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https://www.courtlistener.com/api/rest/v3/opinions/1584540/ | 728 N.W.2d 373 (2007)
2007 WI App 34
STATE
v.
VERKUILEN.
No. 2005AP1652-CR.
Wisconsin Court of Appeals.
January 23, 2007.
Unpublished opinion. Reversed and remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3345322/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]
MEMORANDUM ON MOTION TO STRIKE
The third party defendant, Providence and Worcester Railroad, has moved to strike the third party complaint brought by the defendant, the third party plaintiff, Simon Ford, Inc.
The third party defendant argues that the third party plaintiff's claim is barred by the statute of limitations, in this case, Connecticut General Statutes Section 52-577a(b). Since the complaint contains all the necessary facts and dates, this defense may be raised through a Motion to Strike. The original complaint was brought against Simon Ford, Inc. on April 7, 1989, with a return date of May 2, 1989, pursuant to Connecticut General Statutes Section 52-572m.
Connecticut General Statutes Section 52-577a(b) states that any third party defendant must be served within one year from the date the original complaint was returned to court. This third party action was brought by a complaint dated June 17, 1991, with a return date of September 24, 1991. The third party defendant was served on August 30, 1991, more than two years after the original action.
Accordingly, the Motion to Strike is granted.
HURLEY, J. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1918876/ | 420 Pa. 416 (1966)
Rufo, Appellant,
v.
Bastian-Blessing Company.
Supreme Court of Pennsylvania.
Argued January 11, 1966.
March 22, 1966.
Before BELL, C.J., MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.
*417 Rudolph J. Di Massa, for appellants.
Philip Price, with him George J. Miller, and Dechert, Price & Rhoads, for appellee.
OPINION BY MR. CHIEF JUSTICE BELL, March 22, 1966:
This is an appeal from the Court of Common Pleas which sustained defendant's preliminary objections to plaintiffs' reinstated complaint in trespass. Plaintiffs alleged that defendant supplied one of the plaintiffs, Clementino Rufo, with a defectively manufactured portable cylinder containing gas and that as he was using the cylinder to melt solder in the basement of his home the cylinder was ignited by a nearby pilot light and an explosion occurred which caused property damage and severe personal injuries.
This accident occurred in December, 1957. Plaintiffs thereafter brought two actions against the defendant, one in trespass and one in assumpsit. Defendant was a foreign corporation. In both actions, service of process was made by serving the Secretary of the Commonwealth.
On January 23, 1959, plaintiffs entered a default judgment against defendant in the trespass action for want of an appearance. On June 20, 1960, the lower Court, after a hearing, ordered the default judgment in the trespass action stricken, and dismissed the complaint *418 in the assumpsit action[*] on the ground, inter alia, that service of the complaint could not legally be made on the Secretary of the Commonwealth.
No appeal was ever taken from the order of the lower Court which struck the default judgment in the trespass action.
On May 20, 1965, plaintiffs, as permitted by Pa. R.C.P. 1010, reinstated the complaint in trespass. The lower Court sustained defendant's preliminary objections to such reinstatement, and plaintiffs thereupon took this appeal.
It is well established in Pennsylvania that "`where a judgment is vacated or set aside [or stricken from the record] by a valid order or judgment, it is entirely destroyed and the rights of the parties are left as though no such judgment had ever been entered.'" Higbee Estate, 372 Pa. 233, 237, 93 A.2d 467.
The filing of the original complaint in trespass on December 12, 1958, tolled the statute of limitations for the statutory period of two years, but not a day longer; and the statute of limitations bars the reissuance of the complaint after this period expires. Marucci v. Lippman, 406 Pa. 283, 285, 177 A.2d 616; Zarlinsky v. Laudenslager, 402 Pa. 290, 167 A.2d 317.
Since the plaintiffs did not reinstate their original complaint in this trespass action within the two-year period, their claim is barred by the statute of limitations.
Order affirmed.
NOTES
[*] The order of the lower Court in the assumpsit action was sustained by this Court in Rufo v. Bastian-Blessing Co., 405 Pa. 12, 173 A.2d 123. Plaintiffs thereafter reinstated the complaint in assumpsit, and this Court once again affirmed the lower Court, which had dismissed the complaint on the ground that plaintiffs' action was barred by the statute of limitations. Rufo v. The Bastian-Blessing Co., 417 Pa. 107, 207 A.2d 823 (1965). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1744529/ | 998 So. 2d 621 (2008)
BROWN
v.
STATE.
No. 5D07-4116.
District Court of Appeal of Florida, Fifth District.
December 30, 2008.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584538/ | 24 So.3d 1043 (2010)
David LYNCH, Appellant,
v.
STATE of Mississippi, Appellee.
No. 2008-KA-01874-COA.
Court of Appeals of Mississippi.
January 5, 2010.
*1044 Leslie S. Lee, Jackson, Justin Taylor Cook, attorneys for appellant.
Office of the Attorney General by W. Glenn Watts, attorney for appellee.
Before LEE, P.J., CARLTON and MAXWELL, JJ.
MAXWELL, J., for the Court.
¶ 1. David Lynch was convicted in Clarke County Circuit Court of possession of cellular phones while confined in a correctional facility, in violation of Mississippi Code Annotated section 47-5-193 (Supp. 2009). He was sentenced as a habitual offender to fifteen years' imprisonment in the custody of the Mississippi Department of Corrections (MDOC). On appeal, Lynch claims the circuit court erred in denying his motion for a mistrial. Lynch moved for a mistrial after the circuit court allowed the State to question Lynch about an out-of-court representation made by his attorney. Finding no reversible error, we affirm.
FACTS AND PROCEDURAL HISTORY
¶ 2. On December 23, 2007, Deputy Elton Davis received a report that something was burning in jail cell M-1, where Lynch was housed. Smoking is prohibited in the correctional facility, so Deputy Davis called for a search of the jail cell for contraband. He was assisted by Deputies Berry White and Jerry Ivey.
¶ 3. The deputies had each of the inmates exit the cell.[1] Deputy Davis remained in the hall, while Deputies White and Ivey entered, cleared, and searched the cell for contraband. According to Deputy Davis, Lynch was the first to exit the jail cell. Lynch was dressed in a T-shirt and orange pants. Deputy Davis patted Lynch's torso area and ordered him to pull down his pants. When Lynch complied, Deputy Davis noticed Lynch was wearing four pairs of boxer shorts, as well as, a pair of thermal underwear. After having him remove his outer garments, Deputy Davis immediately saw a bulge in Lynch's thermal underwear. Davis notified Deputy White. He then retrieved two cell phones from the pouch located in the crotch area of Lynch's thermal underwear. Deputy White testified that he also observed the bulge in Lynch's underwear and witnessed Deputy Davis remove the cellular phones. Mississippi Code Annotated section 47-5-193 prohibits possession of cellular phones in a correctional facility.
¶ 4. Lynch testified in his own defense and admitted the phones were found in his possession but denied ownership or knowing possession of the phones. Lynch's defense centered around his claim that he was showering at the time the deputies began their search of the jail cell. He contended that after exiting the shower, he borrowed clothes from another inmate. Lynch testified that when he began putting on the borrowed pants, the thermal underwear was already inside of the pants. Though he denied wearing four pairs of boxer shorts, he admitted he knew the thermal underwear contained some form of contraband, but he decided to take his chances rather than notify the deputies. *1045 According to Lynch, he was still wet and had soap on him when the deputies entered his cell.
¶ 5. Deputy Davis testified that Lynch was not wet or damp during the search, and Deputy White explained to the jury that Lynch was not showering when the search began. Deputy Ivey was called as a rebuttal witness for the State. He also contradicted Lynch's testimony about being in the shower when the deputies arrived to conduct the search.
¶ 6. During Lynch's cross-examination, he accused Deputies Davis and White of fabricating their testimony about the cell phones on the day of trial. After Lynch made these claims, the prosecutor asked Lynch if he had previously read the two deputies' written statements about the seizure. Lynch denied having read the statements, but said he had heard the statements. The State then questioned Lynch about his attorney's pretrial representation to the circuit judge and assistant district attorney that Lynch had "read his discovery." Lynch's counsel objected to this line of questioning and moved for a mistrial. The circuit court overruled his objection and denied his motion for a mistrial.
¶ 7. The jury found Lynch guilty of possession of contraband inside a correctional facility. The circuit judge denied Lynch's post-trial motions for a new trial and for a judgment notwithstanding the verdict.
STANDARD OF REVIEW
¶ 8. Trial judges enjoy a great deal of discretion in addressing the relevancy and admissibility of evidence. Robinson v. State, 940 So.2d 235, 238(¶ 7) (Miss.2006). "Reversal is proper only where such discretion has been abused and a substantial right of a party has been affected." Johnson v. State, 666 So.2d 499, 503 (Miss.1995) (citing Green v. State, 614 So.2d 926, 935 (Miss.1992)); M.R.E. 103(a).
¶ 9. A mistrial may only be granted by the trial court "when the harm done would render the defendant without hope of receiving a fair trial." Lepine v. State, 10 So.3d 927, 941(¶ 39) (Miss.Ct.App.2009) (quoting Reed v. State, 764 So.2d 511, 513(¶ 7) (Miss.Ct.App.2000)). The trial judge is in the best position to assess the effect of the incident, and we will not reverse unless the trial judge abused his discretion in denying the motion for a mistrial. Ladner v. State, 584 So.2d 743, 753 (Miss.1991).
DISCUSSION
¶ 10. Before trial, Lynch's attorney informed the circuit court and assistant district attorney that Lynch had "read his discovery and he's reviewed the videos that we have been furnished by the State." After Lynch accused Deputies Davis and White of fabricating their trial testimony, the following exchange took place during Lynch's cross-examination by the State:
[Prosecutor] You got to read [the statements], didn't you?
[Lynch] I heard them.
[Prosecutor] I know. But didn't you read those statements?
[Lynch] I heard them.
[Prosecutor] Listen to my question. You read these statements?
[Lynch] No, I haven't read these statements.
[Prosecutor] Now, earlier today, not with the jury here, but Mr. Jordan had made a comment with you present that you had read over all of the discovery, is that not true?
[Lynch] The discovery I didn't know I was even coming to trial here today for the cell phones, sir.
[Defense counsel] We move for a mistrial, Your Honor. The jury needs to be *1046 released for a moment, Judge. I want to argue this, Your Honor.
. . . .
[Defense counsel] Your Honor, I would ask Rhonda, if she would, to read back the last statement about what Mr. Jordan said outside the presence of the jury.
[Prosecutor] What I said was is, outside the presence of the jury, Mr. Jordan said that you had read over your discovery. That's all I said.
[Defense counsel] And I don't think I've ever said that.
[Prosecutor] That's exactly what you said back there in the Judge's chambers. Didn't he, Judge?
THE COURT Yes, sir.
[Defense counsel] I said he had read his discovery. But you don't make that comment when the jury is sitting in the box. He has read his discovery.
THE COURT This man denied exactly that under oath on the witness stand, and that is certainly a matter of fact that would be right for cross-examination. The whole issue is his credibility here.
[Defense counsel] I agree with you, Your Honor.
THE COURT And there was certainly a representation by you that he had, in fact, read over his discovery.
[Defense counsel] To my knowledge he had because he's viewed all the videos.
THE COURT And what we have on the witness stand here is a sworn statement that he had not. That is a conflict that is an appropriate matter for cross-examination.
[Defense counsel] Yes, sir. He has reviewed all the videos to my knowledge. I know [Defense co-counsel] has read them to him. Is that correct, [Defense co-counsel]?
[Defense co-counsel] That's correct.
THE COURT So, I mean, if it is an unusual matter for cross-examination; however, under the facts here presented, I don't think it is an inappropriate matter for cross-examination and your motion for a mistrial under those circumstances and under these circumstances here present is overruled.
¶ 11. Lynch's appeal is based primarily on the supreme court's decision in Walker v. State, 729 So.2d 197 (Miss.1998). He contends that based on Walker, we are required to reverse his conviction. However, we decline to read Walker so broadly.
¶ 12. In Walker, the circuit court allowed the defendant, Calvin Walker, to be cross-examined about comments made by his co-defendant's lawyer during opening statements. The attorney's comments directly implicated Walker in a crack cocaine transaction and were used by the State as substantive evidence of Walker's guilt on the cocaine-distribution charges. Id. at 201(¶ 14). In fact, a substantial portion of Walker's cross-examination centered on the "tacit admission of guilt" made by his co-defendant's attorney. As the supreme court put it:
The State seized on the statements of [the co-defendant's] counsel, and hammered Walker, testifying on his own behalf, with this apparent tacit admission of guilt by his co-defendant, and despite vociferous objection from Walker's attorney, the trial court allowed the prosecutor to treat [the co-defendant's] attorney's opening statement as if it were direct testimony by [the co-defendant] against Walker[.]
Id. at 200-01(¶ 12).
¶ 13. Here, only a small portion of Lynch's cross-examination focused on his *1047 attorney's statements. More importantly though, unlike the attorney's statement in Walker, Lynch's attorney's representation was used only for impeachment purpose on a collateral and quite trivial matter whether Lynch had heard or read his discovery. Lynch's attorney's statements did not touch on his client's guilt, much less rise to the level of a "tacit admission of guilt" on the underlying phone-possession charge.
¶ 14. In addressing the circuit court's decision to permit the State to conduct the complained of examination, we point out that while trial judges enjoy a great deal of discretion in assessing the admissibility of evidence, such discretion must be exercised within the confines of the rules of evidence. Bailey v. State, 956 So.2d 1016, 1025(¶ 26) (Miss.Ct.App.2007) (citing Austin v. State, 784 So.2d 186, 193(¶ 23) (Miss. 2001)).
¶ 15. Unsworn prior inconsistent statements of a witness may be used to impeach the witness's credibility. M.R.E. 613(b). However, here we are not faced with a prior statement from a testifying witness. Also, there is nothing in the record to establish that Lynch agreed with his counsel's representation that he had read the deputies' statements. Absent such an acknowledgment, we cannot conclude that Lynch adopted his attorney's statements as his own. Thus, Lynch's attorney's representations were not prior inconsistent statements under 613(b) and should not have been used for impeachment purposes under these circumstances.
¶ 16. While we find it was error for the circuit court to allow the State to use Lynch's attorney's statements for impeachment purposes, errors in the admission or exclusion of evidence are not grounds for reversal unless the errors adversely affect a substantial right of a party. Bailey, 956 So.2d at 1025-26(¶ 26) (citing Lynch v. State, 877 So.2d 1254, 1281(¶ 86) (Miss.2004)).
¶ 17. The supreme court has explained our standard regarding harmless error as follows:
To warrant reversal, two elements must be shown: error, and injury to the party appealing. Error is harmless when it is trivial, formal, or merely academic, and not prejudicial to the substantial rights of the party assigning it, and where it in no way affects the final outcome of the case; it is prejudicial, and ground[s] for reversal, only when it affects the final result of the case and works adversely to a substantial right of the party assigning it. Obviously, in order for the rule of harmless error to be called into play in support of a judgment, the judgment must be otherwise supportable, and will be reversed when there is nothing in the pleadings or evidence to support it.
Hicks v. State, 6 So.3d 1099, 1103(¶ 17) (Miss.Ct.App.2008) (citing Gray v. State, 799 So.2d 53, 61(¶ 30) (Miss.2001)).
¶ 18. Due to the overwhelming evidence of Lynch's guilt, we find the decision to allow the State to impeach Lynch with his attorney's statement was harmless error. Deputies Davis and White testified that upon searching Lynch they saw the bulge in the crotch area of his long underwear. Deputy Davis testified that he retrieved the cellular phones from Lynch's person, and Deputy White corroborated the seizure. Also, the jury was free to reasonably infer that Lynch wore four pairs of boxer shorts on top of the thermal underwear in an effort to conceal the phones during the search. Furthermore, Lynch's defense that he had been showering when the deputies began the search and hurriedly put on another inmate's clothes was *1048 largely contradicted by the testimony of Deputies Davis, White, and Ivey.
¶ 19. The underlying offense turns on possession of the cellular phones, not ownership. And we find, there was ample evidence for the jury to find that Lynch knowingly possessed the contraband phones. Our supreme court instructs that "[e]rroneously admitted evidence is harmless when `the same result would have been reached had error not existed.'" Caldwell v. State, 6 So.3d 1076, 1079(¶ 9) (Miss.2009) (citing Tate v. State, 912 So.2d 919, 926(¶ 18) (Miss.2005)). As our United States Supreme Court has stated, a criminal defendant is "entitled to a fair trial but not a perfect one, for there are no perfect trials." Brown v. United States, 411 U.S. 223, 231-32, 93 S.Ct. 1565, 36 L.Ed.2d 208 (1973) (citation and internal quotations omitted). Considering the evidence presented against Lynch, we conclude that any error caused by the State's reference to Lynch's attorney's comments was at most harmless and clearly did not affect the final outcome of his case.
¶ 20. While the circuit court erred in permitting the State to pursue this line of questioning, we do not find its decision to deny Lynch's motion for a mistrial rendered Lynch without hope of receiving a fair trial. Accordingly, we find the circuit court did not err in denying Lynch's motion for a mistrial.
¶ 21. THE JUDGMENT OF THE CLARKE COUNTY CIRCUIT COURT OF CONVICTION OF POSSESSION OF CONTRABAND IN JAIL AND SENTENCE AS A HABITUAL OFFENDER OF FIFTEEN YEARS IN THE CUSTODY OF THE MISSISSIPPI DEPARTMENT OF CORRECTIONS WITHOUT THE POSSIBILITY OF PROBATION, PAROLE, EARNED RELEASE, EARNED TIME, GOOD TIME, TRUSTEE STATUS OR ANY TYPE OF REDUCTION OF SENTENCE AND TO PAY A FINE OF $500 IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO CLARKE COUNTY.
KING, C.J., LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ISHEE, ROBERTS AND CARLTON, JJ., CONCUR.
NOTES
[1] The exact number of inmates in jail cell M-S1 was disputed at trial; however, the deputies testified the jail cell could house up to eight inmates. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1586299/ | 176 So.2d 597 (1965)
William Eugene BARTON, Appellant,
v.
STATE of Florida, Appellee.
No. G-59.
District Court of Appeal of Florida. First District.
June 29, 1965.
*598 William Eugene Barton, in pro. per.
Earl Faircloth, Atty. Gen., and John S. Burton, Asst. Atty. Gen., for appellee.
WIGGINTON, Acting Chief Judge.
This appeal is from a final order rendered by the trial court on July 30, 1964, denying appellant's motion filed pursuant to Criminal Procedure Rule 1, F.S.A. ch. 924 Appendix to vacate and set aside the judgment and sentence then being served by appellant under a final judgment rendered by the Court of Record of Escambia County on May 29, 1964. The notice of appeal in this case was not filed by appellant in the Court of Record of Escambia County until October 15, 1964, more than seventysix days after rendition of the order appealed.
Criminal Procedure Rule 1 was adopted by the Supreme Court of Florida effective on April 1, 1963. In one of the first decisions construing this rule the Supreme Court said that appeals from orders entered in proceedings brought under Criminal Procedure Rule 1 shall be taken to the appropriate District Court of Appeal, and that appeal time shall be that governing criminal appeals.[1] This decision fixed the appeal time for filing a notice of appeal in Criminal Procedure Rule 1 proceedings at ninety days from the rendition of the order or judgment appealed.
As the decisional law of this state construing Criminal Procedure Rule 1 developed, and the true nature and purpose of this proceeding became clear, the principle of law emerged that although this type proceeding constituted a collateral attack on a judgment rendered in a criminal case, such proceedings are nevertheless civil in nature and, therefore, must be litigated in accordance with rules governing civil procedure, both trial and appellate.[2]
In State v. Weeks[3] it was held that proceedings under Criminal Procedure Rule 1 provide a remedy co-equal with, but actually more expeditious than, post-conviction habeas corpus. At the time the decision *599 was rendered in the Weeks case, it was generally understood by the bench and bar of Florida that because of certain previous decisions rendered by the Supreme Court of Florida, the time for taking an appeal from a final order or judgment entered in a post-conviction habeas corpus proceeding was ninety days as provided by the statute relating to appeals in criminal cases. Only recently, however, the Supreme Court has come to appreciate the error of its prior judgment on this point, and in the case of Crownover v. Shannon[4] has receded from and overruled its previous decisions holding that the appeal time from a final judgment in post-conviction habeas corpus is ninety days.[5] In Crownover the Supreme Court has now taken the unequivocal position that proceedings for post-conviction habeas corpus are collateral attacks of a civil nature upon the validity of a judgment rendered in a criminal case, the time for appealing which is the same as generally allowed on appeals of other cases of a civil nature, which under the present statutes and rules of this state is sixty days, and not the ninety days which previously prevailed.
The procedure to be followed in taking appeals from final orders or judgments in proceedings brought pursuant to Criminal Procedure Rule 1 is the same as that applicable to appeals from final judgments or orders rendered in post-conviction habeas corpus proceedings. It follows that the time limited for taking an appeal from a final judgment or order rendered in a Criminal Procedure Rule 1 proceeding is sixty days from the rendition of the order or judgment appealed.
Since the appeal time for reviewing final judgments or orders rendered in proceedings instituted under Criminal Procedure Rule 1 has been generally recognized to be ninety days, the rule promulgated and announced in this decision shall have prospective application only.
Since this appeal was taken within ninety days from the rendition of the order or judgment appealed, which time was permissible under former decisions relating to this subject, the appeal will not be dismissed but will be considered on its merits for final disposition.
CARROLL, DONALD K., and RAWLS, JJ., concur.
NOTES
[1] Roy v. Wainwright, (Fla. 1963) 151 So.2d 825, 828.
[2] State v. Weeks, (Fla. 1964) 166 So.2d 892.
[3] Ibid.
[4] Crownover v. Shannon et al., (Fla. 1964) 170 So.2d 299.
[5] Snell v. Mayo, (Fla. 1955) 80 So.2d 330. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1586300/ | 33 So.3d 800 (2010)
D.M.H., Appellant,
v.
Joyce PIETILLA, Administrator, Halifax Medical Center, Appellee.
No. 5D09-351.
District Court of Appeal of Florida, Fifth District.
April 23, 2010.
*801 James S. Purdy, Public Defender, and Kathryn Rollison Radtke, Assistant Public Defender, Daytona Beach, for Appellant.
Harold C. Hubka of Cobb & Cole, Daytona Beach, for Appellee.
COHEN, J.
D.M.H. appeals the denial of her petition for writ of habeas corpus. The issue D.M.H. raises is whether her confinement is unlawful because the hearing on her Baker Act[1] petition, which sought involuntary inpatient placement, was not held within five calendar days. We affirm.
When a petition for involuntary placement is filed under the Baker Act, either involuntary outpatient or involuntary inpatient placement may be sought. §§ 394.4655(6)(a)1., 394.467(6)(a)1., Fla. Stat. (2008). If involuntary outpatient placement is sought, the trial court must hold a hearing "within 5 working days." § 394.4655(6)(a)1. If involuntary inpatient placement is sought, the trial court must hold a hearing "within 5 days." § 394.467(6)(a)1. D.M.H. seizes on the difference in language to argue that because section 394.4655(6)(a)1. uses "working" days, the omission of that word in section 394.467(6)(a)1. reflects a legislative intent that the hearing for involuntary inpatient placement be held in five calendar days.
We recognize the Legislature's use of different terms in different parts of the same statute is "`strong evidence that different meanings were intended.'" Maddox v. State, 923 So.2d 442, 446 (Fla.2006) (quoting State v. Mark Marks, P.A., 698 So.2d 533, 541 (Fla.1997)). However, this principle is not dispositive in this case because of Florida Rules of Civil Procedure 1.010 and 1.090.
The rules of civil procedure apply to "all actions of a civil nature and all special statutory proceedings," subject to certain exceptions not applicable to this case. Fla. R. Civ. P. 1.010. Rule 1.090 governs the computation of time periods under the rules of civil procedure, a court order, or "any applicable statute." Fla. R. Civ. P. 1.090(a). When a statute prescribes action be taken within a certain time period, "[r]ule 1.090 governs the computation of time absent specific computation provisions to the contrary." Canonico v. Callaway, 26 So.3d 53, 54 (Fla. 2d DCA 2010). In relevant part, rule 1.090(a) provides that Saturdays, Sundays, and legal holidays are excluded when the prescribed time period is seven days or less. Because section 394.467 does not specifically indicate *802 how the five-day time period is to be calculated, rule 1.090 governs. See Fla. R. Civ. P. 1.010; Canonico, 26 So.3d at 54.
Based on the foregoing, we reject D.M.H.'s argument that her hearing on involuntary inpatient placement had to be held within five calendar days of the petition being filed. Accordingly, we affirm the trial court's denial of her petition for writ of habeas corpus.[2]
AFFIRMED.
SAWAYA and EVANDER, JJ., concur.
NOTES
[1] § 394.451, Fla. Stat. (2008).
[2] We further note that even if we agreed with D.M.H.'s reading of the statute, the remedy would not be dismissal of the petition. Rather, D.M.H. would be entitled to release pending a hearing. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918931/ | 106 B.R. 775 (1989)
In re ELJAY JRS., INC., Debtor.
Bruce S. SCHERLING, Trustee of Eljay Jrs., Inc., Plaintiff,
v.
Joel S. EHRENKRANZ and Andrea Boles Mallas, Executors of the Estate of Louis J. Mallas, Defendants.
Bankruptcy No. 87-B-10094 (HCB), Adv. No. 88-5366A.
United States Bankruptcy Court, S.D. New York.
October 27, 1989.
*776 *777 Scherling, Davidson & Rech, P.C., New York City by Gustav Rech, for Trustee.
Skadden, Arps, Slate, Meagher & Flom New York City by Michael Cook, Julie L. Miller, and Kayalyn Marafioti, for Joel S. Ehrenkranz, Co-Executor of the Estate of Louis J. Mallas.
HOWARD C. BUSCHMAN, III, Bankruptcy Judge.
This adversary proceeding was commenced by Bruce S. Scherling (the "Plaintiff" or the "Trustee"), Chapter 7 trustee of Eljay Jrs., Inc. (the "Debtor" or "Eljay"), against Joel S. Ehrenkranz and Andrea Boles Mallas (the "Defendants"), Co-Executors of the Estate of Louis J. Mallas (the "Mallas Estate"), to avoid, pursuant to 544(b), 547 and 548(a) of 11 U.S.C. (the "Bankruptcy Code" or the "Code"), transfers of insurance proceeds alleged to be property of Debtor, to the Mallas Estate approximately two months prior to the Debtor's filing for relief under the Bankruptcy Code, at a time when it was insolvent.[1] The principal issues are (i) whether an inter vivos life insurance trust was established in 1980, when there is no proof of insolvency, having as its res the right to collect the proceeds from existing and after acquired policies and (ii) whether, if so, the transfer of the insurance proceeds violated 513(a) of the New York Business Corporation Law and are therefore avoidable pursuant to 544(b) of the Code. Trial was held on June 13 and 16, 1989. Post-trial submissions were completed on October 10, 1989.
I
Eljay is a New York corporation. It was incorporated in 1977. June 16, 1989 Trial Transcript (the "6/16/89 Tr."), pp. 12-13. Louis J. Mallas was a shareholder and officer of the corporation from its inception until his death in 1986. Eljay commenced the business of selling domestically manufactured ladies' garments upon acquiring a division of Lou Mallas, Inc. in exchange for a demand obligation in the principal amount of $2,000,000. 6/16/89 Tr., pp. 12-13.
Eljay obtained from Phoenix Mutual Life Insurance Company of Hartford, Connecticut ("Phoenix") two insurance policies on Mallas' life on June 7, 1977 and September 6, 1977. The policies, Nos. 2,011,175 and 2,021,244, were in the face amounts of $1,500,000 and $500,000, respectively (the "Phoenix Policies"). The Phoenix Policies named Eljay as owner and provided that "[t]he owner controls th[e] polic[ies] while the insured is living." Exh. 12 and Exh. 13,  3. Eljay retained the rights to receive all amounts payable during the insured's life, to change the beneficiary and the interest of any owner, and to assign, release or surrender the policies. Exh. 12 and Exh. 13,  3 and  4.
Beneficiary Designations, dated June 16, 1977 and October 5, 1977 were filed with Phoenix by Eljay in 1977. They stated that the proceeds of the policies would be
"payable on account of the death of the insured . . . to Lou Mallas, Inc., a New York corporation, its successors or assigns, creditor, as such creditor's interest may appear . . . The amount payable on account of the death of the insured, less the amount paid as hereinbefore provided, shall be payable to El Jay Jrs., Inc., a *778 New York corporation, its successors or assigns." Exh. 14 and Exh. 15.
Eljay also assigned, by virtue of Assignments of Policy as Collateral dated June 28, 1977 and October 5, 1977 (the "Assignments"), its rights and interests in the Phoenix Policies to Louis Mallas, Inc. Exh. 17 and Exh. 18. It reserved, however, the right to designate and change the beneficiary. Exh. 17 and Exh. 18, Â B.
Some three years later, Mallas and his fellow shareholders, Laurence Korman and Lee Blumenthal, and Eljay executed an agreement dated as of May 3, 1980 (the "Agreement," Exh. 1). The Agreement provided, inter alia, for Eljay to repurchase shares held by the estate of any deceased shareholder and the estate to sell those shares. Exh. 1, Â 1.4. The Agreement further provided that the purchase price of each share of stock of a deceased shareholder was to be the value of each share on the date of the shareholder's death and that the proceeds of any life insurance policies on the life of the deceased shareholder shall be applied to the purchase price. Exh. 1, Â 1.8.2(c).
The policy proceeds were to be held in trust to satisfy Eljay's obligation to purchase the shares held by the deceased shareholder and excluded from the calculation of Eljay's net worth. The Agreement further provided for assignment of the proceeds by Eljay if it had not received them when it purchased the stock and for return of that portion of the proceeds if it overpaid for the stock. It stated:
. . . there shall not be included in any such calculation of net worth per share any of the life insurance proceeds received or receivable by the Corporation upon the death of a Stockholder. The Corporation shall pay over the full amount of such life insurance proceeds, to the extent received to the estate of the deceased Stockholder when the sale takes place as provided in Section 1.4. Such payments shall be applied against the purchase price for the shares. If the amount of life insurance proceeds received at any time as a result of the death of the Stockholder whose shares are being purchased is greater then what the purchase price for such shares would be, based upon the value calculated as set forth above, then the amount of insurance proceeds so paid over shall be deemed to be the purchase price. If the insurance proceeds are less than the value so calculated then the purchase price shall be the value so calculated. The proceeds of such life insurance shall be kept separate and apart from all other funds of the Corporation and shall be held by the Corporation, in trust, to be applied to its obligation to purchase the shares owned by the deceased Stockholder in accordance with the terms and provisions of this Agreement. If all of the insurance proceeds have not been received when the sale takes place, then the Corporation shall assign to said estate the right to receive such proceeds. If the amount so assigned when received by the estate, is, together with all other amounts of purchase price received by the estate in excess of the total amount of purchase price to which the estate is entitled, then the estate promptly shall return to the Corporation the full amount received by the estate in excess of said purchase price.
Exh. 1, Â 1.8.3 (Emphasis added).
Eljay's purchase of shares of stock was subject to the restrictions imposed by law on New York corporations with respect to the purchase of their own shares of stock. If such restrictions would prevent either the purchase of any shares by Eljay or the payment of any installment of purchase price, then the parties agreed to vote for a reduction in the capital of Eljay in order to enable it to make any purchase or payment required under the Agreement. Exh. 1, Â 7. However, "if the amount of any insurance proceeds received by the Corporation in respect of the death of the Stockholder whose shares are being purchased exceeds the price which would be paid based upon such value, then the price shall be an amount equal to the amount of such insurance proceeds." Exh. 1, Â 1.8.1(ii).
Prior to the execution of the Agreement, Howard Bernstein, of the Joseph S. Herbert Company, Eljay's accountant, attended, *779 as consultant to Korman and Blumenthal, a meeting of the Eljay shareholders convened to discuss the instrument. He testified that it was intended by Mallas that "all matters contained in the Agreement were to be effective on the date of signing," subject to further "embellishment," i.e., purchase of additional insurance, so as to have sufficient proceeds to
cover in the largest amount funds to pay out the decedent's estate on the buyback provision . . . From time to time usually at year end the various stockholders [were to] meet with me, formally or informally, most of the times informally, to discuss whether the life insurance ought to be embellished to be greater than they were originally based on the new values of the company that might pertain on the audit date.
6/16/89 Tr., pp. 11-12.
To this Korman added that he understood that there was to be insurance on the lives of the three shareholders pursuant to the Agreement, that "the expressed purpose of this insurance was for the benefit of, God forbid, whoever passed away, that their family would retain the money," that "there was mention of a trust, but again it was [his] understanding that the trust was basically holding the money for the beneficiary if somebody was deceased," and that the Agreement was to be effective "[a]t the beginning of the shareholders' agreement, May of 1980." 6/16/89 Tr., p. 35.
On November 2, 1983, Connecticut Mutual Life Insurance Company ("Connecticut") issued life insurance policy No. 4271128 (the "Connecticut Policy") for the face amount of $400,000 on the life of Mallas, with Eljay named as owner and beneficiary. Compl., Â 7; Ans., Â 6.
A Standard Confirmation Inquiry dated May 25, 1984 and submitted to Phoenix by Bernstein on behalf of the corporation named Eljay as the owner and "Lou Mallas Inc., Corp. creditor as their interest may appear. Balance same as owner" as beneficiaries of the Phoenix Policies. Exh. 41, 6/16/89 Tr., pp. 18-19. Note 2 of Eljay's certified financial statement dated April 28, 1984, Exh. 40, stated that the Debtor was the owner and beneficiary of the Phoenix Policies and the Connecticut Policies.[2] Bernstein averred that such information was confirmed by the insurer and inscribed on the policies. 6/16/89 Tr., pp. 10, 16. Although the audit note makes no mention of the Agreement, Bernstein claimed that the note was consistent with his assertion that the proceeds of the Policies would be paid to Eljay for turnover to a shareholder's estate under the Agreement. Id. He was, however, unable to explain why his company stated on the Standard Confirmation Inquiry that "Louis Mallas, Inc., corporate creditor" was the primary beneficiary and assignee of the Phoenix Policies, but did not do so in Eljay's financial statements. 6/16/89 Tr., pp. 17-20. A Standard Confirmation Inquiry, dated May 17, 1985, however, named Eljay alone as the beneficiary.
On July 14, 1986, Lou Mallas, Inc., by letter to Phoenix, acknowledged payment of all indebtedness due from Eljay and declared that it had no interest in the Phoenix Policies. Exh. 19. Phoenix, in a letter dated July 21, 1986 to Blumenthal, indicated that the Assignments in favor of Lou Mallas, Inc. were released. Exh. 21. On July 21, 1986, Eljay executed another Beneficiary Designation naming itself the beneficiary of the Phoenix Policies. Exh. 16.
Mallas passed away on August 21, 1986. After the issuance of preliminary letters testamentary to the Defendants, Defendant Ehrenkranz's attorney notified Phoenix on September 19, 1986 that a stock repurchase agreement required Eljay to pay over to the Mallas Estate the full amount of proceeds from the Phoenix Policies in exchange for the shares of Eljay held by the Mallas Estate. Exh. 23. He requested that no distribution be made until the legal *780 rights of the parties were ascertained. Id. Phoenix informed Eljay that the Defendants would file an adverse claim to the proceeds. Exh. 24.
In November 1986, the Mallas Estate and Eljay compromised their differences by Eljay releasing its claim to the proceeds of the policies, Exh. 22 (the "Release"), and the Mallas Estate loaning Eljay $1,000,000 (the "Loan"), the payment of which was guaranteed by Korman. 6/16/89 Tr., p. 36.
In letters dated November 5, 1986, Korman advised Phoenix and Connecticut that Eljay released and assigned to the Mallas Estate its interest in the proceeds of the Policies. Exh. 2 and Exh. 3. He directed that payment of the proceeds of the Policies be made to the Mallas Estate. Id. Connecticut paid $409,210.58, the face amount of the Connecticut Policy plus accrued dividends, to the Mallas Estate on November 10, 1986. Exh. 5. Phoenix paid $2,293,659.74 to the Mallas Estate nine days later for the face amount of the Phoenix Policies plus accrued dividends. Exh. 4. On that date, the Mallas Estate loaned Eljay $1,000,000 pursuant to a Loan Agreement dated November 19, 1986. Exh. 8. Korman personally guaranteed the Loan. Exh. 9 and 6/16/89 Tr., p. 39. The Mallas Estate executed and delivered to Eljay a stock power on November 17, 1986, transferring to it Mallas' thirty-three Eljay shares. Exh. 43.
Eljay filed a petition for relief under Chapter 11 of the Bankruptcy Code two and one-half months later, on January 20, 1987 (the "Petition Date"). The Debtor scheduled liabilities in the amount of $18,562,616 and assets in the amount of $1,957,891.90. Exh. 26. After the case was converted to Chapter 7 in January 1988, Plaintiff was appointed interim trustee, then qualified as trustee.
By this adversary proceeding, the Trustee seeks to recover the insurance proceeds transferred to the Mallas Estate. He contends that the payments of the insurance proceeds were avoidable under sections 544(b) and 550(a) of the Code because Eljay's repurchase of Mallas' shares, funded by the insurance proceeds, violated section 513 of the New York Business Corporation Law (the "BCL"). That statute prohibits redemption of shares by a corporation except from its surplus and prohibits purchase and redemption, and the continuing to fund purchase and redemption, when the corporation is insolvent or would thereby be made insolvent. See Gold v. Lippman (In re Flying Mailmen Service, Inc.), 539 F.2d 866 (2d Cir.1976). He also contends that the payments are avoidable under sections 548(a)(2)(A), 548(a)(2)(B)(i) and 550(a) of the Code as a fraudulent conveyance within one year of the bankruptcy petition, since at the time of the transfer in 1986, the Debtor was insolvent and the stock was worthless, rendering what the Debtor received for the transfer of the Proceeds less than "reasonably equivalent value." He further claims that the payments are avoidable under sections 547 and 550(a) of the Code as voidable preferences.[3] Compl., pp. 6-7.
In material part, Defendants asserted as affirmative defenses: (i) the Proceeds received by the Debtor were held "in trust" for the Mallas Estate such that the proceeds never became part of the Debtor's estate and there was no transfer of property of the Debtor's estate, and (ii) the Mallas Estate could offset the amount of the Loan and any pre-petition interest owed it by the Debtor against money deemed recoverable by the Trustee.
The Defendants moved for summary judgment, contending that there was no genuine issue as to whether the Agreement effectively established, as of May 3, 1980, a business insurance trust to fund the repurchase of the shares owned by Mallas at the time of his death. The Debtor was the trustee; the Mallas Estate was the beneficiary; the corpus was the right to receive the proceeds of the Phoenix Policies; and Eljay's retention of the Phoenix Policies in 1980 and of the Connecticut Policy in 1983 *781 constituted the requisite delivery. It was argued that, to the extent the court found that a valid trust was not created, there was a genuine issue as to Eljay's insolvency at the time of the Transfers. Defs' Sum.J.Mem., pp. 2, 4-6; Defs' Rep.Sum.J. Mem. pp. 5-9.
In response, the Trustee cross-moved for summary judgment, claiming that there was no genuine issue to be tried, the record undisputedly reflecting that the Debtor was insolvent at the time the insurance proceeds were transferred to the Mallas Estate, no trust was created, the proceeds were property of the Debtor's estate, and the proceeds were transferred to the Mallas Estate in November of 1986. Pl's Sum. J.Mem. pp. 8-13; Pl's Rep.Sum.J.Mem. pp. 1-4.
This court denied both motions for summary judgment based on the record and ruled that the following issues were to be tried: (i) whether and when a valid trust was intended to be and was in fact established, and (ii) whether Eljay was insolvent in November 1986 when the proceeds were paid to the Mallas Estate.
At the trial, the testimony convincingly showed that Eljay was insolvent at the time of the transfers since its liabilities exceeded its assets by at least $30,000 (and possibly by several million dollars more if guarantees of its affiliates were included) in both May 1986 and January 1987, and there was no evidence of an upturn in the interim. The Court, therefore, made that finding and reserved on the trust issue. 6/16/89 Tr., pp. 49-51.
In asserting that a valid trust was created by the Agreement in 1980, and, therefore, that Eljay had no interest of its own in the proceeds of the Phoenix Policies in 1986 when it was insolvent, Defendants claim that the corpus of the trust at the time of its creation in 1980 was the right to receive those proceeds. Defs' Cor.Pre-Tr. Mem., p. 11. The right to receive the proceeds of the Connecticut Policy was added to the corpus in 1983. Id. No physical delivery of the policies or any other document was required to establish a trust. Defs' Cor.Pre-Tr.Mem., pp. 14-16. The trust was intended to be immediately effective, i.e., in 1980, and it was not fatal to the creation of an insurance trust that the Agreement referred to "proceeds" only. Defs' Cor.Pre-Tr.Mem., pp. 11-13, 23-24.
In response, the Trustee argues, inter alia, that the Agreement did not evince an intent to impress a trust on the policies. Since the proceeds of any policies on the life of an officer had to be assigned to a deceased shareholder's estate if not received at the time of the sale of such shareholder's stock to Eljay, there was no delivery of the res and a trust was created only to the extent the Debtor received the funds, i.e., a trust in futuro. Pl's Sum.J. Mem., pp. 9-10. Nor could the Defendants claim that the Debtor's retention of the policies constituted the requisite delivery because the Agreement spoke to proceeds only. Id. Had the parties intended that policies be the corpus, they should have so provided, or named Eljay the beneficiary of an identical policy "in trust". Id. The Trustee also asserts that permitting the Phoenix Policies to be used as collateral was inconsistent with creation of a trust.
II
The first principal issue is whether Eljay, in protecting its insurable interest in Mallas' earning capacity by procuring what is commonly known as "key-man insurance," Secor v. Pioneer Foundry Co., 20 Mich. App. 30, 35, 173 N.W.2d 780, 783 (1969); Black's Law Dictionary 723, 781 (5th Ed. 1979), did in fact establish a valid business life insurance trust in 1980 to assure repurchase of Mallas' shares upon his death.
If no trust of the rights under the Phoenix Policies and subsequently obtained Connecticut Policy were created in 1980, it is given that the insurance proceeds were solely property of the Debtor. In that case, it is not disputed by Defendants that the transfer of those proceeds occurred in 1986 when Eljay was insolvent, or by virtue of the transfer became insolvent. June 13, 1989 Transcript, pp. 7-8. It would follow that the Proceeds were transferred to the Mallas Estate in 1986 to fund the repurchase of the shares of Eljay (i) in violation *782 of BCL 513 and, as such, the transfer of that property is avoidable under 544(b) of the Code because a creditor holding an allowable unsecured claim may avoid such a transfer[4] or (ii) for which Eljay did not receive reasonably equivalent value under 548(a)(2) of the Bankruptcy Code and, in either instance, may be recovered from the Mallas Estate under 550(a)(1) of the Bankruptcy Code. On the issue of creation of a valid trust the Defendants concede that they shoulder the burden of proof. Defs' Post-Tr.Mem., pp. 22-23.
A
An express trust is "a fiduciary relationship with respect to property, subjecting the person by whom the title to property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it." Coleman v. Golkin, Bomback & Co., Inc., 562 F.2d 166, 168-69 (2d Cir.1977), quoting Restatement (Second) of Trusts 2 (1959). Generally, four elements comprise an express inter vivos trust: (1) a designated beneficiary; (2) a designated trustee who is not the sole beneficiary; (3) a fund or other property sufficiently designated or identified to enable title thereto to pass to the trustee; and (4) the actual delivery of the fund or other property, or the legal assignment thereof to the trustee, with the intention of passing legal title thereto to him as trustee. E.g. Brown v. Spohr, 180 N.Y. 201, 73 N.E. 14 (1904).
A trust whose corpus is comprised of life insurance policies bears advantages in that the trustee may take immediate action with the proceeds on the death of the insured, E. Phillips, Life Insurance Trusts: A Recapitulation for the Draftsman, 81 U.Pa.L. Rev. 284, 286 (1933), and the beneficiaries may enjoy estate tax savings under both federal and state laws, New York State Legislative Annual 1960, A.I. 1239, Pr. 3543, Ingalls ch. 1066, 28-29.
B
i
Life insurance trusts are the subject of statute in New York. Section 13-3.3(a)(1) of the New York Estates Powers and Trusts Law ("EPTL") provides, in relevant part:
(a) The proceeds of . . . life . . . insurance policies may be made payable to a trustee designated as beneficiary in the manner prescribed by this section and named as:
(1) Trustee under a trust agreement or declaration of trust in existence at the date of such designation, and identified in such designation, and such proceeds shall be paid to such trustee and be held and disposed of in accordance with the terms of such trust agreement or declaration of trust, including any amendments thereto, as they appear in writing on the date of the death of the insured . . . It shall not be necessary to the validity of any such trust agreement or declaration of trust that it have a corpus other than the right of the trustee as beneficiary to receive such proceeds . . .
(2) Trustee of a trust to be established by will, and . . . such proceeds shall be payable to the trustee to be held and disposed of in accordance with the terms of such will as a testamentary trust . . .
*783 (f) This section shall be construed as declaring the law as it existed prior to its enactment and not as modifying it.
EPTL 13-3.3, added c. 1976, c. 626, 1 (Emphasis added).
By providing that a trustee may be named as beneficiary of a life insurance policy pursuant to a trust instrument or a will, and that the contractual right to receive proceeds of an insurance policy is a legally cognizable corpus, EPTL 13-3.3 dispels any doubt that in New York the right to receive proceeds of a life insurance policy may be the corpus of a valid inter vivos trust.
EPTL 13-3.3 has propagated one reported case. In In re Stein, 131 A.D.2d 68, 520 N.Y.S.2d 157 (2d Dept.1987), appeal dismissed without opinion, 72 N.Y.2d 840, 530 N.Y.S.2d 555, 526 N.E.2d 46 (1988), the insured purchased a life insurance policy and designated "James Hume as Trustee" the beneficiary of the policy nearly a year later. Some twenty days after the designation, the insured executed a trust instrument appointing Hume as trustee of the proceeds of the policy and directing him to disburse the proceeds in a specified manner. The court held that compliance with EPTL 13-3.3(a)(1) is mandatory and that a valid trust was not created because the inter vivos trust instrument was not in existence at the time the trustee was designated as beneficiary, as required by the clear and express language of the statute.
In so ruling, the Stein court rejected a lower court's interpretation that the state legislature, by amending the statute in 1976, did not intend to impose a requirement that a trust instrument ante-date the designation of the trustee as the beneficiary of a policy. Prior to that amendment in 1976, the statute contained no express requirement that the trust pre-date the designation. It merely required that the trust agreement be "made by the insured during his life time." EPTL 13-3.3, L.1966, c. 952. eff. 9/1/67. The court reasoned that the lower court's interpretation of the current version of EPTL 13-3.3 would render the language "in existence at the date of such designation" a nullity; that a statute would not be held a mere re-enactment of a prior statute if any other reasonable interpretation is attainable; and that EPTL 13-3.3(f) cannot mean that prior law supersedes the amendment and therefore does not require a contrary result.
With these conclusions we agree. The change in language is too dramatic to be ignored. Furthermore, it does not appear that the issue was settled prior to enactment of the current version of EPTL 13-3.3 in 1976, or prior to 1960 when section 47-f of the Decedent's Estate Law ("DEL"), the predecessor to the original version of EPTL 13-3.3, was enacted. Rather, EPTL 13-3.3 and the Stein court's holding that the trust agreement must be in existence at the time the trustee is designated as beneficiary clarifies prior law which required only that the trust agreement must be made during the insured's lifetime. The New York Court of Appeals, in two cases ante-dating the enactment of DEL 47-f, found, also without focussing upon the timing issue, valid life insurance trusts where the trust agreement occurred prior to the beneficiary designation. See, Blanco v. Velez, 295 N.Y. 224, 66 N.E.2d 171 (1946); Hirsh v. Auer, 146 N.Y. 13, 17, 40 N.E. 397, 398 (1895).
Lower courts found valid trusts regardless of whether the trust was established prior to or after the designation, also without focusing on the timing issue. In In re Kent's Trust, 28 Misc.2d 196, 197, 212 N.Y.S.2d 657, 659 (Sup.Ct.N.Y.Co.1961), In re Kyte's Will, 174 Misc. 1094, 1095, 22 N.Y.S.2d 236, 237 (Sur.Ct.Erie Co.1940) and Johnston v. Scott, 76 Misc. 641, 643, 137 N.Y.S. 243, 245 (Sup.Ct. Saratoga Co.1912), trusts were established prior to the trustee being named beneficiary. In Palmer v. MacDougall, 14 A.D.2d 580, 580, 218 N.Y.S.2d 385, 386 (2d Dept.1961); In re Mackintosh's Estate, 140 Misc. 12, 14, 249 N.Y.S. 534, 535 (Sur.Ct.Westchester Co. 1931) and Lauterbach v. New York Inv. Co., 62 Misc. 561, 563-64, 117 N.Y.S. 152, 153-54 (Sup.Ct.N.Y.Co.1909), aff'd sub nom People ex rel La Chicotte v. Stevenson, 137 A.D. 940, 122 N.Y.S. 1141 (1st Dept.1910), however, the insured designated *784 the beneficiary of the insurance policy prior to creation of the trust. None of these courts addressed the issue and EPTL 13-3.3 can be viewed as merely clarifying and resolving an open issue.
ii
These considerations bring us to the issue of whether EPTL 13-3.3 applies to life insurance trusts established by an owner/beneficiary who is not the individual whose life is the subject of the policy. If the statute applies, then clearly the 1977 designation with respect to the Phoenix policies would not comply with it. The designation preceded the creation of the alleged trust in 1980 and does not refer to Eljay as trustee. Defendants do not claim that the 1986 designation had any force and effect. Eljay was then insolvent. Defendants do not dispute that the 1986 designation would be a transfer of estate property for which the only consideration would be shares of an insolvent company and such a transfer would violate 513 of the BCL[5] and 548 of the Bankruptcy Code.
In determining the scope of EPTL 13-3.3, we look first to the language of the statute. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 197, 96 S.Ct. 1375, 47 L.Ed.2d 668, reh'g denied, 425 U.S. 986, 96 S.Ct. 2194, 48 L.Ed.2d 811 (1976). At first blush, the words of sub-section (a) appear to be all-embracive. No facial distinction is made on the basis of the identity of the trust settlor.
However, "in construing a statute, the task of the courts is to interpret the words of the statute in light of the purposes that animated the law makers in enacting it." Korea Shipping Corporation v. New York Shipping Association, 880 F.2d 1531, 1537 (2d Cir.1989). Here the words of the statute appear in a context that gives pause. Sub-Section (a)(2) refers to testamentary trusts. Sub-section (b) provides for payment of insurance proceeds to the insured's beneficiaries in the absence of a valid designation. Together, these sub-sections strongly imply that the New York legislature intended EPTL 13-3.3 to apply only to instances where an individual owning life insurance on his on life intended to create a life insurance trust funded by the proceeds of that insurance.
Sub-section (f) confirms the limited scope of EPTL 13-3.3. As noted, the statute in its present form was an amendment of former EPTL 13-3.3 which had, in 1966, re-enacted former DEL 47-f verbatim. Former EPTL 13-3.3 had embraced trusts established by an insured "during his life time". That phrase limited EPTL 13-3.3 to the trusts established by individual settlors of policies on their own lives. Sub-section (f) states no change was intended. Although we agree with the Stein court that the legislature should not be deemed as having intended to use words without meaning, following the direct command of a statute, as in Stein, is a far different thing from interpreting a statute consistent with its former version if other portions of the current statute indicate that no change was intended.
Such a limitation here is, moreover, consistent with and supported by the sparse legislative history concerning EPTL 13-3.3. That history shows that EPTL 13-3.3 was designed to liberalize life insurance trusts in order to enable greater flexibility in estate planning by making sure they were not testamentary in nature and were consistent with the rules applicable to federal estate taxation. Memorandum by a Staff Attorney of the Law Revision Commission relating to Assembly Bill No. 11442; Memorandum for the Governor by Louis J. Lefkowitz, Attorney General, June 18, 1976. The organized bar so understood the section. Report of the Association of the Bar of the City of New York, Committee on Trusts, Estates and Surrogate's Courts No. 140, p. 395, June 26, 1976. This purpose is inconsistent with applying the statute to instances where the owner is not the person whose life is insured, such as "key-man" insurance taken *785 out by companies on the lives of essential corporate officers. A corporation is not concerned with estate planning and federal estate taxation. For these reasons, we hold that EPTL 13-3.3 does not apply here.
C
Consequently, we turn to the well-settled rules regarding the creation of life insurance trusts.
First, to establish a present inter vivos trust, an insurance policy must be in existence at the time a trust is declared or an agreement executed. Blanco, 269 A.D. 133, 54 N.Y.S.2d 217; Hirsh, 146 N.Y. 13, 40 N.E. 397; Palmer, 14 A.D.2d 580, 218 N.Y.S.2d 385; Kent, 28 Misc.2d 196, 212 N.Y.S.2d 657; Kyte, 174 Misc. 1094, 22 N.Y.S.2d 236; Mackintosh, 140 Misc. 12, 249 N.Y.S. 534; Johnston, 76 Misc. 641, 137 N.Y.S. 243; Lauterbach, 62 Misc. 561, 117 N.Y.S. 152.
Second, such trusts are effective during the lifetime of the insured, either upon delivery of the res, upon assignment to the trustee enabling legal title to the fund to pass, or in cases where the settlor is also the trustee, upon the declaration of trust. In this, the corpus of the inter vivos life insurance trust is the "contingent interest of the insured [or owner] in the certificate of insurance . . . [which] became vested at the death of the insured, and the beneficiary, having collected the insurance money, the trust under the agreement creating and acknowledging it, attached to the fund." Hirsh, 146 N.Y. at 19, 40 N.E. at 398. Title to the policies passes to the trustee upon satisfaction of the steps necessary to create a trust. Lauterbach, 62 Misc. 561, 117 N.Y.S. 152. See also Blanco, 295 N.Y. 224, 66 N.E.2d 171; Palmer, 14 A.D.2d 580, 218 N.Y.S.2d 385; Bellinger v. Bellinger, 180 Misc. 948, 46 N.Y.S.2d 263 (Sup.Ct.N.Y.Co.1943); Mackintosh, 140 Misc. 12, 249 N.Y.S. 534; Restatement (Second) of Trusts 82, Comment b (1959) ("the interest of a person named as beneficiary of a life insurance policy may be held in trust").
Even where a trust instrument explicitly provides that the trust is to be "operative only with respect to the proceeds of the policy paid to the trustee upon the death of the insured after deduction of all charges against the policy," it has been held that the trust was not testamentary in nature, but took effect upon delivery of the policy during the life of the insured; the rights under the policy then accrued and were merely postponed until after the insured's death. In re Kent's Trust, 28 Misc.2d 196, 212 N.Y.S.2d 657. Although the court in Broga v. Rome Trust Co., 151 Misc. 641, 272 N.Y.S. 101 (Sup.Ct. Oneida Co.1934) ruled that such language is testamentary in nature, EPTL 13-3.3, although not directly applicable to insurance trusts established by corporations, confirms that, in New York, a trust of insurance proceeds is an inter vivos trust of the policy. It is reasoned that:
[a] trust may be created although there is no mention of a trust in the policy. Where the policy is payable to a beneficiary, a trust may arise from an agreement between the beneficiary and the insured that the beneficiary will collect the proceeds of the policy on the death of the insured and hold them for or pay them over to a third person. The beneficiary of the policy thereupon holds his interest in the policy in trust for the third person and when he receives the proceeds after the death of the insured he holds them in trust.
A.W. Scott & W.F. Fratcher, The Law of Trusts 57.3, at 155 (4th ed. 1987) (hereinafter "Scott").
Third, "the property and the disposition of it [must be] definitely stated," Hamer v. Sidway, 124 N.Y. 538, 550, 27 N.E. 256, 258 (1891) or the corpus must be "sufficiently designated or identified to enable title thereto to pass to the trustee." Brown, 180 N.Y. at 209, 73 N.E. at 17. See also, Restatement (Second) of Trusts 76 (1959) ("a trust cannot be created unless the subject matter is definite or definitely ascertainable"); Scott 76, at 440 ("a trust cannot be created where the subject matter is not definite or definitely ascertainable from the facts existing at the *786 time of the creation of the purported trust").
A declaration stating "[l]ife policy # 80547, $1,000, with profits on my life" is obviously sufficient. Mackintosh, 140 Misc. at 13, 249 N.Y.S. at 535. But less specificity is acceptable. Where the policies and the trust instrument were contemporaneously delivered to the trustee, the description "two policies amounting to $75,000 made out to your order as trustee" was found sufficient. Lauterbach, 62 Misc. at 563, 117 N.Y.S. at 153. Two declarations of trust, one "affecting" a policy in the amount of $62,500 and the other "affecting" a $32,580 policy were up held in Johnston, 76 Misc. at 643, 137 N.Y.S. at 245. From such descriptions, the courts could determine the trust res with a fair degree of definiteness. Cf. 61 N.Y.Jur.2d Trusts 56, 58 (1968).
Conversely, where the settlor intended to limit the corpus of the trust to $50,000 in cash and proceeds of tax-exempt bonds and the settlor owned a number of bonds greater than the number intended to fund the trust, general descriptions in a purported trust instrument such as "tax exempt bonds" and "U.S. bonds furnished" are inadequate. Sussman v. Sussman, 61 A.D.2d 838, 402 N.Y.S.2d 421 (2d Dept. 1978), aff'd 47 N.Y.2d 849, 418 N.Y.S.2d 768, 392 N.E.2d 881 (1979). The court stated that absent delivery of the bonds intended to the trustee, specific identification was required. Id., 61 A.D.2d at 839, 402 N.Y.S.2d at 423. Lacking such description, the court could not tell which of the bonds were subject to the trust.
Fourth, where the owner of property declares himself trustee of it for another, the trust is valid although the settlor does not part with the trust instrument. Scott 32.5, at 369.
[Where] there is a written trust declaration . . . delivery is not necessary to constitute a valid trust. The owner has declared that he, himself, holds the property in trust for the person designated. A writing creating a trust, kept by the donor without delivery to anyone, will be given effect as such by the courts.
MacKintosh, 140 Misc. at 14, 249 N.Y.S. at 536.
For the same reasons, there is no need for "delivery," i.e., physical delivery of the res or other property or a legal assignment of the fund to the trustee where the settlor and the trustee are the same entity. Coleman, 562 F.2d at 169 n. 5 (applying New York law); Scott 32.5 at 369; Restatement (Second) of Trusts 17 Comment a (1959).
Fifth, the cases firmly establish that a reservation of the right by the settlor under a policy of insurance to use the policy as security for a loan or for any other purpose will not defeat an otherwise valid life insurance trust: it is held that retention of a right to pledge the policy as collateral is not inconsistent with disposition of the equity interest in the policy, whatever it may be. See Hirsh, 146 N.Y. at 19, 40 N.E. at 398; Males v. New York Life Ins. Co., 48 A.D.2d 50, 367 N.Y.S.2d 575 (3rd Dept.1975); Kent, 28 Misc.2d 196, 212 N.Y.S.2d 657; Johnston, 76 Misc. 641, 137 N.Y.S. 243; Lauterbach, 62 Misc. at 566, 117 N.Y.S. at 155.
Sixth, there must be either an explicit declaration of trust or circumstances showing unequivocally, and admitting of no other intention, than that a trust was intended to be created. Wadd v. Hazelton, 137 N.Y. 215, 33 N.E. 143 (1893); Martin v. Funk, 75 N.Y. 134 (1878); Shea v. Crofut, 203 A.D. 210, 214, 196 N.Y.S. 850, 853 (2d Dept.1922); In re Skuse's Estate, 165 Misc. 554, 1 N.Y.S.2d 202 (Sur.Ct.Kings Co.1937) (where reliance is placed on acts alone, those acts must be so clear as not to be capable of any other construction or consistent with another intention). C.f. Del Drago v. Commissioner of Internal Revenue, 214 F.2d 478 (2d Cir.1954); Elyachar v. Gerel Corporation, 583 F.Supp. 907 (S.D.N.Y.1984). See also Sayer v. Wynkoop, 248 N.Y. 54, 59, 161 N.E. 417, 418, reh'g denied, 248 N.Y. 591, 162 N.E. 537 (1928); Title Guarantee & Trust Co. v. Haven, 214 N.Y. 468, 481, 108 N.E. 819, 823 (1915); Beaver v. Beaver, 117 N.Y. 421, 428, 22 N.E. 940, 941 (1889); In re Estate *787 of Fontanella, 33 A.D.2d 29, 30-31, 304 N.Y.S.2d 829, 831 (3d Dept.1969); Wojtkowiak v. Wojtkowiak, 85 N.Y.S.2d 198, 202 (Sup.Ct. Erie Co.1947), aff'd, 273 A.D. 1052, 81 N.Y.S.2d 171 (4th Dept.1948); In re Schrieb's Will, 190 Misc. 547, 78 N.Y.S.2d 54 (Sur.Ct.Richmond Co.1947); Sadwith v. Lantry, 219 F.Supp. 171, 176 (S.D.N.Y.1963) (holding that the test is the beyond a reasonable doubt standard).
No particular, legal or technical words, including "trust", need be employed to create an express trust. Title Guarantee, 214 N.Y. at 481, 108 N.E. at 822; Sayer, 248 N.Y. at 59, 161 N.E. at 418. Use of the word "trust" is not determinative in bankruptcy or under New York law. In re Lord's Inc., 356 F.2d 456 (7th Cir.1965) cert. denied sub nom, Chicago Cutter-Karcher, Inc. v. Maley, 385 U.S. 847, 87 S.Ct. 55, 17 L.Ed.2d 78 (1966); In re Shulman Transportation Enterprises, Inc., 21 B.R. 548, 552 (Bankr.S.D.N.Y.1982), aff'd, 33 B.R. 383 (S.D.N.Y.1983), aff'd, 744 F.2d 293, 12 B.C.D. 779, Bankr.L.Rptr  70,138 (CCH) (2d Cir.1984); In re Paley, 8 B.R. 466, 469, 3 C.B.C.2d 648, Bankr.L.Rptr. (CCH)  67789 (Bankr.E.D.N.Y.1981) (for purposes of dischargeability of an individual acting in a fiduciary capacity under 727 of the Code). Rather, intention is to be found in "direct and positive acts which indicate an intention to create a trust." Two Clinton Square Corp. v. Friedler, 91 A.D.2d 1193, 459 N.Y.S.2d 179 (4th Dept. 1983); see also Palmer, 14 A.D.2d at 580, 218 N.Y.S.2d at 387. In addition, "[a]ll the transactions, the insurance papers, the assignments thereof and the trust deeds, are to be considered together, each being a part of the complete transaction." Johnston, 76 Misc. at 645-46.
III
As applied to this case, it is clear that the Trustee's assertions that the trust is invalid through lack of delivery of the policies or the trust instrument, the assignment of the Phoenix proceeds to Lou Mallas Inc. as collateral, and the lack of a res until the insurance proceeds are delivered to the putative trustee, are without merit. The cases squarely hold that a beneficiary seeking to declare itself trustee need not make a formal delivery of the trust res or trust instrument to itself as trustee. Mackintosh, 140 Misc. at 14, 249 N.Y.S. at 536; Coleman, 562 F.2d at 169 n. 5; Scott 32.5 at 369. They further establish, under New York law, that assignment of insurance policies as collateral does not defeat an otherwise valid insurance trust. Hirsh, 146 N.Y. 13, 40 N.E. 397; Males, 48 A.D.2d 50, 367 N.Y.S.2d 575; Kent, 28 Misc.2d 196, 212 N.Y.S.2d 657; Johnston, 76 Misc. 641, 137 N.Y.S. 243; Lauterbach, 62 Misc. at 566, 117 N.Y.S. 152. It is also clear that, if properly established, an insurance trust has the policy itself as its res and the proceeds are to be distributed on the death of the insured pursuant to the trust. Scott 57.3, at 155.
A
The evidence here, moreover, shows that in entering into the shareholders agreement, Eljay and its shareholders intended to create some kind of a trust. While the mere declaration of a trust may not be sufficient indicia of intent, Shulman, 21 B.R. at 552, here there is more. The elaborate provisions of the Agreement and the testimonial evidence establish unequivocally and beyond a reasonable doubt, that the parties intended to create a trust.
Confirming that the Agreement constituted an express declaration of trust are the unrebutted testimony of intention and the Agreement's provision for repurchase of stock for the higher of the book value as determined periodically or the insurance proceeds received by Eljay as trustee on the death of the stockholder. The classic elements of a business life insurance trust evincing intent to provide a fair price for the buyback of a principal's interest, by way of periodic valuation or maintaining insurance, J. Hanna, Some Legal Aspects of Life Insurance Trusts, 78 U.Pa.L.Rev. 346, 349 (1930), are thus present.
The 1984 and 1985 Standard Confirmation Inquiries, Exh. 41, relied on by the trustee do not show a lack of intent in 1980. The 1984 Standard Confirmation Inquiry *788 properly indicated that the assignee for purposes of collateral, Lou Mallas Inc., was the primary beneficiary and that Eljay was the secondary beneficiary. The 1985 Standard Confirmation Inquiry correctly or incorrectly failed to refer to Lou Mallas, Inc. Both failed to indicate that Eljay, as sole beneficiary of the Phoenix Policies, held that interest as trustee. No claim is made that Eljay, as beneficiary of a trust, was required to report to Phoenix that it held only legal title to the proceeds since EPTL 13-3.3 is inapplicable.
The listing of the cash surrender value of the Policies in Eljay's financial statements and tax returns is also not inconsistent with the Defendants' trust theory and Eljay's disclaimer of an equitable interest in the Proceeds. Although a more accurate reporting consistent with the trust theory would have revealed that Eljay had only a legal and not beneficial interest in the Proceeds, such reporting is apparently sanctioned by Generally Accepted Accounting Principles, 6/16/89 Tr., pp. 27-29.[6] Eljay, as owner of the Policies, was entitled to recoup payments of premiums in excess of actual actuarial costs in the event it desired to terminate the policies before the death of the insured. S. Riesenfeld, Creditors' Remedies and Debtors' Protections, p. 311 n. 10 (4th ed. 1987).
Nor does Eljay's having disputed the interest of the Mallas Estate in 1986 bear on the intention of the parties to create a trust in 1980. Eljay was insolvent in 1986. Its claiming of the proceeds and its eventual settlement of that dispute by receiving a $1,000,000 loan was a grasping at straws for survival.[7]
Thus, we are left on this score with the Agreement of the parties and the testimony of their intention at that time. That evidence unequivocally shows an intention to create a trust.
We, therefore, turn to the issues of whether the trust res was identified with the specification required by New York law and whether the alleged trust in issue here was, in fact, a present inter vivos trust or a trust that was designed to come into being in futuro when the proceeds were received.
B
The Trustee's contentions that a trust was not created because the Agreement failed to identify specifically the then existing Phoenix Policies or to mandate procurement of any policies is not without some merit. The Agreement merely provides that any life insurance proceeds received or receivable by the Corporation would be held in trust. Without doubt, a reference in the Agreement to Phoenix, the number or face amounts of the Phoenix Policies, or even to "existing policies" or "after acquired policies" would have made the provision more clear. Our task, however, is to determine not whether the language is perfect but whether it is clear enough to permit identification of the trust res.
Here, the description indicates that the res is the right to receive proceeds from all policies of which Eljay was the designated beneficiary, in existence at the time the Agreement was executed or procured thereafter. As such the res was definitely ascertainable.
Unlike the circumstances in Sussman, there is no indication in the description or elsewhere in the record that a trust was intended to be impressed upon only some policies procured by Eljay. Bernstein's testimony that other policies might be added to the trust supports this construction. His further testimony that it was intended that proceeds of insurance be sufficient to fund the buyback and the provision in the Agreement that the purchase price was to be the higher of the calculated value or proceeds of policies are consistent with the *789 intent to form a trust of all life insurance policies. By permitting the trust to include additional life insurance policies as the value of Eljay stock increased, Eljay was to be relieved, in whole or in part, from the prospective burden of dipping into its own coffers to repurchase a deceased shareholder's stock.[8]
The Trustee's assertion that in 1977 Eljay intended for the Phoenix Policies to collateralize the debt owed to Louis Mallas Inc. and to retain a beneficial interest in the difference between the proceeds and balance of the Loan is of no moment. When the parties executed the Agreement in 1980, Eljay had a different intent: to hold the proceeds of all life insurance policies on Mallas' life in trust for the estate of Mallas to the extent of its residual interest. It manifested that intent, albeit not in the clearest manner, in the Agreement. That Eljay was entitled to do.
C
These considerations leave us with the issue of whether a present trust was intended.[9] That the Agreement provided that Eljay would collect and distribute proceeds of any life insurance policies and did not speak specifically to policies does not preclude the finding of a present trust and seems to confirm that intention. The Agreement was formulated on the advice of counsel. Presumably counsel was aware that the courts have held such language to create a present trust of an insurance policy. Blanco, 295 N.Y. 224, 66 N.E.2d 171; Hirsh, 146 N.Y. at 19, 40 N.E. 397; Palmer, 14 A.D.2d 580, 218 N.Y.S.2d 385; Bellinger, 180 Misc. 948; Mackintosh, 140 Misc. 12, 249 N.Y.S. 534; Lauterbach, 62 Misc. 561, 117 N.Y.S. 152; Scott 57.3, at 155.
Bernstein's and Korman's testimony that the Agreement and all matters in the Agreement were to be effective in May 1980 is more persuasive. They made no distinction as to the operative date of the trust provisions. It is credible that to lay-persons such as Bernstein and Korman, the immediate effectiveness of the Agreement, in their minds, meant effectiveness of the trust.
The provisions requiring Eljay to assign and a stockholder's estate to return insurance proceeds, however, gives considerable pause. If it did not own the proceeds itself but only as trustee, there was no need for Eljay to assign that which it did not own. Similarly, the use of the word "return" gives the connotation that the proceeds were owned by Eljay.
Nevertheless, it also appears that at least the "return" requirement is consistent with the establishment of a trust. The clauses in question state:
If all of the insurance proceeds have not been received when the sale takes place, then the Corporation shall assign to said estate the right to receive such proceeds. If the amount so assigned when received by the estate, is, together with all other amounts of purchase price received by the estate in excess of the total amount of purchase price to which the estate is entitled, then the estate promptly shall return to the Corporation the full amount received by the estate in excess of said purchase price.
Exh. 1, Â 1.8.3. (Emphasis added). This language attempts to address the situation where Eljay, after paying the calculated purchase price for the stock of a deceased shareholder including a credit for insurance proceeds, overpaid. Since the sale was to occur within a specified time under the *790 Agreement, Eljay might have been required to pay a portion of the purchase price to a deceased stockholder's estate prior to the payment of proceeds by the insurance company. The provision ensures that Eljay would be reimbursed for its outlay.
This reasoning, however, does not account for the use of an assignment concept. Under trust theory, Eljay need only comply with the trust, not separately assign its bare legal title as trustee. No explanation of that language was proffered by any witness.
All this record contains is Bernstein's testimony that Mallas intended and Korman's testimony that he intended that any policies procured by Eljay be for the benefit of a deceased stockholder's estate and that a trust was to be effective in 1980. The assignment language, as indicated above, is inconsistent. That language, however, could also be construed to refer to an intention that Eljay inform the issuers of the policies of the beneficial interest of the deceased shareholder.
Thus, this is a case where the evidence unequivocally shows that the parties intended to create a trust but where not all of the evidence bearing on this issue indicates an intention to create a present trust. The evidence is not unequivocal because the assignment language of the Agreement indicates, contrary to Bernstein's and Korman's testimony, that the trust was to arise on receipt of the proceeds. Such a construction is, moreover, consistent with the natural meaning of the phrase that the "proceeds are to be held in trust," employed in the Agreement, notwithstanding the meaning given to that phrase under New York law.
Although the rule is clear that intention to form a trust must be unequivocal, no cases have been cited to us and we have not been able to find any case regarding the burden of proof required to establish a present trust as opposed to a trust in futuro. The question is of significance here given Eljay's insolvency when Mallas died and the use of the proceeds to fund its obligation to purchase its shares in 1986. If the trust arose in 1986, the transfer of the proceeds in 1986 to the trust or to defendants is voidable as discussed above.
Precisely put, the issue is whether the New York courts would distinguish the burden of proof necessary to show intention to form a trust from the burden of proof showing the nature of the trust intended. We think that they would make such a distinction. The policy justification for requiring an exceptionally high standard of proof of intention to form a trust lies in the putative trustee's apparent ownership of the beneficial interest in property to which it holds legal title. Requiring anything less would result in dangerous instability of titles. Elyachar, 583 F.Supp. at 922, citing Young v. Young, 80 N.Y. 422 (1880); Hamer, 124 N.Y. 538, 27 N.E. 256; Tsai v. Tsai, 39 A.D.2d 652, 331 N.Y.S.2d 691, 692 (1st Dept.1972); Fontanella, 33 A.D.2d at 312, 304 N.Y.S.2d at 831. Creditors can rely on that apparent ownership. But once that burden has been satisfied and the intention to separate beneficial ownership from legal title unequivocally shown, there would appear to be little reason to require more than that the evidence of the present nature of the trust be clear and convincing, that the intention of the parties be definitely identified. A similar test applies to the rule that, for a trust to be valid, the beneficiaries be capable of definite identification. Trunkey v. Van Sant, 176 N.Y. 535, 68 N.E. 946 (1903) (testator's intention as to beneficiaries of a testamentary trust must be "clear and positive"); 61 N.Y.Jur. 275; C.f. Ministers & Missionaries Board of Am. Baptist Convention v. McKay, 64 Misc.2d 231, 315 N.Y.S.2d 549 (Sup.Ct.N.Y.Co.1970) (beneficiaries must be definitely ascertainable under New Jersey law). Consistent with that lesser showing is a requirement that proof that a present trust was intended need be clear and convincing once it is shown unequivocally and beyond a reasonable doubt, as here, that the settlor intended to form a trust. Accordingly, we hold that the clear and convincing standard applies and conclude, in light of all the writings, acts, and words of the parties, and the testimony, as enumerated supra, that the Defendants *791 met their burden of proof showing that a present trust of the Policies was intended. Although the assignment clause is inconsistent, the other evidence clearly and convincingly indicates an intention to form a present trust. That an alternative construction of the assignment clause, noted above is possible supports that conclusion.
Having concluded that a present trust of the insurance policies was formed in 1980, it follows that there was no transfer by Eljay of the proceeds of those policies in the year preceeding bankruptcy as required by 548(a) of the Bankruptcy Code.[10]
IV
The Trustee contends that notwithstanding the finding of a valid present trust, the Defendants cannot prevail because enforcing the trust would circumvent the proscription of BCL 513. E.g., Pl's Post-Tr.Mem., pp. 9-11.
BCL 513(a) provides:
A corporation . . . may purchase its own shares, or redeem its redeemable shares, out of surplus except when currently the corporation is insolvent or would thereby be made insolvent.
Barred are, not only repurchase agreements entered into when the corporation is insolvent but also, payments when the corporation is insolvent even though the agreement to make them was entered into when the corporation was solvent. E.g., Flying Mailmen, 539 F.2d at 869; Cross v. Beguelin, 252 N.Y. 262, 169 N.E. 378 (1929) (applying N.Y.Penal Law 664). Payments made when a corporation is insolvent, although pursuant to a valid repurchase agreement, prefer shareholders over creditors and thereby prejudice the superior rights of creditors. Flying Mailmen, 539 F.2d 866; In re Dawson Brothers Construction Co., 218 F.Supp. 411, 413 (N.D.N.Y.1963); In re Dino & Artie's Automatic Transmission Co., 68 B.R. 264, 268 (Bankr.S.D.N.Y.1986). See also, Reiner v. Washington Plate Glass Co. Inc. (In re Washington Plate Glass Co., Inc.), 711 F.2d 414, 417 (D.C.Cir.1983) (construing D.C. law); McConnell v. Estate of Butler, 402 F.2d 362, 366 (9 Cir.1968) (construing California law); In re Charter Co., 63 B.R. 680, 683 (Bankr.M.D.Fla.1986) (construing Florida law).
In Flying Mailmen and Dino, the courts applied BCL 513(a) to bar such payments even though they were secured by a security interest granted while the corporation was solvent. In Flying Mailmen, the court held the security interest invalid since the U.C.C. form reflecting that interest did not explicitly give notice to subsequent creditors that the collateral secured payments for the repurchase of stock.
In Dino, 68 B.R. at 269, this court held, without discussion of the question of notice, that a motion to vacate the automatic stay in bankruptcy to permit foreclosure of a mortgage to secure a repurchase agreement would be denied on the ground that the security interest falls if the underlying obligation becomes invalid, citing Washington Plate Glass Co., Inc., 711 F.2d 414. The Washington Plate Glass court, however, expressly stated that it did not decide the notice point and observed that several cases, although criticized, have ruled that claims against insolvent corporations based on stock repurchase agreements would be honored if actual or constructive notice had been given that the collateral secured performance of a stock repurchase agreement. Id. 711 F.2d at 417 n. 8.
Here, unlike the usual case under 513(a), the assets of the Corporation were not depleted by the payments of the insurance proceeds to the Mallas Estate in 1986, given our conclusion that the Phoenix Policies became subject to a valid inter vivos present trust in 1980. The Trustee does not contend that, if the trust was in place in 1980 and had a res consisting of the Phoenix Policies, the trust could not be supplemented by Eljay's obtaining the Connecticut Policy in 1983. It cannot be said, therefore, that the transfer of the insurance proceeds in 1986 was a transfer of corporate property. All that could be said *792 is that Eljay may have transferred corporate property when it continued to pay the premiums on those policies in which it, in its own right, had no beneficial interest. The Trustee, however, has not shown the amount of those premiums or if any were paid while Eljay was insolvent.
For these reasons, it cannot be said, as the Trustee argues here, that the payment of the insurance proceeds to the Mallas Estate violated the statutory proscription of BCL 513(a). Surely, Eljay repurchased its stock while insolvent; but Eljay did not prejudice the superior rights of creditors by diverting to a shareholder property rightfully belonging to those creditors.
Thus, this is a case where the Trustee's argument rests on the notion that BCL 513(a) should be read to contain a broad proscription barring all corporate repurchases of stock when insolvent regardless of prejudice to creditors through use of corporate funds to make the repurchase. The New York Court of Appeals, in Cross v. Beguelin, however, rejected that notion. There, the court held that "The rights of the seller of the stock appear to be superior to those of subsequent creditors who became such with notice of the purchase of the corporation of its own stock." 252 N.Y. at 266, 169 N.E. at 379. Judge Friendly's decision in Flying Mailmen also argues against that notion. By carefully holding that notice of the obligation's being collateralized was insufficient and stating that the sentence from Cross v. Beguelin quoted above "remains viable," 539 F.2d at 870, Judge Friendly implicitly rejected a broader rule.
The reasoning in Dino however could be said to support a broader rule. Since the court did not follow Judge Friendly's notice analysis and address the question of the validity of the security agreement, it could be argued that Dino supports the proposition that all repurchases of stock while insolvent are barred. After all, since the seller's security interest was obtained and perfected when the corporation in Dino was solvent, it could be argued that creditors would not be harmed by a subsequent payment for stock, although the corporation was insolvent, since the corporation would receive consideration in the form of a partial release of the collateral if the value of the security equalled or exceeded the debt.
To interpret Dino as standing for a broad proscription without regard to prejudice to creditors, however, is contrary to Cross v. Beguelin and Flying Mailmen. Dino is thus only a slender reed on which to found such a rule. Our task, like that of Judge Friendly in Flying Mailmen, is to construe BCL 513(a) as the New York Court of Appeals would construe it. Since the statute remains unchanged after Cross v. Beguelin and Flying Mailmen, it appears that the Court of Appeals would find no broader proscription in a case where the repurchase was funded with life insurance proceeds held pursuant to a valid trust established by a corporation when it was solvent.[11]
For the above stated reasons, it is held that the transfers to the Mallas Estate are not avoidable under 11 U.S.C. 544(b), 548 and 550(a). The foregoing constitutes this court's findings of fact and conclusions of law pursuant to Rule 7052 of the Bankruptcy Rules. Judgment is to be entered in favor of the Defendants dismissing the complaint.
NOTES
[1] Accordingly, this adversary proceeding is a core proceeding under 28 U.S.C. 157(b) (1984).
[2] That financial statement also listed, as an Eljay asset, the aggregate cash surrender value of the policies Eljay owned on the lives of the shareholders, in an amount of $101,944, net of amounts due the insurers for loans granted by them against such policies. Exh. 40, Note 2. The cash surrender value of the Policies was also scheduled as an asset of the Corporation in its tax return for the year ending May 3, 1986. Exh. 10.
[3] It does not appear that the Mallas Estate was a creditor of Eljay when it received the proceeds. Since the payment was not on account of an antecedent debt, no preference action under 547(a) of the Bankruptcy Code may be sustained.
[4] Vowteras v. Argo Compressor Service Corp., 77 A.D.2d 945, 431 N.Y.S.2d 136 (2d Dept.1980), later app'd, 81 A.D.2d 582, 437 N.Y.S.2d 689 (1981), later app'd, 83 A.D.2d 834, 441 N.Y.S.2d 562 (1981), app denied, 55 N.Y.2d 605, 447 N.Y.S.2d 1028, 432 N.E.2d 603 (1982) (BCL 513 ensures that the assets left after a distribution to shareholders are sufficient to cover existing liabilities and stated capital); Nakano v. Nakano Adv., 84 Misc.2d 905, 377 N.Y.S.2d 996, reh'g granted in part, 84 Misc.2d 905, 377 N.Y.S.2d 1001 (Sup.Ct.N.Y.Co.1975) (BCL 513 was designed to protect creditors who extend credit in reliance upon a corporation's capital structure). See also Flying Mailmen, 539 F.2d 866; In re Dino & Artie's Automatic Transmission Co., Inc., 68 B.R. 264 (Bankr.S.D.N.Y.1986) (BCL 513 reinforces the basic rule that the equities generally favor the conventional general creditors rather than stockholders or former stockholders).
Section 544(b) gives a bankruptcy trustee the power to avoid transfers that are avoidable by creditors under other applicable law such as state law.
[5] Requested by the Court to file a supplemental brief on these issues to which Plaintiff would respond, Defendants claimed that EPTL 13-3.3 did not apply rather than assert that the 1986 designation was not voidable.
[6] While a creditor who extended credit in reliance on the auditor's incomplete statement of Eljay's interest in the policies might be aggrieved, no such creditor has been identified by the Trustee.
[7] Because of the settlement, payment of the proceeds of the Phoenix Policies directly to the Mallas Estate, as opposed to Eljay as trustee, also does not necessarily give rise to an inference that a trust was intended.
[8] In its fiscal year ending April 28, 1984 during which it purchased the Connecticut Policy, Eljay had an increase in surplus of $480,000. See Exh. 40 at 3.
[9] Whereas a manifestation of an intention to create a present trust gives rise to an immediately effective trust, manifestation of an intention to create a trust at a subsequent time will not give rise to a present trust and a trust will later arise under limited circumstances, e.g., where a person executes a declaration of trust of certain property not at the time owned by him and he thereafter purchases property of that description, the act of acquiring the property coupled with the earlier declaration of trust may be a sufficient manifestation of an intention to create a trust at the time of the acquisition of the property. Restatement (Second) of Trusts 26, Comment k, Illus. 12 (1959).
[10] Section 548(a) of the Bankruptcy Code makes avoidable only those fraudulent transfers by a debtor within the year preceeding bankruptcy.
[11] In so ruling, we recognize that Cross v. Beguelin and other knowledge cases have been criticized as "having an unfortunately circular character" since a creditor with knowledge may assume it still has priority. Herwitz, Installment Repurchase of Stock: Surplus Limitations, 79 Harv.L.Rev. 303, 316 (1965). Flying Mailmen, however, came after that criticism and here Eljay funded the purchase only in the amount of the premiums it had paid previously. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918807/ | 912 So. 2d 491 (2005)
Don M. DOBBS, Appellant
v.
Patricia C. DOBBS, Appellee.
No. 2004-CA-00800-COA.
Court of Appeals of Mississippi.
October 4, 2005.
*492 Jay Foster, attorney for appellant.
Dean Holleman, Gulfport, attorney for appellee.
Before BRIDGES, P.J., GRIFFIS and BARNES, JJ.
GRIFFIS, J., for the Court.
¶ 1. Don M. Dobbs appeals the decision of the Chancery Court of Harrison County. On appeal, Don asserts the following errors: (1) the chancellor erred in his distribution of marital assets, and (2) the chancellor erred in awarding alimony. We find no error and affirm.
FACTS
¶ 2. Don and Patricia C. Dobbs ("Pat") were married on December 12, 1979. No children were born of the marriage. Pat was granted a divorce based on adultery on October 24, 2003. The chancellor awarded Pat exclusive possession of the marital home. The chancellor further awarded Pat $1,000 per month in periodic alimony. It is from this judgment that Don appeals.
STANDARD OF REVIEW
¶ 3. This Court will not disturb the findings of a chancellor when supported by substantial evidence unless the chancellor abused his or her discretion, was manifestly wrong, clearly erroneous, or applied an erroneous legal standard. Sanderson v. Sanderson, 824 So. 2d 623, 625-26(¶ 8) (Miss.2002).
ANALYSIS
I. Did the chancellor err in his distribution of the marital assets?
¶ 4. Don contends that the chancellor erred in his distribution of the marital assets. Specifically, he argues that the chancellor erred in awarding the marital home to Pat. The record shows that the home was purchased by Don four years prior to his marriage to Pat. The down payment on the home was paid exclusively by Don. Don argues that the home was a non-marital asset. He claims he should have received credit for this payment.
¶ 5. In some instances a non-marital asset may lose its character and be subject to equitable distribution. See Heigle v. Heigle, 654 So. 2d 895, 897 (Miss. 1995); Johnson v. Johnson, 650 So. 2d 1281, 1286 (Miss.1994). After their marriage in 1979, Don and Pat lived in the home until their separation in 2002. Although Don's paycheck paid the mortgage, Pat's paycheck was used to pay household expenses. Additionally, Don left the marital home in order to live with the woman with whom he had been having an affair since 2001. At the time of their separation, Don and Pat had lived in the home as a married couple for approximately twenty two years. Thus, the chancellor did not err in finding that the home was a marital asset subject to equitable distribution.
¶ 6. In Ferguson v. Ferguson, 639 So. 2d 921, 928 (Miss.1994), the Mississippi Supreme Court set forth guidelines that a chancellor must consider when attempting to make an equitable division of marital property. Under Ferguson, a chancellor is required to analyze the following factors: (1) substantial contribution to the accumulation of property; (2) the degree to which each spouse has expended, withdrawn, or otherwise disposed of marital assets, and any prior distribution of such assets by agreement, decree, or otherwise; (3) the market value and the emotional value of the assets subject to distribution; (4) the value of assets not ordinarily, absent equitable factors to the contrary, subject to such distribution, such as property *493 brought to the marriage by the parties and property acquired by inheritance or inter vivos gift by or to an individual spouse; (5) tax and other economic consequences, and contractual or legal consequences to third parties, of the proposed distribution; (6) the extent to which division of the property may, with equity to both parties, be used to eliminate periodic payments and other potential sources of future friction between the parties; (7) the needs of the parties for financial security with due regard to the combination of assets, income, and earning capacity; and (8) any other factor which in equity should be considered. Id. The record shows that the chancellor examined the evidence and set forth his findings as to each of the Ferguson factors. The evidence presented at trial supports the chancellor's findings.
¶ 7. Pat was awarded fifty five percent of the marital assets. The law of this state requires equitable, not equal, distribution of the marital estate. Tate v. Tate, 875 So. 2d 257, 260(¶ 7) (Miss.Ct.App.2004) (quoting Peterson v. Peterson, 797 So. 2d 876, 880(¶ 17) (Miss.2001)). Upon review, we find that the chancellor did not err in his distribution of the marital assets. Thus, this issue lacks merit.
II. Did the chancellor err in awarding Pat alimony?
¶ 8. After making the equitable distribution of the marital assets, the chancellor awarded Pat $1,000 per month in periodic alimony. Don argues that the chancellor's award of alimony was "excessive." In Armstrong v. Armstrong, 618 So. 2d 1278, 1280-81 (Miss.1993) the supreme court set forth guidelines to be used in determining if alimony is appropriate. These guidelines are: (1) the income and expenses of the parties; (2) the health and earning capacities of the parties; (3) the needs of each party; (4) each parties' obligations and assets; (5) the length of the marriage; (6) the presence or absence of minor children in the home, which may require that one or both of the parties either pay for, or personally provide, child care; (7) the age of the parties; (8) the standard of living of the parties, both during the marriage and at the time of the support determination; (9) the tax consequences of the spousal support order; (10) fault or misconduct by the parties; (11) wasteful dissipation of assets by either party; or (12) any other factor deemed by the court to be "just and equitable" in connection with the setting of spousal support. Id.
¶ 9. The record indicates that the chancellor addressed and analyzed each of the Armstrong factors in detail. The chancellor's findings, on the Armstrong factors, were consistent with the testimony presented. If the situation is such that an equitable division of marital property leaves a deficit for one party, then alimony should be considered. Johnson, 650 So.2d at 1287. Upon review, we find that the chancellor did not err in awarding Pat $1,000 per month in periodic alimony. Thus, we find no error.
¶ 10. THE JUDGMENT OF THE CHANCERY COURT OF HARRISON COUNTY IS HEREBY AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.
KING, C.J., BRIDGES AND LEE, P.J., IRVING, MYERS, CHANDLER, BARNES AND ISHEE, JJ., CONCUR. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918816/ | 912 So. 2d 719 (2005)
STATE of Louisiana, Appellee,
v.
Jerome SEWELL, Appellant.
No. 40,768-KW.
Court of Appeal of Louisiana, Second Circuit.
October 20, 2005.
*720 Walter Lee Perkins, Jr., for Appellant.
Jerry L. Jones, District Attorney, Robert Nicholas Anderson, Assistant District Attorney, for Appellee.
Before DREW, MOORE and LOLLEY, JJ.
WRIT GRANTED, SUPPRESSION REVERSED AND VACATED, REMANDED.
The initial stop (of the vehicle in which defendant Sewell was riding) was lawful, based on the officer's observation of the car straddling the center line of the roadway, which is an obvious violation of La. R.S. 32:79. See State v. Waters, 780 So. 2d 1053 (La.2001). The officer clearly had probable cause for the stop, though a traffic stop technically could be made upon satisfying the lesser burden of reasonable suspicion of the offense. See U.S. v. Santiago, 310 F.3d 336 (5th Cir.2002). This stop could also be justified upon reasonable suspicion that the operator was impaired. See State v. McVan, 744 So. 2d 641 (La.2d Cir.1999).
The subjective intent of the officer making the traffic stop is irrelevant, as long as he observed the traffic violation. See Whren v. United States, 517 U.S. 806, 116 S. Ct. 1769, 135 L. Ed. 2d 89 (1996).
To extend a traffic stop longer than required to process the traffic matter, an officer must develop additional reasonable suspicion of criminal activity, pursuant to La. C. Cr. P. art. 215.1. D. Several observable facts provided the officer with ample justification for extending the stop.
Though the phrase "high crime area" is often overused these days, the area around North 11th Street and Adam Street in Monroe is associated with drugs and prostitution. There is a close association between narcotics traffickers and weapons. See State v. Wilson, 00-0178 (La.12/8/00), 775 So. 2d 1051. Further uncertainty was injected into this volatile situation by Sewell's conduct when he spotted the officer. Sewell quickly climbed into the vehicle, and the car then sped off. Flight is the consummate act of evasion. See Illinois v. *721 Wardlow, 528 U.S. 119, 120 S. Ct. 673, 145 L. Ed. 2d 570 (2000), and State v. Benjamin, 722 So. 2d 988 (La.1998). The situation became even more problematic when someone in the vehicle tried to exit the car before it stopped rolling.
Even though Officer Hitt's previous interaction with Sewell did not involve guns, the standard for whether or not reasonable suspicion of danger exists is an objective test, predicated on the observations, reactions, and conclusions of "a reasonable peace officer." See State v. Dumas, 786 So. 2d 80 (La.2001).
The officer called for backup, and then, for his safety, justifiably blocked the exit of the person trying to get out of the moving vehicle. By nosing his patrol unit to block this dangerous attempt at egress, he may have saved someone from physical injury.
La. C. Cr. P. art 215.1. A-C is Louisiana's codification of Terry v. Ohio, 392 U.S. 1, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968), our nation's seminal stop and frisk case. Both Terry and the referenced code article establish these simple guidelines:
An officer may make a stop (detain a person or vehicle) if the officer is able to articulate particularized observations leading to the conclusion that reasonable suspicion of criminal activity is present;
If the officer develops reasonable suspicion of danger, the detainee may be frisked for weapons; and
If the officer then develops reasonable suspicion that the subject is actually armed, then the subject may be searched for weapons.
Reasonable suspicion is a much lesser burden than probable cause, and a search is much more extensive than a frisk. See State v. Cooper, 830 So. 2d 440 (La.App. 2d Cir.2002)
The officer then removed Sewell from the car, for officer safety, as per his training. This technique allows the officer to see the suspect's hands. Of benefit to this analysis are three cases involving removing suspects from vehicles for officer safety:
Pennsylvania v. Mimms, 434 U.S. 106, 98 S. Ct. 330, 54 L. Ed. 2d 331 (1977), which authorizes getting the driver out of the car for officer safety, predicated upon the officer reasonably suspecting general danger;
State v. Landry, 588 So. 2d 345 (La.1991), a Louisiana case authorizing the removal of guest passengers for officer safety, again only requiring a generalized reasonable suspicion of danger; and
Maryland v. Wilson, 519 U.S. 408, 117 S. Ct. 882, 137 L. Ed. 2d 41 (1997), a U.S. Supreme Court case concerning the removal of guest passengers, holding basically the same as the Louisiana Supreme Court had in Landry, six years earlier.
When the officer patted Sewell down, he felt a small hard object that he reasonably suspected might be a weapon. He had every right to remove the object, whether or not Sewell consented. This means that when Officer Hitt reached for the object, he was attempting to make a lawful seizure of property, which would fit into the official conduct contemplated in La. R.S.14:108. A. Sewell's quick shoving of his hands into his pockets and the ensuing struggle amounted to resistance and opposition to this lawful search. Such conduct is proscribed by La. R.S. 14:108. B(1)(b), Resisting an Officer. The officer testified that he subdued and cuffed the subject, then arrested him for "interfering with a police investigation." Technically, a crime by this name doesn't exist. However, *722 the officer had ample probable cause for an arrest for resisting an officer, so the arrest was legal. See Devenpeck v. Alford, 543 U.S. 146, 125 S. Ct. 588, 160 L. Ed. 2d 537 (2004).
The subsequent seizures of the drugs remaining (post-struggle) on the back of the car were justified by abandonment and/or plain view and/or a wingspan or lunge space search incident to arrest.
The residue legally gathered from Sewell's fingers and buttocks is admissible under the continuing right of an officer to search incident to a valid arrest and also pursuant to the inevitable discovery rule. See State v. Drake, 31,528 (La.App.2d Cir.1/20/99), 733 So. 2d 33, writ denied, 99-1060 (La.9/24/99), 747 So. 2d 1117.
As we disagree with the learned trial court's suppression of this evidence, we accordingly grant the writ, reverse the trial court's ruling, and remand this case for further proceedings. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918838/ | 912 So. 2d 285 (2004)
Bobby Lee GLASS
v.
STATE of Alabama.
CR-03-0136.
Court of Criminal Appeals of Alabama.
April 30, 2004.
*286 Bobby Lee Glass, pro se.
William H. Pryor, Jr., and Troy King, attys. gen., and James B. Prude, asst. atty. gen., for appellee.
On Rehearing Ex Mero Motu
WISE, Judge.
The opinion of this Court dated February 27, 2004, is withdrawn and the following is substituted therefor.
The appellant, Bobby Lee Glass, appeals the circuit court's denial of his petition for postconviction relief filed pursuant to Rule 32, Ala.R.Crim.P., in which he attacked his 1994 convictions for burglary in the first degree, rape in the first degree, and assault in the first degree and his resulting sentences of life imprisonment for the burglary and rape convictions and 15 years' imprisonment for the assault conviction. This Court affirmed Glass's convictions and sentences. See Glass v. State, 671 So. 2d 114 (Ala.Crim.App.1995). The Alabama Supreme Court denied certiorari review, and this Court issued a certificate of judgment on November 17, 1995.
On or about April 1, 1997, Glass filed his first Rule 32 petition. In that petition he argued that the trial judge had been biased against him. Glass further made numerous allegations of ineffective assistance of trial and appellate counsel. The trial court dismissed the petition, and this Court affirmed the trial court's denial of Glass's Rule 32 petition in an unpublished memorandum issued on September 11, 1998. Glass v. State (No. CR-97-1398), 741 So. 2d 489 (Ala.Crim.App.1998) (table).
On October 17, 2000, Glass filed a second Rule 32 petition. In that petition he argued: (1) that his convictions violated double jeopardy principles; (2) that his *287 Batson[1] claim had been erroneously denied; (3) that the trial court allegedly violated his due-process rights when it granted the State's motion to consolidate the charges against him without giving him an opportunity to respond; and (4) that he did not have an opportunity to respond to the State's motion to dismiss because, he said, the State allegedly did not serve him with a copy of its motion. After the State responded, the trial court summarily denied the petition. This Court affirmed the trial court's summary denial in an unpublished memorandum issued on March 23, 2001. Glass v. State (No. CR-00-0785), 821 So. 2d 1045 (Ala.Crim.App.2001) (table).
On May 19, 2003, Glass filed his third Rule 32 petition, alleging that he was entitled to a new trial and a new sentence because he was not mentally competent to stand trial. Specifically, Glass appears to claim that the trial court never made a legal determination on his competency despite the fact that the trial court ordered a mental evaluation. On August 18, 2003, the State filed a motion to dismiss and argued that Glass's claim was without merit and that his petition did not state a claim or present a material issue of fact that would entitle him to relief. The State also argued that Glass had raised the issue of competency in a prior petition and that the instant petition was thus precluded as successive. On August 18, 2003, the trial court denied Glass's petition, stating that his claims were successive. This appeal followed.
On appeal, Glass argues: (1) that "the trial court commit[ted] error of constitutional magnitude by beginning [Glass's] trial without a legal determination of his competency when a bona fide doubt existed"; (2) that "the trial court den[ied] [Glass] due process and equal protection by failing to record the Rule 32 hearing"; (3) that "the trial court commit[ted] reversible error in not addressing [Glass's] specific ground"; and (4) that "the trial court abuse[d] its discretion in dismissing petition."
The trial court, in denying Glass's Rule 32 petition, made the following findings:
"[Glass] alleges this Court was without jurisdiction to render judgment or impose sentence and the Constitution requires a new trial because the issue of [Glass's] competency was not raised by his trial counsel, Billy Hill.
"On April 1, 1997, [Glass] filed a Rule 32 Petition alleging ineffective assistance of counsel on the part of his attorney, Billy Hill. The petition, including the issue of competency that [Glass] raised in said petition, was heard on the merits before the Honorable J. Michael Joiner on March 4, 1998. Part III of Judge Joiner's order denied the ineffective assistance of counsel claim raised in [Glass's] April 1, 1997 petition.
"Because [Glass] previously filed a petition alleging the same grounds as the instan[t] petition, which was adjudicated on the merits, the instant petition is a successive petition due to be denied for the reasons cited in the Court's order of April 1, 1997, and on the authority of Rule 32.2(b), Alabama Rules of Criminal Procedure."
(R. 28.) To the extent that this claim raises the issue whether Glass's procedural due-process rights were violated, his claim is procedurally barred because it could have been, but was not, raised at trial or on appeal. Rule 32.2(a)(3) and (5), Ala. R.Crim.P.
*288 However, after thoroughly reviewing the record and Glass's prior Rule 32 petitions, we find that the issue Glass now raisesthe issue of his competency to stand trialis different than the issue raised in his April 1, 1997, petition. The alleged competency issue raised in the 1997 petition challenged the effectiveness of counsel for his failure to pursue a defense of not guilty by reason of mental disease. Here, Glass alleges that the trial court ordered a competency hearing and twice continued the case "in order to establish the mental and stability and sanity of the Petitioner." (R. 16.) To the extent that Glass's petition raises a substantive due-process claimthat he was convicted while he was mentally incompetent to stand trialthe petition is not subject to procedural bars.
"Trial of a person who is incompetent violates the due process guarantees. Therefore, when a trial court is faced with facts that create a reasonable and bona fide doubt as to the mental competency of the defendant to stand trial, the trial court must take steps to assure that a reasonable legal determination of competency is reached. In other words, in such situations, the trial court must inquire into the defendant's competency, generally by conducting a competency hearing."
Ex parte Janezic, 723 So. 2d 725, 728 (Ala. 1997) (citations omitted). Moreover, the record before this Court is silent as to whether the trial court conducted a competency hearing or made any inquiry into Glass's competency to stand trial.
Accordingly, we remand this case to the trial court for that court to make specific findings of fact as to whether there was any inquiry into the matter of Glass's competency before his trial on charges of first-degree burglary, first-degree rape, and first-degree assault, and, if so, whether a legal determination was made regarding his competency to stand trial. The circuit court shall take all necessary action to see that the circuit clerk makes due return to this Court at the earliest possible time and within 56 days of the release of this opinion.
ON REHEARING EX MERO MOTU: OPINION OF FEBRUARY 27, 2004, WITHDRAWN; OPINION SUBSTITUTED; REMANDED WITH DIRECTIONS.[*]
McMILLAN, P.J., and COBB, BASCHAB, and SHAW, JJ., concur.
NOTES
[1] Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986).
[*] Note from the reporter of decisions: On October 22, 2004, on return to remand, the Court of Criminal Appeals affirmed, without opinion. On December 17, 2004, that court denied rehearing, without opinion. On May 13, 2005, the Supreme Court denied certiorari review, without opinion (1040458). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918844/ | 912 So. 2d 902 (2005)
In the Matter of the Petition of Jimmy D. McGUIRE for Reinstatement to the Mississippi Bar.
No. 2004-BR-01250-SCT.
Supreme Court of Mississippi.
March 17, 2005.
*903 Chester D. Nicholson, Gail D. Nicholson, Gulfport, Attorneys for Appellant.
Adam Bradley Kilgore, Attorney for Appellee.
EN BANC.
CARLSON, Justice, for the Court:
¶ 1. This is Jimmy D. McGuire's third Petition for Reinstatement to the practice of law. See McGuire v. Miss. Bar, 849 So. 2d 880 (Miss.2003) (McGuire III); McGuire v. Miss. Bar, 798 So. 2d 476 (Miss.2001) (McGuire II). McGuire was disbarred in 1997, Miss. Bar v. McGuire, 694 So. 2d 674 (Miss.1997) (McGuire I), based upon his felony conviction in the United States District Court for the Southern District of Mississippi for filing a false currency reporting form as required by the Internal Revenue Service. United States v. McGuire, 99 F.3d 671 (5th Cir.1996) (en banc), cert. denied, 520 U.S. 1251, 117 S. Ct. 2407, 138 L. Ed. 2d 174 (1997). The following facts are taken from our opinion concerning McGuire's first Petition for Reinstatement:
McGuire was taped conspiring with purported drug trafficking clients (who were actually undercover agents) to accept cash payments in a manner shielding the source and purpose of the cash in violation of federal law. In the process he advised these purported drug dealers of routes of travel that they could use to avoid detection in their drug trafficking. Though McGuire was acquitted on other counts, he received the maximum sentence because he was involved in other money laundering schemes and he attempted to obstruct justice in his trial.
McGuire II, 798 So.2d at 477. The amount of illicit cash involved was $20,000. Id. at 479-80.
¶ 2. After a thorough review of the record before us, we find that Jimmy D. McGuire's petition for reinstatement should be granted, conditioned upon his passage of the Mississippi Bar Examination and the Multi-State Professional Responsibility Exam as required by M.R.D. 12.5.[1]
DISCUSSION
¶ 3. In McGuire's Second Petition for Reinstatement, we set out the proper standard of review for reinstatement of disbarred attorneys:
Rule 12 of the Rules of Discipline governs the reinstatement of suspended or disbarred attorneys.[[2]] Burgin v. Miss. *904 State Bar, 453 So. 2d 689, 690 (Miss.1984). "The burden of proving that he has rehabilitated himself and re-established the requisite moral character sufficient to entitle him to reinstatement is upon the Petitioner." Id., at 691 (citing Ex parte Marshall, 165 Miss. 523, 147 So. 791 (1933)). The fundamental question to be addressed before reinstatement is the attorney's rehabilitation in conduct and character since the disbarment. Burgin, 453 So.2d at 691 (citing Miss. State Bar Ass'n v. Wade, 250 Miss. 625, 167 So. 2d 648 (1964)).
McGuire III, 849 So.2d at 881. This Court has established that certain jurisdictional requirements must be met prior to reinstatement:
The petitioner must: (1) state the cause or causes for suspension or disbarment; (2) give the name and current address of all persons, parties, firms, or legal entities who suffered pecuniary loss due to the improper conduct; (3) make full amends and restitution, (4) show that he has the necessary moral character for the practice of law; and (5) demonstrate the requisite legal education to be reinstated to the privilege of practicing law.
In re Benson, 890 So.2d, 888, 890 (Miss.2004). "Though not a jurisdictional requirement, we consider the Bar's position as to reinstatement as a factor in determining whether to grant the petition." Id. (citing In re Holleman, 826 So. 2d 1243, 1248 (Miss.2002)).
1. Cause for Disbarment
¶ 4. In setting out the cause for disbarment, McGuire states with specificity the facts warranting his discipline. He further attaches the forms upon which his prosecution was based and the judgment of his conviction.
2. Pecuniary Loss
¶ 5. As stated in McGuire III, McGuire has provided proof that he has made all payments ordered by the United States District Court for the Southern District of Mississippi. 849 So. 2d at 882.
3. Full Amends
¶ 6. As we also found in McGuire III, McGuire was ordered to pay the Bar's costs and expenses involved in the investigation and prosecution of the disbarment proceedings. The costs and expenses in the amount of $437.51 have been fully paid. Id. at 882.
4. Requisite Moral Character
¶ 7. The Bar deposed McGuire on August 23, 2004, as part of its investigation of McGuire's Petition for Reinstatement. The following categories were considered in an attempt to provide this Court with information concerning McGuire's moral character.
A. Civic, Church and Charitable Involvement
¶ 8. McGuire testified that he has engaged in several activities in service to his community. He is an active member of Gateway United Methodist Church in Gulfport, where he serves as an usher, church historian and Chairman of the finance committee. He has also volunteered for vacation bible school, is a member of the United Methodist's Men's group and has bribery, extortion, misappropriation, theft, the sale or distribution of a controlled substance, or an attempt, conspiracy or solicitation of another to commit such a crime, shall be ineligible for reinstatement to the practice of law. *905 recently become certified as a lay speaker in the Methodist Church.
¶ 9. McGuire is a volunteer with the M.L. Tootle Mission project, tutor and substitute teacher, and volunteer with Memorial Hospice. McGuire has also made charitable donations to Make-a-Wish Foundation, Alzheimer's Foundation, American Diabetes Association, Christopher Reeve Foundation, Habitat for Humanity and the Ocean Springs Honor Choir. McGuire testified that he spends approximately 10-14 hours per week doing charitable work, which he will continue to do if he is reinstated to the practice of law.
B. Personal Recommendations
¶ 10. McGuire attached approximately sixty-six letters of recommendation to his Petition for Reinstatement. These letters were from law enforcement officers, former and current Circuit and Chancery Clerk personnel, professional and business persons, and persons from McGuire's church. Approximately fifteen of the letters were from members of the Bar. Most of these letters acknowledged the severity of McGuire's conduct leading to his disbarment and his remorse regarding the crimes he committed.
C. Mental and Emotional Status
¶ 11. The Bar noted that McGuire appeared to be mentally and emotionally stable during his deposition. McGuire testified that he was not suffering from any medical problems except a torn biceps tendon which caused him to take a prescription medication. He also takes a prescription eyedrop to prevent glaucoma.
D. Future Plans
¶ 12. McGuire testified that he had not worked for anyone other than himself since his release from incarceration. He was supporting himself through financial investments. McGuire had also established a medical debt collection agency, Apollo Collections, Inc. McGuire stated that his future plans were to reestablish a practice on the Mississippi Gulf Coast, but that prior to doing so he would seek out a firm of reputable lawyers to work for so that he could be supervised and brought up to speed as to the practice of law. He also expressed an interest in serving as a public defender. He indicated he does not intend to represent anyone who is charged with a drug violation. McGuire further stated that he was considering entering a Ph.D. program at Temple University in constitutional law.
5. Requisite Legal Education
¶ 13. McGuire testified that since his disbarment he has read various legal textbooks concerning legal matters which interest him. He worked in the law library while incarcerated in the Talladega facility and assisted in its upgrade. McGuire has kept abreast of developments in the law through periodic review of case decisions.
¶ 14. McGuire earned an LL.M. from the Universiteit Utrecht, which is located in Utrecht, Holland, in June 2000 in the field of law and economics. McGuire also took and passed the Multi-State Professional Responsibility Exam in March 2001. McGuire testified that he has also participated in bar-review courses in anticipation of being able to sit for the Mississippi Bar Exam.
6. Position of the Bar
¶ 15. The Bar stated that the petition presented the necessary substantive factual evidence rising to the level of a clear and convincing demonstration of rehabilitation. Additionally, unlike the position taken in McGuire III where it unequivocally opposed McGuire's petition for reinstatement, the Bar now states that it conditionally supports McGuire's reinstatement to the practice of law subject to his taking the complete Mississippi *906 Bar Exam and achieving a passing score required of new attorneys.
7. Postscript
¶ 16. While we cannot totally disagree with the Bar's opinion that McGuire has evidently for the first time exhibited "genuine remorse" for his misconduct and has finally acknowledged the seriousness of his misconduct, we are more than a little disappointed with portions of McGuire's deposition testimony of August 23, 2004.[3] During his deposition, McGuire continued to characterize his actions as basically an exercise of bad judgment. McGuire continued to express ignorance over the fact that the large sum of money discussed with the undercover agents came from an illicit source. McGuire also continued to take the position that he was confused at the time as to how he should complete a simple IRS reporting form since an unknown third person handed the $20,000 to McGuire's client, who then in turn handed the money to McGuire. McGuire's position is belied by Judge Bramlette's statements on the record at the time he sentenced McGuire in federal court.[4]McGuire II, 798 So.2d at 479-80. McGuire's deposition response was:
There was never a representation that the money that they brought to me was from any illegal source whatsoever, only the inference that the money that they found in the car was from an illegal source. There was an inference to that, and I can see how the judge could draw that inference when he passed sentence on me.
¶ 17. A noted syndicated columnist once observed that we live in a "blameless society" in that we as mere human beings have a tendency to blame others for our transgressions "blame anybody for my wrong acts, just don't blame me." Henceforth, we expect McGuire to accept full responsibility for his criminal actions to be willing to be held fully accountable for his actions, past, present and future. McGuire should consider himself extremely fortunate. Had he committed this criminal act at a time when he was subjected to the applicability of the amended Rule 12 of the Rules of Discipline, he would have been ineligible for reinstatement to the practice of law.
CONCLUSION
¶ 18. The offense for which McGuire was disbarred was very serious. However, he has fulfilled all the requisite jurisdictional requirements for reinstatement and has demonstrated rehabilitation in conduct and moral character since the incident which led to his disbarment. Also, the Bar conditionally supports McGuire's reinstatement to the practice of law. For these reasons, Jimmy D. McGuire is reinstated to the practice of law in the State of Mississippi conditioned upon his passing the Mississippi Bar Exam and the Multi-State Professional Responsibility Exam prepared by the National Conference of Bar Examiners, as required by Rule 12.5 of the Mississippi Rules of Discipline.
¶ 19. PETITION FOR REINSTATEMENT TO THE PRACTICE OF LAW CONDITIONALLY GRANTED.
SMITH, C.J., WALLER AND COBB, P.JJ., EASLEY, GRAVES, DICKINSON AND RANDOLPH, JJ., CONCUR. DIAZ, J., NOT PARTICIPATING.
NOTES
[1] This Court recognizes that McGuire took and passed the MPRE on March 9, 2001. However, because those scores are only valid for three years, McGuire must retake the exam.
[2] Although of no moment in the case before us today, Rule 12 was amended by this Court on April 4, 2002, as follows:
(c) An attorney who has been disbarred for conviction of a felony criminal offense which occurred after April 4, 2002, in a court of this state or any other state, or a court of the United States for any felony crime a necessary element of which, as determined by the statutory or common law definition of the crime, involves interference with the administration of justice, false swearing, misrepresentation, fraud, deceit, bridbery, extortion, misappropriation, theft, the saleor distribution of a controlled substance, or an attempt, conspirancy or solicitation of another to commit such a crime, shall be ineligible for reinstatement to the practice of law.
[3] This deposition was taken at the request of the Bar as part of its investigatory duty concerning McGuire's petition for reinstatement.
[4] Honorable David C. Bramlette, III, United States District Judge for the Southern District of Mississippi, was McGuire's sentencing judge. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918847/ | 912 So. 2d 1000 (2005)
Steven BROWNLEE, Appellant,
v.
STATE of Mississippi, Appellee.
No. 2003-KA-01522-COA.
Court of Appeals of Mississippi.
March 15, 2005.
*1001 James D. Franks, Hernando, attorney for appellant.
Office of The Attorney General by Deirdre McCrory, attorney for appellee.
Before BRIDGES, P.J., GRIFFIS and ISHEE, JJ.
BRIDGES, P.J., for the Court.
¶ 1. Steven Brownlee stood before the Desoto County Circuit Court and faced three charges: (1) Conspiracy to Commit Grand Larceny; (2) Possession of Larceny Tools; and (3) Attempt to Commit Grand Larceny. The jury acquitted Brownlee of attempt to commit grand larceny, but found Brownlee guilty of conspiracy to commit grand larceny and possession of larceny tools. Brownlee filed a motion for judgment notwithstanding the verdict or, alternatively, for a new trial. The trial court denied that motion. For conspiracy to commit grand larceny, the circuit court sentenced Brownlee to five years in the custody of the Mississippi Department of Corrections, but suspended three years of the sentence, leaving two years remaining. As for possession of larceny tools, the circuit court sentenced Brownlee to five years, but suspended the sentence pending good behavior. Though the trial court suspended the sentence for possession of larceny tools, the trial court fixed the sentences to run consecutively. Aggrieved, Brownlee appeals and asserts the following issues:
I. THE TRIAL COURT ERRED IN FAILING TO GRANT THE DEFENDANT'S MOTION FOR DIRECTED VERDICT AS THE STATE FAILED TO PROVE AN ESSENTIAL ELEMENT OF EACH OF THE CRIMES CHARGED, NAMELY THAT THE ATTEMPTED TAKING OF PROPERTY WAS "AGAINST THE WILL OF" OR "WITHOUT THE CONSENT OF" THE OWNER.
II. THE TRIAL COURT ERRED IN FAILING TO GRANT A LESSER-INCLUDED OFFENSE JURY INSTRUCTION IN TRESPASS.
III. THE TRIAL COURT ERRED IN INVOKING A SENTENCE GROSSLY DISPROPORTIONATE TO THE CRIME CHARGED AND CONSTITUTING CRUEL AND UNUSUAL TREATMENT.
Finding no error, we affirm the decision of the circuit court.
FACTS
¶ 2. At approximately 2:00 a.m. on April 15, 2002, Officer Nick Woolsey of the Hernando Police Department was dispatched to Cars Unlimited, an auto sales lot. Upon arrival, Woolsey saw two men removing tires and rims from a Ford automobile. Woolsey watched the men for *1002 three to five minutes while he waited on another officer to arrive.
¶ 3. Sergeant Shane Ellis, also of the Hernando Police Department, parked his car behind Cars Unlimited, turned his lights off, and walked up the hill to the suspects' hidden vehicle. With Ellis in place, Woolsey tried to get closer to the suspects, but they spotted him. When the suspects spotted Woolsey, Woolsey ordered them to stop. Instead, the suspects ran to their car-where Ellis was waiting. When Ellis ordered the suspects to stop, they split up and ran. Ellis chased and caught one suspect, Steven Brownlee, hiding in the kudzu. The other suspect got away.
¶ 4. A search of Brownlee yielded a screwdriver and a small flashlight. Ellis and Woolsey inspected the Ford that the suspects were near. The Ford was jacked up on both sides and a four-way lug wrench was on the ground near the passenger side of the car. In the suspects car, Ellis saw a tire that matched the other tires on the jacked-up Ford even the rims were the same. Mike Pounders, manager of Cars Unlimited, testified that the Ford, owned by the business, was intact when he left for the night on April 14, 2002.
ANALYSIS
I. THE TRIAL COURT ERRED IN FAILING TO GRANT THE DEFENDANT'S MOTION FOR DIRECTED VERDICT AS THE STATE FAILED TO PROVE AN ESSENTIAL ELEMENT OF EACH OF THE CRIMES CHARGED, NAMELY THAT THE ATTEMPTED TAKING OF PROPERTY WAS "AGAINST THE WILL OF" OR "WITHOUT THE CONSENT OF" THE OWNER.
¶ 5. A motion for directed verdict challenges the sufficiency of the evidence. Edwards v. State, 797 So. 2d 1049(¶ 14) (Miss.Ct.App.2001). When one appeals and challenges the sufficiency of the evidence, this Court reviews that evidence in the light most favorable to the State. Id. (quoting McClain v. State, 625 So. 2d 774, 778 (Miss.1993)). We reverse only if the evidence is such that reasonable and fair-minded jurors could only find the accused not guilty. Id. (citations omitted).
¶ 6. Brownlee argues that the circuit court should have granted his motion for directed verdict because out of the three witnesses that testified for the State, none of those witnesses testified that the alleged taking was without the consent of or against the will of the owner. Brownlee's theory centers on the notion that there must be some evidence or testimony that he lacked permission to take the property, otherwise one must assume that he had permission. This argument lacks merit.
¶ 7. Before going into too much depth on this issue, we note that Brownlee was convicted of conspiracy to commit grand larceny and possession of larceny tools. Conspiracy is a recognition by at least two people that they have a common plan or agreement to commit a crime and the intent to further their common purpose. Newell v. State, 754 So. 2d 1261(¶ 11) (Miss.Ct.App.1999) (citations omitted). A conspiracy agreement may be inferred from the circumstances, thus conspiracy may be established by circumstantial evidence. Id.
¶ 8. One proves possession of larceny tools by showing (1) adaptation and design of the tool for taking and carrying away the property of another, (2) possession of such tools by one with knowledge of their character, and (3) a general intent to use or employ them in taking and carrying *1003 away another's property. See Pamphlet v. State, 271 So. 2d 403 (Miss.1972).
¶ 9. Neither conspiracy to commit grand larceny, nor possession of larceny tools requires proof of a "taking" permissive or otherwise. Failure to prove that the attempted taking was without consent implies an element of attempted grand larceny, for which Brownlee was acquitted. Even if it were necessary to prove lack of owner consent, resolution of that issue is irrelevant to Brownlee's conviction for conspiracy to commit grand larceny and possession of larceny tools. Accordingly, there can be no error for lack of proof of a taking without consent if it is not even necessary to demonstrate a taking.
¶ 10. For the sake of closure, we assume arguendo that some degree of proof indicating lack of owner consent is necessary. The evidence showed that Brownlee and the other unidentified conspirator (1) hid their car, (2) attempted to remove tires from a vehicle in a car lot at two o'clock in the morning, and (3) tried to escape when confronted by authorities. Combined with the fact that no witness testified that Brownlee did have permission to remove the tires, a jury could reasonably infer that Brownlee lacked permission or consent. Regardless, that the State did not present direct testimony that Brownlee lacked consent is irrelevant. Neither of the crimes under which Brownlee was convicted depend upon a positive showing of such.
II. THE TRIAL COURT ERRED IN FAILING TO GRANT A LESSER-INCLUDED OFFENSE JURY INSTRUCTION IN TRESPASS.
¶ 11. Brownlee requested a lesser-included offense instruction on trespass and argued that while the State's proof indicated attempted grand larceny, the same evidence could prove trespass, as well. The circuit court declined to instruct the jury according to Brownlee's request. Brownlee argues that the decision was erroneous because the jury did not hear evidence that indicated lack of owner consent. Thus, Brownlee draws the conclusion that the jury could have found that Brownlee was merely trespassing and had no intent to commit grand larceny.
¶ 12. We cannot see how Brownlee experienced prejudice from the trial court's decision. Again, Brownlee was not convicted of attempted grand larceny. How could Brownlee experience prejudice where the trial court did not grant a lesser included offense instruction if Brownlee was not convicted of the "greater offense" that implies that lesser included offense? Accordingly, Brownlee suffered no prejudice due to the circuit court's denial of Brownlee's requested instruction. This issue is meritless.
III. THE TRIAL COURT ERRED IN INVOKING A SENTENCE GROSSLY DISPROPORTIONATE TO THE CRIME CHARGED AND CONSTITUTING CRUEL AND UNUSUAL TREATMENT.
¶ 13. Brownlee argues that his sentence is grossly disproportionate to the crimes charged because he had no prior felony convictions and that there are many more serious crimes for which he would have received a lesser sentence. This argument is not well-taken.
¶ 14. This Court will generally refrain from disturbing a sentence unless it exceeds the statutory limits as prescribed by law. Edwards v. State, 615 So. 2d 590, 597 (Miss.1993). Section 97-17-35 of the Mississippi Code sets the penalty for possession of larceny tools. That Section sets the penalty for violation at a maximum of five years within the custody *1004 of the MDOC. Miss.Code Ann. § 97-17-35 (Rev.2000). Conspiracy to commit grand larceny is codified at Section 97-1-1 of the Mississippi Code. A violation carries a sentence of no more than five years. Miss. Code Ann. § 97-1-1 (Rev.2000). Accordingly, this Court would disturb Brownlee's sentence if Brownlee received a sentence greater than five years for either one of his two convictions.
¶ 15. For conspiracy to commit grand larceny, Brownlee was sentenced to five years, with three suspended. For possession of larceny tools, the circuit court sentenced Brownlee to five years with all five suspended. As it currently stands, Brownlee is sentenced to a total sentence of two years for both crimes. Thus, Brownlee's sentence is clearly within statutory limits and is not disproportionate to the crimes for which he was convicted.
¶ 16. THE JUDGMENT OF CIRCUIT COURT OF DESOTO COUNTY OF CONVICTION OF COUNT I OF CONSPIRACY TO COMMIT GRAND LARCENY AND SENTENCE OF FIVE YEARS WITH FIVE YEARS SUSPENDED; COUNT II OF POSSESSION OF LARCENY TOOLS AND SENTENCE OF FIVE YEARS WITH THREE SUSPENDED, WITH SENTENCES TO RUN CONSECUTIVELY, ALL IN THE CUSTODY OF THE MISSISSIPPI DEPARTMENT OF CORRECTIONS IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO DESOTO COUNTY.
KING, C.J., LEE. P.J., IRVING, MYERS, CHANDLER, GRIFFIS, BARNES AND ISHEE, JJ., CONCUR. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1736354/ | 727 N.W.2d 375 (2006)
2007 WI App 19
STATE
v.
CARTER.
No. 2006AP680-CR.
Wisconsin Court of Appeals.
December 21, 2006.
Unpublished opinion. Reversed and remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584571/ | 717 F. Supp. 1129 (1989)
Elizabeth HOBAN, as Administratrix and Personal Representative of the Estate of James Patrick Hoban, Deceased, Plaintiff,
v.
GRUMMAN CORPORATION and Grumman Aerospace Corporation, Defendants.
Civ. A. No. 88-615-N.
United States District Court, E.D. Virginia, Norfolk Division.
July 12, 1989.
*1130 Bruce A. Blakeman, Robert M. Blakeman & Associates, Valley Stream, N.Y., and Jeff W. Rosen, Adler & Rosen, Norfolk, Va., for plaintiff.
Frank J. Chiarchiaro, Mendes and Mount, New York City, and Bruce T. Bishop and Randy D. Singer, Willcox & Savage, Norfolk, Va., for defendants.
MEMORANDUM OPINION AND ORDER
CLARKE, District Judge.
This matter comes before the Court on the defendants' Motion for a Directed Verdict. For the reasons discussed below, the Motion is GRANTED.
I. Background
The plaintiff, Elizabeth Hoban, is the widow of Lt. James P. Hoban, a Navy pilot. Lt. Hoban was killed on May 22, 1986 when the A-6E aircraft he was piloting crashed shortly after takeoff from the Naval Air Station (NAS) Oceana in Virginia Beach, Virginia.
The plaintiff, as administratrix of Lt. Hoban's estate, sued the manufacturers of the plane, the Grumman Corporation and Grumman Aerospace Corporation (hereinafter referred to in the singular as Grumman), proceeding on theories of negligent manufacture and breach of implied warranty.
Trial began before a jury on April 11, 1989. After approximately four and a half days of trial, the case was submitted to the jury on April 19. On April 24, the jury announced that it was unable to reach a verdict and was discharged. At that time, Grumman renewed its Motion for a directed verdict, which had previously been made and denied both at the close of the plaintiff's evidence and before the case was submitted to the jury. The transcript of the trial has been completed, the Motion has been fully briefed and the parties have agreed to waive oral argument. The Motion is, therefore, ripe for disposition.
The plaintiff alleges that the crash of the A-6E was due to an engine fire caused by a manufacturing defect in the plane's fuel system. The defendant denies the existence of a defect and asserts that, regardless of whether an engine fire occurred, the *1131 sole cause of the accident was pilot error. Grumman also asserts the affirmative defenses of contributory negligence and assumption of the risk.
II. Trial Evidence
A significant portion of the evidence in this case is contained in the Judge Advocate General's Manual Investigative Report [hereinafter "JAG Report"], which contains the results of the Navy's investigation into the crash. The JAG Report's factual findings are essentially undisputed, although the parties sharply disagree about the Report's opinions and conclusions.
On May 22, 1986, Lt. Hoban was assigned to fly an A-6E aircraft from NAS Oceana to NAS Cecil Field and ultimately to the aircraft carrier USS JOHN F. KENNEDY. The plane in question had been delivered to the Navy from Grumman's Calverton, New York factory on May 15, 1986, one week before the crash, and had logged approximately twelve and a half hours of flight time before the accident.
Before departure, Lt. Hoban was briefed on the flight and informed that the weather conditions mandated Instrument Flight Rules (IFR) procedures. JAG Report at 13. IFR departures at NAS Oceana require the pilot to "climb as rapidly as possible to 1,000 feet [and] then turn to conform with your departure procedure." Tr. 665. However, Lt. Hoban performed a "low transition" maneuver, climbing to no more than approximately 100 feet and remaining at this altitude nearly until the end of the runway. JAG Report at 14. The plane then made a sharp right turn and a rapid roll into a 60° to 80° angle of bank, reaching a maximum altitude of 300 to 500 feet. Id.
At some point before impact, the pilot reduced the aircraft's power from maximum power to idle. Id. Seconds before the crash, Lt. Hoban and the bombardier/navigator ejected from the plane. Due to the plane's sharp angle of bankthe plane's wings were described as being perpendicular to the ground at this pointthe crewmen ejected into the ground; both were killed. The plane had been airborne for approximately a minute and a half when the crash occurred. Tr. 841.
The plaintiff presented testimony from two witnesses who described seeing flames at the rear of the plane before the crash. Tr. 81, 97. She also introduced statements contained in the JAG Report from two more witnesses who stated that they saw flames or fire at the rear of the plane. Tr. 337, 354. Other witnesses at trial or in statements to the Navy investigators stated that they heard the plane become silent or quieter shortly before the crash. Tr. 97-98, 120, 342, 343, 345, 352.
To prove the cause of the crash, the plaintiff offered as an expert witness Dr. Frederick Ryder, a "safety engineer" and self-described expert in accident reconstruction.[1] Dr. Ryder stated that, in his opinion, the crash was caused by a fire on the aircraft. Tr. 387. He testified that he based this conclusion on "the numerous statements of witnesses who saw fire coming out of the airplane." Id. He stated that the fire was caused "by a manufacturing defect which resulted in fuel leakage. The fuel leaked, ignited, burned in an uncontrollable manner, rather than in the normal controlled manner within the engine." Id. at 391.
Grumman introduced the testimony and written statements of several witnesses who affirmatively stated that they saw no smoke or flames on the plane before the crash. See, e.g., Tr. 406, 408, 548, 633, 640, 650. Three of Grumman's witnesses reported that they heard no reduction in the plane's noise level before the crash. Tr. 567, 604, 616. All of the witnesses who mentioned it agreed that the aircraft was "clean," that is, with its landing gear up and its flaps and slats retracted. Tr. 537-38, 590, 612, 637.
Commander John T. Meister, the naval officer assigned to investigate the accident and prepare the JAG Report, testified on *1132 behalf of Grumman. Commander Meister's report included the witness statements, the engineering reports on the plane, weather information for the day of the crash, Oceana flight rules, the operations manual for the A-6E and other material. He also performed computerized simulations of the fatal flight. Tr. 659-662. Commander Meister concluded that the cause of the crash was pilot error. Tr. 692; JAG Report 24. Commander Meister's report and its conclusions were formally endorsed by seven officers in the Navy operational and administrative chains of command. JAG Report 26-36.
Commander Meister, a pilot who has logged more than 3000 hours of flight time in A-6 aircraft, testified that the crash occurred when the plane went into aerodynamic stall. Tr. 671. Aerodynamic stall is a normal physical phenomenon in which various combinations of the plane's air speed and configuration cause it to lose "lift" and descend. As both Dr. Ryder and Commander Meister explained, the wings of an airplane are designed so that, when the plane is moving, the air rushing past the wings exerts less pressure on the top of the wings than on the bottom, creating a net pressure upward, or lift. Tr. 376-77, 668. If the plane's speed drops below a certain point, the stall speed, there will be too little upward pressure under the wings and the plane will lose this lift and descend. Id. at 377.
The stall speed is the minimum speed at which an aircraft must fly in a given attitude or angle in order not to enter a stall. Tr. 670. The stall speed increases as the aircraft's nose rises, as its angle of bank increases and when the flaps and slats are retracted. Tr. 668-670. Commander Meister testified that stall training was an integral part of Lt. Hoban's training in A-6 aircraft. Id. at 723.
Commander Meister testified that, in his opinion, the aircraft's reduced power, sharp angle of bank and clean configuration resulted in a stall speed higher than the approximately 240 knots at which the plane was flying, resulting in a stall. Specifically, he testified, any angle of bank greater than 63° would cause a plane travelling at 240 knots to stall. Tr. 671. Because of the plane's low altitude, Lt. Hoban was unable to recover from the stall and the plane crashed. Tr. 722.
The engines and other components of the plane were examined by engineers at the Naval Air Rework Facility in Jacksonville, Florida. The engineering investigation found no evidence of pre-impact fire, Tr. 681, and determined that both engines were operating at 70 percent, or idle, power at the time of the crash. Id. The report also concluded that the warning lights that would indicate a fire or a problem with the fuel pressure were not lit. Id. at 685-86. The report concluded that the plane was fully functional and operable at the time of impact. Tr. 686.
Commander Meister also testified that the A-6E could fly with only one engine, being capable of climbing 1500 feet per minute on one engine with its wings level. Tr. 687. If the plane lost an engine while it was banking, the proper procedure would be to roll the wings level and gain altitude. Tr. 687-88.
Captain Robert Ferguson, a pilot with more than 2300 hours of A-6 flight time, also concluded that the cause of the crash was pilot error. Tr. 819. Captain Ferguson conducted additional simulations of Lt. Hoban's flight, both at full power and idle power. The simulator stalled and the low altitude resulted in a crash each time. Tr. 822. He agreed that a properly flown A-6 would be capable of flying on one engine and that the loss of the right engine would not cause the plane to bank to the right. Tr. 830-31.
An engineer from Pratt and Whitney, the manufacturer of the engine that Grumman incorporated into the plane, testified that he was present at the Navy's examination of the plane's parts after the crash. He concluded, as did the Navy engineers, that there was no abnormal fire in either engine. Tr. 882. The defendant also presented testimony from a test pilot at Grumman who explained the company's testing procedures and stated that he had flown the *1133 plane in question three times without incident before its delivery to the Navy.
III. Discussion
Under Rule 50(a) of the Federal Rules of Civil Procedure, the Court must direct a verdict if, under the applicable law, there can be but one reasonable conclusion as to the verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202 (1986). The question is not whether the evidence clearly 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." Id. at 252, 106 S.Ct. at 2512. As the Fourth Circuit has recently explained, a directed verdict is properly granted "where there is no substantial evidence in opposition and, without weighing the credibility of witnesses, there can be but one reasonable conclusion as to the verdict." Poynter v. Ratcliff, 874 F.2d 219 (4th Cir.1989).
In this case, due to the conflicting statements of the witnesses, the Court must assume for the purpose of this Motion that there was a fire on the aircraft before the crash. The questions remain whether the fire was caused by a manufacturing defect that was present when the plane left Grumman's control and whether the fire was the proximate cause of the crash.
The only evidence in the case suggesting a manufacturing defect was the testimony of the plaintiff's engineering expert, Dr. Ryder. At trial, Grumman moved to strike Dr. Ryder's testimony on the grounds that he was not qualified to testify as an expert regarding aircraft engines or fuel systems. Although Dr. Ryder was allowed to testify in order to fully develop the record, the Court must agree that Dr. Ryder was not competent to testify as an expert on the issues in this case and his testimony should be stricken.
Dr. Ryder, a licensed professional engineer, has degrees in electrical and mechanical engineering. Tr. 276. He stated that his only formal education in aerodynamics was as part of an undergraduate physics course. Tr. 277, 301. The bulk of his experience with aircraft concerned the design of aircraft control instrumentation, mainly fuel gauges. Tr. 283-88. This work, he stated, required him "to take into account completely the characteristics of ... jet aircraft in general." Tr. 286-87. Since 1975, Dr. Ryder has been a self-employed safety engineer and accident investigator and has investigated approximately eight aviation accidents. Tr. 289-90.
Dr. Ryder stated that he was familiar with the general principles of jet engines, Tr. 298-99, but that he has never performed any aerodynamic design work or engine design. Tr. 303-09. He had previously studied accidents that involved fires in airplane cabins, Tr. 299, and has testified in three cases involving aircraft. Tr. 310. These cases involved a stress factor in the structure of a helicopter, a cabin fire in an aircraft and a tire change on an aircraft. Tr. 310-11. Dr. Ryder has had no training or experience as a pilot. Tr. 312.
The A-6E's engine had been destroyed and was unavailable for study.[2] Tr. 483. However, Dr. Ryder failed to examine any of the other components of the aircraft that were available. Tr. 439, 503. For example, he did not examine the annunciator panel, which contained the fire warning light, the fuel pressure light and other indicators that were discussed in the Navy's engineering report. Tr. 452-54, 501-03. He stated that he thought the annunciator panel "was not important." Tr. 503.
Dr. Ryder failed to examine the engine or fuel system of any other A-6E or a similar aircraft. At no time did he testify that he was familiar with the design of the A-6 engine or fuel system that he claimed was defective.
*1134 At trial, the Court found that Dr. Ryder was not qualified to testify in the fields of either aerodynamics or jet engines and their fuel systems. Tr. 324, 327. For purposes of developing a full record, however, the Court allowed Dr. Ryder to testify but informed counsel that a plaintiff's verdict would likely be set aside. Tr. 324, 327. The jury was informed that Dr. Ryder would be permitted to testify in the fields of "jet propulsion and jet engines, and the fuel systems in connection therewith." Tr. 334. Although Dr. Ryder was permitted to testify, the Court never "ruled that Dr. Ryder was competent and qualified to testify," as the plaintiff's brief states. Plaintiff's Memorandum of Law at 29. The plaintiff asserts that the Court's findings concerning Dr. Ryder's lack of qualifications "were based upon misconceptions which were cleared up by plaintiff in oral argument." Plaintiff's Sur-Reply Memorandum at 2-3. This assertion is simply wrong.
The plaintiff is correct that an expert witness is not required to have direct experience with the precise device or machine alleged to be defective if the expert has knowledge in the area and is familiar with the general engineering principles involved. In support of this proposition, the plaintiff cites Martin v. Fleissner GMBH, 741 F.2d 61, 64 (4th Cir.1984). However, the two expert witnesses in Martin were specialists in mechanical engineering and machine design. Id. at 63. Although they had no prior direct experience with the textile crimper machine at issue, both were familiar with the general principles of the machine's rollers from experience in other, similar fields such as printing, papermaking and sheet metal production. Id. Further, both witnesses had visited the plant and seen the machine in operation. Id. Clearly, the general experience of the expert witnesses in Martin was considerably more relevant to the issues there than Dr. Ryder's experience is to this case.
The plaintiff also relies on Garrett v. Desa Industries, Inc., 705 F.2d 721 (4th Cir.1983), which held that an expert need not have specific experience with the particular article involved. Garrett involved a stud driver that operated on the same principles as a handgun and used .22 caliber cartridges. The plaintiff's expert had a master's degree in mechanical engineering, was a licensed professional engineer and had been a naval gunnery officer responsible for small arms. He was familiar with the type of .22 cartridges the stud driver used and had examined the particular model at issue. Again, the expert's experience and knowledge, though indirect, were relevant to the item at issue.
In this case, Dr. Ryder had no education or direct experience with aerodynamics or jet engine design and no knowledge of the workings of the particular aircraft and its fuel system. Further, he possessed no indirect experience that related to the design of the allegedly defective fuel system. Dr. Ryder simply did not possess any "knowledge, skill, experience, training, or education" that would assist the jury in this case. Fed.R.Evid. 702. Accordingly, his testimony is entitled to no weight and should be stricken. See Newman v. HyWay Heat Systs., Inc., 789 F.2d 269 (4th Cir.1986).
Even if Dr. Ryder were qualified as an expert, his testimony should be stricken as unsupported by the evidence. All of the scientific evidence from the Navy's engineering investigation indicated that there was no internal fire in the engines. The only evidence on which Dr. Ryder relied was the statements of witnesses who said they saw fire on the aircraft. He cited no evidence, scientific or otherwise, that the alleged fire occurred in the fuel system or that the fire was caused by a manufacturing defect. An expert's opinion must be based on the evidence; he may not "speculate in fashions unsupported by, and in this case indeed in contradiction of, the uncontroverted evidence in the case." Newman v. Hy-Way Heat Systs., Inc., 789 F.2d at 270. See also Nichols Constr. Corp. v. Cessna Aircraft Co., 808 F.2d 340 (5th Cir.1985) (upholding judgment n.o.v. for defendant airplane manufacturer where plaintiff's only evidence of causation was *1135 "purely speculative" testimony of expert witness).
Furthermore, in his testimony about the alleged defect, Dr. Ryder made absolutely no explanation of how a manufacturing defect that could cause an engine fire could go unnoticed throughout the plane's testing and earlier flights and suddenly manifest itself during Lt. Hoban's takeoff. The evidence showed that the aircraft had been extensively tested, both on the ground and in the air, before Grumman transferred it to the Navy. Tr. 904-13, 964-70. There were six test flights at the Grumman factory, performed by both Grumman and Navy personnel. Tr. 913-14. The plane was also flown by Navy personnel from the New York factory to Virginia, for a total flight time of 12.3 hours. JAG Report 8. Dr. Ryder offered no explanation of how any alleged manufacturing defect that was present when the plane left Grumman's control could have caused an engine fire on this flight but not on the previous flights.
Finally, even if Dr. Ryder could be considered competent to testify about the existence and cause of a fire in the engine, he would not be qualified to testify that a fire was the sole proximate cause of the crash. In his own words, Dr. Ryder is not a pilot but an engineer. Tr. 312. Plaintiff's counsel admitted that Dr. Ryder was not qualified to state whether the loss of one engine would cause a twin-engine plane such as the A-6E to crash, nor to discuss the proper piloting procedures in the case of a fire. Tr. 319. Nonetheless, Dr. Ryder stated that, in his opinion, the crash was caused solely by a fire on the plane. Tr. 386-87. The two expert pilots testified that, if Lt. Hoban had flown to the correct altitude and followed proper procedures, a fire in one engine would not have caused the plane to crash. Dr. Ryder did not, and could not, dispute this evidence.
The plaintiff presented no other evidence of a defect in the aircraft besides Dr. Ryder's testimony. She failed to establish a defect in the aircraft or a causal nexus between any alleged defect and the crash. Even Dr. Ryder failed to state that a manufacturing defect in the fuel system was the only possible cause of the alleged fire, despite counsel's assertions to the contrary. Negligence claims "cannot be based solely on conjecture and speculation as to the abstract possibility that an alleged defect caused the aircraft to crash.... A jury is not permitted to speculate or guess as to the proximate cause of an accident." Sievers v. Beechcraft Mfg. Co., 497 F. Supp. 197, 201 (E.D.La.1980).
The plaintiff argues that she has established a prima facie case proving a defect and that she should not be required to prove the specific location and cause of the defect. She cites two cases that are inapposite to the facts here. In North American Aviation v. Hughes, 247 F.2d 517 (9th Cir.1957), cert. denied, 355 U.S. 914, 78 S. Ct. 341, 2 L. Ed. 2d 273 (1958), a case involving a military aircraft, the court found that there was "substantial evidence" that was "clearly indicative of mechanical failure, which the circumstances indicate is the fault of the manufacturer." Id. at 521. Such substantial evidence of a manufacturing defect of some type is simply not present in this case.
Lindsay v. McDonnell Douglas Aircraft Corp., 460 F.2d 631 (8th Cir.1972), also involved the death of a Navy pilot in an airplane crash. The plaintiff executrix was allowed to proceed on her theory of strict liability in tort without being required to prove the specific defect that caused the crash. The plaintiff showed that the aircraft was being used properly, that the maneuvers undertaken were within the performance capabilities of the aircraft and that fires had occurred and defects had been found in other aircraft manufactured by the defendant. The court held that the plaintiff would have a submissible case if she could "show that the crash was caused by some unspecified defect and that no other cause is likely." Id. at 640 (emphasis added). In this case, there was substantial evidence of another likely cause of the crash, pilot error. The plaintiff also failed to rule out other conceivable causes of the crash such as faulty maintenance.
The plaintiff has failed to prove the existence of a defect in the aircraft or a *1136 causal relationship between any alleged defect and the crash. Accordingly, the defendant is entitled to a directed verdict on both the negligence and breach of warranty counts.
Grumman also argues that, if it were found to be negligent, it would be entitled to a directed verdict because of Lt. Hoban's alleged contributory negligence and assumption of the risk. The Court finds these arguments persuasive.
In Virginia, a plaintiff's contributory negligence is a complete bar to recovery on a negligence claim. See, e.g., Smith v. Virginia Elec. & Power Co., 204 Va. 128, 129 S.E. 655 (1963). In this case, the defendant produced substantial evidence of Lt. Hoban's negligence. Commander Meister in the JAG Report concluded that the sole cause of the mishap was pilot error. This conclusion was specifically endorsed by the Navy officers who reviewed and endorsed the Report. See, e.g., JAG Report 26, 28, 32. Grumman's pilot witness, Captain Ferguson, also concluded that Lt. Hoban committed a series of errors that combined to cause the crash.
It is uncontroverted that Lt. Hoban failed to follow the IFR flight rules at Oceana, which require all aircraft to climb as rapidly as possible to 1,000 feet before making any turns. Tr. 665. Instead, Lt. Hoban performed a low transition maneuver, flying the length of the runway at an altitude of only 100 feet and climbing to no more than 300 to 500 feet during the final turn. Despite the plaintiff's attempts to suggest that low transition maneuvers were unauthorized but routine, witnesses for both sides agreed that Lt. Hoban's takeoff followed an abnormal flight pattern for an A-6 aircraft. Tr. 87, 104, 546, 592, 615, 631-32. Commander Meister testified that the maneuver violated NAS Oceana course rules. Tr. 788.
The evidence also showed that Lt. Hoban violated Navy procedures that would apply if there were a fire on the aircraft. The Navy's flight procedures are set out in the Naval Air Training and Operational Procedural Standardization Flight Manual for the A-6E aircraft [hereinafter "NATOPS Manual"]. The NATOPS Manual for a particular aircraft was described as the "bible" for operating that plane. Tr. 661-62.
The plaintiff points out that, in the case of engine fire, one of the steps the NATOPS Manual requires is ejection. NATOPS Manual at p. 5-5. She suggests that the pilot's and bombardier/navigator's ejections indicate that the plane was on fire and that the pilot behaved properly. However, ejection is listed as the tenth recommended step in the case of engine fire. Id. at pp. 5-5 to 5-6. When the fire warning light is lit, the pilot should, among other things, place the engines on maximum thrust, jettison external stores, climb with the wings level, jettison wing and fuselage fuel and then shut down the affected engine. If fire indications are then positive after these steps are completed, the Manual requires ejection. Id. In case of a fire, the NATOPS Manual states, "[i]t is imperative that the pilot fly straight ahead, attempting no turns (terrain permitting) until reaching a safe altitude and air speed." Id. at p. 5-5. The Manual also instructs pilots that the A-6E's fire warning light is reliable. Id.
Commander Meister testified that, if Lt. Hoban had received a fire warning light during his takeoff, he violated the NATOPS emergency procedures. Tr. 791. He stated that the first thing the pilot should have done was to roll the wings level. Id. This procedure and the others previously mentioned are called boldfaced procedures because of their emphasis in the Manual; they must be memorized by the pilots. Tr. 792.
In this case, Lt. Hoban reduced the plane's power on both engines to 70 percent, rather than placing both engines at maximum thrust as required by the Manual. Tr. 792-96. He did not jettison the external stores, place the plane in a wingslevel configuration or perform any of the first nine procedures called for in the Manual.[3] Tr. 793-99. Commander Meister *1137 stated that all these procedures are to be done before the pilot determines if the fire indications are positive and ejects. Tr. 800.
Capt. Ferguson, the expert pilot witness, agreed that Lt. Hoban departed from proper procedures. Tr. 823. He stated that the aircraft's angle of bank was so extreme that it was technically considered acrobatic flight, which is prohibited in a controlled zone such as the Oceana runway. Id. He testified that the low transition violated both Oceana course rules and the squadron's standard operating procedures and that the flaps and slats were improperly retracted during the maneuver. Tr. 825.
Capt. Ferguson testified that the presence of a fire in one engine, either before or during the turn, would not change his opinion that pilot error caused the accident. Tr. 830-33. He stated that the plane was capable of flying on one engine and that the loss of the right engine would not cause a properly flown plane to bank right. Tr. 831. Capt. Ferguson testified that, if an engine fire occurs during a turn, the pilot should roll the plane level and continue upward flight with maximum thrust. Tr. 832-33. In the case of fire, he stated, ejection is proper only when the other procedures outlined in the NATOPS Manual are followed first and fire indications remain positive. Tr. 846.
Capt. Ferguson testified that a pilot's actions should be the same whether there is a fire warning light or some other positive indication of fire such as smoke. Tr. 844-45. He also stated that A-6 pilots receive extensive training in emergency procedures and aerodynamics. Tr. 834-36.
The plaintiff offered no evidence to contradict the defendant's evidence that Lt. Hoban violated course rules, NATOPS procedures and proper piloting standards. Even if a fire occurred on the aircraft before the crash, the uncontroverted evidence shows that the pilot's errors at least contributed to, if not caused, the accident. The defendant would therefore be entitled to a directed verdict on the negligence count, based on Lt. Hoban's contributory negligence.
In Virginia, assumption of the risk is a defense to claims for both negligence and breach of implied warranty. See Lust v. Clark Equip. Co., 792 F.2d 436, 439 (4th Cir.1986) (involving breach of warranty); McDowall & Wood, Inc. v. Kilby, 211 Va. 476, 478, 178 S.E.2d 497 (1971) (involving negligence). Lust involved a consumer who was injured when he attempted to repair a loader machine by inserting his hand between the frame of the loader and its lift cylinder. There was evidence that the plaintiff knew that the machine's lift arm could come down and injure him. Lust, 792 F.2d at 440. It was not necessary that the plaintiff have known that the lift arm was about to malfunction and in what manner, as long as he was aware that a possibility of malfunction existed and that he was subjecting himself to possible danger. Because the evidence about the plaintiff's knowledge of the risk was contradictory, the court held that the issue of assumption of the risk was one for the jury. Id.
In this case, the uncontradicted evidence showed that Lt. Hoban was aware of the potential of malfunctions and other emergencies that could occur in an aircraft but, by making a low transition, "placed his aircraft in a position which allowed him no margin for error." JAG Report 28 (endorsement of B.K. McDanel, Commander, Medium Attack Wing One, NAS Oceana). Given his extensive training in emergency procedures, Lt. Hoban was certainly aware *1138 of the risk that some type of malfunction or other problem could occur in the aircraft. However, he undertook a maneuver that left him no room to properly respond to any potential malfunction. Moreover, Lt. Hoban had previously been disciplined for making a low transition during his training at NAS Pensacola and was certainly on notice of the dangers of such a maneuver. Tr. 680; JAG Report 23.
As in the Lust case, there is evidence that Lt. Hoban knew of the possibility of a malfunction and placed himself in a position that subjected him to the risk of harm associated with a malfunction. Unlike Lust, however, the defendant's evidence that Lt. Hoban assumed the risk is uncontroverted, and no jury question exists. Assumption of the risk is a bar to recovery on claims of both negligence and breach of warranty, even if a defect is proved. Accordingly, the defendant is entitled to a directed verdict on this basis as well.
IV. Conclusion
For the reasons discussed above, the defendant's Motion for a Directed Verdict is GRANTED, and this case is DISMISSED.
IT IS SO ORDERED.
NOTES
[1] As will be discussed more fully below, the Court expressed considerable doubt about Dr. Ryder's qualifications to testify as an expert in this case but permitted him to testify in limited areas in order to fully develop the record. Tr. 324-35.
[2] The parties stipulated at trial that, after performing its engineering investigation, the Navy destroyed the plane's engine. Various other components of the aircraft were retained and available to the plaintiff. Tr. 483.
[3] The plaintiff points out that the engineering investigation found that the right speed drive switch and the right engine fuel master switch were in the off position. JAG Report 17. She argues that this is conclusive proof that Lt. Hoban shut down the engine and, therefore, that the engine was on fire. Commander Meister testified that the position of the switches is contradicted by other, strong evidence that both engines were operating at 70 percent power at the time of impact. Tr. 764. Although he described these findings as anomalous, id. at 765, he concluded in his report that the switches positions were likely caused by the impact. This view is confirmed by the fact that there was no evidence that Lt. Hoban jettisoned his external stores, shut off the bleed air isolation valves or performed any of the six NATOPS-prescribed procedures that are to be followed before an engine is to be shut down. See NATOPS Manual at pp. 5-5 to 5-6. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584591/ | 641 So. 2d 489 (1994)
Rodney Pierre LOWERY, Appellant,
v.
STATE of Florida, Appellee.
No. 93-2447.
District Court of Appeal of Florida, Fifth District.
August 19, 1994.
James B. Gibson, Public Defender, and Kenneth Witts, Asst. Public Defender, Daytona Beach, for appellant.
Robert A. Butterworth, Atty. Gen., Tallahassee, and Belle B. Turner, Asst. Atty. Gen., Daytona Beach, for appellee.
PETERSON, Judge.
Rodney Pierre Lowery appeals his conviction of aggravated child abuse, a second degree felony. We affirm.
Lowery and his wife allowed the seven year old boy who was punished in this case, along with the boy's mother and sisters, to reside in their home when the boy's father died. The mother authorized Lowery to discipline her children when she was present.
The boy misbehaved at school and was disrespectful to his teacher. Consequently, Lowery punished the boy in the presence of the residents of his home by striking him on the thigh, leg and buttock areas at least three times with an electrical extension cord. This form of discipline caused multiple linear lesions defined by a physician who testified at trial as bruise marks, blue in color, configured in the shape of straight lines and hoops. The physician observed at least 15 of these marks and opined that the hoop marks could have been inflicted by any object hooked over into a loop, such as an extension cord, a switch or a narrow belt. Lesions overlying the buttocks were scabbed over and the physician believed that it was more likely than not that blood was drawn as a result of the strike of an object. Two keloids were also observed that were from injuries predating the lesions. The physician testified that keloids are scars formed in the healing process when tissue "heap[s] up and pile[s] on itself producing a lump ... in place of a scar." When asked whether the lesions would lead to permanent scarring or permanent disfigurement, the physician responded:
Since this child has established himself as a keloid former, that's a child who tends to develop keloids in response to a scar, in response to an injury, some of the lesions will leave permanent marks such as those pointed out in [one of the state's exhibits].
*490 Lowery contends that the trial court erred by denying his motion for judgment of acquittal and cites Moakley v. State, 547 So. 2d 1246 (Fla. 5th DCA 1989) in support of his position. In Moakley, the defendant struck his eight year old daughter with the leather portion of his belt to discipline her for her behavioral problem. When an HRS worker responded to the defendant's own call, the child was found crying next to a wall with her pants wet. Upon examination, bruise marks were found on her buttocks and right hip. At trial, no evidence was presented that the child experienced great bodily harm, permanent disability or permanent disfigurement. The precise question addressed by the court was stated to be "one concerning when the boundary between permissible punishment or discipline is crossed and the area of maliciousness is entered." After commenting that "the law should be quite careful about intrusion into family relationships and must tread most lightly in borderline cases," this court reversed the conviction because the facts were borderline and because the state failed to establish that Moakley crossed the line between permissible and impermissible punishment.
The evidence in the instant case, unlike the evidence in Moakley, indicates that the seven year old boy suffered a permanent disfigurement because of the disciplinary strikes applied by Lowery. The evidence also indicates that blood was likely drawn as a result of the strikes. This evidence removes the case from the borderline situation present in Moakley and removes it from a situation in which the trial court could grant Lowery's motion for acquittal. The trial court properly followed the procedure set forth in Kama v. State, 507 So. 2d 154 (Fla. 1st DCA 1987):
It is not possible to legislatively lay down any fixed parameters of "reasonable discipline" of a child. Whether in any particular case the punishment inflicted was permissible or excessive must necessarily depend on the age, condition, and disposition of the child, as well as the attendant circumstances. This determination must be made by the jury under proper instruction.
Id. at 158-159. The action taken by Lowery was properly submitted to the jury which determined that Lowery crossed the line between permissible discipline and impermissible punishment.
The appellant's conviction and sentence are affirmed.
AFFIRMED.
GRIFFIN and DIAMANTIS, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584603/ | 641 So. 2d 66 (1994)
Calvin WILEY, Petitioner,
v.
Carrie Linn Young ROOF, Respondent.
No. 82412.
Supreme Court of Florida.
June 23, 1994.
Rehearing Denied August 25, 1994.
Martin Errol Rice of Martin Errol Rice, P.A., St. Petersburg, and Joryn Jenkins, Tampa, for petitioner.
Barry A. Cohen and Christopher P. Jayson of Barry A. Cohen, P.A., Tampa, for respondent.
Peggy Fisher of Geller, Geller, Burton & Garfinkel, Dania, and Sally Richardson of Shutts and Bowen, and Barbara W. Green, Miami, amici curiae for Academy of Florida Trial Lawyers, Florida Ass'n for Women Lawyers and NOW Legal Defense and Education Fund.
James E. Tribble of Blackwell & Walker, P.A., Miami, amicus curiae for Blackwell & Walker, P.A.
McDONALD, Senior Justice.
We review Roof v. Wiley, 622 So. 2d 1018 (Fla. 2d DCA 1993), in which the district court held that chapter 92-102, section 2, Laws of Florida, revived a previously barred right to commence an action for damages based on intentional abuse or incest. We have jurisdiction pursuant to article V, section 3(b)(3) of the Florida Constitution. We quash the district court's decision.
Carrie Linn Young Roof filed her initial complaint on April 18, 1991, and an amended complaint on October 9, 1991, against Calvin Wiley (her grandfather), Wilma Wiley (her grandmother), C.W. Young (her uncle), Thomas Edward Young (her father) and Toni Young (her stepmother). In the first count, Roof alleged that her grandfather had sexually *67 abused her on or about March 15, 1973, when she was fifteen years old. In the second count, Roof alleged that her grandmother, uncle, and father had knowledge of the abuse and failed to report it, prevented her from reporting it to the lawful authorities, and refused to assist her in obtaining medical care. In the third count, Roof alleged that her father was negligent in his failure to protect her, and in the fourth count, she alleged that all of the named defendants conspired to prevent her from reporting the alleged abuse.
The trial court dismissed the amended complaint because the statute of limitations barred Roof's cause of action pursuant to sections 95.011 and 95.11(3)(o), Florida Statutes (1991).[1] While the case was pending before the Second District Court of Appeal, the Florida Legislature, in chapter 92-102, Laws of Florida, amended section 95.11 to read:
Actions other than for recovery of real property shall be commenced as follows:
... .
(3) WITHIN FOUR YEARS.
... .
(o) An action for assault, battery, false arrest, malicious prosecution, malicious interference, false imprisonment, or any other intentional tort, except as provided in subsections (4), (5), and (7).
... .
(7) FOR INTENTIONAL TORTS BASED ON ABUSE. An action founded on alleged abuse, as defined in s. 39.01 or s. 415.102, or incest, as defined in s. 826.04, may be commenced at any time within 7 years after the age of majority, or within 4 years after the injured person leaves the dependency of the abuser, or within 4 years from the time of discovery by the injured party of both the injury and the causal relationship between the injury and the abuse, whichever occurs later.
§ 95.11, Fla. Stat. (1993). Section 2 of chapter 92-102 provides:
Notwithstanding any other provision of law, a plaintiff whose abuse or incest claim is barred under section 1 of this act has 4 years from the effective date of this act to commence an action for damages.
As pointed out by the amici curiae briefs submitted in this case, the torts of incest and abuse involve a myriad of social, psychological, and legal variables that often prevent a person, particularly a minor, from immediately reporting these types of offenses. The legislature may appropriately determine and modify the period of time for filing actions in abuse and incest cases. This does not mean, however, that it may revive a cause of action that has already been barred by the expiration of the pre-existing statute of limitations.
Roof argues that the revival of a previously time-barred cause of action does not violate Wiley's constitutional rights. Roof relies on Campbell v. Holt, 115 U.S. 620, 6 S. Ct. 209, 29 L. Ed. 483 (1885), in which the Court considered whether the expiration of the statute of limitations created a constitutionally protected right to have a creditor's claim barred. The Court noted that in an action to recover real or personal property, removal of the bar of the statute of limitations deprives a person of his property without due process of law because the legal title and real ownership of the property have already been transferred. Id. at 628, 6 S.Ct. at 213. In a divided opinion, Campbell further opined, *68 however, that in actions involving a violation of an implied contract to pay money, the debtor does not have a vested right to be released from the debt upon the expiration of the statute of limitations. Id. "No man promises to pay money with any view to being released from that obligation by lapse of time. It violates no right of his, therefore, when the legislature says time shall be no bar, though such was the law when the contract was made." Id. at 628, 6 S.Ct. at 213.
In Chase Securities Corporation v. Donaldson, 325 U.S. 304, 65 S. Ct. 1137, 89 L. Ed. 1628 (1945), the Court revisited the principles set forth in Campbell. Chase Securities adopted the view in Campbell that "statutes of limitation go to matters of remedy, not to destruction of fundamental rights." Id. at 314, 65 S.Ct. at 1142. Chase held that, even after the statute of limitations has barred the action, the Fourteenth Amendment is not violated when the legislature repeals or extends a statute of limitations, restores the plaintiff with a remedy, and divests the defendant from the benefits of the statutory bar. Chase also noted that the states may interpret their constitutions differently. Regardless of whether the statute of limitations pertains to a right or a remedy, retroactively applying a new statute of limitations robs both plaintiffs and defendants of the reliability and predictability of the law.
The immunity from suit which arises by operation of the statute of limitations is as valuable a right as the right to bring the suit itself... . Statutes of limitation are not only calculated for the repose and peace of society, but to provide against the evils that arise from loss of evidence and the failing memory of witnesses... .
Remedies are the life of rights, and are equally protected by the Constitution. Deprivation of a remedy is equivalent to a deprivation of the right which it is intended to vindicate, unless another remedy exists or is substituted for that which is taken away.
Campbell, 115 U.S. at 631, 6 S.Ct. at 215 (Bradley, J., dissenting). The law does not prioritize rights over remedies. Once the defense of the statute of limitations has accrued, it is protected as a property interest just as the plaintiff's right to commence an action is a valid and protected property interest. See Starnes v. Cayouette, 244 Va. 202, 419 S.E.2d 669 (1992) (statute authorizing tort action for sexual abuse occurring during infancy of plaintiff violated the due process right defendant had acquired in limitations defense).
The district court cited Walter Denson & Son v. Nelson, 88 So. 2d 120 (Fla. 1956), for the proposition that the legislature has the power to revive a claim previously barred by a statute of limitations if the language of the statute clearly expresses such an intent. However, Walter Denson includes a caveat not mentioned in the district court opinion: "The Legislature has the power to increase a prescribed period of limitation and to make it applicable to existing causes of action provided the change in the law is effective before the cause of action is extinguished by the force of a pre-existing statute." Id. at 122 (emphasis supplied).[2] In Corbett v. General Engineering and Machinery Co., 160 Fla. 879, 37 So. 2d 161 (1948), a worker's compensation case, we also determined that "a person has no vested right in the running of a statute of limitations unless it has completely run and barred the action. Before the action is barred by the statute, the Legislature has absolute power to amend the statute and alter the period of limitations prescribed therein... ." Id., 37 So.2d at 162 (quoting Davis & McMillan v. Industrial Accident Commission, 198 Cal. 631, 246 P. 1046, 1047 (1926)). Florida's statute of limitations, section 95.011, bars all action unless commenced within designated times. Once barred, the legislature cannot subsequently declare that "we change our mind on this type of claim" and then resurrect it. Once an action is barred, a property right to be free from a claim has accrued. Wiley's property interest *69 to be free from a claim of damages accrued long before Roof's lawsuit was filed.
We find that chapter 92-102, section 2, deprives Wiley of a constitutionally protected property interest and is violative of article I, section 9 of the Florida Constitution. Therefore, we hold that provision invalid as to a previously barred action and quash the decision below.
It is so ordered.
GRIMES, C.J., and OVERTON, SHAW, KOGAN and HARDING, JJ., concur.
NOTES
[1] Roof's complaint was filed more than eighteen years after the last instance of alleged abuse. Section 95.011, Florida Statutes (1991), provides:
A civil action or proceeding, called "action" in this chapter, including one brought by the state, a public officer, a political subdivision of the state, a municipality, a public corporation or body corporate, or any agency or officer of any of them, or any other governmental authority, shall be barred unless begun within the time prescribed in this chapter or, if a different time is prescribed elsewhere in these statutes, within the time prescribed elsewhere.
Subsection 95.11(3)(o), Florida Statutes (1991), provides:
Actions other than for recovery of real property shall be commenced as follows:
... .
(3) WITHIN FOUR YEARS.
... .
(o) An action for assault, battery, false arrest, malicious prosecution, malicious interference, false imprisonment, or any other intentional tort, except as provided in subsections (4) and (5).
[2] As we mentioned in Firestone Tire & Rubber Company v. Acosta, 612 So. 2d 1361 (Fla. 1992), the statute of repose and the statute of limitations are analogous. Firestone held that the repeal of the statute of repose did not reestablish a cause of action that had been previously extinguished. We find Firestone instructive in our resolution of the instant case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2695488/ | [Cite as Yarbrough v. Ohio Dept. of Transp., Dist. 12, 2011-Ohio-1115.]
Court of Claims of Ohio
The Ohio Judicial Center
65 South Front Street, Third Floor
Columbus, OH 43215
614.387.9800 or 1.800.824.8263
www.cco.state.oh.us
GEORGE H. YARBROUGH
Plaintiff
v.
OHIO DEPARTMENT OF TRANSPORTATION, DISTRICT 12
Defendant
Case No. 2010-08942-AD
Deputy Clerk Daniel R. Borchert
MEMORANDUM DECISION
{¶ 1} Plaintiff, George H. Yarbrough, filed this action against defendant,
Department of Transportation (ODOT), contending the tire on his 2009 Ford Taurus was
damaged as a proximate cause of negligence on the part of ODOT in maintaining a
hazardous condition on Interstate 480 in Cuyahoga County. Specifically, plaintiff
related: “I was driving westbound on Interstate 480, near Transportation Blvd., at
approximately 11:00 AM on August 1, 2009, when a vehicle, slightly ahead of me and to
my left, struck an object on the road” propelling the object into the path of the 2009 Ford
Taurus and causing damage to the tire when the vehicle ran over it. Plaintiff described
the damage-causing object as a “wheel cover.” In his complaint, plaintiff requested
damage recovery in the amount of $124.94, the cost of a replacement tire. The filing
fee was paid.
{¶ 2} Defendant conducted an investigation and determined that the damage-
causing incident occurred at state milepost 21.70 or county milepost 19.55 on Interstate
480 in Cuyahoga County. Defendant asserts that it had no “notice of the subject
condition prior to” the damage-causing incident. Defendant, “believes that the debris
existed in that location for only a relatively short amount of time before plaintiff’s
incident.” Defendant asserted that plaintiff failed to produce any evidence to establish
the length of time the debris condition existed prior to 11:00 a.m. on August 1, 2009.
Defendant also asserted that plaintiff did not offer any evidence to show the damage-
causing debris condition was attributable to any conduct on the part of ODOT.
{¶ 3} Defendant pointed out that defendant’s “Cuyahoga County Manager
conducts roadway inspections on all state roadways within the county on a routine
basis, at least one to two times a month.” Apparently no debris was discovered at state
milepost 21.70 on Interstate 480 the last time that specific section of roadway was
inspected prior to August 1, 2009. Defendant reviewed a six-month maintenance
jurisdiction history of the area in question and found five litter patrols were performed,
the last being on July 30, 2009. Also, defendant’s records show that sixteen litter pick-
ups were performed in the area with the last occurring on June 30, 2009 and according
to defendant, any debris found would have been picked up.
{¶ 4} For plaintiff to prevail on a claim of negligence, he must prove, by a
preponderance of the evidence, that defendant owed him a duty, that it breached that
duty, and that the breach proximately caused his injuries. Armstrong v. Best Buy
Company, Inc., 99 Ohio St. 3d 79, 2003-Ohio-2573,¶8 citing Menifee v. Ohio Welding
Products, Inc. (1984), 15 Ohio St. 3d 75, 77, 15 OBR 179, 472 N.E. 2d 707. Plaintiff
has the burden of proving, by a preponderance of the evidence, that he suffered a loss
and that this loss was proximately caused by defendant’s negligence. Barnum v. Ohio
State University (1977), 76-0368-AD. However, “[i]t is the duty of a party on whom the
burden of proof rests to produce evidence which furnishes a reasonable basis for
sustaining his claim. If the evidence so produced furnishes only a basis for a choice
among different possibilities as to any issue in the case, he fails to sustain such
burden.” Paragraph three of the syllabus in Steven v. Indus. Comm. (1945), 145 Ohio
St. 198, 30 O.O. 415, 61 N.E. 2d 198, approved and followed.
{¶ 5} Defendant has the duty to maintain its highways in a reasonably safe
condition for the motoring public. Knickel v. Ohio Department of Transportation (1976),
49 Ohio App. 2d 335, 3 O.O. 3d 413, 361 N.E. 2d 486. However, defendant is not an
insurer of the safety of its highways. See Kniskern v. Township of Somerford (1996),
112 Ohio App. 3d 189, 678 N.E. 2d 273; Rhodus v. Ohio Dept. of Transp. (1990), 67
Ohio App. 3d 723, 588 N.E. 2d 864.
{¶ 6} In order to prove a breach of the duty to maintain the highways, plaintiff
must prove, by a preponderance of the evidence, that defendant had actual or
constructive notice of the precise condition or defect alleged to have caused the
accident. McClellan v. ODOT (1986), 34 Ohio App. 3d 247, 517 N.E. 2d 1388.
Defendant is only liable for roadway conditions of which it has notice but fails to
reasonably correct. Bussard v. Dept. of Transp. (1986), 31 Ohio Misc. 2d 1, 31 OBR
64, 507 N.E. 2d 1179.
{¶ 7} Defendant professed liability cannot be established when requisite notice
of the damage-causing conditions cannot be proven. Generally, defendant is only liable
for roadway conditions of which it has notice, but fails to correct. Bussard. However,
proof of notice of a dangerous condition is not necessary when defendant’s own agents
actively caused such condition. See Bello v. City of Cleveland (1922), 106 Ohio St. 94,
138 N.E. 526, at paragraph one of the syllabus; Sexton v. Ohio Department of
Transportation (1996), 94-13861. Plaintiff has failed to produce any evidence to prove
that his property damage was caused by a defective condition created by ODOT or that
defendant knew about the particular wheel cover debris condition prior to 11:00 a.m. on
August 1, 2009.
{¶ 8} Ordinarily, to recover in any suit involving injury proximately caused by
roadway conditions including wheel cover debris, plaintiff must proof that either: 1)
defendant had actual or constructive notice of the debris condition and failed to respond
in a reasonable time or responded in a negligent manner, or 2) that defendant, in a
general sense, maintains its highways negligently. Denis v. Department of
Transportation (1976), 75-0287-AD. Plaintiff has not provided any evidence to prove
that ODOT had actual notice of the damage-causing condition. Therefore, in order to
recover plaintiff must offer proof of defendant’s constructive notice of the condition as
evidence to establish negligent maintenance.
{¶ 9} “[C]onstructive notice is that which the law regards as sufficient to give
notice and is regarded as a substitute for actual notice or knowledge. In re Estate of
Fahle (1950), 90 Ohio App. 195, 197-198, 48 O.O. 231, 105 N.E. 2d 429. “A finding of
constructive notice is a determination the court must make on the facts of each case not
simply by applying a pre-set time standard for the discovery of certain road hazards.”
Bussard, at 4. “Obviously, the requisite length of time sufficient to constitute
constructive notice varies with each specific situation.” Danko v. Ohio Dept. of Transp.
(Feb. 4, 1993), Franklin App. 92AP-1183. In order for there to be a finding of
constructive notice, plaintiff must prove, by a preponderance of the evidence, that
sufficient time has elapsed after the dangerous condition appears, so that under the
circumstances defendant should have acquired knowledge of its existence. Guiher v.
Dept. of Transportation (1978), 78-0126-AD; Gelarden v. Ohio Dept. of Transp., Dist. 4,
Ct. of Cl. No. 2007-02521-AD, 2007-Ohio-3047.
{¶ 10} Plaintiff has not produced any evidence to indicate the length of time that
the wheel cover debris was present on the roadway prior to the incident forming the
basis of this claim. Plaintiff has not shown that defendant had actual notice of the
condition. Also, the trier of fact is precluded from making an inference of defendant’s
constructive notice, unless evidence is presented in respect to the time that the wheel
cover debris appeared on the roadway. Spires v. Ohio Highway Department (1988), 61
Ohio Misc. 2d 262, 577 N.E. 2d 458. There is no indication that defendant had
constructive notice of the wheel cover debris on the roadway.
{¶ 11} Evidence in the instant action is conclusive to show that plaintiff’s damage
was caused by an act of an unidentified third party. Defendant has denied liability
based on the particular premise that it had no duty to control the conduct of a third
person except in cases where a special relationship exists between defendant and
either plaintiff or the person whose conducts needs to be controlled. See Federal Steel
& Wire Corp. v. Ruhlin Const. Co. (1989), 45 Ohio St. 3d 171, 543 N.E. 2d 769.
However, defendant may still bear liability if it can be established if some act or
omission on the part of ODOT was the proximate cause of plaintiff’s injury. This court,
as trier of fact, determines questions of proximate causation. Shinaver v. Szymanski
(1984), 14 Ohio St. 3d 51, 14 OBR 446, 471 N.E. 2d 477.
{¶ 12} “If an injury is the natural and probable consequence of a negligent act
and it is such as should have been foreseen in the light of all the attending
circumstances, the injury is then the proximate result of the negligence. It is not
necessary that the defendant should have anticipated the particular injury. It is
sufficient that his act is likely to result in an injury to someone.” Cascone v. Herb Kay
Co. (1983), 6 Ohio St. 3d 155, 160, 6 OBR 209, 451 N.E. 2d 815, quoting Neff Lumber
Co. v. First National Bank of St. Clairsville, Admr. (1930), 122 Ohio St. 302, 309, 171
N.E. 327.
{¶ 13} Plaintiff has not produced any evidence to infer that defendant, in a
general sense, maintains its highways negligently or that defendant’s acts caused the
defective condition. Herlihy v. Ohio Department of Transportation (1999), 99-07011-AD.
Defendant submitted evidence showing that ODOT personnel were periodically
performing work activities on the particular section of Interstate 480 where plaintiff’s
damage incident occurred. Plaintiff has failed to provide sufficient evidence to prove
that defendant maintained a hazardous condition on the roadway which was the
substantial or sole cause of his property damage. Plaintiff has failed to prove, by a
preponderance of the evidence, that any ODOT roadway maintenance activity created a
nuisance. Plaintiff has not submitted evidence to prove that a negligent act or omission
on the part of defendant caused the damage to his property. Hall v. Ohio Department of
Transportation (2000), 99-12963-AD.
Court of Claims of Ohio
The Ohio Judicial Center
65 South Front Street, Third Floor
Columbus, OH 43215
614.387.9800 or 1.800.824.8263
www.cco.state.oh.us
GEORGE H. YARBROUGH
Plaintiff
v.
OHIO DEPARTMENT OF TRANSPORTATION, DISTRICT 12
Defendant
Case No. 2010-08942-AD
Deputy Clerk Daniel R. Borchert
ENTRY OF ADMINISTRATIVE DETERMINATION
Having considered all the evidence in the claim file and, for the reasons set forth
in the memorandum decision filed concurrently herewith, judgment is rendered in favor
of defendant. Court costs are assessed against plaintiff.
________________________________
DANIEL R. BORCHERT
Deputy Clerk
Entry cc:
George H. Yarbrough Jolene M. Molitoris, Director
19015 Van Aken Blvd. Department of Transportation
Apt. 406 1980 West Broad Street
Shaker Hts., Ohio 44122-3504 Columbus, Ohio 43223
RDK/laa
12/1
Filed 1/11/11
Sent to S.C. reporter 3/4/11 | 01-03-2023 | 08-02-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1013685/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
In re: KIMBERLY DOANE, a/k/a
Kimberly Harig,
Debtor.
EDUCATIONAL CREDIT MANAGEMENT
CORPORATION,
Plaintiff-Appellee,
v. No. 03-2458
KIMBERLY DOANE, a/k/a Kimberly
Harig,
Defendant-Appellant,
and
REBECCA CONNELLY; U.S. TRUSTEE,
Trustees.
Appeal from the United States District Court
for the Western District of Virginia, at Roanoke.
Samuel G. Wilson, Chief District Judge.
(CA-03-84-7; BK-96-1907-RKR-7)
Submitted: May 28, 2004
Decided: June 28, 2004
Before WIDENER and WILLIAMS, Circuit Judges, and
Robert R. BEEZER, Senior Circuit Judge of the
United States Court of Appeals for the Ninth Circuit,
sitting by designation.
Affirmed by unpublished per curiam opinion.
2 IN RE: DOANE
COUNSEL
Gary M. Bowman, Roanoke, Virginia, for Appellant. Julie K. Swed-
back, St. Paul, Minnesota, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Kimberly Doane appeals a district court order issued pursuant to
Federal Rule of Civil Procedure 60(b) (West 1992) relieving Educa-
tional Credit Management Corporation (ECMC) from a bankruptcy
court discharge order that purported to discharge Doane’s student
loans. Finding no error, we affirm.
I.
On June 14, 1996, Doane filed for bankruptcy protection from her
creditors. At that time, Doane owed a balance on student loans owned
by ECMC. Doane did not seek to have her student loans discharged
during the bankruptcy, but she did list ECMC as a creditor in her
bankruptcy petition, and ECMC filed a proof of claim. Doane’s bank-
ruptcy plan did not purport to affect Doane’s debt to ECMC in any
way.
Doane made the payments required of her under the bankruptcy
plan, and on September 10, 1999, the bankruptcy court discharged
Doane’s debts. For reasons that are not entirely clear, the bankruptcy
court issued a discharge order that purported to discharge Doane’s
student loans, even though such discharge was neither sought by
Doane nor authorized by the bankruptcy code.1 See 11 U.S.C.A.
1
The bankruptcy court appears to have used an outdated form dis-
charge order. The form discharge order that the bankruptcy court used
IN RE: DOANE 3
§§ 523(a)(8), 1328(a)(2) (West 1993 & Supp. 2004) (prohibiting the
discharge of student loans in bankruptcy unless the debtor proves in
an adversary proceeding that excepting the debt from discharge would
impose an undue hardship).
Sometime after the discharge order became final, ECMC attempted
to collect the balance of Doane’s student loans. Doane then filed an
action in the bankruptcy court alleging that ECMC’s collection activi-
ties violated the discharge order. The bankruptcy court agreed and
enjoined ECMC from attempting to collect the debt, rejecting
ECMC’s contention that the discharge of Doane’s debt to ECMC vio-
lated due process. ECMC appealed to the United States District Court
for the Western District of Virginia. The district court relieved ECMC
from the discharge order pursuant to Federal Rule of Civil Procedure
60(b), finding that the discharge of Doane’s debt to ECMC violated
due process because ECMC had not received adequate notice in the
form of a properly initiated adversary proceeding. Doane now
appeals.
II.
When a district court acts in its capacity as a bankruptcy appellate
court, we review the bankruptcy court’s decision independently. See
Kielisch v. Educ. Credit Mgmt. Corp. (In re Kielisch), 258 F.3d 315,
319 (4th Cir. 2001). We review the bankruptcy court’s factual find-
ings for clear error, and we review its legal conclusions de novo. Id.
was created at a time when the strictures applicable to the discharge of
student loans were set to expire on October 1, 1996, pursuant to a sunset
provision in the legislation creating the strictures. See Pub. L. No. 101-
508 §§ 3007(b)(1), 3008. The form order provided that "the debtor [wa]s
discharged from all debts . . . except any debt . . . for a student loan . . .
in which discharge is granted prior to October 1, 1996." (J.A. at 5.) In
1992, Congress repealed the sunset provision, and the strictures became
permanent. See Pub. L. No. 102-325 § 1558. When the sunset provision
was repealed, a new form discharge order without a date restriction on
the student loan exception was created, but the bankruptcy court here
appears to have erroneously used the old order.
4 IN RE: DOANE
A party may be relieved from an adverse judgment if "the judg-
ment is void." Fed. R. Civ. P. 60(b)(4). "[A] judgment is not void
merely because it is erroneous. It is void only if the court that ren-
dered it lacked jurisdiction of the subject matter, or of the parties, or
if it acted in a manner inconsistent with due process of law." Eber-
hardt v. Integrated Design & Constr., Inc., 167 F.3d 861, 871 (4th
Cir. 1999) (internal quotation marks omitted). "[W]hether [a dis-
charge] violate[s] a creditor’s due process rights [is] [a] legal ques-
tion[ ] we review de novo." Banks v. Sallie Mae Servicing Corp. (In
re Banks), 299 F.3d 296, 300 (4th Cir. 2002).
We have held that, in the bankruptcy context, "due process
entitle[s] the creditor to receive notice . . . as provided by the Bank-
ruptcy Rules." Banks, 299 F.3d at 302. "The Bankruptcy Code and
Rules require Debtors to bring an adversary proceeding to determine
the dischargeability of their student loans." Id. at 300; Fed. R. Bankr.
P. 7001(6) (West Supp. 2004). "Student loans are nondischargeable
in bankruptcy unless the Debtor can prove excepting the debt from
discharge would impose an undue hardship." Banks, 299 F.3d at 300.
When a student loan debtor "fail[s] to initiate an adversary proceeding
to establish undue hardship[,] . . . [the creditor] d[oes] not receive the
requisite notice of . . . intent to discharge . . . [the] student loan debts.
For lack of adequate notice, . . . discharge orders discharging the
[debt] are not entitled to preclusive effect." Id. at 302-03 (footnote
omitted).
In this case, it is undisputed that Doane did not initiate an adver-
sary proceeding to establish undue hardship. Thus, ECMC did not
receive adequate notice, and the bankruptcy court’s discharge order
violated ECMC’s due process rights. Id. at 303. Because the bank-
ruptcy court’s discharge order is "inconsistent with due process of
law," the order is void as to ECMC, and the district court properly
relieved ECMC from the order. Eberhardt, 167 F.3d at 871.
III.
We agree with the district court that ECMC did not receive ade-
quate notice of intent to discharge and that the bankruptcy court order
discharging Doane’s student loans is therefore void. Accordingly, we
IN RE: DOANE 5
affirm the judgment of the district court relieving ECMC from the
effect of the erroneous discharge order.
AFFIRMED | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8304546/ | PORTRUM, J.
On the 31st day of August and the 2nd day of
September, 1925, John A. Taylor purchaser the stock of goods and fixtures of the Buladeen Supply Company, a partnership composed •of D. R. Grindstaff, S. R. Estepp, and Jake Shoun, located on Stony Creek, in Carter County, Tennessee, for the purchase price of $2578.52, evidenced by twenty-five $100 notes, and one note of $78.52, payable consecutively on the first of each month, and to secure the payment an attempt was made to retain the title in the seller under a conditional sales contract. But as additional security Taylor and wife executed a trust deed upon their home, securing the twenty-six notes. The purchaser went into possession and began to carry on a retail mercantile business.
On the 18th day of February,. 1926, the purchaser, John A. Taylor, procured, or continued fire insurance covering the stock of goods and fixtures, by insuring his merchandise in the sum of $2000, and his fixtures in the sum of $150; this coverage was carried by two companies, each issuing a policy in the sum of $1075.
On the night of March 8, 1926, the store and all its contents were destroyed by fire. The insured filed proof of loss, and upon request filed an additional and supplemental proof of loss; thereafter he was called by the attorney representing the insurance companies and examined under oath in reference to his method of bookkeeping, for the purpose of determining if the iron safe clause of the policies had been violated. From this evidence the companies denied liability upon the policies, and expressed their intention to resist payment of the claims, for the reason the insured had not complied with the iron safe clause of the policies.
In the meantime the insured had assigned his claims under the policies to his creditors, the former partners of the Buladeen Supply Company, and the holders of the unpaid $100 purchase money note series. His general creditors learning of this had filed an involuntary petition in bankruptcy against him, and because of this the secured creditors, and the insured, agreed to set aside the assign*540ment, by making another assignment to Lee F. Miller, Attorney for the insured, as Trustee, to secure the claims of all creditors, named in the assignment, and in this manner and for this purpose “John A. Taylor hereby joins in assigning, selling, delivering and passing to the said Lee F. Miller, Trustee, all their rights, title, claims, interest and equity, of every kind and character, and without exception or reservation, in and to said policies and said insurance contracts, and any proceeds or avails to be derived therefrom, for the purpose and to the end that he, as representing all of the parties hereto, shall negotiate, institute and prosecute claims and demands, or suits, if necessary, against one and both of said insurance companies, for the purpose of collecting the proceeds and avails thereof by law; or, for the purpose of negotiating and consummating compromise or settlement with one or both of said companies, all to the end of securing in the quickest time and way, the maximum amount therefrom; and which trust the said Lee F. Miller hereby accepts without incurring any obligations, whatsoever, excepting to properly account for any funds coming into his hands by the proper pro rata distribution thereof, as hereinafter explained, after making deductions for fees and expenses in connection with the collection of same.”
Then follows the manner of disposition of the proceeds realized on a pro rata basis, and then provides “said net avails thus ratably distributed, or to give the said Taylor proper credit therefor, and to be an extinguishment of the said Taylor’s indebtedness to them to that extent only.” Having thus secured the claims of all creditors, the petition in bankruptcy was dismissed.
The Trustee began negotiations with counsel representing the insurance companies for a settlement of the claim. The companies denied liability because of an alleged violation of the iron safe clause; and particularly this provision of the clause: “ (2) That the insured shall keep a set of books showing a complete record of business transacted, including all purchases and sales both for cash and credit;” but the companies consented to negotiate.
These negotiations v'ere carried on by correspondence; the companies offered to settle on the basis of forty per cent of the claims, and the Trustee and his legal associate then apprehensive of their ability to reduce the claims to judgment because of the failure of the insured to keep a book account of his cash sales, concluded it was advisable to accept the forty per cent offer. (The Trustee states further that he was not aware that the insured had any books in his safe upon which to base a claim of loss.) Having determined to accept the offer of settlement the Trustee communicated with the creditors named in the assignment and with the insured Taylor, for *541the purpose of obtaining their assent to the settlement. The creditors assented and authorized the settlement, but the insured Taylor would not agree to the settlement. These facts were communicated by the Trustee to counsel representing the companies, with the offer on the part of ■ the Trustee to 'make the settlement, notwithstanding the objection of the insured, if the companies would recognize his authority to act independently under his trust agreement. Counsel representing the insurance companies then communicated with the adjuster, who was representing and carrying on the compromise, and stated that the Trustee, Miller, was reliable, and in effect recommended the acceptance of the Trustee's offer to make the compromise independent of the insured. The adjuster writes counsel representing the companies referring to the reliability of the Trustee, and relying on the Trustee’s representation of his power to act independently, accepted the proposition on behalf of the companies with the following provision, namely, that the creditors named in the assignment join with the Trustee in executing the release.to the companies. The Trustee procured the signatures of the creditors and assigned and transmitted to counsel representing the companies the release, to be forwarded to the home offices of the companies, and checks representing the settlements Were turned over to the Trustee, but before he cashed the checks he received a communication from the insured protesting against the settlements, and threatening to hold him personally liable for making the settlements over his objection and protest. The insured called upon the Trustee who then claimed to have first learned that the insured in fact had books in the safe at the time of the fire from which proof of loss could be made, and the Trustee immediately returned the checks with the statement that the compromised agreement was made under a misapprehension of facts.
This suit Was then instituted in the name of the Trustee and the insured against the two insurance companies, to recover upon the two policies of insurance. The bill refers to the-Trustee’s compromised settlement, but alleges it was procured through fraud on the part of the defendant companies. By an amendment this charge of fraud was modified so as to exonerate counsel representing the insurance companies. The bill prays for general relief.
The defendants answered the bill setting up the compromised settlement and relied upon its binding force. The allegations of fraud were denied. But as an alternative the companies defended upon the ground of the violation of the iron safe clause by the insured. The answer was then filed as a cross-bill seeking relief upon the compromised agreement, and asking for a penalty of twenty-five per cent against the insured because of his failure to carry out *542tbe agreement. Tbe cross-bill was answered and “it is denied that tbe minds of all of tbe parties ever met on tbe subject of tbe alleged compromised settlement. . . . It is denied tbat any final settlement was reached by and between all tbe parties, or tbat any fair settlement was ever sought to be reached by tbe defendants. Tbe cross-defendants deny tbat tbe defendants are acting or have acted in good faith in this matter. . . . It is also denied tbat tbe defendants have tendered to tbe complainants any sums whatever in such way and manner as to amount to a legal tender.”
Tbe Chancellor first disposed of tbe issues raised under tbe cross-bill, and held tbat tbe Trustee’s powers were analogous to tbe powers of an agent, and SO' be bad no authority to act over tbe protest of one of bis principals and bind tbe principal. That tbe insured bad such an interest in tbe trust agreement as authorized him to veto tbe action of tbe Trustee, in compromising a claim for a sum which he thought was inadequate. Tbe Chancellor dismissed tbe cross-bill; and upon this holding the companies have assigned error.
We think tbe bolding of tbe Chancellor w!as correct; to approve tbe action of tbe Trustee participated in by the creditors and tbe insurance companies over tbe protest of tbe insured is to approve a constructive fraud. Tbe secured creditors represent a claim of more than $2000, protected by a trust deed upon tbe home of tbe insured, while the general creditors are represented by claims of less than $300. If these creditors can force a settlement of tbe claim against tbe insurance companies for $800, or forty per cent'of tbe face of tbe claim, they may be enabled to collect their debt in full, out of tbe property of tbe insured, and leave him denuded of all assets. If tbe insured can prevent this settlement, and collect the face of tbe policy, be will find himself free of debt with the exception of less than $400, and his home free of encumbrance. At the date of tbe execution of this trust agreement tbe insured was not relieved of one dollar of primary liabilities. Tbe sum realized under agreement was to be applied only‘in partial discharge of tbe liabilities. Tbe Trustee acts for the best interest of all the beneficiaries, and when the Court sees he acts to tbe prejudice of one, bis action will be restrained. Under tbe circumstances of this case tbe insured bad a voice in this settlement, and so long as be is acting in good faith, and for the protection of bis interests his right to act will be recognized.
The primary purpose of this trust agreement was to sequestrate the funds in tbe interest of tbe creditors, and not to denude the insured of bis rights in tbe settlement. At first this purpose was recognized by all parties; tbe Trustee consulted with the creditors and tbe insured, and tbe insurance companies prepared a release *543to be executed by the insured. Later the companies agreed to accept a releáse signed by the creditors and the Trustee, then why was it necessary for the creditors to sign the release if the companies recognized the rights of the Trustee to bind all the parties? And even then the companies made the settlements upon the reliability and representation of the Trustee. The companies had full knowledge of the facts, and under the circumstances as is detailed, the companies had no .right to rely upon the sole authority of the Trustee to act for the insured, they cannot coerce the insured, by such a method. There was no binding compromised agreement consummated; the minds of the parties to be bound never met, and • the pleadings were sufficient.
The Chancellor found as a fact that the iron safe clause had been substantially complied with. He also held that no question was made by the insurance companies as to the three-fourths value clause, and this holding is not questioned by an assignment of error. The court found that on the night of the fire the insured had within his safe three books which contained first the inventory made at the date of the purchase, August 31, 1925; second, the entry of invoices of goods purchased from the date of the sale to the date of the fire; third, and a list of the credit sales during this period. These books were exhibited in evidence. The Chancellor further found "said Taylor’s cash sales, as shown by the deposition of E. H. Holly, Vice-President and Cashier of the First National Bank of Elizabethton, Tennessee, and as shown by the original ledger sheets of said First National Bank covering the amount of said Taylor, amounts to $2381.51,” to which is to be added Taylor’s board for six months and eight days at $17 per month, amounting to $104.40, represents the cash sales. By adding the inventory and invoices and subtracting the sum of the cash and credit sales, less twenty-five per cent gross profits, we obtain the value of the goods at the date of the fire. The Chancellor found this value to be $2958.20. The cash sales are only determinable by the bank’s statement, and the companies insist it was incumbent upon the insured to keep a book account of his cash sales. The companies except to the introduction of the bank statement. The evidence shows, and the Chancellor found, that the insured regularly deposited the cash derived from the cash sales in bank, and the statement reflects the value of the stock reduced to cash. This, he held, to be a substantial compliance with the provision of the policies. The purpose of the iron safe clause is to provide a reliable method for the determination of the loss; it is not necessary to keep the books within the safe so long as they are preserved, for they may be kept in another house. If .the merchant elects to keep a record of his cash *544sales by bis bank statement, and keeps it accurately, or at least not to tbe detriment of tbe insurance companies, then we can! see no objection to tbe method. Tbe method is as reliable as an entry at tbe end of tbe day of tbe cash sales in a book. Tbe merchant is not required to keep tbe cost and sale price of each article sold, so tbe bank account will reflect tbe same facts as tbe books would reflect. An accountant was introduced, who bad bad experience in determining tbe value of tbe destroyed stock of goods, and be demonstrated tbe correctness of tbe Chancellor’s figures. Counsel crit-icised tbe court in permitting tbe use of tbe bank’s statement, in determining tbe amount of tbe cash sales. We will examine these criticisms to see if injury is done, or could be done, to tbe insurance companies;
It is said tbe merchant would exchange bis goods for produce; but he would sell tbe produce for cash and deposit tbe proceeds, and if be made a double profit it rebounded to tbe ibterest of tbe insurance company by increasing bis cash sales.
And sometimes be would take cheeks in as cash from bis customers and refund to them tbe difference, but when be deposited tbe checks as cash, tbe difference rebounded to tbe interest of tbe insurance companies. Sometimes he wouldn’t have tbe money to repay tbe difference to tbe customer, and be would take tbe checks to tbe bank, obtain tbe money and return and pay it to tbe customer. Tbe same result followed.
Some of Taylor’s customers issued orders on tbe store to their laborers, and Taylor would pay these orders in cash and charge to tbe customer’s account. These items were not reflected in the bank account, but were reflected in tbe charge account, and the companies were in no w'ay injured.
Tbe next criticism is that tbe Chancellor allowed twenty-five per cent as gross profits, and tbe profits were not reflected by tbe bank account. Had the insured kept a book account, of his cash sales bis profits would not have been reflected by tbe boobs; a cash sale would not reflect the profits. To name the article Would be of no advantage, for it may represent one of two invoices carrying different prices. The Chancellor sustained an exception to tbe evidence given by tbe insured in reference to bis profits, but in bis opinion he used this evidence in making his calculations and determining the value of tbe stock of goods destroyed. He therefore must have reversed himself upon tbe ruling of the evidence. But if we exclude the evidence and do not deduct tbe twenty-five per cent profits, still tbe value of tbe goods destroyed exceeds the amount of the" recovery, since there is no issue made upon the three-fourths value clause. *545We concur in the holding of the Chancellor that the bank’s statements substantially reflect the cash sales, and the companies are benefited and not injured by the figures or totals representing the cash sales.
Exceptions were taken to the introduction of the inventory and invoice accounts on the ground that these papers have been altered since the fire, by identification marks, calculations and the addition of the omitted items. It is said an inspection of the instruments justified this conclusion, and they should have been excluded as evidence. If the instruments appear upon their face to have been altered, the presumption of law is that the alteration was made at the time of the execution of the instruments; but these papers are not contractual and contain no part of the terms of the contract, and an addition will not defeat the entire instrument by requiring its exclusion as evidence. There is no reason why the insured could not correct his invoice accounts by- the insertion of an omitted invoice; this or any other invoice could be attacked as spurious, but the court is not justified in excluding the entire account because it appears that an omitted invoice has been inserted.
We concur in the findings of fact as found by the Chancellor, and are satisfied with the justness and soundness of his decree, which is affirmed with costs. The recovery against each of the companies is for the sum of $1028.75 with interest from February 28, 1927.
Snodgrass and Thompson, JJ., concur. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/1013747/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-4141
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
LEROY FELTON, a/k/a Joe Nelson Felton,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Norfolk. Jerome B. Friedman, District
Judge. (CR-99-66)
Submitted: July 2, 2004 Decided: July 15, 2004
Before WILLIAMS and TRAXLER, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
Frank W. Dunham, Jr., Federal Public Defender, Larry M. Dash,
Assistant Federal Public Defender, Norfolk, Virginia, for
Appellant. Paul Joseph McNulty, United States Attorney,
Alexandria, Virginia; Laura Marie Everhart, Assistant United States
Attorney, Norfolk, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Leroy Felton appeals from the district court’s order
revoking his supervised release and imposing a four-month prison
term and a twenty-four month term of supervised release. Felton’s
counsel filed a brief pursuant to Anders v. California, 386 U.S.
738 (1967), stating that, in their view, there are no meritorious
grounds for appeal but raising three issues. Felton was advised of
his right to file a pro se supplemental brief but did not do so.
We affirm.
Counsel contend that the district court erred by revoking
Felton’s supervised release. Our review of the record convinces us
that the preponderance of the evidence established that Felton
violated certain conditions of his supervised release. See 18
U.S.C.A. § 3583(e)(3) (West 2000 & Supp. 2004). We therefore find
no abuse of discretion in the district court’s revocation of
Felton’s supervised release. See United States v. Copley, 978 F.2d
829, 831 (4th Cir. 1992) (stating standard of review).
Counsel also contend that the district court failed to
consider the factors outlined in 18 U.S.C.A. § 3553(a) (West 2000 &
Supp. 2004) before sentencing Felton. We find, however, that the
district court properly considered the factors set forth in
§ 3553(a). See United States v. Davis, 53 F.3d 638, 642 (4th Cir.
1995) (“A court need not engage in ritualistic incantation in order
to establish its consideration of a legal issue. It is sufficient
- 2 -
if . . . the district court rules on issues that have been fully
presented for determination. Consideration is implicit in the
court’s ultimate ruling.”).
Finally, counsel suggest that Felton’s sentence is
plainly unreasonable. Because the district court sentenced Felton
to the low end of the suggested sentencing guideline range, see
U.S. Sentencing Guidelines Manual § 7B1.4(a), p.s. (2003), we find
that the sentence is not plainly unreasonable.
In accordance with the requirements of Anders, we have
reviewed the entire record in this case and have found no
meritorious issues for appeal. Accordingly, we affirm. This court
requires that counsel inform their client, in writing, of his right
to petition the Supreme Court of the United States for further
review. If the client requests that a petition be filed, but
counsel believe that such a petition would be frivolous, then
counsel may move in this court for leave to withdraw from
representation. Counsel’s motion must state that a copy thereof
was served on the client. We dispense with oral argument because
the facts and legal contentions are adequately presented in the
materials before the court and argument would not aid the
decisional process.
AFFIRMED
- 3 - | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584646/ | 728 N.W.2d 917 (2007)
In re Petition for REINSTATEMENT OF Richard T. JELLINGER, a Minnesota Attorney, Registration No. 137765.
No. A05-2091.
Supreme Court of Minnesota.
March 22, 2007.
*918 Mark W. Gehan, Collins, Buckley, Sauntry & Haugh, PLLP, St. Paul, MN, for Petitioner.
Martin A. Cole Office of Lawyers Professional Responsibility, St. Paul, MN, for Office of Lawyers Professional Responsibility.
Heard, considered, and decided by the court en banc.
*919 OPINION
PER CURIAM.
A panel of the Lawyers Professional Responsibility Board recommended that petitioner Richard T. Jellinger, who was indefinitely suspended from the practice of law, be reinstated subject to a four-year probationary period and other terms and conditions, including a restriction on the practice of law as a solo practitioner and a requirement that he apply for malpractice insurance. Jellinger argues that the length of the probationary period and the terms and conditions on his probation are inconsistent with the panel's findings of fact. The Director of the Office of Lawyers Professional Responsibility (the Director) supports the panel's recommendations. We have independently reviewed the file and conclude that Jellinger is entitled to be reinstated to the practice of law, subject to a probationary period and a number of conditions which are described more fully below.
Jellinger was admitted to practice law in Minnesota on May 13, 1982. For eight years, he practiced in a number of different settings. Jellinger then spent four years working for the Minnesota State Bar Association. In 1994, he opened his own practice, where he continued to work until we temporarily suspended him in 2001.
On May 3, 2001, because Jellinger "did not read or respond to the Director's inquiries, * * * commingled client funds with operating funds in the trust account, neglected a client matter, failed to place a client's retainer in trust, and repaid the client with funds from a personal account," we publicly reprimanded Jellinger and placed him on probation, subject to certain conditions. In re Jellinger, 625 N.W.2d 143, 146-48 (Minn.2001).
Thereafter, Jellinger failed to comply with the terms of his probation, and the Director filed a petition for temporary suspension. The Director alleged that Jellinger failed to respond to correspondence regarding his probation and failed to respond to notices of investigation of additional complaints of professional misconduct. In re Jellinger, 632 N.W.2d 640, 641 (Minn.2001). Jellinger did not respond to the petition, so we deemed the allegations admitted,[1] and on August 17, 2001, we temporarily suspended Jellinger from the practice of law, pending final determination of the disciplinary proceedings. Id.
On November 29, 2001, the Director filed a supplementary petition for further disciplinary action, and the matter was referred to a referee. In re Jellinger, 655 N.W.2d 312, 313 (Minn.2002). We upheld the referee's findings of misconductthat Jellinger had misappropriated client funds, that he had failed to communicate with his clients, that he had neglected clients, that he had made false statements to clients, and that he had failed to cooperate with the Director's investigationand we concluded that Jellinger failed to prove his claim of mitigation by clear and convincing evidence. Id. at 315-16. We noted that Jellinger's treating psychologist had testified that Jellinger had a major depressive disorder and that, in the psychologist's opinion, Jellinger's misconduct was "in large part a result of his depressive disorder." Id. at 314. But we concluded that Jellinger had failed to prove that his depression was the cause of his misconduct. Id. at 315-16.
While we acknowledged that Jellinger's depression might have caused his passive misconduct, we concluded that the psychologist's testimony did not indicate that the depression was the likely cause of Jellinger's "affirmative acts of dishonesty (misappropriating *920 funds from client accounts, making false statements to clients and making false statements to the Director's office)." Id. at 315. Further, we concluded that, because he had only been undergoing treatment for two months, and his psychologist had prescribed a course of treatment that would take from two to three years to complete, Jellinger failed to prove that his recovery was sufficient to arrest the misconduct and therefore failed to prove that his misconduct was not apt to recur. Id.
We said that "ample precedent supports the sanction of disbarment in cases involving misappropriation of client funds." Id. at 316. But we noted, as mitigating factors, that there was a causative relationship between Jellinger's depression and his passive misconduct and that Jellinger's former clients did not ultimately suffer any pecuniary loss as a result of his misconduct. Id. Therefore, on December 26, 2002, we disbarred Jellinger, but stayed the disbarment subject to indefinite suspension. Id. at 316. We ordered that Jellinger could not petition for reinstatement for at least two years, and said that "[u]pon reinstatement, [Jellinger] shall be on supervised probation for a period of two years under the conditions set forth in this court's order of May 3, 2001." Id. at 317.[2]
After we indefinitely suspended him, Jellinger found employment for a short time as a tax preparer, and as a driver for a local courier service. Since July 2003 Jellinger has worked as a part-time paralegal.[3]
On October 19, 2005, Jellinger petitioned for reinstatement pursuant to Rule 18 of the Rules on Lawyers Professional Responsibility (RLPR). The panel heard the matter on June 30, 2006.[4]
The panel received testimony from Jellinger's psychologist by way of deposition. The psychologist opined that Jellinger's depression "has dropped from the moderate range to the no concern range." The psychologist also stated that "there does not seem to be any data that would preclude his ability to practice law" and that Jellinger "has been maintaining good mental health and practicing good self care." Finally, the psychologist suggested that it would be important for Jellinger to have a "network of colleagues" to consult with on a semi-regular basis.
W.K., who has known Jellinger since 1985, and for whom Jellinger has worked in a paralegal capacity, also testified before the panel. According to the panel's findings, W.K. testified that he and Jellinger had discussed Jellinger's past misconduct in detail, and W.K. had discussed with Jellinger at length how to successfully and ethically operate as a solo practitioner. Additionally, W.K. told the panel that if Jellinger were to be reinstated, W.K. would be willing to act as a co-signer on Jellinger's trust account. W.K. acknowledged that this responsibility would require *921 him to be familiar with the client files and services being performed by Jellinger. W.K. also told the panel that he did not believe he could hire Jellinger as an employee, because Jellinger's practice was different and because W.K. wanted to reduce, rather than increase, overhead.
Jellinger also testified before the panel. According to the panel's findings, Jellinger expressed shame and remorse over his misconduct. He acknowledged that he will continue to struggle with "depression and honesty issues," but said that he feels better equipped to handle such issues, in part because of his anti-depression medication and because of his work with his psychologist to identify the warning signs of depression. The panel also noted that Jellinger testified about his business plan, and that W.K. has taught him about the network of lawyers available for him to contact in various areas of law practice.
Jellinger's attorney argued to the panel that Jellinger should be reinstated subject to supervised probation for a period of two years, provided that Jellinger enter into an "of counsel" arrangement with W.K.[5] The Director argued that Jellinger should be denied reinstatement for failing to show by clear and convincing evidence that he had achieved the requisite moral change required for reinstatement. In the alternative, the Director argued for reinstatement subject to a two-year period of supervised probation and subject to further terms and conditions including: monitoring by an attorney approved by the Director, no practice as a solo practitioner for one year, and the adoption of approved office procedures related to the handling of client funds and maintenance of a trust account.
The panel concluded that Jellinger had proven by clear and convincing evidence that he has:
(a) completed the required two-year period of suspension, (b) continued treatment for his depression and arranged for his psychologist to report periodically to the Director concerning the progress of his treatment, (c) paid the costs required by Rule 24, RLPR, (d) successfully completed the professional responsibility exam, (e) satisfied his CLE requirements, and (f) complied with Rule 26, RLPR.
The panel also concluded that Jellinger "possesses current legal skills and knowledge," "is psychologically fit to resume the practice of law, as it relates to his prior passive misconduct," "currently has in place adequate personal and professional support systems to assist him in managing the stress and practicalities of a law practice," and "has shown the requisite moral change as to his prior dishonesty."
On the basis of these findings of fact and conclusions of law, the panel recommended reinstatement, subject to a four-year period of supervised probation under a number of terms, including (1) that Jellinger not engage in the practice of law as a solo practitioner for two years from the date of the reinstatement order; and (2) that Jellinger apply for malpractice insurance.[6]
*922 I.
Our first consideration is whether Jellinger should be reinstated to the practice of law. We independently review the entire record in reinstatement proceedings to determine if an attorney should be reinstated. In re Kadrie, 602 N.W.2d 868, 870 (Minn.1999). We consider the panel's recommendations, but we are not bound by them. Id.
"[A]n attorney applying for reinstatement must establish by clear and convincing evidence that she or he has undergone such a moral change as now to render him a fit person to enjoy the public confidence and trust once forfeited." In re Porter, 472 N.W.2d 654, 655 (Minn. 1991) (quoting In re Hanson, 454 N.W.2d 924, 925 (Minn.1990)). Evidence of moral change is, however, only one factor. In re Kadrie, 602 N.W.2d at 870. Other factors to be considered are: "(1) [the attorney's] recognition of the wrongfulness of his conduct; (2) the length of time since the misconduct and [the] disbarment or suspension; (3) the seriousness of the original misconduct; (4) the existence of physical or mental illness or pressures that are susceptible to correction; and (5) [the attorney's] intellectual competency to practice law." Id. (internal citations omitted).
The panel concluded that Jellinger has undergone the moral change required to be reinstated to the practice of law. And the Director no longer argues that Jellinger is unfit to be reinstated. The panel found that Jellinger expressed shame and remorse over his misconduct and that Jellinger indicated that he knew what he did was wrong. The panel's findings also indicate that Jellinger has gained control of his depression by working with his psychologist and by taking anti-depression medication. The panel noted that Jellinger said he is now aware of the warning signs of depression and that he will seek help if those signs occur.
We conclude that Jellinger has current legal skills and knowledge, demonstrated by his successful completion of the professional responsibility exam, satisfaction of his CLE requirements, and his work as a paralegal. And, although we only prohibited Jellinger from applying for reinstatement for two years, it has been more than four years since Jellinger's indefinite suspension on December 26, 2002. Thus, although Jellinger's misconduct was very serious, based on the panel's findings of fact (and in the absence of a transcript of the hearing before the panel), we agree with the panel that Jellinger has shown that he is fit to resume the practice of law, and we hold that he should be reinstated.
II.
Having concluded that Jellinger has met his burden to show that he should be reinstated, we turn next to the issue of what, if any, conditions should continue to apply to Jellinger. The Director argues that a probationary period subject to certain conditions is routine in reinstatement matters, and that the panel's recommendations related to the length of Jellinger's probation and the conditions on the probation are reasonable in this case. Jellinger argues that the conditions recommended by the panel are punitive and inappropriate. In particular, he objects to the length of the probationary period, the condition that he apply for malpractice insurance, and the prohibition on practice as a solo practitioner for the first two years of his reinstatement.
The goals of the lawyer disciplinary system are to protect the public, the courts, and the legal profession, and to guard the administration of justice. Jellinger, 655 N.W.2d at 316. To further these purposes, we have imposed conditions *923 on reinstatement in many previous cases, and often those conditions have been as rigorous, or even more rigorous than the conditions the panel recommended in this case. See, e.g., In re Anderley, 696 N.W.2d 380, 386 (Minn.2005) (reinstating Anderley subject to indefinite probation and prohibition on practice as a solo practitioner); Kadrie, 602 N.W.2d at 873 (reinstating Kadrie subject to two years of probation and no practice as a solo practitioner for two years); In re McCreary, 528 N.W.2d 856, 856 (Minn. 1995) (reinstating McCreary subject to two years of probation and no practice as a solo practitioner). With the relevant goals in mind, we turn to an examination of the three conditions recommended by the panel to which Jellinger objects.
First, Jellinger objects to the length of the probationary period recommended by the panel. We conclude that the panel's recommendation is in accord with the probationary periods we have imposed in other cases. See, e.g., In re Maki, 536 N.W.2d 631, 631 (Minn.1995) (reinstating lawyer and placing him on five years' probation). In light of Jellinger's disciplinary history, four years of probation is appropriate to ensure that Jellinger gets the supervision and experience necessary to adequately protect the public, the courts, and the legal profession from further misconduct.
Second, Jellinger objects to the panel's recommendation that he be required to apply for malpractice insurance. We have imposed this as a condition in other cases. See In re Schaefer, 711 N.W.2d 467, 467 (Minn.2006); In re Schutter, 489 N.W.2d 233, 233 (Minn.1992). We likewise conclude it is appropriate in this case, if Jellinger engages in solo practice, to accomplish the goals of the lawyer disciplinary system.
Third, Jellinger objects to the panel's recommendation that he be prohibited from engaging in the solo practice of law for two years. Jellinger argues that because he is a 59-year-old attorney with a disciplinary history, he will have difficulty attaining gainful legal employment. The Director notes that we have in past reinstatement cases imposed a prohibition on solo practice. See, e.g., Anderley, 696 N.W.2d at 386; Kadrie, 602 N.W.2d at 873; McCreary, 528 N.W.2d at 856. But in the cases the Director cites, the prohibition on solo practice does not appear to have been contested, as it is here.
The panel's recommendation prohibiting solo practice was likely based on an assumption that Jellinger would find employment in a law firm or corporate setting. Given that Jellinger committed misconduct while he was engaged in solo practice it serves the goals of the disciplinary system to condition Jellinger's return to solo practice upon reinstatement. If however, as Jellinger argues, he is unable to attain legal employment in a law firm or as in-house counsel, then a prohibition on solo practice will in effect operate as a continuation of his suspension rather than a reinstatement. The purpose of the attorney discipline system is not to punish the wrongdoer but to protect the public. In re Plummer, 725 N.W.2d 96, 98 (Minn.2006). We have said that "a disbarred attorney who meets the heavy burden of demonstrating [his] rehabilitation will be reinstated." In re Ramirez, 719 N.W.2d 920, 924 (Minn.2006) (quoting Anderley, 696 N.W.2d at 385). In this case, we have concluded that Jellinger has carried this burden, and he is entitled to reinstatement. Thus, while it is appropriate to place certain conditions on his reinstatement, the effect of the conditions should not be to extend his suspension.
*924 There is insufficient evidence in the record to substantiate Jellinger's claim that it will be difficult or impossible for him to find gainful legal employment in any context other than solo practice. We conclude, however, that if Jellinger can demonstrate to the Director's satisfaction that he cannot find other legal employment, then he may engage in the practice of law as a solo practitioner, subject to intensive supervision as set forth below.
We therefore order that Jellinger is reinstated to the practice of law and placed on probation for a period of four years, subject to certain conditions. The nature of the supervision during probation shall depend on the setting in which Jellinger practices law. The conditions of Jellinger's probation are as follows:
(a) Jellinger shall cooperate fully with the Director's Office in its efforts to monitor compliance with this probation. Jellinger shall promptly respond to the Director's correspondence by the due date. Jellinger shall cooperate with the Director's investigation of any allegations of unprofessional conduct that may come to the Director's attention. Upon the Director's request, Jellinger shall provide authorization for release of information and documentation to verify compliance with the terms of this probation.
(b) Jellinger shall abide by the Minnesota Rules of Professional Conduct.
(c) Jellinger shall continue his current mental health treatment program, under which he is now seen on an as-needed basis, and shall follow all recommendations of his treating professional.
(d) If Jellinger engages in the practice of law other than as a solo practitioner, he shall do so subject to supervision, until the end of the probationary period, by a licensed Minnesota attorney, who may be employed by the same entity as Jellinger. The attorney shall be appointed by the Director to monitor Jellinger's compliance with the terms of this probation. Jellinger shall notify the Director as soon as practicable of his intention to engage in the practice of law other than as a solo practitioner. At the same time Jellinger notifies the Director of his intention to engage in the practice of law other than as a solo practitioner, Jellinger shall provide to the Director the names of at least two attorneys who have agreed to be nominated as his supervisor. If, after diligent effort, Jellinger is unable to locate a supervisor acceptable to the Director, the Director will locate the supervisor. Jellinger shall cooperate fully with the supervisor in his or her efforts to monitor Jellinger's compliance with this probation. The supervisor shall file written reports with the Director at least quarterly, or at such more frequent intervals as the Director may reasonably request.
(e) Jellinger shall not engage in solo practice for the first two years of the probationary period unless Jellinger demonstrates to the satisfaction of the Director that he cannot find other employment as an attorney. If Jellinger engages in the practice of law as a solo practitioner at any time during the probationary period, he shall be subject to the following conditions for two years or until the end of the probationary period, whichever occurs sooner:
(i) Jellinger shall notify the Director at least 30 days before engaging in the practice of law as a solo practitioner.
(ii) Jellinger shall be supervised by a licensed Minnesota attorney, appointed by the Director to monitor Jellinger's compliance with the terms of this probation. At the same time Jellinger notifies the Director of his intention to *925 open a solo practice, Jellinger shall provide to the Director the names of at least two attorneys who have agreed to be nominated as his supervisor. If, after diligent effort, Jellinger is unable to locate a supervisor acceptable to the Director, the Director will locate the supervisor. Jellinger shall make active client files available to the Director upon request.
(iii) Jellinger shall cooperate fully with the supervisor in his or her efforts to monitor compliance with this probation. Jellinger shall contact the supervisor weekly, either in person or by telephone, and shall schedule a minimum of one in-person meeting per month. Jellinger shall submit to the supervisor an inventory of all active client files at least one week before each in-person meeting. With respect to each active client file, the inventory shall disclose the client name, type of representation, date opened, most recent activity, next anticipated action, and anticipated closing date. In addition, the inventory shall contain information about any retainers accepted and any trust account transactions affecting each such client. At least quarterly, the supervisor shall review a random sample of Jellinger's open files. In a general way, Jellinger shall keep the supervisor aware of the financial success or difficulties being faced by the practice and Jellinger's plans to address those matters. The supervisor shall file written reports with the Director at least quarterly, or at such more frequent intervals as may reasonably be requested by the Director.
(iv) Jellinger shall initiate and maintain office procedures that ensure (1) that there are prompt responses to correspondence, telephone calls, and other important communications from clients, courts, and other persons interested in matters he is handling, and
(2) that Jellinger regularly reviews all files and completes legal matters on a timely basis.
(v) At the same time Jellinger notifies the Director of his intention to engage in the solo practice of law, Jellinger shall provide to the Director a written plan outlining office procedures designed to ensure that Jellinger complies with the requirements of this probation. Jellinger shall also provide the Director with an updated business plan, and shall provide the updated business plan and office procedures plan to his supervisor, once appointed.
(vi) Jellinger shall enter into a written retainer agreement with each client, which shall be signed by Jellinger and the client and which shall comply with Rule 1.5(b), Minn. R. Prof. Conduct (MRPC), and Rule 1.15(b), MRPC.
(vii) Jellinger shall maintain law office and trust account books and records in compliance with Rule 1.15, MRPC. These books and records shall include the following: client subsidiary ledger, checkbook register, monthly trial balances, monthly trust account reconciliation, bank statements, cancelled checks, duplicate deposit slips and bank reports of interest earned, service charges, and interest payments to the Lawyers Trust Account Board. Such books and records shall be made available to the Director at such intervals as the Director deems necessary to determine compliance. Jellinger shall not maintain a trust account without a co-signer acceptable to the Director, whose signature shall be required on each trust account check.
*926 (viii) Jellinger shall initially limit his practice to no more than 20 open files and shall thereafter increase his case load only with the approval of his supervisor and the Director.
(ix) Jellinger shall apply for malpractice insurance with coverage, limits, and an insurance company approved by the Director. Jellinger shall not be required to purchase malpractice insurance if he can demonstrate to the Director that it is unavailable or unduly expensive.
(f) Failure to comply with any of the conditions of this probation shall be grounds for revocation of probation and temporary suspension.
It is so ordered.
NOTES
[1] See Rule 16(c), Rules on Lawyers Professional Responsibility (RLPR).
[2] The specific conditions on Jellinger's probation are set forth at Jellinger, 625 N.W.2d at 148-49. These conditions do not include a restriction on practice as a solo practitioner or a requirement that Jellinger apply for malpractice insurance. Id.
[3] On October 24, 2003, the Director issued Jellinger an admonition for conduct that took place before Jellinger's indefinite suspension but while he was on probation. The Director issued the admonition because Jellinger had failed to adequately communicate with a client, failed to return a retainer fee, and failed to notify the client that he had been suspended.
[4] The parties did not order a transcript of the hearing before the panel. Our recitation of the facts is therefore taken from the panel's findings of fact. Cf. Rule 14(e), RLPR ("Unless the respondent or Director * * * orders a transcript * * * the findings of fact and conclusions shall be conclusive.").
[5] This relationship would essentially require W.K. to act as a co-signer on Jellinger's trust account, to be familiar with Jellinger's client files, and to serve as, in effect, a financial probation officer who would monitor the financial side of Jellinger's practice.
[6] The remaining terms and conditions recommended by the panel are generally consistent with the terms and conditions set forth in our May 3, 2001 order. Jellinger, 625 N.W.2d at 148. One other condition, however, was not part of our May 3, 2001 order: the requirement that Jellinger have another attorney co-sign all checks written on his trust account. Jellinger does not object to the inclusion of this condition. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584594/ | 641 So. 2d 231 (1994)
SUPERSKATE, INC.
v.
Candice Brooke NOLEN, a minor, by her next friend, Angela A. MILLER.
Jack C. COLLINS
v.
Candice Brooke NOLEN, a minor, by her next friend, Angela K. MILLER.
1921094, 1921095.
Supreme Court of Alabama.
February 25, 1994.
Rehearing Denied April 29, 1994.
*232 William T. Denson, Homewood, for Superskate, Inc.
*233 Carl E. Chamblee, Sr., Birmingham, for Jack C. Collins.
James D. Turner of Turner and Turner, P.C., Tuscaloosa, for appellee.
ALMON, Justice.
The defendants, Superskate, Inc., and Jack C. Collins, appeal from a judgment entered on a jury verdict awarding $85,000 to the minor plaintiff, Candice Brooke Nolen, who brought the action by and through her mother, Angela K. Miller, as next friend.[1] Nolen was injured at the skating rink owned by Superskate; Collins is the president, a stockholder, and an employee of Superskate. Collins and Superskate argue that the trial court erred in denying their motions for summary judgment, their motions for directed verdict or J.N.O.V., and their requested jury charges, principally the charge on the defense of assumption of the risk.
While skating at Superskate's rink, Nolen was bumped from behind and fell, and the person who bumped her fell on her. Her left leg was broken, and the adult who had fallen on her carried her off the skating area. The evidence from that point is conflicting, but would support a finding that Collins either picked her up and carried her back onto the rink or stood her up and pushed her onto the rink, saying her injury was "nothing but a bruise." She fell down again, crying and screaming, and somebody helped her off the floor again. She was then placed on some steps leading to the control booth, where Collins was working. According to her evidence, she asked Collins if she could call her mother, but he said no, that she was only bruised. At some point a patron of the rink gave a quarter to Nolen's eight-year-old stepsister, Meeka Miller, who telephoned Mrs. Miller. Nolen's stepfather, Mr. Miller, then drove to the rink, came inside, picked up Nolen, carried her to his automobile, and took her to a hospital.
Superskate and Collins argue that their motions for summary judgment were due to be granted because the affidavits and other evidence they submitted in support of those motions made a prima facie showing that there was no genuine issue as to any material fact and that they were entitled to a judgment as a matter of law. Rule 56(c)(3), Ala.R.Civ.P. They argue that the materials submitted in opposition to the motion did not rebut this showing by presenting evidence creating a genuine issue of material fact.
The parties do not cite, and our research has not disclosed, a case in which this Court has separately addressed the denial of a summary judgment motion after a trial court has denied motions for directed verdict and J.N.O.V. and has then entered a judgment on a jury verdict for the nonmoving party. Ordinarily, any issue as to the denial of the summary judgment motion would be moot, because the sufficiency of the evidence at trial would be the significant question on appeal. However, a movant who conclusively establishes that a summary judgment is appropriate, with no pertinent opposition from the nonmovant, is "entitled to a judgment as a matter of law," and "[t]he judgment sought shall be rendered forthwith," Rule 56(c)(3), Ala.R.Civ.P. The denial of a summary judgment is not appealable, and if the trial court refuses to issue the statement provided for by Rule 5(a), Ala. R.App.P. (relating to appeals by permission), the movant has no opportunity for review other than an appeal after an adverse judgment. Therefore, it is at least arguable that the later appeal could challenge the correctness of the denial of a summary judgment.
Furthermore, in this case, the plaintiffs' evidence in opposition to the summary judgment motions was somewhat different from their evidence at trial, so the question of sufficiency differs at the two stages. To say that a judgment should have been entered against the plaintiff for failure at an early stage to produce sufficient probative evidence may be an exaltation of form over substance where the plaintiff has produced sufficient evidence at trial. On the other hand, if it appears that the plaintiff has changed testimony or other evidence based *234 on experience gained during the proceedings on the motion for summary judgment, the defendant may have a legitimate argument that the case should never have gone to trial.[2]
Interestingly, the two principal treatises on the Federal Rules of Civil Procedure give conflicting answers to this question. Professors Wright, Miller, and Kane state that, after a judgment following a trial on the merits, "the party who unsuccessfully sought summary judgment may argue that the trial court's denial of the Rule 56 motion was erroneous." 10 Charles A. Wright, et al., Federal Practice and Procedure § 2715 (2d ed. 1983) (citations omitted). Professor Moore, however, states the following in text added to the 1993 supplement, based on Jarrett v. Epperly, 896 F.2d 1013 (6th Cir.1990):
"Although normally interlocutory orders merge into the final judgment and are then appealable, it has been held that an interlocutory denial of summary judgment will not serve as a ground of appeal after the movant loses a full trial on the merits. This is so because it would be unjust for the court of appeals to deprive a party of a judgment rendered after a full trial based upon the appellate court's examination of the evidence presented at the time of the motion."
Vol. 6 pt. 2 James W. Moore, et al., Moore's Federal Practice ¶ 56.21[2] (2d ed. 1988) (text accompanying footnote 10a in 1991-92 supplement).
Upon a proper showing, it might be appropriate to resolve the summary judgment issue separately from the J.N.O.V. issue. Thus, we will not simply hold that the summary judgment issue is moot. We caution that it would be a rare case where this Court would reverse the denial of a summary judgment when the nonmovant has produced sufficient evidence at trial to survive a directed verdict motion.
Here, the plaintiffs' evidence in opposition to the summary judgment motion consisted of an affidavit from Nolen and the plaintiffs' answers to interrogatories, which were answered by Mrs. Miller with assistance from Nolen, Meeka Miller, and Dax Lancaster, their eight-year-old cousin who was with them at the rink. The essential difference from the later evidence is that Nolen stated initially that another Superskate employee, not Collins, pushed her back onto the rink after she was first injured, whereas she testified at trial that it was Collins who did this. However, this was not the only evidence that would support a judgment against Collins individually. Nolen consistently stated that, after she was brought off the rink the second time, Collins refused to allow her to telephone her mother. This evidence would support a claim that Collins negligently, wantonly, or willfully caused or contributed to her injury and suffering by delaying her access to medical treatment and relief from her pain. Moreover, the interrogatories asked what the plaintiffs claimed Collins did that caused or contributed to Nolen's injuries, and the plaintiffs answered that he "was in direct control and management" of the rink at the time of the accident and they made reference to the other answers to interrogatories. Thus, the pre-trial failure to name Collins as the person who pushed Nolen back onto the floor does not require a reversal of the denial of his motion for summary judgment. We see no material difference as to Superskate between the pre-trial evidence and that presented at trial, so we shall not treat the summary judgment issue separately as to Superskate.
The defendants' principal argument as to the sufficiency of the evidence is that Nolen did not show any wrongful conduct on their part that caused the break to her leg. The complaint alleged that the defendants operated the rink "in a negligent, wanton, willful, grossly negligent, and reckless manner by selling admissions to such large numbers of paying customers that [the] facility *235 became overcrowded and unsafe for the use of the facilities by Plaintiff Candice Brooke Nolen and other paying customers," that Nolen was "run over by another paying customer with great force," and that Nolen's injuries were a direct and proximate result of the defendants' wrongful conduct. In a second count, the plaintiffs alleged the events subsequent to Nolen's fall and claimed damages based on the tort of outrage. The trial court entered a directed verdict on the outrage count, but the subsequent events were admitted without limitation to the outrage count. We deem the first count to have been amended by consent to include under the count for negligence or wantonness the allegations regarding Nolen's being placed back onto the skating floor and Collins's refusal to let her telephone her mother. Rule 15(b), Ala. R.Civ.P.
The parties stipulated that Nolen's treating physician, Dr. Buckley, if called to testify, would say that the broken leg was caused by the initial fall and was not contributed to by the events alleged to have occurred subsequently:
"The parties stipulate and agree that if Dr. Buckley were called to testify in this case, he would testify that Brooke sustained the fracture of her femur when she fell and the adult individual fell on top of her, causing pressure and stress to the side of her left leg. And that the subsequent act of placing her back on the floor, if it in fact occurred, did not contribute to the break or the fracture in any way."
The defendants presented evidence that the rink was less crowded on the night of Nolen's injury than it usually was. They argued strenuously at trial and again here that mere overcrowding in a skating rink or similar amusement facility is not a basis for imposing liability without evidence of failure to exercise proper crowd control, citing Cigan v. Arcadia Garden Corp., 323 Ill.App. 170, 55 N.E.2d 290 (1944). They say that all the evidence indicates that their efforts at crowd control were adequate. Further, they say, they owe no duty to protect skaters from the risks inherent in skating, citing Berman v. Radnor Rolls, Inc., 374 Pa.Super. 118, 542 A.2d 525 (1988); and Ridge v. Kladnick, 42 Wash.App. 785, 713 P.2d 1131 (1986). See, generally, Annot., Liability of Owner or Operator of Skating Rink for Injury to Patron, 24 A.L.R. 3d 911 (1969); 4 Am.Jur.2d Amusements and Exhibitions § 83, "Skating Rinks" (1962). See also Baker v. Merry-Go-Round Roller Rink, Inc., 537 So. 2d 1 (Ala. 1988).
We agree that the only evidence here of negligence causing or contributing to the initial fall would be evidence that the defendants sold too many admission tickets, so that the rink was overcrowded to the point that skating was unsafe. The plaintiffs presented evidence that the rink was overcrowded, through the testimony of Nolen, Meeka Miller, Dax Lancaster, and Michael Hawthorne, another patron who witnessed some of the events surrounding Nolen's injury. Nolen and Lancaster both testified that it was so crowded that one could not move without bumping into another person. All four witnesses testified that it was more crowded than usual and too crowded to skate easily or well.
The defendants introduced the testimony of several witnesses, employees of Superskate, who said that the rink was less crowded than usual on a Friday night and that they did not see any problems on the floor or even see Nolen's fall. They presented evidence that they were monitoring and controlling the crowd properly, such as by enforcing rules against reckless skating or excessive speed, and even some of the plaintiffs' evidence would support such a conclusion.
Under the circumstances of this case, however, we decline to reverse the judgment on this basis. We decline to hold, as the Appellate Court of Illinois did in Cigan, that overcrowding alone is not evidence of negligence. At some stage of crowding, those managing a skating rink would have a duty to prevent more people from coming onto the rink or to remove some from the rink so that the skaters might skate safely. Allowing crowding might not be negligence, but allowing over crowding could be negligence. The plaintiffs' evidence that the rink was too crowded for a person to skate without touching others is substantial evidence of negligence. The trial court directed a verdict as *236 to wantonness on this aspect of the claim, and no issue is presented here as to wantonness in regard to the question of overcrowding.
Even if the evidence of crowding, without more, might not be substantial evidence of negligence, the evidence of the defendants' conduct after the initial injury is certainly sufficient to support the submission of the case to the jury. The stipulation that the doctor would testify that the injury was caused by the initial fall and not by the subsequent acts tends to give the appearance that all of Nolen's injuries were caused by the initial fall and that her recovery would thus depend on proving the initial negligence. Nolen stated, however, that the pain was worse after she fell when pushed back onto the floor than it was after the initial fall. The evidence that Collins intimidated the children and prevented them from calling Mrs. Miller for some time supports a finding that he at least aggravated her pain and suffering by this willful conduct.
The verdict was divided as $25,000 in past damages, $25,000 in future damages, and $35,000 in punitive damages. Although the future damages are arguably related only to the initial injury, we decline to reverse the judgment on this basis when the evidence of overcrowding can be evidence of negligence and when the remainder of the verdict is amply supported by the evidence. The defendants argue that there was no clear and convincing evidence of wanton or willful conduct, pointing to the denials by Collins and others that the alleged subsequent acts occurred and to equivocal or self-contradictory testimony by the plaintiffs' witnesses. They argue that, therefore, punitive damages may not be awarded, citing Ala.Code 1975, § 6-11-20(a), and Berry v. Fife, 590 So. 2d 884 (Ala.1991). After reviewing the record, however, we hold that the plaintiffs did present clear and convincing evidence of willful or wanton conduct. The mere fact that the defendants contradict the plaintiffs cannot preclude a finding of clear and convincing evidence. Although there are some contradictions in the children's testimony, their evidence, when viewed as a whole, is sufficiently consistent and credible to constitute clear and convincing evidence. Some equivocation or inconsistency in the testimony of children of tender years is not unusual, and it does not extend in this case to the point that their evidence cannot be taken as clear and convincing.
For the foregoing reasons, the trial court did not err in denying the defendants' motions for directed verdicts.
Superskate argues that the trial court erred in denying its requested jury instruction number 12: "Overcrowding of a skating rink alone is not evidence of negligence." Because, as we hold above, allowing a skating rink to become overcrowded can amount to negligence, this instruction does not accurately state the law.
Both Superskate and Collins argue that the trial court erred in not instructing the jury on the defense of assumption of the risk as to Nolen. The trial court did instruct the jury on assumption of the risk and contributory negligence as to Mrs. Miller's claims. Nolen has not cited a case discussing assumption of the risk as a defense to a claim by an eight-year-old child, but argues that the cases discussing the application of contributory negligence to children are analogous.
"A child between the ages of 7 and 14 is prima facie deemed incapable of contributory negligence. King v. South, 352 So. 2d 1346 (Ala.1977), citing Alabama Power Co. v. Taylor, 293 Ala. 484, 306 So. 2d 236 (1975). However, a child between the ages of 7 and 14 may be shown by evidence to be capable of contributory negligence by evidence that he possesses that discretion, intelligence, and sensitivity to danger that the ordinary 14-year-old possesses. Fletcher v. Hale, 548 So. 2d 135 (Ala.1989).
"`... To apply [contributory negligence] to a child, the Court must examine the following elements: (1) the intelligence of the child; (2) the capacity of the child to understand the potential danger of the hazard; (3) the child's actual knowledge of the danger; (4) the child's ability to exercise discretion; (5) the educational level of the child; (6) the maturity of the child; and (7) the age of *237 the child. See, Lyle v. Bouler, 547 So. 2d 506 (Ala.1989).'
"Jones v. Power Cleaning Contractors, 551 So. 2d 996, 999 (Ala.1989)."
Works v. Allstate Indem. Co., 594 So. 2d 60, 63 (Ala.1992); Savage Industries v. Duke, 598 So. 2d 856 (Ala.1992).
"The assumption of the risk defense is not based on the plaintiff's fault or negligent conduct.... The plaintiff must know that a risk is present and must understand its nature.... His choice to incur the risk must be free and voluntary....
"Assumption of the risk proceeds from the injured person's actual awareness of the risk.... Furthermore, with assumption of the risk the plaintiff's state of mind is determined by the subjective standard, whereas with contributory negligence the court uses the objective standard.... The factfinder looks at whether the plaintiff knew of the risk, not whether he should have known of it."
McIsaac v. Monte Carlo Club, Inc., 587 So. 2d 320, 324 (Ala.1991) (citations omitted); McClendon v. Mountain Top Indoor Flea Market, 601 So. 2d 957, 960 (Ala.1992).
We have found no Alabama cases directly addressing the availability of the defense of assumption of the risk to a claim by a minor. However, in Fox v. Hollar Co., 576 So. 2d 223 (Ala.1991), the plaintiff argued that the guest statute, Ala.Code 1975, § 32-1-2, was inapplicable to a claim by a minor under 14 years of age:
"Fox, in her brief, analogizes the concept of a minor's consenting to become a guest under the guest statute to the doctrine of assumption of the risk. She then cites to us a case from another jurisdiction holding that there is a rebuttable presumption that a child between the ages of 7 and 14 is incapable of exercising care and prudence and further that a child under the age of 14 is incapable of knowingly and voluntarily accepting an invitation to become a guest in an automobile so as to subject himself to a gross negligence or wantonness rule. See Smith v. Kauffman, 212 Va. 181, 183 S.E.2d 190 (1971)." 576 So.2d at 226-27. The Court rejected the argument, based on our earlier cases holding that the question whether a child under 14 is subject to the guest statute is a question for the factfinder.
We hold that the question whether a child plaintiff is capable of assumption of the risk is ordinarily a question for the factfinder. However, there is an even higher burden on the defendant in regard to assumption of the risk than in the case of contributory negligence, because the defendant attempting to show assumption of the risk must show that the child subjectively appreciated the danger and voluntarily undertook it. Where the defendants have not made such a showing, the trial court properly would not submit the question to the jury. Collins and Superskate point to no evidence from which we can conclude that the trial court erred in denying their request for an instruction on assumption of the risk as to Nolen's claim. The evidence to which they point in support of this defense tends only to show that Nolen considered herself a good skater and had been skating on a number of previous occasions. It does not tend to show that she consciously appreciated the dangers of skating or voluntarily undertook them; it certainly does not tend to show her maturity, intelligence, capacity, discretion, or the other factors that the defendant has the burden of showing in order to overcome the presumption of incapacity. Therefore, there is no showing of error in the denial of the requested instruction.
AFFIRMED.
HORNSBY, C.J., and HOUSTON, KENNEDY and COOK, JJ., concur.
NOTES
[1] Mrs. Miller also sued individually, but the jury returned a verdict in favor of the defendants on her claim. We shall occasionally refer to "the plaintiffs" in regard to the proceedings in the trial court, even though Nolen, through Mrs. Miller, is the only appellee.
[2] These remarks would also apply where the plaintiff, as movant, made a prima facie showing that the plaintiff was entitled to a judgment as a matter of law, and the defendant did not produce a defense in opposition to the summary judgment motion but did produce evidence in defense during trial. Such a situation is even less common, however, than the case where the defendant is the movant. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584653/ | 641 So. 2d 103 (1994)
LOVELL FARMS, INC., a Florida corporation, Appellant/Petitioner,
v.
Joseph LEVY, Appellee/Respondent.
Nos. 93-1653, 93-1657.
District Court of Appeal of Florida, Third District.
February 15, 1994.
Rehearing Denied August 31, 1994.
Timothy Carl Blake, Miami, for appellant.
Berger & Shapiro, and Leonard K. Samuels, Fort Lauderdale, for appellee.
Before NESBITT, JORGENSON and GERSTEN, JJ.
GERSTEN, Judge.
Appellant/petitioner Lovell Farms (employer), appeals from a non-final order denying a temporary injunction and seeks a writ of certiorari to quash an order denying protection of a trade secret. We affirm the denial of the temporary injunction. We also grant the writ, quash the order and remand for determination of whether the information in dispute is, in fact, a trade secret.
Employer, the owner of a nursery, hired Joseph Levy (employee), as a horticulturist. In August 1991, the parties entered into a five year non-compete agreement which restrained the employee from engaging in the *104 nursery business throughout most of South Florida. The parties dispute whether the employee resigned or was discharged following Hurricane Andrew. Subsequently, the former employee was hired as a horticulturist by a nursery in Naples, Florida.
The employer sought a temporary injunction to enjoin the employee from working for its competitor in Naples and from using its growing techniques which the employer alleged were trade secrets. Prior to any discovery requests, the employer also filed a motion for protective order of its alleged trade secrets. In the motion, the employer alleged that the employee used its trade secrets consisting of specialized growing techniques. The trial court, without making any factual findings, denied both the motion for protective order and injunctive relief.
The employer appeals the denial of the injunction asserting that the former employee violated the non-compete agreement by using the employer's trade secrets at his new job. The employee contends that there are no trade secrets in flower growing procedures.
For many years, courts narrowly construed section 542.33(2)(a), Florida Statutes (1989), governing non-compete agreements. In Capraro v. Lanier Business Products, Inc., 466 So. 2d 212 (Fla. 1985), the court held that irreparable injury may be presumed upon proof of a breach of a valid covenant not to compete.
In 1990, the Legislature amended section 542.33(2)(a), Florida Statutes (Supp. 1990), with the intent of restricting the availability of injunctive relief and the existence of an irreparable injury. See Sun Elastic Corp. v. O.B. Industries, Inc., 603 So. 2d 516, 517 (Fla. 3d DCA 1992). The relevant portion of section 542.33(2)(a) now provides:
[O]ne who is employed as an agent, independent contractor, or employee may agree with his employer, to refrain from carrying on or engaging in a similar business and from soliciting old customers of such employer within a reasonably limited time and area, so long as the buyer or any person deriving title to the goodwill from him, and so long as such employer, continues to carry on a like business therein. Said agreements may, in the discretion of a court of competent jurisdiction, be enforced by injunction. However, the court shall not enter an injunction contrary to the public health, safety, or welfare or in any case where the injunction enforces an unreasonable covenant not to compete or where there is no showing of irreparable injury. However, use of specific trade secrets, customer lists, or direct solicitation of existing customers shall be presumed to be an irreparable injury and may be specifically enjoined.
(emphasis supplied).
Because the Legislature has narrowed the grounds for enforceability of non-compete covenants, the exception for specific trade secrets cannot be allowed to consume the new rule. Employers now alleging violations of specific trade secrets must be held to their burden to plead and prove the "use" of "specific trade secrets." Hapney v. Central Garage, Inc., 579 So. 2d 127, 134 (Fla. 2d DCA), review denied, 591 So. 2d 180 (Fla. 1991); § 542.33(2)(a), Fla. Stat. (1991).
Further, the Legislature enacted section 688.002(4), Florida Statutes (Supp. 1988), which is identical to the Uniform Trade Secrets Act, and provides:
"Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process that:
(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
In Lee v. Cercoa, Inc., 433 So. 2d 1, 2 (Fla. 4th DCA 1983), review denied, 444 So. 2d 417 (Fla. 1984), the court set forth some criteria for determining whether a trade secret, in fact, exists:
[T]he plaintiff must establish ... (a) [that] the process is a secret; (b) the extent to which the information is known outside of *105 the owner's business; (c) the extent to which it is known by employees and others involved in the owner's business; (d) the extent of measures taken by the owner to guard the secrecy of the information; (e) the value of the information to the owner and to his competitors; (f) the amount of effort or money expended by the owner in developing the information, and (g) the ease or difficulty with which the information could be properly acquired or duplicated by others.
In order to ascertain whether trade secrets exist, the information at issue must be disclosed. Becker Metals Corp. v. West Florida Scrap Metals, 407 So. 2d 380, 382 (Fla. 1st DCA 1981). The court must take protective measures to protect the interests of the holder of the trade secret privilege and the opposing party, and to further the interests of justice. Id.; § 90.506, Fla. Stat. (1991); Fla.R.Civ.P. 1.280(c)(7).
The court may conduct an in camera inspection to review whether the employer's information constitutes a trade secret. See Kavanaugh v. Stump, 592 So. 2d 1231, 1232 (Fla. 5th DCA 1992); Austin v. Barnett Bank, 472 So. 2d 830 (Fla. 4th DCA 1985); Scientific Games, Inc. v. Dittler Bros., Inc., 586 So. 2d 1128, 1131 (Fla. 1st DCA 1991). Furthermore, a protective order can be sought in advance of the release of any documents. Showa Denko America, Inc. v. Hopkins, 586 So. 2d 65 (Fla. 2d DCA 1991).
Applying these principles to this case, we determine that the threshold issue is whether or not the employer's flower growing technique is, in fact, a trade secret. As such, we remand this cause for either an in camera inspection of the documents which the employer claims would establish the existence of a trade secret, or an evidentiary hearing which may include expert testimony. See General Hotel & Restaurant Supply Corp. v. Skipper, 514 So. 2d 1158 (Fla. 2d DCA 1987).
If the employer establishes the existence of a trade secret, the court must then determine whether the former employee used the specific trade secret at his new place of employment. § 542.33(2)(a), Fla. Stat. (Supp. 1990). Further, the court must state its factual findings, specifying whether 1) the disputed information constitutes a trade secret, and 2) the former employee used the specific trade secret in his new place of employment. See generally Eastern Cement Corp. v. Department of Envtl. Regulation, 512 So. 2d 264, 266 (Fla. 1st DCA 1987).
Moreover, if the trial court finds the former employee used a specific trade secret in his new employment, then there is a presumption of irreparable injury. The court, then, must determine the reasonableness of the non-compete agreement's time and space restrictions and the employee's non-compete contract may be enforced by injunction. See Sun Elastic Corp., 603 So.2d at 518; Mathieu v. Old Town Flower Shops Inc., 585 So. 2d 1160 (Fla. 4th DCA 1991) (the maximum period non-compete covenants should be enforced against low-level employees is three years).
However, if the court determines that no trade secrets are involved, then it must engage in the balancing test of the 1990 statutory amendment. The court must weigh the public interest, the potential effects on the employee, and the legitimate business interests of the employer, to determine the enforceability of the non-compete contract. Section 542.33(2)(a), Fla. Stat. (Supp. 1990).
An injunction cannot be granted upon mere allegation of the employee's "use" of "specific trade secrets." The presumption of irreparable injury, and thus the enjoinability of the employee's conduct, attaches only after the employer has proved the use of specific trade secrets. See Sun Elastic Corp., 603 So.2d at 516-17 (the presumption attached upon an admission of direct solicitation of existing customers).
Accordingly, we affirm the denial of the motion for temporary injunction, grant the writ of certiorari, quash the denial of the protective order, and remand for further proceedings.
Denial of temporary injunction affirmed; certiorari granted; order quashed.
JORGENSON, J., concurs.
*106 NESBITT, Judge, (dissenting and concurring):
I respectfully dissent. I would reverse the order denying the application for a temporary injunction. Under section 542.33(1), (2)(a), Florida Statutes (1993), the use of trade secrets creates a presumption of irreparable injury. The use of trade secrets may be enjoined. As we construed the statute in Sun Elastic Corp. v. O.B. Indus., 603 So. 2d 516, 517 (Fla. 3d DCA 1992), irreparable injury refers to that type of injury, whether great or small, which may not be adequately addressed by an award of money damages. Farming is ever becoming a highly complex and sophisticated business. The appropriation of business secrets and their dissemination simply cannot be remedied by an award of money damages. I would grant a temporary injunction with an appropriate bond to protect the grower's former employee.
I dissent in part to the court's disposition of application for common law certiorari. Here, the grower is entitled to the benefit of the presumption that the claimed information did constitute a trade secret. However, the presumption may be dissipated by a proper evidentiary showing to the contrary by the former employee.
In other respects, I generally agree with the court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2455241/ | 257 P.3d 1020 (2011)
350 Or. 530
MAYFLY GROUP, INC.
v.
RUIZ.
(S059388).
Supreme Court of Oregon.
June 30, 2011.
Petition for Review Denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918872/ | 912 So. 2d 307 (2005)
William C. BULGIN, Petitioner,
v.
STATE of Florida, Respondent.
Kinjal H. Patel, Petitioner,
v.
State of Florida, Respondent.
Brandon P. Pelky, Petitioner,
v.
State of Florida, Respondent.
Nos. SC03-2214, SC03-2215, SC03-2217.
Supreme Court of Florida.
May 19, 2005.
Rehearing Denied September 21, 2005.
*308 Fred M. Conrad, Tallahassee, FL, and Edward T. Bauer and Matthew K. Foster of Brooks, LeBoeuf, Bennett and Foster, Tallahassee, FL, for Petitioners.
Charles J. Crist, Jr., Attorney General, Robert R. Wheeler, Bureau Chief, Criminal Appeals, and Thomas D. Winokur, Assistant Attorney General, Tallahassee, FL, for Respondents.
ANSTEAD, J.
We have for review State v. Bulgin, 858 So. 2d 1096, 1096-97 (Fla. 1st DCA 2003), which the First District Court of Appeal consolidated with two other cases, which expressly and directly conflicts with the decision in Williams v. State, 757 So. 2d 597 (Fla. 5th DCA 2000).[1] We have jurisdiction. See Art. V, § 3(b)(3), Fla. Const. For the reasons set forth herein, we quash the decision of the First District Court of Appeal and approve Williams. We hold that a criminal defendant's agreement to cooperate with the police, standing alone, does not act as a waiver of the right to a speedy trial or otherwise prevent the running of the time in which a defendant must be brought to trial.
PROCEEDINGS BELOW
The First District's opinion summarizes the facts of this case as they apply to all three petitioners:
The appellees/defendants were all arrested on December 15, 2000 for the sale of a controlled substance. The three agreed to cooperate with law enforcement in a continuing drug investigation and were released. On or about December 20, 2000, the defendants, accompanied by their attorneys, agreed to provide substantial assistance to law enforcement by conducting controlled drug buys. The law-enforcement officials agreed that no charges would be filed until their assistance was complete. These agreements satisfied the defendants' concern that formal charges and court appearances would jeopardize their covert assistance. The defendants did not sign speedy trial waivers and there was no discussion of the issue. After differing levels of cooperation with law enforcement, the defendants were arrested and charged. The defendants filed motions for discharge based on the speedy trial rule, Fla. R.Crim. P. 3.191, which were granted by the trial courts.
State v. Bulgin, 858 So. 2d 1096, 1096-97 (Fla. 1st DCA 2003). The First District reversed the trial courts' decisions, ruling that the delays in holding trial were attributable to the petitioners. Id. at 1097 ("Here, the failure to hold trials for the defendants within the speedy trial rule was attributable to the defendants' cooperation agreements because the agreements postponed the charges and court proceedings until their assistance was complete."). The petitioners sought review in this Court, citing conflict with the Fifth District's decision in Williams v. State, 757 So. 2d 597 (Fla. 5th DCA 2000).
WILLIAMS
In Williams v. State, 757 So. 2d 597 (Fla. 5th DCA 2000), the defendant was arrested and thereafter entered into an agreement to assist police. Id. at 598. After acting as a drug informant for the police for several weeks, Williams was "re-arrested" by the State for the same offense. Id. *309 However, because the State failed to bring the case to trial within 175 days from his initial arrest, he filed a motion for expiration and discharge under the speedy trial rule, which the trial court denied. Id. On appeal, the Fifth District reversed, and rejected the State's argument that because Williams was assisting the State, he was "unavailable" for trial under Florida Rule of Criminal Procedure 3.191(k). Id. at 600. Specifically, the Fifth District concluded:
A person is deemed "unavailable" for trial if the person or the person's counsel fails to attend a proceeding where their presence is required or the person or counsel is not ready for trial on the day trial is scheduled.
Here, no proceedings were ever scheduled and the trial was never set. Thus Williams cannot be considered "unavailable."
Id. The court also noted that there was no evidence that Williams had waived his right to a speedy trial or had otherwise engaged in conduct that would estop him from asserting his rights. Id. The court specifically rejected the State's claim that the speedy trial rule should not be followed because Williams was not placed in jail upon his initial arrest:
The state also argues that Williams should be estopped to claim speedy trial protections because he was free following his unarrest. However, a defendant need not remain in custody to have the benefits of the speedy trial rule. The speedy trial rule specifically provides that a person charged with a crime is entitled to the benefits of the rule whether the person is in custody or is at liberty on bail or recognizance or other pre-trial release condition. If the state is concerned about speedy trial, it could merely obtain a waiver from the defendant, as part of his substantial assistance agreement.
In addition, the speedy trial rule provides that the intent and effect of the rule shall not be avoided by the state by nolle prossing a crime and then prosecuting a new crime grounded on the same conduct or criminal episode. Just as the state cannot avoid the effect of the rule by the prosecutor's actions in nolle prossing a crime, the state should not be able to avoid the effect of the rule by the actions of the police in "unarresting" the defendant.
Id. The State now asserts that we should hold that the petitioners were responsible for the State not bringing them to trial by virtue of their agreement to cooperate with the police. We decline to do so because we conclude such a holding would be contrary to the provisions and purpose of the speedy trial rule and the underlying constitutional right it protects.
ANALYSIS
The United States Supreme Court has repeatedly emphasized the importance and fundamental nature of a citizen's right to a speedy trial as guaranteed by the Sixth Amendment. See e.g., Klopfer v. North Carolina, 386 U.S. 213, 226, 87 S. Ct. 988, 18 L. Ed. 2d 1 (1967) ("The history of the right to a speedy trial and its reception in this country clearly establish that it is one of the most basic rights preserved by our Constitution."). Further, the Court has held that it is the individual states' responsibility to provide an accused with clear parameters to assure the protection of the right to a speedy trial. Klopfer, 386 U.S. at 225-26, 87 S. Ct. 988; see also Barker v. Wingo, 407 U.S. 514, 523, 92 S. Ct. 2182, 33 L. Ed. 2d 101 (1972) ("The States, of course, are free to prescribe a reasonable period consistent with constitutional standards, but [the Supreme Court's] approach must be less precise.").
*310 Consistent with this mandate, Florida Rule of Criminal Procedure 3.191(a) requires that a defendant who is charged with a felony be brought to trial within 175 days of arrest, absent a more specific demand, and that those charged with a misdemeanor be tried within ninety days. Subdivision (p) outlines the proper remedy, including discharge, when the State fails to try a case within 175 days. However, that subdivision also provides: "No remedy shall be granted to any defendant under this rule until the court has made the required inquiry under subdivision (j)." Subdivision (j), entitled "Delay and Continuances; Effect on Motion" states that there are four circumstances in which a pending motion for discharge is properly denied. Of the four exceptions, the State now relies upon two to deny petitioners relief: "(2) the failure to hold trial is attributable to the accused, a codefendant in the same trial, or their counsel; (3) the accused was unavailable for trial under subdivision (k)...." Fla. R.Crim. P. 3.191(j). In other words, the State asserts that its failure to bring the petitioners to trial "is attributable to the [fault of] the accused" and the petitioners' "unavailab[ility] for trial." We conclude that cooperation with the police, standing alone, does not constitute conduct contemplated by either of these exceptions to the rule.
Both Bulgin and Williams involve situations where defendants were arrested, cooperated with the police, and were arrested a second time on the same charges, but at no time waived their rights to a speedy trial. See Bulgin, 858 So.2d at 1096-97. In both cases, the State failed to bring the cases to trial within 175 days of the defendants' initial arrests. Compare Bulgin, 858 So.2d at 1096-97, with Williams, 757 So.2d at 598-99. The Bulgin court considered the situation in the context of whether or not the delay was attributable to the defendants under rule 3.191(j)(2), whereas the Williams court considered the situation in the context of whether or not the defendant was "unavailable" under rule 3.191(j)(3). We conclude that neither exception to the rule applies here.
This Court has consistently held that the 175-day speedy trial period begins upon a defendant's initial arrest. See Weed v. State, 411 So. 2d 863, 865 (Fla.1982) ("[T]he date of the original arrest is the focal point for speedy trial considerations, irrespective of changes made in charges. Only in specifically delineated circumstances can the time periods be adjusted."); see also State v. Naveira, 873 So. 2d 300, 305 (Fla.2004) (citing Genden v. Fuller, 648 So. 2d 1183, 1184 (Fla.1994)) ("The speedy trial period begins when a defendant is first taken into custody, not when charges are first filed.").
In Weed, in an opinion by Justice Adkins, this Court summarized some of the case law in which the courts had concluded that the State's unilateral actions could not delay the running of time for speedy trial:
In [State v.] Thaddies, [364 So. 2d 819 (Fla. 4th DCA 1978)] the court held that when a charge is dropped and another is filed based on the same incident, the date of the arrest is the relevant date for speedy trial purposes. In [State ex rel. Smith v.] Nesbitt, [355 So. 2d 202 (Fla. 3d DCA 1978)] the fact that the charge was changed from a felony to a misdemeanor and then back to a felony did not alter the running of the speedy trial period from the original arrest date. See also Gue v. State, 297 So. 2d 135 (Fla. 2d DCA 1974). In [State ex rel. Williams v.] Cowart, [281 So. 2d 527 (Fla. 3d DCA 1973)] there was a mistrial, after which charges were amended. After the expiration of the 90 days under Rule 3.191(g), the state attempted to nolle prosequi one charge. The court *311 held the speedy trial time limit had run since the trial had not commenced within the 90 days. The court went on to add that the fact that the state entered a nolle prosequi did not operate to deprive the accused of his right to a speedy trial given the language in Rule 3.191(h)(2) which provides that the time cannot be extended by the filing of new charges based on the same criminal episode.
These cases stand for a basic proposition that is central to this case, that is, the date of the original arrest is the focal point for speedy trial considerations, irrespective of changes made in charges. Only in specifically delineated circumstances can the time periods be adjusted.
411 So.2d at 864-65 (emphasis supplied). Thus, in the case at bar, it is apparent that under Florida law the speedy trial period started running when petitioners were first arrested. The question then becomes whether the petitioners were at fault or acted in some way to prevent the State from bringing the case to trial within the speedy trial time. We find no such action here.
We hold that the outcome in Williams comports with both the Sixth Amendment guarantee to a speedy trial and Florida's speedy trial rule. Under the speedy trial rule, the defendant, upon being arrested, has no obligation under the rule to further assert his right to be brought to trial unless he first waives his right. The Williams decision correctly points out that it is the State's responsibility to bring those arrested to trial within the times provided in the speedy trial rule. Further, as noted above in Weed, this Court has consistently disapproved of any action by the State unilaterally tolling the running of the speedy trial period. See, e.g., Genden, 648 So.2d at 1185 (holding that the State's announcement of "no action" does not toll speedy trial); State v. Agee, 622 So. 2d 473, 475 (Fla.1993) (holding that the State's announcement of a nolle prosequi in a case does not toll speedy trial). We also agree with the observation by the court in Williams that the exceptions to enforcement of the speedy trial times usually contemplate some affirmative action by the defendant rendering him unavailable for trial or responsible for delaying a trial. No such action has been cited here.
In Bulgin and Williams, it is undisputed that the State was essentially in complete control of the chain of events (e.g., arrest, offer and terms of the cooperation agreement, rearrest, and timetable on filing formal charges). Thus, it appears any delay or unavailability in prosecution and trial was attributed to the State in the first instance by deciding to place these cases on a different prosecutorial track, and in seeking the benefit of the cooperation of the defendants to make other cases. As the Fifth District noted, it is not unreasonable to expect that if the State makes this decision after an arrest, it cannot ignore the speedy trial rule; and it has the responsibility to take the rule into account, including the obvious option of including a waiver of speedy trial in the cooperation agreement, something the court noted the State was aware of and obviously knew how to do since it was undisputed that it had done so in other cooperation agreements. See Williams, 757 So.2d at 600. However, as noted above, in neither Bulgin nor Williams was the speedy trial issue discussed or waivers sought. Rather, the State relies on the silence of the defendants and a silent record. Yet, the State can cite no instance in which a court has held that mere silence constitutes a waiver of the right to a speedy trial.
We simply conclude that if defendants are to waive their speedy trial rights *312 there must be some more explicit action or evidence of intent to do so than the mere agreement to cooperate with the police in other criminal investigations or prosecutions. As noted above, it is the responsibility of the prosecution to bring the case to trial within 175 days of arrest, and, absent speedy trial waivers or other grounds to establish a speedy trial exception, the State has the responsibility to proceed with a timely prosecution of the defendants. It is undisputed that they did not do so in the cases before us today.
We realize that there may be situations in which this holding will not apply (e.g., when other arguments are made involving different circumstances, that defendants were "unavailable" or that they affirmatively frustrated the State's ability to go to trial). See Barker, 407 U.S. at 522, 92 S. Ct. 2182 ("[A]ny inquiry into a speedy trial claim necessitates a functional analysis of the right in the particular context of the case....").[2] However, here the State makes no claim that the prosecutions or trials were otherwise delayed because of some action of the defendants beyond their cooperation with the police. And, of course, as has been noted above, we are not faced with a situation where the speedy trial rule was specifically discussed and waivers secured.
We conclude that the First District improperly attributed the speedy trial delays to the defendants when it pointed solely to the existence of the cooperation agreements to establish the defendants' responsibility for the delay. Accordingly, we quash the First District's decision in Bulgin and approve the Fifth District's decision in Williams.
It is so ordered.
PARIENTE, C.J., and LEWIS, QUINCE, and CANTERO, JJ., concur.
QUINCE, J., concurs with an opinion, in which CANTERO, J., concurs.
BELL, J., concurs in result only with an opinion.
WELLS, J., dissents with an opinion.
QUINCE, J., concurring.
While I agree with the decision reached by the majority in these cases, I write to express my concerns about the need for an amendment to the speedy trial rule that would address these types of situations. We have reiterated very recently that speedy trial begins to run when the defendant is arrested. See State v. Naveira, 873 So. 2d 300 (Fla.2004). I do not take issue with this proposition. We have also held that, absent a waiver by the defendant, only one of the circumstances delineated in Florida Rule of Criminal Procedure 3.191 will serve to extend the time in which a defendant must be brought to trial. I also agree with the majority that the circumstances of this case do not fall within any of the recognized exceptions to the speedy trial rule.
However, we should not allow defendants to use the speedy trial rule in the manner demonstrated by these cases. The defendants were approached by the State and given opportunities to assist the State with other drug cases. For whatever reasons,[3] the defendants agreed. Nothing *313 in this record indicates that the defendants were in any way coerced into making these decisions. As a part of the agreements, the State, at the defendants' behest, agreed to release the defendants and to delay the filing of their criminal charges until their substantial assistance was completed. Thus, the defendants not only had the benefit of being free to roam the streets, but were also free of any criminal charges during the period of time they were rendering assistance. They received the benefits of their agreements with the State.
While there was no discussion of the speedy trial rule, the defendants certainly knew that the State was going to charge them when their assistance to the State was completed. It seems to me that implicit in the defendants' agreements with the State was an acknowledgement that the State could proceed with the defendants' individual criminal cases when their assistance to the State was over. Yet the defendants, after getting the benefits of their bargains, filed motions for discharge under the speedy trial rule.
I believe that we should amend rule 3.191(l) to allow for an extension of speedy trial under this type of circumstance. Rule 3.191(l) allows a trial judge to extend the time periods provided for under the speedy trial rule for exceptional circumstances. This subdivision outlines six instances of exceptional circumstances, but the situation presented by these cases does not fall within any of the six exceptions. I believe that this type of situation should be included as an exceptional circumstance. Defendants should not be allowed to enter into these types of agreements and then use the speedy trial rule to their advantage. I recognize that the State can also protect the people's interest by getting a waiver of speedy trial at the time these agreements are negotiated. I further urge assistant state attorneys to do so. However, in those instances where the State does not get an explicit waiver, the defendant should not be allowed to "have his cake and eat it too."
CANTERO, J., concurs.
BELL, J., concurring in result only.
The precedent of this Court constrains me to concur with the majority. However, like Justices Wells and Quince, I am troubled with the rule of law that flows from this case. Most importantly, I too believe that we have applied (and now rewritten) a judicially created rule of procedure in a manner that unnecessarily constricts the applicable statute of limitations. Therefore, I concur in result only.
Also, given the breadth of applicability this Court has given to the right to a speedy trial, I write separately out of a concern that we lose sight of the pivotal event to which this right attachesan "arrest." Because there was no issue that these defendants were arrested, the majority opinion did not need to define the term. However, because the speedy trial rule does not provide a definition of arrest and because of the unique facts of the cases before us, I believe a reiteration of what constitutes an arrest for purposes of the speedy trial rule is important. The proper, technical definition of arrest is clear in Florida. As this Court wrote in Melton v. State, 75 So. 2d 291, 294 (Fla.1954):
It is uniformly held that an arrest, in the technical and restricted sense of the criminal law, is "the apprehension or taking into custody of an alleged offender, in order that he may be brought into the proper court to answer for a crime." Cornelius, Search and Seizures, 2nd ed., Sec. 47. When used in this sense, an arrest involves the following elements: (1) A purpose or intention to effect an arrest under a real or pretended authority; *314 (2) An actual or constructive seizure or detention of the person to be arrested by a person having present power to control the person arrested; (3) A communication by the arresting officer to the person whose arrest is sought, of an intention or purpose then and there to effect an arrest; and (4) An understanding by the person whose arrest is sought that it is the intention of the arresting officer then and there to arrest and detain him.
Given this definition of arrest, it is clear that not all custodial detentions constitute an arrest in which the right to speedy trial has attached. For example, an investigatory detention would not mark the start of the speedy trial period. See State v. Lail, 687 So. 2d 873, 875 (Fla. 2d DCA 1997). On the other hand, a formal arrest is not always necessary to mark the start of the speedy trial period. See id.
In essence, the right to speedy trial attaches only to those persons who have been arrested. We must be careful that the expansion of this right has a proper boundary and that we not permit its attachment to spill over into nonarrest circumstances. Reiterating the technical definition of arrest will hopefully assist law enforcement, defendants, and trial judges in understanding and applying the scope of this Court's opinion.
WELLS, J., dissenting.
I dissent because the majority applies a judicial rule of procedure in a manner that eviscerates the statute of limitations enacted by the Legislature. The majority's decision adds to a line of precedents from this Court that has created and continually expanded a substantive right which has no basis in the original language of the rule itself or in Florida's statutes and is not mandated by the State or Federal Constitutions. I also dissent because I would approve the First District's decision in this case that the speedy trial rule should not discharge the defendants under these circumstances.
The original language of Florida's speedy trial rule stated that "every person charged with a crime by indictment or information shall be brought to trial" within a specified time of the arrest. Fla. R.Crim. P. 3.191(a) (2003). Because its meaning is plain from the text, I have interpreted this to mean that the speedy trial rule only applies to defendants facing charges brought by indictment or information. Genden v. Fuller, 648 So. 2d 1183, 1185 (Fla.1994) (Wells, J., dissenting). Despite this plain meaning, this Court has produced a line of cases that has steadily chipped away at the Legislature's statute of limitations by interpreting the rule to apply to any individual who has been arrested, even when no indictment or information has been filed and even when charges have been dismissed and the defendant released. State v. Williams, 791 So. 2d 1088 (Fla.2001); Reed v. State, 649 So. 2d 227 (Fla.1995); Genden v. Fuller, 648 So. 2d 1183 (Fla.1994); Farina v. Perez, 647 So. 2d 113 (Fla.1994); Dorian v. State, 642 So. 2d 1359 (Fla.1994); State v. Agee, 622 So. 2d 473 (Fla.1993); see also State v. Robbins, 863 So. 2d 168 (Fla.2003); Brown v. State, 715 So. 2d 241 (Fla.1998). I dissented from or concurred in these decisions, citing my concern that the majority was creating substantive law in a procedural context. This line of cases most recently culminated in the removal of the words "by indictment or information" from the first paragraph of the rule. Amendments to Fla. Rules of Crim. Pro., 886 So. 2d 197, 198 (Fla.2004). I concurred in the amendment only because the rule codified what the Court had already done through its case law, but I wrote a specially concurring opinion to again voice my *315 concerns. Id. at 200 (Wells, J., concurring specially).
Florida's speedy trial rule is a procedural mechanism used to implement a defendant's constitutional right to a speedy trial. The rule itself is not constitutionally required. See generally R.J.A. v. Foster, 603 So. 2d 1167, 1169-72 (Fla.1992); State v. Bivona, 496 So. 2d 130, 133 (Fla.1986). Florida's speedy trial rule sets precise time limits, but the State and Federal Constitutions do not require that a defendant be tried within a specific period of time. In fact, the United States Supreme Court has explicitly stated that there is "no constitutional basis for holding that the speedy trial right can be quantified into a specified number of days or months." Barker v. Wingo, 407 U.S. 514, 523, 92 S. Ct. 2182, 33 L. Ed. 2d 101 (1972).
Likewise, there is no constitutional right to a permanent discharge from a crime when a state's speedy trial rule has been violated. Many jurisdictions allow courts to remedy a violation by granting discharges (i.e., dismissals) without prejudice against a state's ability to recharge the defendant for the same crime. For example, federal courts have discretion to dismiss a case with or without prejudice depending on a number of factors. 18 U.S.C. § 3162(a)(2) (2000). Oklahoma courts must conduct a review when an incarcerated defendant has not been brought to trial within one year of arrest. Okla. Stat. tit. 22, § 812.1(A) (2004). If upon review the court finds the state has not proceeded with due diligence, the court may dismiss the case, but such dismissal does not preclude the refiling of charges as long as there is good cause and the dismissed case has not yet advanced to a preliminary hearing before dismissal. Id. § 812.2(D). A dismissal in California for a speedy trial violation similarly does not bar future prosecution if the dismissal occurred prior to a preliminary hearing. Cal.Penal Code § 1382, 1387(c) (Deering 2004). California additionally allows the refiling of felony charges even if a preliminary hearing has already been held, provided that the refiling is only the second time charges have been brought for that offense. Id. § 1387(a); Burris v. Superior Court of Orange County, 34 Cal. 4th 1012, 22 Cal. Rptr. 3d 876, 103 P.3d 276 (2005). Even then, charges may be refiled upon a showing of certain special circumstances. Cal.Penal Code § 1387(a)(1)-(3).
I dissent here because the majority now expands the scope of protection under the speedy trial rule to include defendants who have been arrested with no subsequent filing of formal charges and then released so that they can meet their end of a bargain under a cooperation agreement by assisting the State in apprehending other criminals. These individuals were not expecting a trial until their assistance was complete and therefore could not have been prejudiced by the State's failure to proceed to trial within the speedy trial period. Despite this, the majority has essentially decided that every violation of the speedy trial rule requires the defendant be granted total immunity from prosecution for any crime arising from that episode, including even immunity for a defendant who makes a deal with a law enforcement agency that inherently requires a delay in proceedings. Construing the speedy trial rule as requiring a discharge with prejudice in all cases converts the procedural rule into a trumping of the statute of limitations. This immunity extends to serious crimes like murder, effectively reducing the statute of limitations for murder from a limitless period down to only 175 days. § 775.15(1)(a), Fla. Stat. (2004).
This latest application of the rule fails to account for the reality that the decision to arrest is different from the decision to *316 charge. Prosecutors are not always involved in arrest decisions. In cases where police officers make the decision to arrest, prosecutors will be forced to indict and proceed to trial within the speedy trial period even though they may need more time to gather sufficient evidence, prepare the case, secure the apprehension of other suspects, or negotiate a plea arrangement with the defendant. The only other option is to forgo arrest, which in some cases could produce even more dire consequences. See, e.g., Agee, 622 So.2d at 477 (Overton, J., dissenting) ("The option of waiting to arrest until after sufficient evidence to convict has been obtained provides an opportunity for a defendant to leave the jurisdiction as well as to inflict additional harm on others.").
I continue to hold the opinion that Florida's speedy trial rule needs redrafting and rewriting. The rule should not apply to defendants in these kinds of cases. Even if the rule is applied, these cases present a situation in which there should not be a discharge with prejudice. I am concerned about the use of the rule to manipulate, not foster, the process. As previously noted, neither the State nor the Federal Constitution requires that a speedy trial violation be remedied with a permanent discharge. Instead, charges should be allowed to be refiled unless the defendant can demonstrate that the rule violation prejudiced the preparation of a defense.
In this case, it appears to me that the rule was manipulated. The cooperation agreement specifically provided that no charges would be filed until the defendants' assistance to law enforcement was complete. The provision was intended to satisfy the defendants' concern that formal charges and court appearances would jeopardize their covert assistance. The delay in the filing of charges was therefore the result of a provision bargained for by the defendants. The defendants essentially sought a condition to the agreement that allowed them to exploit the speedy trial rule to their advantage. These types of delays should be considered attributable to the accused and therefore a valid exception to the speedy trial rule. Otherwise, the rule is vulnerable to manipulation by clever defendants. I would approve the decision of the First District.
NOTES
[1] The other two cases considered with Bulgin by the First District were State v. Patel, and State v. Pelky, case numbers 1D02-5003 and 1D02-5004, respectively.
[2] Each case should be reviewed on its own to determine to whom the failure to hold trial should be attributed. For example, there may be circumstances where the defendant specifically asks not to be tried until his cooperation is complete, in which case the failure to hold trial would be "attributable to the accused."
[3] There is nothing in this record to indicate whether the defendants' agreements also included reduced charges. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918877/ | 912 So. 2d 859 (2005)
Isaac STUCKEY and Karen Stuckey
v.
THE PROVIDENT BANK.
No. 2003-CA-02003-SCT.
Supreme Court of Mississippi.
March 17, 2005.
*861 R. Charles Robb, attorney for appellants.
Richard Scott Pietrowski, attorney for appellee.
EN BANC.
CARLSON, Justice, for the Court.
¶ 1. Isaac and Karen Stuckey ("the Stuckeys"), husband and wife, appeal to this Court from a final judgment of dismissal entered by the Chancery Court of the First Judicial District of Hinds County. The Stuckeys assert that the chancery court failed to consider both the substantive and evidentiary value of the allegations stated in their sworn complaint and thus abused its discretion in granting summary judgment. Finding the Stuckeys' argument unconvincing and the chancellor's final judgment of dismissal well-founded, we affirm.
FACTS AND PROCEEDINGS IN THE TRIAL COURT
¶ 2. On November 29, 1999, Isaac and Karen Stuckey refinanced their home through Southern Mortgage Company ("SMC"), a Louisiana corporation, and borrowed a total of $27,000. In accordance with the provisions of the fully executed loan documents, SMC was named as the Stuckeys' official lender and beneficiary, and the account was to be funded through a warehouse line of credit which SMC maintained with the Evangeline Bank, another Louisiana financial institution. The Stuckeys, who were securing the loan in order to pay off mounting debt obligations, received their loan proceeds from SMC on December 3, 1999.
¶ 3. On December 10, 1999, the Provident Bank ("Provident"), an Ohio banking corporation, purchased the rights to the Stuckey loan from SMC by way of payment of the appropriate funds wired directly to the Evangeline Bank for credit to SMC's account. As of January of 2001, the Stuckeys stopped making their mortgage payments and were in default on their loan. Thus, Provident, as the holder of the deed of trust, instituted foreclosure proceedings against the Stuckeys.
¶ 4. On January 7, 2002, the Stuckeys commenced their subject lawsuit in the Chancery Court of the First Judicial District of Hinds County by filing a sworn *862 pleading entitled "Motion For Injunctive Relief And Complaint," (hereinafter referred to simply as "complaint").[1] The named defendants were "Royce McNeal, Brent McNeal, Brian Michael Pellissier, James R. Hall, and Craig A. Netterville,[2] The Provident Bank, Ray Michael Gibson, Jr., Universal Title & Escrow, L.L.C., Jo Alice Rankins, American Pioneer Title Insurance Company, Lem Adams, III, XYZ corporation, and John Does 7-15." The thirty-three page complaint, which consisted of 147 paragraphs, exclusive of the three-page prayer for relief, sought, inter alia, to enjoin Provident from foreclosing on the Stuckey loan and alleged that Provident along with its agents had conspired with SMC to engage in predatory lending practices to the detriment of the Stuckeys. To this end, the Stuckeys asserted that Provident and SMC had collaborated in securing the Stuckeys' loan and that Provident had pre-approved the loan for closing and promised SMC a yield premium spread in exchange for allowing it to purchase the loan at a discount. In addition to seeking injunctive relief, the Stuckeys requested the chancery court to determine the validity of liens, cancel and remove clouds from title, set aside conveyances of deeds of trust and direct an accounting. The complaint was accompanied by the Stuckeys' sworn affidavit. Attached to the complaint were twenty-seven pages of documents relating to SMC[3], including corporate records from the Secretary of State of the State of Mississippi.
¶ 5. A month later, on motion of two of the defendants, Ray Michael Gibson, Jr., and Universal Title & Escrow, L.L. C., the case was removed to the United States District Court for the Southern District of Mississippi; however, the case was subsequently remanded back to the Chancery Court of Hinds County. Upon remand, the chancery court, on January 28, 2003, entered a very detailed scheduling order in several pending cases, including the case sub judice. Since we deem this scheduling order to be of significant import in this case, we restate here verbatim the provisions of this scheduling order:
Pursuant to Rule 16 of the Mississippi Rules of Civil Procedure, it is:
ORDERED that motions for joinder of parties or amendments to the complaint shall be served on or before February 28, 2003.
ORDERED that a hearing will be conducted on all pleadings for joinder of parties or amendments to the complaints on March 7, 2003 at 10:00 a.m.
*863 ORDERED that all amended pleadings shall be filed and service of process shall be completed as to any and all parties not previously named as Defendants on or before April 1, 2003.
ORDERED that (I) responsive pleadings pursuant to Rule 12 of the Mississippi Rules of Civil Procedure to all amended pleadings and (ii) all other motions not presently pending which any party desires to be heard at the July 28, 2003 setting, shall be served on or before April 30, 2003.
ORDERED that Plaintiffs shall file a written response to all motions filed prior to or on April 30, 2003 on or before June 15, 2003.
ORDERED that a hearing shall be conducted on all motions filed prior to or on April 30, 2003 on July 28, 2003 at 9:30 a.m. Should counsel desire for any motions presently pending to be heard on said date, then counsel shall file a notice of hearing in connection with such motions prior to April 30, 2003.
ORDERED that all experts of Plaintiffs shall be designated on or before August 31, 2003.
ORDERED that all experts of Defendants shall be designated on or before September 30, 2003.
ORDERED that all discovery shall be completed on or before December 2, 2003.
ORDERED that all dispositive motions, with exception of evidentiary in limine motions, shall be served on or before January 29, 2004.
ORDERED that the opposing party shall file a written response to all dispositive motions and other motions filed prior to or on January 29, 2004 on or before February 28, 2004.
ORDERED that a hearing shall be conducted on all dispositive motions and any other motions filed prior to or on January 29, 2004 on March 29, 2004 at 9:30 a.m.
ORDERED that nothing contained herein shall constitute a waiver of any defense of any Defendant in any of the above styled and numbered civil actions.
¶ 6. In compliance with the chancery court's scheduling order, the Stuckeys filed an amended complaint on March 7, 2003. Unlike the original complaint, this amended complaint was signed only by the Stuckeys' attorney, and was thus an unsworn pleading. On April 30, 2003, Provident filed its answer accompanied by a motion for summary judgment. Attached to Provident's motion, were an affidavit, exhibits, deposition excerpts, and copies of checks disbursed at the Stuckeys' loan closing. Based on the clear and unequivocal provisions of the scheduling order, the Stuckeys were directed by the chancellor to file a written response to Provident's timely filed motion for summary judgment by June 15, 2003. Interestingly, this June 15th court-imposed deadline arrived and passed uneventfully with the Stuckeys failing to file a written response to Provident's motion for summary judgment, with the attached exhibits. On July 17, 2003, finding that no genuine issues of material fact existed for trial, the chancellor entered an order granting Provident's motion for summary judgment. On August 14, 2003, the chancery court entered its Final Judgment as to The Provident Bank wherein, pursuant to the previously entered order granting summary judgment, the chancery court entered final judgment in favor of Provident on all claims asserted by the Stuckeys in their amended complaint, dismissed the amended complaint with prejudice, and certified that dismissal as final under Miss. R. Civ. P. 54(b).
¶ 7. On appeal, the Stuckeys assert two issues for us to consider: (1) Whether the *864 sworn complaint "filed and of record" constituted evidence on material issues so as to create triable issues which thus defeated the motion for summary judgment; and (2) Whether the sworn complaint established evidence to place the investigation of Provident's notice of irregularities of the loan closing "in equilibrio,"[4] thus creating a triable issue concerning Provident being a holder in due course. Not surprisingly, the Stuckeys fervently assert that we should resolve these issues in their favor and thus reverse the chancellor's grant of summary judgment; but quite interestingly, the Stuckeys likewise assert in their brief that this case ought to be reversed and remanded "to allow the Stuckeys' (sic) discovery and a trial on the issues raised."
DISCUSSION
¶ 8. The standard of review of a trial court's grant of a summary judgment motion is de novo. Miller v. Meeks, 762 So. 2d 302, 304 (Miss.2000) (citing Short v. Columbus Rubber & Gasket Co., 535 So. 2d 61, 63 (Miss.1988)). Accordingly, this Court must employ a factual review tantamount to that of the trial court when considering evidentiary matters in the record. Aetna Cas. & Sur. Co. v. Berry, 669 So. 2d 56, 70 (Miss.1996). By design, the threshold for summary judgment is high and requires that "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Miss. R. Civ. P. 56(c). "If any triable facts exist, the lower court's grant of a summary judgment will be reversed; otherwise the decision will be affirmed." Miller, 762 So.2d at 304 (citing Brown v. Credit Ctr., Inc., 444 So. 2d 358, 362 (Miss.1983)). "When a motion for summary judgment is made and supported as provided in Rule 56 an adverse party may not rest upon the mere allegations or denials of his pleadings, his response must set forth specific facts showing that there is a genuine issue for trial. Id. If he does not so respond, summary judgment, if appropriate, shall be entered against him." Id.
I. WHETHER THE CHANCERY COURT PROPERLY GRANTED SUMMARY JUDGMENT.
¶ 9. Central to the Stuckeys' argument that genuine issues of material fact still exist is their assertion that a sworn complaint, in and of itself, represents admissible evidence sufficient to defeat a motion for summary judgment. The Stuckeys maintain that the chancery court erroneously overlooked the statements and factual inferences contained within the four corners of their thirty-three page complaint and misapplied the law by granting summary judgment. Conversely, Provident urges that while a complaint must be considered by the trial court on a motion for summary judgment, the court only considers the allegations contained therein.
¶ 10. The procedure governing summary judgment is unequivocal and its function as well as purpose is entrenched in this Court's precedent. The comment to Miss. R. Civ. P. 56 reads in relevant part as follows:
The purpose of Rule 56 is to expedite the determination of actions on there merits and eliminate unmeritorious claims or defenses without the necessity of a full trial.... Rule 56 provides the *865 means by which a party may pierce the allegations in the pleadings and obtain relief by introducing outside evidence showing that there are no fact issues that need to be tried ... [I]n addition to providing an effective means of summary action in clear cases, it serves as an instrument of discovery in calling forth quickly the disclosure on the merits of either a claim or defense on pain of loss of the case for failure to do so.
Miss. R. Civ. P. 56 cmt. In Brown v. Credit Ctr., Inc., 444 So. 2d 358 (Miss.1983), the first case addressing Miss. R. Civ. P. 56 after our enactment of the Mississippi Rules of Civil Procedure, we clearly explained our Rule 56 summary judgment procedure by quoting portions of the Comment of the Advisory Committee which had assisted this Court in the drafting our rules of civil procedure:
The motion for a summary judgment challenges the very existence of legal sufficiency of the claim or defense to which it is addressed; in effect, the moving party takes the position that he is entitled to prevail as a matter of law because his opponent has no valid claim for relief or defense to the action, as the case may be.
Rule 56 provides the means by which a party may pierce the allegations in the pleadings and obtain relief by introducing outside evidence showing that there are no fact issues that need to be tried.
Brown, 444 So.2d at 362 (emphasis added). In Brown a creditor brought an action against debtor for the repayment of the balance due on a loan. Id. at 361. In defense, the debtor asserted a series of affirmative matters alleging that the creditor had violated the Truth In Lending Act. Id. In finding summary judgment appropriate, we concluded that the debtor's allegations amounted to mere denials and that her response to the creditor's motion to dismiss was "woefully inadequate". Id. at 364. In so concluding, we read the "unmistakable language" of Rule 56 as providing "that mere denial is insufficient to create an issue of fact.... This is true whether the denial be in pleadings, briefs or arguments. Only sworn denials providing a credible basis therefore in evidentiary fact will suffice." Id. Citing federal precedent, we ultimately held:
Our Rule 56 mandates that the party opposing the motion [for summary judgment] be diligent. "Mere general allegations which do not reveal detailed and precise facts will not prevent the award of summary judgment." Liberty Leasing Co. v. Hillsum Sales Corporation, 380 F.2d 1013, 1015 (5th Cir.1967). The party opposing the motion is required to bring forward significant probative evidence demonstrating the existence of the triable issue of fact. Union Planters National Leasing, Inc. v. Woods, 687 F.2d 117, 119 (5th Cir.1982). This Carolyn L. Brown [debtor] has wholly failed to do.
444 So.2d at 364 (emphasis added).
¶ 11. The Stuckeys have clearly misapprehended the fact-driven purpose and function of summary judgment in favor of the much different Miss. R. Civ. P. 12(b)(6) motion for failure to state a claim upon which relief can be granted. While the two rules provide for dismissal of actions, their bases are completely different. Accordingly, a Rule 12(b)(6) motion tests legal sufficiency, and in applying this rule "a motion to dismiss should not be granted unless it appears beyond a reasonable doubt that the plaintiff will be unable to prove any set of facts in support of the claim." Missala Marine Services, Inc. v. Odom, 861 So. 2d 290, 294 (Miss.2003). Quite differently, Rule 56 tests the notion of well-pled facts and requires a party to present probative evidence demonstrating *866 triable issues of fact. In Shaw v. Burchfield, 481 So. 2d 247 (Miss.1985), we clearly stated:
The summary judgment movant has a burden of persuasion; a burden to establish that there is no genuine issue of material fact to be tried. Pearl River County Board v. South East Collections, 459 So. 2d 783, 785 (Miss.1984); Brown v. Credit Center, Inc., 444 So. 2d 358, 362 (Miss.1983). The party opposing the motion must rebut, if he is to avoid entry of an adverse judgment, by bringing forth probative evidence legally sufficient to make apparent the existence of triable fact issues. Smith v. First Federal Savings and Loan Association of Grenada, 460 So. 2d 786, 792 (Miss.1984).
481 So.2d at 252.
¶ 12. Summary judgment, as defined under both our state and federal rules of civil procedure, is a mechanism by which a moving party is able to pierce the allegations made in the opponent's pleadings and, quite simply, place the non-moving party (opponent) in a position of having to convince the trial court via discovery documents (depositions, answers to interrogatories, admissions, etc.) and/or sworn affidavits that there are genuine issues of material fact which require resolution by a plenary trial before the trier-of-fact. In this way, summary judgment roots out mere accusation and conjecture in favor of merit and ultimately functions to force a non-movant to present some modicum of material evidence. While summary judgment is not a substitute for the trial of disputed fact issues, it is an effective rule of procedure which forces parties to produce evidence sufficient to convince a trial court that a genuine issue of material fact exists. Brown, 444 So.2d at 362.
¶ 13. In this case, the Stuckeys have included a litany of allegations in their sworn complaint which, if supported, would produce genuine issues of material fact for trial. However, the Stuckeys have mistakenly relied solely on their sworn complaint in an effort to avoid summary judgment. In support of their sole reliance on their sworn complaint, the Stuckeys cite easily distinguishable case law as holding that a sworn pleading is admissible evidence. In Simon v. Desporte, 150 Miss. 673, 116 So. 534 (1928), a case cited by the Stuckeys, Sophie Desporte sued Joe Simon in the Circuit Court of Harrison County for breach of contract due to Simon's failure to execute and deliver a deed to Desporte subsequent to her payment to Simon of the stated consideration under the deed. Prior to institution of the circuit court action, Desporte had commenced a chancery court action by filing a sworn bill of complaint which contained allegations inconsistent with the evidence which she offered during the circuit court trial. Simon sought unsuccessfully to introduce this sworn chancery court pleading to rebut the evidence presented by Desporte during the circuit court trial. Desporte claimed that she had signed the chancery court bill of complaint under oath without reading it. We held that the circuit judge improperly excluded this evidence. 116 So. at 535. In so holding, we stated that "admissions in a pleading sworn to by the party in whose behalf it was filed are admissible against him in another action." Id. at 535 (citations omitted). While we fully adhere to our holding in Simon and agree that in the proper context an admission made by a party-opponent in prior litigation can be used as evidence, we find that Simon is wholly inapplicable to the case sub judice. A party attempting during trial to introduce as evidence for impeachment purposes a party-opponent's sworn admission is altogether different than parties attempting to rely on their own sworn allegations, that and that, alone, in an effort to save themselves from summary judgment.
*867 ¶ 14. So that there be no misunderstanding, the express provisions of Rule 56(c) and our case law interpreting this rule mandate that the trial judge, in considering a motion for summary judgment, must inter alia review and consider "the pleadings .... on file." Certainly, the trial judge must consider the pleadings, whether they be sworn or unsworn. Although disputed by the Stuckeys, we find clearly from the record before us that the chancellor in today's case did in fact consider inter alia the Stuckeys' sworn complaint and their unsworn amended complaint en route to granting Provident's motion for summary judgment.
¶ 15. We can thus state with confidence that the chancellor dutifully complied with the Rule 56 provisions by considering inter alia the Stuckeys' pleadings. The provisions of Rule 56(e) which caution practitioners that they "may not rest upon the mere allegations or denials of [their] pleadings," clearly do not mandate a grant of summary judgment if there is no response to the summary judgment motion; however, Rule 56(e) does caution that if the non-moving party fails to respond, "summary judgment, if appropriate, shall be entered against [the non-moving party]." (Emphasis added). We can also state with confidence that our learned trial judges have on many occasions, in compliance with Rule 56 and our case law, quite appropriately denied summary judgment motions even though the non-moving party failed to respond to the motion. The non-moving party merely failed to respond at his/her peril, and survived the motion anyway.
¶ 16. However, the Stuckeys propose that the allegations contained in their sworn complaint should be deemed as creating genuine issues of material fact because they, themselves, believe these allegations to be true. Again, this assertion is contrary to the spirit of Rule 56, and our case law interpreting our summary judgment procedure.
¶ 17. In Dennis v. Searle, 457 So. 2d 941 (Miss.1984), this Court was confronted with the propriety of a chancery court's grant of summary judgment, when the trial court had before it for consideration several documents, including a sworn complaint. Dennis had sued the Searles in chancery court on theories of fraud and breach of contract after Dennis discovered termite infestation in the house which he had purchased from the Searles. In due course, the Searles filed a motion for summary judgment. Although we affirmed the chancellor's grant of summary judgment on the fraud issue, we reversed the chancellor's grant of summary judgment on the contract theory, finding that the Searles failed to carry the required burden of establishing the non-existence of genuine issues of material fact, or that they were otherwise entitled to a judgment as a matter of law on Dennis's contract claim. En route to our decision in Dennis, we stated:
At that time [of the summary judgment hearing], [the chancellor] had before him the sworn complaint [footnote omitted here but discussed later] and amended complaint, the admissions made in the answer of the Searles, the deposition of Norman George Dennis taken June 16, 1982, the affidavit of Patty Palmer dated July 9, 1982, the affidavit of Norman George Dennis dated September 11, 1982, the affidavit of Entomologist Stephen R. Leker dated September 9, 1982.
* * * * * * * * * * * *
The trial judge was eminently correct when he granted summary judgment on so much of the complaint as charged the Searles with fraud. From the matters before us there can be no serious doubt but that the Searles had no actual *868 knowledge of the termite infestation at the time they made the contract with Dennis or at the time of the closing. Dennis offered nothing of any consequence to dispute this proposition or to establish actual fraudulent conduct on the part of the Searles.
457 So.2d at 943, 944-45 (emphasis added).
¶ 18. The footnote referenced in the above quote from Dennis, stated:
Under the Mississippi Rules of Civil Procedure, it is not necessary that a complaint be sworn before it may be filed in a chancery court. On the other hand, the fact that this complaint was sworn rendered its allegations eligible for consideration in opposition to the motion for summary judgment. See Rule 56(e), Miss. R. Civ. P.
457 So.2d at 943.
¶ 19. With all of this in mind, the Stuckeys, just like Dennis, in response to the motion for summary judgment, were required to do more than rest on the mere allegations of their pleadings, sworn or unsworn, and when the Stuckeys chose to do no nothing more in response to Provident's motion for summary judgment, they rolled the dice and lost. In Dennis, we affirmed the chancellor's grant of summary judgment on one of the two issues, notwithstanding the existence of a sworn complaint. Today, we likewise affirm the chancellor's grant of summary judgment, notwithstanding the existence of the Stuckeys' sworn complaint.
¶ 20. The rules of evidence are certainly critical in our summary judgment procedure, as they specifically govern the assemblage of various forms of evidence attached to the summary judgment motion, or otherwise used in support of a motion for summary judgment. "Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matter stated therein." M.R.C.P. 56(e). See also 10B Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure, Civil 3d § 2738, at 328 (1998). Even when we analyze the Stuckeys' sworn complaint as an affidavit, the complaint's admissibility as substantive evidence fails due to the complainants' lack of personal knowledge concerning any material fact allegation.
¶ 21. The Stuckeys were afforded the opportunity to respond with proof to Provident's well supported motion for summary judgment. Instead, and to their detriment, they chose to rest on the mere allegations outlined in their sworn complaint. The Stuckeys failed to "go forward" in the face of substantial credible evidence and either contradict Provident's proof or support their own allegations. Kerr-McGee v. Maranatha Faith Center, Inc., 873 So. 2d 103, 107 (Miss.2004). Recently in Kerr-McGee, under similar circumstances, we held that, "[a] party must set forth "specific facts" showing that there are indeed genuine issues for trial" Id. at 107 (citing Moore v. Mem'l Hosp. of Gulfport, 825 So. 2d 658, 663 (Miss.2002)). Today we reiterate, "In order to avoid entry of summary judgment, a party must be diligent and not rest upon allegations or denials in the pleading[s]." Id.
¶ 22. We take this opportunity to emphasize that the parties in today's case were guided in their conduct not only by our rules of civil procedure, and our legion of cases addressing Rule 56 procedure, but also by a very thorough scheduling order entered by the chancellor. In that scheduling order, the chancellor specifically ordered that the Stuckeys "shall file a written response to all motions filed prior to or on April 30, 2003 on or before June 15, *869 2003." Provident timely filed its motion for summary judgment on April 30, 2003. Thus, the chancellor's order clearly informed the Stuckeys that they "shall" file a written response to Provident's motion for summary judgment by June 15, 2003. At their peril, the Stuckeys chose to ignore the chancellor's directive.
¶ 23. In Bowie v. Montfort Jones Memorial Hospital, 861 So. 2d 1037 (Miss. 2003), we affirmed a circuit judge's grant of summary judgment in a medical malpractice case after the judge struck the plaintiff's expert designation which had been untimely filed in violation of the judge's scheduling order. In so holding, we stated:
Our trial judges are afforded considerable discretion in managing the pre-trial discovery process in their courts, including the entry of scheduling orders setting out various deadlines to assure orderly pre-trial preparation resulting in timely disposition of the cases. Our trial judges also have a right to expect compliance with their orders, and when parties and/or attorneys fail to adhere to the provisions of these orders, they should be prepared to do so at their own peril. (Citations omitted).
* * * * * * * * * * * *
While the end result in today's case may appear to be harsh, litigants must understand that there is an obligation to timely comply with the orders of our trial courts ....... [T]he parties must take seriously their duty to comply with court orders.
861 So.2d at 1042-43.
¶ 24. Although the Stuckeys were not thrown out of court for their failure to comply with the chancellor's scheduling order, and although under certain circumstances, the Stuckeys may have survived Provident's summary judgment motion regardless of the fact that they failed to respond to the motion in violation of the chancellor's scheduling order, the Stuckeys chose at their peril not to heed the provisions of Rule 56(e) or the chancellor's scheduling order. Instead they chose to rest on the mere allegations of their sworn complaint, evidently on the mistaken belief that they would survive the summary judgment motion simply because they had signed their original complaint under oath.[5]
¶ 25. For the reasons stated, we find that the chancellor did not err in his grant of summary judgment in favor of Provident; however, notwithstanding our disposition of this first issue, we will proceed below to address the more specific issue of whether Provident was a holder in due course.
II. WHETHER THE CHANCELLOR CORRECTLY FOUND THAT THERE WAS NO GENUINE ISSUE OF MATERIAL FACT REGARDING PROVIDENT'S STATUS AS A HOLDER IN DUE COURSE.
¶ 26. The applicable statute provides that a holder of an instrument is a holder in due course if:
*870 (1) The instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and
(2) [t]he holder took the instrument (I) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 75-3-306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 75-3-305(a).
Miss.Code Ann. § 75-3-302(a) (Rev.2002).
¶ 27. The Legislature has defined what is contemplated above when it refers to "a defense or claim in recoupment" in part (vi):
(a) Except as stated in subsection (b), the right to enforce the obligation of a party to pay an instrument is subject to the following:
(1) A defense of the obligor based on (I) infancy of the obligor to the extent it is a defense to a simple contract, (ii) duress, lack of legal capacity, or illegality of the transaction which, under other law, nullifies the obligation of the obligor, (iii) fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to learn of its character or its essential terms, or (iv) discharge of the obligor in insolvency proceedings;
(2) A defense of the obligor stated in another section of this chapter or a defense of the obligor that would be available if the person entitled to enforce the instrument were enforcing a right to payment under a simple contract; and
(3) A claim in recoupment of the obligor against the original payee of the instrument if the claim arose from the transaction that gave rise to the instrument; but the claim of the obligor may be asserted against a transferee of the instrument only to reduce the amount owing on the instrument at the time the action is brought.
Miss.Code Ann. § 75-3-305(a) (Rev.2002).
¶ 28. Provident has produced uncontested evidence and has expressly documented the fact that it purchased the rights to the Stuckeys' loan for value, in good faith, without notice of uncured default and without notice of impropriety. In appraising the evidence presented to him on Provident's motion, the chancellor's findings were as follows:
Provident is the current holder of the [Stuckeys'] Promissory Note and Deed of Trust. Provident was unaware of any of the allegations raised in this lawsuit when it bought the [Stuckeys'] loan after closing. Therefore, Provident is a holder in due course of the subject Promissory Note and Deed of Trust. All claims made against Provident are based solely upon unsupported theories of vicarious liability for the allegedly wrongful acts of unrelated co-defendants. None of the co-defendants were agents of Provident and therefore Provident is a bona fide purchaser in good faith and for value and is entitled to all the protections accorded to holders in due course.
¶ 29. In the face of Provident's motion and its attached supporting outside evidence, the Stuckeys failed to advance their case. Moreover, the Stuckeys decided to rest on the mere allegations contained in their sworn complaint, and conspicuously chose to forgo their opportunity to present evidence of a relationship between Provident *871 and SMC. The Stuckeys have presented no argument as to why summary judgment was not appropriate and offered nothing for the chancellor to consider in making his summary judgment determination. In his order granting summary judgment, the chancellor accurately appraised the legal sufficiency of the Stuckeys' suit:
In the matter at hand, [the Stuckeys] have not provided any specific facts which show that a genuine issue remains for trial as to Provident. [The Stuckeys] assert a claim against Provident based upon vicarious liability, but have provided absolutely no factual basis for such allegations. Mere allegations are insufficient to survive a motion for summary judgment.
¶ 30. In this case, the chancellor's dismissal of Provident was appropriate as nothing in the record evidences that Provident was in collusion with SMC. Moreover, there is no genuine issue of material fact as to Provident's status as a holder in due course. Under Mississippi law and as a holder in due course, Provident therefore is immune to any claim of impropriety against SMC, its predecessor in interest, and was properly dismissed from this suit.
CONCLUSION
¶ 31. The chancellor in today's case entered a very thorough order granting summary judgment followed by a final judgment consistent with the order and a Rule 54(b) certification. For the reasons stated, the chancellor quite appropriately applied the Rule 56 criteria and our case law in reaching the inescapable conclusion that Provident was entitled to a summary judgment as a matter of law. Thus, we affirm the final judgment dismissing the Stuckeys' claims against Provident as entered by the Chancery Court of the First Judicial District of Hinds County.
¶ 32. AFFIRMED.
SMITH, C.J., WALLER AND COBB, P.JJ., DICKINSON AND RANDOLPH, JJ., CONCUR. GRAVES, J., CONCURS IN RESULT ONLY. EASLEY, J., DISSENTS WITHOUT SEPARATE WRITTEN OPINION. DIAZ, J., NOT PARTICIPATING.
NOTES
[1] This complaint was signed by the Stuckeys' attorney. However, appearing immediately after the attorney's signature and law firm information is an Affidavit which stated: "Personally appeared before me, the undersigned authority for said jurisdiction, Isaac Stuckey and Karen Stuckey, who, having first been sworn my me, state on oath that the facts and matters set forth [in] the foregoing Motion For Injunctive Relief and Complaint are true and correct as stated." Thereafter appear the signatures of Isaac Stuckey and Karen Stuckey, followed by the language "Sworn to and subscribed before me, this the 5th day of January, 2002." After this language there appears the signature of the Stuckeys' attorney, as a notary public, along with his notary seal and commission expiration date.
[2] Royce McNeal, Brent McNeal, Brian Michael Pellissier, James R. Hall and Craig A. Netterville were named separately as adult citizens of the State of Louisiana doing business in the State of Mississippi as Southern Mortgage Company d/b/a Heritage Mortgage Company ("SMC"), a Louisiana corporation. The complaint and amended complaint do not name SMC as a party to the suit.
[3] On March 7, 2001, Southern Mortgage Company filed for a chapter 7 bankruptcy, and pursuant to 11 U.S.C. § 362(a), all actions against SMC were automatically stayed.
[4] The only case decided by this Court in which the term "in equilibrio" is used is Shackelford v. Brown, 72 Miss. 380, 17 So. 896, 897 (1894). This term does not even appear in Black's Law Dictionary. However, in the context of its use, the term means "equally balanced" or "on equal footing."
[5] Part of the relief requested by the Stuckeys is that the case be reversed and remanded to allow them "discovery and a trial on the issues raised." However, again in referring to the chancellor's scheduling order, the Stuckeys were allowed from January 28, 2003, until December 2, 2003, to complete discovery-almost a year. We emphasize again, as we did in Bowie, that attorneys and parties must take seriously the deadlines established in the pre-trial orders entered by our trial courts. Attorneys and parties should not complain about the consequences when they consciously fail to adhere to our trial judges' orders. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585638/ | 763 F.Supp. 1301 (1991)
Edward PYGATT and Jennings Love, Plaintiffs,
v.
PAINTERS' LOCAL NO. 277, INTERNATIONAL BROTHERHOOD OF PAINTERS & ALLIED TRADES and James T. Brennan, as Business Manager and Individually, Defendants.
Civ. No. 90-408 (SSB).
United States District Court, D. New Jersey.
May 20, 1991.
*1302 *1303 Mark J. Blunda, Belford, N.J., for plaintiffs.
Theodore M. Lieverman, Tomar, Simonoff, Adourian & O'Brien, Haddonfield, N.J., for defendants.
OPINION
BROTMAN, District Judge:
This case involves a dispute between plaintiffs, members of Painters' Local No. 277 (herein "Union") in Atlantic City, and the Union over certain conduct of the Union in 1980 and 1981. Defendants have moved for dismissal of the complaint pursuant to Rule 12(b), Fed.R.Civ.Pro., or in the alternative, summary judgment pursuant to Rule 56, Fed.R.Civ.Pro., principally on grounds of collateral estoppel and mootness. For the following reasons, the motion will be granted in part and denied in part.
FACTS AND PROCEDURE
Plaintiffs originally instituted suit in this court on March 2, 1981 alleging violations of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), §§ 101(a)(2), (a)(5) and 609, as amended, 29 U.S.C. §§ 411(a)(2), (a)(5) and 529. Pygatt v. Painters' Local No. 277, Civ.No. 81-641(SSB) (D.N.J.1981). Plaintiff Pygatt, a black man with 30 years experience as a paperhanger, became a member of the Union in July 1977. Plaintiff Love, a black man who was enrolled in the Union's apprenticeship program, became a member of the Union in February 1978.
Plaintiffs complained that the Union discriminated against them by failing to refer them out to employers seeking qualified paperhangers during the casino construction boom then underway in Atlantic City. Plaintiffs also alleged that they were penalized by the Union for speaking out against the Union's discriminatory practices by imposing fines on them, refusing to accept *1304 payment of dues, failing to provide a full and fair hearing on charges against them and expelling them from the Union. Under the LMRDA, 29 U.S.C. § 529, it is unlawful for a labor organization or its officers to fine, suspend, expel, or otherwise discipline any of its members for exercising rights of free speech guaranteed by 29 U.S.C. § 411(a)(2) or without affording a full and fair hearing as required by 29 U.S.C. § 411(a)(5).
The facts leading up to these allegations involve a series of incidents in which plaintiffs Pygatt and Love voiced their complaint that defendants were discriminating against them on account of their race. In June 1980, plaintiff Love attempted to place a classified ad in The Press, a local newspaper of general circulation, alleging discrimination by the Union.[1] At a Union meeting on June 3, plaintiffs stood up and charged the Union with discriminatory referral practices. Later that month, The Press printed an article about a meeting of minority tradesman organized by plaintiffs and quoted Pygatt's criticism of the Union. The Union then filed charges against Pygatt for disloyalty, libel and other infractions of the Constitution of the Brotherhood. Love was charged with similar violations. On July 5, 1980, the Union's financial secretary, William L. Kinzer, charged Love with additional infractions, including libel for criticizing his maintenance of the Union's records.
On July 5, a Union trial was held on these charges, resulting in a $3,200 fine against Pygatt and a $3,650 fine against Love. The Union informed plaintiffs that they could not appeal these fines unless they paid 20% of the amount, which they did not do. On August 5, Love was fined an additional $1,200 for his criticism of the Union's financial secretary. On September 26, 1980, Pygatt was fined another $1,000 for picketing the Union headquarters. Since these were their second offenses, the Union told them that the entire $4,200 was to be paid in full before an appeal could be filed. Pygatt repeatedly attempted to pay his dues to the Union, but the Union refused to accept the dues until he paid the fines and expelled him. Subsequently, the Union expelled Love as well.
Rather than pursue their appeals within the Union, plaintiffs brought suit in this court alleging violations of LMRDA by the Union and state law tortious interference with employment rights by Business Manager James Brennan.[2] On plaintiffs' motion for a preliminary injunction, this court decided to stay any further proceedings and ordered the International to consider the matter on the merits within four months. Pygatt v. Painters' Local No. 277, supra, Order of April 27, 1981.
The International's General Executive Board considered plaintiffs' appeal and rendered a decision on November 5, 1981. It found that the underlying charges of the Local Union's trial board related to plaintiffs' false statements to The Press, libel and slander against the business manager and financial secretary, attempting to run a classified ad in The Press critical of the Union, abusive comments at membership meetings, "and the like." The International concluded that such actions fell within plaintiffs' free speech rights, which the courts have protected from union disciplinary action. The International reversed the decision of the trial board and rescinded all fines. It explicitly limited its decision "to the Trial Board actions described herein that are the subject of this appeal." Defendants' Exhibit 5 at 2.
Meanwhile, concurrent with their suit in this court, plaintiffs pursued charges before the National Labor Relations Board (NLRB). On December 22, 1980, plaintiffs filed an Unfair Practice Charge before the NLRB alleging that the Union refused to refer them for employment in violation of *1305 sections 8(b)(2) and 8(b)(1)(A) of the National Labor Relations Act of 1947 (NLRA), as amended, 29 U.S.C. § 158. After two days of hearings, the Administrative Law Judge (ALJ) issued a decision on December 28, 1981, finding that the Union had refused to refer Pygatt out for jobs, in violation of sections 8(b)(2) and 8(b)(1)(A) of the NLRA, "because he engaged in conduct viewed by union officials as disloyal." Polis Wallcovering Co., 262 NLRB 1336, 1343. The conduct referred to by the ALJ as "disloyal" was the same conduct underlying Pygatt's charges in his present complaint before this court, i.e., expression of Pygatt's opinion on the Union's discriminatory referral practices.[3] The ALJ ordered that Pygatt "be made whole for any loss of earnings suffered as a result of the discrimination against him by payment of a sum equal to that which he normally would have earned as wages from the date of discrimination against him until such time as respondent Union properly refers him for employment, less net interim earnings during such period." Id. at 1344.
With respect to Love, the ALJ found no violation of the NLRA on account of testimony on behalf of the Union that its contract with the employers only authorized it to refer qualified apprentices. Love had been removed from the apprenticeship on the basis of his past poor employment record, a recent discharge for flagrant misconduct and his failure to meet the classroom attendance requirements, and no challenge to the legitimacy of the removal was made. Id. at 1340. Therefore, the ALJ concluded, "Local 277 would not have referred Love even if he had not engaged in conduct found offensive by union officials and which formed the predicate for internal union discipline." Id.
The ALJ's decision was affirmed by a panel of the NLRB on July 27, 1982, ruling on the exceptions filed by the Union and Love.[4] 262 NLRB 1336. The Union and Love then filed a petition for review before the Third Circuit Court of Appeals, which affirmed the Board's decision on liability of the Union. The Third Circuit found that "there was substantial evidence to support the Board's finding that the Union's refusal to refer Pygatt for employment after June, 1980 was motivated by its hostility to Pygatt's criticism." Local Union No. 277, International Brotherhood of Painters and Allied Trades v. NLRB, 717 F.2d 805, 812 (3d Cir.1983). However, under the Supreme Court's ruling in NLRB v. Transportation Management Corp., 462 U.S. 393, 103 S.Ct. 2469, 76 L.Ed.2d 667 (1983), the claimed unavailability of employers willing to hire Pygatt is an affirmative defense. Since the Board "did not determine whether the Union carried its burden of proving that there were no requests for paperhangers from employers who would accept Pygatt if he were referred," the Third Circuit remanded to the Board to consider that issue. Local Union No. 277, 717 F.2d at 813.
With respect to Love, the Third Circuit deferred to the Board's finding that the apprenticeship committee expelled Love for legitimate reasons and that this disqualified him from receiving job referrals. Id. at 811. The court also affirmed the Board's denial of Love's motion to reopen the record. Id. at n. 7.
On remand, the Board issued a supplemental decision and order on June 29, 1984, reaffirming its initial findings and ordering its same make-whole remedy. The Board concluded that the Union "presented no credible or probative evidence demonstrating that referring Pygatt would have been futile because no area contractors with jobs available would have hired him." Painters Local 277 (Polis Wallcovering Co.), 271 NLRB 58, 59. This decision was enforced by the Third Circuit in a memorandum decision *1306 on March 27, 1985, 760 F.2d 258 (3d Cir.1985).
While plaintiffs were pursuing their remedies before the International and the NLRB, this court retained jurisdiction over their LMRDA claims. Plaintiffs also had filed charges of discrimination with the Equal Employment Opportunity Commission (EEOC), which on August 25 and 26, 1982 issued to each plaintiff a Notice of Right to Sue the Union for employment discrimination in violation of Title VII, § 704(a), 42 U.S.C.A. § 2000e-3(a).[5] Subsequently, on October 25, 1982, plaintiffs filed a motion for partial summary judgment, expedited hearing on damages and leave to file an amended complaint to assert a claim under Title VII. According to the docket sheet, the magistrate granted plaintiffs' motion to amend complaint on February 24, 1983.
On January 10, 1984, defendants filed a motion for summary judgment on multiple grounds of statute of limitations, preemption, mootness and estoppel. On February 16, 1984, prior to any ruling by this court, the parties entered in a stipulation of voluntary dismissal without prejudice on grounds "that a more orderly and economical resolution of the instant causes of action may be achieved by awaiting the final outcome of the NLRB proceedings before submitting the instant causes of action to civil trial." The stipulation, which was approved by the court, also stated that defendants' defenses and claims raised in its summary judgment motion "shall be preserved"; defendants also reserved the right to renew them upon reinstitution of plaintiffs' complaint.
After plaintiffs' suit in this court was voluntarily dismissed without prejudice and the NLRB had issued its supplemental order against the Union, Pygatt brought a second Unfair Practice Charge before the NLRB alleging that the Union had violated sections 8(b)(1)(A) and 8(b)(2) of the NLRA by causing the Claridge Hotel to discharge him. On August 12, 1985, the ALJ issued an opinion, finding that the Union had committed the unfair labor practices and ordering that Pygatt be made whole. The Board affirmed the ALJ's decision on January 22, 1986. Local Union No. 277, International Brotherhood of Painters (Del E. Webb), 278 NLRB 169.
Since the parties disagreed over the amounts the Union owed to Pygatt in both the Polis Wallcovering and Del E. Webb cases, the Regional Director ordered consolidation and a hearing. On June 27, 1986, the ALJ issued an order delineating the amounts to be paid to Pygatt for lost wages, replacement of medical health insurance, pension contributions and interest. 282 NLRB 405. The Union filed exceptions and a panel of the Board modified the formula used by the ALJ in determining the amounts owed. 282 NLRB 402 (1986).
Pursuant to the Board's determination, the Union paid the full amount ordered (over $43,000) in damages to and on behalf of Pygatt with the exception of $948.05, which the Union deducted as administrative dues. Again, the parties could not resolve the dispute over the correct amount, leading the Board to file an application for enforcement with the Third Circuit Court of Appeals on March 11, 1988. In an unpublished judgment order dated September 16, 1988, the Third Circuit granted the Board's petition and ordered the Union to remit the disputed $948.05. The Union has paid that amount, with interest.
Plaintiffs have now returned to this court and reactivated their 1981 suit by filing a new complaint almost identical to its second amended complaint in the 1981 action. Pygatt v. Painters' Local No. 277, Civ. No. 90-408(SSB). Defendants have moved to dismiss the complaint or grant judgment as a matter of law. They argue that 1) plaintiffs are collaterally estopped from relitigating their claims, 2) their claims concerning the Union's disciplinary *1307 action are moot, 3) the Union did not violate the "full and fair hearing" protection of section 101(a)(5) of the LMRDA, 4) plaintiffs' state law claim is preempted by federal law, 5) plaintiffs' Title VII claims are time-barred and 6) part of plaintiffs' requested relief should be stricken.
DISCUSSION
A. Standard on Motion to Dismiss
On a motion to dismiss, the court must take as true the well-pleaded allegations in the complaint. Miree v. DeKalb County, 433 U.S. 25, 27 n. 2, 97 S.Ct. 2490, 2492 n. 2, 53 L.Ed.2d 557 (1977); Rogin v. Bensalem Township, 616 F.2d 680, 685 (3rd Cir.1980), cert. denied 450 U.S. 1029, 101 S.Ct. 1737, 68 L.Ed.2d 223 (1981). A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim which would entitle him or her to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). Motions to dismiss should be granted sparingly and only where the complaint discloses that plaintiff can not possibly prove a case entitling him or her to relief. Sheppard v. American Dredging Co., 77 F.Supp. 73 (E.D.Pa.1948). "Reasonable factual inferences will be drawn to aid the pleader." D.P. Enterprises, Inc. v. Bucks County Comm. College, 725 F.2d 943, 944 (3rd Cir.1984).
B. Collateral Estoppel
According to the general rule regarding collateral estoppel, or issue preclusion, "[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim." National Labor Relations Board v. Yellow Freight Systems, Inc., 930 F.2d 316, 319 (3d Cir.1991), quoting Restatement (Second) of Judgments § 27 (1982). Administrative proceedings may have preclusive effect on subsequent litigation when the agency "is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate...." United States v. Utah Construction Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642 (1966).
Federal courts have consistently held that NLRB unfair labor practice determinations can be binding as to fact and law under the doctrine of collateral estoppel in subsequent damage actions. See, e.g., Wickham Contracting Co. v. Board of Educ., 715 F.2d 21, 26 (2d Cir.1983); Glaziers & Glassworkers v. Custom Auto Glass Dist., 689 F.2d 1339, 1341 (9th Cir. 1982); Consolidated Express v. New York Shipping Ass'n, Inc., 602 F.2d 494, 503-06 (3d Cir.1979), vacated on other grounds, 448 U.S. 902, 100 S.Ct. 3040, 65 L.Ed.2d 1131 (1980), on remand, 641 F.2d 90 (3d Cir.1981); Jaden Electric v. Int'l Brotherhood of Electrical Workers, 508 F.Supp. 983, 988 (D.N.J.1981). Absent demonstration of particularized unfairness, a party may not relitigate issues adjudicated by the NLRB to the extent that the issues are identical and their resolution was essential to the NLRB's decision. Wickham, 715 F.2d at 26-27.
As set forth above, the issues litigated in the NLRB proceedings concerned the Union's discriminatory referral practices against Pygatt and Love in retaliation for their "disloyalty," i.e., their activities protesting the Union's refusal to refer them out to employers. The factual circumstances underlying plaintiffs' unfair practice charges are identical to those underlying their present allegations of violations of LMRDA. Compare 262 NLRB at 1340-42 with Plaintiffs' Complaint at ¶¶ 717. Furthermore, as the thorough opinion of the ALJ indicates, the determination of the Union's violation of sections 8(b)(1)(A) and 8(b)(2) necessarily involved resolution of the same factual issues present here. The ALJ determined that the Union refused to refer Pygatt to employers because of Pygatt's conduct in speaking out against the Union's discriminatory practices, picketing Union headquarters, organizing fellow minority workers and failing to pay the resulting fines. As to Love, the ALJ found *1308 that the Union showed just cause in refusing to refer Love to employers on account of his dismissal from the apprenticeship program and his poor work record.
The lengthy and arduous proceedings before the NLRB demonstrate that the parties had a full and fair opportunity to litigate these issues in that forum. Furthermore, neither party alleges procedural unfairness and the court is unable to perceive any "procedural opportunities available to the [party] that were unavailable in the first action of a kind that might be likely to cause a different result." Consolidated Express, 602 F.2d at 504, quoting Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331, 99 S.Ct. 645, 652 & n. 15, 58 L.Ed.2d 552 (1979).[6] Therefore, upon an appropriate motion for summary judgment, the court will apply the findings of fact made by the NLRB in deciding whether plaintiffs are entitled to judgment on their LMRDA, Title VII and state law claims.
Defendants would have the court go one step further and determine as a matter of law at this stage that plaintiffs are collaterally estopped from relitigating their claims in this suit because they "are identical to claims raised before the NLRB." Defendants' Brief at p.9. What defendants really seek is claim preclusion, not issue preclusion. The court, however, has before it separate and independent causes of action that concern identical facts previously litigated. Therefore, it cannot dismiss plaintiffs' claims as a matter of law on grounds that these particular claims have already been adjudicated.
C. Mootness
1. LMRDA Section 609:
The court must have before it a live case or controversy in order to assert Article III jurisdiction. Liner v. Jafco, Inc., 375 U.S. 301, 306 n. 3, 84 S.Ct. 391, 394 n. 3, 11 L.Ed.2d 347 (1964). "Federal courts are without power to decide questions that cannot affect the rights of litigants in the case before them." North Carolina v. Rice, 404 U.S. 244, 246, 92 S.Ct. 402, 404, 30 L.Ed.2d 413 (1971). A suit "must be a real and substantial controversy admitting of specific relief through a decree of conclusive character." Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41, 57 S.Ct. 461, 464, 81 L.Ed. 617 (1937).
The LMRDA § 609, 29 U.S.C.A. § 529, makes it unlawful for any labor organization or officer to fine, suspend, expel or otherwise discipline any of its members for exercising such protected rights as freedom of speech. In order for a plaintiff to bring suit under this section, he or she must be presently fined, suspended, expelled or otherwise disciplined by the union. Otherwise, a § 529 suit is moot. See Stelling v. IBEW Local 1547, 587 F.2d 1379, 1389-90 (9th Cir.1978), cert. denied, 442 U.S. 944, 99 S.Ct. 2890, 61 L.Ed.2d 315 (1979) (when disciplinary actions taken against two union members were dismissed, their § 529 claims were rendered moot); Powers v. St. Louis Typographical Union, 549 F.2d 60 (8th Cir.1977).
Here, plaintiffs admit in their complaint that in November 1981 the International dismissed the fines and readmitted them to the Union as new members. Competent evidence submitted by defendants supports this fact. Therefore, plaintiffs' cause of action under LMRDA § 609, 29 U.S.C.A. § 529, based on the Union's impermissible conduct against plaintiffs in exercising their free speech rights protected by LMRDA § 101(a)(2), 29 U.S.C.A. § 411(a)(2), must be dismissed as moot. Likewise, Count Two, which asserts a cause of action under LMRDA § 609, 29 U.S.C.A. § 529, based on the Union's disciplining plaintiffs without a full and fair hearing as guaranteed by LMRDA § 101(a)(5), 29 U.S.C.A. § 411(a)(5), must be dismissed as moot. The intraunion "trial" *1309 of which plaintiffs complain was the very proceeding that resulted in the imposition of charges and fines against plaintiffs and, as those fines no longer exist, the cause of action has evaporated.
2. LMRDA Section 102:
The LMRDA, however, does not limit an aggrieved union member's cause of action for infringement of the Act's codified "Bill of Rights" to § 529. Section 102 of LMRDA, 29 U.S.C.A. § 412, states that "[a]ny person whose rights secured by the provisions of this subchapter have been infringed by any violation of this subchapter may bring a civil action in a district court of the United States for such relief (including injunctions) as may be appropriate." Federal courts construing this provision of the LMRDA have ruled that plaintiffs may recover loss of wages, Robins v. Schonfeld, 326 F.Supp. 525 (D.C.N.Y.1971), mental suffering, emotional distress and loss of reputation, Petramale v. Local No. 17 of Laborers' Int'l Union of North America, 847 F.2d 1009 (2d Cir.1988), punitive damages, Vanderventer v. Local Union No. 513 of Int'l Union of Operating Engineers, AFL-CIO, 579 F.2d 1373 (8th Cir.1978), cert. denied 439 U.S. 984, 99 S.Ct. 576, 58 L.Ed.2d 656 and attorney's fees, Hall v. Cole, 412 U.S. 1, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1972); Brennan v. United Steelworkers of America, 554 F.2d 586 (3d Cir.1977).
Although plaintiffs' complaint seeks compensatory, consequential, incidental and punitive damages, as well as attorney's fees, it fails specifically to plead a cause of action pursuant to § 412.[7] However, the court "may evaluate pleadings both in terms of their content at the time of their submission and as they might be amended at some later date." Wright, Miller & Kane § 2722, at 47. Given the liberality of granting leave to amend under Rule 15(a), Fed.R.Civ.Pro., and plaintiffs' demand for consequential and punitive damages in Counts One and Two, and in the interest of judicial economy, the court will consider the merits of defendants' motion in the face of a § 412 claim as well.
A plaintiff has a cause of action under § 412 if he can show the rights secured under 29 U.S.C.A. § 411 ("Bill of Rights") "have been infringed by any violation of this subchapter" (emphasis added). Therefore, in order to recover under § 412, Pygatt and Love must show a violation of Subchapter II, which covers the protection of freedom of speech and safeguards against improper disciplinary action.
Defendants contend that, as to both plaintiffs, this issue has already been litigated before the NLRB. With respect to Pygatt, the NLRB found that the Union fined and ultimately expelled Pygatt on account of his free speech activities and that this consideration motivated its refusal to refer Pygatt to employers. Essential to finding that the Union was motivated by improper considerations was the conclusion that the Union violated Pygatt's free speech rights by charging him with certain infractions, imposing fines and ultimately expelling him. Therefore, Pygatt has shown a viable cause of action under § 412. In addition, as to Pygatt's claim that the Union violated his right to a full and fair hearing, the NLRB did not consider that issue and the court does not have before it sufficient evidence to make a judgment as a matter of law. Therefore, defendants' motion for summary judgment on this point will be denied.
Defendants further argue that, since Pygatt has already received back pay and reinstatement to the Union, he is collaterally estopped from litigating any further damage issues. The court disagrees. Under case law interpretation of the relief available under § 412, Pygatt may be able to recover consequential and punitive damages as well as attorney's fees. Since discovery has not even begun on these damage issues, they must be preserved for a later stage of this litigation.
*1310 The court now turns to whether Love can show any violation of rights protected by § 411. Love was a cohort of Pygatt's who joined him in criticizing the Union for its racially discriminatory practices. Love's activities also led to charges for certain infractions, imposition of fines and ultimately expulsion from membership. However, at the time, Love was only an apprentice and the Union was obligated to refer only "qualified" apprentices. In finding no violation of sections 8(b)(1)(A) and (2) of the NLRA, the ALJ credited the Union's affirmative defense that it "would not have referred Love even if he had not engaged in conduct found offensive by union officials and which formed the predicate for internal union discipline." 262 NLRB at 1340. Therefore, Love is collaterally estopped from relitigating whether the Union was improperly motivated when it refused to refer him to employers.
However, the NLRB did not make a ruling on whether the Union violated Love's rights under § 411, a finding clearly not essential to its ruling. Rather, it gave weight to the evidence that Love was not a qualified apprentice. Since the NLRB did not specifically rule on whether the Union violated Love's rights under § 411 by imposing certain fines and expelling him, Love is not collaterally estopped from raising that issue in this court. The same is true of Love's claim that the Union violated his right to a full and fair hearing.
Pending plaintiffs' amending their complaint to assert a cause of action pursuant to LMRDA § 102, 29 U.S.C.A. § 412, plaintiffs have preserved their LMRDA cause of action. They will be granted leave to amend their complaint within thirty days.
D. Title VII Claim
Count IV of plaintiffs' amended complaint alleges that the Union retaliated against plaintiffs' opposition to what they believed were unlawful employment practices in violation of section 704(a) of Title VII, 42 U.S.C.A. § 2000e-3(a).[8] In a letter dated June 4, 1982, the Equal Employment Opportunity Commission (EEOC) issued a determination finding reasonable cause to believe that the fines and failure to refer plaintiffs' for employment constituted unlawful retaliation in violation of § 704(a). After defendants refused to participate in EEOC-sponsored conciliation, EEOC issued a Notice of Right to Sue to each plaintiff on August 25 and 26, 1982. On October 12, 1982, plaintiffs filed a notice of motion for leave to amend their complaint to add the § 704(a) allegation, returnable on November 19, 1982. The docket reveals that the motion was granted on February 24, 1983.
Defendants raise two points in support of their motion to dismiss plaintiffs' Title VII claim. First, defendants argue that plaintiffs' Title VII claim was not timely filed in that their motion to amend the complaint was not granted until after the ninety day filing deadline noticed in the August right to sue letters. Although the argument may have some technical appeal, its practical application would work a real injustice to parties who already have a complaint filed in district court and then timely file a motion to amend to add a Title VII claim pursuant to an EEOC right to sue letter. It also puts an undue burden on an already overworked judicial system to consider and determine a motion to amend within ninety days of a notice of right to sue, regardless of when in that ninety-day period the motion to amend was filed. As the court found in Pollard v. City of Hartford, 539 F.Supp. 1156, 1161 (D.Conn.1982), the plaintiffs have taken all the steps they could within the ninety-day period. The liberal interpretation accorded Federal Rule of Civil Procedure 15(a) for granting leave to amend and the broad remedial purposes of Title VII provide yet additional support to conclude that filing a *1311 motion for leave to amend a complaint constitutes the bringing of a Title VII claim within the statutory ninety-day period.
Defendants' second argument is more compelling. They argue that the Title VII claim does not afford any additional relief than plaintiffs have already obtained from the International and the NLRB. As defendants correctly point out, monetary damages are not available under Title VII, which allows only equitable relief in the form of restitution and injunctions; neither compensatory nor punitive damages are recoverable. See, e.g., Richerson v. Jones, 551 F.2d 918, 926-28 (3d Cir.1977); Boddy v. Dean, 821 F.2d 346, 352 (6th Cir.1987). Since plaintiff Pygatt has already received backpay and a cease and desist order against the Union for the same charges alleged in his Title VII claim, and concedes that he is not entitled to a double recovery, his Title VII claim must be dismissed.
On the other hand, the court is not convinced on the evidence before it that plaintiff Love must lose his Title VII claim. Although the International rescinded the fines imposed on Love and reinstated him to membership, he has not received backpay or a cease and desist order from the NLRB because the NLRB found that the Union was allowed to expel him for legitimate reasons and such disqualified him from receiving job referrals. However, it is not apparent to the court whether Love is collaterally estopped from pursuing his Title VII claim in that the Union's affirmative defense to the NLRA charge may not be valid in the Title VII context. The parties have not briefed this issue and, therefore, the court will reserve decision on it pending further motion practice. For now, the court will grant defendants' request that plaintiffs' demand for consequential, incidental and punitive damages be stricken from their Title VII count.
E. Malicious Interference with Employment Rights
Count III of plaintiffs' complaint charges Business Agent Brennan with intentionally and maliciously interfering with plaintiffs' employment rights by "[e]ncouraging the Union members to harass, ridicule and threaten Plaintiff Love on the job site in an effort to get him branded a `poor worker'; [s]oliciting letters from contractors ... in order to mark Plaintiffs as poor workers; [and] [o]ther malicious and intentional acts" as described elsewhere in the complaint. Plaintiffs' Amended Complaint at ¶ 27.
Defendants argue that plaintiffs' state law claim must be dismissed because it is preempted by the National Labor Relations Act and within the exclusive and primary jurisdiction of the NLRB. The Supreme Court has on several occasions set out the court's task in determining whether preemption applies.
"First, we determine whether the conduct that the State seeks to regulate or to make the basis of liability is actually or arguably protected or prohibited by the NLRA.... if the conduct at issue is arguably prohibited or protected otherwise applicable state law and procedures are ordinarily preempted. When, however, the conduct at issue is only a peripheral concern of the Act or touches on interests so deeply rooted in local feeling and responsibility ... we refuse to invalidate state regulation or sanction of the conduct." Operating Engineers v. Jones, 460 U.S. 669, 676 [103 S.Ct. 1453, 1458-59, 75 L.Ed.2d 368] (1982), citing, San Diego Building Trades Council v. Garmon, 359 U.S. 236, 245 [79 S.Ct. 773, 779, 3 L.Ed.2d 775] (1959); Farmer v. Carpenters, 430 U.S. 290, 296 [97 S.Ct. 1056, 1061, 51 L.Ed.2d 338] (1977).
Conduct the Supreme Court has found not preempted by the NLRA includes violence, United Automobile Workers v. Russell, 356 U.S. 634, 78 S.Ct. 932, 2 L.Ed.2d 1030 (1958), libel, Linn v. Plant Guard Workers, Local 114, 383 U.S. 53, 86 S.Ct. 657, 15 L.Ed.2d 582 (1966), intentional infliction of emotional distress, Farmer, supra, and trespass, Sears, Roebuck & Co. v. San Diego District Council of Carpenters, 436 U.S. 180, 98 S.Ct. 1745, 56 L.Ed.2d 209 (1978).
There is no doubt in the court's mind that part of plaintiffs' claim of malicious interference *1312 with employment rights is preempted by the NLRA. Plaintiffs' complaint that Brennan solicited letters from contractors in order to mark plaintiffs as poor workers charges conduct that is arguably prohibited by sections 7 and 8 of the NLRA, 29 U.S.C.A. §§ 157 and 158 ("[i]t shall be an unfair labor practice for a labor organization or its agents to cause or attempt to cause an employer to discriminate against an employee...."). Indeed, those very charges were brought before and considered by the NLRB in its initial ruling on plaintiffs' case. 262 NLRB at 1342. Likewise, plaintiffs' claim of "other malicious and intentional acts" described elsewhere in the complaint involve conduct that arguably is prohibited by the NLRA. Therefore, to the extent plaintiffs' allegation of malicious interference is based on Brennan's conduct in soliciting unfavorable letters from employers, it is covered by the NLRA, and, therefore, preempted. See Iron Workers Local 207 v. Perko, 373 U.S. 701, 83 S.Ct. 1429, 10 L.Ed.2d 646 (1963); Jones, supra.
The court is more circumspect, however, as to whether the NLRA preempts Love's claim that Brennan encouraged other Union members to harass, ridicule and threaten him on the job site in order to get him branded as a poor worker. The complaint alleges that "[i]n or about August, 1980, Plaintiff Jennings Love was finally referred by the Union to a job. Love was suffering from physical illness due to severe insomnia which was caused by the intimidation and threatening atmosphere he was forced to endure from the [Union] and its members." As evidenced by the record before the NLRB, Love's claimed "insomnia" led to an incident in which on August 15, 1980 he was discovered asleep on the floor in his work area by the general contractor's superintendent. The matter was reported to the subcontractor and Love was discharged immediately. This incident proved to be Love's undoing, as he was subsequently removed from the apprenticeship program in part due to his unsatisfactory performance on past jobs. 262 NLRB at 1340. Love alleges that he suffered severe emotional and physical distress as a result of Brennan's activities.
Essentially, Love charges Brennan with orchestrating a campaign among the Union members to harass and intimidate him to such an extent that he lost sleep and was unable to perform properly on the job. The court's review of sections 7 and 8 of the NLRA reveals no provision that would arguably prohibit or protect this type of conduct. For example, 29 U.S.C.A. § 158(b), which applies to conduct of a labor organization and its agents, refers only to action by a union against employees that restrains or coerces them in the exercise of their rights under § 157. Section 157 says employees shall have the right to refrain from activities of self-organization, collective bargaining and similar activities. Here, Love alleges that Brennan took action to maliciously interfere with his ability to perform the job he was hired to do, as opposed to interfering with Love's collective bargaining activities. Likewise, Love alleges something different than hiring hall discrimination or breach of duty of fair representation, which would be preempted by the NLRA.
Furthermore, New Jersey law imposes liability on "one who unjustifiably interferes with the contract of another," or meddles into the affairs of another, for which punitive damages are recoverable. Cappiello v. Ragen Precision Indus., Inc., 192 N.J.Super. 523, 529, 471 A.2d 432 (App. Div.1984). In the criminal case of Harris v. Perl, 41 N.J. 455, 197 A.2d 359 (1964), the New Jersey Supreme Court stated:
The law protects a man in the pursuit of his livelihood. True, he cannot complain of every disappointment ... But if the act complained of does not rest upon some legitimate interest or if there is sharp dealing or overreaching or other conduct below the behavior of fair men similarly situated, the ensuing loss should be redressed.
41 N.J. at 461, 197 A.2d 359. Furthermore, protection extends to an individual's interest in reasonable expectations of economic advantage. Id. at 462, 197 A.2d 359. In light of the state's interest in prohibiting *1313 conduct that is inherently and "deeply rooted in local feeling" about what fair people do to one another in pursuit of their livelihoods, the court finds that Brennan's conduct of encouraging Union members to harass Love is peripheral to the NLRA and, therefore, not preempted.[9]
CONCLUSION
For the reasons set forth above, defendants' motion to dismiss will be granted in part and denied in part. An appropriate order will be entered.
NOTES
[1] Plaintiffs say The Press did not run the ad allegedly on grounds that the discrimination charge had to be filed with a government agency first. A Press employee showed the ad to the Union's leadership. Plaintiffs' 1981 Complaint at ¶ 8.
[2] Plaintiff Love also alleged violation of the Union's fiduciary duty of fair representation. This charge has not been renewed in the present action and, therefore, is not relevant to this discussion.
[3] The ALJ found that "Brennan terminated, effectively, Pygatt's access to the hiring hall upon the same considerations which resulted in the imposition of union discipline, fines, and ultimate expulsion of Pygatt from union membership." Polis Wallcovering Co., 262 NLRB at 1342.
[4] The NLRB rejected Love's motion to reopen the record to present certain evidence pertaining to his employment record prior to Local 277's failure to refer him for employment. 262 NLRB 1336, n. 1.
[5] The provision states in pertinent part:
It shall be unlawful employment practice ... for a labor organization to discriminate against any member thereof ... because he has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter.
[6] Although Love sought to reopen the record before the Board to present evidence regarding his prior employment record, the Board rejected his request because he failed to allege extraordinary circumstances or any other matter satisfying the requirements to warrant reopening the record. 262 NLRB 1336, n. 1 (1982). This finding was explicitly affirmed by the Third Circuit Court of Appeals when it was raised by Love on appeal. Local Union No. 277 v. NLRB, 717 F.2d at 811, n. 7. This court is bound by their findings.
[7] Plaintiffs explicitly frame their cause of action as one under § 412 for the first time in their opposition papers. Plaintiffs' Brief in Opposition to Motion to Dismiss at p. 12.
[8] The provision states:
It shall be an unlawful employment practice ... for a labor organization to discriminate against any member thereof or applicant for membership, because he has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter.
42 U.S.C.A. § 2000e-3(a).
[9] This conclusion does not require the court to rule at this time on whether Brennan may be individually liable for interfering with Love's employment rights by encouraging other Union members to harass him. The determination of this issue must await further discovery of Brennan's purported conduct and whether he was acting as an authorized agent of the Union at the time, an issue not determined by the NLRB. If indeed Brennan was acting as an agent of the Union, he can not be held individually liable under federal or state law for his acts. See 29 U.S.C. § 185(b); Atkinson v. Sinclair Refining Co., 370 U.S. 238, 82 S.Ct. 1318, 8 L.Ed.2d 462 (1962); Vaca v. Sipes, 386 U.S. 171, 179, 87 S.Ct. 903, 911, 17 L.Ed.2d 842 (1967). Since plaintiffs did not name the Union in Count III, it would be dismissed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585869/ | 508 So.2d 1136 (1987)
Kerri M. MARTIN, Ricky J. Martin, and April Kelli Hazelrig
v.
Richard P. WATTS and Huntsville Jaycees, Inc.
84-1007.
Supreme Court of Alabama.
April 10, 1987.
Rehearing Denied May 8, 1987.
Charles C. King and Charles A. Sullins, Huntsville, and Francis H. Hare, Jr., and D. Leon Ashford of Hare, Wynn, Newell & Newton, Birmingham, for appellants.
E. Cutter Hughes, Jr., and H. Harold Stephens of Lanier, Shaver & Herring, Huntsville, for appellee Richard P. Watts.
Don G. DeCoudres, Birmingham, for appellee Huntsville Jaycees, Inc.
PER CURIAM.
This is an appeal from a summary judgment made final pursuant to Rule 54(b), A.R.Civ.P. Defendants, Richard Watts, David Worley, and Huntsville Jaycees, Inc. ("Jaycees"), were alleged to have participated in sponsoring or to have assisted in sponsoring a party at which alcoholic beverages were provided to minors.
Two of the minors became intoxicated and caused an automobile accident in which plaintiffs were injured and another person was killed. The plaintiffs brought an action for damages against these defendants and others. Settlements have been reached with some of the original defendants, while others have been dismissed.
Defendants Watts and Jaycees filed motions to dismiss and motions for summary judgment. The lower court denied the motions to dismiss. In considering the motions for summary judgment, the trial court addressed two issues: First, whether an action for damages under the Alabama Dram Shop Act could be brought against either the Huntsville Jaycees or Watts, and second, whether an action founded upon common law negligence principles would lie *1137 against either defendant? Judge Smith, in a lengthy and scholarly order which traces the history of legislation affecting alcoholic beverages in this state, held that an action will not lie on either theory and granted summary judgment for Watts and the Jaycees.
FACTS
The following facts are taken from Judge Smith's order.
The Huntsville Jaycees, Inc.
The Huntsville Jaycees, Inc., is a service organization created to benefit and improve the city of Huntsville. According to 11 World Book Encyclopedia 51 (1976),
"Jaycees are organizations that stress individual development through leadership training and civic involvement.... Jaycees learn to be leaders by working in community improvement programs. They sponsor programs on youth development, government affairs, health, safety, and international relations."
Included among the many community programs which the Huntsville Jaycees conducted was its sponsorship of the Huntsville High School Junior Jaycees.
The Huntsville High School Junior Jaycees
The Huntsville High School Junior Jaycees ("HHS Jr. Jaycees") is a high school service and social club. The members must be enrolled in Huntsville High School, have completed their sophomore year, and be at least sixteen years old. The following boys were officers of the HHS Jr. Jaycees during the 1981-82 school year: President: John Watts (son of defendant Richard Watts); Vice President: Drew Crow; Secretary: David Vest; and Treasurer: Wes Neighbors (son of William W. "Billy" Neighbors, Jr.). These boys were responsible for planning and preparing the party where the alcoholic beverages were consumed.
Mrs. Sandra Norton was the school faculty sponsor; however, she took no part in the affairs of the club. According to testimony, she was "just a name used by the club to comply with the stated school policy."
David Worley
David Worley is an attorney. He is associated with the Huntsville Jaycees, Inc., and served as "sponsor" for the HHS Jr. Jaycees chapter. In that capacity, he served as liaison between the two organizations and coordinator of their joint activities. To perform those duties, Worley attended meetings of both clubs.
Richard Watts
Richard Watts is the father of John Watts, the president of the HHS Jr. Jaycees. He and his wife, Jean Watts, are part owners of a lake cabin where this party was held.
The Party
Each year for a number of years, the HHS Jr. Jaycees had held "a big social event" for the club members and their invited friends. Thus, at one of the last club meetings during the 1980-81 school year, the members discussed party plans. Someone suggested a place where the beer might be purchased, but Worley, who was present, stated that he could get the club "a special deal." According to deposition testimony of Wes Neighbors,
"[Worley] said we could get it for nine dollars a case, so we decided on thirty cases of beer."
On Friday, May 15, 1981, following the end of classes for the day, Neighbors drove with David Vest to the law office of Worley with a check drawn on the "Huntsville High School Imprest Account" and made payable to Wes Neighbors. Neighbors endorsed the check and gave it to Worley. He and David Vest then followed Worley to Turner Beverage Company. Worley also endorsed the check, and handed it to Tully Turner, owner of the beverage company. Half-cases of beer were loaded by the boys and employees of the beverage company into the trunks of Vest's and Worley's automobiles. Next, they proceeded to the residence of Worley, where they stored the beer on Worley's back porch.
The following morning, Saturday, May 16, 1981, Neighbors and Vest returned to *1138 Worley's home. They loaded the beer into a pick-up truck and covered it with tarpaulins. After meeting fellow club members John Watts and George Mahoney, they transported the beer from Huntsville to the cabin on Guntersville Lake in Marshall County.
When the four boys arrived at the Watts cabin, around noon, they iced the beer down in six coolers. John Watts had obtained these coolers from a building owned by the Jaycees.[1] Soon other HHS Jr. Jaycees and their guests began to arrive. During the early part of the afternoon, there was little or no control over access to the beer. Anyone could walk up to the coolers and help himself to as much as he desired. According to Neighbors, just about everybody who attended the party "was pretty much intoxicated." He described the party as "wild, a melee." Four young people passed out totally and had to be placed on beds in the Watts cabin. Many more were not capable of safely operating a motor vehicle.
Adults present during the party were: Billy Neighbors, the father of Wes Neighbors; Richard Watts, owner of the cabin and father of club president John Watts; and David Worley, who attended the party in his capacity as club "sponsor." Around 3:30 p.m., Billy Neighbors decided that things were getting out of hand; he and Richard Watts called a halt to the party. Richard Watts told the boys to load the beer back into the pick-up truck. Warren Bradford, age 18, was one of the boys who became intoxicated. Billy Neighbors told John Watts to remove the ignition keys from Bradford's vehicle. The keys were given to Bradford's companion, Mark Pullen, age 17. Pullen was told that he was to drive the vehicle back to Huntsville.
Pullen and Bradford left around 4 or 4:30 p.m., with Pullen driving. After they left, Bradford demanded forcefully that Pullen let him drive the car. Pullen stopped the vehicle and the boys changed positions.
Just after they had crested Monte Sano Mountain, and were on their way down into the city proper, "moving to the [beat of the] music" playing on the car's stereo, laughing, and "in a good mood," Bradford lost control of the vehicle. It skidded across his two lanes, across a wide, grassy median separating the lanes of traffic, and into the path of plaintiffs' on-coming vehicle.
Neither Pullen nor Bradford was injured very badly. However, the driver of the other car, Georgia L. Hazelrig, was killed. Her two daughters, Kerri Martin and April Hazelrig, were gravely injured.
DISCUSSION
Appellants argue that the appellees should be amenable to suit because appellees created and controlled a dangerous and foreseeable risk of harm. They contend that Judge Smith erred in holding as a matter of law that there was no cause of action which would lie against these defendants for their part in promoting a party at which alcoholic beverages were served to minors.
The essential element underpinning Judge Smith's order is an assumption that there can be no right of action against a noncommercial supplier of alcoholic beverages. Appellees go one step further and argue that to hold otherwise would amount to a social host liability. At the outset, a very important distinction should be made. The facts of this case do not require us to consider social host liability. Here we are concerned only with the providing of alcoholic beverages by adults to minor school children, which is a clear violation of law.
DRAM SHOP ACTION
Appellants contend that they should have been allowed to proceed under Code 1975, ง 6-5-71(a), Alabama's Dram Shop Act. Appellees contend that this section does not pertain to dispensing outside of the commercial setting.
*1139 The relevant portion of the Dram Shop Act provides:
"Every wife, child, parent or other person who shall be injured in person, property or means of support by an intoxicated person or in consequence of the intoxication of any person shall have a right of action against any person who shall by selling, giving or otherwise disposing of to another, contrary to the provisions of law, any liquors or beverages, cause the intoxication of such person for all damages actually sustained, as well as exemplary damages."
Code 1975, ง 6-5-71(a). Whether an action will lie under this section depends upon a statutory construction of two of the operative terms of the Act. We must determine the effect of the phrases "selling, giving or otherwise disposing of" and "contrary to the provisions of law". Section (a) of the statute contains a compound subject, modified by a dependent clause, and a predicate, modified by a series of prepositional phrases and a dependent clause. Stripped of their modifiers the subject is "every wife, child, parent, or other person," and the predicate is "shall have a right of action." Thus it can be seen that the overall purpose of this sentence is to create a cause of action.
We are concerned here with the effect of the modifiers of the predicate. The right of action is granted "against any person who shall ... cause the intoxication" of the intoxicated person referred to in the dependent clause which modifies the subject. The language represented by the ellipsis in the preceeding quotation consists of a compound prepositional phrase. The gerunds "selling," "giving," and "disposing of" form the compound object of the preposition "by". These gerunds are modified by the phrases "to another" and "contrary to the provisions of law," and take the compound object "any liquors or beverages." By analyzing the sentence grammatically we are able to arrive at the cause of action which has been created. The gerundial phrases act as modifiers of the verb of the dependent clause in the predicate, "who shall ... cause intoxication." The effect of these modifiers is to identify who may be sued and under what circumstances. That is, the right of action is granted "against any person who shall ... cause the intoxication of [the] person [injuring the plaintiff]," (1) "by selling ... to another, contrary to the provisions of law, any liquors or beverages," (2) "by giving ... to another, contrary to the provisions of law, any liquors or beverages," or (3) "by otherwise disposing of to another, contrary to the provisions of law, any liquors or beverages."
Our responsibility is to apply the statute according to the intent of the legislature. In discerning the intent of the legislature the Court looks solely to the language of the act, unless it appears that the wording is ambiguous or leads to a result which the Legislature could not have intended. Alabama Industrial Bank v. State Ex rel. Avinger, 286 Ala. 59, 237 So.2d 108 (1970).
We note that the legislature, in describing the conduct which will trigger the application of ง 6-5-71, has employed words and phrases which have or suggest a general application: "any person who shall, by selling, giving or otherwise disposing of to another, contrary to the provisions of law." Had the legislature intended to limit the class of persons against whom an action could be brought, the draftsmen could certainly have employed words much better suited to an expression of such an intent. If it was the intention to create a right of action against only that narrowly defined class of persons, i.e., "commercial dispensers," the draftsmen could have incorporated that term into the act. Or, they could have stopped with the words "by selling." They did not do that. Instead, they included the terms "giving" and "otherwise disposing of." It is hard to imagine a phrase more expansive than "otherwise disposing of."
However, these gerunds are further modified by the phrase "contrary to the provisions of law." Appellees argue that this is evidence of a legislative purpose to regulate those in the business of selling alcoholic beverages. Here also, the choice of words is significant. Elsewhere in the Code, under Title 28, the legislature has *1140 enacted an elaborate scheme for regulating the manufacture, dispensing, and consumption of alcoholic beverages. If the purpose was to tie the causes of action allowed under ง 6-5-71 to the legislature's regulation of the industry, that purpose could have been clearly expressed by a specific reference to the provisions under Title 28; the drafters could have provided "in violation of the regulations of Title 28." Such is not the case. Rather, we find the words "contrary to the provisions of law." Again, it is difficult to imagine a compilation of words suggesting a broader application.
Much attention has been devoted to a historical discussion of the Dram Shop Act. Section 6-5-71 is virtually a word-for-word codification of the language of ง 8 of the 1909 Act which first created the cause of action. Act No. 191, ง 8,1909 Ala. Acts, p. 65. To determine whether the draftsmen of the 1909 Act intended to restrict its application to the commercial setting, we turn to the definitional section of that Act. Section 31 of the 1909 Act defines the term "otherwise dispose of":
"when employed in any warrant, process, affidavit, indictment, information or complaint, or in any bill in equity or other pleading in any judicial proceeding or in any judgment or decree [the term] shall include and be deemed to include barter, exchange, giving away, furnishing, or any manner of disposition by which said liquors and beverages may pass unlawfully from one person to another."
Id. at p. 96 (emphasis supplied).
It is important to observe that the 1909 Act, of which the civil remedy was but one small part, was a very broad enactment intended to "suppress the evils of intemperance," p. 63. A perusal of the entire Act, which spans 33 pages, reveals that much of the current law regulating alcoholic beverages may also be traced to the 1909 Act. The fact is, the Act of 1909, just like the current provisions affecting "dry counties," prohibits virtually all use of alcoholic beverages, without regard to their source. But see Code 1975, ง 28-4-200.
Appellees go beyond the specific wording of the statute in search of support for their position. They present three additional factors which they contend provide such support: (1) the fact that the section is listed under the heading "ARTICLE 6. ILLEGAL LIQUOR SALES"; (2) the fact of frequent reference by this Court in prior cases to ง 6-5-71 as the "Dram Shop Act"; and (3) that prior opinions of this Court imply that a commercial sale is a prerequisite to an action under ง 6-5-71. The latter two factors are readily dismissed. The specific question not having been before the court, the prior case law "implying" such an intent of the legislature provides no guidance and amounts to little more than dicta. Likewise, there is no precedential value in the past references by the Court to ง 6-5-71 as the "Dram Shop Act" when that limited question was not being considered. See Ward v. Rhodes, Hammonds & Beck, [Ms. 85-930, April 10, 1987] (Ala.1987) (Jones, J., concurring, n. 1) (stating that the label "Dram Shop Act" is a misnomer).
Appellees assert that the legislature's designation "ARTICLE SIX. ILLEGAL LIQUOR SALES" is evidence of an express intent of the legislature to regulate illegal liquor sales. Certainly, if the reader looked at nothing more, the designation would alert in the reader an expectation that Article Six deals with illegal liquor sales. But, appellees attach too much significance to the name given to Article Six. As has already been pointed out, Article Six comes under Chapter 5, "ACTIONS," of Title Six, "CIVIL PRACTICE." Its purpose is to provide a civil remedy for a civil wrong arising out of a violation of law. The designation given by the legislature does no more than alert the reader to the general subject matter covered by the provisions of the Article. See Alabama Constitution 1901, Art. IV, ง 45. The designation is not accorded greater dignity than the substantive provisions of the Article. It is to be read consistent with those provisions, not vice versa, and should not impute a meaning different from that provided by the language of the statute. *1141 Where most acquisitions of alcoholic beverages originate from a commercial transaction, it would not be unreasonable to anticipate that most acts giving rise to a civil remedy under ง 6-5-71 would also originate from a commercial transaction. Nor would it be unusual for the draftsmen to reflect that fact by designating the Article "ILLEGAL LIQUOR SALES." We think that the legislature did no more than seize upon a label which would succinctly state the general nature of the causes of action covered under Article Six.
Section 6-5-71 creates a civil remedy against persons who, contrary to law, cause the intoxication of another by providing the other person with alcoholic beverages, when the plaintiff is injured because of the intoxication. The term which most narrowly limits this cause of action is the requirement that the providing of the alcoholic beverages be contrary to law.
The legislature has prohibited all use of alcoholic beverages by minors. Code 1975, ง 28-3A-25(a)(19). Pullen and Bradford were both minors when the lake party was held. See Code 1975, ง 28-3A-2(18); cf. Acts 1986, No. 86-212, ง 2, effective April 1, 1986. It was the clearly stated intent of the legislature that these minors not have access to alcoholic beverages. It has long been recognized that "The sale or furnishing of prohibited alcoholic beverages to a minor is ... unlawful whether made by a licensee in a wet county, or by a nonlicensee in any territory in this State." Phillips v. Derrick, 36 Ala.App. 244, 54 So.2d 320 (1951).
The trend in recent decisions of other jurisdictions is to allow causes of action where adults have assisted in furnishing alcoholic beverages to minors. See the appendix to this opinion.
There are no facts to support an allegation that Watts provided any of the alcoholic beverages consumed by the minors. One of the elements of the cause of action under the Dram Shop Act is that the defendant provide alcoholic beverages to the intoxicated person who caused the injury to the plaintiff. Appellee Watts states in his brief that his only connection to the HHS Jr. Jaycees lake party was his ownership interest in the cabin and his presence during the party; that he took no part in providing the minors with alcoholic beverages. This has not been contested by Appellants in their brief. Therefore, summary judgment was properly granted for Watts.
COMMON LAW NEGLIGENCE
We hold that a common law cause of action does not lie in this case, notwithstanding the case of Buchanan v. Merger Enterprises, Inc., 463 So.2d 121 (Ala.1984). See Ward v. Rhodes, Hammonds, & Beck, Inc., [Ms. 85-930, April 10, 1987] (Ala.1987).
Therefore, the judgment for Watts is affirmed. The judgment for Huntsville Jaycees, Inc., is reversed, and the cause is remanded for trial.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
TORBERT, C.J., and MADDOX, JONES, ALMON, SHORES, BEATTY and STEAGALL, JJ., concur.
HOUSTON, J., concurs in the result insofar as it affirms the summary judgment for defendant Watts, and insofar as it holds there is no liability under common law negligence, but otherwise dissents.
APPENDIX
Cause of Action Allowed
Fassett v. Delta Kappa Epsilon, 807 F.2d 1150 (3d Cir.1986). (Applying Pennsylvania law, Court of Appeals held that questions of material fact existed as to whether persons helped organize party for purposes of serving alcoholic beverages to minors, and whether they provided substantial assistance to minor in his consumption of alcoholic beverage, thus precluding summary judgment.)
Sutter v. Hutchings, 254 Ga. 194, 327 S.E.2d 716 (1985). (Analogizing to the rule that an owner of an automobile is liable when he entrusts it to an intoxicated individual, *1142 the court held that a person who encouraged an intoxicated minor to have more drinks, knowing the minor would be driving an automobile, could be liable to a third person injured by the negligence of the intoxicated minor.)
Brattain v. Herron, 159 Ind.App. 663, 309 N.E.2d 150 (1974). (Violation of statute providing "No alcoholic beverages shall be sold, bartered, exchanged, given, provided or furnished, to any person [under age]" is negligence per se. Cause of action existed where adult acquiesced in minors' helping themselves to liquor from her refrigerator.)
Williams v. Klemsrud, 197 N.W.2d 614 (Iowa 1972). (Court found right of action under Dram Shop Act, against person "not engaged in liquor traffic" for having provided liquor to minor.) See also, Lewis v. State, 256 N.W.2d 181 (Iowa 1977).
Longstreth v. Gensel, 423 Mich. 675, 377 N.W.2d 804 (1985). (Violation of sections of liquor statute prohibiting furnishing of liquor to minor gave rise to action in favor of minor who was served and later injured himself.)
Reinert v. Dolezel, 147 Mich.App. 149, 383 N.W.2d 148 (1985). (Cause of action lies against defendants who furnished alcoholic beverages to persons under the legal drinking age.)
Lover v. Sampson, 44 Mich.App. 173, 205 N.W.2d 69 (1972). (Though the Dram Shop Act applied only to commercial vendors, nevertheless an action can be brought by an injured party against a non-commercial supplier who provides alcoholic beverages to a minor.)
Ross v. Ross, 294 Minn. 115, 200 N.W.2d 149 (1972). (Court found liability against individuals who purchased liquor for 19-year-old and held that Dram Shop Act, though never before applied in a non-commercial setting, imposed liability on all violations.)
Linn v. Rand, 140 N.J.Super. 212, 356 A.2d 15 (1976). (Without reference to any statute, Court held that furnishing of alcoholic beverages to minors in a social setting may give rise to a suit for injuries to third parties.)
Walker v. Key, 101 N.M. 631, 686 P.2d 973 (Ct.App.1984). (Violation of statute prohibiting dispensing of alcoholic beverages to minors gave rise to action by third parties injured by intoxicated minor.)
Huyler v. Rose, 88 App.Div. 755, 451 N.Y. S.2d 478 (1982). (Court found no cause of action under Dram Shop Act, but a common law duty to control the conduct of minor who was intoxicated, argumentative, and combative.)
Wiener v. Gamma Phi Chapter of Alpha Tau Omega Fraternity, 258 Or. 632, 485 P.2d 18 (1971). (Cause of action lies against fraternity that hosted party and served alcoholic beverages to minors and knew, or should have known, that minors were being served.)
Congini v. Portersville Valve Co., 504 Pa. 157, 470 A.2d 515 (1983). (Though court held in companion case that ordinarily there exists no liability on the part of a social host, an action does lie where the server provides alcohol to a minor.)
Douglas v. Schwenk, 330 Pa.Super. 392, 479 A.2d 608 (1984). (Following Congini, court held that "Defendants were more than mere social hosts furnishing liquor, they were knowledgeable persons providing alcohol to a minor....")
Koback v. Crook, 123 Wis.2d 259, 366 N.W.2d 857 (1985). (In action against hosts of high school graduation party, it was negligence per se to furnish liquor to a minor.)
NO CAUSE OF ACTION
United Services Automobile Ass'n v. Butler, 359 So.2d 498 (Fla.Dist.Ct.App.1978). (Deferring to the State legislature, the Court noted that historically there has not been a common law action against the dispenser and that Florida has no Dram Shop Act.)
Cory v. Shierloh, 29 Cal.3d 430, 174 Cal. Rptr. 500, 629 P.2d 8 (1981). (California statute explicitly bars suit against all dispensers.)
Holmquist v. Miller, 367 N.W.2d 468 (Minn.1985). (Civil Damage Act preempts *1143 a cause of action against non-commercial dispenser, whether recipient was an adult or a minor.)
Runge v. Watts, 180 Mont. 91, 589 P.2d 145 (1979). (Citing public policy grounds, the court distinguished between the justifications supporting imposition of liability on the commercial vendor and on the non-commercial dispenser and held that the justifications were not sufficient to warrant extension of liability to the non-commercial vendor. Overruled in Nehring v. La-Counte, 712 P.2d 1329 (Mont.1986) (not involving a minor or a non-commercial dispenser), insofar as Runge holds that "the drinking of the intoxicating beverage, not the furnishing thereof, is the proximate cause of any subsequent injury.")
HOUSTON, Justice (concurring in part and dissenting in part).
ON APPLICATION FOR REHEARING
I withdraw my original opinion (concurring in part and dissenting in part, issued May 1, 1987) and in its place substitute the following:
Dram Shop Act actions brought under ง 6-5-71(a), Code 1975, are recognized in Alabama against licensed vendors and purveyors of alcoholic beverages. Certainly there was a scintilla of evidence that Turner Beverage sold beer to minors who were members of the Junior Jaycees; that Turner Beverage accepted a check drawn on the Huntsville High School Imprest Account for this beer; that the check contained the notation "For Jr. JC'sโLake Party Expenses"; and that the beer was removed from Turner Beverage's warehouse by these minors and Turner's employees. Turner Beverage was a licensed vendor and purveyor of alcoholic beverages. Clearly, an action under the Alabama Dram Shop Act against Turner Beverage would have withstood a motion for summary judgment. Buchanan v. Merger Enterprises, Inc., 463 So.2d 121 (Ala.1984). However, that is not the case before this Court. Here the plaintiffs sought to extend the Dram Shop Act to reach the Huntsville Jaycees, Inc., a service organization, which is neither a licensed vendor nor purveyor of alcholic beverages, and as such in my opinion had no liability under the Alabama Dram Shop Act. The majority opinion permits this.
The majority opinion extends the Alabama Dram Shop Act to social hosts if minors are involved. The Jaycees neither sold nor gave the beer to the minors. In some way, without any evidence of authorization or ratification that I can find in the record, an honorary member, not an active dues paying member served as sponsor of the Junior Jaycees and otherwise disposed of beer to minors by assisting the minors to purchase the beer. How an illegal act of an honorary member of a service organization which is not authorized or ratified becomes the act of the service organization is not addressed by the majority opinion.
I am persuaded that Judge Lynwood Smith's "Memorandum of Opinion and Order on Motions for Summary Judgment" is correct and should be affirmed. Judge Smith presented, in complete and masterful fashion, the reasons for his decision. To the extent that I dissent, I adopt Judge Smith's opinion as my own. It is as follows (omitting citations to the relevant pages of the trial record):
"MEMORANDUM OF OPINION AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT
"These consolidated actions are before the Court on the motions for summary judgment filed by defendants Huntsville Jaycees, Inc., and Richard P. Watts. Upon consideration of the pleadings, affidavits, depositions, and briefs of counsel, the Court renders the following memorandum of opinion and order.
"I. SUMMARY OF FACTS RELEVANT TO THE ISSUES PRESENTED
"On May 16, 1981, the Huntsville High School Junior Jaycees club hosted a party at the lake cabin of defendant Richard P. Watts. The cabin is situated on Guntersville Lake in Marshall County, Alabama, a `dry county.' All but a handful of the persons who attended the party were minors. Nonetheless, a large quantity of iced *1144 beer was freely available to all who desired to consume it. The beer had been purchased for the Junior Jaycees by an adult, defendant David E. Worley, with funds provided him by the Junior Jaycees club. David E. Worley was a non-voting, semi-retired, `honorary member' of defendant Huntsville Jaycees, Inc., but he had been approved by that organization as `sponsor' of (or liaison to) the Huntsville High School Junior Jaycees club. Mr. Worley was present at the lake party for a portion of the afternoon it was held, but he personally made no effort to restrict the consumption of beer by the minors present. Moreover, even though defendant Richard P. Watts was present for all but thirty minutes of the party, he also made no effort to restrict the consumption of beer until it became obvious that matters were getting out of hand. As subsequent events proved, however, it was by then too late. One of the young persons present, who had consumed beer to the point of intoxication (former defendant Warren Lee Bradford) was involved in an automobile collision while driving back to Huntsville. The driver of the vehicle he struck was killed, and her two daughters were seriously injured. Hence, these consolidated actions.
"II. THE ISSUES PRESENTED
"The motions raise a number of troublesome questions. In the main, however, there are two, overwhelming questions. One, does an action for damages under the Alabama dram shop act lie against either the organization that established and sponsored the Huntsville High School Junior Jaycees club, or the property owner who permitted the party to be held on his premises? Two, if not, does an action founded upon common law principles lie against either defendant?
"Surprisingly, neither question has been squarely answered by the appellate courts of this State. There is no decision on all fours. Consequently, close attention must be paid to those appellate decisions and other authorities which may be found, in order to glean a direction for reasoning. Hence the following detailed analysis of the facts and law applicable to these actions.
"III. FULL STATEMENT OF THE FACTS RELEVANT TO THE ISSUES PRESENTED
"A. THE HUNTSVILLE JAYCEES, INC.
"The Huntsville Jaycees, Inc. is a service organization created to benefit and improve the City of Huntsville.' It is affiliated with a national organization founded in 1920, and then known as the `Junior Chamber of Commerce.' (The name was changed in 1965 to the `United States Jaycees.')
Jaycees are organizations that stress individual development through leadership training and civic involvement. * * Jaycees learn to be leaders by working in community improvement programs. They sponsor programs on youth development, government affairs, health, safety, and international relations.
11 World Book Encyclopedia 51 (1976). Jaycees believe, as a creed ...:
[That] faith in God gives meaning and purpose to human life. That the brotherhood of man transcends the sovereignty of nations. That ... economic justice can be best won by free men through free enterprise. That government should be of laws rather than of men.
"Ernest C. Kaufmann II was President of the Huntsville Jaycees, Inc., from June 1, 1980, through May 31, 1981. That year, the local Jaycees had `a minimum' of 300 members. The general membership met twice each month, as did the Board of Directors (but on dates different from the general membership meeting).
"The Huntsville Jaycees, Inc., conducted a number of community programs during 1980-1981. At least one of those programs (the Northeast Alabama State Fair) generated a large cash flow. Nonetheless, the `corporation' was loosely structured. Minutes of meetings were kept only on a `sporadic basis.' There was neither a central depository for, nor any member designated to preserve, corporate documents on a `permanent basis.' Rather, all organizational *1145 records were `kept ... loose,' in the home or garage of the individual who was secretary during any particular organizational year.
"B. THE HUNTSVILLE HIGH SCHOOL JUNIOR JAYCEES
"The Huntsville High School Junior Jaycees (HHS Jr. Jaycees) is a high school service and social club. The members must be enrolled in Huntsville High School, have completed their sophomore year, and be at least sixteen years old. All general meetings of the club (with the exception of the year-end Awards Banquet and Lake Party) are held in Huntsville High classrooms. Election of new members to the club and of officers for the succeeding year, occurs near the end of each school year. Thus, in late April or early May of 1981 the following young men were elected officers of the HHS Jr. Jaycees for the forthcoming 1981-1982 school year:
"PRESIDENT: John Watts (son of Richard P. Watts);
"VICE-PRESIDENT: Drew Crow;
"SECRETARY: David Vest; and,
"TREASURER: Wes Neighbors (son of Wm. W. `Billy' Neighbors, Jr.). This new slate of officers was responsible for planning and preparing both the 1980-81 year-end Awards Banquet and [the] Lake Party.
"C. DISTINCTIONS BETWEEN THE TWO ORGANIZATIONS
"The defendant Jaycees did not control the day-to-day activities of the HHS Jr. Jaycees. There really is no question about that. Rather, as David Vest (Secretary of the HHS club) testified, the Junior Jaycees did not seek the `input' or `permission' of the Huntsville Jaycees, Inc., for every club activity. `It was our club to run as we saw fit in an orderly and respectful manner.' Thus, the HHS Jr. Jaycees engaged in school activities, and, conducted community service projectsโsuch as helping at `an old folks' home'โindependent of the defendant Jaycees.
"Moreover, the Huntsville Jaycees, Inc., did not provide any financial assistance to the HHS Jr. Jaycees. The high school organization was `self-sustaining.' Each school year, the club would raise its own funds by means of such things as `a talent... or gong show,' or firewood sale. The proceeds from those projects were deposited to the `Imprest Account' maintained by the administration of Huntsville High School, and drawn on as necessary to meet club expenses. The expenditures occasioned by the year-end Awards Banquet and Lake Party, for example, were paid by means of checks drawn on that account.
"Nonetheless, there were seven significant connections between the defendant Jaycees and the HHS Jr. Jaycees during 1980-1981. And it is those connections that now shall be discussed.
"D. CONNECTIONS BETWEEN THE ORGANIZATIONS
"First among such connections, of course, is ... the fact that both organizations share the name of `Jaycees.' The implications of that shared title are obvious, in spite of the many ways in which the defendant Jaycees have sought to disavow any relationship. Nevertheless, it is undisputed that the Huntsville Jaycees, Inc., `established' and `organized' the Junior Jaycee chapters in area high schools. [Testimony of Randy Morris.][1] Moreover, it is not disputed that the parent organization appointed individuals to `stay in touch with' the high school chapters for the purposes of coordinating common community activities (discussed infra), determining whether the junior clubs needed assistance from the senior club, and also ensuring that the high school chapters `keep [to] that purpose' for which they were established.
"Second, the HHS Jr. Jaycees assisted each year in the `March of Dimes Walkathon' *1146 sponsored by the Huntsville Jaycees, Inc. In that activity, the Huntsville Jaycees solicit area elected officials, personalities, dignitaries, and other `residents [to] walk 15 miles and get money donated per mile' for the benefit of the March of Dimes. Members of the HHS Jr. Jaycees were stationed at each of the fifteen-mile checkpoints, and stamped each participant's card for verification of the distance walked.
"Third, the HHS Jr. Jaycees assisted every year in the conduct of the `Northeast Alabama State Fair' by:
picking up garbage, taking up tickets at the gates, patrolling the fences, helping park cars, directing traffic onto the parking areas. * * * Whatever ... needed to be done.
In other words, from Monday through Saturday night of each Fair week, the HHS Jr. Jaycees performed many of the same functions as members of the Huntsville Jaycees, Inc., `[w]ith the exception of handling money.'
"Fourth, each organizational year the Huntsville Jaycees, Inc., designated one general membership meeting as `Junior Jaycee Night.' The officers of Junior Jaycee chapters were invited to attend, and were recognized at that meeting.
"Fifth, in return for the assistance they rendered the parent Jaycee organization during the March of Dimes Walkathon and the Northeast Alabama State Fair,
the Huntsville High Junior Jaycees were allowed to use the Bonn Building on the fairgrounds to hold their annual banquet. Nothing other than the building was provided by us for their banquet. A request was made by them for us to let them use the building for a party, but this request was refused. ...
[Emphasis added by Judge Smith.][2]
"The sixth connection is an ironic one. The defendant Jaycees took credit for sponsoring and promoting the laudable community service projects of the HHS Jr. Jaycees. In award competitions among State and National Jaycee organizations, the defendant Jaycees, on at least three occasions, listed the HHS Jr. Jaycees program as an example of their youth development programs in this City. `We won a state award and a national award for the Huntsville High chapter.' David E. Worley contends that prior to 1980-81, he, personally, was given an award by the defendant Jaycees in his capacity as sponsor of the high school chapter, `for having one of the better projects, or the best project' during the year.
"The seventh, and possibly the most significant, connection is that David E. Worley served as `sponsor' for the HHS Jr. Jaycee chapter. In that capacity, he served as liaison between the two organizations, and coordinator of their joint activities. To perform those duties, Worley periodically attended meetings of both clubs.
"Of course, for summary judgment purposes the question of whether David E. Worley was the principal link in the chain connecting the defendant Jaycees to the high school chapter is a `material fact.' And in that regard, the defendant Jaycees have gingerly attempted to imply there is a `genuine issue' about that fact, without *1147 flatly stating such.[3] But, in spite of the understandably cautious manner in which they approach the question, in the final analysis they do not deny that Worley was the club's sponsor.[4] Indeed, as the following summary of the evidence should make clear, they really can not deny that connection.
"(1) Worley, himself, asserts that he was the sponsor of the club, practically from its inception. While admitting that he had passed the age of 36 by the year 1981, and thus could no longer vote or hold elected office in the Huntsville Jaycees, Inc., Worley insisted that he continued to attend the meetings, and to participate in the activities of that organization as `an honorary member.' Furthermore, Worley asserts that, during the `first three or four years' of the club's existence, he was asked by either the President or the `external Vice-President' of the defendant Jaycees to serve as sponsor for the HHS Jr. Jaycees. But, `in the last couple, two, three years that I was [sponsor], it was at the request of the Junior Jaycees, and okayed by the Jaycees.' [Emphasis supplied by Judge Smith.]
"(2) All members of the HHS Jr. Jaycees who have been deposed state, unanimously, that David E. Worley was their sponsor.
"(3) Joe L. Anglin, Jr., the Principal of Huntsville High School, has stated that Worley was the club's sponsor.
The Huntsville Jaycees, Inc.... sponsors a club at Huntsville High School called the Junior Jaycees. School policies require that the sponsoring organization furnish a sponsor for the club to assist in its functions and to coordinate the club's on-and-off campus activities. The clubs also have a school faculty member sponsor who assists the clubs in [their] school-related activities. The sponsor assigned to the Huntsville High Junior Jaycees by the Huntsville Jaycees, Inc. from the time the club was organized up through the 1980-81 school year was David E. Worley. Beginning with the 1981-82 school year the Huntsville Jaycees, Inc. replaced David E. Worley as the school club sponsor by designating John Zachary in place of Mr. Worley as the club sponsor. Mr. John Zachary was also the club sponsor for the 1982-83 school year.
It should be noted, at least in passing, that the `school faculty member sponsor,' to whom Mr. Anglin makes reference above, was Mrs. Sandra Norton during the 1980-81 school year. However, as the boys have testified: `She was just a name,' used by the club to comply with the stated school policy.
She didn't go to any of the meetings. She didn't do anything. Like when we needed something signed by our sponsor at school she would sign it and that was it.
"(4) Finally, counsel for defendant Huntsville Jaycees, Inc. stipulated during pre-trial conference that David E. Worley `was one of the sponsors of the Junior Jaycees.'
"Thus, when all of the evidence is summarized, the links in the organizational chain connecting the defendant Jaycees with the HHS Jr. Jaycees may be depicted *1148 by the diagram shown [at a later point in this opinion.]
"E. PREPARATIONS FOR THE HHS JR. JAYCEES LAKE PARTY
"Each year for a number of years, the HHS Jr. Jaycees had held `a big social event' for club members and their invited friends. [The year] 1981 was no different. Thus, at one of the last club meetings during the 1980-1981 school year, the members discussed party plans. Someone suggested that beer be purchased `from Ragland's place,' but David E. Worley, who admits he was present, allegedly stated he could get the club `a special deal.'
He said we could get it for nine dollars a case, so we decided on thirty cases of beer, voted on thirty cases of beer, [and] that's the reason for the two hundred seventy dollar check.
"On Friday, May 15, 1981, Wes Neighbors obtained from `Mrs. Pukl' in the main office a check drawn on the `Huntsville High School Imprest Account' in the amount of $270, and drawn payable to the order of `Wes Neighbors.' The check shows that it was `FOR Jr. JC'sโLake Party Expenses.'
"Later that same afternoon, following the end of classes for the day,[5] Wes drove with David Vest to the law office of David E. Worley. Wes endorsed the back of the check and gave it to Worley. Wes and David Vest then followed Worley to Turner Beverage Company. They arrived late in the day, just as the business was closing. Worley also endorsed the back of the check, and handed it to `Tully' Turner, owner of the beverage company. Half-cases of Budweiser beer were loaded by the boys and employees of the beverage company into the trunks of Vest's and Worley's automobiles. That done, the boys followed Worley to his residence. The beer was stored on Worley's screened, back porch.[6] When unloading the beer, the two boys were surprised to learn they had purchased not 30 full cases, but 51.
"The following morning of Saturday, May 16, 1981, Wes Neighbors and David Vest returned to Worley's home. They loaded 31 to 35 cases of the beer into the bed of George Mahoney's black Ford pickup truck, which they had borrowed for the purpose, and covered it with tarpaulins. Wes and David Vest, after meeting John Watts and George Mahoney at another location, then drove the beer from Huntsville to the cabin of Richard P. Watts on Guntersville Lake, in Marshall County.
"Richard P. Watts is the father of John Watts, the newly elected President of the HHS Jr. Jaycees. He and his wife, Jean Cummings Watts, own an undivided one-third interest in the lake home where this party was to be held. The other two-thirds interest is owned by Jean Watts' two sisters and their husbands. The cabin is situated in a `dry' county. But, Richard Watts was under the impression that it was permissibleโeven for minorsโto consume beer in a dry county, `if it was on private property.' Moreover, Richard Watts asserts that he was not asked, nor did he give his son permission, to hold the HHS Jr. Jaycee party at the cabin. Rather, he contends, his wife (and John's mother) was the one who gave permission, and he did not learn of the plans until two days before. In any event, the party was held at that cabin, and Richard P. Watts was present throughout most of the day.
"When the four boys arrived at the Watts cabin around noon, they iced the beer down in `long legged' metal Coca-Cola coolers. John Watts had, apparently surreptitiously, obtained those coolers from the Bonn Building at the Jaycees' fairgrounds. `I don't think they knew we had them ...' [said Wes Neighbors]. They then spread out barbecued pork and other edibles left over from the annual Awards *1149 Banquet, held the previous week, and waited for everyone else to arrive.
"F. THE PARTY ITSELF
"And arrive they did. Estimates of the number who attended vary from a low of forty to a high of 110. During the early part of the afternoon, there was little or no control over access to the beer. Anyone could walk up to the coolers and help himor herself to as much as desired.
It was available to anybody that wanted it. At the first ... we were handing it out and I guess people got tired of handing it. We were going to take hours [i.e., shifts] at a time, [and] I had the first two hours to make sure nobody came up and took a whole bunch off ... in a boat or something, but after a while it was just out in the open and nobody was watching it.
[Wes Neighbors.] Consequently, things began to get out of hand, as Wes Neighbors later implied by his choice of the words `wild' and `melee' to describe the scene.
"According to Wes Neighbors, just about `everybody' who attended the party `was pretty much intoxicated, except for Mark Pullen and John [Watts] ....' Four young people `passed out totally,' and had to be placed on beds in the Watts cabin. Many more were not capable of safely operating a motor vehicle. Warren Lee Bradford was among those.
"`Late in the morning, maybe ten-thirty, eleven' o'clock on May 16, 1981, Warren Lee Bradford (son of Dr. Ivan B. Bradford) called at the home of Dr. Joe R. Pullen for his son, Mark. The two boys then drove from the Pullen residence to Guntersville Lake in Dr. Ivan Bradford's 1978 International `Scout,' a four-wheel drive vehicle. Lee Bradford, the driver, was eighteen years old. His friend, Mark Pullen, was 17. They arrived at the Watts cabin around noon. From then until 3:30 that afternoon, the boys admittedly consumed some beer. Pullen said he drank four cans of Budweiser. Lee Bradford estimated he drank five or six cans, in conjunction with `three or more' barbecued pork sandwiches. Whatever the true facts may be, Lee Bradford became noticeably intoxicated. According to Wes Neighbors, Bradford's speech was slurred, he staggered, he kissed a girl that `wasn't his girlfriend,' and `he couldn't run a race.'
"Former [University of] Alabama All-American (and NFL All-Pro) football player Billy Neighbors also drove to the Watts cabin that afternoon. He went to check on his son, Wes, and arrived about 1:30. For a while he talked with Richard Watts and David E. Worley, who attended the party in his capacity of club `sponsor' and father of Jonnie Worley, the `Sweetheart' of the HHS Jr. Jaycees. By 3:30, however, Billy Neighbors decided that enough was enough. He and Richard Watts stopped the flow of beer. According to Wes Neighbors, his father `laid down the law.... [A]nd my dad got a lot of respect from everybody, to say the least.' Richard Watts told the boys to load the beer back into the bed of the pick-up truck. And Billy Neighbors told John Watts to remove the ignition keys from Warren Lee Bradford's Scout. The keys were given to Mark Pullen with instructions that he was to drive the vehicle back to Huntsville. Billy Neighbors told Bradford that he would `kick his tail' if he tried to drive home.
"The two boys followed those instructions, after a fashion. Pullen and Bradford remained at the cabin for possibly as much as another hour, drinking no more beer. They left `around four [or] four-thirty,' with Mark Pullen behind the wheel. At the point where U.S. Highway 431 changes from a two-lane to a four-lane roadway, however, Lee Bradford `demanded,' `forcefully,' that Pullen let him drive the car. Mark pulled onto the shoulder of the road, and the boys changed positions.
"The boys almost made it safely home. Just after they had crested Monte Sano Mountain, and were on their way down into the city proper, `moving to the [beat of the] music' playing on the car's stereo/radio, laughing, and `in a good mood,' Bradford lost control of the vehicle. It skidded across his two lanes, across a wide, grassy median separating the lanes of traffic, and *1150 into the path of plaintiffs' oncoming vehicle.
"Neither Mark Pullen nor Lee Bradford was injured very badly. It was another story with the plaintiffs, however. The driver, Georgia L. Hazelrig, died. Her two daughters, Kerri M. Martin and April Kelli Hazelrig, were horribly injured.
"Warren Lee Bradford was subsequently indicted and prosecuted for manslaughter. He was convicted by a jury of criminally negligent homicide. And, of course, these civil actions were brought against those defendants listed in paragraph 1 of this Court's Order on Pre-Trial Hearing. Since then, however, a substantial out-of-court settlement was reached with certain defendants. And the claims against Warren Lee Bradford, Ivan B. Bradford, and Mark Edward Pullen have been dismissed, by stipulation, with prejudice. This Court also granted Billy Neighbors's motion for summary judgment. Which brings us, then, to the instant motions.
"G. HUNTSVILLE JAYCEES, INC. AND HHS JR. JAYCEES ORGANIZTIONAL DIAGRAM
*1151
PRESIDENT (June 1, 1980 May 31, 1981)
Ernest C. Kaufmann, II
COMMUNITY DEVELOPMENT VICEโPRESIDENT:
Dale Thompson
YOUTH ASSISTANCE DIRECTOR: Randy Morris
JUNIOR JAYCEE PROGRAM CHAIRMAN: John Zachary
HUNTSVILLE JAYCEES, INC. HUNTSVILLE JAYCEES, INC.
SPONSOR TO THE BUTLER SPONSOR TO THE HUNTSVILLE
HIGH SCHOOL JR. JAYCEE HIGH SCHOOL JUNIOR JAYCEE
CHAPTER:? CHAPTER: David E. Worley
S.R. BUTLER HIGH SCHOOL HUNTSVILLE HIGH SCHOOL
JUNIOR JAYCEE CHAPTER JUNIOR JAYCEE CHAPTER:
President - John Watts
Vice-Pres. - Drew Crow
Secretary - David Vest
Treasurer - Wes Neighbors
"IV. DISCUSSION OF ISSUES PRESENTED
"A. DOES THE DRAM SHOP ACTION LIE?
"The Alabama legislature first enacted a dram shop act in 1909. It came into being as section 8 of Act Number 191, passed during the 1909 Special Session. It read as follows:
8. That every wife, child, parent or other person who shall be injured in person, or property or means of support by any intoxicated person, or in consequence of the intoxication of any person, shall have a right of action against any person who shall by selling, giving or otherwise disposing of to another contrary to the provisions of law, any liquors or beverages, cause the intoxication of such person, for all damage actually sustained, as well as exemplary damages; upon the death of any party the action, or right of action will survive to or against his executor or *1152 administrator. The party injured, or his legal representatives, may bring a joint or separate action against the person intoxicated, or who furnished the liquor; and all such suits shall be by civil action in any court having jurisdiction thereof.
1909 Acts of Alabama, Act No. 191, ง 8 at 65-66 (Aug. 25, 1909) (emphasis supplied).
"The troublesome phrase in the statute is emphasized: i.e., `selling, giving or otherwise disposing of ....' (the same language now is found at Ala.Code, ง 6-5-71(a) (1975)). The moving defendants contend they did not sell, give, furnish, or otherwise dispose of the intoxicating beverages consumed by Warren Lee Bradford, or any other member of the HHS Jr. Jaycee Club. Plaintiffs contend the statutory language is un ambiguous, and clearly applicable to the facts of this controversy. These conflicting positions raise the question of what the Alabama Legislature intended when it employed the disputed language. Surprisingly, the answer to that question requires a more intensive inquiry into the history of our dram shop act than this Court initially surmised.
"1. The Historical Common Law Position
"At common law, no action to recover damages for injuries caused by intoxication could be brought against the person who furnished liquor to another, whether by sale, by gift, or by other means. The reason generally given for the common law rule was simple. The voluntary consumption (and not the dispensing) of liquor was deemed the proximate cause of injuries sustained as a result of intoxication. See, 45 Am.Jur.2d, Intoxicating Liquors งง 553, 554 (1969). `The rule was based on the obvious fact that one cannot be intoxicated by reason of liquor being furnished him if he does not drink it.' Nolan v. Morelli, 154 Conn. 432, 226 A.2d 383 (1967).
"The common law rule was enunciated in Alabama in King v. Henkie, 80 Ala. 505 (1876). Mrs. King, the widow of a man who died as a result of excessive consumption of alcohol, brought suit under the wrongful death statute against the owners of a Tuscumbia saloon. She alleged that her husband had stumbled into the bar one day `in a hopeless state of intoxication' and, while `in this condition of helplessness and mental darkness,' the proprietors ...
in violation of law, furnished, gave and sold to the plaintiff's intestate a large quantity of intoxicating liquors which he drank, and which caused the death of plaintiff's intestate before he left said saloon....
Id., at 506. The `violation of law' to which plaintiff referred in her complaint was a provision of the 1876 Code of Alabama which made it a misdemeanor to furnish any quantity of liquor to `persons of known intemperate habits except upon the requisition of a physician for medicinal purposes....' Id., at 508. In affirming the trial court's dismissal of the action, the Supreme Court said:
The death of the deceased was not `caused' so much by the wrongful act of the defendants in selling him whiskey, as by his own act in drinking it after being sold to him. The only wrongful act imputed to the defendants was the selling, or giving, as the case may be, of intoxicating liquors to the deceased while he was in a stupidly drunken condition, knowing that he was a man of intemperate habits. * * * The act ... was a statutory misdemeanor. But this was only the remote, not the proximate or intermediate, cause of the death of plaintiff's intestate. * * * Had it not been for the drinking of the liquor, after the sale, which was a secondary or intervening cause co-operating to produce the fatal result, and was the act of deceased, not of defendants, the sale itself would have proved entirely harmless. Hence it can not be said that the wrongful act of the defendants, in making sale of the liquor, caused the death of King; but rather his own act in drinking it.
King v. Henkie, supra, at 510.
"2. Remedial Legislation
"The common law rule expounded by such cases as King v. Henkie eventually was overthrown by legislative enactments *1153 in a number of states.[7] But such remedial legislation was not generated as much by a legislative rejection of the courts' rationale,[8] as it was encouraged by both the temperance and prohibitionist movements.[9]
"Referred to as either `civil damage acts' or, more commonly, `dram shop acts,' such statutes create a cause of action against the suppliers of liquors under specified circumstances, and in favor of specified persons. The language of such statutes varies from state to state. See, generally, the authorities cited in note 7, supra. Consequently, each act must be closely studied to determine who is entitled to sue, who may be sued, under what circumstances suit may be brought, and for what damages. Generally speaking, however:
One thing that must be constantly borne in mind when considering such acts is that the right and remedy created by them are exclusive; no right of action exists except as expressly given by the statutes, and the remedy prescribed cannot be enlarged except by further legislative enactment.
45 Am.Jr.2d Intoxicating Liquors ง 561 (1969) (emphasis supplied). See also footnote 16, infra.
"In addition, there is one other principle upon which the authorities are generally consistent: liability under such dram shop acts extends only to those engaged in the business of manufacturing, distributing, or selling intoxicating liquors.
Although dram shop or civil damage acts usually provide for the recovery of damages from `any person' giving or selling intoxicating liquor, the general rule appears to be well established that such statutes were not intended to and do not create a right of action against one who gives another the beverage as a mere act of hospitality or social courtesy and without pecuniary gain, but instead provide a right of action only against those in the business of selling liquor.
Annot., 8 A.L.R.3d 1412, 1413 (1966) (emphasis supplied). An instructive case on this point is Miller v. Owens-Illinois Glass Co., 48 Ill.App.2d 412, 199 N.E.2d 300, 8 A.L.R.3d 1402 (App.Ct.1964).[10]
*1154 "3. The Alabama Dram Shop Act: Its Judicial Interpretation
"Unfortunately, the appellate courts of Alabama have not squarely addressed the question of whether our dram shop act provides an action against persons (such as defendants herein) who are not engaged in the business of manufacturing, distributing, or selling liquor. Even so, the case of DeLoach v. Mayer Electric Supply Co., 378 So.2d 733 (Ala.1979), supports (at least inferentially) the argument that the question would be answered negatively.
"In DeLoach, defendant Mayer Electric hosted an `open house' and `New Products Show' on its premises. Food, soft drinks, and beer were gratuitously provided for consumption by those who attended. Mayer Electric's employees were among the invited guests. One such employee became intoxicated. After leaving the function, he drove his automobile onto the wrong side of Interstate 59, and into the motorcycle of a uniformed policeman. The policeman was seriously injured, and brought suit against both Mayer Electric and the business entity (Britling's) which had catered the function. Id., at 733-34. He contended the Alabama dram shop act applied because those defendants had `sold' liquor without being licensed to do so. See Ala. Code งง 28-3-260(10), 28-3-1(16) (1975). In an opinion affirming the trial court's entry of summary judgment in favor of defendants, the Supreme Court did not write expansively. Rather, in speaking for the Court, Mr. Justice Bloodworth said only that `there was no "sale" within the meaning of the Code sections referred to above and, therefore, `the Dram Shop Act is not applicable.' Id., at 734-35.
"Admittedly, the DeLoach opinion is susceptible to conflicting interpretations. On one hand, it may be argued that the decision should be limited to its facts, and to its specific holding of no `sale,' because no compensation changed hands between the drunk and the supplier of the liquor. On the other hand, it also may be persuasively argued that DeLoach should be read more broadly, and as holding that the Alabama dram shop act normally does not apply in the absence of a sale (e.g., when the liquor is furnished gratuitously, in a social setting).
"In choosing between these conflicting interpretations, this Court is persuaded by the following authorities that the latter is the correct one.
"The broader holding suggested by De-Loach is supported by Phillips v. Derrick, 36 Ala.App. 244, 54 So.2d 320 (1951). In that case, the Alabama Court of Appeals stated that Alabama's dram shop act:
evidences a policy on the part of the law-making body to discourage the illegal sale of alcoholic beverages.
Id. at โ, 54 So.2d at 312 (emphasis supplied). The Phillips court emphasized the commercial focus of the Act by utilizing the words `sale,' `sell,' and `sold' no less than thirteen times in the course of two pages.
"In like manner, an early Supreme Court decision construing the dram shop act indicated that the action lay only against one in the businessโalbeit, the illegal business โof selling liquor. Thus, in Webb v. French, 228 Ala. 43, 152 So. 215 (1934), after first noting that the Act had come into existence as part of a sweeping `prohibition enforcement measure,' the Alabama Supreme Court held that the dram shop act:
creates a cause of action against the bootlegger (to use a modern term) for personal injuries to third persons at the *1155 hands of one to whom the bootlegger has furnished prohibited liquor and the injury is the proximate consequence of intoxication from such liquor.
Id. at 44, 152 So. at 216 (emphasis supplied).
"Moreover, Alabama Pattern Jury InstructionsโCivil 36.92 begins with the following language: `Because public policy discourages [the] illegal sale of alcoholic beverages....' (Emphasis supplied.)
"Finally, the most recent pronouncement of our Supreme Court on the dram shop act contains this statement: `Alabama's dram shop statute creates a civil action against a purveyor of alcoholic beverages ....' Buchanan v. Merger Enterprises, Inc., 463 So.2d 121, 122 (Ala.1984) (emphasis supplied). Webster's Third New International Dictionary (1971 unabridged ed.) defines `purveyor' as `one who provides victuals or whose business is to make provisions for the table,' at 1848 (emphasis supplied).
"However, the keys which unlock the statutory scope intended by the Alabama Legislature when it inserted the phrase `selling, giving or otherwise disposing of into the dram shop act will not be found in the foregoing authorities. Rather, those interpretive keys are found in the history of the temperance and prohibitionist movements in Alabama, and in the statutory changes which those movements impressed upon public policy (of which the dram shop act is but one).
"4. The Alabama Dram Shop Act in Historical Context
"The question of liquor regulation predates statehood. It was an important issue of government from the time settlers first moved into the region which eventually became the State of Alabama. `[E]ach colonial government ... found it necessary to devise ways and means of handling the problem of liquor control.' J.B. Sellers, The Prohibition Movement in Alabama 1702-1943, at 1 (1943) (hereinafter Sellers). From then until now, the questions of whether, and how, to control liquor have been persistent issues of our political history.
"But, the prohibition issue virtually dominated State politics during the first two decades of the twentieth century. The explanations for that political phenomenon are varied, and interesting.[11] Even so, an exploration of the socio-economic bases of the temperance and prohibitionist movements ultimately would prove a non-productive, ambiguous digression.[12] On the other hand, an examination of legislative action on the issue (and judicial construction of such acts) provides important information for interpreting the intended scope of our present dram shop act.
"(a) The Vanguard of Temperance: Late 19th Century Prohibition Acts & Their Judicial Interpretation
"As the last Federal troop trains crossed Alabama's northern border at the end of Reconstruction, the temperance and prohibitionist forces began to stir. See, Sellers 40-51. From then until 1909, the movements steadily grew, both in the number of their adherents and in the intensity of their demands. Id., at 52-100.
"Initially, the efforts of the prohibitionist forces to impress their ostensible, moralistic *1156 views[13] upon public policy met with only limited success. During the 1880s and 1890s, the movements succeeded only in the enactment of sporadic special acts of legislation prohibiting the `manufacture, or sale, or other disposition of ... intoxicating liquors within the limits of particular counties, or particular areas of a county.[14]
"Nonetheless, for two reasons, those early efforts at prohibition on a local level provide important precedents for construing the scope of our present dram shop act.[15] First, some of those local prohibition acts contained statutory phrases identical, or strikingly similar to the phrase that is so troublesome in the present case: i.e., `selling, giving or otherwise disposing of ....' And second, a number of cases arising under those acts, and requiring a construction of such language, were appealed to the Supreme Court of Alabama. A review of those decisions furnishes helpful interpretive insights.
"The first significant decision is Reynolds v. State, 73 Ala. 3 (1882). In Reynolds, the defendant was indicted and convicted for violating a local act of the legislature which made it a crime to `make, sell, or otherwise dispose of any spirituous or malt liquors' in Dale or Henry Counties. The evidence against him showed that the defendant `gave' two drinks of whiskey to the prosecution's witness at his home. There had been no sale, in the sense of compensation changing hands. On appeal, the Supreme Court reversed, saying:
To dispose of, ... when used in reference to property, means to part with the right to, or ownership of it; in other words, a change of property. If this does not take place, it would scarcely be said that the property is disposed of.... In this (possibly injurious) act of hospitality, we apprehend no one would entertain the thought of a change of property, or ownershipโthat he was thereby `disposing of the article thus used and consumed. Quite as appropriate would it be to affirm that the host had disposed of the viands his friend consumed, while enjoying a hospitable dinner with him.
We would not be understood as affirming that no disposition can be made, under the statute we are construing, except by bargain and sale. A gift, consummated by delivery, works as complete a change of property or ownership, as does a sale on valuable consideration. What we declare is, that the act, shown in the evidence in this case, was not a disposing of the liquor, within the contemplation of the legislature.
During the same session of the legislature at which the statute in question was enacted, several other statutes of kindred character received the approval of that body. In some of them we find the same words, `sell, or otherwise dispose of.' Sometimes the language is more express, and inhibits the `giving away' of intoxicating liquors. We do not know that this variance in phraseology changes the meaning, or imposes the duty of a changed interpretation. That question is not now before us.
Reynolds v. State, supra, at 4.
"Three aspects of the Reynolds opinion are worthy of note. First, the Supreme *1157 Court did not liberally construe the language of a statute in derogation of the common law.[16] Second, the Court applied the `ejusdem generis rule' when holding that the phrase `otherwise dispose of meant only a disposition in the nature of a sale.[17] And third, the court reserved for later decision the construction of the phrase `sell, give, or otherwise dispose of.' The opportunity to construe that phrase was presented the Court within a year.
"In Amos v. State, 73 Ala. 498 (1883), the defendant had been indicted and convicted of violating a local act of the legislature which made it a crime to `sell, give away, or otherwise dispose of spirituous, vinous or malt liquors' in Conecuh County. At trial, the prosecution had shown that defendant's father owned a store in Conecuh County, and that the father had ordered five gallons of whiskey for a man named `Bethea.' When the whiskey arrived, Bethea `had no way to take it all away,' so he persuaded the defendant's father to store it for him in a small building the storekeeper used to keep `other things incident to his business.' From time to time, Bethea would come to the store and defendant, or defendant's father, would draw off a portion of the stored whiskey, and give it to Bethea. The evidence further disclosed that defendant, though frequently about his father's store, `was not connected with his father's business in any capacity.... `Id., at 499-500.' On appeal, the Supreme Court reversed, holding that on the foregoing state of the evidence the defendant could not be said to have violated the statute. The defendant had not sold the whiskey to Bethea; his father had.
"Moreover, the defendant had not given the whiskey to Bethea (in the sense of parting with the ownership of property) because Bethea already owned it. And finally, it could not be said that the defendant had `otherwise disposed of the whiskey because, under the principle of ejusdem generis, that phrase had to be construed as applying only to transactions that fell within the classification of a sale or gift.
The manifest purpose of the statute, taking the words in their ordinary signification, is the prohibition of all dealing in the nature of trade or traffic, in the locality specified.... The effective words are `sell, give away, or otherwise dispose of'; all of which, in a general sense, found in this connection, signify some act by which one person parts *1158 with, to another, possession or ownership of property. A sale, ex vi termini, imports the transfer of personal property upon a valuable consideration; and a gift imports a like transfer gratuitously, or upon a merely good consideration. The more general words, `or otherwise dispose of,' following the more specific or particular words, `sell, or give away,' upon a settled rule of statutory construction, a larger legislative purpose not being clearly expressed, must be construed as extending only to a disposition ejusdem generis with a sale or a gift; they are not to be extended to any and every act which may be said to be a disposition. The rule is, when general words follow, in a statute, words of particular and special meaning, if there be not a clear manifestation of a different legislative intent, they are construed as applicable to persons or things, or cases of like kind, as are designated by the particular words.... It would be a departure from the rule, not necessary to give effect to the Legislative intent, and not within it, to give the general words, `or otherwise dispose of a meaning so loose and expansive as to include within them any act not akin to a sale or a gift, not intended as, and not having in it any of the properties of, a parting with property by one person to another. A common carrier, transporting the enumerated liquors to the designated locality, and there delivering them to the consignee, or to the true owner, it may be said, in a large and loose sense, disposes of them. A warehouseman, with whom they were stored, delivering them on demand, could also be said to dispose of them; and a destruction of them intentionally could be denominated a disposition; and yet, these acts are not within the proper significance of the general words, nor are they within the objects and purposes of the statute.
Amos v. State, supra, at 501-02 (emphasis supplied).
"The next case of significance is that of Norris v. Town of Oakman, 138 Ala. 411, 35 So. 450 (1903). In Norris, the defendant had been convicted of violating a city ordinance which made it a misdemeanor to `sell, give away, ... or cause to be ... delivered' any liquors on a Sunday. The evidence at trial established that Norris was both an employee of, and a boarder in the house of, a man named Coudan. Mr. Coudan owned a saloon. One Sunday afternoon, Mr. Coudan instructed Norris `to go down to the saloon and bring up some beer for him and the defendant.' Norris did so, and `he and Coudan and son drank the beer as they desired it' for the rest of the afternoon. For these acts, the defendant Norris was convicted. On appeal, however, the Supreme Court reversed. The Court first noted that Norris could not be convicted for having sold the beer because Coudan owned it. For the same reason, Norris did not `give away' the beer, because one cannot give what one does not own. All of which brought the Court to the word `delivered.'
One may, as a physical fact, deliver to another something he is in possession of but in which he has no personal interest, and which belongs to the one to whom it is delivered. Such an act would have in it no element of a sale or a gratuitous giving away. Reynolds v. State, 73 Ala. 3. Such seems to be the character, exactly, of the delivery of the beer by defendant to Coudan in this case. The word `delivered' implies other and more general meaning than the specific or particular words `sell' or `give away,' as employed in the ordinance, and which words it follows, and must, on a settled rule of statutory construction, be held to extend only to a disposition, ejusdem generis, with a sale or gift. Amos v. State, 73 Ala. 498.
Norris v. Town of Oakman, supra, at 414-15, 35 So. at 451 (emphasis supplied).
"The last case to be considered, Maxwell v. State, 140 Ala. 131, 37 So. 266 (1904), arose out of the following facts.
... G.S. Harmon, a witness for the State, testified that ... he went to the mill owned by John H. Maxwell, the father of the defendant, and asked for the defendant's father, and was told that he was away from the mill; that he waited for *1159 the return of the said John Maxwell for about two hours and then stated to the defendant that he could wait no longer, and told him that he wanted to get from defendant's father some whiskey for his (witness') wife, who was sick, and asked the defendant to take the bottle which he gave him, and see if he could get the whiskey for him, stating to defendant that it would be all right with his father, and that his father had before given him whiskey for his wife; that the defendant took a quart bottle which the witness gave him, went away, and brought back a quart of whiskey, and put it in the witness' buggy; that thereupon the witness handed to the defendant 25 cents, and said to him, `That is for your trouble'; that a quart of whiskey was worth 50 cents; and that he knew the defendant was under age. ...
Id. (Emphasis supplied.) On these facts, Buck Maxwell, then sixteen years of age, was convicted on an indictment charging that he `sold, gave away, or otherwise disposed of whiskey without a license, and contrary to law.' On appeal, the Supreme Court reversed, citing Amos v. State, supra. The defendant had not sold the whiskey because Harmon had not paid for it. The twenty-five cents given defendant was in the nature of a tip, because the whiskey was worth fifty cents. Furthermore, defendant had neither sold nor given away the whiskey, because he did not own it. His father did. And, therefore, defendant had not parted with `possession or ownership of property.'
"The importance of the Reynolds, Amos, Norris, and Maxwell line of cases lies simply in this. In each, the Supreme Court construed statutory language strikingly similar to the dram shop phrase that is so troublesome in the case before this Court, and, in the context of legislative enactments prohibiting the sale, gift, or other disposition of intoxicating liquors. Moreover, all of these cases were decided long before the legislature enacted the dram shop act. Consequently, when our Supreme Court has repeatedly construed particular statutory language, and the legislature enacts another statute employing that same language, there arises a strong presumption that the legislature has acquiesced in the Court's interpretation of the legislature's intent in the use of such language.
"(b) Temperance in the Ascendancy: Early 20th Century Prohibition Acts
"Alabama temperance forces were strengthened considerably by two events in the first decade of this century: (1) the formation of the Alabama contingent of the Anti-Saloon League of America in 1904, Sellers 102; and (2) the election of Braxton Bragg Comer as Governor of Alabama in 1906.
"Following the end of Reconstruction, `Bourbon Democrats' from the Black Belt counties and the increasingly influential `Big Mule' industrial interests in Birmingham and Mobile tightened their grip upon state government. See, e.g., V.O. Key, Southern Politics in State and Nation, 42, 46 (1949).
Having weathered the flare-up of agrarian revolt in the 1890's, conservative forces within the state consolidated their control over state government (whose taxing powers were increasingly curtailed) with the constitution of 1901. Both Negroes and many poorer whites were effectively disenfranchised. With the electorate increasingly weighted in their favor, the Black Belt leaders with industrial allies dominated state government for much of the twentieth century.
W.D. Barnard, Dixiecrats and Democrats: Alabama Politics 1942-1950, at 10 (1974).
"Once in a long while, however, a `progressive' candidate for Governor would successfully defy that conservative coalition. B.B. Corner was such a man. Although stigmatized by the press as a radical, a self-willed, impetuous, self-seeking, and generally dangerous man' [A.B. Moore, History of Alabama 664 (1934)], Comer handily won the 1906 gubernatorial election. In the process, many men committed to `progressive' programs rode into the legislature on his coattails. `Not since the development of factionalism within the *1160 Democratic party had the progressive wing been so victorious.' Id. 666. Both Comer and his legislative lieutenants were dominated by a `passion for reform.' Id. 667.
Comer left his impress on Alabama. He terminated abruptly the regime of laissez faire and enthroned the new philosophy of public welfare. He put the State into social service in various directions, and during his four years as governor the State made more progress in public education than had been made in all of its previous history. He aroused sentiments and established traditions that are still potent influences in the life of the people. In a word, broadly speaking, it may be said that the New Alabama began with the Corner term. [Id. 672.]
Prohibition was among the most important issues (if not the most important issue) used by Corner to achieve his phenomenal political success. That issue tapped the strength of the aggressive and powerful Anti-Saloon League.' Sellers 102. The focus of the Alabama Anti-Saloon League's opposition to liquor traffic was implicit in its name. League members felt that saloons bred destitution, prostitution, and other deleterious social institutions (e.g., gambling and racial equality).[18]
"Thus, the cry for the end of the `day of the saloonkeeper, gambler, harlot, and pimp domination in government,' Sellers 130, was pregnant with many connotations. But, without question, racism was prominent among the meanings telegraphed by such `code words.' Even so, that despicable truth should not blind the modern observer to the fact that the primary objective of the prohibitionist forces was the abolition of the business of selling alcohol.
"In the first Regular Session of the Legislature following Comer's election, the prohibitionists succeeded in passing the State's first, general local-option law. 1907 Acts of Alabama, Act No. 149, at 200 (Feb. 26, 1907). That act `permitted the temperance legions to force local option elections with petitions signed by one-fourth of the voters in a county.' S. Hackney, Populism to Progressivism in Alabama 303 (1969). Significantly, the Act provided that the issue to be submitted to the voters of a county was whether they approved, or disapproved of the sale of liquor.
The ballot used in such election shall have printed or written on the same `Against the sale of liquors,' `For the sale of liquors,' and the voter in preparing or casting his ballot shall make a cross mark before the phrase `Against the sale of liquor' or before the phrase `For the sale of liquors' as the case may
be....
1907 Acts of Alabama, Act No. 149, ง 6 at 202 (Feb. 26, 1907) (emphasis supplied). If a majority cast ballots `against the sale of liquor,' then the act provided that
It shall not be lawful to sell or otherwise dispose of any intoxicating liquors, drinks, or beverages within the bounds of said county ..., nor shall a license be obtained or granted authorizing ... the sale or other disposition of such intoxicating liquors, drinks or beverages after the date of such election within said county, and all licenses issued before such election shall be null and void and shall not authorize the sale or other disposition of such intoxicating liquors ...; provided subsequent elections may be held under the provisions of this act. And if at any subsequent election held in such county a majority of the votes cast are for the sale of liquors . . . then on and after the first day of January next succeeding such election, intoxicating liquors may be sold in such county *1161 as the same was authorized to be sold on January 1st, 1908.
Id., ง 14, at 204 (emphasis supplied).
"Clearly, therefore, this State's first general local-option law was aimed at the business of selling intoxicating liquors, and the phrase `or other disposition' should be construed doubt about that, it is dispelled by the following provision of the Act.
The provisions of this act shall extend to all sales or other dispositions of intoxicating liquors, drinks or beverages, whether by dispensaries, retailers, wholesale dealers, or any separate or isolated sales or dispositions.
Id., ง 16, at 205 (emphasis supplied).
"The 1907 local-option act was more successful than the temperance forces had hoped. Under its auspices, prohibitionists forced, and won, elections in 58 of Alabama's 67 counties. S. Hackney, supra, 304. See also, Sellers 114.
"`Rather than satisfying the urge for temperance, [however,] the new laws stimulated demand for stricter controls.' S. Hackney, supra, 304. During a special session of the legislature commencing November 7, 1907, the Alabama Anti-Saloon League and its allies pressed their advantage. They demanded the passage of a statewide, general prohibition law. Sellers 118-20.
"Such a bill was introduced by the Speaker of the House of Representatives, A.H. Carmichael of Colbert County, and passed both houses in rapid succession. It was signed into law by Governor Comer on November 23, 1907, and provided that:
it shall be unlawful for any person, firm, corporation, or association, within this State to manufacture, sell, barter, exchange, give away to induce trade, furnish at public places or otherwise dispose of any alcoholic ... liquors or beverages by whatever name called, which if drunk to excess will produce intoxication....
1907 Acts of Alabama (Special Session), Act No. 53, ง 1, at 72 (Nov. 23, 1907) (emphasis supplied).
"Without any question, Alabama's first statewide prohibition act was aimed at those engaged in the business of manufacturing, selling, or distributing liquor. It did not attempt `to restrain a man's private indulgence in drink....' Eidge v. City of Bessemer, 164 Ala. 599, 51 So. 246, 247 (1909). Rather, it specifically provided:
That the provisions of this act shall not prohibit the social serving of liquors and beverages mentioned in this act in private residences in ordinary social intercourse.
1907 Acts of Alabama (Special Session), Act No. 53, ง 12, at 76.
"(c) The High-Water Mark of Prohibition: the 1909 Special Session
"For a while, the passage of a statewide prohibition act satiated the prohibitionists' lust for stricter State controls on the business of liquor. By mid-1909, however, it was obvious that the law was not working well, and that remedial enforcement measures were necessary. `Things got so bad' that the Sheriff of Jefferson County begged Governor Comer
to call a special session of the legislature to put the prohibition `dodgers' out of business. He declared that if `the present status of affairs continues there will soon be more whiskey and intoxicants sold in the county without revenue, than were ever sold under the old saloon regime.' In support of his statement he sent along to the governor a list of clubs organized ostensibly `for the advancement of literature and culture' but which had, among their members, a suspicious number of ex-saloonists and liquor men and which were really only a cover for law breaking.
Sellers 126 (emphasis supplied).
"With the accumulation of such evidence indicating the failure of the statewide prohibition law, Governor Comer acted. On July 15, 1909, he called for the legislature to convene in a special session that same month. In his address to both houses at the beginning of the session, the Governor `frankly declared the statutory prohibition *1162 law "inadequate of enforcement."` Sellers 132. He urged firm legislative action in two areas: strict enforcement legislation, and, an amendment to the State Constitution prohibiting the manufacture or sale of alcoholic liquors. The history of both proposals provides important information for interpreting the scope of our present dram shop act and, hence, each proposal will be discussed separately.
(i) The Carmichael-Fuller Acts
"In that portion of his speech calling for `more strenuous prohibition' enforcement legislation, Governor Comer told the Legislature that:
violation of your [statewide, general] prohibition law ... has almost come to the point when you must determine for the people whether whiskey shall dominate and control the State, or the State dominate and control whiskey. I assure you that the open, persistent disrespect of any law engenders serious conditions, and you had better never have touched the prohibition question unless you make the penalty for violations prompt and sure.
The Huntsville Weekly Mercury, July 28, 1909, p. 1 at col. 2. See also, Sellers 132.[19] In response to the Governor's call, two of his chief lieutenants in the House (Speaker A.H. Carmichael and Representative J.T. Fuller) introduced companion bills to stanch the flow of liquor. Both bills passed without difficulty.
"Speaker Carmichael's bill passed first, and was signed into law by the Governor on August 9, 1909. 1909 Acts of Alabama (Special Session), Act No. 7, at 8 (Aug. 9, 1909). It declared that
It shall be unlawful for any person, firm, or corporation or association within this State to manufacture, sell, offer for sale, keep or have in possession for sale, barter, exchange, give away, furnish at public place or elsewhere, or otherwise dispose of the prohibited liquors and beverages described in section 1 of this act, or any of them, in any quantity....
Id. ง 3, at 9. The contemporary value of the legislation lay in the fact that it increased both the period of imprisonment and the amount of fines that might be imposed for violation of its provisions, and, the provisions of the first statewide prohibition act which had taken effect on November 23, 1907. It further provided that each day that a business operated a brewery or distillery or `vender of intoxicants' constituted a separate offense.
"For present purposes, however, the chief importance of the Carmichael bill is found in that proviso which stated that
this inhibition does not include, and nothing in this act shall affect the social serving of ... liquors or beverages in private residences in ordinary social intercourse.
Id. Thus, it is beyond dispute that the Carmichael bill was aimed at those engaged in the business of manufacturing, selling, or distributing liquor for a profit.
"Although the Carmichael bill was called `radical,' critics had to get out their dictionaries to find stronger invectives to describe its companion legislation. The Fuller bill was described by the Montgomery Journal as `the most drastic prohibition bill ever brought to the attention of any legislature.' Sellers 133. It was an omnibus, prohibition enforcement measure. It contained 39 sections, spilling ink over 33 pages of the statute book. It outlawed everything from the manufacture of intoxicants to the advertisement of liquor, and covered just about everything in between.[20]
*1163 "But, for present purposes, the primary importance of the Fuller bill lies in the fact that section eight created the Alabama dram shop law. 1909 Acts of Alabama (Special Session), Act No. 191, ง 8, at 65-66 (Aug. 25, 1909): quoted herein, supra. That fact, then, leads one back to the question of what the legislature intended when it first said, in section eight of the Fuller bill, that certain plaintiffs injured in their person, property, or means of support by an intoxicated person had a right of action for damages against
any person who shall by selling, giving or otherwise disposing of to another contrary to the provisions of law, any liquors or beverages, cause the intoxication of such person....
Id. Two considerations indicate that the legislature only intended for such action to lie against commercial vendors of liquor.
"The first consideration comes from the fact that the Carmichael and Fuller bills were `companion laws ... to be construed together.' Grace v. State, 1 Ala.App. 211, 56 So. 25, 26 (1911); Priest v. State, 5 Ala.App. 171, 59 So. 318, 319 (1912). Consequently, the express provision of the Carmichael Act stating that it did not apply to `the social serving of ... liquors or beverages in private residences in ordinary social intercourse' must be read in pari materia with the provisions of the Fuller Act.
"The second considerationโfound in the text of the Fuller Act itselfโbuttresses the first. Thus, section four of the Fuller Act provided:
4. That the keeping of liquors or beverages that are prohibited by the law of the State to be manufactured, sold or otherwise disposed of in any building not used exclusively for a dwelling shall be prima facie evidence that they are kept for sale, or with intent to sell the same, contrary to law.
1909 Acts of Alabama (Special Session), Act No. 191, ง 4, at 64 (Aug. 25, 1909) (emphasis supplied). This provision now is codified at Ala.Code ง 28-4-92 (1975). In like manner, section 22(12) of the same Act provided in part that:
The keeping of prohibited liquors in any building not used exclusively for a dwelling shall be prima facie evidence that the same are kept to be sold or otherwise disposed of or delivered or furnished contrary to law....
Act No. 191, ง 22(12), supra, at 81 (emphasis supplied).
"Of course, both provisions created evidentiary presumptions. But, a fair reading of them indicates that the reverse of the presumption also is true: i.e., that the keeping of `prohibited liquors' in any building used exclusively for a dwelling is not prima facie evidence that the liquor was kept for the purpose of selling, or otherwise disposing of the same, `contrary to law.' The Alabama Court of Appeals so held.
[T]he mere possession of prohibited liquors in a building used exclusively for a dwelling is not prima facie evidence that the whiskey was kept for sale.
Strickland v. State, 20 Ala.App. 600, 104 So. 351 (1925). See also, Carmichael v. State, 11 Ala.App. 209, 65 So. 694, 695 (1914); Hauser v. State, 6 Ala.App. 31, 60 So. 549, 552 (1912).
"It follows, therefore, that the Fuller Act (like the companion Carmichael Act) was not aimed at social hosts who dispensed alcohol in the privacy of their own home to guests, as an act of social hospitality. While no appellate decision has been found which expressly holds that such a logical *1164 progression is true, two in particular hint that this court's interpretation is correct.
"For example, in Salley v. State, 9 Ala. App. 82, 64 So. 185, 187 (1914), the Alabama Court of Appeals held that the discovery of 55 gallons of whiskey in a building located some 20 to 30 feet from the defendant's residence:
would dispel any reasonable belief that it was kept for personal consumption or for the purpose of dispensing hospitality in ordinary social intercourse at the dwelling of the defendant....
"In another case, the same court held that evidence showing the defendant had delivered whiskey to the prosecution's witness in a shed adjoining a poolroom:
utterly repudiate[d] the idea that the case falls within the exception applying to gifts by one at his private residence, as an act of hospitality in ordinary social intercourse. ... [T]he defendant... can hardly be fancied by the most imaginative as in the role of a host in his private residence, in ordinary social intercourse, dispensing hospitality.
Grace v. State, 1 Ala.App. 211, 213, 56 So. 25 (1911) (emphasis supplied). See also, Toole v. State, 170 Ala. 41, 54 So. 197, 199 (1911).
(ii) The Constitutional Prohibition Election of 1909
"If there was any doubt lingering in the mind of this court over the correctness of the conclusion that the legislature did not intend for the dram shop act to apply to social hosts, or other non-commercial suppliers of liquor, then it was dispelled by the history of the constitutional amendment battle of 1909.
"In his speech to both houses of the legislature at the beginning of the 1909 special session, Governor Corner recommended that an amendment to the Alabama Constitution be submitted to the voters
so as to prohibit the manufacture, sale, and keeping for sale of alcoholic ... liquors and beverages, ... and providing for the designation in the amendment or by the Legislature of places where such liquors and beverages may be stored and kept.
Sellers 130-31 (emphasis supplied). A bill proposing such an amendment passed the legislature in short order, and was signed by the governor on August 18, 1909. In pertinent part it provided that the following question should be submitted to the voters at a special election to be held that year:
`Shall the following be adopted as Article XIX of the Constitution of Alabama: Section 1. The manufacture, sale and keeping for sale of alcoholic and malt liquors and other intoxicating beverages shall be forever prohibited in this State; but alcohol may be sold for medical, scientific and mechanical purposes, and wine for sacramental purposes, under such regulations as the Legislature may have prescribed or may hereafter prescribe. Section 2. Nothing in the constitution of Alabama shall be construed to prevent the legislature under the police power from designating places where such liquors may not be stored or kept. Yes, No.' The choice of the elector shall be indicated by a cross-mark made by him or under his direction opposite the word expressing his desire.
1909 Acts of Alabama (Special Session), Act No. 21, ง 3, at 21 (Aug. 18, 1909) (emphasis supplied).
"Opposition to the proposed amendment centered on the emphasized language. Those opposed to the amendment charged that the language was designed to close the loophole in the Carmichael-Fuller Acts which allowed private individuals to keep liquor in their homes, and to dispense liquor as an act of hospitality in ordinary social intercourse. Emmet O'Neal of Florence, who would be elected Governor of Alabama in 1910, largely as a result of his leadership of the anti-amendment forces,
sounded the keynote of the campaign [to a massive rally in Montgomery on September 15,] and gave his listeners their slogan when he said: `If this amendment is ratified, it means the legislature can invade the home.' `The sanctity of the home must be kept inviolate,' swore the *1165 delegates, and they prepared to ring the changes on this theme.
Sellers 135.
"The campaign over the amendment was intense, bitter, and heated. Every major politician in the State was drawn into the fray, and publicly chose sides. Id. 141-42. Many considerations for and against were debated, but the focus of discussion and decision was section two, and the question of whether the legislature should be constitutionally empowered to prevent individuals from keeping liquor in the privacy of their homes. See id. 133-48; A.B. Moore, History of Alabama 673-74 (1934).
Both sides went to the polls [on November 29, 1909] confident of victory. Intense excitement marked the day, but excellent order was maintained on the crowded streets and at the polls. Probably the anti-amendment forces were only a little less surprised than the prohibitionists when the official count of that day's votes showed 72,272 against, and 49,093 for the amendment. No one had foreseen so overwhelming a defeat for the measure.
The amendment lost in all but six counties, and in these six the total favorable majority was only 467.... All of the large urban centers voted against the amendment. The will of the people seemed clear.
Sellers 147.
"5. Conclusions on the Scope of the Dram Shop Act
"Not only did the `will of the people' seem clear in their rejection of the prohibition amendment, but, with the clarity of hindsight, the intent of the legislature when it passed the Carmichael-Fuller Acts also now seems clear. Even though the dram shop section contains the phrase `giving or otherwise disposing of to another,' those wordsโwhen placed in the context of their legislative and judicial historyโclearly do not have a scope of operation as broad as would first appear. Rather, the words properly were intended to apply only to those who furnished liquor owned by them to another person in return for monetary compensation or other consideration.
"The foregoing conclusion is not weakened by the fact that the Alabama Legislature defined the phrase `otherwise dispose of in the Fuller Act. Tucked away in section 31 of that Act, one finds the following:
... and the term `otherwise dispose of following the words, sell, offer for sale or keep for sale, and the term `otherwise disposed of following the words sold, offered for sale, kept for sale, when employed in any warrant, process, affidavit, indictment, information or complaint, or in any bill in equity or other pleadings in any judicial proceeding or in any judgment or decree shall include and be deemed to include barter, exchange, giving away, furnishing, or any manner of disposition by which said liquors and beverages may pass unlawfully from one person to another;
1909 Acts of Alabama (Special Session), Act No. 191, ง 31, at 91. This provision now is codified at Ala.Code, 28-4-1(4) (1975). The words `barter' or `exchange' are just terms which refer to another species of a `sales' transaction. In a sale, the consideration for the transfer is money. In a `barter' or `exchange,' the consideration is either other property, or services, of equivalent value. See, 45 Am.Jur.2d Intoxicating Liquors งง 239-241 (1966). The phrase `giving away,' as noted by the decisions of the Alabama appellate courts discussed earlier ..., would denote the transfer of property owned by one person to another person without consideration that could be measured in terms of money or other indices of value. See, e.g., id. ง 247. See also, Clark v. State, 167 Ala. 101, 52 So. 893 (1910) (Mayfield, J., dissenting). The concluding words of the statutory definition would, in accordance with the ejusdem generic rule of statutory construction, have to be read as applying only to transactions of the same general kind or class as barter, exchange, or gift.
"It follows from all that has been said thus far, therefore, that a dram shop action does not lie against either the Huntsville Jaycees, Inc., or Richard P. Watts, because:
*1166 "(1) Neither defendant is a commercial vendor, nor did either sell the beer to the HHS Jr. Jaycees (or Warren Lee Bradford); rather, Turner Beverage Company did.
"(2) They did not give the beer to the HHS Jr. Jaycees (or Warren Lee Bradford) because they had no ownership or property interests in the beer. Rather, Turner Beverage Company owned the beer, and, all monies used to acquire the beverage company's property interest in the beer came from Jr. Jaycee funds.
"(3) They did not otherwise dispose of the beer because, as discussed above, that phrase must be construed [under the ejusdem generis principle] with the words `sell' and `give,' and neither the Jaycees nor Richard Watts disposed of any ownership or property interests in the beer.
"B. DOES A COMMON LAW NEGLGENCE ACTION LIE?
"Having concluded that a dram shop action does not lie against the Huntsville Jaycees, Inc., and Richard P. Watts, the second question must be addressed: Does an action grounded on common law negligence principles lie against either defendant?[21]
"Until just recently, the answer to that question would have been an easy, unequivocal `no.' For example, it was only a few years ago that the plaintiff in DeLoach urged the Alabama Supreme Court to `recognize an action for common law negligence for [dispensing] alcohol....' He argued that King v. Henkie should be cast onto the scrap heap of history because
social attitudes and public policy have changed since King was decided, and ... this court should change the law to meet society's change.
DeLoach v. Mayer Electric Supply Co., 378 So.2d 733, 735 (Ala.1979). The Supreme Court rejected that plea, saying tersely: `The rule expressed in King is as viable today as when first expressed.' Id. In a prescient phrase, however, Mr. Justice Bloodworth added:
We do not choose, at this time, to depart from the rule expressed in King and followed by a majority of jurisdictions.
Id. (Emphasis added.) Mr. Justice Bloodworth's portentous phrase may now, several years after his death, have come to pass.
"In Buchanan v. Merger Enterprises, Inc., 463 So.2d 121 (Ala.1984), the Alabama Supreme Court partially overruled King v. Henkie, and recognized a common law negligence action against a commercial licensee for the on-premises sale of alcoholic beverages to a visibly intoxicated patron. The facts of the case were summarized by Mr. Justice Faulkner as follows:
[A]bout 5:30 in the morning of July 29, 1981, David Slaughter entered the Checkers Lounge in Dothan after an all-night drive from Florida. He commenced drinking and continued imbibing until around noon, when he left with a waitress. Thirty minutes later he returned and remained at the lounge until around 5:00 P.M. Although Slaughter became visibly intoxicated while in the lounge, the lounge's employees continued to serve him alcoholic beverages up until the time he left. About fifteen minutes after leaving the lounge, the automobile which Slaughter was driving left the road and careened through the yard of the plaintiff's mother, killing her as she worked in her garden.
Id. at 122. The son of the deceased brought suit against the corporation which did business as the `Checkers Lounge.' The action was founded on the dram shop act. Ala.Code ง 6-5-71 (1975).
"However, defendant had clever counsel who discovered that, in 1980, when amending the Alabama Alcoholic Beverage Licensing *1167 Code, the Legislature had inadvertently repealed that statute which made it unlawful for an on-premises licensee to `sell, furnish or give any beverages to any person visibly intoxicated....' Ala.Code 23-3-260(2) (1975) (repealed by Act No. 80-529, 1980 Acts of Alabama, effective Sept. 30, 1980). Hence, plaintiff could not prove one of the essential elements of the dram shop action: a sale `contrary to law.' The trial court, accordingly, granted defendant's motion for summary judgment.
"On appeal, therefore, the Alabama Supreme Court was `faced with an anomalous situation,' id. at 124, in which the facts were egregiously hard, but in which the trial judge had unquestionably ruled correctly. Due to the `emasculation of the dram shop statute by the passage of the new alcohol licensing act' (id. at 123), no action arose under the statute. And yet, the court was convinced that the loophole through which defendant had squiggled was `the result of legislative oversight, not legislative wisdom'; and that the legislature had not intended to
legalize the sale of alcohol to visibly intoxicated persons, to minors, and to insane persons. To the contrary, it appears to us that the legislature was very concerned with the problem of drunken driving. In the same term during which the new alcohol licensing act was passed, the legislature passed a new drunk driving law ... granting trial courts new powers to suspend driving licenses of those convicted of drunk driving upon their first conviction and providing for increased penalties and a mandatory suspension of driving privileges for second and subsequent convictions.... The stated purpose of the new drunk driving laws was to `do a better job of helping to identify the problem drinking driver and keep him off the highways.' Commentary to ง 32-5A-191. Unless the legislature was afflicted with a collective split personality, it is difficult to believe that it intended to give taverns carte blanche authority to continue serving alcohol to visibly intoxicated patrons, given its concern for drunken driving. If it had intended to do away with the dram shop statute the legislature would have repealed the statute itself, not just its teeth.
Id. at 123-24 (emphasis supplied).
"Toothless though it might be, the Court could not `rewrite the dram shop statute. It exists, regardless of intent, as written.' Id. at 124. Therefore, the Court was forced to consider the question of whether the plaintiff might proceed under a negligence theory. A bare majority of the Court held that he could. (Buchanan is a five-four decision.) The clearest statement of the majority's holding is found in the following extract.
The recognition of a cause of action for the negligent sale of alcohol by a licensee for on-premises consumption to one who is visibly intoxicated will discourage drunk driving by discouraging the sale of alcohol to patrons who lack the self control to cease drinking when they have `had enough.'
Id. at 127 (emphasis supplied).
"In effect, the majority held that the law imposed a duty upon licensees for on-premises consumption to refrain from continuing to sell alcohol to visibly intoxicated patrons, in order to protect a class of third persons which included plaintiff's decedent.
"Thus, King v. Henkie was overruled. But only just enough to allow `this plaintiff to have his day in court.' Id. at 128. The court expressly limited its holding, and its overruling of King v. Henkie, to cases involving the on-premises sale of liquor by licensed, commercial vendors. The limited nature of the majority's holding is demonstrated by the following extracts from the opinion:
We recognize that the rule that there could be no common law cause of action for negligently serving alcohol, which was espoused in King, was reaffirmed in DeLoach, supra. DeLoach is, however, distinguishable from the facts presented here. It did not involve a licensed vendor. Had these facts been alleged in DeLoach, a cause of action would have *1168 been stated under the dram shop statute.... [Id. at 127 (emphasis added).]
* * * * * *
Finally, the defendant argues that the recognition of a common law action for negligently dispensing alcohol would allow actions to be brought against social hosts. That result does not necessarily follow. Most of the states which have recognized a common law action for negligently dispensing alcohol have restricted those actions to instances of sales by vendors. Only New Jersey, in Kelly v. Gwinnell, [96 N.J. 538, 476 A.2d 1219 (1984)], has extended liability to social hosts. There is an arguable distinction between licensed vendors and social hosts based on the governmental interest which supports the statutory requirement that commercial vendors of alcohol be licensed. An analogy to that position may be found in products liability law. The rule stated in ง 402A of the Restatement of Torts (Second) does not apply for instance to a `housewife who, on one occasion, sells her neighbor a jar of jam or a pound of sugar.' Comment f to ง 402A. We hasten to point out, however, that the question of a social host's liability is not before us and we specifically decline to decide that issue. ... [Id. at 127-28 (emphasis added).]
"The extremely limited scope of the Buchanan holding also is demonstrated by the majority's choice of supporting authorities.
We find precedent for the proposition that legislatively created principles of dram shop liability, not fully implemented by the acts themselves, can be effectuated by a common law negligence action in the case of Waynick v. Chicago's Last Department Store, 269 F.2d 322 (7th Cir.1959)....
Id. at 124. Later in the opinion, the majority cites the following decisions as examples of instances in which `other states have ... recognized common law negligence actions under similar facts' (id. at 127): Ontiveros v. Borak, 136 Ariz. 500, 667 P.2d 200 (1983) (en banc) (allowing negligence action against commercial licensee for sale to visibly intoxicated patron); Kelly v. Gwinnell, 96 N.J. 538, 476 A.2d 1219 (1984) (allowing negligence action against social host who personally and `directly serves' liquor to a visibly intoxicated guest, and `continues to do so even beyond the point at which the host knows that the guest is intoxicated, and does this knowing that the guest will shortly thereafter be operating a motor vehicle'); Hutchens v. Hankins, 63 N.C. App. 1, 303 S.E.2d 584 (1983) (allowing negligence action against commercial licensee for sale to visibly intoxicated patron, with knowledge that patron will drive from the premises); Sorensen v. Jarvis, 119 Wis.2d 627, 350 N.W.2d 108 (1984) (allowing negligence action against a retail establishment for knowing sale to a minor); and, McClellan v. Tottenhoff, 666 P.2d 408 (Wyo.1983) (allowing negligence action against commercial vendor for knowing sale to a minor).
"One must ask, what does the majority's choice of authorities tell us about its decision? What do the six cases have in common? Only one (Kelly) involves social host liability; so that is not the point. Two (Sorensen and McClellan) involve minors; so that might be, but probably is not, significant. Five of the six (i.e., all but Kelly) involve sales of liquor by commercial vendors; so that obviously is a significant common denominator. However, there is one factor which all of the cited cases share, and that is: all arose either in jurisdictions that had no dram shop statute, or under circumstances in which no dram shop act was in force and effect.
"For example, in Waynick, neither the Michigan nor the Illinois dram shop statute applied to the peculiar facts of that case. (See the Buchanan majority's discussion of Waynick at 124-25.) In Sorensen, the Wisconsin dram shop act had been repealed by that state's legislature in 1982 (see 350 N.W.2d at 113 and n. 8). In Ontiveros, Arizona had no dram shop act (see 667 P.2d at 211-12). In McClellan, Wyoming had no dram shop act (see 666 P.2d at 411). At the time of plaintiffs' injuries in Hutchens, North Carolina did not have a dram shop *1169 act (see 303 S.E.2d at 588). And New Jersey did not, and does not now, have a dram shop act (see Kelly, 476 A.2d at 1221).
"Moreover, counting the decision of our supreme court in Buchanan, the decision of the Wisconsin Supreme Court in Sorensen, and the decision of the North Carolina Court of Appeals in Hutchens, one finds that a majority of the states (twenty-seven in all) now have allowed a negligence action against commercial vendors of liquors for injuries sustained by third persons as a result of the acts of an intoxicated person. Significantly, however, the overwhelming majority of those states (22 out of 27) did not have a dram shop, or civil damage, act in force on the date the action arose. Compare the list of decisions in the `Appendix' to Sorensen v. Jarvis, 350 N.W.2d at 119-20, with 12 Am.Jr. Trials 729, "Dram Shop Litigation" ง 2 (1966).
"There can be little doubt, therefore, that the absence of a statutory, dram shop remedy has been a substantial factor influencing those courts which have extended negligence liability to commercial vendors of intoxicating liquor. As the New Jersey Supreme Court observed in Kelly:
Whether mentioned or not in these opinions, the very existence of a Dram Shop Act constitutes a substantial argument against expansion of the legislatively-mandated liability. Very simply, when the Legislature has spoken so specifically on the subject and has chosen to make only licensees liable, arguably the Legislature did not intend to impose the same liability on [social] hosts.
Kelly v. Gwinnell, 96 N.J. at 554, 476 A.2d at 1227 (emphasis supplied).
"The statutory vacuum created by legislative inadvertence, in which the Buchanan majority operated, now has been filled by administrative regulations promulgated by the A.B.C. Board. Regulation 20-X-6-.02. Thus, in one sense, the Buchanan decision may be sui generis. We may never see its like again. (At least, in the absence of a similar legislative (or administrative) error.) That also is an argument against expanding the Buchanan negligence action beyond commercial vendors, to encompass defendants such as those before this Court. The majority hinted as much when they said:
Most of the states which have recognized a common law action for negligently dispensing alcohol have restricted those actions to instances of sales by vendors. ... There is an arguable distinction between licensed vendors and social hosts based on the governmental interest which supports the statutory requirement that commercial vendors of alcohol be licensed.
Buchanan v. Merger Enterprises, Inc., supra, at 127-28 (emphasis supplied).
"V. CONCLUSIONS OF LAW AND ORDER ON MOTIONS
"Therefore, this Court concludes that an action based upon common law negligence principles does not lie against either of the moving defendants. In view of the clear legislative intent gleaned from the history of the Carmichael-Fuller Acts, and, the carefully limited holding of the Buchanan majority, it is not the province of this court to define a new cause of action against non-commercial entities. That law-making prerogative lies either with the Alabama Supreme Court or, more properly, the Alabama Legislature.
"Accordingly, it is ORDERED, AJUDGED, and DECREED that the motions for summary judgment of defendant HUNTSVILLE JAYCEES, INC., and, defendant RICHARD P. WATTS be, and the same hereby are, GRANTED.
"In accordance with Rule 54(b), Ala.R. Civ.P., the Court determines there is no just reason for delay, and expressly directs that judgment be entered in favor of the HUNTSVILLE JAYCEES, INC., and RICHARD P. WATTS, and against plaintiffs on all claims.
"In accordance with the foregoing, it also is CONSIDERED, ORDERED, AJUDGED, and DECREED that plaintiffs have and take nothing of defendants HUNTSVILLE JAYCEES, INC., and RICHARD P. WATTS, and that these consolidated actions be, and the same hereby *1170 are, DISMISSED with prejudice as to said defendants. Costs are taxed to plaintiffs, for which execution may issue.
"DONE and ORDERED this 14th day of May, 1985.
"S/Lynwood Smith
"Circuit Judge"
NOTES
[1] Permission had been sought to use the building for the party. Though the HHS Jr. Jaycees had been allowed to use the building on at least one prior occasion, permission was denied.
The evidence suggests the possibility that the request was denied because the adult organization knew that alcoholic beverages would be served at the party.
[1] "Randy Morris, Youth Assistance Director of the defendant Jaycees during the administration of Ernest Kaufmann, testified during deposition that one of his goals that year was that of establishing `a Junior Jaycee Chapter in each of the area high schools, based on the Jaycee Creed.' During the 1980-81 organizational year, only two of the City's five high schools had Junior Jaycee Chapters: S.R. Butler High School and Huntsville High School."
[2] "This emphasized language raises the question of `why' the request was refused. Was it because the defendant Jaycees were aware that alcohol beverages were consumed by the Junior Jaycees at their `senior party' and for that reason refused the request? The record on this point is ambiguous.
"Ernest Kaufman testified that some unidentified members of the HHS Jr. Jaycees
came to our Board meeting and made a request that year [i.e., 1981] for two items. One being their annual awards banquet, number two, being able to use our building for an additional party of which they were refused the second request.
Kaufman stated the second request was refused `[b]ecause we wanted to have them one time a year for an annual awards banquet and that was it.'
"On the other hand, Randy Morris (Kaufmann's Youth Assistance Director) acknowledged that the second request for use of the Bonn Building was for the party ultimately held on Guntersville Lake, but he could not `remember' whether the request was refused because the Board had knowledge that beer was dispensed at that party."
[3] "See, for example, page 2 of the `Brief in Support of Defendant, Huntsville Jaycees, Inc.'s Motion for Summary Judgment,' where counsel says:
The allegation has been made that at the time of the occurrence, May 16, 1981, David Worley was a Huntsville Jaycees' sponsor for the Huntsville High Junior Jaycees and was the person who arranged for the beer to be purchased for the party. * * * * [Emphasis supplied (by Judge Smith).]"
[4] "Ernest Kaufmann does not deny that Worley was the sponsor. Rather, he states that Randy Morris appointed John Zachary `to oversee' the activities of the two high school chapters; and he thus `assumes' that Zachary served as the liaison; but admits he did not `personally know' that to be true.
"In like manner, while Randy Morris began his deposition by denying that David E. Worley was sponsor, he finally admits: (1) that he does not know; and (2) that John Zachary would have been in charge of designating the sponsor for each of the two high school chapters."
[5] "On May 15 and 16, 1981, the city schools still were in session for the year."
[6] "It should be noted that defendant David E. Worley denies any knowledge of how, or where, the beer was purchased. Without question, that is a material fact. But this Court doubts that a genuine issue has been made of it. In any event, this court will jump over Worley's denial for the moment, in order to reach the questions of law which are raised by the pleadings."
[7] "For a list of those states which have Dram Shop Acts, see 12 Am.Jr. Trials ง 2 ["Dram Shop Litigation"]. See also, Note, 9 Cumber.L.Rev. 613, 615 & nn. 16-20 (1978)."
[8] "Indeed, another common law principle, closely related to the rationale of cases such as King v. Henkie, was that which held an intoxicated person to the same standard of conduct as if he were sober. See, Prosser, Handbook of the Law of Torts ง 32 (4th ed. 1971).
This rule was premised on the belief that intoxication would be too easy to assert as an excuse for any misconduct. Thus, the inebriate alone was held responsible for his acts causing injury.
Note, 14 Cumber.L.Rev. 411, 413 (1984). The point was referred to by the Alabama Supreme Court in King when it said:
A drunkard, or one in a state of voluntary intoxication, can scarcely claim so much charity from the law ... as imbeciles and lunatics, because he has by his own agency, either wantonly or negligently, brought about his own misfortune. As drunkenness is no excuse for crimes, or for torts, no more should it be a basis for the liability of another in an action brought against him by the victim of such inebriety.
King v. Henkie, supra, at 511. Thus, it is doubtful that the common law courts' position would have been any different, even it it had not occurred to them to lay the `proximate cause' of injury in the cup of the drinker, rather than the bottle of the seller."
[9] "For a discussion of the temperance movement and its role in the movement for dram shop acts, see Ogilvie, History and Appraisal of the Illinois Dram Shop Act, 1958 U.Ill.L.F. 175."
[10] "The plaintiffs in the Miller case were injured by an automobile driven by a person who became intoxicated while attending a picnic sponsored by a voluntary association of employees of the Owens-Illinois Glass Company at its Madison, Illinois, plant. The picnic was held on premises owned by the employer, with its consent. Suit was brought against the employees' association and the employer under the Illinois dram shop act. In pertinent part, that act provided:
Every person, who shall be injured, in person or property by any intoxicated person, shall have a right of action in his or her own name, severally or jointly, against any person or persons who shall, by selling or giving alcoholic liquor, have caused the intoxication, in whole or in part, of such person; * * * *
Miller v. Owens-Illinois Glass Co., supra, at 419, 199 N.E.2d at 304, 8 A.L.R.3d at 1409.
"The defendants filed motions for summary judgment grounded on affidavits asserting that neither was engaged in the business of selling liquor. The motions were granted and plaintiffs appealed. Thus, the Illinois Appellate Court was presented the question of whether that State's dram shop act applied: (1) to a voluntary club or association which holds a social function at which intoxicating liquors are served to the members and guests; or (2) to the owner of property who permits a voluntary club or association to hold a social function on its property, at which intoxicating liquors are served to members and guests. The appellate court responded negatively to each question, and held that the Illinois dram shop act was
intended to regulate the business of selling, distributing, manufacturing and wholesaling alcoholic liquors for profit. In other words, it was to regulate those in the business, not the social drinker or the social drinking of a group.
Id. at 423, 199 N.E.2d at 306, 8 A.L.R.3d at 1411 (emphasis supplied)."
[11] "See, e.g., W.J. Cash, The Mind of the South 231-233 (1941: Vintage ed.); S. Hackney, Populism to Progressivism in Alabama 302-305, 316 (1969); A.B. Moore, History of Alabama 666-679, 753-757 (1934)."
[12] "Prohibition is not presently regarded as a `progressive' measure. But the historic reality of Progressivism [as a political movement] is sometimes at odds with the
value-laden adjective `progressive.' Prohibition sentiment had been strong among the Progressive forces in the South. Prohibition was just one among the many economic, political, and social reforms that constituted the curiously polyglot movement, Progressivism. The strength of its appeal in the South may represent, as Dewey Grantham suggests, an enduring conservatism in matters moral and social, an essentially romantic willingness to be distracted from the hard, real problems of economics and class interest by quixotic crusades for some mystical goal of publicly enforced moral purity.
W.D. Barnard, Dixiecrats and Democrats: Alabama Politics 1942-1950, at 25 (1974). See also, id., at 9-10, 160 & n. 13."
[13] "As is so often the case when public figures self-righteously assume the cloak of virtue, one finds they have other vices aplenty. In this case, the prohibitionists' clay feet were molded from the grimy soil of racism. In the name of protecting a `traditional way of life,' they struck at Blacks.
Another [reason for the rapid growth of the prohibition movement] was the will to [master] the Negro [who], when primed with a few drinks of whiskey, was ... lamentably inclined to let his ego a little out of its chains and to relapse into the dangerous manners learned in carpetbag days.... And it seems genuinely to have been believed that to forbid the sale of legal liquor, and so presumably to force up the price of the bootleg product, would be to deprive him of alcohol altogether and so make it easier to keep him in his place.
W.J. Cash, supra, note 11, at 232."
[14] "See, e.g., Sellers 67-68 & n. 104; S. Hackney, supra, 302."
[15] "A perusal of the general, special and local laws regulating the sale of intoxicating beverages prior to 1907 shows the growth and development of the desire on the part of the people of Alabama to restrict the sale thereof.
`Editor's Note,' The Alabama Code of 1928, at 742 (Michie 1929) (not adopted by Legislature)
(emphasis supplied)."
[16] "Indeed, the early decisions of the Alabama appellate courts were very restrictive in their interpretation of language found in the prohibition statutes. For example, in Coker v. State, 91 Ala. 92, 8 So. 874 (1891), the Alabama Supreme Court was presented a case in which the defendant had been convicted for `selling or giving' liquor to a minor in violation of a local prohibition act. The evidence at trial showed that the minor had attempted to purchase whiskey from the defendant, but the defendant `told him that he had no whiskey for sale, and refused to sell him any.' The minor testified that he then `borrowed' a pint of whiskey from the defendant; and that several days later, when he happened upon the defendant who was en route to Montgomery in his wagon, he (the minor) told defendant that he did not have:
any whiskey on hand to return the whiskey he had borrowed from the defendant as before stated, [and] he handed the defendant some money, and requested him to buy as much whiskey in Montgomery as the [minor] witness had borrowed from him, and in that way returned the whiskey he, witness, had borrowed from him.
Id. The Supreme Court reversed the conviction because the trial court had erred in charging the jury that the transaction was a `giving' or `selling' contrary to law, rather than a `loan' or `barter.'
The statute is a highly penal one, and cannot be extended beyond its letter by the result, necessarily more or less uncertain, of speculations into the realms of supposed legislative intent, or the supposed evils aimed at by the law-makers. The alleged offender must be tried upon what the law-giving power has said, and not by what it may be inferred, with greater or less assurance of safety, it has intended beyond the language employed.
Coker v. State, supra at 94-95, 8 So. at 875."
[17] "On this point, Black's Law Dictionary 464 (5th ed. 1979) says:
In the construction of laws, wills, and other instruments, the `ejusdem generis rule' is, that when general words follow an enumeration of persons or things by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same general kind or class as those specifically mentioned....
See also, Maples v. Chinese Palace, Inc., 389 So.2d 120, 124 (Ala.1980); Brook v. Cook, 44 Mich. 617, 7 N.W. 216 (1880)."
[18] "This attitude is capsulized in the following:
The saloon is a place of rendezvous for all classes of the low and vulgar, a resort for degraded whites and their more degraded negro associates, the lounging place for adulterers, lewd women, the favorite haunt of gamblers, drunkards and criminals. Both blacks and whites mix and mingle together as a mass of degraded humanity in this cess-pool of iniquity. Here we have the worst form of social equality, but I am glad to know that it is altogether among the more worthless of both races.
J.F. Clark, `The Saloon and Racial Equality,' in Alabama Christian Advocate, January 4, 1906: quoted Sellers 101."
[19] "In stating that the issue confronting the legislature was `whether whiskey shall dominate and control the State, or the State dominate and control whiskey,' Governor Corner was speaking of the whiskey lobbyists, representing those businesses which profited from the manufacture, sale, and distribution of liquor."
[20] "This was a sweeping bill. Buildings should not be let for the sale or making of intoxicants or such violation permitted in them. Tenants violating this act forfeited their leases.... [I]t was made unlawful to advertise liquor in any public place. The keeping of liquors in any place but a residence was prima facie evidence that they were kept for sale, or intended for sale. Delivery of liquor to any public place was an evidence of sale. It was a misdemeanor for any railroad or boat employees to be intoxicated while on duty. In case of injury to any person caused by one who was drunk, damages could be obtained from the man who sold the liquor. Heavy fines were imposed for selling liquor from behind screens or other obstructions. Judges were required to charge, and grand juries which had testimony had no discretion but to indict. Witnesses who refused to testify were in contempt of court, and even servants could not be excused from testifying against principals. Storage of liquor in any public place was a violation of the law. The law prohibited soliciting from without the state. Sheriffs were authorized to procure lists of United States liquor licenses every month and have them published in heavy black type, with the name and location of the business. Prohibited liquors were contraband when they were stored in violation of the law. Search could be made by warrant, and the presence of government license was prima facie evidence of guilt....'
Sellers 133 n. 30 (emphasis supplied."
[21] "Plaintiffs have neither pled, nor does the Pre-Trial Order recite, a negligence claim against either defendant. Rather, the clear thrust of plaintiffs' claims against these defendants is the dram shop act. Nevertheless, applying notice pleading principles [Rule 8, Ala.R. Civ.P. (and the committee comments thereto) ], this Court believes the question of whether a common law negligence action will lie under the circumstances of this case also should be addressed." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918935/ | 106 B.R. 339 (1989)
In re PARIS INDUSTRIES CORPORATION, Vitro Agate Corporation, Otselic Enterprises, Inc., Stylecrafters Corporation, Gladding Cordage Corporation, Debtors.
Bankruptcy Nos. 87-20111 through 87-20115.
United States Bankruptcy Court, D. Maine.
August 24, 1989.
James Liston, Kaye Fialkow Richmond & Rothstein, Boston, Mass., for trustee.
David A. Munro, Ann Goldweber, Robert Abrams, Atty. Gen., Albany, N.Y. for State of N.Y.
C. Hall Swaim, A. Davis Whitesell, Hale and Dorr, Boston, Mass., for former Directors and/or Officers of debtor Paris Industries Corp. and/or debtor Gladding Cordage Corp.
Charles L. Glerum, Choate, Hall & Stewart, Boston, Mass., for State Street Bank.
*340 MEMORANDUM OF DECISION
FREDERICK A. JOHNSON, Chief Judge.
INTRODUCTION
On April 10, 1987, the Debtors filed for relief under Chapter 11 of the Bankruptcy Code. On May 26, 1987, a Chapter 11 Trustee was appointed.
On December 27, 1988, the trustee filed a motion for authorization to enter into an agreement regarding the sale of certain real estate in South Otselic, New York and the settlement of certain claims (the settlement agreement). This contested matter is before the court on an objection to the trustee's motion filed by certain of the former directors and officers (collectively, the "Objecting Parties") of the debtor Gladding Cordage Corporation (Gladding) and/or the debtor Paris Industries Corporation (Paris).[1]
Among the terms of the proposed settlement agreement, the State of New York (NYS) has agreed to release or otherwise limit the potential liability of certain individuals and entities, including Gladding and Paris, in connection with the cost of the environmental clean-up at Gladding's Otselic facility. The proposed agreement does not provide for any release of the former officers and directors of Paris and/or Gladding. As a result, NYS has reserved whatever rights it has to look to these former officers and directors for the costs of cleanup. The Objecting Parties have protested against their specific exclusion from the releases provided by NYS and have urged this court, on various grounds, to reject the proposed agreement.
Hearing was held, and the parties have extensively briefed the issues.
FACTS
At the time of the filing of the petition, Gladding an affiliate of Paris, operated a manufacturing facility at South Otselic, New York. The real estate at the Gladding facility consists of a seven acre parcel of land, with various buildings and structures (the property). The property has been environmentally damaged. The damage consists of ground water contamination and discharges of hazardous chemicals located on the site.
By order dated August 5, 1987, this court authorized the sale of Gladding's personal property situated at South Otselic, New York to Continental Cordage Corporation (Continental) free and clear of liens and encumbrances for the purchase price of $475,000.00.[2] Valid liens and encumbrances were to attach to the proceeds.
State Street Bank and Trust Company (State Street) was owed in excess of $10 million (as of July 10, 1987), secured by valid and perfected first mortgages and security interests in all of the debtors' assets. See In re Paris Industries Corp., 80 B.R. 2, 3 (Bankr.D.Me.1987). NYS had asserted an unliquidated contingent claim for the cost of remediation, which was estimated at an amount in excess of $1 million. NYS objected to the payment of the $475,000.00 in proceeds from the sale of the personal property to State Street. By order dated December 7, 1987, the court instructed the trustee to pay the proceeds to State Street. On January 5, 1988, NYS filed a notice of appeal. The court has subsequently granted NYS several enlargements of time to file the record on appeal and statement of issues, pending possible approval of the proposed settlement agreement.
Gladding Braided Products, Inc. (GBP), the trustee, NYS, and State Street are the only parties to the settlement agreement now before the court. Among the terms of the proposed agreement, the trustee proposes to sell the property to GBP, an affiliate *341 of Continental, for a purchase price of $160,000.00 free and clear of liens and encumbrances. The parties to the agreement also propose to settle the rights, obligations and claims asserted against each other.
State Street currently holds a valid first mortgage on the property in the approximate amount of $2 million. It also holds postpetition security interests and liens in all of the Debtors' assets, including the real estate. The debt far exceeds the value of the property, which has been estimated at between $500,000.00 and $1 million, if clean.
NYS has hired a consulting engineering firm to conduct a remedial investigation/feasibility study (the study), at an estimated cost of $750,000.00. The purpose of the study is to document the extent of contamination and to select a remediation program. Subsequently, the remedial program which is chosen will have to be carried out.
The pertinent provisions of the proposed settlement agreement can be summarized as follows:
(1) Distribution of Proceeds From Sale of the Real Estate[3]
Of the total price of $160,000.00, GBP will pay the trustee $75,000.00 in cash. The trustee will immediately turn over the $75,000.00 to NYS. NYS will use those funds to pay for the removal of barrels of hazardous materials, presently stored on the property.
GBP will pay the balance of $85,000.00 in the form of a promissory note, executed in favor of the trustee, and secured by a first priority purchase money mortgage. The mortgage is payable in full, in a lump sum, without interest, three years from the closing date.
(2) GBP Obligations in Connection With the Remediation
Certain obligations are assumed by GBP: it has agreed to submit and carry out a plan for the replacement and capping, removal and/or disposal of existing septic tanks. It has also agreed to construct a self-contained sanitation treatment system.
(3) Releases Given by NYS
Relative to the environmental cleanup, NYS has agreed to limit its recovery to the lesser of: "(i) the amount of any such Claims asserted by NYS; or (ii) twenty-five percent of the proceeds of any recoveries that are made available to the estates of the Debtors, Paris . . . and Gladding . . ." The trustee, the affected bankruptcy estates, the Debtors, and any future "officers, directors, stockholders, [and] employees . . . of any of the Debtors" are the beneficiaries of the limited liability portion of the agreement. Any "former officers, directors, stockholders, [and] employees . . ." are specifically excluded as beneficiaries.
NYS will provide State Street with what appears to be a general release of claims, in connection with the environmental problems at the Otselic facility.[4] NYS specifically will release State Street from any claims it might assert to the $475,000.00 in proceeds from the sale of personal property, in connection with which NYS had filed a notice of appeal.
DISCUSSION
A. Background
Two important governmental concerns are at stake in this proceeding. The Bankruptcy Code embodies a governmental policy favoring reorganization and a fresh start. The discharge of prefiling obligations and the abandonment or rejection of burdensome property or contracts are among the methods provided for to accomplish that result. Federal and state environmental laws embody society's interest in protecting the environment and the health and safety of its inhabitants. To the *342 extent possible, these two sometimes competing objectives should be reconciled. See In re Distrigas Corp., 66 B.R. 382, 384 (Bankr.D.Mass.1986).
It is clear that the property is burdensome and of inconsequential value to the estate. See 11 U.S.C. § 554(a). At the hearing the trustee suggested that given any situation other than an environmentally damaged property, he would have requested this court to approve its abandonment. Essentially, the trustee is using the sale of the property as a means of transferring it out of the estate.
Although the issue of abandonment is not before the court, cases which have considered that issue in connection with environmentally damaged property are instructive in evaluating the settlement agreement.
The leading case on abandonment of a hazardous waste site is Midlantic National Bank v. New Jersey Department of Environmental Protection, 474 U.S. 494, 106 S.Ct. 755, 88 L.Ed.2d 859, reh'g denied, 475 U.S. 1090, 106 S.Ct. 1482, 89 L.Ed.2d 736 and 475 U.S. 1091, 106 S.Ct. 1482, 89 L.Ed.2d 736 (1986). In Midlantic, the Supreme Court concluded that the "Bankruptcy Court does not have the power to authorize an abandonment without formulating conditions that will adequately protect the public's health and safety." Id. 474 U.S. at 507, 106 S.Ct. at 762 (quoted in In re Stevens, 68 B.R. 774, 781 (D.Me.1987)). However the Supreme Court did not address, how, as a practical matter, a trustee can comply with the applicable environmental laws or adequately protect the public health and safety, without funds in the estate to do so. See In re 82 Milbar Boulevard, Inc., 91 B.R. 213, 218 (Bankr.E.D. N.Y.1988). This proposed settlement agreement provides a practical answer. Under the particular circumstances of this proceeding, the court now concludes that the objections of the former officers and directors must be overruled.
B. Exclusion of Former Officers and Directors
The Objecting Parties argue that any future claims asserted by NYS against the former officers and directors will give rise to contractual indemnification claims against the estates of Gladding and/or Paris.[5] They also argue that any agreement releasing those primarily liable for the cleanup must effect the release of the Objecting Parties, who are alleged to be secondarily liable.
The decision in In re Stevens, supra., suggests that at a minimum the trustee needs the acquiescence of the public authorities to satisfy the requirements of Midlantic, under the conditions presented in this proceeding.
Midlantic leaves no room for the estate to avoid the administrative expense attendant upon its possession of hazardous waste, except upon the acquiescence of the public authorities whose ultimate legal obligation it is to protect the public health and safety from hazardous waste abandoned by those responsible for its existence.
In re Stevens, 68 B.R. at 781.
Pursuant to the terms of the proposed settlement, the trustee is permitted to sell the contaminated property, under conditions which limit the liability of the affected bankruptcy estates and the trustee, and with the acquiescence of NYS. NYS has made it clear that the former officers and directors cannot be released from liability, if NYS is to be a party to the agreement.
To require the trustee to include the former directors and officers in resolving the disposition of this asset could create a bankruptcy case in perpetuity and fetter the estate to a situation without resolve. See In re Oklahoma Refining Co., 63 B.R. 562, 565 (Bankr.W.D.Okla.1986). With the consent of State Street and the consent of NYS, this trustee has done what is reasonable under the circumstances. For this court to preempt the administration of this estate by ordering the inclusion of the former officers and directors "would derogate *343 the spirit and purpose of the bankruptcy laws requiring prompt and effectual administration within a limited time period." Id. at 566 (citing Katchen v. Landy, 382 U.S. 323, 328, 86 S.Ct. 467, 471, 15 L.Ed.2d 391 (1966)).
NYS believes that the agreement will promote the public interest, i.e. the public's health and safety is adequately protected. Such approval carries with it a strong presumption of validity. See United States v. Hooker Chemicals & Plastics Corp., 540 F.Supp. 1067, 1080 (W.D.N.Y.1982). At the hearing, the trustee indicated that sale of this asset would remove a major obstacle toward closing this case. Essentially, the trustee believes that the benefits of the settlement agreement greatly outweigh the possible assertion of future claims.
The court concludes that, particularly in a Chapter 11 proceeding, "the bankrupt's estate should not be burdened by estimated claims contingent in nature." In re Charter Co., 862 F.2d 1500, 1502 (11th Cir.1989).
The former officers and directors are not debtors in this court, and the trustee was not obligated to negotiate on their behalf. If the agreement is approved, it will not prevent the Objecting Parties from asserting any claims and defenses now available.
C. Statutory Duty of the Trustee
Title 28 U.S.C. § 959(b) provides in pertinent part that
. . . a trustee . . . shall manage and operate the property in his possession as such trustee . . . according to the requirements of the valid laws of the State in which such property is situated, in the same manner that the owner or possessor thereof would be bound to do if in possession thereof.
The Objecting Parties claim that the trustee has not complied with the State of New York's environmental laws because he has not undertaken to clean up the property, citing N.Y.Envtl.Conserv.Law § 27-1313.[6] These parties argue that approval of the settlement agreement would enable the trustee to shift his responsibility for cleanup onto other individuals and entities. The court concludes to the contrary.
At the time of the trustee's appointment, the property was already environmentally damaged, and the trustee lacked the funds for cleanup. The proposed settlement agreement, involving a year and a half of negotiations, provides for the sale of the property and the use of a portion of the sales proceeds for cleanup. It also limits the estate's liability to a reasonable portion of the assets which will be made available to it.
In Midlantic, the Supreme Court indicated that a "trustee may not abandon property in contravention of a state statute or regulation that is reasonably designed to protect the public health or safety from identified hazards." Midlantic Nat. Bank v. New Jersey D.E.P., 474 U.S. at 507, 106 S.Ct. at 762. As evidenced by the proposed settlement agreement, the trustee has complied with the goal of the New York statute, which is to develop and implement a remedial program approved by NYS. See N.Y.Envtl.Conserv.Law § 27-1313(3)(a) (Consol.Supp.1988) (Commissioner may order development and implementation of remedial program, subject to State approval). By inference the parties to that agreement recognized the practical limitations imposed on the trustee by the lack of funds.
CONCLUSION
It is not the court's function to substitute its judgment for that of the parties to this proposed agreement, but to assure itself that the settlement adequately protects the public interest and is in accord with relevant environmental and bankruptcy law. See United States v. Hooker Chemicals & Plastics Corp., 540 F.Supp. at 1072, 1073. The court concludes that these standards have been met, and the objections of the former officers and directors must be overruled. The trustee's motion to enter into *344 the sale of the real estate and the settlement of claims will be approved.
An appropriate order will be entered.
NOTES
[1] In the original objection, filed on January 18, 1989, the Objecting Parties were identified as J. Gerald Mayer, David Johnson, Clifford Parsons, Arthur Abramson and Marie Morvan. On January 25, 1989, a restated objection was filed to indicate that Parsons had withdrawn as an "Objecting Party". The Parties have objected "individually and on behalf of all other similarly situated former directors and officers" of Gladding and/or Paris.
[2] Some of the personal property was located at Cuyler, New York.
[3] The court has supplied subdivisions to the proposed agreement for the purposes of clarity.
[4] State Street initially objected to the motion because NYS refused to specify in its release the circumstances under which it would seek EPA involvement. State Street subsequently withdrew its objection. However, State Street reserved the right to assure itself that the release was in the form agreed to.
[5] The court need not decide at this time whether any such future claims would be treated as administrative expenses or as a general unsecured claim.
[6] Although the Objecting Parties claim that the trustee violated N.Y.Envtl.Conserv.Law § 27-1313, they did not refer the court to any particular subdivision within § 27-1313 nor to any language within the statute as support for that assertion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584638/ | 728 N.W.2d 61 (2006)
IN RE MARRIAGE OF KOLBO.
No. 06-0098.
Iowa Court of Appeals.
November 30, 2006.
Decision without published opinion. Affirmed as Modified and Remanded on Appeal; Affirmed on Cross-Appeal. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1013857/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BYRON B. SIMMS, as Guardian and
Next Friend of Christopher Byron
Simms,
Plaintiff-Appellee,
v.
KENNETH BRUCE; JOSEPH LYLES;
KENNETH MACK,
Defendants-Appellants, No. 03-2181
and
CHARLES DOUKAS; ELLENDER
FRANCETROUPE; KENNETH CARROLL;
JASON DUCELLIER; BARRY STANTON;
BEN YUE; PRINCE GEORGE’S COUNTY,
MARYLAND; JANICE HARDESTY,
Defendants.
Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Andre M. Davis, District Judge.
(CA-02-3506-AMD)
Argued: May 7, 2004
Decided: July 19, 2004
Before WIDENER and GREGORY, Circuit Judges,
and C. Arlen BEAM, Senior Circuit Judge of the
United States Court of Appeals for the Eighth Circuit,
sitting by designation.
2 SIMMS v. BRUCE
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Kevin Bock Karpinski, ALLEN, KARPINSKI, BRYANT
& KARP, Baltimore, Maryland, for Appellants. Steven Bruce Vinick,
JOSEPH, GREENWALD & LAAKE, P.A., Greenbelt, Maryland, for
Appellee. ON BRIEF: Victoria M. Shearer, ALLEN, KARPINSKI,
BRYANT & KARP, Baltimore, Maryland, for Appellants. Timothy
F. Maloney, Brian J. Markovitz, JOSEPH, GREENWALD &
LAAKE, P.A., Greenbelt, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
While awaiting trial on assault and related charges, Christopher
Byron Simms (Simms) was detained at the Prince George’s County
Detention Center. He suffered severe and permanent injuries during
an altercation with three prison officers. Acting as Simms’s next
friend, his father sued the officers, alleging, among other things, that
they violated Simms’s due process rights. The district court denied
the officers’ qualified-immunity-based summary judgment motions,
and the officers filed this interlocutory appeal. We affirm.
Before reciting the facts, we address how our limited jurisdiction
shapes the evidence we may consider.
I.
The finality rule and the collateral-order doctrine govern our juris-
diction. We are granted authority under 28 U.S.C. § 1291 to review
SIMMS v. BRUCE 3
a district court’s final judgments. This finality rule prevents us from
reviewing most interlocutory orders because they are not final deci-
sions. But the collateral-order doctrine carves out a small class of pre-
judgment edicts that are "final" enough to be appealable, under
section 1291. Behrens v. Pelletier, 516 U.S. 299, 305 (1996); Johnson
v. Jones, 515 U.S. 304, 309 (1995); Gray Hopkins v. Prince George’s
County, 309 F.3d 224, 229 (4th Cir. 2002); see Cohen v. Beneficial
Loan Corp., 337 U.S. 541, 546 (1949).
At the summary judgment stage, when an official asserts qualified
immunity, the district judge must do several things. She must deter-
mine whether, when viewed in the light most favorable to the plain-
tiff, the facts could support a jury finding that the defendants violated
the Constitution. Saucier v. Katz, 533 U.S. 194, 200-01 (2001). And
viewing the facts in this same light, the district judge must then deter-
mine whether such conduct violated clearly established law. Id. at
201. But importantly, the district judge performs one task that is often
overlooked: before answering the legal questions, she must determine
what the facts look like when viewed in the light most favorable to the
plaintiff. This task requires the judge to resolve evidentiary conflicts
in the plaintiff’s favor. But because the plaintiff is entitled to only
reasonable inferences, the district judge must determine what infer-
ences are reasonable.
Our interlocutory jurisdiction is narrower. Gray Hopkins, 309 F.3d
at 229. During an interlocutory appeal brought under the collateral-
order doctrine, we have no jurisdiction to quarrel with the district
court’s preliminary task of constructing the record in the light most
favorable to the plaintiff. Martin v. Dishong, 57 Fed. Appx. 153, 154
(4th Cir. 2003); see Behrens, 516 U.S. at 313; Gray Hopkins, 309
F.3d at 229. We must assume the district court organized the facts and
resolved the inferences correctly. See Dishong, 57 Fed. Appx. at 154.
Thus, our task is limited to asking whether the facts, as recited by the
district court, show the defendants violated clearly established law.
No matter how a defendant frames his challenge on interlocutory
appeal, we have no jurisdiction (and thus no need) to peruse deposi-
tions, exhibits, or expert reports to determine whether the district
court inferred too much or speculated from too little evidence. See
Gray Hopkins, 309 F.3d at 229 (citing Winfield v. Bass, 106 F.3d 525,
529 (4th Cir. 1997)).
4 SIMMS v. BRUCE
This case illustrates our limited jurisdiction. The parties dispute
what happened when the officers entered Simms’s cell. And they dis-
pute whether the district judge drew reasonable inferences from
expert testimony. But these arguments, under whatever disguise, seek
to alter the facts as the district court viewed them. We have no juris-
diction to consider such an alteration at this stage.
II.
On the morning of September 11, 1998, Simms caused a distur-
bance at the jail by throwing water from his cell. When jail officials
entered the cell to disable the water system, Simms ran out of the cell
and into the common area. Members of the Emergency Response
Team (ERT) responded, restrained Simms without seriously injuring
him, and took him to another unit.
Simms’s cell in his new unit was basic. It had a sink, a toilet, and
a metal desk to the right of the doorway, and a bunk bed against the
wall directly across from the doorway. The only way to see into the
cell was through an eight-by-five-inch window in the door.
Later that day, the ERT, comprised of defendants Kenneth Bruce,
Joseph Lyles, and Kenneth Mack, received a nonemergency report
about Simms causing another disturbance. This time, Simms was
banging loudly on his door, using profanity, throwing toilet water on
the floor, and being generally disruptive. An on-duty sergeant autho-
rized the use of restraints to prevent Simms from harming himself. By
the time they arrived at Simms’s cell with the restraints, the ERT
members could see water coming from under the door, but found
Simms quiet, lying on his bed with his hands behind his head.
Due to the injuries he suffered that day, Simms remembers nothing
more about the incident. Thus, to construct the record in the light
most favorable to Simms, the district court was limited to two types
of evidence. First, the ERT members testified about the sequence of
events. And second, Simms’s expert witnesses challenged the offi-
cers’ versions, based on the nature and extent of Simms’s injuries,
along with the cell’s layout.
SIMMS v. BRUCE 5
According to the ERT members, the following facts reflect what
happened after they arrived at Simms’s cell. Officer Bruce looked
through the window and told the other officers that Simms was sitting
or lying on his bunk bed and that there was water on the floor. Bruce
ordered Simms to get on the floor and to place his hands behind his
back. Simms remained on the bunk. Lyles, the team leader, then
ordered the officers to enter the cell.
Mack opened the door. Bruce entered first. Simms remained on the
bed, with his hands behind his head, despite being ordered to the
floor. Bruce approached Simms and tried to pull him onto the floor
using an arm-bar technique. Simms resisted and a struggle ensued.
Officer Bruce slipped on the wet cell floor, and caught himself on the
sink. Simms, by that time, was somehow off the bunk, trying to bite
Bruce’s leg and Mack’s hand.
Lyles entered the cell to pull Simms away from Bruce and Mack.
Lyles grabbed Simms’s prison suit as Lyles slipped on the floor.
Mack and Lyles tried to take Simms down and handcuff him. Simms
continued to resist. Somehow, the officers found themselves back on
their feet. They tried to stabilize Simms by restraining him against the
wall, but the three officers were unsuccessful because the water made
it hard to grasp him.
They all then spun around and found themselves back on the floor
struggling. According to the officers, when Simms went to the
ground, he first went to his knees, then to his chest, and then to the
floor. In other words, Simms’s head did not violently strike the
ground during the takedown. At some point after Simms reached the
ground, he suddenly stopped struggling and the officers handcuffed
him. All three officers attest that at no time did any of them hit, kick,
or punch Simms during the fray.
After they handcuffed Simms on the ground, the officers noticed
blood on the floor and realized Simms’s nose was bleeding. Simms
was unconscious. They then moved Simms outside of the wet cell so
he could receive medical treatment. Lyles called out a medical emer-
gency and the nurses soon arrived.
The nurses found Simms face down with blood around his face and
head, and concluded Simms had suffered forceful blunt head and
6 SIMMS v. BRUCE
facial trauma. Simms did not respond to oral commands. None of the
officers were hurt.
After Simms was treated in the jail’s medical unit, Sergeant Bybee
transported him to Prince George’s County Hospital. Simms suffered
black eyes, abrasions, a fracture to the left orbital floor and the nasal
bone, subdural hematoma or hematomas, subarachnoid brain hemor-
rhage, a hydrocephalus, cerebral atrophy, ventricular dilatation, a sub-
dural hygroma, and intracerebral blood collection. Simms v. Hardesty,
303 F.Supp.2d 656, 663 (D. Md. 2003).
The hospital discharged Simms on September 28th. His stay lasted
seventeen days.
Simms argued below that the circumstantial evidence supported a
different version of events. He argued that, despite the officers’ insis-
tence that they struck no blows, the evidence supported a reasonable
inference that "he was subjected to a severe beating with fists, booted
feet, and perhaps a baton, and/or that his head was thrust violently
into or against the steel toilet bowl that was present in cell 215 at the
time of his struggle with the officers." Id.
The district court concluded that Simms’s circumstantial evidence
was sufficient to support his version of what occurred. We have no
jurisdiction to challenge that conclusion, so we need not detail
Simms’s evidence. We simply accept, for this appeal, the district
court’s conclusion that the record evidence supports a reasonable
inference that "Simms was beaten and kicked into submission" and
that his head was bashed inside or into the toilet. Id. at 668, 671. It
is that sequence of events that guides our review.
III.
To determine whether the officers are entitled to qualified immu-
nity, we must ask two questions. Saucier, 533 U.S. at 200. First, we
must ask whether the facts, viewed as we described above, show that
the ERT members’ conduct violated Simms’s constitutional right to
be free from excessive force. See id. at 201. If the answer is no, we
proceed no further. But if the answer is yes, "the next, sequential step
SIMMS v. BRUCE 7
is to ask whether the right was clearly established. This inquiry, it is
vital to note, must be undertaken in light of the specific context of the
case, not as a broad general proposition." Id. The ultimate inquiry in
determining whether a right is clearly established is whether it would
be clear to a reasonable officer that his conduct was unlawful in the
situation he confronted. Id. at 202.
To prevail on his Fourteenth Amendment excessive-force claim,
Simms must satisfy the same legal standards that a sentenced prisoner
must satisfy under the Eighth Amendment. See Taylor v. McDuffie,
155 F.3d 479, 483 (4th Cir. 1998); Riley v. Dorton, 115 F.3d 1159,
1166 (4th Cir. 1997). Therefore, he must satisfy both a subjective and
an objective standard. Neither party disputes Simms’s ability to meet
the objective prong, so we focus on the subjective prong.
To satisfy the subjective prong, Simms must show that the force
the officers used inflicted unnecessary and wanton pain and suffering.
Stanley v. Hejirika, 134 F.3d 629, 634 (4th Cir. 1998)(citing Hudson
v. McMillian, 503 U.S. 1,6, (1993)). Because Simms’s claim arises
out of force used during a "prison disturbance," he must show wan-
tonness by proving that the ERT members used the force "‘mali-
ciously and sadistically for the very purpose of causing harm’" and
not as part of a good faith effort to maintain or restore discipline. Id.
(quoting Whitley v. Albers, 475 U.S. 312, 320-21 (1986)).
From the facts as we must view them, a reasonable jury could infer
wantonness. When the ERT members arrived, Simms was lying on
his bunk with his hands behind his head. The officers acknowledge
a later struggle, but deny striking any blows. The district court, how-
ever, determined that the evidence supported reasonable inferences
that Simms was beaten and kicked into submission by officers who
found him lying on his bunk, and that the ERT members bashed
Simms’s head inside of or into the toilet. If the jury discredits the offi-
cers’ testimony, finds that the officers beat and kicked Simms into
submission, and finds that the officers bashed his head into a toilet,
then the jury can reasonably infer that this beating went beyond a
good faith attempt to restore order.
Even if undisputed, the fact that the officers initially approached
the cell in a good faith attempt to restore order does not immunize the
officers’ later actions from a wantonness finding.
8 SIMMS v. BRUCE
Further, in September of 1998, it was clearly established that pre-
trial detainees were protected from wanton beatings that exceeded
good faith efforts to restore order. Under the facts the district court
articulated, we affirm because a reasonable officer would have known
that his conduct violated a constitutional right if, under circumstances
like Simms’s, "he or she were to use a booted foot to kick (in and
about the face and head), and, contemporaneously, if he or she were
to bash the face and head of such a detainee into a toilet." Simms, 303
F.Supp.2d at 669.
During this interlocutory appeal, we are constrained to view the
factual record the way the district court did. We accept at face value
the district court’s view of what reasonable inferences a jury could
draw from Simms’s evidence. If the events occurred the way the dis-
trict court described them (in the light most favorable to Simms), then
the officers violated Simms’s clearly established constitutional right.
AFFIRMED | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1014229/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-6725
REX EUGENE LOVE,
Petitioner - Appellant,
versus
ART BEELER, Warden,
Respondent - Appellee.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. Louise W. Flanagan,
District Judge. (CA-04-120-5-FL)
Submitted: August 26, 2004 Decided: September 2, 2004
Before WIDENER and SHEDD, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Dismissed by unpublished per curiam opinion.
Rex Eugene Love, Appellant Pro Se.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Rex Eugene Love seeks to appeal the district court’s
order denying relief on his motion filed under 28 U.S.C. § 2255
(2000)* as successive. The order is not appealable unless a
circuit justice or judge issues a certificate of appealability. 28
U.S.C. § 2253(c)(1) (2000). A certificate of appealability will
not issue absent “a substantial showing of the denial of a
constitutional right.” 28 U.S.C. § 2253(c)(2) (2000). A prisoner
satisfies this standard by demonstrating that reasonable jurists
would find that his constitutional claims are debatable and that
any dispositive procedural rulings by the district court are also
debatable or wrong. See Miller-El v. Cockrell, 537 U.S. 322, 336-
38 (2003); Slack v. McDaniel, 529 U.S. 473, 484 (2000); Rose v.
Lee, 252 F.3d 676, 683 (4th Cir. 2001). We have independently
reviewed the record and conclude that Love has not made the
requisite showing. Accordingly, we deny a certificate of
appealability and dismiss the appeal.
To the extent Love’s notice of appeal and informal brief
could be construed as a motion for authorization to file a
successive § 2255 motion, we deny such authorization. United
States v. Winestock, 340 F.3d 200, 208 (4th Cir.), cert. denied,
124 S. Ct. 496 (2003). We dispense with oral argument because the
*
The action was originally filed under 28 U.S.C. § 2241
(2000).
- 2 -
facts and legal contentions are adequately presented in the
materials before the court and argument would not aid the
decisional process.
DISMISSED
- 3 - | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584650/ | 728 N.W.2d 881 (2006)
272 Mich. App. 678
PEOPLE of the State of Michigan, Plaintiff-Appellant,
v.
Lloyd Joseph WALTONEN, Defendant-Appellee.
Docket No. 270229.
Court of Appeals of Michigan.
Submitted October 12, 2006, at Petoskey.
Decided November 7, 2006, at 9:00 a.m.
Released for Publication February 28, 2007.
*882 Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, John A. Jarema, Prosecuting Attorney, Shaynee K. Fanara, Chief Assistant Prosecuting Attorney, and Brian O. Neill, Assistant Attorney General, for the people.
Kerry B. Zahner, Charlevoix, for the defendant.
Before: WHITBECK, C.J., and MURPHY and SMOLENSKI, JJ.
MURPHY, J.
The prosecution appeals by leave granted the circuit court's order granting defendant's motion to quash the information relative to four counts of first-degree criminal sexual conduct (CSC I), MCL 750.520b(1)(c), which makes it an offense to engage in sexual penetration under circumstances involving the commission of any other felony. The underlying or predicate felony in this case is delivery of less than 50 grams of a controlled substance *883 (Oxycontin),[1] MCL 333.7401(2)(a)(iv), as indicated in the felony information. Evidence was presented at the preliminary examination that indicated that defendant had initially supplied the victim with Oxycontin at no cost over a two-week period, supposedly creating an addiction, and defendant subsequently demanded sex in exchange for more Oxycontin. On multiple occasions, the victim ostensibly consented to sexual intercourse and oral sex with defendant in order to obtain Oxycontin and feed her drug habit. One of the primary issues on appeal regards the extent of the nexus between the sexual penetration and the underlying felony, as well as the sequence of events, necessary to support a conviction under MCL 750.520b(1)(c). We also address whether consent to sexual penetration is a defense to a prosecution pursued under MCL 750.520b(1)(c), accepting that the law does not recognize consent as a viable defense to the underlying felony.
Applying the plain and unambiguous language of the statute, we conclude that the prosecution was required to submit evidence sufficient to establish probable cause to believe that defendant sexually penetrated the victim, that defendant committed the underlying felony, and that there existed a direct interrelationship between the felony and the sexual penetration, which does not necessarily require that the penetration occur during the commission of the felony. We further hold that the defense of consent is irrelevant to our inquiry because consent is not a defense to delivery of controlled substances and the Legislature has not provided any framework to otherwise permit a consent defense to unlawful sexual penetration under MCL 750.520b(1)(c). Considering the evidence presented at defendant's preliminary examination, we conclude that the circuit court erred in quashing the district court's order binding defendant over for trial on four counts of CSC I. Accordingly, we reverse and remand.
I. Preliminary Examination Evidence and Procedural History
The victim testified that in September 2003 she worked at a northern Michigan bar where defendant was a regular customer. She stated that defendant offered her free Oxycontin while she was working at the bar one day. The victim accepted the Oxycontin despite not having previously tried the drug. She asserted that for approximately two weeks thereafter, defendant would give her free Oxycontin each time he patronized the bar, which was approximately five days a week.
The victim contended that defendant initially gave her one pill at a time, but that he later gave her two or three pills at a time because she required more of the drug to get high. She testified that defendant eventually invited her to his trailer in Charlevoix to help him paint, which she did in exchange for additional Oxycontin, along with some methadone.
The victim claimed that, over time, she became dependent on the drugs such that she would get sick to her stomach, would sweat, and could not sit still if she did not take them. After becoming dependent, the victim went to defendant for more drugs, and he told her that she "had to help him out too." She testified that defendant would not sell her the pills for money and that she had to negotiate alternatives with him in order to obtain more pills. Defendant wanted sex in return for the Oxycontin and, although she did not *884 want to have sex with defendant at first, the victim decided to engage in sexual relations with him so that she could acquire more drugs and satisfy her dependency.
The victim testified that it was her choice to have sex with defendant and that she had sexual intercourse and oral sex with him on numerous occasions. In return, defendant provided her with drugs. The acts of sexual penetration along with the delivery of drugs formed the basis for the prosecution under MCL 750.520b(1)(c). The victim indicated that her sex-for-Oxycontin encounters with defendant became "routine" and that she would go to defendant's home for pills "pretty much" every other day. At one point, the victim told defendant that she wanted the pills before having sex with him, but, when he complied, she left immediately, so thereafter he demanded that they have sex before she would receive any drugs. At times, the victim would ask defendant to stop when they were having sex, which he would not always do right away, and she would then push him off her if he did not stop on his own. The victim testified that on another occasion when she did not want to have sex with defendant, he began to chase her and ripped the pocket off her pants, and she ran to a gas station to ask for help. She engaged in various social activities with defendant, but she only did so in order to obtain more drugs.
The felony warrant issued against defendant charged him with three counts of third-degree criminal sexual conduct (CSC III), MCL 750.520d(1)(b), which makes it a crime to use force or coercion to accomplish sexual penetration; one count of engaging the services of a prostitute, MCL 750.449a; and one count of delivery of less than 50 grams of a controlled substance, MCL 333.7401(2)(a)(iv). At the preliminary examination, the prosecution requested bindover on additional charges and elevation of the CSC III charges to CSC I under MCL 750.520b(1)(c). Defendant was bound over on four counts of CSC I; four counts of delivery of less than 50 grams of a controlled substance; four counts of maintaining a drug house, MCL 333.7405(1)(d); one count of eavesdropping, MCL 750.539d; and four counts of engaging the services of a prostitute.
Defendant subsequently moved to quash the bindover or information in the circuit court with respect to the CSC I charges. After hearing oral argument, the circuit court granted the motion, determining that the victim engaged in consensual sex with defendant in exchange for the illegal delivery of drugs and that this did not constitute CSC I. Throughout the hearing, the circuit court commented about the lack of any nexus or connection between the acts of sexual penetration and the underlying felony. The circuit court refused to consider the prosecution's request for reinstatement of the CSC III charges, which forms the basis of another appellate argument, but one that we need not resolve in light of our holding. This Court subsequently granted the prosecutor's application for leave to appeal. People v. Waltonen, unpublished order of the Court of Appeals, entered June 15, 2006 (Docket No. 270229).
II. Standards of Review and Principles Governing Preliminary Examinations
In People v. Hill, 269 Mich.App. 505, 513-514, 715 N.W.2d 301 (2006), this Court set forth the applicable standards of review relative to motions to quash and the pertinent principles concerning preliminary examinations:
A circuit court's ruling regarding a motion to quash an information and the district court's decision to bind over a defendant are reviewed to determine *885 whether the district court abused its discretion in making its decision. People v. Hotrum, 244 Mich.App. 189, 191, 624 N.W.2d 469 (2000); People v. Riggs, 237 Mich.App. 584, 587, 604 N.W.2d 68 (1999); People v. Hamblin, 224 Mich. App. 87, 91, 568 N.W.2d 339 (1997). However, where the decision entails a question of statutory interpretation, i.e., whether the alleged conduct falls within the scope of a penal statute, the issue is a question of law that we review de novo. People v. Stone, 463 Mich. 558, 561, 621 N.W.2d 702 (2001); Hotrum, supra at 191, 624 N.W.2d 469; Riggs, supra at 587-588, 604 N.W.2d 68. . . .
The primary function of a preliminary examination is to determine whether a felony has been committed and, if so, whether there exists probable cause to believe that the defendant committed the felony. People v. Yost, 468 Mich. 122, 125-126, 659 N.W.2d 604 (2003), citing MCL 766.13. Probable cause requires evidence sufficient to make a person of ordinary caution and prudence to conscientiously entertain a reasonable belief of the defendant's guilt. Yost, supra at 126, 659 N.W.2d 604. The magistrate, however, need not be without doubts regarding guilt. Id. Following the conclusion of the preliminary examination, if it appears to the district court that there is probable cause to believe that a felony was committed and that the defendant committed it, the court must bind the defendant over for trial. MCL 766.13; MCR 6.110(E).
III. Analysis
A. Statutory Construction
This appeal requires us to ascertain the Legislature's intent regarding MCL 750.520b(1)(c); therefore, we shall commence our analysis with a review of the general principles that guide statutory construction. Our primary task in construing and interpreting a statute is to discern and give effect to the intent of the Legislature. People v. Tombs, 472 Mich. 446, 451, 697 N.W.2d 494 (2005) (opinion by Kelly, J.); Shinholster v. Annapolis Hosp., 471 Mich. 540, 548-549, 685 N.W.2d 275 (2004). The actual words used in the statute provide us with the most reliable evidence of the Legislature's intent. Shinholster, supra at 549, 685 N.W.2d 275. In ascertaining legislative intent, we give effect to every word, phrase, and clause in the statute. Id. This Court must consider both the plain meaning of the critical words or phrases as well as their placement and purpose in the statutory scheme. Id. It is necessary to avoid a construction that would render any part of a statute surplusage or nugatory. Bageris v. Brandon Twp., 264 Mich.App. 156, 162, 691 N.W.2d 459 (2004). "The statutory language must be read and understood in its grammatical context, unless it is clear that something different was intended." Shinholster, supra at 549, 685 N.W.2d 275 (citation and quotation omitted). If the language of a statute is unambiguous, the Legislature is deemed to have intended the meaning clearly expressed, and we are required to enforce the statute as written. Tombs, supra at 451, 697 N.W.2d 494; Shinholster, supra at 549, 685 N.W.2d 275. Critical to our analysis here, "[a] necessary corollary of these principles is that a court may read nothing into an unambiguous statute that is not within the manifest intent of the Legislature as derived from the words of the statute itself." Roberts v. Mecosta Co. Gen. Hosp., 466 Mich. 57, 63, 642 N.W.2d 663 (2002).
B. Interpretation of MCL 750.520b(1)(c) and the Defense of Consent
Defendant was bound over to the circuit court on four counts of CSC I pursuant *886 to MCL 750.520b(1)(c), which provides:
(1) A person is guilty of criminal sexual conduct in the first degree if he or she engages in sexual penetration with another person and if any of the following circumstances exists:
* * *
(c) Sexual penetration occurs under circumstances involving the commission of any other felony.
In People v. Wilkens, 267 Mich.App. 728, 736-737, 705 N.W.2d 728 (2005), this Court examined § 520b(1)(c) and determined that the plain language of the statute requires the prosecutor to prove (1) that a sexual penetration occurred and (2) that it occurred during the commission of another felony. See also People v. Pettway, 94 Mich.App. 812, 815, 290 N.W.2d 77 (1980).[2] The Wilkens panel addressed an argument by the defendant that the trial court had erred in precluding a defense of consent when it refused to instruct the jury on the defense. The defendant was charged with CSC I under § 520b(1)(c), with the underlying felony being production of child sexually abusive material, MCL 750.145c(2). Wilkens, supra at 736-737, 705 N.W.2d 728. This Court stated that "regardless of whether the penetration was consensual, if it occurs during the commission of another felony, the elements of MCL 750.520b(1)(c) are satisfied." Id. at 737, 705 N.W.2d 728. The panel further concluded that "if consent is not a defense to the underlying felony, then it is not a defense to the CSCI charge under MCL 750.250b(1)(c) [sic]."[3]Id. Applying these principles to the facts presented, the Court held that "because consent is not a defense to the underlying felony, producing child sexually abusive material, defendant cannot argue consent as a defense to his charges under MCL 750.520b(1)(c). Therefore, the trial court properly excluded consent as a defense." Id. at 737-738, 705 N.W.2d 728.
Wilkens distinguished People v. Thompson, 117 Mich.App. 522, 324 N.W.2d 22 (1982), which held that it was error for the trial court not to instruct the jury on the defense of consent to a charge of violating § 520b(1)(c) where the underlying felony was kidnapping, on the basis that consent is a defense to a charge of kidnapping. Wilkens, supra at 737, 705 N.W.2d 728; Thompson, supra at 525-526, 324 N.W.2d 22.
The Thompson panel, relying on People v. Hearn, 100 Mich.App. 749, 300 N.W.2d 396 (1980), in reaching its decision, stated:
As in Hearn, defendant's theory here was that complainant had consented to sexual intercourse. Although Hearn involved commission of first-degree criminal sexual conduct by sexual penetration while armed with a weapon, MCL 750.520b(1)(e); MSA 28.788(2)(1)(e), we *887 believe that the reasoning used in Hearn is equally applicable where defendant is charged with commission of the crime by sexual penetration under circumstances involving commission of a felony, MCL 750.520b(1)(c); MSA 28.788(2)(1)(c). [Thompson, supra at 526, 324 N.W.2d 22.]
As indicated in Thompson, Hearn addressed the issue whether consent was a viable defense to a charge of CSC I under MCL 750.520b(1)(e), the only elements of which are "first, that there be sexual penetration and, second, that the sexual penetration occur while the actor is armed." Hearn, supra at 753, 300 N.W.2d 396. The Hearn panel concluded that "[a]lthough the statute does not specifically address the defense of consent, its various provisions when considered together clearly imply the continuing validity of that defense." Id. at 755, 300 N.W.2d 396. Thus, Hearn determined that consent was a valid defense to a charge of CSC I pursuant to MCL 750.520b(1)(e) even though consent was not expressly referenced in the statute.
In support, Hearn quoted approvingly from People v. Khan, 80 Mich.App. 605, 264 N.W.2d 360 (1978). Hearn, supra at 754, 300 N.W.2d 396. In Khan, the defendant had been convicted of CSC III predicated on sexual penetration accomplished by force or coercion. The Court stated in a footnote as follows:
Although the statute is silent on the defense of consent, we believe it impliedly comprehends that a willing, noncoerced act of sexual intimacy or intercourse between persons of sufficient age who are neither "mentally defective," "mentally incapacitated," nor "physically helpless," is not criminal sexual conduct. [Khan, supra at 619 n. 5, 264 N.W.2d 360 (citations omitted).]
The Khan panel further noted that the statute speaks of force or coercion used to accomplish sexual penetration and consent would, of course, be a defense. Id.
It appears that Wilkens distinguished Thompson on faulty grounds, because the Thompson panel did not hold that the trial court erred in failing to give a consent instruction on the basis that consent was a defense to kidnapping. Rather, this Court in Thompson spoke in terms of consent to the sexual penetration. Indeed, the Thompson panel rejected the prosecutor's argument that the trial court's instruction on consent relative to the kidnapping charge was sufficient to protect the defendant's rights despite the court's failure to instruct on consent with respect to the CSC I charge. Thompson, supra at 526, 324 N.W.2d 22. Nevertheless, the problem with Thompson as well as Hearn, two cases in which the prosecution did not proceed under any of the force or coercion provisions of § 520b(1)(c), is that they ultimately rely on Khan, in which force or coercion was the foundation for the CSC III charges. In the context of the CSC statutes, consent can be utilized as a defense to negate the elements of force or coercion. People v. Stull, 127 Mich.App. 14, 19-21, 338 N.W.2d 403 (1983).[4] Also problematic in our view is that Hearn and Thompson rely on the proposition that a consent defense is implicit under the CSC statutes, which most certainly runs contrary to accepted principles of statutory construction. See Tombs, *888 supra at 451, 697 N.W.2d 494; Shinholster, supra at 549, 685 N.W.2d 275; and Roberts, supra at 63, 642 N.W.2d 663. We further note that we are not bound by Thompson, Hearn, or Khan as they were all issued before November 1, 1990. MCR 7.215(J)(1). We are bound, however, by Wilkens, and although the Wilkens panel misconstrued Thompson, we are in agreement with its statutory analysis concerning § 520b(1)(c).
The plain and unambiguous language of § 520b(1)(c) does not require proof of force or coercion and does not otherwise provide for the defense of consent. We agree with Wilkens that the issue of consent relative to charges brought under § 520b(1)(c) can only arise in the context of the underlying felony because if a defendant successfully argues the existence of consent with respect to the underlying felony, assuming that consent is a legally recognizable defense, the prosecution cannot establish the second element of CSC I pursuant to § 520b(1)(c). Here, there is no dispute that the crime of delivery of a controlled substance is not subject to a consent defense; therefore, consent is not a defense to the particular CSC I charges on which defendant is being prosecuted. The problem with implying that a consent defense is viable under § 520b(1)(c) with respect to sexual penetration, other than the fact that making such an implication runs afoul of principles of statutory construction, is that it results in a judicial modification of the statutory language. The language of § 520b(1) encompasses all acts of "sexual penetration," and ruling in favor of defendant's position would alter this clear language by carving out an exception for certain acts of sexual penetration, i.e., consensual sexual penetration. The statute does not provide that it applies to "nonconsensual sexual penetration," but rather it simply refers to "sexual penetration."
We find further support for our position in People v. Starks, 473 Mich. 227, 235, 701 N.W.2d 136 (2005), in which our Supreme Court ruled:
MCL 750.520d(1)(a) states that a person is guilty of third-degree criminal sexual conduct if the person engages in sexual penetration with another person and that person is at least thirteen but younger than sixteen years old. Accordingly, a thirteen-year-old child cannot legally consent to sexual penetration with another person because sexual penetration of a thirteen-year-old child is automatically third-degree criminal sexual conduct. [Emphasis added.]
Likewise, pursuant to the plain language of § 520b(1)(c), sexual penetration occurring "under circumstances involving the commission of any other felony" is also automatically criminal sexual conduct. The statute leaves no room for consent. Accordingly, we hold that consent is not a defense to the CSC I charges brought against defendant.[5]
*889 C. The Nexus Between the Sexual Penetration and the Underlying Felony
Next, we do believe that it is important to further examine the language of the statute to make clear that there must be a sufficient nexus between the underlying felony and the sexual penetration, otherwise there will be CSC I convictions in cases never intended by the Legislature to call for such a result. The lack of a nexus or connection appears to be the primary basis for the circuit court's ruling in the case at bar. As indicated above, MCL 750.520b(1)(c) punishes the act of sexual penetration when it "occurs under circumstances involving the commission of any other felony." This language was examined in People v. Jones, 144 Mich.App. 1, 373 N.W.2d 226 (1985), in which the defendant accosted the victim as she was about to enter a car, telling her that if she did as requested she would not be injured. The victim dropped her purse, and the defendant picked it up. The defendant then directed the victim to a vacant lot where he sexually assaulted her. After completion of the sexual assault, the defendant refused the victim's request to return the purse, and he then took the car keys from the victim and drove her vehicle away. Id. at 3, 373 N.W.2d 226. The defendant was convicted, in part, under § 520b(1)(c), and he argued for reversal on appeal on the basis "that the robbery did not occur until after the sexual acts had been completed because that is when he left the victim and permanently deprived her of her purse." Id. In construing § 520b(1)(c), this Court held:
Even if we were to accept the argument that the statutory language must be construed to punish sexual acts occurring "during" the commission of any other felony, which we do not, defendant's own argument tacitly acknowledges the continuum of the armed robbery in focusing on the final act of defendant in leaving with his victim's purse after the sexual acts while ignoring the events preceding the sexual acts which included his taking possession of the purse while armed with the stick. The Legislature, however, did not attempt to narrowly define the coincidence or sequence of the sexual act and the other felony; rather it chose to address the increased risks to, and the debasing indignities inflicted upon, victims by the combination of sexual offenses and other felonies by treating the sexual acts as major offenses when they occur "under circumstances involving the commission of any other felony." [Id. at 4, 373 N.W.2d 226.]
We agree with the Jones panel that § 520b(1)(c) cannot be construed to require that the sexual penetration occur during the commission of the underlying felony; the language of the statute is not so limiting with respect to sequence and is more broadly drafted.[6] The key language of the statute is "occurs under circumstances involving," which does not necessarily demand that the sex act occur during the commission of the felony, although this generally will be the case. But the statutory language does require a direct interrelationship between the felony and *890 the sexual penetration. Here, the delivery of controlled substances technically occurred after the sexual acts; however, the sexual acts were directly related to the delivery of the drugs because the only reason the victim engaged in sexual penetration was to acquire the drugs.[7] Stated somewhat differently, delivery of the drugs was part and parcel of the act of sexual penetration. Before and during the sexual penetration, the victim and defendant were operating under the knowledge and expectation that drugs would be delivered to the victim after the sexual act and only because of the sexual act. There existed a continuum of interrelated events. The evidence presented at the preliminary examination supported a probable-cause determination that the acts of sexual penetration occurred "under circumstances involving the commission of any other felony." MCL 750.520b(1)(c). Accordingly, the circuit court erred in quashing the information with regard to the CSC I charges.
IV. Conclusion
Applying the plain and unambiguous language of MCL 750.520b(1)(c), we hold that the prosecution was required to submit evidence sufficient to establish probable cause to believe that defendant sexually penetrated the victim, that defendant committed the underlying felony, and that there existed a direct interrelationship between the felony and the sexual penetration, which does not necessarily require that the penetration occur during the commission of the felony. We further hold that the defense of consent is irrelevant to the inquiry because consent is not a defense to delivery of controlled substances and the Legislature has not provided any framework to otherwise permit a consent defense to unlawful sexual penetration under MCL 750.520b(1)(c).[8] Considering the evidence presented at defendant's preliminary examination, we conclude that the circuit court erred in quashing the district court's order binding defendant over for trial on four counts of CSC I.
Reversed and remanded for proceedings consistent with this opinion. We do not retain jurisdiction.
NOTES
[1] Oxycontin contains oxycodone, which is listed as a schedule 2 controlled substance pursuant to MCL 333.7214(a)(i).
[2] We note that, with regard to the second element, the Wilkens panel stated that the prosecutor had to prove that the sexual penetration occurred "during the commission of another felony." Wilkens, supra at 737, 705 N.W.2d 728. The Pettway panel stated that the sexual penetration had to occur "under circumstances involving the commission of any other felony." Pettway, supra at 815, 290 N.W.2d 77. The Pettway language is identical to the statutory language, while the language in Wilkens could be construed as too narrow a summation of the statutory language. The focus in Wilkens was not on interpretation of the phrase "occurs under circumstances involving the commission of any other felony," nor on the nexus between the sexual penetration and the underlying felony. Rather, the Court was concerned with whether a consent defense could be read into § 520b(1)(c). We shall explore the issue concerning the nexus between the sexual penetration and the underlying felony in detail later in this opinion.
[3] The Court was clearly referring to MCL 750.520b as there is no MCL 750.250b.
[4] CJI2d 20.27(1) provides: "There has been evidence in this case about the defense of consent. A person consents to a sexual act by agreeing to it freely and willingly, without being forced or coerced." The notes to this instruction and the decision in Stull, supra at 20-21, 338 N.W.2d 403, make clear that consent is an affirmative defense and that lack of consent is not an element of the crime to be proven by the prosecution.
[5] We recognize that affirmative defenses in criminal cases should typically be presented and considered at trial and that a preliminary examination is not a trial. See People v. Martin, 59 Mich.App. 471, 490, 229 N.W.2d 809 (1975), overruled on other grounds Jackson Co. Prosecutor v. Court of Appeals, 394 Mich. 527, 232 N.W.2d 172 (1975). But considering that consent appeared to play a role in the circuit court's ruling and that the issue of consent would necessarily have arisen on remand had we not addressed the matter, it is appropriate to rule on the issue. Furthermore, if consent were a complete defense to the CSC I charges and consent was undisputed, it could be argued that there would be no probable cause to believe "that a felony was committed." See Hill, supra at 514, 715 N.W.2d 301. We do note that the victim's alleged consent to the sexual penetration in this case is not a given, considering that her ability to freely consent is questionable in light of the Oxycontin addiction. In light of our decision, however, further inquiry into the matter is unnecessary.
[6] Because Wilkens was not concerned with the issue addressed here, we give no weight to the panel's general recitation of the elements of the crime, in which recitation the Court summarized § 520b(1)(c) as indicating that the sexual penetration must occur during the commission of the felony. Wilkens, supra at 737, 705 N.W.2d 728.
[7] As an example of a situation where such a direct relationship would not exist, we offer a scenario in which a defendant maintains a home full of illegal narcotics and engages in sexual relations with his spouse in the home, without any connection between the drugs and the sex acts. Although the sexual penetration is occurring during the commission of another felony, possession of controlled substances, it cannot be said that the sexual penetration is occurring under circumstances involving the commission of another felony.
[8] We cannot help but question whether the Legislature actually intended the result we reach here today, considering that a voluminous number of felonious acts can be found in the Penal Code, but we are curtailed by the language of the statute from reaching any other conclusion. In Pettway, supra at 817, 290 N.W.2d 77, this Court noted, "As the prosecution correctly argues, felony, as construed in the phrase `any other felony', refers to any felony other than criminal sexual conduct." (Emphasis in original.) Technically, any time a person engages in sexual penetration in an adulterous relationship, a felony pursuant to MCL 750.30, he or she is guilty of CSC I under § 520b(1)(c). We believe that the Legislature, in drafting § 520b(1)(c), may have conceived of situations in which there was a violent felony involving an unwilling victim. We encourage the Legislature to take a second look at the statutory language if it is troubled by our ruling. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584684/ | 24 So. 3d 235 (2009)
STATE of Louisiana
v.
George McGEE.
No. 09-KA-102.
Court of Appeal of Louisiana, Fifth Circuit.
September 29, 2009.
*236 Paul D. Connick, Jr., District Attorney, Terry M. Boudreaux, Assistant District Attorney, Gretna, LA, for Plaintiff/Appellee, The State of Louisiana.
Holli A. Herrle-Castillo, Attorney at Law, Marrero, LA, for Defendant/Appellant, George McGee.
Panel composed of Judges SUSAN M. CHEHARDY, JUDE G. GRAVOIS, and MARC E. JOHNSON.
SUSAN M. CHEHARDY, Judge.
This is an Anders appeal,[1] in which we find merit to the assertion by the defendant's *237 appellate counsel that there are no non-frivolous issues to raise on appeal, and we further find no reversible patent errors. We affirm the convictions and sentences.
The Jefferson Parish District Attorney filed a five-count bill of information against George McGee, to which the defendant pleaded not guilty at arraignment on December 18, 2006.[2]
On May 25, 2007, the district attorney filed an amended five-count bill of information, charging the defendant as follows: Count 1, violation of La. R.S. 40:967(A) by distribution of cocaine; Count 2, violation of La. R.S. 14:27:30 by attempted first degree murder; Count 3, violation of La. R.S. 14:95.1 by possession of a firearm as a convicted felon; Count 4, violation of La. R.S. 40:967(A) by possession with intent to distribute cocaine; and Count 5, violation of La. R.S. 40:966(C) by possession of marijuana, second offense. On the same date the defendant was arraigned on the amended charges and pleaded not guilty.
On October 12, 2007, the trial court heard and denied the defendant's motions to suppress evidence and statement, but held open the defendant's motion to suppress identification.
On January 4, 2008, the State amended Count 5 of the bill of information to charge possession of marijuana, third offense. Although the minute entry for January 4, 2008 indicates arraignment on the amended charge was scheduled for January 7, 2008, the record does not show the defendant was arraigned on that date.[3]
On March 10, 2008, the defendant withdrew his not-guilty pleas and pleaded guilty as charged to all five offenses. He was sentenced that day to ten years at hard labor on Count 1, the first two years to be served without benefit of probation, parole, or suspension of sentence; 25 years at hard labor on Count 2, without benefit of probation, parole, or suspension of sentence; ten years at hard labor on Count 3, without benefit of probation, parole, or suspension of sentence; ten years at hard labor on Count 4, the first two years to be served without benefit of probation, parole, or suspension of sentence; and ten years at hard labor on Count 5. The court ordered that all the sentences run concurrently.
The State filed a habitual offender bill as to Count 2, alleging the defendant to be a second-felony offender. On March 12, 2008, the defendant stipulated to his habitual offender status. The court vacated the sentence on Count 2 and imposed a habitual offender sentence of 25 years at hard labor without benefit of probation, parole, or suspension of sentence, to run concurrently with all the other sentences.
The defendant later sought and was granted an out-of-time appeal.
FACTS
Because there was no trial, the following facts are taken from the hearing on the defendant's pre-trial motions. Detective Brian McGregor of the Kenner Police Department testified he investigated the attempted murder of Michael Knowles. Detective McGregor stated that upon locating witnesses who identified George McGee as the shooter, he obtained a warrant for the defendant's arrest.
In the warrant application, Detective McGregor averred that on Thursday, September 14, 2006, Kenner police officers responded to a complaint of aggravated battery by shooting in the 2800 block of *238 Greenwood Street in Kenner. When they arrived they found the victim, Michael Knowles, had been shot multiple times. Knowles told them he and his friend, Carl McKnight, attempted to buy crack cocaine from a man whom McKnight knew. When Knowles expressed his dissatisfaction with the cocaine that was offered, the man shot him.
Detective McGregor further stated in his arrest warrant application that officers interviewed Carl McKnight. McKnight informed them that Knowles arranged to buy drugs from a subject known as Tony. Tony and the defendant, George McGee, met with Knowles and McKnight in the 2800 block of Greenwood Street. Knowles refused to buy the crack cocaine the defendant offered because he believed it to be of poor quality. The defendant responded by producing a handgun and shooting Knowles several times.
According to the arrest warrant affidavit, detectives were familiar with the subject called Tony, known to them as Anthony Young, because the officers had arrested Young numerous times for drug offenses. McKnight told the officers that Young lived at 2829 Greenwood Street, Apartment C, in Kenner, and the defendant lived in an apartment behind Young's.
Detective McGregor testified he learned from the owner of the apartment complex that the defendant lived in apartment A. The detective then applied for and obtained a search warrant for 2829 Greenwood Street, apartment A. Detective McGregor testified he executed the search warrant on September 22, 2006. He seized a .32 caliber Smith and Wesson handgun, as well as some Louisiana identification cards and documents bearing the defendant's name. The defendant was not at the apartment at the time of the search. Detective McGregor learned he might be at 1500 West Esplanade, apartment 1-A.
Detective David Stromeyer testified that he and other officers went to the West Esplanade apartment to execute the arrest warrant. The apartment's occupants allowed the officers to enter. The officers found the defendant sleeping on the floor of a bedroom. Detective Stromeyer testified that when he entered the bedroom, he saw the handle of a handgun protruding from under a dresser six inches from where the defendant lay. The officers arrested the defendant on the warrant, and searched him incident to the arrest. They found marijuana, crack cocaine, currency, and bullets on the defendant's person. Detective Stromeyer advised the defendant of his rights, and the defendant was transported to the detective bureau of the Kenner Police Department.
Detective McGregor testified he met with the defendant at the police department and advised him of his Miranda[4] rights. The defendant waived his rights and agreed to submit to questioning. The defendant gave a recorded statement regarding the narcotics and weapon seized at 1500 West Esplanade. Detective McGregor testified he advised the defendant of his rights a second time. The defendant again waived his rights, and he made a recorded statement regarding the attempted murder charge. Detective McGregor took a third statement from the defendant that day regarding a shooting incident in which he claimed to have been the victim. Detective McGregor testified that he did not use threats or coercion to induce the defendant to submit to the interviews, nor did he promise the defendant anything in exchange for his statements.
*239 ANDERS BRIEF
Under the procedure set forth in State v. Benjamin, 573 So. 2d 528, 530 (La. App. 4 Cir.1990),[5] the defendant's appointed appellate counsel has filed a brief pursuant to Anders v. California, 386 U.S. 738, 87 S. Ct. 1396, 18 L. Ed. 2d 493 (1967), and State v. Jyles, 96-2669, p. 3 (La.12/12/97), 704 So. 2d 241, 242 (per curiam). Counsel asserts she has thoroughly reviewed the trial court record and cannot find any non-frivolous issues to raise on appeal. Accordingly, defense counsel asks this Court's leave to withdraw as counsel of record.
The State agrees that the record shows there are no non-frivolous issues for appeal.
In Anders, the United States Supreme Court stated that appointed appellate counsel may request permission to withdraw if he finds his case to be wholly frivolous after a conscientious examination of it.[6] The request must be accompanied by "a brief referring to anything in the record that might arguably support the appeal" so as to provide the reviewing court "with a basis for determining whether appointed counsel have fully performed their duty to support their clients' appeals to the best of their ability" and to assist the reviewing court "in making the critical determination whether the appeal is indeed so frivolous that counsel should be permitted to withdraw." McCoy v. Court of Appeals of Wisconsin, Dist. 1, 486 U.S. 429, 439, 108 S. Ct. 1895, 1902, 100 L. Ed. 2d 440 (1988).
In State v. Jyles, 96-2669 at 2, 704 So.2d at 241, the Louisiana Supreme Court stated that an Anders brief need not tediously catalog every meritless pretrial motion or objection made at trial with a detailed explanation of why the motions or objections lack merit. Rather, the court explained, an Anders brief must demonstrate by full discussion and analysis that appellate counsel "has cast an advocate's eye over the trial record and considered whether any ruling made by the trial court, subject to the contemporaneous objection rule, had a significant, adverse impact on shaping the evidence presented to the jury for its consideration." State v. Jyles, supra.
In evaluating an appeal for compliance with Anders, an appellate court must conduct an independent review of the record to determine whether the appeal is wholly frivolous. State v. Bradford, 95-929, p. 4 (La.App. 5 Cir. 6/25/96), 676 So. 2d 1108, 1110. If, after an independent review, the reviewing court determines there are no non-frivolous issues for appeal, it may grant counsel's motion to withdraw and affirm the defendant's conviction and sentence. However, if the court finds any legal point arguable on the merits, it may either deny the motion and order the court-appointed attorney to file a brief arguing the legal point(s) identified by the court, or grant the motion and appoint substitute appellant counsel. Id.
The defendant's appellate counsel asserts that after a detailed review of the record, she could find no non-frivolous issues to raise on appeal. Counsel notes the defendant entered guilty pleas to the substantive *240 offenses without preserving any issues for appeal. The defendant also stipulated to the allegations in the habitual offender bill of information, and his enhanced sentence was part of a sentencing agreement. Counsel avers that she could find no deficiencies in the Boykin colloquy[7] and that the defendant's guilty pleas were knowing and voluntary. She further asserts that the trial court properly advised the defendant of his rights prior to his habitual offender stipulation, and the defendant knowingly waived his rights and entered into the habitual offender admission.
Appellate counsel filed a motion for leave to withdraw as attorney of record in this Court, as well as a copy of the briefing notice she sent to the defendant informing him of his right to file a pro se brief. In addition, this Court sent the defendant a letter by certified mail informing him that an Anders brief had been filed and that he had until April 2, 2009 to file a pro se supplemental brief. The defendant has not filed a brief.
An independent review of the record supports appellate counsel's assertion that there are no non-frivolous issues to be raised on appeal. When a defendant pleads guilty, he normally waives all non-jurisdictional defects in the proceedings leading up to the guilty plea and precludes review of such defects either by appeal or post-conviction relief. State v. Wingerter, 05-697, p. 5 (La.App. 5 Cir. 3/14/06), 926 So. 2d 662, 664. Of the defendant's pre-trial motions, the district court heard and denied only the motions to suppress evidence and statement.[8] At the time of his guilty pleas, the defendant did not preserve the district court's rulings for appeal under the holding in State v. Crosby, 338 So. 2d 584 (La.1976).
The record shows the district court ascertained that the defendant was 29 years old and had an eleventh-grade education. The district court properly advised the defendant of the right to a jury trial, the right of confrontation, and the privilege against self-incrimination, as required by Boykin. The judge also explained the offenses with which the defendant was charged, the sentencing ranges for those offenses, and the sentences he would receive under the plea agreement. The defendant acknowledged that he understood his rights, and that he wished to waive them and enter a guilty plea. In addition, the defendant, his attorney, and the judge signed a waiver-of-rights form that enumerated the defendant's rights and detailed the sentence he would receive pursuant to his plea bargain.
The defendant's original sentences present no appealable errors. The sentence on Count 2 was vacated when the defendant stipulated to the multiple bill. The other four sentences resulted from a plea agreement. La. C. Cr. P. art. 881.2(A)(2) provides, "The defendant cannot appeal or seek review of a sentence imposed in conformity with a plea agreement which was set forth in the record at the time of the plea." Thus, the defendant is precluded from challenging his habitual offender sentence on appeal, since it was also part of a sentencing agreement. State v. Cross, 06-866, p. 4 (La.App. 5 Cir. 4/11/07), 958 So. 2d 28, 30.
In addition, all of the sentences fell within the sentencing ranges prescribed by *241 statute. At the time of defendant's offenses, the sentencing range for distribution and possession with intent to distribute cocaine (Counts 1 and 4) was two to 30 years, with the first two years being without benefit of parole, probation, or suspension of sentence. La. R.S. 40:967(B)(4)(b). The second-felony-offender sentencing range for attempted first degree murder (Count 2) was 25 to 100 years, without benefit of parole, probation, or suspension of sentence. La. R.S. 15:529.1(A)(1)(a); La. R.S. 14:27(D)(1)(a); La. R.S. 14:30(C). The sentencing range for possession of a firearm by a convicted felon (Count 3) was ten to 15 years, with a mandatory fine of $1,000 to $5,000. La. R.S. 14:95.1(B). The sentencing range for third offense possession of marijuana (Count 5) was zero to 20 years. La. R.S. 40:966(E)(3).
The defendant entered an admission to the allegations in the habitual offender bill of information. La. R.S. 15:529.1(D)(1)(a) requires that prior to stipulating to the allegations in a habitual offender bill, a defendant must be advised of the specific allegations contained in the bill and his right to a formal hearing at which the State must prove its case. Implicit in this requirement is the additional requirement that the defendant be advised of his constitutional right to remain silent. State v. Johnson, 432 So. 2d 815, 817 (La. 1983); State v. Bell, 03-217, p. 4 (La.App. 5 Cir. 5/28/03), 848 So. 2d 87, 90.
Before accepting the defendant's admission, the district court adequately advised him of his right to a habitual offender hearing and his right to remain silent. The court also advised the defendant of the enhanced sentence the court would impose in accordance with the sentencing agreement. The defendant stated he understood his rights. The defendant, his attorney, and the judge completed a habitual offender waiver-of-rights form that listed his rights and the sentencing range to which he was exposed.
Because appellate counsel's brief adequately demonstrates by full discussion and analysis that she has reviewed the trial court proceedings and cannot identify any basis for a non-frivolous appeal, and an independent review of the record supports counsel's assertion, we grant appellate counsel's motion to withdraw as attorney of record.
ERROR PATENT DISCUSSION
Pursuant to our usual procedure, we reviewed the record for patent errors, as set out in La. C. Cr. P. art. 920; State v. Oliveaux, 312 So. 2d 337 (La.1975); State v. Weiland, 556 So. 2d 175 (La.App. 5 Cir. 1990). We found two patent errors.
First, the record does not show the defendant was arraigned on an amended charge: On January 4, 2008, the State amended Count 5 of the bill of information to a charge of third-offense possession of marijuana. Although the minute entry for January 4, 2008 indicates the defendant's arraignment on the amended charge was scheduled for January 7, 2008, the record does not show he was arraigned on the amended offense prior to entering his guilty plea. That error does not affect the outcome of the case, however, because the defendant waived the error when he entered his guilty plea without objecting to the district court's omission. La. C. Cr. P. art. 555. In such an instance, a defendant is considered to have pleaded not guilty; hence, no corrective action is needed. Id.
Second, the district court imposed an illegally lenient sentence on Count 3, possession of a firearm by a convicted felon (La. R.S. 14:95.1), because the court failed to impose the mandatory fine of between $1,000 and $5,000. Neither the State nor the defendant has raised *242 the issue on appeal. This Court has the authority to correct an illegally lenient sentence. La. C. Cr. P. art. 882. This authority is permissive rather than mandatory. State v. Jordan, 02-820, p. 8 (La.App. 5 Cir. 12/30/02), 836 So. 2d 609, 614.
Where a defendant is sentenced pursuant to a guilty plea, this Court has declined to correct an illegally lenient sentence, recognizing that the appellate court should refrain from employing errors patent review to set aside guilty pleas about which the defendant makes no complaint and that resulted in disposition of the case favorable to the defendant. State v. Grant, 04-341, pp. 4-5 (La.App. 5 Cir. 10/26/04), 887 So. 2d 596, 598.
In a recent case, State v. Campbell, 08-1226 (La.App. 5 Cir. 5/26/09), 15 So. 3d 1076, this Court declined to correct an illegally lenient sentence where the district court failed to impose a mandatory fine in a sentence that was part of a plea bargain. We stated that where the defendant is indigent we have often declined to exercise our authority to correct illegally lenient sentences agreed upon as part of a plea bargain.
In the case at bar, it appears the defendant is indigent. He is represented by the Louisiana Appellate Project, which provides appellate services for indigent criminal defendants in non-capital felony cases. (See http://www.appellateproject.org/). Since the defendant's sentence in the instant case resulted from a guilty plea, we refrain from exercising our authority to correct the illegally lenient sentence.[9]
For the foregoing reasons, the defendant's convictions and sentences are affirmed. The motion to withdraw as counsel for the defendant is hereby granted.
AFFIRMED.
NOTES
[1] Anders v. California, 386 U.S. 738, 87 S. Ct. 1396, 18 L. Ed. 2d 493 (1967).
[2] The original bill of information is not in the record on appeal.
[3] See error patent discussion, infra.
[4] Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966).
[5] The procedure set forth in Benjamin for compliance with Anders was sanctioned by the Louisiana Supreme Court in State v. Mouton, 95-0981, pp. 1-2 (La.4/28/95), 653 So. 2d 1176, 1177 (per curiam), and adopted by this Court in State v. Bradford, 95-929, pp. 3-4 (La.App. 5 Cir. 6/25/96), 676 So. 2d 1108, 1110.
[6] The United States Supreme Court most recently reaffirmed its position on Anders in Smith v. Robbins, 528 U.S. 259, 120 S. Ct. 746, 145 L. Ed. 2d 756 (2000).
[7] Boykin v. Alabama, 395 U.S. 238, 89 S. Ct. 1709, 23 L. Ed. 2d 274 (1969).
[8] The defendant waived his outstanding motions by pleading guilty without complaining of the trial court's failure to rule on them. State v. Corzo, 04-791, p. 2 (La.App. 5 Cir. 2/15/05), 896 So. 2d 1101, 1102.
[9] See also, State v. Griffin, 41,946, p. 4 (La. App. 2 Cir. 5/2/07), 956 So. 2d 199, 202, in which the second circuit declined to correct an illegal sentence that did not include a mandatory fine, stating, "Given defendant's apparent indigent status and state of health, amendment of his sentence to include such a fine would be injudicious." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584696/ | 24 So. 3d 784 (2009)
Lawrence ENO, Appellant,
v.
STATE of Florida, Appellee.
No. 5D09-1104.
District Court of Appeal of Florida, Fifth District.
December 31, 2009.
*785 Lawrence Eno, Crawfordville, pro se.
Bill McCollum, Attorney General, Tallahassee, and Carlos A. Ivanor, Jr., Assistant Attorney General, Daytona Beach, for Appellee.
ON MOTION FOR REHEARING
PER CURIAM.
We recall our prior per curiam decision and issue the following opinion on rehearing.
Lawrence Eno appeals the summary denial of his motion for postconviction relief filed pursuant to Florida Rule of Criminal Procedure 3.850. The motion raised six claims, three of which are not conclusively refuted by the record attachments to the trial court's order, requiring a reversal as to the denial of those claims. See, e.g., McLin v. State, 827 So. 2d 948, 954 (Fla. 2002).
In his first claim, Eno alleged that his trial counsel was ineffective for failing to advise him that his open plea could result in a seven-year minimum mandatory sentence and failing to point out to the court that the information does not support a seven-year minimum mandatory. The trial court correctly concluded that the first portion of this claim is conclusively refuted by the record. At the plea proceeding, defense counsel expressly stated that the plea arrangement resolved charges from three felony cases with an agreed overall sentencing cap of ten years in state prison, and a seven-year minimum mandatory sentence applicable to the charge of trafficking in methamphetamine. Then, in response to the trial court's questioning, Eno acknowledged under oath his understanding that one of the charges to which he was entering a plea carried a seven-year minimum mandatory sentenceand that this would be the lowest sentence that he could receive upon entering his pleas.
On rehearing, however, Eno correctly points out that nothing attached to the trial court's order refutes his claim that the information charged him with trafficking in fourteen grams of methamphetaminewhich only carries a three-year minimum mandatory sentence[1]and that his trial lawyer was ineffective for misadvising Eno and the court that a seven-year minimum mandatory sentence applied when only a three-year minimum mandatory sentence applied. Accordingly, we reverse the summary denial of that portion of Eno's first claim not refuted by the attachments to the trial court's order, and remand with instructions that the trial court either supplement its denial with attachments that do refute this allegation, or grant Eno a hearing on this claim. We also agree with Eno that the record attachments do not refute his claims of ineffective assistance of counsel premised upon counsel's failure to finalize an earlier, more favorable plea offer, which Eno told his *786 lawyer he wanted to accept (Eno's claim two) and failure to finalize a substantial assistance agreement that would have resulted in a further reduction of Eno's sentence, which he also communicated to his lawyer that he wanted to enter (Eno's claim three). In all other respects, the trial court's order is affirmed.[2]
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH INSTRUCTIONS.
ORFINGER and LAWSON, JJ., concur.
GRIFFIN, J., concurs in result only.
NOTES
[1] See § 893.135(1)(f)1.a., Fla. Stat. (2007).
[2] In another claim, Eno alleged errors to his Criminal Punishment Code Scoresheet. Because it is clear from the record attachments to the trial court's order that Eno would have received the same sentence irrespective of the alleged errors, we have affirmed the summary denial of his claim without elaboration. See State v. Anderson, 905 So. 2d 111, 118 (Fla. 2005) (applying the "would-have-been-imposed" standard to rule 3.850 motions alleging scoresheet error). However, if Eno is granted any relief with respect to his first, second or third claims, and is ultimately resentenced, the trial court should address Eno's claimed scoresheet errors prior to any resentencing. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584715/ | 2007 WI 30
In re the termination of parental rights to Brianca M. W., a person under the age of 18:
Oneida County Department of Social Services, Petitioner-Respondent,
v.
Nicole W., Respondent-Appellant-Petitioner.
No. 2005AP2656.
Supreme Court of Wisconsin.
Oral Argument: October 30, 2006.
Opinion Filed: March 13, 2007.
For the respondent-appellant-petitioner there were briefs and oral argument by Martha K. Askins, assistant state public defender.
For the petitioner-respondent there was a brief and oral argument by Thomas D. Wiensch, assistant corporation counsel and there was oral argument also by Jennifer A. Stuber, guardian ad litem.
¶ 1 PATIENCE DRAKE ROGGENSACK, J.
This is a review of an unpublished decision of the court of appeals[1] affirming the circuit court's order[2] terminating Nicole W.'s (Nicole) parental rights to her daughter, Brianca M.W. (Brianca). The focus of Nicole's appeal is that the circuit court erred in granting partial summary judgment under Wis. Stat. § 48.415(10) because her parental rights to her other child, Rockey, were terminated in a default judgment. Nicole contends that there was insufficient evidence demonstrating the particularized grounds for the termination of Nicole's parental rights in regard to Rockey, which precludes the use of that termination under § 48.415(10)(b) and that a default judgment is not a "termination on grounds," as she interprets § 48.415(10)(b). Consequently, Nicole argues, partial summary judgment should not have been granted and her parental rights were unlawfully terminated.
¶ 2 We conclude that Wis. Stat. § 48.415(10)(b) does not require proof of which § 48.415 ground was relied upon for a prior termination of parental rights because the phrase, "on one or more of the grounds specified in this section," in § 48.415(10)(b) refers to proving only that the prior termination was an involuntary termination. We also conclude that the order terminating Nicole's parental rights to Rockey, which arose from her default for failing to comply with a court order to personally appear at the fact-finding hearing, cannot be collaterally attacked in this proceeding and is sufficient evidence to prove that there was a prior involuntary termination of Nicole's rights to another child. Accordingly, we affirm the court of appeals.
I. BACKGROUND
¶ 3 Nicole's daughter, Brianca, was born on October 21, 2003. Brianca was placed in foster care shortly after birth and has continued in foster care through the time of trial.[3] On March 11, 2005, the Oneida County Department of Human Services (the Department) filed a petition to terminate Nicole's parental rights to Brianca. The petition alleged two grounds for the termination of Nicole's parental rights: Wis. Stat. § 48.415(2), Brianca's continuing need of protection or services and § 48.415(10), the involuntary termination of Nicole's parental rights to another child within the previous three years.
¶ 4 The Department moved for partial summary judgment on the second ground, relying on an order filed in Waukesha County on February 3, 2003 that involuntarily terminated Nicole's parental rights to her son, Rockey.[4] The order states that Nicole was in default because she failed to appear at the fact-finding hearing and that the termination of her rights to Rockey was involuntary, but it does not state the precise grounds for the involuntary termination. To explain more fully, section 6 of the standard order form that the Waukesha County Circuit Court employed contains a list of all of the grounds found in Wis. Stat. § 48.415 for an involuntary termination. Opposite each ground is a box to check, which when checked would indicate that ground was a basis for the termination. However, the circuit court checked none of the boxes in section 6 of the form. The petition that commenced the Waukesha County termination of parental rights proceedings alleged that Nicole had abandoned Rockey, § 48.415(1), and that Rockey was in continuing need of protection or services, § 48.415(2).
¶ 5 In the present Oneida County termination proceedings, two hearings were held on the Department's motion for partial summary judgment. At the first hearing, Nicole argued that the order terminating her rights to Rockey was not sufficient because it was not a "termination on grounds," as she interprets Wis. Stat. § 48.415(10)(b), because the order was based on her default at the termination proceedings. The court reviewed the Waukesha order, which stated that Nicole was in default but did not state the specific grounds employed for the involuntary termination. The court then continued the hearing to allow the Department to produce a copy of the Waukesha petition to determine whether grounds sufficient under § 48.415 had been alleged. At the second hearing, the court reviewed the petition in combination with the Waukesha County Circuit Court order and determined that the order was sufficient to establish an involuntary termination of parental rights within the criteria set out in § 49.415(10)(b).[5]
¶ 6 Nicole appealed and repeated her argument that the termination of her parental rights to Rockey based on her default was not "based on grounds" as she interprets Wis. Stat. § 48.415(10). Nicole also argued that the default order did not show the circuit court had made findings of fact based on evidence presented to show the county had proved the grounds alleged and therefore, the prior termination order was insufficient in that way as well.
¶ 7 The court of appeals rejected Nicole's arguments and affirmed the circuit court's decision. The court of appeals reasoned that because the prior termination was involuntary, a fact that Nicole does not contest, it was necessarily accomplished on one of the grounds listed in Wis. Stat. § 48.415. See Oneida County Dep't of Soc. Servs. v. Nicole W., No. 2005AP2656, unpublished slip op., ¶10 (Wis. Ct. App. February 7, 2006). The court of appeals also concluded that an order demonstrating an involuntary termination of parental rights to another child within the previous three years, as required in § 48.415(10)(b), was the only proof the Department was required to submit. The court of appeals reasoned that even with a default judgment rendered because Nicole failed to comply with a court order to personally appear at the fact-finding hearing as the basis for terminating parental rights, the Department must have proved the grounds for the termination by clear and convincing evidence. Id., ¶11. The court stated, "[t]o require the type of extensive review suggested by Nicole would be tantamount to permitting a collateral attack on the prior TPR." Id., ¶12.
II. DISCUSSION
A. Standard of Review
¶ 8 We review the partial grant of summary judgment independently, applying the same methodology as the circuit court. Hoida, Inc. v. M&I Midstate Bank, 2006 WI 69, ¶15, 291 Wis. 2d 283, 717 N.W.2d 17. Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Id.; Wis. Stat. § 802.08(2).
¶ 9 To determine whether partial summary judgment was properly granted in this case, we interpret Wis. Stat. § 48.415(10). The interpretation of a statute is a question of law that we also review independently, "but benefiting from the analyses of the court of appeals and the circuit court." Marder v. Bd. of Regents of the Univ. of Wis. Sys., 2005 WI 159, ¶19, 286 Wis. 2d 252, 706 N.W.2d 110.
B. Termination of Parental Rights
¶ 10 Terminations of parental rights "are among the most consequential of judicial acts, involving as they do `the awesome authority of the State to destroy permanently all legal recognition of the parental relationship.'" Steven V. v. Kelley H., 2004 WI 47, ¶21, 271 Wis. 2d 1, 678 N.W.2d 856 (quoting Evelyn C.R. v. Tykila S., 2001 WI 110, 246 Wis. 2d 1, 629 N.W.2d 768). A parent's interest in the parent-child relationship may rise to the level of a fundamental liberty interest protected by the Fourteenth Amendment of the United States Constitution. Id., ¶22 (citing Santosky v. Kramer, 455 U.S. 745, 753 (1982)).[6] When a fundamental liberty interest is at issue, the due process clause of the Fourteenth Amendment requires that proof of parental unfitness be shown by clear and convincing evidence. Id., ¶23.
¶ 11 The Wisconsin Children's Code, Wis. Stat. ch. 48, reflects constitutional safeguards. Evelyn C.R., 246 Wis. 2d 1, ¶22. As provided in the Children's Code, an involuntary termination of parental rights proceeding involves two stepsgrounds and disposition. Id., ¶¶22-23. The first step, the grounds or unfitness phase, includes a fact-finding hearing "to determine whether grounds exist for the termination of parental rights." Id. (quoting Wis. Stat. § 48.424).
¶ 12 Wisconsin Stat. § 48.415 sets out 12 grounds for an involuntary termination of parental rights, including the grounds relied upon here, a prior involuntary termination of parental rights to another child within the prior three years. § 48.415(10).[7] At the fact-finding hearing, "[t]he petitioner must prove the allegations [supporting grounds for termination] by clear and convincing evidence." Evelyn C.R., 246 Wis. 2d 1, ¶22; Wis. Stat. § 48.31(1). While the legislative objective of the Children's Code is to promote the best interests of the child,[8] the parent's rights are a court's central focus during the grounds phase of a termination of parental rights proceeding. Id.
¶ 13 If grounds are found, the court must find the parent unfit. Steven V., 271 Wis. 2d 1, ¶25. The proceeding then moves to step two, the dispositional phase. Evelyn C.R., 246 Wis. 2d 1, ¶23; Steven V., 271 Wis. 2d 1, ¶26 (citing Sheboygan County DHHS v. Julie A.B., 2002 WI 95, ¶28, 255 Wis. 2d 170, 648 N.W.2d 402). At the dispositional phase, the court determines whether the best interests of the child are served by the termination of the parent's rights. Evelyn C.R., 246 Wis. 2d 1, ¶23; Steven V., 271 Wis. 2d 1, ¶27 (citing Wis. Stat. § 48.426(2)). While the central focus of the court proceeding is now on the best interests of the child, the parent's rights are not ignored. A parent has the right to present evidence and to be heard at the dispositional phase too. Evelyn C.R., 246 Wis. 2d 1, ¶23 (citing Wis. Stat. § 48.427(1)-(1m)).
¶ 14 We have concluded that summary judgment may be employed in the grounds phase of a termination of parental rights proceeding when there is no genuine factual dispute that would preclude finding one or more of the statutory grounds by clear and convincing evidence. Steven V., 271 Wis. 2d 1, ¶¶28-44 (citing Wis. Stat. § 802.08(2)-(3)). We explained that nothing in the statutes prohibits summary judgment in the grounds phase and that § 802.08 sets the procedure to be followed. Id., ¶33. We further explained that "[s]ome statutory grounds for unfitness . . . are expressly provable by official documentary evidence, such as court orders or judgments of conviction." Id., ¶37. Wisconsin Stat. § 48.415(10) is one of the subsections we listed as provable by court order. Id., ¶¶37-38. We explained:
The availability of partial summary judgment in the grounds phase of a TPR proceeding where the entire proof of unfitness under the statute is an undisputed court record furthers the legislature's purpose and is consistent with the general rule that the provisions of the code of civil procedure apply to all civil actions and proceedings.
Id., ¶39.
¶ 15 In this case, we address whether partial summary judgment was properly granted under Wis. Stat. § 48.415(10) when the order that terminated Nicole's parental rights to Rockey did not state the explicit § 48.415 ground upon which the circuit court relied and the prior involuntary termination was based on her default for failing to comply with a court order to personally appear at the fact-finding hearing of the grounds phase of the termination of parental rights proceeding. With these questions in mind, we begin by determining the meaning of § 48.415(10)(b).
C. Statutory Interpretation
¶ 16 We interpret Wis. Stat. § 48.415(10) to determine what is required to satisfy the proof requirements of § 48.415(10)(b). Statutory interpretation begins with the language of the statute. If the meaning of the words of a statute is plain, we ordinarily stop our inquiry and apply the words chosen by the legislature. State ex rel. Kalal v. Circuit Court for Dane County, 2004 WI 58, ¶45, 271 Wis. 2d 633, 681 N.W.2d 110 (citing Seider v. O'Connell, 2000 WI 76, ¶43, 236 Wis. 2d 211, 612 N.W.2d 659). Statutes are interpreted in the context in which they are used, as part of a whole and in relation to the language of surrounding or closely related statutes. Id., ¶46. A statute is ambiguous "if it is capable of being understood by reasonably well-informed persons in two or more senses." Id., ¶47. If a statute is ambiguous, the court may examine extrinsic sources, such as legislative history. Id., ¶48. However, "[s]tatutory interpretation involves the ascertainment of meaning, not a search for ambiguity." Id., ¶47 (quoting Bruno v. Milwaukee County, 2003 WI 28, ¶25, 260 Wis. 2d 633, 660 N.W.2d 656).
¶ 17 Wisconsin Stat. § 48.415(10) provides:
Prior involuntary termination of parental rights to another child, which shall be established by proving all of the following:
(a) That the child who is the subject of the petition has been adjudged to be in need of protection or services under s. 48.13(2), (3) or (10).
(b) That, within 3 years prior to the date the court adjudged the child who is the subject of the petition to be in need of protection or services as specified in par. (a), a court has ordered the termination of parental rights with respect to another child of the person whose parental rights are sought to be terminated on one or more of the grounds specified in this section.
¶ 18 We conclude that the statute is not ambiguous and that its plain language requires that: (1) the child who is the subject of the petition has been adjudged to be in need of protection or services under Wis. Stat. § 48.13(2), (3) or (10); and (2) within the three years prior to that adjudication a court has terminated the parent's rights to another child in an involuntary termination proceeding. We come to this second conclusion because the words of § 48.415(10)(b), "on one or more of the grounds specified in this section," when read in the context of the whole statute, plainly refer to the 12 grounds listed for an involuntary termination of rights under § 48.415. This is significant because it is only an involuntary termination of rights that is sufficient to satisfy § 48.415(10). Stated otherwise, if Nicole had voluntarily given up her rights to Rockey, the order terminating her parental rights to him would be insufficient to satisfy § 48.415(10) because that order would not have been based "on one or more of the grounds specified in this section," i.e., in § 48.415.
¶ 19 Wisconsin Stat. § 48.415(10)(b) does not require proof of which of the available 12 grounds set out in § 48.415 was the basis for the involuntary termination because the phrase, "on one or more of the grounds specified in this section," is meant as only a general directive that assures the termination of rights was involuntary. In regard to the sufficiency of a prior order that can be used as grounds under § 48.415(10), there is no need for the order to specify which ground was employed, as any of the grounds set out in § 48.415 is sufficient to satisfy the requirement of paragraph (10)(b).[9] Furthermore, there is no reason that the legislature would require proof of which ground under § 48.415 was used in the prior termination because by enacting § 48.415 with multiple grounds for an involuntary termination of rights, the legislature established that proving any single ground listed therein by clear and convincing evidence is sufficient for a court to conclude that a parent was unfit. Steven V., 271 Wis. 2d 1, ¶25.
¶ 20 Although we do not consult legislative history to interpret Wis. Stat. § 48.415(10) because we have concluded that it is unambiguous, we may do so to confirm our decision. Kalal, 271 Wis. 2d 633, ¶51. In this case, we note that the joint legislative council note analyzing § 48.415(10) is consistent with our interpretation of the statute. See 1995 Wis. Act 275, § 89. The analysis states:
Note: Adds a ground for involuntary TPR based on the involuntary TPR of another child when the following conditions are met:
1. The child who is the subject of the petition has been adjudicated CHIPS under s. 48.13(2), stats., (abandonment), (3), stats., (sexual or physical abuse) or (10), stats., (parent, guardian or legal custodian neglects, refuses or is unable for reasons other than poverty to provide necessary care, food, clothing, medical or dental care or shelter so as to seriously endanger the physical health of the child); and
2. Within the 3 years prior to the date the child was adjudicated CHIPS, a juvenile court has ordered the involuntary TPR of another of the person's children.
Id. (emphasis added). The joint legislative council note explaining the statute supports our interpretation that the language requiring the prior termination to be on grounds specified in § 48.415 means only that it must be proved that the prior termination was involuntary.
¶ 21 As one of her contentions, Nicole asserts that the termination of her parental rights to Rockey may not be used to satisfy Wis. Stat. § 48.415(10)(b) because the Waukesha County Circuit Court failed to check any of the boxes in section 6 on the form order the court used. Nicole's argument is not persuasive because, as we have explained above, the last clause in § 48.415(10)(b) requires only that the prior termination be an involuntary termination and does not require proof of which grounds were the bases for that termination. Nicole concedes that her parental rights to Rockey were involuntarily terminated.
¶ 22 Furthermore, once a court has entered an order terminating a parent's rights, unless it is overturned in a further proceeding, it is presumed valid. See Zrimsek v. Am. Auto. Ins. Co., 8 Wis. 2d 1, 3, 98 N.W.2d 383 (1959). In Zrimsek, we explained that a "judgment rendered by a court having jurisdiction of the parties and the subject matter, unless reversed or annulled in some proper proceeding, is not open to contradiction or impeachment, in respect of its validity, verity, or binding effect, by parties or privies, in any collateral action or proceeding, except . . . for fraud in its procurement." Id. (quoting 49 C.J.S. Judgments, § 401). We so explained in the context of examining the finality of a default judgment on a bail bond action against the principal. Id. at 3-4. We concluded that the presumption of validity of judgments is no less binding if the judgment was based on a default than if it were based on a full trial.[10] Id.
¶ 23 Based on Wisconsin's presumption of validity of judgments, we must assume the Waukesha County Circuit Court found by clear and convincing evidence that at least one of the grounds listed in Wis. Stat. § 48.415 had been proved before it terminated Nicole's parental rights to Rockey. This is so because Nicole does not allege that the Waukesha Circuit Court was without jurisdiction, that the order was appealed or otherwise set aside or that it was procured by fraud.
¶ 24 Furthermore, that an order does not have a written statement of which ground was the basis for an involuntary termination, but instead lists all possible grounds, is no basis for nullifying the effect of the order. We must assume the order is valid. Therefore, it is logical also to assume the missing check mark on the standard form employed by the Waukesha County Circuit Court is but a clerical or scrivener's error. See Bostwick v. Van Vleck, 106 Wis. 387, 390, 82 N.W. 302 (1900) (stating that a clerical mistake is "a mere omission to preserve of record, correctly in all respects, the actual decision of the court, which in itself was free from error," while an error in a judgment is "something that the trial court erroneously omitted to pass upon or considered and passed upon erroneously").
¶ 25 The Oneida County Circuit Court said it also assumed the omission "was probably an inadvertent oversight in the filling out of the standard form. The rest of the form appeared to have been filled out fine . . . ." Mere clerical errors do not affect the validity of orders. See, e.g., State ex rel. Gottschalk v. Miller, 136 Wis. 344, 348, 117 N.W. 809 (1908) (affirming an order of the supervisors of the town of Eagle to lay out a new highway and discontinue part of an old one because the alleged error in the description of the highway was "a mere clerical error and does not affect the validity of the order").
D. Collateral Attack
¶ 26 Nicole also contends that the Waukesha County order that terminated her parental rights to Rockey cannot be used because it was entered after she was found in default for failing to comply with a court order to personally appear at the fact-finding hearing. However, a circuit court must take sufficient evidence to prove by the clear and convincing standard of proof that grounds for the termination exist, and it must make such a finding even when the parent is found in default for failing to comply with a court order that she personally appear. Evelyn C.R., 246 Wis. 2d 1, ¶26.[11] Nevertheless, Nicole requests us to look under the order to the proceedings in Waukesha County to assure that this was done.
¶ 27 We agree with the court of appeals that to require more evidence than a prior involuntary termination order to satisfy Wis. Stat. § 48.415(10) would be tantamount to permitting a collateral attack on the prior order. A collateral attack on a judgment is "an attempt to avoid, evade, or deny the force and effect of a judgment in an indirect manner and not in a direct proceeding prescribed by law and instituted for the purpose of vacating, reviewing, or annulling it." Zrimsek, 8 Wis. 2d 1, 3 (citing 5 Callaghan's, Bryant, Wisconsin Pleading and Practice (3d ed.), p. 373, § 37.97).[12]
¶ 28 In general, "a judgment is binding on the parties and may not be attacked in a collateral action unless it was procured by fraud." State v. Madison, 120 Wis. 2d 150, 154, 353 N.W.2d 835 (Ct. App. 1984); cf. State v. Campbell, 2006 WI 99, ¶¶52-55, 294 Wis. 2d 100, 718 N.W.2d 649. Wisconsin courts have recognized the general disfavor of allowing collateral challenges on the basis that "they disrupt the finality of prior judgments and thereby tend to undermine confidence in the integrity of our procedures and inevitably delay and impair the orderly administration of justice." State v. Gudgeon, 2006 WI App 143, ¶6, ___ Wis. 2d ___, 720 N.W.2d 114 (citing Custis v. United States, 511 U.S. 485, 497 (1994) and Hahn, 238 Wis. 2d 889, ¶¶26-28 (following Custis)) (internal quotations omitted). The finality of a judgment in a termination of parental rights proceeding is even more critical because, as the legislature recognized," instability and impermanence in family relationships are contrary to the welfare of children." Waukesha County v. Steven H., 2000 WI 28, ¶32, 233 Wis. 2d 344, 607 N.W.2d 607.
¶ 29 Nicole contends that her attack on the termination of rights order that arose in part from her default rendered because she failed to comply with a court order to personally appear is not a collateral attack on the validity of the order. She characterizes it as a failure of proof by the Department because it has not shown what actually occurred at the fact-finding hearing in Waukesha County Circuit Court when her parental rights to Rockey were terminated. For example, in oral argument her counsel raised the issue of a possible denial of the right to counsel in the prior proceeding. When counsel was asked whether Nicole was attacking the Waukesha County termination of her parental rights to Rockey because she had not been represented by counsel in that proceeding, counsel responded that it was not possible to tell whether she had been represented by counsel, given the record before the court.
¶ 30 We have allowed defendants to collaterally attack a prior criminal conviction in the very limited circumstance of the deprivation of the right to counsel. In Hahn, we held that a defendant may collaterally attack a prior conviction that serves to enhance a prospective sentence where the defendant makes a prima facie showing that his or her constitutional right to counsel provided by the Sixth Amendment to the United States Constitution was violated in that prior proceeding.[13] Hahn, 238 Wis. 2d 889, ¶¶17, 28. We subsequently noted that we were "bound as a matter of federal constitutional law" and that "the Supreme Court's concerns about ease of administration and finality of judgments weighed in favor of a bright-line rule against collateral attacks, with the limited exception of right-to-counsel violations." State v. Peters, 2001 WI 74, ¶15, 244 Wis. 2d 470, 628 N.W.2d 797 (citing Hahn, 238 Wis. 2d 889, ¶¶28-29).
¶ 31 We note that allowing a collateral attack due to a violation of the right to counsel has been applied only in the context of criminal proceedings and a termination of parental rights proceeding is civil in nature. Steven V., 271 Wis. 2d 1, ¶32 (stating termination of parental rights proceedings under Chapter 48 are civil proceedings). The Sixth Amendment right to counsel does not attach in civil proceedings. State v. Krause, 2006 WI App 43, ¶11, 289 Wis. 2d 573, 712 N.W.2d 67 (citing Stroe v. INS, 256 F.3d 498, 500 (7th Cir. 2001)).
¶ 32 However, even though termination of parental rights proceedings are civil proceedings, we have determined that they "require heightened legal safeguards against erroneous decisions." Evelyn C.R., 246 Wis. 2d 1, ¶21 (concluding the Fourteenth Amendment to the United States Constitution requires a showing of clear and convincing evidence that the termination is appropriate).
¶ 33 While the Sixth Amendment does not apply to civil proceedings, the right to counsel in termination of parental rights proceedings is accorded by Wis. Stat. § 48.23(2).[14] The legislature emphasized the necessity of counsel and "[t]he legislative edict is that, in termination proceedings, `any parent . . . shall be represented by counsel.'" M.W. v. Monroe County Dep't of Human Servs., 116 Wis. 2d 432, 437, 342 N.W.2d 410 (1984). We have recently affirmed that the statutory right to counsel is necessary to preserve the "fairness and integrity" of termination proceedings. State v. Shirley E., 2006 WI 129, ¶63, __ Wis. 2d __, 724 N.W.2d 623. We have further explained that the statutory right to counsel includes effective assistance of counsel. A.S. v. State, 168 Wis. 2d 995, 1004, 485 N.W.2d 52 (1992). In examining whether assistance of counsel in an involuntary termination of rights proceeding was effective, we have applied the Strickland test. Id. at 1005 (citing Strickland v. Washington, 466 U.S. 668 (1984)). In Strickland, the United States Supreme Court adopted the following two-part test:
First, the defendant must show that counsel's performance was deficient. This requires showing that counsel made errors so serious that counsel was not functioning as the `counsel' guaranteed the defendant by the [S]ixth [A]mendment.
Second, the defendant must show that the deficient performance prejudiced the defense. This requires showing that counsel's errors were so serious as to deprive the defendant of a fair trial, a trial whose result is reliable.
Id. (citing State v. Harvey, 139 Wis. 2d 353, 375, 407 N.W.2d 235 (1987) (emphasis added). Therefore, we have applied Sixth Amendment concepts in the context of termination of parental rights proceedings, even though the proceedings are civil in nature and the Sixth Amendment does not apply to civil proceedings.
¶ 34 When a claim of denial of the right of counsel is made, the claimant has the burden to make a prima facie showing of a violation of the right to counsel. State v. Ernst, 2005 WI 107, ¶25, 283 Wis. 2d 300, 699 N.W.2d 92. In that showing:
[W]e require the defendant to point to facts that demonstrate that he or she did not know or understand the information which should have been provided in the previous proceeding and, thus, did not knowingly, intelligently, and voluntarily waive his or her right to counsel. Any claim of a violation on a collateral attack that does not detail such facts will fail.
Id. (concluding there was not a prima facie showing because the defendant did not mention specific facts that indicated his waiver of counsel was not knowing, intelligent, and voluntary) (citation omitted).
¶ 35 However, we need not determine whether the prior Waukesha County termination of rights order may be collaterally attacked due to a violation of the right to counsel because Nicole made no prima facie showing that she was denied the right of counsel in the termination of rights proceeding regarding Rockey. Hahn, 238 Wis. 2d 889, ¶¶17, 28; Ernst, 283 Wis. 2d 300, ¶25. Furthermore, Nicole does not argue that she was not actually represented by counsel in the prior termination proceedings; she simply argues that the record does not demonstrate she was represented by counsel. However, the Department does not have the burden of proof in a collateral attack; Nicole does. See Ernst, 283 Wis. 2d 300, ¶25 (citing State v. Hampton, 2004 WI 107, ¶46, 274 Wis. 2d 379, 683 N.W.2d 14). She has not met it here.
III. CONCLUSION
¶ 36 We conclude that Wis. Stat. § 48.415(10)(b) does not require proof of which § 48.415 ground was relied upon for a prior termination of parental rights because the phrase, "on one or more of the grounds specified in this section," in § 48.415(10)(b) refers to proving only that the prior termination was an involuntary termination. We also conclude that the order terminating Nicole's parental rights to Rockey, which arose from her default for failing to comply with a court order to personally appear at the fact-finding hearing, cannot be collaterally attacked in this proceeding and is sufficient evidence to prove that there was a prior involuntary termination of Nicole's rights to another child. Accordingly, we affirm the court of appeals.
By the Court. The decision of the court of appeals is affirmed.
¶ 37 SHIRLEY S. ABRAHAMSON, C.J. (dissenting).
The Department of Social Services' motion for partial summary judgment terminating Nicole W.'s parental rights to Brianca was based on a certified copy of a Waukesha County Circuit Court order terminating Nicole W.'s parental rights to another child, Rockey. The issue presented in the instant case is whether the Department was entitled, as a matter of law, to a partial summary judgment on the basis of the Waukesha order.
¶ 38 The text of Wis. Stat. § 48.415(10) clearly, explicitly, and plainly requires that the "prior involuntary termination of parental rights . . . shall be established by proving . . . that a court has ordered the termination of parental rights [to the other child] . . . on one or more of the grounds specified in this section."[15]
¶ 39 The Waukesha order terminating Nicole W.'s parental rights to her other child, Rockey, a copy of which is attached, does not satisfy the requirements of Wis. Stat. § 48.415(10). Everyone agrees, including, I am sure, the reader, that the order fails state the grounds upon which the termination was ordered.[16]
¶ 40 The majority opinion plugs the omission in the Waukesha order relating to Rockey by rewriting Wis. Stat. § 48.415(10). The majority opinion simply reads the statutory words "ordered the termination of parental rights . . . on one or more of the grounds specified in this section" out of the statute book.
¶ 41 The majority opinion interprets this statutory language as merely requiring that the prior termination be an involuntary termination; the ground of termination need not be stated. According to the majority opinion, "the last clause in § 48.415(10)(b) requires only that the prior termination be an involuntary termination and does not require proof of which grounds were the bases for that termination." Majority op., ¶21; see also ¶¶2, 36.[17]
¶ 42 By rewriting Wis. Stat. § 48.415(10)(b), the majority opinion can declare the Waukesha order sufficient even though the order does not specify any ground for terminating Nicole W.'s parental rights to the child. I disagree with the majority opinion. If the legislature had concluded that proof of a prior involuntary termination of parental rights was all that was needed it could have simply so stated in Wis. Stat. § 48.415(10). It did not.
¶ 43 I would not rewrite the text of the statute. I would apply the statute as written by the legislature, giving meaning to all of the words. The statute clearly states that a prior involuntary termination of parental rights to another child shall be established by proving that the prior court ordered termination on a ground specified in Wis. Stat. § 48.415. The Waukesha order relied upon by the Department did not satisfy this requirement, and therefore the Department's motion for partial summary judgment must fail as a matter of law.
¶ 44 Even if I were to accept the majority opinion's reading of the statute, the Waukesha order does not satisfy the statute. The Waukesha order is based on a default, not on any of the statutory grounds, as I explain below.
¶ 45 Recognizing the defect in the Waukesha order, the circuit court attempted to repair the Waukesha order by importing into the Waukesha order the grounds for termination stated in the petition for termination filed in Waukesha. I disagree with the circuit court's approach.
¶ 46 At the hearing on the motion for summary judgment in the present case, Nicole W. asserted, and the circuit court agreed, that the Waukesha order was defective and could not support the motion for summary judgment as a matter of law because the order did not state a statutory ground for termination.
¶ 47 Accordingly, the circuit court adjourned the hearing on the motion for summary judgment and permitted "the corporation counsel to obtain the rest of the file . . . ." The circuit court suggested various Waukesha County documents the corporation counsel might produce to cure the deficiency, such as the petition for termination and a transcript of the Waukesha County court hearings, and even proposed that the Department have the Waukesha court amend the order to correct it.[18]
¶ 48 When, at the motion hearing, the corporation counsel offered an uncertified copy of the termination petition filed in Waukesha County, the circuit court refused to accept it. The circuit court instructed, "[W]e should get a certified copy and we should also compare it with the order and we should give Waukesha County the opportunity to amend the order by, you know, having one of the boxes checked here."[19]
¶ 49 At the next hearing on the motion for partial summary judgment, the corporation counsel produced only a certified copy of the petition for termination of parental rights to Rockey filed in Waukesha County, which, as might be expected, stated a statutory ground for termination. The circuit court found that the petition was good enough to plug the hole in the Waukesha order. I disagree with the circuit court. There is no proof the ground for termination alleged in the petition was ever proven.
¶ 50 Although the form order provides the circuit court an opportunity to state that the matter was tried to a jury or to the circuit court and that one or more of the statutory grounds for termination was found, the completed Waukesha order in the instant case merely states that Nicole W. failed to appear and was in default. The spaces in which to indicate that a hearing was held and that fact-finding occurred remain blank on the form order.
¶ 51 The Waukesha order on its face violates chapter 48 of the statutes by relying only on default and not fact-finding. Before entering a default judgment in a termination of parental rights case, a circuit court must hold a fact-finding hearing and find by clear and convincing evidence, upon the evidence presented, that the grounds to terminate the defaulting parent's rights to the child have been proven, even when a parent fails to appear at all and defaults or fails to appear at a proceeding in disobedience to a court order. Evelyn C.R. v. Tykila S., 2001 WI 110, ¶¶24-25, 246 Wis. 2d 1, 629 N.W.2d 768.
¶ 52 The Waukesha order and the petition relating to Rockey upon which the Department relies do not establish that the circuit court held a fact-finding hearing or made the required findings. The only reasonable reading of the Waukesha order terminating Nicole W.'s parental rights to Rockey was that the order was entered on Nicole W.'s failure to appear and that no fact-finding hearing was held and no findings were made. Although this court has been clear that the fact-finding hearing must occur even if a parent does not appear, it is apparently not uncommon for circuit courts to skip an evidentiary hearing and fact-finding when a parent fails to appear for it. See Torrance P. v. Shirley E., 2006 WI 129, ___ Wis. 2d ___, 724 N.W.2d 623; Evelyn C.R. v. Tykila S., 2001 WI 110, 246 Wis. 2d 1, 629 N.W.2d 768. Accordingly, I conclude that the circuit court erred in relying on the petition to terminate parental rights to Rockey to fill the void in the Waukesha order.
¶ 53 The sad part of the case is that this dispute could have been resolved simply and swiftly, thereby bringing permanency to Brianca's life. All the corporation counsel had to do to satisfy Wis. Stat. § 48.415(10) in the instant case was to produce in the circuit court, as the circuit court suggested, a transcript of the Waukesha County proceedings or a corrected copy of the Waukesha order. Either of these methods would have clearly demonstrated one way or the other whether the prior termination of parental rights was on statutory grounds.
¶ 54 Because partial summary judgment was erroneous, I would reverse the circuit court order granting partial summary judgment and remand the matter to the circuit court to give the Department an opportunity to prove that the Waukesha County Circuit Court "ordered the termination of parental rights [to Nicole W.'s child Rockey] . . . on one or more of the grounds specified [in Wis. Stat. § 48.415(10)]." If the Department cannot offer such proof, then the circuit court must, as Nicole W.'s brief requests, hold a trial on Nicole W.'s fitness as a parent with respect to Brianca.
¶ 55 In any event, the court's rewriting of the statute should have ended the majority opinion. The statute, as rewritten by the majority opinion, disposes fully of the case. Nevertheless, the majority opinion reaches out to discuss and decide other issues. It tries to bolster its opinion, declaring, without any basis, an error in the order (majority op., ¶24), and relying on a presumption of the validity of a judicial proceeding (majority op., ¶¶22-23). It seems to me that it is just as likely that the order was correct and reflected an error at the proceedings as that the order was in error and the proceedings correct.
¶ 56 The majority opinion then wanders even more broadly and addresses collateral attacks on a prior judgment terminating parental rights (majority op., ¶¶27-28), although no such collateral attack has been made in the present case, and winds up with an unnecessary discussion of Nicole's Sixth Amendment right to counsel in the Waukesha court (majority op., ¶¶30-35).
¶ 57 Even if I agreed with the mandate, I would not join these parts of the majority opinion because they are not necessary to a decision in this case; I do not write to them now because they are not actually before the court. A court should not reach out and decide matters not before it. Less is often more when deciding cases before the court. "If an issueno matter how important or interestingis not squarely presented by a case, the court should not reach out to decide it. The court will get another chanceparticularly if the court notes the issue but does not express any opinion on it."[20]
¶ 58 David M. Borden, Associate Justice of the Connecticut Supreme Court, offered the following advice on appellate decision making: "[W]e ought to decide only what the case fairly presents. Put another way, ordinarily we ought not reach out to decide what is not reasonably necessary to the decision, even though we are convinced that what we have to say in that regard is correct."[21]
¶ 59 For the reasons set forth, I dissent.
¶ 60 I am authorized to state that Justices ANN WALSH BRADLEY and LOUIS B. BUTLER, JR., join this opinion.
NOTES
[1] The appeal was decided by one judge pursuant to Wis. Stat. § 752.31(2) (2003-04). All subsequent references to the Wisconsin Statutes are to the 2003-04 version unless otherwise indicated.
[2] The Honorable Robert E. Kinney, Circuit Court Judge for Oneida County, presided.
[3] The circuit court found that Brianca was adjudged to be in need of protection or services under Wis. Stat. § 48.13(2),(3), or (10) based on a "Child in Need of Protection and/or Services" (CHIPS) order dated December 5, 2003. The CHIPS case was identified as Oneida County Juvenile Court Case No. 03-JC-94.
[4] The Honorable Marianne E. Becker, Circuit Court Judge for Waukesha County, signed the order on January 24, 2003.
[5] The circuit court also found that Brianca was adjudged to be in need of protection or services under Wis. Stat. § 48.13(2),(3), or (10) based on a CHIPS order dated December 5, 2003, as required by Wis. Stat. § 48.415(10)(a).
[6] The Due Process Clause in the Fourteenth Amendment of the United States Constitution states: "nor shall any State deprive any person of life, liberty, or property, without due process of law."
[7] The other grounds for involuntary termination include abandonment, relinquishment, continuing need of protection or services, continuing parental disability, continuing denial of periods of physical placement or visitation, child abuse, failure to assume parental responsibility, incestuous parenthood, homicide or solicitation to commit homicide of parent, parenthood as a result of sexual assault, and commission of a serious felony against one of the person's children. Wis. Stat. § 48.415(1)-(9m).
[8] Wisconsin Stat. § 48.01 states: "[i]n construing this chapter, the best interests of the child . . . shall always be of paramount consideration."
[9] Of course the issue may be different if the termination of Nicole's parental rights to Rockey were being appealed. In that case, the reviewing court could be asked to ascertain whether sufficient proof was admitted by the circuit court to support the court's determination that a specific ground was proved by clear and convincing evidence. However, an appeal of the termination of Nicole's parental rights to Rockey is not before us.
[10] The Waukesha County Circuit Court had the authority to render a default judgment in response to Nicole's failure to comply with its order that she appear at the fact-finding hearing. See Gaertner v. 880 Corp., 131 Wis. 2d 492, 497, 389 N.W.2d 59 (Ct. App. 1986). Nicole does not contest this authority.
[11] In Evelyn C.R. v. Tykila S., 2001 WI 110, 246 Wis. 2d 1, 629 N.W.2d 768, the parent did not personally appear at the fact-finding hearing and the circuit court found that grounds existed to terminate the parental rights based on allegations in the petition that the parent had abandoned the child. Id., ¶9. We concluded the court had erroneously exercised its discretion and reasoned, "by entering a default judgment against Tykila [the parent] on the issue of abandonment without first taking evidence sufficient to support such a finding, the circuit court failed to comply with the constitutional and statutory requirements for termination of parental rights." Id., ¶19. However, we found a factual basis in the record to support the termination and concluded the circuit court's procedural error was harmless. Id., ¶¶32-35.
[12] See State v. Hahn, 2000 WI 118, ¶¶17, 28, 238 Wis. 2d 889, 618 N.W.2d 528 (allowing an offender to collaterally attack a prior conviction in an enhanced sentence proceeding "only when the challenge to the prior conviction is based on the denial of the offender's constitutional right to a lawyer").
[13] The Sixth Amendment to the United States Constitution states: "[i]n all criminal prosecutions, the accused shall enjoy the right . . . to have the Assistance of Counsel for his defence." This amendment is made applicable to the states by the Fourteenth Amendment. Hahn, 238 Wis. 2d 889, ¶4 n.3 (citing Gideon v. Wainwright, 372 U.S. 335 (1963)).
[14] Wisconsin Stat. § 48.23(2) provides in relevant part: "If a proceeding involves . . . the involuntary termination of parental rights, any parent 18 years old or older who appears before the court shall be represented by counsel; but the parent may waive counsel provided the court is satisfied such waiver is knowingly and voluntarily made."
[15] Section 48.415(10) provides as follows:
Prior involuntary termination of parental rights to another child, which shall be established by proving all of the following:
(a) That the child who is the subject of the petition has been adjudged to be in need of protection or services under s. 48.13(2), (3) or (10).
(b) That, within 3 years prior to the date the court adjudged the child who is the subject of the petition to be in need of protection of services as specified in par. (a), a court has ordered the termination of parental rights with respect to another child of the person whose parental rights are sought to be terminated on one or more of the grounds specified in this section.
[16] Observe that the order provides several boxes to be marked to indicate on which grounds the termination of parental rights was ordered. None was marked and no other reference to the statutory ground for termination appears.
[17] Other paragraphs in the majority opinion repeat that it is only necessary that the prior termination be "involuntary," majority op., ¶20, and that "there is no need for the [Waukesha] order to specify which ground was employed, as any of the grounds set out in § 48.415 is sufficient to satisfy the requirement of paragraph (10)(b)." Majority op., ¶19.
[18] The circuit court stated that the corporation counsel should "find out what the petition alleged and, perhaps, obtain a transcript of the proceedings at which the default order was entered. Presumably that was transcribed because I think it would have been in the ordinary course of things. . . ."
The circuit court further explained that it could not "determine from the current order what the grounds really were. What was Nicole W. defaulting to? What did the petition allege? That's really what we have to have. . . . We don't know really who the scrivener of the order was. . . ."
The circuit court suggested that "it may well be that we should really have an amended order out of Waukesha County. . . . [I]t would be preferable to let Waukesha County correct its apparent inadvertent error."
The circuit court concluded its instructions to the corporation counsel by saying that "what we have to do here is come back here and find out at that point whether the basis that was statedor bases stated were those mentioned in the statute. So we can't decide it today and we should have that information supplied."
[19] The circuit court was referring to the boxes on the order terminating parental rights which could be marked to indicate on which statutory grounds the order was granted. None of the boxes was checked here.
[20] See Chicago Council of Lawyers, Evaluation of the United States Court of Appeals for the Seventh Circuit, 43 DePaul L. Rev. 673, 685-86 (Spring 1994) (footnotes omitted). The Chicago Council of Lawyers conducted the evaluation to provide information to judges on how they are perceived by the Chicago bar and to provide information to lawyers and litigants practicing in the Seventh Circuit.
[21] Hon. David M. Borden, Some Neutral Principles Revisited, 27 Conn. L. Rev. 1, 13 (Fall 1994). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584718/ | 728 N.W.2d 61 (2006)
IN RE ESTATE OF ERLAND.
No. 05-0978.
Iowa Court of Appeals.
November 30, 2006.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584725/ | 24 So.3d 933 (2009)
Donna KEESLAR Individually and on behalf of her Deceased Husband, Myron Keeslar, Plaintiff-Appellant.
v.
DR. J.B. "Duke" McHUGH, Defendant-Appellee.
No. 44,641-CA.
Court of Appeal of Louisiana, Second Circuit.
September 30, 2009.
*934 Gauthier, Houghtaling, & Williams, by Todd R. Slack, Metairie, for Appellant.
Pettiette, Armand, Dunkelman, Woodley, Byrd & Cromwell, by Lawrence W. Pettiette, Jr., Joseph S. Woodley, Shreveport, for Appellee.
Before WILLIAMS, PEATROSS and LOLLEY, JJ.
LOLLEY, J.
Donna Keeslar, the widow of Myron "Dale" Keeslar, appeals two rulings of the 4th Judicial District Court, Parish of Ouachita, in favor of J.B. "Duke" McHugh, Jr., M.D. For the following reasons, we affirm the trial court's judgment.
FACTS
Myron "Dale" Keeslar, a 52-year-old man, presented at the Emergency Room of Glenwood Regional Medical Center ("Glenwood") at 10:17 a.m. on February 13, 2001. He complained of intermittent abdominal pain, cold sweats, and shortness of breath. During the day, Dr. Billy Alexander, the emergency room physician, called in a gastroenterologist, Dr. J.B. "Duke" McHugh, for a consultation. Dr. McHugh arrived at approximately 6:30 p.m. and examined Mr. Keeslar and reviewed the test results that had been ordered and received by Dr. Alexander. After considering Mr. Keeslar's x-ray, Dr. McHugh's first impression was "severe constipation," and he admitted Mr. Keeslar to the hospital, primarily because he had been administered a sedative. Around 10:30 p.m., the nursing staff informed Dr. McHugh that Mr. Keeslar's oxygen level had dropped and he was having respiratory problems. Dr. McHugh called for a consult by a pulmonologist, Dr. Thomas Gullatt, who came and intubated the patient. Mr. Keeslar was moved to the intensive care unit. Dr. McHugh left the hospital for the evening, leaving the patient in the care of Dr. Gullatt. Later that night, at approximately 2:00 a.m., Dr. Gullatt consulted the general surgeon, Dr. Russell Lolley. Dr. Lolley wanted to take the patient into emergency surgery, but he was too unstable. By 10:30 on the morning of February 14, Mr. Keeslar had stabilized enough for surgery, during which Dr. Lolley discovered a clot that had lodged in the mesenteric artery in the abdomen, cutting off blood flow to the colon. Resultantly, the colon had died and was gangrenous. Dr. Lolley attempted to save the patient by removing his colon, but Mr. Keeslar died on February 16.
*935 Mr. Keeslar's widow, Donna, brought the case against Dr. McHugh to the Medical Review Panel ("MRP"), which, after reviewing the evidence, concluded that Dr. McHugh had breached the applicable standard of care as to Mr. Keeslar. The panel determined that:
It is the opinion of the panel that there is evidence that Dr. McHugh failed to meet the standard of care expected of him in his treatment of Myron Keeslar in that he failed to make the diagnosis of a possible ischemic bowel and recognize the life threatening nature of that diagnosis in a timely manner.
Subsequently, Mrs. Keeslar filed a motion for summary judgment at the trial court, requesting that it find that liability had been established by the MRP and order a trial for damages only. Her motion was granted and judgment was entered in her favor, with the trial court determining that a breach of the standard of care had occurred. There was no finding, however, that Dr. McHugh's actions had caused the death of Mr. Keeslar.
Subsequently, the original trial court judge presiding over the case, Judge Dimos, retired and Judge C. Wendell Manning was elected to the bench and presided over the case. Dr. McHugh filed a motion to reconsider the grant of Mrs. Keeslar's motion for summary judgment. After a hearing, the trial court overturned the prior court's summary judgment in favor of Mrs. Keeslar, and the matter proceeded to trial. After the trial, the jury concluded that Dr. McHugh did not breach the medical standard of care, and judgment was entered in favor of Dr. McHugh. Mrs. Keeslar appeals that judgment.
DISCUSSION
Summary Judgment
In her first assignment of error, Mrs. Keeslar argues that the trial court erred in reconsidering and then denying her motion for summary judgment. She maintains that Dr. McHugh's motion to reconsider the summary judgment was akin to a motion for new trial, and argues that pursuant to La. C.C.P. art. 1972, a motion for new trial requires the discovery of evidence important to the case which could not be obtained prior to the trial. She states that no new evidence was introduced that warranted a reconsideration of the previously granted summary judgment.
As stated, Judge Dimos originally presided over Mrs. Keeslar's lawsuit against Dr. McHugh, and he partially granted her motion for summary judgment, concluding only that Dr. McHugh had breached the standard of care. The trial court made no determination regarding whether that breach actually caused the patient's death. The partial final judgment was designated a final judgment by the trial court, which Dr. McHugh appealed. After a de novo review of the trial court's certification of the judgment, this court determined that the trial court erred in certifying its judgment as suitable for immediate appeal, and the appeal was dismissed. Upon Dr. McHugh's request, the trial court reconsidered the summary judgment and denied it.
We do not agree with Dr. McHugh's characterization of the partial summary judgment as merely an interlocutory judgment. Pursuant to La. C.C.P. art. 1841, an interlocutory judgment does not "determine the merits but only preliminary matters in the course of the action. ..." Clearly, in this case, the summary judgment originally rendered by Judge Dimos addressed the merits of this case, i.e., an element of liability. Thus, the judgment rendered by Judge Dimos was a partial judgment, albeit not final, as described in La. C.C.P. art. 1915(B)(2). However, subsection *936 (B)(2) of the article also states that such a "decision issued may be revised at any time prior to rendition of the judgment adjudicating all the claims and the rights and liabilities of all the parties." Thus, we conclude that the trial court acted in accordance with the article and did not err in reconsidering and revising the previously granted summary judgment.
Moreover, we note that the grant of summary judgment on a single element of La. R.S. 9:2794, the statute which sets out the elements to show liability in a medical malpractice claim, is improper. See Jones v. LSU Health Sciences Center-Shreveport, 39,292 (La.App. 2d Cir.09/02/04), 880 So.2d 269. As stated in Jones:
By dividing the issue of liability into smaller issues, the court's judgment that the defendant breached the standard of care might be used at trial to preclude the introduction of evidence by the defendant regarding whether there was a breach in the standard of care and that breach caused the plaintiffs injury. There is possibility of confusion arising out of the factual interrelationship between the adjudicated element and the unadjudicated element that could lead to inconsistent rulings and piecemeal litigation.
Id. at 270.
Mrs. Keeslar also maintains that the trial court was correct when it partially granted her motion for summary judgment, in effect arguing that the trial court erred in subsequently denying her motion for summary judgment after the reconsideration. Initially, we point out that Mrs. Keeslar's original motion for summary judgment sought relief on all claims. As discussed, the trial court under Judge Dimos granted only the claims relating to Dr. McHugh's breach of the standard of care all other claims by Mrs. Keeslar were denied by the trial court. Ultimately, the trial court under Judge Manning denied Mrs. Keeslar's motion for summary judgment, presumably including all claims even those which had been previously denied. We do not believe the denial of Mrs. Keeslar's motion for summary judgment was error.
The appellate court's review of a grant or denial of a summary judgment is de novo. Independent Fire Ins. Co. v. Sunbeam Corp., 1999-2181, 1999-2257 (La.02/29/00), 755 So.2d 226; Hinson v. Glen Oak Retirement Home, 34,281 (La. App. 2d Cir.12/15/00), 774 So.2d 1134. The summary judgment procedure is designed to secure the just, speedy and inexpensive determination of every action allowed by law. See La. C.C.P. art. 966(A)(2); Hinson v. Glen Oak Retirement Home, supra. A motion for summary judgment shall be granted if the pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits, show that there is no genuine issue of material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(B).
Here, despite the MRP's finding that Dr. McHugh breached the standard of care, there was no conclusive determination that his actions caused the patient's death, the other necessary element to prove liability in a medical malpractice case. Thus, the MRP left open the factual issue as to whether Dr. McHugh's actions caused the death. We believe that this factual issue precluded summary judgment on the issue of liability in this case. In opposition to Mrs. Keeslar's motion for summary judgment, Dr. McHugh offered his own deposition wherein he maintained his position that his care met the applicable standard of care (despite the MRP's conclusion to the contrary) and that his actions did not cause the patient's death. Obviously, Dr. McHugh's affidavit is self-serving; however, he also offered the affidavit *937 of Dr. Claude Minor, a general surgeon, who opined that the care and treatment rendered by Dr. McHugh did not result in the patient's death. Although Dr. Minor was not a gastroenterologist, considering the nature of the patient's medical ailment and the integral part played by a general surgeon in the diagnosis and treatment of such, we believe that Dr. Minor's opinion as to Dr. McHugh's treatment and the cause of the patient's death was sufficient to raise a genuine issue of material fact on the issue of liability. Thus, the trial court properly denied Mrs. Keeslar's motion for summary judgment.
Breach of Standard of Care
Finally, in her third assignment, Mrs. Keeslar argues that the jury's verdict was in error in finding that Dr. McHugh did not breach the standard of care when all of the evidence, she maintains, was to the contrary. We disagree.
The jury's finding in a medical malpractice case is subject to manifest error review; it cannot be set aside unless the appellate court finds that it is manifestly erroneous or clearly wrong. Stobart v. State through Dept. of Transp. and Development, 617 So.2d 880 (La.1993); Tanner v. Cooksey, 42,010 (La.App. 2d Cir.04/04/07), 954 So.2d 335, writ denied, XXXX-XXXX (La.06/22/07), 959 So.2d 508. In order to reverse a fact finder's determination of fact, an appellate court must review the record in its entirety and (1) find that a reasonable factual basis does not exist for the finding; and, (2) further determine that the record establishes that the fact finder is clearly wrong or manifestly erroneous. The appellate court must not reweigh the evidence or substitute its own factual findings because it would have decided the case differently. Pinsonneault v. Merchants & Farmers Bank & Trust Co., 2001-2217 (La.04/03/02), 816 So.2d 270.
Where there are two permissible views of the evidence, the fact finder's choice between them cannot be manifestly erroneous or clearly wrong. However, where documents or objective evidence so contradict the witness's story, the court of appeal may find manifest error or clear wrongness even in a finding purportedly based on a credibility determination. Stobart, supra. But where such factors are not present, and a fact finder's finding is based on its decision to credit the testimony of one or two or more witnesses, that finding can virtually never be manifestly erroneous or clearly wrong. Salvant v. State, 2005-2126 (La.07/06/06), 935 So.2d 646.
In a medical malpractice case, the plaintiff has the burden of proving:
(1) The degree of knowledge or skill possessed or the degree of care ordinarily exercised by physicians, dentists, optometrists, or chiropractic physicians licensed to practice in the state of Louisiana and actively practicing in a similar community or locale and under similar circumstances; and where the defendant practices in a particular specialty and where the alleged acts of medical negligence raise issues peculiar to the particular medical specialty involved, then the plaintiff has the burden of proving the degree of care ordinarily practiced by physicians, dentists, optometrists, or chiropractic physicians within the involved medical specialty.
(2) That the defendant either lacked this degree of knowledge or skill or failed to use reasonable care and diligence, along with his best judgment in the application of that skill.
(3) That as a proximate result of this lack of knowledge or skill or the failure to exercise this degree of care the plaintiff *938 suffered injuries that would not otherwise have been incurred.
La. R.S. 9:2794(A). Resolution of each of these inquiries is a determination of fact which should not be reversed on appeal absent manifest error. Martin v. East Jefferson General Hosp., 582 So.2d 1272 (La.1991); Tanner, supra.
Where there are conflicting expert opinions concerning the defendant's compliance with the standard of care, the reviewing court will give great deference to the conclusions of the trier of fact. Pinnick v. Louisiana State University Medical Center, 30,263 (La.App. 2d Cir.02/25/98), 707 So.2d 1050.
In the case sub judice, the jury heard and considered the testimony of Dr. Michael Townsend, Dr. Thomas Lieberman, Dr. Thomas Gullatt, Dr. Russell Lolley, Dr. McHugh, Dr. Claude Minor, and Dr. David Scott.
Plaintiff's experts
The first witness called by the plaintiff was Dr. Michael Townsend, a general surgery physician hired by Mrs. Keeslar to review the medical records and give an expert opinion. Dr. Townsend specialized in general surgery and surgical critical care. Dr. Townsend testified that the standard of care for a patient like Mr. Keeslar would have required a surgeon to have been brought in at 10:00 p.m. at the very latest for the patient to have survived. However, Dr. Townsend also testified that in his experience, ischemic bowel is most commonly not diagnosed definitively before surgery.
The plaintiff also called Dr. Thomas Lieberman, a gastroenterologist who had not been personally involved in the patient's care, but had reviewed the records for purposes of forming an expert opinion. Like Dr. Townsend, Dr. Lieberman opined that Dr. McHugh had breached the standard of care in failing to timely diagnose the patient's condition. However, Dr. Lieberman did acknowledge that ischemic bowel carries a high risk of death. He also stated that it would be common for ischemic bowel to present in a nonspecific manner which can be confused with other illnesses. He also stated that ischemic bowel generally can be a very hard diagnosis to make, unless the physician specifically thinks about it. Dr. Lieberman also agreed that Dr. McHugh had acted properly by admitting the patient into the hospital and consulting with the pulmonologist for the respiratory issues.
Dr. Russell Lolley was also called by Mrs. Keeslar. Dr. Lolley was the general surgeon who performed surgery on Mr. Keeslar on February 14. Dr. Lolley was called by Dr. Gullatt at approximately 2:00 a.m. When he first saw Mr. Keeslar, he was "on a ventilator and in shock and had a distended abdomen and his laboratory work showed that he was also acidotic." At the time Dr. Lolley originally saw the patient, his condition was not stable enough for surgery. Dr. Lolley transfused him with large amounts of intravenous fluids and some plasma in an attempt to improve Mr. Keeslar's general condition for surgery. According to Dr. Lolley, in order to truly make a diagnosis of ischemic bowel, surgery is necessary, and he was able to operate on Mr. Keeslar later that morning. Dr. Lolley opined that it is preferable to operate on ischemic bowel patients before complications from the illness set in, but he offered no explicit opinion regarding Dr. McHugh's actions.
Dr. Paul Jordan also testified on behalf of Mrs. Keeslar. Dr. Jordan, a gastroenterologist, was a member of the MRP that reviewed this case, and he was on the gastroenterology department faculty of the Louisiana State University Health Sciences Center. Dr. Jordan stated that he *939 had treated perhaps 20 ischemic bowel cases in his career and that one or two of those had survived. In fact, Dr. Jordan testified that the mortality rate for ischemic bowel was 80%. As to this particular case, Dr. Jordan noted the MRP's finding that Dr. McHugh breached the standard of care as to Mr. Keeslar, specifically because it was believed that the diagnosis should have been made earlier on in the process. However, Dr. Jordan went on to state that ischemic bowel is probably the "biggest nightmare" for gastroenterologists, because it is "extremely difficult to make the diagnosis." He also stated that the MRP did not feel that in this case the patient had the symptoms that would have allowed Dr. McHugh to make the diagnosis of ischemic bowel, but that the earlier the gastroenterologist makes the diagnosis and calls the surgeon, the better the rate of recovery. Finally, Dr. Jordan noted that the MRP could not determine whether Dr. McHugh's conduct was a factor in causing the patient's death.
Defendant's experts
Dr. Thomas Gullatt, an intensivist and pulmonologist, treated Mr. Keeslar after he was admitted at Glenwood and when Dr. McHugh called him in as a consult around 10:25 that evening. Dr. Gullatt's first treatment of the patient was at approximately 11:25 p.m. He first noted that the patient had labored respirations and his oxygen saturations were low, which indicated to Dr. Gullatt a pulmonary problem. When Dr. Gullatt examined his abdomen, he noted it was distended; however, when he listened, he did not hear any bowel sounds. When he pressed the patient's abdomen in different locations, there was no obvious tenderness. At that point, Dr. Gullatt did not see any indication of ischemic bowel. Dr. Gullatt noted that the patient did not have pain out of proportion to his physical symptoms and certainly not writhing pain which would have been typical for a diagnosis of ischemic bowel. However, he also testified that when Dr. Lolley examined the patient's abdomen several hours later, he had a very different result. Finally, Dr. Gullatt agreed that patients with ischemic bowel have a low survival rate.
Dr. McHugh also testified on his own behalf. According to Dr. McHugh when he first saw Mr. Keeslar his initial white blood count was within normal ranges. He noted that Dr. Alexander had circled a small, localized area of the stomach where the patient was in pain. Dr. McHugh testified that localized pain would be atypical for generalized ischemic bowel. Dr. McHugh also explained that when he initially saw Mr. Keeslar and reviewed his test results, the radiology report noted a "massive amount of formed stool throughout the colon." He noted that the radiologist's use of the word "massive" was unusual. Dr. McHugh reviewed the nurse's notation that Mr. Keeslar was pain-free at 5:00 p.m. He testified that he first saw Mr. Keeslar between 6:30-7:00 p.m. in the emergency room and, at that time, he physically examined the patient. In reference to that examination, Dr. McHugh described the pain associated with ischemic bowel as typically "the worst pain you can have. ... It's the heart attack of the intestine." However, Dr. McHugh noted that in this case, when he examined the patient, he did not display any pain (his last pain shot had been approximately five hours earlier). Dr. McHugh explained that Mr. Keeslar was admitted to the hospital at 7:30 p.m., and Dr. McHugh was paged back to the hospital at 9:30. Between that time, no one called him to inform him of any changes in the patient's condition. In fact, he stated that when he returned his page, the nurse made no mention of increased abdominal pain. At approximately 10:25 p.m. Dr. McHugh was informed that *940 the patient has developed shortness of breath, and so he consulted Dr. Gullatt for pulmonary assistance. Dr. McHugh returned to the patient around 11:00 p.m., and he made the decision to move Mr. Keeslar to the intensive care unit ("ICU"). Dr. McHugh was present when Dr. Gullatt arrived at 11:25, and he accompanied the patient and Dr. Gullatt to the emergency room where he was to undergo bronchoscopy (intubation). Again, when Dr. Gullatt examined the patient, there was no point tenderness in the abdomen at that time, the patient's only ailments seemed to be more pulmonary. Considering that and the fact that the patient was in the ICU, which is the domain of the intensivist (i.e., Dr. Gullatt), he was comfortable with Dr. Gullatt taking over Mr. Keeslar's care; thus, he went home for the evening at around 12:30 a.m. on February 14. When Dr. Gullatt noted a change in Mr. Keeslar's condition to warrant a call to the surgeon, Dr. Lolley, Dr. McHugh was never notified. It was not until 8:40 a.m., when Dr. McHugh came back to see the patient, that he suspected ischemic bowel in light of the patient's overnight deterioration. Dr. McHugh noted several reasons why he did not initially diagnose the patient's ischemic bowel: a benign physical examination; only moderate pain during his examination of the patient; the "massive" amount of stool in his colon leading to his impression of constipation; a normal white blood count; and, relatively normal temperature.
The defense also called Dr. Claude Minor, a general surgeon, to testify. He was certified as an expert medical doctor, general surgeon, with a specialty in trauma and surgical critical care. Although he had not been a part of the patient's care, Dr. Minor had been a surgeon at Glenwood and, thus, was familiar with the standard of care and protocol of that facility. He agreed that for a diagnosis of ischemic bowel, excruciating, writhing pain is experienced by the patient. He related one typical example of a 45-year-old patient with ischemic bowel whose pain had not been relieved with 100 milligrams of Demerol. For comparison in this case, prior to seeing Dr. McHugh, the patient had received 2 milligrams of Dilaudid, which Dr. Minor said was equivalent to 20-30 milligrams of Demerol. Dr. Minor opined that small amount of painkiller would not typically affect the pain associated with ischemic bowel. Additionally, Dr. Minor agreed that the admitting notes of Dr. Alexander indicated pain in an area of the abdomen not typically associated with ischemic bowel. Dr. Minor testified that the care rendered to Mr. Keeslar was appropriate. Further, he opined that up until Dr. Lolley's examination of the patient at 2:00 a.m., there had been no evidence of ischemic bowel. He pointed out that even then Dr. Lolley only listed "possible ischemic bowel" as a third impression, and this after Mr. Keeslar had rapidly deteriorated. Dr. Minor opined that Mr. Keeslar's survival prospect was low, especially considering that his disease progressed rapidly and he showed no pathognomic signs or symptoms of the illness.
Finally, the defense called its last witness, Dr. David Scott, a gastroenterologist, who was tendered as an expert medical doctor in internal medicine, specifically gastroenterology. Dr. Scott was not involved with Mr. Keeslar's case personally and only had reviewed the medical records. He testified that in his 17 years of practice, he had seen five or six cases of ischemic bowel, noting that they are all complicated cases. By looking at the patient's medical record from Glenwood, Dr. Scott noted that he appeared to be stable when he left the ER and was admitted to the hospital at approximately 7:30 p.m. Dr. Scott stated that according to the records the patient did not have the type of pain normally seen with ischemic bowel. He *941 concluded that he did not believe that Dr. McHugh had breached the standard of care in treating Mr. Keeslar.
Here, the jury was presented with opposing, but permissible, views of the evidence regarding Dr. McHugh's treatment of Mr. Keeslar. However, although differing in their final opinion regarding a possible breach of the standard of care, certain common impressions by the physicians stand out: ischemic bowel is a complicated diagnosis which is most often fatal and is typified by extreme, nearly untreatable pain. Here, the stand-out fact is that Mr. Keeslar did not appear to be in excruciating pain the hallmark symptom of ischemic bowel as described by all the expert witnesses for both sides. It is always tragic when a patient dies, especially when the patient is relatively young and the onset of illness is unexpected and quick. But in this matter, the jury was presented with two permissible views of the evidence regarding whether Dr. McHugh breached the standard of care and caused the death of Dale Keeslar. The jury obviously chose to credit Dr. McHugh and his experts over the others. The objective evidence does not contradict that finding. Accordingly, we cannot find that the jury verdict in favor of Dr. McHugh was manifestly erroneous or clearly wrong.
CONCLUSION
For the forgoing reasons, we affirm the jury verdict in favor of the defendant, Dr. J.B. "Duke" McHugh, finding that Dr. McHugh did not breach the standard of care applicable to gastroenterologists in this case and dismissing the claims of the plaintiff, Donna Keeslar, individually and on behalf of Myron Keeslar. Costs in this matter are assessed to Donna Keeslar.
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584700/ | 728 N.W.2d 374 (2007)
2007 WI App 34
HEYRMAN CONSTR. CO.
v.
MIDWEST AMUSEMENT PARK, LLC.
No. 2006AP506.
Wisconsin Court of Appeals.
January 23, 2007.
Unpublished opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3036375/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 03-1084
___________
Phillip K. Smith, *
*
Plaintiff-Appellant, *
*
v. *
*
City of Jennings, Missouri; a municipal *
corporation; City of Berkeley, Missouri, *
a municipal corporation; City of *
Florissant, a municipal corporation; *
* Appeal from the United States
Defendants-Appellees, * District Court for the Eastern
* District of Missouri.
St. Louis County, Missouri, a municipal *
corporation; * (UNPUBLISHED)
*
Defendant, *
*
M. Tetrault, detective, DSN 240; Jack *
Derr, detective, *
*
Defendants-Appellees. *
___________
Submitted: October 18, 2004
Filed: November 1, 2004
___________
Before MURPHY, HEANEY, and BEAM, Circuit Judges.
___________
PER CURIAM.
On November 20, 2001, Phillip Smith brought this action under 42 U.S.C. §
1983, alleging an unlawful deprivation of property seized during a November 21,
1991 search of his residence. The district court1 granted the defendants' motions for
summary judgment, holding that Smith's claims accrued on the date of the seizure and
were therefore barred by Missouri's five year statute of limitations. On appeal, Smith
does not contest the applicability of the five year limitations period, but argues that
his claim did not accrue until November 22, 1996. That was the date when the
government would no longer have been able to initiate a criminal prosecution based
on the seized evidence. See 18 U.S.C. § 3282. We conclude, however, that Smith's
claim accrued on November 21, 1991, and we affirm on the basis of the well-reasoned
opinion of the district court. See 8th Cir. R. 47B.
______________________________
1
The Honorable Catherine D. Perry, United States District Judge for the Eastern
District of Missouri.
-2- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1584694/ | 24 So. 3d 367 (2009)
CITY OF HATTIESBURG, Mississippi, Appellant
v.
J.W. McARTHUR and Kenney Properties, Inc., Appellees.
No. 2008-CA-01134-COA.
Court of Appeals of Mississippi.
December 15, 2009.
*369 James W. Gladden, Jr., attorney for appellant.
Lawrence Cary Gunn, Jr., Hattiesburg, attorney for appellees.
Before MYERS, P.J., IRVING and ROBERTS, JJ.
ROBERTS, J., for the Court.
¶ 1. Developers, J.W. "Johnny" McArthur and Kenney Properties, Inc. (Kenney Properties), appealed an action of the City of Hattiesburg, Mississippi (the City), which denied the developers' petition to rezone a 29.63 acre parcel of land (subject property) from R-1B, single-family residential, to R-4, high-density residential. The Forrest County Circuit Court reversed the decision of the Hattiesburg City Council (city council), permitting the rezoning of the subject property. The City filed its notice of appeal to this Court contending that the circuit court reviewed the legislative decision de novo, thereby applying the wrong legal standard and improperly substituting its opinion for that of the city council. Conversely, McArthur and Kenney Properties contend that the circuit court applied the proper legal standard of review, and the only issue before this Court is whether the circuit court correctly found that there was no evidence to support the city council's denial of the zoning petition in question. We find that the circuit court applied the appropriate standard, but erred in its holding. After a thorough review of the record, we find that the issue before the City of Hattiesburg was "fairly debatable," and its ruling was not arbitrary nor capricious. Accordingly, we reverse the judgment of the circuit court and render judgment reinstating the decision of the city council.
FACTS
¶ 2. Hattiesburg resident McArthur and North Carolina developer Kenney Properties filed an application request for rezoning with the City of Hattiesburg on May 16, 2007, requesting that approximately thirty acres of land, owned by McArthur, be rezoned from R-1B, single-family residential, to R-4, high-density residential. The proposed project for the parcel of land is a "luxury student housing project." In other words, McArthur and Kenney Properties desire to build a 444-unit apartment complex.
¶ 3. McArthur's and Kenney Properties' plan was reviewed by the site review committee for the Hattiesburg Planning Department, and subsequent to the review, the application for rezoning was scheduled for a public hearing before the Hattiesburg Planning Commission (planning commission) on June 6, 2007. At that hearing, the application was tabled until July 5, 2007, at which time it was reconsidered. By a four-to-one vote, the planning commission recommended that the rezoning application be approved. Dissatisfied by the planning commission's recommendation, Hattiesburg residents Hilda Perrott, Charles Holt, and Robert Walters appealed the planning commission's decision to approve the petition filed by Kenney Properties *370 on behalf of McArthur. In response, McArthur petitioned the City to approve the planning commission's recommendation. All four persons requested a public hearing before the city council, which was held on August 6, 2007. Many area residents were present at the meeting. At the public hearing, the residents presented a petition to the City with approximately 288 signatures of persons opposing the zoning change, and the attendees were given an opportunity to voice their concerns about rezoning the area. McArthur and Kenney Properties reintroduced the evidence that was presented to the planning commission in support of rezoning, as well as a letter from an engineer employed by Neel-Schaffer, Inc. (Neel-Schaffer), which had been hired by Kenney Properties to perform a traffic-impact analysis. Following consideration of the evidence presented and discussion by the city council, the council voted four to zero to deny McArthur's and Kenney Properties' petition to rezone the subject property.
¶ 4. McArthur and Kenney Properties filed a bill of exceptions in the Forrest County Circuit Court appealing the city council's decision. Judge Robert Helfrich recused himself, and the supreme court appointed Honorable Roger T. Clark to preside over the appeal. Judge Clark had presided over a rezoning dispute in Hattiesburg two years earlier; that case involved land situated on Beverly Hills Road, which is the same road involved in the instant case. In the earlier case, Judge Clark ruled that the City had acted arbitrarily and capriciously in denying a requested zoning change at the intersection of Beverly Hills Road, West 7th Street, and West 4th Street/North 38th Avenue. The intersection and general area is a few hundred feet south of the McArthur property at issue in the case at bar.[1]
¶ 5. Returning to the dispute involved in the instant case, Judge Clark, once again, determined that: the character of the neighborhood had changed; there was a public need to justify rezoning; and the City's denial of McArthur's and Kenney Properties' application for rezoning was arbitrary and capricious, rather than fairly debatable. The circuit court reversed the city council's decision and ordered that the property be rezoned from R-1B, single-family residential, to R-4, multi-family residential. The City filed a timely appeal raising the issue stated above.
STANDARD OF REVIEW
¶ 6. An appellate court's standard of review in zoning matters is well settled:
The classification of property for zoning purposes is a legislative rather than a judicial matter. The order of the governing body may not be set aside unless it is clearly shown to be arbitrary, capricious, discriminatory, or is illegal, or without a substantial evidentiary basis. The action of the [b]oard of [s]upervisors in enacting or amending an ordinance, or its action of rezoning, carries a presumption of validity, casting the burden *371 of proof upon the individual or other entity asserting its invalidity. On appeal[,] we cannot substitute our judgment as to the wisdom or soundness of the [b]oard's action. We have stated that where the point in controversy is "fairly debatable," we have no authority to disturb the action of the zoning authority.
Childs v. Hancock County Bd. of Supervisors, 1 So. 3d 855, 859(¶ 12) (Miss.2009) (quoting Faircloth v. Lyles, 592 So. 2d 941, 943 (Miss.1991)). "`Fairly debatable' is the antithesis of arbitrary and capricious." Id. (citation omitted).
ANALYSIS
WHETHER THE CITY COUNCIL'S DECISION TO DENY REZONING WAS ARBITRARY AND CAPRICIOUS
¶ 7. Before an application for rezoning should be approved, the "applicant seeking rezoning must prove by clear and convincing evidence either that: (1) there was a mistake in the original zoning, or (2) the character of the neighborhood has changed to such an extent as to justify rezoning and that a public need exists for rezoning." Id. at 859-60(¶ 13) (citation omitted). McArthur and Kenney Properties do not contend that there was a mistake in the City's original 1988-89 comprehensive zoning plan, so only the second prong of the analysis was a relevant issue before the city council. Not surprisingly, the parties vigorously disagree about the amount of change in the subject area, as well as a public need.
¶ 8. To begin, we will consider the issue raised and thoroughly addressed in the parties' briefs regarding whether the planning commission initially recommended to the city council that the subject property be rezoned. McArthur and Kenney Properties contend that Lisa Reid, with the planning commission, stated that the planning commission recommended the change, but she later denied that the planning commission made such recommendations. On appeal to the circuit court, McArthur and Kenney Properties made a motion to the circuit court to supplement the minutes of the planning commission meeting to prove that a recommendation had been made by the planning commission to rezone the property. The City argues extensively that the consideration of this motion and the testimony given related to this motion was paramount to a de novo review by the circuit court.[2] We find that both parties' arguments are without merit.
¶ 9. First, it is clear from the record that the circuit court acknowledged the correct legal standard to apply when reviewing a decision of the city council. Furthermore, the circuit court denied McArthur's and Kenney Properties' motion to supplement the record, finding that the affidavits presented and testimony given, including testimony by Reid, supported that the planning commission did not recommend zoning changes. Rather, the circuit court held that the information provided by the planning commission was "more of a finding than a recommendation." Second, it is irrelevant whether the planning commission initially recommended the change in zoning. The city council is not obligated to adopt the planning commission's recommendation. The planning *372 commission "does not have the authority to approve or disapprove a zoning change request, but acts merely as an advisory body to the board of supervisors." Byram 3 Dev., Inc. v. Hinds County Bd. of Supervisors, 760 So. 2d 841, 843(¶ 5) (Miss.Ct. App.2000) (citing City of Jackson v. Sheppard Investment Co., 185 So. 2d 675, 676 (Miss.1966)). "An appeal from a decision of the board of supervisors [or city council] on a zoning matter is strictly limited to the record of what occurred before the [city council] as contained in the bill of exceptions." Id. (citation omitted). Accordingly, whether or not the planning commission or one of its employees initially recommended a zoning change is not outcome determinative; it was merely a recommendation.
¶ 10. McArthur and Kenney Properties argue extensively that they presented "overwhelming" evidence to the planning commission and the city council, and they further argue that the City failed to contradict, challenge, or refute the evidence. We disagree, and we now briefly address the evidence that was presented to the city council.[3]
A. Petitions and Various Attachments
¶ 11. The city council was presented with signed petitions by both the proponents and the opponents of the zoning change. The opponents presented 288 signatures of area residents opposing the zoning change.[4] Many of the opponents were residents of the Highland Neighborhood, which is located across the street from the subject property at issue. Likewise, but in a much smaller showing, McArthur and Kenney Properties presented signed statements by three or four property owners located adjacent to the subject property, which supported the zoning change. As stated, many of the opponents attended the city council meeting, and they were given an opportunity to voice their opposition. McArthur and Kenney Properties now state that although the opponents "expressed their disapproval [with] the zoning request, [they] offered no real evidence against the petition." The record indicates that the opponents stated legitimate concerns.
¶ 12. Among other things, the opponents spoke about their concerns over increased traffic congestion, a possible increase in crime, and their desire for the area to remain a single-family residential area. In support of it remaining a single-family residential area, they argue that was the type of property they had invested in and would not have purchased the property, if they had known that it would be changing. The City was well within its discretion to give credence to the opponents' views. We have previously held that giving substantial weight to homeowners' testimonies regarding opposition to a nearby zoning change is not error. Mayor and Board of Aldermen v. Estate of Lewis, 963 So. 2d 1210, 1216 (¶ 13) (Miss. Ct.App.2007).
¶ 13. The rationale behind this view is as follows:
It should also be borne in mind, however, that while a duly enacted comprehensive zoning ordinance is not a true protective covenants agreement, it bears some analogy.
*373 Purchasers of small tracts of land invest a substantial portion of their entire lifetime earnings, relying upon a zoning ordinance. Without the assurance of the zoning ordinance, such investments would not be made. On this small area they build their homes, where they expect to spend the most peaceful, restful and enjoyable hours of the day.
Zoning ordinances curb the exodus of city workers to a lot in the distant countryside. Indeed, the protection of zoning ordinances in municipalities, as opposed to no zoning in most county areas, encourage the choice of a city lot rather than a country lot for a home in the first instance. Zoning ordinances make city property more attractive to the prudent investor.
In the absence of agreement between all interested parties, an amendment to a zoning ordinance is not meant to be easy. Otherwise, it would be a meaningless scrap of paper. As former Justice Robertson noted in City of Jackson v. Wilson, 195 So. 2d 470 (Miss.1966), at 473:
Homeowners are the backbone of any community. They take pride in developing and maintaining attractive homes and yards, and anything that discourages this wholesome attitude on their part hurts the community.
Estate of Lewis, 963 So.2d at 1216(¶ 13) (citing Mayor and Comm'rs of Jackson v. Wheatley Place, Inc., 468 So. 2d 81, 83 (Miss.1985)). The homeowner's concerns and objections were a valid consideration before the city council.
B. Zoning and Land Use Maps, As Well As Zoning Changes Over The Past Two Decades
¶ 14. The city council was presented with multiple maps reflecting the subject area, as well as zoning trends in the area over the past two decades. McArthur and Kenney Properties assert that these maps and zoning-change summaries support that there has been a substantial change in the area. However, the City notes that not all of the changes have been from a lower-density residential zone to a higher-density residential zone. The City is correct.
¶ 15. A review of the record and the zoning summaries reveal that there were eight zoning changes during the 1990s, and only two of them changed from a business zone to a high-density residential area. Between January 1, 2000, and July 2, 2007, there were eight zoning changes requested, and four of the eight rezonings were from a lower-density multi-family use to a higher-density multi-family use. One of the four zoning changes resulted from the disputed rezoning petition in the Foundation Development case two years prior. Undoubtedly, the area surrounding the Hillside Neighborhood and Beverly Hills Road includes a variety of businesses, apartments, and neighborhoods of single-family residences. However, the City was presented with evidence that did not fully support McArthur's and Kenney Properties' assertion that the area was changing to higher-density zoning, as several of the changes over the past two decades resulted in fewer residences in the area.
C. Information Regarding Kenney Properties, Marketing Research, the Anticipated Growth of the University of Southern Mississippi, and the Need for More Apartments
¶ 16. McArthur and Kenney Properties have presented a voluminous amount of information to the planning commission, the city council, and to this Court. However, the City correctly notes that much of itover one hundred pagesis self-serving sales advertisements, articles about the developer, and letters of recommendation *374 for Steve Kenney with Kenney Properties from various lenders and business acquaintances. If the decision before the city council was whether to accept Kenney Properties as an accomplished developer, perhaps the issue may not have been "fairly debatable." However, that was not the issue before the city council. Included in the evidence presented by McArthur and Kenney Properties were various newspaper articles and other public information concerning the growth of University of Southern Mississippi (USM) and the need for additional housing in the area. The City also presented evidence. We decline to address the majority of the presented information, but we will recognize some significant facts that the city council was presented with by both parties, in order to demonstrate that the issue before the city council was "fairly debatable."
¶ 17. In support of their argument, McArthur and Kenney Properties presented the city council with a newspaper article from the June 19, 2006, edition of the Hattiesburg American, which stated that there were five major projects ongoing in Hattiesburg that would add 1,200 apartment units to the City's inventory. The article discussed the need for apartments and the "booming" apartment business, and it also stated that the expansion or growth was due to military expansion, Hurricane Katrina, and the recently enacted Gulf Opportunity Zone Act that provided tax breaks for new developments. However, the article also addressed the potential problem of over saturation of apartments in the area once the influx of persons from Hurricane Katrina declined. The article stated:
But adding thousands of units could over saturate the market, especially with fewer troops coming to Camp Shelby for training and people returning to their homes in the hurricane zones.... There's always a limit, and you can overbuild, says Alan Levow, whose Georgia-based company Foundation is in the planning stages for a 210-unit complex along Beverly Hills Drive.[5] We saw this in Florida. Properties went from 105 percent occupied and six months later everybody packed up and left.
(Internal quotation omitted). Although McArthur and Kenney Properties choose to emphasize only the newspaper comments in support of their ambition, the City was within its discretion to consider the possibility of an overexpansion of multi-family residences within the area.
¶ 18. Also, evidence was presented that USM is actively involved in renovating its dormitories, as well as adding new ones. McArthur and Kenney Properties presented evidence to the city council that USM's strategic growth plan was for its enrollment to increase by five percent between 2005 and 2008. However, USM's enrollment has actually declined 1.8%. The City recognizes that this is a low percentage, but nonetheless, it verified that USM has not experienced its anticipated growth. Therefore, it is a plausible argument that there is not the need for rapid apartment development within the area of USM's campus, as McArthur and Kenney Properties aggressively argue. Additionally, evidence has been presented to support that Hattiesburg can only absorb 167 new apartments each year, and as stated, there was evidence that there were currently 1,200 new apartments being constructed in Hattiesburg.
*375 D. The Foundation Development Case
¶ 19. Both parties, and the circuit court in its opinion, address, at length, the Foundation Development case, wherein the circuit court previously ruled in favor of the developer in that case, thereby reversing the city council's decision to deny rezoning of property on Beverly Hills Road. As mentioned, the earlier case virtually mirrors this one. It involves land in the same area, another apartment-complex development, the same opponents, and the same circuit court judge overruling the city council's decision to deny rezoning. However, the City did not appeal the circuit court's decision in the Foundation Development case. We are not constrained by the ruling of the circuit court in its Foundation Development ruling, and it does not serve as precedent in the instant case. Furthermore, the Foundation Development case was not binding precedent upon the city council when it was considering whether to rezone the McArthur property.[6]
E. The Neel-Schaffer and Perrott Reports
¶ 20. McArthur and Kenney Properties hired Neel-Schaffer to prepare a report, which was done by land-use planner Patricia Brantley, to describe that the zoning change was consistent with the overall comprehensive land-use plan of the City, to demonstrate the general growth in the area, and to show that the new development would not negatively impact the traffic situation in the area. A report, in opposition, was prepared by rezoning opponent Hilda Perrott, which will be discussed further below.
1. Neel-Schaffer report
¶ 21. As stated in the Neel-Schaffer report, "Neel-Schaffer, Inc.[,] was hired by The Kenney Companies, Inc.[,] of Raleigh North Carolina to conduct a traffic[-]impact analysis for the proposed development of Eagle's Pointe Apartments."[7] Indeed, Neel-Schaffer presented a twenty-five page report on this matter.[8] However, in summary, it was shown that the traffic congestion and poor level of service in the area of Beverly Hills Road, West 7th Street, West 4th Street, and North 38th Avenue is significant. As mentioned, this intersection is only a few hundred feet south of the McArthur property. The recommendation and conclusion section of the *376 Neel-Schaffer report begins with the statement: "Development of the project site with 21 new buildings comprised of 444 dwelling units will only add slightly to an already significant traffic problem at the intersections of West 4th Street/North 38th Avenue, and West 7th Street/Beverly Hills Road." (Emphasis added). The report recommended that the City place turn lanes into the development, install a new traffic signal, and change the timing of the traffic signal at the intersection stated above to mitigate the traffic congestion. The traffic-congestion issue was contested in Perrott's report and at the city council meeting.
¶ 22. The minutes from the August 6, 2007, city council meeting reflect that City Council President Bradley[9] stated that the City did not think that the intersection could handle the traffic generated by the new development. Councilman Bradley also questioned Brantley, who was previously a planner for the City, about whether she had predicted increased traffic problems when the city council was considering the Foundation Development issue. Brantley, who by that time worked for Neel-Schaffer, seemed to side-step the issue and simply stated that at the time the Foundation Development case was being decided, the planning staff did not make recommendations, and just as in this case, a traffic analysis had been done by Neel-Schaffer for Foundation Development.
¶ 23. Councilman Bradley expressed some of his concerns about the traffic problems in the area based upon his own perceptions. Councilman Bradley stated that "[h]e travels through [the intersection], [he] sees the traffic issues on [West] 7th, and [he wonders] what, if anything, [could] be done about the number of cars." The response by Neel-Schaffer's representative, Mike Essary, was that "there is no doubt that there will be increased traffic," and Essary went on to outline the mitigation plans stated above. At the meeting, other council members also expressed their concerns about rezoning the area.
¶ 24. The city council was entitled to rely on its representatives' personal perceptions of the area and its related problems. See Childs, 1 So.3d at 860(¶ 16) (supreme court held that the board properly considered its own familiarity with the subject area when determining whether there was a need for rezoning); Bd. of Aldermen v. Conerly, 509 So. 2d 877, 885 (Miss.1987) (recognizing that informality attends rezoning proceedings, and board members may take into consideration their personal knowledge and familiarity with their community; such knowledge would be nearly impossible to ignore). We find from the record that the city council had a legitimate concern related to an already significant traffic problem in the area, and it was reasonable for the city council to determine that an apartment complex adding 444 units would greatly exacerbate an existing problem. McArthur and Kenney Properties clearly acknowledge that the apartments would be marketed to college students. The apartments would include units with as many as four bedrooms, and it is likely that each college-student resident would have his or her own car. Therefore, the additional 444 units, with multiple residents per unit, has the potential to add well over 1,000 cars traveling through that area multiple times per day. The city council's consideration of this problem and its decision not to exacerbate the existing traffic problem was not arbitrary and capricious.
2. Perrott Report
¶ 25. Perrott is the daughter of Hughlene Perrott (Hughlene). Hughlene *377 is an area homeowner that initially contracted to sell her home to the developers, but she later asked to be released from the contract. Kenney Properties agreed to release Hughlene from the sales contract if she agreed not to oppose the rezoning. Perrott, who holds a Mississippi driver's license and claims to own a residence on Beverly Hills Road, apparently took up the cause and has fought vigorously to prevent the rezoning of the area. Perrott presented a ten-page letter at the June 6, 2007, hearing, and she had expanded it to a twenty-five-page report by the time of the July 5, 2007, hearing. In the minutes of the city council meeting, the city council acknowledged the receipt of Perrott's report.[10]
¶ 26. In their brief to this Court, McArthur and Kenney Properties do not contest Perrott's qualifications as aggressively as they did to the circuit court, but in their brief to the circuit court, they refer to Perrott as a "gadfly," "not a real professional," and they claim that her report is "devoid of any real evidence." We decline to comment about the parties' dueling urban planners, but we note that McArthur and Kenney Properties have not disproved Perrott's stated credentials. Furthermore, among other things, she relies on newspaper articles from the Hattiesburg American, USM facts and statistics, and the Neel-Schaffer report, just as McArthur and Kenney Properties do. The city council was within its discretion to consider Perrott's report. After thoroughly reviewing the record, we find that the evidence presented by McArthur and Kenney Properties alone was sufficient to indicate the decision before the city council was a fairly debatable issue.
CONCLUSION
¶ 27. City councils are better situated than are the appellate courts to determine the zoning needs of their cities, and where the decision is not clearly arbitrary, capricious, or unsupported by substantial evidence, and the issues are fairly debatable, we will not substitute our judgment for that of a local governing body. Estate of Lewis, 963 So.2d at 1216(¶ 14). Finding that the issues presented by McArthur's and Kenney Properties' petition to rezone were fairly debatable, and finding no evidence in the record that the decision to deny the petition was arbitrary, capricious, or unsupported by substantial evidence, we hold that the judgment of the Forrest County Circuit Court overreached the appropriate standard of appellate review and must be reversed. Accordingly, the decision of the city council denying McArthur's and Kenney Properties' petition for rezoning is reinstated.
¶ 28. THE JUDGMENT OF THE CIRCUIT COURT OF FORREST COUNTY IS REVERSED AND RENDERED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLEES.
KING, C.J., LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ISHEE AND MAXWELL, JJ., CONCUR. CARLTON, J., DISSENTS WITHOUT SEPARATE WRITTEN OPINION.
NOTES
[1] The prior case was styled Foundation Development v. City of Hattiesburg, Cause No. C105-0052. Judge Clark found that the character of the neighborhood had changed from single family to multi-family and that there was a public need for additional student housing in the area in question. He found that the City had failed to put forth evidence refuting that there had been a substantial change. The City did not appeal that ruling, and Foundation Development built an apartment complex with approximately 200 units on the same street at issue in the instant case. As mentioned, McArthur and Kenney Properties are seeking to rezone the McArthur property to build an apartment complex with 444 units.
[2] McArthur and Kenney Properties acknowledge that this issue is not outcome determinative in the instant appeal, but the matter was argued vigorously by both parties to the circuit court and to this Court. Therefore, we briefly address the matter to verify that the consideration of the motion and related testimony was not a matter that affects the decision of this Court in the instant case.
[3] Some of the items listed in the briefs are interrelated, so they will be combined.
[4] Although McArthur and Kenney Properties assert that some of the opponents were not from the immediate area of the proposed change, there has been no evidence placed in the record that refutes that most of the opponents were from the Highland Neighborhood/Beverly Hills Road area.
[5] It appears that Mr. Levow is the developer that waged the same battle as McArthur and Kenney Properties with the city council two years earlier in the Foundation Development case.
[6] In the opinion of the Foundation Development case, the circuit court opined that, other than Highland Neighborhood opponents speaking against rezoning at the public hearing before the city council, the opponents presented no expert testimony relating to such issues as neighborhood change and public need. As it is not before this Court, we do not address the circuit court's evaluation of the evidence presented in the Foundation Development case. However, we are inclined to state that opponents to rezoning are not required to hire experts to demonstrate that an area has not substantially changed or that there is not a public need. We are cognizant of the fact that acquiring expert testimony is likely to be cost prohibitive to many people, and our laws do not require that such testimony be presented to our city councils in zoning disputes. Expert testimony is simply a tool that may be utilized by both proponents and opponents to zoning changes.
[7] "Eagle's Pointe Apartments" is the name of McArthur's and Kenney Properties' proposed development.
[8] Additionally, Brantley prepared a multiple-page report about the land use and zoning trends in the area. The report also addressed matters other than just traffic issues. As we have already briefly addressed some of the zoning changes and trends in the area, we will not discuss them further, nor will we address all of the evidence presented in the record. We are of the opinion that the stated matters alone illustrate that the issue before the city council was "fairly debatable."
[9] The city council minutes do not reflect Councilman Bradley's full name.
[10] Perrott states the she holds three graduate degrees in urban planning and development, including a Masters of Urban and Regional Planning from the University of New Orleans, LA. She grew up in the Beverly Hills Road area, and her husband works abroad, but she maintains a permanent address in Hattiesburg. At the public hearing, in response to allegations that she was not a resident of Hattiesburg, Mississippi, she presented her Mississippi driver's license. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584702/ | 24 So. 3d 325 (2009)
Sidney Kelton PACE, Appellant
v.
Melanie Jean PACE, Appellee.
No. 2008-CA-00380-COA.
Court of Appeals of Mississippi.
November 24, 2009.
*327 David A. Roberts, attorney for appellant.
Mark H. Watts, Pascagoula, Ray T. Price, Hattiesburg, attorneys for appellee.
Before MYERS, P.J., ISHEE and MAXWELL, JJ.
ISHEE, J., for the Court.
¶ 1. Sidney Pace and Melanie Pace were granted a divorce on the ground of irreconcilable differences on December 4, 2002; the judgment of divorce incorporated a written agreement concerning custody and property settlement. Thereafter, on July 7, 2005, Melanie filed a complaint for contempt in the Chancery Court of Jackson County, alleging that Sidney was in arrears on his agreed payments. Sidney responded and asked the chancery court to find the agreement unconscionable and, therefore, unenforceable. The chancery court held a hearing on the matter and refused to find Sidney in contempt. In the judgment, the chancery court modified some provisions of the agreement but, for the most part, left it intact. Aggrieved, Sidney appeals and presents the following issues for consideration:
I. Whether it was error to refuse to find the property settlement agreement to be unenforceable based on its unconscionability and ambiguity.
II. Whether it was error to order payment of the arrearage on the mortgage, property taxes, and property insurance.
III. Whether it was error to refuse to modify the property settlement agreement to clarify the ambiguous terms.
IV. Whether the chancery court's ruling was ambiguous and unenforceable.
Finding no error, we affirm.
FACTS
¶ 2. Melanie and Sidney were married on June 7, 1986, and they had three children during their marriage, all of whom were minors at the time of the proceeding in chancery court. Melanie and Sidney separated on or about May 29, 2002, and on December 4, 2002, they were granted a divorce on the ground of irreconcilable differences.[1] The parties had previously signed an agreement for custody and property settlement (the Agreement), which was signed by Sidney on September 17, 2002, and by Melanie on September 24, 2002. The Agreement was incorporated into the final judgment of divorce.
¶ 3. Sidney did not consult an attorney before signing the Agreement, despite the fact that he was a doctor and had the financial means to do so. The Agreement provided that the parties would share joint legal custody of the three minor children, with Melanie receiving primary physical custody and Sidney receiving visitation. In pertinent part, the Agreement included the following provisions: (1) Sidney shall pay $1,500 or twenty-two percent of his income per month in child support; (2) Sidney shall maintain medical, health, dental, and optical insurance through his employer for Melanie and the three children, and Sidney shall be responsible for any costs not covered by that insurance; (3) Sidney shall be responsible for the payment to obtain school uniforms; (4) Sidney shall be responsible for the payment of the daycare expenses; (5) Sidney shall be responsible for the payment of the children's college expenses and extracurricular activities; *328 (6) Sidney shall maintain $500,000 worth of life insurance for the benefit of Melanie and the children; (7) Sidney shall be allowed to claim the children for tax purposes; (8) Melanie shall be awarded all assets and interest that Sidney has or may acquire in his professional associations or corporations; (9) Melanie shall be awarded the marital home in Ocean Springs, Mississippi, with Sidney to be responsible for the remaining indebtedness, taxes, and insurance on the home; (10) Melanie shall be awarded the 1999 GMC Suburban, and Sidney shall purchase Melanie a new vehicle every four years and be responsible for payments of said vehicles; (11) Sidney shall be awarded the home in Pascagoula, Mississippi, and the 1999 Jeep Wrangler; (12) Melanie shall waive any interest in Sidney's medical practice; (13) Sidney shall pay Melanie $1,500 per month in alimony, to increase to $4,500 per month if Melanie "is fired, quits, laid off, or her position of employment with [Sidney's] office and/or company is terminated for any reason ...," with alimony to survive Sidney's death or Melanie's remarriage; and (14) each party shall waive any right to the other party's retirement.
¶ 4. Following the parties' divorce, Sidney made payments of $6,000 per month to Melanie. According to Sidney, this represented $1,500 in alimony, $1,500 in child support, and $3,000 for Melanie's household expensesitems such as the mortgage and car payment that he had agreed to pay. Sidney contended that he paid more than he was required to pay under the Agreement. However, Melanie claimed that he was in arrears in his payments for the mortgage, taxes, and insurance because she thought the $6,000 per month represented $4,500 in alimony and $1,500 in child support. Sidney did not make any payments for the school uniforms or for daycare, but Melanie admitted that she never sent him a bill for those expenses. Also, Sidney never added Melanie as a beneficiary to the $500,000 life insurance policy that he maintained for the children, and Melanie never executed a release of her claims to Sidney's retirement.
¶ 5. After hearing from the parties, the chancellor, for the most part, upheld the terms of the Agreement. However, the chancellor did find that: (1) Melanie waived the provision granting her an interest in Sidney's business; (2) Melanie waived the provision ordering Sidney purchase her a new car every four years; and (3) Sidney's obligation to pay alimony would cease upon his death or Melanie's remarriage. The chancellor found that there had not been a material change in circumstances that would warrant a reduction in alimony payments because Sidney's income had increased since the divorce; the chancellor also ordered Sidney to pay the arrearage on the marital home expenses: the mortgage, insurance, and taxes. The chancellor found that Sidney was not in willful contumacious contempt of court but did order him to pay $2,500 in attorney's fees to compensate Melanie for having to file the contempt action.
STANDARD OF REVIEW
¶ 6. This Court's standard of review in a domestic relations matter provides that a chancellor is "vested with broad discretion, and this Court will not disturb the chancellor's findings unless the court was manifestly wrong, the court abused its discretion, or the court applied an erroneous legal standard." Pulliam v. Smith, 872 So. 2d 790, 793(¶ 5) (Miss.Ct.App.2004) (citing Andrews v. Williams, 723 So. 2d 1175, 1177(¶ 7) (Miss.Ct.App.1998)).
DISCUSSION
I. Property Settlement Agreement
¶ 7. Sidney first argues that the Agreement that he and Melanie signed *329 was unenforceable because it was unconscionable and ambiguous. He describes the Agreement as "one such as no man in his senses and not under a delusion would make on the one hand, and as no honest and fair man would accept on the other...." Warren v. Warren, 815 So. 2d 457, 461(¶ 14) (Miss.Ct.App.2002) (quoting In re Will of Johnson v. Robinson, 351 So. 2d 1339, 1341 (Miss.1977)). Sidney claims that he had no choice but to sign the Agreement, which had been drafted by Melanie's attorney, and Sidney had little time to study it or read it carefully. Furthermore, Sidney notes that he "was in the unfortunate position of having a pregnant girlfriend and a hostile wife."
¶ 8. Generally, a chancery court may modify an award of periodic alimony if there has been a material change of circumstances that "occurred as a result of after-arising circumstances not reasonably anticipated at the time of agreement." Dix v. Dix, 941 So. 2d 913, 916(¶ 15) (Miss. Ct.App.2006) (citing Varner v. Varner, 666 So. 2d 493, 497 (Miss.1995)). However, the supreme court has also stated that "[p]roperty settlement agreements are fixed and final, and may not be modified absent fraud or contractual provision allowing modification." Weathersby v. Weathersby, 693 So. 2d 1348, 1352 (Miss.1997) (citing Mount v. Mount, 624 So. 2d 1001, 1005 (Miss.1993); Brown v. Brown, 566 So. 2d 718, 721 (Miss.1990); East v. East, 493 So. 2d 927, 931-32 (Miss.1986)). In Weathersby, the supreme court stated that:
In property and financial matters between the divorcing spouses themselves, there is no question that, absent fraud or overreaching, the parties should be allowed broad latitude. When the parties have reached agreement and the chancery court has approved it, we ought to enforce it and take as dim a view of efforts to modify it, as we ordinarily do when persons seek relief from their improvident contracts.
Weathersby, 693 So.2d at 1351 (quoting Bell v. Bell, 572 So. 2d 841, 844 (Miss. 1990)); see also Kelley v. Kelley, 953 So. 2d 1139, 1143(¶ 9) (Miss.Ct.App.2007) (noting that a property settlement agreement incorporated into the divorce decree is not subject to modification except in limited situations).
¶ 9. Sidney first notes that "[w]here a property settlement agreement is entered into in contemplation of a divorce on the ground[s] of irreconcilable differences, there is more at work than general contract law." Warren, 815 So.2d at 461(¶ 13) (quoting Grier v. Grier, 616 So. 2d 337, 340 (Miss.1993)). He also bases his argument on the fact that a chancellor has discretion to modify a property settlement agreement "where he finds it is necessary to protect the parties because the courts are not used as tools `for implementing unconscionable contracts which are not fair to either party.'" Id.
¶ 10. Sidney would further have this Court find overreaching based on this Court's citation to the Florida District Court of Appeals' definition of the concept, which we stated as follows:
"[T]hat which results from an inequality of bargaining power or other circumstances in which there is an absence of meaningful choice on the part of one of the parties." Schreiber also stated that "overreaching involves the situation where one party, having the ability to force the other into an unfair agreement, does so."
Lowrey v. Lowrey, 919 So. 2d 1112, 1119(¶ 27) (Miss.Ct.App.2005) (quoting Schreiber v. Schreiber, 795 So. 2d 1054, 1057 (Fla.Ct.App.2001)). However, Sidney neglects to include this Court's later citation to Schreiber, where we stated as follows:
*330 [T]he Florida District Court of Appeal held that an agreement was not the product of overreaching where it was definitely one-sided and unfair, but that alone did not equate to overreaching absent a sufficient showing that the settlement agreement resulted from an inequality of bargaining power or other circumstances such that there was no meaningful choice on the part of the disadvantaged party.
Id. at 1121(¶ 35) (citing Schreiber, 795 So.2d at 1057). In Lowrey, this Court went on to summarize the wife's situation that evidenced overreaching, such as the fact that: the wife did not have an attorney; she could not afford an attorney; the husband threatened to see her in court if she hired an attorney; the husband threatened that he would "destroy her"; the husband threatened that she would never live in that town again or see her children again; and the wife signed the property settlement agreement at the law office of the husband's brother and attorney. Id. at (¶ 37).
¶ 11. We find nothing similar in the circumstances in the present case except for the fact that Sidney did not hire an attorney before signing the Agreement. We do not hold this factor against Melanie because Sidney was a successful doctor who certainly had the financial means to hire an attorney. The chancellor also found that Sidney had the intelligence to fully read and understand the Agreement before signing it. In the final judgment, the chancellor concluded that:
The Court is quite aware that Dr. Pace entered into an onerous agreement. As the evidence indicated, Dr. Pace was motivated to obtain a divorce, and according to Ms. Pace, Dr. Pace promised to take care of her and the children [by] entering into the property settlement agreement. This Court is mindful that the Agreement provided Ms. Pace with more in monthly support from Dr. Pace than likely would have been awarded had this matter been litigated before a chancellor. However, Dr. Pace entered into this Agreement of his own free will and accord and must live by the terms thereof.
The fact that he "was in the unfortunate position of having a pregnant girlfriend and a hostile wife" affords Sidney little sympathy or grounds to constitute overreaching.
¶ 12. Sidney's reliance on Duncan v. Duncan, 815 So. 2d 480, 484(¶ 13) (Miss.Ct. App.2002) is similarly misplaced. In Duncan, the chancery court granted a divorce on the ground of uncondoned adultery, and the court made the determination as to the financial award. Id. at 482(¶ 1). Duncan is distinguishable from the present situation in which the parties were granted an irreconcilable differences divorce and signed a property settlement agreement.
¶ 13. In Lowrey, this Court stated that:
Our standard of review dictates that this Court must enforce a settlement agreement connected to a divorce action as long as that agreement received approval by the chancery court. There are two exceptions to our mandate to enforce an approved settlement agreement: this Court may not enforce such an agreement if the moving party demonstrates either fraud or overreaching.
Lowrey, 919 So.2d at 1118(¶ 23) (citations omitted). We find no evidence of such fraud or overreaching in the present case. Accordingly, this Court must enforce the Agreement into which the parties voluntarily entered and which was approved by the chancery court. We find that this issue is without merit.
*331 II. Arrearage
¶ 14. Sidney next takes issue with the chancellor's ruling that ordered him to pay the arrearage on the mortgage, insurance, and taxes for the marital home. To support his argument, he claims that he should only be obligated to pay $1,500 per month in alimony instead of the $4,500 per month that Melanie alleges he owes. Sidney argues that the Agreement contained a condition precedent that needed to be met in order for the alimony payments to increasethat Melanie no longer work at Sidney's office. According to Sidney, Melanie never really worked for him; therefore, she was not entitled to increased alimony because she never stopped working for him. Under Sidney's reasoning, he was not in arrears on any payments because he had been paying $6,000 per month, which included $1,500 for child support, $1,500 for alimony, and $3,000 for other expenses such as the mortgage, taxes, and insurance on the former marital home.
¶ 15. The provision of the Agreement with which Sidney takes issue provides the following:
It is understood and agreed between the herein parties that in the event Melanie Jean Ward Pace is fired, quits, laid off, or her position of employment with Sidney Kelton Pace's office and/or company is terminated for any reason whatsoever, then the amount of permanent, periodic alimony, shall be increased to four thousand five hundred dollars ($4,500.00), per month.
At trial, Melanie testified that she had performed various work for Sidney at his medical clinic. At the time the parties signed the Agreement, Melanie was no longer working for him; therefore, the condition precedent had already been satisfied.
¶ 16. The amount of the arrearage totaled $87,889.33, which included the following expenses for the former marital home: $62,466 for the mortgage, $10,633.33 for taxes, and $14,790 for insurance. These amounts were documented by Melanie at trial. The chancellor found that Sidney was able to pay the amount of alimony that he agreed to pay and further found that his income had actually increased since the time he signed the Agreement. Sidney agreed that he would pay $4,500 per month in alimony to Melanie if she was no longer working for him. We find no abuse of discretion or manifest error in the chancellor's ruling that Sidney was responsible for the arrearage claimed by Melanie. Accordingly, this issue is without merit.
III. Refusal to Modify the Property Settlement Agreement
¶ 17. In his third allegation of error, Sidney argues that the chancellor erred by failing to clarify the provisions of the Agreement in which Sidney agreed to pay for medical costs incurred by Melanie and the children and in which he agreed to pay for the children's college expenses. He cites error with the chancellor's refusal to apply Duncan, 815 So.2d at 484(¶ 14) in this case. On appeal, Sidney again cites Duncan, but he cites no other authority to support his position.
¶ 18. As previously stated, Duncan addressed an equitable division of marital assets and the corresponding award of alimony as determined by the chancellor. The present case involved an agreement to which both parties voluntarily agreed, and which the chancellor merely approved. The chancellor refused to apply Duncan for that very reason, and we find no error with the chancellor's ruling. This issue is without merit.
*332 IV. Ambiguity of the Chancery Court's Judgment
¶ 19. Lastly, Sidney takes issue with the chancellor's order that Sidney continue to pay the balance of the mortgage on the marital home, as was agreed. Sidney argues that the chancellor's judgment was vague in that it did not take into consideration the fact that Melanie had refinanced the mortgage. According to Sidney, the judgment failed to state "when the obligation would end or the amount due."
¶ 20. We disagree with Sidney's assessment of the chancellor's judgment. The chancellor clearly specified that:
The Court finds that Ms. Pace refinanced said home in order to receive a portion of the equity from the marital home for family expenses. This Court finds that Dr. Pace is not required to pay said amount of equity realized from the refinancing of the marital domicile, but he is responsible for the balance outstanding at the time of the parties' divorce. Thus, Dr. Pace is responsible for the amount of the house payment that existed at the time he agreed to the property settlement agreement.
Thus, Sidney's argument is contradicted by the chancellor's judgment, which clearly provides that Sidney is only responsible for the amount of the mortgage outstanding at the time he signed the Agreement. This issue is without merit.
¶ 21. THE JUDGMENT OF THE CHANCERY COURT OF JACKSON COUNTY IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.
KING, C.J., LEE AND MYERS, P.JJ., GRIFFIS, BARNES, ROBERTS AND MAXWELL, JJ., CONCUR. CARLTON, J., DISSENTS WITH SEPARATE WRITTEN OPINION. IRVING, J., NOT PARTICIPATING.
CARLTON, J., Dissenting.
¶ 22. I respectfully dissent. I submit that Sidney and Melanie Pace's property settlement agreement is ambiguous and riddled with conflicting terms and is, therefore, unenforceable due to ambiguity. Simply put, the contradictions and ambiguity prevent this Court from ascertaining the parties' intent. Moreover, a plain reading of the agreement fails to reflect that there was a meeting of the minds as to the terms. For example, the agreement provides that Melanie shall be awarded all assets and interest that Sidney has or may acquire in his businesses, professional associations, or corporations. Then, the agreement later states that Melanie shall waive any interest in Sidney's medical practice and business. These terms stand in conflict with one another, and as a result, the chancellor modified certain provisions of the agreement. However, modification of such an ambiguous contract results in a contract written by the court, and it is not the purpose of the courts to make contracts for parties. HeartSouth, PLLC v. Boyd, 865 So. 2d 1095, 1109(¶ 41) (Miss.2003) (citations omitted).
¶ 23. Further, since the agreement fails to reflect a meeting of the minds, "[a] court cannot `draft a contract between two parties where they have not manifested a mutual assent to be bound.'" Ivison v. Ivison, 762 So. 2d 329, 336(¶ 23) (Miss.2000) (quoting A. Copeland Enterprises v. Pickett & Meador, Inc., 422 So. 2d 752, 754 (Miss.1982)). I respectfully submit that due to the ambiguity and conflicting terms of the agreement, the parties' intent cannot be ascertained, and the agreement fails to reflect mutual assent as to the terms. Hence, I would find the property settlement *333 agreement unenforceable due to such ambiguity. Accordingly, I must dissent from the majority's holding to affirm the chancellor's judgment.
NOTES
[1] Testimony revealed that Sidney was seeing another woman, who was pregnant with his child. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584743/ | 815 F.Supp. 454 (1992)
NATURAL RESOURCES DEFENSE COUNCIL, INC., et al., Plaintiffs,
v.
Delos Cy JAMISON, et al., Defendants.
Civ. A. No. 82-2763.
United States District Court, District of Columbia.
December 8, 1992.
*455 *456 Timothy Biddle, Washington, DC, for Nat. Coal Ass'n, intervenor. Steven P. Quarles, Crowell and Moring, Washington, DC, for State of Wyo., intervenor.
Eugene D. Gulland, Coving and Burling, Washington, DC, for Shell Oil Co., intervenor.
Glenn P. Sugameli, National Wildlife Federation, Washington, DC, for plaintiff National Wildlife Federation.
Melinda Taylor, National Audubon Soc., Washington, DC, for plaintiff Nat. Audubon Soc.
Johanna H. Wald, Natural Resources Defense Council, Inc., William S. Curtiss, Sierra Club Legal Defense Fund, Inc., San Francisco, CA, for plaintiffs.
MEMORANDUM AND ORDER
BRYANT, Senior District Judge.
Background
The sale and mining of federal coal implicate a large number of overlapping statutory mandates.[1] Congress has delegated broad authority to the Secretary of the Interior to promulgate regulations in keeping with those mandates.[2]
Under Department of the Interior regulations, the process by which federal coal lands may be leased and mined proceeds in four basic stages, or tiers. First, the Bureau of Land Management ("the Bureau") engages in land use planning, determining potential uses for large areas of federal land, at which time the Bureau may locate coal deposits potentially appropriate for mining. The Bureau must prepare a "comprehensive" land use plan to permit future coal lease sales.[3]
During land use planning the Bureau identifies areas acceptable for further consideration for coal leasing by applying four "screens":
1) the potential for development of coal;
2) a list of "unsuitability criteria" mandated by various statutes;
3) multiple-use tradeoffs, including alternate resource values; and
4) surface owner opposition.[4]
Second, the Bureau engages in resource-focused activity planning, and delineates specific tracts for coal leasing.[5] At this stage the Bureau prepares a regional lease sale Environmental Impact Statement ("EIS"), as required by the National Environmental Policy Act ("NEPA"), assessing the impact of leasing the proposed sites.
Third, the Bureau conducts a lease sale.[6] Such sales may occur under procedures for *457 "competitive leasing"[7] or under "leasing on application"[8] where in the activity planning stage private entities have requested specific tracts, generally adjacent to existing mining operations. In the case of so-called "split estate"[9] lands, where the government owns coal but private parties own surface rights, sales may take place only after potential bidders obtain the written consent of all "qualified" surface owners and present them to the Bureau.[10]
Fourth, in the case of surface mining, lessees have three years, absent extraordinary circumstances, to submit an "operation and reclamation plan" which must be approved by the Office of Surface Mining Reclamation and Enforcement ("Office of Surface Mining") before a mining permit will be issued.[11] Lessees carry the burden of demonstrating in their operation and reclamation plan that the land they seek to mine can be reclaimed.[12] Lessees then have ten years, absent extraordinary circumstances, to commence mining "commercial quantities" of coal, or their lease will be terminated.[13]
The regulatory scheme by which the Department of the Interior authorizes the sale and mining of federal coal dates in large part to 1979.[14] Plaintiffs brought this suit in 1982, after the Secretary substantially modified the 1979 regulations in an effort to ease the burden on parties seeking to obtain federal coal.[15] The Department of the Interior promulgated final rules on July 30, 1982.[16] On September 28, 1982 plaintiffs filed their eleven count Complaint, alleging violations of the MLA, FCLAA, SMCRA, NEPA, FLPMA, and the Administrative Procedure Act ("APA").[17]
A number of plaintiffs' 1982 challenges have been resolved. In count I, plaintiffs claimed that the 1979 regulations constituted "major Federal actions significantly affecting the quality of the human environment," which under NEPA must be preceded by publication of an EIS.[18] Count II alleged that the defendants based their decision not to prepare a new or supplemental EIS upon an inadequate environmental assessment. Count III alleged that, in violation of the APA, defendants "failed to provide adequate explanations" for significant changes made in the coal leasing program, and that those changes had "no basis in the record."[19] Congress suspended a large part of all federal coal leasing in September 1983. In the summer of 1984 the Secretary of the Interior administratively suspended all regional coal lease sales and undertook a review and revision of the entire federal coal leasing program. On October 4, 1985, the Department completed a Final Supplemental Environmental Impact Statement ("SEIS") on the coal leasing program. On February 21, 1986, the Secretary made a further series of decisions regarding coal leasing, contained in the 1986 Secretarial Issue Document ("SID"), and resumed federal coal leasing.
Granting a Joint Motion on May 9, 1986, the court dismissed plaintiffs' claims in count I ("Failure to Prepare an Environmental Impact Statement"), count II ("Failure to Prepare *458 Adequate Environmental Assessment") and count III ("Violation of Administrative Procedure Act") as being substantially satisfied.[20] The court dismissed count VII ("Violation of the Mineral Leasing Act") as moot, since it was determined that the Department would subject all lands covered by pending preference right lease applications to an unsuitability review.[21] The 1985 and 1986 departmental actions changed the status of plaintiffs' counts IV, V, and VIII, which required rebriefing. Counts VI, IX, X and XI remained unchanged.[22]
On November 1, 1988, the court granted defendants' Motion for Summary Judgment based upon plaintiffs' failure to demonstrate standing to bring suit.[23] On November 9, 1989, however, the court granted plaintiffs' Motion for Reconsideration and on June 6, 1990 the court vacated its previous Order, finding Article III subject matter jurisdiction to hear plaintiffs' claims, based upon plaintiffs' submission of fifteen affidavits identifying specific tracts of land used by their members, tracts which have been affected by the disputed regulations.[24] Supplemental briefing on a number of issues concluded September 1990.
Six issues remain for determination.
First, count IV charges that even after changes embodied in the 1986 SID, the coal leasing program continues to violate the land use planning requirements of FCLAA and FLPMA in regard to: 1) activity planning suspended in 1984, 2) emergency leasing, 3) leasing on application, and 4) preference right lease applications. Second, count V charges that the failure to include reclaimability in the "unsuitability criteria" screen applied during land-use planning violates SMCRA.[25] Third, count VIII charges that agency procedures for public participation in coal leasing decisions spelled out in an agency handbook do not meet FLPMA's requirement that such procedures be provided for by regulation. Fourth, count IX charges that the failure to apply FCLAA's ten-year deadline for "diligent development" of coal to leases pre-existing at the time FCLAA became law violates FCLAA.[26] Fifth, count X argues that FCLAA's three year deadline for submission of an operation and reclamation plan cannot be extended by regulations to include a force majeure exception. Finally, count XI charges that the 1982 regulations do not guarantee SMCRA's requirement that no coal will be leased without the written consent of qualified surface owners.
*459 Standard of Review
The Secretary of the Interior has been granted broad statutory authority to administer the MLA, FCLAA, SMCRA, and FLPMA. As a result, in regard to those statutory schemes this court applies the two standards articulated in Chevron v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984). First, in what is colloquially known as Chevron "prong one," where "Congress has directly spoken to the precise question at issue.... that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." 467 U.S. at 842-43, 104 S.Ct. at 2781. On the other hand, in what is known as "prong two" of Chevron, "if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." 467 U.S. at 843, 104 S.Ct. at 2781. The judicial determination of what is permissible requires deference; the standard is essentially one of reasonableness. The court "may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency." 467 U.S. at 844, 104 S.Ct. at 2782.
1. Count IV, Land Use Planning Requirements of FCLAA and FLPMA
Land use plans for coal lease sales must meet the statutory requirements of the Federal Coal Leasing Amendments Act of 1976 ("FCLAA") and the Federal Land Planning and Management Act of 1976 ("FLPMA"). As a general matter, FCLAA forbids the Secretary of the Interior to issue a coal lease without prior preparation of a "comprehensive" land use plan, but leaves that term largely undefined. 30 U.S.C. § 201(a)(3)(A)(i).[27] Any coal lease sale must be "compatible with" that plan.[28] By contrast, FLPMA provides explicit criteria for required planning of all public lands.[29] 43 *460 U.S.C. § 1712(c). The requirements of FLPMA are generally recognized as sufficient to meet FCLAA's requirement that plans be "comprehensive," although FCLAA has never been amended to require FLPMA plans.[30]
The new type of sophisticated land-use plans FLPMA mandates are known as "resource management plans" ("RMPs"). RMPs are developed pursuant to regulations originally promulgated August 7, 1979, and amended May 5, 1983 ("the RMP regulations") detailing how the planning requirements of FLPMA, as well as related statutes, should be met.[31]
The RMP regulations contain a section ("the FLPMA transition period regulations") providing for a transition period during which land use plans predating FCLAA and FLPMA, known as management framework plans ("MFPs"), may continue to serve as the basis for agency actions if they meet certain limited requirements.[32]
In order to serve as the basis specifically for a coal lease sale, however, regulations promulgated July 19, 1979 ("the 1979 coal leasing regulations") required that pre-existing MFPs be amended to meet a number of additional substantive criteria.[33] The 1979 coal leasing regulations also set a December *461 31, 1984 deadline for phasing out reliance on amended MFPs. After December 31, 1984, activity planning with respect to any coal deposits administered by the Bureau of Land Management could not be initiated without an RMP developed in conformity with the full RMP regulations.[34]
On July 30, 1982 the Department of the Interior promulgated new regulations eliminating the 1979 coal leasing regulations' substantive criteria for judging the adequacy of amended MFPs.[35] Since then, amended MFPs used for coal leasing are held to the general transition period requirements of the RMP regulations.[36] The 1982 regulations also eliminated the December 31, 1984 deadline for coal leasing based on amended MFPs. The two changes mean that coal leasing based on land use plans meeting only the FLPMA transition period regulations may apparently continue indefinitely.
In count IV of their Complaint, plaintiffs charged that the 1982 regulatory scheme's failure to include "specific" criteria to evaluate whether an amended MFP was "comprehensive" violated FCLAA, and that the failure to include a deadline for the complete transition to RMPs violated FLPMA and constituted agency action unlawfully withheld.[37] Events since 1982 substantially alter the nature of count IV. In May of 1983 the Department of the Interior indicated its intent to develop RMPs "as rapidly as possible."[38] The Department suspended coal lease sales in the summer of 1984 to undertake a thorough review of the coal management program, which had become highly controversial after the 1982 changes, and had been largely suspended by Congress in September 1983.[39] In regard to requiring RMPs as a basis for coal leasing, the Secretary of the Interior considered four options:
(1) Any land use plan meeting the requirements of BLM or Forest Service land management planning regulations would be acceptable as the planning base for further coal leasing activities....
(2) New regional coal lease sale activity planning would be initiated only in those areas where RMPs have been completed. The regional coal lease sale activity planning suspended during the program review would proceed based on the land use plans in effect. Emergency leasing, leasing by application, and PRLA processing may proceed based on MFP amendments.
. . . . .
(3) No regional leasing of any kind would occur until RMPs have been completed. This includes sales in those regions where regional coal lease sale activity planning was suspended during the program review. Emergency leasing, leasing by application, and PRLA processing may proceed based on MFP amendments....
(4) No leasing of any kind i.e., no regional leasing, leasing by application, and emergency leasing, and no PRLA processing would occur until RMPs are completed.
SID at 34-36.
On February 21, 1986, the Secretary chose option (2), and the Department resumed coal leasing activity. SID at ES-3. Plaintiffs now challenge continued reliance upon amended MFPs under the transitional provisions of the RMP regulations for: 1) areas where activity planning had been initiated prior to the 1984 suspension of coal lease sale activity planning, 2) emergency leasing, 3) leasing by application, and 4) preference right lease applications. Defendants continue to argue, as they did in 1982, that the amended MFPs in question meet all the requirements of the "applicable statutes," namely FCLAA, SMCRA, and FLPMA.[40]*462 Furthermore, defendants argue that preference right leases are not covered by the regulations governing competitive coal lease sales.[41]
A. The Requirements of FCLAA
FCLAA requires that activity planning for coal lease sales be preceded by a "comprehensive" land use plan. 30 U.S.C. § 201(a)(3)(A)(i). The Department of the Interior initially limited its discretion in how to meet FCLAA's statutory mandate by providing binding, enforceable criteria, in the form of regulations, by which the comprehensiveness of land use plans could be judged.[42] In 1982 the Department abandoned that approach and now proceeds on a case-by-case basis, leaving aggrieved parties no choice but to challenge the statutory validity of questionable land use plans one at a time. However, no language in FCLAA requires that the Department of the Interior promulgate regulations to articulate its interpretation of what a "comprehensive" land use plan requires. Congress knows how to require an agency to proceed by rulemaking.[43] Absent such a statutory mandate, agencies may choose whether or not to limit their discretion through rulemaking. See SEC v. Chenery Corp., 332 U.S. 194, 203, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995 (1947) ("the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency"); Independent U.S. Tanker Owners Committee v. Lewis, 690 F.2d 908, 917 (D.C.Cir.1982), (agency not "legally obligated to limit its discretion through rulemaking"). An agency promise to "meet the requirements of applicable statutes" will not be assumed to be made in bad faith. Congress has never amended FCLAA to explicitly provide that only plans meeting the full requirements of FLPMA would be "comprehensive." Consequently, the regulations do not, on their face, violate FCLAA. Plaintiffs must challenge individual land use plans they believe are not "comprehensive."
B. The Requirements of FLPMA
The issue for the court is whether indefinite delay in replacing plans that meet only the FLPMA transition period regulations with plans meeting the full RMP regulations is lawful.
In contrast to FCLAA, the Department of the Interior has limited its discretion in how to meet FLPMA by promulgating a clear regulatory program requiring preparation of RMPs. It is beyond contention that RMPS are the type of plan FLPMA requires. "Land use plans mandated by [FLPMA] are called `Resource Management Plans.'"[44] 1983 amendments to the regulations allegedly demonstrated the Department of the Interior's intent "to complete resource management plans for lands under its jurisdiction as rapidly as possible, on a priority basis, within fiscal and manpower constraints."[45] The Department's own 1986 planning document tacitly acknowledged that amended MFPs *463 cannot meet the substantive requirements of FLPMA, by disputing only whether the delay in meeting those substantive requirements had already been excessive. "Nine years have passed since the passage of the Federal Land Policy and Management Act, which some believe is more than enough time for the Bureau to bring its planning base into compliance with the statute." SID at 35 (emphasis added). Six more years have since passed without such compliance.
FLPMA mandates that land use plans in keeping with the statute's substantive requirements "shall be developed," 43 U.S.C. § 1712(a). If the Bureau has effectively abandoned movement toward elimination of amended MFPs, giving them de facto permanence, then the statutory requirement that the agency "develop" plans is being violated.[46]
If on the other hand the Bureau is inching toward eventual compliance, the problem is more complex.[47] FLPMA does not contain a statutory deadline, and Congress clearly anticipated some transitional period during which continued reliance on older plans would not violate the statute.[48] However, what is transitional must have an end. The Department of the Interior's position, in effect, is that because it has applied some part of its limited resources toward the goal of developing RMPs, it is still in compliance with FLPMA, even though fifteen years have passed since FLPMA became law and RMPs have still not been prepared for a number of areas.[49]
The Department of the Interior has not made clear whether it is proceeding very slowly toward full implementation of FLPMA's mandate, or has actually abandoned the attempt to complete Resource *464 Management Plans for all federal lands to which FLPMA applies, which would be illegal. Until it learns otherwise the court will assume delay.
However:
There comes a point when what has been designated a "temporary measure" lasts for so long, and shows so little sign of being terminated in the foreseeable future, that to continue to categorize it as "temporary" is to ignore the realities of the situation.
MCI Telecommunications Corp. v. FCC, 627 F.2d 322, 344 (D.C.Cir.1980) (citing American Broadcasting Co. v. FCC, 191 F.2d 492, 500-501 (D.C.Cir.1951)). FLPMA became law fifteen years ago. Failure to eliminate the transition period regulations eventually becomes unreasonable. This court has jurisdiction to compel "agency action unlawfully withheld or unreasonably delayed."[50] In Telecommunications Research & Action Center v. FCC, 750 F.2d 70 (D.C.Cir.1984) ("TRAC") the court articulated six factors to be weighed in determining whether agency delay is so egregious as to warrant mandamus:
(1) the time agencies take to make decisions must be governed by a "rule of reason,";
(2) where Congress has provided a timetable or other indication of the speed with which it expects the agency to proceed in the enabling statute, that statutory scheme may supply content for this rule of reason;
(3) delays that might be reasonable in the sphere of economic regulation are less tolerable when human health and welfare are at stake;
(4) the court should consider the effect of expediting delayed action on agency activities of a higher or competing priority;
(5) the court should also take into account the nature and extent of the interests prejudiced by delay; and
(6) the court need not "find any impropriety lurking behind agency lassitude in order to hold that agency action is `unreasonably delayed.'"
750 F.2d at 80 (citations omitted).
Because Congress did not include a statutory timetable in the FLPMA planning requirements, a determination of reasonableness in this case will require greater emphasis on factors (3)-(5). At this time the court lacks an adequate factual basis to "test the delay ... against the above standard to determine if it is egregious enough to warrant mandamus." TRAC, 750 F.2d at 80. The case is currently before the court on cross-motions for summary judgment, but proper weighing of these factors will require "a number of factual determinations...." Cutler v. Hayes, 818 F.2d at 896. Before deciding whether or not to issue a writ, the court will require more information in particular on the effect mandating completion of RMPs would have on competing agency priorities, and the nature of the interests actually prejudiced by the agency's failure to complete RMPs.
However, as the TRAC court wrote, "[w]hether or not these delays would justify mandamus, we believe they clearly warrant retaining jurisdiction." TRAC, 750 F.2d at 81. The interim action adopted by the TRAC court seems appropriate here. See also MCI v. FCC, 627 F.2d at 345. Within thirty days the Department of the Interior shall advise the court of a feasible schedule *465 for completion of resource management plans for the Big Dry, Great Divide, Green River, and White River resource areas, and any other areas, if any, "in which there is a potential for surface mining."[51] Prior to completion of these RMPs, any party may petition the court to take additional appropriate action as may be warranted.
2. Count V, Absence of SMCRA's Reclaimability Requirement in the Unsuitability Criteria
In enacting SMCRA, the Surface Mining Control and Recovery Act of 1977, Congress sought to ensure that land which cannot be reclaimed will not be mined. "The whole concept of this bill ... is based upon the proposition that certain areas cannot be mined. Certain areas can only be mined where they can be reclaimed...."[52] SMCRA requires that where reclamation of federal lands is not "technologically or economically feasible," the Secretary of the Interior must declare the land unsuitable for coal leasing. 30 U.S.C. §§ 1272(a)(2), 1272(b). SMCRA contains a sixty-day statute of limitations, 30 U.S.C. § 1276, which defendants allege has been exceeded because the regulations implementing the portions of SMCRA at issue here were promulgated in 1979 and not changed in 1982.
A. SMCRA's Statute of Limitations
The original 1979 proposed regulations implementing the coal leasing program included SMCRA's requirement of reclaimability in its list of more than twenty "unsuitability criteria" to be applied during land use planning.[53] After notice and comment, the Department of the Interior deleted reclaimability from the "unsuitability criteria" in the final rules effective July 19, 1979.[54] Plaintiffs participated in the 1979 rulemaking but did not at that time challenge the absence of reclaimability in the unsuitability criteria.[55]
In February 1981, following a change of administrations, the Department of the Interior called for comments on how it might make its regulatory schemes less burdensome. On December 16, 1981, after what appears to be extensive reexamination of the coal leasing program, the Department promulgated proposed amendments "as part of the effort to streamline the Department of the Interior regulations and reduce the burden imposed on the public by unneeded regulations...."[56] The agency promulgated final rules July 30, 1982, effective August 30 of that year.[57] Plaintiffs filed suit on September 28, 1982.
The 1982 regulations left unchanged the provisions plaintiffs challenge here: namely the absence of reclaimability as one of the unsuitability criteria applied during land use planning. Defendants claim that as a consequence plaintiffs are barred by SMCRA's sixty-day statute of limitations.
This circuit has frequently wrestled with the issue of what events renew the statute of limitations on an unchanged agency rule or regulation. In Montana v. Clark, 749 F.2d 740 (D.C.Cir.1984), cert. denied, 474 U.S. 919, 106 S.Ct. 246, 88 L.Ed.2d 255 (1985), the agency held out the unchanged provision as a proposed regulation, offered an explanation of its language, and solicited and responded to comments concerning it. The court found sufficient "affirmative indications that the agency evaluated the entire substance of the regulation" to permit review. Id. at 744.
In Ohio v. EPA, 838 F.2d 1325, 1328 (D.C.Cir.1988) the EPA: 1) proposed some changes in a regulatory scheme, 2) requested comments only on the new or changed provisions 3) explained the unchanged but republished portion of the regulations, and 4) responded to at least one comment aimed directly at the unchanged regulations. The *466 court found a challenge to the unchanged regulation permissible, holding that where the agency "by some new promulgation creates the opportunity for renewed comment and objection," review of unchanged portions of the regulations becomes appropriate. Id. In Association of American Railroads v. ICC, 846 F.2d 1465, 1473 (D.C.Cir.1988), the ICC proposed rulemaking only to "supplement" an older rule. Nevertheless, the court found jurisdiction, arguing that the Commission had stated that it would "attempt to harmonize" its past decisions, "possibly suggesting that the search for harmony might lead to a rethinking of old positions." Id. "[T]he general principle [is] that if the agency has opened the issue up anew, even though not explicitly, its renewed adherence is substantively reviewable." Id. In Public Citizen v. NRC, 901 F.2d 147, 150 (D.C.Cir. 1990), cert. denied, 498 U.S. 992, 111 S.Ct. 536, 112 L.Ed.2d 546 (1990), the court of appeals held that where the court makes a determination that, as a factual matter, the agency "has reconsidered the rule and decided to keep it in effect, challenges to the rule are in order."
[T]he crucial question ... is whether an agency has in fact reopened an issue, explicitly or implicitly; the four factors mentioned in State of Ohio are indeed relevant evidence of reopening, but the court cannot stop there. It must look to the entire context of the rulemaking including all relevant proposals and reactions of the agency to determine whether an issue was in fact reopened.
901 F.2d at 150.
Of course, it must be the agency which has reopened the issue. "The `reopening' rule of Ohio v. EPA is not a license for bootstrap procedures by which petitioners can comment on matters other than those actually at issue, goad an agency into a reply, and then sue on the grounds that the agency had reopened the issue." American Iron & Steel Institute v. EPA, 886 F.2d 390, 398 (D.C.Cir. 1989), cert. denied, 497 U.S. 1003, 110 S.Ct. 3237, 111 L.Ed.2d 748 (1990). Similarly, while plaintiffs may petition for a rulemaking and challenge a denial of that petition on substantive grounds, Public Citizen v. NRC, 901 F.2d at 152, they may not use such petitions to permit "back door procedural challenges by those who had the opportunity to seek direct review of regulations but failed to do so in a timely fashion." Natural Resources Defense Council, Inc. v. NRC, 666 F.2d 595, 602 (D.C.Cir.1981) (emphasis added).
In the present case, in keeping with the deregulatory philosophy of an incoming administration, the Department of the Interior invited comment on, and implied a willingness to fundamentally reevaluate, all its regulatory programs. The Department of the Interior by its own actions unsettled the finality which provides the primary policy rationale for statutes of limitations. As a factual matter, considering the full record of events that transpired after 1979, including changes in other, related parts of the regulations which in their impact may have "fundamentally altered ... [the] program," MCI Telecommunications Corp. v. FCC, 765 F.2d 1186, 1190 (D.C.Cir.1985), there can be little doubt that in 1982 the Department of the Interior reopened the issue of how the coal leasing program would comply with the requirements of SMCRA. Therefore plaintiffs' SMCRA challenges are not time-barred.[58]
B. The Substantive Requirements of SMCRA
Under SMCRA, the Secretary of the Interior must review all federal lands to identify those areas where "reclamation ... is not technologically or economically feasible." 30 U.S.C. § 1272(a)(2). The Secretary must determine such unreclaimable areas "unsuitable for all or certain types of surface coal mining operations." 30 U.S.C. § 1272(b). Plaintiffs argue that SMCRA requires that this determination of unsuitability for surface mining due to unreclaimability must be made during the land use planning *467 stage of Bureau decision-making.[59] In support of their interpretation, plaintiffs cite SMCRA's requirement that:
[D]eterminations of the unsuitability of land for surface coal mining, as provided for in this section, shall be integrated as closely as possible with present and future land use planning and regulation processes at the Federal, State, and local levels.
30 U.S.C. § 1272(a)(5) (emphasis added).
Currently, the Office of Surface Mining makes this determination for the Secretary after a lease has already been sold, based upon information provided by the lessee in the operation and reclamation plan submitted at the time the lessee seeks a permit to begin surface mining operations.[60] Before a permit application can be approved, the regulations have always required the leaseholder to affirmatively demonstrate that:
[S]urface coal mining and reclamation operations, as required by the Act, this chapter, and the regulatory program, can be feasibly accomplished under the mining and reclamation operations plan contained in the application.[61]
Defendants argue that the phrase "as closely as possible" leaves the Department of the Interior substantial flexibility as to how best to integrate that requirement into the overall coal management regulatory scheme. The court agrees. In the context of delegating authority to an administrative agency, a determination of what is possible must be practical rather than theoretical. The statute can most reasonably be read as an instruction to integrate the various regulatory regimes to the greatest extent feasible, leaving to the agency in the first instance the determination of feasibility.
The regulations first proposed by the Department of the Interior in 1979 did include reclaimability among the "unsuitability criteria" considered during land use planning.[62] After notice and comment, the Department deleted reclaimability from the unsuitability criteria (along with wetlands and prime farm lands), because:
[T]hese determinations cannot by made by the Bureau of Land Management at the pre-lease stage without significant expenditures of money and personnel; and the values are fully protected in the mine plan approval process under the Office of Surface Mining's permanent program regulations.[63]
"An initial agency interpretation is not instantly carved in stone." Chevron, 467 U.S. at 863, 104 S.Ct. at 2791. The Department of the Interior gave eminently reasonable grounds for its 1979 decision not to make the reclaimability determination during land use planning. The 1979 concern for rational allocation of limited resources remains just as valid today:
During land use planning, BLM may look at vast areas. Although these areas are under review, they will not be subject to coal leasing because other resource values are accorded a higher preference, such as, grazing, agricultural, recreational, timber production, etc. It is not effective use of resources to determine whether or not an area can be mined when that area would not be mined any way [sic] because of other competing resource values. Since the determination of reclaimability is highly technical and resource intensive, it makes sense to apply it on a site specific basis, and this is what happens during the permit application phase. It is at this time that the coal operators submit the wealth *468 of data required by SMCRA....[64]
The Department advanced "a reasonable explanation for its conclusion that the regulation serves the ... objectives" of the statute. Chevron, 467 U.S. at 863, 104 S.Ct. at 2791. Plaintiffs raise the concern that after major investments by the purchaser of a lease, it will be politically impossible for the Office of Surface Mining to deny lessees a permit to mine, even if the land is not reclaimable.[65] This concern addresses the wisdom of defendants' regulatory scheme, not its legality. The court will not assume future illegal conduct by the Department of the Interior. The current regulatory scheme is not ideal. Among its weaknesses, it largely obstructs judicial oversight of SMCRA's guarantee that land which cannot be reclaimed will not be mined. The court is aware of the practical difficulties facing a plaintiff trying to challenge the issuance of a permit on the grounds the permit violated SMCRA's reclaimability requirement. Nevertheless, the regulation is not invalid on its face.
3. Count VIII, Opportunities for Public Participation under FLPMA
Section 202(f) of FLPMA requires that:
The Secretary shall allow an opportunity for public involvement and by regulation shall establish procedures, including public hearings where appropriate, to give Federal, State, and local governments and the public, adequate notice and opportunity to comment upon and participate in the formulation of plans and programs relating to the management of the public lands.
43 U.S.C. § 1712(f) (emphasis added).
Similarly, section 309(e) FLPMA, which provides for advisory councils, requires that:
[T]he Secretary, by regulation, shall establish procedures, including public hearings where appropriate, to give the Federal, State, and local governments and the public adequate notice and an opportunity to comment upon the formulation of standards and criteria for, and to participate in, the preparation and execution of plans and programs for, and the management of, the public lands.
43 U.S.C. § 1739(e) (emphasis added).
Plaintiffs' count VIII challenges not the substance of the public participation procedures adopted by the Secretary, but the lack of regulations implementing those provisions.[66] Plaintiffs correctly assert that Congress has mandated implementation of the public participation provisions by regulation, leaving no discretion to the agency. Congress has addressed this "precise question." Chevron, 467 U.S. at 842, 104 S.Ct. at 2781. Both sections 309(e) and 202(f) of FLPMA use the imperative "shall" and specify that their public participation opportunities will be established "by regulation." "If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron, 467 U.S. at 842, 104 S.Ct. at 2781.
Defendants respond to these undeniable facts by suggesting that plaintiffs' insistence on the protection provided by regulations "trivialize[s] Section 309(e) of FLPMA"[67] since public participation procedures are spelled out in an agency handbook, and the handbook cannot be changed such as to terminate public participation without violating the Federal Advisory Committee Act.[68] Whether or not the stability of the current public participation rules is adequately guaranteed without additional regulations is a policy question. Congress left the Secretary no discretion in how to provide that guarantee: *469 notice and comment rulemaking. Consequently plaintiffs' Motion for Summary Judgment on this count must be granted.
4. Count IX, Application of the FCLAA Diligent Development Requirement
FCLAA, the Federal Coal Leasing Amendments Act of 1976, sought to stop speculation in coal leases by requiring that, in the future, holders of coal leases actually mine the coal they lease. In relevant part, FCLAA states that:
A coal lease shall be for a term of twenty years and for so long thereafter as coal is produced annually in commercial quantities from that lease. Any lease which is not producing in commercial quantities at the end of ten years shall be terminated.
30 U.S.C. § 207(a).
The Department of the Interior has, in its regulations, interpreted FCLAA to apply the "diligent development" requirements to preexisting leases only "[u]pon the effective date of the first lease readjustment after August 4, 1976," when FCLAA became law.[69] Readjustments may occur when the original lease expires, and then at the end of each subsequent ten-year period if a lease is extended. 30 U.S.C. § 207(a). Under preexisting law, readjustment permits the government to change the royalty rate and other conditions of a lease. Id.
Plaintiffs argue that the ten year time limit to achieve commercial levels of production, the "diligent development" requirement, should be applied to pre-existing leases as well. Plaintiffs rely on the fact that the statute does not distinguish between new and pre-existing leases, referring simply to "[a]ny lease." Id.
Congress' failure to provide explicitly for pre-existing leases actually argues in favor of defendants' interpretation of the statute. Pre-FCLAA leases are contracts whose terms would be retroactively modified by application of the diligent development requirement. It is a basic principle of statutory construction that when Congress legislates with retroactive effect, it does so explicitly. "Words in a statute ought not to have a retrospective operation, unless they are so clear, strong and imperative, that no other meaning can be annexed to them, or unless the intention of the legislature cannot be otherwise satisfied." United States v. Heth, 7 U.S. (3 Cranch) 399, 413, 2 L.Ed. 479 (1806) (Paterson, J., concurring). "Retroactivity, even where permissible, is not favored, except upon the clearest mandate." Claridge Apartments Co. v. Commissioner, 323 U.S. 141, 164, 65 S.Ct. 172, 185, 89 L.Ed. 139 (1944).[70]
In FCLAA, Congress provided penalties for failure to develop coal for each of three classes of leases: newly issued after August 4, 1976, readjusted after that date, and pre-existing but not yet readjusted. Under the most reasonable interpretation of FCLAA, the lease-termination penalty applies to the first two classes, while an alternative penalty applies to the third:
The Secretary shall not issue a lease or leases ... to any person ... [who] has held a lease or leases for a period of ten years when such entity is not ... producing coal from the lease deposits in commercial quantities. In computing the ten-year period referred to in the preceding sentence, periods of time prior to August 4, 1976, shall not be counted.[71]
*470 Congress did not apply the penalty of lease-termination for failure to mine commercial quantities of coal retroactively, but only to new leases and newly readjusted leases. Failure to develop pre-existing leases prior to readjustment triggers only the less severe penalty of being ineligible to acquire any new leases. Because leaseholders arguably have no present contractual or property interest in acquiring additional leases at some future time, Congress avoided acting retroactively. The legislative history supports this reading.[72] In short, Congress intended that the diligent development requirement apply only to post-FCLAA leases and extensions of pre-FCLAA leases.
5. Count X, FCLAA's Deadline for Submission of Operation and Reclamation Plans
FCLAA requires coal leaseholders to submit operation and reclamation plans, which must be approved before mining may begin:
Prior to taking any action on a leasehold which might cause a significant disturbance of the environment, and not later than three years after a lease is issued, the lessee shall submit for the Secretary's approval an operation and reclamation plan. The Secretary shall approve or disapprove the plan or require that it be modified.
30 U.S.C. § 207(c) (emphasis added).
Defendants have promulgated regulations which extend this three year deadline for submission of a resource recovery and protection plan by:
the period of time in which the authorized officer determines that operations under the Federal coal lease or L[ogical] M[ining] U[nit] are interrupted by strikes, the elements, or casualties not attributable to the operator/lessee.[73]
Plaintiffs argue that a force majeure exception for planning is inconsistent with the statute. Congress provided a statutory force majeure exception to the requirements that leaseholders mine commercial quantities of coal within ten years and each subsequent year. 30 U.S.C. § 207(b). Defendants argue that "[i]t follows a fortiori, that if a lease may be extended for a period of time, so too must the operator's obligations under the lease and statute to submit a mine plan; the two go hand-in-hand."[74] In fact, the statute draws a clear distinction between mine operation and the planning which must take place prior to mining.
In enacting the penalty of lease termination for failure to meet the diligent development requirements, Congress permitted only two exceptions: where the Secretary determines that the public interest will be served by permitting that advance royalties be paid instead, and where "operations under the lease are interrupted by strikes, the elements, or casualties not attributable to the lessee." 30 U.S.C. § 207(b) (emphasis added). The statutory three year deadline for submitting operation and reclamation plans is mandatory, unambiguous, and provides for no exceptions. "`[S]hall' ... is the language of command...." Escoe v. Zerbst, 295 U.S. *471 490, 493, 55 S.Ct. 818, 818, 79 L.Ed. 1566 (1935).
Defendants also argue that under Mourning v. Family Publications Service, Inc., 411 U.S. 356, 372, 93 S.Ct. 1652, 1662, 36 L.Ed.2d 318 (1973) the fact that Congress provided a force majeure clause in only one context does not prevent the agency from providing for such a clause by regulation in another context. In Mourning, the Court held that Congress, in explicitly providing for disclosure of certain transactions in the Truth In Lending Act, did not preclude the Federal Reserve Board from requiring disclosure of certain other transactions. 411 U.S. at 372-373, 93 S.Ct. at 1662. Mourning is what would now be generally recognized as a Chevron "prong two" case, where the agency exercised delegated powers in a permissible interpretation of the statute. Chevron, 467 U.S. at 843, 104 S.Ct. at 2781. By contrast, the present case involves no ambiguity in the statute. The absolute three-year deadline and the more flexible ten-year deadline both give explicit expression to legislatively negotiated choices on hotly debated issues. Consequently the purported extension of the three year deadline for submission of operation and reclamation plans is impermissible.
6. Count XI, Surface Owner Consent
"Split Estate" lands are lands where the United States owns coal deposits and private parties own surface rights. SMCRA sought to protect some of these split estate surface landowners against surface coal mining of their land without their consent. In relevant part, SMCRA provides that in cases where coal to be leased is to be mined by other than underground techniques:
The Secretary shall not enter into any lease of Federal coal deposits until the surface owner has given written consent to enter and commence surface mining operations and the Secretary has obtained evidence of such consent.
30 U.S.C. § 1304(c).
SMCRA confines its definition of a "surface owner" to those persons who:
(1) hold legal or equitable title to the land surface;
(2) have their principal place of residence on the land; or personally conduct farming or ranching operations upon a farm or ranch unit to be affected by surface coal mining operations; or receive directly a significant portion of their income, if any, from such farming or ranching operations; and
(3) have met the conditions of paragraphs (1) and (2) for a period of at least three years prior to the granting of the consent.
30 U.S.C. § 1304(e).
Plaintiffs object to the 1982 regulations implementing 30 U.S.C. § 1304(e) because, in contrast to the 1979 regulations they replace, the new regulations shift the burden of proof to the alleged surface owner to demonstrate that he or she meets SMCRA's requirements under § 1304(e), in effect "failing to guarantee that leasing will not proceed without the consent of qualified owners."[75] The new regulations state that:
If the surface owner fails to provide evidence of qualifications in response to surface owner consultation or to a written request for such evidence, and if the authorized officer is unable to independently determine whether or not the surface owner is qualified, the authorized officer shall presume that the surface owner is unqualified. The authorized officer shall notify the surface owner in writing of this determination and shall provide the surface owner an opportunity to appeal the determination.[76]
To include land in a lease sale, the Bureau of Land Management must receive prior written consent from every qualified surface owner. As a practical matter, the Bureau must implement some procedure for determining who those qualified surface owners are. The Bureau has adopted some procedural safeguards in the event of a dispute involving a person who refuses consent and is found to be unqualified:
*472 The authorized officer shall in all cases notify the person or persons filing the ... statement of refusal to consent of the results of the review of the filing, including any request for additional information needed to satisfy the requirements of this subpart in cases where insufficient information was supplied with the original filing.[77]
If unable to satisfy such a request to the satisfaction of that officer, the landowner may appeal to the State Director of the Bureau of Land Management, the National Director, and ultimately to the courts.[78] Lease sales may continue during this appeals process, but that is only in keeping with the general principle that agency action will not be presumed unlawful prior to a judicial determination.
Under Chevron, if the statute is clear, that is the end of the matter. 467 U.S. at 842, 104 S.Ct. at 2781. The statute is clear as to the absolute veto surface owners meeting the requirements of § 1304(e) exercise over lease sales. However, nothing in the regulatory scheme conflicts with the statute.
In addition, plaintiffs argue that the regulations fail to "specify that refusals to consent last the life of land use plans"[79] but instead last only for the current activity planning cycle.[80] In fact, a surface owner refusing consent during an activity planning cycle, and found to be qualified under § 1304(e), remains protected indefinitely against surface mining. Whether or not the land is included in a new cycle of activity planning, it cannot be included in a lease tract, "even if the surface owner refuses to submit anything...."[81] The regulations clearly state that:
On split estate lands ... where the surface is owned by a qualified surface owner, coal deposits that will be mined by other than underground mining techniques shall not be included in a lease sale without evidence of written consent from the qualified surface owner....[82]
While it is possible, as plaintiffs contend, that a surface owner who would otherwise be qualified might remain unknown to the Bureau, the occurrence of such an accident is highly speculative, and given minimal vigilance by surface owners in safeguarding their own lands, unlikely.
Conclusion
Plaintiffs have already obtained what they sought on counts I, II, III, and VII of their original Complaint. At this time plaintiffs' Motion for Summary Judgment is GRANTED as to counts VIII and X, and defendants' Cross-Motion for Summary Judgment is DENIED. Plaintiffs' Motion for Summary Judgment is DENIED as to counts V, VI, IX, and XI, and defendants' Cross-Motion for Summary Judgment is GRANTED.
As to count IV, within thirty days the Secretary of the Interior shall advise the court of a feasible schedule for completion of resource management plans for the Big Dry, Great Divide, Green River, and White River resource areas, and any other areas, if any, in which there is a potential for surface mining. Prior to completion of these RMPs, any party may petition the court to take additional appropriate action as may be warranted.
IT IS SO ORDERED.
NOTES
[1] Mineral Lands Leasing Act of 1920, ch. 85, 41 Stat. 437, 30 U.S.C. §§ 181-287 (1988 & Supp. II 1990) ("MLA"), as amended by Federal Coal Leasing Amendments Act of 1976, Pub.L. No. 94-377, 90 Stat. 1083, 30 U.S.C. §§ 184, 191, 201-209, 352 (1988) ("FCLAA"); Surface Mining Control and Reclamation Act of 1977, Pub.L. No. 95-87, 91 Stat. 445, 30 U.S.C. §§ 1201-1328 (1988 & Supp. II 1990) ("SMCRA"); National Environmental Policy Act of 1969, Pub.L. No. 91-190, 83 Stat. 852, 42 U.S.C. §§ 4321-4370c (1988 & Supp. II 1990) ("NEPA"); Federal Land Policy and Management Act of 1976, Pub.L. No. 94-579, 90 Stat. 2743, 43 U.S.C.A. §§ 1701-1784 (West 1986 & Supp.1992) ("FLPMA").
[2] MLA at 30 U.S.C. § 189; SMCRA at 30 U.S.C. § 1211(c)(2); FLPMA at 43 U.S.C. § 1733(a).
[3] FCLAA at 30 U.S.C. § 201(a)(3)(A)(i) (1988).
[4] See 43 C.F.R. § 3420.1-4(e)(1) (1991) (development potential screen); 43 C.F.R. § 3420.1-4(e)(2) (1991) (unsuitability criteria screen); 43 C.F.R. § 3461.5 (1991) (list of unsuitability criteria); 43 C.F.R. § 3420.1-4(e)(3) (1991) (multiple-use tradeoff screen); 43 C.F.R. 1601.0-5(f) (1991) (definition of "multiple use"); 30 C.F.R. § 762.5 (1992) (definitions of other values considered in multiple-use land decisions); 43 C.F.R. § 3420.1-4(e)(4) (1991) (surface owner opposition screen); 3400.0-5(gg) (1991) (definition of "surface owner").
[5] 43 C.F.R. § 3420.3-4(c) (1991).
[6] 43 C.F.R. Part 3420 (1991).
[7] 43 C.F.R. Subpart 3420 (1991).
[8] 43 C.F.R. Subpart 3425 (1991).
[9] 43 C.F.R. § 3400.0-5(kk) (1991) (definition of "split estate" lands).
[10] SMCRA at 30 U.S.C. § 1304(e); 43 C.F.R. § 3400.0-5(gg) (1991) (definition of "qualified" surface owner); 43 C.F.R. Subpart 3427 (1991) (procedures for obtaining written consent).
[11] FCLAA at 30 U.S.C. §§ 207(c), § 1211; 43 C.F.R. § 3483.3(a)(1) (1991).
[12] 30 U.S.C. § 1260(b)(2); 30 C.F.R. § 773.15(a)(2) (1992).
[13] FCLAA at 30 U.S.C. § 207(a). See also 43 C.F.R. Subpart 3483.3(a)(1) (1991).
[14] 44 Fed.Reg. 14,902-15,463, 42,584-42,652, 46,386-46,401 (1979).
[15] Plaintiffs include the Natural Resources Defense Council, Inc., the Sierra Club, the National Wildlife Federation, the National Audubon Society, the Environmental Policy Institute, the Northern Plains Resource Council, the Western Organization of Resource Councils, and the Powder River Basin Resource Council.
[16] 47 Fed.Reg. 33,114-33,195 (1982).
[17] 5 U.S.C. §§ 551 et seq. (1988).
[18] 42 U.S.C. § 4332(c).
[19] Complaint at 29.
[20] April 22, 1986 Joint Motion at 2; May 9, 1986 Order at 1. The court subsequently ruled that plaintiffs were not entitled under the Equal Access to Justice Act to attorneys' fees and expenses incurred in litigating counts I, II, and III because the position of the United States was "substantially justified." August 6, 1992 Order at 7-8.
[21] April 22, 1986 Joint Motion at 2. The term "preference right lease" is not mentioned in the MLA. It is used by the Department of the Interior in regulations governing lease applications by holders of prospecting permits for coal, phosphate, sodium, sulphur, and potassium. Preference right lease applications ("PRLAs") are discussed at 43 C.F.R. Subpart 3430 (1991). See also NRDC v. Berklund, 609 F.2d 553, 556 n. 6 (D.C.Cir.1979).
[22] Further, 1987 changes in the unsuitability criteria regulations became the occasion for additional challenges to the coal leasing program in a related case. National Wildlife Federation v. Lujan, C.A. No. 88-0301.
[23] NRDC v. Burford, 716 F.Supp. 632 (D.D.C. 1988).
[24] NRDC v. Jamison, 787 F.Supp. 231 (D.D.C. 1990). That decision is distinguishable from Lujan v. National Wildlife Federation, 497 U.S. 871, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990). In contrast to Lujan, in this case plaintiffs' members have set forth specific facts showing actual use of lands affected by the disputed decisions, and defendants have long since conceded for all practical purposes that the Department of the Interior has, through a related group of regulations and secretarial decisions, taken final agency action with respect to the "coal leasing program." SID at 21.
[25] In count VI of their Complaint, plaintiffs allege that the Department of the Interior refuses to apply the SMCRA reclaimability unsuitability criteria to other federal lands, including lands already under lease. This issue has been briefed together with count V, with which it is closely related, and the two issues will be considered together.
[26] FCLAA requires leaseholders mine "commercial quantities" of coal. 30 U.S.C. § 207(a). The implementing regulations use the term "diligent development" for this requirement. See 43 C.F.R. Subpart 3483 (1991).
[27] FCLAA did identify several elements that a "comprehensive land-use plan" must contain: (1) consultation with state agencies and local governments, and the general public; (2) an assessment of the amount of coal deposits attainable by means of "deep mining operations" and "by surface mining operations"; and (3) an evaluation of the impact of mining on the environment and on agricultural and other economic activities, and public services. See 30 U.S.C. § 201(a)(3).
[28] 30 U.S.C. § 201(a)(3)(A)(i).
[29] FLPMA states that the Secretary shall:
(1) use and observe the principles of multiple use and sustained yield set forth in this and other applicable law;
(2) use a systematic interdisciplinary approach to achieve integrated consideration of physical, biological, economic, and other sciences;
(3) give priority to the designation and protection of areas of critical environmental concern;
(4) rely, to the extent it is available, on the inventory of the public lands, their resources, and other values;
(5) consider present and potential uses of the public lands;
(6) consider the relative scarcity of the values involved and the availability of alternative means (including recycling) and sites for realization of those values;
(7) weigh long-term benefits to the public against short-term benefits;
(8) provide for compliance with applicable pollution control laws, including State and Federal air, water, noise, or other pollution standards or implementation plans; and
(9) to the extent consistent with the laws governing the administration of the public lands, coordinate the land use inventory, planning, and management activities of or for such lands with the land use planning and management programs of other Federal departments and agencies and of the States and local governments within which the lands are located, including, but not limited to, the statewide outdoor recreation plans developed under the Act of September 3, 1964 (78 Stat. 897), as amended [16 U.S.C. § 4601-4 et seq.], and of or for Indian tribes by, among other things, considering the policies of approved State and tribal land resource management programs. In implementing this directive, the Secretary shall, to the extent he finds practical, keep apprised of State, local, and tribal land use plans; assure that consideration is given to those State, local, and tribal land use plans that are germane in the development of land use plans for public lands; assist in resolving, to the extent practicable, inconsistencies between Federal and non-Federal Government plans, and shall provide for meaningful public involvement of State and local government officials, both elected and appointed, in the development of land use programs, land use regulations, and land use decisions for public lands, including early public notice of proposed decisions which may have a significant impact on non-Federal lands. Such officials in each State are authorized to furnish advice to the Secretary with respect to the development and revision of land use plans, land use guidelines, land use rules, and land use regulations for the public lands within such State and with respect to such other land use matters as may be referred to them by him. Land use plans of the Secretary under this section shall be consistent with State and local plans to the maximum extent he finds consistent with Federal law and the purposes of this Act.
43 U.S.C. § 1712(c).
[30] There is indirect legislative history to the effect that the type of plan ultimately mandated by FLPMA is "the kind of land use plan contemplated by the [Federal Coal Leasing] amendment." S.Rep. No. 296, 94th Cong., 1st Sess. 14 (1975).
[31] 44 Fed.Reg. 46,386-46,401 (1979) as amended 48 Fed.Reg. 20,364-20,375 (1983); (codified at 43 C.F.R. Part 1600 (1991) (titled Planning, Programming, Budgeting)).
[32] FLPMA transition period regulations codified as amended, 48 Fed.Reg. 20,364, 20,375 (1983), at 43 C.F.R. § 1610.8 (1991). Under the transition period regulations, pre-FLPMA land use plans must be amended so as to be:
[I]n compliance with the principle of multiple use and sustained yield and shall have been developed with public participation and governmental coordination, but not necessarily precisely as prescribed in §§ 1610.2 and 1610.3 of this title.
43 C.F.R. § 1610.8(a)(1).
The term "multiple use" is defined as:
[T]he management of the public lands and their various resource values so that they are utilized in the combination that will best meet the present and future needs of the American people; making the most judicious use of the lands for some or all of these resources or related services over areas large enough to provide sufficient latitude for periodic adjustments in use to conform to changing needs and conditions; the use of some lands for less than all of the resources; a combination of balanced and diverse resource uses that takes into account the long term needs of future generations for renewable and non-renewable resources, including, but not limited to, recreation, range, timber, minerals, watershed, wildlife and fish, and natural scenic, scientific and historical values; and harmonious and coordinated management of the various resources without permanent impairment of the productivity of the lands and the quality of the environment with consideration being given to the relative values of the resources and not necessarily to the combination of uses that will give the greatest economic return or the greatest unit output.
43 C.F.R. 1601.0-5(f) (1991).
[33] 44 Fed.Reg. 42,584, 42,617 (1979). The 1979 coal leasing regulations required the Secretary to have:
(1) Considered a range of present and potential resource values and uses in accordance with the principles of multiple use and sustained yield;
(2) Used necessary professional disciplines in the analysis of resource development proposals;
(3) Identified critical environmental areas, if any;
(4) Reflected available, relevant data commensurate with anticipated conflicts in values and potential uses, and with likely levels and impacts of such uses;
(5) Developed and analyzed alternative proposals for multiple resource development and use;
(6) Analyzed the significance of values that would be affected by proposed actions in terms of local, regional and national perspectives, consistent with agency directives; and
(7) Been formulated in consultation with appropriate state and local governments and agencies and with the opportunity for public participation, including a public hearing if requested by an adversely affected party.
43 C.F.R. § 3420.1-5(c) (1981).
[34] 43 C.F.R. § 3420.1-5(e) (1981).
[35] 47 Fed.Reg. 33,114, 33,136 (1982).
[36] Transition period regulations codified at 43 C.F.R. § 1610.8 (1991).
[37] Complaint at 30.
[38] 48 Fed.Reg. 20,364, 20,367 (1983).
[39] SID at ES-1, ES-4.
[40] 47 Fed.Reg. 33,114, 33,118 (1982). In response to public comment criticizing elimination of the deadline for phasing out use of amended MFPs as a basis for coal leasing, the Bureau of Land Management explained that the Bureau "plans to use resource management plans as soon as they are available, but, in some cases, the current planning schedule will not produce resource management plans by December 31, 1984. In those instances, the Bureau will rely upon management framework plan amendments that meet the requirements of applicable statutes." Id. (emphasis added). Specifically, defendants assert that when MFPs are relied upon in coal activity planning (under the 1979, 1982, and 1986 versions of the Program), they must be amended to add:
1) application of the twenty unsuitability criteria as listed at 43 C.F.R. § 3461.5 (1991);
2) an assessment of coal development potential as required by FCLAA, 30 U.S.C. § 201(a)(3)(B) (implemented at 43 C.F.R. 3420.1-4(e)(1) (1991));
3) the results of consultation with surface owners as required by SMCRA, 30 U.S.C. § 1304(d); and
4) review and determination that the amended MFP is in "compliance with the [FLPMA] principle of multiple use and sustained yield" under the FLPMA transition period regulations. 43 C.F.R. § 1610.8(a)(1) (1991).
[41] In keeping with the discussion below, the court need not reach this issue.
[42] 43 C.F.R. § 3420.1-5(c) (1981).
[43] For example, compare 43 U.S.C. § 1712(c) (Secretary directed to consider various enumerated criteria in the development and revision of land use plans) with 43 U.S.C. § 1712(f) (Secretary directed to establish by regulation certain procedures for public involvement in formulation of plans for public land management).
[44] 44 Fed.Reg. 46,386 (1979).
[45] 48 Fed.Reg. 20,364, 20,367 (1983).
[46] See also 43 U.S.C. § 1701(a)(2), "the national interest will be best realized if the public lands and their resources are periodically and systematically inventoried...." (emphasis added).
[47] If an agency simultaneously promulgated two regulatory schemes as alternative means of implementing a statute, one scheme a permissible interpretation of the statute and the other not, the courts could invalidate the impermissible scheme. However, if the agency implemented the two schemes but called the impermissible one "transitional," when would that scheme become ripe for review? If the agency relied exclusively on the "transitional" scheme, the subterfuge would become obvious. If the agency relied on both schemes, the mere labeling of one as transitional should not forever insulate it from review. The lack of a sunset provision in transitional regulations should alert courts to the potential for evasion. With the passage of time, failure to repeal transitional provisions becomes reviewable as agency action unreasonably delayed.
[48] See 43 U.S.C. § 1732(a) (referring to use of FLPMA land use plans "when they are available"); 43 U.S.C. § 1712(d) ("Any classification of public lands or any land use plan in effect on October 21, 1976, is subject to review in the land use planning process....") (emphasis added).
[49] The SID focuses on deciding what types, if any, of coal leasing should be permitted to go forward based on amended MFPs, rather than on deciding how the Department will achieve full compliance with FLPMA. The SID gives three reasons for the Secretary's decision to permit continued leasing based upon amended MFPs.
First, "substantial fiscal resources" had already been spent on amending MFPs. SID at 32. This is not a reason for present failure to prepare RMPs, as the earlier expenditures would have been required anyway to meet the transition period regulations, unless the Bureau had chosen not to sell any leases until RMPs were ready.
Second, the SID claims that waiting for RMPs to be completed would result in "substantial delays" in offering certain tracts for lease. Id. The Department gave its estimate that some lease sales might be delayed as long as 36 months pending completion of RMPs. Id. at 36. Since then (1986) more than six years have passed with no indication that the RMPs will be completed.
Third, "the Department previously stated that the MFPs supporting these leasing activities, which were amended to bring them into compliance with FLPMA, are adequate documents." Id. at 32. The SID pointedly fails to indicate that amended MFPs are actually adequate, claiming only that the agency once asserted they were. The Department's difficulty is that the MFPs amended between 1982 and 1986 were brought into compliance with the FLPMA transition period regulations. While that may have been adequate at one time, it cannot remain so forever.
These reasons address the Department's desire to permit interim coal leasing, but constitute a weak rationale for further delay in full implementation of RMPs. Given that these three reasons form the core of the Department's 1986 argument for delay, it is not surprising that an admitted disadvantage of the option chosen by the Secretary is that "[t]he risk ... [of] successful litigation ... is high." Id. at 35.
[50] 5 U.S.C. § 706(1). Suits seeking such a remedy raise two special jurisdictional issues. First is the question whether the power to compel such action vests exclusively in the court of appeals. In Telecommunications Research & Action Center v. FCC, 750 F.2d 70, 75 (D.C.Cir.1984) ("TRAC"), the court held that "[w]here a statute commits review of agency action to the Court of Appeals, any suit seeking relief that might affect the Circuit Court's future jurisdiction is subject to the exclusive review of the Court of Appeals." However, neither FCLAA nor FLPMA contains such a direct review provision. Thus the district court has jurisdiction under the All Writs Act, the mandamus statute, and 28 U.S.C. § 1331, the general federal question statute. See Cutler v. Hayes, 818 F.2d 879, 887 n. 61 (D.C.Cir.1987). Second, unreasonable delay cases seem to require judicial review even where there is no final agency action. However, the court of appeals has held that in this context the finality requirement is prudential and does not preclude reviewing claims of unreasonable delay. TRAC, 750 F.2d at 75 n. 27. See also Public Citizen Health Research Group v. FDA, 740 F.2d 21, 30 (D.C.Cir. 1984).
[51] Defendants' August 17, 1990 Supplemental Memorandum at Attachment A.
[52] Remarks of Senator Metcalf, floor manager for SMCRA. 123 Cong.Rec. 15,695 (1977).
[53] 44 Fed.Reg. 16,800, 16,838 (1979).
[54] 44 Fed.Reg. 42,584, 42,604 (1979).
[55] Defendants' August 26, 1983 Memorandum in Support of Their Cross-Motion for Summary Judgment at 69.
[56] 46 Fed.Reg. 61,390 (1981).
[57] 47 Fed.Reg. 33,114-33,195 (1982).
[58] Consequently, the court need not here reach the issue of whether the Secretary's reexamination of the coal management program and 1986 actions in regard to the unsuitability criteria, see SID at DS-3, independently trigger renewal of SMCRA's statute of limitations.
[59] In count VI of their Complaint, plaintiffs allege that the Department of the Interior refuses to apply the SMCRA reclaimability unsuitability criteria to other federal lands, including lands already under lease. Plaintiffs' September 4, 1990 Supplemental Memorandum at 4. See 43 C.F.R. § 3461.3-2 (1991). Defendants maintain that the unsuitability requirements are applied to lands already under lease during the mine plan review stage. Defendants' August 26, 1983 Memorandum in Support of Their Cross-Motion for Summary Judgment at 72. Consequently counts V and VI are closely related and can be resolved together.
[60] 30 C.F.R. Part 780 (1992).
[61] 30 C.F.R. § 786.19(b) (1981).
[62] 44 Fed.Reg. 16,800, 16,838 (1979).
[63] 44 Fed.Reg. 42,584, 42,604 (1979).
[64] Defendants' August 26, 1983 Memorandum in Support of Their Cross-Motion for Summary Judgment at 71 (footnotes omitted).
[65] Plaintiffs' September 4, 1990 Supplemental Memorandum at 5-6.
[66] Plaintiffs' original complaint alleged a failure to provide for adequate public participation, because the 1982 regulations deleted earlier regulations providing such opportunities. The Department of the Interior has since provided for public participation, in procedures spelled out in a "competitive coal leasing handbook." Plaintiffs' May 29, 1986 Supplemental Memorandum at 12.
[67] Defendants' June 17, 1986 Supplemental Memorandum at 23.
[68] 5 U.S.C.A. appx. 2 §§ 1-15 (1988 & Supp. III 1991).
[69] 43 C.F.R. § 3483.1(b)(2) (1991).
[70] In addition, whenever possible the courts will construe statutes so as to avoid raising constitutional issues. See, e.g., Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575, 108 S.Ct. 1392, 1397, 99 L.Ed.2d 645 (1988) ("[W]here an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress"). It is apparent to this court, as it was in Congress, that retroactive application of the diligent development requirements has the potential to "trigger constitutional questions involving the taking of legislatively conferred rights...." Remarks of Congresswoman Mink, Chairperson of the House Subcommittee on Mines and Mining, explaining that the "tough provisions" of the bill were not intended to be applied retroactively. 122 Cong.Rec. 486 (1976).
[71] 30 U.S.C. § 201(a)(2)(A). See also 43 C.F.R. § 3472.1-2(e)(1)(i) (1991).
[72] The Senate Committee Report stated that FCLAA would prevent lessees from holding leases indefinitely without production "under future leases" S.Rep. No. 296, 94th Cong., 1st Sess. 15 (1975). The House Committee Report was even clearer. "Old leases would be exempt from this provision [termination for failure to produce in commercial quantities], except to the extent it might be made applicable upon readjustment of lease terms." H.R.Rep. No. 681, 94th Cong., 1st Sess. 15 (1975). Comments from the House floor also support this interpretation. Congressman Drinan: "Leases already in existence would be exempt from this provision, but the lessees could not acquire any new leases while they continue to hold nonproducing tracts." 122 Cong.Rec. 497 (1976). Congressman Baucus: "[T]he 534 existing leases will not have to produce coal until 10 years after the next scheduled readjustment of lease terms, which in many cases will not be for 15 or 20 years." 122 Cong.Rec. 25,464 (1976). Congresswoman Mink responded to a presidential veto of the legislation, subsequently overridden, by addressing the issue directly. "The 534 existing leases would be subject to this provision only to the extent that it is inserted in lease terms at the next scheduled readjustment period...." 122 Cong.Rec. 25,093 (1976).
[73] 43 C.F.R. § 3483.3(a)(1) (1991).
[74] Defendants' August 26, 1983 Memorandum in Support of Their Cross-Motion for Summary Judgment at 83.
[75] Plaintiffs' July 21, 1983 Memorandum in Support of Their Motion for Summary Judgment at 73.
[76] 43 C.F.R. 3427.2(j) (1991).
[77] 43 C.F.R. 3427.2(g) (1991).
[78] 43 C.F.R. § 3427.2(k) (1991). See also Defendants' August 17, 1990 Supplemental Memorandum at Attachment C.
[79] Complaint at 36.
[80] Plaintiffs' July 21, 1983 Memorandum in Support of Their Motion for Summary Judgment at 73 n. 55.
[81] Defendants' August 26, 1983 Memorandum in Support of Their Cross-Motion for Summary Judgment at 91 n. 1.
[82] 43 C.F.R. § 3427.1 (1991). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584746/ | 815 F.Supp. 1475 (1993)
UNITED STATES of America, Plaintiff,
v.
METROPOLITAN DADE COUNTY, FLORIDA, et al., Defendants.
No. 93-0485-CIV.
United States District Court, S.D. Florida.
March 13, 1993.
*1476 Stuart M. Gerson, Acting Atty. Gen., James P. Turner, Acting Asst. Atty. Gen., Steven H. Rosenbaum, Chief, Voting Sect., Civ. Rights Div., Rebecca J. Wertz, James Vigil, Elizabeth Johnson, Attorneys Voting Sect., Civ. Rights Div., Dept. of Justice, Washington, DC, Roberto Martinez, U.S. Atty., Veronica Harrell-James, Asst. U.S. Atty., Miami, FL, for plaintiff.
Robert A. Ginsburg, Dade County Atty., Murray A. Greenberg, First Asst. County Atty., R.A. Cuevas, Jr., Asst. County Atty., Miami, FL, for defendants.
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR TEMPORARY RESTRAINING ORDER
HIGHSMITH, District Judge.
THIS CAUSE comes before the Court upon Plaintiff United States of America's ("United States") motion for a temporary restraining order, filed March 11, 1993.
BACKGROUND
Metropolitan Dade County ("Dade County") has scheduled special elections for county commissioners ("special elections") for March 16, 1993. These special elections are being held in response to a federal district court's ruling that Dade County's prior at-large county commissioner election system violated Section 2 of the Voting Rights Act, as amended, 42 U.S.C. § 1973, by diluting black and Hispanic voting strength. Meek v. Metropolitan Dade County, 805 F.Supp. 967 (S.D.Fla.1992), aff'd, 985 F.2d 1471 (11th Cir. 1993).
The special elections will result in the election of county commissioners for thirteen single-member districts. In districts where a candidate does not receive a majority vote, run-off elections will be held on April 20, 1993. In February, 1993, Dade County determined that it would benefit voters to print and disseminate a pamphlet explaining the changes in the new election system that resulted from the Meek decision. After substantial research and consultation between Dade County's Election Department, Communications Department, and the Office of the County Attorney, Dade County reached the conclusion that it was prohibited from publishing and disseminating the proposed pamphlet in Spanish by Dade County Local Ordinance Sec. 2-11.18. Consequently, the Dade County Department of Communications only produced an English-language voter information pamphlet. This pamphlet was mailed to over 400,000 voter households during the first week of March, 1993.
The pamphlet describes the new system of electing county commissioners in Dade County and provides answers to the following twelve questions about the special elections:
(a) Why are there 13 districts instead of the previous nine member Board of County Commissioners?;
(b) How many county commissioners will I be voting for?;
(c) Will I be voting for a mayor?;
(d) Didn't Dade County voters recently approve an executive mayor form of government?;
(e) Will there be a runoff election after the March 16 vote?;
(f) When will the new system take effect?;
(g) How long will the terms of office be for the newly elected Board of County Commissioners?;
(h) Have county commission elections been permanently changed to March and April?;
(i) Can I still register to vote for this special election?;
(j) I'm registered as an independent. Will I be able to vote for a district commissioner?;
(k) How do I know what county commission district I'm in?;
*1477 (l) Are there any other countywide issues on the March 16 special election ballot?
The pamphlet provides brief answers to each of these questions, and it also provides a chart listing the precincts that fall under each new district.
On March 11, 1993, the United States filed a complaint challenging Dade County's publication of the pamphlet in English only and requested the entry of a temporary restraining order against Dade County. The United States contends that Dade County's failure to publish and distribute a Spanish-language voter information pamphlet is a violation of Section 203 of the Voting Rights Act of 1965, as amended. The United States has not asked the Court to enjoin the March 16th election. The United States, however, requests that the Court issue a temporary restraining order requiring Dade County and the other named defendants (collectively, "Dade County") to:
(1) translate, publish and distribute copies of the pamphlet to county offices, public libraries, post offices and Hispanic community organizations;
(2) have a sufficient number of copies of Spanish-language versions of the pamphlet available at all polling places on election day;
(3) place advertisements of the Spanish-language version of the pamphlet in Spanish-language newspapers and English-language newspapers of general circulation to run on Sunday, Monday and Tuesday, March 14, 15, and 16, 1993; and
(4) place advertisements or public service announcements on Spanish-language radio and television stations to run from the time the Court issues the order until the polls have closed on election day, informing the voters of the contents of the pamphlet and where Spanish-language versions are available.
In its response to the United States' Motion, Dade County states that it plans to publish a verbatim translation of the pamphlet in Spanish in El Nuevo Herald and Diario Las Americas on Sunday, March 14, 1993. These two Spanish-language newspapers have a combined local circulation of approximately 191,000 readers. On the same date, Dade County is publishing a bilingual sample ballot in a variety of English and Spanish-language newspapers in Dade County. Dade County argues, however, that it will not be able to comply with the entire request of the United States prior to the March 16 election date.
On March 12, 1993, the undersigned District Judge requested the designation of a three-judge panel, pursuant to 28 U.S.C. § 2284(b)(1), for the ultimate adjudication of this case. Later that same day, United States Chief Circuit Judge Gerald B. Tjoflat convened a three-judge panel consisting of the undersigned District Judge, United States District Judge Stanley Marcus and United States Circuit Judge Peter T. Fay. The Court determined that the three-judge panel was not necessary for the disposition of the plaintiff's motion for a temporary restraining order. An evidentiary hearing was held by the undersigned District Judge on March 13, 1993.
STANDARD OF REVIEW
To grant a temporary restraining order, the moving party must demonstrate that:
(1) there is a substantial likelihood that the moving party will prevail on the merits;
(2) the moving party will suffer irreparable injury if the injunction is not granted;
(3) the threatened injury to the moving party outweighs the threatened harm the proposed injunction may cause the opposing party; and
(4) the injunction, if issued, would not be adverse to the public interest.
Johnson v. U.S. Department of Agriculture, 734 F.2d 774, 781 (11th Cir.1984). See also Levas and Levas v. Village of Antioch, 684 F.2d 446, 448 (7th Cir.1982) (Noting that the standard of review for a temporary restraining order is the same as the standard of review for a preliminary injunction).
FINDINGS
A. Substantial Likelihood of Prevailing on the Merits
The purpose of the Voting Rights Act of 1965 was and is to "promote practical implementation *1478 of the Fifteenth Amendment, and to ensure that no citizen's right to vote is denied or abridged on account of race." NAACP v. New York, 413 U.S. 345, 93 S.Ct. 2591, 37 L.Ed.2d 648 (1973). In interpreting provisions of the Voting Rights Act, the Supreme Court has directed that it be given a broad construction. Allen v. State Board of Elections, 393 U.S. 544, 565, 89 S.Ct. 817, 831, 22 L.Ed.2d 1 (1969).
Section 203 of the Voting Rights Act of 1965 provides that:
Whenever any State or political subdivision subject to the prohibition of subsection (b) of this section provides any registration or voting notices, forms, instructions, assistance, or other materials or information relating to the electoral process, including ballots, it shall provide them in the language of the applicable minority group as well as in the English language.
42 U.S.C.A. § 1973aa-1a(c) (West 1981 & Supp.1992) (emphasis added).
Dade County essentially contends that the pamphlet is not subject to Section 203 of the Voting Rights Act because the pamphlet is not a necessary procedural document issued prior to and during an election, such as a notice of polling places or a sample ballot. The Court concludes, however, that the pamphlet is covered under the plain language of Section 203 as "assistance or other materials or information relating to the electoral process." Id. Moreover, an administration interpretation of the pertinent language suggests that:
The quoted language should be broadly construed to apply to all stages of the electoral process, from voter registration through activities related to conducting elections, including for example the issuance, at any time during the year, of notifications, announcements, or other informational materials concerning the opportunity to register, the deadline for voter registration, the time, places and subject matter of elections, and the absentee voting process.
28 C.F.R. § 55.14 (1987). Although this interpretation is only suggestive, and not a mandatory interpretation, it is consistent with the central purpose of Section 203 of the Voting Rights Act. In this instance, the pamphlet distributed by Dade County not only explains the changes in the election format, but it also informs voters when to register, when to vote, and where to vote in the election. Consequently, the Court finds, for the purposes of the United States' motion for temporary restraining order, that Dade County's failure to publish the pamphlet in Spanish violates Section 203 of the Voting Rights Act. Accordingly, the Court finds that the United States has demonstrated a substantial likelihood of prevailing on the merits.
B. Irreparable Injury
Dade County's failure to disseminate the election pamphlet in Spanish will cause irreparable injury to the Hispanic community in Dade County. Such injury will not be severe, because of Dade County's plans to publish a Spanish-language version of the pamphlet on March 14 in Dade County's two largest local Spanish-language newspapers. Nevertheless, the Court finds that the United States has demonstrated that Dade County's Hispanic community will suffer irreparable harm absent some measure of relief from this Court.
C. Relative Harm
The Court finds that the harm to the voters who are protected by the Voting Rights Act outweighs the harm that the County must bear in complying with the measures of relief that the Court will prescribe.
D. Public Interest
In Dade County, where the special elections are being held to remedy the long-standing vote dilution of Hispanics and blacks, the public interest is best served by seeing that all voters are fully informed about the new system of election. The Court finds, therefore, that the Court's Order is in the public interest.
DISCUSSION
Where an impending election is imminent and the election machinery is already *1479 in progress, a Court may take into account equitable considerations when prescribing immediate relief. Reynolds v. Sims, 377 U.S. 533, 585, 84 S.Ct. 1362, 1393, 12 L.Ed.2d 506 (1964). Accordingly, the Court finds that drastic steps are neither required nor appropriate at this juncture. Specifically, the Court does not find it necessary to postpone the March 16th election. Moreover, the potential harm arising from the violation has been partially cured by Dade County's planned publication of the translated pamphlet in the community's primary Spanish-language newspapers El Nuevo Herald and Diario Las Americas presently scheduled for Sunday, March 14, 1993. These scheduled publications shall take place as planned. In addition, Dade County shall make every attempt to extend these publications to the Monday, March 15, 1993 and the Tuesday, March 16, 1993 editions of El Nuevo Herald, as well as the Monday-distribution edition of El Diario Las Americas.
Finally, Dade County shall elect one of the following steps:
(1) Print a Spanish-language version of the pamphlet and deliver sufficient copies of the translated pamphlet to every precinct in Dade County prior to the opening of the polls on Tuesday, March 16, 1993. Dade County shall instruct the precinct clerk to display these pamphlets in a prominent place, with a sign that alerts voters of their availability; or
(2) Prepare posters, not less than three feet by five feet, containing an enlarged Spanish-language version of the pamphlet and deliver one poster to every precinct in Dade County prior to the opening of the polls on Tuesday, March 16, 1993. Dade County shall instruct the precinct clerk to place the poster in a prominent place.
Because the Court finds that these measures are sufficient, the Court denies the other relief requested by the United States in its motion for temporary restraining order. All other relief sought in this action shall be addressed by the three-judge panel designated for the ultimate adjudication of this case.
CONCLUSION
Based on the foregoing considerations, the United States's motion for temporary restraining order is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to the relief prescribed by this order, and the motion is DENIED as to the remaining relief sought by the United States.
DONE AND ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584748/ | 24 So.3d 948 (2009)
TOURO INFIRMARY
v.
AMERICAN MARITIME OFFICER, Amerihealth Administrators, Amerihealth New Jersey, Benefit Planners Limited, L.L.P., Brokerage Concepts, Inc./Universal Health, Coresource Inc./Susquehanna Health, Coresource Inc./Formosa Plastics, Golden Rule Insurance Company, et al.
No. 2009-CA-0697.
Court of Appeal of Louisiana, Fourth Circuit.
November 9, 2009.
*949 Franklin D. Beahm, Jacob Best, Beahm & Green, New Orleans, LA, for Touro Infirmary.
Warren Horn, Heller Draper Hayden Patrick & Horn, L.L.C., New Orleans, LA, Jeffrey A. Ehrich, Leonard Street and Deinard, Minneapolis, MN, for Defendant, Fiserv Health Plan Administrators, Inc.
D. Scott Landry, Jonathan C. McCall, Chaffe McCall, L.L.P., New Orleans, LA, for Appellee, Pacific Life & Annuity Company.
Court composed of Chief Judge JOAN BERNARD ARMSTRONG, Judge MAX N. TOBIAS, JR., Judge PAUL A. BONIN.
JOAN BERNARD ARMSTRONG, Chief Judge.
The plaintiff-appellant, Touro Infirmary, appeals two judgments, each in favor of one of the many defendants it sued in this matter. The first is a judgment of February 3, 2009, granting the exception of no cause of action filed by the defendant-appellee, Pacific Life & Annuity Company (hereinafter "Pacific Life") and dismissing Touro's claims with prejudice. The second is a judgment of February 4, 2009, granting the exception of no cause of action to Touro's Supplemental and Amended Petition for Damages filed by the defendant-appellee, Fiserv Health Plan Administrators, Inc. (hereinafter "Fiserv") and dismissing Touro's claims with prejudice.[1]
We review the exception of no cause of action de novo. In Reis v. Fenasci & Smith, 93-1785 (La.App. 4 Cir., 4/14/94), 635 So.2d 1319, 1321, this Court explained that:
The exception of no cause of action must be decided on the face of the petition and no evidence may be introduced to support or controvert the exception. Charia v. Hulse, 619 So.2d 1099 (La. App. 4th Cir.1993); La. C.C.P. Art. 931. All well pleaded allegations of the petition and any annexed documents must be assumed as true, and any doubt *950 should be resolved in favor of the petition. Kuebler v. Martin, 578 So.2d 113, 114 (La.1991); Charia, supra. [Emphasis added.]
Moreover, evidence admitted without objection may be viewed as an enlargement of the pleadings and considered as such. Sterling v. Jones, 255 La. 842, 233 So.2d 537 (1970); Roy O. Martin Lumber Co. v. Saint Denis Securities Co., 225 La. 51, 72 So.2d 257 (1954); Rheuark v. Terminal Mud & Chemical Co., 213 La. 732, 35 So.2d 592 (1948). The parties to this appeal have offered several contracts in evidence in the trial court and ask this Court to consider them. As they were offered to the trial court and to this Court, not only without objection, but with the active approval of all parties to this appeal, this Court, pursuant to the above cited authorities, will consider them in the opinion that follows. Additionally, in evaluating an exception of no cause of action, allegations which are nothing more than conclusions are disregarded. Hayes v. The Parish of Orleans, 98-2388, p. 3 (La. App. 4 Cir. 6/16/99), 737 So.2d 959, 961.
Touro is suing under the Preferred Provider Organizations Statute, La. R.S. 40:2201, et seq., for the difference between what the standard rate it would charge a patient and the discounted rate it would charge to a patient seeking a discount through the MultiPlan, Inc. PPO (Preferred Provider Organization), plus the penalties provided by La. R.S. 40:2203.1 G. This Court is aware of no relevant jurisprudence[2]. We shall rely instead upon our reading of the plain language of the law in the context of this record.
Fiserv alleges that it is a third party claims administrator ("TPA") for a selffunded ERISA health plan, which self-funded health plan is not a party to this action. Fiserv further alleges that it has no direct contractual relationship to Touro and that its only contract is with MultiPlan granting it access to the MultiPlan PPO. The name "Touro" appears nowhere in Fiserv's contract with MultiPlan.
Pacific Life alleges that, like Fiserv, its only contract is with MultiPlan and Touro's name appears nowhere in its contract with MultiPlan.
Because of the many allegations and statutory provisions that we are required to consider in detail, in the interest of clarity we will state our conclusions first:
1. La. R.S. 40:2202(6) defines "[p]rovider" as an entity, such as the plaintiff Touro, which offers health care services. As a matter of law, MultiPlan, Fiserv and Pacific Life do not fit this definition and are, therefore, not "providers."
2. La. R.S. 40:2202(5)(a) defines a "Preferred Provider Organization (P.P.O.)" as a contractual agreement between a "provider", in this case Touro, and a "group purchaser", to provide "alternative" (discounted) rates of payment.
3. La. R.S. 40:2202(3) defines a "[g]roup purchaser" as an entity which contracts with "providers."
4. Touro alleges that, through its agent Choice Healthcare, it entered into a contractual relationship with MultiPlan, Inc., a PPO, to provide discount medical services to MultiPlan members. A copy of this contract is in the record. Neither Fiserv nor Pacific Life signed this contract and their names appear nowhere therein. As the only contract *951 offered by the parties with the "provider," Touro, is the contract between Touro and MultiPlan, then the only entity referred to in this litigation that could possibly meet the definition of "group purchaser," as defined by La. 40:2202(3), is MultiPlan. Neither Fiserv nor Pacific Life is a "group purchaser" because neither contracted with a "provider." The contracts which they executed are in the record and were with MultiPlan, not Touro, and MultiPlan is not a "provider". It is uncontested that they are not signatory to any contract to which Touro, which is a "provider," is a party.
5. The La. R.S. 40:2203.1 G penalties sought by Touro are only enforceable against a "group purchaser." Neither Fiserv nor Pacific Life is a "group purchaser." Therefore, Touro has no cause of action against either Fiserv or Pacific Life for La. R.S. 2203.1 G penalties.
6. La. R.S. 40:2203.1 states that the "alternative" or discounted rates are not enforceable against the "provider", in this case Touro, unless the PPO is clearly identified on the benefit card presented by the patient. Touro alleges that the benefit cards presented by Fiserv and Pacific Life clients did not properly identify the PPO. We must accept this allegation as true for purposes of the exception of no cause of action. Therefore, we conclude that Touro has stated a cause of action for the difference between the "alternative" rate of payment and the full standard rate for which Fiserv and Pacific Life were billed.
Touro's claim against Fiserv arises out of medical services rendered on or about May 20, 2004, to a single patient enrolled in the Plan for which Fiserv served as TPA. Touro billed Fiserv $10,561.06 for these services. Fiserv remitted the MultiPlan discounted rate of $7,392.74. More than two years later, on December 6, 2006, Touro sent Fiserv a demand letter for $3,168.32, the amount of the discount to which Touro alleges the Fiserv patient was not entitled because the patient's benefit card allegedly failed to clearly identify the MultiPlan PPO as required by La. R.S. 40:2203.1. Additionally, Touro demanded statutory penalties of $46,300.00.
The following statutory provisions are relevant to this litigation:
La. R.S. 40:2203.1 provides in pertinent part that:
B. A preferred provider organization's alternative rates of payment shall not be enforceable or binding upon any provider unless such organization is clearly identified on the benefit card issued by the group purchaser or other entity accessing a group purchaser's contractual agreement or agreements and presented to the participating provider when medical care is provided.
* * * *
D. In no instance shall any provider be bound by the terms of a preferred provider organization agreement that is in violation of this Part.
* * * *
G. Failure to comply with the provisions of Subsection A, B, C, D, or F of this Section shall subject a group purchaser to damages payable to the provider of double the fair market value of the medical services provided, but in no event less than the greater of fifty dollars per day of noncompliance or two thousand dollars, together with attorney fees to be determined by the court. A provider may institute this action in any court of competent jurisdiction.
*952 La. R.S. 40:2202 provides in pertinent part that:
(3) "Group purchaser" shall mean an organization or entity which contracts with providers for the purpose of establishing a preferred provider organization. "Group purchaser" may include:
(a) Entities which contract for the benefit of their insured, employees, or members such as insurers, self-funded organizations, Taft-Hartley trusts, or employers who establish or participate in self funded trusts or programs.
(b) Entities which serve as brokers for the formation of such contracts, including health care financiers, third party administrators, providers or other intermediaries.
(5)(a) "Preferred Provider Organization (P.P.O.)" shall mean a contractual agreement or agreements between a provider or providers and a group purchaser or purchasers to provide for alternative rates of payment specified in advance for a defined period of time in which.
(i) the provider agrees to accept these alternative rates of payment offered by group purchasers to their members whenever a member chooses to use its services....
* * * *
(6) "Provider" shall mean one or more entities which offer health care services and shall include but not be limited to hospitals, individuals, or groups of physicians, individuals or groups of psychologists, nurse midwives, ambulance service companies, and other health care entities.
It is now appropriate to review the relevant allegations in Touro's petitions to determine whether they are sufficient to state a cause of action against either Fiserv or Pacific Life.
Touro's Supplemental and Amending Petition for Damages contains the following allegations relative to its claim against Fiserv:
31.
Defendant Benefit Planners Limited, LLP, n/k/a Fiserv Health Plan Administrators, Inc., entered into a contractual relationship with Multiplan, Inc., a New York-based preferred provider organization, whereby Defendant Benefit Planners Limited, LLP, obtained the right to pay negotiated contract rates for services provided to their insureds by providers enrolled in the Multiplan, Inc., network of providers.. . .
32.
The contact entered into by Benefit Planners Limited, LLP, and Multiplan, Inc., provides as follows:
WHEREAS, MPI [MultiPlan] has created and maintains a network of health care providers ("MPI Providers"), by entering into agreements with health care facilities and ancillary health care providers ("MPI" Facilities"), and individual healthcare practitioners ("MPI" Practitioners"), to provide health care services to individuals ("Participants") covered by health services benefits programs ("Benefit Program"), insured or administered by MPI's Clients;
WHEREAS, [Fiserv] either provides a Benefit Program for its Participants, or provides certain administrative services to its customers who provide Benefit Programs for their Participants; and
WHEREAS, on behalf of [Fiserv's] Participants or customers, [Fiserv] *953 seeks access to MPI's Facility and Practitioner Networks;
THEREFORE, in consideration of the foregoing and of the mutual covenants herein, intending to be legally bound hereby, the parties agree as follows: [...]
33.
The contract entered into between Defendant [Fiserv] and Multiplan, Inc., establishes a mandatory relationship between Defendant and Multiplan, Inc., pursuant to La. Civ.Code Art. 2989, and consequently confers upon Multiplan, Inc., the mandatory authority to enter into a contractual relationship on behalf of Defendant with Petitioner.
34.
[Touro] entered into a contractual relationship with Multiplan, Inc., whereby Petitioner agreed to charge discounted rates for medical services provided to the insureds of Defendant Benefit Planners Limited, LLP....
35.
The contract entered into by Petitioner and Multiplan, Inc., provides as follows:
WHEREAS, on behalf of various organizations, including self-insured employers, union welfare funds, third party administrators, and other similar entities (Clients), who issue or administer health benefits services coverage pursuant to a benefit plan, automobile liability insurance, workers' compensation program or other plan (Benefit Programs) for covered individuals (Participants), MPI has established networks of preferred health care providers who have agreed to render health care services to Participants in exchange for reimbursement at negotiated rates; and
WHEREAS, PHO is authorized to represent its member facilities, as well as its member physicians and/or other professional providers of health care services (Practitioners), (collectively, Providers), for the purposes of entering this Agreement on their behalf; and [...]
THEREFORE, in consideration of the foregoing and of the mutual promises herein, and intending to be legally bound hereby, the parties agree as follows:
36.
The separate contracts entered into between [Fiserv] and Multiplan, Inc. and [Touro] and Multiplan, Inc., create rights and obligations inuring to the benefit of [Fiserv] and [Touro] and, therefore, create a valid and binding contractual relationship between [Fiserv] and [Touro].
37.
The insureds of [Fiserv], presented to Touro Infirmary for the purposes of obtaining medical treatment, which was provided to those insureds at Touro Infirmary.
38.
[Touro] billed [Fiserv] for the fair market value of the services provided to [Fiserv's] insureds due to the fact the insurance cards presented by [Fiserv's] upon presentation to Touro Infirmary did not include the Multiplan, Inc, logo in violation of La. R.S. 40:2203.1
*954 39.
Pursuant to the contractual relationship between [Fiserv] and [Touro], [Fiserv] paid [Touro] for the services provided to its insureds at the MultiPlan, Inc. negotiated contract rate and is, therefore, liable for damages to Petitioner as set forth in La. R.S. 40:2203.1.
In paragraphs 22-30 of the same Supplemental and Amending Petition for Damages, Touro makes identical allegations against the other defendant-appellee herein, Pacific Life. Touro's claim against Pacific Life, in the amount of $31,906.37, like its claim against Fiserv, arises out of a billing to a single patient.
While Touro alleges in the foregoing paragraphs of its petition that it entered into a contract with MultiPlan, in its brief Touro refers to the contract entered into "between MultiPlan, Inc., and Choice Healthcare, PHO, as agent of Touro Infirmary." Touro is admittedly not a signatory of this contract, nor is Choice Healthcare identified as Touro's agent in the contract. There is, however, a clause in the contract indicating that Choice Healthcare "is authorized to represent its member facilities, as well as its member physicians and/or other professional provider of health services ..." We note that none of the parties that Choice Healthcare purportedly represents are identified in the contract as submitted to this Court, other than an oblique reference to Touro in what appears to be a general schedule for services and fees which contains a reference to fees for "Touro at Home" and the "Touro Rehabilitation Center Post Acute Brain Injury Program." Moreover, for reasons known only to Touro, neither MultiPlan nor Choice Healthcare are parties to either this litigation or this appeal.
The following allegations found in paragraphs "4" and "5" of Touro's original petition, which allegations are reaffirmed in its Supplemental and Amending Petition, are also relevant:
4.
Multiplan, Inc. (hereinafter "Multiplan"), is a Preferred Provider Organization, as defined by R.S. 40:2202(5), and is subject to the provisions of R.S. 40:2203.1, who, upon information and belief, contracted with several health insurance companies and health plans, i.e., "The Companies", to negotiate preferred, or "alternate rates", with health care providers for health care services provided by said providers.
5.
Touro Infirmary and Multiplan executed an Agreement, effective March 1, 2001, whereby Touro agreed to charge "alternate rates" for providing health care services to Multiplan's network of Companies for all services provided to The Companies' enrolled members (hereinafter "enrollees") . . .
Touro references the contract between Multiplan and the "Companies" in its petition, brief on appeal and elsewhere in the record, as do the appellees. The appellees, Fiserv and Pacific Life, are among those parties referred to in paragraphs "4" and "5" quoted above as "The Companies." As is clear from these allegations and from Touro's brief on appeal, the agreement between Touro as the "provider" and MultiPlan is the "Preferred Provider Organization" which, as a matter of law, makes MultiPlan the "group purchaser" as those the terms "provider", "Preferred Provider Organization," and "group purchaser" are defined by La. R.S. 40:2202(6), La. R.S. 40:2202(5)(a) and La. R.S. 40:2202(3), respectively, and as used in La. R.S. 40:2203.1.
*955 In addition to the allegations quoted above from Touro's petition, Touro re-urges in its brief the following arguments consistent with the statements made by this Court in the preceding paragraph:
Multiplan, Inc . . . . is a Preferred Provider Organization, as defined by R.S. 40:2202(5), and is subject to the provisions of R.S. 40:2203.1, who . . . contracted . . . to negotiate preferred, or "alternate rates", with health care providers [such as Touro] for health care services . . .
Touro Infirmary and Multiplan executed an Agreement, effective March 1, 2001, whereby Touro agreed to charge "alternate rates" for providing health care services to Multiplan's network of Companies for all services provided to the Companies' enrolled members....
Neither Fiserv nor Pacific Life contracted with Touro "for the purpose of establishing a preferred provider organization" as contemplated by La. R.S. 40:2202(3). Instead, they contracted with MultiPlan as the "group purchaser" from "providers" such as Touro for the purpose of accessing the MultiPlan PPO. Touro refers in several places in its brief to "Appellant's and Appellees' separate agreements with a third party preferred provider organization." It is undisputed that Touro is the "provider" as defined by La. R.S. 40:2202(6). There is no other "provider" involved in this litigation. The only contract involving a "provider" is the contract between Touro as the "provider" and MultiPlan. If there is an La. R.S. 40:2202(5)(a) "Preferred Provider Organization", and all parties agree that there is, then it must be the agreement between Touro (and then only if we assume that Choice Healthcare entered into the contract as Touro's agent) and MultiPlan. This is the only conclusion consistent with the law and Touro's many allegations and arguments referring to the MultiPlan Preferred Provider Organization. Under La. R.S. 40:2202(3) the party who contracts with the "provider" is the "group purchaser", in this case MultiPlan. As a matter of law, the penalty provisions of La. R.S. 40:2203.1 G, if applicable, are "payable to the provider", Touro, but may only be enforced against the "group purchaser," in this case MultiPlan. In other words, as a matter of law, Touro has no cause of action against either Fiserv or Pacific Life for La. R.S. 40:2203.1 G penalties as they are not "group purchasers."
Touro argues that the contracts which MultiPlan entered into with Fiserv and Pacific Life confer a mandate on MultiPlan such that it creates a direct contractual relationship between Touro and Fiserv and Touro and Pacific Life. But this is simply a legal conclusion, not an allegation of fact that this Court must accept as true in reviewing the exceptions of no cause of action. Hayes, supra. This allegation is contradicted by the Preferred Provider Organizations law, La. R.S. 40:2201, et seq., in the context of the contracts and allegations submitted by Touro.
However, without expressing any opinion as to the merits of such a claim, we find that Touro has stated a cause of action against Fiserv and Pacific Life for the difference between the discounted "alternative rates of payment" and the full standard rate of payment as billed by Touro. La. R.S. 40:2203.1 B states that the "alternative rates of payment shall not be enforceable or binding upon any provider [Touro] unless [the preferred provider] organization is clearly identified on the benefit card . . ." Touro's pleadings state that the PPO was not properly identified on the card. As noted earlier in this opinion, we must accept this allegation of fact as true at this stage of the proceedings. This is sufficient to state a cause of action to claim Touro's full standard rate of payment which it billed. La. R.S. 40:2203.1 G designates specifically who may be liable for *956 penalties and names only the "group purchaser." But La. R.S. 40:2203.1 B states in sweeping and universal terms that the "alternative rates of payment shall not be enforceable or binding upon any provider unless such organization is clearly identified on the benefit card issued by the group purchaser. . . ." We read this language to mean that no one has the right to enforce the "alternate" rate of payment against Touro where the benefit card does not meet the requirements of La. R.S. 40:2203.1 B. Under this broad language, Touro has stated sufficient allegations, when viewed under the standards for an exception of no cause of action, to entitle it to a day in court to assert its claims for the difference between its full standard rate and the discounted "alternative rate" allegedly tendered to it by Fiserv and Pacific Life. While both Fiserv and Pacific Life have made convincing arguments as to why they should not be subjected to La. R.S. 40:2203.1 G penalties, at this stage of the proceedings, they have not yet made a convincing case justifying why they should be permitted to enforce discounted rates against Touro in the face of Touro's factual allegations concerning the benefit cards.
For the foregoing reasons, we amend the judgment of the trial court in part to vacate and remand only that portion of the judgment dismissing Touro's claims against Fiserv and Pacific Life for the difference between its full standard rate and the discounted "alternative rate," in order to allow Touro to pursue those claims in the trial court. In all other respects, the judgment of the trial court is affirmed. All parties to bear their own costs.
AMENDED. AFFIRMED AS AMENDED, AND REMANDED.
NOTES
[1] Touro's claims against the appellees were initially dismissed with leave to amend on previous exceptions of no cause of action by judgment of September 24, 2008. This appeal arises out of the amendments made by Touro in response to the previous dismissal.
[2] We decline to refer to the two unreported federal district court cases cited by the appellees. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584752/ | 641 So.2d 445 (1994)
HALKEY-ROBERTS CORPORATION, Appellant,
v.
Glenn H. MACKAL, Appellee.
No. 93-03735.
District Court of Appeal of Florida, Second District.
August 12, 1994.
*446 Robert R. Vawter, Jr., of Carlton, Fields, Ward, Emmanual, Smith & Cutler, P.A., Tampa, for appellant.
George E. Nader of Trenam, Simmons, Kemker, Scharf, Barkin, Frye & O'Neill, P.A., Tampa, for appellee.
PATTERSON, Judge.
Halkey-Roberts Corporation (HRC) appeals from a final summary judgment in favor of its former president, Glenn H. Mackal. We reverse.
HRC is a manufacturer of valves for inflatable products and medical equipment. Hanson Industries has wholly owned HRC since 1987. Mackal was originally hired as an engineer in 1966 when Kidde Corporation owned HRC. In 1972, he became president of HRC, a position he held until he was terminated in 1989.
On August 1, 1991, HRC filed a three-count complaint, charging that Mackal had repeatedly used corporate funds to further his personal, political, and religious interests. The complaint asserted claims for: (I) breach of the fiduciary duty of loyalty; (II) breach of the fiduciary duty of due care; and (III) constructive fraud. Mackal answered and asserted affirmative defenses that he had acted within his authority as president and that HRC had consented to or ratified all of his actions. He later was permitted to amend his answer to assert the additional affirmative defense of the running of the statute of limitations. On September 22, 1993, the trial court granted summary judgment in favor of Mackal based on his affirmative defenses of authority and the statute of limitations.
THE AUTHORITY DEFENSE
The deposition testimony of Leonard Riccardo, Mackal's immediate superior on the corporate ladder, precludes summary judgment based on the defense that Mackal had authority for his actions. Kidde Corporation was HRC's parent company during the majority of the time when Mackal allegedly made improper expenditures of HRC funds. Riccardo testified that Kidde Corporation had a formal corporate policy which applied to Mackal and prohibited the use of company funds, personnel, or property for the personal benefit of employees. He further testified as to specific expenditures set forth in the complaint as being beyond Mackal's authority and in violation of company policy. Since genuine issues of fact exist as to this defense, the granting of summary judgment was error. See Crandall v. Southwest Fla. Blood Bank, Inc., 581 So.2d 593 (Fla. 2d DCA 1991).
*447 THE STATUTE OF LIMITATIONS DEFENSE
In addressing this issue, it is first necessary to identify the causes of action set forth in the complaint and the applicable statute of limitations as to each. Counts I and II are actions for breach of fiduciary duty which is an intentional tort. See Allerton v. State Dep't of Ins., 635 So.2d 36 (Fla. 1st DCA 1994). As such, the four-year statute of limitations applies. § 95.11(3)(o), Fla. Stat. (1991). The discovery rule found in section 95.031(2), Florida Statutes (1991),[1] does not apply to either of these counts.
Count III is an action for constructive fraud.
"Constructive fraud is simply a term applied to a great variety of transactions * * * which equity regards as wrongful, to which it attributes the same or similar effects as those which follow from actual fraud, and for which it gives the same or similar relief as that granted in cases of real fraud," etc. Pomeroy's Eq.Jur. (4th Ed.) § 992.
Douglas v. Ogle, 80 Fla. 42, 85 So. 243, 244 (Fla. 1920). As a recognized species of fraud, constructive fraud is controlled by section 95.11(3)(j), Florida Statutes (1991), a four-year limitations period, and the discovery rule of section 95.031(2) applies. The affidavit of John M. Heijmans, a vice-president of another Hanson Industries subsidiary, states that he conducted an investigation into Mackal's management of HRC on Hanson's behalf, and because of the confused nature of HRC's business records and the fact that some records had apparently been destroyed, he was unable to provide Hanson with facts upon which to base a lawsuit until October 1989. This affidavit raises issues of material fact as to when Mackal's purported misdeeds could or should have been discovered by his superiors, thereby precluding summary judgment as to count III.
In regard to counts I and II, HRC contends that Mackal's behavior constituted continuing torts, for which the limitations period runs from the date the tortious conduct ceases. The continuing torts doctrine is recognized under our state law. See Seaboard Air Line R.R. v. Holt, 92 So.2d 169 (Fla. 1956). The question of whether Mackal's actions constituted continuing torts precludes the granting of summary judgment as to counts I and II. To what extent, if any, the concept applies to this case is an issue for the trier of fact to decide. We also note that the granting of summary judgment as to counts I and II in their entirety was error because several of the complained-of acts are alleged to have occurred within four years preceding the filing of the complaint.
Reversed and remanded.
CAMPBELL, A.C.J., and FULMER, J., concur.
NOTES
[1] Section 95.031(2), Florida Statutes (1991), provides:
(2) Actions for products liability and fraud under s. 95.11(3) must be begun within the period prescribed in this chapter, with the period running from the time the facts giving rise to the cause of action were discovered or should have been discovered with the exercise of due diligence, instead of running from any date prescribed elsewhere in s. 95.11(3), but in any event an action for fraud under s. 95.11(3) must be begun within 12 years after the date of the commission of the alleged fraud, regardless of the date the fraud was or should have been discovered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584754/ | 641 So.2d 847 (1994)
Cary Michael LAMBRIX, Petitioner,
v.
Harry K. SINGLETARY, etc., Respondent.
No. 81941.
Supreme Court of Florida.
June 16, 1994.
Rehearing Denied September 8, 1994.
Steven M. Goldstein, Sp. Counsel, Volunteer Lawyers' Resource Center of Florida, Inc., Tallahassee, and Robert Josefsberg of Podhurst, Orseck & Josefsberg, Miami, for petitioner.
Robert A. Butterworth, Atty. Gen., Richard B. Martell, Chief, Capital Appeals, Tallahassee, *848 and Robert J. Krauss, Asst. Atty. Gen., Tampa, for respondent.
PER CURIAM.
Cary Michael Lambrix, a prisoner under sentence of death, petitions this Court for a writ of habeas corpus. We have jurisdiction pursuant to article V, section 3(b)(9), Florida Constitution, and find that Lambrix is not entitled to relief.
Lambrix was initially convicted of two counts of murder and sentenced to death in 1984. The convictions and sentences were affirmed by this Court in Lambrix v. State, 494 So.2d 1143 (Fla. 1986). We have also rejected three collateral postconviction claims from Lambrix. See Lambrix v. Dugger, 529 So.2d 1110 (Fla. 1988) (habeas petition); Lambrix v. State, 534 So.2d 1151 (Fla. 1988) (appeal of trial court's denial of a 3.850 motion for postconviction relief); Lambrix v. State, 559 So.2d 1137 (Fla. 1990) (appeal of trial court's denial of a petition for a writ of habeas corpus). Subsequent to these claims, the United States District Court denied Lambrix's habeas petition, Lambrix v. Dugger, No. 88-12107-Civ-Zloch (S.D.Fla. May 12, 1992), but the Eleventh Circuit directed Lambrix to return to this Court to settle any unresolved issues stemming from the United States Supreme Court's decision in Espinosa v. Florida, ___ U.S. ___, 112 S.Ct. 2926, 120 L.Ed.2d 854 (1992). Lambrix v. Dugger, No. 92-4539 (11th Cir. Mar. 3, 1993). This proceeding is a result of that directive.
In Espinosa, the United States Supreme Court held that it was error to instruct a jury "that it was entitled to find as an aggravating factor that the murder of which it has found [a defendant] guilty was `especially wicked, evil, atrocious or cruel'" because this instruction was unconstitutionally vague and because it failed to provide sufficient guidance to the sentencer for determining the existence of the aggravating factor. 112 S.Ct. at 2927-29. In addressing this type of Espinosa claim, we have recently held that a defendant must do two things in order to preserve the claim for postconviction review. First, the defendant must attack "the instruction itself, either by submitting a limiting instruction or making an objection to the instruction as worded." Beltran-Lopez v. State, 626 So.2d 163, 164 (Fla. 1993), cert. denied, ___ U.S. ___, 114 S.Ct. 2122, 128 L.Ed.2d 678 (1994); see also Atwater v. State, 626 So.2d 1325 (Fla. 1993), cert. denied, ___ U.S. ___, 114 S.Ct. 1578, 128 L.Ed.2d 221 (1994). Second, the defendant must also pursue the objection on appeal. Chandler v. Dugger, 634 So.2d 1066 (Fla. 1994); James v. State, 615 So.2d 668 (Fla. 1993).
In the instant case, Lambrix properly raised and preserved his Espinosa objection at trial. The record reveals that, although Lambrix failed to object specifically to the vagueness of the instruction on the heinous, atrocious or cruel aggravating factor, he did request a limiting instruction based on the definition of the aggravator found in State v. Dixon, 283 So.2d 1 (Fla. 1973), cert. denied, 416 U.S. 943, 94 S.Ct. 1950, 40 L.Ed.2d 295 (1974). However, Lambrix did not raise the issue of the trial court's failure to include this special instruction on his direct appeal and, consequently, Lambrix's Espinosa claim is procedurally barred. Cf. Henderson v. Singletary, 617 So.2d 313 (Fla.) (claim was procedurally barred because it was not raised on appeal even though the defendant had preserved the issue at trial by both objecting to the instruction and requesting an expanded instruction), cert. denied, ___ U.S. ___, 113 S.Ct. 1891, 123 L.Ed.2d 507 (1993).
Because appellate counsel failed to anticipate the United States Supreme Court decision in Espinosa and raise the Espinosa claim on direct appeal, Lambrix next argues that appellate counsel was ineffective. Although this present ineffective assistance of counsel claim is based on a different issue, Lambrix has already raised numerous claims alleging ineffective assistance of appellate counsel in a previous habeas petition. See Lambrix v. Dugger, 529 So.2d 1110 (Fla. 1988). Because ineffective assistance of counsel claims have been considered and rejected in a previous petition, Lambrix is procedurally barred from raising such claims again in a subsequent habeas petition. See Aldridge v. State, 503 So.2d 1257 (Fla. 1987) (defendant procedurally barred from raising an ineffective assistance of counsel claim when such a claim has been raised previously *849 even though the current claim is based on a different issue). Furthermore, even if this issue was not procedurally barred, we find that appellate counsel was not ineffective under the test set out in Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984), because this Court would have rejected Lambrix's Espinosa claim on direct appeal.[1]See Henderson, 617 So.2d at 317 ("[T]he failure to raise a claim that would have been rejected at the time of the appeal does not amount to deficient performance.").
We find that the remaining issues raised by Lambrix are also procedurally barred.[2] The petition for a writ of habeas corpus is denied.
It is so ordered.
GRIMES, C.J., OVERTON, SHAW and HARDING, JJ., and McDONALD, Senior Justice, concur.
KOGAN, J., concurs in result only.
NOTES
[1] The claim would have been rejected because the trial court used the standard jury instruction on the "heinous, atrocious or cruel" aggravating factor and because the United States Supreme Court had not yet rendered its Espinosa decision.
[2] Lambrix has also raised the following claims: (1) invalid aggravating circumstances were presented to Lambrix's jury including "cold, calculated and premeditated," "committed during a robbery," and "pecuniary gain," (2) Lambrix's death sentence is unconstitutional because this Court has failed to apply a consistent limiting construction of the "especially heinous" aggravating factor, (3) ineffective assistance of counsel, and (4) the State failed to prove premeditation beyond a reasonable doubt. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584761/ | 641 So. 2d 1260 (1993)
Isaac SANDERS
v.
STATE.
CR-92-1194.
Court of Criminal Appeals of Alabama.
September 3, 1993.
As Corrected on Denial of Rehearing January 21, 1994.
Certiorari Denied May 27, 1994.
*1261 James M. Barnes, Jr., Marion, for appellant.
James H. Evans, Atty. Gen., and Steve Willoughby, Asst. Atty. Gen., for appellee.
Alabama Supreme Court 1930556.
TAYLOR, Judge.
The appellant, Isaac Sanders, was convicted of theft of property in the second degree, in violation of § 13A-8-4, Code of Alabama 1975. He was sentenced to three years in prison.
The state's evidence tended to show that on the morning of October 19, 1990, it was discovered that 40 or 41 bags of chemicals were missing from the old Newbern school building in Newbern, Alabama. At the time, Dombhart Catfish Supply was using the building for storage; 18 bags of copper sulfate, 15 bags of sodium bicarbonate, and 7 or 8 bags of lime were inside the building. These chemicals were used to treat the catfish ponds.
Phillip Rushing, an employee of Dombhart, testified that on October 18, 1990, he was unloading these bags of chemicals and putting them inside the building when a two-tone Ford truck drove into the area where he was loading. Rushing identified the appellant as the driver of the truck. Rushing also stated that no one other than Dombhart employees had any reason to be in the area. Rushing testified that he asked the appellant if he needed any help and that the appellant said that he was just turning around. When Rushing came back to the building the next morning, he discovered that the back door to the building had been kicked open and that the bags of chemicals were missing. Lime was on the floor and footprints led to the opened back door. Rushing said that he notified Jerry Sexton, the owner of Dombhart, and that he also notified the police.
Sexton testified that several hours after the theft, he was driving around the area searching for the two-tone truck, when he discovered what he believed to be the truck parked in front of a mobile home. Sexton said that he went to the truck and that he saw bags of chemicals in the bed. He quickly counted them and noted that they corresponded to the number of bags taken from the Newbern school building. Sexton said that he then returned to his truck and used his two-way radio to call his wife and ask her to call the police. The appellant and another man came out of the mobile home, got into *1262 the appellant's truck, and drove away. Sexton testified that he started to follow them and that shortly thereafter the police arrived and talked with the appellant, who had stopped his truck in the road.
Sheriff Larry Johnson of Hale County testified that the appellant told him that he had gotten the chemicals from an old building in Newbern. He also said that Sexton had told him that the bags in the truck that was parked in front of the mobile home were the ones taken from the school building. At trial Sexton further testified that the copper sulfate was valued at $30 a bag, the sodium bicarbonate at $10 a bag, and the lime at $3-$4 a bag.
I
The appellant initially argues that there was insufficient evidence to find him guilty of stealing the bags of chemicals because, he says, they were not adequately identified as the ones taken from the school building. We do not agree.
As Judge Bowen stated in Alldredge v. State, 431 So. 2d 1358 (Ala.Cr.App.1983):
"Although the property must be identified by the most direct and positive testimony of which the case is susceptible, Haun v. State, 44 Ala.App. 675, 678, 219 So. 2d 906 (1969), `(w)hat is sufficient may depend, however, on the nature of the thing taken and the circumstances of the particular case, and what evidence constitutes an identification is generally a matter for the jury.' 50 Am.Jur.2d Larceny, Section 158 (1970). Identity may be established by circumstantial evidence. Harper v. State, 389 So. 2d 184, 185 (Ala.Cr.App. 1980). Correspondence between the amount, kind and nature of the property stolen with similar characteristics of the property found may supply the necessary identification. 50 Am.Jur.2d Larceny at Section 158.
"`Identity may be established by the testimony of the owner of the goods that the articles found in the possession of accused, where they have no earmarks to identify them, are of the same brand and character as the stolen goods, and that, from their brand, character, and appearance, he believes them to be the property stolen from him, especially where many different articles of various kinds, brands, and sizes were stolen, and articles similar in make, brand, character, and appearance to the stolen ones were found in the recent possession of accused.'
"Evidence that the goods recovered were similar in kind, quantity and character to the stolen property may provide sufficient evidence of identification to create a jury question. Bills v. State, 49 Ala.App. 726, 728, 275 So. 2d 706 (1973)."
431 So.2d at 1360-61. We decline to hold that items such as those involved in this case, which "have no earmarks to identify them," can never be the subject of stolen property. We agree with the Virginia Court of Appeals which stated: "`When an accused is found in possession of goods of a type recently stolen, strict proof of identity of the goods is not required.' [Henderson v. Commonwealth, 215 Va. 811], 813, 213 S.E.2d [782] 783 [(1975)]." Wright v. Commonwealth, 2 Va. App. 743, 348 S.E.2d 9, 12 (1986). The number of bags recovered from the appellant's truck did differ from the number of bags taken from the school building by two or three bags. However, this fact alone was not fatal to the prosecution.
The evidence presented in this case presented a jury question as to whether the items recovered from the appellant's truck were in fact the same items taken from the school building. The jury chose to resolve that question against the appellant, and it found him guilty. We see no reason to disturb that verdict on appeal.
II
The appellant next argues that the trial court erred in allowing the prosecutor to ask an allegedly impermissible question during the voir dire of the jury. The following occurred:
"[Prosecutor]: Now, getting a little more personal, have any of you ever had this experience: Have either you yourself, a family member of yours, or have you had a close personal friend that has ever suffered *1263 at any time from what you consider to be a drug or alcohol problem? I'm not
"[Defense counsel]: I object to that. Excuse me. I object to this. This is a theft charge. I don't know what drugs has got to do with it.
"The Court: Overruled.
". . . .
"[Prosecutor]: What I want to know is, have either you yourself, or have you had a family member, or have you had a close friend who has ever suffered from what you considered to be a drug or alcohol problem? Maybe it was a family member and they never thought they had a problem but you felt like they did and you had that experience in dealing with someone like that."
The appellant argues that the above question was asked solely for the purpose of biasing the prospective jurors against the appellant and that, therefore, he is entitled to a new trial.
Rule 18.4(c), A.R.Crim.P., states: "The court shall permit the parties or their attorneys to conduct a reasonable examination of prospective jurors." Rule 18.4(d), states: "Void dire examination of prospective jurors shall be limited to inquiries directed to basis for challenge for cause or for obtaining information enabling the parties to knowledgeably exercise their strikes."
The trial court has considerable discretion in "insur[ing] an unbiased jury." Motes v. State, 356 So. 2d 712 (Ala.Cr.App.), writ denied, 356 So. 2d 720 (Ala.1978). Counsel questioning the prospective jurors is given the right to question the jurors as to any matter that "might aid him in the intelligent exercise of his right to peremptory challenges. Dyer v. State, 241 Ala. 679, 4 So. 2d 311 (1941)." Alabama Power Co. v. Bonner, 459 So. 2d 827, 832 (Ala.1984), overruled on other grounds, Cooper v. Bishop Freeman Co., 495 So. 2d 559 (Ala.1986). "The scope of the examination is left largely to the discretion of the trial judge." Bonner, 459 So.2d at 832.
Under the facts of this case, we refuse to find an abuse of discretion in the trial court's allowing the prosecutor to ask the above question. Where the relevancy of a question posed during voir dire examination is not apparent, the trial court should, upon proper motion or objection, outside the presence of the jury, inquire as to how the question relates to counsel's exercise of peremptory strikes. This practice will alleviate overreaching by the prosecutors into areas that have no bearing on the striking of a impartial jury.
For the foregoing reasons, the judgment in this cause is due to be affirmed.
AFFIRMED.
All the Judges concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584789/ | CURTIS E. DILLON
v.
DOUG WELBORN, CLERK OF COURT
No. 2009 CA 0531.
Court of Appeals of Louisiana, First Circuit.
October 27, 2009.
Not Designated for Publication
CURTIS E. DILLON, Plaintiff/Appellant In Proper Person.
E. WADE SHOWS, JEFFREY K. CODY, Counsel for Defendant/Appellee Doug Welborn, Clerk of Court for East Baton Rouge Parish.
Before: DOWNING, GAIDRY, and McCLENDON, JJ.
GAIDRY, J.
Plaintiff, Curtis E. Dillon, an inmate in the custody of the Louisiana Department of Public Safety and Corrections, filed suit against Doug Welborn, East Baton Rouge Parish Clerk of Court, alleging that Welborn overcharged him for fees associated with a number of lawsuits. Dillon submitted his petition against Welborn without the applicable filing fees or a motion and order to proceed in forma pauperis. On August 12, 2004, Dillon was ordered to either submit the applicable filing fee or complete the necessary forms to proceed in forma pauperis within thirty days or his suit would be dismissed. Dillon neither paid the fees nor sought to receive pauper status.
On December 12, 2008, Dillon submitted a motion to dismiss his suit without prejudice, stating that his suit had been stayed in accordance with the Prison Litigation Reform Act (PLRA) for the last three years while awaiting his payment of fees, and since he had not submitted payment, he was seeking to have his suit dismissed. The court signed the judgment dismissing Dillon's suit on December 18, 2008. Dillon then filed a Notice of Appeal, seeking to appeal the trial court's signing of his own motion to dismiss. The order attached to the Notice of Appeal was signed by the trial court on March 3, 2009, although the court did not indicate whether it was granting or denying the appeal.[1]
This court, on its own motion, issued a rule to show cause why the appeal should not be dismissed due to the fact that 1) Dillon moved to dismiss his own cause of action and therefore cannot appeal the dismissal, and 2) it is unclear whether the court granted or denied Dillon's appeal. Dillon responded by brief that he had moved to have his action dismissed because that was "the vehicle available to `finally' appeal the Court's implementation of the PLRA `STAY.'" Regarding the court's failure to indicate whether it was granting him an appeal, Dillon argues: "It is clear that Dillon was granted an appeal .... It is the custom of the 19th Judicial District Court to add in the order of appeal that the appeal brief is due `in accordance with law,' that being the `30' days allotted under appellate procedure."
We will first address his argument that he needed to dismiss his suit voluntarily to appeal the implementation of the PLRA stay. Louisiana Revised Statutes 15:1186 provides, in pertinent part:
A. (1) A prisoner who seeks to bring a civil action or file an appeal or writ application in a civil action without prepayment of fees or security must comply with all requirements for proceeding in forma pauperis except Code of Civil Procedure Article 5183(A)(2) and shall submit a certified copy of the trust fund account statement or institutional equivalent for the six-month period immediately preceding the filing of the petition, notice of appeal, or writ application obtained from the appropriate official of each prison at which the prisoner is or was confined.
(2) If a prisoner brings a civil action or files an appeal or writ application in forma pauperis as authorized by Paragraph (A)(1), the prisoner shall still be required to pay the full amount of a filing fee. The court shall assess and, when funds exist, collect, as a partial payment of any court fees required by law, an initial partial filing fee of twenty percent of the greater of the average monthly deposits to the prisoner's account, or the average monthly balance in the prisoner's account for the six-month period immediately preceding the filing of the petition, notice of appeal, or writ application.
(3) If a prisoner brings a civil action, files an appeal, or files a writ application in which the prisoner is not allowed to proceed as a pauper, the prisoner must pay the required costs in advance. If the prisoner does not pay the costs in advance, the civil action, appeal, or writ application shall be dismissed without prejudice. If the action is dismissed pursuant to this Paragraph, the filing of the suit shall not be considered an interruption of prescription for purposes of Civil Code Article 3463.
B. (1) After payment of the initial partial filing fee, as required by Paragraph (A)(2) of this Section, the prisoner shall be required to make monthly payments of twenty percent of the preceding month's income credited to the prisoner's account. The agency having custody of the prisoner shall forward payments from the prisoner's account to the clerk of the court each time the amount in the account exceeds ten dollars until the filing fees are paid. In no event shall the filing fee collected exceed the amount of fees permitted by statute.
(2)(a) The order granting a prisoner's request to proceed in forma pauperis automatically stays all proceedings, including any service of process, until all costs of court or fees due the clerk by the prisoner in this matter are paid. During the pendency of the stay the prisoner may not take any action to prosecute the suit, including but not limited to filing any pleadings, discovery, or motions other than a motion for voluntary dismissal or a motion to lift the stay because all costs have been paid.
(b) If at any time during the pendency of the action additional costs of court or fees due the clerk by the prisoner accrue and are unpaid by the prisoner, then upon order of the court ex proprio motu or upon motion of the clerk or any other party, the action may be stayed as provided herein until all such additional costs are paid.
(c) If the prisoner does not pay the full court costs or fees within three years from when they are incurred, the suit shall be abandoned and dismissed without prejudice. This provision shall be operative without formal order, but, on the court's own motion or upon ex parte motion of any party, the clerk or other interested person by affidavit which provides that the full court costs and fees have not been paid within three years from when they were incurred, the trial court shall enter a formal order of dismissal as of the date of its abandonment. The order shall be served on the plaintiff pursuant to Code of Civil Procedure Article 1313 or 1314, and the plaintiff shall have thirty days from date of service to move to set aside the dismissal. However, the trial court may direct that a contradictory hearing be held prior to dismissal.
Thus, in accordance with La. R.S. 15:1186(B)(2), the three-year automatic stay of proceedings applies only in cases where the prisoner is granted the right to proceed in forma pauperis. If a prisoner files a civil action in which he is not granted the right to proceed in forma pauperis, he must pay the court costs in advance or his suit will be dismissed without prejudice. Since Dillon did not seek pauper status in his suit, the three-year stay provided for in the PLRA was not applicable to his suit. Furthermore, there is nothing in the record that would indicate that the matter was stayed. The court's August 12, 2004 Order for Costs simply instructed Dillon to either pay the full advanced court costs of $195.00 or apply for pauper status within thirty days, or his suit would be dismissed. Dillon's assertion that a stay was implemented under the PLRA is unfounded.
Furthermore, Dillon voluntarily sought to have his suit dismissed. Under La. C.C.P. art. 2085, "An appeal cannot be taken by a party who confessed judgment in the proceedings in the trial court or who voluntarily and unconditionally acquiesced in a judgment rendered against him." Therefore, since Dillon voluntarily and unconditionally acquiesced in a judgment rendered against him, he cannot seek to appeal that judgment, and his appeal should be dismissed.[2]
DECREE
This appeal from the trial court's December 18, 2008 dismissal of Curtis Dillon's suit is dismissed. Costs of this appeal are to be borne by plaintiff, Curtis E. Dillon.
DISMISSED.
NOTES
[1] The Order attached to the Notice of Appeal stated: "It is hereby `ORDERED' that the foregoing Motion/Notice of Appeal is hereby GRANTED/DENIED and a return date of in accordance with law given to file briefs in this matter." The court did not strike through either GRANTED or DENIED, but simply signed and dated the Order.
[2] Since we have determined that Dillon's appeal should be dismissed due to his acquiescence in the judgment against him, we need not determine whether the trial court intended to grant him an appeal. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918859/ | 912 So. 2d 292 (2005)
Eric DIXON
v.
STATE of Alabama.
CR-03-1889.
Court of Criminal Appeals of Alabama.
January 28, 2005.
*293 Terry Lee Dempsey, Russellville, for appellant.
Troy King, atty. gen., and Stephen N. Dodd, asst. atty. gen., for appellee.
BASCHAB, Judge.
On June 7, 2002, the appellant, Eric Dixon, pled guilty to one count of unlawful possession of a controlled substance and two counts of first-degree unlawful possession of marijuana. The trial court sentenced him to serve concurrent terms of ten years in prison, but split his sentences and ordered him to serve fifteen months followed by five years on supervised probation. In 2004, revocation proceedings were initiated. After conducting a revocation hearing, the circuit court revoked the appellant's probation and reinstated his original sentences. It then split those sentences and ordered him to serve an additional twenty-four months followed by three years on probation. This appeal followed.
I.
The appellant argues that the circuit court erroneously imposed split sentences in his cases after it revoked his probation. Specifically, he contends that *294 he should have been allowed to serve his original sentences because he indicated that he wanted to decline the split sentences.
Initially, we must determine whether the circuit court had the authority to impose split sentences after it revoked the appellant's probation. In its written revocation order, the circuit court noted that the appellant had already served fifteen months. In Hollis v. State, 845 So. 2d 5, 6-7 (Ala.Crim.App.2002), we held:
"[A] trial court does not have jurisdiction to impose a sentence not provided for by statute. Therefore, as an issue concerning subject-matter jurisdiction, "`[a]n illegal sentence may be challenged at any time."' Johnson v. State, 722 So. 2d 799, 800 (Ala.Crim.App.1998) (quoting J.N.J., Jr. v. State, 690 So. 2d 519, 520 (Ala.Crim.App.1996)). See also Hunt v. State, 659 So. 2d 998, 999 (Ala. Crim.App.1994) (`Matters concerning unauthorized sentences are jurisdictional and, therefore, can be reviewed even if they have not been preserved.').
"Second, § 15-18-8(c), Ala.Code 1975, provides:
"`Regardless of whether the defendant has begun serving the minimum period of confinement ordered under the provisions of subsection (a), the court shall retain jurisdiction and authority throughout said period to suspend that portion of the minimum sentence that remains and place the defendant on probation, notwithstanding any provision of the law to the contrary and the court may revoke or modify any condition of probation or may change the period of probation.'
"(Emphasis added.) See also Davis v. State, 644 So. 2d 44, 44 (Ala.Crim.App. 1994) (`Because Davis had already served the minimum period of confinement, the trial court was without jurisdiction to consider the untimely motion for modification; therefore the order denying the motion was void and unappealable. § 15-18-8(c), Ala.Code 1975. See also Massey v. State, 587 So. 2d 448 (Ala. Crim.App.1991) (trial court loses all jurisdiction to modify sentence if the request to modify a sentence is not filed within 30 days of sentencing).').
"Although the trial court retained jurisdiction over the split sentences throughout Hollis's period of confinement, it no longer had jurisdiction over the sentences after he was released. Therefore, it was not within the purview of the trial court to alter or amend Hollis's original sentences. Its only sentencing option was to impose that portion of the sentence that had been suspended at the original hearing 13 years. See § 15-22-54(e)(2), Ala.Code 1975. The trial court did not have jurisdiction to alter or amend the reinstated balance sentence of 13 years, that is, to suspend or split the remaining 13-year sentence."
Quoting § 15-18-8(c), Ala.Code 1975, in Hollis, this court held that the circuit court loses jurisdiction over a defendant's split sentence once the defendant completes the period of incarceration. However, a closer reading of § 15-18-8(c), Ala. Code 1975, makes it clear that this section merely authorizes a circuit court to suspend any portion of the period of confinement, to modify the conditions of probation, and to revoke probation even if the defendant had not begun serving his period of confinement or if the defendant is currently serving his period of confinement. Section 15-18-8(c), Ala.Code 1975, does not address the alternatives available to a circuit court when it finds that a defendant has violated the terms and conditions of his probation and does not address the circuit court's jurisdiction over a *295 defendant who has served the period of confinement. Rather, as we discuss below, § 15-22-54(d), Ala.Code 1975, provides for the initiation of revocation proceedings against a defendant who is on probation and sets forth the alternatives available to a circuit court when it finds that a defendant has violated the terms and conditions of his probation.
In reaching the decision in Hollis, this court relied on Davis v. State, 644 So. 2d 44 (Ala.Crim.App.1994). However, Davis dealt with a circuit court's authority to entertain a motion to modify a sentence that Davis filed more than thirty days after his probation had been revoked and after he had already completed serving his minimum period of incarceration. Because it did not address the circuit court's jurisdiction over a split sentence during revocation proceedings, we erroneously relied upon Davis in reaching our conclusion in Hollis.
In Hollis, this court also relied on Massey v. State, 587 So. 2d 448 (Ala.Crim.App. 1991), in which we held that, absent the filing of a motion for a new trial or a motion to modify a sentence within thirty days after sentencing, a trial court loses jurisdiction to amend an original sentence thirty days after the sentence is imposed. However, Massey did not involve the court's modification of the terms and conditions of probation or a split sentence during revocation proceedings. Therefore, Massey does not support the proposition for which we cited it in Hollis.
Further, in Hollis, this court held that, pursuant to § 15-22-54(d)(2), Ala.Code 1975, when a circuit court finds that a defendant has violated the terms and conditions of his probation, that court may only reinstate the suspended portion of the original term of confinement.[1] However, this holding ignores the remaining language of § 15-22-54(d), Ala.Code 1975, which provides, in pertinent part:
"(1) If the defendant violates a condition of probation or suspension of execution of sentence, the court, after a hearing, may implement one or more of the following options:
"a. Continue the existing probation or suspension of execution of sentence.
"b. Issue a formal or informal warning to the probationer that further violations may result in revocation of probation or suspension of execution of sentence.
"c. Conduct a formal or informal conference with the probationer to reemphasize the necessity of compliance with the conditions of probation.
"d. Modify the conditions of probation or suspension of execution of sentence, which conditions may include the addition of short periods of confinement.
"e. Revoke the probation or suspension of execution of sentence.
"(2) If the court revokes probation, it may, after a hearing, impose the sentence that was suspended at the original hearing or any lesser sentence, including any option listed in subdivision (1)."
(Emphasis added.)
Finally, the opinion in Hollis ignores previous cases in which we recognized a circuit court's authority to split a defendant's sentence after it revokes the defendant's probation. In Parker v. State, 648 So. 2d 653, 654-56 (Ala.Crim.App.1994), we *296 addressed the circuit court's authority to impose a split sentence after it revokes the defendant's probation as follows:
"This is an appeal from a revocation of probation. The appellant, Samuel Labarron Parker, contends that the circuit court was without authority to increase his term of confinement in the penitentiary upon the revocation of his probation.
"In 1991, the appellant pleaded guilty to and was convicted of, possession of a forged instrument in the second degree. His sentence of five years' imprisonment was suspended and he was placed on probation. In February 1994, the appellant was arrested on a charge of kidnapping. His probation was revoked in March 1994, based on evidence that he had committed a kidnapping and a burglary. After revoking his probation, the circuit court ordered the appellant to serve a `split' sentence on his 1991 possession case.
"....
"... [A] reading of Ala.Code 1975, § 15-22-54, makes it clear that the trial court did have the authority to `split' the appellant's original sentence on revocation of probation. Section 15-22-54(d), Ala.Code 1975, in pertinent part, provides:
"`(2) If the court revokes probation, it may, after a hearing, impose the sentence that was suspended at the original hearing or any lesser sentence....
"`(3) If revocation results in a sentence of confinement, credit shall be given for all time spent in custody prior to revocation. Full credit shall be awarded for full-time confinement in facilities such as county jail, state prison, and boot camp. Credit for other penalties, such as work release programs, intermittent confinement, and home detention, shall be left to the discretion of the court, with the presumption that time spent subject to these penalties will receive half credit. The court shall also give significant weight to the time spent on probation in substantial compliance with the conditions thereof. The total time spent in confinement may not exceed the term of confinement of the original sentence.'
"Construed in the context, the sentence `[t]he total time spent in confinement may not exceed the term of confinement of the original sentence,' clearly refers to the total time a defendant has spent in confinement whether it be in full-time confinement in facilities such as county jail, state prison, and boot camp, or any `partial' confinement such as work release programs, intermittent confinement, and home detention, if awarded and that such total time of confinement may not exceed the term of the defendant's original sentence. In other words, the length of a defendant's sentence ... may not be increased after his probation is revoked."
Further, in Phillips v. State, 755 So. 2d 63 (Ala.Crim.App.1999), we addressed the circuit court's authority to increase the period of confinement on a split sentence. In that case, Phillips' probation officer filed a delinquency report after Phillips had already completed his minimum period of confinement. Subsequently, the circuit court noted on the case action summary sheet that the parties had agreed to dismiss the revocation proceeding based upon the condition that Phillips serve an additional two years of confinement under the split portion of his sentence. We subsequently addressed the circuit court's authority to increase the circuit court's confinement *297 portion of a split sentence as follows:
"The circuit court's order purporting to increase the confinement portion of Phillips's split sentence was entered more than 12 months after Phillips's sentence was originally imposed long past the period during which the circuit court had jurisdiction to modify Phillips's sentence either pursuant to a motion to modify or `ex mero motu.' Hollins v. State, 737 So. 2d 1056 (Ala.Cr. App.1998). See Ex parte Hayden, 531 So. 2d 940, 941 (Ala.Cr.App.1988) (`Since there was no motion for new trial or request to modify sentence filed with 30 days of sentencing, the trial judge lost all jurisdiction to modify the defendant's sentence.'). The only manner in which the circuit court could properly exercise jurisdiction to increase the confinement portion of Phillips's split sentence was through a probation revocation proceeding. In Leonard v. State, 686 So. 2d 554 (Ala.Cr.App.1996), this court held:
"`When a split sentence is imposed and the period for filing a petition to modify a sentence has expired, in order for the trial court to revoke probation and impose the original sentence of imprisonment, the procedural due process rights of the defendant must be protected; the court must conduct a proper revocation proceeding.'
"686 So.2d at 555. In Phillips's case, the circuit court, in its order of May 6, 1998, did not order execution of the full 15-year sentence originally imposed at Phillips's sentencing, but instead continued the split sentence and increased the confinement portion by an additional 2 years. The circuit court had authority to do this, if it did so pursuant to a proper probation revocation proceeding. Under § 15-22-54(d)(2), Ala.Code 1975, if the court revokes probation, it may impose the full sentence originally imposed `or any lesser sentence, including any option listed in subdivision (1) [of § 15-22-54(d)].'3 (Emphasis added.)
"______
"3 Upon revocation of the probation of a defendant sentenced under the Split Sentence Act, if the circuit court does not order execution of the full sentence originally imposed at sentencing, but instead continues the split sentence and increases the confinement portion of the split sentence, the total length of the confinement portion of the split sentence may not exceed three years. See Havis v. State, 710 So. 2d 527, 528-29 (Ala.Cr.App. 1997); § 15-18-8(a), Ala.Code 1975. The total length of the confinement portion of the sentence in this case, as increased, did not exceed three years."
755 So.2d at 64-65 (footnote omitted).
Based on the clear language set forth in § 15-22-54(d), Ala.Code 1975, and our holdings in Parker and Phillips, a circuit court has the authority to split a defendant's sentence after it revokes the defendant's probation, regardless of whether the defendant has completed serving his original period of confinement. Further, imposing a split sentence after revoking a defendant's probation would not alter or amend the original sentence imposed by the trial court. This court's holding in Hollis that the circuit court may only impose the suspended portion of a sentence when it revokes the probation of a defendant who has completed serving his period of confinement is contrary to the statutory language set forth in § 15-22-54(d), Ala. Code 1975, and is not supported by our existing caselaw. Therefore, we hereby expressly overrule Hollis. Accordingly, the circuit court had the authority to split the appellant's sentences after it revoked his probation.
Next, we must determine whether a defendant has the authority to reject a *298 split sentence that is imposed after the defendant's probation has been revoked.
"`A probation is subject to rejection or acceptance by the convict. He has an unfettered election in that regard, and the court order is not effective or operative until it has been accepted by him. If he prefers to serve out his sentence, as originally imposed upon him, to a suspension of it by subjecting himself to the conditions nominated in the probation, he has the clear right to do so. But if he elects to accept the probation and avails himself of the liberty it confers, he must do so upon the conditions upon which alone it is granted to him. One of these conditions is that his sentence shall continue in fieri, and that the State shall have the power to execute it in full upon him should he forfeit the liberty and immunity conditionally secured to him by the order. That a convict having only a short time remaining of his sentence would make an unwise choice by accepting such probation upon onerous conditions for a breach of which he might years after be remanded to complete his sentence affords no argument against the constitutional integrity of the enactment.'
"[Persall v. State,] 31 Ala.App. [309,] 313, 16 So.2d [332,] 335 [(1944)](emphasis added)."
Cannon v. State, 624 So. 2d 238, 239 (Ala. Crim.App.1993) (some emphasis added).
In this case, the appellant initially accepted the trial court's offer of a split sentence and availed himself of the liberty that the split sentence conveyed upon him. Consequently, he was bound by the conditions upon which such liberty was granted. One such condition was the circuit court's power to "[m]odify the conditions of probation or suspension of execution of sentence, which conditions may include the addition of short periods of confinement," in the event he violated the terms and conditions of his probation. § 15-22-54(d)(1)d., Ala.Code 1975 (emphasis added). Therefore, the appellant did not have the right to reject the split sentence the circuit court imposed after it found that he had violated the terms and conditions of his probation. Accordingly, his argument is without merit.
II.
The appellant also argues that the circuit court erroneously imposed a twenty-four month period of confinement on his ten-year sentence. Specifically, he contends that, because he had previously served fifteen months, the imposition of an additional twenty-four months of confinement caused the total period of confinement in his case to exceed the maximum set forth in § 15-18-8(a)(1), Ala.Code 1975. As we previously noted, the appellant had already served fifteen months. Therefore, when the circuit court ordered him to serve an additional twenty-four months, that increased the total period of confinement to thirty-nine months. However, § 15-18-8(a), Ala.Code 1975, provides, in pertinent part:
"When a defendant is convicted of an offense and receives a sentence of 20 years or less in any court having jurisdiction to try offenses against the State of Alabama and the judge presiding over the case is satisfied that the ends of justice and the best interests of the public as well as the defendant will be served thereby, he or she may order:
"(1) That the convicted defendant may be confined in a prison, jail-type institution, or treatment institution for a period not exceeding three years in cases where the imposed sentence is not more than 15 years ...."
*299 (Emphasis added.) In this case, the trial court sentenced the appellant to serve concurrent terms of ten years in prison. Therefore, the total period of confinement the circuit court could impose on his split sentences was three years, and the circuit court was not authorized to impose an additional period of confinement that would cause his total period of confinement to exceed three years. See Phillips, supra; Havis v. State, 710 So. 2d 527 (Ala. Crim.App.1998). Because the additional twenty-four month period of confinement caused the appellant's total period of confinement to exceed the maximum set forth in § 15-18-8(a)(1), Ala.Code 1975, we remand this case to the circuit court with instructions that that court set aside the additional twenty-four month period of confinement in each case. On remand, the circuit court may impose additional periods of confinement on his split sentences as long as the total period of confinement does not exceed the three-year maximum set forth in § 15-18-8(a)(1), Ala.Code 1975. The circuit court shall take all necessary action to see that the circuit clerk makes due return to this court at the earliest possible time and within 42 days after the release of this opinion. The return to remand shall include a transcript of the remand proceedings, if any, conducted by the circuit court.
REMANDED WITH INSTRUCTIONS.[*]
McMILLAN, P.J., and COBB, SHAW, and WISE, JJ., concur.
NOTES
[1] In Hollis, the court cites § 15-22-54(e)(2), Ala.Code 1975. However, § 15-22-54 does not contain a subpart (e). It appears that this is a typographical error and that the court was actually referring to § 15-22-54(d)(2), Ala.Code 1975.
[*] Note from the reporter of decisions: On April 8, 2005, on return to remand, the Court of Criminal Appeals affirmed, without opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584803/ | 728 N.W.2d 373 (2007)
2007 WI App 34
STATE
v.
MELENCIANO.
No. 2005AP1259-CR.
Wisconsin Court of Appeals.
January 3, 2007.
Unpublished opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1744614/ | 998 So. 2d 621 (2008)
ZAYAS
v.
STATE.
No. 3D07-788.
District Court of Appeal of Florida, Third District.
December 17, 2008.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1588962/ | 972 So. 2d 925 (2007)
Michael BECHINA, et al., Appellants,
v.
ENTERPRISE LEASING COMPANY, Appellee.
No. 3D07-1225.
District Court of Appeal of Florida, Third District.
December 12, 2007.
*926 Andre Mura; Franklin J. Siegel, Miami, for appellants.
Holland & Knight and David C. Borucke, Tampa; George, Hartz, Lundeen, Flagg & Fulmer and Mitchell L. Lundeen, Coral Gables, for appellees.
Richard P. Schweitzer, for Truck Renting and Leasing Association, Inc., as Amicus Curiae.
Before COPE, GREEN, and SALTER, JJ.
SALTER, J.
The Bechinas appeal a final summary judgment in favor of the appellee, Enterprise Leasing Company. Enterprise owned and leased a motor vehicle to a nonparty, who in turn injured the Bechinas in a collision. The Bechinas included Enterprise as a vicariously liable defendant in their lawsuit for damages for their injuries, and Enterprise successfully raised the defense of the federal "Graves Amendment"[1] as a complete bar to the Bechinas' claim.
On appeal, the Bechinas raise two issues. First, they assert that the trial court misinterpreted a provision of the Graves Amendment that limits the preemptive reach of the statute and preserves certain vicarious liability provisions under preexisting Florida statutory and common law. Second, they assert that the Graves Amendment was unconstitutional. We disagree as to each of these arguments and affirm.
This Court recently interpreted and applied the Graves Amendment in a similar case, Kumarsingh, v. PV Holding Corp., 32 Fla. L. Weekly D2389 (Fla. 3d DCA Oct.3, 2007).[2] In Kumarsingh, we concurred with the thorough analysis of the issue in Garcia v. Vanguard Car Rental USA, Inc., 510 F. Supp. 2d 821 (M.D.Fla.2007), and we upheld the preemptive language of the Graves Amendment as applied to subparagraph 324.021(9)(b)(2) of the Florida Statutes (2005).[3] Applying that analysis here, the Graves Amendment abrogated Enterprise's vicarious liability, and the final summary judgment must be affirmed.
The Bechinas urge us to follow other reported cases that have concluded that the Graves Amendment is "outside of the Congressional powers created by the Commerce Clause of the United States Constitution and, therefore, unconstitutional." Vanguard Car Rental USA, Inc. v. Huchon, 2007 WL 2875388 at *6 (S.D.Fla. Sept. 7, 2007).[4]See Graham v. Dunkley, 13 Misc. 3d 790, 827 N.Y.S.2d 513 (N.Y.Sup.Ct.2006); Vanguard Car Rental USA, Inc. v. Drouin, 521 F. Supp. 2d 1343 *927 (S.D.Fla. 2007). We decline to follow those rulings, holding instead that motor vehicle leasing transactions unquestionably affect the channels of interstate commerce, the instrumentalities of interstate commerce, and intrastate activities substantially related to interstate commerce. United States v. Lopez, 514 U.S. 549, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995); Garcia, 510 F.Supp.2d at 834-37. Though mindful of the interests of Florida citizens in an accident that in this case occurred in Florida, we may not strike a Congressional enactment for those local interests. Neither the trial court nor this Court has been provided "a plain showing that Congress has exceeded its constitutional bounds,"[5] and we must therefore apply the Graves Amendment as duly enacted.
Affirmed.
NOTES
[1] 49 U.S.C. § 30106, (enacted August 10, 2005).
[2] The case is presently pending here on motions for rehearing or clarification, rehearing en banc, and certification to the Florida Supreme Court.
[3] The trial court in Kumarsingh held that the $10,000 financial responsibility requirement imposed by subsection 324.021(7), Florida Statutes (2005), survived as a cap on the rental car company's vicarious liability, and that determination was not cross-appealed. In the Bechinas' case, however, the trial court granted summary judgment against the Bechinas as to any vicarious liability, whether under subsection 324.021(7), subparagraph 324.021(9)(b)(2), or otherwise.
[4] The irreconcilable conflict between Huchon and Garcia appears to be headed for the United States Court of Appeals for the Eleventh Circuit, and perhaps beyond.
[5] United States v. Morrison, 529 U.S. 598, 607, 120 S. Ct. 1740, 146 L. Ed. 2d 658 (2000). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3344519/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]
MEMORANDUM OF DECISION
James T. Cowdery, Esq., Defense Counsel for Petitioner
John A. Connelly, Esq., State's Attorney, for the State.
Sentence Affirmed.
BY THE DIVISION: The petitioner, thirty years of age at the time of CT Page 2298 sentencing, was convicted after a trial by jury of the crime of Murder, in violation of 53a-54a of the Connecticut General Statutes. He received the maximum sentence for the crime of life imprisonment, which is defined by Connecticut General Statutes Sec. 53a-35b as a definite sentence of sixty years.
The victim of this murder was a twenty-four year old woman who had left her home at approximately 10:30 PM on August 3, 1984 to walk to her place of employment, a kennel in Ansonia. From the evidence the petitioner, who had been at an area bar, encountered the victim as she was walking to work. She was beaten about the head and face, and repeatedly stabbed in the back, chest and neck. After she was killed, her body was thrown into Lake Zoar where it was recovered on August 7, 1984. The clothing which she had been carrying in a gym bag was burned by the petitioner in a fire in a secluded area along a nearby river.
The petitioner argues that media and public pressure for revenge must have impacted on the sentencing proceedings and that bending under that pressure the Court imposed a sentence that was disproportionate and inappropriate.
Additionally, he claims that members of the Courtroom audience, during defense counsel's final argument, made gestures and facial expressions which were concededly inappropriate and offensive. He claims such behavior created a lynch mob atmosphere and tainted the later sentencing proceedings.
The transcript contains no comments made by the sentencing Court which could reasonably be interpreted as an indication that it was somehow improperly influenced by any outside pressures. In fact, defense counsel, in remarks to the Court after sentence had been imposed stated that the sentence was precisely what everybody said all along would be imposed CT Page 2299 upon conviction, and not just because the sentencing Court generally imposed the maximum sentence in a murder conviction, but "because in this particular case it was certainly what one would have expected would have been imposed."
With respect to the courtroom misconduct, it is noteworthy that the Court showed its objectivity by chastising the offenders, by cautioning the jury to disregard any improper behavior, and by giving defense counsel an opportunity to address the jury a second time following the state's summation.
The fact is that this was a brutal and vicious murder as characterized by the Court. An innocent young life was horribly taken and the victim's last moments must have been unspeakably terrifying to her.
The Division has reviewed the sentence imposed applying the standards of review set forth in Sec. 942 of the Practice Book. It finds the sentence was neither inappropriate nor disproportionate and, accordingly, affirms it.
LAWRENCE C. KLACZAK, JUDGE
JOSEPH J. PURTILL, JUDGE
RICHARD J. STANLEY, JUDGE
Purtill, Klaczak and Stanley, J.'s, participated in this decision. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/599007/ | 983 F.2d 1528
61 USLW 2474, 16 Employee Benefits Cas. 1321
Frederic J. RAYMOND, J.A. Morrison, Robert G. Jacobsen,Donald F. Hill, George H. Liveris, Robert A. Irwin, A.D.Bond, Virginia Howard, Ira S. Reavis, and Billy RheaSargent, for themselves and on behalf of others similarlysituated, and others as opt in or consent plaintiffspursuant to applicable federal law, Plaintiffs-Appellees,v.MOBIL OIL CORPORATION, Defendant-Appellant.
No. 92-1298.
United States Court of Appeals,Tenth Circuit.
Jan. 20, 1993.
Rodney R. Patula (Elizabeth C. Moran, Gary J. Benson, and Ricardo M. Barrera, with him on the briefs), Pryor, Carney & Johnson, Englewood, CO, for plaintiffs-appellees.
Michael E. Tigar, Austin, TX (Loren Kieve and John G. Koeltl, Debevoise & Plimpton, New York City, Harold A. Haddon and Saskia A. Jordan, Haddon, Morgan & Foreman, P.C., Denver, CO, with him on the briefs), for defendant-appellant.
Before LOGAN, ANDERSON, and BALDOCK, Circuit Judge.
STEPHEN H. ANDERSON, Circuit Judge.
1
In this class action involving the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461, defendant/appellant Mobil Oil Corporation appeals under 28 U.S.C. § 1292(b) from an interlocutory order of the district court denying Mobil's motion for summary judgment on certain claims of plaintiffs, former employees of Mobil.1 Plaintiffs' action arose out of the same pension plan amendment involved in a previous decision of this court, Mitchell v. Mobil Oil Corp., 896 F.2d 463 (10th Cir.), cert. denied, 498 U.S. 898, 111 S. Ct. 252, 112 L. Ed. 2d 210 (1990), as well as a recent decision of the Fifth Circuit, Christopher v. Mobil Oil Corp., 950 F.2d 1209 (5th Cir.), cert. denied, --- U.S. ----, 113 S. Ct. 68, 121 L. Ed. 2d 35 (1992). Because we conclude that plaintiffs are not "participants" in an ERISA plan, and therefore lack standing to sue under ERISA, we reverse the district court's denial of Mobil's motion for summary judgment and remand for entry of summary judgment in favor of Mobil.
BACKGROUND
2
The essential undisputed facts relevant to this appeal are set forth in the Mitchell and Christopher opinions. We quote at some length from each:
3
Until 1977, Mobil provided retirement benefits only in the form of an annuity. In 1977, Mobil added a "lump-sum option" to its retirement plan, the terms of which, for the purposes of this case, appear in the Retirement Plan of Mobil Oil Corporation as of January 1, 1984 (the Plan). Under the Plan, an employee could elect to receive a lump-sum payment which had the same equivalent actuarial value, discounted at 5%, as the annuity. In the case of early retirement, the Plan reduced the lump-sum payment by 5% for each year of retirement prior to the age of sixty. To qualify for the lump-sum option, an employee had to elect this option prior to retirement; had to be over fifty-five; and, at the date of his retirement, had to have a net worth of at least $250,000 or an accumulated lump sum in excess of $250,000.
4
In February 1984, Mobil amended the lump-sum option. It raised the discount rate prospectively from 5% to 9.5% and increased the eligibility threshold from $250,000 to $450,000. It also linked the new threshold to the Consumer Price Index (CPI), projecting a rise in the threshold to correlate with a rise in the CPI. These changes, however, would not take effect until at least six months after Mobil announced them, pending approval by the IRS. The delayed effective date gave employees who were eligible for the lump-sum payment under the old criteria, but who might not meet the new threshold, the opportunity to decide whether to retire and take the lump sum or to continue working and accumulating more pension benefits with the possibility that they might not accumulate sufficient additional benefits to meet the new threshold requirement at the date of their retirement.
5
Mitchell, 896 F.2d at 466.
6
On July 16, 1984, Mobil sought a determination from the IRS that the plan as amended continued to meet the Internal Revenue Code's requirements for favorable tax treatment, including the requirement that pension plans not "discriminate in favor of highly compensated employees." 26 U.S.C. § 401(a)(4). In meetings in late September 1984, the IRS reviewing agent expressed concern that the amended plan could result in benefits favoring highly compensated employees, and indicated that he might need to seek technical advice from Washington. In response, Mobil adopted another plan amendment allowing Mobil, in its sole discretion, to waive the eligibility threshold in individual cases for valid cause shown. After insertion of this provision, the IRS issued to Mobil a favorable determination letter on November 23, 1984, noting that continued qualification of the plan would depend upon its effect in operation.
7
Mobil announced the IRS approval to its employees on December 21, 1984, but did not notify its employees of the waiver provision until well after expiration of the six-month window--October 1985.
Christopher, 950 F.2d at 1213.2
8
Porter Mitchell, the plaintiff in Mitchell, was a fifty-six year old Mobil employee who retired during the six-month window period, and took his retirement benefits under the lump-sum $250,000 option, for which he qualified.3 He brought suit, claiming that, by amending its retirement plan, Mobil had willfully violated the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-634, by constructively discharging him because of his age, had "breached its fiduciary duties under ERISA and had violated ERISA's anti-cutback provision, 29 U.S.C. § 1054(g), by retroactively limiting his right to the lump-sum benefit, an accrued benefit." Mitchell, 896 F.2d at 466. He also claimed that Mobil violated § 510 of ERISA, 29 U.S.C. § 1140, which prohibits discrimination against or discharge of a participant in an ERISA-covered benefit plan "for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan."
9
After receiving a favorable jury verdict awarding him substantial damages, this court reversed the award on appeal. We held that Mitchell had established that he had been constructively discharged because of his age, but that he had failed to prove that Mobil's proffered justification for its plan amendment was a mere pretext for discrimination.4 Accordingly, his ADEA claim failed.
10
We held that Mitchell lacked standing under ERISA to challenge the plan amendment, and therefore reversed the award. We observed that the definition of "participant" under ERISA "excludes ... former employees who have received a lump-sum payment of all their vested benefits because 'these erstwhile participants have already received the full extent of their benefits and are no longer eligible to receive future payments.' " Mitchell, 896 F.2d at 474 (quoting Joseph v. New Orleans Elec. Pension & Retirement Plan, 754 F.2d 628, 630 (5th Cir.), cert. denied, 474 U.S. 1006, 106 S. Ct. 526, 88 L. Ed. 2d 458 (1985)). And we held Mitchell lacked standing as a former employee with a "reasonable expectation of returning to covered employment," Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 117, 109 S. Ct. 948, 958, 103 L. Ed. 2d 80 (1989), because he had never sought reinstatement.
11
The Christopher plaintiffs also elected to retire during the six-month window period, opting for the lump-sum benefit under the old $250,000 criteria. They similarly filed suit, claiming that Mobil's conduct surrounding the plan amendment constituted age discrimination in violation of the ADEA, as well as "common-law fraud, civil conspiracy, unlawful interference with contract rights, breach of the employment contract, negligence, and gross negligence." Christopher, 950 F.2d at 1213. The plaintiffs' complaint also alleged "in brief and conclusory fashion" that Mobil's conduct violated ERISA. Id.5
12
The district court granted Mobil's motion for summary judgment on the ADEA claims, holding that they were time-barred and granted Mobil's motion for judgment on the pleadings on the state law claims, holding that they were preempted by ERISA. It granted Mobil's Fed.R.Civ.P. 12(b)(1) and (6) motion to dismiss the contingent ERISA claim on the ground that plaintiffs were not "participants" under ERISA. On appeal, the Fifth Circuit affirmed the grant of summary judgment on the ADEA claims because they were time-barred, affirmed the dismissal of the state law claims as preempted by ERISA, but reversed the dismissal of plaintiffs' ERISA claims and remanded the matter to permit plaintiffs to plead their ERISA claims with greater specificity. The court specifically noted that it had "not determined that appellants [plaintiffs] will be able to establish a violation of section 510, only that they should be allowed to attempt to do so." Christopher, 950 F.2d at 1223.
13
Plaintiffs in this case are a class of former employees who retired on or before January 1, 1985, who were not told of the waiver option, and who assert that they would not have lost their jobs had they known of their right to apply for a waiver. They also allege that they were unaware of the fact that the $250,000 threshold could be "grandfathered" for each of them, by virtue of the enactment of the Retirement Equity Act ("REA"), effective July 31, 1984.6 Specifically, they argue that:Mobil interfered with their right to the lump sum benefit under the $250,000 test by fraudulently leading plaintiffs to believe that that right was conditioned on an additional requirement, namely that plaintiffs retire early, when in fact that additional condition did not really exist. Plaintiffs were also discharged for the exercise of their right to the lump sum benefit under the $250,000 test and the right to be free from the cutback of that benefit. And Mobil fraudulently caused plaintiffs' discharges so that they could not attain the right under the Plan to apply for a waiver of the $450,000 requirement, and thereby keep both their jobs and the lump sum benefit.
14
Brief of Appellees at 24-25.
15
They filed suit, alleging that Mobil's conduct constituted a willful violation of the ADEA, as well as a violation of section 510 of ERISA.7 Plaintiffs amended their complaint twice, ultimately deleting all of their ERISA claims except those based on a fraudulent discharge in violation of section 510. As a result of the alleged ERISA violations, plaintiffs seek
16
all equitable and other relief as may be necessary to redress plaintiffs' rights asserted under those claims and to redress the violations of law alleged in those claims, including an order compelling reinstatement or equitable reinstatement of each plaintiffs' employment at a status and salary commensurate with his tenure as though his employment with Mobil were uninterrupted and with all previously elected retirement benefits, as well as accounts benefits, both past and future, as well as all other compensatory, consequential, and incidental measures of restitution, together with interest, attorneys' fees, costs, expert witness fees, punitive and exemplary damages.
17
Third Amended Complaint at 22, Appellant's Appendix Vol. I at A000022.
DISCUSSION
18
Under ERISA § 502, 29 U.S.C. § 1132, "participants" have standing to bring civil actions to enforce their rights under the terms of an ERISA-covered benefit plan or to enforce ERISA's provisions.8 The term "participant" is statutorily defined as "any employee or former employee of an employer, ... who is or may become eligible to receive a benefit of any type from an employee benefit plan...." ERISA § 3(7), 29 U.S.C. § 1002(7). In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117, 109 S. Ct. 948, 958, 103 L. Ed. 2d 80 (1989) the Supreme Court further defined the term "participant," holding that it "is naturally read to mean either 'employees in, or reasonably expected to be in, currently covered employment,' or former employees who 'have ... a reasonable expectation of returning to covered employment' or who have 'a colorable claim' to vested benefits." (quoting Saladino v. I.L.G.W.U. Nat'l Retirement Fund, 754 F.2d 473, 476 (2d Cir.1985), and Kuntz v. Reese, 785 F.2d 1410, 1411 (9th Cir.) (per curiam), cert. denied, 479 U.S. 916, 107 S. Ct. 318, 93 L. Ed. 2d 291 (1986)). The Court has defined the statutory term "may become eligible" as requiring proof that the claimant has "a colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future." Firestone, 489 U.S. at 117-18, 109 S.Ct. at 958; see also Uselton v. Commercial Lovelace Motor Freight, Inc., 940 F.2d 564, 581 n. 16 (10th Cir.), cert. denied, --- U.S. ----, 112 S. Ct. 589, 116 L. Ed. 2d 614 (1991). Thus, to have standing to bring an ERISA action, plaintiffs must either be employees in or reasonably expected to be in currently covered employment, or former employees with a reasonable expectation of returning to covered employment or a colorable claim to vested benefits. Employees or former employees seeking to show they "may become eligible" for a benefit must prove that they have a colorable claim that they will prevail in a suit for benefits, or that eligibility requirements will be fulfilled in the future.
19
Plaintiffs argue that this case is like Christopher and, more importantly, is distinguishable from Mitchell. They therefore claim they should be afforded standing as participants, as the Christopher plaintiffs provisionally were, and not be bound by our finding of no standing in Mitchell.
20
The crucial difference they assert exists between this case and Mitchell is that the entire case in Mitchell proceeded on the theory that Porter Mitchell was presented with a choice between retiring under the $250,000 lump sum option and continuing to work with the uncertainty of ever qualifying for the $450,000 lump sum. Thus, they characterize our Mitchell opinion as holding that "an employee faced with a difficult choice between preserving a valuable retirement benefit but giving up his job versus foregoing the benefit and keeping his job generally cannot choose the former, leave his job with all earned wages and benefits paid, and then later sue under ERISA for wages and benefits not earned." Brief of Appellees at 2. They assert that the choice Mr. Mitchell made was a "conscious one" even if "coercive" and amounting to a "constructive discharge." Because Mr. Mitchell's choice was conscious, plaintiffs argue, he could only establish ERISA standing by meeting one of the tests for "former employees" under Firestone--either a colorable claim to vested benefits or a reasonable expectation of returning to covered employment.
21
By contrast, they assert that plaintiffs' choices here were not conscious, because they were fraudulently procured and were therefore "no different from outright firings under ERISA § 510." Id. at 3. Relying on Christopher, they argue that Mobil's deceptive and fraudulent conduct, in violation of ERISA, vitiated the voluntariness of their decisions to retire. They therefore assert that, unlike Porter Mitchell, they need not establish standing as "former employees." While plaintiffs are obviously in fact former employees, they argue they are to be viewed legally as current employees, with clear participant status because they were current employees at the time of the ERISA violation which effectively involuntarily discharged them.9 Even if they have to establish standing as former employees, plaintiffs argue they have demonstrated the existence of a genuine factual issue as to whether they have a reasonable expectation of returning to covered employment, such that Mobil's motion for summary judgment was properly denied.
22
Mobil responds that this case "is Mitchell redux." Brief of Appellant Mobil Oil Corporation at 17. It contends both that Mr. Mitchell clearly argued and the Mitchell opinion clearly held that an employee who retires, even if fraudulently induced to do so, and takes all the vested benefits to which he is entitled and does not ask his employer for reinstatement and has no reasonable expectation, based on custom or practice, that he will be reinstated, lacks standing to bring an ERISA action. He is clearly a former employee, who has no colorable claim to vested benefits (he has received them all already and cannot show that he will fulfill eligibility requirements in the future) and has no reasonable expectation of returning to covered employment (he has not sought reinstatement from his employer, and has no factual basis for believing that he will be reinstated).10 He is merely seeking damages, not ERISA-protected benefits.
23
Thus, Mobil asserts that Mitchell correctly established a bright-line test that ERISA protects only benefits, and an employee who leaves his employment, under any circumstance, and receives all his benefits, cannot sue under ERISA. Moreover, Mitchell established that a request for judicial reinstatement is per se insufficient to establish a reasonable expectation of returning to covered employment. "Thus, ERISA does not provide a cause of action for former employees who have fulfilled all their eligibility requirements, received the full amount of their vested benefits, and seek only (a) reinstatement to accrue further benefits or (b) damages based on years they never worked." Brief of Appellant Mobil Oil Corporation at 28-29.
24
We review the denial of a motion for summary judgment de novo, applying the same standard as did the district court. Miller v. Coastal Corp., 978 F.2d 622 (10th Cir.1992). Summary judgment will only be granted if "viewing the facts in the light most favorable to the opposing party, there is no genuine issue of material fact in dispute and the moving party should prevail as a matter of law." Millensifer v. Retirement Plan for Salaried Employees of Cotter Corp., 968 F.2d 1005, 1007 (10th Cir.1992) (quoting Woolsey v. Marion Lab., Inc., 934 F.2d 1452, 1456 (10th Cir.1991)); Boren v. Southwestern Bell Tel. Co., Inc., 933 F.2d 891, 892 (10th Cir.1991).
25
We begin by rejecting plaintiffs' rather novel argument that they really are, legally, current employees. As indicated, ERISA provides a remedy for "participants." "Participants" include " 'employees in, or reasonably expected to be in, currently covered employment,' " Firestone, 489 U.S. at 117, 109 S.Ct. at 957-58 (quoting Saladino, 754 F.2d at 476), or certain "former employees." Attributing " 'conventional meanings to the statutory language,' " id., as we must, it defies common sense to conclude that employees who retired some seven years ago are anything other than "former employees." Thus, plaintiffs are, in fact and in law, "former employees." See Katzoff v. Eastern Wire Prod. Co., 808 F. Supp. 96, 98 (D.R.I., 1992) (rejecting argument that plaintiff was a current employee and therefore an ERISA participant even though he was "not currently working."); Andre v. Salem Technical Serv., 797 F. Supp. 1416, 1421 (N.D.Ill.1992) ("Because [plaintiff] no longer works for [employer], he does not fall within the statutory provision for suits by current 'employees.' ").
26
In reaching this conclusion, we similarly reject plaintiffs' related argument that their standing as participants should be judged as of the time of the ERISA violation and not as of the time of their lawsuit. Such an interpretation runs counter to the natural meaning of ERISA itself. Section 502 provides that "[a] civil action may be brought ... by a participant ... to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." ERISA § 502, 29 U.S.C. § 1132 (emphasis added). The statute by its terms does not permit a civil action by someone who was a participant at the time of the alleged ERISA violation. Cf. Teagardener v. Republic-Franklin Inc. Pension Plan, 909 F.2d 947, 951 n. 2 (6th Cir.1990) ("The Plan provides benefits for a 'Former Participant,' a term that is not defined or mentioned in ERISA."), cert. denied, 498 U.S. 1027, 111 S. Ct. 678, 112 L. Ed. 2d 670 (1991). Rather, it is written in the present tense, indicating that current participant status is the relevant test. See Winchester v. Pension Comm. of Michael Reese Health Plan, Inc., 942 F.2d 1190, 1194 (7th Cir.1991) ("[Plaintiff] was not a plan participant at the time the action was filed and thus has no standing."); Yancy v. American Petrofina, Inc., 768 F.2d 707, 708 (5th Cir.1985) ("[Q]uestions of standing must be resolved on the facts existing when the challenge is raised."); McKinnon v. Cairns, 698 F. Supp. 852, 858 (W.D.Okla.1988). Furthermore, there would be little need for the widely-invoked category of "former employees" if participant status was based upon status at the time of the alleged ERISA violation.11
27
Having concluded that plaintiffs must meet the requirements for former employees in order to satisfy ERISA's "participant" requirement, we conclude that, despite plaintiffs' artful attempts to fit within Christopher, Mitchell compels the conclusion that plaintiffs lack standing.
28
As indicated, only former employees who are or "may become eligible to receive a benefit of any type from an employee benefit plan" satisfy the participant requirement of ERISA. That definition includes "former employees who 'have ... a reasonable expectation of returning to covered employment' or who have 'a colorable claim' to vested benefits." Firestone, 489 U.S. at 117, 109 S.Ct. at 958 (quoting Kuntz v. Reese, 785 F.2d 1410, 1411 (9th Cir.) (per curiam), cert. denied, 479 U.S. 916, 107 S. Ct. 318, 93 L. Ed. 2d 291 (1986)). A former employee may further prove that he or she "may become eligible" to receive a benefit by showing he or she has "a colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future." Id.
29
We held in Mitchell that that definition simply "excludes ... former employees who have received a lump-sum payment of all their vested benefits because 'these erstwhile participants have already received the full extent of their benefits and are no longer eligible to receive future payments.' " Mitchell, 896 F.2d at 474 (quoting Joseph, 754 F.2d at 630); see also Sanson v. General Motors Corp., 966 F.2d 618, 621 (11th Cir.1992) (retiree claiming he was fraudulently induced to retire early is not an ERISA participant); Boren, 933 F.2d at 893-94; Teagardener, 909 F.2d at 952 ("Explicit in the Supreme Court's definition of 'participant' in Bruch is a requirement that the plaintiffs prove either that their right to assets has 'vested' or will 'vest.' "); Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 714 (9th Cir.1990) ("former employees whose vested benefits under a plan have already been distributed in a lump sum at the time they file suit are not 'participants' within the meaning of section 1002(7)"). They therefore seek "a damage award, not vested benefits improperly withheld." Mitchell, 896 F.2d at 474; Boren, 933 F.2d at 893-94; Saporito v. Combustion Eng'g, Inc., 843 F.2d 666, 671 (3rd Cir.1988) ("As a general rule, employees who take early retirement and elect to receive lump sum retirement benefits do not have standing to seek the increased payment later made to retirees or to challenge changes in the retirement plan."), vacated, 489 U.S. 1049, 109 S. Ct. 1306, 103 L. Ed. 2d 576 (1989); Kuntz, 785 F.2d at 1411 ("plaintiffs are not participants because, as former employees whose vested benefits under the plan have already been distributed in a lump sum, [they] were not 'eligible to receive a benefit' and were not likely to become eligible to receive a benefit, at the time they filed the suit."); Yancy v. American Petrofina, Inc., 768 F.2d 707 (5th Cir.1985) (per curiam); cf. Sommers Drug Stores Co. Employee Profit Sharing Trust v. Corrigan, 883 F.2d 345, 350 (5th Cir.1989) (plaintiffs are ERISA participants because they claimed "that the amount received was not the full amount of vested benefits due under the terms of the profit sharing plan...."). The crucial point is the receipt of the "full extent" of their vested benefits. That is equally true of plaintiffs in this case. They too seek a damage award based upon their allegedly fraudulent discharge from their jobs; they do not seek "vested benefits improperly withheld."
30
Plaintiffs invoke the Christopher court's analysis in an attempt to avoid the breadth of that holding in Mitchell. Thus, they argue that the fact that Mobil fraudulently induced them to retire by hiding from them the existence of the waiver provision and certain facts which they needed to be able to properly evaluate the impact of the REA on their pension rights, somehow renders our Mitchell holding inapplicable to them. We disagree. The existence of fraud is irrelevant to the linchpin of our Mitchell holding--the receipt of all benefits to which the employee is entitled under the plan.
31
Furthermore, the Christopher court itself acknowledged, in its discussion of plaintiffs' ADEA claims, that the alleged fraud made no legal or conceptual difference concerning the voluntariness of plaintiffs' decision:
32
[A]ppellants allege a constructive discharge arising from the choice to which they were put by the plan amendment. To further argue that the actual election made was involuntary because it was based on incomplete information would be superfluous; involuntariness is implicit in appellants' argument that they were coerced into early retirement by the threatened removal of the lump sum option.
33
Christopher, 950 F.2d at 1215. Similarly, plaintiffs here cannot say that the constructive discharge in Mitchell was actually a conscious choice whereas the equally compelled discharge here was completely involuntary simply because plaintiffs here acted on incomplete information.
34
Moreover, the Christopher court's "but for" standing analysis--"but for the employer's conduct alleged to be in violation of ERISA, the employee would be a current employee with a reasonable expectation of receiving benefits", Christopher, 950 F.2d at 1221--amounts to the kind of analysis rejected by the Supreme Court in Firestone: "[t]o say that a 'participant' is any person who claims to be one begs the question of who is a 'participant' and renders the definition set forth in § 1002(7) superfluous." 489 U.S. at 117, 109 S.Ct. at 957. To say that but for Mobil's conduct, plaintiffs would have standing is to admit that they lack standing and to allow those who merely claim to be participants to be deemed as such. See Stanton v. Gulf Oil Corp., 792 F.2d 432, 435 (4th Cir.1986) ("The effect of reading a 'but for' test is to impose participant status on every single employee who but for some future contingency may become eligible. Neither caselaw nor other provisions of ERISA supports such a reading of 'participant.' "). Plaintiffs therefore cannot, under Firestone, Mitchell, and Boren, show that they are former employees with a colorable claim to vested benefits.12
35
Plaintiffs also assert that they satisfy the "participant" requirement as former employees with "a reasonable expectation of returning to covered employment." More specifically, they argue that there is a genuine factual dispute as to that issue, such that summary judgment for Mobil on their ERISA claims would be improper.
36
In Mitchell, we agreed with Mobil that Mr. Mitchell "has never had a reasonable expectation of returning to covered employment." In so doing, we observed that Mr. Mitchell "did not claim that Mobil had improperly withheld vested benefits. He also did not make such a claim in his complaint, nor did he seek reinstatement." Mitchell, 896 F.2d at 474 (emphasis added).
37
Mobil argues we established a clear rule that a request for judicial reinstatement is per se insufficient to establish a "reasonable expectation of returning to covered employment," because Mitchell made it clear to this court in his briefs and his petition for rehearing that he had sought judicial reinstatement. Thus, Mobil argues that our rejection of his argument must be viewed in that context and must be read as implying that a request for judicial reinstatement alone is insufficient.
38
We are reluctant to read anything more into a judicial opinion, even one of our own, than what the plain words of the opinion state. Viewing the actual language of our Mitchell opinion alone, without any background information to which we may be privy but which others lack, we must conclude that the opinion does not establish any per se rule concerning the effect of a request for judicial reinstatement. The opinion simply observes that Mr. Mitchell did not "seek reinstatement," and that was one reason why he did not have a reasonable expectation of returning to covered employment. Mitchell is unclear as to what kind of request for reinstatement was insufficient to establish a reasonable expectation of returning to covered employment.
39
We agree with Mobil, however, that plaintiffs here cannot satisfy ERISA's participant requirement by claiming to be former employees with a reasonable expectation of returning to covered employment. Few cases have examined carefully what constitutes such a reasonable expectation. We agree with the analysis in Shawley v. Bethlehem Steel Corp., 784 F. Supp. 1200, 1205 (W.D.Pa.1992):
40
Plaintiffs had no statutory right to be rehired, nor any contractual right to be rehired.... It would be paradoxical to hold that the pension plan provisions gave them more. For a reasonable expectation of returning to employment to exist, there must be a claim of right on the part of the former employee to return to work.
41
See also Winchester v. Pension Comm. of Michael Reese Health Plan, Inc., 942 F.2d 1190, 1193 (7th Cir.1991) (refusing to hold that "by filing a discrimination suit, [after being dismissed for cause], plaintiff may harbor a 'reasonable expectation of returning to covered employment.' "); Zydel v. Dresser Indus., Inc., 764 F. Supp. 277, 280-81 (W.D.N.Y.1991) (reasonable expectation of returning to covered employment evaluated with reference to four specific pieces of evidence); Rhee v. Witco Corp., 762 F. Supp. 211, 213 (N.D.Ill.1991) (ERISA plaintiff had no reasonable expectation of returning to covered employment because he "does not seek to return to work ...; he wants only to obtain the benefits he would have accrued had he continued to work."); Deller v. Portland Gen. Elec. Co., 727 F. Supp. 1369, 1370 (D.Ore.1989) (former employees terminated pursuant to a reduction in force "are clearly not employees ... who have a reasonable expectation of returning to covered employment."). We hold as a matter of law that a reasonable expectation of returning to covered employment cannot encompass the undisputed situation here, where plaintiffs retired, received all their vested benefits, did not ask their employer for reinstatement and can point to nothing suggesting that Mobil will, should or must reinstate them, but instead filed suit seeking reinstatement to commence accruing benefits anew.
42
Finally, plaintiffs suggest that a definition of "participant" which excludes them will leave them without a remedy, inasmuch as their state law claims were held preempted by ERISA.13 Preemption is not at issue in this case, and we do not address it. However, we note that the fact that a state law claim may be preempted does not necessarily mandate that there be an ERISA remedy. See Corcoran v. United HealthCare, Inc., 965 F.2d 1321, 1333 (5th Cir.) ("While we are not unmindful of the fact that our interpretation of the preemption clause leaves a gap in remedies within a statute intended to protect participants in employee benefits plans, the lack of an ERISA remedy does not affect a pre-emption analysis."), cert. denied, --- U.S. ----, 113 S. Ct. 812, 121 L. Ed. 2d 684 (1992); Cromwell v. Equicor HCE Corp., 944 F.2d 1272, 1276 (6th Cir.1991) ("Nor is it relevant to an analysis of the scope of federal preemption that appellants may be left without a remedy."), cert. denied, --- U.S. ----, 113 S. Ct. 2, 120 L. Ed. 2d 931 (1992); Hospice of Metro Denver, Inc. v. Group Health Ins., 944 F.2d 752, 755 (10th Cir.1991) ("We are aware that preemption normally is not dependent upon the availability of ERISA remedies.") (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54, 107 S. Ct. 1549, 1556, 95 L. Ed. 2d 39 (1987); Lister v. Stark, 890 F.2d 941, 946 (7th Cir.1989)).14
43
Furthermore, while pension and other benefits are undeniably an important part of an employee's compensation package, they are nonetheless an adjunct to the primary item which the employee has--his or her job. And, ERISA's goal of protecting those benefits from interference does not transform ERISA's statutory scheme into a federal job protection scheme where those benefits are fully paid out, or create a federal cause of action for wrongful discharge.15 To do so would, as Mobil argues, transform traditional employment law in the fifty states.16 We cannot believe Congress intended such a result when it enacted ERISA. Cf. Patterson v. Shumate, --- U.S. ----, ----, 112 S. Ct. 2242, 2250, 119 L. Ed. 2d 519 (1992) ("ERISA's goal ... [is to] protect[ ] pension benefits.") (emphasis added); Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 148, 105 S. Ct. 3085, 3093, 87 L. Ed. 2d 96 (1985) (purpose of ERISA is "to protect contractually defined benefits."); Hospice of Metro Denver, 944 F.2d at 755-56; Gavalik v. Continental Can Co., 812 F.2d 834, 851 (3rd Cir.) ("Proof of incidental loss of benefits as a result of a termination will not constitute a violation of § 510."), cert. denied, 484 U.S. 979, 108 S. Ct. 495, 98 L. Ed. 2d 492 (1987); Stanton v. Gulf Oil Corp., 792 F.2d 432, 435 (4th Cir.1986) ("the legislative intent of ERISA was not to assure the sanctity of early retirement expectations, but to safeguard accrued retirement benefits.").17
44
For the foregoing reasons, we REVERSE the district court's denial of Mobil's motion for summary judgment on plaintiffs' ERISA claims and REMAND for entry of summary judgment in favor of Mobil.
1
28 U.S.C. § 1292(b) permits interlocutory appeals from orders involving "a controlling question of law as to which there is substantial ground for difference of opinion...." By order dated September 30, 1992, a panel of this court granted Mobil's petition to bring this interlocutory appeal, and ordered the appeal expedited
2
The existence of the waiver provision was not discovered by Mitchell in his case until trial was underway. Our decision in Mitchell makes no mention of the waiver provision. The plaintiffs in Christopher argued that the concealment of the waiver option was fraudulent, and the plaintiffs in this case have, following Christopher, made the same fraud argument concerning the waiver option
3
As we noted in our decision, the availability of the lump-sum option "was important to Mr. Mitchell because at the time he was making [his choice], the market interest rate was over 9%. As a result, his lump sum, discounted at 5%, was worth approximately 140% more than his annuity." Mitchell, 896 F.2d at 466
4
We observed that "[t]he relevant question [in a constructive discharge case] is whether Mobil's amendment of the Plan forced Mr. Mitchell, and similarly situated employees, to choose between two options both of which would leave him worse off than the status quo." Mitchell, 896 F.2d at 467. We held that it did, because Mitchell was forced to choose between (1) retiring during the six-month window period, as he in fact did, and receiving the lump-sum option under the old ($250,000) eligibility requirement, and (2) continuing to work, but having to requalify for the lump-sum option under the new ($450,000/linked to the CPI) criteria, and being uncertain if he ever would in fact so qualify. Either option was less desirable than the status quo--continuing to work, knowing that he was qualified for a lump-sum retirement when he decided to retire
5
The brevity of plaintiffs' ERISA allegations was apparently the result of their desire to preserve the ERISA claims in the event their state law claims were held preempted by ERISA
6
Section 301 of the REA prohibits the retroactive elimination of "an optional form of benefit" by means of a plan amendment. 29 U.S.C. § 1054(g). However, the REA specifically states that section 301's prohibition applies only to plan amendments made after July 30, 1984. 29 U.S.C. § 1001, Historical Note (Pub.L. 98-397, Title III, §§ 302, 303, Aug. 23, 1984, 98 Stat. 1451 § 302(d)(1)). Mobil formally adopted the plan amendment on June 13, 1984, prior to the effective date of the REA. However, because it did not receive IRS approval at that time for the entire amendment, it did not in fact adopt the plan with the waiver provision until September, 1984. Thus, plaintiffs argue that the entire plan amendment was subject to the REA, so that the right to retire under the $250,000 lump sum was "grandfathered". While they do not suggest that Mobil can be charged with concealing the existence and effect of the REA, they do claim that Mobil concealed the facts (i.e. the true date of the plan amendment) bearing upon their rights under the REA
7
ERISA § 510, 29 U.S.C. § 1140, provides in pertinent part:
It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant ... for exercising any right to which he is entitled under the provisions of an employee benefit plan ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan....
8
Section 502 provides in pertinent part:
(a) Persons empowered to bring a civil action
A civil action may be brought--
(1) by a participant or beneficiary--
(A) for the relief provided for in subsection (c) of this section, or
(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;
ERISA § 502, 29 U.S.C. § 1132.
9
They alternatively argue that their standing as participants must be determined as of the time of the ERISA violation, and not at the time of their lawsuit. Under that theory too they would have participant status because they were clearly participants at the time of the alleged ERISA violation, and they would not have to meet the former employee tests for standing
10
Mobil argues that plaintiffs have failed to show either that they have a reasonable expectation of returning to covered employment or a colorable claim to vested benefits by showing that eligibility requirements will be fulfilled in the future
11
We disagree with plaintiffs' assertion that Drennan v. General Motors Corp., 977 F.2d 246 (6th Cir.1992), "held that an employee who has lost his status as a current employee and thus as an ERISA 'participant' as a result of his employer's deceit has standing to sue under ERISA because he had such standing at the time of the ERISA violation." Brief of Appellees at 5. In Drennan, the Sixth Circuit held that employees who were eligible for a certain benefit payout were participants for ERISA purposes, even though they had already received their benefits under another, less favorable, benefits plan. By contrast, plaintiffs here in fact received all benefits for which they were eligible. They cannot claim participant status based on eligibility for benefits not received
12
We also note, as have several other courts, that Department of Labor regulations interpreting ERISA specifically exclude from the definition of participant "an individual to whom an insurer has made an irrevocable commitment to pay all the benefits to which the individual is entitled under the plan." 29 C.F.R. § 2610.2. See, e.g., Teagardener, 909 F.2d at 952; Kuntz, 785 F.2d at 1412; Joseph, 754 F.2d at 630; Saladino v. I.L.G.W.U. Nat'l Retirement Fund, 754 F.2d 473, 476-77 (2d Cir.1985); see also 29 C.F.R. § 2510.3-3(d)(2)(ii)(B)
13
Counsel for plaintiffs stated at oral argument that they have appealed the state court decision finding preemption
14
Furthermore, ERISA preemption extends to "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." ERISA § 514(a), 29 U.S.C. § 1144(a). The Supreme Court has "repeatedly stated that a law 'relates to' a covered employee benefit plan for purposes of § 514(a) 'if it has a connection with or reference to such a plan.' " District of Columbia v. Greater Washington Bd. of Trade, --- U.S. ----, ----, 113 S. Ct. 580, 583, 121 L. Ed. 2d 513 (Dec. 14, 1992) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97, 103 S. Ct. 2890, 2900, 77 L. Ed. 2d 490 (1983)); see also Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S. Ct. 478, 482-83, 112 L. Ed. 2d 474 (1990); FMC Corp. v. Holliday, 498 U.S. 52, 58-59, 111 S. Ct. 403, 407-08, 112 L. Ed. 2d 356 (1990); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 S. Ct. 1549, 1552, 95 L. Ed. 2d 39 (1987); Monarch Cement Co. v. Lone Star Indus., Inc., 982 F.2d 1448, 1451-52, (10th Cir.1992)
While ERISA's preemption clause is "conspicuous for its breadth," Ingersoll-Rand, 498 U.S. at 138, 111 S.Ct. at 482 (quoting FMC Corp. v. Holliday, 498 U.S. at 58, 111 S.Ct. at 407), we recently observed in Monarch Cement Co., that the:
purpose of ERISA preemption is twofold. First, preemption "protect[s] the interests of employees and their beneficiaries in employee benefit plans." Second, preemption "ensure[s] that plans and plan sponsors are subject to a uniform body of benefit law ... [by] minimizing the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government."
982 F.2d at 1453-54 (quoting Straub v. Western Union Tel. Co., 851 F.2d 1262, 1265 (10th Cir.1988) (quoting Nachwalter v. Christie, 805 F.2d 956, 960 (11th Cir.1986)) and Ingersoll-Rand, 111 S. Ct. at 484). " 'What triggers ERISA preemption is not just any indirect effect on administrative procedures but rather an effect on the primary administrative function of benefit plans, such as determining an employee's eligibility for a benefit and the amount of that benefit.' " Monarch Cement Co., 982 F.2d at 1452 (quoting Aetna Life Ins. Co. v. Borges, 869 F.2d 142, 146-47 (2d Cir.), cert. denied, 493 U.S. 811, 110 S. Ct. 57, 107 L. Ed. 2d 25 (1989)); see also National Elevator Indus., Inc. v. Calhoon, 957 F.2d 1555, 1558-59 (10th Cir.), cert. denied, --- U.S. ----, 113 S. Ct. 406, 121 L. Ed. 2d 331 (1992).
ERISA's preemptive reach, although broad, is not unlimited. Monarch Cement Co., 982 F.2d at 1452; Hospice of Metro Denver v. Group Health Ins., 944 F.2d 752, 755 (10th Cir.1991). In Monarch Cement Co., we tried to define the parameters of ERISA preemption, noting that the case law in the area is far from uniform:
Laws that have been ruled preempted are those that provide an alternative cause of action to employees to collect benefits protected by ERISA, refer specifically to ERISA plans and apply solely to them, or interfere with the calculation of benefits owed to an employee. Those that have not been preempted are laws of general application--often traditional exercises of state power or regulatory authority--whose effect on ERISA plans is incidental.
Id. at 1452, (quoting Aetna Life Ins. Co., 869 F.2d at 146); see also National Elevator Indus., Inc., 957 F.2d at 1558-59; Hospice of Metro Denver, 944 F.2d at 755. Thus, ERISA does not preempt "if the state law has only a 'tenuous, remote, or peripheral' connection with covered plans, as is the case with many laws of general applicability." Greater Washington Bd. of Trade, --- U.S. at ---- n. 1, 113 S. Ct. at 583 n. 1 (quoting Shaw, 463 U.S. at 100 n. 21, 103 S. Ct. at 2901 n. 21)). An argument could certainly be made that the fraud claims plaintiffs have made in this case are such "laws of general applicability."
Thus, this is not a case where the state law "specifically refers" to an ERISA plan, as in Greater Washington Bd. of Trade, --- U.S. at ----, 113 S. Ct. at 585, nor even where the preempted claim is "premised on" the existence of an ERISA plan, as in Ingersoll-Rand, 498 U.S. at 140, 111 S.Ct. at 483. The state law claim in Ingersoll-Rand was a common law claim for wrongful discharge based upon the employer's desire to prevent the employee from vesting in his benefit plan. There is no such claim here. Rather, plaintiffs here simply allege a wrongful discharge, achieved through fraud. The fact that an ERISA plan was merely part of the means by which Mobil allegedly fraudulently procured plaintiffs' dismissal does not necessarily compel the conclusion under Ingersoll-Rand that that state law claim is "premised on" the existence of an ERISA-covered plan. Cf. Tolle v. Carroll Touch, Inc., 977 F.2d 1129 (7th Cir.1992) (state law wrongful discharge claim preempted because claim was that plaintiff was discharged in order to avoid payment of benefits under ERISA plan); but see Sanson v. General Motors Corp., 966 F.2d 618, 621 (11th Cir.1992) (plaintiffs' state law fraud claim for fraudulently induced retirement is preempted).
15
Indeed, Congress knows perfectly well how to create a federal cause of action for wrongful discharge when it wants to. See, e.g., the ADEA, 29 U.S.C. §§ 621-634; Title VII, 42 U.S.C. § 2000e et seq
16
Under plaintiffs' theory, to the extent that the employer-employee relationship allows termination at-will under state law, employers would, in some instances, no longer be able to exercise that right whenever an ERISA-covered plan is part of an employee's compensation package
17
The appellees' "Request For Leave to File Limited Sur-Reply in Opposition to Motion to Strike Appellees' Supplemental Appendix and Portions of Appellees' Brief" is granted. Appellant's "Motion to Strike Appellees' Supplemental Appendix and Portions of Brief Relying on Supplemental Appendix" is granted insofar as it relates to materials which were not before the district court in this case | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1584827/ | 641 So.2d 1341 (1994)
THE FLORIDA BAR, Complainant,
v.
Joel E. GRIGSBY, Respondent.
No. 81980.
Supreme Court of Florida.
September 8, 1994.
*1342 John F. Harkness, Jr., Executive Director and John T. Berry, Staff Counsel, Tallahassee, and Carlos E. Torres, Bar Counsel, Orlando, for complainant.
Kevin K. Broderick, Lakeland, and Joel E. Grigsby, pro se, Ashland, IL, for respondent.
PER CURIAM.
This attorney-discipline proceeding is before the Court on petition of The Florida Bar. The Bar seeks review of that portion of the referee's report that recommends Joel E. Grigsby be given a public reprimand. We have jurisdiction pursuant to article V, section 15 of the Florida Constitution.
The facts in this case are not in dispute. According to the referee's findings, Joel E. Grigsby was appointed to represent an indigent inmate who subsequently filed a grievance with the Bar alleging that Grigsby failed to communicate with him concerning his case. Twice the Bar asked Grigsby for a response and a copy of a letter he wrote the inmate. When neither was received, the matter was referred to the grievance committee. On several occasions the committee asked Grigsby for a response and the letter, but Grigsby failed to present either. Grigsby finally presented the letter at the grievance committee hearing, where it was determined that the inmate's complaint lacked merit. If Grigsby had timely provided a copy of the letter to the Bar when requested, there would have been no need for the grievance committee hearing. Grigsby admitted at that hearing that he had not responded to the Bar's repeated requests.
The Bar charged Grigsby with violating Rule of Professional Conduct 4-8.1(b) for failing to respond to a lawful demand for information from a disciplinary authority and with violating Rule of Professional Conduct 4-8.4 for violating the Rules of Professional Conduct. The referee found that Grigsby suffers from clinical depression for which he has voluntarily sought treatment, and although Grigsby's illness explained his conduct, it did not excuse it. Thus, the referee recommends that Grigsby be found guilty of the misconduct charged. As discipline, he recommends that Grigsby 1) be given a public reprimand, 2) be placed on three years' conditional probation, during which time Grigsby must continue therapy and be supervised by an attorney who will monitor his case files, and 3) be ordered to reimburse all monitoring costs to the Bar.
Before making this recommendation, the referee considered Grigsby's prior disciplinary record which consists of two prior instances of discipline. In the first, Grigsby was admonished before the Board of Governors for inadequate communication with a client and failure to respond to the Bar's inquiries concerning that grievance. In the second, Grigsby was given a three-months suspension because on three separate occasions he failed to act with reasonable diligence in representing his clients and failed to keep them informed. The Florida Bar v. Grigsby, 617 So.2d 321 (Fla. 1993). In view of this prior history, the Bar petitions for review of the referee's recommendation as to discipline and seeks a ninety-day suspension in addition to the three-year conditional probation recommended by the referee.
We approve the referee's findings of fact and recommendation as to guilt, neither *1343 of which have been challenged. As to the appropriate discipline, the Bar is correct that as a general rule a suspension is appropriate when an attorney is found guilty of misconduct that causes injury or potential injury to the legal system or to the profession and that misconduct is similar to that for which the attorney has been disciplined in the past. Florida Standards for Imposing Lawyer Sanctions 8.2. However, under the circumstances, we do not believe that a suspension is warranted. The referee's finding that Grigsby suffers from clinical depression for which he voluntarily sought professional help is not challenged. Since Grigsby's failure to respond to the Bar's requests was likely caused by this mental disability, we believe the recommended discipline is adequate.
Accordingly, Joel E. Grigsby is hereby publicly reprimanded, which shall be accomplished by publication of this opinion. He also is placed on a three-year period of conditional probation, pursuant to Rule of Discipline 3-5.1(c), during which time he shall continue to actively participate in therapy with a licensed mental health counselor. Grigsby shall ensure that his counselor submits quarterly reports to The Florida Bar during the probationary period. The reports shall confirm Grigsby's active participation in counseling for the preceding period and shall evaluate his ability to engage in the active practice of law. During the probationary period, Grigsby shall be supervised by an attorney who is a member in good standing with The Florida Bar and who is acceptable to the Bar to act as supervisor. The supervising attorney shall provide continuous monitoring of Grigsby's case files and provide quarterly reports to the Bar regarding the files. Grigsby shall be responsible for submitting the quarterly reports to the Bar's headquarters in Tallahassee. As a further condition of his probation, Grigsby shall reimburse the Bar monthly for all costs of monitoring his probation. He shall remit the monthly monitoring costs to the Bar headquarters in Tallahassee no later than five days from the end of each month in which the costs are due. The costs of these proceedings also are taxed against Grigsby and judgment is entered in the amount of $1,137.37, for which sum let execution issue.
It is so ordered.
GRIMES, C.J., and OVERTON, SHAW, KOGAN and HARDING, JJ., concur.
WELLS, J., is recused. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584828/ | FRANK MILLSAP, JR.
v.
BURL CAIN, WARDEN, LOUISIANA STATE PRISON, AND RICHARD STALDER, SECRETARY OF CORRECTIONS
No. 2009 CA 0511.
Court of Appeals of Louisiana, First Circuit.
October 23, 2009.
Not Designated for Publication.
FRANK MILLSAP, Jr., Louisiana State Prison Plaintiff/Appellant, pro se.
TERRI L. CANNON, Counsel for Defendant/Appellee, Louisiana Department of Public Safety & Corrections
Before: WHIPPLE, GUIDRY and HUGHES, JJ.
WHIPPLE, J.
This is an appeal by plaintiff, Frank Millsap, Jr., an inmate in the custody of the Louisiana Department of Public Safety and Corrections (the DPSC), from a judgment of the Nineteenth Judicial District Court dismissing his petition for judicial review of a grievance he filed with the DPSC pursuant to the Corrections Administrative Remedy Procedure (CARP), LSA-R.S. 15:1171, et seq.
On November 22, 1971, plaintiff was sentenced to forty years at hard labor without benefit of probation or parole for an armed robbery conviction. On July 18, 2007, plaintiff filed a grievance under CARP, alleging that he was overdue for release when the three years, ten months and one day of good time credits he had earned were factored into his sentence. Plaintiff contended that while the DPSC had added twenty-nine years to his forty-year sentence based on "allegations of escape," he had been found not guilty of the charge of escape. Thus, he contended that the DPSC was without authority to alter the sentence of the sentencing court.
Plaintiffs request for an administrative remedy was denied in both steps at the administrative level. In the second-step response, the DPSC found that plaintiff had escaped on August 8, 1973, remaining out of custody until July 3, 1976, and had again escaped on June 22, 1978, remaining out of custody until January 28, 2004. Thus, the DPSC concluded that plaintiffs time had been correctly calculated.
Plaintiff then instituted a petition for judicial review in the district court below. Following a hearing before the District Court Commissioner, at which the Commissioner accepted evidence to expand the administrative record, the Commissioner recommended that the agency decision be affirmed and that plaintiffs request for judicial review be dismissed with prejudice. The district court then rendered judgment in accordance with the Commissioner's recommendation. Plaintiff now appeals, contending in his original and supplemental briefs that: (1) the Commissioner erred and exceeded the authority of the district court by expanding the administrative record at the district court level with documents not developed at the administrative proceedings level; (2) the Commissioner erred in his recommendation by considering only physical custody in the calculation of plaintiffs sentence; (3) the Commissioner's recommendation violates the United States and Louisiana Constitutions, by twice placing plaintiff in jeopardy for the same offense, given the verdict of acquittal on an escape charge following one of his alleged escapes; and (4) the DPSC's allegation in the instant CARP that plaintiff was out of custody by way of escape should have been barred by res judicata, LSA-R.S. 13:4231.
Turning to plaintiffs first argument regarding the Commissioner's lack of authority to admit evidence at the district court level to expand the administrative record, we note that, pursuant to CARP, the opportunity for the parties to present evidence occurs at the administrative level, not at the district court level. Robinson v. Stalder, 98-0558 (La. App. 1st Cir. 4/1/99), 734 So. 2d 810, 812. The review by the district court "shall be confined to the record" established at the administrative level, absent alleged irregularities in the procedure. LSA-R.S. 15:1177(A)(5); Robinson, 734 So. 2d at 812. The district court has no authority to accept evidence or testimony at the hearing on review. See McDowell v. Taylor, 99-1587 (La. App. 1st Cir. 6/23/00), 762 So. 2d 1149, 1151. Rather, the district court has the authority to order that additional evidence be taken before the agency upon conditions determined by the court or to remand the case for further proceedings. LSA-R.S. 15:1177(A)(4) & (A)(8); McDowell, 762 So. 2d at 1151 n.3; see also State ex rel. Robinson v. Cain, 99-2986 (La. 8/31/00), 766 So. 2d 1268.
Considering the foregoing, we conclude that the Commissioner erred in allowing the DPSC to introduce evidence in the district court, which expanded the administrative record at the district court level.[1] If further evidence was needed, the remedy was to order that such additional evidence be taken before the agency, i.e., before the DPSC. McDowell, 762 So. 2d at 1151-1152 & n.3.
Accordingly, in reviewing the agency decision herein, we have confined our review to the evidence appearing in the "administrative record" as established before the DPSC and find no merit to appellant's claims. A review of plaintiffs master prison record indicates that plaintiff escaped from the custody of the DPSC on August 9, 1973, and was subsequently returned to custody on July 8, 1976, and that plaintiff again escaped from the custody of the DPSC on June 22, 1978 and was not recaptured until January 28, 2004.
Moreover, we find no merit to plaintiffs argument that the Commissioner erred by considering only physical custody in the calculation of plaintiffs sentence. Plaintiff contends that his sentence was being served while he was either in the physical or legal custody of the DPSC and, thus, that the DPSC erred in adding twenty-nine years to his original full-term date based on his escapes. Plaintiff is correct in his assertion that a sentence is being served whenever the offender is in the physical or legal custody of the DPSC. Parkerson v. Lynn, 556 So. 2d 91, 95 (La. App. 1st Cir. 1989), writ denied, 563 So. 2d 1151 (La. 1990). However, plaintiff is incorrect in his assertion that he was in the legal custody of the DPSC, for purposes of computation of his time served on his sentence, during the time periods in which he had absconded. Rather, an offender remains in the legal custody of the DPSC, although no longer in physical custody, when he is on probation or parole. Parkerson, 556 So. 2d at 95. Conversely, we conclude that, during the periods when plaintiff was out of the custody of the DPSC due to his escapes, he was not in the physical or legal custody of the DPSC for purposes of computation of the time served on his sentence. Accordingly, we find no merit to this argument.
We likewise find no merit to plaintiffs double jeopardy argument. The Fifth Amendment to the United States Constitution and Louisiana Constitution article I, sec. 15 provide that no person shall twice be placed in jeopardy for the same offense. These clauses protect against three distinct abuses: (1) a second prosecution for the same offense after acquittal; (2) a second prosecution for the same offense after conviction; and (3) multiple punishments for the same offense. State v. Duncan, 98-1730 (La. App. 1st Cir. 6/25/99), 738 So. 2d 706, 709, writ denied, 96-2571 (La. 3/21/97), 691 So. 2d 81. However, action taken by a disciplinary board against a prison inmate generally provides no basis for a plea of double jeopardy. Duncan, 738 So. 2d at 709. In determining whether a criminal prosecution and another penalty in a separate proceeding violate double jeopardy, this court employs a two-part test utilized by the United States Supreme Court. First, were the proceedings intended to be criminal or civil in nature? Second, were the proceedings so punitive in form and effect as to render them criminal, despite legislative intent to the contrary? To satisfy the latter prong, the "clearest proof is necessary to show that the sanction is criminal and not civil. Duncan, 738 So. 2d at 710 (quoting United States v. Ursery, 518 U.S. 267, 289, 116 S. Ct. 2135, 2147-2148, 135 L. Ed. 2d 549 (1996)).
On appeal, plaintiff essentially asserts that his acquittal of the charge of escape in the Nineteenth Judicial District Court prevents the DPSC from twice placing him in jeopardy for the same offense by adding twenty-nine years to the original full-term date of his sentence. However, we conclude that, because the actions of the DPSC do not constitute a criminal sanction or punishment, the double jeopardy clauses of the United States and Louisiana Constitutions are not implicated.
In State v. Duncan, this court considered whether an inmate's loss of good time credits and the imposition of a fine in a DPSC disciplinary proceeding for his escape from custody in addition to a two and one-half year criminal sentence for simple escape constituted two punishments for the same offense. With regard to the first Ursery prong, the court concluded that administrative disciplinary proceedings for forfeiture of good time and to impose restitution were intended to be civil in nature. Duncan, 738 So. 2d at 710 & 711. Regarding the second Ursery prong, this court further concluded that the "clearest proof that these sanctions were criminal in nature had not been shown. Duncan, 738 So. 2d at 711-712. Accordingly, because the sanctions imposed in the administrative disciplinary proceedings were civil in nature, there was no violation of the Double Jeopardy Clause. Duncan, 738 So. 2d at 710-712.
Applying this analysis to the present case, we note that the actions of the DPSC of which plaintiff complains do not even involve sanctions imposed in a disciplinary proceeding, but, rather, the purely administrative, and civil, function of the DPSC in computing or calculating the time plaintiff has served on his sentence. Moreover, an inmate, in being sentenced for a crime for which he is convicted, is required to satisfy that sentence, subject to credits for good time and the possibility, in some instances, of parole or probation. See LSA-C.Cr.P. arts. 890, 897, & 898; LSA-R.S. 15:565-15:574.44; see generally Parkerson, 556 So. 2d at 93-95. Thus, the DPSC's actions in computing plaintiffs sentence, without giving him credit for time when he was out of custody due to escape, are not such "punitive" actions as would render those actions a criminal sanction. See Duncan, 738 So. 2d at 711-712. Accordingly, the DPSC's calculation of plaintiffs sentence herein did not constitute the imposition of a criminal penalty for double jeopardy purposes.
Finally, we also find no merit to plaintiffs contention that, pursuant to LSA-R.S. 13:4231, the DPSC was barred from considering the time periods that plaintiff was out of custody in the computation of the time he has served, given that on November 2, 2006, plaintiff was acquitted of the criminal charge of escape arising out of his June 22, 1978 escape. While the res judicata statute, LSA-R.S. 13:4231, does preclude subsequent litigation of causes of action arising out of the transaction or occurrence that was the subject matter of prior litigation and precludes relitigation of issues actually litigated and determined, these prohibitions apply only where the prior valid and final judgment was rendered between the same parties. See Foley v. Entergy Louisiana, Inc., XXXX-XXXX (La. 11/29/06), 946 So. 2d 144, 156 n.4, and Five N Company, L.L.C. v. Stewart, XXXX-XXXX (La. App. 1st Cir. 7/2/03), 850 So. 2d 51, 61-62. Pretermitting whether plaintiff could ever establish the other essential elements of res judicata, we note, as did the Commissioner, that plaintiff has failed to establish identity of the parties in his criminal prosecution, where the party opposing him was the District Attorney for East Baton Rouge Parish and the instant dispute, where the party opposing him is the DPSC. Accordingly, we find no error in the Commissioner's conclusion that the doctrine of res judicata does not preclude the DPSC from considering the time periods when plaintiff was out of custody in computing the time he has served toward his sentence. This argument also lacks merit.
CONCLUSION
For the above and foregoing reasons, the September 15, 2008 judgment of the district court, dismissing plaintiffs petition for judicial review, with prejudice, is affirmed. Costs of this appeal are assessed against plaintiff, Frank Millsap, Jr.
AFFIRMED.
NOTES
[1] The evidence introduced by the DPSC, to which plaintiff objected, included, among other things: (1) the June 22, 1978 and August 9, 1973 fugitive warrants; (2) a guilty plea by plaintiff to a Disciplinary Rule 8 violation for the June 22, 1978 escape; (3) a disciplinary incident report indicating that plaintiff was found guilty of a violation of Disciplinary Rule 10 with regard to the August 8, 1973 escape. Notably, while this evidence was offered and accepted into evidence at the hearing before the Commissioner for the district court, it was not made a part of the record on appeal.
However, we further note that plaintiff also sought to expand the administrative record at the district court level to include a November 2, 2006 minute entry in docket number XX-XX-XXXX of the Nineteenth Judicial District Court regarding plaintiffs escape charge. The minute entry indicates that plaintiff was found not guilty of the charge of escape. Notably, the DPSC did not object to plaintiff introducing that document into evidence at the hearing before the Commissioner of the district court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585334/ | 815 F.Supp. 127 (1993)
Israel WEINSTOCK, et al., Plaintiffs,
v.
CLEARY, GOTTLIEB, STEEN & HAMILTON, et al., Defendants.
No. 92 Civ. 7557 (LAP).
United States District Court, S.D. New York.
March 8, 1993.
Order Denying Reargument May 4, 1993.
Weinstock, Joseph & Farley, P.C. by Israel Weinstock, Peter A. Joseph, Joel Farley, New York City, for plaintiffs.
Wachtell, Lipton, Rosen & Katz by Warren R. Stern, New York City, for Cleary, Gottlieb, Steen & Hamilton.
OPINION AND ORDER
PRESKA, District Judge.
Defendant Cleary, Gottlieb, Steen & Hamilton ("Cleary") moves to dismiss the amended complaint on three grounds: (1) the order of another court bars plaintiffs from proceeding on their claims in this action; (2) for reasons of judicial administration, this Court should decline to exercise its jurisdiction in deference to concurrent state proceedings; and (3) plaintiffs fail to state a federal claim, and the Court should not exercise jurisdiction over the pendent state law claims. For the reasons stated below, Cleary's motion is granted and the amended complaint is dismissed.
BACKGROUND
This action concerns the relationships among several parties involved in numerous transactions and lawsuits, some of which predate this action by over a decade. Apparent from the eighty-page amended complaint and the fervor with which the parties argue their positions, many of the parties share great enmity for each other; as might be expected, a tale of some interest lies behind this dispute.
The central figure in this action is plaintiff, Israel Weinstock ("Weinstock").[1] In the early 1980's, Weinstock, an attorney, represented Realty Corp. in an action, 4200 Ave. K Realty Corp. v. 4200 Realty Corp., No. 7604/80 (N.Y.Sup.Ct. Kings County) (the "specific performance action"), seeking specific performance of a contract involving the purchase of two Brooklyn properties (the "Brooklyn properties"). In December 1984, Jack Walker ("Walker"), a defendant herein and allegedly the sole owner of Realty Corp. *128 at the time,[2] allegedly transferred 20% of the stock of Realty Corp. to Weinstock in exchange for Weinstock's continued representation of Realty Corp. in the specific performance action.
Walker allegedly transferred the other 80% of the stock of Realty Corp. to Weinstock and JB Trading in February 1985. Walker allegedly made this transfer in connection with the settlement of an action brought by Walker against Weinstock, Walker v. Weinstock, No. 15210/84 (N.Y.Sup.Ct. Nassau County) (the "Nassau County action"). The Nassau County action concerned allegations by Walker that Weinstock had acted improperly while representing Walker in connection with the purchase of property in Nassau County. In consideration for 80% of the stock of Realty Corp. and Walker's stipulation to the dismissal of the Nassau County action with prejudice,[3] Weinstock allegedly waived any claims he held against Walker for defamation and the like arising out of the Nassau County action.
In September 1986, Walker, Handler, and the Yeshiva instituted suit against Weinstock and JB Trading, Walker v. Weinstock, No. 27600/86 (N.Y.Sup.Ct. Kings County) (the "Kings County action"), in which they sought, inter alia, a declaration that they owned 100% of Realty Corp. Cleary represented Handler and the Yeshiva in the Kings County action,[4] and Schlam Stone & Dolan, a defendant herein, represented Walker.
Also in September 1986, Realty Corp. received an appellate ruling in its favor in the specific performance action. 4200 Ave. K Realty Corp. v. 4200 Realty Co., 123 A.D.2d 419, 506 N.Y.S.2d 723 (2d Dep't 1986). By this time, however, Weinstock, who remained counsel for Realty Corp. in the specific performance action, had become seriously ill and was unable to conduct his affairs. As a consequence of Weinstock's illness, Cleary was substituted as counsel for Realty Corp. in the specific performance action.[5]
Weinstock's claims against Cleary in the instant action arise in large part out of a letter dated October 21, 1986 from George Weisz ("Weisz"), a partner at Cleary, to Toby Stone, an associate of Weinstock, setting out a four-point agreement between Cleary and Weinstock (the "substitution agreement").[6]*129 As described below, Weinstock alleges in this action that Cleary has failed to comply with the terms of the substitution agreement.
Following the substitution of Cleary as counsel for Realty Corp., Realty Corp. allegedly refinanced the Brooklyn properties in November 1987 on the basis of a falsified loan application to First Nationwide Bank, a defendant herein. The loan application allegedly was false because, inter alia, defendants Samuel Roth and Rita Handler stated that they owned 100% of the stock of Realty Corp. Handler allegedly appropriated a portion of the loan proceeds thus acquired to pay fees owed Cleary. In addition, Realty Corp. allegedly transferred title to the Brooklyn properties in December 1987 to 4200 Avenue K Associates ("Associates"), a limited partnership also a defendant herein.
Weinstock appears only to have recovered sufficiently from his illness to protect his interests in or around February 1988 when he wrote to Cleary inquiring as to the Brooklyn properties. Weinstock and Cleary then embarked upon an exchange of correspondence concerning the Brooklyn properties and Weinstock's contention that Cleary owed him a fiduciary obligation in regard to the Brooklyn properties arising out of the substitution agreement. Put mildly, the correspondence reflects diametrically opposed views as to whether Cleary met its obligations under the substitution agreement; unsurprisingly, the conflict between Weinstock and Cleary as represented in the correspondence appears to take root in the Kings County action and the question of who owns Realty Corp.
The Kings County action in fact appears to have become revitalized with Weinstock's return to his affairs. In January 1988, Weinstock answered the complaint and asserted six counterclaims, three relating directly to Weinstock's alleged interest in Realty Corp. and the Brooklyn properties.[7] In May 1988, approximately two months after Weinstock warned Cleary that he might take legal action in connection with the content of their correspondence described above, Weinstock and JB Trading sought a temporary restraining order in the Kings County action seeking, inter alia, to enjoin Walker, Handler, and the Yeshiva from taking any action affecting Realty Corp. or the Brooklyn properties and to enjoin Cleary from representing Realty Corp. The motion was denied in all respects with prejudice in October 1988.
In February 1990, an order issued in the Kings County action denying with prejudice a motion by Weinstock and JB Trading seeking an accounting but referring to a referee the issue of whether Weinstock owns 20% of Realty Corp. In June 1990, a motion by Weinstock and JB Trading seeking reargument of their motion for an accounting was denied. At about this time, Weinstock and JB Trading amended their answer in the Kings County action. The amended answer asserted two additional counterclaims relating to the ownership of Realty Corp. and the Brooklyn properties.
More significantly, Weinstock and JB Trading asserted with their amended answer a third-party complaint against seven third-party defendants, including Cleary, six of whom are defendants in the instant action. The third-party complaint states three causes of action against Cleary concerning many of the same allegations already described above; essentially, these involve breach of fiduciary duty, fraud, and breach of contract. The allegations contained in the third-party complaint include statements regarding, inter alia, the substitution agreement, the November 1987 refinancing of the Brooklyn properties, and the December 1987 transfer of title to Associates.
*130 Thereafter, the parties in the Kings County action engaged in a tumult of motion practice. As a result, the court, inter alia, amended its prior order so that the reference to a referee included the issue of the extent of any ownership interest Weinstock or JB Trading might have in Realty Corp. and denied a motion by Weinstock and JB Trading for summary judgment as to their alleged 100% ownership of Realty Corp.; also, the court granted Cleary's motion to dismiss the third-party complaint without prejudice to its reassertion should Weinstock or JB Trading be found to have an ownership interest in Realty Corp.
The Instant Action
Upon reviewing the background of this matter, the instant action appears as a natural extension. Weinstock is pursuing his interest in Realty Corp. and the Brooklyn properties. Having had certain of his claims at least temporarily thwarted in the Kings County action, Weinstock has sought out a new avenue of attack upon defendants, most of whom have already been implicated in the Kings County action.
Here, Weinstock sues under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. 1961, et seq. Weinstock asserts nineteen causes of action against eleven defendants arising for the most part out of his claims regarding Realty Corp. and the Brooklyn properties. The amended complaint is organized around the alleged fraudulent conduct of defendants surrounding Realty Corp. and Glenwood Estates.[8]
To restate the extensive allegations contained in the amended complaint is unnecessary in view of the background material already provided. It suffices to note that Weinstock alleges that defendants conspired through a racketeering enterprise to steal his interest in Realty Corp. and Glenwood Estates.[9] The underlying factual allegations speak to, inter alia, the November 1987 refinancing of the Brooklyn properties, the December 1987 transfer of title to Associates, and the substitution agreement.
Discussion
Cleary initially urges the Court to grant its motion on the basis of the order in the Kings County action dismissing the third-party complaint of Weinstock and JB Trading against Cleary because Weinstock and JB Trading had yet to demonstrate adequately an ownership interest in Realty Corp. Cleary argues that until Weinstock and JB Trading meet the requirement set by the court in the Kings County action, they should be unable to pursue Cleary in any forum on their claims. Cleary's argument has great appeal because the claims contained in the third-party complaint in the Kings County action are very similar to the claims contained in the amended complaint here; Weinstock appears to have brought this action attempting to evade the restriction placed upon him in the Kings County action.
Nevertheless, the doctrines of res judicata and collateral estoppel do not clearly apply to these circumstances. Most noticeably, Weinstock's claims regarding Glenwood Estates *131 are not at issue in the Kings County action. Thus, although Cleary presents a serious argument for preventing Weinstock from asserting his claims in any forum until he establishes an ownership interest in Realty Corp., this argument does not address fully the situation now faced by the Court.
The second argument asserted by Cleary provides a more lucid and better developed basis for dismissal of the amended complaint. In Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 96 S.Ct. 1236, 1246, 47 L.Ed.2d 483 (1976), the Supreme Court noted the existence of certain principles governing the contemporaneous exercise of concurrent jurisdictions by state and federal courts. "These principles rest on considerations of `[w]ise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.'" Id. (citation omitted). While recognizing the obligation of federal courts to exercise jurisdiction, the Supreme Court set out several factors in Colorado River for a district court to evaluate in determining if circumstances permitted dismissal for reasons of "wise judicial administration." Id. 96 S.Ct. at 1246-47. These factors must be carefully balanced and applied to the specific facts before a court. Id.; Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 103 S.Ct. 927, 937, 74 L.Ed.2d 765 (1983). Since Colorado River, federal courts have time and time again followed the analysis set out by the Supreme Court and have declined to adjudicate disputes before them in deference to parallel state court proceedings. See American Disposal Servs., Inc. v. O'Brien, 839 F.2d 84, 87 (2d Cir.1988) (setting out six factors).
The first factor considered in regard to Colorado River abstention is the assumption of jurisdiction over a res. Here, the existence of a res is not easily apparent but does exist and weighs in favor of this Court's deciding not to exercise jurisdiction. Although Weinstock formally asserts an ownership interest in Realty Corp. and Glenwood Estates, Weinstock's substantive concerns lie with the Brooklyn properties and the Yonkers property to which he claims to have been denied sticks in their respective bundles of rights. Furthermore, to the extent that Weinstock contends that he owns 100% of the stock in Realty Corp., Realty Corp. itself is a res at issue. See Tweel v. Frankel, 444 F.Supp. 1071, 1076-77 (S.D.W.Va.1978). Weinstock himself makes conspicuous the disputed ownership of Realty Corp. by naming Realty Corp. as a plaintiff in this action. Because the ownership of Realty Corp. and Glenwood Estates is already before the New York courts in the Kings County action and the New York County action, the first Colorado River factor weighs in favor of this Court's determination to decline jurisdiction.
The second factor, the inconvenience of the federal forum, appears to be neutral in this matter. The third factor, the desirability of avoiding piecemeal litigation, weighs heavily toward dismissing this action, however. In the instant action, the Kings County action, and the New York County action, the alleged transfers to Weinstock and JB Trading of interests in Realty Corp. and Glenwood Estates form the central dispute between the parties. All of Weinstock's causes of action in this matter hinge upon ownership of Realty Corp. and Glenwood Estates; if Weinstock and JB Trading never received an ownership interest in those entities, then this suit fails. As already discussed above, the courts in the Kings County action and the New York County action have found that a genuine issue exists as to the ownership of the entities; each court denied a motion for summary judgment by Weinstock and JB Trading. Moreover, the court in the Kings County action ruled that the issue of whether Weinstock and JB Trading have an ownership interest in Realty Corp. is so fundamental that it dismissed claims against many of the same defendants whom Weinstock now pursues here pending the finding of some such ownership interest. Accordingly, if this Court allows the instant action to proceed, the possibility exists that it will reach a determination as to Weinstock's ownership of Realty Corp. and Glenwood Estates conflicting with the state courts having concurrent jurisdiction.[10]
*132 The fourth Colorado River factor, the order in which jurisdiction was obtained, also favors the dismissal of this action. Simply, Weinstock instituted the instant action years after the underlying factual disputes were already the subject of litigation in the New York courts. Even granting that Weinstock did not actively seek to protect his alleged interests until 1988 because of illness, this suit comes almost five years late. Moreover, by asserting here claims nearly identical to those asserted in the state forums after having received several adverse rulings there, Weinstock appears to have instituted this action as much for tactical reasons as for a genuine interest in obtaining relief. See Moses H. Cone, 103 S.Ct. at 937 n. 20 ("the vexatious or reactive nature of either the federal or the state litigation may influence the decision whether to defer to a parallel state litigation").
Fifth, the Court must consider whether federal or state law provides the rule of decision. Only the five RICO causes of action stated in the amended complaint arise under federal law. In view of the other factors weighing in favor of Colorado River abstention and the predominance of state claims in the amended complaint, this factor does not shift the balance toward retaining jurisdiction. Moreover, this factor has little significance because Weinstock may pursue his RICO claims in state court. See Tafflin v. Levitt, 493 U.S. 455, 110 S.Ct. 792, 107 L.Ed.2d 887 (1990) (state courts have concurrent jurisdiction over civil RICO actions); Nakash v. Marciano, 882 F.2d 1411, 1416 (9th Cir.1989) (exercising Colorado River abstention where RICO claims exist). In addition, the sixth factor, whether state court proceedings will adequately protect Weinstock's rights, is also satisfied because he can assert his RICO claims in state court. Lawrence v. Cohn, 778 F.Supp. 678, 686 (S.D.N.Y.1991).
To the extent that Cleary is not a party to the concurrent state proceedings, my evaluation of the Colorado River factors does not change. Essentially, the same claims are at issue in the state courts as are contained in the amended complaint. With this action, Weinstock is once again asserting his alleged ownership interest in Realty Corp. and Glenwood Estates, challenging the November 1987 refinancing of the Brooklyn properties and the December 1987 transfer of title to Associates, and alleging breaches of the substitution agreement. See Telesco v. Telesco Fuel and Masons' Materials, Inc., 765 F.2d 356, 362 (2d Cir.1985) ("Merely raising an alternative theory of recovery, which may still be raised in state court, is not enough to differentiate the federal suit from the state suit."); see also Nakash, 882 F.2d at 1416-17 (substantial similarity, not exact parallelism, required between state and federal actions). To the extent Weinstock seeks relief against Cleary, Weinstock has the right to institute proceedings against Cleary in the Kings County action if he is determined to have an ownership interest in Realty Corp. In addition, the dismissal of the instant action does not preclude Weinstock from instituting another suit in this Court upon the conclusion of the concurrent state actions.
Because the Court has found it appropriate not to exercise jurisdiction pursuant to Colorado River, the Court need not go beyond the threshold issue of jurisdiction and address the third alternative presented by Cleary for dismissal, the failure of Weinstock to state a claim under RICO. In addition, because the Court dismisses the amended complaint pursuant to Colorado River, the other defendants need not respond to the amended complaint.[11] Significant resources, both of the Court and the parties, are saved in proceeding along this course.
Conclusion
The amended complaint is dismissed without prejudice to Weinstock's right to renew his claims in this Court upon the conclusion *133 of the Kings County action and the New York County action.
SO ORDERED.
ORDER
PRESKA, District Judge.
Plaintiffs having moved to reargue the Court's Opinion and Order dated March 8, 1993, and the Court having found that plaintiffs do not set forth any matters or controlling decisions overlooked by the Court which might have influenced its decision, see Farkas v. Ellis, 783 F.Supp. 830 (S.D.N.Y.), aff'd, 979 F.2d 845 (1992), it is hereby
ORDERED that plaintiffs motion for reargument is denied.
SO ORDERED.
NOTES
[1] Although three plaintiffs exist formally, Weinstock is clearly the motivating force behind the institution of this action. The amended complaint alleges that JB Trading International, Ltd. ("JB Trading") is a nominee of Weinstock, Am. Compl. ¶ 5, and that Weinstock and JB Trading own 4200 Avenue K Realty Corp. ("Realty Corp."). Am.Compl. ¶ 1.
[2] As explained further below, several issues regarding the ownership of Realty Corp. are disputed by the parties. One issue concerns whether Emmerich Handler ("Handler"), a defendant herein, and the Kamenitzer Yeshiva (the "Yeshiva") own a portion of Realty Corp. If Handler and the Yeshiva held an interest in Realty Corp. in December 1984, then Walker obviously did not own 100% of Realty Corp. at that time.
[3] In addition, Walker and his wife, Anita Walker, also a defendant herein, allegedly assigned to JB Trading their 65% combined interest in a limited partnership known as Glenwood Estates Associates ("Glenwood Estates"). At the time, Glenwood Estates allegedly held a leasehold on certain property in Yonkers (the "Yonkers property").
[4] Cleary appears to have ceased representing Handler and the Yeshiva in or before September 1991.
[5] The consent to substitution of counsel is signed by Walker and Handler on behalf of Realty Corp. and by Weinstock as retiring attorney.
[6] The letter states:
(a) [Cleary] will follow up on the September 29, 1986 decision of the Appellate Division, Second Department, so as to cause a closing of the sale of the [Brooklyn properties] to take place as promptly as possible; in that connection, [Cleary] undertake[s] to contest any motion by the defendants for leave to appeal, or any appeal from the Appellate Division's decision;
(b) At the aforementioned closing, [Cleary] will cause title to the real property in question to be taken in the name of [Realty Corp.];
(c) [Cleary] will represent [Realty Corp.] in the accounting proceeding directed by the Appellate Division and will, should that accounting proceeding result in a payment of money to [Realty Corp.], cause that money to be placed in a corporate bank account in its name;
(d) [Cleary] will see to it that pending a final determination of the [Kings County action], either by final judgment or by settlement, that
(i) fee title will remain in [Realty Corp.], which will not transfer or encumber the title to the [Brooklyn properties], except insofar as it may be necessary or appropriate to refinance the mortgage and obtain a first mortgage from a lending institution;
(ii) the status quo will be maintained as to the [Brooklyn properties] with, insofar as it may be under [Cleary's] control, no material change in circumstance;
(iii) the corporate bank account which may be opened to receive the money referred to in subparagraph (c) above, as well as any excess in the first mortgage to be obtained over the cash purchase price paid to the sellers at the closing, will remain intact except as may be necessary for the ordinary and necessary operation of the buildings; and
(iv) [Realty Corp.] will retain appropriate persons to manage and operate the buildings, paying such persons comparable market rates for their services.
Weisz concluded the letter by stating:
Nothing contained in this letter, or in the enclosures, shall be deemed to affect in any manner the claims of Messrs. Weinstock, Walker and Handler, or of the Kaminetzer Yeshiva, to any beneficial interest in [Realty Corp.] or the [Brooklyn properties].
[7] The other counterclaims feature Handler prominently, although in connection with other transactions.
[8] The amended complaint states seventeen causes of action against Cleary. Five of the causes of action arise under RICO and form the basis for this Court's jurisdiction. The other twelve causes of action include fraud, conspiracy to defraud, conversion, an accounting, imposition of a constructive trust, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, violation of N.Y.Jud. Law § 487 (misconduct by attorneys), breach of contract, prima facie tort, and legal malpractice.
[9] Weinstock's allegations regarding Glenwood Estates arise out of the same background as the allegations concerning the Brooklyn properties insofar as JB Trading allegedly received an interest in Glenwood Estates in connection with the Nassau County action. See n. 3, supra. Defendants, except for Associates, allegedly took various actions affecting the Yonkers property to the detriment of JB Trading's interest in Glenwood Estates. Although distinct, the allegations concerning Glenwood Estates correspond with the allegations concerning Realty Corp., e.g., Weinstock alleges that defendants have concertedly schemed to deprive him of his interests in the Brooklyn properties and the Yonkers property. Notably, Weinstock and JB Trading instituted an action regarding their alleged interest in Glenwood Estates, Weinstock v. Handler, No. 11133/88 (N.Y.Sup.Ct. N.Y. County) (the "New York County action"), and were denied summary judgment on the basis of issues of fact surrounding the alleged transfer of the Walkers' 65% interest in Glenwood Estates to Weinstock and JB Trading.
[10] Allowing Weinstock to pursue claims against Cleary before he establishes an ownership interest in Realty Corp. would in fact conflict in part with the court's ruling in the Kings County action.
[11] The Court, by Order dated January 26, 1993, extended the time for defendants other than Cleary to respond to the amended complaint until after the disposition of Cleary's motion to dismiss. Notably, those defendants are in the position to make meritorious motions to dismiss under Colorado River consistent with, if not substantially identical to, the Court's analysis herein. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585337/ | 382 N.W.2d 231 (1986)
Mary K. GERR, Respondent,
v.
TARGET-FRIDLEY, Relator, Commissioner of Economic Security, Respondent.
No. C8-85-1982.
Court of Appeals of Minnesota.
February 18, 1986.
Paul D. Nelson, Joel A. Fisher, Minneapolis, for Mary K. Gerr.
Robert L. Grossman, Minneapolis, for Target-Fridley.
Hubert H. Humphrey, III, Atty. Gen., Peter C. Andrews, Sp. Asst. Atty. Gen., St. Paul, for Com'r of Economic Security.
Heard, considered and decided by LESLIE, P.J., and PARKER and CRIPPEN, JJ.
OPINION
LESLIE, Judge.
This is an appeal from a determination that respondent's absences due to illness did not constitute "misconduct" for purposes of the unemployment compensation laws. We affirm.
FACTS
Respondent Mary Gerr was hired by relator Target-Fridley in 1969. She has a medical condition known as "hives" (in medical terms "urticaria"), which at various times incapacitates her. Her supervisor was aware of this problem, and in November 1983 Gerr brought in a medical disability statement which documented her condition and indicated that the hives could cause her to miss work from time to time.
In 1983 Gerr missed 27 days of work due to illness, eight of which were due to hives. On December 9, 1983 her supervisor warned her verbally about her excessive absenteeism.
From January until May 24, 1984, Gerr missed several more days of work due to *232 her illness. It is disputed how many of these absences were due to a flare-up of hives. Consequently, on May 24, 1984 she was given a Phase I warning regarding her absences, which stated:
IMPROVEMENT REQUIRED:
You must not have further attendance/punctuality problems within the next 30 days that are not substantiated by a doctor's statement or provide evidence of extreme extenuating circumstances or further disciplinary action will result. Continued problems after this warning will also result in further disciplinary action.
SUGGESTED IMPROVEMENT METHOD:
If you are experiencing reoccurring medical problems it is suggested you seek medical attention to alleviate excessive sick days. We recommend you consult with your physician and have them communicate to us matters involving your health as it relates to your work as well as the kind of work you are capable of performing.
* * * * * *
FAILURE TO MEET THE ABOVE DEFINED COMPANY REQUIREMENTS WITHIN THE ABOVE SPECIFIED TIME PERIOD OR A REPETITION OF THE SAME CONDUCT WITHIN 6 MONTHS AFTER SUCCESSFULLY COMPLETING THE 30 DAY WARNING PERIOD WILL RESULT IN THE ISSUANCE OF A PHASE II WARNING.
During the following 30 days, (May 24 to June 24, 1984) Gerr did not miss any days of work. However, from June 24 through November 6, 1984, she missed nine days. Again, it is disputed how many of those absences were due to hives. On November 6, 1984 Gerr received a Phase II warning which contained the same language as the Phase I warning, but which changed the 30-day period to 15 days and which indicated that failure to meet the required improvements would result in her discharge.
During the following 15 days, Gerr was not absent from work. On December 4 and 5, 1984 she had the flu, and brought in a doctor's slip, pursuant to the terms of the Phase II warning. In accordance with the "suggested improvement method" in the Phase II warning, Gerr also brought in a letter from her physician on December 12, 1984 which discussed her chronic urticaria and indicated that her physician was modifying her treatment.
Between January 28 and February 4, 1985, Gerr was stricken with gastroenteritis and was absent from work for those five days. Although she again brought in a doctor's slip verifying her illness, she was discharged on February 5, 1985.
Gerr applied for unemployment compensation and a claims deputy awarded her benefits, determining that her last absence was for illness and that no evidence of willful misconduct had been presented. Target appealed and a referee affirmed, determining that her absences did not constitute misconduct. A Commissioner's representative also affirmed, explaining that Gerr had conformed with the requirements of the Phase II warning but had nonetheless been discharged. Target has appealed.
ISSUE
Did Gerr's absences due to illness constitute disqualifying misconduct, even though she expressly followed her employer's requests by verifying each absence with a doctor's statement?
DISCUSSION
Employees who are discharged for misconduct are disqualified from receiving unemployment compensation benefits. Minn. Stat. § 268.09, subd. 1(2) (1984). The Minnesota Supreme Court defined the term "misconduct" in Tilseth v. Midwest Lumber Co., 295 Minn. 372, 204 N.W.2d 644 (1973):
[T]he intended meaning of the term misconduct * * * is limited to conduct evincing such wilful or wanton disregard of an employer's interests as is found in *233 deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to his employer. On the other hand mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good-faith errors in judgment or discretion are not to be deemed "misconduct."
Id. at 374-75, 204 N.W.2d 646 (quoting Boynton Cab Co v. Neubeck, 237 Wis. 249, 259, 296 N.W. 636, 641 (1941)). In Feia v. St. Cloud State College, 309 Minn. 564, 244 N.W.2d 635 (1976) the Minnesota Supreme Court also indicated that misconduct may encompass actions "demonstrating a lack of concern by the employee for her job." Id. at 565, 244 N.W.2d at 636.
An employer has the burden of proving that an employee was discharged for misconduct. Plowman v. Copeland, Buhl & Co., Ltd., 261 N.W.2d 581, 585 (Minn.1977). Once the Commissioner has determined whether or not this burden has been met, appellate review is limited to deciding whether there is evidence in the record which reasonably tends to support the Commissioner's determination. White v. Metropolitan Medical Center, 332 N.W.2d 25 (Minn.1983).
As this court noted in Smith v. American Indian Chemical Dependency Diversion Project, 343 N.W.2d 43 (Minn.Ct.App. 1984), "[t]he Minnesota Supreme Court has recognized absenteeism as misconduct." Id. at 45, citing Moeller v. Minnesota Department of Transportation, 281 N.W.2d 879, 882 (Minn.1979). In Moeller, the Minnesota Supreme Court recognized that behavior which results from illness may constitute misconduct, even if an employee has no control over the illness. The court found that failure to report to work without notifying the employer constituted misconduct, even though the employee was legitimately ill.
In several instances, the courts have indicated that failure to notify an employer of illness constitutes misconduct. See e.g. Fresonke v. St. Mary's Hospital, 363 N.W.2d 328 (Minn.Ct.App.1985); Flahave v. Lang Meat Packing, 343 N.W.2d 683 (Minn.Ct.App.1984).
These cases are clearly distinguishable, however, because Gerr did notify her employer each time she was going to be absent. The issue here rather, is whether Gerr's absences alone, as a result of chronic illness,[1] constitute misconduct.
Although Minn.Stat. § 268.09, subd. 1(2) (1984) provides that an employee is not disqualified from receiving unemployment compensation benefits if he or she is "separated from employment due to his own serious illness provided that such individual has made reasonable efforts to retain his employment," neither the referee nor the Commissioner's representative relied upon this exception. Both the referee and the Commissioner's representative found that Gerr had not engaged in misconduct since she had complied with her employer's requirements concerning verification and notification of absences due to illness. Target also does not rely upon the serious illness exception, but claims only that excessive absences for any reason even illness constitute misconduct. Target's arguments fail for two reasons: (1) the case law does not establish that absences due to illness alone constitute misconduct; and (2) Target itself set forth the requirements for Gerr to retain her employment, and Gerr met those requirements.
1. Absences due to illness do not, alone, constitute misconduct.
The present situation is factually almost identical to St. Williams Nursing *234 Home v. Koep, 369 N.W.2d 33 (Minn.Ct. App.1985). In Koep, this court noted that after being warned against excessive absenteeism the employee had been absent for an additional three days. Each of those absences was due to illness and in each instance the employee properly notified her employer of her absence. Although the employer regarded the employee's absences as sufficient for her discharge, this court stated:
The issue here is not whether Koep should have been terminated but whether, now that she has been terminated, she should be denied unemployment compensation benefits. * * * An employer's standards for discharging an employee for cause may differ from the misconduct standard enunciated in the economic security law.
In affirming the decision of the referee, the Commissioner stated:
In the instant case the Referee reasonably found from the evidence that the claimant's absenteeism did not show the culpability required to come within the definition of misconduct * * *.
Id. at 34. The Koep court affirmed the Commissioner's determination that the employee was not guilty of misconduct.
Here, also, although Target may have been justified in discharging Gerr, the mere fact of her illness does not demonstrate the culpability required by Tilseth.
Target claims that our decision in Jones v. Rosemount, Inc., 361 N.W.2d 118 (Minn. Ct.App.1985) indicates that chronic and excessive absenteeism may, as a matter of law, demonstrate a lack of concern for a job. Indeed, this interpretation of Jones was recently accepted by this court in McLean v. Plastics, Inc., 378 N.W.2d 104 (Minn.Ct.App.1985). Although McLean noted that absenteeism may constitute misconduct despite the fact that there has been no showing of willfulness, the McLean court underscored the word may, and cited the following passage from Jones:
Although there was no showing that Jones' absenteeism was willful or deliberate, it was sufficiently chronic and excessive to demonstrate a lack of concern by Jones for her job.
* * * * * *
Regardless of the reason for her absence on her last day of work, Jones' pattern of persistent absence demonstrated negligent behavior toward her employer, justifying termination and justifying withholding unemployment compensation benefits. Jones, 361 N.W.2d at 120.
378 N.W.2d at 108.
We must emphasize, however, that even though the Jones court found the employee's chronic absenteeism to constitute misconduct as a matter of law, Jones also continued to recognize that at least the Feia standard of misconduct must be met; i.e., even if willfulness is absent, at least a lack of concern for the employee's job must still be demonstrated. In Jones, unlike the present case, there was no evidence of chronic illness by the employee (although the last day of work was missed due to illness). Here, on the other hand, we cannot find that an employee's absences due to documented illnesses demonstrated lack of concern for her job.
The fact that Gerr's illness was not easily controlled is also relevant. In Winkler v. Park Refuse Service, Inc., 361 N.W.2d 120 (Minn.Ct.App.1985), this court indicated that an employee's absences from work due to his incarceration constituted misconduct, since those absences were within the employee's control (he could have paid his fines on time). The Winkler court, citing Moeller, stated:
The critical factor is whether the employee's behavior caused his failure to report to work.
Winkler, 361 N.W.2d at 124 (emphasis added). Cases involving misconduct clearly focus on conduct or behavior. Gerr's illness, rather than any conduct or behavior, caused her failure to report to work.
2. Gerr scrupulously complied with Target's absence/notification requirements.
Misconduct may be judged by determining whether an employee has violated *235 the standards of behavior which his employer has the right to expect of his employee. See Tilseth. As noted above, an employer has the right "to establish and enforce reasonable work rules relating to absenteeism." Jones, 361 N.W.2d at 120. However, an employer must also observe its own published policies and procedures.
In Hoemberg v. Watco Publishers, Inc., 343 N.W.2d 676 (Minn.Ct.App.1984) an employer had provided its employees with handbooks indicating that an employee would receive an individual disciplinary warning before being discharged. When the employer did not follow its own rules, the Hoemberg court refused to find the employee guilty of misconduct, explaining:
[T]here is evidence that the employees had notice of the disciplinary procedures in the handbook and had every right to expect the company would follow those procedures.
Id. at 679.
In Hoemberg, the employee had violated his employer's work rules. In the present situation, Gerr did not violate Target's rules regarding attendance problems but, rather, complied with them fully. Here, even more than in Hoemberg, Gerr had the right to expect that her employer would comply with its own agreement.
DECISION
Gerr's absences from work due to her illness did not constitute misconduct.
Affirmed.
NOTES
[1] It is undisputed that not all of Gerr's absences were due to a flare-up of hives. However, she did substantiate when requested that she was in fact ill when she was absent. Gerr testified that chronic urticaria weakens the immune system, making the body more vulnerable to infection. In any event, it is not contested that she was ill when she claimed to be ill. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585345/ | 382 N.W.2d 340 (1986)
222 Neb. 107
STATE of Nebraska, Appellee,
v.
Mary K. WILKENING, Also Known As Mary Anderson, Appellant.
No. 85-404.
Supreme Court of Nebraska.
February 28, 1986.
Bruce H. Abrahamson, of Gunderson, Abrahamson, Grewe & Miller, Omaha, for appellant.
Robert M. Spire, Atty. Gen., and Lynne R. Fritz, Lincoln, for appellee.
KRIVOSHA, C.J., and BOSLAUGH, WHITE, HASTINGS, CAPORALE, SHANAHAN, and GRANT, JJ.
*341 KRIVOSHA, Chief Justice.
The appellant, Mary K. Wilkening, was charged in the district court for Douglas County, Nebraska, with three counts of acquiring or obtaining or attempting to acquire or obtain possession of a controlled substance by misrepresentation, fraud, forgery, deception, or subterfuge in violation of Neb.Rev.Stat. § 28-418(1)(c) (Reissue 1979). Following trial, the case was submitted to a jury which, on April 3, 1985, returned a verdict of guilty against Wilkening on all three counts. On May 17, 1985, the district court entered judgment in conformity with the verdict of the jury and sentenced Wilkening to incarceration in the county jail for a period of 4 months on each count, the sentences to run concurrently. Wilkening has now appealed to this court, maintaining that the evidence was insufficient as a matter of law to sustain a verdict and that the district court improperly submitted to the jury an instruction on "aiding and abetting." We believe that the district court did not commit error and that the judgment and sentences should be affirmed.
On December 8, 1983, Joseph A. Novita, a licensed pharmacist at Beaton Drug, 1218 South 119th Street, Omaha, Nebraska, filled a prescription for the narcotic analgesic Percodan, which was ordered by prescription for a "Mary Anderson" by a Dr. Gerald C. O'Neil. After filling the prescription Mr. Novita noticed that Dr. O'Neil was a pediatrician and became somewhat suspicious. Shortly thereafter, he phoned Dr. O'Neil's home and was informed that the doctor had been retired for several months. The state drug inspector was therefore notified by Beaton Drug.
Based upon the information received from Mr. Novita regarding the apparently forged prescription for Percodan filled on December 8, 1983, a drug investigator for the state Department of Health began a search for similar prescriptions in the Omaha, Douglas County, area. A search through numerous pharmacies throughout the city of Omaha revealed many prescriptions for Percodan reportedly ordered for Mary Anderson, Mary K. Wilkening, or Bob Anderson by Dr. O'Neil. The drug inspector was also able to ascertain that the appellant, Mary K. Wilkening, had worked for Dr. O'Neil as a nurse for approximately 8 years preceding his retirement in August of 1983 and in an administrative capacity subsequent thereto until approximately September 21, 1983. The record also shows that Wilkening's maiden name was Anderson.
At trial Mr. Novita identified Wilkening as the person for whom he filled the prescription on December 8, 1983, though, on cross-examination, he admitted that his identification could be mistaken. Dr. O'Neil testified that he wrote no prescriptions during the months of September, November, or December of 1983, the dates on the three prescriptions made out to Mary Anderson and involved in this case.
The handwriting on these prescriptions was then compared by a questioned documents expert to exemplars and samples obtained from Dr. O'Neil, Mary K. Wilkening, and her husband, Rod Wilkening. The expert testified that the signature of Dr. O'Neil on each of the prescriptions was a simulated signature, i.e., a forgery. While the handwriting expert could not identify the actual author of these simulated signatures, he did testify that he believed that there was only one author for all of these simulated signatures. There was, however, other writing on the prescriptions, specifically on the line indicating for whom the prescription was to be filled. The expert testified that the name on each of these prescriptions which indicated for whom the prescription was ordered was authored by the same person and, in his opinion, that person was the appellant, Wilkening.
At the conclusion of the trial the case was submitted to the jury, and the court, over the objection of Wilkening's counsel, instructed the jury, among other matters, that in order to convict the defendant the State must prove beyond a reasonable doubt that Wilkening "either alone or by aiding and abetting another, acquired or *342 obtained possession of a controlled substance, percodan," on the three dates in question. The court further instructed the jury that it was not necessary that the State prove that Wilkening herself committed the unlawful act because anyone who aids, abets, or procures another to commit any offense may be prosecuted as if she were the principal offender. The court further instructed the jury that "[w]here a crime requires the existence of a particular intent an alleged aider or abettor cannot be held as a principal unless it is established that the aider knew that the perpetrator of the act had the required intent, or that the aider herself possessed the required intent."
Turning first to the question of whether the evidence was sufficient to convict Wilkening of the charges, we believe the evidence was sufficient. In State v. Buchanan, 210 Neb. 20, 312 N.W.2d 684 (1981), we declared that one accused of a crime may be convicted on the basis of circumstantial evidence if, taken as a whole, the evidence establishes guilt beyond a reasonable doubt. We said in Buchanan, supra, that the State is not required to disprove every hypothesis but that of guilt. See, also, State v. Evans, 215 Neb. 433, 338 N.W.2d 788 (1983). We have further held that after a jury has considered all of the evidence and returned a verdict of guilty, that verdict may not, as a matter of law, be set aside on appeal for insufficiency of evidence if the evidence sustained some rational theory of guilt. State v. Evans, supra. And, further, in State v. Schroder, 218 Neb. 860, 359 N.W.2d 799 (1984), we held that the verdict of the trier of fact must be sustained if, taking the view most favorable to the State, there is sufficient evidence to support it. See, also, State v. Kakela, 218 Neb. 843, 359 N.W.2d 786 (1984).
Exhibits 1, 2, and 3, on their face, set out that on December 8, 1983, November 14, 1983, and September 30, 1983, a prescription order for Percodan for Mary Anderson, purportedly signed by Dr. Gerald C. O'Neil, was presented to a pharmacy. As to the prescription order labeled exhibit 1, the pharmacist was able to make a tentative identification of Wilkening as the one who presented the prescription to him to be filled on December 8, 1983. As to the prescription orders labeled exhibits 2 and 3, these documents were placed into files kept by the pharmacies. While there was no evidence introduced at trial as to who presented exhibits 2 and 3 to be filled, nevertheless the connecting link between all of these prescriptions was the fact that the words "Mary Anderson" on each of the prescriptions were written by Wilkening without the knowledge or consent of Dr. O'Neil. We cannot say as a matter of law that the jury could not believe that Wilkening, while employed by Dr. O'Neil, acquired the prescription forms and signed her maiden name on each of the prescriptions, as suggested by the handwriting expert. This, coupled with the fact that the jury could have reasonably believed the testimony of Mr. Novita that Wilkening was the individual who presented the December 8, 1983, prescription to be filled, certainly amounted to enough evidence to sustain some rational theory of guilt. Wilkening's assignment of error to the effect that there was insufficient evidence to sustain a verdict of guilty, thus, is simply without merit.
That leaves us, then, with the question of whether the trial court erred in submitting to the jury an instruction on aiding and abetting. The State was unable to produce evidence to establish without question that Wilkening had herself presented the prescriptions to the respective pharmacies in counts II and III and, therefore, could not establish that in fact she was the individual who had obtained or attempted to obtain the drug. What is clear, however, is that there was sufficient circumstantial evidence for a jury to conclude that Wilkening had obtained the prescription forms and had at least affixed her maiden name to the prescriptions on the line "For." Additionally, there was evidence, which the jury could believe, that whoever affixed the name to the "For" line also signed the prescriptions. This, then, *343 would be sufficient evidence of aiding and abetting an attempt to procure the drug, even though the evidence did not establish that Wilkening herself presented the prescriptions for filling. There was sufficient evidence presented for the jury to believe that either Wilkening presented the prescriptions herself, in which case she was guilty as the principal, or someone else did so after being assisted by Wilkening, in which case she was guilty of aiding and abetting. There was no other evidence as to how the prescriptions could have been received by the various pharmacies and the prescriptions filled and placed in the filled file. The aiding and abetting instruction was therefore supported by the evidence in this case. See State v. Garza, 193 Neb. 283, 226 N.W.2d 768 (1975).
For these reasons the judgment of the district court entered following a jury verdict is affirmed.
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3344520/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] MEMORANDUM OF DECISION DE PLAINTIFF'S MOTION FOR CHILD SUPPORT (#101)
The court heard testimony from both parties. Each party submitted a child support guidelines worksheet (Defendant's Exhibit F and Plaintiff's Exhibit #1). The defendant seeks a deviation on the basis that he is carrying several debts. The plaintiff's form proposes $190 while the defendant's form proposes $172.65. The court orders $175 weekly child support. A wage withholding order is entered. First payment is due on May 5, 2000.
The court finds no basis in "Section 46b-215a-3. Child support guidelines deviation criteria" for the defendant's deviation request and it is denied.
MEMORANDUM OF DECISION DE DEFENDANT'S MOTION FOR ALIMONY (#102)
The court has ordered the defendant to pay child support weekly of $175 after which he will have less than $500 weekly net disposable income. Without the child support the plaintiff's net disposable income is $952. (cf Exhibits #1 and F).
The court orders the plaintiff to pay $150 weekly as periodic alimony, taxable to the defendant and deductible by the plaintiff. The first payment is due May 5, 2000. A wage withholding order is entered.
HARRIGAN, JUDGE. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1584810/ | 641 So. 2d 29 (1994)
PUCKETT MACHINERY COMPANY
v.
Russell EDWARDS.
No. 90-CA-01264.
Supreme Court of Mississippi.
July 21, 1994.
*30 Frank T. Moore, Jr., T. Calvin Wells, Wells Moore Simmons & Neeld, David M. McMullan, Jr., Stubblefield & Clark, Jackson, for appellant.
Rebecca C. Taylor, Jack Parsons, Parsons & Taylor, Wiggins, for appellee.
En Banc.
ON PETITION FOR REHEARING
JAMES L. ROBERTS, Jr., Justice, for the Court:
The original opinions are withdrawn and this opinion substituted therefor.
This is an appeal from a judgment rendered by the Circuit Court of Forrest County, Mississippi, following a jury trial. Puckett Machinery Company sued Russell Edwards in a replevin action for the repossession of equipment Puckett sold to Edwards, which was secured by a purchase money note and security agreement. Edwards counterclaimed in this action, seeking $111,768.00, plus additional damages suffered as a result of alleged defective machinery and misrepresentations by Puckett. The jury awarded Edwards damages in the amount of $108,036.00, *31 after deducting $41,964.00 they found was owed by Edwards to Puckett.
Puckett moved for, and was denied, judgment notwithstanding the verdict, or in the alternative, a new trial. Feeling aggrieved of this finding, Puckett appeals to this Court on the issues of replevin and damages. We reverse and remand on the same.
STATEMENT OF THE FACTS
Mr. Russell Edwards is in the logging business. Prior to August, 1986, Edwards used a ten year-old John Deere, Model 544 B Loader for cutting trees. He decided to buy new tree-cutting equipment, and approached Mr. Gwenzil Dossett, a salesman for Puckett Machinery Company, about purchasing a Caterpillar tree-harvester. Edwards testified that he was fond of his other Caterpillar equipment, and wanted all his equipment to be the same.
Edwards decided to purchase a Caterpillar 910 from Puckett. He put $5,000.00 down, and was given a $12,000.00 trade-in allowance for his John Deere.[1] The sales price for the 910 was $73,320.00, but the total purchase price was $92,138.00, including all features and insurance. The 910 carried a three year or 5,000 hour warranty, whichever occurred first. The 910 was delivered to Edwards at his work site in Roberts, Louisiana. There is undisputed testimony that the 910 did not work properly from the time it was delivered to Edwards. Puckett sent mechanics down to the site to work on the 910. The 910 never operated properly, and was eventually picked up by Puckett. Other than the original down payment and the trade-in allowance, Edwards did not pay anything further on the note on the 910. In fact, a credit memorandum was issued to Edwards on the 910.
After several weeks of attempting to use the 910, a decision was reached by Edwards to purchase another model Caterpillar, the 518 tree-harvester. There is disputed testimony as to what transpired regarding the decision for Edwards to buy the 518. Edwards testified that he felt he had no choice in purchasing another model Caterpillar since Puckett had retained his down payment. However, Mr. Myron Sitton, the executive vice-president and secretary of Puckett Machinery Company, stated that Puckett was not unwilling to give Edwards his down payment back; and in fact, there was no evidence that Edwards ever asked for his money back. It should also be noted that during the pendency of Edwards' decision to purchase the 518, he also looked at similar John Deere equipment.
The original $5,000.00 down payment was applied to the purchase of the 518. The trade-in allowance on the John Deere was raised from $12,000.00 to $29,000.00. Sitton testified that this increase was made because Puckett knew that Edwards was unhappy about the 910 and they wanted to try and make it up to him.
There were a few operational problems with the 518 as well. Edwards testified that the 518 never cut trees as large as he was told that it would. Furthermore, Edwards had trouble with the hydraulic system, and had to have a cylinder rebuilt within the first year of owning the 518. The 518 carried the same warranty as the 910. Edwards testified that the 518 was a fine machine, and he continued to use it right up until the time of trial. Moreover, he planned to continue to use it after the trial.
On or about January 9, 1989, Puckett refinanced the note on Edwards' 518. Edwards had fallen behind in his payments, and this was an attempt to bring his account current. Edwards testified that he had fallen behind on the payments because it had been raining and he was unable to work as a result. He further testified that he had gone into Puckett to "set three notes up." He stated that he did not want to refinance the whole note, but he said he signed the paperwork doing so anyway.[2]
*32 As a result of the refinancing, the monthly payments were lowered from $3900.00 to $3500.00. Id. According to the terms of the refinanced note, there were to be eighteen (18) payments at $3497.00 per month. Sitton testified that the last payment received was the one due on July 10, 1990. It was received on September 26, 1990, but was returned for insufficient funds. It was later made good. Sitton stated that Edwards was twelve (12) payments in arrears, totalling $41,964.00.
There was further disputed testimony as to what transpired at the time the note was refinanced. Edwards testified that he told the people at Puckett that the 518 was not working properly, and that Mr. Delk, the branch manager at the Hattiesburg store, said he would "fix" it. Edwards stated that no one came to his work site to fix the equipment. Sitton testified that he was unaware of any promise made to Edwards to go out to the work site and look at the 518. Furthermore, Delk testified that he recalled Edwards complaining about the 518, but that he did not promise he would go out to the site and look at the 518; and in fact, he did not go.
Edwards stated that he got behind on his payments again after refinancing the note due to rain, but decided at that time he was not going to pay anymore on the 518. He said he was tired of the equipment not working properly. However, he did not notify Puckett of this decision, nor his reasons for discontinuing payment. Puckett, and later its attorneys, sent letters to Edwards, and Edwards acknowledged receipt of these letters regarding his past due payments, but did nothing about them. Edwards continued to use the 518. It was only when the replevin action was brought against him that he took the whole matter to his attorneys.
As stated, Puckett wrote Edwards several letters regarding his past due account. After Edwards failed to bring his account current, Puckett filed a complaint seeking repossession of the Caterpillar 518 tree-harvester on October 18, 1989, pursuant to the January 9, 1989, purchase money note and security agreement signed by Edwards and properly executed by Puckett. Edwards answered and filed a counterclaim on November 14, 1989, claiming breach of warranty and seeking costs of repairs, $111,768.00, plus additional damages.
A jury trial was held July 19-21, 1990. The jury returned a verdict for Edwards. The jury verdict read: "[w]e, the jury, find for Russell Edwards against Puckett Machinery Company and assess his damages at $108,036.00, after deducting the sum of $41,964.00 owed by Russell Edwards to Puckett Machinery on the machine."
Puckett filed a motion for (partial) judgment notwithstanding the verdict, and in the alternative, for a new trial.[3] These motions were denied by the lower court. Puckett perfected its appeal to this Court.
DISCUSSION OF THE ISSUES
I.
Puckett contends that the trial court erred by not granting its Motion for (Partial) Judgment Notwithstanding the Verdict, and in the alternative, its Motion for a New Trial. A motion for judgment notwithstanding the verdict is a procedural device for challenging the sufficiency of the case, and requires that the lower court consider all the evidence before it at the time the motion is made. First United Bank of Poplarville v. Reid, 612 So. 2d 1131, 1136 (Miss. 1992) (citing Clements v. Young, 481 So. 2d 263, 268 (Miss. 1985)). The sufficiency of the evidence presented by Edwards must be considered on the basis of all the evidence offered and the lower court's ruling tested under its denial of Puckett's judgment notwithstanding the verdict motion. *33 See Reid, 612 So.2d at 1136. That is, the evidence must be viewed in a light most favorable to Edwards, the nonmoving party. See North River Homes, Inc. v. Bosarge, 594 So. 2d 1153, 1159 (Miss. 1992).
Our scope of review is well-established:
The motion for J.N.O.V. tests the legal sufficiency of the evidence supporting the verdict. It asks the court to hold, as a matter of law, that the verdict may not stand. Where a motion for J.N.O.V. has been made, the trial court and this Court on appeal must consider all the evidence not just the evidence which supports the non-movants case in the light most favorable to the party opposed to the motion. The non-movant must also be given the benefit of all favorable inferences that may be drawn from the evidence. If the facts and inferences so considered point so overwhelmingly in favor of the movant that reasonable men could not have arrived at a contrary verdict, granting the motion is required. On the other hand, if there is substantial evidence opposed to the motion, that is, evidence of such quality and weight that reasonable and fairminded men in the exercise of impartial judgment might reach different conclusions, the motion should be denied and the jury's verdict allowed to stand.
Splain v. Hines, 609 So. 2d 1234, 1238 (Miss. 1992) (citing Andrew Jackson Life Insurance Co. v. Williams, 566 So. 2d 1172, 1177 (Miss. 1990); Goodwin v. Derryberry Co., 553 So. 2d 40, 42 (Miss. 1989); Guerdon Industries, Inc. v. Gentry, 531 So. 2d 1202, 1205 (Miss. 1988); Stubblefield v. Jesco, Inc., 464 So. 2d 47, 54 (Miss. 1984); Paymaster Oil Mill Co. v. Mitchell, 319 So. 2d 652, 657 (Miss. 1975)).
II.
REPLEVIN
The initial complaint filed in this cause was a replevin action by Puckett Machinery Company against Russell Edwards for repossession of a Caterpillar 518 tree-harvester, with tree shearer and feller buncher attachments. The equipment was secured by a properly executed purchase money note and security agreement. In a most extraordinary series of events at trial, the jury was never instructed regarding the replevin action.
Puckett called as its first and only witness on the matter of replevin, Mr. Myron Sitton, the executive vice-president and secretary for Puckett. Sitton testified, in pertinent part, that Edwards had purchased a 518 Caterpillar tree-harvester with a tree shearer and feller buncher from Puckett, and that a purchase money note and security agreement secured the purchase of this equipment. Sitton further stated that Edwards had violated the terms of that agreement and had payments past due totalling $41,964.00,[4] while retaining possession of the equipment. Sitton stated that Puckett had asked Edwards to return the machine to Puckett, and that Edwards had failed to do so.
During the jury instruction colloquy between the trial judge and counsel, Puckett asked that instruction P-1 be given. It read:
You are instructed that Puckett Machinery Company, the Plaintiff, is entitled to possession of that certain:
New 518 Caterpillar Harvester, s/n 08ZC00088 (3304 Engine 07Zi6895 Arr 2W3989); New Caterpillar ROPS Canopy, NSN; New Balderson BHS 518 Tree Shear, s/n 140626 (ZZ798); New Balderson BFB518 Feller Buncher, s/n 135356 (ZZ739).
Edwards objected to P-1 as peremptory. Puckett responded that the proof was clear that Puckett was entitled to a peremptory instruction on the issue of possession. The court responded thusly:
Let me tell ya'll if this were just before me, I would grant the possession of it since this is of a possessory nature. And I'm seeking your thinking on it. The one thing that bothers me, and I don't mean bothersome *34 because I don't care how this case comes out, but jury wise, if I give the PI I think it's very conceivable that this jury is gonna think automatically, we got to now give some on that counter-claim. Jurors don't understand repossessions anyway, or replevins anyway.
How do you think we can best handle it? I can do one of two things, I can either refuse that and handle post verdict. In other words I am going to make sure ya'll get your I want to hear from you. Because you've even admitted that he didn't make the payments, but I'm just trying to decide how best to handle it.
BY HON. JACK PARSONS [counsel for Edwards]: We think we got it covered in our instructions where it says you reduce if there is any verdict that it is reduced by that amount of money.
We think that would give the jury the wrong impression.
BY THE COURT: Obviously you're entitled to it, but I'm a little bit that what bothers me about a replevin before a jury.
BY HON. FRANK MOORE [counsel for Puckett]: That is the hard thing. On the other hand, because of the way we view all of the circumstances in the case, Judge, including the issues of consequential damages, the proof on consequential damages, what our rights may be, if any, on that issue and the Court's ruling on it, we feel that we are entitled to a peremptory on this if there is an instruction somehow along the back, if you find that they are entitled to possession but if you also find for Russell Edwards
The court did not rule on P-1 at that time.
After completion of consideration of the other proposed jury instructions, P-1 was revisited:
In this record let it be noted that previously proffered for an instruction was P-1 which would have been peremptory in nature and granted the machinery to Puckett Machinery. In light of the manner in which this jury instruction has been couched, I am now going to refuse P-1 but refuse it with the verbal reasoning of the court being, the reason it is being refused solely for the purpose of not confusing the jury. But with everybody in agreement and understanding that the court realizes the legal rights of Puckett to possession of the machinery, but that it is in the manner in which the jury verdict was couched that it has been taken care of that contingency in there.
Seriously, I've said this before but I want it highlighted if it does go to the Supreme Court for them to realize that I am not so terribly dumb that I don't realize the rights of Puckett in this matter. And I think and I should put in here that I discussed this with the attorneys so that they will know the Court's ruling, what it normally would have been, that it would've normally granted that instruction but for the way we handled this verdict form rather than confuse the jury.
The jury verdict form the court spoke of was submitted to the jury and read:
The form(s) of the verdict will be one of the following forms:
We, the jury, find for Puckett Machinery Company and further find Russell Edwards is not entitled to recover on his counterclaim.
OR
We, the jury, find Puckett Machinery Company is entitled to recover from Russell Edwards the amount of $ ____ after deducting Russell Edwards' damages of $ ____.
OR
We, the jury, find for Russell Edwards against Puckett Machinery Company and assess damages at $ ____ after deducting the sum of $41,964.00 owed by Russell Edwards against Puckett Machinery Company on the machine.
It has long been held that it is reversible error to give instructions likely to mislead or confuse the jury as to the principles of law applicable to the facts in evidence. See, e.g., McCary v. Caperton, 601 So. 2d 866, 869 (Miss. 1992); Moak v. Black, 230 Miss. 337, 351, 92 So. 2d 845 (1957); Film Transport Co. v. Crapps, 214 Miss. 126, 58 So. 2d 364 (1952); Jackson v. Leggett, 186 Miss. 123, 131-132, 189 So. 180 (1939).
*35 That is the case here. To have given instruction P-1 would have been unnecessarily confusing to the jury. The trial court ruled correctly that the deduction of the remaining balance on the machine covers the possessory right. In other words, Puckett was entitled to possession only because Edwards had not paid the balance due on the machine. When the jury deducted the remaining balance from the damages assessed to Puckett in favor of Edwards, Puckett no longer had a claim.
The instructions were properly drawn to elicit a decision from the jury as to who owed what, including whatever was due on the machine. Once that was determined, the right to possession would follow. While P-1, the peremptory instruction on possession, was consistent with the first of the forms of verdict instruction which would be used in case of a finding for Puckett on Edwards' claim, it was not consistent with either the second or the third form, one of which would be used when the jury found for Edwards.
As to the first form, had the jury rendered such a verdict, all the court would have had to do was enter a judgment in accordance with that verdict, giving possession to Puckett. There was nothing for a jury to decide, directed or undirected, on this issue. The balance due was uncontested. Once the jury makes a finding with regard to the counterclaim all else follows as a matter of law. If Puckett owes more than it is due, the balance due it is used to reduce its liability and Edwards has fully paid for the machine and keeps possession. This is what happened with the present verdict, which we now reverse. If Puckett had owed less than what was due, it would be entitled to the difference between what it owed and the balance, and if Edwards failed to pay it, Puckett was entitled to possession.
It does not really matter that this began as a replevin matter. Puckett's entitlement to possession turns on whether it is due money from Edwards. That determination involves more than the question of what Edwards has paid. It also involves a determination whether Puckett owes Edwards, entitling Edwards to, in effect, a set off. See, Miss.R.Civ.Pro. 13 and Comment. We have long since determined that under the Mississippi Rules of Civil Procedure, the fact that an action begins as one in replevin does not dictate the relief ultimately granted or the course of the litigation. Hall v. Corbin, 478 So. 2d 253 (Miss. 1985).
The jury should only be instructed on those aspects of the law as will enable it to decided the issues commended to it for determination. Here the only thing that the jury had to decide was whether Edwards' counterclaim was meritorious and, if so, the amount of his damages. The trial court properly handled this issue.
III.
CONSEQUENTIAL DAMAGES
Puckett takes no issue with the jury finding that there was a breach of warranty, but rather, appeals on the issue of damages alone. Edwards bought a Caterpillar 910 tree shearer from Puckett on or about August 14, 1986. As stated above, there is no dispute that the 910 was defective from the beginning. Puckett sent mechanics out to Edwards' work site in Louisiana numerous times to try and repair the 910. After approximately three weeks, Edwards parked the 910 and did not use it thereafter. Edwards never paid a single payment on the 910, and the sale was cancelled and he was given full credit for his down payment at that time. On or about September 23, 1986, Edwards executed a purchase order for a Cat 518 to replace the 910. Edwards testified that he was told the 518 would be ready in a week or two. However, the 518 arrived three months later.
Edwards testified that the 518 never cut trees as large in diameter as he had been told it was supposed to cut. He also had to have a hydraulic cylinder rebuilt within the first year. However, there was no evidence presented by Edwards that his output was diminished in any way by his continued use of the 518. Regarding the 518, the only consequential damage Edwards alleged that he suffered is that he had to hire a second sawman because the 518 would not cut the really big trees. When he owned and used *36 his John Deere, he only employed one sawman.
Puckett contends that the trial court erred in submitting the issue of consequential damages to the jury. It bases this contention on the fact that Edwards' evidence as to such damages was legally insufficient, and that Edwards did not specifically plead special damages.
During the course of the trial, Edwards alleged that he suffered lost profits as a result of the breach of warranties regarding the Cat 910. All of the proof offered at trial was oral testimony.
Edwards, Jimmy Douglas, an Edwards' employee, and John Dees, the buyer of the cut timber from the Louisiana work site, all testified that Edwards cut approximately twelve truck loads of timber a day with the John Deere he traded in for partial payment of the 910. They further testified that the output was cutback to six truck loads a day with the 910. Edwards alleged that this cutback in production lasted the three months he was forced to wait for delivery of the 518 to replace the defective 910. The average payoff was $400.00 per load.[5] Apparently, these approximate amounts were based on gross revenues. Moreover, Edwards testified that as a result of the defective condition of the 910, he was forced to hire additional sawmen to supplement the cutting of the trees. Edwards stated that the sawmen's take home pay was $70.00 per day. However, with the insurance and taxes he was required to pay on behalf of the workers, Edwards paid an additional $100.00 per day.
There were no documents on these matters offered into evidence. Although it was established that there were truck tickets given for every load, Edwards stated he threw them away as an ordinary practice after receiving payment on the loads. There were no receipts on salaries paid to the additional sawmen either. Edwards admitted on cross-examination that his wife and his accountant kept his books. He also stated that he did have a bank account for his business, and that the salaries of the additional laborers would have been paid from that account. Also, he admitted that his 1099 tax forms would have reflected what he had been paid for jobs during the regular course of business. Furthermore, Edwards testified that these records still existed. There was no attempt to produce such documents at the time of trial.
Throughout the course of the trial, Puckett objected to any attempt by Edwards to prove consequential damages. At the close of all of the evidence, Puckett requested a jury instruction which would limit Edwards' damages to incidental damages only. The requested instruction, P-4, read in pertinent part:
... you may award Russell Edwards only those damages which Russell Edwards has established to a reasonable certainty, as follows: (1) An amount equal to the amount of the purchase price, if any, which Russell Edwards paid on the equipment involved in the first transaction and which was not credited back to him; (2) Incidental damages, if any, directly and proximately resulting from Puckett Machinery Company's failure, if any, to deliver conforming goods including expenses reasonably incurred in the inspection, receipt, transportation, care and custody of the equipment rightfully rejected, and any commercially reasonable charges, expenses or commissions incident to such failure. [Emphasis added].
The trial court amended the instruction by removing the word "only," and then granted it.
This Court has said that "... while the measure of damages need not be perfect, the most accurate and reliable evidence available should be required." City of New Albany v. Barkley, 510 So. 2d 805, 807 (Miss. 1987) (citing Harrison v. Prather, 435 F.2d 1168, 1174 (5th Cir.1970)). See also Purina Mills, Inc. v. Moak, 575 So. 2d 993 (Miss. 1990). Furthermore, the plaintiff bears the burden of proof as to the amount of damages. City of New Albany, 510 So.2d at 808 (citing Harper v. Hudson, 418 So. 2d 54 (Miss. 1982)).
*37 It seems that Edwards failed to comply with a basic rule in proof of damages, because it is "absolutely incumbent upon the party seeking to prove damages to offer into evidence the best evidence available [for] each and every item of damage. If he has records available, they must be produced. While certainty is not required, a party must produce the best that is available to him." Eastland v. Gregory, 530 So. 2d 172, 174 (Miss. 1988) (citing Thomas v. Global Boat Builders & Repairmen, Inc., 482 So. 2d 1112 (Miss. 1986); Copiah Dairies, Inc. v. Addkison, 247 Miss. 327, 153 So. 2d 689 (1963); Conrad v. Dorweiler, 189 N.W.2d 537 (Iowa 1971)).
On cross-examination, Edwards admitted that the records of what was paid to, and on behalf of, the additional sawmen, as well as his personal tax records and banking records, were available. Therefore, the oral testimony admitted as to what Edwards paid the additional workers was not the best evidence when there were records available. See Eastland, supra.
Edwards testified on direct that he had thrown away the truck tickets which would show how much he made per load, thereby rendering them "unavailable" for trial purposes. However, such things as the tax returns for his business and his banking deposits would have been better evidence of the amount of lost profits he experienced as a result of the breach of warranty.
In Yazoo & M.V.R. Co. v. Consumers' Ice & Power Co., 109 Miss. 43, 67 So. 657 (1915), the ice company sued the railroad for closing a spur of track that served its business of shipping ice. The judge awarded the ice company $700.00 in damages. This Court found that there was sufficient evidence of liability on the part of the railroad, but reversed and remanded on the issue of damages. At trial, the president of the company testified that his company suffered damages at $100.00 per day. When asked, he explained that he arrived at this figure by a mental calculation. The company's books could not be found and were not introduced. There was a corroborating witness as to the president's calculations of the company's profits. Id. This Court cited the rule on the recovery of gains and profits lost through breach of contract, which stated: "[l]osses of profits in a business cannot be allowed, unless the data of estimation are so definite and certain that they can be ascertained reasonably by calculation." Id., 67 So. at 658 (citing Crystal Ice Co. v. Holliday, 106 Miss. 714, 64 So. 658 (1914)). The Court found that the testimony lacked necessary information from which a calculation of the amount of loss sustained could be calculated. Id., 64 So. at 685.
Furthermore, this Court has held that in calculating the loss of profits, the loss to be calculated is that of net profits, not gross profits. Lovett v. E.L. Garner, Inc., 511 So. 2d 1346, 1353 (Miss. 1987) (citing Dunn, Recovery of Damages for Lost Profits 3d, § 6.1 (1987); Cook Industries, Inc. v. Carlson, 334 F. Supp. 809, 816 (N.D.Miss. 1971)). Lovett gave instruction on how to ascertain net profits: a party must deduct such items as overhead, depreciation, taxes and inflation. 511 So.2d at 1353.
Only testimony regarding lost gross profits was presented at trial. There was no mention of deductions for overhead, depreciation, taxes, or inflation.
Additionally, Puckett alleged that M.R.C.P. 9(g) required that in order for Edwards to be entitled to consequential damages, he must first specifically plead them. The rule states simply: "Special Damage. When items of special damage are claimed, they shall be specifically stated." However, the comment to Rule 9(g) more fully explains what is meant:
The kinds of damage which are special and required to be set out in the complaint are infinite; only a few instances will be noted here... . So in actions for breach of contract all consequential losses, such as expenses or the loss of profits expected upon transactions with third persons, must be specially pleaded... .
At trial, Puckett objected when Edwards began to establish his claim to consequential damages. Puckett raised the rule 9(g) objection. After a lengthy colloquy, the trial court overruled the objection, with the judge noting that he presumed under the notice pleadings that Edwards had sufficiently pled his special damages.
Case law is sparse on this matter. In Baugh v. Baugh, 512 So. 2d 1283, 1285 (1987), *38 this Court stated that "[r]ule 9(g), Miss. R.Civ.P., requires that in cases where special damages are alleged they must be charged with particularity." Fuselier, Ott & McKee, P.A. v. Moeller, 507 So. 2d 63, 68-69 (Miss. 1987), also relied on Rule 9(g). This Court reversed the chancellor's award to Moeller for ten per cent (10%) of the assessed value of his stock because of Moeller's failure to specifically plead the item of damages as required by Rule 9(g). Id.
In pertinent part, paragraph four of Edwards' pleadings read as follows:
... The Counterdefendant shows as a result of these two pieces of machinery wholly failing to do the job they were represented to do he has suffered substantial and great damages. The Counterplaintiff shows he went from a $73,000.00 machine to a $185,000.00, and had the $73,000.00 machine done what it was supposed to do, then he would not have had to pay the additional $111,768.00 for the difference in the value of the machine plus additional interest and insurance on the piece of machinery... .
We find that Edwards failed to comply with M.R.C.P. 9(g) by not sufficiently pleading his consequential damages, and that Edwards did not sufficiently prove his consequential damages for the 910 transaction, nor the 518 transaction.
IV.
DIFFERENCE IN VALUE DAMAGES
Under § 75-2-714, Miss. Code Ann. (1972), the measure of damages for a breach of warranty is the difference between the value of the goods at the time they were accepted and the value of the goods if there had been no breach. See Fedders Corp. v. Boatright, 493 So. 2d 301, 309 (Miss. 1986). In the case sub judice, the jury was given a "difference in value" instruction. Puckett alleges that the record is silent as to the value of either the 910 or the 518 as delivered, thereby giving no basis for comparison. Edwards contends that the value of the 910 was zero, and that the value of the 518 was $30,000.00.
The 910 transaction was cancelled when it became obvious that it could not be repaired. Although Puckett kept Edwards' down payment on account, there is no evidence that Edwards could not get it back to apply to the purchase of a different make of equipment. Edwards chose to purchase the 518.
In Fedders, regarding a question of difference in value of damages, this Court stated that if the goods could not be repaired and were worthless, the buyer would have been entitled to a refund of the purchase price. However, if the goods could have been repaired so as to function properly, the damages would have been the costs of repairs. 493 So.2d at 309.
In the 910 transaction, Edwards never paid a single payment on the equipment, and was credited for his down payment. This would show that Puckett complied with § 75-2-714, by refunding the purchase price if the goods are deemed worthless. With respect to the 518 transaction, the value assigned to it at trial was the value ascertained at the time of trial by Edwards' expert witness, not at the time of acceptance four years earlier. Therefore, Edwards did not provide an adequate measure of damages for the 518 transaction.
The trial court erred in instructing the jury on "difference in value" damages.
CONCLUSION
We find that the lower court did not err in failing to instruct the jury that Puckett was entitled to possession in the replevin action. Finding no issue as to liability on the counterclaim, we remand this case to the lower court for a reassessment of damages not inconsistent with this opinion.
AFFIRMED IN PART; REVERSED AND REMANDED ON THE ISSUE OF DAMAGES.
HAWKINS, C.J., PRATHER, P.J., and SULLIVAN, PITTMAN, BANKS and SMITH, JJ., concur.
DAN M. LEE, P.J., and McRAE, J., concur in result only.
NOTES
[1] Puckett sold the John Deere in short order for an undisclosed amount of money. At one point, there was testimony that Edwards told Puckett he wanted his John Deere back, but was told it had already been sold.
[2] Mr. Sitton testified that the entire note was refinanced based mainly on his conversations with Mrs. Edwards, who not only was Edwards' wife, but was also his employee. Edwards stated that she kept the books and wrote the checks. Mr. Sitton testified that he had had more dealings with Mrs. Edwards over the past year, than with Mr. Edwards, and that they had discussed the refinancing of the entire note. Edwards pointed out that Mrs. Edwards had not signed the notes, negotiated the terms of the deal, and was not a party to this suit.
[3] Puckett's judgment notwithstanding the verdict motion was partial because Puckett does not wish to disturb an award of $1,820.33, the cost of repairing the 518, as they deem the award as incidental damages. Furthermore, Edwards provided a copy of the cancelled check for the costs of the repairs.
[4] Sitton had Edwards' ledger card, reflecting Edwards' account with Puckett, with him at trial. The ledger card indicated that Edwards had made six of the scheduled eighteen payments. The last payment made by Edwards was the July 10, 1989, payment, which was received by Puckett on September 26, 1989, and was returned for insufficient funds, but was subsequently made good on October 12, 1989. Therefore, there are a total of twelve payments past due.
[5] Edwards testified that each truck load consisted of four thousand board feet, and that he hauled forty-eight thousand board feet per day. He stated he was paid $100.00 per thousand feet. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584802/ | 641 So. 2d 355 (1994)
Thomas Anthony WYATT, Appellant,
v.
STATE of Florida, Appellee.
No. 79245.
Supreme Court of Florida.
May 5, 1994.
Rehearings Denied June 30, and August 31, 1994.
*357 Richard L. Jorandby, Public Defender and Gary Caldwell, Asst. Public Defender, West Palm Beach, for appellant.
Robert A. Butterworth, Atty. Gen., and Richard Martell, Tallahassee, and Celia A. Terenzio, Asst. Attys. Gen., West Palm Beach, for appellee.
PER CURIAM.
Thomas Wyatt appeals his conviction for first-degree murder and his sentence of death. We have jurisdiction under article V, section 3(b)(1) of the Florida Constitution.
Wyatt and Michael Lovette escaped from a North Carolina road gang on May 13, 1988. The pair then set out on a crime spree throughout Florida.[1] On May 19, 1988, Cathy Nydegger was at a bar near Tampa where she was seen talking to and playing the "skill crane" with Wyatt. They left together carrying several stuffed animals they had won. Wyatt returned to the bar ten or fifteen minutes later and left again with Michael Lovette. Nydegger's body was found the next day in a ditch in a deserted area in Indian River County. She had been shot once in the head.
The day Nydegger's body was found, Wyatt checked into a motel in Clearwater using an assumed name. He arrived at the motel in Nydegger's car, which he abandoned a few days later. While at the motel, Wyatt met Freddie Fox and gave him some bullets matching the fatal bullet. Fox also took a gun from Wyatt with rifling characteristics similar to those of the gun used to kill Nydegger. Wyatt was later arrested in South Carolina on an unrelated charge. While in jail, he told Patrick McCoombs, another inmate, that he had killed Nydegger. At trial, Wyatt denied killing Nydegger and blamed the murder on Lovette. He admitted to twenty-one prior felony convictions.
*358 Wyatt was convicted of the first-degree murder of Nydegger. The jury recommended the death penalty by a vote of eleven to one. The judge followed the recommendation and sentenced Wyatt to death. The judge found five aggravating factors[2] and no statutory mitigating factors. As a nonstatutory mitigator, the court found that in his early youth, Wyatt had lived in a broken and unstable home provided by his stepfather while his mentally ill mother was in and out of mental hospitals.
Wyatt makes numerous claims regarding the guilt phase of his trial. He first argues that the trial court improperly instructed the jury on flight in light of this Court's opinion in Fenelon v. State, 594 So. 2d 292 (Fla. 1992), in which we held that the jury instruction on flight shall not be given. However, our ruling on the flight instruction in Fenelon had prospective application only. Taylor v. State, 630 So. 2d 1038 (Fla. 1993). Because Wyatt's trial preceded our decision in Fenelon, there is no merit in this contention.
Wyatt next argues that the State's cross-examination of Wyatt was improper because the State called upon Wyatt to comment on the veracity of various State witnesses. However, defense counsel did not object to most of the questions asked of Wyatt about which Wyatt now complains. As to those questions, this claim is procedurally barred. On two occasions, proper objections were made to questions regarding the veracity of Jennifer Oler, and these objections were erroneously overruled. Boatright v. State, 452 So. 2d 666, 668 (Fla. 4th DCA 1984). However, we find the error to be harmless beyond a reasonable doubt. State v. DiGuilio, 491 So. 2d 1129 (Fla. 1986).
Wyatt also claims error in the admission of certain character evidence. Officer Robinson testified that after he arrested Wyatt in South Carolina, Wyatt told him he was glad he did not have a gun when he got stopped, otherwise he would have shot the officer. The trial court properly admitted this testimony as evidence of flight. Straight v. State, 397 So. 2d 903, 908 (Fla.), cert. denied, 454 U.S. 1022, 102 S. Ct. 556, 70 L. Ed. 2d 418 (1981).[3] Another law enforcement officer from South Carolina testified that while Wyatt was in jail, he stated that his alter ego, "Jim," had gone crazy in Florida and that "Jim" had hurt many people. This issue is procedurally barred because no objection was made at trial to the testimony. See, e.g., Vaught v. State, 410 So. 2d 147 (Fla. 1982). The State also asked questions of Patrick McCoombs, a fellow inmate of Wyatt's, about the term "convict code." Wyatt complains that these questions about McCoombs' adherence to the convict code implied that Wyatt also lived by a convict code of manipulating the system. Wyatt's claim has no merit. A review of the record shows that references to the convict code were not used to infer bad character but rather to show that convicts usually do not testify against other convicts.
Over defense objection, a State witness testified that on one occasion Wyatt hit someone over the head with a bottle. The State also presented testimony that Wyatt feigned a conversion to Christianity. While the trial court's admission of the testimony on these two issues was error, we find the error to be harmless beyond a reasonable doubt. DiGuilio, 491 So.2d at 1129.
Wyatt also contends that the prosecutor's closing argument included several impermissible comments on the evidence. Because *359 there were no objections to the subject remarks, the issue has been waived for appeal. See Waterhouse v. State, 596 So. 2d 1008 (Fla.), cert. denied, ___ U.S. ___, 113 S. Ct. 418, 121 L. Ed. 2d 341 (1992). Although Wyatt argues that the comments constitute fundamental error, a review of the record shows that the prosecutor's comments in the guilt phase closing argument did not violate Wyatt's right to a fair trial and do not amount to fundamental error. Therefore, defense counsel's failure to preserve the issue for appeal renders the issue procedurally barred. Crump v. State, 622 So. 2d 963 (Fla. 1993); Davis v. State, 461 So. 2d 67 (Fla. 1984), cert. denied, 473 U.S. 913, 105 S. Ct. 3540, 87 L. Ed. 2d 663 (1985).
We deny without comment Wyatt's remaining guilt-phase claims because they have no merit.[4]
We now turn to the penalty phase of the trial. Wyatt argues that the trial court erred in finding the murder was committed while Wyatt was involved in the robbery of Nydegger's vehicle. However, there is ample evidence in the record to support this finding. Wyatt was seen leaving the bar with Nydegger and admits to being in her car. On the day Nydegger's body was found, Wyatt was seen driving her car and later abandoned it in a parking lot. The trial court did not err in finding that the murder was committed during the course of a robbery.
Wyatt also argues that the trial court incorrectly found the existence of the avoidance of arrest aggravating circumstance. We agree. In finding this circumstance, the trial court relied on the testimony of Patrick McCoombs and stated in the sentencing order "[d]efendant, in relating to his cell mate in South Carolina in great detail concerning this killing, said that the victim was killed so that there could be no identification later." We find no such evidence in the record. McCoombs testified that Wyatt told him he killed Nydegger "to see her die." Although testimony was presented that Wyatt told McCoombs that he killed three people at a Domino's Pizza store to eliminate any witnesses, it cannot automatically be inferred that the same motive still existed when Wyatt encountered Nydegger. Accordingly, we find that this factor was not proven beyond a reasonable doubt.
Wyatt next contends that the trial court erred in finding the existence of the cold, calculated, and premeditated aggravating circumstance. We also agree. The trial court found that the gunshot wound to the top of Nydegger's head was consistent with an execution-style killing. However, proof of the cold, calculated, and premeditated circumstance requires evidence of calculation prior to the murder, i.e., a careful plan or prearranged design to kill. Capehart v. State, 583 So. 2d 1009, 1015 (Fla. 1991), cert. denied, ___ U.S. ___, 112 S. Ct. 955, 117 L. Ed. 2d 122 (1992); Holton v. State, 573 So. 2d 284, 292 (Fla. 1990), cert. denied, 500 U.S. 960, 111 S. Ct. 2275, 114 L. Ed. 2d 726 (1991). There is insufficient evidence in the record to justify the level of premeditation required for a finding of this circumstance.
We reject Wyatt's claims that the trial court did not properly consider or weigh all the mitigating evidence presented by the defense. It is well established that the decision regarding whether or not a mitigating circumstance has been established is within the trial court's discretion. Preston v. State, 607 So. 2d 404 (Fla. 1992), cert. denied, ___ U.S. ___, 113 S. Ct. 1619, 123 L. Ed. 2d 178 (1993). In the instant case, the trial court's determination regarding the establishment and weighing of the mitigating factors is supported by competent and substantial evidence.
*360 Wyatt's next argument, regarding alleged errors in the penalty-phase jury instructions, also fails. With one exception, there was no objection to these instructions, and thus, these claims are not preserved for appeal. Even if objections had been made, Wyatt's claims would have no merit. He did object to the instruction on the aggravating circumstance that the crime was especially heinous, atrocious, or cruel on the ground that the evidence did not support the instruction. The instruction given on this aggravating circumstance was that which is found in the current Florida Standard Jury Instructions in Criminal Cases rather than the one found wanting in Espinosa v. Florida, ___ U.S. ___, 112 S. Ct. 2926, 120 L. Ed. 2d 854 (1992). We need not decide whether the evidence would support this aggravating circumstance because the jury was properly instructed and the trial judge did not find the existence of this aggravating circumstance. Sochor v. Florida, ___ U.S. ___, 112 S. Ct. 2114, 119 L. Ed. 2d 326 (1992); Johnson v. Singletary, 612 So. 2d 575 (Fla.), cert. denied, ___ U.S. ___, 113 S. Ct. 2049, 123 L. Ed. 2d 667 (1993).
Wyatt also contends that the State presented improper hearsay testimony of several police officers concerning Wyatt's prior violent felonies which violated his constitutional right to confront his accusers. While Wyatt's counsel objected to the testimony regarding the prior felonies based on its inflammatory nature, no objection was made at trial to the testimony on the basis of hearsay. Therefore, this point was not preserved for appeal. In any event, hearsay evidence of this nature is admissible in the penalty phase. Waterhouse, 596 So.2d at 1115. Wyatt further argues that, over objection, the State was improperly allowed to use photographs of victims of the prior violent crimes and such evidence was cumulative and prejudiced the defense. However, the trial court has discretion to admit relevant photographic evidence. Thompson v. State, 565 So. 2d 1311, 1314 (Fla. 1990). We do not find that the trial court abused its discretion in admitting the photographs in question.
Wyatt also argues that the trial court committed error in allowing the prosecutor to make several improper comments during the penalty phase closing argument. There were no objections to the comments in question. After carefully reviewing the prosecutor's comments in the context of the argument as a whole, we conclude that these comments were not so prejudicial as to taint the jury's recommendation of death. Because the remarks do not constitute fundamental error, we find that the defense counsel's failure to preserve the issue for appeal precludes review. See, e.g., Mason v. State, 438 So. 2d 374 (Fla. 1983), cert. denied, 465 U.S. 1051, 104 S. Ct. 1330, 79 L. Ed. 2d 725 (1984).
Finally, we reject without discussion Wyatt's arguments that the death penalty is unconstitutional and that the manner of selecting judges in Florida creates a system that is racially discriminatory.
Although we agree with Wyatt that the evidence is insufficient to support two of the aggravating factors found by the trial court, we nevertheless find that the elimination of these two factors was harmless error beyond a reasonable doubt. The three remaining aggravating factors far outweigh the minimal mitigating evidence. Hamblen v. State, 527 So. 2d 800 (Fla. 1988); Bassett v. State, 449 So. 2d 803 (Fla. 1984). The fact that Wyatt was an escaped prisoner who had been convicted of robbery and kidnapping were strong aggravators. Moreover, the jury was properly instructed, and it cannot be presumed that the jury found the existence of aggravating factors not supported by the record. Sochor. Accordingly, we affirm Wyatt's conviction for first-degree murder and his sentence of death.
It is so ordered.
GRIMES, C.J., and OVERTON, McDONALD, SHAW, KOGAN and HARDING, JJ., concur.
NOTES
[1] According to evidence presented at the guilt and penalty phases of the trial, Wyatt and Lovette: kidnapped and robbed someone on their way to Florida; stole a car in Jacksonville and later burned it in Indian River County; robbed a Taco Bell in Daytona Beach; and killed three Domino's Pizza employees with Wyatt committing sexual battery on one of them. Also, Wyatt stole a car in Madeira Beach.
[2] The trial court found that the following aggravating circumstances existed: (1) Wyatt was under a sentence of imprisonment at the time of the murder; (2) Wyatt had previously been convicted of violent felonies; (3) the murder was committed during the course of a robbery; (4) the murder was committed for the purpose of avoiding arrest; (5) the murder was committed for pecuniary gain; and (6) the murder was cold, calculated, and premeditated. The court merged factors three and five and weighed them together.
[3] In Straight, this Court held:
When a suspected person in any manner attempts to escape or evade a threatened prosecution by flight, concealment, resistance to lawful arrest, or other indications after the fact of a desire to evade prosecution, such fact is admissible, being relevant to the consciousness of guilt which may be inferred from such circumstance.
[4] Wyatt also argues that: (1) defense was precluded from conducting relevant and timely discovery because State witness Jennifer Oler was not required to identify her drug supplier; (2) the trial court improperly prevented the defense from asking the venire under what circumstances they would vote to impose the death penalty; (3) the trial court erred in admitting an autopsy photograph of Nydegger; (4) the trial court improperly sustained the State's objection to the questioning of the manager of a motel in Clearwater about whether Freddie Fox was intoxicated while he lived at the motel; (5) the trial court improperly terminated the cross-examination of Fox and made improper remarks during the cross-examination of Wyatt; and (6) the standard reasonable doubt instruction is unconstitutional. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1588941/ | 972 So. 2d 401 (2007)
Randy FONTENOT, et al.
v.
PATTERSON INSURANCE, et al.
Germaine Brooks, et al.
v.
City of Lafayette, et al.
No. 06-1624.
Court of Appeal of Louisiana, Third Circuit.
December 5, 2007.
Rehearing Denied January 23, 2008.
*404 Lawrence N. Curtis, Lawrence N. Curtis, Ltd., Lafayette, LA, for Plaintiffs/Appellants/Appellees, Randy Fontenot and Susanne Fontenot.
Rickey W. Miniex, Clyde R. Simien, Todd M. Swartzendruber, Holli K. Yandle, Simien & Miniex, Lafayette, LA, for Defendant/Appellee/Appellant, Lafayette City-Parish Consolidated Government.
Colleen McDaniel, Assistant Attorney General, Louisiana Department of Justice, Division of Risk Litigation, Lafayette, LA, for Defendant/Appellee/Appellant, The State of Louisiana Through The Department of Transportation and Development.
Court composed of Chief Judge ULYSSES GENE THIBODEAUX, SYLVIA R. COOKS, JIMMIE C. PETERS, ELIZABETH A. PICKETT, and J. DAVID PAINTER, Judges.
PETERS, J.
These consolidated personal injury, wrongful death, and property damage actions arise from an automobile accident which occurred in Broussard, Louisiana, on March 23, 2001. The trial court judgments rendered therein have resulted in three appeals which are now before us. The first appeal is by the personal injury plaintiffs, Randy and Susanne Fontenot and their minor child. The merits issues in the Fontenot appeal are the respective fault and degrees of fault of the drivers of the two vehicles involved in the collision and the State of Louisiana, Department of Transportation and Development (DOTD). In the second appeal, DOTD appeals the issues of fault and degrees of fault, as well as the amount of the trial court's general damage award to Randy Fontenot rendered through a judgment notwithstanding the verdict (JNOV) of the jury. The third appeal arises from the efforts of the third-party plaintiff, Lafayette City-Parish Consolidated Government (City-Parish), to recover its claim for the property damage to the police car being driven by Mr. Fontenot at the time of the accident. In its *405 appeal, the City-Parish also argues DOTD's degree of fault in causing the accident.
DISCUSSION OF THE RECORD
The accident giving rise to this litigation occurred a few minutes after 11:00 p.m. on March 23, 2001, at the intersection of Morgan Street and Main Street in Broussard, Louisiana. At the time of the accident, Randy Fontenot was employed by the City-Parish as a policeman, had just responded to a domestic disturbance call, was driving a police vehicle owned by the City-Parish, and was attempting to locate the vehicle of an individual involved in the domestic disturbance. In searching for the vehicle, he proceeded east on Main Street in the direction of the Morgan Street intersection. At the same time, Germaine Brooks was driving his vehicle south on Morgan Street and was also approaching the same intersection. Charlotte Phillips was a guest passenger in the Brooks vehicle. The collision between the two vehicles resulted in Ms. Phillips's death, in personal injuries to both Mr. Fontenot and Mr. Brooks, and in substantial damage to both vehicles.
Mr. and Mrs. Fontenot filed the first of the two consolidated suits involved in this appeal. During the course of the litigation, they named Mr. Brooks; his liability insurer, Patterson Insurance Company; and DOTD as defendants and sought recovery for the damages they sustained as a result of the accident. The City-Parish intervened against the same defendants seeking, among other relief, recovery of the property damages associated with loss of its patrol car.[1] After Patterson Insurance Company became insolvent, the Fontenots and the City-Parish added the Louisiana Insurance Guaranty Association (LIGA) as a defendant.[2]
Mr. Brooks and Leona Phillips, the mother of Charlotte Phillips, filed the second action, naming Mr. Fontenot and the City-Parish as defendants. In this action, Mr. Brooks sought to recover the damages he sustained, and Ms. Phillips pursued a wrongful death action for the loss of her daughter. The Fontenots reconvened against Mr. Brooks, and the City-Parish filed a third-party demand against DOTD. The two plaintiffs in this second suit settled the principal demands before trial. Thus, when the two consolidated suits came to trial, the only remaining party plaintiffs (both principal and third-party) were the Fontenots and the City-Parish. The remaining defendants were Mr. Brooks, LIGA, and DOTD.[3] At trial, the claims of the Fontenots were decided by a jury and the claims of the City-Parish were decided by the trial court.
After a four-day trial in which liability was the main factual dispute,[4] the jury *406 answered the propounded interrogatories, assessing Mr. Brooks with ninety percent of the fault causing the accident and assessing Mr. Fontenot with the remaining ten percent. The jury concluded that Mr. Fontenot sustained $255,000.00 in past medical expenses and $176,512.00 in loss of past wages, and would sustain $250,000.00 in lost future wages and earning capacity. However, it awarded Mr. Fontenot no general damages. The jury also concluded that Susanne Fontenot sustained $10,000.00 for loss of consortium and that their minor daughter sustained $5,000.00 in damages. The trial court, on the other hand, concluded that the City-Parish was entitled to recover $19,994.87 for the property damage to its patrol car,[5] but apportioned fault for that damage equally between Mr. Brooks and DOTD. Thus, the jury found no fault on the part of DOTD and the trial court found no fault on the part of Mr. Fontenot.
Mr. Fontenot responded to the jury verdict by filing a motion for a JNOV, or in the alternative a motion for a new trial. In doing so, he challenged the jury's allocation of fault and its failure to award him any general damages. The trial court granted the motion for a JNOV as to the general damages complaint, awarding Mr. Fontenot $500,000.00 in general damages. However, the trial court denied the motions in all other respects. Thereafter, the trial court executed three separate judgmentsone with regard to its judgment on the City-Parish's claim, and two with regard to the jury verdict and its subsequent grant of the JNOV. The three appeals now before us were then timely filed.
OPINION
Standard of Review
Our initial inquiry on appeal is the appropriate standard of review for conflicting verdicts arising from a bifurcated trial. In addressing this inquiry, we must first acknowledge that the methodology for resolving such conflicts is disputed among the state's courts of appeal and indeed within this circuit.
The Louisiana Supreme Court, in several of its opinions, has indicated its awareness that the procedures for reconciling conflicting decisions by the jury and the judge in bifurcated trials vary in the courts of appeal. See Powell v. Reg'l Transit Auth., 96-0715 (La.6/18/97), 695 So. 2d 1326; Davis v. Witt, 02-3102, 02-3110 (La.7/2/03), 851 So. 2d 1119; and Hebert v. Rapides Parish Police Jury, 06-2001, 06-2164 (La.4/11/07), ___ So.2d. ___, 2007 WL 1108851. However, it has chosen not to provide any instruction in this unsettled area save its original statements in Thornton v. Moran, 343 So. 2d 1065 (La.1977).
Left to their own devices, the circuits have tried different approaches since the Thornton decision. In this circuit, our latest effort resulted in two panels rendering opinions on the same day in July of 2006, with each suggesting a different review methodology. These opinions were in Hebert v. Rapides Parish Police Jury, *407 05-471 (La.App. 3 Cir. 7/12/06), 934 So. 2d 912, rev'd on other grounds, 06-2001, 06-2164 (La.4/11/07), ___ So.2d. ___, and McDaniel v. Carencro Lions Club, 05-1013 (La.App. 3 Cir. 7/12/06), 934 So. 2d 945, writ denied, 06-1998 (La.11/3/06), 940 So. 2d 671.
In Hebert, the opinion's author suggested that a de novo review was the appropriate approach in part because the other procedures employed by the various circuits in the past were too cumbersome and unwieldy to survive objective application.[6] A majority of the panel in McDaniel proposed a more complicated review process of fault findings which would: (1) ignore the jury's finding regarding the public defendant; (2) with regard to "the other defendants" choose the "more reasonable" finding of fact if neither of the conflicting findings was manifestly erroneous; (3) adopt the finding that was not manifestly erroneous if the other was; and (4) go to a de novo review if the judge and jury findings were both manifestly erroneous.[7]Id. The opinions in Hebert and McDaniel both began the standard of review analysis with reference to the supreme court decision in Thornton, 343 So. 2d 1065, and documented their reasoning by review of the jurisprudence from this and other circuits which arose after that decision.
The decision in Thornton remains the supreme court's only direct instruction to the courts of appeal concerning the handling of conflicting judgments in bifurcated trials. In Thornton, the jury and the trial court had reached contradictory results and rendered conflicting judgments. The first circuit reviewed the judgments separately, found no manifest error in either decision, and essentially affirmed each judgment. Thornton v. Moran, 341 So. 2d 1136 (La.App. 1 Cir.1976). The supreme court remanded the matter to the first circuit with instructions "to resolve the differences in the factual findings between the jury and the judge . . . and to render a single opinion based upon the record." Thornton, 343 So.2d at 1065. In so instructing the first circuit, the supreme court cited La. Const. Art. 5, § 10(B), which expressly extends the jurisdiction of appellate courts in civil cases to the review of facts as well as law.
Thus, while the supreme court has shown a present-day unwillingness to specifically instruct the courts of appeal with regard to the appropriate standard of review, it has not been entirely silent on the subject. Because Thornton remains the only direct instruction by the supreme court on this issue, we must look to it for guidance. In doing so, we choose not to read an ambiguity into the two infinitive phrases, "to resolve the difference in the factual findings between the jury and the judge . . . and to render a single opinion based upon the record." Instead, we find it reasonable to conclude that the supreme court gave its blessing to an independent de novo review by the use of this language.
We reach this conclusion in part because, two years before its decision in Thornton, the supreme court had used the same constitutional extension of appellate jurisdiction to law and facts, La. Const. *408 Art. 5, § 10(B), to hold that where one or more trial court legal errors interdict the fact-finding process, the manifest error standard is no longer applicable, and, if the record is otherwise complete, the reviewing court should make its own independent de novo review and assessment of the record. Gonzales v. Xerox Corp., 254 La. 182, 320 So. 2d 163 (1975). See also Campo v. Correa, 01-2707 (La.6/21/02), 828 So. 2d 502. We believe that a fair reading of Thornton supports a de novo methodology at least as logically as it supports any other standard of review heretofore advanced by any of the courts of appeal.[8]
Our interpretation of the remand instructions found in Thornton is also supported by the supreme court's approach to its review of this circuit's decision in Hebert, 934 So. 2d 912. While declining to comment on the approach of this court in harmonizing the conflicting verdicts, and without stating its own approach, the supreme court addressed the liability issue by performing what amounted to a de novo review of the record before it. Hebert, ___ So.2d ____.
Based on the above rationale, we adopt, and will utilize in our review of this matter, the de novo procedure used by this court in Hebert, 934 So. 2d 912. We find it to be the most practical and legally sound procedure susceptible of uniform application, and conclude that it complies with the supreme court instruction in Thornton, 343 So. 2d 1065.
Liability Issues
It is undisputed that Main Street is the favored street at the intersection where the accident occurred, and that both Main and Morgan Streets are part of the Louisiana State Highway System. The intersecting streets are controlled by a sequencing traffic light designed, constructed, and maintained by DOTD. The standard red-yellow-green sequenced traffic signals control the flow of traffic through the intersection from 5:00 a.m. until 11:00 p.m. each day. However, at eleven o'clock each night the light automatically switches to a flashing mode, with the yellow flashing for the favored traffic on Main Street and the red flashing for Morgan Street. At the time of the accident, the traffic light had just switched to flashing mode.
Approximately one year before the accident, DOTD had widened and overlaid the intersection. In doing so, DOTD had added a third lane for left-turning vehicles in all four approaches. Additionally, DOTD had added a stop bar in the turning lanes, but not in the through lanes. Vision to the west for traffic traveling south on Morgan Street and to the north for traffic traveling east on Main Street is impaired by a four-story brick building situated on the northwest corner of the intersection. This building had been constructed on that location in 1917, and served as a library.
While the physical surroundings at the intersection are not in dispute, the determination of liability for the accident suffers from the paucity of eyewitness testimony. Of the three persons involved in the accident, Ms. Phillips died of her injuries at the scene, Mr. Brooks did not testify, and Mr. Fontenot could not recall the accident because of an amnesic disorder arising from the injuries he sustained in the accident. The only information provided the triers of fact by those involved in the accident was presented second-hand, through the testimony of the officer who *409 questioned Mr. Brooks at the scene on the night of the accident. Mr. Brooks told the officer that he stopped at the red flashing light on Morgan Street, saw no vehicles approaching on Main Street, and was driving across the intersection when Mr. Fontenot's patrol car struck his vehicle.
"In evaluating the evidence, the trier of fact should accept as true the uncontradicted testimony of a witness, even though the witness is a party, where the record indicates no sound reason for its rejection." Robertson v. Scanio Produce & Institutional Foods, Inc., 449 So. 2d 459, 462 (La.1984). There are no circumstances in this record casting suspicion on the reliability of Mr. Brooks's statement, and no reason for us not to accept the explanation of his actions as true.[9] Thus, we accept his statement as true.
In performing a de novo examination of the evidence pertaining to the fault of Mr. Fontenot, Mr. Brooks, and DOTD, we must perform a duty-risk analysis. This is a five-step process which requires that a party asserting fault on another establish (1) that the party whose fault is at issue had a duty to conform his conduct to a specific standard, (2) that the party's conduct failed to conform to the appropriate standard, (3) that the party's conduct was a cause-in-fact of the injuries at issue, (4) that the party's substandard conduct was a legal cause of the injuries at issue, and (5) that there were actual damages. Toston v. Pardon, 03-1747 (La.4/23/04), 874 So. 2d 791. A party asserting comparative fault bears the burden of proof by a preponderance of the evidence that the other party's fault was a cause-in-fact of the damage complained of. Watson v. Brazeel, 36,499 (La.App. 2 Cir. 12/18/02), 833 So. 2d 1276, writ denied, 03-217 (La.04/04/03), 840 So. 2d 1215. The cause-in-fact element generally involves a "but for" inquiry which questions whether or not the injury would have occurred "but for" the defendant's substandard conduct. Petre v. State ex rel. Dept. of Transp. & Dev., 00-545 (La.App. 3 Cir. 12/29/00), 775 So. 2d 1252, aff'd 01-876 (La.4/3/02), 817 So. 2d 1107. Additionally, fault in a vehicular collision case is determined by judging the conduct of each motorist under the facts and circumstances of each particular case. Matthews v. Arkla Lubricants Inc., 32,121 (La.App. 2 Cir. 8/18/99), 740 So. 2d 787.
*410 Mr. Fontenot's Fault
Because Mr. Fontenot was facing the flashing yellow light, he was authorized to proceed through the intersection, but he had a duty to do so "with caution." La. R.S. 32:234(A)(2). DOTD and Mr. Brooks assert that Mr. Fontenot violated this duty in that he proceeded through the intersection at a speed in excess of the posted speed limit,[10] and that this excessive speed constituted fault which was a cause-in-fact of the accident. But the fact that a motorist involved in an accident was speeding does not in and of itself require a finding of liability. Loveday v. Travelers Ins. Co., 585 So. 2d 597 (La.App. 3 Cir.), writ denied 590 So. 2d 65 (La.1991).
In support of their position on this issue, they rely solely on the testimony of Dr. Andrew McPhate, a former professor of mechanical engineering who was recognized by the trial court as an expert in mechanical engineering and vehicle dynamics. Dr. McPhate investigated the accident on behalf of DOTD but did not attempt to fully reconstruct the accident. Instead, with the information he gathered in his investigation, he concluded that Mr. Fontenot applied his brakes before impact, and was traveling fifty-six miles per hour at the time of impact. The speed limit for traffic on both streets at the intersection was thirty-five miles per hour.
While Dr. McPhate testified to speed at impact, he offered no opinion that would connect the vehicle's speed to the cause of the accident. Thus, DOTD failed to establish the "but for" portion of the cause-in-fact test. That is to say, DOTD offered no evidence to establish that, but for the Mr. Fontenot's excess speed the accident would not have happened. While such a scenario is possible, there was no evidence presented to establish that possibility as a fact, or even a probability. To reach that conclusion based solely on the speed of the vehicles would be mere speculation on our part. Thus, we find that DOTD failed to meet its initial burden of proof to show that Mr. Fontenot's actions contributed to the collision. Accordingly, we find Mr. Fontenot free from fault.
Mr. Brooks's Fault
Faced with a flashing red light, Mr. Brooks' had a duty to stop before entering the intersection and yield the right of way to traffic on Main Street. La.R.S. 32:234(A)(1). Because the intersection did not contain a cross-walk or a stop bar,[11] Mr. Brooks had a duty to stop at a point where he had a view of approaching traffic on Main Street, and to not proceed if he observed any traffic approaching on Main Street that would constitute an immediate hazard if he attempted to enter the intersection. Id.; La.R.S. 32:123(B). As stated in Toston v. Pardon, 874 So. 2d 791, 802,
[S]topping is only half the duty, the other half is not to proceed until the determining that the way is clear. Guillot v. Valley Forge Ins. Co., 99-1044, p. 4 (La.App. 3 Cir. 12/8/99), 753 So. 2d 891, 894. The second duty is heavier and requires an even greater degree of care when the intersection is blind, or partially obstructed. Continental Ins. Co. v. Duthu, 235 So. 2d 182, 186 (La.App. 4 Cir.1970). A driver entering a superior highway where his view is obstructed is under a duty to proceed with extraordinary caution. Taylor v. *411 State, 431 So. 2d 876, 879 (La.App. 2 Cir.1983).
As this court recognized in McCauley v. LaFleur, 213 So. 2d 176, 179 (La.App. 3 Cir.1968), "[t]o stop and then proceed in the immediate path of oncoming vehicles constitutes negligence."
Dr. McPhate described the library's location as creating a "blind intersection," and Archie Burnham, an expert in traffic design and traffic safety, was of the opinion that Mr. Brooks stopped at a point where the intersection view was obstructed by the library building. Accepting his statement to the investigating officer as true, it is obvious that Mr. Brooks stopped at a point where the library building prevented him from observing the oncoming traffic because, had he stopped at a point where he could have seen down Main Street, nothing prevented him from observing the approaching police car. In fact, had Mr. Brooks looked continuously to make sure he could proceed across the intersection with safety, the accident would not have occurred. We find that his negligence was a cause-in-fact of the collision.
DOTD's Fault
Two DOTD employees working in the district where the intersection is located, Michael Moss, the district maintenance engineer, and Charles Moran, the district maintenance superintendent, testified concerning the intersection inspection procedure. Their testimony established that DOTD inspected the intersection once every two weeks. But for the limited purpose of determining what, if anything, needed to be repaired. Mr. Moran, as maintenance superintendent, was responsible for having the inspection performed.
Richard Savoie, a project development engineer in DOTD's road design section, testified that when the widening and overlay project was completed in 2000, stop bars were placed only in the turning lanes of the four approaches, and at a distance away from the intersection itself. He explained that the purpose of a stop bar in the turning lane is to establish the point at which a vehicle should stop in order to avoid being "clipped" by a vehicle coming from another direction and turning left onto the street. It is not to be used as a stopping guide for through traffic.
The record reflects that with regard to the design and construction of intersections, DOTD maintains a set of standard plans referred to as the PM-01 plan. This standard plan is used by the contractor and project engineer during the construction of a given project and calls for a stop bar in the through lanes as well as the turning lanes. However, the design engineer for a particular intersection can choose to deviate from this standard plan, and his or her decision is controlling. In the case of the Main Street/Morgan Street intersection, the design engineer chose not to require stop bars in the through lanes. The record is silent concerning the reason for this decision.
Mr. Burnham evaluated the intersection on behalf of the plaintiffs, and it is his professional opinion that, while Mr. Brooks's fault was a cause-in-fact of the accident, the design of the intersection contributed as well. In expressing this opinion, Mr. Burnham pointed to at least four deficiencies in the highway environment which contributed to the accident:
1. An appropriate design of the intersection would require a 250 foot sight distance and, because there was no guide or stop line in the through traffic lane, Mr. Brooks was left to his own judgment in where stop. Mr. Burnham pointed out that, if Mr. Brooks picked the wrong stopping point (which he apparently did in this case), he would be left with less than one hundred feet of *412 sight distance in which to make an adequate decision on how to proceed.
2. Mr. Burnham considered the absence of the stop bar, particularly at night, to be a defect. According to Mr. Burnham, not only is the stop bar generally required by DOTD's own PM-01 standard plan, but it is also called for in the Manual on Uniform Traffic Control Devices (MUTCD) promulgated by the National Committee for Uniform Traffic Control Devices (NCUTCD).[12] The stop bar's purpose is to give the approaching motorist assistance in locating the optimum point for making the decision to safely traverse the favored roadway. Although variances are permitted, Mr. Burnham could find no justification for not providing the stop bars in the approaching lanes of this intersection. In his opinion, the failure to follow the requirements of the PM-01 standard created a hazardous condition at this intersection.
3. Mr. Burnham found no record of a traffic engineering update by DOTD since the traffic signal had been installed over twenty years before the accident. According to Mr. Burnham, such a study would have included a review of the accident patterns, the type of traffic at the intersection, and the nature of the traffic both day and night. Had such a study been conducted, he opined, it would have disclosed the deficiencies present, including particularly the absence of stop bars in the through lanes. The study would have also revealed the eighteen collision-type accidents that had occurred at the intersection prior to the accident at issue, as well as the fact that eleven of those accidents involved traffic approaching from the eastbound lane.
4. According to Mr. Burnham, his experience and review of the literature on the subject caused him to be of the opinion that the intersection would have been made safer if DOTD had not programed the traffic signal to switch to flashing signals at 11:00 p.m. each night. He testified that a safer method is to have the light remain on a red-yellow-red sequence twenty-four hours per day, but on an actuated basis. By an actuated basis, he meant that the light would remain green for Main Street, the favored street, unless and until a vehicle approached from either direction on Morgan Street. At that point, the signal would cycle to green on Morgan Street to allow the traffic to safely pass. As an alternative, he suggested that had the traffic signal cycled to a red/red flashing condition, both drivers would have to stop, thereby decreasing the likelihood of an accident. Such an adjustment, according to Mr. Burnham would require a minimum of expense and trouble in re-programing the circuitry.
Mr. Burnham concluded, based on the combination of deficiencies he discovered in his investigation, that this was a dangerous intersection. The import of his testimony was that its deficiencies, in combination with the negligence of Mr. Brooks, caused the accident.
Dr. Jack Humphries, an expert in traffic engineering and highway design, testified *413 as an expert for DOTD. He disagreed with Mr. Burnham's opinion concerning the importance of the stop bar on the through street although he admitted that if Mr. Brooks had stopped at a point even with the stop bar in the turning lane, he would not have been able to see eastbound approaching traffic on Main Street. Dr. Humphries's solution was for the driver to pull up farther and stop at a point which did not encroach on Main Street and which would allow him unrestricted vision. Concerning the effect of the flashing light, he testified that his research revealed that problems as described by Mr. Burnham have not been prevalent at intersections involving streets of lesser classifications than arterial, and in this case only one, Main Street, was an arterial. Also, he observed that the MUTCD does not prohibit flashing lights, especially for late-night, low-volume traffic, and that the use of such signals is a matter of engineering judgment. However, he acknowledged that his one visit to the intersection occurred in the daylight hours, that the pictures he relied upon in his study were also taken in the daytime, and that they were taken on the opposite side of the intersection from the direction of travel of the Brooks car. His ultimate opinion was that Mr. Brooks's failure to comply with his duty to stop at a point where he could see approaching traffic was the sole cause of the accident.
In a tort action against DOTD, whether based on strict liability or negligence, the plaintiff must show: (1) the property which caused the damage was in the custody of the DOTD, (2) the property was defective because it had a condition that created an unreasonable risk of harm, (3) DOTD had actual or constructive notice of the risk, and (4) the defect in the property was a cause-in-fact of the plaintiff's injuries. Toston, 874 So. 2d 791. The analysis under either theory, strict liability or negligence, is the same. Id. DOTD's duty is to "maintain the public highways in a condition that is reasonably safe for persons exercising ordinary care and reasonable prudence." Id. at 799. To that end, the design of a controlled intersection must "not present an unreasonable risk of harm to motorists." Id.
Based on the facts regarding this intersection and Mr. Burnham's reasoning, which we accept in preference to that of any other expert testifying, we find that the defective condition of the intersection and its signing created an unreasonably dangerous condition and was a cause-in-fact of the accident. Dr. McPhate and Mr. Burnham both testified that at night the library building in the northwest corner of the intersection presented an obstruction to view to traffic entering the intersection on Morgan Street; Mr. Burnham opined that the sight obstruction of the library building at night, together with the absence of a stop bar on the Morgan Street through lane, presented a motorist proceeding south on Morgan street with no guidance on the optimal stopping location. Furthermore, the presence of the stop bar in the turning lane was deceptive because it could mislead a driver into thinking that was a safe stopping location, whereas it was not. Mr. Burnham made a connection between the number of accidents at the intersection and the unexplained disregard of DOTD's own standard requiring stop bars in all approaches. Dr. Humphries's testimony did not detract from Mr. Burnman's well reasoned opinion, as Dr. Humphries's opinion was conclusory and without reasoned foundation.
We also find more convincing Mr. Burnham's testimony regarding the deficiency in the traffic signal. His documented explanation of the risk in converting to a flashing mode at 11:00 p.m. is reasonable, as were his alternatives to this action. On the other hand, DOTD's evidence focused *414 primarily on its attention to proper maintenance of the signalsa nonissue in this litigation. At best, Dr. Humphries established that the installation of a flashing light was not itself a violation of AASHTO or MUTCD minimum standards. He did not address the effect of the flashing system at this particular intersection.
DOTD also argues that it proved it had discharged its duty of care to the motoring public because the evidence at trial established that the intersection at issue met the AASHTO and MUTCD standards or requirements. DOTD argues that because the intersection met these standards or requirements, it is entitled to the presumption of La.R.S. 32:235(E) that it is without fault in causing the accident. We disagree that DOTD is entitled to the presumption provided in that statute. Louisiana Revised Statutes 32:235(E) provides that if there exists proof that, at the time of the accident, DOTD was "in compliance with the provisions of the department's traffic control devices manual shall be prima facie evidence of discharge by [DOTD] of its obligations to the motoring public." Simply stated, the evidence establishes that DOTD was not in compliance with its own traffic control devices manual in that it failed to install stop bars for the through lands.
We also find that DOTD had knowledge of the possible defects in the intersection. In Hammons v. City of Tallulah, 30,091 (La.App. 2 Cir. 12/10/97), 705 So. 2d 276, writ denied, 98-407 (La.3/27/98), 716 So. 2d 892 and 98-440 (La.3/27/98), 716 So. 2d 894, constructive knowledge of a hazardous condition sufficient to allow recovery against a public body was based on facts demonstrating that the defective condition had existed for such a period of time that it should have been discovered and repaired if the public body had exercised reasonable care. In the present case the blind intersection was as old as the library building and the traffic light had been present for more than twenty years. Additionally, the accident records of the Town of Broussard demonstrated that of the eighteen accidents occurring at that intersection, more than half involved traffic traveling east on Main. The long-term existence of the hazardous conditions and the accident history at this intersection was sufficient to establish that the DOTD had actual or constructive notice that it was not in compliance with its own standards. See Cole v. State ex rel. Dept. of Transp. & Dev., 99-912 (La.App. 3 Cir. 12/22/99), 755 So. 2d 315, writ denied, 00-199 (La.4/7/00) 759 So. 2d 766. We have no hesitancy finding that DOTD knew or should have known that the intersection posed an unreasonable risk.
Apportionment of Fault
The ruling case law on the apportionment of fault between parties is Watson v. State Farm Fire & Cas. Ins. Co., 469 So. 2d 967 (La.1985). In Watson, the supreme court identified various factors that may influence the degree of fault assigned, including:
(1) whether the conduct resulted from inadvertence or involved an awareness of the danger; (2) how great a risk was created by the conduct; (3) the significance of what was sought by the conduct; (4) the capacities of the actors, whether superior or inferior; and (5) any extenuating circumstances that might require the actor to proceed in haste, without proper thought.
Watson, 469 So.2d at 974.
In the present case, we have already concluded that the parties at fault in causing the accident were Germaine Brooks and DOTD. In evaluating their conduct pursuant to the Watson factors, and without restating the factual and legal conclusions reached in this de novo review, we *415 find that their fault was in equal proportions.
Damages
On appeal DOTD questions only the amount of general damages awarded to Mr. Fontenot. Specifically, DOTD asserts that the trial court "committed manifest error by amending the jury verdict by JNOV to add $500,000 in general damages." This assertion is premised on the argument that the trial court award was an additur and not a JNOV.
An additur may be entered "only if the issue of quantum is clearly and fairly separable from other issues in the case." La. Code. Civ.P. art 1814. In its brief, DOTD declares that "the parties agreed for the judge to grant an additur in lieu of a new trial and to reform the jury verdict accordingly, since the damage issue was separable from liability issues." Then, observing that "additur only allows reformation of the award to the lowest reasonable amount," DOTD sums up its briefed argument in support of this assignment with the contention that the $500,000.00 JNOV was excessive.
We have carefully examined the proceedings in relation to the motion for a JNOV, or in the alternative a motion for a new trial, and we find nothing in the record to suggest either an agreement between the parties or DOTD's consent to convert the motions to an additur. Mr. Fontenot's motion was for a JNOV, and the judgment rendered by the court was plainly and simply a JNOV. Inasmuch as DOTD has made no factual argument and no valid legal argument that the JNOV was improperly granted or that it was excessive, there is nothing further for us to review concerning this assignment of error. The assignment has no merit.
DISPOSITION
For the foregoing reasons, we affirm the judgment on the verdict of the jury as amended by the trial court's judgment notwithstanding the verdict and affirm the remaining awards of damages in the judgment on the jury verdict. We reverse the jury's failure to assign fault to the State of Louisiana, Department of Transportation and Development, and reverse its assignment of fault to Randy Fontenot. We reallocate fault, finding that the State of Louisiana, Department of Transportation and Development, and Germaine Brooks were equally at fault in causing the accident at issue in this litigation, and assess each with fifty percent of the fault. Accordingly, we render judgment in favor of Randy and Susanne Fontenot, individually and on behalf of their minor daughter, against the State of Louisiana, Department of Transportation and Development, for fifty percent of all damages awarded, and in favor of Randy and Susanne Fontenot, individually and on behalf of their minor daughter, against Germaine Brooks and Louisiana Insurance Guaranty Association for fifty percent of all damages awarded. We affirm the judgment awarding legal interest according to law but providing that Louisiana Insurance Guaranty Association is responsible for legal interest on its obligation only from March 17, 2003. We recast the judgment for costs, ordering that the State of Louisiana, Department of Transportation; Germaine Brooks; and Louisiana Insurance Guaranty Association shall be responsible for court costs, including cost of this appeal, in proportion to their fault. Pursuant to the requirement of La.R.S. 13:5112(A), we set the fifty percent share of costs assessed to the State of Louisiana, Department of Transportation and Development in a monetary amount, $21,882.31 in lower court costs and $4,193.34 in appellate costs.
AFFIRMED IN PART, REVERSED IN PART, AND RENDERED.
PICKETT, J., dissents and assigns written reasons.
*416 PICKETT, J., dissenting.
I maintain that the appropriate method of review in a case involving conflicting verdicts is the process set out in McDaniel v. Carencro Lions Club, 05-1013 (La.App. 3 Cir. 7/12/06), 934 So. 2d 945, writ denied, 06-1998 (La.11/3/06), 940 So. 2d 671. Thus, I dissent from the de novo review employed by the majority.
Further, I disagree with the majority's finding of no liability on the part of the plaintiff, Randy Fontenot. I agree with the jury's assessment of 10% fault to Mr. Fontenot. Although I agree with Judge Peters' statement of the standard of care and the duty imposed in a motorist approaching a flashing yellow light, I believe that the plaintiff violated that duty by traveling 21 miles per hour over the posted speed limit, thereby contributing to the cause of the accident.
For these reasons, I respectfully dissent.
NOTES
[1] The Fontenots and the City-Parish added other defendants during the course of the litigation, but they were all dismissed prior to trial.
[2] Under La.R.S. 22:1375-1394, the Louisiana Insurance Guaranty Association Law, a mechanism is provided "for the payment of covered claims under certain insurance policies to avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer . . ." La.R.S. 22:1376.
[3] We are rendering our decision and judgment in Fontenot v. Patterson Insurance Company, 06-1624 (La.App. 3 Cir. 12/5/2007), 972 So. 2d 401, in which the jury verdict was rendered. A separate judgment is being handed down today in the consolidated case of Brooks v. City of Lafayette, 06-1625 (La. App. 3 Cir. 12/5/2007), 972 So. 2d 416, 2007 WL 4247601, wherein the judge decision was rendered.
[4] The extent of Randy Fontenot's personal injuries was not seriously disputed. In reasons for judgment dated July 13, 2005 the trial judge described Mr. Fontenot's injuries as "multiple injuries, including a right ankle fracture with tendon avulsion, right heel fracture, right patella fracture, fractures of the right hand, compression fractures of the thoracic spinal vertebrae, right lower leg fracture, three fractured ribs, lung contusion, cardiac contusion, facial lacerations and laceration of the spleen." The trial court further found that "Mr. Fontenot was in coma for several weeks. He had a number of surgeries to repair his injuries and was treated for post traumatic stress disorder, anxiety, neurosis and depression."
[5] The City-Parish had sought recovery for medical expenses and workers' compensation weekly benefits paid to Mr. Fontenot. However, that part of the judgment is not before us on appeal.
[6] The five-judge panel hearing Hebert was not unanimous. The author was joined by one member of the panel while two others (one being the author of the opinion in McDaniel) concurred in the result but suggested the approach in McDaniel was the appropriate method of review. The fifth judge disagreed with the decision's result.
[7] While the result was unanimous in McDaniel, the panel split two to one concerning the appropriate method of review. The judge disagreeing with the method was the author of the opinion in Hebert.
[8] In the present case DOTD urges us to fully implement both judgments even though they are based on conflicting findings of fact by reviewing each under the manifest error standard. We reject this approach. DOTD's solution is precisely what the court of appeal did in Thornton, a procedure which the supreme court rejected.
[9] According to the record, DOTD subpoenaed Mr. Brooks to testify. He was served but did not appear. His deposition was taken but not introduced. Instead, DOTD proffered a time-lapse video showing the accident, and a CD made from it, that had supposedly been recorded on surveillance tapes from a nearby gas station. By a motion in limine filed before trial the plaintiffs, citing La.Code Evid. arts. 402 and 403, sought a ruling that the time lapse video was unreliable and inadmissible, arguing that even if it were relevant and admissible it should be excluded because its probative value was substantially outweighed by the danger of unfair prejudice and confusion of the issues, and because it would mislead the jury. The trail court, after viewing the video, agreed and excluded the offering, noting in oral reasons that it was time lapse photography and showed the Brooks car "stopped a couple of times." The court thought this would be very confusing to the jury and too misleading to overcome its highly questionable probative value. Also, the trial court noted that the video, having little or no probative value in and of itself, would have to be explained to the trier of fact, which could result in the trial taking a disproportionate time over the issues of when, if, and how many times Mr. Brooks's car stopped before entering the intersection.
Although DOTD did not assign error to the exclusion of these offerings, it argues in its appellate brief that the trial court erred in excluding them. We have viewed the video and the CD and are totally in accord with the trial court's assessment of their lack of evidentiary significance and the likelihood they would have caused confusion and resulted in an inordinate waste of time.
[10] Louisiana Revised Statutes 32:42 does allow a police officer to violate the speed limit under certain limited circumstances. However, the facts before us does not grant that privilege to Mr. Fontenot in this case.
[11] The stop bar is referred to as a "limit line" in La.R.S. 32:234(A)(1).
[12] Burnham served on the NCUTCD and was one of the contributors to the development of the MUTCD. He also served on committees of the American Association of State Highway and Transportation Officials (AASHTO) which addressed traffic control and safety standards. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1014055/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-6330
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
CRAIG LAMONT SCOTT,
Defendant - Appellant.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Catherine C. Blake, District Judge. (CR-
95-202-HNM, CA-03-1957-CCB)
Submitted: July 19, 2004 Decided: August 10, 2004
Before LUTTIG and MOTZ, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Dismissed by unpublished per curiam opinion.
Craig Lamont Scott, Appellant Pro Se. Jefferson McClure Gray,
OFFICE OF THE UNITED STATES ATTORNEY, Baltimore, Maryland, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Craig Lamont Scott seeks to appeal the district court’s
order denying relief on his Fed. R. Civ. P. 59(e) motion to alter
or amend its order dismissing his motion filed under 28 U.S.C.
§ 2255 (2000) as untimely. A Rule 59(e) motion should be granted
in only one of three circumstances: “(1) to accommodate an
intervening change in controlling law; (2) to account for new
evidence not available at trial; or (3) to correct a clear error of
law or prevent manifest injustice.” Pac. Life Ins. Co. v. Am.
Nat’l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998). This Court
reviews the denial of a Rule 59(e) motion for an abuse of
discretion. Dennis v. Columbia Colleton Med. Ctr., Inc., 290 F.3d
639, 653 (4th Cir. 2002). Scott’s Rule 59(e) motion extends
appellate review to the underlying denial of habeas relief.
Sawyer v. Atl. Discount Corp., 442 F.2d 349, 351 (4th Cir. 1971).
An appeal may not be taken from the final order in a
§ 2255 proceeding unless a circuit justice or judge issues a
certificate of appealability. 28 U.S.C. § 2253(c)(1) (2000). A
certificate of appealability will not issue absent “a substantial
showing of the denial of a constitutional right.” 28 U.S.C.
§ 2253(c)(2) (2000). A prisoner satisfies this standard by
demonstrating that reasonable jurists would find that his
constitutional claims are debatable and that any dispositive
procedural rulings by the district court are also debatable or
- 2 -
wrong. See Miller-El v. Cockrell, 537 U.S. 322, 336 (2003);
Slack v. McDaniel, 529 U.S. 473, 484 (2000); Rose v. Lee, 252 F.3d
676, 683 (4th Cir. 2001).
We have independently reviewed the record and conclude
that Scott’s § 2255 motion was clearly untimely. Accordingly, he
has not made the requisite showing for issuance of a certificate of
appealability. We further find no abuse of discretion in the
district court’s denial of Scott’s Rule 59(e) motion. We thus deny
a certificate of appealability and dismiss the appeal. We dispense
with oral argument because the facts and legal contentions are
adequately presented in the materials before the court and argument
would not aid the decisional process.
DISMISSED
- 3 - | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1014114/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-6292
LARRY KEITH EASTER,
Petitioner - Appellant,
versus
GENE M. JOHNSON, Director of the Virginia
Department of Corrections,
Respondent - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Norfolk. Henry Coke Morgan, Jr., District
Judge. (CA-00-242)
Submitted: June 18, 2004 Decided: August 19, 2004
Dismissed by unpublished per curiam opinion.
Before NIEMEYER, MICHAEL, and KING, Circuit Judges.
Larry Keith Easter, Appellant Pro Se. Richard Carson Vorhis, OFFICE
OF THE ATTORNEY GENERAL OF VIRGINIA, Richmond, Virginia, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Larry Keith Easter appeals an order of the district court
dismissing for lack of jurisdiction Easter’s motion to set aside
judgment, which was characterized by the district court as a
successive 28 U.S.C. § 2254 (2000) petition.
Easter may not appeal from the denial of relief in a
§ 2254 proceeding unless a circuit justice or judge issues a
certificate of appealability. See 28 U.S.C. § 2253(c)(1) (2000).
Easter may satisfy this standard by demonstrating that reasonable
jurists would find both that his constitutional claims are
debatable and that any dispositive procedural rulings by the
district court are debatable or wrong. See Miller-El v. Cockrell,
537 U.S. 322 (2003); Slack v. McDaniel, 529 U.S. 473, 484 (2000);
Rose v. Lee, 252 F.3d 676, 683 (4th Cir.) (2001). We have reviewed
the record and determine that Easter’s motion to set aside judgment
is, in substance, a second petition attacking his conviction and
sentence under 28 U.S.C. § 2254 (2000). See United States v.
Winestock, 340 F.3d 200, 206 (4th Cir. 2003). We therefore treat
Easter’s notice of appeal and appellate brief as a request for
authorization from this court to file a second § 2254 petition.
See id. at 208.
This court may authorize a second or successive § 2254
petition only if the applicant can show that his claims are based
on (1) a new rule of constitutional law, made retroactive to cases
- 2 -
on collateral review by the Supreme Court, that was previously
unavailable; or (2) newly discovered evidence that, if proven and
viewed in light of the evidence as a whole, would be sufficient to
establish by clear and convincing evidence that no reasonable
factfinder would have found him guilty of the offense. See 28
U.S.C. § 2244(b)(2). The applicant bears the burden of making a
prima facie showing of these requirements in his application. See
In re Fowlkes, 326 F.3d 542, 543 (4th Cir. 2003). In the absence
of pre-filing authorization, the district court is without
jurisdiction to entertain the successive petition. Evans v. Smith,
220 F.3d 306, 325 (4th Cir. 2000).
After reviewing Easter’s motion and the record in this
matter, we conclude that it does not meet the applicable standard.
We therefore deny Easter’s request for a certificate of
appealability, deny Easter’s implied request for authorization to
file a second or successive § 2254 petition, and dismiss the
appeal. We dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before the
court and argument would not aid the decisional process.
DISMISSED
- 3 - | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584833/ | 815 F.Supp. 620 (1993)
In re INTEGRATED RESOURCES REAL ESTATE LIMITED PARTNERSHIPS SECURITIES LITIGATION.
MDL No. 897, No. MISC. 21-61 (RWS).
United States District Court, S.D. New York.
January 8, 1993.
As Amended February 11, 1993.
*621 *622 *623 *624 *625 *626 Anderson Kill Olick & Oshinsky, P.C. (Steven M. Pesner, Robert H. Pees, David M. Zensky, of counsel), Camhy Karlinsky & Stein (Kenneth A. Lapatine, Mark H. Budoff, of counsel), Townley & Updike (Jonathan M. Herman, of counsel), New York City, for defendants.
Arnold & Porter (Stephen M. Sacks, Larry Rector, of counsel), Washington, DC, for defendant Deloitte & Touche.
*627 Arent Fox McGarrahan & Heard (Ronald Weiner, of counsel), New York City, for defendant GA Partners Inc.
Cahill Gordon & Reindel (Susan Buckley, Thomas J. Kavaler, of counsel), New York City, for defendant Prudential Bache Securities, Inc.
Carter, Ledyard & Milburn (Beth D. Jacob, Jonathan F. Mack, of counsel), New York City, for defendant Landauer Associates.
Hunton & Williams (Christopher M. Mason, Scott J. McKay Wolas, Joseph J. Salturelli, of counsel), New York City, for defendant Mfrs. Hanover Trust.
Jones, Day, Reavis & Pogue (Elaine H. Mandelbaum, Jeffrey S. Tolk, of counsel), New York City, for defendant Cushman & Wakefield of Pennsylvania, Inc.
Kornstein Veisz & Wexler (David S. Douglas, Howard Levi, of counsel), New York City, for Ameritrust Co. Nat. Assoc., First Interstate Bank of California, Morgan Guar. Trust Co. of New York, Sec. Pacific Nat. Bank, Signet Bank/Virginia.
Robert J. Mannix, Deputy General Counsel, Deloitte & Touche, New York City.
Morrison & Foerster (Carroll Neesemann, of counsel), New York City, for defendant Kidder Peabody & Co., Inc.
Proskauer Rose Goetz & Mendelsohn (David I. Goldblatt, Lawrence P. Eagel, of counsel), New York City, for Richard H. Ader and Alan H. Weiner.
Ross & Hardies (Peter I. Livingston, Michelle J. d'Arcambal, of counsel), New York City, for defendants Hunter Pub. Co., Inc., Elliot Stein, Jr., I. Martin Pompadur.
Beigel & Sandler (Bijan Amini, Elizabeth Toll, Marilyn Neiman, Alexander T. Moore, of counsel), New York City, for plaintiffs.
Martin Mushkin, New York City, Waite, Schneider, Bayless & Chesley Co., L.P.A. (Stanley M. Chesley, Terrence L. Goodman, of counsel), Cincinnati, OH, for plaintiffs in Ellingson v. Kanzar Assocs.
OPINION
SWEET, District Judge.
The Judicial Panel on Multidistrict Litigation ("MDL") consolidated and transferred to this Court on October 10, 1991, a number of actions arising out of the demise of partnerships affiliated with Integrated Resources, Inc. ("Integrated"), which filed for relief under chapter 11 of the bankruptcy code, 11 U.S.C. งง 101, et seq., in 1990. See In re Integrated Resources, Inc., 135 B.R. 746, 748 (Bankr.S.D.N.Y.1992). Since the transfer of the original actions, several others have been filed in the Southern District of New York or transferred by the Multidistrict Panel to this Court and consolidated with these proceedings ("Later Filed Actions").
In general, the Plaintiffs in each of these actions bought limited partnership interests in ventures sponsored by Integrated or an entity associated with Integrated. The ventures were investment vehicles which bought, owned, operated, and leased residential and commercial real estate and equipment. The offer and sale of these interests was conducted in compliance with the requirements of Regulation D ("Reg. D"), Rules 501-08, 17 C.R.F. 230.501-230.508, of the Securities Act of 1933 ("1933 Act"), 15 U.S.C. งง 77a, et seq., thereby exempting the transactions from the registration requirements of the 1933 Act. Since these transactions are not registered with the Securities and Exchange Commission, the 1933 Act limits purchasers to those who qualify as "accredited investors."
To qualify as a Reg. D accredited investor, a "natural person" must have "an individual net worth, or joint net worth with that person's spouse, at the time of his purchase [in excess of] $1,000,000"; or he must have:
had an individual income in excess of $200,000 in each of the two most recent years or joint income with the person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.
Rule 501(a)(5) & (6). A trust qualifies for accredited-investor status if it has "total assets in excess of $5,000,000, not formed for *628 the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person ...," Rule 501(a)(7), to wit, one who "has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment ...," Rule 506(b)(2)(ii).
The purpose of these requirements is to facilitate and expedite specially designed offerings, while at the same time offsetting the danger posed by the lack of SEC scrutiny of the offer and sale by precluding those from participating in the offering who are inexperienced purchasers of securities and unable to afford professional advice regarding the merits and risks of purchasing the offered securities. Each of the investors in the Integrated partnerships was required to represent in writing that he qualified for Reg. D accredited-investor status and that he met the additional financial criteria set forth in the "Who May Invest" section of the confidential private placement memorandum ("PPM") issued for each partnership.
The investors were also warned in the respective partnership PPMs of various financial risks involved with each partnership investment. The following statement from the first paragraph of the Clovine Associates Limited Partnership PPM is typical:
The tax consequences of an investment in the Partnership, the absence of Cash Flow from such investment for at least the first four years of the operation of the Partnership and the illiquidity of such investment make the purchase of Interests suitable only for investors who have substantial net worth and substantial taxable income, and an Interest should be purchased only as a long-term investment.
Clovine PPM at 1.
Additionally, each PPM contained a section entitled "Risk Factors," in which the various risk factors of the investment were explicated at length, including, for example, restrictions on transferability and the possible lack of a market for the investment interests; the possible unavailability of tax benefits and changes in the tax law; risks arising from the terms and conditions of purchase money notes, mortgages, and leases; the possible inability to refinance the project; the possible lack of available sources of funds for the operating partnership; risks arising from leveraged financing and the ownership of the specific property; the possible inability to sell the project; and the possible adverse effects of technological developments in competing equipment.
The limited partnerships were highly leveraged, and the Plaintiffs allege they were promised considerable tax savings through debt financing and, after the initial debt was paid off, considerable profits from rental income from the buildings and equipment. The Plaintiffs further allege that the investments had no prospects for success from their inception and served no other economic purpose than to provide the Defendants with millions of dollars of profit in sales proceeds, fees, and other commissions.
On February 3, 1992, this Court signed "Pre-Trial Order No. 1" ("Pre-Trial Order") which, among other things, established an initial motion and discovery schedule for all actions subject to the MDL Order. The Pre-Trial Order created four separate global motion categories: (I) statutes of limitations governing the federal securities claims ("Global Motion I"), (II) the legal sufficiency of the federal securities claims ("Global Motion II"), (III) the legal sufficiency of the federal RICO claims ("Global Motion III"), and (IV) all Global Motion I, II, III motions applicable to the Later Filed Actions ("Global Motion IV"). The Pre-Trial Order also consolidated the briefing and hearing schedules for Global Motions I and II and Global Motions III and IV.
The actions subject to the present motion are:
Byrne v. Research Triangle Associates Limited Partnership, 91 Civ. 6966 ("Research Triangle") (filed January 3, 1991 in the Arizona District, Phoenix Division);
Reagan v. 600 Grant Street Associates Limited Partnership, 91 Civ. 5498 ("600 Grant Street/Reagan") (filed April 12, 1991 in the Central District of California);
Schoonmaker Homes v. 600 Grant Street Associates Limited Partnership, 91 Civ. 8528 ("600 Grant Street/Schoonmaker") *629 (filed December 18, 1991 in the Southern District of New York);
Standefer v. Clovine Associates Limited Partnership, 91 Civ. 6968 ("Clovine/Standefer") (filed April 9, 1991, in the Southern District of Ohio, Western Division);
Ellingson v. Kanzar Associates, 91 Civ. 6967 ("Clovine/Ellingson") (filed March 14, 1991, in the Southern District of Ohio, Western Division);
Baird v. EVP Fourth Corp., 91 Civ. 1063 ("West Palm/Baird") (filed February 12, 1991, in the Southern District of New York);
Coleman v. EVP Fourth Corp., 91 Civ. 0678 ("West Palm/Coleman") (filed January 23, 1991, in the Southern District of New York);
Coolspring Dental Clinic v. EVP Seventh Avenue Corp., 91 Civ. 6905 ("Rittenhouse") (filed October 15, 1991, in the Southern District of New York);
Martin v. EVP Second Corp., 90 Civ. 7074 ("Lenox Towers") (filed November 2, 1990, in the Southern District of New York; dismissed with leave to replead to add additional plaintiffs by this Court on August 26, 1992);
Gorman v. Sevzar Associates, 90 Civ. 6979 ("Southern Inns") (filed October 19, 1990 in the Southern District of New York);
Greene's Ready Mixed Concrete Co. v. Fillmore Pacific Associates Limited Partnership, 91 Civ. 0978 ("Fillmore/Greene's") (filed February 8, 1991, in the Southern District of New York);
Enviro Corp. v. Fillmore Pacific Associates Limited Partnership, 91 Civ. 1625 ("Fillmore/Enviro") (filed March 7, 1991, in the Southern District of New York);
White v. Hunter Publishing Limited Partnership, 91 Civ. 2232 ("Hunter Publishing") (filed April 1, 1991, in the Southern District of New York);
Christian v. Integrated MR Limited Partnership, 91 Civ. 6003 ("Intermobile") (filed September 5, 1991, in the Southern District of New York).
The present motions do not apply to any of the Later Filed Actions or to Barron v. Miami Executive Towers Assocs. Ltd. Partnership, 89 Civ. 8569 (RWS) (filed December 18, 1989, in the Southern District of New York), or to Rabin v. Fivzar Assocs., 90 Civ. 4869 (RWS) (filed July 23, 1990, in the Southern District of New York). Nevertheless, the parties should assume that general principles set forth below will be applied to those actions in accordance with Global Motion IV.
Additionally, the Pre-Trial Order stayed the production of documents to the Plaintiffs by various parties pending the disposition of the Global Motions.[1] The Pre-Trial Order also stayed the depositions of parties, except as to the Plaintiffs' deposition of Landauer Associates, Inc., in Clovine/Ellingson, pending the disposition of the Global Motions and the completion of document discovery.
Pursuant to the schedule established in the Pre-Trial Order, as amended, the "Anderson Kill" and "Integrated" Defendants ("Moving Defendants")[2] moved for summary judgment *630 dismissing the federal securities claims in the subject actions pursuant to Fed.R.Civ.P., Rules 12(b), 12(c), and 56, (Global Motion I), and for an order dismissing those claims under pursuant to Fed.R.Civ.P., Rules 12(b), 12(c), and 9(b) (Global Motion II), on February 21, 1992. Most of the Individual Defendants joined in these motions and either adopted the reasoning of the Anderson Kill and Integrated Defendants or submitted their own papers.[3]
Additionally, pursuant to Rule 12(b)(6), Fed.R.Civ.P., the Plaintiffs in Lenox Towers moved to dismiss counterclaims made against them by the Anderson Kill and Camhy Karlinsky & Stein Defendants. See supra note 2.
Oral argument on these motions was heard on June 10, 1992. The cross-motion of the Lenox Towers Plaintiffs is considered submitted as of that date. Various supplemental letter briefs were received by the Court through October 30, 1992 and October 2, 1992 on Global Motions I and II, respectively, and the Global Motions are considered submitted as of those dates.
Global Motion I
On Global Motion I, the Moving Defendants seek summary judgment dismissing most of the Plaintiffs' federal securities claims on the ground that the claims are untimely under the applicable statutes of limitations. The individual complaints allege claims under either ง 10(b) of the Securities Exchange Act of 1934 ("1934 Act"), 15 U.S.C. ง 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. ง 240.10b-5, or ง 12(2) of the 1933 Act, 15 U.S.C. ง 77l(2), or both. For the reasons set forth below, Global Motion I is granted in part and denied in part.
For simplicity's sake, the general legal principles governing the statute of limitations *631 issues will be set forth first. These principles will then be applied to the individual complaints on a case-by-case basis.
I. The Statute of Limitations for the ง 12(2) Claims
Section 13 of the 1933 Act provides that:
No action shall be maintained to enforce any liability created under section 77k or 77l (2) [12(2)] of this title unless brought within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence.... In no event shall any such action be brought to enforce a liability created ... under section 77l(2) of this title more than three years after the sale.
15 U.S.C. ง 77m.
"The three-year time limit in section 13 is an absolute outer limit." Bresson v. Thomson McKinnon Sec., Inc., 641 F.Supp. 338, 343 (S.D.N.Y.1986). Moreover, because compliance with ง 13 is an essential ingredient of a ง 12(2) claim, see Morin v. Trupin, 747 F.Supp. 1051, 1063 (S.D.N.Y.1990) ("Morin I") (quoting Bresson, 641 F.Supp. at 343), a complaint asserting such a claim must set forth:
(1) the time and circumstances of the discovery of the fraudulent statement;
(2) the reasons why it was not discovered earlier (if more than one year has lapsed since the making of the fraudulent statement); and
(3) the diligent efforts which plaintiff undertook in making or seeking such discovery.
Id.; see Friedman v. Arizona World Nurseries, Ltd. Partnership, 730 F.Supp. 521, 543-44 (S.D.N.Y.1990).
Failure to comply with these requirements will subject an individual ง 12(2) claim to dismissal. The issues concerning the individual discovery dates are set forth below in the ง 10(b) discussion.
II. The Statutes of Limitations for the ง 10(b) Claims
Before the Supreme Court's decision in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, ___ U.S. ___, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991), on June 20, 1991, Congress had never seen it fit to legislate a uniform statute of limitations for the implied right of action arising out of ง 10(b). Once the Court announced such a limitations period in Lampf, see ___ U.S. at ___ & n. 9, 111 S.Ct. at 2782 & n. 9, and directed that it be applied retroactively, see Welch v. Cadre Capital, 946 F.2d 185, 187 (2d Cir.1991) ("Welch II"); Ahmed v. Trupin, 781 F.Supp. 1017, 1021 (S.D.N.Y.1992), Congress responded by amending the 1934 Act and inserting a new ง 27A:
(a) EFFECT ON PENDING CAUSES OF ACTION. โ The limitation period for any private civil action implied under section 10(b) of this Act that was commenced on or before June 19, 1991, shall be the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991.
(b) EFFECT ON DISMISSED CAUSES OF ACTION. โ Any private civil action implied under section 10(b) of this Act that was commenced on or before June 19, 1991 โ
(1) which was dismissed as time barred subsequent to June 19, 1991, and
(2) which would have been timely filed under the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991,
shall be reinstated on motion by the plaintiff not later than 60 days after the date of enactment of this section.
Federal Deposit Insurance Corporation Improvement Act of 1991, Pub.L. No. 102-242, ง 476, 105 Stat. 2236 (codified at Securities Exchange Act of 1934, ง 27A, 15 U.S.C. ง 78aa-1).
This action includes cases filed after the Supreme Court's decision in Lampf; cases filed in the Second Circuit before Lampf, but after the November 8, 1990 decision in Ceres Partners v. GEL Assocs., 918 F.2d 349, 364 (2d Cir.1990) (adopting uniform limitations period ง 10(b) actions); cases filed in the Second Circuit before Ceres Partners; and *632 cases filed in federal district courts outside the Second Circuit.
Such a state of affairs rarely lends itself to simply stated rules, and the present motions are no exception. Rather, myriad issues must be addressed, including the constitutional validity of ง 27A; the applicable statute of limitations for each case and, in certain instances, for each Plaintiff; whether the limitations period from some other circuit can be applied here; and at what point various Plaintiffs should have discovered the conduct upon which their claims are based.
A. The ง 10(b) Statute of Limitations to be Applied to Claims Filed on or after June 20, 1991
In Lampf, the Supreme Court held that private actions under ง 10(b) must be commenced within one year after the discovery of the facts constituting the violation and within three years after such violation. See ___ U.S. at ___, 111 S.Ct. at 2781-82. In adopting this uniform federal statute of limitations, the Court borrowed from ง 9(e) of the 1934 Act, 15 U.S.C. ง 78i(e), which provides:
No action shall be maintained to enforce any liability created under this section, unless brought within one year after the discovery of the facts constituting the violation and within three years after such violation.
See ___ U.S. at ___ n. 9, 111 S.Ct. at 2781-82.
The Court also noted that the language used in ง 9(e) of the 1934 Act varies from that used in the 1933 Act. See id. While ง 13 of the 1933 Act imposes a strict three-year limit from the date of "sale," ง 9(e) of the 1934 Act imposes such a limit "after the cause of action accrued". Compare 15 U.S.C. ง 77m with id. ง 78i(e). To the extent this difference has any substantive effect in an individual case will be determined in applying the statute of limitations below.
The Supreme Court decided Lampf on June 20, 1991. Section 27A is directed at only those cases commenced on or before June 19, 1991. Therefore, ง 9(e) limitations period will be applied to the ง 10(b) claims in the cases commenced on or after June 20, 1991.
B. Section 27A is Not Unconstitutional
This Court fully considered the question of ง 27A's constitutionality based on briefs filed by counsel to most of the parties to this litigation in Rabin v. Fivzar Assocs., 801 F.Supp. 1045, 1051-56 (S.D.N.Y.1992). Additional materials submitted in this matter shed no further light on the decision there that the statute does not violate principles of separation of powers and due process. See id. at 1056; cf. Litton Industries, Inc. v. Lehman Brothers Kuhn Loeb Inc., 967 F.2d 742, 751 n. 6 (2d Cir.1992).
C. The ง 10(b) Limitations Period to be Applied to Claims Filed before June 20, 1991, and on or after November 8, 1990
The statute of limitations for ง 10(b) in the Second Circuit required that the case be brought within one year of discovery of the fraud and within three years of the fraud some seven months before Lampf was decided. In Ceres, the Second Circuit concluded that the limitations period found in งง 9 and 18 of the 1934 Act should apply to implied claims brought under ง 10(b), the same period selected by the Supreme Court in Lampf. See Ceres, 918 F.2d at 364. Therefore, all those ง 10(b) claims filed on or after November 8, 1990, the date Ceres was decided, will be subject to the uniform one-year/three-year period adopted in Ceres and Lampf. See 15 U.S.C. ง 78aa-1; Henley v. Slone, 961 F.2d 23, 24 (2d Cir.1992).
The Integrated lawsuits originally filed in this Court after November 8, 1990 and therefore bound by the statute of limitations laid down in Ceres are West Palm/Baird (filed February 12, 1991), West Palm/Coleman (filed January 23, 1991), Fillmore/Greene's (filed February 8, 1991), Fillmore/Enviro (filed March 7, 1991), Hunter Publishing (filed April 1, 1991),[4] and 600 Grant Street/Reagan (filed April 12, 1991).
*633 Two other lawsuits were originally filed in the Southern District of New York just before the Second Circuit handed down the new statute of limitations in Ceres: Lenox Towers (filed November 2, 1990) and Southern Inns (filed October 19, 1990). Claims in these two cases will be governed by the Second Circuit's prior practice of borrowing the most analogous state statute of limitations for the ง 10(b) claims. See Ades v. DeLoitte & Touche, Fed.Sec.L.Rep. (CCH) ถ 96,469 (S.D.N.Y.1992). The ง 12(2) claims in these cases, of course, continue to be governed by the one-year/three-year statute of limitations prescribed by ง 13 of the 1933 Act, 15 U.S.C. ง 77m.
D. Determining the Applicable ง 10(b) Limitations Periods for Claims Filed in Other Jurisdictions
The other three lawsuits were originally filed elsewhere and then transferred to this Court by the Judicial Panel on Multidistrict Litigation. The complaints were filed in Arizona, Phoenix Division (Research Triangle, filed Jan. 3, 1991), the Central District of California (600 Grant Street/Reagan, filed April 12, 1991), and the Southern District of Ohio, Western Division (Clovine/Standefer, filed April 9, 1991, and Clovine/Ellingson, filed March 14, 1991).
In all three, both the Plaintiffs and the Moving Defendants agree that the fraud occurred more than three years before the Plaintiffs brought suit. Since the alleged fraud occurred when the Plaintiffs were induced to purchase their partnership interests, and since in Research Triangle and Clovine/Standefer the latest Plaintiffs purchased in 1986, claims in all three actions are time-barred under Second Circuit law.
The Clovine/Ellingson Plaintiffs contend that the Court must use the ง 10(b) statute of limitations of the district in which the action was filed, on the grounds that the transferor state's jurisdiction is the "jurisdiction" meant by ง 27A. The Plaintiffs in the other two partnership actions maintain it would be "inequitable" to apply Second Circuit law to these claims.
The definition of "jurisdiction," however, is not quite as clear cut as the Clovine/Ellingson Plaintiffs make it out to be. Prior to the statute's enactment, the crazy-quilt of statutes of limitations employed in ง 10(b) actions was well known. See Ceres, 918 F.2d at 353-60. At the most, ง 27A has done nothing more than codify this procedural morass in place.
1. Second Circuit Law Before "Ceres"
Prior to Ceres, courts within the Second Circuit traditionally applied the forum state's most analogous statute of limitations to claims under ง 10(b). See Welch v. Cadre Capital, 923 F.2d 989, 993 (2d Cir.) ("Welch I"), vacated and remanded sub nom. Northwest Sav. Bank, PaSa v. Welch, ___ U.S. ___, 111 S.Ct. 2882, 115 L.Ed.2d 1048, aff'd, 946 F.2d 185 (2d Cir.1991); Armstrong v. McAlpin, 699 F.2d 79, 86-87 (2d Cir.1983). In the Southern District of New York, that statute of limitations is contained in both the State's statute of limitations for common-law fraud actions and its "borrowing statute". See Armstrong, 699 F.2d at 87; Arneil v. Ramsey, 550 F.2d 774, 779 (2d Cir.1977); Morin v. Trupin, 799 F.Supp. 342, 345 (S.D.N.Y.1992) ("Morin III").
In the case of plaintiffs who were residents of New York State at the time of the injury, the former period set forth in N.Y.Civ. Prac.L. & R. ง 213(8) (McKinney 1990 Supp.) applies: The action must be commenced within six years of the commission of the alleged fraud or two years from the time the alleged wrongdoing was, or with reasonable diligence should have been, discovered. See Armstrong, 699 F.2d at 87; Morin III, 799 F.Supp. at 345. In those cases where the plaintiffs were nonresidents at the time the cause of action accrued, N.Y.Civ.Prac.L. & R. ง 202 (McKinney 1990) applies.
Under this "borrowing statute," a court is to apply the limitations period "of either *634 [New York] or the place without [New York] where the cause of action accrued," whichever is shorter. See Bresson, 641 F.Supp. at 349; Klock v. Lehman Brothers Kuhn Loeb, Inc., 584 F.Supp. 210, 214 (S.D.N.Y.1984). "Thus, if a suit brought in the `place' of the plaintiff's residence would be time-barred, the suit in a New York federal court is time-barred." Ceres, 918 F.2d at 353 (citations omitted).
As this Court recently noted:
Although federal courts look to state law for the applicable limitations period, they look to federal law for guidance as to the appropriate accrual and equitable tolling principles. See ITT v. Cornfeld, 619 F.2d 909, 929 (2d Cir.1980) (period commences to run "when the plaintiff has actual knowledge of the alleged fraud or knowledge of facts which the exercise of reasonable diligence should have led to actual knowledge"); Baskin v. Hawley, 807 F.2d 1120, 1130-31 (2d Cir.1986).
A plaintiff must bring a ง 10(b) action in federal court. Thus, in applying the rule of "the place without the state where the cause of action accrued" a federal court sitting in New York does not automatically turn to state law but rather must look to the statute of limitations that would be applied by the federal district court where the nonresident plaintiff resided at the time of the injury. See Ceres, 918 F.2d at 353; Ahmed v. Trupin, 781 F.Supp. 1017, 1022-23 (S.D.N.Y.1992).
Morin III, 799 F.Supp. at 347. Therefore, the Court must look to the relevant states for statutes of limitations governing the ง 10(b) actions filed before Ceres. In the matter at hand, this applies to the actions filed in Lenox Towers and Southern Inns.
2. Retroactivity as Determined by Chevron
Although the Ceres court explicitly refused to address the retroactive effect of its ruling, see Ceres, 918 F.2d at 364, the Second Circuit resolved that question in Welch I, 923 F.2d at 993-95. Welch I established that the retroactive application of Ceres must be determined on a case-by-case basis according to a three-part test laid out in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). Only then should the court return to the Second Circuit's prior practice of applying the most analogous state statute of limitations. The three parts of the test hinge on 1) whether the new rule was "clearly foreshadowed" at the time the relevant complaint were filed, 2) whether retroactive application of the statute of limitations would serve the purpose of the new rule, and 3) whether the equities weighed in favor of nonretroactivity. See Chevron, 404 U.S. at 106-7, 92 S.Ct. at 355-56; Welch I, 923 F.2d at 993-95; Rabin, 801 F.Supp. at 1049.
The argument offered by the Plaintiffs in Research Triangle and Clovine/Standefer โ that this Court's failure to apply the law of the transferor state would work harsh inequities โ is only one part of the test, not a determination of the whole. Whether retroactive application of the law was foreseeable and whether it serves the purpose of the law is more significant here: "As for the third Chevron factor, the courts have held that the retroactive application of Ceres does not produce substantial inequitable results when the statute of limitations is unchanged by retroactive application," as it is for cases filed after November 8, 1990. In re Chaus Sec. Litig., 801 F.Supp. 1257, 1269 (S.D.N.Y.1992) (applying Ceres statute of limitations to case transferred pursuant to 28 U.S.C. ง 1407). The law of the jurisdiction is Second Circuit law.
The second prong of the Chevron test โ that retroactive application will further the new rule โ does warrant retrospective application under Ceres. In the context of a transferred class action, the traditional method of looking to the state of each nonresident class plaintiff to determine whether each claim would be time-barred could result in the claims of some plaintiffs being time-barred while the claims of others would not be. This result would be at least as inequitable as the result envisioned by the Plaintiffs if Ceres were applied to their claims in Clovine/Standefer and Research Triangle. See Chaus, 801 F.Supp. at 1269.
The uniform application of Ceres in this context does further the rule because here *635 the rule is not, strictly speaking, retroactive. All four Complaints were filed in their respective jurisdictions after November 8, 1990: Research Triangle on January 3, 1991; Clovine/Ellingson on March 14, 1991; Clovine/Standefer on April 9, 1991; 600 Grant Street/Reagan on April 12, 1991. If the Plaintiffs could avoid the application of Second Circuit law merely by filing their claim in an inconvenient forum which had a longer statute of limitations, and then take that statute of limitations with them when their case was transferred, they could make an end run around the rule laid down by Ceres. Although this is now impossible for all claims filed after June 19, 1991, due to the Supreme Court's decision in Lampf, the eight-month lag between Ceres and Lampf creates an apparent window of opportunity which the Plaintiffs should not be allowed to exploit.
Finally, the first prong of the Chevron test โ that the rule changes the practice in this Circuit โ is met for cases filed here, and for cases transferred here but not transferred as part of MDL litigation. The precedents for MDL cases are not as clear-cut as for cases filed under other statutes, because the special concerns inherent in MDL litigation have been reflected in the case law.
3. Multidistrict Litigation
The multidistrict transfer statute, 28 U.S.C. ง 1407, attempts to provide for the "just and efficient conduct" of related cases scattered throughout the federal courts by consolidating such cases before one court. See 28 U.S.C. ง 1407(a). One of the key means by which this goal is achieved is through the establishment of a single body of law for the unified proceedings. See generally In re Korean Air Lines Disaster, 829 F.2d 1171, 1176-84 (D.C.Cir.1987) (Ginsburg, J., concurring), aff'd on other grounds sub nom. Chan v. Korean Air Lines, Ltd., 490 U.S. 122, 109 S.Ct. 1676, 104 L.Ed.2d 113 (1989); see also In re Pan American Corp., 950 F.2d 839, 847 (2d Cir.1991) (adopting Korean Air Lines). Without such a mechanism, "[t]he conduct of multidistrict litigation, which is invariably time consuming as it is, will grind to a standstill while transferee judges read separate briefs, each based on the case law of a transferor circuit, on a single issue of federal law." Pan Am, 950 F.2d at 847. In most cases such an effort should be futile, since it must be presumed that the Supreme Court will eventually resolve any pertinent split among the circuits and set down a uniform federal law. See, e.g., Chan, 490 U.S. at 124-25, 135, 109 S.Ct. at 1678-79, 1684 (resolving the split at issue in Korean Air Lines).
The Clovine/Ellingson Plaintiffs argue that under Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964),[5]Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), and Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), this Court must apply the statute of limitations that each transferor court would have applied to these actions. See Berry Petroleum Co. v. Adams & Peck, 518 F.2d 402, 406 (2d Cir. 1975); H.L. Green Co. v. MacMahon, 312 F.2d 650, 653 (2d Cir.1962), cert. denied, 372 U.S. 928, 83 S.Ct. 876, 9 L.Ed.2d 736 (1963); In re Plumbing Fixtures Litig., 342 F.Supp. 756, 758 (J.P.M.L.1972) (per curiam).
Although this argument finds support within Erie's progeny, see Walker v. Armco Steel Corp., 446 U.S. 740, 752-53, 100 S.Ct. 1978, 1986, 64 L.Ed.2d 659 (1980); Guaranty Trust Co. v. York, 326 U.S. 99, 110-12, 65 S.Ct. 1464, 1470-71, 89 L.Ed. 2079 (1945), it ignores the fundamental difference between those cases and the present litigation, just as the Clovine/Ellingson Plaintiffs' reliance on New York law ignores the fact that this cause of action can only be tried in a federal court. Jurisdiction here is based on a federal question. As such, Erie's familiar concerns over state law are inapplicable here. See West v. Conrail, 481 U.S. 35, 39 n. 4, 107 S.Ct. 1538, 1541 n. 4, 95 L.Ed.2d 32 (1987); Isaac v. Life Inv. Ins. Co., 749 F.Supp. 855, 863 (E.D.Tenn.1990); see also Richard L. Marcus, Conflicts Among the Circuits and Transfers Within the Federal Judicial System, 93 Yale L.J. 677, 679 (1984) ("Erie is *636 simply irrelevant where federal claims are involved").
The reasoning in the cases relied on by the Clovine/Ellingson Plaintiffs in making this argument has been subsequently rejected. The line of authority holding that a transferee court should apply the law of the transferor court in federal claims transferred pursuant to ง 1407 finds its genesis in Plumbing Fixtures, 342 F.Supp. at 758 ("It is clear that the substantive law of the transferor forum will apply after transfer," citing Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964)). This language has, however, been expressly withdrawn by the Multidistrict Panel:
Any suggestion to the contrary in dictum found in Plumbing Fixtures is withdrawn. Indeed, the dictum in Plumbing Fixtures is itself questionable given that Plumbing Fixtures was a litigation arising under the federal courts' federal question jurisdiction and Van Dusen, on which the Panel relied in support of its dictum, was an action arising under the federal courts' diversity jurisdiction.
In re General Motors Class E Stock Buyout Sec. Litig., 696 F.Supp. 1546, 1547 n. 1 (J.P.M.L.1988). The other cases these Plaintiffs have cited in support of this argument principally rely on Plumbing Fixtures. See, e.g., Berry Petroleum, 518 F.2d at 408 n. 7; In re Haven Industries, Inc., 462 F.Supp. 172, 179 (S.D.N.Y.1978). To this extent, then, the reasoning of these cases is now called into question.
In its place, the federal courts have adopted two considerations for cases transferred under 28 U.S.C. ง 1407: first, that statutes of limitations are either federal or procedural in nature, and second, that the circuits do not need to defer to other circuits' interpretation of federal law if it conflicts with their own.
In the MDL context, the statute of limitations may not be a matter of state law at all, and as such, the limitation period should be decided by a federal transferee court in accordance with its own interpretation of federal law "without deference to any contrary interpretation of a transferor circuit." In re General Dev. Corp. Bond Litig., 800 F.Supp. 1143, 1146 (S.D.N.Y.1992). Since "the choice of a limitations period for a federal cause of action is itself a question of federal law," Del Costello v. International Brotherhood of Teamsters, 462 U.S. 151, 159 n. 13, 103 S.Ct. 2281, 2288 n. 13, 76 L.Ed.2d 476 (1983), the limitations periods for federal causes of action, from wherever derived, are not matters of state law in any meaningful sense and should not, in the transfer context, implicate Van Dusen principles. As the court in General Development noted:
"[I]t seems ... clear that the best reading of the F.D.I.C.'s Improvement Act's phrase "laws applicable in the jurisdiction," as it applies to a complaint ... filed before the date of the decision in Lampf and transferred here, is that the jurisdiction referred to must be the one in which the federal transferee court sits ... i.e., the one- and three-year period set forth in Ceres Partners."
800 F.Supp. at 1148.
Even if the choice of the limitations period is not itself a question of federal law, there is another reason why a federal limitations period should govern. Federal courts have viewed questions pertaining to the statutes of limitations for federal securities claims as procedural, not substantive, matters, and they are, therefore, subject to the federal law of the transferee court. See, e.g., Singer v. Olympia Brewing Co., 878 F.2d 596, 599 (2d Cir.1989); Duke v. Touche Ross & Co., 765 F.Supp. 69, 73 (S.D.N.Y.1991).
In short, the Plaintiffs have presented no compelling reason to require the rejection of the holdings of Pan Am and Korean Air Lines. The Second Circuit's rules for determining which statute of limitations to apply to the individual ง 10(b) claims therefore govern. See Pan Am, 950 F.2d at 847; Korean Air Lines, 1175-76.
Despite the expectation of some supporters of section 27A that it would routinely apply a more generous state or federal common law limitations period to all suits pending on June 19, 1991, we see no escape from the clear statutory language requiring the application of "the laws applicable in the jurisdiction."
*637 Henley v. Slone, 961 F.2d 23, 25 (2d Cir.1992) (refusing to apply common-law fraud statute of limitations to securities fraud claim brought in Connecticut).
E. New York Law
Finally, the Clovine/Ellingson Plaintiffs contend that a general choice of law clause in their limited partnership materials mandates that New York's six-year statute of limitations for common-law fraud should apply. The clause in question reads:
This Agreement, the Notes, any amendments or replacements hereof and thereof, and the legality, validity and performance of the terms hereof and thereof, shall be governed by and construed in all respects in accordance with the internal laws of the State of New York ... applicable to contracts, transactions and obligations entered into and to be performed in New York.
Pls.' Mem. in Opp. Ex. A at 3.
This contention fails for two reasons. First, the clause is a generic choice of law clause governing the interpretation of contracts. Such clauses generally do not apply to statutes of limitations; indeed, this clause is silent as to the issue. Absent an express term, the clause does not alter the federal law applicable to this federal claim. See Des Brisay v. Goldfield Corp., 637 F.2d 680, 682 (9th Cir.1981); Gatto v. Meridian Medical Assocs., Inc., No. Civ. A 87-5076 (JCL), 1989 WL 23125 (D.N.J. Feb. 9, 1989).
Second, if the New York choice of law clause does apply, it would have to be read as requiring the application of the law of a federal court sitting in New York. Section 27 of the 1934 Act grants federal courts with exclusive jurisdiction of federal securities claims. See Ceres, 918 F.2d at 353. A plaintiff must begin a ง 10(b) action in federal court. A federal court sitting in New York cannot automatically turn to state law but must first look to the statute of limitations that would be applied by the federal district court in the state where the plaintiff brought his ง 10(b) action. Therefore, Second Circuit, not New York, law would apply. See id.; Ahmed, 781 F.Supp. at 1022; Marlow v. Gold, [1991 Transfer Binder] Fed.Sec.L.Rep. (CCH) ถ 96,112, 1991 WL 107268 (S.D.N.Y. 1991).
F. Determining When Plaintiffs Were Placed on Inquiry Notice
In the Second Circuit, the statute of limitations for securities fraud claims begins to run when the plaintiff has actual knowledge of the alleged fraud or when the plaintiff is placed on inquiry notice, to wit, when the plaintiff has "knowledge of facts which in the exercise of reasonable diligence should have led to actual knowledge." Phillips v. Levie, 593 F.2d 459, 462 (2d Cir.1979) (quoting Stull v. Bayard, 561 F.2d 429, 432 (2d Cir.1977), emphasis added).
Thus, the statute is not tolled for a plaintiffs "leisurely discovery of the full details of the alleged scheme." Klein v. Bower, 421 F.2d 338, 343 (2d Cir.1970). Instead, the period runs from the time at which a plaintiff "should have discovered the general fraudulent scheme." Robertson v. Seidman & Seidman, 609 F.2d 583, 587 (2d Cir.1979) (quoting Berry Petroleum Co. v. Adams & Peck, 518 F.2d 402, 410 (2d Cir.1975)).
Kronfeld v. Advest, Inc., 675 F.Supp. 1449, 1458 (S.D.N.Y.1987); accord Arneil, 550 F.2d at 780.
1. The Objective Test
The Second Circuit has held that the test determining whether a plaintiff was placed on inquiry notice is "objective" in nature.
The means of knowledge are the same thing in effect as knowledge itself. Where the circumstances are such as to suggest to a person of ordinary intelligence the probability that he has been defrauded, a duty of inquiry arises, and if he omits that inquiry when it would have developed the truth, and shuts his eyes to the facts which call for investigation, knowledge of that fraud will be imputed to him. This rule is fully applicable in cases ... which involve claims of securities fraud.
Armstrong, 699 F.2d at 88 (citations and internal quotations omitted). This objective test mandates a dismissal of or summary judgment on a plaintiff's securities fraud *638 claim when the "pleadings disclose facts sufficient to have placed the plaintiff on inquiry notice of the alleged fraud prior to the one-year cutoff." Bresson, 641 F.Supp. at 345.
To satisfy this test, the knowledge of the alleged fraud imputed to a plaintiff must rise to the level of the probable and not merely of the possible. When inquiry notice is asserted by a defendant as the basis for a summary judgment motion, as is the case here, the defendant has the burden of showing that no genuine issue of material fact exists as to whether the plaintiff, exercising reasonable diligence, would have discovered the fraudulent scheme by the dates identified by the defendant. See Kronfeld, 675 F.Supp. at 1458. The defendant also must establish that the circumstances in question suggested to the plaintiff the probability that he allegedly had been defrauded and not the mere possibility of the alleged fraud to trigger inquiry notice and start the running of the statute of limitations period. See Armstrong, 699 F.2d at 88; see also Zola v. Gordon, 685 F.Supp. 354, 367 n. 14 (S.D.N.Y.1988) ("Zola I") (rejecting as "incorrect" the proposition in Klein v. Shields & Co., 470 F.2d 1344, 1347 (2d Cir.1972), that inquiry notice is triggered when the imputed knowledge is of the possibility of fraud).[6]
2. Deciding Motions for Summary Judgment Based on Inquiry Notice
This Court has noted the care with which a motion for summary judgment based on an assertion of inquiry notice must be decided, because the question of whether a plaintiff exercised reasonable diligence is usually a question of fact for the jury to decide. See Intre Sport, Ltd. v. Kidder, Peabody & Co., 625 F.Supp. 1303, 1310 (S.D.N.Y.1985), aff'd without opinion, 795 F.2d 1004 (2d Cir.1986), vacated on other grounds, 482 U.S. 922, 107 S.Ct. 3203, 96 L.Ed.2d 690 (1987). As the Second Circuit stated in Robertson,
[i]ssues of due diligence and constructive knowledge depend on inferences drawn from the facts of each particular case โ similar to the type of inferences that must be drawn in determining intent and good faith, [and w]hen conflicting inferences can be drawn from the facts, ... summary judgment is inappropriate.
609 F.2d at 591. In light of these considerations, this Court has concluded it is only in "extreme circumstances" that summary judgment is appropriate when the defendants assert that the action was untimely commenced because inquiry notice was triggered more than a year before the action was brought by the plaintiff. Freschi v. Grand Coal Venture, 583 F.Supp. 780, 785 (S.D.N.Y. 1984).
These circumstances do obtain when a court readily can impute knowledge of a probable fraud to the plaintiff from the face of the documents and facts in evidence supporting the motion for summary judgment without having to assume the role of the jury and undertake a detailed deductive analysis of the factual record to justify that imputation of such knowledge to the plaintiff. Thus, in Borden, Inc. v. Spoor Behrins Campbell & Young, Inc., 778 F.Supp. 695, 700 (S.D.N.Y.1991), Judge Conner stated that,
[w]hile defendants spend an inordinate amount of time in their papers trying to prove the essentially factual issue of what plaintiff knew and when plaintiff knew it, this Court is reluctant to engage in the type of fact-finding defendants request on a motion for summary judgment.
Cf. Friedman v. Meyers, 482 F.2d 435, 439 (2d Cir.1973) (summary judgment is "particularly inappropriate" when inferences which the parties sought to have drawn regarding the discovery of the alleged fraud were questions of motive, intent, and subjective feelings and reactions).
Nonetheless, when these circumstances do obtain, the issues of inquiry notice and the discovery of the alleged fraud may be decided by the court as a matter of law and the court "should not be reluctant to grant summary judgment." Hartford Fire Ins. Co. v. Federated Dep't Stores, Inc., 723 F.Supp. 976, 981 (S.D.N.Y.1989); see In re General Dev. Corp. Bond Litig., 800 F.Supp. 1128, 1136 (S.D.N.Y.1992) (because the test of inquiry *639 notice is objective, "a court's determination that the information available to a plaintiff in a given instance should (or should not) have given him reason to consider and investigate the probability of fraud is surely warranted in appropriate cases" in the context of a motion to dismiss); Quantum Overseas, N.V. v. Touche Ross & Co., 663 F.Supp. 658, 663-64 (S.D.N.Y.1987) (quoting Rickel v. Levy, 370 F.Supp. 751, 756 (E.D.N.Y.1974) and Cook v. Avien, Inc., 573 F.2d 685, 697-98 (1st Cir.1978), that general suspicions and "storm warnings" in financial data trigger inquiry notice upon which summary judgment may be granted); Kronfeld, 675 F.Supp. at 1458 ("the cases are legion in which summary judgment has been granted on the ground that the plaintiff should have discovered his cause of action under the securities law before the statute of limitations had run"); Harner v. Prudential Sec. Inc., 785 F.Supp. 626 (E.D.Mich.1992) ("where ... the underlying facts are undisputed, even factually-based issues may be decided as a matter of law").[7]
3. Information Triggering Inquiry Notice
The information that triggers inquiry notice of the probability of an alleged securities fraud is any financial, legal, or other data available to the plaintiffs providing them "with sufficient storm warnings to alert a reasonable person to the [probability] that there were either misleading statements or significant omissions involved in the sale of the [securities]."[8]Quantum Overseas, 663 F.Supp. at 664 (quoting Cook, 573 F.2d at 697-98). Such data may come in the form of the letters and other documents provided to limited partners by the partnership, see Bresson, 641 F.Supp. at 341; Farr, 755 F.Supp. at 1225; Miller v. Grigoli, 712 F.Supp. 1087, 1088 (S.D.N.Y.1989); Hirschler v. GMD Inv. Ltd. Partnership, [1990-1991 Transfer Binder] Fed.Sec.L.Rep. (CCH) ถ 95,919, 1991 WL 115773 (E.D.Va. Mar. 28, 1991); the offering materials themselves, see Marlow v. Gold, [1991 Transfer Binder] Fed. Sec.L.Rep. (CCH) ถ 96,112, at 90,633-90,635, 1991 WL 107268 (S.D.N.Y. June 6, 1991); Landy v. Mitchell Petro. Tech. Corp., 734 F.Supp. 608, 617 (S.D.N.Y.1990); Kennedy v. Josephthal & Co., 814 F.2d at 798, 802 (1st Cir.1987); Hirschler, ถ 95,919, at 99,564; Bender v. Rocky Mountain Drilling Assocs., 648 F.Supp. 330, 334-35 (D.D.C.1986); and public disclosures in the media about the financial condition of the defendant and other lawsuits alleging fraud committed by the defendant, see Arneil, 550 F.2d at 781; Zola II, 701 F.Supp. at 70; Korwek v. Hunt, 646 F.Supp. 953, 959 (S.D.N.Y.1986), aff'd, 827 F.2d 874 (2d Cir.1987); Bresson, 641 F.Supp. at 345; Gluck v. Amicor, Inc., 487 F.Supp. 608, 613-14 & n. 6 (S.D.N.Y.1980).
*640 Furthermore, neither reassurances accompanying the relevant notice nor the continued failure to disclose the facts allegedly misrepresented in the first place, relieves the plaintiff of his duty to undertake reasonable inquiry or tolls the statute of limitations. For example, in Zola I, the plaintiffs contended that the IRS notice did not start the statute of limitations because the defendant allegedly sent the plaintiffs a letter representing that he intended to fight the IRS, and because the defendant had stated earlier that the partnership had obtained its own expert appraisals supporting its valuation of the firm. See 685 F.Supp. at 366-67.
The court rejected this position, stating that "as a matter of law plaintiffs would not be entitled to rely on `reassuring comments' given them after they received constructive knowledge of the fraud." Id. at 366. The court also rejected the plaintiffs' contention that the defendant's continuing failure to disclose material facts which originally had been misrepresented constituted fraudulent concealment sufficient to further toll the statute of limitations:
The suppression of this information simply is irrelevant to plaintiffs' duty to inquire, which was triggered by receipt of the IRS report. See Hupp [v. Gray, 500 F.2d 993,] 997 [(7th Cir.1974)] ("the fact which would have put a reasonable person on notice of the possibility of fraud ... was concealed"). ... Plaintiffs present no facts indicating that they undertook any inquiry whatsoever. The court can only reach one conclusion, that plaintiffs remained narcose.
Zola I, 685 F.Supp. at 368 (footnote omitted). See also Farr, 755 F.Supp. at 1228 ("statements of cautious optimism, reiterations of the goal of providing income to investors, and explanations for past poor performance do not rise to the level of affirmative concealment necessary to excuse a reasonable investor from the duty of inquiry presented by the cold numbers contained in the [reports]"). Thus, once placed on inquiry notice, a limited partner cannot avoid the duty to inquire by relying on reassurances and optimistic statements made by the partnership.
4. Inquiry Notice of Integrated's Demise
This Court has previously noted that sophisticated investors legally may be presumed to know of information in the public domain, such as newspapers and magazine articles. See Hartford Fire Ins., 723 F.Supp. at 976. In Hartford, the plaintiff bondholders claimed that Federated had committed a material omission by failing to disclose the risk that Federated would be the subject of a leveraged buyout and the adverse impact that such a buyout would have on the subject debt instruments. See id. at 981-83, 987.
On the defendants' motion for summary judgment, this Court held that the alleged omissions were not material, and dismissed the plaintiffs' งง 10(b) and 12(2) claims. See id. at 990. This disposition followed from the fact that the disclosure of the omitted information would not have affected the "total mix" of available information because plaintiffs already should have known of such matters from general publicity accorded Federated in the media. See id. at 988. There, over sixty newspaper articles and financial reports in the general press and financial community had identified Federated as an "attractive" takeover candidate and had outlined the negative effect of takeovers on investment grade securities, such as the notes in which plaintiffs subsequently invested. See id. at 987-88 (citing Business Week and The New York Times articles); see also Seibert v. Sperry Rand Corp., 586 F.2d 949, 952 (2d Cir.1978) (plaintiff shareholders presumed to know information in public domain); Goldberger v. Baker, 442 F.Supp. 659 (S.D.N.Y.1977) (allegations of material omissions insufficient where omitted information was a "matter of public knowledge that anyone could acquire by reading a newspaper with an Amex listing").
The Moving Defendants assert that the central allegation raised by the Plaintiffs in their various Complaints, which serves as the unifying thread throughout all of the actions, is the allegation that the Plaintiffs relied on the Defendants' misrepresentations and material omissions regarding the financial stability of Integrated. The Moving Defendants assert further that, in light of the extensive publicity surrounding the collapse of Integrated, *641 the Plaintiffs were placed on inquiry notice of this central aspect of their fraud claim from June 1988.[9]
At oral argument, however, the Plaintiffs denied that reliance on Integrated's financial condition to secure the financial viability of the various limited partnerships is a key unifying feature and one of the common elements of the alleged fraud perpetrated by the Defendants. Rather it was asserted that the only commonality among these cases is that "most of the defendants are Integrated or Integrated-related entities or elements." Tr. at 34. Thus, there are several unique elements of the fraud that relates to Integrated:
It is different for each partnership.... Integrated is there because we allege control in some cases, we allege guarantees in some cases, but in each case there is a specific fraud which is unique to that partnership. Or there might be a group of partnerships that have a specific fraud that we are focusing on now.
Id.
The Plaintiffs allege "until [they] were advised that the units were not sold out, there was no damage," and contend from this claim that, because only then was each Partnership faced with the need to borrow money to cover the shortfall, "Integrated is not necessarily an integral part of that fraud or the damage." Tr. at 35. The Plaintiffs derive, as a final conclusion from this analysis, the proposition that "until the plaintiffs, the investors, were on notice of the shortfall, they were not on notice of any fraud." Id.
Despite the Plaintiffs' blanket denial of their reliance on Integrated's financial condition in deciding to invest in these Partnerships, the final determination of this issue turns on what the Plaintiffs actually pleaded in their various Complaints regarding the Defendants' allegedly fraudulent scheme. Thus, to the extent that the Plaintiffs allege in their Complaints that the fraud committed by the various limited partnerships was, in whole or in part, tied to misrepresentations or omissions about the financial condition of Integrated, the media reports regarding the financial demise of Integrated placed the Plaintiffs on inquiry notice about the probability of the alleged fraud caused by investing in these Partnerships out of reliance on the financial condition of Integrated and the assumption that Integrated would be in a position to finance any shortfall caused by under-subscription of the offerings.
G. Pleading Compliance with the Statute of Limitations
This Court has directed that plaintiffs asserting securities fraud claims must, inter alia, plead with specificity the date of purchase of the securities at issue. See Morin I, 747 F.Supp. at 1062; Intre Sport, 625 F.Supp. at 1310. "Failure to plead compliance with the statute of limitations requires dismissal without prejudice to replead." Chaus, 801 F.Supp. at 1269; accord Ingenito v. Bermec Corp., 441 F.Supp. 525, 552 (S.D.N.Y.1977).
In the numerous complaints at issue here, the Plaintiffs have consistently failed to specify their dates of purchase, in some cases simply alleging that Plaintiffs' investments *642 occurred "after" a certain date. Thus, each is defective insofar as it fails to plead compliance with the relevant statutes of limitations.
The Defendants have provided comprehensive schedules setting forth the purchase dates for the various Partnerships. In light of the fact that the Defendants do not dispute these dates,[10] these dates are accepted as the relevant dates in determining the issue of compliance with the statute of limitations, thereby obviating the need to dismiss the Complaints with leave to replead and suffer the delay that such a disposition would necessitate.
III. Applying the Statutes of Limitations
Five of the complaints have been amended to add more plaintiffs: Fillmore/Greene's,[11]Clovine/Standefer,[12]West Palm/Coleman,[13]Hunter Publishing,[14] and Southern Inns[15]. The Anderson Kill Defendants allege that all new Plaintiffs and Defendants are barred because they fail to relate back to the original complaints according to the requirements of Rule 15(c), Fed.R.Civ.P., which governs the "relation back" of amendments to the original pleadings.
A. Certain Plaintiffs' Claims Relate Back
Although the language of Rule 15(c) does not explicitly govern the relation back of amendments changing or adding plaintiffs, the Advisory Committee Notes to the 1966 amendment to the Rule state that "the attitude taken in revised Rule 15(c) toward change of defendants extends by analogy to amendments changing plaintiffs." Additional plaintiffs may be added provided there was both notice to the defendants of the existence of the additional claim and a mistake in the original pleading as to the proper party. See Morin v. Trupin, 778 F.Supp. 711, 734 (S.D.N.Y.1991) ("Morin II"); Adler v. Berg Harmon Assocs., 790 F.Supp. 1235, 1239 (S.D.N.Y.1992); 6 Wright, Miller & Kane, 6A Federal Practice and Procedure ง 1501 at 154 (1990).
Rule 15(c), in effect at the time of the filing of the Amended Complaint in Hunter Publishing (filed September 9, 1991, adding forty-four plaintiffs) and of the filing of the first two Amended Complaints in Southern Inns *643 (filed November 16, 1990, adding eleven new plaintiffs, and January 7, 1991, adding seven plaintiffs), provided that:
An amendment changing the party against whom a claim is asserted relates back if ... within the period provided by law for commencing the action against the party to be brought in by amendment that party (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party the action would have been brought against him.
Fed.R.Civ.P., Rule 15(c) (1988).
On December 19, 1991, the Plaintiffs filed amended pleadings in five of the pending actions to add additional plaintiffs (Fillmore/Greene's, adding nine plaintiffs, Clovine/Standefer, adding twenty-nine plaintiffs, West Palm/Coleman, adding three plaintiffs, Hunter Publishing, adding one plaintiff, and Southern Inns, adding two plaintiffs). These are governed by Rule 15(c) as amended.[16]
However, the Plaintiffs may not add new plaintiffs to any action after June 19, 1991, the date laid down in ง 27A. Relation back must be permitted by the statute of limitations. "Plaintiffs who joined this action by Amendments [dated after June 19, 1991] are not entitled to ... reinstatement under Section 27A. The plain language of the statute permits ... only ... claims commenced prior to June 20, 1991 and dismissed pursuant to Lampf and Beam. [T]he Court disagrees with plaintiffs' argument that the claims of the post-Lampf plaintiffs relate back to the date of the filing of the original Complaint in 1989." Adler, 790 F.Supp. at 1238. Therefore, only the plaintiffs added prior to June 20, 1991, namely, the First and Second Amended Complaints in Southern Inns, may be permitted, and then only if these plaintiffs satisfy the two prongs of Rule 15(c): Notice to the defendants sufficient to prevent prejudice to their defense, and some form of mistake concerning the identity of the proper party.
In Morin II, 778 F.Supp. at 733-35, additional plaintiffs (added through a consolidation of actions) were barred for two reasons. The first was that cited above, namely, that to consolidate untimely actions with timely ones "totally defies the reasoning and import of Lampf." Id. at 734. The second was that the amended complaint did not satisfy the notice prong since the original complaint "contained no like intimation of a greater universe of possible plaintiffs." Id. This Court distinguished Nielsen v. Professional Financial Management, Ltd., 682 F.Supp. 429 (D.Minn.1987) (following Stoppelman v. Owens, 580 F.Supp. 944 (D.C.Cir.1983)), *644 which had permitted additional limited partners otherwise time-barred to be added as plaintiffs in a similar action, based on identity of interest and the fact that the original timely complaint in Nielsen had stated that "plaintiffs are one [sic] of several hundred Energy Brain investors nationwide and one [sic] of several investors in this district." Nielsen, 682 F.Supp. at 435, quoted in Morin II, 778 F.Supp. at 735. In Stoppelman, the court held that the untimely claims of other limited partners could be permitted because the original action put the defendants on notice. See 580 F.Supp. at 946.
The notice contemplated by Rule 15(c) is related to the idea of mistake. It must be clear to the Court that the late action is not a deliberate device to circumvent the statute of limitations. As this Court stated in Morin II, "[s]ubsection (2) makes clear that Rule 15(c) does not exist merely to keep the door open for any tardy plaintiff of whom a defendant may be aware. Rather, Rule 15(c) stands as a device of adding a party who `but for a mistake concerning the identity of the proper party' would have been named originally." 778 F.Supp. at 735; accord, Adler, 790 F.Supp. at 1239 (eliminating additional plaintiffs whose claims were added after deadline of June 19, 1991 in ง 27A). But Morin concerned consolidated actions which were not only not governed by Rule 15(c) but also clearly failed the notice prong. Because defendants could easily believe that they were not named in the original Morin action as a deliberate tactical matter, they would not be on notice that they would be named in the future. The distinction is between the plaintiffs' strategy or lack of due diligence and their honest error.
"In view of the history of the application of Rule 15(c), the phrase `a mistake concerning the identity of the proper party' should clearly not be read to limit its usefulness to cases of misnomer." 3 Moore's Federal Practice ถ 15-15[4.-2] at 15-167, n. 19 (1992). "The `mistake' condition does not isolate a specific type or form of error in identifying parties, but rather is concerned fundamentally with the new party's awareness that failure to join it was error rather than a deliberate strategy." Advanced Power Sys., Inc. v. Hi-Tech Sys., Inc., 801 F.Supp. 1450 (E.D.Pa.1992). Here the Defendants were on notice of the lawsuit from the time of the original complaint. "The addition of the other Plaintiffs did not bring any new claims into the action. The purpose behind the statute of limitations, namely notice, is not defeated in this action by permitting the amended complaint to relate back." Stoppelman, 580 F.Supp. at 947. As long as the original complaint gives the defendant adequate notice, an amendment relating back is proper even if it exposes defendants to greater damages. Wright, Miller & Kane, supra ง 1501 at 162. In the matter at hand, unlike the plaintiffs in Morin, the additional Plaintiffs in the first two amended complaints come directly within the holding of Stoppelman, 580 F.Supp. at 947.
Therefore, the งง 10(b) and 12(2) claims of the Plaintiffs added in the Amended Complaint in Fillmore/Greene's, the Amended Complaint in Clovine/Standefer, the Amended Complaint in West Palm/Coleman, the First and Second Amended Complaints in Hunter Publishing, and the Third Amended Complaint in Southern Inns are dismissed and the Moving Defendants' motion for summary judgment against these Plaintiffs' claims is granted. However, the งง 10(b) and 12(2) claims of the Plaintiffs added in the First and Second Amended Complaints in Southern Inns do relate back to the original Complaint and survive this aspect of the Global Motion I.
B. Plaintiffs' Claims Do Not Relate Back To Include New Defendants
The logic in Adler extends to defendants as well, since if the date of ง 27A is an absolute bar, it should bar both plaintiffs and defendants. Although Adler concerned only plaintiffs, there seems no reason not to follow it where the amendment adding defendants was filed December 19, 1991, an even six months after the effective cutoff date. However, the additional defendants are barred by more than an extension of the recent decision in Adler.
Since Rule 15(c) applies by its terms to defendants, the relation back analysis is *645 the same. The new Defendants in Southern Inns have been added by the Third Amended Complaint filed December 19, 1991, over a year after the original Complaint was filed (in October 1990).[17] These Defendants have been added more than three years after the alleged fraudulent purchases by some of the Plaintiffs, and more than one year after all of the Plaintiffs were put on "inquiry notice" of the alleged fraud. "Where a plaintiff seeks to add a new defendant in an existing action, the date of the filing of the motion to amend constitutes the date the action was commenced for statute of limitations purposes." Northwestern Nat. Ins. Inc. v. Alberts, 769 F.Supp. 498, 510 (S.D.N.Y.1991) (citing Schiavone, 477 U.S. at 25-32, 106 S.Ct. at 2382-85). But Schiavone allowed a claim otherwise barred by the statute of limitations to name a defendant only if that defendant had notice: "Timely filing of a complaint, and notice within limitations period to the party named in the complaint, permit imputations of notice to a subsequently named and sufficiently related party.... The linchpin is notice, and notice within the applicable limitations period." Id. at 29, 31, 106 S.Ct. at 2384, 2385.
The Plaintiffs allege that the new Defendants are "the individuals who own and direct and control the activities of the defendant entities, including the general partners," and that "the identity of interests between the original and the newly added defendants is complete." Pls.' Mem. in Opp. at 116. The sole specific example of the new Defendants' identity of interests with the prior Defendants is the fact that the newly added Defendants are represented by the same counsel. Id. The Plaintiffs do not state whether the new defendants were always represented by the same counsel, or whether they acquired the services of the same counsel after the original Complaint was served.
The Complaint itself is more specific. It alleges that Selig Zises was the Chairman of the Board of Directors and CEO of Integrated Resources; that his brother Jay Zises was Vice Chairman of the Board of Directors; that they and their immediate family owned 12% of the outstanding stock of Integrated Resources; and that "through such ownership exercised effective control over Integrated Resources and all of its subsidiaries." Compl. ถ 7. The other eight personal Defendants are all alleged to have been officers and directors of Integrated Resources, EVP, and Sevzar at the time of the allegedly fraudulent events, and to have overseen the purchases and operations of the partnership. The two remaining Defendants are Zar Corporation and EVP Sixth Corporation, both corporate general partners. The Complaint gives the full corporate title and positions of each of the named Defendants.
The Supreme Court noted in Schiavone, 477 U.S. at 29, 106 S.Ct. at 2384, that for newly added defendants:
Relation back is dependent upon four factors, all of which must be satisfied: (1) the basic claim must have arisen out of the conduct set forth in the original pleading; (2) the party to be brought in must have received such notice that it will not be prejudiced in maintaining its defense; (3) that party must or should have known that, but for a mistake concerning identity, the action would have been brought against it; and (4) the second and third requirements must have been fulfilled within the prescribed limitations period.
Id. at 31, 106 S.Ct. at 2385. The last requirement has been modified by the amendment to Rule 15(c). See supra note 16. The Court in Schiavone declined to decide whether or not to accept the "identity of interest" exception to this rule:
Some Courts of Appeals have recognized an "identity-of-interest" exception under which an amendment that substitutes a party in a complaint after the limitations period has expired will related back to the date of the filing or the original complaint.... Even if we were to adopt the identity-of-interest exception, and even if Fortune properly could be named as a defendant, we would be compelled to reject *646 petitioners' contention that the facts of this case fall within the exception.
Schiavone, 477 U.S. at 28, 29, 106 S.Ct. at 2383, 2384. Since the specific ground for the Plaintiffs' claim that the allegations against the new Defendants relate back to the original Complaint is the new Defendants' alleged identity of interest with the existing Defendants, this ground will be considered below.
The classic definition of the identity of interest exception is in Hernandez Jimenez v. Calero Toledo, 604 F.2d 99, 102-03 (1st Cir.1979):
The identity of interests concept, a judicial gloss on Rule 15(c)(1), provides that the institution of the action serves as constructive notice of the action to the parties added after the limitations period expired, when the original and added parties are so closely related in business of other activities that it is fair to presume the added parties learned of the institution of the actions shortly after it was commenced.... The identity of interest principle is often applied where the original and added parties are a parent corporation and its wholly owned subsidiary, two related corporations whose officers, directors, or shareholders are substantially identical and who have similar names or share office space, past and present forms of the same enterprise, or co-executors of an estate.
Id. at 102-03. In the Second Circuit, "[c]ourts have generally held that Rule 15(c) is satisfied where the original party and added party have a close identity of interests.... [I]dentity of interests has also served as touchstone for determining whether the new party knew or should have known that `but for' a mistake in identity, he would have been sued in the first instance." Sounds Express Int'l Ltd. v. American Themes and Tapes, Inc., 101 F.R.D. 694, 697 (S.D.N.Y.1984). The Second Circuit, following Schiavone, has analyzed the exception as if it did apply. See In re Allbrand Appliance & Television Co., 875 F.2d 1021, 1025 ("We assume for purposes of this discussion that an identity of interest exception exists.").
Analyzed under in Allbrand, the Plaintiffs' Second Amended Complaint here relates back neither to the corporate general partners nor to the individual defendants. "Courts accepting that rationale [identity of interest] have required substantial structural and corporate identity, such as shared organizers, officers, directors, and offices." Id. at 1025. The Plaintiffs have alleged that Zar Corporation is a wholly-owned subsidiary of Integrated. See Southern Inns 2d Am. Compl. ถ 5. Complete ownership by itself does not suffice to relate the claims back to Zar Corporation. In Allbrand, in which a wholly-owned subsidiary was served in place of its corporate parent in a case almost factually identical to Schiavone,[18] "the parent-subsidiary relationship standing alone is simply not enough โ as Professors Wright and Miller perhaps too optimistically state ... โ to establish the identity of interest exception to the relation back rule. Greater identity of interest must be shown than this record reveals." Allbrand, 875 F.2d at 1025. The Seventh Circuit has distinguished Allbrand from a mere "misnomer" case, when it allowed a complaint that incorrectly named only the trademark but was correctly served on the corporation's legal agent for service of process to relate back:
[O]ur case does not differ from a misnomer.... Allbrand Appliance is based on the principle that the corporate form must be respected. Corporations are not agents of their stockholders (their "parents"). Nothing in our opinion calls this principle into question. The notice in this case came to C.T. Corporation, which unlike a subsidiary was unquestionably Seal Air's agent for the purpose of receiving process. The decisions do not conflict.
Peterson v. Sealed Air Corp., 902 F.2d 1232, 1237-38 (7th Cir.1990). Ownership alone is not enough. Service upon a subsidiary, without more, is not service upon the parent corporation.
*647 For the other new corporate Defendant, the Plaintiffs have only alleged that EVP Sixth Corporation is wholly owned and controlled by five of the individual defendants. Since the Plaintiffs have failed to show that the complaint relates back to the individual Defendants, this claim too must be denied.
The notice requirement for the individual Defendants is crucial. "The conclusion of a growing number of courts and commentators is that sufficient notice may be deemed to have occurred where a party who has some reason to expect his potential involvement as a defendant hears of the commencement of litigation through some informal means." Kinnally v. Bell of Pennsylvania, 748 F.Supp. 1136, 1141 (E.D.Pa.1990). The notice has to be such that the new defendant must be able to anticipate and therefore prepare for his role as a defendant. Plaintiffs rely on a case from the Federal Circuit, Fromson v. Citiplate, Inc., 886 F.2d 1300 (Fed.Cir.1989), for the proposition that they may hold individual officers liable, since the court in Fromson found "corporate officers and directors personally liable for `participating in, inducing, and approving acts of patent infringement' by a corporation." Id. at 1304. There, however, the Court permitted the complaint to relate back to two defendants who were both founders, sole owners, and sole directors of the defendant corporation in a situation where the plaintiff had alleged both adequate notice and mistake. On the facts in that case, the two defendants "could not have been surprised when Fromson moved before trial to add them as defendants," and, since they themselves had resisted that motion "on the basis of false assurances that Citiplate was solvent," they "themselves created the `mistake' respecting the identity of the proper party rightfully to be sued and capable of responding in damages." Id. at 1304.
The case relied on by Fromson, in turn, was also based on "general principles relating to piercing the corporate veil." In Orthokinetics, Inc. v. Safety Travel Chairs, Inc., 806 F.2d 1565 (Fed.Cir.1986), the court imposed liability on a defendant who "was at all material times the President and sole stockholder" of one defendant corporation and, together with two other principals, held all of the directorships and owned all of the stock in the other defendant corporation. Id. at 1579, cited in Fromson, 886 F.2d at 1304. Other situations in which the plaintiffs were allowed to relate their claims back contain similar allegations that the named defendants were the only real parties in interest. An untimely amended complaint related back where it named as defendant the president who owned 97% of the defendant corporation, see Itel Capital Corp. v. Cups Coal Co., 707 F.2d 1253, 1258 (11th Cir.1983), or where it named two former employees, founders and principals of a new company, in an action which alleged the new company had stolen trade secrets from its principals' former employer, see Advanced Power Sys., 801 F.Supp. at 1450. The 12% ownership alleged by Plaintiffs here usually is not considered a controlling share, and none of the cases cited by the Plaintiffs make corporate officers or directors personally responsible based solely on holding their office.
For new defendants as well as new plaintiffs, the notice prong of Rule 15(c) is intertwined with the element of mistake. Unless the plaintiffs can allege a specific reason why they failed to identify these corporate officers in the original complaint, an officer will not expect to be sued personally for the sins of the corporation and so will have no true notice of the lawsuit within the meaning of Rule 15(c). 3 Moore's Federal Practice ถ 15.15[4.-2], at 15-120 & n. 22 (1992). Therefore, even in situations where the courts have found an "identity of interest" between the corporate officer and the corporation, or between two corporations, the new defendant suffers prejudice unless the plaintiff alleges a reason for the mistake.
In cases where the plaintiff has attempted to relate an amended pleading back to name corporate officers solely by virtue of their position, the relation back has been denied. In Hashim v. First National Bank of Chicago, No. 86 C 2696, 1992 U.S.Dist. LEXIS 5686 (N.D.Ill. Apr. 17, 1992), the district court denied the plaintiffs' motion for leave to amend the complaint to include a bank officer and an advisor of a bank-sponsored *648 commercial real estate investment, finding that:
[t]he record reveals that Hashim dealt with both Anderson [President and Managing Director of defendant corporation] and Herbert [member of defendant bank's Trust Committee having a "supervisory capacity" with respect to certain trust assets] while at First Chicago. He knew who they were and therefore could have sued them at the time [of] the original complaint.
1992 U.S.Dist. LEXIS 5686, at *29. Mistake must be alleged even when one corporation is substituted for the other, if they are separate legal entities and plaintiff at the time of the original complaint knew of the existence and role of the second.
Plaintiff was notified in March 1975, prior both to the filing of her first two complaints and the expiration of the limitations statute, that TRW manufactured the steering gear mechanism; yet, she named only International Harvester and its insurer as defendants in her complaints. Moreover, plaintiff has never alleged that she made a mistake or has offered an explanation for her three-year delay in naming TRW as a defendant.
Norton v. International Harvester Co., 627 F.2d 18, 22 (7th Cir.1980). A firm or an individual may receive notice that the lawsuit exists (Rule 15(c)(1)) without recognizing itself as the proper defendant and so without knowledge that it would be sued (Rule (15)(c)(2)), just as a firm or individual may be the proper party without receiving any notice at all. The former is as thoroughly barred by Rule 15(c) as the latter. Here the Plaintiffs have alleged no reason or mistake which could explain why they failed to name the new defendants in the first place.
To support their claim of "identity of interest" between the new and the prior Defendants, the Plaintiffs allege that the new Defendants share counsel with prior Defendants. Shared counsel, without more, is not determinative, and plaintiffs have not alleged that the new Defendants were represented by the same counsel at the time the original complaint was filed. See Wood v. Worachek, 618 F.2d 1225, 1230 (7th Cir.1980); Miles v. Department of Army, 881 F.2d 777 (9th Cir. 1989). Even if they had, this by itself would not be enough in the Second Circuit. In Allbrand, where both defendants shared counsel throughout the relevant time period, "appellant makes much of the shared legal counsel and parses Heveran's role as Caloric's counsel into something more than it really was. Consequently, we conclude the identity of interest exception may not be used to impute to Raytheon the timely service of pleadings made on its subsidiary Caloric." Allbrand, 875 F.2d at 1026.
Alleging that the new Defendants were all on notice merely because they were somehow involved in the limited partnerships does not rise to the level of notice. The Plaintiffs did nothing to indicate to the separate and distinct new groups of defendants that they intended to include them. Gleason v. McBride, 869 F.2d 688, 694 (2nd Cir.1989). Adding control persons and other partners to the existing Defendants is not a mistake of the kind Rule 15(c) contemplates. Curry v. Johns-Manville Corp., 93 F.R.D. 623, 626-27 (E.D.Pa.1982).
C. The Complaints Barred by "Ceres"
Four of the complaints are clearly barred by Ceres: Research Triangle, 600 Grant Street/Reagan, Clovine/Standefer, and Clovine/Ellingson. All four allege an act of fraud based on omissions and representations and transaction loss from sales which could at the very latest have taken place in 1986. All four lawsuits were filed in 1991, more than four years thereafter. Applying Ceres' limitation against ง 10(b) actions brought more than three years from the date of the fraud, and ง 13 statutory ban against ง 12(2) actions brought more than three years from the date of the fraud, all plaintiffs' actions in these suits are time-barred.
A fifth claim is apparently barred by Ceres, although it is difficult to tell from the facts pleaded by the Plaintiff whether the claim is effectively barred or not. In Fillmore/Enviro (offered by a private placement memorandum dated January 11, 1988) the Plaintiffs allege they purchased their interests from February 11, 1988 through "mid-March 1988." The Moving Defendants, on *649 the other hand, maintain that all interests were purchased on February 16, 1988. However, there is only one Plaintiff in Fillmore/Enviro (the Enviro Corporation) and that Plaintiff has not offered any evidence to refute the February 16, 1988 date of purchase.[19]
The Complaint in Fillmore/Enviro was filed in the Southern District of New York on March 7, 1991, and so the statute of limitations is that laid down by Ceres. All claims arising out of interests purchased by March 7, 1988 in this case are time-barred. The date of purchase is the date the subscription agreements evidencing an interest in the partnerships were executed for both ง 10(b) and ง 12(2) claims. It is not the date that the Plaintiffs received notification that they were accepted into the Partnership. Marlow v. Gold, 1991 Fed.Sec.L.Rep. (CCH) ถ 96,112, at p. 90,633, 1991 WL 107268 (S.D.N.Y. June 13, 1991); Maxwell v. LaBrunerie, 731 F.Supp. 358, 362-63 (W.D.Mo.1989); Amoroso v. Southwest Drilling Multi-Rig Partnership No. 1, 646 F.Supp. 141 (N.D.Cal.1986). The three-year limitation is an absolute. Farley v. Baird, Patrick & Co., 750 F.Supp. 1209, 1214 (S.D.N.Y.1990).
D. Pre-Ceres Actions: Lenox Towers and Southern Inns
Two of the cases filed in New York are not governed by Ceres: Lenox Towers and Southern Inns. Those actions were commenced just prior to the Second Circuit's decision in Ceres. Because this Court has held above that ง 27A of the 1934 Act is constitutionally valid, the statute of limitations set forth in Ceres does not apply retroactively to the pending ง 10(b) claims in these two cases. Under pre-Ceres law, the applicable statute of limitations would be either the forum state's most analogous state law claim statute of limitations or the most analogous state law claim under New York's "borrowing statute," whichever is shorter. See Armstrong, 699 F.2d at 87; Arneil, 550 F.2d at 779-80; Morin III, 799 F.Supp. at 345. In the case of plaintiffs who were residents of New York State at the time of the injury, N.Y.Civ.Prac.L.R. ง 213(8) (McKinney 1990 Supp.) applies: The action must be commenced within six years of the commission of the alleged fraud or two years from the time the alleged wrongdoing was, or with reasonable diligence should have been, discovered. For plaintiffs who were nonresidents at the time, New York's "borrowing statute," N.Y.Civ.Prac.L. & R. ง 202 (McKinney 1990 Supp.), applies.
The law of New York applies to the Plaintiffs in Lenox Towers. However, since the relevant Plaintiffs in Southern Inns live in Alabama, Connecticut, the District of Columbia, Florida, Illinois, Iowa, Maryland, Missouri, Mississippi, North Carolina, New Jersey, Pennsylvania, and Tennessee, it is necessary to identify the statute of limitations which would be applied by district courts sitting in these states in order to determine the timeliness of the various ง 10(b) claims. In both cases, the timeliness of all of the ง 12(2) claims is governed by the one year/three year limitations set forth in the 1933 Act.
1. Lenox Towers
The Lenox Towers Associates Limited Partnership, which was syndicated on February 15, 1989, was set up to acquire and manage two office buildings in Atlanta, Georgia. The Plaintiffs purchased their units in the Partnership between June 1988 and January 1988, and they filed their original Complaint on November 2, 1990.
a. Section 10(b) Claims Survive
Under New York's six-year statute of limitations, the Plaintiffs' ง 10(b) claims in Lenox Towers are timely and survive this motion to dismiss.
b. Section 12(2) Claims Survive
Although the Plaintiffs' ง 12(2) claims fall within the three-year outer limit of the 1933 Act's statute of limitations, it remains to be determined whether these claims are time-barred under the "within one year of discovery" *650 limitation. 15 U.S.C. ง 77m (1991). The question, then, is this: When did the Plaintiffs have actual knowledge or when were they placed on inquiry notice regarding the probability of the fraud they now allege in their Complaint?
The thrust of the securities fraud claims in the Lenox Towers action is that the subject private placement offering memorandum misrepresented and failed to disclose the possibility that the limited partnership units being offered would not completely sell out, and that the Partnership might borrow the resulting shortfall from outside lenders. Specifically, the Complaint alleges that:
The Memorandum and investment summary ... were drafted to lead plaintiffs and the class to believe that $15,345,000 of capital contributions [i.e. the full amount of the offering] would be obtained from the syndication. Thus, for example, the investment summary contained an illustration of economic benefits of investing in one unit of the Partnership as though all of the units would be sold. The Memorandum, in the very first page, stated the offering was for $15,345,000.
Lenox Towers Compl. ถ 19.
The Complaint continues with a recitation of other sections in the PPM, all of which the Complaint alleges led the Plaintiffs mistakenly to believe that the offering would completely sell out. These sections include the "pro forma allocation of capital contribution," the "illustration of the hypothetical economic benefits" to an investor, and the "illustration of the economic consequences of a hypothetical sale of the properties." Id.
However, the Lenox Towers PPM unambiguously did disclose, in capitalized type on page ii, that the offering might be undersubscribed and specifically indicated that the Partnership retained the option of borrowing the shortfall:
THE PARTNERSHIP MAY IN THE FUTURE BE REQUIRED TO BORROW ADDITIONAL AMOUNTS SUFFICIENT TO ENABLE THE PARTNERSHIP TO PAY CERTAIN OF ITS OBLIGATIONS THAT HAVE OR WILL BECOME DUE BEFORE THE PARTNERSHIP RECEIVES THE PROCEEDS OF THIS OFFERING. TO THE EXTENT THAT THE UNITS OFFERED HEREBY REMAIN UNSOLD, A PORTION OF SUCH BORROWINGS WILL REMAIN OUTSTANDING.
Lenox Towers PPM at ii.
In addressing this same issue of disclosure in the Lenox Towers PPM, Judge Stanton found, in Martin v. EVP Second Corp., No. 90 Civ. 7074 (LLS), 1991 WL 131176, *1, 1991 U.S.Dist. LEXIS 9234, *3 (S.D.N.Y. July 9, 1991), that the Memorandum "warned three times that if investor interests remain unsold, the partnership might have to rely on borrowed capital." However, despite these warnings, the Court went on to conclude that the Defendants failed to disclose "the allegedly material fact that in the recent past, similar investments syndicated by the same entities had failed to sell out." Id. Therefore, if the Plaintiffs' claim that the Defendants had failed to inform the Plaintiffs that previous limited partnership offerings had failed to sell out proved to be true, the Plaintiffs had pleaded a material omission sufficient to withstand a motion to dismiss.
In Martin, Judge Stanton considered the adequacy of the offering materials in question within the context of a motion brought by the Integrated Defendants to dismiss the Plaintiffs' Complaint pursuant to Rules 9(b) and 12(b)(6), Fed.R.Civ.P. The Integrated Defendants did not raise the question of the timeliness of the งง 10(b) and 12(2) claims, nor did Judge Stanton explicitly address that issue. However, his holding regarding the omission of an allegedly material fact from the offering materials is directly relevant to the present issue of whether the Plaintiffs were placed on inquiry notice by those materials of the fraud they now allege in their First Amended Complaint.
The holding in Martin is the law of this particular case, and as such, it controls the disposition of the Global Motion I as it relates to the timeliness of the Complaint filed in Lenox Towers. Therefore, to the extent Martin holds that the offering materials omitted a material fact regarding the unsold units of prior partnerships โ a fact which now serves as the basis of the ง 12(2) claims of *651 the Lenox Towers Plaintiffs, those Plaintiffs were not placed on inquiry notice by the PPM, and their ง 12(2) claims are not time-barred under ง 13 of the 1933 Act.
2. Southern Inns
The Southern Inns Associates Limited Partnership, which was syndicated on June 10, 1988, had acquired and was set up to operate seven Comfort Inns motels located in Charlotte, Raleigh, and Winston-Salem, North Carolina, Greenville, South Carolina, and Richmond, Virginia. The Plaintiffs purchased their units in the Partnership between June 1988 and January 1988, and they filed their action against the Defendants in this case on October 19, 1990.
Like the allegations made in Lenox Towers, the Southern Inns Complaint asserts securities fraud claims that are grounded on a purportedly defective private placement offering memorandum. The defects are alleged to be certain misrepresentations made by the Defendants and the Defendants' failure to disclose the possibility that the limited partnership units being offered would not completely sell out and that, in the event any units remained unsold, the Partnership might borrow from outside lenders to cover the resulting shortfall. See Southern Inns 3d Am.Compl. ถถ 13, 14, 16-18. The Plaintiffs also allege that the pro forma balance sheet and other sections in the PPM were fraudulent because they were based upon the presumed sale of all of the limited partnership units. Id. at ถ 12.
However, like the Lenox Towers PPM, the Southern Inns PPM disclosed that the respective offerings might not sell out and that the Partnership might borrow the shortfall. The PPM expressly stated that:
In the event that not all of the Interests are sold to investors in the Offering, it is anticipated that the General Partner or one of its Affiliates will purchase such Interests for its own account at the same purchase price (less selling commissions) as charged to Investors and that it will hold such Interests as a Limited Partner.... The General Partner or its designee may, in the alternative, lend to the Partnership from time to time an amount equal to the aggregate purchase price (net of selling commissions) of all unsold Interests, including the interest payment on the deferred portion of such purchase price, in exchange for the Partnership's promissory note(s).
Southern Inns PPM at 140.
In light of the warnings in the PPM regarding the possibility that the offering may not sell out and the well-known status of the Defendants as organizers of similar limited-partnership ventures, the reasonable investor[20] would inquire about the success of recent offerings that the Defendants had conducted that were similar to the one the investor was presently considering. This is not a case where the investor would have had to check the brokerage registration of a company, the validity of its corporate articles, or the chain of title to the properties in order to discover the misstatements. It was no secret that Integrated was in the business of syndicating investment vehicles. Large sections of at least several of the partnership PPMs revealed the financial status, including bankruptcies, of Integrated-sponsored partnerships.
The rule set forth here is consistent with the Second Circuit law on inquiry notice, which requires the imputation of constructive knowledge of the probability of the alleged fraud before the statute of limitations is triggered but does not require actual knowledge of the fraud and is hostile to the notion that the plaintiff be allowed "leisurely discovery of the full details of the alleged scheme." Klein, 421 F.2d at 343. However, it is just this sort of "leisurely discovery" that is implicitly tolerated by the finding in Martin that the failure to disclose unsold units in other partnerships constituted an omission of a material fact. On this view, the reasonable investor would be relieved from any duty to make even the most obvious of inquiries regarding the track record of the parties with whom he is dealing. It is such inquires that the reasonable investor would make and is in a position to make when discussing his investment *652 in the partnership with the syndicators and general partners at the time of the offering.
The contradiction between the disclosure of the possibility of an undersubscribed offering and the alleged misrepresentations in the offering materials that all of the units would be sold, could have been discerned readily by a reasonable investor reading the PPM prior to investing. This apparent contradiction on the face of the PPM placed the Plaintiffs on inquiry notice of the probability of the fraud alleged in their Complaint from the date they purchased investment units in the Partnership.
The publicity concerning Integrated's financial collapse commencing in June 1989 also put the Plaintiffs on inquiry notice of the alleged misrepresentations respecting Integrated's financial wherewithal. See Southern Inns Compl. ถถ 15, 17, 18. Indeed, the June 1989 publicity put the Plaintiffs on notice of not only their fraud claims relating to Integrated's financial condition but also of their claim based on the failure to sell all of the units. The alleged misrepresentations and omissions regarding Integrated's financial stability are central to the fraud claims concerning the incomplete sale as they are set forth in the Plaintiffs' Complaint.
Therefore, if, as the Plaintiffs allege, the pro forma and other provisions regarding the Southern Inns investment were misleading insofar as they assumed the sale of all of the limited partnership units, the alleged fraud was evident from the face of the PPM. In light of the explicit disclosures and warnings in the offering materials and the publicity surrounding Integrated's financial demise, the Southern Inns Plaintiffs were placed on inquiry notice of the fraud they now allege over twelve months prior to the time their Complaint was filed. It follows that the Southern Inns Plaintiffs were placed on inquiry notice at the time they purchased investment units in the Partnership. Furthermore, the information available to them at the time of purchase was such that it placed them on notice of the probability and not merely the possibility of virtually every aspect of the งง 10(b) and 12(2) securities fraud claims they now allege in their Complaint.
With this background of the Partnership and the determination of when inquiry notice was triggered, the status of each Plaintiff to the action must be evaluated to determine whether his or her claim was timely when this action was filed. This exercise reveals that the ง 10(b) claims of most of the Southern Inns Plaintiffs are time-barred under pre-Ceres law involving the application of New York's statutes of limitations, including the New York "borrowing statute," N.Y.Civ. Prac.L. & R. ง 202 (McKinney 1990). See generally, Ahmed, 781 F.Supp. 1017; Ceres, 918 F.2d at 352-53.
The ง 10(b) claims of most of these non-New York resident Plaintiffs are barred under pre-Ceres law because the ง 10(b) limitation periods applied by the district courts embracing their respective residences had already expired at the time the action in Southern Inns was commenced; hence, pursuant to the New York "borrowing statute", they may not avail themselves of a longer time period established by New York law. The exception is the Plaintiffs who were residents of Florida and Illinois at the time they purchased an investment interest in Southern Inns. For the reasons set forth below, their claims survive Global Motion I.
a. Section 10(b) Claims that are Time-Barred Under Statutes of Limitations Triggered by the Purchase of a Security
The ง 10(b) claims of two Southern Inns Plaintiffs are time-barred by the relevant statutes of limitations which are triggered by the purchase of a security, and which a district court sitting in respective circuits would be required to apply in this case.
1. Fifth Circuit: Alabama
A district court sitting in the Fifth Circuit and deciding the timeliness of a ง 10(b) claim governed by pre-Ceres law would apply that state's blue sky law and hold that a plaintiff had two years from the contract date of the purchase of the security to bring an action for ง 10(b) violations. See White v. Sanders, 650 F.2d 627, 629 (5th Cir.1981) (applying Alabama blue sky law, *653 Ala.Code ง 8-6-19(e)). Ronald Stein, a resident of Alabama, purchased his investment unit in the Partnership on August 8, 1988 but did not join in bringing this action until October 19, 1990. Thus, Stein's ง 10(b) claim is time-barred under the applicable Alabama law.
2. District of Columbia Circuit
Applying the applicable pre-Ceres law governing ง 10(b) actions brought in the District of Columbia, a district court sitting there would apply D.C.'s blue sky law and hold that a plaintiff had two years from the contract date of the purchase of the security to bring this action. See Forrestal Village, Inc. v. Graham, 551 F.2d 411, 413 (D.C.Cir. 1977) (applying D.C. blue sky law, D.C.Code ง 2-2613(e)). DeWest Hooker, a resident of Washington, D.C., purchased his investment unit in Southern Inns on July 29, 1988, more than two years before the Complaint in this action was filed. Thus, Hooker's ง 10(b) claim is time-barred under the applicable Washington, D.C. law.
b. Claims that are Time-Barred Under Statutes of Limitations Triggered by Inquiry Notice
The timeliness of the remaining ง 10(b) claims brought by Southern Inns Plaintiffs are governed by the applicable state statute of limitations which are triggered by a plaintiff's being placed on inquiry notice of the fraud he subsequently alleges in his complaint against a defendant.
1. Second Circuit: Connecticut
Barring retroactive application of Ceres, a district court sitting in the Second Circuit on or before June 19, 1991 would have applied the forum state's most analogous statute of limitations. The statute of limitations for ง 10(b) claims accruing in Connecticut prior to Ceres was the state's blue sky limitations period of two years. See Welch I, 923 F.2d at 995 (applying Connecticut blue sky law, Conn.Pub.Act 77-482 งง 21, 30(c)); Luca v. Hanson Indus., Fed.Sec. L.Rep. (CCH) ถ 95,672, 1990 WL 163969 (D.Conn.1990); Conn.Gen.Stat. ง 36-498(f) (1990). This period commences to run when the plaintiff has actual knowledge of the alleged fraud or knowledge of facts which in the exercise of reasonable diligence would have led to actual knowledge.
Peter Leibold, a resident of Connecticut, purchased his investment unit in the Partnership on August 16, 1988 and was placed on inquiry notice as of that date of the ง 10(b) allegations on which he is basing this present action. The original Complaint in this action was filed on October 19, 1990. Thus, Leibold's ง 10(b) claim is time-barred under Connecticut law.
2. Third Circuit
On June 19, 1991, a district court sitting in the Third Circuit would have applied the statute of limitations established set forth in In re Data Access Sys. Sec. Litig., 843 F.2d 1537 (3d Cir.) (en banc), cert. denied sub nom. Vitiello v. I. Kahlowsky & Co., 488 U.S. 849, 109 S.Ct. 131, 102 L.Ed.2d 103 (1988). See Ceres, 918 F.2d at 353 (applying Data Access rule to ง 10(b) claim of New Jersey resident). In that case, the Third Circuit adopted a uniform statute of limitations for ง 10(b) claims of "one year after the plaintiff discovers the facts constituting the violations, and in no event more than three years after such a violation." Id. at 1550. Although not relevant here, the Third Circuit has held that its holding is to be applied retroactively. See Hill v. Equitable Trust Co., 851 F.2d 691, 698 (3d Cir.1988), cert. denied sub nom. Data Controls N., Inc. v. Equitable Bank, Nat'l Assn., 488 U.S. 1008, 109 S.Ct. 791, 102 L.Ed.2d 782 (1989). This period is shorter than New York's two-year/six-year period, and is therefore applicable to the claims of New Jersey and Pennsylvania plaintiffs.
(a) New Jersey
The following Plaintiffs are residents of New Jersey who purchased their units in the Partnership (and were placed on inquiry notice) more than one year prior to the filing of the Complaint and whose ง 10(b) claims are, therefore, time-barred: Phillip and Laraine Katzev (January 26, 1989); Vo-Toys, Inc. (August 22, 1988); and John Lucania (July 13, 1988).
*654 (b) Pennsylvania
Barry Kraymark, a resident of Pennsylvania, purchased his investment unit in Southern Inns on October 13, 1988, and his ง 10(b) claims are time-barred under Pennsylvania law.
3. Fourth Circuit
A district court sitting in the Fourth Circuit faced with the prospect of borrowing a state statute of limitations for federal purposes in a pre-Ceres case would apply the statute that "most clearly addresses the same or similar policy considerations as are addressed by the federal right being asserted." Howard v. Haddad, 962 F.2d 328, 330 & n. 3 (4th Cir.1992); accord Gurley v. Documation, Inc., 674 F.2d 253, 258 (4th Cir. 1982); O'Hara v. Kovens, 625 F.2d 15, 18 (4th Cir.1980), cert. denied, 449 U.S. 1124, 101 S.Ct. 939, 67 L.Ed.2d 109 (1981).
(a) Maryland
Under the law of Maryland, a plaintiff has one year from discovery of the alleged fraud to bring an action to recover on a ง 10(b) claim. See O'Hara, 625 F.2d at 18 (applying Maryland blue sky law, Md.Corp. & Ass'ns Code Ann. ง 11-703(f)). Plaintiffs J. Lee Bailey and Phyllis Bailey, residents of Maryland, purchased their investment interest in Southern Inns on July 28, 1988. Thus, their ง 10(b) claims are time-barred under Maryland law.
(b) North Carolina
Under North Carolina law, the statute of limitations on actions for securities fraud is two years from the date of discovery. See Umstead v. Durham Hosiery Mills, Inc., 578 F.Supp. 342, 347 (M.D.N.C.1984) (applying N.C.Gen.Stat. ง 78A-56(f)). The following Plaintiffs are residents of North Carolina and purchased their interests in the Southern Inns partnership more than two years prior to the commencement of this action, and their ง 10(b) claims are, therefore, time-barred: Alotis Family Trust (July 21, 1988); Katherine Palmer (September 26, 1988); Jesse Fox (July 12, 1988); James Thompson (July 11, 1988); and Wesley Huggins (June 29, 1988).
4. Sixth Circuit: Tennessee
Federal district courts sitting in Tennessee are split as to which statute of limitations is to be borrowed for pre-Ceres ง 10(b) actions. Several courts have applied the state's three-year common-law fraud limitations period, see, e.g., Nichols v. Merrill Lynch, Pierce, Fenner & Smith, 706 F.Supp. 1309, 1320-21 (M.D.Tenn.1989); Media General, Inc. v. Tanner, 625 F.Supp. 237 (W.D.Tenn.1985), while the majority of district courts have borrowed the state's analogous one-year/two-year blue sky limitations period set forth in Tenn.Code Ann. ง 48-2-122(h), see, e.g., Ockerman v. May Zima & Co., 785 F.Supp. 695, 706 (M.D.Tenn.1992) ("Ockerman II"); Ockerman v. May Zima & Co., 694 F.Supp. 414, 416 (M.D.Tenn.1988); Haney v. Dean Witter Renyolds, Inc., No. CIV-1-85-531, 1986 WL 21340 (E.D.Tenn. Aug. 20, 1986).
This Court follows Ockerman II in holding that the appropriate statute of limitations to be applied in this case is Tennessee's blue sky limitations period "because it is the most analogous state statute of limitations." 785 F.Supp. at 706; see Holmberg v. Armbrecht, 327 U.S. 392, 395, 66 S.Ct. 582, 584, 90 L.Ed. 743 (1946); Herm v. Stafford, 663 F.2d 669, 682 (6th Cir.1981). Therefore, an action to recover on a ง 10(b) claim is time-barred if it is brought one year after the violation was or should have been discovered.
Plaintiffs Robert Evans and Harriet Smith, residents of Tennessee, purchased their respective investment units in the Southern Inns partnership on July 25, 1988 and September 14, 1988. Thus, their ง 10(b) claims are time-barred by the application of Tenn.Code Ann. ง 48-2-122(h) to those claims.
5. Seventh Circuit: Illinois
Confronted with the matter at hand, a district court sitting in Illinois, the relevant Seventh Circuit state, would apply the statute of limitations applicable to actions for securities violations under that state's blue sky law. See Ill.Rev.Stat. ch. 121ฝ, ถ 137.13(D) (1991); McCool v. Strata Oil Co., 972 F.2d 1452, 1460 (7th Cir.1992). Paragraph *655 137.13(D) prescribes a limitations period which runs for three years from the time when the plaintiff knows or should know that the securities laws have been violated and ends no more than five years after the sale of the securities.
Although the district court would borrow the Illinois state statute of limitations, the accrual of a federal cause is a question of federal law. See McCool, 972 F.2d at 1460; Wilson v. Giesen, 956 F.2d 738, 740 (7th Cir.1992); Cada v. Baxter Healthcare Corp., 920 F.2d 446, 450 (7th Cir.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 2916, 115 L.Ed.2d 1079 (1991). Thus, an Illinois plaintiffs' cause of action accrues "on the date the sale of the instrument is completed," McCool, 972 F.2d at 1460 (quoting Suslick v. Rothchild Sec. Corp., 741 F.2d 1000, 1005 (7th Cir.1984)), unless federal tolling principles apply, see McCool, 972 F.2d at 1461; Suslick, 741 F.2d at 1004.
Plaintiff Bhurji Singh, a resident of Illinois ("Illinois Plaintiff"), purchased on an investment interest in the Southern Inns partnership on September 1, 1988. He brought his ง 10(b) claim against the Southern Inns Defendants in the Second Amended Complaint in that action, which was filed on January 7, 1991. Therefore, his ง 10(b) is timely and Global Motion I as to it is denied.
6. Eighth Circuit
A district court sitting in the Eighth Circuit faced with the prospect of borrowing a state statute of limitations for federal purposes in a pre-Ceres case would apply the statute that "best effectuates the federal policy at issue." Vanderboom v. Sexton, 422 F.2d 1233, 1237 (8th Cir.), cert. denied, 400 U.S. 852, 91 S.Ct. 47, 27 L.Ed.2d 90 (1970).
(a) Iowa
A district court sitting in Iowa deciding a pre-Ceres action for a ง 10(b) claim would apply the two-year statute of limitations period set forth in Iowa's blue sky statute, Iowa Code ง 502.26, rather than the five-year limitations period applicable to common-law fraud actions brought in that state. See In re Alodex Corp. Sec. Litig., 533 F.2d 372, 374 (8th Cir.1976).
Plaintiff Ali Kholeif, a resident of Iowa, purchased an interest in Southern Inns on August 9, 1988. Under the applicable blue sky provision, Kholeif had two years from discovery of the alleged fraud to bring this action. Thus, Kholeif's ง 10(b) claim is time-barred under the applicable Iowa law.
(b) Missouri
Pre-Ceres actions for ง 10(b) violations heard by district courts sitting in Missouri are governed by the two-year statute of limitations set forth in Missouri's blue sky statute, Mo.Rev.Stat. ง 409.411(e). See Harris v. Union Electric Co., 787 F.2d 355, 360 (8th Cir.1986), cert. denied, 479 U.S. 823, 107 S.Ct. 94, 93 L.Ed.2d 45 (1986); Morris v. Stifel, Nicolaus & Co., 600 F.2d 139, 146 (8th Cir.1979). The limitations period is tolled until the alleged fraud is discovered or, upon reasonable inquiry, when it should have been discovered. See Harris, 787 F.2d at 360.
Data Comm, Inc. Salary Reduction Plan and Joseph Aldon, both residents of Missouri, purchased their investment interests in Southern Inns on September 12, 1988 and July 30, 1988, respectively, more than two years before the Complaint was filed. Thus, their ง 10(b) claims are time-barred under the application of Missouri's two-year statute of limitations running from the date they were placed on inquiry notice.
7. Eleventh Circuit: Florida
A district court sitting in Florida, the relevant Eleventh Circuit state, would apply Florida's two-year statute of limitations applicable to actions under Florida Statutes ง 517.301(1)(a)(2) (1991). See Knight v. E.F. Hutton & Co., 750 F.Supp. 1109, 1112 (M.D.Fla.1990); Byrne v. Gulf-stream First Bank & Trust Co., 528 F.Supp. 692, 694 (S.D.Fla.1981) (applying Florida's blue sky law, Fla.Stat. ง 95.11(4)(e)), aff'd without op., 720 F.2d 686 (11th Cir.1983). The running of this statute of limitations is tolled until the alleged fraud is discovered or reasonably should have been discovered in the exercise of reasonable diligence. See Osterneck v. E.T. Barwick Indus., Inc., 825 F.2d 1521, 1532, 1535 (11th Cir.1987), aff'd, 489 U.S. 169, 109 S.Ct. 987, 103 L.Ed.2d 146 *656 (1989); Knight, 750 F.Supp. at 1112. Whether due diligence would have led to discovery more than two years before suit was filed is a jury question. Id. at 1112.
The ง 10(b) claims of the Southern Inns Plaintiffs who were Florida residents at the time they purchased their interests in the Partnership survive the Moving Defendants' Global Motion I, because the question of whether due diligence would have led to the discovery of the fraud they now allege more than two years before they filed this action is a question for the jury to decide. Therefore, Global Motion I is denied as to the ง 10(b) claims of Plaintiffs Joan Agurcia, Leonard Ganderton, Ruth Ganderton, Richard House, Henrietta House, Rhona Miller, Mary Walker, Elizabeth Walker Trust, and James Weldon ("Florida Plaintiffs").
c. All ง 12(2) Claims are Time-Barred
The Southern Inns Plaintiffs were on inquiry notice when they purchased their units of the Partnership between June 30, 1988 and January 31, 1989. Therefore, their ง 12(2) claims are time-barred pursuant to the one-year statute of limitations of the 1933 Act.
E. The One-Year Statute of Limitation Bars Various Plaintiffs' งง 10(b) and 12(2) Claims
1. Intermobile
The Intermobile MR Investors Limited Partnership was set up to acquire and maintain magnetic resonance imaging ("MRI") equipment, which was then to be contracted out to hospitals and physicians' groups. The Partnership was syndicated on November 7, 1988, and the general partners accepted investor subscriptions between November 30, 1988 and July 15, 1989. On September 5, 1991, the Intermobile Plaintiffs filed their Complaint against the Defendants.
In the Complaint, the Intermobile Plaintiffs allege several material misrepresentations and omissions in the private placement offering materials upon which they relied in investing in this limited partnership. These misrepresentations and omissions constitute the basis upon which the Intermobile Plaintiffs ground their งง 12(2) and 10(b) securities fraud claims against the Defendants.
At the outset of the Intermobile Plaintiffs' allegations regarding the nature of the Defendants' conduct, the Plaintiffs explicate their reliance on Integrated's financial condition in investing in the Intermobile partnership:
[A]s a result of the statements contained in the Offering Materials regarding Integrated Resources' exceptionally high quality reputation and Integrated's marketing programs, plaintiffs reasonably believed that Integrated Resources, its subsidiaries and affiliates, were deserving of a great amount of trust and confidence, which plaintiffs vested in them.
Intermobile Compl. ถ 20.
The misrepresentations which the Plaintiffs assert contributed to the fraud perpetrated upon them by the Defendants include the following: (a) the investment was a unique opportunity that provided a "very attractive semi-annual cash distributions, safety, short holding period, and very substantial capital appreciation"; (b) the offering materials stressed that the MRI equipment was "the best diagnostic examine available" with "no competing technology on the horizon," and without advising the partners that the equipment was "already obsolete"; (c) the "extreme downside scenario" of the investment was that the "limited partners could expect to receive 8% to 12% in semi-annual cash distributions"; (d) Integrated or an affiliate would contribute funds to offset any unsold units; (e) there were no foreseeable technological advances that would render the equipment obsolete; (f) sufficient revenue would be generated to continue as a going concern and sustain the partnership; and (g) Integrated was financially stable. Intermobile Compl. ถ 21.
Intermobile Plaintiffs allege further that the Defendants failed to disclose the following material facts:
(a) that in the event all of the units were not sold, Integrated Resources and its affiliates ... were without the financial wherewithal to contribute to any shortfall inequity capital and that the Partnership *657 should be unable to repay the equity loan and would have to borrow such balance;
(b) that in the event all the units were not sold, the description of the offering, use of the proceeds, allocation of the capital contributions and illustrations of the anticipated economic returns to the limited [partners] would not reflect the actual condition or reasonable expected returns from the offering or operation of the Partnership, but that the equity loans would remain outstanding, thereby increasing the debt/equity ratio and diverting funds otherwise available for capital investment and income distributions to service the undisclosed debt;
(c) that at the time of the offering, commencing in June 1988 and continuing through February 1990, Integrated Resources had significantly overvalued its assets and shareholder equity by, among other things, listing as assets over $200 million in receivables from prior syndications of limited partnerships that were troubled or in default and could not be expected to pay such receivables;
(d) that Integrated had been unable to successfully market all the units of its limited partnership offerings as had already occurred in several partnerships ...;
(e) that the investment was not a unique health care investment opportunity and ... the equipment which was already obsolete at the time of the offering ...;
(f) that a lag in providing upgrades to the equipment created a market perception problem [and] ... caused the partnership to be without enough clients for the use of its machines and to lose significant goodwill; and
(g) that omitted from the financial projections were operating and administrative cost increases of between 10% to 27%, all of which were known to the [Defendants] ... at the time the interests in the Partnership were sold....
Intermobile Compl. ถ 22.
The งง 12(2) and 10(b) claims in the Complaint are time-barred because the Intermobile Plaintiffs were on inquiry notice of the alleged frauds from the November 1988 PPM, from the publicity surrounding the financial difficulties of Integrated, and from letters of October 26, 1989 and April 9, 1990 sent by the Partnership to the limited partners.
To the extent that the Plaintiffs allege that they relied on Integrated's financial stability and commitment to offset any shortfalls in financing the Partnership, the Plaintiffs were placed on inquiry notice from the time they invested in the Partnership, and they were placed on further inquiry notice during the summer of 1989 when Integrated announced its debt moratorium and its subsequent unsuccessful struggle to refinance its debt burden and remain viable.
The PPM specifically stated, in bold, all-capitalized print, under the heading "INTEGRATED RESOURCES, INC.":
NOTWITHSTANDING THE FOREGOING [description of Integrated's financial condition], SINCE INTEGRATED HAS NO RESPONSIBILITIES OR OBLIGATIONS TO THE PARTNERSHIP, THE FINANCIAL CAPABILITY OF INTEGRATED SHOULD NOT BE VIEWED AS DIRECTLY OR INDIRECTLY BENEFITTING THE PARTNERSHIP.
Intermobile PPM at 125. Therefore, to the extent that any representations were made to the Intermobile Plaintiffs giving rise to the belief that Integrated's financial assets stood behind the Partnership, this explicit provision placed them on inquiry notice that something was amiss.
The Intermobile Plaintiffs allege that the Defendants concealed their fraud through incomplete, misleading, and materially untrue statements. The Plaintiffs point to various letters sent by the Partnership to the limited partners, including a letter dated October 26, 1989, in which the alleged concealment took place. The Plaintiffs assert that this letter misleadingly brought tidings of "good news" regarding the status of the Partnership. Intermobile Compl. ถ 35.
The October 26, 1989 letter, however, expressly placed the Plaintiffs on inquiry notice regarding many of the issues that are referred to in their Complaint. For example, the letter informed the limited partners that *658 the financial condition of the Partnership was worse than it was a year earlier, while revenues were lagging behind the forecast; that lower utilization and rapid expansion of the fleet contributed to lower than projected profits; that the semi-annual distribution was to be delayed; and that interest, depreciation, and administrative overhead resulted in lower than anticipated net income. Rocano Aff. Ex. B at 8-9.
The April 9, 1990 letter went even further in explicitly advising the limited partners of numerous business problems the Partnership was experiencing, many of which are referred to in the Complaint. The limited partners were advised that "earnings for 1989 were disappointing" and that this "require[d] the Partnership to omit the cash flow distribution for 1989." Id. at B, 1. The letter further notified the limited partners that the operating fleet of mobile MRI equipment had generated "lower average utility rates," that the expansion of the fleet to 15 units had caused "higher operating depreciation and interest expenses" which "resulted in an operating loss," and that "two machines were out of services for significant periods of the third quarter." Id. The Plaintiffs do not dispute that they received the April 9, 1990 letter.
In light of the PPM, the publicity surrounding Integrated's financial demise, and the letters of October 26, 1989 and April 9, 1990, the Intermobile Plaintiffs were placed on inquiry notice of the fraud they now allege at least seventeen months before their complaint was filed. Furthermore, the information available to them at that time was such as to place them on notice of the probability and not merely the possibility of virtually every aspect of the งง 10(b) and 12(2) securities fraud claims they now allege in their Complaint.
It follows that the one-year statute of limitations began to run no later than April 9, 1990 and expired well before the Intermobile Complaint was filed on September 5, 1991. Therefore, the Intermobile Plaintiffs' งง 10(b) and 12(2) claims are time-barred by the applicable one-year statute of limitations periods and are dismissed as untimely commenced.
2. Rittenhouse
The Rittenhouse Square Associates Limited Partnership was organized to own, maintain, and operate a residential apartment building consisting of 104 apartment units and approximately 9,400 square feet of commercial space, in Philadelphia, Pennsylvania. The Partnership was syndicated on September 6, 1988, and on October 15, 1991, the Rittenhouse Plaintiffs filed their Complaint against the Defendants.
In the Complaint, the Plaintiffs allege several material misrepresentations and omissions in the PPM upon which they relied in investing in this Partnership. These alleged misrepresentations and omissions constitute the basis upon which the Rittenhouse Plaintiffs ground their งง 10(b) and 12(2) securities fraud claims against the Defendants.
The Rittenhouse Plaintiffs' preface their allegations against the Defendants by discussing the financial strength of Integrated and their reliance on representations regarding Integrated in deciding to invest in this Partnership:
Statements contained in the Offering Materials and Integrated's marketing programs regarding Integrated's exceptionally high quality reputation, in addition to similar oral representations made, caused plaintiffs to believe that Integrated, as well as its subsidiaries and affiliates, were deserving of a great amount of trust and confidence, which plaintiffs reasonably vested in them.
Rittenhouse Compl. ถ 9.
Turning to the series of alleged material misrepresentations and omissions in the offering materials, the Rittenhouse Plaintiffs contend that the Partnership's property, a residential apartment building in Philadelphia, Pennsylvania, which was to be converted into condominiums over a five year period from the date of the offering, was falsely represented as being in a "dynamic" market, in "a premier neighborhood," and backed by Integrated โ "one of the nation's leading diversified financial service companies." Rittenhouse Compl. ถถ 14, 15. The result was that the Partnership was "virtually ensured of success." Id. ถ 14.
*659 The related material omissions alleged by the Plaintiffs include the failure to disclose that "there was no `dynamic growth' for the Partnership to take advantage of in Philadelphia" because of a glutted real estate market; that the appraisal provided by Cushman & Wakefield was misleading because "it did not address the survivability of the project during the first five years"; that "there were insufficient revenues to be generated"; and that "there was no equity reasonably to have been gained by the limited partners." Id. ถถ 17, 18.
It is also alleged that Integrated's financial condition was misrepresented and that the Defendants did not intend to increase the equity in the property, but instead pledged the investors' notes to get cash to meet Integrated's own financial needs. These notes were pledged to Marine Midland Bank, which ultimately sued the Partnership. As a result of the suit, the Partnership was unable to use approximately $186,000 of Partnership funds and was prevented from receiving an additional $232,000.
Finally, the Plaintiffs claim that they did not know, and could not have known, of the alleged frauds until they received a letter from the general partner, dated November 20, 1990, which advised the limited partners that the Partnership did not have sufficient income to meet its obligations.
However, a letter from the general partner dated March 8, 1990 placed the Rittenhouse Plaintiffs on inquiry notice regarding these various issues some eight months prior to the November letter. The March 8, 1990 letter informed the limited partners of the financial difficulties facing the Partnership. The rents were below projections and the property was only 84% leased. Furthermore,
[p]reliminary operating reports indicate that 1989 income was below the projections in the Confidential Offering Memorandum. Among the causes of this variance are greater than anticipated vacancy losses due to construction activities, the loss of a tenant who had master leased several units, and higher than projected operating expenses.
Rocano Aff. Ex. C at 1.
With respect to the Plaintiffs' claims concerning the pledging of their notes, the allegations of fraud in ถ 17(b) of the October 15, 1991 Rittenhouse Complaint are a virtually verbatim recitation of the facts set forth in the March 8, 1990 letter. The letter informed the limited partners, in detail, of the suit brought by Marine Midland Bank against the Partnership and of the adverse affect it had on the Partnership's funds and its operations. Additionally, the March 8, 1990 letter advised the limited partners that Integrated had filed for bankruptcy protection on February 13, 1990, and that "there can be no assurance that Integrated will continue to so advance funds to the Partnership if such funds are needed." Id. at 2.
The Rittenhouse Plaintiffs assert that these gloomy facts were overshadowed by the statement in the letter that "[w]hile the lower-than-projected income for 1989 reduced the amount available for capital expenditures during the year, we do not anticipate that this will impair the property's performance in the long run." Id. at 1. This statement, combined with the fact that the Partnership was then operating at a profit, in the Plaintiffs' view, prevented them from being placed on inquiry notice any time prior to the November 20, 1990 letter.
The Plaintiffs' claim regarding their ability to rely on this positive assurance is mistaken. Judge Conboy's statement in Farr, 755 F.Supp. at 1228, is equally appropriate here: This lone statement "of cautious optimism ... [did] not rise to the level of affirmative concealment necessary to excuse a reasonable investor from the duty of inquiry presented by the cold numbers contained in the" March 8, 1990 letter. See Zola I, 685 F.Supp. at 366.
Finally, the Rittenhouse PPM itself contained numerous statements which gave notice of the facts which the Plaintiffs now contend to have been fraudulent misrepresented or omitted. The Plaintiffs' claim regarding the alleged inadequacy of the Cushman & Wakefield appraisal fails to note the explicit limitations set forth in the appraisal *660 itself. The purpose of the study was "to estimate the gross sell-out price of the project, assuming conversion to condominium ownership, as of January 1, 1993." Rittenhouse PPM Ex. D at 155. Thus, the Rittenhouse Plaintiffs' claim that they were misled because the appraisal failed to address the viability of the project during the first five years is necessarily unfounded. These Plaintiffs had the requisite information in the appraisal, which was part of the PPM, to make an informed evaluation of the scope of the appraisal and the viability of the project.
The Plaintiffs also allege in the Complaint that they were promised to receive financial returns sooner than is typically expected in such a real estate investment: Investors would collect pre-tax conversion proceeds of $236,633 per $98,000 invested, and the short holding period of five years would enable investors to receive their capital back more quickly.
The offering material, however, explicitly stated that there could be no assurances that the partnership would be able to convert the project to condominium status according to the time schedule or prices set forth in the accompanying economic forecasts:
[A]ctual results of operations or operating properties, such as the Project, are inherently subject to unpredictable events and, for that reason, cannot be predicted with any degree of certainty. Actual results of operations and an Investor's economic and tax benefits arising therefrom, are likely to vary from year to year from the results forecasted.
Rittenhouse PPM at 45.
In light of the offering materials, the publicity surrounding Integrated's financial demise, and the letter of March 8, 1990, the Rittenhouse Plaintiffs were placed on inquiry notice of the alleged งง 10(b) and 12(2) violations they now raise at least nineteen months before they filed their Complaint on October 15, 1991. Furthermore, the information available to them at that time was such as to place them on notice of the probability and not merely the possibility of virtually every aspect of the งง 10(b) and 12(2) securities fraud claims they now allege in their Complaint.
Therefore, the one-year statute of limitations began to run no later than March 8, 1990 and expired well before the Rittenhouse Complaint was filed. As a result, the Rittenhouse Plaintiffs' งง 10(b) and 12(2) claims are dismissed as untimely commenced.
3. Fillmore/Greene's[21]
The Fillmore Pacific Associates Limited Partnership was organized to acquire, own, and manage a 93% limited partnership interest in Fillmore Center Associates, a partnership set up to own, develop, construct, maintain, and operate a mixed use multi-family rental development, consisting of 1,113 apartments and 73,000 square feet of retail space, in San Francisco, California. The Partnership was syndicated on January 11, 1988, the Plaintiffs purchased their partnership units in 1988 and 1989, and on February 8, 1991, the Plaintiffs filed their Complaint against the Defendants.
At the outset of the Fillmore/Greene's Plaintiffs' allegations regarding the Defendants' conduct, the Plaintiffs explicate their reliance on Integrated's financial condition in investing in the partnership, using the same description of Integrated as was used in the Intermobile Complaint quoted above. In the Complaint, the Plaintiffs allege several material misrepresentations and omissions in the offering materials upon which they relied in investing in this limited partnership. These misrepresentations and omissions constitute the basis upon which the Fillmore/Greene's Plaintiffs ground their งง 12(2) and 10(b) securities fraud claims against the Defendants.
The alleged misrepresentations and omissions relate to Integrated's financial stability, the costs and schedule for construction of the partnership property, and the various "safety *661 features" designed to protect the Partnership and limited partners against construction cost overruns and delays:
(a) Integrated's net worth and financial wherewithal were grossly misrepresented and overstated ...;
(b) Developers' much-heralded "guaranties" [against cost overruns and operating deficits and capping the maximum price of the construction contract] were virtually valueless and provided no protection to investors ...;
(c) the $8 million of "reserves in the development budget was wholly inadequate to protect against the collapse of the Project ...";
(d) contrary to the detailed explanations of the safety of an investment in the Partnership, the Partnership was forced to return to the investors for approval of a proposed additional borrowing of $20,000,000 in November 1990 ...;
(e) the "(g)uaranteed maximum price construction contract" and the bonding of all significant construction performation were misrepresented as providing protection against overruns and delays. In fact, after the offering, ... the general contractor demanded a new and higher guaranteed maximum price; ...
(f) the excessive fees that the Integrated and Tishman defendants charged plaintiffs and the excessive price that the Integrated and Tishman defendants caused the Partnership to pay for the operating interest in the Property, made it very unlikely that investors ... could ever achieve a profit from their investments ... and left the Partnership with insufficient construction capital and in a precarious position such that bankruptcy or inability to continue construction as scheduled would likely result; [and]
(g) the offering materials omitted to state that by late January 1988, prior to the sale of any limited partnership interests to plaintiffs, the project on which construction had commenced in early August, 1987 had encountered approximately $10 million of cost overruns which [the general contractor] advised it would not take responsibility for and which neither the Integrated nor Tishman defendants had the financial wherewithal to pay for.
Fillmore/Greene's 1st Am. Compl. ถ 25.
The Plaintiffs were placed on inquiry notice of these various issues, which now constitute the basis of their งง 10(b) and 12(2) claims, by the publicity surrounding Integrated's financial difficulties and subsequent demise beginning in June 1989, and by a letter and solicitation statement from the Partnership dated August 24, 1989 (collectively, "August 1989 Solicitation"). The purpose of the August 1989 Solicitation was to solicit the consent of the limited partners to a restructuring of the debt of the Operating Partnership and the Partnership, and the Plaintiffs acknowledge receipt of the August 1989 Solicitation.
The August 1989 Solicitation provided a detailed description of the Partnership's financial difficulties, including the following: the construction cost overruns that had been encountered; the extension of the anticipated construction completion schedule; the intention of the lenders to foreclose; the failure, inability and/or unwillingness of the general contractor and developer to protect the Partnership; the necessity to substantially increase the Partnership's debt; and Integrated's own financial difficulties. Thus, the August 1989 Solicitation provided the Fillmore/Greene's Plaintiffs with virtually all of the information upon which they subsequently relied in alleging their securities fraud claims against the Defendants.
With regard to the construction cost overruns, the first page of the August 24, 1989 letter expressly referred to "needed additional financing to pay for cost overruns experienced in the construction of the Fillmore Center." Rocano Aff. Ex. D at 1. The limited partners were specifically advised that the Project's new construction manager determined that the Operating Partnership would require "at least an additional $9,500,000 in excess of the amount contemplated in the [March 31, 1989 solicitation] in order to complete construction of the Project." Id. at 5.
Moreover, the August 1989 Solicitation advised the limited partners that, in August *662 1988, the original general contractor had projected "substantial cost overruns," and that, in October 1988, the general contractor had "demanded that [the] Operating Partnership agree to a new Guaranteed Maximum Price of $123,000,000." Id. at 8. This amount was nearly $40,000,000 more than the original Guaranteed Maximum Price of $83,750,000 disclosed in the Fillmore PPM.
The Fillmore/Greene's Plaintiffs also were placed on inquiry notice of their claim that the construction schedule was "grossly underestimated" in the offering materials. Fillmore/Greene's 1st Am. Compl. ถ 21. The August 1989 Solicitation advised the Plaintiffs that the anticipated completion of the Project, which had been "scheduled for late 1989," was "currently anticipated ... [to] occur in October 1990," almost a year behind schedule. Rocano Aff. Ex. D at 8.
The August 1989 Solicitation provided a detailed review of the original financing and set forth a chronological discussion of the problems encountered with the lenders. The limited partners were explicitly and repeatedly advised that foreclosure was imminent.
Moreover, with regard to the partnership's alleged "safety features" involving the general contractor, developer, and Integrated, the August 1989 Solicitation alerted the Plaintiffs to substantial problems into which a reasonable investor would have made further inquiry. The limited partners were informed that the general contractor had been terminated and was being sued by the Operating Partnership and that he, in turn, was counter-suing for $17,000,000. They also were notified that the developer's management company had been replaced, that the developer had been removed as Managing General Partner of the Operating Partnership, and that, in connection with the restructuring, the developer would be released from all obligations.
Finally, the August 1989 Solicitation advised the Fillmore limited partners of the financial difficulties Integrated was experiencing, to wit, a "liquidity crisis" that prevented it from providing the Partnership with any additional capital in connection with the March 31, 1989 contemplated restructuring as a result of the declared debt moratorium. The limited partners were also told that, while over $50,000,000 had been borrowed by the Operating Partnership on the basis of guarantees by Integrated, the declared debt moratorium by Integrated had eliminated any further funding by Integrated.
The Fillmore/Greene's Plaintiffs assert that they even if they were placed on inquiry notice with regard to various aspects of the alleged fraud by the August 1989 Solicitation, they had no notice regarding the gravamen of their Complaint, namely, the Defendants' fraudulent concealment of any information regarding substantial cost overruns occurring before the syndication, from any Partnership correspondence.
The Plaintiffs' reasoning is defective on two counts: First, the central claim in the Plaintiffs' Complaint is that the Defendants misrepresented that "the Partnership was reasonably expected to be profitable for investors." Fillmore/Greene's 1st Am. Compl. ถ 22. The alleged misrepresentations and omissions concerning the "safety features" and the pre-syndication cost overruns are alleged in the Complaint to have been the means by which the prospective profitability of the investment was misrepresented. Therefore, the Plaintiffs cannot not argue that the August 1989 Solicitation statement did not place them on notice to inquire into the reasons for the Partnership's dire financial situation. Second, the August 1989 Solicitation expressly identified the cost overrun of almost $40,000,000 for the entire project. Rather than concealing the alleged cost overruns incurred prior to the syndication, this statement placed the Plaintiffs on notice to investigate why, less than half-way into the construction of the project[22] and within months of the syndication, the general contractor was projecting that the total cost to complete construction would be $40,000,000 more than originally estimated before construction began.
In light of the publicity surrounding Integrated's financial demise and the August *663 1989 Solicitation, the Fillmore/Greene's Plaintiffs were placed on inquiry notice of the fraud they now allege at least seventeen months before they filed their Complaint on February 8, 1991. Furthermore, the information available to them at that time was such as to place them on notice of the probability and not merely the possibility of virtually every aspect of the งง 10(b) and 12(2) securities fraud claims they now allege in their Complaint.
Therefore, the one-year statute of limitations began to run no later than August 24, 1989 and expired well before the Fillmore/Greene's Complaint was filed. As a result, the Fillmore/Greene's งง 10(b) and 12(2) claims are dismissed as untimely commenced.
4. West Palm/Coleman and West Palm/Baird
The West Palm Associates Limited Partnership was organized to develop, construct, own, maintain, and operate a residential housing development consisting of 582 apartment units and other amenities. The Plaintiffs have commenced two separate West Palm actions, asserting identical allegations: West Palm/Coleman was filed on January 19, 1991 and West Palm/Baird was filed on February 13, 1991. The Partnership was syndicated on June 21, 1988, and the general partners accepted investor subscriptions between July 15, 1988 and March 15, 1988.
The offering materials of the Partnership are alleged to have been false and misleading as a result of various misrepresentations and omissions of material facts. The misrepresentations included the following: Integrated would raise or contribute $18,711,000 in equity to the Partnership; the general partner would contribute funds to offset any unsold units of the Partnership; the Partnership would have 30% equity stake in the project; Integrated was financially stable and would guarantee certain obligations of the Partnership; the fair market value of the Partnership was between $66,000,000 and $68,000,000; and the project would generate sufficient revenues to continue as a going concern and sustain the Partnership. See West Palm 1st Am. Compl. ถ 28.
The Plaintiffs alleged that the offering materials also were false and misleading because of various omissions by the Defendants, namely,
(a) that in the event all the units were not sold, they were without wherewithal to contribute the shortfall in equity and would cause the Partnership to borrow the balance;
(b) that in the event all the units were not sold, they would cause the Partnership to be liable for principal and interest on loans from First Fidelity [Bank] and [Resources Funding Corporation, a wholly-owned subsidiary of Integrated];
(c) that in the event all the units were not sold, the description of the offering, use of the proceeds, allocation of the capital contributions and illustrations of the anticipated economic returns to the limited partners would not reflect the actual condition or reasonable expected returns from the offering or operation of the Partnership;
(d) that at the time of the offering, commencing in June, 1988 and continuing through February, 1990, Integrated Resources had significantly overvalued its assets by ... claiming over $250 million in receivables from troubled and defaulting prior limited partnerships it had syndicated and that could not be expected to pay such receivables;
(e) that the alleged fair market value of the property was inflated;
(f) that Integrated had no basis in fact for its financial projections; and
(g) that Integrated needed to syndicate the property so as to generate funds for itself as well as to enable it to continue to obtain credit in the face of then existing serious financial difficulties.
Id. ถ 29.
The gravamen of the Complaint, as it emerges from these alleged misrepresentations and omissions, is that the offering materials were false and misleading insofar as they provided an investment summary and pro forma balance sheet which projected future economic benefits on the assumption *664 that the entire Partnership offering had been sold and failed to disclose the possibility that all of the units would not sell.
The West Palm PPM, however, disclosed in at least three separate places the possibility that the proceeds from the offering might be insufficient thereby indicating that all of the units might not sell, and nowhere in the PPM was any representation made regarding the amount of equity that would be raised from the offering. For example, the PPM contained the same explanatory clause as was set forth in the Southern Inns PPM (at 140) quoted above. See West Palm PPM at 75.
The West Palm Plaintiffs rely on Martin, 1991 WL 131176, *1, 1991 U.S. Dist. LEXIS 9234, at *3, alleging that even with these warnings in the offering materials, they were not placed on inquiry notice concerning the alleged fraud because the Defendants failed to disclose that recent similar investments they had syndicated were not fully subscribed. For the reasons stated above in the discussion of Southern Inns, this contention is rejected, and the West Palm Plaintiffs are held to have been on inquiry notice at the time they purchased their shares in the Partnership.
Therefore, the Plaintiffs were placed on inquiry notice of the fraud they now allege by the June 21, 1988 by the West Palm PPM itself, well over twelve months before the Plaintiffs filed their respective Complaints. Furthermore, the information available to them at that time was such as to place them on notice of the probability and not merely the possibility of the งง 10(b) and 12(2) securities fraud claims they now allege in their Complaint. Thus, these claims are time-barred under the relevant statutes of limitations.
5. 600 Grant Street/Schoonmaker
The Partnership at issue in 600 Grant Street/Schoonmaker was formed to acquire, own, operate, manage, finance, and eventually sell or dispose of the United States Steel Building, a sixty-four story office building located on approximately two-and-a-half acres of land in Pittsburgh, Pennsylvania. The Plaintiffs purchased a seven-unit limited partnership interest in the 600 Grant Street Partnership in May 1989, several years after the original Partnership offering was made in 1985 and 1986.
The Plaintiffs allege งง 10(b) and 12(2) securities fraud violations on the ground that the Defendants failed to disclose various material facts prior to the sale of the partnership units. These omissions include the following: Integrated was "only days ... [from] delcar[ing] a moratorium on the payment of all of its debts leading to its eventual bankruptcy," 600 Grant Street/Schoonmaker Compl. ถ 1; "there was no reasonable likelihood that the Property or the subject securities could generate the represented tax savings because the financial condition of the Partnership and Sivram was, at the time, severely impaired," id. at ถ 16; Integrated was in an "impaired financial condition" which would have an adverse impact upon the Partnership and Sivram, id. at ถ 21; and the Partnership sustained operating losses "due to the presence of asbestos and the cost of its removal," id. at ถ 23.
Despite these allegations, the Plaintiffs acknowledge in their Complaint that they were aware of Integrated's bankruptcy by May 1990. See id. at ถ 25. Thus, the Plaintiffs were placed on inquiry notice as of that time with respect to the facts upon which they now base their allegations of fraud that relate to Integrated's financial condition.
In a letter dated May 17, 1990, all 600 Grant Street limited partners were advised, inter alia, that Integrated had filed a bankruptcy petition, that certain services previously performed by Integrated might be affected by the bankruptcy, and that the likelihood Integrated would continue to fund shortfalls in debt payments or pay other Partnership expenses were thereby reduced.
The following month, the Plaintiffs were provided with additional information regarding the impaired condition of the Partnership. In a letter dated June 20, 1990, the limited partners were notified of several significant developments: The cash flow generated by the partnership's property was insufficient to meet debt service obligations under the first mortgage; previous debt service shortfalls in excess of $10,000,000 had been *665 funded by Integrated subsidiaries which themselves had no assets other than promissory notes from Integrated, making it highly unlikely that any further obligations of the Partnership would be met by those guarantors; the first mortgagee had agreed to defer $8,000,000 in debt service upon which an Integrated subsidiary had defaulted; and while foreclosure by the first mortgagee was averted for the time being, further restructuring of the partnership's debt would be required.
Finally, with respect to the Plaintiffs' claim concerning the asbestos, the Plaintiffs had knowledge of sufficient facts both prior to and immediately following their investment in the 600 Grant Street Partnership regarding the asbestos situation to place them on inquiry notice. At the time of their investment, the Plaintiffs were fully aware of the fact that the costly asbestos abatement program had been commenced in the building because they received the Investor Correspondence previously transmitted to all limited partners, including a letter of March 7, 1988, in which it was disclosed that $5,000,000 had been set aside by management for asbestos abatement in 1988 alone.
Following their investment, the Plaintiffs received additional Investor Correspondence concerning the costs of the asbestos removal program. In a letter dated May 31, 1989, the Plaintiffs were advised that the partnership was continuing with its "costly asbestos abatement program," that the program called for abatement at the rate of approximately four floors per year, that the partnership had already spent approximately $7,000,000 on the program, and that $3,000,000 more was budgeted for abatement during 1989. Rocano Aff. Ex. E at 12-13. The aforementioned June 20, 1990 letter also noted the "continuation of the asbestos abatement program." Id. at 17.
The Plaintiffs attempt to avoid the effect of the statute of limitations by claiming the correspondence sent to them by the Partnership's legal counsel in March 1990 led them to believe that the bankruptcy would have no effect on the operation of the Partnership or on their investment: "[T]he bankruptcy's impact on Integrated's ability to assist Schoonmaker was not apparent from the notice of the bankruptcy." Pls.' Mem. in Opp. at 131. The Plaintiffs claim they had no reason to believe they had been defrauded until they received a letter dated March 18, 1991 from the Partnership allegedly indicating that Integrated and certain of its subsidiaries had been replaced as manager of the Partnership property and that an Integrated subsidiary had defaulted on its obligation to guaranty Partnership debt service.
In light of the publicity surrounding Integrated's financial demise and the letters of March 7, 1988, May 31, 1989, May 17, 1990, and June 20, 1990 from the Partnership to the limited partners, the 600 Grant Street/Schoonmaker Plaintiffs were placed on inquiry notice regarding virtually every aspect of the fraud they are now alleging in a Complaint filed well after the one-year statute of limitations. Thus, the Plaintiffs' งง 10(b) and 12(2) claims are time-barred and are dismissed.
Therefore, the Moving Defendants' Global Motion I is granted as to the Plaintiffs' งง 10(b) and 12(2) claims in Research Triangle, 600 Grant Street/Reagan, 600 Grant Street/Schoonmaker, Clovine/Standefer, Clovine/Ellingson, West Palm/Baird, West Palm/Coleman, Rittenhouse, Fillmore/Greene's, Fillmore/Enviro, and Intermobile, and is granted as to the Plaintiffs' ง 12(2) claims and as to all of the Plaintiffs' ง 10(b) claims in those actions, except those of the Florida Plaintiffs and the Illinois Plaintiff, in Southern Inns. Global Motion I is also granted as to the Plaintiffs added by the First and Second Amended Complaints in Hunter Publishing. Global Motion I is denied as to the ง 10(b) claims of the Florida Plaintiffs and Illinois Plaintiff in Southern Inns, and it is denied as to the Plaintiffs' งง 10(b) and 12(2) claims in Lenox Towers, and as to the Plaintiffs named in the original Complaint in Hunter Publishing.
Global Motion II
In light of the disposition of the various cases on the Global Motion I, three actions remain for consideration on the Moving Defendants' Global Motion II: the งง 10(b) and 12(2) claims in Hunter Publishing and Lenox *666 Towers, and the ง 10(b) claims of the Florida Plaintiffs and the Illinois Plaintiff in Southern Inns. On this motion, the Moving Defendants seek the dismissal of these claims pursuant to Rules 12(b), 12(c), and 9(b), Fed. R.Civ.P.
Again for simplicity's sake, general legal principles governing the pleading requirements for fraud will be laid out here and applied in more detail below. Rule 9(b) of the Federal Rules of Civil Procedure requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." The particularity requirement of Rule 9(b) serves to provide a defendant with fair notice of a plaintiff's claim, to protect a defendant's professional reputation, and to reduce the number of strike suits. See Di Vittorio v. Equidyne Extractive Industries, Inc., 822 F.2d 1242, 1247 (2d Cir.1987); Stern v. Leucadia National Corp., 844 F.2d 997, 1003 (2d Cir.), cert. denied, 488 U.S. 852, 109 S.Ct. 137, 102 L.Ed.2d 109 (1988).
The requirements of Rule 9(b) should be applied stringently, especially "where allegations of securities fraud are involved." Ruff v. Genesis Holding Corp., 728 F.Supp. 225, 227 (S.D.N.Y.1990). The strict application of Rule 9(b) in securities fraud litigation "reduces the possibility that conclusory complaints will enable a plaintiff to engage in lengthy and costly discovery, `with the right to do so representing an in terrorem increment of the settlement value, rather than a reasonably founded hope that the process will reveal relevant evidence....'" Lou v. Belzberg, 728 F.Supp. 1010, 1022 (S.D.N.Y. 1990) (quoting Denny v. Barber, 576 F.2d 465, 470 (2d Cir.1978)).
Rule 9(b) pleading requirements (which dictate that plaintiffs must specify the time, place, and manner of making the fraudulent statement) are "somewhat relaxed where ... plaintiff[s] base [their] complaint on an Offering Memorandum." Stevens v. Equidyne Extractive Indus. 1980, 694 F.Supp. 1057, 1061 (S.D.N.Y.1988). "Reference to the Offering Memorandum satisfies 9(b)'s requirements as to identification of the time, place and content of the alleged misrepresentations." Luce v. Edelstein, 802 F.2d 49, 55 (2d Cir.1986). However, "allegations grounded in the offering memorandum [must] be based on specific facts allegedly misrepresented in that memorandum." Tobias v. First City Nat'l Bank and Trust Co., 709 F.Supp. 1266, 1277 (S.D.N.Y.1989) (construing Luce, 802 F.2d at 55). This applies to private offering materials the general rule for fraud: That any Plaintiffs must specify "`precisely what statements were made in what documents or oral misrepresentations.'" Tobias, 709 F.Supp. at 1277 (quoting Todd v. Oppenheimer & Co., 78 F.R.D. 415, 420-21 (S.D.N.Y.1978)).
Therefore, the offering materials used to sell the partnership interests to the Plaintiffs will be considered by this Court here in Global Motion II as in Global Motion I and for the same reasons. They are still "integral to [P]laintiffs' claim[s] and thus may be considered by the Court on a motion to dismiss." Cortec Industries, Inc. v. Sum Holding L.P., 949 F.2d 42, 48 (2d Cir.1991); I. Meyer Pincus & Assocs. v. Oppenheimer & Co., 936 F.2d 759, 762 (2d Cir.1991); Ruff, 728 F.Supp. at 226.
I. Hunter Publishing
The Integrated Defendants (here IR Publishing, IR Credit, and Integrated Resources Equity Corporation) have moved to dismiss the claims of the Plaintiffs added by the two Amended Complaints in Hunter Publishing on the grounds that both of the Amended Complaints were filed after June 19, 1991, the date on which the new Plaintiffs' claims became barred by Lampf. This motion is granted.[23]
The Integrated Defendants have also moved to dismiss all of the remaining Plaintiffs' claims for failure to state a claim pursuant to Rule 12(b)(6) and for failure to plead fraud with the particularity required by Rule 9(b). Both the Defendant Deloitte & Touche and the Defendants Elliot Stein, Jr. and I. Martin Pompadur have joined in this motion, but they have also filed separate and independent motions on precisely the same *667 grounds and for the same reasons. All three motions are granted.
A. Facts
On a motion to dismiss, the facts alleged by the plaintiffs must be accepted as true, and all factual inferences must be drawn in favor of the plaintiffs. See Dwyer v. Regan, 777 F.2d 825, 828-29 (2d Cir.1985); Cosmas v. Hassett, 886 F.2d 8, 13 (2d Cir. 1989). Accordingly, the facts below are taken from the Plaintiffs' Second Amended Complaint and do not represent any findings of fact by this Court.
Hunter Publishing Company, Inc. ("Hunter") is a Delaware corporation allegedly controlled by I. Martin Pompadur ("Pompadur") and Elliot Stein, Jr. ("Stein"). In 1986, Pompadur and Stein bought IR Publishing Limited Partnership ("IR Publishing"), a publisher of industrial trade magazines, for approximately $26.5 million in an apparently fully leveraged buyout (the "Initial Acquisition") that left the new company (Hunter) $27 million dollars in debt to Manufacturers Hanover (the "Bank").[24] Pompadur and Stein each owned 50% of the stock of the new company and each personally guaranteed the loan to the Bank.
By 1987, Hunter's cash flow was insufficient to pay off the debt as scheduled. Hunter then sought and was refused additional credit (the Plaintiffs do not say from or by whom). Pompadur and Stein turned next to Integrated Resources Equity Corporation ("IREC") a wholly-owned subsidiary of Integrated. IREC syndicated Hunter as a limited partnership in July, 1988 (the "Offering"). Integrated formed IR Publishing Credit Corp. ("IR Credit") to finance the capital contributions of limited partners who wished to pay for their interests through a combination of cash and promissory notes instead of straight cash. The Plaintiffs do not say whether Hunter or Integrated first retained the accounting firm Touche, Ross & Co., whose successor in these actions is Deloitte & Touche ("Touche") but allege that Touche served as the accountants for Hunter prior to, during, and after the formation of the Limited Partnership.
If the Offering were successful and the Defendants succeeded in syndicating Hunter as a limited partnership, the Bank promised to renegotiate the loan on terms more favorable to Hunter. The Offering was successful by November 1988 (the date is supplied by the Defendants; the Plaintiffs do not allege when they bought) and the loan was renegotiated. Among other new terms, Pompadur and Stein were no longer required to guarantee personally Hunter's finances.
The Plaintiffs allege that the Offering was successful only because of the Defendants' misstatements and omissions. These were communicated through a Confidential Private Placement Memorandum dated July 20, 1988 (the "Hunter PPM"), a Broker-Dealer Summary, a color brochure, a product audio tape, and an undated information memorandum (the "Offering Materials"). The Offering Materials included certified financial statements for the year ending 1987 and the last four months of 1986, and an unaudited set of financial statements for the first four months of 1988, all issued without qualification by Touche. The Plaintiffs apparently had purchased their interests by November 1988, but allege they were not put on notice of Hunter's dire financial condition until they were informed in August 1990, that Hunter's income was insufficient to service its debt. The Defendants do not contest this date as the date of inquiry notice. These facts bring their claims within the three-year/one-year statute of limitations laid down by Ceres for actions (such as the Complaint in Hunter Publishing) filed in New York after 1990.
The Plaintiffs allege that the Defendants promised that the managing general partner (Hunter Publishing)[25] would contribute $10 million in equity to the Partnership, that *668 partners could expect 245% to 300% in capital appreciation over a five-year period, that Hunter would launch an aggressive acquisition strategy to achieve growth and diversity, and that Hunter would be managed by "seasoned" veterans with a long and successful record in the media. The Plaintiffs allege that the $10 million investment, "because of Hunter Publishing's inability to continue as a going concern, [was] inflated and worth substantially less than $10 million." The Plaintiffs also allege that since Hunter could not pay off its debt at the time of the Offering, it could not be reasonably expected to pay any significant return on its equity. They claim that Hunter had already been unable to obtain additional financing, and that Defendants Stein and Pompadur lacked ability and experience. Finally, they allege that Integrated, as the ultimate sponsor of the offering, was represented as an entity with more than $1.8 billion in assets, whereas a sizable portion of its "assets" consisted of now-worthless receivables from other partnerships, and that the Defendants' failure to disclose the financial condition of Integrated was a material omission. Since Integrated (which has filed for relief under chapter 11 of the bankruptcy code) is not a party to this action, and since the Plaintiffs have not alleged how Hunter knew of Integrated's financial problems, this last claim will not be considered by this Court in any of these actions.
The Plaintiffs charge the "Promoter Defendants" (all Defendants save IR Credit and Touche) with violations of ง 12(2) of the 1933 Act and ง 10(b) of the 1934 Act, common law fraud, negligence, and breach of fiduciary duty in connection with the sale to them of their interests in Hunter Publishing, and they request an equitable accounting as a separate claim. They charge Touche with a primary violation of ง 10(b), common law fraud, and negligence for allegedly misleading financial statements included in the Offering Materials. They also charge the associate general partner IR Publishing (itself a limited partnership), IR Publishing's own general partner IR, and Integrated with violations under the RICO statute, 18 U.S.C. ง 1961 et seq. They name IR Credit as a defendant to claim declaratory relief under 28 U.S.C. งง 2201-02 to the effect that none of the Plaintiffs need pay off any promissory notes still owed to the Hunter Partnership.
B. Discussion
1. Going Concern Qualification
The Plaintiffs allege five separate misleading statements on the part of the Promoter Defendants: (1) that the managing general partner would contribute $10 million in equity; (2) that the Limited Partners would receive projected distributions of 6% per year and could expect up to a 300% capital appreciation in the next five years; (3) that Hunter would launch an aggressive acquisition strategy; (4) that Hunter had previously been successfully operated; and the (5) Hunter would be managed by "seasoned" veterans.
The first allegation is the most important one and is tied to the alleged failure of Touche to include "going concern" qualification. The Plaintiffs make what is apparently a novel claim: They allege that the $10 million in assets was not worth its face value, not because the worth of any particular category of assets was falsified or fraudulent, but because the assets were "in effect" overvalued (since the Defendants knew that Hunter could not continue as a going concern). If the assets of the Hunter Partnership had been valued at liquidation or "distress-sale" prices, as the Plaintiffs claim they should have been, the $10 million in existing assets would have been worth considerably less.
The Plaintiffs have supplied this $10 million figure, for the Hunter PPM merely states that "[a]t such time as the first investor is admitted to the Partnership, the Managing General Partner [Hunter Publishing] will contribute all of the assets of the Managing General Partner to the Partnership, and the Partnership will assume all liabilities of the Managing General Partner relating to the Business...." Hunter PPM at 8 & 53. The Plaintiffs have valued all the assets of the old Hunter Publishing at $10 million by making this calculation: "The Memorandum [Hunter PPM] stated that the business was worth $34.0 million. This implied that since the Bank was owed $22.5 million, the Business *669 had equity of over $10 million." Pls.' Mem. in Opp. at 68.
The Hunter PPM states that Pompadur and Stein purchased Hunter in the Initial Acquisition pursuant to two appraisals "prepared by an independent appraiser which provide[d] that the assets of the Business were valued using the residual method provided by Section 33(b)(5) of the [Internal Revenue] code." Hunter PPM at 52. The value of the first appraisal is not given; the second, dated as of August 25, 1986, reflected a $37 million value. The Hunter PPM continues:
In connection with this offering the firm of Kane-Reece Associates, Inc. has rendered an appraisal that updates the [second] Appraisal as of July 1, 1988 (the "Updated Appraisal"). The valuation of the assets of the Business as reflected in the Updated Appraisal is $34 million.... The primary reason for the decline in such value ... results from the fact that actual operating cash flow of the Business for the year ended December 31, 1987 was less than that which was anticipated at the time.... The Partnership is in possession of the Updated Appraisal. Investors are urged to review the Updated Appraisal in its entirety.
Hunter PPM at 52-53. The Updated Appraisal was not included in the Hunter PPM, although (as was customary for Integrated) the memoranda invited potential purchasers to obtain it and other additional information. While the Plaintiffs imply the appraisal was fraudulent ("The defendants obtained an appraisal which ignored the debt problems and valued the business at $34 million", Pls.' Mem. in Opp. at 69), they do not claim that it was, in fact, fraudulent, and they have not named the appraisers as defendants. In effect, the Plaintiffs allege that $10 million in assets supplied to the Partnership became worth much less simply because "the business the Partnership was acquiring had failed, ... when they knew that controlling accounting principles required [the assets] only be valued in a distressed sale context." Id. at 67.
Thus the major claim of fraud against the Promoter Defendants relates to the claim of ง 10(b) fraud against Touche, for if Touche had qualified its opinions with a "going concern" hedge, the assets of Hunter would have been seen for what they were truly worth. The primary question, then, is whether Touche is liable for securities fraud for not having included a "going concern" qualification with its financial statements.
2. The Plaintiffs' Claims Against Touche
Although the Plaintiffs condemn Touche for financial statements extending over three calendar years ("Touche prepared (a) Certified Financial Statements for the year ending 1987 and the last four months of 1986, and (b) an unaudited set of financial for the first four months of 1988," 2d Am.Compl. ถ 62), Touche may be liable only for the items listed by Plaintiffs under (a). An unaudited set of financial is precisely that: "It is substantially less in scope than an examination in accordance with generally accepted auditing standards.... Accordingly, we do not express such an opinion," namely, an opinion on whether the statements are in accordance with generally accepted accounting principles. Opinion Letter of Touche Ross Dated July 12, 1988, quoted in Hunter PPM at 205. This is a disclaimer of opinion, which by definition cannot be considered as either an unqualified opinion or as a qualified opinion and cannot have been relied on by the Plaintiffs.
To allege fraud in overvaluing the assets listed in the 1987 and 1986 financial statements prepared by Touche, the Plaintiffs must allege at least the accounting value which governs the way in which the assets are carried, or which calls for a writedown to market value at a particular time. See Quantum Overseas, 663 F.Supp. at 666-67. The Plaintiffs must allege "what accounting practices should have been used," Posner v. Coopers & Lybrand, 92 F.R.D. 765, 768 (S.D.N.Y.1981), aff'd without op., 697 F.2d 296 (2d Cir.1982), how these practices were not followed, and what practices should have been used in their place.[26]
*670 The accounting principle the Plaintiffs cite here is the Auditing Standards Board's ("ASB") Statement on Auditing Standards ("SAS") Nos. 34, 59.[27] The relevant portion of SAS No. 34 reads:
In an examination of financial statements in accordance with generally accepted auditing standards, the auditor does not search for evidential matter relating to the entity's continued existence because ... an entity's continuation is usually assumed.... Nevertheless ... in forming an opinion on the financial statements, the auditor considers any such contrary information, together with any factors tending to mitigate that information and any management plans for dealing with the underlying conditions.
SAS No. 34 at ถ 3. Certain items which are listed as "contrary information" by SAS No. 34 (ถ 4(a)) were undeniably present: Hunter's 1987 financial and the Hunter PPM itself reveal "negative trends" such as working capital deficiencies and two instances of missed loan payments. See Hunter PPM at 54. However, several of the mitigating factors were also present, including "Consideration of Management Plans," SAS No. 34 at ถ 5, which (among others) specifically refers the auditor to consider the "feasibility of plans to increase ownership equity, including existing or committed arrangements to raise additional capital." SAS No. 34 also states that:
Particular emphasis ordinarily is placed on [management] plans that might have a significant effect on the entity's solvency within a period of one year following the date of the financial statements on which the auditor is currently reporting.... The auditor's function, however, does not include predicting the outcome of future events, and an unqualified opinion on the financial statements does not constitute a guarantee or assurance by the auditor that the entity has the ability to continue for any particular period beyond the date of his opinion.
SAS No. 34 at ถถ 8 & 9. This suggests both that the auditor's obligation does not extend beyond one year, and in any event, it is left altogether to the auditor's professional judgment.
The Plaintiffs have not alleged how Touche violated this standard nor any facts to indicate that any liabilities were undisclosed or that any particular numbers on the balance sheet were fraudulent or that Hunter was not a going concern a year later. Shareholders' equity and working capital were both negative, but this was fully revealed in the 1987 balance sheet. See Hunter PPM at 193. The Plaintiffs have not alleged any financial analyses that the auditors should have conducted or conducted fraudulently, any ratios they failed to calculate or include which would have alerted a reasonable investor, any other risks factors which may have been concealed, or any negligent behavior on the part of the accountants at all. "Identifying the point at which uncertainties about recoverability, classifications, and amounts require the auditor to modify his report is a complex professional judgment. No single factor or combination of factors is controlling." SAS No. 34 at ถ 11. The Plaintiffs have cited no undisclosed factors which could be controlling and which therefore would demonstrate that Touche violated SAS No. 34.
3. The Plaintiffs' Claims Against the Promoter Defendants
The first claim against the Promoter Defendants, as previously set forth, relate to the *671 value of the $10 million contribution. Aside from the going concern qualification just considered, no allegations of fraud have been specified with respect to this first claim and it is, therefore, dismissed.
Beyond the absence of a "going concern" qualification, however, the Plaintiffs allege four other misrepresentations against the Promoter Defendants. First, they contend that they were misled to believe that partners would receive a 6% yearly distribution and a 245%-300% capital appreciation over a 5-year period. See Hunter 2d Am.Compl. ถ 30. The Plaintiffs do not say where in the Offering Materials the Defendants explicitly guaranteed this return. In fact, warnings in the Hunter PPM stated:
There can be no assurance that the partnership will operate profitably. In addition, there can be no assurance that investors will realize any return on their investment. [Hunter PPM at v.]
No representations or warranties of any kind are made or intended to be made, nor should any be inferred, with respect to the economic return or the tax attributes of an investment in the partnership. [Hunter PPM at vii.]
Only investors meeting the conditions set forth under the heading "Who May Invest" may purchase units. An investment in the partnership entails significant risks. [Hunter PPM at v.]
Potential investors were advised that the investment was inappropriate for investors seeking liquidity or predetermined amounts of return: "An investment in the partnership is not appropriate for investors seeking liquidity or any predetermined amount of aggregate cash return." Hunter PPM at 22 (at "Who May Invest," "Investment Considerations" and "Borrowing Option Available to Investors").
Under the heading "General Business Considerations โ Competition," the following notification was set forth:
There can be no assurance that the Partnership will operate profitably. The future performance of the Partnership will be subject to the prevailing economic conditions and the ability to locate and acquire additional publications. The performance of the Partnership will be subject to financial, business and other factors beyond its control, including competition from present competitors (many of which are substantially larger, and have substantially greater resources, than the partnership) and technological advances and changes in the communication, media, advertising and other related industries in which the Partnership operates....
Hunter PPM at 23 (see "The Business"). Under the heading "Publishing Industry," another notification was set forth:
The performance of the Partnership may be negatively effected [sic] by certain factors relating to the publishing industry outside the control of the Partnership. These factors include potential increases in the cost of raw materials such as paper and ink, increases in applicable postal rates and weakness in the advertising markets in general. In addition, the Partnership may be negatively affected by weakness in industries served by the Partnership's publications (such as the oil and gas and automotive industries), weakness in the markets for goods advertised and competition by both other publications and other media for available advertising dollars.
Hunter PPM at 24. Under the heading "Working Capital," still another warning read:
There can be no assurance that the Partnership will have sufficient working capital. A deficiency of working capital might be caused, for example, by a decrease in gross revenues or by an increase in expenses. There can be no assurance that the Partnership will be able to borrow funds in addition to those available to it under the Bank Loan. In addition, there can be no assurance that the Partnership will be able to replace that line of credit after its anticipated expiration on June 30, 1996.
Hunter PPM at 24-25 (see "Financing" under "The Business"). Under the heading "Profitability โ Variances from Forecasts and Projections," the Hunter PPM provided:
There can be no assurance that the Partnership will attain the operating results forecasted in Schedule A hereto. The *672 forecasts and projections contained in Schedules A, B and C to this Confidential Memorandum are based on the estimates and assumptions set forth therein. Although the General Partners believe those estimates and assumptions to be reasonable, some of the estimates or assumptions may prove to be inaccurate .... In any event, the actual results of future operations of the Partnership likely will vary from those set forth in the forecasts and projections, and such variations may be material.
Hunter PPM at 25-26. As warnings go, these are sufficient to defeat the claim based on allegations of future performance.
It is true that caveats about the projections do not insulate the Promoter Defendants from fraud. However, the warnings show that future presentations are merely projections, not statements of fact upon which the Plaintiffs can rely. Future misrepresentations may be misleading despite warnings only if based on present fraudulent numbers or present fraudulent facts or omissions. See Luce v. Edelstein, 802 F.2d 49, 56 (2d Cir.1986). None such are alleged here. A projection of future prospects which "bespeaks caution" is not actionable. See Haggerty v. Comstock Gold Co., 765 F.Supp. 111, 114 (S.D.N.Y.1991); CL-Alexanders Laing & Cruickshank v. Goldfeld, 739 F.Supp. 158, 162 (S.D.N.Y.1990); see also In re Donald J. Trump Casino Sec. Litig., 793 F.Supp. 543, 549-52 (D.N.J.1992) (comprehensive discussion of how virtually every circuit has come to agree with the emerging "bespeak caution" trend in the law).
The Plaintiffs' second claim is that they were misled into believing the Partnership would be profitable because they were allegedly told that the Partnership was going to launch an "aggressive acquisition strategy." Such a statement cannot be actionable as a guaranty of future profitability. All it should do is put the potential investor on notice that the partnership was a high-risk enterprise; an aggressive acquisition strategy guarantees immediate inroads into investment capital.
The Plaintiffs allege in their third claim that, contrary to fact, the Defendants claimed that Hunter had been successfully operated in the past. Although Hunter had been losing money, its financial statements clearly revealed this. Hunter had missed two debt payments in the recent past, but the Hunter PPM stated this. See Hunter PPM at 53-5.
Finally, the Plaintiffs allege they were told that Hunter would be managed by "seasoned" veterans. Brief curricula vitae of both Pompadur and Stein were included in the Hunter PPM at 61-62, and the Plaintiffs have not alleged what portions, if any, of that information was false. The Plaintiffs also allege that Pompadur and Stein's "true purpose" was merely to rid themselves of a losing investment. However, when the facts are fully revealed in the offering memorandum, that purpose is not actionable. See Bucher v. Shumway, [1979-80 Transfer Binder], Fed.Sec.L.Rep. (CCH) ถ 97,142 (S.D.N.Y. Oct. 12, 1979). The current finances of the business at the time were fully revealed, as were all transactions of Stein and Pompadur; therefore their motive, as such, is irrelevant. See Lavin v. Data Systems Analysts, Inc., 443 F.Supp. 104 (E.D.Pa.1977), aff'd. without op., 578 F.2d 1374 (3d Cir.1978).
4. Plaintiffs' งง 10(b) and 12(2) Claims Are Dismissed With Prejudice
The Plaintiffs' claims are directly contradicted by warnings and notifications contained in the Offering Materials. These warnings and notifications were set out with underscored subject headings, they were listed in capitalized letters for the first few pages of the Hunter PPM, and they were often cross-referenced to other risk notification sections throughout. Under these circumstances, Plaintiffs have not made out a case of fraud with sufficient particularity to pass muster under Rule 9(b).
In prior proceedings in this case, Judge Stanton twice orally directed the Plaintiffs to replead their Complaint with more particularity. They have repleaded their Complaint now for the second time with no better result. The Plaintiffs have had ample opportunity to remedy the flaws in their pleading, but they have not done so. Therefore, this Court hereby dismisses the งง 10(b) and *673 12(2) claims set forth in the Hunter Publishing Plaintiffs' Second Amended Complaint with prejudice.
II. Lenox Towers
A. Prior Proceedings
The Lenox Towers action differs from the others since, as explained supra in Global I ง III.D.1., a decision in that case has already been rendered by the Honorable Louis H. Stanton in Martin, 1991 WL 131176, 1991 U.S.Dist. LEXIS 9234. This decision is part of the law of the case, and familiarity with it is assumed. Judge Stanton concluded that, should the Plaintiffs' claim that the Defendants had failed to inform the Plaintiffs that previous limited partnership offerings had failed to sell out prove to be true, the Plaintiffs had pleaded a material omission sufficient to withstand a motion to dismiss. However, since he also found that the Plaintiffs had not pleaded fraud with the particularity required of them by Rule 9(b), Fed.R.Civ.P., he dismissed the Complaint as to all Defendants except IREC. See Martin, 1991 WL 131176, at *3, *4, 1991 U.S.Dist. LEXIS 9234, at *5-*7, *12-*13.
The Plaintiffs have since then filed an Amended Complaint, which is now opposed by the Defendants on the grounds of statute of limitations, see Global Motion I ง III.D.1, failure to state a claim, and failure to plead fraud with particularity. The Defendants do not oppose the determination that the nondisclosure of the prior failure of other limited partnerships was a material omission, and accordingly that point is not addressed here. The Moving Defendants oppose the Plaintiffs' other allegations of material misstatement and nondisclosure, and it is these allegations which this Court considers for dismissal now.
B. Facts
Unlike Hunter Publishing, which was essentially a refinancing of a leveraged buyout, the facts in Lenox Towers seem more typical of the type of commercial real estate offering which Integrated often sponsored. The Lenox Towers Associates Limited Partnership (the "Partnership") was syndicated on February 15, 1989, to acquire, own and operate two 17-story office towers together with a 72-year leasehold interest in the underlying land (the "Lenox Property") located in Atlanta, Georgia. The Lenox Property comprised two nearly identical buildings originally built in the 1960s, but recently renovated, and a commercial garage.
Integrated syndicated the Lenox property through the same wholly-owned subsidiary as in Hunter Publishing (Integrated Resources Equity Corporation, or "IREC"), using essentially the same partnership structure. Through a private placement memoranda dated February 15, 1989 (the "Lenox PPM") and two investment summaries dated September, 1988 and March, 1989 (collectively the "Offering Materials"), Plaintiffs were offered 155 units at $99,000 per unit, on the condition that they warranted that their purchase of the interests would maintain the partnership's exemption from registration under the federal securities laws. As in the offering in Hunter, purchasers were given the option of paying in cash or in a combination of cash and promissory notes offered by IR Lenox Credit Corporation ("Lenox Credit"). Unlike the offering in Hunter, however, the Lenox Towers Defendants did not state that the Offering would be withdrawn and all purchases cancelled if all partnership units were not sold. By November 1989 only 49 of the 155 units offered had been sold, and the Defendants began to look elsewhere for financing. Although the Partnership acquired additional financing via commercial bank loans, the Plaintiffs have alleged that their partnership interests now have little or no worth.
C. Discussion
1. The Plaintiffs' งง 10(b) and 12(2) Claims
The Plaintiffs' งง 10(b) and 12(2) claims are again insufficiently pleaded to pass muster under Rule 9(b). The Plaintiffs' งง 10(b) and 12(2) allegations, which are subject to the motion to dismiss, essentially state that the Defendants misrepresented and failed to disclose the possibility that the limited partnership units would fail to sell out completely. They also allege that they were *674 told that if additional financing proved necessary, the Partnership would borrow from Integrated or an affiliate, and not from an outside lender as it actually did. Finally, they also allege that the Lenox PPM misrepresented the projected occupancy and rental rates of the project, and that these projections contradicted the results of an internal analysis of the property prepared by Integrated itself in December 1988.
As stated above in Global I ง III.D.1., the Lenox PPM explicitly warned that the offering might be undersubscribed and that the Partnership had the option of borrowing any shortfall from outside lenders. The Lenox PPM warned in three places that if all the units were not sold, amounts borrowed to cover Lenox cash requirements would remain outstanding. See Lenox PPM at ii, 9 & 15. The Lenox PPM made it clear that certain financial obligations would accrue "assuming all of the interests are sold" and "assuming the sale of all interests." (Lenox PPM at 3). The Lenox PPM always represented that Integrated would loan the Partnership any necessary money "if possible," and Plaintiffs have pointed to no guarantees that Integrated would always do so. "[N]o liability attaches to an offering memorandum that purports to be speculative." Stevens, 694 F.Supp. at 1063.
The Plaintiffs contend that the Lenox PPM misrepresented the projected occupancy and rental rates of the project. Projections, in the context of a securities offering, are promises; and promises are actionable only if the defendant knows they are false when he makes them. See Luce, 802 F.2d at 56. A promise of future income will be false when made if it is based on current facts which are falsely misrepresented in order to support the projections. See Virginia Bank-shares, Inc. v. Sandberg, ___ U.S. ___, ___, 111 S.Ct. 2749, 115 L.Ed.2d 929, 948 (1991). To label a projection which does not pan out "fraud" merely because it turned out not to be true is "fraud by hindsight," in Judge Friendly's famous phrase. Denny v. Barber, 576 F.2d 465, 470 (2d Cir.1978). Some aspect of the projection must be actually false, and known to be false to the defendant making the promise at the time it was made, for the projection to be fraudulent.
The projections in Luce which were held not to be fraudulent were hedged with cautionary language, which made it clear that projections were "necessarily speculative in nature," and the court stated that "[w]e are not inclined to impose liability on the basis of statements that `bespeak caution.'" Luce, 802 F.2d at 56. The rationale is that if projections can be misleading if they are portrayed as certainties, they cannot be misleading if all the risks and uncertainties accompanying the investment are fully revealed. The result is the "bespeak caution" approach to federal securities fraud claims:
The essence of the doctrine is that where an offering statement, such as a prospectus, accompanies statements of its future forecasts, projections and expectations with adequate cautionary language, those statements are not actionable as securities fraud. Within the past thirteen months, five circuit courts have adopted this approach to evaluating the actionability of a federal securities fraud claim based on future projections contained in a prospectus or other offering statement.
Trump Casino, 793 F.Supp. at 549 (citations omitted); see also id. (citing Luce as a seminal case for the "bespeak caution" doctrine). "[C]ourts in this Circuit have repeatedly held that, with respect to future projections, there is no liability under ง 10(b) for statements in an offering memorandum that `bespeaks caution.'" Haggerty, 765 F.Supp. at 114.
However, employing statements which "bespeak caution" does not automatically absolve the defendants of liability for any securities violation. Fraud is still fraud, and all the cautionary language in the world will not replace a true material omission or misstatement of a fact which would matter to a reasonable investor. But adequate cautionary language may be the equivalent of full disclosure for predictions, since it should tell a reasonable investor how far he may rely on management's usually glowing predictions. "[W]arnings and disclaimers may limit the extent to which an investor can rely on the offering documents as a forecast of future events." Griffin v. McNiff, 744 F.Supp. *675 1237, 1253 (S.D.N.Y.1990); see CL-Alexanders Laing & Cruickshank v. Goldfeld, 739 F.Supp. 158, 162 (S.D.N.Y.1990); Friedman v. Arizona World Nurseries Limited Partnership, 730 F.Supp. 521, 541 (S.D.N.Y.1990), aff'd without op., 927 F.2d 594 (2d Cir.1991).
The Lenox PPM in the Lenox Towers Offering Materials characterized projected rent rate increases of 3% to 6% as "assumptions" and explicitly stated that, "[b]ecause the successful operation of the property will depend upon many factors over which the Partnership will have little or no control, no assurance can be given that future operating results will match the forecasts contained herein." Lenox PPM ถ 7. The same warning was repeated at the beginning, Lenox PPM at iii, and in the "Risk Factors" section of the Lenox PPM, id. at 32. The competition in office space in the vicinity of Atlanta and problems of traffic congestion around the property were disclosed in the "Office Market Overview," appended to the Lenox PPM. See Lenox PPM Ex. 3 at 192-97.
The Plaintiffs cite but one example of anything approaching a material omission. They allege that an internal analysis of the property prepared by Integrated stated that it was "unrealistic" to assume the property could achieve 95% occupancy. According to the Defendants, the internal analysis simply stated that it was "realistic" that 1989 would be a tough leasing year, but that 95% leasing by December 1, 1989 was still the "primary goal" which would be "aggressively" pursued.[28] The Plaintiffs still have cited no statements in the internal analysis to support allegations of knowledge of misstatements on the part of the Defendants. Since this citation to the internal analysis is the closest the Plaintiffs' Complaint comes to specific allegations of fraud, the Plaintiffs' Complaint is dismissed for failure to plead fraud with particularity pursuant to Rule 9(b).
2. The Plaintiffs' Cross-Motion Against the Defendants' Counterclaims is Granted
The two named Plaintiffs in Lenox Towers, Jules Martin and Frances M. Donovan, each executed a Subscription Agreement on May 25, 1989 and May 17, 1989. These Agreements were required from each Investor as a prerequisite to purchasing any limited partnership interests. In Section 6 of every Subscription Agreement, each Investor warranted, among other things, that (1) each relied only upon the Offering Materials for information, (2) each has consulted with an attorney or accountant who had reviewed and analyzed the offering, (3) each understood that the financial projections were based only on certain assumptions and did not purport to be a representation of the effects of any investment in the Partnership, and (4) each was able to bear the economic risk of an investment in the Partnership. As investors, moreover, both Plaintiffs agreed to indemnify the Defendants for any breach of these warranties:
[Plaintiffs would] indemnify and hold harmless the Partnership, the General Partner, Credit Corp., Integrated, any natural person, corporation or entity affiliated with any of the above ... from and against any and all loss, damage, liability or expense, including costs and reasonable attorneys' *676 fees to which the Partnership or such other person may be put or which it may incur by reason of or in connection with any misrepresentation made by the undersigned or any breach of any of his warranties or his failure to fulfill any of his covenants or agreements under this Agreement or the Partnership Agreement.
Lenox Towers Subscription Agreement ง 7, ถ 8.
Alleging that the claims filed by the Plaintiffs in this lawsuit demonstrate the Plaintiffs' breach of these warranties, the Defendants have counterclaimed for their costs and legal fees pursuant to this indemnity clause. The Defendants specifically allege that the Plaintiffs breached the first warranty by relying on "an investment summary dated September, 1988 and March, 1989," Am.Compl. ถ 4, and written and oral communications instead of only on the offering materials. They allege that the Plaintiffs breached the second by failing to analyze the Lenox PPM, for the Lenox PPM openly stated that all partnership units might not be sold, that traffic was a problem for businesses thinking of renting space in the Lenox Property, and that the commercial real estate market in Atlanta was competitive. They allege that the Plaintiffs breached the third when the Plaintiffs pleaded reliance upon the financial projections. Finally, they allege that the Plaintiffs breached the fourth by claiming now that they could not afford to lose the money that they lost.
The Defendants' counterclaims, unlike the Plaintiffs' claims, do give the Plaintiffs fair notice of what their claims are and the grounds upon which those claims rest. See Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957). Although ง 14 of the 1933 Act, 15 U.S.C. ง 77n, and ง 29(a) of the 1934 Act, 15 U.S.C. ง 78cc(a), provide that any provision binding any buyer of securities to waive compliance with the federal securities laws or rules is void, the indemnity provision escapes this fate because it explicitly states that the Plaintiffs retain all their rights under the federal securities laws. Nevertheless, as a matter of law, the Defendants' counterclaims must be dismissed since the indemnity agreement at issue here does not encompass the right of the Defendants to recover their attorneys' fees expended in their successful defense. The Defendants still may be entitled to reasonable attorneys' fees pursuant to ง 11(e) of the 1933 Act, 15 U.S.C. ง 77k(e) (which allows defendants' costs provided plaintiffs' securities claims prove frivolous), but they cannot collect them under this indemnity agreement for the reasons stated below.
The leading opinion on the issue in the Second Circuit is Zissu v. Bear, Stearns & Co., 805 F.2d 75 (2d Cir.1986) ("Zissu II"). There the Court considered in detail the "troubling question involving an apparent inherent contrariety between" plaintiffs' non-waiver of the right to sue on securities fraud and an indemnity clause protecting sponsors from plaintiffs' breach of warranty clause in the same agreement. The court in Zissu II concluded that while the indemnity agreement was too vague to put the plaintiff in that case on notice that he might have to pay the defendants' attorneys' fees, plaintiff's lawsuit was frivolous within the meaning of ง 11(e), and so the district court's award of attorney's fees could stand.
Here that does not seem to be the case, for this indemnity agreement, unlike the one at issue in Zissu II, explicitly states that the Plaintiffs will be liable for the Defendants' attorney's fees. However, other courts in other circuits have followed Zissu II and yet held that even when an indemnity agreement such as this one does explicitly mention attorneys' fees, it still does not put plaintiffs on notice that they must pay defendants' attorneys' fees unless their case is frivolous. See Stratmore v. Combs, 723 F.Supp. 458 (N.D.Cal.1989), aff'd sub nom. Layman v. Combs, 981 F.2d 1093 (9th Cir.1992); Fulco v. Continental Cablevision, Inc., Fed.Sec. L.Rep. (CCH) ถ 95,345, 1990 WL 120689 (D.Mass.1990).
The district court opinion in Zissu considered plaintiff's warranties to be a pure contract claim. One of the purposes of the contract, to be sure, was to make certain that the plaintiff's investment preserved that private offering's exemption from the requirements of registration under SEC Rule 146, 17 C.F.R. ง 230.146), but that was not determinative. *677 See Zissu v. Bear Stearns & Co., 627 F.Supp. 687, 693 (S.D.N.Y.1986) ("Zissu I"), aff'd on other grounds, 805 F.2d 75 (2d Cir.1986). The Court of Appeals stated:
[T]he warranties in question were necessary to exempt the limited partnership from the requirements of the 1933 Act and are so understood by investors. That being the case, the parties had little reason to expect that such warranties might also be the basis for the counterclaim made in the present case. Thus, although New York courts have held that contractual indemnity provisions for attorneys' fees will be enforced, and broad indemnification provisions like the one here should be read to extend to such fees ... a higher level of specificity is required when attorneys' fees are being assessed against a plaintiff suing for securities fraud.
Zissu II, 805 F.2d at 79-80 (citations omitted).
In other circuits, merely including the mention of attorney's fees in the list of items for which a plaintiff promises indemnification does not reach the requisite level of specificity. In Stratmore, 723 F.Supp. 458 (N.D.Cal. 1989), the court construed an indemnity clause which was part of a limited partnership agreement and which did mention attorneys' fees. The relevant portions of the indemnity clause read:
The Subscriber hereby agrees to indemnify and hold harmless the Company, the Sellers and agents of each of them from and against any losses, claims, damages, liabilities, expenses (including attorneys' reasonable fees and disbursements), judgements [sic] and amounts paid in settlement resulting from the untruth of any of the warranties....
Stratmore, 723 F.Supp. at 460. The Court wrote in Stratmore:
Sellers should not be absolutely barred from enforcing by indemnity agreements the warranties and representations made by buyers. However, as the Zissu court stated, if those indemnity provisions are to include defendants' attorneys' fees incurred in suit by buyers for securities laws violations, such an inclusion should be very clear.
Defendants here argue that this indemnity clause explicitly mentions attorneys' fees, unlike the one in Zissu. Therefore, defendants believe that this indemnity provision was specific. However, the reasoning in Zissu went beyond the mere presence or absence of the words "attorneys fees" in the clause. The court pointed out that the main purpose of the warranties and representations was to protect the private placement exemption, as it is here. In that context, plaintiffs had little reason to anticipate that the indemnity provision would apply to suits by the buyers themselves against the sellers for securities act violations.
Id., 723 F.Supp. at 463.
The argument that a clause designed to preserve an exemption does not put plaintiffs on notice is probably a stronger argument than the "public policy" reason cited in other opinions, such as Doody v. E.F. Hutton & Co., 587 F.Supp. 829, 833 (D.Minn.1984) ("The Court finds that enforcing an indemnity provision such as [this] one ... would discourage prospective plaintiffs from bringing securities fraud actions"); Barnebey v. E.F. Hutton & Co., 715 F.Supp. 1512, 1522 (M.D.Fla.1989) (denying plaintiffs' public policy argument because of Zissu II but nevertheless denying summary judgement in favor of defendants). The public policy argument โ that enforcing such agreements would discourage legitimate securities fraud actions โ is too absolute. Where possible, the securities laws should not be construed against freedom of contract.[29] Nor would *678 the statement in Zissu II that a higher level of specificity would be required make sense if such indemnity clauses could not be enforced altogether.
Therefore, under the circumstances of this contractual language, the Defendants cannot assert a claim for indemnification of attorney's fees and other costs unless the Plaintiffs' claim is frivolous, in which case they are entitled to costs under ง 11(e).
Parties in these actions who may assert claims for indemnification under such agreements are third-party beneficiaries. See MFS Managed High Yield Municipal Bond Trust v. Osteopathic Hospital Association, Inc., Fed.Sec.L.Rep. (CCH) ถ 94,375, 1989 WL 73217 (D.Mass.1989) ("defendants correctly argue that they were third-party beneficiaries, entitled to enforce the representations and warranties made by plaintiffs"); Samuels v. Wilder, 871 F.2d 1346, 1353 (7th Cir.1989) (plaintiffs must indemnify nominee for actions brought due to owner's participation in the investment scheme). This is nothing more than the traditional law of indemnity (often an agreement between two parties to shift the risk to the real party in interest) in the context of securities law. See Colon v. Automatic Retailers Ass'n Serv., Inc., 74 Misc.2d 478, 343 N.Y.S.2d 874 (Civ.Ct.1972) (general discussion of the law of indemnity in New York).
3. The Plaintiffs' งง 10(b) and 12(2) Claims are Dismissed With Prejudice
In light of the fact that the Complaint in Lenox Towers was previously amended following the dismissal of Claims I through VII[30] of the original Complaint for failure to comply with the pleading requirements of Rule 9(b), Fed.R.Civ.P., see Martin, 1991 WL 131176, at *5, 1991 U.S.Dist. LEXIS 9234, at *14, the Moving Defendants' Global Motion II is granted, and the Lenox Towers Plaintiffs' งง 10(b) and 12(2) claims are dismissed with prejudice as to all Defendants.
III. Southern Inns
Applying the relevant statutes of limitations to this action had whittled the number of Plaintiffs in this action down to ten and the number of Defendants down to four. The ten Plaintiffs are the nine Florida Plaintiffs and the one Illinois Plaintiff whose claims were brought or added before June 19, 1991, the date in ง 27A. The Florida Plaintiffs are Joan Agurcia, Leonard C. and Ruth M. Gaderton, Richard and Henrietta House, Rhona Miller, Mary F. Walker, the Elizabeth J. Walker Trust, and Jim Weldon. The Illinois Plaintiff is Bhurji Singh. The four original defendants also remain: Integrated's wholly-owned subsidiary IREC, the Southern Inns Associates Limited Partnership (the "Partnership"), IR Southern Inns Credit Corporation ("Southern Credit Corp."), and Sevzar Associates ("Sevzar"), a Connecticut partnership which is one of three general partners in the Partnership. The Plaintiffs' claims against the additional Defendants do not relate back as is explained above. See supra Global Motion I ง III.B.
A. Facts
The facts and the Plaintiffs' claims in Southern Inns are virtually identical to those in Lenox Towers. The Plaintiffs allege that the Defendants organized the Partnership in June, 1988, to purchase, own, and operate seven Comfort Inn motels in the Carolinas and Virginia (the "Properties") (see supra Global I ง III.D.2.) The Properties were syndicated by a private placement memorandum (the "Southern Inns PPM") and an investment summary (collectively the "Offering Materials"). As in Lenox Towers, purchasers could buy with cash or with cash and a promissory note financed by Southern Credit Corp. Each unit was priced at $99,500. The Plaintiffs allege that Defendants could sell only 55.5 out of 128 units offered, or 43% of the Offering. It is clear that, as in Lenox Towers, the Defendants had not sold all the units by late 1989 and borrowed money from outside lenders to cover the shortfall. The Plaintiffs have alleged that the Partnership has failed, that their investments are now *679 worthless, and that four of the seven Properties have been lost to foreclosures.
B. Discussion
The core of the Plaintiffs' allegations in Southern Inns is the same as it was in Lenox Towers: They allege that the Defendants falsely represented that the partnership would sell out completely and that, if it did not, Integrated or an affiliate would be willing and able to advance any necessary money.
The Plaintiffs' ง 10(b) claims in the Third Amended Complaint of Southern Inns is dismissed for failure to plead fraud with particularity for the same reason it was dismissed above in Lenox Towers. The Southern Inns PPM here contained the same caveats and warnings. It also disclosed the possibility that not all partnership units might sell: It stated that the anticipated capital contributions "will be $12,871,147 if all the interests are sold." Southern Inns PPM at 18. Investors were twice informed that the Partnership might have to obtain additional loans, including loans from outside lenders, if current financing proved insufficient. See Southern Inns PPM at 14 & 19. Without alleging more facts which could raise an inference of material misstatements or omissions, let alone scienter, projections of this nature are not actionable in either Southern Inns or Lenox Towers.
C. The Southern Inns Plaintiffs' ง 10(b) Claims are Dismissed With Prejudice
In light of the fact that the Complaint in Southern Inns has been amended three times, the Moving Defendants' Global Motion II made pursuant to the Rule 9(b), Fed. R.Civ.P., is granted and the ง 10(b) claims of the Florida Plaintiffs and the Illinois Plaintiff as set forth in the Plaintiffs' Third Amended Complaint are dismissed with prejudice.
For the reasons set forth above, the Moving Defendants' Global Motion II is granted and the งง 10(b) and 12(2) claims in Hunter Publishing and Lenox Towers are dismissed with prejudice as are the ง 10(b) claims of the Florida Plaintiffs and the Illinois Plaintiff in Southern Inns. Finally, the Lenox Towers Plaintiffs' Rule 12(b)(6) motion is granted and the counterclaims of the Lenox Towers Defendants are dismissed with prejudice.
Conclusion
For the foregoing reasons, Global Motion I is granted in part and denied in part, and Global Motion II is granted. Therefore, the causes of action are dismissed as set forth above.
The parties are hereby directed to attend a pre-trial conference that is to be scheduled at their earliest convenience after January 19, 1993.
It is so ordered.
NOTES
[1] Those Defendants are the following: Kidder Peabody & Co.; GA Partners Inc.; Marine Midland Bank, N.A.; Hunter Publishing Co.; Deloitte & Touche; Cushman & Wakefield of Pennsylvania; Prudential-Bache Securities, Inc.; Manufacturers Hanover Trust Company; Ameritrust Company National Association; First Interstate Bank of California; Morgan Guaranty Trust Company of New York; Security Pacific National Bank; Signet Bank/Virginia; and Landauer Associates, Inc.
[2] The following is a list of the Moving Defendants and their respective attorneys in each case. The Anderson Kill Defendants are represented by Anderson Kill Olick & Oshinsky ("AKOO"), and the Integrated Defendants are represented by Camhy Karlinsky & Stein ("CKS") and Townley & Updike ("TU").
Research Triangle: Research Triangle Associates Ltd. Partnership (AKOO), RTA Assocs. (AKOO), Tripark Corp. (AKOO), James R. Greene (AKOO), Durham Property Corp. (CKS), Integrated Resources Equity Corp. (CKS).
600 Grant Street/Reagan: 600 Grant Street Assocs. Ltd. Partnership (AKOO), DCGP Assocs. Ltd. Partnership (AKOO), Conzar Assocs. (AKOO), Zar Corp. (AKOO), Odin Management Co., L.P. (AKOO), Bartmil, Inc. (T & U), Integrated Resources Equity Corp. (T & U), Grant Property Corp. (T & U), Sivram Corp. (T & U), GA Partners Inc. (Arent Fox McGarrahan & Heard), Prudential Bache Securities Inc. (Cahill Gordon & Reindel), Kidder Peabody & Co., Inc. (Morrison & Foerster), Manufacturers Hanover Trust (Hunton & Williams).
600 Grant Street/Schoonmaker: DCPG Assocs. (AKOO), Conzar Assocs. (AKOO), Zar Corp. (AKOO), Integrated Resources Equity Corp. (TU), Ron Jacobs (TU).
Clovine/Standefer: Clovine Assocs. Ltd. Partnership (AKOO), Kanzar Assocs. (AKOO), Newzar Assocs. (AKOO), Zar Corp. (AKOO), Somnat Corp. (CKS), Integrated Resources Equity Corp. (CKS), Landauer Assocs. (Carter, Ledyard & Milburn).
Clovine/Ellingson: Kanzar Assocs. (AKOO), Newzar Assocs. (AKOO), Zar Corp. (AKOO), Somnat Corp. (CKS), Integrated Resources Equity Corp. (CKS), Integrated Financial, Inc. (CKS), Landauer Assocs. (Carter, Ledyard & Milburn).
West Palm/Coleman & West Palm/Baird: EVP Fourth Corp. (AKOO), Richard H. Ader (AKOO), Arthur H. Goldberg (AKOO), Jay H. Zises (AKOO), Selig A. Zises (AKOO), Jay D. Chazanoff (AKOO), Alan H. Weiner (AKOO), Richard A. Oppenheim (AKOO), Resources Funding Corp. (CKS), IR West Palm Credit Corp. (CKS).
Rittenhouse: EVP Seventh Corp. (AKOO), Richard Ader (AKOO), Arthur Goldberg (AKOO), Jay H. Zises (AKOO), Selig A. Zises (AKOO), Jay D. Chazanoff (AKOO), Resources Funding Corp. (CKS), Integrated Resources Equity Corp. (CKS), IR Rittenhouse Square Credit Corp. (CKS), Cushman & Wakfield of Pennsylvania, Inc. (Jones, Day, Reavis & Pogue).
Lenox Tower: EVP Second Corp. (AKOO), Richard H. Ader (AKOO), Arthur H. Goldberg (AKOO), Jay H. Zises (AKOO), Selig A. Zises (AKOO), Jay D. Chazanoff (AKOO), Frank A. Savage (AKOO), Nancy Frankel (AKOO), Lenox Towers Ltd. Partnership (AKOO), Integrated Resources Equity Corp. (AKOO), Federick J. Spagnola (CKS), IR Lenox Towers Credit Corp. (CKS).
Southern Inns: Sevzar Assocs. (AKOO), Zar Corp. (AKOO), EVP Sixth Corp. (AKOO), Richard H. Ader (AKOO), Arthur H. Goldberg (AKOO), Jay H. Zises (AKOO), Selig A. Zises (AKOO), Jay D. Chazanoff (AKOO), Gary W. Krat (AKOO), Philip W. Cohen (AKOO), Joel M. Pashcow (AKOO), Daniel N. Davis (AKOO), Benjamin D. Fein (AKOO), Southern Inns Assocs. Ltd. Partnership (AKOO), Integrated Resources Equity Corp. (CKS), IR Southern Inns Credit Corp. (CKS).
Fillmore/Greene's & Fillmore/Enviro: Fillmore Pacific Assocs. Ltd. Partnership (CKS), IR Golden Gate, Inc. (CKS), Integrated Resources Equity Corp. (CKS), Resources Funding Corp. (CKS), Richard H. Ader (Proskauer Rose Goetz & Mendelsohn), Alan H. Weiner (Proskauer Rose Goetz & Mendelsohn), Ameritrust Company National Assoc. (Kornstein Veisz & Wexler ["KVW"]), First Interstate Bank of California (KVW), Morgan Guaranty Trust Company of New York (KVW), Security Pacific National Bank (KVW), Signet Bank/Virginia (KVW).
Hunter Publishing: IR Publishing Ltd. Partnership (CKS), Integrated Resources Equity Corp. (CKS), IR Publishing Credit Corp. (CKS); Hunter Publishing Co., Inc. (Ross & Hardies), Elliot Stein, Jr. (Ross & Hardies), I. Martin Pompadur (Ross & Hardies), Deloitte & Touche (Arnold & Porter).
Intermobile: Integrated MR Ltd. Partnership (CKS), Integrated MR, Inc. (CKS), Integrated Health Care Investments, Inc. (CKS), IR Intermobile Credit Corp. (CKS), Deloitte & Touche (Arnold & Porter).
[3] Of all the Defendants against whom federal securities claims have been asserted in the fourteen actions and who have been served and have not settled, one failed to join in these motions, Bach & Associates, Inc., in Research Triangle.
[4] The Moving Defendants raise no real issue concerning the timeliness of the Original Complaint filed in the Hunter Publishing action, contending only that the Hunter Publishing Plaintiffs were placed on inquiry notice of their claims by the publicity of Integrated's financial demise. The Original Complaint was timely filed. This leaves only the issue of the timeliness of the forty-five Plaintiffs added in the two subsequent Amended Complaints in this action within the scope of the Global Motion I.
[5] Superseded by statute as stated in Ross v. Colorado Outward Bound Sch., Inc., 822 F.2d 1524 (10th Cir.1987).
[6] This Court follows Armstrong and those cases decided under it.
[7] A representative sampling of recent cases in which the issues of inquiry notice and discovery of fraud were decided as a matter of law includes the following: Armstrong, 699 F.2d at 88 (motion to dismiss); Arneil, 550 F.2d at 781 (summary judgment motion); Berry Petroleum, 518 F.2d at 411 (summary judgment motion); Farr v. Shearson Lehman Hutton, Inc., 755 F.Supp. 1219, 1225 (S.D.N.Y.1991) (summary judgment motion); Dimplex v. Scovill, Inc., No. 88 Civ. 7983 (LMM), 1991 WL 168041, at *5, 1991 U.S.Dist. LEXIS 18032, at *14 (S.D.N.Y. Aug. 22, 1991) (motion to dismiss); Dolan v. Rothschild Reserve Int'l, Inc., No. 90 Civ. 1003 (MP), 1991 WL 155770, at *2 (S.D.N.Y. Aug. 8, 1991) (motion to dismiss RICO claim predicated on securities fraud allegations); Marlow v. Gold, [1991 Transfer Binder] Fed.Sec.L.Rep. (CCH) ถ 96,112, at 90,633, 1991 WL 107268 (S.D.N.Y. June 6, 1991) (motion to dismiss); Landy v. Mitchell Petro. Tech. Corp., 734 F.Supp. 608, 617 (S.D.N.Y.1990) (motion to dismiss); Cohen v. Prudential-Bache Sec., Inc., 713 F.Supp. 653, 663 (S.D.N.Y.1989) (motion to dismiss); Henkind v. Brauser, [1989 Transfer Binder] Fed.Sec.L.Rep. (CCH) ถ 94,488, at 93,123, 1989 WL 54109 (S.D.N.Y. May 16, 1989) (motion to dismiss); Goodman v. Shearson Lehman Bros., Inc., 698 F.Supp. 1078, 1082 (S.D.N.Y.1988) (motion to dismiss RICO claim predicated on securities fraud allegations); Zola v. Gordon, 701 F.Supp. 66, 70 (S.D.N.Y.1988) ("Zola II") (summary judgment motion); Zola I, 685 F.Supp. at, 365 (summary judgment motion); Bresson, 641 F.Supp. at 345 (motion to dismiss).
[8] Of course, the triggering financial data must be such that it relates directly to the misrepresentations and omissions the plaintiffs later allege in their action against the defendants. Compare Freschi, 583 F.Supp. at 785 (disclosures of the high-risk nature of the investment did not trigger inquiry notice when plaintiffs' claims were based on alleged misrepresentations not related to the riskiness of the investment) with Farr, 755 F.Supp. at 1225-26 (disclosures of the high-risk nature of the investment did trigger inquiry notice when plaintiffs' claims were based on alleged misrepresentations related to the unsuitability of the investment as too risky).
[9] On June 15, 1989, Integrated announced that it was imposing a debt moratorium and suspending all payments on its commercial paper and other short-term debt totaling $1,500,000,000.00 This was the first failure of a Drexel-backed "junk bond" and only the second default on commercial paper since Manville defaulted in the early 1970's.
The press was quick to respond to news of Integrated's default. On June 15, 1989, most of the major wire services including the Associated Press ("AP") and Reuters carried stories on Integrated's debt moratorium. On June 16, 1989, The New York Times, Wall Street Journal, Los Angeles Times, Newsday and others all printed prominent stories on Integrated's default. These stories not only reported Integrated's debt moratorium but also discussed in detail the cash flow and debt problems that plunged the company into a liquidity crisis. In the days that followed, major news sources continued to report on Integrated's declining stock and bond prices, falling bond ratings and attempts to restructure its mountain of debt.
Throughout June and the summer of 1989, numerous stories continued to appear in The New York Times and Wall Street Journal reporting Integrated's struggle to refinance its debt burden in order remain viable. In the same time period, nearly every major newspaper in the United States reported on Integrated's default and related troubles.
[10] The one exception is Fillmore/Enviro which is discussed infra.
[11] The Plaintiffs added in the Amended Complaint are the following: Tuf Labs Inc., Durane Gas Co., Thomas Liv. Trust, Gary & Carolyn Bream, McNamara Pontiac Inc., Duard & Marlene Morris, C.T. Fowler Inc., Bar-Tak Importers Inc., and Snowhill Investments.
[12] The Plaintiffs added in the Amended Complaint are the following: James Berger, Thomas McKearn, John Pullen, Justin Stone, Carl La Manna, Joseph Kirk, Alex Knezevich, Robert Zimmerman, Kenneth & Mary Lovelace, Peter McIver, Heights Building Co., Thomas Bryant, Barry Kraynack, Steven Cady, John Dunbar, III, Estate of Robert Gunn, Bernard Bacevich, John Robinson, Charles Munn, William Foster, Howard Steahly, Kenneth Monnin, George & Louise Sousa, Fred Schunmann, Michael Rozen, Donald Williams, Stephen Autry, Ron Arrick, and Jack Zigler.
[13] The five new Plaintiffs added in the Amended Complaint are the following: Robert & Wendy Lembersky, Maurice & Barbara Morin, and John Jory.
[14] The Plaintiffs added in the First and Second Amended Complaints in Hunter are the following: Angellina Harwood Sales Co. Inc., T. Cass Ballenger, Louis & Sandra Bonessa, Janice Carson, Louie Davis, Sydney Falk, J. Thomas Foster, Marilyn Gallagher, Gerald Garbacz, Peter Gelzinis, Jr., Vito & Lucreza Gentile, Jeffery Goldberg, Jeffery Goldberg, Esq., Nihal Gooneratne, P. Guniganti, Richard Guth, C.T. Holland, Carroll Johnson, William Kent, Michael King Assoc. Retirement Trust, Barry Kraynack, Ursula Kroettinger, Martin Loon, Jerald & Joan Mahanke, Margaret McComb, Martin Meyers, Maurice & Barbara Morin, Ronald Park, Randy Price, John Pullen, Clifford Raisbelk, John Saathoff, Scott Santerre, Baldwin Sawyer, Jareen Schmidt, Richard Scott, Robert Slater, Harriet Smith, Ronald Smith, Haze Varner, Wadsworth Golf Constr. Co. Trust, Wadsworth Golf Constr. Co., James Wilson, and Kenneth Moorhead.
[15] The Southern Inns Plaintiffs added by the First and Second Amended Complaints are the following: Joan Agurcia, Rhona Miller, Mary Walker, Bhurji Singh, J. Lee & Phyllis Bailey, Donald Litzenberger Trust, Jesse Fox, James Thompson, John Lucania, Meyer Mann, Robert Evans, D. Wesley Huggins, III, Claudia Roach, Joseph Adlon, Richard Henrietta House, Rev. Eliz. J. Walker Trust, James Weldon, and DeWest Hooker. Louis Black and Barry Kraynack (misidentified as "Barry Kraymark" in the Complaint) were added as Plaintiffs in the Third Amended Complaint.
[16] Rule 15(c) as amended and in effect after December 1, 1991, applies to the Amended Complaints if:
(1) relation back is permitted by the law that provides the statute of limitations applicable to the action, or
. . . . .
(3) the amendment changes the party of the naming of the party against whom a claim is asserted if the foregoing provision (2) is satisfied and, within the period provided by Rule 4(j) for service of the summons and complaint, the party to be brought in by amendment (a) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (b) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.
Fed.R.Civ.P., Rule 15(c) (as amended Apr. 30, 1991, eff. Dec. 1, 1991; Dec. 9, 1991, Pub.L. 102-198, ง 11(a), 105 Stat. 1626.) (The period provided by Fed.R.Civ.P., Rule 4(j) is 120 days.) Lower courts have disagreed as to whether "the period provided by law for commencing the action" included the time available for service pursuant to the Federal Rules. 3 Moore's Federal Pract. 15.15[4.-2] at 15-159 (1992) (collecting cases). In Schiavone v. Fortune, 477 U.S. 21, 106 S.Ct. 2379, 91 L.Ed.2d 18 (1986), the supreme Court held it did not. Congress amended Rule 15(c) after the Advisory Committee labeled the result in Schiavone inconsistent with the liberal pleading practice provided for by Rule 8, Fed.R.Civ.P. See Notes of the Advisory Committee on Rules, Notes to the 1991 Amendment to Rule 15(c), Committee Note of 1991 to Rule 15(c), reprinted in Moore's, supra, 15.01[13] at 15-10.3 (1992). The amendment does not help the Plaintiffs, since the new Defendants are added in the amended complaint dated December 19, 1991, which is obviously more than 120 days after any prior pleading.
Rule 15(c) as amended applies prospectively, but it may be applied retrospectively by a district court in the exercise of its discretion. Boliden Metech, Inc. v. U.S., 140 F.R.D. 254 (D.R.I.1991).
[17] The new Defendants are: Richard H. Ader, Jay D. Chazanoff, Arthur H. Goldberg, Selig A. Zises, Jay H. Zises, Gary W. Krat, Philip H. Cohen, Joel M. Pashcow, Daniel N. Davis, Benjamin D. Fein, Zar Corp., and EVP Sixth Corp.
[18] It should be noted that while the logic of Allbrand is still good law, the precise holding is no longer valid: Now, when the correct corporate defendant is served with the complaint beyond statute of limitations but within 120 days of filing against a corporate division with no independent legal existence, the true corporate defendant has been served within the statute of limitations. Schiavone and Allbrand have been modified only to this extent. See supra note 16.
[19] Fillmore/Enviro is also time-barred by the Plaintiffs' failure to satisfy the "one year from discovery" statute of limitations. See infra n. 21.
[20] Recall that the Plaintiffs had to qualify as "accredited investors" to participate in this offering pursuant to Reg. D. See 1933 Act, Rule 501(a), 17 C.F.R. 230.501(a).
[21] The analysis of Fillmore/Greene's also applies to Fillmore/Enviro because the securities fraud allegations are identical and the information available to the plaintiffs in both actions was the same. Thus, even if Fillmore/Enviro's งง 10(b) and 12(2) claims survived the three-year of statute of limitations, which they do not, they would still fail to be timely under the one-year statute of limitations.
[22] The Project began in mid-1987 and was originally scheduled to be completed by late 1989.
[23] See the discussion supra in Global Motion I ง III.A.
[24] Six lines further on, however, the Plaintiffs allege that at the time of the Offering in 1988 the Bank was owed $22.5 million. The Confidential Private Placement Memorandum lists the principle amount of the Bank Loan as approximately $22.5 million. See id. at 54. There is no need under the circumstances for the Court to resolve this discrepancy, if it is such. See infra.
[25] The Hunter Limited Partnership has two general partners, Hunter Publishing and IR Publishing.
[26] In Posner, the plaintiff claimed that an accounting method, the "percentage of completion" method to report sales, was improper because the defendants knew of the nonviability of the project and therefore of their own inability to complete orders. The court held that, since it was "not dealing with a concrete fact, but rather with a conclusion: `that the process ... was not economically viable,'" the accounting method chosen was valid unless the plaintiff could show some fact indicating that it was impossible at that time to complete the sales orders. Id. at 769. "Not everyone reaches a conclusion at the same time, and liability to purchasers of stock would arise only after the conclusion was reached and additional material misstatements were made." Id.
[27] The accounting principle cited by the Plaintiffs, ASB's SAS 34, AU 340, "The Auditor's Considerations When a Question Arises About an Entity's Continued Existence," ถ 77(a), was superseded in April 1988 by a new SAS No. 59, "The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern." SAS No. 34 applies here, however, for SAS No. 59 applies only to periods beginning on or after January 1, 1989.
[28] The "internal analysis" has been placed before this Court as part of one of the Defendants' Affidavits, the Robert Pees Affidavit. The Court may rely on it since the Plaintiffs have incorporated it by reference into their Complaint. See Shumate v. McNiff, Fed.Sec.L.Rep. (CCH) ถ 95,916, 1991 WL 42184 (S.D.N.Y.1991). Entitled "Lenox Towers Marketing Plan for 1989," and dated December 9, 1988, the contested statement actually reads:
The primary objective will be to have Lenox Towers 95% leased by December 31, 1989, or sooner if possible. In addition to aggressively pursuing this projected leasing schedule, it will be the objective of this marketing program to procure the most desirable tenants possible and realize the optimum leasing terms allowed by the market.
While achieving a 95% occupancy level always remains our focus at all times, to be absolutely realistic, 1989 will be a tough leasing year due to the fact that there is 47,412 rentable square feet of known vacancies coming up ... (Exhibit B).
Exhibit B to the internal analysis marketing plan listed 6 tenants who had notified the Partnership that they would not renew. The information in Exhibit B, i.e., the nonrenewing tenants' names and the amount of space each would no longer be leasing, was revealed to investors in the Lenox PPM at 54, under the heading, "The Space Leases."
[29] Compare the reasoning in Wilko v. Swan, 346 U.S. 427, 438, 74 S.Ct. 182, 188, 98 L.Ed. 168 (1953) (holding that the arbitration of securities claims was forbidden by the grant of exclusive jurisdiction to federal courts in ง 22 of the 1933 Act) with Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 233-34, 238, 107 S.Ct. 2332, 2341, 96 L.Ed.2d 185 (1987) (construing ง 27 of the 1934 Act and narrowly reading Wilko as barring waiver of a judicial forum only where arbitration is inadequate to protect the substantive rights at issue) and Rodriguez de Quijas v. Shearson/American Express Inc., 490 U.S. 477, 481, 484-85, 109 S.Ct. 1917, 1921-22, 104 L.Ed.2d 526 (1989) (overruling Wilko as conceptually obsolete and practically incompatible with McMahon).
[30] Claim I was dismissed as to all defendants except IREC. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584834/ | 641 So.2d 414 (1993)
Audrey MARKS, David Hendel, Ltd., Albert Sutton and Lorraine Sutton, Ira Aronson, et al., Appellants/Cross-Appellees,
v.
Harris MILLMAN and Valerie Millman, his Wife, Appellees/Cross-Appellants.
Nos. 92-2429, 92-2423 and 92-2296.
District Court of Appeal of Florida, Third District.
June 15, 1993.
Rehearing Denied September 7, 1994.
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., and Charles M. Auslander; Semet, Lickstein, Morgenstern, Berger, Friend, Brooke & Gordon, P.A., and Paul S. Berger, Keith, Mack, Lewis, Cohen & Lumpkin and R. Hugh Lumpkin and Cynthia Perez, for appellants/cross-appellees.
Margulies & Rones, P.A., and Victor K. Rones, for appellees/cross-appellants.
Before BASKIN, COPE and GERSTEN, JJ.
COPE, Judge.
Multiple investors[1] appeal an adverse final judgment in proceedings supplementary. We reverse.
Harris and Valerie Millman won a judgment for $351,563 against Slachter Mortgage Company. In looking for assets on which to execute, the Millmans found that Slachter Mortgage Company was the mortgagee of *415 record on a number of mortgages on real estate in Dade County.
The Millmans initiated proceedings supplementary in which they sought to seize the notes and mortgages. In those proceedings the appellant investors contended that they were the beneficial owners of the mortgages, not Slachter. The investors argued that the notes and mortgages were therefore not property of Slachter and were not subject to execution. Based on a special master's report entered after an evidentiary hearing, the trial court rendered judgment in favor of the Millmans. The investors have appealed.
The evidence showed that Slachter was for 33 years a mortgage broker. When Slachter desired to make a mortgage loan to a borrower, Slachter would contact one of more investors to determine if the investor wished to provide the funding for that specific loan. If the investor agreed, the investor would provide the funds and be the beneficial owner of the mortgage. Slachter would make the mortgage loan in its own name and then record an assignment in favor of the investor.
Once the mortgage loan was made, Slachter would receive the payments from the borrower. Slachter would remit the principal and interest from the mortgage to the investor or investors who owned that specific mortgage loan. Slachter served as the investors' agent for purposes of servicing the mortgages. See generally Restatement (Second) of Agency § 14B (1958).
In the mortgages that are at issue on this appeal, the investors provided the funding. However, Slachter failed to promptly execute and record assignments in favor of the investors. Consequently, there was a period of months, or in some cases, years, when Slachter was the mortgagee of record.
On January 4, 1990 the Millmans recorded their judgment against Slachter.[2] At that time all of the mortgages involved in this appeal were in Slachter's name. Later in 1990, Slachter recorded assignments in favor of the investors.[3]
The special master concluded that the Millmans' judgment, or the writ of execution, created a lien on the notes and mortgages. The master reasoned that any later-recorded assignments caused the investors to receive the assignments subject to the Millmans' lien.[4] The master ruled that the notes and mortgages should be treated as being assets of Slachter, and must be delivered over to the Millmans to satisfy their judgment.
We conclude that the order under review is erroneous. The master proceeded on the incorrect assumption that record ownership of the mortgages was dispositive. The master reasoned that if a mortgage was held of record by Slachter when the Millmans' lien attached, then the mortgage was an asset of Slachter and subject to execution.
The ruling below runs counter to settled law. Record title was not conclusive. Where, as here, a judgment debtor (Slachter) holds assets upon a resulting trust for someone else (the investors), the judgment creditor (Millmans) cannot execute on the trust assets.
Here, the investors established that the notes and mortgages were held by Slachter upon a resulting trust. As stated in Wadlington v. Edwards, 92 So.2d 629 (Fla. 1957):
A resulting trust is simply a status that automatically arises by operation of law out of certain circumstances... . In the creation of a resulting trust it is essential that the parties actually intend to create the trust relationship but fail to execute documents or establish adequate evidence of the intent. The typical illustration is where one man furnishes the money to buy a parcel of land in the name of another with both parties intending at the time that the legal title is held by the named *416 grantee for the benefit of the unnamed beneficiary.
Id. at 631 (citations omitted; emphasis added).
In the present case the mortgage company served as intermediary between the borrower and the investor. Slachter offered specific loans to specific investors on a loan-by-loan basis. In the instances before us the investors agreed to provide, and did provide, the funding for the mortgage loans. The investors were intended to be the beneficial owners of the respective notes and mortgages. There should have been a contemporaneous assignment of each note and mortgage to the investor who provided the funding, but the assignments were not promptly recorded. The circumstances establish that Slachter held the notes and mortgages upon a resulting trust.
As stated in First National Bank of Arcadia v. Savarese, 101 Fla. 480, 134 So. 501 (1931):
[I]t is also generally recognized that a judgment creditor cannot have his debt satisfied out of property held by his judgment debtor under a resulting trust for another, no matter how completely his debtor has exercised apparent ownership over it, unless it is made to appear that it was on the faith of such ownership that the credit was given which resulted in the judgment sought to be satisfied.
101 Fla. 480, 134 So. at 504 (citation omitted); accord Arundel Debenture Corp. v. Le Blond, 139 Fla. 668, 190 So. 765, 767-78 (1939); Estey v. Sharp Electronics Corp., 409 So.2d 217 (Fla. 4th DCA 1982).
Here, the beneficial owners of the mortgages are the investors. The Millmans are entitled to satisfy their judgment out of the assets of Slachter, not the investors. While First National Bank of Arcadia v. Savarese recognizes an estoppel exception to the general rule, that exception has no application in this case.[5]
The special master was troubled by Slachter's belated execution and recording of the assignments of mortgage. To the special master, this gave the appearance that Slachter was attempting to divest itself of assets which the Millmans might attempt to reach in satisfaction of their judgment. The mortgage company contended that the belated assignments were recorded when the omission was flagged by auditors.[6]
Regardless of the exact reason for the recording of the belated assignments, the relevant inquiry is whether the subject mortgages were beneficially owned by the investors. The belated recording of assignments was immaterial. Indeed, on the facts present here the investors would have been entitled to the recognition of a resulting trust, even if there had never been any assignments recorded at all. Under the cases cited above, the investors were entitled to show that they beneficially owned the mortgages and that the mortgages were not property of Slachter subject to execution.[7]
The investors also argue that the special master erred in ruling that a lien was created on the notes and mortgages by the Millmans' judgment or writ of execution.[8] In view of our conclusion that the assets were held upon a resulting trust, we need not reach this issue and express no view on the correctness *417 of the master's analysis. We likewise need not reach appellants' other points on appeal.
The Millmans cross-appeal so much of the judgment as found that seven mortgages were not subject to the proceedings supplementary. The parties agree that the master erred in relying on section 494.081, Florida Statutes (1989).[9] The statute applies solely to usury and does not create a safe harbor from creditors' claims.
We do not reverse, however, because these mortgages are also ones entitled to the recognition of a resulting trust. For that reason the Millmans were not entitled to reach those mortgages. The cross-appeal is therefore affirmed.
As to the appeal, we reverse and remand with directions to enter judgment for the appellant investors. As to the cross-appeal, we affirm.
Affirmed in part, reversed in part, and remanded.
NOTES
[1] The appellants are Audrey Marks, (Case No. 92-2429); Ira Aronson, Rose Arlin, Beatriz Azor, Jose Azor, Judith C. Carmona, P.A., Alice Chilton, Douglas A. Chilton, Libby Klein, as Custodian of Lance and Matthew A. Klein, Dori Kaplan, Elaine H. Klein, Ellen Leinoff, Andrew Leinoff, Rita R. Rauchwerger, Eric C. Rauchwerger, Elizabeth Rauchwerger, Sorrel S. Resnik, Heidi L. Shore, Selig Seligman, Miriam Seligman, Secretarial Research and Managerial & Development Corp. of America, Richard Sembello, as Trustee for Construction Research Lab, Virginia Sembello, Paul B. Sutta, Stuart Sutta, Patricia Sutta, Sonia Weitzman and William Weitzman (Case No. 92-2296); David Hendel, Ltd., Albert Sutton and Lorraine Sutton (Case No. 92-2423). The appeals were consolidated under Case No. 92-2429.
[2] The Millmans docketed their writ of execution with the sheriff on February 21, 1990.
[3] Slachter testified that an audit by state regulators disclosed that assignments had not been recorded. Consequently, assignments were belatedly executed and recorded.
[4] Although the master ruled that the lien attached as of the docketing of the writ of execution, the master treated all of the mortgages assigned after the recording of the judgment as being assets of Slachter.
[5] First National Bank of Arcadia v. Savarese recognizes that where the judgment creditor extended credit to the judgment debtor on the basis of the judgment debtor's legal title, and the judgment is based on the credit so extended, then the beneficiary of the resulting trust will be estopped from asserting his or her beneficial interest against a bona fide judgment creditor without notice of the true state of affairs. 101 Fla. 480, 134 So. at 504. Thus, if the Millmans had loaned money to Slachter secured by the various notes and mortgages of which Slachter was record holder, and if the Millmans obtained judgment upon Slachter's failure to repay, then the investors would be estopped from asserting the existence of a resulting trust. No such facts exist in this case. Here, the Millmans extended no credit to Slachter at all, much less any credit in reliance on Slachter's being mortgagee of record of the various mortgages.
[6] See supra note 3.
[7] The Millmans argue that affirmance is required by Harnish v. Peele, 386 So.2d 8 (Fla. 5th DCA 1980), review denied, 394 So.2d 1153 (Fla. 1981). We disagree. The evidence of the investors was that in each case they had bound themselves to provide, and did provide, the funds for the mortgage loans. See id. at 10; George T. Bogert, Trusts § 74, at 266, 274-75 (6th ed. 1987).
[8] The investors urge that a lien was created only when the investors were served with process in proceedings supplementary. The Millmans argue that the master was correct, or alternatively that a lien arises on the date of filing of proceedings supplementary, not the date of service.
[9] Repealed by ch. 91-245, § 51, Laws of Fla. (effective Oct. 1, 1991). Cf. § 494.0042, Fla. Stat. (1991) (brokerage fees) (effective Oct. 1, 1991). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584854/ | 641 So.2d 283 (1993)
Roy SAULSBERRY, Jr.
v.
WILCOX COUNTY BOARD OF EDUCATION, et al.
AV92000310.
Court of Civil Appeals of Alabama.
December 30, 1993.
Rehearing Denied February 4, 1994.
Certiorari Denied April 29, 1994.
*284 Rick A. Williams, Montgomery, for appellant.
James C. Pennington of Lange, Simpson, Robinson & Somerville, Birmingham, for appellees.
Alabama Supreme Court 1930642.
THIGPEN, Judge.
The record reveals that Roy Saulsberry, Jr., was employed as a maintenance co-supervisor by the Wilcox County Board of Education (Board) beginning June 6, 1986. By letter dated May 8, 1989, the acting superintendent notified Saulsberry that his employment would be terminated, effective June 30, 1989. The notice was mailed to Saulsberry's home address, and a return receipt was received by the Board indicating that the notice was delivered May 13, 1989; however, according to deposition testimony, the signature on the return receipt was that of Saulsberry's brother and not that of Saulsberry. Although Saulsberry denied that he received proper notice, his petition for a writ of mandamus, filed in May 1990, asserts that he was notified by letter dated May 8, 1989, that his contract would not be renewed.
In his petition, Saulsberry asserted that he had been wrongfully terminated from his employment in violation of the Fair Dismissal Act (Act) as codified in Ala.Code 1975, § 36-26-100 et seq. He further asserted that he had been wrongfully denied payment of certain travel expenses and compensation for accumulated annual leave. His petition requested that the trial court order his reinstatement and reimbursement.
The Board filed motions for summary judgment, supported by affidavits from the Superintendent of Education and excerpts from Saulsberry's deposition. In its motions, the Board contended, inter alia, (1) that Saulsberry was a probationary employee at the time of his dismissal, that his employment was terminated in accordance with the policy and procedures governing the employment of probationary employees, and that he was not entitled to the procedural protection of the Act; (2) that even had Saulsberry been afforded the protection of the Act, he failed to exhaust his administrative remedies prior to pursuing the petition of a writ of mandamus; (3) that his claim was barred by the doctrine of laches, and (4) that the relief sought by Saulsberry was not the proper subject matter for mandamus. Saulsberry submitted affidavits in opposition. Ultimately, the trial court granted the Board's motion for summary judgment, holding as a matter of law that Saulsberry was a probationary employee pursuant to the Act, and that he was properly terminated from his employment on May 8, 1989; hence, this appeal.
Saulsberry contends on appeal (1) that the trial court erred in finding that there was no genuine issue as to a material fact; (2) that his employment was terminated in violation of the Act; and (3) that the Board's action in terminating his employment constituted a violation of his Constitutional right to due process.
The law regarding summary judgment is well established. A motion for summary judgment tests the sufficiency of the evidence; a summary judgment is proper when the trial court determines 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, A.R.Civ.P. The moving party bears the burden of negating the existence of a material fact. Melton v. Perry County Board of Education, 562 So.2d 1341 (Ala.Civ.App.1990).
*285 When a motion for summary judgment is made and supported as provided in the rule, a party adverse to such a motion may not rest upon the mere allegations or denials of his pleadings, but must set forth specific facts showing that there is a genuine issue for trial. Rule 56, A.R.Civ.P. Proof by substantial evidence is now "the test when passing upon a motion for summary judgment." Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 798 (Ala.1989). The reviewing appellate court must apply the same standard utilized by the trial court when reviewing an entry of summary judgment. Melton, supra. We must also review the entire record in a light most favorable to the nonmoving party. Mann v. City of Tallassee, 510 So.2d 222 (Ala.1987).
We first address Saulsberry's contention that his employment termination violated his right to due process of law under the fourteenth amendment of the United States Constitution. The pleadings and the record fail to disclose that this issue was asserted, argued, or ruled upon by the trial court. An appellate court cannot hold a trial court in error for assertions which are advanced for the first time in the appellant's brief. Altiere v. Blue Cross & Blue Shield of Alabama, 551 So.2d 290 (Ala.1989). We will not consider on appeal constitutional issues that were not considered by the trial court. City of Montgomery v. Robinson, 441 So.2d 857 (Ala.1983). Accordingly, we will not consider Saulsberry's argument regarding that issue. The dispositive issue, therefore, is whether the trial court erred in entering the summary judgment on behalf of the Board upon a holding that Saulsberry was a probationary employee, and, therefore, that his employment was properly terminated by the Board.
The Act contains provisions regarding the procedures for the dismissal of non-teacher and non-classified employees. It is undisputed that Saulsberry was employed as a maintenance supervisor on June 6, 1986, which position is governed by the Act. Ala. Code 1975, § 36-26-101, provides:
"(a) All employees as defined in Section 36-26-100 shall be deemed employed on a probationary status for a period not to exceed three years from the date of his or her initial employment, or a lesser period which may be fixed by the employing authority.
". . . .
"(c) At any time during the employee's probationary period, the employing authority may remove an employee by furnishing said employee written notification at least 15 days prior to the effective day of termination."
It is, therefore, equally without dispute that at the time the notice of termination of employment was issued, i.e., May 8, 1989, Saulsberry was a probationary employee, and, as such, could be removed upon the employer's furnishing notice to Saulsberry at least 15 days prior to the effective date of his employment termination.
Saulsberry, however, artfully argues that although the notice may have been timely, the effective day of termination of his employment was twenty-five days beyond the three-year probationary period, and, therefore, that he became a non-probationary employee prior to the day of his employment termination. Therefore, he argues that his employment could be terminated only in accordance with Ala.Code 1975, § 36-26-102 et seq. Our adoption of Saulsberry's interpretation of the Act would result in a requirement that the effective day of termination of employment of a probationary employee must occur before the third anniversary of his or her employment.
In addressing this interpretation, the trial court's order stated:
"There is no dispute that [Saulsberry] was covered by the Fair Dismissal Act nor is there any dispute that the [Board] terminated his employment and sent him notice of that termination prior to the expiration of three years. [Saulsberry] claims, because he was allowed to work for a longer period than three years, he became a non-probationary employee and could only have been terminated for cause as set forth in section 36-26-102. Giving a literal interpretation to section 36-26-102, the Court finds that [Saulsberry's] employment was terminated while he was a probationary *286 employee and thus his employment was properly terminated without giving cause. The language clearly says `at any time during the employee's probationary period' he may be removed upon written notification. It also says he must be given at least fifteen (15) days' notice prior to the effective date of termination. Under this provision [Saulsberry] could have been terminated at any time through June 5, 1989. However, if he had been terminated on June 5, 1989, he would have been entitled to work until June 20, 1989, because the notification must come at least 15 days prior to the effective date. Since the [Board] gave [Saulsberry] notice prior to the expiration of his probationary period his employment was properly terminated and the fact that the [Board] allowed [Saulsberry] to work for a longer period than 15 days after the date of the notice of termination does not make him a non-probationary employee."
The requirement sought to be imposed by Saulsberry's interpretation is not reasonable, nor is it consistent with the principles of statutory construction and the prior opinions of this court and our Supreme Court when construing the Act. The overall purpose of the Act "is to provide non-teacher employees a fair and swift resolution of proposed employment terminations." Bolton v. Board of School Commissioners of Mobile County, 514 So.2d 820, 824 (Ala.1987). Further, the Act should be liberally construed to effectuate its purpose. See Bolton, supra. We cannot, however, add provisions to the Act which the legislature chose not to include. Our Supreme Court observed and noted that "the `Fair Dismissal Act' is not a model of legislative clarity" and has indulged in judicial construction to impart "reasonableness" into its language. Bolton at 824.
In Ex parte Clayton, 552 So.2d 152 (Ala. 1989), our Supreme Court rejected an analogy between the Fair Dismissal Act and the Teacher Tenure Act which interpreted the requisite three years' probationary employment, as stated in Ala.Code 1975, § 36-26-101, to be three consecutive years. Our Supreme Court favored a literal interpretation of the Act by relying on statutory interpretation language found in State v. Calumet & Hecla Consol. Copper Co., 259 Ala. 225, 66 So.2d 726 (1953), as follows:
"Where it appears from the context that certain words have been inadvertently omitted from a statute, the court may supply such words as are necessary to complete the sense, and to express the legislative intent, but it cannot supply words purposely omitted, and should supply an omission only when the omission is palpable and the omitted word plainly indicated by the context; and words will not be added except when necessary to make the statute conform to the obvious intent of the legislature or prevent the act from being absurd; and where the legislative intent cannot be accurately determined because of the omission, the court cannot add words so as to express what might or might not be intended."
Ex parte Clayton, 552 So.2d 152, 154 (Ala. 1989). We employ the language of Justice Steagall in Clayton to the instant case, i.e., "[w]e do not find that the Fair Dismissal Act will be rendered absurd, or its purpose defeated, or the legislative intent obstructed by enforcing a literal interpretation of it." Clayton at 154. If the legislature had intended that the effective day of employment termination must occur before the third anniversary of one's employment, it would have so stated. There is simply no language within the text of the Act to support Saulsberry's construction. Accordingly, we hold that the employment of Saulsberry, a probationary employee, was properly terminated; therefore, the summary judgment was properly entered by the trial court, and that judgment is affirmed.
AFFIRMED.
ROBERTSON, P.J., and YATES, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584856/ | 641 So.2d 785 (1994)
Larry N. SMITH,
v.
Patsy VICE.
1921869.
Supreme Court of Alabama.
April 29, 1994.
*786 Jack Floyd and Jane V. Floyd of Floyd, Keener, Cusimano & Roberts, Gadsden, for appellant.
Allen Millican, Gadsden, for appellee.
INGRAM, Justice.
Larry N. Smith, the proponent of a document he says was the last will and testament of Nellie K. Lowery, appeals from a judgment based upon a jury verdict in favor of the will's contestant, Patsy Vice. Vice, Lowery's daughter, contested the will, contending that Lowery had been unduly influenced and that Lowery had lacked testamentary capacity. The trial court, rejecting Smith's motion for a directed verdict, submitted both issues to the jury. The jury rejected the undue influence claim, but found that Lowery had lacked testamentary capacity. The trial court subsequently denied Smith's motion for a J.N.O.V. or for a new trial and entered a judgment for Vice.
The dispositive issue on appeal is whether the trial court erroneously denied Smith's motion for a directed verdict.
The standard of review applicable to a directed verdict motion is whether the nonmoving party has presented substantial evidence in support of his position. If he has not, then a directed verdict is proper. Bailey v. Avera, 560 So.2d 1038, 1039 (Ala.1990); see Ala.Code 1975, § 12-21-12(a). Substantial evidence is "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989). The ultimate question is whether the nonmovant has presented substantial evidence to allow submission of the case or issue to the jury for a factual resolution. Carter v. Henderson, 598 So.2d 1350 (Ala.1992).
To establish a prima facie case of undue influence, the contestant must show that a confidential relationship existed between a favored beneficiary and the testator; that the beneficiary's influence was dominant and controlling in the relationship; and that there was undue activity on the part of the dominant party in procuring the execution of the will. Bolan v. Bolan, 611 So.2d 1051 (Ala.1993); Clifton v. Clifton, 529 So.2d 980 (Ala.1988).
We further note that it is presumed that every person has the capacity to execute a will, and the burden was upon Vice, the contestant, to establish that the testatrix did not have this capacity. Bolan, supra. The standard for finding testamentary capacity is not a high one; instead, the testatrix need only have
"`mind and memory sufficient to recall and remember the property she was about to bequeath, and the objects of her bounty, and the disposition which she wished to maketo know and understand the nature and consequences of the business to be performed, and to discern the simple and obvious relation of its elements to each other....'"
Fletcher v. DeLoach, 360 So.2d 316, 318 (Ala. 1978), quoting Knox v. Knox, 95 Ala. 495, 503, 11 So. 125, 128 (1892). Simply stated, if the testator knows his estate and to whom he wishes to give his property and understands that he is executing a will, he has testamentary capacity. See 79 Am.Jur.2d Wills, § 71 (1975); Dees v. Metts, 245 Ala. 370, 17 So.2d 137 (1944); Eastis v. Montgomery, 95 Ala. 486, 11 So. 204 (1892). A person may execute a valid will, even if he or she is not competent to transact ordinary, everyday affairs. Harper v. Mason, 571 So.2d 295 (Ala. 1990). Further,
"`[t]he burden is on the contestant to show incapacity at the time the will was made and insanity prior to that time, unless of a permanent character, raises no presumption *787 of insanity at the time the will was made.'"
Fletcher, 360 So.2d at 318, quoting King v. Aird, 251 Ala. 613, 617, 38 So.2d 883, 887 (1949). Accordingly, the burden "can only be discharged or shifted by showing prior habitual or fixed insanity, or actual insanity, or other incapacity at the date of the instrument." Eastis, 95 Ala. at 494, 11 So. at 211.
On May 23, 1978, Nellie K. Lowery, then a resident of Gadsden, Alabama, executed a document styled as her last will and testament. By that document Lowery willed nothing to Vice, her only child and now the contestant of the will. Instead, Lowery named Larry N. Smith, her nephew and now the proponent of the will, as the executor and sole beneficiary of her estate. Lowery died on October 2, 1989. Smith petitioned the Etowah County Probate Court on October 3, 1989, to probate the will. On October 31, 1989, Vice contested the will; the will contest was transferred to the Etowah Circuit Court pursuant to Ala.Code 1975, § 43-8-198. The contest went to trial before a jury.
Vice produced evidence that Lowery had been treated for depression in the early 1960s. There was also evidence that indicated that Vice developed symptoms of a drinking problem after her husband died in 1974. The record demonstrates that Lowery's relationship with Vice during the years before Lowery's execution of the will was tumultuous. Their conflicts came to a head on May 5, 1978, when Lowery's trailer home burned. At that time, Patsy Vice swore out a lunacy warrant for Lowery because, she says, Lowery "was getting mentally sick and she had an alcoholism problem and I didn't know which was worse." The police detained Lowery on that warrant; she was examined in jail and was released on May 8, 1978, after "drying out" from alcohol. Lowery was released into Larry Smith's custody. As indicated above, Lowery executed her will only days later, on May 23, 1978.
At trial, Vice produced several witnesses who testified that Lowery's behavior was erratic in the months before she executed her will. There was also evidence to indicate that Lowery's drinking became a greater problem before the execution of the will. However, Vice produced no evidence that indicated that Smith was dominant and controlling in his relationship with Lowery; nor was any evidence submitted to show that Smith influenced Lowery to will her estate to him. The trial court erred in denying Smith's motion for a directed verdict on the undue influence issue. See Bolan, supra.
Further, while the evidence tends to demonstrate that Lowery had occasionally suffered from symptoms of mental illness and from a drinking problem, Vice did not produce substantial evidence that Lowery was incapacitated at the time she executed the will. Lowery's action to will her entire estate to Smith came only days after Lowery had been arrested on the lunacy warrant sworn out by Vice. Lowery was released into Smith's custody, and upon her release Smith took Lowery to the home of his mother and father. Whether Lowery's decision to will nothing to Vice, and to will her entire estate to Smith, was right or wrong is not for this Court to decide. Instead, we must look only toward whether Lowery, at the time she executed the will, had the capacity to execute it. The fact that Lowery willed the property as she did and the fact that she executed the will so soon after the lunacy arrest tend to indicate that Lowery did have "mind and memory sufficient to recall and remember [her] property ... and the disposition which she wished to make" of that property. Fletcher, 360 So.2d at 318. Lowery's failure to will property to Vice appears to be logically attributable to what one might suppose was Lowery's adverse reaction to Vice's having her arrested on the lunacy warrant; thus, that failure to leave property to Vice should not be viewed as a product of mental illness or alcoholism. An insane delusion is distinguishable from a belief that is founded upon prejudice or aversion, no matter how unreasonable or unfounded the prejudice or aversion may be. See Coffey v. Miller, 160 Ky. 415, 169 S.W. 852 (1914). It seems clear that Lowery believed that she had been treated harshly by Vice when Vice swore out the lunacy warrant; this appears to have led Lowery to will her estate to Smith. The fact that, in a discordant family, a testatrix may perceive her daughter's actions in obtaining a *788 lunacy warrant for her arrest as unfavorable, and accordingly will nothing to the daughter, simply does not indicate a lack of testamentary capacity. See 79 Am.Jur.2d Wills, § 95 (1975).
Further, although much of Vice's evidence dealt with Lowery's drinking, there was no proof that Lowery was intoxicated when she executed the will. Moreover, even if there had been such proof, this would not be conclusive evidence that she lacked the capacity to execute the will.
"The fact that the testator is under the immediate influence of intoxicating liquor or drugs at the time he performs the testamentary act does not invalidate his will on the ground of lack of testamentary capacity, provided that he then comprehends the nature, extent, and disposition of his estate and his relation to those who have or might have a claim on his bounty; and clearly, a person addicted to the use of drugs or liquor, if lucid and sober when a will is made, does not lack testamentary capacity merely by reason of the habit.... Habitual drunkenness does not give rise to a presumption that the testator was incapacitated at the time he executed the will."
79 Am.Jur.2d Wills, § 83 (1975).
Smith produced several witnesses who stated that Lowery was of sound mind near the time when she executed the will. The witnesses included the attorney who had drafted the will and who had been one of the witnesses to Lowery's execution of the will; the attorney said he had observed nothing strange about her conduct at that time. As stated above, however, it is the contestant's burden to prove the will's invalidity, not the proponent's burden to show its validity. See Bolan, supra. Vice, as the contestant, did not meet her burden by presenting substantial evidence to defeat Smith's motion for a directed verdict on the testamentary capacity issue.
Because Vice did not present substantial evidence of undue influence or of incapacity, the trial court should have directed a verdict for Smith on both issues. Therefore, the judgment of the trial court is reversed, and a judgment is rendered in favor of Smith.
REVERSED AND JUDGMENT RENDERED.
HORNSBY, C.J., and HOUSTON, STEAGALL and COOK, JJ., concur.
MADDOX, ALMON and KENNEDY, JJ., dissent. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1588884/ | 61 S.W.3d 661 (2001)
In the Interest of R.G. and M.M., Children.
No. 10-01-007-CV.
Court of Appeals of Texas, Waco.
October 31, 2001.
*664 Guy K. Rodgers, Cleburne, for Appellant.
Melinda H. Sims, Asst. Solicitor General, Texas Attorney General Office, Austin, Shelly D. Fowler, Mary C. Davis, MacLean & Boulware, Cleburne, for R.G. and M.M.
Before Chief Justice DAVIS, and Justice VANCE and Justice GRAY.
OPINION
TOM GRAY, Justice.
Robert Gomez appeals the termination of his parental rights to his daughters, R.G. and M.M. Gomez complains that the evidence presented was legally and factually insufficient to support either of the alleged statutory grounds for termination of his parental rights. Gomez also complains that the evidence was legally and factually insufficient to support the finding that the termination was in the best interest of his children. We affirm the judgment of the trial court.
BACKGROUND
Gomez is the biological father of R.G. and M.M. The children's mother, Eloisa Maria Martinez, was killed in an automobile accident in 1993. Both children were in the car with their mother at the time of the wreck, and R.G. suffers from mental and physical difficulties as a result of the accident. From the time his wife died in 1993 until May of 1998, Gomez and the children lived primarily in his mother's home in Granbury, Texas.
Sometime in May, 1998, Gomez took both children to Dr. Stephen Bishop, who was Gomez's employer at the time, to verify allegations that his daughters were victims of sexual abuse by his brothers, Ramond Gomez and Johnny Joe Gomez. It is unclear exactly how and when Gomez learned of the possibility of the abuse. In a signed voluntary statement to law enforcement, Gomez stated that "in the last part of May, through the first part of July of 1998" the girls had told him of the abuse. According to this statement, the girls told him that their uncles had grabbed them and pressed up against them and that Johnny Joe had "put his thing (penis)" in R.G. In his brief, Gomez states that his second wife told him in May of 1998 that the girls had made an outcry of sexual abuse perpetrated by Ramond and Johnny Joe at the home of the girls' paternal grandmother. According to the statement that Gomez's second wife made to a law enforcement officer, however, Gomez *665 had known about the sexual abuse of both children for approximately three years. The record reflects that R.G. claimed that she had told her father and grandmother about the abuse, but that they had done nothing about it. According to Gomez's trial testimony, he wanted concrete proof ("paper proof or something") from the doctor that his children had been sexually abused, but Dr. Bishop did not tell him that the girls had definitely been assaulted.
In June 1998, Dr. Bishop made arrangements for Gomez to move with his children to an apartment in Godley, Texas. Gomez testified that he continued to take the girls to his mother's house because she was there by herself. However, R.G. told her school counselor that at least one more incident of sexual assault took place there after the move to Godley.
On the second day of school, August 13, 1998, R.G. made an outcry to a Godley school counselor, indicating that the sexual abuse of both her and her sister had been ongoing for years. She stated that both her father and grandmother were aware of it; in fact, her grandmother was in the house when the abuse occurred. R.G. described the most recent incident of abuse just several days prior. The counselor contacted Child Protective Services. A worker immediately took both children to the Advocacy Center, where they were interviewed on videotape. Both described how Ramond and Johnny Joe and their cousins sexually abused them at their grandmother's house. The girls were also taken to Cook's Children's Hospital for a sexual assault exam. Again, Gomez claims that he was told that there was no physical evidence of abuse. However, during cross-examination, Gomez was asked if he had been told that there had been sexual abuse by multiple perpetrators. He replied, "I believe she [the examining physician] said something like that." He also admitted that he was told by medical personnel that there may not be physical evidence in sexual assault cases, but that "I thought they had to have proof."
Child Protective Services removed the children from the Gomez home and placed them in foster care for twenty-four hours. The next day, Gomez signed a child safety plan that provided that he would keep his daughters away from his mother's residence and the town of Granbury and that he would cooperate with Child Protective Services in protecting his children. Child Protective Services learned that Gomez had violated the safety plan on at least three different occasions by taking the children to his mother's house. At first, the girls denied that they had been to their grandmother's house. R.G. also recanted her original outcry statement, but later that same day told her school counselor that she had recanted because she was concerned that if her uncles went to jail, her grandmother would have no one to care for her and would die. After speaking with her counselor, R.G. reconfirmed that the sexual abuse did occur and admitted that she had been at her grandmother's house since her father signed the safety plan. The next day, Child Protective Services removed the children from Gomez's home and placed them with a therapeutic foster home in Fort Worth, Texas. This was approximately one week after the two brothers were arrested for the sexual abuse of the children.
On October 14, 1999, a jury convicted Johnny Joe of aggravated sexual assault of a child and sentenced him to fifty years in prison. The jury also convicted him of two counts of indecency with a child, for which he was sentenced to fifteen years confinement. Gomez testified on behalf of his brother at the trial, as did several other family members. On November 2, 1999, *666 Ramond pled guilty to indecency with a child and was sentenced to ten years confinement. Gomez testified that he believes that his brothers were wrongly convicted, that he knows of no family members who believe that the abuse took place, and that members of his family are seeking to overturn both convictions.
Child Protective Services initially sought to reunite the children with their family. Approximately one year after becoming involved, Child Protective Services determined that one of the following permanency plans should be sought: (1) permanent placement with a relative and transfer of conservatorship, or (2) permanent placement with a non-relative in the form of adoption. As of November 16, 1999, however, Gomez was serving a seven-year prison sentence for a felony conviction of driving while intoxicated.[1] Child Protective Services had not designated a relative as a suitable placement for the children. Therefore, termination was sought to allow adoptive placement for the children. At the trial, the State alleged two possible grounds for the termination of parental rights: (1) knowingly placing or allowing the child to remain in conditions or surroundings which endangered the physical or emotional well-being of the child or (2) engaging in conduct or knowingly placing the child with persons who engage in conduct which endangered the physical or emotional well-being of the child. See Tex. Fam.Code. Ann. § 161.001(1)(D), (E) (Vernon Supp.1998). The State also alleged that it would be in the children's best interest to terminate their father's rights. See Tex. Fam.Code Ann. § 161.001(2) (Vernon Supp.1998). The court conducted a bench trial and found by clear and convincing evidence that Gomez had violated subsections D and E and that it was in the best interest of the children that Gomez's parental rights be terminated.
TERMINATION OF PARENTAL RIGHTS
We recognize the gravity of the termination of parental rights and appreciate the possible effects of its finality. As we stated in J.M.T.:
The natural right existing between a parent and child is of constitutional dimension. The right to raise one's child has been characterized by the United States Supreme Court as essential, as a basic civil right, and as a right far more precious than property rights. A termination decree is complete, final, irrevocable, and divests for all time that natural right as well as all legal rights, privileges, duties, and powers with respect to each other except for the child's right to inherit. Termination is a drastic remedy and is of such weight and gravity that due process requires the petitioner to justify termination by "clear and convincing evidence." (cites omitted).
In re J.M.T., 39 S.W.3d 234, 237 (Tex. App.-Waco 1999, no pet.).
Because of the drastic nature of involuntary termination under the provisions of Section 161.001 of the Family Code, we require the petitioner to establish two elements. First, petitioner must prove a culpable act or omission on the part of the parent under the first subsection of the statute. Tex. Fam.Code Ann. § 161.001(1)(Vernon Supp.1998). Second, *667 petitioner must prove that termination of the parent-child relationship is in the best interest of the child. Tex. Fam.Code Ann. § 161.001(2) (Vernon Supp.1998). Proof of one element does not relieve the petitioner of the burden of proving the other. Holley v. Adams, 544 S.W.2d 367, 370 (Tex. 1976).
STANDARDS OF REVIEW
Legal sufficiency
We use the traditional "no-evidence" standard of review in considering a legal sufficiency complaint of a finding that must be established by clear and convincing evidence. We consider only the evidence that tends to support the findings and disregard all evidence and inferences to the contrary to determine if there is more than a scintilla of probative evidence in the record to support the decision. In the Interest of D.L.N., 958 S.W.2d 934, 936 (Tex.App.-Waco 1997, pet. denied, pet. rehear'g denied); Lucas v. Texas Dep't of Protective and Regulatory Services, 949 S.W.2d 500, 502 (Tex.App.-Waco 1997, writ denied). If there is any evidence in the record to support the finding of the trial court, we will overrule the appellant's legal sufficiency complaint. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661-62 (1951).
Factual sufficiency
To determine whether the evidence is factually sufficient, we consider all the evidence in the record both for and against the finding. In re A.P. and I.P., 42 S.W.3d 248, 256 (Tex.App.-Waco 2001, no pet. h.). In reviewing an involuntary termination, we will find the evidence factually insufficient if the trier of fact could not reasonably find the existence of the fact to be established by clear and convincing evidence. Spangler v. Texas Dept. of Protective and Regulatory Services, 962 S.W.2d 253, 256 (Tex.App.-Waco 1998, no pet.). Clear and convincing evidence is defined as "that measure or degree of proof which will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established." Id. at 256. This court has adopted the clear and convincing standard of review because this intermediate standard is believed necessary to protect fundamental constitutional rights involved in termination of parental rights. Id at 257.
APPLICATION OF THE TWO PRONG TERMINATION TEST
Prong one: culpable act or omission
In order to terminate Gomez's parental rights, the State was required to allege and to prove at least one of the acts or omissions enumerated in the Family Code. Tex. Fam.Code Ann. § 161.001(1) (Vernon Supp.1998). As noted, the State alleged two possible grounds, subsections (D) and (E). Subsection (D) permits termination based upon a single act or omission, while subsection (E) requires a "course of conduct." In re M.J.M.L., 31 S.W.3d 347, 351 (Tex.App.-San Antonio 2000, pet. denied). Gomez states that there is no evidence that he "knowingly harmed his children or knowingly exposed them to the abusers" and that "the State cannot point to an act or course of continuing conduct by Mr. Gomez that truly endangered his children's physical or emotional well-being." We disagree.
It is beyond question that sexual abuse is conduct that endangers a child's physical or emotional well-being. See In re King, 15 S.W.3d 272, 276 (Tex.App.-Texarkana 2000, pet. denied). "Endanger" means "to expose to loss or injury; to jeopardize." Texas Dep't. of Human Servs. v. Boyd, 727 S.W.2d 531, 533 (Tex. 1987). Parental knowledge that an actual *668 offense has occurred is not necessary; it is sufficient that the parent was aware of the potential for danger and disregarded that risk. See In re Tidwell, 35 S.W.3d 115, 118 (Tex.App.-Texarkana 2000, no pet.).
Legal sufficiency of the evidence
To be legally sufficient, there must have been more than a scintilla of evidence that Gomez placed his children in an environment of potential sexual abuse. The evidence shows that Gomez knew of the children's claims of abuse by May of 1998, yet he continued to return them to their grandmother's house where the abuse allegedly took place. Gomez testified at trial and stated in a sworn statement that he was informed of the abuse by May of 1998. In that same statement, he said that his brothers lived at his mother's address. Testimony revealed that R.G. said that she told her father about the abuse, that he did nothing about it, and that the abuse continued. In her original outcry to her school counselor in August of 1998, R.G. stated that she had been abused at her grandmother's house just days before. Gomez's second wife informed law enforcement that R.G. claimed that she was assaulted during a visit to her grandmother's house on July 25, 1998. It is unclear whether R.G. was referring to one incident or two separate incidents; however, at least one assault allegedly took place after Gomez became aware of his children's claims. Gomez also admitted that he took the children back to their grandmother's house after he signed the safety plan in August of 1998, violating his agreement that he would cooperate with Child Protective Services to protect his children.
In considering the evidence in a light that supports the finding made by the trier of fact, we conclude that there is more than a scintilla of evidence that Gomez engaged in conduct that endangered the physical or emotional well-being of R.G. and M.M. From this evidence, it is clear that Gomez continued to place his children in a potentially dangerous environment after he learned of the children's claims of sexual abuse. We find that this evidence is legally sufficient to prove both of the grounds alleged for termination, and overrule Gomez's legal sufficiency challenge of the evidence supporting the first prong required to terminate his parental rights.
Factual sufficiency of the evidence
To determine if the evidence was factually sufficient, we review all of the evidence to determine if the court could reasonably have found that the facts at issue were established by clear and convincing evidence. Spangler, 962 S.W.2d at 259. Thus, we will determine if there is clear and convincing evidence that Gomez was aware of the children's claims of sexual abuse and that he placed them in potential danger after he learned of those allegations. Tidwell, 35 S.W.3d at 118.
As noted, there is conflicting evidence regarding when and how Gomez learned of the allegations of sexual abuse. The court viewed Child Protective Services' videotaped interview with both girls. In that interview, R.G. stated that her father knew of the abuse, indicating that he had been told more than once about the abuse by the brothers: "He gets real mad and starts cussing, but he don't telltell them anything, I guess `cause they are hishe's the most littlest." During that same interview, M.M. stated that her father and grandmother had looked at both girls' "privates" and found that R.G. was "cracked open ... a lot" and that she was "cracked open ... a little bit." R.G. told the counselor that she had told her father of the abuse a number of timesthe last time as recently as a few days before her outcry at school. Gomez's second wife *669 claimed that he had known of the abuse for as long as three years.
In his sworn statement, Gomez stated the children told him about the abuse at the end of May to the first part of July of 1998. At trial, he first testified that he did not know of any allegations until R.G. made her outcry to the school counselor and that he took R.G. to Dr. Bishop in May of 1998 because she was having problems urinating. He also claimed that his prior statement had been coerced. The detective who took Gomez's statement denied any coercion. Richard Hattox, the District Attorney who had prosecuted the brothers, testified that Gomez's statements to him were consistent with the sworn statement.
During later testimony, however, Gomez indicated that he took both children to the doctor in May of 1998 to verify that they had been sexually abused. District Attorney Hattox confirmed that Dr. Bishop had conducted a sexual assault examination of the children at that time. According to this version of Gomez's testimony, which is consistent with his sworn statement, Dr. Bishop said that he could find nothing wrong with the children. Because Gomez told the doctor that he had to find out for himself if the children had been sexually abused, Dr. Bishop agreed not to file a report with the proper authorities until Gomez could talk with his two brothers. Both subsequently denied that the abuse had occurred. When Gomez told Dr. Bishop that he "had got it straight with my brothers not to be around my girls," the doctor agreed not to file a report at all.
Gomez's statement that he was unaware of abuse allegations until August 1998, is inconsistent with his sworn statement, with the children's videotaped interview, and with his actions in May 1998, according to his own testimony. Furthermore, we find that there was clear and convincing evidence that Gomez was aware of the allegations of sexual abuse that his children made regarding his brothers before he took the girls to Dr. Bishop in May of 1998. We next determine if there is clear and convincing evidence that Gomez disregarded the danger to his children by returning them to his mother's house, where he knew that the abuse had allegedly taken place.
There is no doubt that Gomez knew that the abuse allegedly took place at his mother's house. According to his sworn statement, both of his brothers lived there. When he conducted his own investigation of the alleged abuse, the first person he spoke with after leaving the doctor's office was his mother: "I then went to my mother and told her what the girls had told me about my brothers. My mother said that there was no way because she watched them all the time. And that she would not have let my brothers get that close."
Gomez testified that he moved his children to another town and that his children were never around his brothers after he confronted them with the allegations of abuse. He did, however, admit that he had returned the girls to his mother's house during the summer of 1998: "I remember leaving the girls, but the boys weren't home." At another point in his testimony, Gomez states that during at least one visit, Ramond was in another part of the house while Gomez and the girls remained in the front watching television. Gomez also admits that he violated the safety plan by taking the girls to their grandmother's house, but that it was after the brothers had been arrested.
However, in R.G.'s outcry to her school counselor, she stated that her father had dropped her off at her grandmother's house just a few days prior, assuring her that nothing bad would happen. R.G. said that when she got in the car, she yelled at *670 her dad, telling him that something bad did happen. According to R.G., her father did not respond. Gomez's second wife reported to authorities that R.G. had told her that she had been sexually assaulted at her grandmother's house on July 25, 1998.
We find that there is clear and convincing evidence that Gomez returned the girls to his mother's house after he learned of the allegations of abuse. Whether or not the brothers were present at the time that Gomez left his children at his mother's house is irrelevant. The fact remains that he knowingly left the children in the home of the alleged perpetrators, in a place where sexual abuse had allegedly occurred in the past and where the children were vulnerable to potential abuse in the future. According to the children not only was their grandmother aware of the abuse that was taking place, she was in the house when it occurred. Therefore, while the grandmother was not a potential threat to the children per se, she had allegedly been unable to protect them from abuse in the pastand Gomez was aware of that.
Therefore, having reviewed all of the evidence, we find that the evidence is factually sufficient to prove both grounds for termination.[2] We thus overrule Gomez's factual sufficiency challenge of the evidence supporting the first prong required to terminate his parental rights.
Prong two: best interest of the child
There is a strong presumption that the best interest of children will be served by preserving the parent-child relationship. Wiley v. Spratlan, 543 S.W.2d 349, 352 (Tex.1976). Thus, the party seeking to deprive the natural parent of parental rights must also establish this second element by clear and convincing evidence. Herrera v. Herrera, 409 S.W.2d 395, 396 (Tex.1966). Again, however, in reviewing a legally insufficient complaint, we apply the traditional no-evidence standard. In the Interest of D.L.N., 958 S.W.2d 934, 936 (Tex.App.-Waco 1997, pet. denied).
The Texas Supreme Court has recognized several factors that may be considered in determining when termination is in the best interest of the child. Holley v. Adams, 544 S.W.2d 367, 372 (Tex.1976). These include: the desires of the child; the emotional and physical needs of the child now and in the future; the emotional and physical danger of the child now and in the future; the parental abilities of the individuals seeking custody; the programs available to assist these individuals to promote the child's best interest; the plans for the child by the party seeking custody; the stability of the home or proposed placement; the act/omission of the parent which may indicate that the existing parent-child relationship is not proper; and any excuse for the acts/omissions of the parent. Id. No single consideration is controlling. However, the analysis of one factor may be adequate in a particular factual situation to support a finding that termination is in the best interest of the child. Furthermore, evidence of "sexual abuse is a significant factor in determining whether termination is in the best interest of the child." Green v. Tex. Dep't of Protective and Regulatory Servs., 25 S.W.3d 213, 221 (Tex.App.-El Paso 2000, no pet.). In Green, the court affirmed the termination of a mother's parental rights as being in the best interest of her child in light of evidence that the mother continued contact with her husband, who sexually abused her daughter.
*671 Legal sufficiency of the evidence
The State argues that the evidence introduced at trial supports the determination that termination is in the best interest of the children. Specifically, the State contends that the Gomez family's difficulty in accepting that the two brothers sexually abused the children can be harmful in the future. Gomez testified that he believed that his brothers were wrongfully convicted and actually testified on behalf of Johnny Joe at his brother's criminal trial. Family members are actively working to appeal both convictions. As noted, there is evidence that Gomez continued to take his children to their grandmother's house, instead of engaging in a course of action to protect them from further abuse. The court heard testimony from a social worker that such lack of support from Gomez could result in the children not reporting future abuse by the same individuals or new individuals.
The court also heard testimony that the children were undergoing various behavioral problems associated with the abuse. Among other things, both children have exhibited sexual behavior such as public masturbation and inappropriate sexual language. The social worker further expressed concern that the Gomez family will not be able to provide the emotional support that these children will need because they do not believe that the children were sexually abused by the brothers. For example, there was evidence that family members had pressured the girls to recant by telling them that their grandmother would die as a result of their actions.
Under the traditional no-evidence standard, this evidence is legally sufficient to support the court's ruling because it is probative of the inability of Gomez to provide the necessary emotional support for the girls and of Gomez's acts and omissions that tend to support a finding of an improper parent-child relationship.
Factual sufficiency of the evidence
Gomez asserts that the evidence is factually insufficient to support the finding that termination is in the children's best interest because these children want to be with their father. Specifically, Gomez states in his brief that the record contains "innumerable references to the children's bond with their father." He contends that the children sent letters and pictures to him during their placement with the foster family, that they had to be "heavily medicated" to control their depression and anxiety as a result of being separated from him, and that they exhibited suicidal tendencies because they were afraid that they would not see their father again.
Gomez's contentions are simply not a complete summary of the court's record. The children are reported to be bonded with their father, with the record indicating that in the past both have expressed a desire to see and live with their father. As the State points out, however, that bond seems to be weakened by the children's recognition that their father did not protect them. For example, in one of her letters to her father, R.G. told him that she was ashamed of him and was angry with him for not protecting her and her sister. M.M. told her foster parents that if her mother had been alive, the abuse would not have happened. The record confirms that both children are on a variety of medications. For example, R.G., who suffers from hallucinations of her deceased mother, has been treated with psychotropic medications. M.M. has been treated with medications for Attention Deficit Hyperactivity Disorder, Oppositional Defiant Disorder, and Adjustment Disorder with Anxiety. While there is evidence that these children have suffered separation anxiety, there is nothing in the *672 record that attributes their emotional or psychological problems solely to the separation from their father. Evidence indicates that the death of their mother is also a contributing factor. Regarding the suicidal tendencies of both girls, the record does not reflect that M.M. ever exhibited such tendencies or thoughts. The record does indicate that R.G. has talked about suicide and even threatened to commit suicide. When R.G. learned that her father had again been put in jail, she grabbed a kitchen knife, held it to her chest, and stated that she wanted to die. However, according to the record, R.G. typically spoke of suicide as a means of being with her mother, not as an expression of fear that she would never see her father again.
The desires of the children are just one factor. Even if we determine that these children truly want to be returned to their father when he is released from jail, such a preference is not enough to resolve the issue of the best interest of the children. See In re Cassey D., 783 S.W.2d 592, 596 (Tex.App.-Houston [1st Dist.] 1990, no pet.). Other factors support a finding that termination is in the best interest of the children under the heightened standard of review.
The court heard testimony that the Gomez family does not believe that the girls were sexually abused by the brothers. This is evidenced by the fact that members of the family are actively working for the release of the brothers from prison. The record also reflects that the family has a history of pressuring the children to recant and of making the children feel responsible for the arrest of the brothers and, as noted, for the potential death of their grandmother. Gomez testified that the best placement for his children, if not with him, was with either his sister Beatrice, whose husband had been arrested for domestic violence, or with his sister Sally, who is financing the appeal of the convictions. Child Protective Services completed home studies on the families of both sisters and found both to be inappropriate placements for these two children.
Gomez himself would not state that he could believe his children without medical evidence. The State presented evidence that he disregarded the potential risks of future sexual abuse to his daughters by returning them to their grandmother's house, where he knew that such abuse had allegedly taken place. Because Gomez subjected his children to potential physical and emotional danger in the past, several witnesses expressed concern that Gomez would again place these children in danger.
In his brief, Gomez concedes that it is not in the best interest of the children to live with him. We agree. Moreover, there is sufficient evidence that it is not in the best interest of the children to return them to the Gomez family environment. The record indicates that the children's current therapeutic foster placement should be continued to meet their physical, emotional, and educational needs. Thus, the evidence is sufficient to produce in the mind of the fact finder a firm belief that (1) the already fragile emotional well-being of the children will be compromised by returning them to an environment where they are perceived as liars; (2) Gomez's plans for alternative placement with his family members are inappropriate and could potentially endanger the children emotionally or physically; and (3) Gomez's continued doubts that his children were sexually abused affords him an excuse to ignore danger to his children, further establishing an improper parent-child relationship. Therefore, we find that the evidence is both legally and factually sufficient to establish that termination was in the best *673 interest of the children and overrule Gomez's third issue.
CONCLUSION
Having overruled Gomez's three issues, we affirm the trial court's judgment of termination.[3]
NOTES
[1] During the time that Gomez had possession of his daughters, he was on probation for a felony DWI. After the children were removed from his home, his probation for that offense was revoked as a result of a new DWI. Gomez pled guilty to the new offense and pled true to a Motion to Revoke and was sentenced to a total of seven years in the penitentiary. His mandatory discharge date was set for October 9, 2001.
[2] The State has also argued that Gomez repeatedly driving while intoxicated is another course of conduct the supports termination. Because of our disposition, we do not need to decide that issue.
[3] At the end of his brief, Gomez suggests that designating Child Protective Services and Gomez as joint managing conservators without terminating his parental rights would be in the best interest of the children. Having made no prior references, citations, or arguments regarding the issue of joint conservatorship, he requests that we remand this case to the trial court for a determination on visitation and conservatorship. We will not address this suggestion for several reasons: (1) this request seems to contradict Gomez's trial testimony and the rest of his brief; (2) this issue is inadequately briefed (See Cavender v. State, 42 S.W.3d 294 (Tex.App.Waco 2001, no pet.)); and (3) this issue is moot because we have determined that the evidence supports the finding that termination of parental rights is in the best interest of the children. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584862/ | 815 F.Supp. 7 (1993)
UNITED STATES of America
v.
Jeff Jerome MONTGOMERY, Defendant.
Crim. No. 92-0280-LFO.
United States District Court, District of Columbia.
March 1, 1993.
*8 Brian M. Murtagh, Asst. U.S. Atty., Washington, DC, for U.S.
Penny Marshall, Asst. Federal Public Defender, Washington, DC, for defendant.
MEMORANDUM
OBERDORFER, District Judge.
A federal grand jury has returned, and the United States is prosecuting in federal court, an indictment that alleges that on June 21, 1992, within the District of Columbia, defendant, Jeff Jerome Montgomery, maliciously damaged and attempted to destroy, by means of fire, the building located at 4301 Argyle Terrace, N.W., in Washington, and a 1992 Pontiac van garaged there, both of which were "used in activities affecting interstate commerce"[1] in violation of 18 U.S.Code § 844(i). The indictment also charges essentially the same conduct as a violation of D.C.Code §§ 22-401 and 403. Finally, the indictment charges that Montgomery violated D.C.Code § 22-403 on September 8, 1991, when he broke and destroyed "private property not his own, consisting of a window of a value of less than $200 located at 4301 Argyle Terrace N.W."
The defendant has entered a plea of not guilty and has given notice of possible reliance on the insanity defense. A magistrate judge ordered that the defendant be held without bond and that ruling was approved by Chief Judge Penn. In pretrial proceedings, the defendant has been adjudged competent to stand trial, but he is now confined at the District of Columbia's St. Elizabeth's Hospital. Elizabeth Teegarden, Ph.D., Chief of the Evaluation Unit of the Forensic Inpatient Services of the District of Columbia Commission on Mental Health Services, has filed a report that relates the opinions of two psychiatrists, Drs. Glenn Miller and Mitchell Hugonnet, that "Montgomery was suffering from paranoid delusions at the time of the instant offense in such a way that he was unable to appreciate the nature and quality or the wrongfulness of his actions." They diagnosed his disorders as delusional (paranoid) disorder, persecutory type, alcohol abuse, cannabis abuse, cocaine abuse, and personality disorder, NOS, with antisocial features. Meanwhile, both the prosecution and the defense have filed a number of motions, one of which is defendant's motion to dismiss the indictment for lack of federal jurisdiction.
The defendant's motion to dismiss will be granted effective March 8, 1993, because the United States has failed to carry its burden of establishing that the building and the van which were burned were used in *9 an activity affecting interstate commerce within the meaning of the Commerce Clause and 18 U.S.C. § 844(i), as construed in Russell v. United States, 471 U.S. 858, 859 & n. 4, 105 S.Ct. 2455, 2456 & n. 4, 85 L.Ed.2d 829 (1985). The brief Russell opinion cited with approval the statement in Scarborough v. United States, 431 U.S. 563, 571, 97 S.Ct. 1963, 1967, 52 L.Ed.2d 582 (1977), that:
As we have previously observed, Congress is aware of the "distinction between legislation limited to activities `in commerce' and an assertion of its full Commerce Clause power so as to cover all activity substantially affecting interstate commerce." (Emphasis added.)
In construing the clause and the statute, the Russell opinion further stated:
In the floor debates on the final bill, although it was recognized that the coverage of the bill was extremely broad, the Committee Chairman, Representative Celler, expressed the opinion that "the mere bombing of a private home even under this bill would not be covered because of the question whether the Congress would have the authority under the Constitution." In sum, the legislative history suggests that Congress at least intended to protect all business property, as well as some additional property that might not fit that description, but perhaps not every private home.
Russell, 471 U.S. at 861, 105 S.Ct. at 2457 (citations omitted).
The Russell opinion leaves it to courts to draw on a case-by-case basis the line between those private homes (and, by necessary inference, those private vehicles) which are used in activities affecting interstate commerce and those which are not. Such ambiguity in a criminal statute requires construction of it in accordance with the principles of lenity. See, e.g., United States v. Mennuti, 639 F.2d 107, 113 (2d Cir.1981) (Friendly, J.).[2]
As then-Justice Rehnquist has observed with respect to "the broad dicta" with which the Supreme Court has described the reach of Congress' power to regulate pursuant to the Commerce Clause: "there are constitutional limits." Hodel v. Virginia Surface Min. & Reclam. Ass'n., 452 U.S. 264, 309, 101 S.Ct. 2352, 2390, 69 L.Ed.2d 1 (1981) (concurring opinion). He reiterated the concern expressed by Chief Justice Hughes that the commerce power "not be extended so as to ... obliterate the distinction between what is national and what is local and create a completely centralized government." Id., citing NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 37, 57 S.Ct. 615, 624, 81 L.Ed. 893 (1937). Finally, Justice Rehnquist stated:
[I]t would be a mistake to conclude that Congress' power to regulate pursuant to the Commerce Clause is unlimited. Some activities may be so private or local in nature that they simply may not be in commerce. Nor is it sufficient that the person or activity reached have some nexus with interstate commerce. Our cases have consistently held that the regulated activity must have a substantial effect on interstate commerce.
Hodel, 452 U.S. at 310-11, 101 S.Ct. at 2391 (emphasis in original).
The construction of this essentially arson statute must also be informed by the constitutional concept of "Our Federalism."[3] The *10 crime of arson, which the prosecution would federalize here, is the same common law crime, see 2 Blackstone's Commentaries *220, that is punishable in the District of Columbia by a sentence of up to ten years, D.C.Code § 22-403. Thus, Judge Friendly invoked
the Supreme Court's admonitions that "ambiguity" concerning the ambit of criminal statutes should be resolved in the favor of lenity, Rewis v. United States, 401 U.S. 808, 812[, 91 S.Ct. 1056, 1059, 28 L.Ed.2d 493] ... (1971) and that "when choice has to be made between two readings of what conduct Congress has made a crime, it is appropriate, before we choose the harsher alternative, to require that Congress should have spoken in language that is clear and definitive." [citations omitted] Moreover, ... "unless Congress conveys its purpose clearly, it will not be deemed to have changed the federal-state balance" in the prosecution of crimes.
Mennuti, 639 F.2d at 113.
The simple facts set out in the compact Russell opinion further inform, in the context of criminal law, the broad, but not unlimited, reach of section 844(i) to private residences and, by reasonable inference, to private vehicles. Russell owned an urban building which housed residential apartments. He let the apartments for rent, and made his home elsewhere. In a scheme to defraud the carrier of fire insurance on the building, he hired a convicted felon to set it on fire. The "torch" attempted to carry out his nefarious mission by igniting a pipe which carried natural gas into this residential apartment building. The attempt failed and he turned Russell in to the FBI instead of making the second attempt requested. The Supreme Court concluded, as a matter of law, that the rental of real estate is "unquestionably" an activity that affects commerce. Said the Court:
[T]he local rental market of an apartment unit is merely an element of a much broader commercial market in rental properties. The congressional power to regulate the class of activities that constitute the rental market for real estate includes the power to regulate individual activity within that class.
The petitioner was renting his apartment building to tenants at the time[[4] he attempted to destroy it by fire. The property was therefore used in an activity affecting commerce within the meaning of the Act.
Id. 471 U.S. at 862, 105 S.Ct. at 2457.
The contrast between the simple facts of Russell and the prosecutor's proffer here (a copy of which is attached) is striking. Judge and Mrs. Mize own and occupy a private home in the District of Columbia and regularly park their van in an attached garage. When the garage and van were burned, Judge Mize was not engaged in any activity affecting interstate commerce, substantially or otherwise. See United States v. Monholland, 607 F.2d 1311, 1315 (10th Cir.1979) (statute not applicable to burning of state judge's truck used for transportation to and from work but with no "real relationship to commerce").
Viewing Mrs. Mize's activity, as proffered by the prosecution, in perspective and in light of the principle of lenity, it is apparent that only a minor preparatory fraction of her nurse training activity occurred in the family home. Nor does her infrequent use of the family van primarily for occasional shopping in the Washington suburbs and one trip to a nurse-training seminar in Williamsburg, Virginia, constitute use of the van in an activity affecting interstate commerce within the meaning of this criminal statute and the Commerce Clause, as fairly construed in light of Russell and Mennuti.
If Mrs. Mize's part-time, $5500-per-year job in nurse training is, in any sense, "commerce," it is not of a kind or magnitude which federal law and the federal courts have regulated civilly, except in the most limited *11 and tangential ways. Congress may very well have acted with restraint in such situations to minimize the Commerce Clause problems such as those which lurk here. See, e.g., Independent Ladies' Garment Workers' Union v. Donovan, 722 F.2d 795 (D.C.Cir.1983) (piece work in home is prohibited in certain industries to facilitate enforcement of minimum wage law obligations of an employer engaged in demonstrably interstate commerce business); Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 247, 85 S.Ct. 348, 352, 13 L.Ed.2d 258 (section 201(b)(1) exempts from the federal public accommodations law "any inn, hotel, motel, or other establishment ... which contain not more than five rooms for rent or hire and which is actually occupied by the proprietor of such establishment as his residence").
But this is a criminal prosecution, attempting to apply a federal criminal statute to a garden variety arson such as has been traditionally and severely punishable in a local court pursuant to local law.[5] In this criminal case, it is appropriate to construe both the Commerce Clause and Section 844(i) with restraint and according to the principle of lenity. Application of that principle leads to the conclusion that Congress was not authorized by the Commerce Clause, and, in any event, has not stated with sufficient clarity an intent, to federalize a residential arson case like this. In particular, the Russell facts do not establish a precedent for applying section 844(i) to the potpourri strung together in the prosecution's proffer here.[6] If the proffered facts can prove a federal crime within the meaning of the Commerce Clause and section 844(i) as construed in Russell and Mennuti, it is difficult to imagine any rational and manageable limit on the application of that statute to an urban (or suburban) home, or a vehicle garaged there, particularly in communities like Kansas City, Missouri/Kansas and the metropolitan areas of New York and Washington.
In sum, it is inconceivable that the Framers of the Commerce Clause or even the Congress that approved Section 844(i) contemplated that such a statute (originally aimed at protecting from attack by terrorists and racketeers property substantially used in genuine interstate commercial activity) would be applied to convert into enclaves protected by federal criminal law every private home occupied, and every vehicle used, for example, by the hundreds of thousands who work in a metropolitan area like Washington, do a modicum amount of work at home, and drive privately owned vehicles back and forth across the District line in the course of their daily routine.
There remain for consideration counts 3, 4, and 5 alleging violations of District of Columbia law. These are pendent charges. Jurisdiction is authorized under D.C.Code § 11-502(3) and is a matter of discretion. United States v. Kember, 685 F.2d 451, 454-55 (D.C.Cir.1982) (federal court has discretion to retain case where retention is warranted by remaining matters of federal concern and judicial economy); United States v. Kember, 648 F.2d 1354, 1359 (D.C.Cir.1980) (federal jurisdiction over offenses under District of Columbia law is appropriate in some cases even after disposition of federal offenses is reached). On this eve of trial with all the preparation that has taken place, it would be an abuse of discretion to dismiss the District of Columbia *12 counts. Accordingly, the accompanying Order will dismiss counts 1 and 2. Counts 3, 4, and 5 will be tried as scheduled.
APPENDIX
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA
v.
JEFF JEROME MONTGOMERY
Filed Nov. 30, 1992.
GOVERNMENT'S RESPONSE TO MOTION TO DISMISS INDICTMENT FOR LACK OF FEDERAL JURISDICTION
FACTUAL PROFFER
The evidence which the Government will seek to introduce at trial will establish that on the night of June 21, 1992, the Mize residence located at 4301 Argyle Terrace N.W. was seriously damaged by arson.[1] In addition the Mize's 1992 Pontiac Trans Sport SE Van (the van) that was parked in the driveway, was destroyed by arson, when it was doused with gasoline and ignited. The defendant is charged with the commission of these acts involving the house and the van in Counts One and Two of the Indictment respectively, which allege violations of the federal arson statute in violation of 18 U.S.C. 844(i).
THE BUILDING
The building located at 4301 Argyle Terrace N.W. in the District of Columbia is occupied by Judge Gregory Mize, his wife Marisa, their four children and a housekeeper who resides with the family during the week.
Mrs. Marisa Mize is a Registered Nurse who is licensed by the State of California and the District of Columbia, and who practices in the field of pediatric critical care. Mrs. Mize is further employed in the building, and elsewhere, as an independent contractor by Mosby Year Book Inc. (Mosby), of Saint Louis, Missouri, to participate in Mosby's Nursing Board Review business as an educator. Since 1990, Mrs. Mize has treated this commercial activity conducted in the building as a business for federal income tax purposes. (App. pp. 1-5).
As a leading publisher of nursing texts, references, and review tools used by candidates preparing for licensing examinations, Mosby sponsors seminars throughout the United States, and in Canada. Prior to June 21, 1992, Mrs. Mize was contracted by Mosby, through its subsidiary Resource Applications Inc. of Hanover, Maryland, to prepare, review and edit instructional materials, including course outlines, visual presentations using slides and overhead transparencies, for these seminars, to furnish the materials after preparation, review or editing, to Resource Applications for reproduction and distribution, and to travel to various locations in the United States (e.g. Williamsburg, Virginia) and Canada (e.g. Calgary, Alberta) to conduct the seminars.
In all but the instances in which she actually travels in interstate and foreign commerce to conduct the nursing seminars, Mrs. Mize engages in preparation, review, editing, administrative and professional activities, incident to this commercial activity, in the building, which affect interstate commerce.[2]
In 1991 Mosby filed an IRS Form 1099 "Miscellaneous Income" for Mrs. Mize in the amount of $5550.00. (App. p. 3). Mrs. Mize reported that income to the IRS by filing a Form Schedule C ("Profit or Loss From Business") as part of her 1991 tax return. (App. p. 1).[3]
*13 In order to maintain her eligibility as an educator in the field of nursing, Mrs. Mize maintains her Board Certification in Nursing, by the State of California, which requires the payment of a biannual fee of $80.00. The fee was paid by check mailed to the California State Board of License Renewal in Sacramento, California.
To maintain her proficiency in developments occurring in nursing, Mrs. Mize subscribes to various professional journals including: Focus On Critical Care. published by Mosby Year Book, Saint Louis Missouri; American Journal of Critical Care, both published by the American Association of Critical Care Nurses (AACN), of Aliso Viejo, California (App. p. 178, 180); HEARTBEAT, published by the American Heart Association, Chicago, Illinois, (App. p. 179); Maternal Child, published by the American Journal of Nursing, New York; Image, published by the Journal of Nursing Scholarship, Indianapolis, Indiana, (App. p. 181).
These, and other subscriptions and memberships fees for Mrs. Mize are all paid for by checks prepared at the building, which are cleared through interstate banking channels. (App. pp. 142-153) The journals are all delivered to the building by the U.S. Postal Service, where they are maintained for reference. (App. pp. 178-81)
Mrs. Mize further maintains her professional credentials by attending various nursing training courses such as the National Teaching Institute which was given in Boston, in 1991. In addition Mrs. Mize maintains her certification in advanced cardiac life support (ACS), by being recertified every eighteen months, at Fairfax City, Virginia.
The typical sequence of events in a seminar sponsored by Mosby, in which Mrs. Mize participated, is illustrated by the Pediatric Nursing Conference between June 15-19, 1992 at Williamsburg, Virginia. On January 16, 1992, a letter contract was mailed to Mrs. Mize at 4301 Argyle Terrace N.W. (the building) from Resource Applications in Hanover, Maryland, to confirm her agreement to participate in the Pediatric Nursing conference in Williamsburg.[4] (App. p. 40). On February 5, 1992, Mrs. Mize executed the contract at the building and returned it by U.S. Mail to Resource Applications. (App. p. 41) Pursuant to the contract, Mrs. Mize was required to prepare and submit a topical outline and handout materials by May 4, 1992. (App. p. 40). Mrs. Mize prepared the required materials in the building using an IBM personal computer, manufactured by IBM, Armonk, New York, which was programmed with WordPerfect software, supplied by WordPerfect Corporation of Orem, Utah. (App. pp. 195-96) The course materials were sent by U.S. Mail to Resource Applications in Hanover, Maryland, for review, duplication, and eventual transportation to the conference site at Williamsburg, Virginia.
On June 16, 1992, Mrs. Mize drove from the building to the conference site in Williamsburg, in the Pontiac Trans Sport Van, which is also the subject of Count Two. (App. p. 27-30). On June 17, 1992 Mrs. Mize drove back to Washington in the van. (Id.) On June 18, 1992, Mrs. Mize prepared an expense voucher in the building in order to obtain reimbursement from Resource Applications for mileage and food expenses. (App. p. 30). On June 19, 1992, Mosby Year Book/Resource Applications mailed a check to Mrs. Mize for $400, which constituted the honorarium for the conference. (App. p. 26).
*14 On July 17, 1992 Resource Applications mailed Mrs. Mize a second check as reimbursement for mileage to and from Williamsburg, Virginia, and other incidental expenses. (App. p. 38) Both checks were drawn on Mosby's account at Citibank-Delaware, New Castle, Delaware.
With the exception of the use of commercial airline facilities, a similar sequence of events occurred in connection with Mrs. Mize's participation in the course on critical pediatric care which was presented in Calgary, Canada between June 3-6, 1992. (App. pp. 12-24). (For additional expense vouchers processed by Resource Applications/Mosby Year Book See App. 189-90.)
In addition to the nurse/educator consulting business which Mrs. Mize conducts, the building is used in other commercial activities affecting interstate and foreign commerce, which provide an independent basis for federal jurisdiction. This is due to the fact that since April, 1992, the Mize's have employed a housekeeper who resides with them from Monday to Friday, but who returns to Virginia each weekend[5].
As part of her employment at the Mize residence the housekeeper is provided with room and board, in addition to a salary which is paid in cash. As they did for the 1991 tax year involving a previous housekeeper, the Mize's will file for the 1992 tax year, an IRS Form 2441 Child and Dependent Care Expenses reflecting these employee expenses.
As employers of the housekeeper, the Mize's are required to, and have filed an IRS Form 942 Employer's Quarterly Tax Return For Household Employees. (App. p. 176) For this purpose they have been issued a Federal Employer's Identification Number (EIN). Id. The payments are made by check to the IRS in Philadelphia and the end of each calendar quarter, including the one in which the arson took place. Id.
As far as the Government of the District of Columbia is concerned, and with the approval of Congress, the Mize's are engaged in "a business" by virtue of the fact that they employ one employee at 4301 Argyle Terrace N.W., and consequently they are required by Title 36, Section 334 of the District of Columbia Code (D.C.C.) to obtain Worker's Compensation for the housekeeper. (App. pp. 154-55) Failure to obtain this insurance coverage is punishable under Title 36, Section 339 (App. p. 157) by fine of up to $10,000.00.
The Mize's complied with their legal obligations as employers engaged in a business employing at least one person, by obtaining a Workers Compensation And Employers Liability Insurance Policy, from the Continental Insurance Company, Cranbury, New Jersey, through insurance brokers Early, Cassidy and Schilling, of Bethesda, Maryland. (App. pp. 154, 159-171). The policy was in force at the time of the arson. Id.
As in the federal context, the Mize's are required to file, and did file during the relevant quarter, employee wage information for the housekeeper. (App. p. 175)
The housekeeper's employment duties, which are performed in the building, include meal preparation involving the use of staples (i.e. meat, butter, eggs, milk, cereals, rice, coffee,) which have been produced outside the District of Columbia, or in the case of items purchased by the Mize's at Freshfields of Bethesda (i.e. fruits, juices, vegetables) actually transported in interstate commerce by the Mize's. Some of the meals are cooked by the housekeeper using a stove that burns natural gas obtained from interstate commerce.
As a further part of her employment agreement with the Mize's, the housekeeper's health insurance premiums for Kaiser Permanente California corporation) are paid in part for her. When the housekeeper wishes to see a doctor she travels in interstate commerce to the Kaiser Permanente facilities located in Virginia.
The commercial activity of employing the housekeeper at 4301 Argyle Terrace, N.W., further affects interstate and foreign commerce, *15 in that the housekeeper, who is a native of Chile, regularly sends a portion of her salary back to Chile. This is effected by the transportation of a portion of her wages to Virginia, which is then consolidated with other monies from relatives living there, and wired back to Chile by Western Union.
In addition to the activities described above, the building is used in other activities affecting interstate commerce, such as real estate mortgage financing, hazard insurance, and consumption of natural gas which has been transported in the facilities of interstate commerce. These activities are incident to both the consulting business conducted by Mrs. Mize, and the employment of the housekeeper. Consequently, and as is explained infra, these links to interstate commerce should not be viewed singularly for jurisdictional purposes, but rather in combination with each other, and incidental to each of the commercial activities described supra.
At the time of the fire, the mortgage payments for 4301 Argyle Terrace N.W. were made to Maryland National Mortgage Corporation in Baltimore, Maryland, which merged with the holders of the original deed of Trust. (App., p. 68).
The building was insured by Fireman's Fund of Bethlehem, Pennsylvania, based upon a policy which had been produced by Early, Cassidy & Schilling, independent insurance agents, of Bethesda, Maryland. (App. pp. 69-75).[6] As a direct result of the arson involving the building, a claim ("Proof of Loss") was submitted by the Mizes to Fireman's Fund Insurance Company of Novato, California. (App. pp. 76-77). The claim was handled by Fireman's Fund of Greensboro, North Carolina, which employed the services of an adjuster located in Fairfax, Virginia. (App., pp. 87-88). Fireman's Fund paid claims for the fire damage to the building by checks drawn on the First Union National Bank of Chapel Hill, North Carolina. (App. pp. 80-83)[7]. Fireman's Fund also paid $3,333.07 to the Mizes for the cleaning of smoke damage to the building, which was performed by Servicemaster, of Chantilly, Virginia. (App. pp. 80-81, 88-97).
Lastly, during the relevant time period, the building was supplied with natural gas for heating and cooking purposes by the Washington Gas Light Company. (App. pp. 100-01). According to Gas Facts, compiled by the American Gas Association no natural gas is produced in the District of Columbia. (App. pp. 98-99). Indeed, the Annual Report filed with the SEC by Washington Gas Light Company pursuant to the Securities Exchange Act of 1934, reflects, that of the six methods of supply of natural gas utilized by the company, none of them originate in the District of Columbia. (App., pp. 102-104).
THE VAN
The 1992 Pontiac Trans Sport SE, which is the subject of Count Two of the Indictment, 1992, was manufactured in the State of Michigan, ordered in late 1991 from Ridge Motors, in Des Plaines, Illinois, and shipped from there to Bill Cairns Pontiac-Buick, of Marlow Heights, Maryland in November 1991. (App. p. 173). The van was driven *16 into the District of Columbia from Maryland, where it was registered on December 10, 1991. (App. p. 135)
As described above, prior to its destruction by arson, the van was used by Mrs. Mize to travel from Washington, D.C. to Williamsburg, Virginia, and return, in connection with her nurse/educator business.[8] The van was also routinely used in interstate commerce by Mrs. Mize to drive to Freshfields, a grocery store located in Bethesda, Maryland.[9] (App., pp. 191-94)
The van was insured by Government Employees Insurance Company (GEICO), which the evidence will show, that notwithstanding its Washington, D.C. Zip Code, is physically located in the State of Maryland. (App., pp. 106-109). Following the fire, the van was towed to a storage facility by Raley's Towing, of Capitol Heights, Maryland. (App., p. 105). A claim was filed by the Mize's for the destruction of the van which GEICO ultimately settled for $19,534.00, payable by draft mailed from Maryland to 4301 Argyle Terrace N.W., Washington, D.C. (App., pp. 119-130).
The immediate impact on interstate commerce of the destruction of the van on June 21, 1992 was that Mrs. Mize was without transportation to get to the nursing seminar in Baltimore which she was to conduct on June 25-26, 1992. Consequently, Resource Applications, Hanover, Maryland, hired a car and driver from Carey Limosine, Arlington Virginia, to take Mrs. Mize to and from Baltimore, Maryland.
The subsequent impact on interstate commerce was caused by the need to replace the van. This was done by purchasing an identical model in the same fashion as the one destroyed by the arson.
Respectfully submitted,
JAY B. STEPHENS
United States Attorney
/s/ Brian M. Murtagh
By: BRIAN M. MURTAGH
Assistant United States Attorney
U.S. Attorney's Office, 5th Fl.
Transnational/Major Crimes Unit
555 4th Street, N.W.
Washington, D.C. 20001
(202) 514-7304
D.C. Bar No. 108480
NOTES
[1] The indictment conspicuously fails to allege that either the building or the van was used "in commerce."
[2] The Russell opinion did not mention Mennuti, so it is appropriate to read the two cases together.
The parties have not cited, and research has not disclosed, any relevant precedent in this circuit. Accordingly, any conflict between the more authoritative and better-reasoned opinions in Russell and Mennuti on the one hand, and the decisions of other courts of appeals, cannot be resolved at this level. Compare, e.g., United States v. Stillwell, 900 F.2d 1104 (7th Cir.1990); United States v. Moran, 845 F.2d 135, 138 (7th Cir.1988).
[3] See Younger v. Harris, 401 U.S. 37, 44, 91 S.Ct. 746, 750, 27 L.Ed.2d 669 (1971) (Black, J.); see also Harmelin v. Michigan, ___ U.S. ___, ___, 111 S.Ct. 2680, 2699, 115 L.Ed.2d 836 (1991) (Scalia, J.) (applying the concept of federalism in a criminal law context to preserve the diversity of policy that is "the very raison d'etre of our federal system"). See generally Panneton, Federalizing Fires: The Evolving Federal Response to Arson Related Crimes, 23 Am.Crim.L.Rev. 151, 206 (1985); Stern, The Commerce Clause Revisited The Federalization of Interstate Crime, 15 Ariz.L.Rev. 271 (1973); Ruff, Federal Prosecution of Local Corruption: A Case Study in the Making of Law Enforcement Policy, 65 Geo.L.J. 1171, 1172 (1977).
[4] There is nothing in the prosecution's proffer that Mrs. Mize, the only member of the family even arguably engaged in an activity affecting commerce, was in the family home at the time the garage and van were burned.
[5] Furthermore, if, as is entirely possible, Montgomery should be found not guilty by reason of insanity, his commitment at St. Elizabeth's facility under the supervision of the District of Columbia and its courts may be at least as appropriate as sending him to a distant and more elaborate mental institution operated by the Federal Bureau of Prisons.
[6] The proffer recites the following particulars, among others, as evidence of interstate commerce activity actionable under section 844(i) and the Commerce Clause: magazine subscriptions delivered to the Mizes' home; their use of computer software manufactured by IBM in Armonk, New York; the mailing of an $80 check to California for Mrs. Mize's nursing board certification; the supply of natural gas, insurance on the house and van, and financing for the home from sources outside the District; the employment of a housekeeper during the week, including the provision of room and board for her and the fact that she "regularly sends a portion of her salary back to Chile"; and Mrs. Mize's part-time, $5500-per-year job in nurse training as an "independent contractor" for Mosby Year Book Inc.; not to mention the use of their van for shopping trips to Freshfields of Bethesda.
[1] This factual proffer is based upon the anticipated testimony of witnesses and the introduction of documentary evidence.
[2] Contrary to the defendant's unsupported premise, that the materials required for her presentations are not prepared by her in the building (Motion p. 6), Mrs. Mize does in fact conduct this activity in the building.
[3] Defendant's assertion that because the Schedule C's filed by the Mize's do not reflect any deductions for the use of the building, and that this is fatal to the building being used in an activity affecting interstate commerce, is wrong. The IRS Instructions for the Schedule C expressly provide that in order to claim an expense for the use of a portion of a residence it must be used exclusively for that purpose. See App. p. 188) Neither the language, legislative history, nor decisions of the courts of appeal concerning Section 844(i) require that the building be used exclusively in an activity affecting interstate commerce. See United States v. Moran, 845 F.2d 135, 137 (7th Cir.1988) "The stipulated facts clearly establish that through the use of the business computer for business purposes and the interstate telephone calls, the residence was used in part for commercial purposes. This commercial activity readily distinguishes Mennuti."
[4] All communications to Resource Applications from Mrs. Mize are conducted either by interstate phone call using the MCI long distance service maintained at the building, by U.S. Mail. Communications from Resource Applications, are conducted either by interstate phone call, by U.S. Mail or by Federal Express, addressed to Mrs. Mize at 4301 Argyle Terrace, N.W., Washington, D.C.
[5] For example, the housekeeper had traveled into the District of Columbia from Virginia to return to work on the day of the arson, Sunday June 21, 1992.
[6] The defendant's reliance on United States v. Voss, 787 F.2d 393 (8th Cir.1986) for the proposition that insurance obtained out of state is never sufficient as a matter of law to show an activity affecting interstate commerce (Motion p. 4) is incorrect. As we explain infra at pp. 21-23 the holding in Voss, supra, is limited by the factual context of the erroneous jury instruction in that case. Furthermore, the government does not rely on each distinct link to interstate commerce standing alone, but rather in combination with each other, and incidental to each of the two commercial activities conducted in the building. See United States v. Barton, infra.
[7] The actual repairs to the building were made by Jarman Construction Company, which served as the prime contractor. (App. p. 88). Jarman subcontracted with Certified Roofing Systems and Contracting Corp., Bladensburg, Maryland, for the replacement of the existing copper roof over the garage beneath the living quarters. (App. p. 137) Jarman obtained the replacement garage doors from Overhead Door Company of Washington D.C., which is located in Beltsville, Maryland. (App. p. 138).
[8] Defendant seems to argue that the evidence does not show extensive use of the van by Mrs. Mize for her business trips. (Motion pp. 6-7). There is a very simple reason for that fact: the defendant destroyed the van by arson when it was virtually brand new.
[9] Defendant concedes (Motion p. 7) that the van was used for shopping, but fails to grasp that when the shopping involves crossing state lines, that the van is being ... "used in, and in an activity affecting interstate commerce." Defendant further fails to appreciate that the use of the van for interstate shopping provides an independent basis for the exercise of federal jurisdiction. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584863/ | 24 So.3d 360 (2009)
Bridgit WILLIAMS, Appellant,
v.
STATE of Mississippi, Appellee.
No. 2008-KP-00227-COA.
Court of Appeals of Mississippi.
December 15, 2009.
*361 Bridgit Williams (pro se), attorney for appellant.
Office of the Attorney General by: Laura Hogan Tedder, attorney for appellee.
Before KING, C.J., BARNES, and CARLTON, JJ.
BARNES, J., for the Court.
¶ 1. A Madison County grand jury indicted Bridgit Williams for felony shoplifting in violation of Mississippi Code Annotated section 97-23-93 (Supp.2003). After a jury trial in the Madison County Circuit Court, Williams was convicted and sentenced *362 as a habitual offender to serve ten years in the custody of the Mississippi Department of Corrections (MDOC) without eligibility for parole or probation and to pay a fine of $10,000. Williams now appeals, claiming that her sentence is unconstitutional and illegal.
SUMMARY OF FACTS AND PROCEDURAL HISTORY
¶ 2. On January 20, 2004, a loss-prevention officer for the Dillard's department store, located in Ridgeland, Mississippi, observed Williams and another suspect, Sharon Harris, selecting merchandise and carrying the items to one location, behind a rack of clothing. The officer also noticed Williams concealing some of the merchandise in a shopping bag. These activities continued for approximately twenty minutes. When Williams and Harris attempted to depart the store without paying for the merchandise, the officer detained them. Upon searching the bag in Williams's possession, the officer found ten items of clothing, the total value of which was over $500. None of the items had proof of purchase labels, an indicator that they had been sold.
¶ 3. On June 9, 2004, Williams was indicted for felony shoplifting pursuant to Mississippi Code Annotated section 97-23-93. It was later discovered that Williams had been previously convicted of two felonies: felony shoplifting[1] on August 17, 1995, which carried a sentence of three years in custody, with her sentence suspended for five years, during which time she was on probation; and possession of less than an ounce of marijuana with intent to distribute on July 21, 1999, for which she was sentenced to one year in the custody of the MDOC, with the sentence to run concurrently with her previous felony shoplifting sentence, which was revoked for probation violation. On January 26, 2005, the State filed a motion to amend the instant indictment to include habitual offender status.
¶ 4. Williams's jury trial was held on February 3, 2005, at which time the circuit court granted the State's motion to amend the indictment. During the trial, Williams informed the circuit court that she wanted to testify on her own behalf. The court called a lunch recess; however, Williams did not return to the courtroom after the recess. The circuit court entered a bench warrant for Williams, revoked her bond, and the trial proceeded in her absence.[2] The jury convicted Williams of felony shoplifting, and she was sentenced, as a habitual offender, to ten years in custody of the MDOC without eligibility for parole or probation. She was also assessed a $10,000 fine plus costs. Williams was eventually detained in Tennessee in August 2006 and extradited to Mississippi to begin serving her sentence.
¶ 5. Despite Williams's absence, her defense counsel timely filed a motion for new trial on February 10, 2005, claiming that the verdict was against the overwhelming weight of the evidence. However, the circuit court never ruled on the motion. After Williams was taken back into custody, she retained new counsel and filed a motion for trial transcript on February 27, 2007, in order that she might proceed with her previously-filed motion for a new trial. On April 16, 2007, the circuit court entered an order requiring the court reporter to *363 produce the trial transcript. Williams then filed an amended motion for a new trial on June 18, 2007, adding that the circuit court erred in granting two jury instructions over the defense's objection: an "accomplice" instruction and a "flight" instruction. The circuit court denied Williams's motion on August 2, 2007.
JURISDICTION
¶ 6. On February 1, 2008, Williams filed a pro se notice of appeal. Mississippi Rule of Appellate Procedure 4(a) states that a notice of appeal "shall be filed with the clerk of the trial court within 30 days after the date of entry of the judgment or order appealed from." As Williams's notice of appeal was filed three years after the entry of the court's February 3, 2005, order, the Mississippi Supreme Court issued a "Show Cause Notice" on April 4, 2008, requesting that Williams show cause why her untimely appeal should not be dismissed. Williams filed her show cause notice, and on August 6, 2008, this Court entered an order stating that it was uncertain, based on the limited record, whether Williams's appeal warranted suspension of the rules under Mississippi Rule of Appellate Procedure 2(c). Therefore, the appeal was allowed to proceed on its merits. On February 2, 2009, the State filed a motion to dismiss the appeal. This Court found that the State's motion should "be passed for consideration," along with the merits of Williams's appeal, based upon the previous order. As the appellate record is now complete, we will now consider whether Williams's untimely appeal merits a suspension of the rules.
¶ 7. First, we note that Williams's June 18, 2007, amended motion for a new trial effectively superseded her February 10, 2005, motion for a new trial, since that motion was still pending before the court.[3] Therefore, the circuit court's denial of Williams's amended motion for a new trial on August 2, 2007, determines the starting date for the purposes of determining whether the appeal was untimely filed. As Williams filed her notice of appeal approximately six months after the circuit court denied her amended motion for a new trial under Rule 4(a), the notice of appeal was untimely, leaving this Court without jurisdiction to consider Williams's appeal.
¶ 8. However, under Rule 2(c) of the Mississippi Rules of Appellate Procedure, this Court may suspend the thirty-day requirement of Rule 4(a) and allow an out-of-time appeal in a criminal case for "good cause shown" and "in the interest of expediting decision." See McGruder v. State, 886 So.2d 1, 2(¶ 4) (Miss.2003) (citation omitted) ("We may suspend Rules 2 and 4 `when justice demands' to allow an out-of-time appeal in criminal cases."). "The party seeking an out-of-time appeal carries the burden of persuasion regarding the lack of a timely notice." Andrews v. State, 932 So.2d 61, 62(¶ 5) (Miss.Ct.App. 2006) (citations omitted). Williams, in her show cause notice, claimed that she was financially unable to retain counsel and was not aware of the appellate rules. We do not find that this constitutes good cause. An out-of-time appeal may be granted in cases where the prisoner, "through no fault of his own[,] is effectively denied his right to perfect his appeal within the time prescribed by law by the acts of his attorney or the trial court." Dorsey v. State, 986 So.2d 1080, 1084(¶ 12) (Miss.Ct.App.2008) (citation omitted). *364 However, a "[p]etitioner's pro se status and ignorance of the law alone are wholly insufficient to establish cause." Gardner v. State, 848 So.2d 900, 901(¶ 5) (Miss.Ct. App.2003) (citing Culberson v. State, 612 So.2d 342, 346 (Miss.1992)).
¶ 9. Moreover, Williams is also procedurally barred from raising her claim that her sentence was illegal as she failed to object to her sentence at trial. See Fulks v. State, 944 So.2d 79, 85(¶ 14) (Miss. Ct.App.2006) (a defendant who makes no objection at trial to his sentence cannot raise this allegation initially on appeal). However, notwithstanding the procedural bar or Williams's failure to show good cause, dismissing this appeal for lack of jurisdiction would most likely result in a motion for post-conviction relief citing not only that her sentence was unconstitutional and illegalthe issue before us in this appealbut also ineffective assistance of counsel for failure to object to her sentence. Therefore, "in the interest of expediting decision" pursuant to Rule 2(c), we will suspend the rules and review Williams's out-of-time appeal on the merits.
¶ 10. Our basis for allowing this out-of-time appeal is to expedite a decision, as the dismissal of this appeal would result in a judicially-inefficient petition for post-conviction relief, consuming further trial and appellate court resources. The dissent argues that our reasoning is "faulty" as Williams is "likely" to file a motion for post-conviction relief anyway, and that it is irrelevant whether we address the substance of the appeal because Williams's post-conviction relief motion will be procedurally barred. However, the issue may not be as straightforward as the dissent contends. The right to be free from an illegal sentence is a fundamental constitutional right; therefore, a claim of illegal sentence cannot be procedurally barred under the Mississippi Uniform Post-Conviction Collateral Relief Act. See McBride v. State, 914 So.2d 260, 263(¶ 10) (Miss.Ct. App.2005). The legality of Williams's sentence has been fully briefed and considered by the entire Court; consequently, we see no reason to decline jurisdiction, thus requiring a hard-working, overburdened trial judge to review either this issue or the issue of the procedural bar to a motion for post-conviction relief merely to have the issues(s) come back to this Court to be re-briefed, reconsidered, and rewritten. Rather than "rewarding" Williams's shortcomings, this Court's decision to review the merits of her appeal is based upon judicial economy.
I. Whether Williams was incorrectly sentenced as a habitual offender.
¶ 11. Williams claims that she should not have been charged as a habitual offender as the sentences for her two previous convictions were served concurrently. Therefore, she was only in custody for one year. The amendment to Williams's indictment charged her under Mississippi Code Annotated section 99-19-81 (Rev. 2000), which states:
Every person convicted in this state of a felony who shall have been convicted twice previously of any felony or federal crime upon charges separately brought and arising out of separate incidents at different times and who shall have been sentenced to separate terms of one (1) year or more in any state and/or federal penal institution, whether in this state or elsewhere, shall be sentenced to the maximum term of imprisonment prescribed for such felony, and such sentence shall not be reduced or suspended nor shall such person be eligible for parole or probation.
(Emphasis added). This statute merely requires that the defendant be sentenced to one year or more for each crime. It *365 does not require that the individual be incarcerated under his imposed sentences to obtain habitual offender status. Davis v. State, 5 So.3d 435, 441(¶ 14) (Miss.Ct. App.2008); see also Green v. State, 802 So.2d 181, 183(¶ 14) (Miss.Ct.App.2001) ("Service of sentence through actual incarceration is not mandatory when considering habitual offender status under [section] 99-19-81") (citation omitted). Williams was convicted and sentenced for two separate crimes prior to her February 3, 2005, conviction: felony shoplifting in 1995 and possession of marijuana in 1999. Thus, the felonies were "separate incidents," which occurred "at different times," and each carried a sentence of at least one year. Thus, the fact that Williams was only incarcerated for one year while serving her concurrent sentences does not afford her relief from habitual offender status under section 99-19-81.
II. Whether Williams's sentence constituted cruel and unusual punishment in violation of the Eighth Amendment.
¶ 12. Williams also claims that her sentence was unconstitutional as it exceeded the maximum sentence allowed by law. A sentence may be subject to attack if it is "`grossly disproportionate' to the crime committed," as this is a violation of "the Eighth Amendment prohibition of cruel and unusual punishment." Minor v. State, 992 So.2d 664, 666(¶ 6) (Miss.Ct.App. 2008) (quoting Lewis v. State, 905 So.2d 729, 737(¶ 26) (Miss.Ct.App.2004)). However, the circuit court has complete discretion in imposing a sentence, and the sentence will "not [be] subject to appellate review if it is within the limits prescribed by statute." Id. Consequently, "a sentence that does not exceed the maximum period usually will not be disturbed on appeal." Fannings v. State, 997 So.2d 953, 966(¶ 42) (Miss.Ct.App.2008) (citing Ford v. State, 975 So.2d 859, 869(¶ 39) (Miss. 2008)).
¶ 13. Williams was indicted under Mississippi Code Annotated section 97-23-93(1) which states that:
Any person who shall wilfully and unlawfully take possession of any merchandise owned or held by and offered or displayed for sale by any merchant, store or other mercantile establishment with the intention and purpose of converting such merchandise to his own use without paying the merchant's stated price therefor shall be guilty of the crime of shoplifting and, upon conviction, shall be punished as is provided in this section.
Further, as Williams was apprehended with more than $500 in merchandise, she was convicted under subsection (7) of section 97-23-93 which states that: "A person convicted of shoplifting merchandise for which the merchant's stated price exceeds Five Hundred Dollars ($500.00) shall be guilty of a felony and, upon conviction, punished as provided in Section 97-17-41 for the offense of grand larceny." (Emphasis added). Williams has also argued, in a separate motion received by this Court on November 6, 2009, that she should not have been sentenced under subsection (7) of section 97-23-93 for grand larceny. However, it is clear from the evidence that the merchandise was valued at more than $500. Therefore, as Williams was a habitual offender, the circuit court was required under section 99-19-81 to impose the maximum sentence for grand larceny, which is ten years in the custody of the MDOC, and a fine of $10,000. See Miss.Code Ann. § 97-17-41 (Supp.2003). This is exactly the sentence that Williams received.
¶ 14. The sentence imposed by the circuit court did not exceed the statutory maximum, and we find no violation of the *366 Eighth Amendment to the United States Constitution.
¶ 15. THE JUDGMENT OF THE CIRCUIT COURT OF MADISON COUNTY OF CONVICTION OF FELONY SHOPLIFTING AND SENTENCE AS A HABITUAL OFFENDER OF TEN YEARS IN THE CUSTODY OF THE MISSISSIPPI DEPARTMENT OF CORRECTIONS WITHOUT ELIGIBILITY FOR PAROLE OR PROBATION AND TO PAY A FINE OF $10,000 IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO MADISON COUNTY.
KING, C.J., LEE, P.J., IRVING, ISHEE AND CARLTON, JJ., CONCUR. ROBERTS, J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY MYERS, P.J., GRIFFIS AND MAXWELL, JJ.
ROBERTS, J., dissenting.
¶ 16. Although affirmance of the conviction, by the majority, may have the same practical effect, I write separately to emphasize that I would dismiss this appeal for lack of jurisdiction. It is well settled that: "We may suspend [Mississippi Rules of Appellate Procedure] 2 and 4 `when justice demands' to allow an out-of-time appeal in criminal cases." McGruder v. State, 886 So.2d 1, 2(¶ 4) (Miss.2003) (citing Fair v. State, 571 So.2d 965, 966 (Miss. 1990)) (emphasis added). However, it is when a defendant is effectively denied his or her right to perfect a timely appeal through no fault of his or her own, that the appellate court is motivated to suspend or relax the rules of appellate procedure. Id. (citing Jones v. State, 355 So.2d 89, 90 (Miss.1978)). This is definitely not the situation in the instant appeal.
¶ 17. The majority has amply stated the procedural facts of this case, but I note, again, that Bridgit Williams chose to flee the state in the middle of her trial, and she had to be extradited from Tennessee eighteen months later. Williams made a calculated decision to flee from justice. Furthermore, the record reflects that this was not the first time she had chosen to take flight from legal proceedings or restraint. In 1998, Williams violated the terms of her probation by leaving the state and had to be extradited from Tennessee to Warren County, Mississippi for a probation-violation hearing. As evidenced by Williams's habitual-offender status and the prior underlying proceedings in Warren County, this was not her first legal rodeo.
¶ 18. At trial, Williams was represented by a public defender, who in Williams's absence, was diligent to file a motion for a new trial after her conviction. After her extradition, Williams hired private counsel to present her amended motion for a new trial, and the record does not reflect an order stating that Williams's retained attorney was ever relieved of his representation of Williams. Nevertheless, six months after the trial judge dismissed Williams's motion for a new trial, Williams filed a pro se notice of appeal. Williams was five months late in filing her appeal. Although Williams claims her appeal was untimely filed because she did not have the means to afford an attorney and she was ignorant of the appellate rules, Williams did not request in forma pauperis status until March 28, 2008, approximately eight months after her amended motion for a new trial was denied. In forma pauperis status was granted, and Rankin County paid her appeal costs. Yet, the record does not reflect a request by Williams to the trial court for court-appointed counsel to pursue her appeal. Williams's claimed ignorance is unpersuasive, particularly in light of the fact that she is no stranger to the legal system. Without a doubt, the majority correctly recognizes that Williams *367 has not shown good cause for her untimely filed appeal.
¶ 19. However, in spite of this recognition, the majority chooses to forgive or ignore this fact and addresses Williams's appeal on the merits out of concern that she may pursue a post-conviction-relief action. I suggest that this is faulty reasoning. Whether we address the merits of Williams's appeal or not, she is likely to file a post-conviction-relief motion because this is her right, if she can show that there are objections, defenses, claims, questions, issues, or errors which in practical reality could not have been or should not have been raised at trial or on direct appeal. Miss.Code Ann. § 99-39-3 (Rev.2007). Also, whether we permit this untimely filed appeal or not is irrelevant to any possible future post-conviction-relief motion Williams may file. It is irrelevant because, if she could have raised such issues in a timely filed appeal, but by her own fault failed to file a timely appeal, the procedural bar stands to prevent them from being raised in a post-conviction-relief proceeding. Ultimately, the decision to allow this appeal should be based solely upon the facts before us in the record.
¶ 20. With the caveat of finding "good cause" for an untimely filed appeal in criminal proceedings, "Rule 2(a) reflects the long-standing rule in this state that the failure to file a timely appeal leaves this Court without jurisdiction to consider the case." Byrd v. Biloxi Reg'l Med. Ctr., 722 So.2d 166, 168(¶ 10) (Miss.Ct.App.1998) (quoting Bank of Edwards v. Cassity Auto Sales, Inc., 599 So.2d 579, 582 (Miss.1992)). In my considered judgment, accepting this appeal on the merits without any showing of good cause is tantamount to abolishing the requirements of Mississippi Rule of Appellate Procedure 2. Certainly, with the facts in this case, justice does not demand relaxation of our thirty-day rule. As we are without any appellate jurisdiction based on the facts before us, I would grant the State's motion to dismiss this appeal.
MYERS, P.J., GRIFFIS AND MAXWELL, JJ., JOIN THIS OPINION.
NOTES
[1] Miss.Code Ann. § 97-23-93(7) (Rev.2006).
[2] In Jefferson v. State, 807 So.2d 1222, 1227(¶ 18) (Miss.2002), the Mississippi Supreme Court ruled that a court may try a defendant in absentia, if the defendant has willfully, voluntarily, and deliberately taken actions to avoid trial.
[3] Uniform Rule of Circuit and County Court 10.05 states that "[a] motion for a new trial must be made within ten days of the entry of judgment. The trial judge may hear and determine a motion for new trial at any time and in any county or judicial district within the trial judge's jurisdiction." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584864/ | 641 So.2d 715 (1994)
Carol DOMITE, Plaintiff-Appellee,
v.
IMPERIAL TRADING COMPANY, INC., Defendant-Appellant.
No. 94-16.
Court of Appeal of Louisiana, Third Circuit.
August 3, 1994.
*716 W. Bernard Kramer, for Carol Domite.
Michael Thomas Tusa Jr., Carolyn Jeanelle Smilie, for Imperial Trading Co., Inc.
Before SAUNDERS, WOODARD and DECUIR, JJ.
SAUNDERS, Judge.
Defendant-appellant, IMPERIAL TRADING COMPANY, INC., appeals from the trial court's award to plaintiff-appellee, CAROL DOMITE, of unpaid vacation days in the amount of $275.00, penalty wages in the amount of $4,950.00 and attorney's fees in the amount of $1,750.00. Plaintiff-appellee answers that appeal and requests additional attorney fees.
On October 30, 1992, IMPERIAL TRADING COMPANY, INC. terminated CAROL DOMITE'S employment. CAROL DOMITE worked at IMPERIAL TRADING COMPANY, INC. as a sales representative from approximately January 10, 1989, to October 30, 1992. Following her termination, CAROL DOMITE requested payment of paid vacation days that she had earned, but had not yet taken and a bonus that she allegedly earned, but for which she was never paid.
IMPERIAL TRADING COMPANY, INC. takes this appeal and argues that the trial court erred when it: 1) ruled that paid vacation days earned and not taken by an employee are not considered paid wages, 2) assessed penalty wages without proof of bad faith on the part of the employer, 3) awarded $1,750.00 in attorney's fees to plaintiff. CAROL DOMITE answers the appeal and requests additional attorney's fees.
FACTS
CAROL DOMITE (hereinafter DOMITE) worked as a customer service representative for IMPERIAL TRADING COMPANY, INC. (hereinafter IMPERIAL) from January 10, 1989 to October 30, 1992, on which date she was terminated. In a letter sent to IMPERIAL dated November 6, 1992, DOMITE formally requested payment for one (1) week (5 days) of earned vacation days, which she had not yet taken at the time of her termination. In addition, DOMITE requested payment of a bonus that she alleged she had earned, but for which she had never received payment.
In the first two years of employment, IMPERIAL awarded to its employees one (1) week of paid vacation after an employee completed a full year of employment. At the completion of three years of employment and in each year thereafter, IMPERIAL awarded two (2) weeks of paid vacation after an employee completed the full year of employment. IMPERIAL required that its employee take all earned paid vacation days before their next anniversary date of employment or the paid vacation days were lost. In addition, IMPERIAL employees were not allowed to take two consecutive weeks of paid vacation days.
IMPERIAL awarded bonuses in the form of $50.00 savings bonds to employees who established viable new accounts. A new account was considered "viable" if the account resulted in orders of a minimum of $500.00 per week for six weeks during a thirteen (13) week period.
IMPERIAL'S vice-president of sales, Robert L. Pierpoint, Jr., responded to DOMITE'S request for payment of the vacation days not taken and the alleged unpaid bonus in a letter dated November 11, 1992. Pierpoint informed DOMITE that, pursuant to IMPERIAL'S company policy, its employees were not paid for vacation days earned and not taken before an employee's anniversary date. Lastly, Pierpoint informed DOMITE that, pursuant to IMPERIAL'S company policy, bonuses were awarded only to active employees.
Pursuant to La.R.S. 23:631 et seq., DOMITE filed suit praying for payment of the paid vacation days earned, the unpaid bonus, attorney's fees, and penalty wages. After a *717 trial on the merits, the trial court awarded DOMITE one week of wages for the unused week of paid vacation, $275.00 or five (5) days multiplied times DOMITE'S daily rate of pay, $55.00, attorney's fees in the amount of $1,750.00, and penalty wages in the amount of $4,950.00 or ninety (90) days multiplied times DOMITE'S daily rate of pay, $55.00. In denying DOMITE'S claim for the bonus, the trial court ruled that DOMITE failed to prove by a preponderance of the evidence that she earned a bonus.
I. Issues Presented
1) Whether penalty wages should be awarded to an employee pursuant to La.R.S. 23:631 et seq. without proof of bad faith or arbitrary action on the part of the employer in withholding payment of past due wages. 2) Whether defendant was in bad faith in failing to pay past due wages. 3) Whether the trial court erred in awarding $1,750.00 in attorney's fees when there was no evidence presented by plaintiff's counsel concerning the time spent and expenses incurred in preparing plaintiff's case. 4) Whether plaintiff is entitled to additional attorney's fees in responding to and answering this appeal.
II. Law and ArgumentIssue I
Whether penalty wages should be awarded to an employee pursuant to La.R.S. 23:631 et seq. without proof of bad faith or arbitrary action on the part of the employer in withholding payment of past due wages.
Pursuant to La.R.S. 23:631, upon discharge or resignation of an employee, the employer is required to pay the amount due the employee under the terms of his employment "not later than three days following the date of discharge or resignation." In addition, La.R.S. 23:632 requires that:
"Any employer who fails or refuses to comply with the provisions of R.S. 23:631 shall be liable to the employee either for ninety days wages at the employee's daily rate of pay, or else for full wages from the time the employee's demand for payment is made until the employer shall pay or tender the amount of unpaid wages due to such employee, whichever is the lesser amount of penalty wages. Reasonable attorney fees shall be allowed the laborer or employee by the court which shall be taxed as costs to be paid by the employer, in the event a well-founded suit for any unpaid wages whatsoever be filed by the laborer or employee after three days shall have elapsed from time of making the first demand following discharge or resignation." (Emphasis added.)
In an attempt to adhere to the clear unambiguous and mandatory language of the statute, the trial court did not agree with IMPERIAL'S argument that the trial court must find that IMPERIAL acted in bad faith or arbitrarily in not paying DOMITE'S wages in order for the trial court to cast IMPERIAL in judgment for penalty wages.[1] After reviewing the wording of the statute, this court would, at least initially, agree with the trial court's interpretation of the statute. Particularly, in view of the following statutes, we would find no error in the trial court's interpretation of the statute:
"When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature." La.C.C. art. 9.
"When the language of the law is susceptible of different meanings, it must be interpreted as having the meaning that best conforms to the purpose of the law." La. C.C. art. 10.
"The words of a law must be given their generally prevailing meaning." La.C.C. art. 11.
"When the words of a law are ambiguous, their meaning must be sought by examining the context in which they occur and the text of the law as a whole." La.C.C. art. 12.
Despite the clear unambiguous and mandatory language of the statute requiring that an employer "shall be liable" for penalty *718 wages, the jurisprudence interpreting La. R.S. 23:632 holds that the statute is penal in nature and must be strictly construed and must yield to equitable defenses, i.e. no penalty wages can be awarded if the employer was in good faith and not acting arbitrarily in failing or refusing to pay the past due wages. See, Boudreaux v. Hamilton Medical Group, Inc., 631 So.2d 721 (La.App. 3d Cir.1994) (citations omitted); Brown v. Navarre Chevrolet, Inc., 610 So.2d 165 (La.App. 3d Cir. 1992) (citing Glover v. Diving Services International, Inc., 577 So.2d 1103 (La.App. 1st Cir.1991); Jones v. Hebert & LeBlanc, Inc., 499 So.2d 1107 (La.App. 3d Cir.1986)); Becker v. Choate, 204 So.2d 680 (La.App. 3d Cir. 1967) (citing Mitchell v. First Nat. Life Ins. Co. of La., 109 So.2d 61 (La.1959)); Clevy v. O'Meara, 236 La. 640, 108 So.2d 538 (1959); Tuberville v. Foster, 113 So.2d 805 (La.1959); Elliott v. General Gas Corporation, 229 La. 128, 85 So.2d 55 (1956); Strickland v. American Pitch Pine Export Co., 224 La. 949, 71 So.2d 338 (1954); Deardorf v. Hunter, 160 La. 213, 106 So. 831 (1926).
The predecessor of La. 23:631 and 23:632 was Act 150 of 1920. That act provided upon discharge or resignation of an employee, the employer was required to pay the amount due the employee under the terms of his employment "within twenty-four hours after such discharge or resignation." In addition, Act 150 provided for penalty wages:
"Any individual, firm, person or corporation employing laborers or others in this State who shall fail or refuse to comply ... shall be liable to the said laborer or other employee for his full wages from the time of such demand for payment by the discharged or resigned laborer or employee, until the said person, firm, or corporation shall pay or tender payment of the amount due to such laborer or other employee."
In 1926 the Louisiana Supreme Court in Deardorf v. Hunter, 160 La. 213, 106 So. 831 (1926), held without citation of authority that "[t]he language of the Act 150 of 1920 is not so peremptory as to forbid an equitable defense against the penalty." Since that decision, Louisiana courts have continuously and without much further legal analysis held, using the Deardorf wording or similar language, that equitable defenses are available to an employer. After carefully reviewing the facts of Deardorf and the present day reading of 23:632, it does not appear that equitable defenses should be allowed.
In Deardorf, the plaintiff was employed as a laborer at the defendant's, Hunter's sawmill, as a lumber stacker, at $5.00 per day. When a swamp used for the logging operations flooded, the defendant discharged Deardorf and other employees. Before leaving for his home state of Illinois, defendant requested that one of his employees, Spears, send to him the payroll so that he could remit promptly the wages due the laborers. After receiving the payroll, the defendant prepared the payroll and sent the appropriate funds to Spears who used the money for other purposes and never paid to Deardorf or the other discharged employees the wages due them. Hunter did not know of Spears' failure to pay the laborers until he was so notified by the district court through a curator ad hoc appointed to represent him in his absence. Upon learning of the pending suit, Hunter came to Louisiana and offered to Deardorf and the other discharged laborers more than the amount due them in an effort to stop the lawsuits. Because Deardorf and the other plaintiffs signed contracts with their attorneys for a contingency fee, which according to Act 124 of 1906, forbade them from settling their claims without their attorneys' consent, they would only accept Hunter's offers to pay the wages under protest and with reservations of the right to proceed with the suit for the penalty wages. Hunter hired an attorney and tendered to the court the $35 wages due for the seven (7) days of labor plus the accrued interest or a total of $55.10. The trial court found in favor of Deardorf, but refused to condemn Hunter for the severe penalty of $3200.00, which would have been allowed in this case under Act 150 of 1920. In affirming the trial court's ruling not to impose the penalties, the Louisiana Supreme Court noted the equitable considerations present in the case including the fact that Hunter was a very sick man, almost insane.
Mindful of the equitable considerations, the Louisiana Supreme Court did not allow the statute with its open ended provision for *719 penalty wages to be imposed when such equitable considerations were present. Apparently, the Court recognized that following the clear unambiguous and mandatory language of Act 150 of 1920 requiring imposition of penalty wages, in the case of Deardorf and many other similar cases, would be too harsh and lead to illogical consequences. Moreover, it would have been particularly inequitable where the defendant suffered from mental illness. Referring only to the "equitable considerations," the court declined to impose penalties and set forth the seminal jurisprudence, which has been continuously followed by Louisiana courts, that enables employers to interpose a variety of equitable defenses.
Aside from the good faith effort of the defendant in Deardorf, who tried faithfully and generously to settle the employees' claims despite his poor mental state, the Louisiana Supreme Court would have also presumably held that the statute yielded to equitable defenses due solely to the inequities of the open ended penalty provision. If the penalty wages were automatically imposed after an employee successfully showed by a preponderance of the evidence that unpaid past due wages were owed to him, it is conceivable that a mere delay in bringing suit or making service on an employer, as was apparently true in Deardorf, could make the potential award for penalty wages exhorbitant in comparison to the amount of unpaid wages due the employee. For example, the unpaid wages due in Deardorf were $35.00 while the potential penalty wages were $3200.00. Herein, lies the equity problem associated with the imposition of the statute.
The present law concerning penalty wages has changed significantly since the enactment of Act 150 of 1920. The language of the statute remains clear and unambiguous in its mandatory language requiring imposition of penalty wages, however, the inequities that are associated with the open ended provision for penalty wages have been removed by restricting penalty wages to a maximum of ninety (90) days of wages. With such clear unambiguous and mandatory language and a limited liability of ninety (90) days of wages imposed on an employer, we no longer find necessary the equitable defense afforded the employer in Deardorf. We think that the Deardorf holding and its prodigy are no longer applicable in Louisiana. To allow such defenses is contrary to and makes less effective, if not ineffective, the obvious intent of the legislature in adopting this statute.[2]
In further support of our position, we note that Judge Tate, writing for the Louisiana Supreme Court, ruled that the language of the 1964 amendment of La.R.S. 23:632 had the effect of legislatively overruling pre-1964 jurisprudence that permitted employers to raise equitable defenses to the award of attorney's fees. Carriere v. Pee Wee's Equipment Co., 364 So.2d 555 (La.1978). In support of that court's judgment, Judge Tate points out the clear unambiguous language of the statute that provides "[r]easonable attorneys' fees shall be allowed the laborer ... in the event a well-founded suit for any unpaid wages ... be filed by the laborer." Id. at 556. In the case of penalty wages, the language of the statute is even stronger, i.e. penalty wages shall be awarded regardless of any other considerations of the strength of the employee's suit or bad faith on the part of the employer. In view of the reduced liability on employers and the Louisiana Supreme Court's reasoning in Carriere, we hardly see how penalty wages, like reasonable attorney's fees, should not also automatically be awarded to the employee who prevails at trial.
*720 In this case, the trial court interpreted the statute as not requiring a showing of bad faith on the part of the employer for an employee to collect penalty wages. This view is supported by the clear and unambiguous language of the statute, but it is contrary to the prevailing jurisprudence.
Issue II
2) Whether defendant was in bad faith in failing to pay past due wages.
The issue of IMPERIAL'S bad faith is a question of fact, and therefore, is subject to the manifest error or clearly wrong standard of review. See, Potvin v. Wright's Sound Gallery, Inc., 568 So.2d 623 (La.App. 2d Cir.1990); Rosell v. ESCO, 549 So.2d 840 (La.1989). We have reviewed the record and find no error in the trial court's ruling that IMPERIAL was in bad faith.
At trial, IMPERIAL argued that they were in good faith in not paying DOMITE for the unused vacation days because that was "company policy." The record reveals, however, that DOMITE was never provided with a company policy manual that informed her that she lost earned paid vacation days if she did not take them before her anniversary date or that an employee would lose earned paid vacation days if she was discharged before having the opportunity to take it. The defense did not produce a company manual at trial with the signature of DOMITE indicating at least that she had received one much less that an actual written company manual even existed.
In addition, we note that IMPERIAL'S actions show that it knew that it owed DOMITE vacation time. On the day that IMPERIAL suspended DOMITE from work, IMPERIAL chose to deduct a paid vacation day from the paid vacation days owed to her, apparently, instead of having to pay her a day's salary. IMPERIAL contends that those are not paid wages due DOMITE, but IMPERIAL recognized those unused vacations days as wages due DOMITE or it would not presumably have used them as a way to compensate her for the day that she was told not to come into work. We agree with the trial court's analysis: "[t]he court finds that the defense was not in good faith by not paying her that because they obviously recognize that she was still entitled to a weeks vacation in that they took a days pay of her wages and called it vacation."
We find no manifest error and affirm the trial court's finding of bad faith on the part of IMPERIAL in not paying DOMITE past due wages.
Issue III
3) Whether the trial court erred in awarding $1,750.00 in attorney's fees when there was no evidence presented by plaintiff's counsel concerning the time spent and expenses incurred in preparing plaintiff's case.
Before this court will disturb an award by the trial court of attorney's fees and expenses, the record must clearly reveal that the trier of fact abused its much discretion in making that award. See, Buteau v. Leleux, 591 So.2d 1261 (La.App. 3d Cir.1991); Poirrier v. Otis Engineering Corp., 602 So.2d 207 (La.App. 3d Cir.1992). "Factors to be considered in determining the award of attorney's fees include the degree of professional skill and ability exercised, the amount of the claim, the amount recovered for the plaintiff, and the time devoted to the case." Dunn v. Redman Homes, Inc., 411 So.2d 722, 727 (La.App. 3d Cir.1982) (citing Artigue v. Louisiana Farm Bureau Mut. Ins. Co., 339 So.2d 880 (La.App. 3d Cir.1976), writ refused, 341 So.2d 1132 (La.1977).
The record reveals more than sufficient evidence to indicate that the trial court's award of attorney's fees was fair and reasonable: numerous pleadings, correspondence, legal memorandum, substantial damages, and a full trial on the merits. Consequently, we affirm the trial court's award of $1,750.00 in attorney's fees.
Issue IV
Whether plaintiff is entitled to additional attorney's fees in responding to and answering this appeal.
DOMITE answered the appeal and requests additional attorney's fees for the appellate work. A review of the additional *721 work necessitated by this appeal reveals that an additional award of $1,500.00 in attorney's fees is warranted. Poirrier v. Otis Engineering Corp., 602 So.2d 207 (La.App. 3d Cir.1992) (citing Hall v. McDonald Insulation, 537 So.2d 328 (La.App. 1st Cir.1988).
III. Conclusion
For the foregoing reasons, the judgment of the trial court is affirmed as amended.
It is ORDERED, ADJUDGED, and DECREED, that an additional amount of attorney's fees of $1,500.00 is awarded to plaintiff-appellee, CAROL DOMITE, for the additional work necessitated by this appeal.
All costs of these proceedings are to be paid by defendant-appellants, IMPERIAL TRADING COMPANY, INC.
AFFIRMED as AMENDED and RENDERED.
NOTES
[1] The trial court gave oral reasons for its decision after a trial on the merits. The trial court's reasons are transcribed and part of the record. Despite IMPERIAL'S request for written reasons, however, the trial court never provided actual written reasons for its judgment.
[2] In discussing the intent of Act 150 of 1920, the Louisiana Supreme Court stated in Elliott v. General Gas Corporation, 229 La. 128, 85 So.2d 55 (1955): "In the year 1920 the Legislature of this State, mindful of an evil practice then prevailing among some employers forcing a discharged laborer to wait until pay day, or longer, to receive the wages he had earned, adopted its Act 150, requiring that the laborer or employee be paid any amount regularly due under the terms of the employment within twenty-four hours after discharge... and as a coercive means to compel obedience, the employer was made liable to the employee `for his full wages from the time the demand for payment by the discharged or resigned laborer or employee was made, until the employer shall pay or tender payment of the amount due to such laborer or other employee', plus a reasonable attorney's fee (as amended [by Act 138 of 1936]; now LSA-R.S. 23:632)." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584868/ | 641 So.2d 45 (1994)
John McKENDRY, Petitioner,
v.
STATE of Florida, Respondent.
No. 81477.
Supreme Court of Florida.
May 19, 1994.
Rehearing Denied August 25, 1994.
Ronald B. Smith, Waxler & Smith, Stuart, for petitioner.
Robert A. Butterworth, Atty. Gen., Joan Fowler, Sr. Asst. Atty. Gen., and Melvina Racey Flaherty, Asst. Atty. Gen., West Palm Beach, for respondent.
GRIMES, Chief Justice.
We review State v. McKendry, 614 So.2d 1158 (Fla. 4th DCA 1993), in which the court certified the following question as one of great public importance:
DO THE PROVISIONS OF SECTION 948.01, FLORIDA STATUTES (1989), AUTHORIZE THE IMPOSITION OF A SENTENCE OTHER THAN AS PROVIDED IN SECTION 790.221(2), FLORIDA STATUTES (1989)?
Id. at 1161. We have jurisdiction under article V, section 3(b)(4) of the Florida Constitution.
John McKendry was convicted of possession of a short-barreled shotgun in violation of section 790.221, Florida Statutes (1989). Although the recommended guidelines sentence for McKendry's crime was community control or twelve to thirty months in prison, section 790.221(2) provided for a mandatory *46 minimum term of imprisonment of five years.[1] The trial judge sentenced McKendry to the mandated term of five years. However, because of the facts of the case[2] and McKendry's prior record, the judge suspended the five-year prison term and placed McKendry on community control for one year to be followed by three years of probation.
The State appealed and the district court of appeal reversed McKendry's sentence. The court held that section 948.01, Florida Statutes (1989), the statute which gives a trial court authority to suspend a sentence and implement community control, could not operate to avoid the enforcement of the mandatory minimum term in section 790.221(2). However, because of the conflicting provisions of section 790.221(2) and section 948.01, the court certified the question quoted above.
Under section 790.221, Florida Statutes (1989), it is illegal for any person to own or have in his or her care, custody, possession, or control a short-barreled shotgun. Section 790.221(2) provides that any person convicted under this statute "shall be sentenced to a mandatory minimum term of imprisonment of 5 years." § 790.221(2), Fla. Stat. (1989). At the same time, section 948.01, Florida Statutes (1989), states:
(3) If it appears to the court upon a hearing of the matter that the defendant is not likely again to engage in a criminal course of conduct and that the ends of justice and the welfare of society do not require that the defendant presently suffer the penalty imposed by law, the court, in its discretion, may either adjudge the defendant to be guilty or stay and withhold the adjudication of guilt; and, in either case, it shall stay and withhold the imposition of sentence upon such defendant and shall place him upon probation... .
(4) If, after considering the provisions of subsection (3) and the offender's prior record or the seriousness of the offense, it appears to the court in the case of a felony disposition that probation is an unsuitable dispositional alternative to imprisonment, the court may place the offender in a community control program.
The issue presented is whether or not section 948.01 authorizes a trial judge to depart from the minimum mandatory sentence set forth in section 790.221(2).
We begin our analysis of the issue by applying accepted rules of statutory construction to the statutes in question. First, a specific statute covering a particular subject area always controls over a statute covering the same and other subjects in more general terms. Adams v. Culver, 111 So.2d 665, 667 (Fla. 1959); State v. Billie, 497 So.2d 889, 894 (Fla. 2d DCA 1986), review denied, 506 So.2d 1040 (Fla. 1987). The more specific statute is considered to be an exception to the general terms of the more comprehensive statute. Floyd v. Bentley, 496 So.2d 862, 864 (Fla. 2d DCA 1986), review denied, 504 So.2d 767 (Fla. 1987). Under this rule, section 790.221(2), which specifically addresses the criminal penalty for possession of a short-barreled shotgun, prevails over section 948.01, which generally gives a trial judge discretion to suspend criminal sentences. To arrive at any other conclusion would render the specific mandatory language of section 790.221(2) without meaning.
Further, when two statutes are in conflict, the later promulgated statute should prevail as the last expression of legislative intent. Sharer v. Hotel Corp. of Am., 144 So.2d 813 (Fla. 1962); State v. Ross, 447 So.2d 1380, 1382 (Fla. 4th DCA 1984), review denied, 456 So.2d 1182 (Fla. 1984). Section 948.01 was originally enacted in 1941 long before mandatory minimum sentences were known except in capital cases and at a time when trial courts still had virtually unlimited discretion in sentencing. While section 790.221 was originally enacted in 1969, it was not until 1989 that the statute was amended to include the mandatory sentencing language. *47 Although section 948.01 was also amended in 1989, the amendment concerned an unrelated issue, and there was no mention of section 790.221. Therefore, section 790.221(2) should prevail over section 948.01 as the last expression of legislative intent on the subject of sentencing for possession of a short-barreled shotgun.
Legislative intent is also made clear by the 1989 amendment to section 790.221(2). Prior to 1989, section 790.221(2) read as follows: "[a]ny person convicted of violating this section is guilty of a felony and upon conviction thereof shall be punished by imprisonment in the state penitentiary not to exceed 5 years." Ch. 69-306, § 10, at 1110, Laws of Fla. The 1989 amendment changed the statute to read "[u]pon conviction thereof he shall be sentenced to a mandatory minimum term of imprisonment of 5 years." Ch. 89-312, § 1, at 2042, Laws of Fla. The legislature specifically amended the statute to replace the permissive sentencing language limiting the maximum term of imprisonment to five years with mandatory sentencing language limiting the minimum term of imprisonment to five years. We find the 1989 amendment changing the language of section 790.221(2) to be a clear and unambiguous expression of the legislature's intent.
McKendry argues that Scates v. State, 603 So.2d 504 (Fla. 1992), should control in the instant case. In Scates, the defendant was convicted under section 893.13(1)(e)(1), Florida Statutes (1989), of purchasing cocaine within 1000 feet of a school. Section 893.13(1)(e)(1) provides for a minimum term of imprisonment of three years. However, the defendant in Scates was sentenced to two years' probation and ordered to undergo drug rehabilitation pursuant to section 397.12, Florida Statutes (1989). This Court held that trial judges may order a defendant to participate in a drug rehabilitation program pursuant to section 397.12 rather than impose the three-year minimum sentence under 893.13(1)(e)(1). The State argues that Scates may be distinguished from the case before us. We agree.
The statutes in Scates, section 397.12 and section 893.13(1)(e)(1), were both designed to combat drug abuse, and section 397.12 specifically refers to chapter 893. In contrast, the statutes in the case at bar were not created to work together toward a specific legislative goal. Section 790.221 was enacted in part specifically to address the crime of possession of a short-barreled shotgun. On the other hand, section 948.01 was created to generally address the trial court's authority to grant leniency in any criminal sentencing. Furthermore, section 893.13(1)(e)(1) did not expressly refer to its sentence as "mandatory," thereby implying that the legislature intended to allow trial judges greater discretion in sentencing. Therefore, Scates does not control in the case at bar.
The legislature chose to prescribe as punishment for possession of a short-barreled shotgun a minimum mandatory term of imprisonment of five years. In State v. Coban, 520 So.2d 40 (Fla. 1988), this Court held that "[t]he plenary power of the legislature to prescribe punishment for criminal offenses cannot be abrogated by the courts in the guise of fashioning an equitable sentence outside the statutory provision." Id. at 41. Consistent with our opinion in Coban, we now conclude that the courts have no discretion in whether or not to impose the automatic sentence contained in section 790.221(2). We therefore answer the certified question in the negative and approve the decision of the district court of appeal.
It is so ordered.
McDONALD, KOGAN and HARDING, JJ., concur.
OVERTON, J., concurs with an opinion, in which KOGAN, J., concurs.
SHAW, J., dissents with an opinion.
OVERTON, Justice, concurring.
This unreasonable result has occurred because of the inflexibility of the applicable statute. However, I must concur in the Court's decision because the legislature acted within its constitutional authority when it established the five-year mandatory sentence for this offense. A man is going to prison for five years for cutting off the damaged end of a shotgun barrel and then firing the gun in his own backyard. I agree with the trial *48 judge that these actions, while deserving of a criminal penalty, do not justify this extreme sentence. Incredibly, because of the overcrowded conditions in the state prison system, the possibility exists that a truly violent criminal may be released early to free up a bed for McKendry. This case illustrates the problem with inflexible mandatory sentences prescribed by the legislature. It demonstrates that trial judges should be afforded at least some discretion to determine the appropriate sentence in certain circumstances. Interestingly, the legislature has now eliminated the mandatory sentence for McKendry's offense. The legislature should be extremely careful in directing the imposition of mandatory sentences and should possibly seek a means to reinstate, at least to some extent, the discretion allowed trial judges under section 948.01, Florida Statutes (1993).
KOGAN, J., concurs.
SHAW, Justice, dissenting.
The majority's application of the law in this case produces a result that all agree is exceedingly harsh and disproportionate to the offense. I am convinced that the legislature never intended this result and I would give deference to legislative intent by applying the law in a less rigid and mechanical fashion.
According to unrefuted testimony in the record, John McKendry had never been in serious trouble with the law prior to committing the present offense.[3] On December 23, 1990, in an effort to salvage an old shotgun with a broken barrel, Mr. McKendry cut the barrel off at the point where it was broken and then test-fired the gun in his own backyard. He was arrested, charged, and convicted of violating section 790.221, Florida Statutes (1989), which outlaws possession of a shotgun with a barrel under eighteen inches.
The State argued at sentencing that McKendry should be sentenced to five years' imprisonment under the statute's mandatory minimum provision. McKendry testified, concluding thusly:
THE DEFENDANT (to the court): I never did nothing to hurt anyone, I never did nothing to hurt anybody, nobody ... I wouldn't ever do anything to hurt anybody. And I didn't know when I cut the barrel, I didn't know that it was gonna be short ... I just broke it off to where it was busted and I didn't know what I didn't know anything about the law about the gun at that time, I did not know, I was ignorant about it... . I just cut it off where it was bent and that's all I did. I wouldn't do nothing to hurt anybody. I wasn't gonna do nothing with it, I just did did something stupid.
The trial judge imposed five years' imprisonment as required by the statute, but then suspended the sentence and placed McKendry on one year of community control followed by three years' probation. The State appealed and the district court reluctantly reversed, ruling that the constitution requires enforcement of the five-year mandatory minimum requirement. The majority agrees.
The statute under which McKendry was convicted read in part as follows:
790.221 Possession of short-barreled rifle, short-barreled shotgun, or machine gun; penalty.
(1) It is unlawful for any person to own or to have in his care, custody, possession, or control any short-barreled rifle, short-barreled shotgun, or machine gun which is, or may readily be made, operable; but this section shall not apply to antique firearms.
(2) A person who violates this section commits a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. Upon conviction thereof he shall be sentenced to a mandatory minimum term of imprisonment of 5 years.
§ 790.221, Fla. Stat. (1989). The five-year mandatory minimum requirement was added to the statute just one year before McKendry committed his offense[4] and was rescinded *49 three years after the offense.[5]
The statutory penalty in effect at the time a crime is committed ordinarily controls the punishment at sentencing. This rule is governed by two constitutional provisions: The Ex Post Facto Clause, which bars retrospective application of a law that disadvantages a defendant,[6] and the Savings Clause, which bars retrospective application of a change in law that prejudices the State. This latter clause provides:
Repeal or amendment of a criminal statute shall not affect prosecution or punishment for any crime previously committed.
Art. X, § 9, Fla. Const. This provision was enacted in 1885 to negate a recent court ruling that let an attempted murderer go free after repeal of the assault statute. See State v. Watts, 558 So.2d 994 (Fla. 1990).
The Ex Post Facto Clause is inapplicable here because retrospective application of the rescission of the mandatory minimum provision would not disadvantage the defendant. Further, the Savings Clause by its own terms applies only to changes in a criminal statute that affect "punishment," and Florida's statutory "punishments" spelled out in sections 775.082, 775.083, and 775.084, Florida Statutes (1989) would not be affected by retrospective application. See generally Castle v. State, 330 So.2d 10 (Fla. 1976) (Savings Clause applies to statutorily authorized penalties); Turner v. State, 87 Fla. 155, 99 So. 334 (1924) (same).
Mandatory minimum provisions are nowhere in Florida Statutes defined as "punishments," but rather are guides for judges which, like the sentencing guidelines themselves, channel trial judges' discretion in imposing the "punishments" spelled out in sections 775.082, 775.083, and 775.084. Because they do not affect the underlying statutory "punishments," changes in mandatory minimum provisions may be applied retrospectively just as changes in the sentencing guidelines have been.[7]
The underlying statutory "punishment" in the present case, i.e., "a term of imprisonment not exceeding 15 years," would be unaffected by retrospective application of the rescission of the mandatory minimum provision. See § 775.082(3)(c), Fla. Stat. (1993). That being the case, I see no reason in logic or equity to hold Mr. McKendry's feet to the fire with a five-year mandatory prison term where he committed a technical violation of the statute and did so out of ignorance rather than a willful disregard for the law. Such a draconian result can and should be avoided if possible. Because McKendry's appeal was not yet final when the change in law occurred, I would give him the benefit of that change.[8]
The legislature has indicated that its reason for rescinding the mandatory minimum requirement in section 790.221 is to make room in prison "for violent offenders and nonviolent offenders who have repeatedly committed criminal offenses and have demonstrated *50 an inability to comply with less restrictive penalties previously imposed." Ch. 93-406, § 1 at 2912, Laws of Fla. Mr. McKendry, who all agree does not fit this description in any way, shape, or form, will for the next five years of his life be occupying a prison cell that could otherwise go to an armed robber, rapist, or other violent criminal or recidivist who in turn will be out walking the streets.
In applying abstruse legal theories and venerable rules of construction to the present case, the majority has in my opinion lost sight of one thing simple justice for a common man.
NOTES
[1] In 1993 the legislature amended section 790.221(2) to remove the minimum mandatory term of imprisonment. Ch. 93-406, § 21, at 2948, Laws of Fla.
[2] The shotgun was owned by McKendry's father. The barrel of the gun was bent and McKendry cut it off where it was bent. He testified that he did not realize what he did was illegal. McKendry was arrested after firing the weapon in his backyard.
[3] He apparently had been charged at some point with DUI, but the charge was later dropped.
[4] The pre-amendment version of the statute called for a term of imprisonment not exceeding five years:
(2) Any person convicted of violating this section is guilty of a felony and upon conviction thereof shall be punished by imprisonment in the state penitentiary not to exceed 5 years.
§ 790.221, Fla. Stat. (1987).
[5] The penalty provision of the statute was changed in 1993 to read:
(2) A person who violates this section commits a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, s. 775.084.
§ 790.221, Fla. Stat. (1993).
[6] Weaver v. Graham, 450 U.S. 24, 101 S.Ct. 960, 67 L.Ed.2d 17 (1981).
[7] The sentencing guidelines are applied retrospectively whenever the defendant so elects. See § 921.001(4)(a), Fla. Stat. (1989) ("[t]he guidelines shall be applied to all felonies... committed prior to October 1, 1983, for which sentencing occurs after such date when the defendant affirmatively selects to be sentenced pursuant to the provisions of this act"). The same is true of the recent extensive rewriting of the guidelines. See § 921.001(4)(b), Fla. Stat. (1993) ("[t]he 1994 guidelines apply to sentencing for all felonies ... committed before January 1, 1994, for which sentencing occurs after such date when the defendant affirmatively selects to be sentenced pursuant to the 1994 guidelines"). The guidelines, however, are substantive in nature and cannot under the Ex Post Facto Clause be applied retrospectively where the defendant would be disadvantaged. See Smith v. State, 537 So.2d 982 (Fla. 1989).
[8] Retrospective application would apply only to "pipeline" cases. Cf. Smith v. State, 598 So.2d 1063, 1066 n. 5 (Fla. 1992) (similar policy for decisional law). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584873/ | 382 N.W.2d 293 (1986)
HOWARD, McROBERTS & MURRAY, Appellant,
v.
Larry STARRY, Myrtle Starry, Respondents.
No. C4-85-1767.
Court of Appeals of Minnesota.
February 25, 1986.
*294 James W. Rude, Minneapolis, for Howard, McRoberts & Murray.
Larry Starry, pro se.
Thomas P. Knapp, Hughes, Thoreen & Sullivan, St. Cloud, for Myrtle Starry.
Heard, considered, and decided by LANSING, P.J., and HUSPENI and LESLIE, JJ.
OPINION
HUSPENI, Judge.
Appellant Howard, McRoberts & Murray (HM & M) brought this action against respondents Myrtle Starry and Larry Starry to quiet title to a 360-acre tract of land. HM & M appeals the trial court's award of summary judgment in favor of Myrtle Starry. We affirm.
FACTS
HM & M's claim against the property in issue arises out of legal services that it provided for Larry Starry for which he did not pay. On October 15, 1981, a judgment for the unpaid legal services was entered against Larry Starry in favor of HM & M for $7,604.64. HM & M collected its judgment by foreclosing on the property in issue, a 360-acre tract of land which the parties call the "Peterson farm." On March 26, 1982, the Peterson farm was sold at a sheriff's sale to HM & M. HM & M recorded its certificate of sale on March 31, 1982, and asserts that it is the proper owner of the Peterson farm.
Prior to HM & M's recording, Larry Starry and his mother Myrtle Starry were involved in litigation that dealt in part with the Peterson farm. Larry Starry and Myrtle Starry operated a construction business called Starry Construction Company, Inc. When Starry Construction was incorporated, Larry and Myrtle agreed to transfer all their personal and real property that was used in the business (including the Peterson farm) to the corporation in exchange for pro rata shares of stock in the corporation.
In May 1981, a dispute arose between Larry and Myrtle which resulted in Larry *295 commencing an action against Myrtle and Starry Construction. On May 26, 1981, after the litigation began, Myrtle Starry filed a notice of lis pendens on the Peterson farm as well as on other property involved in the business. The notice of lis pendens described a portion of the Peterson farm as:
The Southeast Quarter of the Northeast Quarter of the East Half of the Southeast Quarter and the Northwest Quarter of the Southeast Quarter, in Section 11, Township 128, Range 34, Todd County, Minnesota.
(Emphasis added). This legal description describes only a portion of the 160 acres of the Peterson farm which is located in section eleven. The notice of lis pendens accurately described the portions of the Peterson farm which lie in sections twelve and fourteen of the same township and range in Todd County.
The correct legal description of the 160 acres of the Peterson farm which is located in section eleven is:
The Southeast Quarter of the Northeast Quarter, the East Half of the Southeast Quarter and the Northwest Quarter of the Southeast Quarter, in Section 11, Township 128, Range 34, Todd County, Minnesota.
(Emphasis added). The Todd County Recorder entered the notice of lis pendens on the tract index for the Peterson farm as if the legal description for the entire Peterson farm had been correctly set forth in the notice of lis pendens.
In the Starry Construction litigation, the trial court determined that the title to the Peterson farm transferred from Larry Starry to Starry Construction as of the date of its incorporation (April 1, 1977), even though Larry Starry still held record title to the property. The court further determined that Myrtle Starry sold her shares in Starry Construction to the corporation and a third party in exchange for the real estate owned by Starry Construction. As a result of this sales agreement, the court concluded that Myrtle Starry is the owner of all the real estate previously owned by Starry Construction, including the Peterson farm. The judgment in the Starry Construction action was entered in favor of Myrtle Starry on October 27, 1982.
On January 7, 1983, the court amended its October 27 judgment. The nature of the amendment is not relevant to this case. HM & M appeared at the post-trial motion, but the court did not allow HM & M to argue its position that the judgment put a cloud on the title to the Peterson farm.
HM & M commenced this action against both Larry Starry and Myrtle Starry in order to quiet title to the Peterson farm. Larry Starry has not appeared in this action. Both HM & M and Myrtle Starry moved for summary judgment in their favor.
The trial court awarded summary judgment in favor of Myrtle Starry. Based upon the outcome of the Starry Construction litigation, the court concluded that when HM & M received its judgment against Larry Starry on October 15, 1981, he had no legal interest in the Peterson farm. The court took "judicial notice" of the "typographical or clerical error" in the legal description of the notice of lis pendens and concluded that the notice of lis pendens gave HM & M constructive notice of the Starry Construction litigation. Because HM & M had constructive notice of the lis pendens, the court found that HM & M's rights to the Peterson farm were subject to Myrtle Starry's rights. The court declared Myrtle Starry the rightful owner of the property pursuant to the result reached in the Starry Construction litigation. The court further declared that HM & M's foreclosure on the Peterson farm was null and void.
ISSUES
1. Did the trial court erroneously consider evidence beyond the record in determining the summary judgment motion?
2. Did the trial court err in concluding that HM & M had constructive notice of Myrtle Starry's pending claim on the Peterson farm?
*296 3. Did the trial court commit reversible error in taking judicial notice of the typographical error in the notice of lis pendens?
ANALYSIS
I.
HM & M initially argues that the trial court erred by looking beyond the record in determining the summary judgment motion. We find no merit in this argument.
HM & M does not point to any specific finding or conclusion that contains information from outside the record. Nor is there anything in the trial court's findings or conclusions indicating that the court relied on information outside the record. This record was sufficient for the trial court to reach its result.
II.
HM & M next asserts that the trial court erred in awarding summary judgment to Myrtle Starry on the basis that HM &M had constructive notice of Myrtle Starry's pending claim. On review of a summary judgment award, we must determine whether there are any genuine issues of material fact for trial and whether the trial court erred in its application of the law. Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979). We agree with the trial court that there are no genuine factual issues here. We must only consider whether the trial court correctly applied the law.
Minn.Stat. § 507.34 (1984) provides, in pertinent part, that:
Every conveyance of real estate shall be recorded * * * and every such conveyance not so recorded shall be void as against any subsequent purchaser in good faith and for a valuable consideration of the * * * real estate, * * * whose conveyance is first duly recorded * * *.
(Emphasis added).
A good faith purchaser is a purchaser who gives consideration in good faith without actual, implied or constructive notice of inconsistent outstanding rights of others. Anderson v. Graham Investment Co., 263 N.W.2d 382, 384 (1978). The trial court determined that HM & M had constructive notice of Myrtle Starry's claim to the Peterson farm and therefore it was not a good faith purchaser.
Constructive notice is a creature of statute. Anderson, 263 N.W.2d at 384. Pursuant to Minn.Stat. § 507.32 (1984), a purchaser is charged as a matter of law with constructive notice of any properly recorded instrument. HM & M argues that the notice of lis pendens was not properly recorded so it could not have constructive notice of Myrtle Starry's pending claim. We cannot agree.
A recorded interest is constructive notice of the facts appearing on the face of the record. Anderson, 263 N.W.2d at 385. In order to have constructive notice of a defect in a legal description, it must be apparent from the record that there is such a defect. Bank of Ada v. Gullikson, 64 Minn. 91, 94-95, 66 N.W. 131, 132 (1896) (the description failed to indicate "the particulars wherein it was defective"). See also Simmons v. Fuller, 17 Minn. 485, 490-91 (1871) (mistake was not apparent). Even if a recorded document contains a defect in a legal description, an interested party may derive from that document actual knowledge of facts sufficient to put the party on inquiry as to the existence of an outstanding interest. See Bailey v. Galpin, 40 Minn. 319, 324, 41 N.W. 1054, 1056 (1889).
In this case, we believe it is apparent from the record of the notice of lis pendens that there is a typographical error in the legal description of the part of the Peterson farm which is located in section eleven. Any interested party could ascertain from the county recorder's record that the word "of" was erroneously typed in the legal description instead of a comma. At a minimum, any interested party could determine that a mistake existed in the legal description, because it would be illogical for Myrtle Starry to file a notice of lis pendens on all of the Peterson farm which lies in sections twelve and fourteen, but *297 only on an irregular and small portion of the farm in section eleven. The description would at least provide an interested party with actual knowledge of facts sufficient to put the party on inquiry notice.
We also note that any interested party could determine from the county recorder's tract index that the county recorder treated the lis pendens as if it covered the entire Peterson farm, including all 160 acres in section eleven.
HM & M argues that it cannot be charged with constructive notice of how the county recorder entered the notice of lis pendens on its tract index. HM & M correctly asserts that tract indexes are not statutorily required and a purchaser is not charged with notice of entries not required by law. See Ahern v. Freeman, 46 Minn. 156, 159, 48 N.W. 677, 678 (1891). If a county chooses to maintain a tract index, however, the county is required by law to make accurate and appropriate entries and the tract index is part of the record of which a purchaser is charged constructive notice. See Minn.Stat. § 386.05 (1984).
In conclusion, we believe the trial court properly determined that HM & M had constructive notice of Myrtle Starry's pending claim and took title to the property subject to the outcome of the Starry Construction litigation.[1]
III.
HM & M asserts that the trial court erred in taking judicial notice of the typographical error in the notice of lis pendens. We agree with HM & M that a typographical error in a notice of lis pendens is not the kind of fact of which a court can normally take judicial notice. See Lickfett v. Jorgenson, 179 Minn. 321, 324, 229 N.W. 138, 139 (1930) (judicial notice may be taken of facts which are the "common knowledge of every person of ordinary intelligence") (cited in National Recruiters, Inc. v. Toro Co., 343 N.W.2d 704, 708 (Minn.Ct.App.1984)). We believe the trial court inaccurately labeled its finding of a typographical error as "judicial notice." However, the trial court was simply making a finding of fact that was obvious and apparent from the record, and firmly supported by that record. We find no reversible error.
DECISION
We affirm the trial court's award of summary judgment in favor of Myrtle Starry.
Affirmed.
NOTES
[1] On appeal, HM & M appears to assert that it should have been allowed to present its argument to the court at the post-trial motion in the Starry Construction litigation. HM & M did not, however, have any interest in that litigation. It bought the Peterson farm after a notice of lis pendens was filed and so it took subject to the final disposition of the Starry Construction action and is bound by the decision entered in that action, even though it was not a party to that action. See Marr v. Bradley, 239 Minn. 503, 510, 59 N.W.2d 331, 335 (1953). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584875/ | 815 F.Supp. 33 (1993)
ACTION AMBULANCE SERVICE, INC., Plaintiff,
v.
ATLANTICARE HEALTH SERVICES, INC., Atlanticare Medical Center, Inc., Life-Line Ambulance Service, Inc., and Life-Line Atlanticare Limited Partnership, Defendants.
Civ. A. No. 92-11093-MA.
United States District Court, D. Massachusetts.
February 5, 1993.
*34 Alan L. Kovacs, Ferriter, Scobbo, Sikora, Caruso & Rodophele, Boston, MA, for Action Ambulance Service, Inc.
Thayer Fremont-Smith, Choate, Hall & Stewart, Bruce F. Metge, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., Boston, MA, for Atlanticare Medical Center, Inc., and Atlanticare Health Services, Inc.
Bruce F. Metge, and Peter Kimm, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., Washington, DC, for Life-Line Ambulance Service, Inc.
Peter Kimm, Mintz, Levin, Cohn, Washington, DC, for Life-Line Atlanticare Limited Partnership.
MEMORANDUM AND ORDER
MAZZONE, District Judge.
The plaintiff in this case, Action Ambulance Service, Inc. ("Action"), alleges in a thirteen-count complaint that the defendants have violated federal antitrust and state consumer protection laws. The defendants, AtlantiCare Health Services, Inc. ("AHS"), Atlanticare Medical Center, Inc. ("AMC"), Life-Line Ambulance Service, Inc. ("Life-Line"), and Life-Line AtlantiCare Limited Partnership ("Partnership"), have moved to dismiss three counts and to strike certain other allegations.
FACTUAL BACKGROUND
There are two acute care hospitals in Lynn, Massachusetts, a city of about 80,000 people. Both hospitals are owned and operated by the defendant AMC. They derive approximately 65% of their combined income from Medicare and Medicaid reimbursements. The defendant AHS, a wholly-owned subsidiary of AMC, operates a nursing home and an imaging center. In May 1985, AHS and the defendant Life-Line, which had been in the ambulance business since 1981, formed a limited partnership to provide ambulance service in Lynn and surrounding areas.
Action, which has provided ambulance service in and around Lynn since 1978, states that prior to 1985, patients at AMC's hospitals who needed ambulance transportation were allowed to select a provider from among various competing services, including Action. However, under the terms of the 1985 partnership agreement between AHS and Life-Line, AHS receives fifty percent of the profits generated by Life-Line's provision of ambulance services. In return, AHS and AMC agreed to refer all patients requiring ambulances to Life-Line. Action alleges that this agreement is, inter alia, an illegal tying arrangement violating both the Sherman Act, 15 U.S.C. §§ 1, 2, and the Massachusetts Regulation of Business Practice and Consumer Protection Act, Mass.Gen.L. ch. 93A, § 2, and an illegal kickback scheme violating state and federal Medicare and Medicaid anti-fraud statutes, Mass.Gen.L. ch. 118E, § 21B and 42 U.S.C. § 1320a-7b.
This case is presently before me on the defendants' motions to dismiss Counts I and VII, the tying counts, and Count XIII, which alleges a violation of the Massachusetts Consumer Protection Act based on the payment of illegal kickbacks. The defendants have also moved to strike the allegations of fraud which form the partial basis for Counts II, III, IV, VIII, IX and X, as well as paragraph 35 of the Complaint, which alleges that the defendants improperly influenced the City of Lynn to enter exclusive use agreements with the Partnership. Finally, in accordance with the statute of limitations applicable to anti-trust actions, Life-Line and the Partnership move to dismiss any portions of any claims *35 purporting to relate to the period between May 1985 and May 1988.
LEGAL STANDARD
The standard for dismissal under Fed. R.Civ.P. 12(b)(6) is clear: "`a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Arroyo Otero v. Hernandez Purcell, 804 F.Supp. 418, 420 (D.P.R.1992) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957)). The court not only must accept the factual averments of the complaint as true, but also must draw all reasonable inferences in favor of the plaintiff. See, e.g., id.; Coyne v. City of Somerville, 972 F.2d 440, 442-43 (1st Cir.1992) (same).
DISCUSSION
1. Illegal Tying
Action alleges in Counts I and VII of its complaint that from 1985 to the present, the defendants have "illegally tied the provision of hospital services (tying product) to ambulance services (tied product) in violation of Section 1 of the Sherman Act" and of section 2 of the Massachusetts Consumer Protection Act. Complaint, ¶¶ 39, 74. The defendants Life-Line and the Partnership take the position that they are not in the business of providing hospital services, and that the relevant precedents establish the proposition "that a party who is not a participant in the market for the tying product cannot engage in tying." Memorandum in Support of Motion to Dismiss of Defendants Life-Line Ambulance Services, Inc. and Life-Line AtlantiCare Limited Partnership [hereinafter "Memorandum of Life-Line and Partnership"] at 9. Similarly, the defendants AMC and AHS argue that because AMC does not provide ambulance services, and because AHS does not provide hospital services, these counts fail to state a claim as to them for the reasons stated by Life-Line and the Partnership.[1] Memorandum in Support of Motion of AtlantiCare Medical Center, Inc. and AtlantiCare Health Services, Inc. to Dismiss the "Tying" and the Medicare and Medicaid Fraud Counts of Plaintiff's Complaint and to Strike Immaterial and Redundant Allegations [hereinafter "Memorandum of AMC and AHS"] at 10.
The Supreme Court has defined a tying arrangement "as an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier." Northern Pac. Ry. v. United States, 356 U.S. 1, 5-6, 78 S.Ct. 514, 519, 2 L.Ed.2d 545 (1958) (footnote omitted). Not all tying arrangements, however, are illegal. The Sherman Act has been construed to prohibit only those contracts, combinations, and conspiracies which "`unreasonably' restrain competition." Id. at 5, 78 S.Ct. at 518. If two products are sold together because there is no demand for one separate from the other, or if tying regulates and promotes competition rather than destroying it, the tie-in will survive judicial scrutiny. See Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 21-22, 104 S.Ct. 1551, 1562-1563, 80 L.Ed.2d 2 (1984) (stating that a tying arrangement is not illegal unless there is enough demand for each service or product independently from the other "to identify a distinct product market in which it is efficient to offer [each service or product] separately"); Hand v. Central Transport, Inc., 779 F.2d 8, 10 (6th Cir.1985) ("`The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition, or whether it is such as may suppress or even destroy competition.'") (quoting Chicago Bd. of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 244, 62 L.Ed. 683 (1918)).
Illegal tie-ins, on the other hand, are those which
harm[] competing sellers of the tied product by foreclosing them from access to the market for reasons having nothing to do with the merits of the tying seller's product, *36 and harm[] buyers by restricting their range of choice in the tied product market.
Anderson Foreign Motors, Inc. v. New England Toyota Distrib., Inc., 475 F.Supp. 973, 980 (D.Mass.1979) (citing Northern Pac. and Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 73 S.Ct. 872, 97 L.Ed. 1277 (1953)). The Supreme Court has explained that "the essence of illegality in tying agreements is the wielding of monopolistic leverage; a seller exploits his dominant position in one market to expand his empire into the next." Times-Picayune, 345 U.S. at 611, 73 S.Ct. at 882. See also Jefferson Parish, 466 U.S. at 27, 104 S.Ct. at 1566 ("Tying arrangements need only be condemned if they restrain competition on the merits by forcing purchases that would not otherwise be made.").
The legality of tying under the Sherman Act may be analyzed either in terms of the per se rule or the rule of reason. In its present posture, this case presents a per se question. To show a per se violation, the plaintiff must establish three elements: 1) that there exists an actual tie between two separate products; 2) that the seller has sufficient economic power in the market for the tying product to force consumers to accept the tied product; and 3) that a not insubstantial amount of interstate commerce in the tied product is affected. See, e.g., Northern Pac., 356 U.S. at 5-6, 78 S.Ct. at 518-519; Jefferson Parish, 466 U.S. at 20-29, 104 S.Ct. at 1562-1567; Wells Real Estate, Inc. v. Greater Lowell Bd. of Realtors, 850 F.2d 803, 814 (1st Cir.), cert. denied, 488 U.S. 955, 109 S.Ct. 392, 102 L.Ed.2d 381 (1988).[2]
At this preliminary stage, the defendants have not disputed Action's ability to establish any of the three well-settled elements of a per se claim. Rather, the defendants argue that there is a fourth element implicit in the test for a per se violation namely, that the defendant must be a participant in the markets for both the tying and the tied product.
To support this proposition, the defendants cite a number of Sherman Act cases in which a single manufacturer or distributor attempted to tie one of its products to another of its products. See, e.g., Grappone, Inc. v. Subaru of New England, Inc., 858 F.2d 792 (1st Cir.1988) (discussing a regional Subaru distributor's requirement that a local dealer buy spare Subaru parts as a condition of continuing to receive its allocation of new Subarus). Cases involving a single defendant participating in both the tying and the tied markets may perhaps be prototypical, but the evils which the Sherman Act is meant to prevent occur whether the tying is within one firm or by agreement between two firms.[3]
While this court is unaware of (and has not been cited) any case which explicitly discusses defendants' proposition, the existence of a phantom fourth element is disproved by the factual circumstances of Jefferson Parish. That case involved an agreement between East Jefferson Hospital and the Roux & Associates anesthesiology firm. Pursuant to contract, only Roux anesthesiologists were *37 permitted to practice anesthesiology at the hospital. Roux was not in the business of providing acute care hospital services, nor was East Jefferson a participant in the anesthesiology market. Nevertheless, the Supreme Court found that the contract between them met the first prong of the per se test: "the hospital's requirement that its patients obtain necessary anesthesiological services from Roux combined the purchase of two distinguishable services in a single transaction." 466 U.S. at 24, 104 S.Ct. at 1564-1565 (footnote omitted) (remanding for further proceedings under the rule of reason because the record did not establish that the hospital enjoyed the kind of dominant market position necessary to meet the second prong of the per se test). The Supreme Court gave no indication that the fact that Roux and East Jefferson participated in different markets affected its analysis in any way.[4] This court therefore declines the defendants' invitation to add a fourth element to the venerable three-pronged per se test. The motion to dismiss Counts I and VII is denied.
2. Kickback Scheme
The defendants next argue that Action's allegations that the defendants have engaged in a Medicaid and Medicare fraud scheme in violation of Mass.Gen.L. ch. 118E, section 21B and 42 U.S.C. section 1320a-7b must be dismissed because those criminal statutes provide no private right of action.[5] The fraud claims form the partial basis for Action's federal antitrust allegations in Counts II, III, and IV and for the analogous state violations in Counts VIII, IX, and X, as well as the entire basis for the violation of Mass.Gen.L. ch. 93A, section 2 alleged in Count XIII.
Action does not contend that the two statutes at issue contemplate a private right of action. Therefore, for purposes of this motion, I will assume that no such action is provided or implied. Therefore, the question before me is whether violations of criminal anti-fraud statutes which do not provide a private cause of action may properly be alleged as bases for claims under either federal antitrust or state unfair business practice laws where the relief requested is equitable.[6]
a. The Sherman Act
The defendants argue that two precedents from other jurisdictions stand for the proposition that violations of the anti-fraud statutes may not serve as the basis for injunctive *38 relief under the Sherman Act. Neither of these opinions provides a detailed discussion of the question. In West Allis Memorial Hosp., Inc. v. Bowen, 852 F.2d 251 (7th Cir.1988), the plaintiff hospital challenged a practice of the defendant hospital as violative of, inter alia, the Sherman Act and 42 U.S.C. section 1395nn(b)(2)(B), which was the precursor to section 1320a-7b. After finding that the precursor anti-fraud statute did not provide a private right of action to health care providers, the Seventh Circuit upheld the decision of the district court that the violation of the anti-fraud statute did not provide the basis for an injunction under the Sherman Act. Both courts considered the question conclusively settled by the maxim "equity will not enjoin the commission of a crime." See West Allis, 852 F.2d at 256-57.[7]
The defendants also cite Telectronics Proprietary, Ltd. v. Medtronic, Inc., 687 F.Supp. 832 (S.D.N.Y.1988). In that case, a manufacturer of cardiac pacemakers alleged as an antitrust claim that one of its competitors had engaged in a conspiracy to violate section 1395nn. See Telectronics, 687 F.Supp. at 837. The court stated that "[t]his allegation by itself is insufficient to state a claim under section 1 of the Sherman Act." Id. In the next sentence, however, the court noted that "`[t]he cornerstone of [antitrust] law is competition.'" Id. (quoting Falstaff Brewing Co. v. Stroh Brewery Co., 628 F.Supp. 822, 826 (N.D.Cal.1986)). This quotation, as well as the context of the entire paragraph, leads me to believe that the Telectronics court was concerned not with the propriety of pleading a criminal violation as the basis of an antitrust claim, but rather with the failure of the manufacturer to assert the necessary element of unreasonable restraint of trade. Thus, I do not consider Telectronics a guiding precedent.
Nevertheless, on the basis of West Allis, as cursory as its exposition of the question is, I conclude that the allegations that the defendants have violated section 1320a-7b and chapter 118E, section 21B must be stricken from Counts II, III, and IV of the complaint. As noted above, Action does not seem to contest this point.
b. Massachusetts Consumer Protection Act
Action also asserts violations of the anti-fraud statutes as bases for claims under the Massachusetts Consumer Protection Act in Counts VIII, IX, X, and XIII. The defendants move to strike these allegations as well, arguing that judicial interpretations of the Consumer Protection Act must follow those of the federal antitrust laws. The defendants arrive at this conclusion by applying the transitive property of law. To wit, the Massachusetts Consumer Protection Act provides that courts shall be guided in their interpretation of unfair methods of competition by the Massachusetts Antitrust Act. See Mass.Gen.Laws Ann. ch. 93A, § 11 (West 1992). The Antitrust Act in turn is supposed to be "construed in harmony with judicial interpretations of comparable federal antitrust statutes insofar as practicable." Mass. Gen.Laws Ann. ch. 93, § 1. Therefore, the phrase "unfair methods of competition" in the Consumer Protection Act means whatever it does under federal antitrust law. See Memorandum of Defendants AtlantiCare Health Services, Inc. and AtlantiCare Medical Center, Inc. in Reply to "Plaintiff's Opposition to Defendants' Motions to Dismiss the Tying Claims and the Medicare and Medicaid Fraud Claims of Plaintiff's Complaint" at 3-4. In other words, because I have ruled that violations of the anti-fraud statutes are not cognizable bases for injunctive relief under the Sherman Act, I should find that alleged violations of those statutes are not a basis for relief under the Consumer Protection Act either.
Action's response is three-pronged. First, it argues that the violations of the anti-fraud statutes "are not asserted as a basis for a private cause of action by Plaintiff, but only serve as part of the overall specification of *39 the conduct which provides plaintiff with a cause of action under M.G.L. c. 93A." Memorandum of Plaintiff, Action Ambulance Service, Inc., in Opposition to the Motions of Defendants to Dismiss the Tying Claims and Alleged Medicare and Medicaid Fraud Claims of the Complaint and the Motions of Defendants to Strike Immaterial and Redundant Allegations [hereinafter "Memorandum of Plaintiff"] at 14. Second, the underlying acts alleged by Action fall within the judicial definition of unfair practices as set forth in the case of Purity Supreme, Inc. v. Attorney General, 380 Mass. 762, 407 N.E.2d 297 (1980).[8]See Memorandum of Plaintiff at 10. Third, the Consumer Protection Act has been interpreted to make unlawful practices which violate existing statutes meant to protect the public health, safety, or welfare, and the antifraud statutes are such statutes. See id. at 10-13.
Action's first and second arguments do not directly address the issue. While the underlying conduct alleged to violate the anti-fraud statutes may properly be pled as the basis for a claim under the Consumer Protection Act, the defendants' objection is to the form of the allegation (that is, to Action's assertion that the underlying conduct violates criminal anti-fraud statutes). Action's third argument, however, is more to the point.
Under section 2(c) of chapter 93A, the Massachusetts Attorney General is empowered to "make rules and regulations interpreting the provisions of subsection 2(a)," which is the section of the Consumer Protection Act prohibiting unfair methods of competition. Pursuant to section 2(c), the Attorney General has promulgated regulation 3.16(3), which makes an act a violation of section 2(a) if "[i]t fails to comply with existing statutes, rules, regulations or laws, meant for the protection of the public's health, safety, or welfare promulgated by the Commonwealth or any political subdivision thereof intended to provide the consumers of this Commonwealth protection...."[9] Mass. Regs. Code tit. 940, § 3.16(3) (1986). As Action notes, the state anti-fraud statute clearly fits this description. See Memorandum of Plaintiff at 11-13.
Nevertheless, it is unclear that in promulgating regulation 3.16(3) the Massachusetts Attorney General meant to give competing businesses a right to sue for a violation of a law intended to protect consumers, especially where that law provides criminal penalties.[10]*40 However, that question need not be resolved today. Regulation 3.16 explicitly states that it is not to be construed to "limit[] the scope of any other rule, regulation or statute...." Therefore, I may, I believe, safely assume that even if in this case regulation 3.16 were in conflict with that portion of the Consumer Protection Act providing that courts shall be guided in their interpretation of unfair methods of competition by the Massachusetts Antitrust Act and federal antitrust statutes, the latter provision should prevail.
It is not intuitively obvious that allowing a criminal anti-fraud statute to serve as the basis for a claim under a state unfair practices act while disallowing its use as the premise for a claim under the Sherman Act would produce undesirable anomalies. But the intention of the Massachusetts legislature, as evinced by the language quoted above, seems to have been to harmonize state and federal treatment of business practices of the type complained of by Action. To allow Action to assert violations of the anti-fraud statutes as bases for liability under the Consumer Protection Act would be to allow an end run around the entire implied right of action inquiry. See State Medical Oxygen & Supply, Inc. v. American Medical Oxygen Co., 230 Mont. 456, 459, 750 P.2d 1085, 1087 (1988) (holding that the precursor federal anti-fraud statute, 42 U.S.C. section 1395nn, could not be asserted as the basis for a claim under a state consumer protection statute because section 1395nn "was enacted for the benefit of recipients of medical care benefits, not for the benefit of a health care provider"). Therefore, I hold that the allegations that the defendants have violated 42 U.S.C. section 1320a-7b and Mass.Gen.L. ch. 118E, section 21B must be stricken from Counts VIII, IX, and X. Count XIII is dismissed.
3. Noerr-Pennington Doctrine
In paragraph 35 of its complaint, Action alleges that AHS and AMC have succeeded in manipulating and influencing the City of Lynn to enter into exclusive use agreements with the Limited Partnership and/or Life-Line. The defendants contend that this allegation, even if true, alleges activity protected under the Noerr-Pennington doctrine. According to that doctrine, "bona fide efforts to obtain or influence legislative, executive, judicial or administrative actions are immune from antitrust liability," even if those efforts are undertaken with the intent of stifling competition. Clipper Express v. Rocky Mountain Motor Tariff Bureau, Inc., 690 F.2d 1240, 1251 (9th Cir.1982) (citation omitted), cert. denied, 459 U.S. 1227, 103 S.Ct. 1234, 75 L.Ed.2d 468 (1983). Action has not contended that the defendants' efforts to influence the City of Lynn were anything other than genuine.
Action attempts to avoid the effect of the Noerr-Pennington doctrine by arguing that it is "challenging defendants' entire course of conduct which allegedly resulted in the various violations of federal and state laws, which was not intended to influence government action and which does not enjoy immunity even if some of the defendants' conduct involved protected political activity." Memorandum of Plaintiff at 18 (footnote omitted). Action is correct that all of the defendants' allegedly unlawful activity is not immunized by the fact that their petitioning of the City is protected; however, that principle does not prevent the immunization of the petitioning activity itself. The Clipper Exxpress court explicitly held that United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965), provides immunity for the narrow petitioning activity, so long as it is bona fide. 690 F.2d at 1264-65. Hence, the defendants' attempts to obtain the desired executive action from the City of Lynn are protected and paragraph 35 of the complaint must be stricken.
4. Statute of Limitations
Action has conceded that a four year statute of limitations applies to the allegations contained in its complaint and acknowledges *41 that it does not seek to recover damages for conduct prior to May 11, 1988. See Memorandum of Plaintiff at 18.
CONCLUSION
For the foregoing reasons, the motion of the defendants to dismiss Counts I and VII is denied. Defendants' motion to strike the allegations that they have violated Mass. Gen.L. ch. 118E, section 21B and 42 U.S.C. section 1320a-7b is granted. Count XIII is dismissed. The motion to strike paragraph 35 is granted.
SO ORDERED.
NOTES
[1] I note at the outset that because AMC is in the market for the tying product, hospital services, I take its argument to be that as a matter of law an entity cannot engage in illegal tying unless it participates in the markets for both the tying and tied products.
[2] If Action were unable to prove all the elements of the per se test, it might still state a claim under the rule of reason. Reduced to essentials, the difference between the two lines of inquiry is that under the rule of reason, but not under per se analysis, the plaintiff "has the burden of proving that the [challenged practice] violated the Sherman Act because it unreasonably restrained competition." Jefferson Parish, 466 U.S. at 29, 104 S.Ct. at 1567. In other words, once a plaintiff has established the three elements of the per se test, anti-competitive effect on the market for the tied product is presumed and its actual scope need not be shown. However, the per se plaintiff must still "make some minimal showing of real or potential foreclosed commerce caused by the tie, if only as a matter of practical inferential common sense." Wells Real Estate, 850 F.2d at 815 n. 11. See also Jefferson Parish, 466 U.S. at 15, 104 S.Ct. at 1560 ("Per se condemnation condemnation without inquiry into actual market conditions is only appropriate if the existence of forcing is probable.") (footnote omitted).
[3] It is counterintuitive to suppose that a company could evade the strictures of anti-tying doctrine merely by erecting corporate walls between the tying and the tied products. It would gut that doctrine to allow businesses to avoid charges of illegal tying either by spinning off subsidiaries to produce one of the tied products or by entering into kickback schemes with unrelated entities. The very language of the Sherman Act prohibits contracts, combinations, and conspiracies in restraint of trade, each of which seems to contemplate the involvement of two or more entities.
[4] This is strong although indirect evidence that there is no requirement that a defendant must participate in the market for the tying as well as the tied product in order for an illegal tie to exist. If there were such a requirement, it would have been simpler and more logical for the Court to have disposed of Jefferson Parish by noting that Roux did not participate in the market for the tying service (acute care) than by conducting an inquiry into East Jefferson's market share and the alleged market imperfections which supposedly allowed the hospital to charge noncompetitive prices.
[5] Section 21B provides that
[w]hoever solicits or receives any remuneration ... in return for purchasing, leasing, or ordering or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under this chapter, or whoever offers or pays any remuneration ... to induce such person to [do the same] shall be punished by a fine ... or by imprisonment ... or by both....
Mass.Gen.Laws Ann. ch. 118E, § 21B (West 1992). Section 1320a-7b provides in part that
whoever knowingly and willfully solicits or receives any remuneration ... (A) in return for referring an individual to a person for the furnishing ... of any item or service for which payment may be made in whole or in part under subchapter XVIII of this chapter or a State health care program, or (B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under subchapter XVIII of this chapter or a State health care program, shall be guilty of a felony and ... shall be fined ... or imprisoned ... or both.
42 U.S.C.A. § 1320a-7b(b)(1) (West 1991). Section 1320a-7b(b)(2) is a parallel provision making it unlawful to offer remuneration to induce others to make referrals.
[6] Action's memorandum does not address the question of whether violations of the anti-fraud statutes may properly serve as a basis for Sherman Act claims. I take it, therefore, that Action concedes that they cannot. Nevertheless, I summarize the case which appears to have so held for the sake of any light it may throw on the inquiry under the Massachusetts Consumer Protection Act.
[7] The Court of Appeals noted, however, that "[t]o the extent West Allis has demonstrated a viable claim under the Sherman Act [citation omitted] independent of its claim under the Medicare fraud provisions [citation omitted] ..., the Clayton Act, 15 U.S.C. § 26, expressly provides the court with the statutory authority to enjoin the criminal activity complained of." Id. at 257 (footnote omitted) (emphasis added).
[8] Section 2(b) of the Consumer Protection Act states that
[i]t is the intent of the legislature that in construing paragraph (a) of this section ... the courts will be guided by the interpretations given by the Federal Trade Commission and the Federal Courts to section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)), as from time to time amended.
Mass.Gen.Laws Ann. ch. 93A, § 2(b) (West 1984). Section 5(a)(1) of the FTC Act provides that "[u]nfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are declared unlawful." 15 U.S.C. § 45(a)(1). Therefore, in formulating its definition, the Purity Supreme court relied upon the FTC definition of unfair practices: 1) within the "penumbra of some common-law, statutory, or other established concept of unfairness;" 2) "immoral, unethical, oppressive, or unscrupulous;" or 3) causing "substantial injury to consumers (or competitors or other businessmen)." 380 Mass. at 777 (internal quotation marks omitted) (quoting 29 Fed.Reg. 8355 (1964)).
It seems clear that the first prong of the FTC definition intends to include criminal statutes among those statutes from which concepts of unfairness may be drawn. See, e.g., FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 243, 92 S.Ct. 898, 904, 31 L.Ed.2d 170 (1972); Commonwealth v. DeCotis, 366 Mass. 234, 241, 316 N.E.2d 748 (1974) ("Unfairness under the [FTC] act has not been limited to practices forbidden at common law or by criminal statute.") (citations omitted) (cited in Chroniak and Pugliese v. Golden Investment Corp., 983 F.2d 1140, 1147 (1st Cir.1993)).
However, even if a violation of a criminal statute may properly be alleged as a basis for a violation of section 5(a)(1) of the FTC Act, a subject upon which this court expresses no opinion, that fact would not advance Action's argument. Section 5(a)(1) is enforced by the FTC. It provides no private right of action. See, e.g., Baum v. Great Western Cities, Inc. of New Mexico, 703 F.2d 1197, 1209 (10th Cir.1983). Therefore, no parallel may be drawn between section 5(a)(1) and the Massachusetts Consumer Protection Act on the question before me.
[9] Action's brief does not address the implications of the fact that one of the anti-fraud statutes, 42 U.S.C. section 1320a-7b, is a federal rather than state statute.
[10] The regulation states on its face that it is aimed at laws "intended to provide the consumers of this Commonwealth protection." Moreover, it seems to have been applied mostly, if not exclusively, in that context. See, e.g., Calimlim v. Foreign Car Center, Inc., 392 Mass. 228, 235, 467 N.E.2d 443 (1984) (suit by customers against dealership premised on violations of statutes requiring warranties of merchantability and fitness); Piccuirro v. Gaitenby, 20 Mass.App.Ct. 286, 480 N.E.2d 30 (1985) (suit by homeowners against real estate broker premised on violations of state environmental code and conflict of interest statute). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1590002/ | 972 So.2d 1084 (2008)
Janice COSTIN, Appellant,
v.
FLORIDA A & M UNIVERSITY BOARD OF TRUSTEES, Appellee.
No. 5D07-126.
District Court of Appeal of Florida, Fifth District.
January 25, 2008.
Thomas Hockman of the Law Offices to Hockman & Hockman, Winter Park, for Appellant.
David C. Self, II, and Shira Thomas of Florida A & M University, Tallahassee, for Appellee.
LAWSON, J.
Janice Costin appeals from a final administrative order entered by Florida A & M University, ("FAMU"), which approved FAMU's dismissal of Costin from her job at FAMU's College of Law. We agree with *1085 Costin that FAMU's final order improperly rejected a pivotal finding of fact from the administrative law judge's, ("ALP), recommended order, and reverse the final order.
In its final order, FAMU states that it has accepted all factual findings made by the ALJ. Those findings include the following: Costin was employed at FAMU's College of Law from December 2002 until May 2005. Her job title was coordinator of computer applications. FAMU's policy was that "all planning, acquisitions, installations, implementations or revisions [to a computer network] must be done in conjunction with the Information Resource Manager." FAMU's Chief Information Officer, at all relevant times, was Dr. Kenneth Perry. He worked at FAMU's main campus, in Tallahassee, Florida. FAMU's law school is located in Orlando, Florida.
Although FAMU policy directed that Costin work "in conjunction with" Perry on computer network matters, Costin's written job description required that she report "directly" to the College of Law's administration in Orlando and described her "primary function" as "interact[ing] with the College of Law administrative and academic personnel in developing, maintaining, and updating computer application/systems that will enhance the productivity of the College of Law end-user." The job description also stated that Costin was to "be self-directed, and work, independently, following general policy discussions." The ALJ found that, "On those occasions when [Costin] did seek support [from Dr. Perry], she received little support from him or others in [FAMU's] Information Technology Services Department in Tallahassee."
In September 2004, the internet service was disrupted at FAMU's College of Law due to a hurricane. This led to internet access problems between FAMU's College of Law and its main campus in Tallahassee. An internet firewall was determined to be the root of the problem. Without consulting with Dr. Perry, Costin successfully replaced the faulty. Nokia firewall with an Enterasays firewall that worked. Although Dr. Perry did not pre-approve the firewall replacement, the College of Law's administration did. The ALJ found that Costin was acting at the express direction "of Percy Luney, dean of the College of Law," when she replaced the faulty firewall. At Dean Luney's request, Dr. Perry later authorized payment for the new firewall equipment. The AU found that no harm came to FAMU because of the firewall repair, because no one was able to breach FAMU's computer system as a result of Costin's activities.
FAMU's College of Law had an additional problem with its .edu website. Information from the main campus was not being posted in a timely manner onto the college of law's website. In some cases, information did not appear on the law school's website for months. To remedy this problem, Costin created a .com website at FAMUIaw.com. Dr. Perry did not approve implementation of the .com website, and felt that because .com websites were for commercial endeavors and .edu for schools, the change was a poor reflection on FAMU's College of Law. However, the ALT found that other FAMU departments also operated on either .com or .net websites at the time.
FAMU sought to justify firing Costin based upon these two changes to the computer system, alleging that it violated FAMU policy for Costin to make the changes without Dr. Perry's approval.[1]*1086 Costin filed an administrative challenge to FAMU's action, which was ultimately heard by an ALL After an evidentiary hearing, the ALT recommended that Costin be reinstated, based upon his conclusion that termination of Costin's employment was not an available sanction under FAMU's administrative rules, given the facts presented.
At the administrative hearing, FAMU had the burden to establish by a preponderance of the evidence that there was just cause to terminate Costin under its complaint procedures for tenured or permanent status employees, located at section 6C3-10.232 of the Florida Administrative Code. See Fla. Admin. Code R. 6C3-10.232(3); § 120.57(j), Fla. Stat. (2006); Allen v. School Bd. of Dade County, 571 So.2d 568 (Fla. 3d DCA 1990).
Florida Administrative Code Rule 6C3-10.230(5) allows FAMU to discipline an employee for "just cause," which is defined to include "misconduct." The rule allows, but does not require "progressive discipline," meaning "that the form of disciplinary action imposed against the employee increases in extent or severity with each action taken." Fla. Admin. Code R. 6C3-10.230(5)(b).[2] Where discipline is warranted, the rule authorizes sanctions of "a written reprimand, suspension or dismissal from employment," and provides that the "discipline that is imposed will depend upon the seriousness of the offense and any aggravating or mitigating circumstances." Id.[3] FAMU's rules further provide that its discipline of an employee can only include dismissal for cause where the "employee's actions adversely affect the functioning of the University or jeopardize the safety or welfare of the employee, other employees or students." Fla. Admin. Code R. 6C3-10.230(5)(f).
The ALJ first found that Costin's failure to consult with Dr. Perry violated FAMU policy, and therefore met the definition of "misconduct" warranting disciplinary action under FAMU's administrative rules. However, the ALJ found that dismissal was not authorized based upon the evidence presented because FAMU failed to prove that Costin "did anything that adversely affected the functioning of the university or endangered anyone." Therefore, the ALJ recommended that Costin be reinstated with full pay.
In its final order, FAMU rejected the ALJ's critical "no adverse affect" finding on the theory that it constituted a conclusion of law. We agree with Costin, however, that the finding of "no adverse affect" is an "ultimate fact" best left to the trier of fact under these circumstances. As explained in Tedder v. Florida Unemployment Appeals Commission, 697 So.2d 900, 902 (Fla. 2d DCA 1997) (Danahy, A.C.J., specially concurring), ultimate facts are those "necessary to determine issues in [a] case" or the "final facts" derived from the "evidentiary facts supporting them." Id. (citing Black's Law Dictionary 1522 (6th ed. 1990)). Ultimate facts are also regularly described as "mixed questions" of law and fact, see, e.g., Antonucci *1087 v. Unemp. App. Comm'n, 793 So.2d 1116, 1117 (Fla. 4th DCA 2001), and must generally be made by the fact finder in an administrative proceeding because they are "necessary for proper review of administrative orders." Tedder, 697 So.2d at 902; see also San Roman v. Unemp. App. Comm'n, 711 So.2d 93 (Fla. 4th DCA 1998) (finding that whether "good cause" exists for unemployment compensation claimant to voluntarily leave work frequently involves mixed question of law and fact, and is an ultimate fact best left to the fact-finder); Heifetz v. Dep't of Bus. Reg., Div. of Alcoholic Beverages & Tobacco, 475 So.2d 1277 (Fla. 1st DCA 1985) (finding that "negligent supervision and lack of diligence are essentially ultimate findings, of fact clearly within the realm of the hearing officer's fact-finder discretion.") (citations omitted). Because the ALJ's finding on the "adverse affect" issue is supported by the record, FAMU was required to accept it. See, e.g., Fonte v. State, Dep't of Envtl. Reg., 634 So.2d 663 (Fla. 2d DCA 1994) (noting that an agency may only reject a hearing officer's findings of fact if it determines from a review of the complete record that the findings were not based upon competent, substantial evidence); Brevard Co. Sheriffs Dep't v. Fla. Comm'n on Human Relations, 429 So.2d 1235, 1237 (Fla. 5th DCA 1983) ("What the Commission has done, in effect, is ignored or rejected the hearing officer's findings of fact without determining that they are not supported by competent, substantial evidence. This it cannot do.") (citations omitted); see also, Kinney v. Dep't of State, Div. of Licensing, 501 So.2d 129, 132 (Fla. 5th DCA 1987) ("Erroneously labeling what is essentially a factual determination a `conclusion of law,' whether by the hearing officer or the agency does not make it so, and the obligation of the agency to honor the hearing officer's findings of fact may not be avoided by categorizing a contrary finding as a `conclusion of law.'").
Alternatively, even if the ALJ's finding could be classified as an issue of rule interpretation (a purely legal matter), as FAMU argues, an agency is not free to reject an administrative rule interpretation set forth in an ALJ's recommended order unless it states "with particularity its reasons for rejecting or modifying" the ALJ's rule interpretation "and make[s] a finding that its substituted conclusion of law or interpretation of administrative rule is as or more reasonable than that which was rejected or modified." § 120.57(1)(l), Fla. Stat. (2006). Here, FAMU did not make the finding that its substituted "interpretation" of the rule was more reasonable than the ALJ's interpretation. Nor could it.
The ALJ interpreted rule 6C3-10.230(5)(f) as requiring an employee's deviation from university policy to result in some palpable harm to the school or one of its employees or students before a tenured or permanent status employee could be terminated (without prior discipline) based upon his or her deviation from school policy. This is a logical, plain reading of the rule. FAMU, however, claims to read the rule as meaning that any "disregard of established University policy," no matter how slight, is itself an "adverse affect to the functioning of the University" (thereby justifying termination of the employee) simply by virtue of the fact that a rule has been broken. FAMU's interpretation makes no sense because it renders the standard for termination meaningless. There would be no reason to have a special "adverse affect" requirement for the ultimate sanction of termination if any deviation from policy was by definition its own adverse affect.
Because FAMU incorrectly rejected the ALJ's conclusion that FAMU failed to prove any adverse affect resulting from Costin's misconduct, we reverse FAMU's final order and direct that FAMU enter an *1088 order that accepts the ALJ's recommendation for Costin's reinstatement with full pay.
REVERSED and REMANDED.
GRIFFIN and TORPY, JJ., concur.
NOTES
[1] FAMU also alleged that Costin inappropriately placed ad links for several computer vendors offering special student pricing on the .com website. However, when it was revealed that this same content also appeared on FAMU's .edu website, and was just carried over by Costin, FAMU dropped this allegation.
[2] Costin had never been the subject of any prior disciplinary proceeding.
[3] FAMU presented no aggravating circumstances. Costin's mitigation included the fact that her actions were approved by the law school's administration (to which she directly reported); that she had never received a negative job-performance evaluation during her tenure with FAMU; that Dr. Perry had been unreachable or unresponsive in the past; and, that her actions were required to address problems or emergencies with the College of Law's computer systems, which she successfully corrected. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1645163/ | 994 So.2d 1252 (2008)
Angel Andy GUZMAN, Appellant,
v.
STATE of Florida, Appellee.
No. 4D07-4303.
District Court of Appeal of Florida, Fourth District.
November 26, 2008.
Carey Haughwout, Public Defender, and Peggy Natale, Assistant Public Defender, West Palm Beach, for appellant.
Bill McCollum, Attorney General, Tallahassee, and Laura Fisher Zibura, Assistant Attorney General, West Palm Beach, for appellee.
DAMOORGIAN, J.
Angel Andy Guzman appeals the trial court's summary denial of his motion to withdraw the plea after sentencing pursuant to Florida Rule of Criminal Procedure 3.170(l). In that motion, after alleging that his plea was involuntary because of his trial counsel's misadvice, Guzman requested that the court appoint conflict-free *1253 counsel. The court summarily denied his motion without appointing conflict-free counsel.
In Schriber v. State, this court held that a defendant is entitled to the appointment of counsel to advise and assist him in preparing a rule 3.170(l) motion to withdraw the plea. 959 So.2d 1254, 1257 (Fla. 4th DCA 2007). Moreover, "the thirty-day window provided in rule 3.170(l) is a critical stage of the criminal proceedings and it would be hollow indeed if the defendant were not allowed the guiding hand of counsel to assist in preparing the initial motion to withdraw the plea." Id. (citing Padgett v. State, 743 So.2d 70 (Fla. 4th DCA 1999)). Accordingly, the trial court erred in summarily denying Guzman's motion to withdraw the plea without first appointing conflict-free counsel to advise and assist Guzman in that motion. We reverse and remand, directing the trial court to appoint conflict-free counsel. The trial court may then determine whether to summarily deny the motion or to hold an evidentiary hearing.
Reversed and Remanded.
FARMER, J., concurs.
WARNER, J., concurs specially with opinion.
WARNER, J., concurring specially.
I concur in the result because of prior precedent, but as I said in concurring in Williams v. State, 959 So.2d 830 (Fla. 4th DCA 2007), I believe that Florida Rule of Criminal Procedure 3.170(l) is not a critical stage of the proceedings. The rule should be eliminated, as the defendant always has relief available under Florida Rule of Criminal Procedure 3.850. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918886/ | 106 B.R. 805 (1989)
In the Matter of 1025 ASSOCIATES, INC., Debtor.
WILMINGTON SAVINGS FUND SOCIETY, Plaintiff,
v.
1025 ASSOCIATES, INC., Defendant.
Bankruptcy No. 89-325, Motion No. 89-111.
United States Bankruptcy Court, D. Delaware.
November 14, 1989.
*806 Randall E. Robbins, Jeffrey S. Welch, Wilmington, Del., for plaintiff.
Thomas D. Runnels, Newark, Del., for debtor.
MEMORANDUM OPINION AND ORDER
HELEN S. BALICK, Bankruptcy Judge.
Wilmington Savings Fund Society (WSFS) has moved for relief from the automatic *807 stay under 11 U.S.C. § 362(d) to continue its foreclosure action in Delaware Superior Court against debtor's real property and principal asset.
Background
Debtor 1025 Associates, Inc. (1025), t/a Reagan's Tavern, operates a neighborhood bar and grill with package store at 1025 Chestnut Street in Wilmington, Delaware. The debtor's real estate consists of a three-story brick and frame building situated on a corner lot in a primarily ethnic, residential neighborhood with some commercial mix. Presently, the tavern/restaurant transacts business on the first floor of the premises while the second and third floors each have an apartment in the process of renovation. This property has historically been used as a tavern since 1889, under various owners, with the apartments having been leased since the days of Prohibition to provide rental income. There is also a detached garage at the rear of the property as well as a basement which services the bar/taproom.
1025 is a Delaware corporation with Karl Weldin being the company's sole officer, director and shareholder. The building at 1025 Chestnut Street, the corporation's primary asset, was purchased along with the tavern business by 1025 on August 1, 1981, for $135,000. It should be noted that the deed conveying the property recites only $65,000 consideration for the premises; thus, 1025 appears to have paid $70,000 for the liquor license and the going-concern value of the tavern business. Mr. Weldin testified that the 100-year old building was extremely run down; therefore, improvements were commenced to the property, especially to the tavern on the first floor. Some of these improvements were a new roof in 1982, installing four air conditioning units, repaneling and retiling the tavern area, revamping the tavern's kitchen and restrooms, and installation of a 48-inch rear projection screen television in the bar. In addition, new furniture for the taproom and other equipment and fixtures were purchased. As for the apartments upstairs, these were rented initially after 1025's purchase of the premises for $150 and $85 per month for the second and third floors, respectively. Subsequently, some cosmetic improvements were made and they were re-rented for $300 and $195 more than double the previous rental.
In order to finance some of these renovations, 1025 executed and delivered a note and mortgage to WSFS for $27,500 on December 10, 1984. With these funds, most of the renovations to the tavern were completed by 1987. From the time of purchase, it was 1025's intention to rehabilitate the upstairs apartments. In this regard, Weldin approached WSFS once again in mid-1987 to obtain financing for apartment renovation, and on November 23, 1987, 1025 entered into a Building Loan Agreement which was executed along with a mortgage and note for $142,650. The Building Loan Agreement provided that 1025 would pay off the original PMM held by the previous owner and two WSFS loans which totalled about $99,500, and WSFS would fund $43,000 for the apartment improvements. Still, the renovations had to be completed within seven months of the agreement; furthermore, the final $8,000 would be held back until a Certificate of Occupancy was issued for the apartments. Finally, 1025 had to present the receipts to WSFS to get a draw from the renovation proceeds.
Although the mortgage contains a legal description of the premises, it does not contain the city, county, or state where the property is located; however, the acknowledgement on the last page of the mortgage does mention the county and state of acknowledgement.
1025 began its renovations in the upstairs apartments by totally gutting them. Despite Mr. Weldin's experience in the construction business, the project fell seriously behind and the seven-month deadline in the Building Loan Agreement passed. WSFS paid 1025 based on its receipts from the rehabilitation in two payments of $12,000 and one payment of $10,000 for a total of $34,000, but it did not pay the other $8,000 on the loan since no Certificate of Occupancy was issued. Cost overruns, compliance with housing safety codes, and unexpected *808 difficulties inherent in renovating an old property were some of the reasons the project was delayed. In addition, the tavern business took a 20½% drop in 1988 due to competition and personnel problems. Consequently, the construction project upstairs did not receive the additional income needed to supplement the draw for apartment renovation. As a result, 1025 fell in arrears of its loan payments, and the renovation project is only about 30% complete.
On March 8, 1989, WSFS sent Mr. Weldin on behalf of 1025 a notice of default informing him that both loans were past due and that the balance on both were now due. When 1025 failed to bring current the two mortgages, WSFS began foreclosure proceedings on March 28. Although 1025 filed an answer to the foreclosure complaint, WSFS moved for default judgment based on a procedural defect. 1025 filed its Chapter 11 petition on June 6, 1989, before the scheduled hearing in Superior Court that very day. WSFS filed its motion for relief from the automatic stay on June 9.
As of the hearing date, August 23 and 24, 1025 owed the following on the 1984 $27,500 mortgage (First Mortgage) and the 1987 $142,650 mortgage (Second Mortgage).
First Mortgage
Principal $12,113.14
Past Due Interest $ 993.82
Late Charges $ 158.56
Legal Fees $ 655.35
__________
Total Due on First Mortgage $13,920.87
Per Diem Rate of Interest $4.21
Second Mortgage
Principal $132,601.17
Past Due Interest $ 16,178.13
Late Charges $ 928.60
Legal Fees $ 7,438.96
___________
Total Due on Second Mortgage $157,146.86
Per Diem Rate of Interest $46.04
The aggregate amount of the two mortgages is $171,067.73 and with interest accruing, the sum now exceeds $175,000. Additionally, 1025 owes approximately $4,000 in back federal, county, and city taxes. The tavern business seems to have a slight albeit uneven positive cash flow, except for August where it lost $1,025. Except for taxes, no other claims have been filed against the estate.
Before reaching the question of whether relief from stay is appropriate, two preliminary issues must be resolved. They are WSFS's allegations of fraud and the validity of the Second Mortgage due to the insufficiency of the instrument's property description.
WSFS's Allegations of Fraudulent Conduct of Debtor's Principal
WSFS contends 1025's president, Karl Weldin, acted fraudulently by diverting funds away from the rehabilitation of the apartments and putting them toward personal use. Though fraud might justify relief for cause under 11 U.S.C. § 362(d)(1), the record reveals no hard evidence substantiating these charges. WSFS's allegation of Weldin's misappropriations are based mainly on the estimates of its appraiser that $8,000 to $9,000 was unaccounted for based on the renovation completed taking into account the amount of the loan. This is insufficient to prove fraud. The elements of fraud are (1) that materially false representations were made; (2) representations were made with the intention and purpose of deceiving the creditor; (3) the creditor relied on the representations; and (4) the creditor was damaged as a proximate cause of the representation. Whiting v. Pacific Finance Discount Co., (In re Whiting), 10 B.R. 687, 689 (Bankr.E.D.Pa.1981). The only misrepresentations made by Weldin are a couple of receipts presented to WSFS to draw on the loan which were not directly related to the apartment renovations, some for example, a flat tire repair and a "dust buster", but most of these "unrelated" receipts were for tavern improvements which were implicitly covered in WSFS's June 23, 1987 commitment letter for the Second Mortgage. In any event, the expenditures are insubstantial compared with the overall loan amount. Though 1025 may have breached its Building Loan Agreement with WSFS, this fact alone does not constitute fraud. Undoubtedly, Mr. Weldin made some bad business decisions on behalf of 1025 which may have delayed the renovation; *809 yet, absent tangible evidence of fraud, he is insulated from direct liability by virtue of his one-person "shell" corporation and the lack of a personal guaranty which would bind him. Accordingly, WSFS's allegations must be dismissed because it has failed to prove the debtor's principal's misappropriation of the loan proceeds.
Validity of WSFS's Second Mortgage
1025 contends that the Second Mortgage held by WSFS is invalid because the property description, aside from the metes and bounds description, does not also include the city, county, and state where the mortgaged premises are located. Buttressing this contention, 1025 argues that the Second Mortgage is defective in form because it violates the statutory format contained in Del.Code Ann., tit. 25 § 2101(a). Mortgages complying with this statutory form operate as an effective mortgage lien pursuant to § 2101(b) if duly executed, acknowledged, and recorded. If the mortgage is unperfected, 1025 as debtor-in-possession can utilize the "strong-arm" provision of 11 U.S.C. § 544(a)(3) to avoid the security interest. Specifically, 1025 can avoid the mortgage only if applicable state law would allow a bona fide purchaser of the real property to avoid it by virtue of the defective description in the mortgage. See Hargrave v. LaPalomento (In re LaPalomento), 29 B.R. 291 (Bankr.D.N.J. 1983).
In general, descriptions of real estate in mortgages must conform to those requisites prevailing with respect to descriptions in deeds; thus, mortgages should describe the property covered with sufficient certainty in order to be effective. E.g., Gulf Coast Investment Corp. v. McClanahan (In re Vezinot), 20 B.R. 950 (Bankr.W.D.La.1982). Though there is no Delaware authority that has addressed the particular issue at bar, the better reasoned decisions hold that omission of a city, county, or state will not invalidate the mortgage instrument per se provided that other means of adequate identification exist. Smith v. Green, 41 F. 455 (C.C.D.Minn. 1889); Wilson v. Calhoun, 157 Tenn. 667, 11 S.W.2d 906 (1928). See generally 59 C.J.S. Mortgages § 108 (1949); 55 Am. Jur.2d Mortgages § 123 (1971). Essentially, these cases look to indicators within the four corners of the mortgage whereby the city, county, or state can be deduced from other locality references such as the acknowledgement or the residences of the parties. Still, third parties searching the title records for mortgages are not bound to look far beyond the mortgage record unless the mortgage itself refers to another record. See Conly v. Industrial Trust Co., 29 A.2d 601 (Del.Ch.1943). See, e.g., Wilson v. Boyce, 92 U.S. 320, 325, 23 L.Ed. 608, (1875) ("The generality of its language forms no objection to the validity of the mortgage . . . A mortgage `of all my property,' like the one we are considering, is sufficient to transfer title."). Constructive notice of a mortgage is notice of whatever matters one would learn by any inquiry that the recitals of the instrument made it one's duty to pursue. Cf. Cashvan v. Darling, 107 A.2d 896 (Del.Ch.1954) (applying this rule to deeds).
Applying these principles to the instant mortgage, it is clear that the debtor's argument that the property description lacks specificity must be rejected. Here, the acknowledgement on the last page of the mortgage clearly states "State of Delaware" and "New Castle County"; in addition, the debtor 1025 is plainly denoted as a Delaware corporation on the first page of the mortgage. Finally, the legal description itself names two streets, i.e., Chestnut and Van Buren; a cursory examination of a map of New Castle County, Delaware reveals that these streets intersect only in the City of Wilmington. Consequently, the additional identification references supplement the bare legal description upon these facts to provide a sufficient description although, as a matter of course, the city, county, and state should always be included in any mortgage instrument to fully describe the collateral.
Similarly, 1025's contention that the mortgage failed to comply with the suggested statutory form is also inapposite. *810 Title 25, § 2101(a) of the Delaware Code states only that "[t]he following shall be a sufficient form of mortgage for the purpose of creating a lien on real estate within this State . . ." (emphasis added). There is no language in this section to indicate that this form is required or otherwise mandated. This interpretation is supported by Del.Code Ann. tit. 25 § 2101(c) which states that "[n]othing herein contained shall invalidate a mortgage not made in the above form, but a mortgage made in the form heretofore in common use within this State shall be valid and effectual." (emphasis added). As a practical matter, many mortgage companies are multistate entities which may desire to employ a standard mortgage form either for regional use or for convenience in selling to the secondary mortgage market. A plain and common sense interpretation of the statute indicates that the format is suggestive rather than mandatory, except for the necessary technical components of a mortgage such as the amount of debt, description of premises, acknowledgement, seal, etc. See, e.g., Monroe Park v. Metropolitan Life Ins. Co., 457 A.2d 734 (Del.1983) (mortgage must be sealed to be enforceable at law, but an unsealed mortgage is still enforceable in equity). As a result, 1025's statutory argument must also fail and, thus, it may not use its avoidance powers to attack the secured status of the Second Mortgage lien.
Relief from Stay
Section 362(d) of the Code provides that relief shall be granted either (1) for cause, including lack of adequate protection of an interest in property OR (2) if the debtor lacks equity in the property and it is not necessary for an effective reorganization. The party requesting relief, WSFS, has the burden of proof as to 1025's equity. § 362(g). On all other issues adequate protection and feasibility of reorganization 1025 must shoulder the burden of proof.
Real Estate Services, Ltd., a subsidiary of B. Gary Scott, Inc., which, in turn, is a subsidiary of WSFS, placed the fair market value of the real estate at $100,000 without the liquor license, $130,000 with the liquor license, and $161,500 with both the liquor license and apartment renovations completed. In addition, it was estimated that $45,000 would be needed to complete the renovations which were only 30% complete. 1025 presented no rebuttal testimony either by an appraiser or by Mr. Weldin who could have testified as to value. See State ex rel. Smith v. O. 15 Acres of Land, 169 A.2d 256 (Del.1961).
However, Mr. Weldin did testify that he estimated the going-concern value of Reagan's Tavern to be $150,000 solely as a business apart from the real estate. This estimate seems extremely high in view of the nominal cash flow the business has been generating recently. Admittedly, numerous improvements were made to the bar and kitchen areas between 1981-87, but most of these affected the real estate itself and added to the business' value incidentally. In any event, WSFS's collateral is against the real estate not the business and, therefore, the net worth of the corporation does not factor in computing the debtor's equity in the premises even though it might be relevant in determining the feasibility of reorganization.
Under § 362(d)(1), adequate protection exists if the value of WSFS's collateral exceeds the value of its claim and the difference is either great enough to absorb interest accrual or the debtor is servicing the debt. Matter of Grantsville Hotel Assocs., L.P., 103 B.R. 509, 510 (Bankr.D.Del 1989). The facts on the record show the property without the liquor license is worth $100,000 ($130,000 with the liquor license) while WSFS's mortgage liens exceed $175,000. Obviously, WSFS is undersecured. As for debt service, 1025 has made no mortgage payments for many months, over 1½ years on the Second Mortgage. Finally, the two unfinished apartment units are sitting without heat, walls, or flooring and might be damaged in the event of cold or severe weather due to the lack of heat and electricity. This exposure of the property is additional grounds for finding that the interest of WSFS is not adequately protected. Thus, WSFS is entitled to relief from stay under § 362(d)(1) for cause.
*811 Though § 362(d) is written in the disjunctive and a ruling under either subsection (d)(1) or (d)(2) is all that is necessary for relief, the court will also address the elements required for relief under subsection (d)(2). Subsection (d)(2)(A) has already been satisfied by WSFS in that it has shown that 1025 has no equity in the Chestnut Street premises. Under § 362(d)(2)(B), debtor must demonstrate that an effective reorganization is realistically possible. In re Park Timbers, 58 B.R. 647, 651 (Bankr. D.Del.1985). 1025's plan appears to be to sell the tavern business with leasing the first floor and basement for its operation and use the proceeds to finish the renovation of the upstairs apartments. The business was listed with Stoltz Realty for six months and 1025 has since repeatedly advertised the sale of the tavern in the newspaper; however, no apparent offers or proposals have yet been made. Additionally, debtor's counsel failed to file the disclosure statement and plan by September 30, 1989 as asserted during the hearing on this motion. Debtor has had its "breathing spell." Though the tavern business seems to be holding its own, the overall circumstances suggest that the feasibility of reorganization is unlikely anytime soon. Therefore, the combination of lack of equity in 1025 and its inability to demonstrate any likelihood of an effective reorganization requires that WSFS be granted relief under § 362(d)(2). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/539798/ | 900 F.2d 445
133 L.R.R.M. (BNA) 3090, 114 Lab.Cas. P 12,067
Mary Zelma ASSEO, Regional Director of the Twenty FourthRegion of the National Labor Relations Board, forand on Behalf of the National LaborRelations Board, Petitioners, Appellees,v.CENTRO MEDICO DEL TURABO, INC. and Joaquin Rodriguez d/b/aTurabo Medical Center Limited Partnership d/b/aHospital Interamericano De MedicinaAvanzada, Respondents, Appellants.
No. 89-1874.
United States Court of Appeals,First Circuit.
April 5, 1990.
Ruben T. Nigaglioni, Hato Rey, P.R., with whom Heber E. Lugo Rigau, Ledesma, Palou & Miranda, Hato Rey, P.R., was on brief for respondents, appellants.
Theresa M. Squillacote, Attorney, N.L.R.B., with whom Jerry M. Hunter, General Counsel, was on brief for petitioners, appellees.
Before BREYER, TORRUELLA and SELYA, Circuit Judges.
TORRUELLA, Circuit Judge.
1
This is an appeal from an order of the United States District Court for the District of Puerto Rico granting the National Labor Relations Board's petition for temporary injunctive relief. For the reasons specified below, we affirm the district court's order. Although the record is replete with detail, we constrain ourselves here to reciting only those facts essential to this appeal.
I. BACKGROUND
2
Hospital San Rafael, Inc. (San Rafael) operated a 104 bed hospital in Caguas, Puerto Rico from 1958 to 1988. By the late 1970's, however, the limited capacity of San Rafael, as well as its deteriorating physical plant, rendered it unable to adequately meet the needs of the community. Two groups applied to the Department of Health of the Commonwealth of Puerto Rico for a Certificate of Need and Convenience to establish another hospital in Caguas: Turabo, doing business as the Hospital Interamericano de Medicina Avanzada (HIMA), and the Caguas Doctors' Hospital Group. After the Certificates were obtained, both groups applied to the United States Department of Health and Human Services for federally-funded mortgage insurance, a prerequisite to obtaining financing for the projects. The agency refused to finance competing hospitals, and funding was consequently refused to both groups.
3
The Certificates issued to Turabo and Doctors' Hospital were conditioned on San Rafael's cessation of operations. To meet this condition, Turabo proposed, and San Rafael agreed, that by October, 1983, San Rafael would surrender its Commonwealth Operation License, in exchange for signing a License Surrender Agreement and $1,000,000 from Turabo. Turabo also paid $800,000 to Doctors' Hospital so that it would surrender its Certificate of Need, which would then allow Turabo, as the sole applicant for hospital financing, to obtain federally-funded mortgage insurance.
4
In May, 1983, a feasibility study commissioned by Turabo was completed. The study projected that the new facility would have at least 300 beds, which in turn would require a substantially larger work force than that needed by San Rafael. The study assumed that the new facility's service area would be the same as that of San Rafael, and that the "San Rafael Hospital physicians would form the core of the active staff faculty at the [new facility]."
5
Between 1983 and 1985, San Rafael informed its employees of the plans for the new facility in the in-house publication, Hablemos. A thorough report on the imminent construction and planned physical layout, and of the new corporate officers of Turabo, was presented to the San Rafael employees in the Winter, 1985 issue of that publication.
6
In 1983, simultaneous with the development of plans for the new facility, the Union commenced an organizing drive among the employees of San Rafael. Prominent among the employees in the drive was X-ray technician Milton Suarez, who had been employed at San Rafael since October, 1980. He visited employees at their homes, distributed Union literature in front of the Hospital, and conducted organizational meetings. Suarez' activities were well-known to the management officials of both San Rafael and Turabo.
7
The Union won Board-conducted elections in two units at San Rafael--one consisting of all registered nurses, and the other consisting of licensed practical nurses, technicians and clerks (technical unit). On January 30, 1984, the Union was certified as the collective-bargaining representative of San Rafael employees in both units.
8
Thereafter, San Rafael and the Union negotiated a collective bargaining agreement, effective from September 1, 1984 through August 31, 1987. Prior to the expiration of that contract, the parties commenced bargaining for a successor agreement. During these negotiations, the Union sought, and San Rafael opposed, a provision that would have obligated Turabo to recognize and bargain with the Union or to apply the terms of the collective bargaining agreement at the new facility. By the last bargaining session on September 14, 1988, the parties were unable to reach agreement on a successor contract. During these negotiations, however, the Union and Turabo entered into a private agreement settling certain unfair labor practice charges that the Union had filed against Turabo and San Rafael. Under that agreement, Turabo agreed to hire a minimum of 95% of the San Rafael unit employees when it opened its new facility.
9
In June, 1988, San Rafael Executive Vice President Carlos Pineiro prepared a staffing guideline for Turabo's new facility. That guideline projected the job classifications, and the number of employees within each classification, for each of four projected phases by which Turabo would reach its maximum operation potential. By mid-1988, construction of the new facility was substantially completed.
10
On October 9, 1988, Turabo opened HIMA and commenced hiring employees. In a visit to the facility on October 27, 1988, Suarez and Union Propaganda and Education Secretary Miguel Gonzalez met with Pineiro, who had become Executive Director of HIMA. Pineiro said that Turabo did not recognize the Union at HIMA, nor did it acknowledge that the terms of the collective bargaining agreement were applicable there. He then directed the two men to the personnel director for further discussion. At that time, Suarez submitted his application for employment at HIMA.
11
On November 3, 1988, San Rafael began closing its facilities, and on November 7, Suarez received his notice of discharge. By November 13, San Rafael had completely ceased all operations, and ultimately sold $242,602 of its moveable equipment to Turabo for use at the HIMA facility. San Rafael also transferred to Turabo a portable X-ray unit which it had under lease.
12
On November 14, 1988, Turabo began providing medical services. By November 19, Turabo had hired 69 employees in the job classifications which had comprised the technical unit at San Rafael. Of those 69 employees, 51, or 74%, were former San Rafael unit employees.
13
On November 23, 1988, and again on December 19, 1988, the Union sent letters to Turabo requesting that it recognize the Union at HIMA. On January 5, the Union received letters from the president of the HIMA and from Turabo's attorney, which expressed their refusal to recognize the Union, denied any obligation to do so, and asserted that Turabo had already fully complied with its only obligation: to hire 95% of the former San Rafael unit employees.
14
In conversations during the first four months of 1989, HIMA employees told the Union that they would not cooperate further with the Union nor engage in activities that would identify them with the Union because of fears of reprisal by Turabo. One employee said that she had already experienced what she perceived to be a warning from a Turabo official not to engage in Union activities.
15
Between the date of its opening and April 15, 1989, Turabo gradually increased the size of its operation, until it was operating 138 beds. It employed 108 employees in former technical unit positions to maintain that operational level.
16
Based on this record, the district court concluded that reasonable cause existed to believe that Turabo is a legal successor to San Rafael and that, when Turabo had hired a substantial and representative complement of employees, a majority of Turabo employees in positions which had been part of the San Rafael technical unit were former San Rafael employees. The court found that there was reasonable cause to believe that Turabo had violated Section 8(a)(5), 29 U.S.C. Sec. 158(a)(5), by refusing to recognize and bargain with the Union. The court also found reasonable cause to believe that Turabo violated Section 8(a)(3), 29 U.S.C. Sec. 158(a)(3), by refusing to hire Suarez because of his Union activities. Finally, the court determined that the preliminary injunctive relief requested by the Board was just and proper to preserve the Board's ability to ultimately afford meaningful relief in the underlying unfair labor practice case.
17
II. APPLICABLE STANDARD FOR INJUNCTIVE RELIEF UNDER Sec. 10(j)
18
Section 10(j) of the National Labor Relations Act, 29 U.S.C. Sec. 160(j) (1982), authorizes district courts to grant interim injunctive relief to restore and preserve the status quo pending the Board's decision on the merits of an underlying unfair labor practice complaint. E.g., Asseo v. Pan American Grain Co., Inc., 805 F.2d 23, 25 (1st Cir.1986); Fuchs v. Hood Industries, Inc., 590 F.2d 395, 397 (1st Cir.1979). Under this statutory scheme, the district court is limited to the determination of whether there is (1) reasonable cause to believe that a violation of the Act, as alleged, has been committed, and (2) whether injunctive relief is appropriate under the circumstances. Asseo v. Pan American Grain Co., Inc., 805 F.2d at 25; Maram v. Universidad Interamericana de Puerto Rico, 722 F.2d 953, 959 (1st Cir.1983).
19
As we have previously stated, on appeal, this Court's review is:
20
limited to [determining] whether the district court was clearly erroneous in finding reasonable cause to believe that there were unfair labor practices and whether it abused its discretion in granting injunctive relief. Union de Tronquistas de Puerto Rico v. Arlook, 586 F.2d 872, 876 (1st Cir.1978).
21
Asseo v. Pan American Grain Co., Inc., 805 F.2d at 25. With these standards firmly in mind, we turn now to the merits of the appeal.
III. EXISTENCE OF REASONABLE CAUSE
22
As this Court has previously made crystal clear, the district court is not empowered to decide the merits of the case, that is, whether an unfair labor practice occurred. Asseo v. Pan American Grain Co., Inc., 805 F.2d at 25. Instead, the district court is charged only with the responsibility of ensuring that there is reasonable cause to believe that a violation of the NLRA occurred. E.g., Maram v. Universidad Interamericana de Puerto Rico, 722 F.2d at 958. In this Circuit, this is accomplished through a determination that the Regional Director's position is fairly supported by the evidence. See Asseo v. Pan American Grain Co., Inc., 805 F.2d 23; Maram v. Universidad Interamericana de Puerto Rico, 722 F.2d at 959. After review of the evidence presented, we cannot say that the district court's finding of reasonable cause was clearly erroneous.
23
A. Refusal to Recognize and Bargain with the Union
24
Section 8(a)(5), 29 U.S.C. Sec. 158(a)(5), makes it an unfair labor practice for an employer to refuse to recognize and bargain with the collective bargaining representative of its employees. Under this standard, an employer is obligated to recognize and bargain with the union representing its predecessor's employees if: (1) the new employer is a "successor" to the old, i.e., if there is substantial continuity between the two employing entities; and (2) a majority of the successor's employees previously were employed by the predecessor. Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 43-52, 107 S.Ct. 2225, 2236-41, 96 L.Ed.2d 22 (1987). If these criteria are satisfied, a rebuttable presumption of majority status arises, leading to a consequent duty to bargain in good faith. The successor employer, however, may defeat that presumption by demonstrating either that the union has lost majority support, or that it has sufficient objective evidence of a good faith doubt of majority status.
1. Successor Status of HIMA
25
The determination of whether a new company is a successor to the old is largely factual in nature. In making its inquiry, it is well settled that the Board (or the court, where it is the factfinder) must direct its attention to the question of whether the new company has "acquired substantial assets of its predecessor and continued, without interruption or substantial change, the predecessor's business operations." Golden State Bottling Co. v. NLRB, 414 U.S. 168, 182, 94 S.Ct. 414, 424, 38 L.Ed.2d 388 (1973). See also NLRB v. Burns International Security Services, 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972). From these vague beginnings, the standard has developed into one with more definitive parameters:
26
[T]he focus is on whether there is "substantial continuity" between the enterprises. Under this approach, the Board examines a number of factors: whether the business of both employers is essentially the same; whether the employees of the new company are doing the same jobs in the same working conditions under the same supervisors; and whether the new entity has the same production process, produces the same products, and basically has the same body of customers.
27
Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. at 43, 107 S.Ct. at 2236 (citations omitted). Given the emphasis of the law on furthering "industrial peace," these factors must be weighed in light of whether "those employees who have been retained will understandably view their job situations as essentially unaltered." Id. See Golden State Bottling Co., 414 U.S. at 184, 94 S.Ct. at 425.
28
Although application of a balancing test is always a delicate proposition, after careful analysis we are unable to say that the district court was clearly wrong in concluding that Turabo was indeed a successor to San Rafael. While we think it unnecessary to parrot each of the district court's findings, upon review, we find that it was not clear error for the district court to hold that the $1,000,000 payment for the License Surrender Agreement, which was necessary for Turabo even to operate a hospital in Caguas, together with the purchase of $242,602 worth of equipment, and the lease of an X-ray unit, constitute the acquisition by Turabo of substantial assets of San Rafael. That this may have represented only a small portion of its total investment in Turabo is not dispositive--the focus is upon San Rafael.
29
The remaining criteria for successorship merit little discussion. It can scarcely be contested that Turabo is engaged in the same business of providing health care services to substantially the same community as had San Rafael. Moreover, it cannot be clear error to have concluded that the former San Rafael technical unit employees perform substantially the same functions at HIMA as they formerly did at San Rafael--indeed, appellant never argues otherwise. We also think that it is significant that the corporate management of Turabo and San Rafael are substantially identical, particularly with regard to key management personnel. Consequently, after careful analysis, we find that there is reasonable cause to believe that Turabo is the legal successor to San Rafael.
2. Union's Majority Status
30
Having established that Turabo is San Rafael's successor, our inquiry next shifts to the district court's determination that the Union enjoyed majority status. As the Supreme Court has made clear, a union's majority status is measured at the time the successor has hired a "substantial and representative complement of its employees." Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. at 47, 107 S.Ct. at 2238. "If, at this particular moment, a majority of the successor's employees had been employed by its predecessor, then the successor has an obligation to bargain with the union that represented these employees." Id.
31
While we cannot say that, had we been sitting as the district court or as the Regional Director of the Board, we would have chosen November 19, 1988 as the date by which HIMA had reached a substantial and representative complement of employees, neither can we say that the district court or the Regional Director were clearly wrong for so choosing. And our role as an appellate court is merely to review the district court's findings, not to make new ones.
32
An employer has hired a "substantial and representative complement of employees" when it has filled or substantially filled the job classifications designated for the operation, and it is engaged in normal or substantially normal production. Id. at 49, 107 S.Ct. at 2239. See also Premium Foods, Inc. v. NLRB, 709 F.2d 623, 628 (9th Cir.1983). In making this determination, the Board must consider "the size of the complement on that date and the time expected to elapse before a substantially larger complement would be at work ... as well as the relative certainty of the employer's expected expansion." Premium Foods, Inc. v. NLRB, 709 F.2d at 682 (cited in Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. at 49, 107 S.Ct. at 2239).
33
The district court concluded that there was reasonable cause to believe that Turabo had reached substantially normal operation and substantially filled its job classifications by November 19, 1988. By November 19, Turabo was operating 50 beds, and was providing a substantially full range of services. Although 50 beds represented only 1/3 of the beds contemplated under Phase I operation, in light of the fact that it was providing all of the health services which it would ultimately supply (except Intensive Care), albeit on a smaller scale, the district court's conclusion was not clearly erroneous. See Briggs Plumbingware v. NLRB, 877 F.2d 1282 (6th Cir.1989) (substantially normal operations achieved where all steps of production process were in operation). Thus, on November 19, Turabo had also substantially filled the unit employee complement that it expected to hire upon reaching full Phase I operation. See, e.g., NLRB v. Hudson River Aggregates, 639 F.2d 865 (2d Cir.1981).
34
Since, on November 19, 1988, 74% of the technical employees were former members of San Rafael's technical unit, the district court acted reasonably in concluding that the Union could be presumed to have majority support among those employees. The fact that Turabo might ultimately hire many more employees is not dispositive, given that expansion beyond the Phase I 150-bed level was contingent on the existence of a demand for additional beds. Compare Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. at 52, 107 S.Ct. at 2240 (since employer's intent to expand to two shifts was contingent upon growth of business, projected size of second shift was irrelevant).1
35
The presumption created by this prima facie demonstration of majority support, however, is only a rebuttable one. It can be overcome with a showing of: (1) actual loss of majority support, or (2) objective considerations sufficient to support a reasonable good faith doubt of the Union's continued majority. Id. at 41, n. 8, 107 S.Ct. at 2235, n. 8 (citing Harley-Davidson Transp. Co., 273 NLRB 1531 (1985)).
36
Appellant never argues that there was an actual loss of majority support, although it does contend that it had a good faith doubt as to the Union's majority status. In so arguing, it relies upon a decertification petition filed on January 11, 1988, and signed by 35 of the 79 technical unit employees at San Rafael. That petition, however, had previously been dismissed by the Board, because of the pendency of unfair labor practice proceedings. As the district court stated, the Board, in similar cases, has held that petitions filed under these circumstances do not constitute sufficient objective evidence to deny recognition to the certified bargaining agent. See, e.g., Dresser Industries, 264 NLRB 1088 (1982); Massey-Ferguson, Inc., 184 NLRB 640, 641 (1970), enforced Massey-Ferguson, Inc. v. NLRB, 78 LRRM (BNA) 2289, 1971 WL 2981 (7th Cir.1971). We do not find the district court's reliance on the procedures of the Board misplaced.
37
Given that the Union demanded recognition on October 27, 1988, and again on November 23 and December 19, and that those demands were rejected by Turabo, we affirm the district court's conclusion that there is reasonable cause to believe that Sec. 8(a)(1), 29 U.S.C. Sec. 158(a)(1) and Sec. 8(a)(5), 29 U.S.C. Sec. 158(a)(5), were violated when Turabo refused to recognize the Union after November 19, 1988, and thus that the Regional Director's position was supported by the record.
B. Refusal to Hire Milton Suarez
38
Section 8(a)(3) of the Act, 29 U.S.C. Sec. 158(a)(3), prohibits an employer from discriminating with regard to the hiring or tenure of employees for the purpose of discouraging union membership. The cases which have interpreted and applied this section have made it clear that a successor employer violates this provision when it refuses to hire employees of the predecessor employer because of their union activities. See Howard Johnson Co. v. Detroit Local Joint Exec. Bd., 417 U.S. 249, 262 n. 8, 94 S.Ct. 2236, 2243 n. 8, 41 L.Ed.2d 46 (1974); NLRB v. Burns International Security Services, 406 U.S. 272, 280-281 n. 5, 92 S.Ct. 1571, 1578-1579 n. 5, 32 L.Ed.2d 61 (1972).
39
We need not repeat all the facts relied upon by the able district court. Suffice it to say that the evidence supported a conclusion that Milton Suarez was an active union participant at San Rafael, and made his union activities known to officials at HIMA. Although Turabo contended that it did not extend an employment offer to Suarez because of his excessive absenteeism at San Rafael, the district court was not clearly wrong in concluding that, because the personnel records of other employees who were hired by Turabo evidence similar absenteeism, there was reasonable cause to believe that Turabo's proffered reasons for not hiring Suarez were merely pretextual. See D'Youville Manor Nursing Home v. NLRB, 526 F.2d 3 (1st Cir.1975). The fact that other union supporters were hired at HIMA does not negate the discrimination claim.
40
Given these circumstances, the district court was not clearly wrong in concluding that the Regional Director's claims that unfair labor practices had been committed were supported by reasonable cause.
III. PROPRIETY OF INJUNCTIVE RELIEF
41
Having concluded that the district court was not clearly erroneous in finding reasonable cause to support the Regional Director's position, our inquiry next focuses on whether the district court abused its discretion in determining that the injunctive relief awarded was just and proper. See Asseo v. Pan American Grain Co., Inc., 805 F.2d at 26; Aguayo v. Tomco Carburetor Co., 853 F.2d 744, 748 (9th Cir.1988).
42
As this Court has previously made clear, while the Regional Director's decisions are entitled to deference on the part of the courts, that deference is not unfettered. Maram v. Universidad Interamericana de Puerto Rico, 722 F.2d at 958. Although other portions of the National Labor Relations Act make it apparent that judicial review is limited in various respects, Sec. 10(j) provides no such guidance.2 This Court has previously held that, "when the Board simply has discretion under the general section 10(j), we believe the whole panoply of discretionary issues with respect to granting preliminary relief must be addressed by the court." Maram v. Universidad Interamericana de Puerto Rico, 722 F.2d at 958.
43
In this Circuit, the standards for granting preliminary injunctive relief are unambiguous:
44
(1) that plaintiff will suffer irreparable injury if the injunction is not granted; (2) that such injury outweighs any harm which granting injunctive relief would inflict on the defendant; (3) that plaintiff has exhibited a likelihood of success on the merits; and (4) that the public interest will not be adversely affected by the granting of the injunction.
45
Women's Community Health Ctr., Inc. v. Cohen, 477 F.Supp. 542, 544 (D.Me.1979) (quoted in Planned Parenthood League of Massachusetts v. Bellotti, 641 F.2d 1006, 1009 (1st Cir.1981); Asseo v. Pan American Grain Co., Inc., 805 F.2d at 26). See also Levesque v. Maine, 587 F.2d 78, 80 (1st Cir.1978).
46
With these factors clearly in mind, we turn now to the injunctive relief at issue here. The district court enjoined Turabo to: (1) recognize and bargain collectively in good faith with the Union representing the technical unit employees, (2) offer employment to Milton Suarez, and (3) post copies of its Opinion and Order at HIMA both in English and Spanish. Upon review, we cannot say that the district court abused its discretion in imposing this relief.
47
The district court concluded that an interim bargaining order was the only effective way to prevent irreparable erosion of employee support for the Union. Not only does the record contain evidence that several HIMA technical unit employees indicated to the Union that they would not continue to support it because they feared retaliation by their employer, but it demonstrates that Milton Suarez, a chief union organizer, had not been hired by Turabo. Whether Suarez was not offered employment because of his union activities, is clearly a matter for the Board to determine. E.g., Asseo v. Pan American Grain Co., 805 F.2d at 25. However, after careful review we cannot conclude that the district court abused its discretion in determining that an interim offer of employment to Suarez was necessary to dispel employees' fears that they would suffer comparable retaliation if they chose to continue their support for the Union.
48
As the district court concluded, there was a very real danger that if Turabo continued to withhold recognition from the Union, employee support would erode to such an extent that the Union could no longer represent those employees. At that point, any final remedy which the Board could impose would be ineffective. See Aguayo v. Tomco Carburetor Co., 853 F.2d at 748. Moreover, Suarez' absence could reasonably contribute to this erosion of support.
49
The preceding discussion obviously focuses on one element of the preliminary injunction standard: whether the Union would suffer irreparable injury if the injunction was not granted. Having concluded that it would, we now turn to the question of whether the final three elements are met. We conclude that they are.
50
First, the danger that the Union would lose support because of unfair labor practices committed by the employer, leading to irreparable injury to the employees and to the bargaining unit, clearly outweighs any harm which granting injunctive relief would inflict on the defendant. Indeed, the only argument which Turabo seriously advanced at the district court level was that "granting the interim bargaining order will be tantamount to imposing an unwanted Union on the employees, which will create labor unrest and adversely affect the Employer's prospects of obtaining necessary financing to continue its operations." We, like the district court, fail to find merit in this contention.
51
Second, although the question of likelihood of success on the merits is a more difficult issue, again, we are satisfied with the district court's conclusion that there is reasonable cause to believe that the alleged unfair labor practices were committed, and that there is substantial likelihood of success on the merits. These conclusions were not an abuse of discretion on the part of the district court.
52
Finally, we agree with the district court's conclusion that the public interest will be furthered by the imposition of the interim injunctive relief. If the goal of the labor laws and regulations is to strengthen the bargaining process, see Asseo v. Pan American Grain, 805 F.2d at 28, then ordering bargaining to commence cannot be contrary to the public interest.
IV. CONCLUSION
53
Interim injunctive relief is warranted for the "preservation or restoration of the status quo ... when the circumstances of a case create a reasonable apprehension that the efficacy of the Board's final order may be nullified, or the administrative procedures will be rendered meaningless ..." Angle v. Sacks, 382 F.2d 655, 660 (10th Cir.1967). Because we find, not only that there was reasonable cause to support the Regional Director's position that unfair labor practices had occurred, but also that injunctive relief was both correct and proper, the order of the district court granting such relief is hereby affirmed. Nothing in this opinion should in any way be interpreted as a prejudgment of the merits of the unfair labor practice charges, which, at this point, remain to be litigated.
54
Affirmed.
1
Nor is it fatal to the district court's conclusion that only 50 of the 150 beds which would signal completion of Phase I were in operation on November 19, 1988. By November 19, 1988, Turabo had hired 64% of the actual number of employees hired by April 15, 1989, when it was close to reaching the 150-bed level of operation
2
Section 10(j), 29 U.S.C. Sec. 160(j), provides that:
(j) The Board shall have power, upon issuance of a complaint as provided in subsection (b) of this section charging that any person has engaged in or is engaging in an unfair labor practice, to petition any United States district court, within any district wherein the unfair labor practice in question is alleged to have occurred or wherein such person resides or transacts business, for appropriate temporary relief or restraining order. Upon the filing of any such petition the court shall cause notice thereof to be served upon such person, and thereupon shall have jurisdiction to grant to the Board such temporary relief or restraining order as it deems just and proper. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1918924/ | 106 B.R. 474 (1989)
In re Frances G. BRIDGE, Debtor.
Fred J. DERY, Trustee, Plaintiff,
v.
UNITED STATES of America, et al., Defendant.
Bankruptcy No. 81-01913-R, Adv. No. 84-0875-R.
United States Bankruptcy Court, E.D. Michigan.
October 23, 1989.
As Amended November 8, 1989.
*475 Thomas Morris, Southfield, Mich., for plaintiff.
Karl Overman, U.S. Atty's. Office, Detroit, Mich., for defendant.
MEMORANDUM OPINION
STEVEN W. RHODES, Bankruptcy Judge.
I.
The procedural history of this adversary proceeding, and the related district court civil and criminal proceedings, is set forth in In re Bridge (Dery v. United States), 90 B.R. 839 (Bankr.E.D.Mich.1988). In that opinion, the Court concluded that $670,000 in Canadian treasury bills seized from the debtor's husband on September 21, 1982, were property of this bankruptcy estate, and the Court ordered the government to turn over the proceeds of the bills to the trustee. At that time the Court declined to award pre-judgment interest beyond that which was actually earned after the government invested the proceeds of the bills in an interest bearing account. Subsequently, the Court granted the trustee's *476 request for a rehearing on the issue of pre-judgment interest, and that rehearing has been held.
II.
The issue now before this Court is whether the trustee is entitled to pre-judgment interest, and if so, during what time period and at what rate. The basis for the trustee's claim is as follows:
As previously noted, Canadian treasury bills worth $670,000 were seized by U.S. Customs officials on September 21, 1982. These bills matured two months later on November 26, 1982, while in the possession of U.S. Customs. Thereafter, the treasury bills remained in a safe in the Federal Building in Detroit, earning no interest. Over five years later, on April 5, 1988, the government did finally invest the proceeds of the bills in interest bearing certificates of deposit. The trustee alleges that he is entitled to pre-judgment interest from March 26, 1984, when the trustee made a written demand on the Commissioner of Customs for turnover of the treasury bills.
In support of his claim, the trustee cites 11 U.S.C. § 542, which provides:
(a) Except as provided in subsection (c) or (d) of this section, an entity, other than a custodian, in possession, custody, or control, during the case, of property that the trustee may use, sell, or lease under section 363 of this title, or that the debtor may exempt under section 522 of this title, shall deliver to the trustee, and account for, such property or the value of such property, unless such property is of inconsequential value or benefit to the estate. [Emphasis added.]
The trustee contends that this section requires not only that the government must turnover the proceeds of the treasury bills as property of the estate (as previously ordered by this Court), but also that pre-judgment interest should be awarded so that the estate will recover the "value of such property." The trustee argues that the estate has been deprived of the interest which the estate should have earned starting on the date the bills matured in 1982.
The trustee further asserts the government's failure to turn over the proceeds of the treasury bills with interest forced him to borrow funds to properly administer the estate. As a result, the estate incurred additional and unnecessary interest expenses, to the prejudice of the creditors.
III.
United States contends that the trustee's claims are based on a negligence theory. It asserts that any such action should be brought under the Federal Tort Claims Act, 28 U.S.C. § 1346. In addition, the government asserts that even if this claim for pre-judgment interest were brought under the Tort Claims Act, Congress and the Supreme Court have made it clear that the United States is not to be held liable for any losses arising from seizures by U.S. Customs. 28 U.S.C. § 2680(c); Kosak v. United States, 465 U.S. 848, 104 S.Ct. 1519, 79 L.Ed.2d 860 (1984).
The Court rejects this argument. In its earlier memorandum opinion, the Court held that the $670,000 in Canadian treasury bills are property of the estate of Frances Bridge. As discussed above, the provisions of 11 U.S.C. § 542 concerning property of the estate provide that the trustee is entitled to "such property or the value of such property" from any entity in possession of estate property. The government's negligence is not the basis upon which the pre-judgment interest issue will be decided under § 542, although as a matter of the Court's discretion, it might be one factor.
Moreover, it is clear that § 542 applies to the United States. The term "entity" used in § 542(a) includes a governmental unit. The United States Supreme Court has held, "The Bankruptcy Code expressly states that the term `entity,' used in § 542(a) includes a governmental unit." United States v. Whiting Pools, Inc., 462 U.S. 198, 209, 103 S.Ct. 2309, 2316, 76 L.Ed.2d 515 (1983).
The government has implied that it would have been unduly burdensome to redeem the matured treasury bills and then to invest the proceeds in an interest bearing *477 account. The Court rejects this argument, because the government submitted no evidence of any such burden, and because the government did convert the bills to certificates of deposit in 1988 without any apparent burden or difficulty. Unfortunately, the government held the bills for five years before they were redeemed, during which time they earned no interest. The ease with which certificates of deposit may be purchased and the safety of this type of investment vehicle further undermine the government's claim of undue burden.
IV.
Whether to award pre-judgment interest is left to the discretion of the Court. Ford Motor Co. v. Transport Indemnity Co., 45 B.R. 843, 846-7 (E.D.Mich. 1984). This discretion is based upon traditional equitable principles. DeLaCruz v. Pruitt, 590 F.Supp. 1296, 1308-9 (N.D.Ind. 1984).
A leading and often-cited case on the issue of pre-judgment interest on estate property recovered by a trustee is In re The H.P. King Co., Inc. (Crampton v. Dominion Bank of Bristol), 64 B.R. 487, 488-9 (Bankr.E.D.N.C.1986), wherein the court stated:
Although the Bankruptcy Code does not directly address the subject, it is well settled that in an action to set aside a preference the trustee is entitled, under the bankruptcy court's equitable powers, to pre-judgment interest from the date of demand for its return, or in the absence of a prior demand, from the date of the filing of the complaint. [Citations omitted.]
The rule favoring pre-judgment interest in preference and fraudulent conveyance actions also applies in turnover actions. In re Gillett (Tavormina v. Merchants Bank of Miami), 55 B.R. 675, 680 (Bankr.S.D.Fla.1985).
In applying these principles of law and equity to the present case, the Court concludes that it is appropriate to award pre-judgment interest to the trustee. The award of pre-judgment interest is necessary to carry out the statutory mandate for turnover of the "value of the property." And it is especially important in this case in light of the substantial and unjustified erosion in value suffered by the property for over five years while in the government's custody, and in light of the ease with which the government could have protected against that erosion in value.
V.
The time period in which interest shall be awarded is also within the Court's discretion. In re Independent Clearing House Co. (Merrill v. Abbott), 41 B.R. 985, 1015 (Bankr.D.Utah 1984), affirmed in part and rev'd in part on other grounds, 77 B.R. 843 (D.Utah 1987). See also 62 B.R. 118, 129-30 (D.Utah 1986).
In this case, the Court must be sensitive to the initial predicament of the government following the seizure of the treasury bills. The illegally imported bills were evidence in the criminal prosecution of William Bridge. As a result the government was no doubt required to maintain the bills intact as long as that case was open. However, on November 16, 1984, Mr. Bridge pleaded guilty to the crimes charged, and the bills were then no longer needed as evidence.
Previously, the government had received two demands for the return of the bills as property of the estate. The first demand was made on March 26, 1984 when the trustee sent a letter to Louis A. Mezzano, District Director of Customs. The second demand for the return of the bills was made in the complaint which initiated the turnover action in this matter. That complaint was filed on September 13, 1984.
In the circumstances, the Court concludes that the United States is liable for pre-judgment interest from November 16, 1984, the conclusion of William Bridge's prosecution, until April 5, 1988, the day the government converted the treasury bills to certificates of deposit.
VI.
The rate of interest is also within the discretion of the Court. The Court *478 concludes that the rate should be set so as to best approximate the current "value of the property," so that the estate will be fully compensated for its property. It is reasonably clear from Dery's testimony that if he had received the bills or their proceeds on November 16, 1984, he would have redeemed them, converted the Canadian currency to United States currency, and then deposited the proceeds in short term certificates of deposit. The evidence establishes that during the pertinent time period, the interest rates on these investments averaged approximately 8%.
Accordingly, based on a principal amount in United States currency equal to $670,000 in Canadian currency as of November 16, 1984, the Court will allow pre-judgment interest at the rate of 8% per annum from November 16, 1984 through April 5, 1988. This amount is in addition to the amount subject to this Court's turnover order of February 22, 1989. An appropriate order is entered herewith. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918943/ | 106 B.R. 943 (1989)
In re H. Roger LAWLER, et al., Debtors.
H. Roger LAWLER, Plaintiff-Appellant,
v.
GUILD, HAGEN & CLARK, LTD., Defendant-Appellee.
Misc. No. 586-501, Civ. A. Nos. CA 3-87-2667-G, CA 3-87-2668-G.
United States District Court, N.D. Texas, Dallas Division.
November 15, 1989.
*944 *945 *946 *947 C. Thomas Wesner, Jr., Wesner Coke Boyd & Clymer, P.C., Dallas, Tex., for plaintiff-appellant.
Judith L. Weaver, Frank Finn, Terry L. Jacobson, Thompson & Knight, Dallas, Tex., for defendant-appellee.
MEMORANDUM ORDER
FISH, District Judge.
This case is before the court on the appeal of plaintiff H. Roger Lawler ("Lawler") from the United States Bankruptcy Court's July 30, 1987 memorandum opinion and order[1] (1) allowing the law firm of Guild, Hagen & Clark, Ltd. ("Guild"), defendant-appellee, to withdraw with prejudice its proof of claim for attorney's fees, and (2) dismissing with prejudice Lawler's objections to Guild's proof of claim.
Lawler seeks reversal of the bankruptcy court's dismissal of his objections joined with what Lawler characterizes as "a compulsory counterclaim" included in his amended objection.[2] Specifically, Lawler asks this court to withdraw the case from the bankruptcy court and, after hearing, enter judgment for Lawler on his "counterclaim" or alternatively to reverse and remand the case to the bankruptcy court to determine the damages Lawler is due on his claim. In either event, Lawler seeks affirmance, as a sanction, of Guild's withdrawal of its proof of claim.[3] Guild, for its part, seeks affirmance of the bankruptcy court's decision in its entirety.[4] After a de novo review of the record, the court is of the opinion, for the reasons stated in this memorandum order, that the bankruptcy court's memorandum opinion and order should be affirmed.[5]
I. Background
On January 9, 1976, an involuntary petition against Lawler was filed in the Bankruptcy *948 Court of the United States District Court for the District of Nevada. The case was transferred to the Bankruptcy Court of the Northern District of Texas on June 6, 1976, and Lawler consented to an adjudication of bankruptcy on January 20, 1978. The case was partially administered under Chapter VII of the Bankruptcy Act with L.E. Creel, III as receiver and trustee, and was later converted to a reorganization under Chapter XI of the Bankruptcy Act with Mr. Creel as operating trustee and disbursing agent. Through various actions brought by the trustee, it was determined that Lawler was solvent, and a "New Plan of Arrangement" was confirmed on April 30, 1984. That plan provided in part that unsecured creditors would receive the full amount of their allowed claims with interest from January 9, 1976.[6]
On February 20, 1976, Guild filed in the Nevada bankruptcy court a proof of claim in the amount of $15,565.40 for unpaid attorney's fees and expenses.[7] No supporting itemization of costs and services or other documents was attached to support the claim.[8] On March 9, 1978, after the case had been transferred to Dallas, Guild filed the identical claim (again, without supporting documents).[9]
On May 25, 1982, Lawler filed his first objection to Guild's four year old proof of claim on grounds that it lacked supporting documentation and that Guild had failed to give him credit for a paid retainer.[10] On *949 February 15, 1984, Lawler filed an application for an order establishing a procedure for objections to claims. On February 17, 1984, the court issued a claims scheduling order which, in relevant part, set (1) March 1, 1984 as the last date for creditors to file proofs of claim and (2) April 3, 1984 as the date to hear the remaining proofs of claim and related objections. That order also stated that the hearing could be adjourned from time to time without notice other than that given at the hearing.[11]
On February 29, 1984, Guild filed an amended proof of claim for unpaid attorney's fees and expenses in the increased amount of $16,433.32, with an attached itemization of the services reflected in statements Guild sent to Lawler between December 1974 and April 1975.[12] The only differences between this amended proof of claim and Guild's prior proofs of claim were that the amended proof of claim sought interest at 7% per annum from April 23, 1975 (the date services ended) to January 9, 1976 (the date of the involuntary petition) and had supporting documentation attached.[13]
On April 3, 1984 the day Guild's proof of claim had been set for hearing by order of February 17, 1984 Lawler filed an amended objection to Guild's proof of claim asserting, for the first time, that Guild attorney Clark was guilty of malpractice and that Lawler in consequence was entitled to at least $510,000.00 "by way of counterclaim and setoff damages."[14] The parties agree that the bankruptcy court adjourned the April 3, 1984 hearing without reaching Guild's claim.[15] On May 1, 1984, Guild filed a written response to Lawler's amended objection arguing (1) that it was filed and delivered to Guild in violation of Code Rule 3007 and (2) that the claim for damages or offset was barred by limitations.[16]
Judge Ford retired in September 1985 without hearing Guild's disputed claim. The case was subsequently reassigned to Judge John C. Akard of the Lubbock Division of the Northern District of Texas.[17] By notice of June 17, 1986, Judge Akard set Lawler's objections for hearing on October 14, 1986 and required that a proposed joint pretrial order be filed by October 1, 1986.[18]
On August 22, 1986, Guild filed a motion for summary judgment urging that the statute of limitations barred Lawler's amended objection.[19] On October 1, 1986, the parties filed a joint pretrial order, in which Lawler set out his malpractice claim and Guild again argued not only the bar of limitations but also that Lawler had raised the malpractice claim in bad faith.[20]
On October 8, 1986, Lawler filed a motion for expedited hearing or continuance of hearing on Guild's motion for summary judgment, asserting as grounds that Lawler needed the testimony of an out of town witness and Clark's deposition to prepare for the hearing.[21]See note 5 above. It *950 appears that the bankruptcy court denied this motion, because at a late evening hearing on October 14, 1986, Judge Akard denied the motion for summary judgment (without discussing its merits on the record) and proceeded to trial on the amended claim and objections.[22] He then heard testimony from Clark on the merits of the amended objection until 11:30 p.m., at which time he called a recess until December 8, 1986.[23] When trial was recessed, Guild had completed its direct examination of Clark but Lawler had not finished his cross-examination.[24] Lawler claims that he also had witnesses of his own to present after Clark concluded his testimony.[25]
On November 26, 1986, before the bankruptcy court heard any further evidence concerning Guild's claim, Guild filed a motion for leave to withdraw its proof of claim and a motion for continuance containing a request for expedited hearing in light of the motion to withdraw proof of claim.[26] In its brief supporting that motion, Guild moved the court to reconsider its October 14, 1986 denial of Guild's motion for summary judgment and "reurged" that motion in light of Guild's motion to withdraw proof of claim.[27] Guild also renewed its argument that Lawler could not recover because he had not brought his counterclaim as an adversary proceeding.[28] The continuance was granted, a hearing on the motion was set for December 8, 1986 (the same date previously set for resumption of trial), and the issues raised on this appeal (including the issues that were the subject of the motion for summary judgment) were briefed for the bankruptcy court.[29]
In its motion, Guild sought to withdraw its proof of claim, but only on the condition that Lawler's objections, including counterclaims or offsets, also be dismissed. The bankruptcy court heard argument on the motion on December 8, 1986 and on July 30, 1987 entered its opinion and order allowing withdrawal of Guild's claim with prejudice and dismissing Lawler's objections with prejudice.[30] That opinion and order are the main subject of this appeal. Compare note 5 above.
II. Analysis
A. Applicable Law
The parties agree that this case, which was commenced on January 9, 1976, is governed by the Bankruptcy Act of 1898. See Act of Nov. 6, 1978 (Bankruptcy Reform Act of 1978), Pub.L. No. 95-598, § 403(a), 92 Stat. 2549, 2683. Lawler argues, however, that the bankruptcy court erred in applying the Rules of Practice and Procedure in Bankruptcy ("Code Rules") (prescribed by the Supreme Court on April 25, 1983[31] and effective on August 1, 1983) rather than the former Rules of Bankruptcy Procedure ("Act Rules") (prescribed by the Supreme Court on April 24, 1973,[32] March 18, 1974,[33] April 28, 1975[34] and April 26, 1976[35]). While Guild does not contest the issue, it argues that the result of the appeal and much of the analysis is the same whether the Act Rules or the Code Rules apply. The court agrees with Guild and finds no merit in Lawler's position.
The bankruptcy court held that the Code Rules govern procedural matters in cases pending on August 1, 1983, when the rules became effective. Lawler, 75 B.R. at 981 *951 (quoting Supreme Court order of April 25, 1983). See 11 U.S.C. Bankruptcy Rules at XIII:
[T]he . . . Bankruptcy Rules shall take effect on August 1, 1983, and shall be applicable to proceedings then pending, except to the extent that in the opinion of the court their application in a pending proceeding would not be feasible or would work injustice, in which event the former procedure applies.
It noted, however, that "only slight differences exist" between the Act and Code Rules applicable to this case and that the result would be the same under either set of rules. Lawler, 75 B.R. at 981-83 and nn. 3, 4, 5, 7 and 9. This court agrees that the Supreme Court's order is unequivocal in its application of the Code Rules to all cases pending on August 1, 1983. Code Rules 1001 is equally broad in applying the Code Rules to all cases "under title 11 of the United States Code," the title codifying both the 1898 and 1978 statutes.
The advisory committee notes to Code Rule 1001 cannot be so broadly construed. They distinguish between the "Bankruptcy Code" (or "Code") (i.e., the Bankruptcy Reform Act of 1978) and the "Bankruptcy Act" (or "Act") (i.e., the Bankruptcy Act of 1898). 11 U.S.C. Rule 1001 at 16. The notes go on to state that the rules "apply to all cases filed under the Code except as otherwise specifically stated," suggesting that the Code Rules do not apply to Act cases. See In re Silverman, 36 B.R. 254, 257 (Bankr.S.D.N.Y.1984); 1616 Reminc Limited Partnership v. Atchison & Keller Company, 704 F.2d 1313, 1315 n. 6 (4th Cir.1983). See also Matter of Chicago, Milwaukee, St. Paul and Pacific Railroad Co., 840 F.2d 1308, 1314 n. 5 (7th Cir.1988); Matter of Lawler, 807 F.2d 1207, 1210 (5th Cir.1987).
Although this court is persuaded by the broader language of the Supreme Court's order and Rule 1001, cf. Central Trust Company, Rochester, N.Y. v. Official Creditors' Committee of Geiger Enterprises, Inc., 454 U.S. 354, 359-60, 102 S.Ct. 695, 696-97, 70 L.Ed.2d 542 (1982), there is no need to resolve the question today because the outcome of this appeal is the same under either the Act Rules or Code Rules.
B. Standard of Review
1. Withdrawal of Guild's Proof of Claim. The bankruptcy court's decision to grant Guild leave to withdraw its proof of claim is subject to review only for abuse of discretion. Schwarz v. Folloder, 767 F.2d 125, 129-30 (5th Cir.1985); Radiant Technology Corporation v. Electrovert USA Corporation, 122 F.R.D. 201, 202-204 (N.D.Tex.1988). See Act Rule 305[36]; Code Rule 3006.[37]See also 12 Moore and King, Collier on Bankruptcy ¶ 305.02 at 3-53 (14th ed. 1978) (Act Rule 305 derived from F.R.Civ.P. 41(a)); 8 King, Collier on Bankruptcy ¶¶ 3006.01-3006.02 (15th ed. 1989) (same as to Code Rule 3006).
If Lawler's objections were brought to defeat Guild's proof of claim, dismissal of that claim with prejudice meant that the *952 objections prevailed. See Lawler, 75 B.R. at 983 ("When Guild withdrew its claim, Lawler received everything to which he was entitled, namely the reduction of Guild's claim to zero"). But to the extent that Lawler was seeking affirmative relief, there are reasons independent of Guild's withdrawal of its proof of claim for dismissing Lawler's claim. Lawler, 75 B.R. at 982-85. See Parts II(C)(1) and (2) below. See also 9 Wright and Miller, Federal Practice and Procedure § 2365 at 175 (1971). Thus, there was no abuse of discretion in allowing the withdrawal. Schwarz, 767 F.2d at 129; Radiant Technology Corp., 122 F.R.D. at 203-04.[38]
2. Dismissal of Lawler's Objections and Claims for Offset or Affirmative Relief. The bankruptcy court's conclusions of law are subject to de novo review by this court. Cf. Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1307 (5th Cir.1985). Accord Matter of Consolidated Bancshares, Inc., 785 F.2d 1249, 1252 (5th Cir.1986); Raine v. Lorimar Productions, Inc., 71 B.R. 450, 452 (S.D.N.Y. 1987). See 9 King, Collier on Bankruptcy ¶¶ 8013.02-8013.03 at 8013-2 to 8013-5 (15th ed. 1988). See also Code Rule 8013; Act Rule 810. De novo review requires this court to make a judgment independent of the bankruptcy court's, without deference to that court's analysis and conclusions. See Moody v. Amoco Oil Company, 734 F.2d 1200, 1210 (7th Cir.), cert. denied, 469 U.S. 982, 105 S.Ct. 386, 83 L.Ed.2d 321 (1984). See also In re Price-Watson Co., 66 B.R. 144, 149 (Bankr.S.D.Tex.1986).
According to Code Rule 8013[39] and Act Rule 810,[40] the court's factual findings are subject to review under a "clearly erroneous" standard. See Richmond Leasing Co., above, 762 F.2d at 1307-08. But Lawler argues that application of a "clearly erroneous" standard would be unconstitutional, citing 1616 Reminc Limited Partnership, above, 704 F.2d at 1316-18.[41] Lawler would have this court review the facts giving rise to this appeal de novo. Citing this one case without analysis does not establish, in the context of this appeal, *953 the unconstitutionality of Code Rule 8013 or Act Rule 810. The issue does not need to be addressed further, however, because the parties are in substantial agreement regarding the procedural history recounted in Part I above. Even under a de novo review of the record, which this court has performed, the ruling of the bankruptcy court may be affirmed. Thus, the constitutional question raised by Lawler need not be discussed. See Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 346-48, 56 S.Ct. 466, 482-83, 80 L.Ed. 688 (1936) (Brandeis, J., concurring).[42]
C. Analysis
1. Notice and Nature of Lawler's Amended Objection
Objections to claims are governed by Code Rule 3007, which provides:
An objection to the allowance of a claim shall be in writing and filed with the court. A copy of the objection with notice of the hearing thereon shall be mailed or otherwise delivered to the claimant, the debtor or debtor in possession and the trustee at least 30 days prior to the hearing. If an objection to a claim is joined with a demand for relief of the kind specified in Rule 7001, it becomes an adversary proceeding.
Similarly, Act Rule 306(c) provides:
(c) Objection to Allowance. An objection to the allowance of a claim for the purpose of distribution shall be in writing. A copy of the objection and at least 10 days' notice or, if the claim is for taxes, at least 30 days' notice of a hearing thereon shall be mailed or delivered to the claimant. If an objection to a claim is joined with a demand for relief of the kind specified in Rule 701, the proceeding thereby becomes an adversary proceeding.[43]
At a minimum, therefore, assuming that Lawler was not bound by the requirements for commencing an adversary proceeding, and assuming further that the Act Rules apply, Guild was entitled to a copy of Lawler's amended objection with a notice of hearing thereon "at least" 10 days before any such hearing. See In re Ambassador Park Hotel, Ltd., 61 B.R. 792, 798 (N.D. Tex.1986). See also Code Rule 9014 (in contested matters, reasonable notice and opportunity for hearing must be afforded to "party against whom relief is sought"; certain rules governing adversary proceedings apply, and the court may direct that "other rules in Part VII shall apply"); Act Rule 914 (same). On February 17, 1984, the bankruptcy court ordered, at Lawler's instance, that March 1, 1984 would be the last date for filing proofs of claims and that such claims would be heard on April 3, 1984. In conformity with this order, Guild filed its proof of claim on February 29, 1984. In violation of Code Rule 3007 and Act Rule 306(c), however, Lawler did not file his amended objection claiming malpractice until the date of the hearing. The bankruptcy court relied in part on this shortcoming to dismiss Lawler's amended objection. Lawler, 75 B.R. at 982.
*954 The bankruptcy court was also of the opinion that for Lawler to obtain damages, his malpractice claim should have been brought as an adversary proceeding subject to the requirements of Code Rule 7001[44]et seq. or alternatively Act Rule 701[45]et seq. The court reasoned that the filing of an objection to a proof of claim was not sufficient to commence an adversary proceeding, that the allegation of malpractice could be used against the proof of claim only as a defense, and that Lawler therefore received all the relief to which he was entitled when the court granted Guild leave to withdraw its claim with prejudice. Lawler, 75 B.R. at 982-83 (citing Agger v. Seaboard Allied Milling Corp. (In re Cushman Bakery), 526 F.2d 23, 35 (1st Cir.1975), cert. denied, 425 U.S. 937, 96 S.Ct. 1670, 48 L.Ed.2d 178 (1976)).
Lawler argues that the bankruptcy court's reasoning was in error because (1) an objection may be made at "any time prior to allowance of a claim," (2) a proof of claim and objection are tantamount to a complaint and answer in a civil action, and thus an objection joined with a counterclaim need only be served on opposing counsel without a summons or payment of a filing fee, (3) the joint pretrial order signed and submitted by both counsel superseded "all prior pleadings and servings," (4) Guild waived any objection to insufficiency of notice or process because it went to trial on the merits of Lawler's objection joined with his counterclaim, (5) it was the bankruptcy judge's duty "to disallow Guild's claim or to inquire into its fairness," and (6) the malpractice allegation was brought as a compulsory counterclaim under Act Rule 713, thereby converting the matter to an adversary proceeding without subjecting Lawler to the prerequisites for commencing an adversary proceeding.[46] All of these arguments are without merit.
First, Lawler relies on the following language from 12 Moore and King, Collier on Bankruptcy ¶ 306.06[3] at 3-68 (14th ed. 1978):
[Act] Rule 306 does not set any time period within which an objection to allowance for purpose of distribution must be filed. A cutoff date would be inappropriate, since in many cases it is not known until late in the administration of a case whether there will be any dividend. . . . To avoid such waste, Rule 306(a) provides that the objection need not be filed if it would serve no purpose.
See Lawler's brief at 30-31. See also 11 U.S.C. § 93(f) (repealed):
Objections to claims shall be heard and determined as soon as the convenience of the court and the best interests of the estates and the claimants will permit.
These policy reasons for not having a deadline to file objections in bankruptcy cases generally did not apply in this case on the date Lawler filed his amended objection. As of December 2, 1983, a substantial payment on the principal amount of all claims (possibly 100%) was contemplated by Lawler's plan.[47] Moreover, Lawler's earlier objection to Guild's proof of claim was clearly indicative of a need, perceived by Lawler and the court in the February 17, 1984 scheduling order, to dispose of claims in an orderly and efficient way. And it is apparent that the documentation attached to Guild's amended proof of claim consisted of copies of bills for attorneys fees and expenses that Lawler had received in 1974 and 1975.[48] Against this backdrop, Lawler's arguments that Guild needed no notice of his amended objection, and that bankruptcy *955 cases generally require none, is unpersuasive.
Second, Lawler argues that the notice and service requirements of Code Rules 3007 and 9014 and Act Rules 306(c) and 914 are somehow abrogated by the Fifth Circuit's opinion in In re Simmons, 765 F.2d 547, 552 (5th Cir.1985) (citing Nortex Trading Corp. v. Newfield, 311 F.2d 163 (2d Cir.1962)). There the court observed in dicta:
It has been said that the filing of a proof of claim is tantamount to the filing of a complaint in a civil action . . . and the trustee's formal objection to the claim, the answer.
Simmons, 765 F.2d at 552 (citations omitted). This statement does not, however, abrogate the provisions of the bankruptcy rules in favor of the pleading requirements of the Federal Rules of Civil Procedure.
If the objection is joined with . . . a counterclaim, it becomes an adversary proceeding under Rule 3007 and is governed by the procedures set out in Part VII of the Bankruptcy Rules.
Simmons, 765 F.2d at 552 n. 5.
To recover damages, "an objection to claim coupled with a counterclaim for affirmative relief . . . must be begun by adversary proceedings under Part VII of the Bankruptcy Rules and not as a mere objection to claim, a contested matter, under [Act] Rule 914." 14 Moore and King, Collier on Bankruptcy ¶ 11-33.09[1] at 11-33-29 (14th ed. 1976). The same principle applies under Code Rule 3007. 8 King, Collier on Bankruptcy ¶ 3007.03 at 3007-2 to 3007-3 and n. 4 (15th ed. 1989). Thus, no matter whether the Act or Code Rules apply, Lawler was required to comply with the service and filing requirements of Code Rules 7003 and 7004 or Act Rules 703 and 704. Even assuming arguendo that proper notice of the amended objection was given by Lawler under Code Rule 3007 or Act Rule 306(c) or was waived by Guild, the bankruptcy court was nonetheless without authority to grant affirmative relief on Lawler's malpractice claim unless an adversary proceeding had been properly commenced. At best, the malpractice claim could be used defensively against Guild's proof of claim. See In re Cushman Bakery, above, 526 F.2d at 35.
In his third and fourth arguments, Lawler contends that the joint pretrial order filed on October 1, 1986 and the partial trial on the merits of Lawler's amended objection constituted a waiver by Guild of any claim that notice or service of process was insufficient. In exhibits B, D and F to the pretrial order, Guild set forth the timing of Lawler's amended proof of claim and asserted that Lawler's malpractice claim was barred by Nevada statutes of limitations and was brought in bad faith. Lawler laid out, in his corresponding exhibits A, C and E, the malpractice claim. Although the issue was not included in the pretrial order, Guild argued violation of Code Rules 3007 and 7001 et seq. in its May 1, 1984 response to Lawler's amended objection and again in its November 26 and December 8, 1986 motion and brief for leave to withdraw its proof of claim.
Code Rule 7016 and Act Rule 716 both state simply that Fed.R.Civ.P. 16 "applies in adversary proceedings." Lawler's argument thus places the cart before the horse. A pretrial order issued pursuant to Fed.R.Civ.P. 16 cannot bind the parties or the court in a bankruptcy case unless the court is conducting an adversary proceeding. Even if F.R.Civ.P. 16 were applicable, the bankruptcy court did not abuse its discretion here. Its decision on the adequacy of notice of Lawler's amended objection and whether an adversary proceeding had been properly commenced were questions of law applicable to an undisputed procedural history. The court raised the first question (adequacy of notice) sua sponte in the memorandum opinion and order which is the subject of this appeal. Lawler fully briefed the second question (whether an adversary proceeding had been properly commenced) when Guild filed the motion for leave to withdraw its claim. Given the lack of prejudice to Lawler, the highly questionable applicability of F.R.Civ.P. 16, and the briefs before the bankruptcy court, that court did not abuse its discretion in addressing these dispositive *956 questions. Sherman v. United States, 462 F.2d 577, 579 (5th Cir.1972). See Trinity Carton Company, Inc. v. Falstaff Brewing Corp., 767 F.2d 184, 192 n. 13 (5th Cir.1985), cert. denied, 475 U.S. 1017, 106 S.Ct. 1202, 89 L.Ed.2d 315 (1986); Hodges v. United States, 597 F.2d 1014, 1017-18 (5th Cir.1979); Wallin v. Fuller, 476 F.2d 1204, 1208-10 (5th Cir.1973).
As to Lawler's argument that the bankruptcy court had to disallow Guild's proof of claim or inquire into its fairness, there was no need for an inquiry once that court allowed the claim to be withdrawn. It is the fairness of the withdrawal, not the fairness of the claim itself, that is at issue in this appeal.
Finally, Lawler argues that because his malpractice counterclaim was compulsory, the matter was converted from a contested proceeding under Code Rule 9014 or Act Rule 914 to an adversary proceeding under Code Rules 3007 and 7001 et seq. or Act Rules 306(c) and 701 et seq. Specifically, Lawler asserts that the attachments to Guild's amended proof of claim contained the "first . . . notice [to Lawler] of the nature of the claim and Lawler's compulsory counterclaim arising therefrom."[49] This statement is at best disingenuous. The documents attached to Guild's amended proof of claim had been sent to Lawler some 9 years before. Lawler does not contend that he failed to receive or notice the bills when they were sent.[50]
In any event, Lawler again puts the cart and the horse in the wrong order. Code Rule 7013 and Act Rule 713 both state that F.R.Civ.P. 13 "applies in adversary proceedings. . . ." It is hard to see how a supposedly compulsory counterclaim can convert a contested matter into an adversary proceeding when the rules contemplate that an adversary proceeding must exist before the rule governing compulsory counterclaims will apply. Ordinarily, the compulsory counterclaim rule does not apply in contested proceedings. See Code Rule 9014; Act Rule 914. Accord 13 Moore and King, Collier on Bankruptcy ¶ 713.03[1] at 7-204 to 7-205 (14th ed. 1977); 9 King, Collier on Bankruptcy ¶ 7013.04 at 7013-5 to 7013-7 and n. 1 (15th ed. 1988). See also 13 Moore and King, Collier on Bankruptcy ¶ 914.03 at 9-61 (14th ed. 1977) ("[t]he formal procedural approaches to adversary proceedings set out in Part VII are . . . inappropriate to decide contested matters where the issues are relatively simple"); 9 King, Collier on Bankruptcy ¶ 9014.05 at 9014-4 to 9014-5 (15th ed. 1988) (same). A counterclaim is not "compulsory" when the Rule governing such a claim does not apply to the proceeding at hand.
Lawler responds that requiring him to formally commence an adversary proceeding under Part VII of the Code or Act Rules defies common sense and the text of Code Rule 3007 and Act Rule 306(c). The operative language in Code Rule 3007 states:
If an objection to a claim is joined with a demand for relief of the kind specified in Rule 7001, it becomes an adversary proceeding.
Similarly, Act Rule 306(c) provides:
If an objection to a claim is joined with a demand for relief of the kind specified in Rule 701, the proceeding thereby becomes an adversary proceeding.
Citing a general dictionary and a law review article, Lawler asserts that the terms "thereby" and "becomes" should be read, in essence, to "convert without requiring service of process and summons and payment of a filing fee under Part VII of the Act rules." He reasons as follows:
Only sheer foolishness would suggest the need to commence a separate proceeding by the filing of a separate complaint, the payment of a filing fee, the issuance of summons, and the service of citation when a proceeding is pending already between the same parties before the Referee on the same transaction. *957 The transformation occurred by operation of law under Act Bankruptcy Rule 306(c) without more when Lawler filed his objection joined with his counterclaim. If this were not the case, then there would be two proceedings pending the contested proceedings initiated by filing the proof of claim and the adversary proceeding initiated by the complaint. That would defy common sense.[51]
The court is unpersuaded. Collier interprets the pertinent language in Rules 306(c) and 3007 not to automatically convert the contested matter to an adversary proceeding (i.e., not to abrogate the prerequisites for commencing such a proceeding under Code Rules 7001 et seq. or Act Rules 701 et seq.), but to subject the objecting party to the rules governing adversary proceedings if he wants to obtain affirmative relief.
There are at least two reasons for this interpretation. First, contested matters under Code Rule 9014 or Act Rule 914 and adversary proceedings under Part VII of the Code or Act Rules are governed by different procedural rules permitting different types of relief. Second, adversary proceedings are generally more complex in nature than contested matters. Reading Rules 3007 and 306(c) to require the objecting party to comply with the notice and procedural requirements and Part VII of the rules is necessary to clearly draw the line between the two types of proceedings, and to put the original claimant on notice that he may be liable to the objector for damages relief not available in a contested proceeding. The key point is that an objection to a proof of claim only commences a contested matter under Code Rule 9014 or Act Rule 914. See In re Poage, 92 B.R. 659, 664 (Bankr.N.D.Tex. 1988). When a claim for affirmative relief is filed, Rules 3007 and 306(c), rather than abrogating the machinery of Part VII of the rules, leave it to the claimant to put that machinery in motion.
2. Bar of Lawler's Malpractice Claim by Statute of Limitations[52]
The substance of Lawler's malpractice claim is set out in the margin.[53] Essentially, *958 Lawler complained that Guild attorney Clark committed malpractice by failing to preserve Lawler's interest in the Soldiers Meadows Ranch when, among other things, he released Lawler's claim in the ranch without Lawler's knowledge or consent. Assuming that all of Lawler's evidence regarding the statute of limitations issue is true, and giving Lawler the benefit of every justifiable favorable inference,[54] the court finds that on June 11, 1974 the Baer Ranch, Inc. sued Lawler alleging default in payment of a $250,000 promissory note executed by Lawler as maker.[55] On August 16, 1974, Lawler hired Guild attorney Clark to represent him in various matters, including the Baer Ranch lawsuit.[56] Clark withdrew as Lawler's attorney in the Baer Ranch lawsuit on April 24, 1975.[57] On February 24, 1975, Lawler represented by Clark filed suit against the Baer Ranch to force conveyance of the ranch to Lawler.[58] Clark never formally withdrew from this lawsuit, and the court dismissed the case on its own motion on September 15, 1975.[59]
In his affidavit in support of Guild's August 22, 1986 motion for summary judgment, Clark states that he was in constant contact with Lawler regarding the Baer Ranch suit:
From December until the date I withdrew as attorney of record, sometime in April of 1975, I was in constant contact with Mr. Lawler regarding the fact that while he had paid off the second lien note, Baer Ranch, Inc. refused to reconvey the property to Lawler. The fact that Baer Ranch, Inc. refused to return the property to Mr. Lawler was never kept from Mr. Lawler, and he at all times knew that there was a problem. In fact, on February 24, 1975, I filed a complaint and notice of Lis Pendens, seeking to compel Baer Ranch, Inc. to convey the real property back to Mr. Lawler. . . . I filed this complaint on the instruction of H. Roger Lawler.
* * * * * *
After we withdrew as attorney of record in the Baer litigation, we continued to respond to phone calls and do other minor clerical work for Mr. Lawler until October 25, 1975. Thereafter, we did not represent Mr. Lawler.[60]
As this affidavit reveals, the notice of lis pendens was filed as part of Lawler's lawsuit to compel conveyance of the ranch. That notice, attached as exhibit C to Guild's motion for summary judgment, is dated February 24, 1975 and bears Lawler's signature. Most of the actions complained of by Lawler occurred prior to the notice of lis pendens, with the notable exception of Clark's refusal to sign a stipulation for dismissal of the second lawsuit until Lawler paid him.[61]
The bankruptcy court held (1) that the Nevada two-year statute of limitations applied; (2) that the statute ran from the time that Lawler knew or should have known all facts material to a malpractice claim; (3) that Lawler's signature on the notice of lis pendens evidenced his knowledge of all facts material to a malpractice claim against Clark; and (4) that the Nevada statute of limitations barred Lawler from asserting malpractice as a ground for affirmative relief, thereby rejecting Lawler's arguments that 11 U.S.C. § 29(e), the parties' joint pretrial order, or Act Rule 306(c) *959 foreclosed Guild's statute of limitations defense. Lawler, 75 B.R. at 983-85.
On appeal, Lawler argues (1) that if a Nevada statute of limitations does apply, it is a four year, and not a two year, statute; (2) that 11 U.S.C. § 791 tolled all statute of limitations, including 11 U.S.C. § 29(e); (3) that 11 U.S.C. § 29(f) and Act Rule 306(c) tolled any state statute of limitations; (4) that Lawler's claim, as a compulsory counterclaim, entitled Lawler to equitable tolling of any statute of limitations; and (5) that the policy of 11 U.S.C. § 29(e) conflicts with, and therefore precludes, the application of any state statutes of limitation.[62]
This court agrees with Judge Akard that the Nevada statute of limitations controls Lawler's malpractice claim, because the claim arose under Nevada law, "the alleged malpractice occurred in Nevada, Guild's practice was in Nevada, and the ranch was located in Nevada." Lawler, 75 B.R. at 984 n. 12. Subject to his arguments for tolling or preemption by federal law, see Parts II(C)(2)(a) and (b) below, Lawler does not dispute that the Nevada statute applies. Putting the issues of federal law to one side momentarily, the court will first consider the question of limitations under Nevada law.
In 1981, the Nevada legislature enacted a 4 year statute of limitations for attorney malpractice. Nevada Revised Statutes § 11.207.[63]See Oak Grove Investors v. Bell & Gossett Company, 99 Nev. 616, 668 P.2d 1075, 1078-79 (1983). See also Vari-Build, Inc. v. City of Reno, 622 F.Supp. 97, 101 (D.Nev.1985). Before 1981, a two year statute applied to attorney malpractice actions sounding in tort. Nevada Revised Statutes § 11.190(4)(e).[64]See Jewett v. Patt, 95 Nev. 246, 591 P.2d 1151, 1151-52 (1979). For purposes of either statute, a cause of action does not accrue, and therefore limitations does not begin to run, "until the plaintiff discovers, or should have discovered, all facts material to the elements of the cause of action, including the sustaining of damages." Oak Grove Investors, 668 P.2d at 1078-79; Sorenson v. Pavlikowski, 94 Nev. 440, 581 P.2d 851, 853-54 (1978). The latest conduct of Clark which Lawler contends was malpractice occurred immediately before dismissal of Lawler's lawsuit against Baer Ranch on September 15, 1975. The limitations period in effect at that time was two years. Nevada Revised Statutes § 11.190(4)(e).
Lawler argues vehemently that he did not discover the basis for his malpractice claim until Guild filed its amended proof of claim on February 29, 1984.[65] As noted in Part II(C)(1) above, however, there was nothing in the bills and invoices attached to Guild's amended proof of claim that Lawler did not know about nine years earlier. The last date on the bills and invoices attached to Guild's amended proof of claim is April 23, 1975.[66] Clark stopped almost all of his *960 work for Lawler on that same date.[67] The last payment of any money from Lawler to Clark was on June 13, 1975.[68] Lawler signed the notice of lis pendens in connection with his suit against Baer Ranch on February 24, 1975. Even if all of Lawler's assertions that he did not actually discover the basis for his malpractice claim until 1984 are credited, this court concludes, as did the bankruptcy court, that he should have discovered all material facts supporting such a claim in 1975, when he personally signed the notice of lis pendens and received the bills for Clark's services. His claim was thus time-barred under Nevada law by the end of 1977 (if the two-year statute applies) or at least by the end of 1979 (if the four-year statute applies) unless his contentions regarding federal tolling or preemption preserve the claim. The court now turns to those remaining contentions.
a. Statutory Tolling
Lawler's reliance on 11 U.S.C. §§ 29(e) and (f)[69] and 791[70] are misplaced at best and frivolous at worst, because those sections have virtually no application to the enforceability of Lawler's malpractice claim.
11 U.S.C. § 29(e) is a limitations statute which
provides simply that the trustee must bring action on any claim in behalf of the estate within two years subsequent to the date of adjudication or within such further time as the federal or state law permits, provided that such law did not bar the action on the date when the petition was filed.
In re Lawler, 53 B.R. 166, 171 (Bankr.N.D. Tex.1985) (quoting Herget v. Central National Bank & Trust Company, 324 U.S. 4, 8, 65 S.Ct. 505, 507, 89 L.Ed. 656 (1945)). Depending on the circumstances of the particular case, § 29(e) may limit or extend the time for a trustee to bring an action, but *961 where the trustee does not bring the action, § 29(e) does not help or hinder a debtor prosecuting a case on his own behalf; it simply does not apply. Id. at 172. See In re Dahlberg, 681 F.2d 546, 548 (8th Cir. 1982); Nairn v. McCarthy, 120 F.2d 910, 912 (7th Cir.1941); Natco Industries, Inc. v. Federal Insurance Company, 69 B.R. 418, 419 (S.D.N.Y.1987). Cf. Cunningham v. Healthco, Inc., 824 F.2d 1448, 1460 (5th Cir.1987). See also 1A Moore and King, Collier on Bankruptcy § 11.13 (14th ed. 1978).[71]
11 U.S.C. § 29(f) provides in pertinent part: "The operation of any statute of limitations of the United States or of any State, affecting the debts of a bankrupt provable under this title . . ." (emphasis added). This provision tolls limitation of a creditor's claims, not the claims of a debtor suing in his own behalf. The Congressional purpose in enacting the section bears out this interpretation. See 1A Moore and King, Collier on Bankruptcy § 11.14 at 1224-25 (14th ed. 1978) (purpose of § 29(f) "was to remedy the situation which prevailed under former Act whereby a creditor's claim could be barred by the running of a statute of limitations during the bankruptcy proceedings") (emphasis added).[72]
11 U.S.C. § 791, the final federal statute on which Lawler relies, can be analyzed in two parts. The first part of § 791 provides, "All statutes of limitations affecting claims provable under this chapter . . . shall be suspended. . . ." This first part applies to "creditors of the debtor so as to allow for unfettered consideration by the creditors of any plan of reorganization or arrangement." Liman v. Bank of Nova Scotia, 337 F.Supp. 62, 66-67 (S.D.N.Y. 1971). See 6A Moore and King, Collier on Bankruptcy ¶ 15.02[1] at 820-21 (14th ed. 1977) (as to § 661). The second part provides, "[T]he running of all periods of time prescribed by this title in respect to the commission of acts of bankruptcy, the recovery of preferences and the avoidance of liens and transfers shall be suspended. . . ." By the plain meaning of the text, this second part is intended to suspend the running of certain time periods prescribed by the Bankruptcy Act rather than state law or other federal time periods. Nairn, 120 F.2d at 912 (in context of § 661). Accord Davis v. Security National Bank of Nevada, 447 F.2d 1094, 1097-98 (9th Cir.1971) (tolling § 29(e) as to trustee's claims for preferential and fraudulent transfers); In re Ira Haupt & Co., 390 F.2d 251, 254 (2d Cir.), cert. denied, 391 U.S. 916, 88 S.Ct. 1811, 20 L.Ed.2d 655 (1968) (refusing to reach § 791 issue but noting lower court's use of it to toll § 29(e)); Liman, 337 F.Supp. at 65-66 (second part of § 791 tolls time for recovery of preference by trustee). See 6A Moore and King, Collier on Bankruptcy ¶ 15.02[1] at 820-21 (14th ed. 1977) (as to § 661).
*962 b. Equitable Tolling
As a corollary to his argument under Act Rule 306(c), Lawler maintains that his claim for malpractice was a compulsory counterclaim entitled to equitable tolling. His theory is that if Guild's proof of claim was timely, then his counterclaim to that proof of claim cannot be considered stale when both arose out of the same transaction.[73] The court disagrees.
Assuming arguendo that Lawler's claim was brought in the context of an adversary proceeding, that proceeding could not have been commenced by Guild's proof of claim, which no one disputes was brought pursuant to Code Rule 9014 or Act Rule 914. An adversary proceeding would have had to be commenced by Lawler's claim for malpractice. If Lawler's claim commenced an adversary proceeding, then the only counterclaims procedurally possible would have come from Guild. Consequently, the principle that the statute of limitations on a compulsory counterclaim is tolled if it has not expired on the day the original claim is brought simply does not apply even under the charitable assumption that Lawler was operating in the context of an adversary proceeding. 6 Wright and Miller, Federal Practice and Procedure § 1419 at 109 and n. 78 (West 1971 and Supp.1989). See 9 King, Collier on Bankruptcy ¶ 7013.04 at 7013-6 to 7013-7 (15th ed. 1988); 13 Moore and King, Collier on Bankruptcy ¶ 713.03[1] at 7-204 to 7-205 (14th ed. 1977).
To the extent that Lawler's objection sought affirmative relief, it was barred by limitations. In re Smith, 737 F.2d 1549, 1553-54 (11th Cir.1984); Basham v. Finance America Corporation, 583 F.2d 918, 927-28 (7th Cir.1978), cert. denied, 439 U.S. 1128, 99 S.Ct. 1046, 59 L.Ed.2d 89, 444 U.S. 825, 100 S.Ct. 47, 62 L.Ed.2d 32 (1979). On the other hand, his counterclaim, though barred by limitations, could still be employed defensively. 6 Wright & Miller, above, § 1419 at 110 and n. 81. Accord MBank Fort Worth, N.A. v. Trans Meridian, Inc., 820 F.2d 716, 720 (5th Cir.1987) (Texas law); In re Larsen, 80 B.R. 784, 791 (Bankr.E.D.Va.1987); Matter of Mid Atlantic Fund, Inc., 60 B.R. 604, 609-11 (Bankr.S.D.N.Y.1986); Matter of Supreme Synthetic Dyers, Inc., 3 B.R. 189, 191 (Bankr.E.D.N.Y.1980). The dismissal of Guild's claim with prejudice, however, gave Lawler all the relief to which his malpractice claim, as a defense, entitled him.
III. Conclusion
For the reasons stated herein, the bankruptcy court's memorandum opinion and order of July 30, 1987 are affirmed.[74]
SO ORDERED.
NOTES
[1] In re Lawler, 75 B.R. 979 (Bankr.N.D.Texas 1987).
[2] Lawler's brief at 44.
[3] Id.
[4] Guild's brief at 45-46.
[5] Lawler also appeals the bankruptcy court's order of August 25, 1987 (bankruptcy docket # 1424) denying a motion for sanctions against Guild attorney D. Anthony Clark ("Clark") for failure to appear at a noticed deposition. See exhibit 9 to Lawler's brief (Item 32 on Lawler's designation of record) at 19 (bankruptcy docket # 1424).
On September 11, 1986, Guild's attorneys, Thompson & Knight, were served with a notice for an oral deposition duces tecum requiring Guild attorney Clark to appear on September 22, 1986 with certain documents for the purpose of giving testimony. See Guild's brief at 7 n. 6; exhibit 1 to item 26 on Lawler's designation of record (bankruptcy docket # 1356a). Judith Weaver, the principal attorney for Guild, was on vacation when the notice of deposition was served. See exhibit 9 to Lawler's brief at 14, 17; Guild's brief at 7 n. 6. Because Ms. Weaver's partners, who were monitoring the file on this case while she was away, were busy with other matters, they did not contact Clark and opposing counsel to make arrangements for rescheduling the deposition. See exhibit 9 to Lawler's brief at 17. When Ms. Weaver returned on September 22, 1986, she received a call concerning the deposition around noon or 1:00 p.m., at which time she realized that no one had informed Clark of the deposition and that he was out of town that day. Id. at 17-18. Lawler has not included his original motion for sanctions in the appellate record, but it is apparent that on Thursday, September 25, 1986, Lawler filed the motion and on that same date asked Guild's attorney by letter to produce the requested documents by Friday, September 26, 1986 at 9:00 a.m. See Guild's brief at 8 n. 6; Lawler's brief at 41. Guild's attorneys saw the letter Friday morning and produced the documents later that day. Clark's deposition was eventually taken on October 13, 1986, the day before the hearing on the amended claim and objections. See Guild's brief at 8 n. 6; exhibit 9 to Lawler's brief at 14-18. Lawler argued that the deposition was needed to prepare for the hearing and that, by way of sanctions, Guild should not be permitted to support its claim for attorney's fees, should not be allowed to call any witnesses in a trial of its claim, and should be required to pay Lawler his reasonable expenses, including attorney's fees. See item 26 on Lawler's designation of record at 3-4. The court orally denied the motion for sanctions at the hearing on October 14, 1986. See exhibit 9 to Lawler's brief at 19. On August 25, 1987, the court issued a written order denying Lawler's motion for sanctions. Lawler's brief at 13; Guild's brief at 7 n. 6. Lawler appeals from that order but has not designated it as part of the record on appeal.
Lawler argues that Clark's failure to appear was unexcused, that the delay in the deposition prejudiced his ability to prepare for the October 14, 1986 hearing, and that at a minimum, payment of attorney's fees and costs to Lawler as sanction was mandatory under F.R.Civ.P. 37(d) (adopted by Rule of Bankruptcy Procedure ("Act Rule") 737). See Rule of Practice and Procedure in Bankruptcy ("Code Rule") 7037. See also Part II(A) below. The court finds no merit in these arguments.
First, Lawler did not make the bankruptcy court's August 25, 1987 order part of the record on this appeal. See Act Rule 806; Code Rule 8006. The court is reluctant to find an abuse of discretion in an order Lawler did not bother to bring forward for review. Second, Lawler has suffered no prejudice from the ruling, because neither the bankruptcy court's July 30 order, nor this order affirming it, depends on the merits of Guild's proof of claim or Lawler's objections. See exhibit 9 to Lawler's brief. Third, neither in his arguments nor in his incompletely designated record has Lawler shown that the September 22, 1986 deposition was set pursuant to a court order, or that it was missed by Clark due to "flagrant bad faith or callous disregard of obligations fully understood." Griffin v. Aluminum Company of America, 564 F.2d 1171, 1172-73 (5th Cir.1977). Without such a showing, it is not within the court's discretion to order a sanction that would effectively dismiss the proof of claim. Id. See Marshall v. Segona, 621 F.2d 763, 766-68 (5th Cir.1980); Bonaventure v. Butler, 593 F.2d 625, 626 (5th Cir.1979). It is apparent from the record that Clark missed the deposition due to inadvertence of counsel and that he was deposed at a later, court-ordered date. Finally, there is no evidence before this court of any reasonable expenses incurred by Lawler when Clark failed to appear.
For all the foregoing reasons, the court finds no abuse of discretion by the bankruptcy court, and its order denying Lawler's motion for sanctions is affirmed.
[6] These facts from Judge John C. Akard's opinion in Lawler, 75 B.R. at 980, are not disputed.
[7] Exhibit 1 to Lawler's brief (item 10 on Lawler's designation of record).
[8] Id.
[9] Exhibit 11 to Lawler's reply brief (item 11 on Lawler's designation of record).
[10] Exhibit 12 to Lawler's reply brief (item 12 on Lawler's designation of record) (bankruptcy docket # 626).
In the meantime, the IRS on November 23, 1979 filed an amended proof of claim for $16 million in taxes, interest, and penalties. After hearings on July 30, 1981 and October 8, 1981, Bankruptcy Judge Dean Gandy held all other matters under advisement until the tax claim could be resolved. See Lawler's brief at 8.
Judge Gandy resigned in mid-1983 and the case was eventually transferred to Judge John C. Ford. See Lawler's brief at 8. On November 30, 1983, Lawler settled with the IRS, allowing the estate to remain solvent and a plan to be prepared. Id. Judge Ford approved the settlement by order of December 20, 1983, and that order became final January 6, 1984. Id. at 8-9.
[11] Lawler's brief at 9-10. This order is not designated in the appellate record (but see item 13 on Lawler's designation of record) (bankruptcy docket # 861).
[12] Exhibit 14 to Lawler's reply brief (not designated in appellate record).
[13] Id. See Exhibit 9 to Lawler's brief at 28.
[14] Exhibit 2 to Lawler's brief (item 15 on appellant's designation of record) (bankruptcy docket # 905).
[15] Lawler's brief at 10; Guild's brief at 4-5; exhibit 9 to Lawler's brief at 50. Apparently, the court continued the hearing on Guild's claim to allow Guild more time to respond to Lawler's 11th hour amendment of the objection.
[16] Item 17 on Lawler's designation of record (bankruptcy docket # 959).
[17] Lawler's brief at 12.
[18] Item 18 on Lawler's designation of record.
[19] Item 19 on Lawler's designation of record (bankruptcy docket # 1335).
[20] Exhibit 5 to Lawler's brief (items 23, 24 and 25 on Lawler's designation of record) (bankruptcy docket ## 1350 and 1352).
[21] Items 20 and 21 on Lawler's designation of record (bankruptcy docket # 1353a).
[22] Exhibit 9 to Lawler's brief at 19.
[23] Id. at 132-34.
[24] Id. at 131.
[25] Lawler's brief at 39-40.
[26] Exhibit 3 to Lawler's brief (item 27 on Lawler's designation of record) (bankruptcy docket # 1358).
[27] Item 28 on Lawler's designation of record (bankruptcy docket # 1361) at 6.
[28] Id. at 4-5.
[29] Items 29, 30 and 31 on Lawler's designation of record (bankruptcy docket ## 1360, 1363, 1365, and 1367); exhibit 4 to Lawler's brief.
[30] Exhibits 6, 7 and 10 to Lawler's brief.
[31] 461 U.S. 973 (1983).
[32] 411 U.S. 989 (1973).
[33] 415 U.S. 1003 (1974).
[34] 421 U.S. 1019 (1975).
[35] 425 U.S. 1003 (1976).
[36] Rule 305. Withdrawal of Claim.
A creditor may withdraw a claim as of right by filing a notice of withdrawal, except as provided in this rule. If, after a creditor has filed a claim, an objection is filed thereto or a complaint is filed against him in an adversary proceeding or the creditor participates significantly in the case or receives a dividend, he may not withdraw the claim save on application or motion, with notice to the trustee or receiver, and on order of the court containing such terms and conditions as the court deems proper.
[37] Rule 3006. Withdrawal of Claim or Acceptance or Rejection of Plan.
A creditor may withdraw a claim as of right by filing a notice of withdrawal, except as provided in this rule. If after a creditor has filed a proof of claim an objection is filed thereto or a complaint is filed against that creditor in an adversary proceeding, or the creditor has accepted or rejected the plan or otherwise has participated significantly in the case, the creditor may not withdraw the claim except on order of the court after a hearing on notice to the trustee or debtor in possession, and any creditors' committee selected pursuant to §§ 705(a) or 1102 of the Code. The order of the court shall contain such terms and conditions as the court deems proper. Unless the court orders otherwise, an authorized withdrawal of a claim shall constitute withdrawal of any related acceptance or rejection of a plan.
[38] Lawler argues that the motion to withdraw proof of claim applied only to Guild's original claim and not to Guild's amended proof of claim filed February 29, 1984. See Lawler's brief at 6, 13. This argument borders on the frivolous. The motion to withdraw refers to the original amount of the claim as well as its present value considering accrued interest. See exhibit 3 to Lawler's brief. Nothing in the motion suggests that Guild intended to withdraw anything other than the claim it had pending at the time its motion was filed. See Part I above.
[39] Rule 8013. Disposition of Appeals; Weight Accorded to Bankruptcy Judge's Findings of Fact.
On an appeal the district court or bankruptcy appellate panel may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings. Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.
[40] Rule 810. Disposition of Appeal: Weight Accorded Referee's Findings.
Upon an appeal the district court may affirm, modify, or reverse a referee's judgment or order, or remand with instructions for further proceedings. The court shall accept the referee's findings of fact unless they are clearly erroneous, and shall give due regard to the opportunity of the referee to judge the credibility of the witnesses.
[41] In 1616 Reminc, the Fourth Circuit held that the application of Act Rule 810's "clearly erroneous" standard to a bankruptcy court's findings of fact on a claim and counterclaim rooted in state law "unconstitutionally vested the non-Article III bankruptcy referee with too great a measure of the judicial power of the United States." 704 F.2d at 1318 (citing Northern Pipeline Construction Co. v. Marathon Pipe Line Company, 458 U.S. 50, 91-92, 102 S.Ct. 2858, 2881-82, 73 L.Ed.2d 598 (1982) (Burger, C.J., dissenting). 1616 Reminc turned on whether the subject of the appeal was a traditional state common law cause of action "not made subject to a federal rule of decision, and related only peripherally to an adjudication of bankruptcy under federal law," i.e., whether the subject of the appeal was a core or non-core proceeding under 28 U.S.C. § 157(b)(2) and (c)(1). Id. See Harman v. Levin, 772 F.2d 1150, 1153 n. 3 (4th Cir.1985). See also In re Martin, 761 F.2d 1163, 1166 (6th Cir.1985); In re Reid, 757 F.2d 230, 233 n. 5 (10th Cir.1985). Here, Guild's proof of claim and Lawler's objection claiming affirmative relief are founded on state law claims independent of and antecedent to the petition. They are therefore analogous to "non-core" proceedings entitled to de novo review.
[42] This conclusion is reinforced by the action of the bankruptcy court in granting Guild's renewed motion for summary judgment, which asserted insufficient notice and the statute of limitations as grounds. In reviewing an order of summary judgment, this court must view the case in the same manner as the bankruptcy court, asking whether there are any genuine issues of material fact and whether Guild was entitled to judgment as a matter of law, viewing the record and facts in the light most favorable to Lawler, the non-moving party. McCrae v. Hankins, 720 F.2d 863, 865 (5th Cir.1983). See Keado v. United States, 853 F.2d 1209, 1211 (5th Cir.1988); Arkwright-Boston Manufacturers Mutual Insurance Company v. Westinghouse Electric Corp., 844 F.2d 1174, 1176 (5th Cir.1988). Accord Frederick S. Wyle Professional Corporation v. Texaco, Inc., 764 F.2d 604, 608 (9th Cir.1985). See also Brewster v. City of Dallas, 703 F.Supp. 1260, 1263 (N.D.Tex.1988) (setting out legal standard for summary judgment).
[43] Act Rule 306(a) provides:
(a) Trustee's Duty to Examine and Object to Claims. The trustee shall examine proofs of claim and object to the allowance of improper claims, unless no purpose would be served thereby.
In spite of the wording of 306(a), a bankrupt, whether or not he is a debtor in possession, may object to a proof of claim for the purpose of distribution. 12 Moore and King, Collier on Bankruptcy ¶ 306.06[1] at 3-67 (14th ed. 1978); 14 id. ¶ 11-33.09 at 11-33-26 to 11-33-27 (14th ed. 1976). See Act Rule 306(b).
[44] Rule 7001. Scope of Rules of Part VII.
An adversary proceeding is governed by the rules of this Part VII. It is a proceeding
(1) to recover money or property. . . .
[45] Rule 701. Scope of Rules of Part VII.
The rules of this Part VII govern any proceeding instituted by a party before a bankruptcy judge to . . . recover money or property. . . . Such a proceeding shall be known as an adversary proceeding.
[46] Lawler's brief at 29-34; Lawler's reply brief at 18-24.
[47] Lawler's brief at 8.
[48] Exhibit 14 to Lawler's reply brief; exhibit 9 to Lawler's brief at 41-45.
[49] Lawler's brief at 35.
[50] See Lawler's brief at 13-28; exhibit 9 to Lawler's brief at 45, 89. See also Lawler's brief at 35-40; Lawler's reply brief at 11, 14-15, 18-22.
[51] Lawler's reply brief at 20 (emphasis in original).
[52] Although the grounds discussed in Part II(C)(1) dispose of this appeal, the court will, for the sake of completeness, assume arguendo that Lawler properly commenced an adversary proceeding and thus reach the merits of this issue.
[53] In his amended objections of April 3, 1984, Lawler stated:
The objection of H. Roger Lawler et. al., filed May 20, 1982, is hereby amended by the following additions:
Debtors assert by way of counterclaim and setoff damages in the amount of at least $510,000 arises from certain course of action pursued by Anthony Clark, name partner in the claimant law firm. Mr. Clark represented Mr. Lawler in connection with Mr. Lawler's attempt to preserve his interest in the Soldiers Meadows Ranch in Nevada. Mr. Lawler had originally acquired the ranch in 1973 from Baer Ranch, Inc., for approximately $1,200,000, composed of approximately $300,000 in cash and debt of approximately $900,000. The property was taken subject to a first lien of approximately $500,000 to the Federal Land Bank and a second lien of approximately $150,000 debt to John Casey. The seller of the ranch to Mr. Lawler, Baer Ranch, Inc., had a third lien to secure approximately $300,000. In 1974 and 1975, Mr. Lawler fell behind in his obligations, the ranch was foreclosed upon, and Mr. Lawler filed suit to contest the foreclosure. Subsequently, Baer Ranch, Inc. (or its owner) became unable to carry the first and second lien debt. Acting on the advice of Mr. Clark, Mr. Lawler agreed to pay off the second lien debt, reinstate the debt to Baer Ranch, Inc. and withdraw the suit contesting the foreclosure. Thereafter Mr. Lawler paid off the second lien, which with interest and attorneys fees had grown to approximately $210,000. The day prior to Clark paying off the Casey note of approximately $210,000 with a Cashier's Check provided by Lawler, Clark refused to obtain written agreement from Baer showing the verbal deal for Baer to immediately reconvey the ranch to Lawler. Then within a few days Clark surrendered to Baer documents releasing Lawler's claim on the ranch without Lawler's knowledge or consent. The results of this action was that Mr. Lawler did not recover the ranch as agreed upon and lost not only the $210,000 paid on the second lien, but also lost his equity in the ranch of approximately $300,000.
WHEREFORE, H. Roger Lawler, et. al., pray that the proof of said claimant be denied, that the debtors be awarded damages in the amount of $510,000, and that the debtors have such other and further relief as may be just and appropriate. Exhibit 2 to Lawler's brief.
[54] See Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corporation, 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986); Brewster, 703 F.Supp. at 1263 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986)).
[55] Lawler's brief at 14.
[56] Id.; exhibit 9 to Lawler's brief at 24.
[57] Lawler's brief at 14; exhibit 9 to Lawler's brief at 42, 45.
[58] Lawler's brief at 20-21; exhibit 9 to Lawler's brief at 59.
[59] Lawler's brief at 26; exhibit 9 to Lawler's brief at 66-67.
[60] Affidavit of Drennan Anthony Clark (item 19 on Lawler's designation of record) (bankruptcy docket # 1335).
[61] Lawler's brief at 26-27; exhibit 9 to Lawler's brief at 64-66.
[62] Lawler's brief at 28-40; Lawler's reply brief at 9-23.
[63] § 11.207. Malpractice actions against accountants, attorneys, veterinarians.
1. No action against any accountant, attorney or veterinarian to recover damages for malpractice, whether based on a breach of duty or contract, may be commenced more than 4 years after the plaintiff sustains damage and discovers or through the use of reasonable diligence should have discovered the material facts which constitute the cause of action.
2. This time limitation is tolled for any period during which the accountant, attorney or veterinarian conceals any act, error or omission upon which the action is founded and which is known or through the use of reasonable diligence should have been known to him.
[64] § 11.190. Periods of limitation.
Actions other than those for the recovery of real property, unless further limited by specific statute, can only be commenced as follows:
* * * * * *
4. With 2 years:
* * * * * *
(e) An action to recover damages for injuries to a person or for the death of a person caused by the wrongful act or neglect of another. The provisions of this paragraph relating to an action to recover damages for injuries to a person apply only to causes of action which accrue after March 20, 1951.
[65] Lawler's brief at 35; Lawler's reply brief at 11.
[66] Exhibit 14 to Lawler's reply brief.
[67] Exhibit 9 to Lawler's brief at 48, 57-58.
[68] Id.
[69] § 29. Suits by and against bankrupts.
* * * * * *
(e) A receiver or trustee may, within two years subsequent to the date of adjudication or within such further period of time as the Federal or State law may permit, institute proceedings in behalf of the estate upon any claim against which the period of limitation fixed by Federal or State law had not expired at the time of the filing of the petition in bankruptcy. Where, by any agreement, a period of limitation is fixed for instituting a suit or proceeding upon any claim, or for presenting or filing any claim, proof of claim, proof of loss, demand, notice, or the like, or where in any proceeding, judicial or otherwise, a period of limitation is fixed, either in such proceeding or by applicable Federal or State law, for taking any action, filing any claim or pleading, or doing any act, and where in any such case such period had not expired at the date of the filing of the petition in bankruptcy, the receiver or trustee of the bankrupt may, for the benefit of the estate, take any such action or do any such act, required of or permitted to the bankrupt, within a period of sixty days subsequent to the date of adjudication or within such further period as may be permitted by the agreement, or in the proceeding or by applicable Federal or State law, as the case may be.
(f) The operation of any statute of limitations of the United States or of any State, affecting the debts of a bankrupt provable under this title, shall be suspended during the period from the date of the filing of the petition in bankruptcy (1) until the expiration of thirty days after the date of the entry of an order denying his discharge; or (2) if he has waived or lost his right to a discharge, then until the expiration of thirty days after the filing of such waiver or loss of such right or, in the case of a corporation, if no application for a discharge is filed within the period of six months after the adjudication, then until the expiration of thirty days after the end of such period; or (3) until thirty days after the dismissal of the bankruptcy proceedings, whichever may first occur.
[70] § 791. Suspension of statutes of limitation, etc.
All statutes of limitation affecting claims provable under this chapter and the running of all periods of time prescribed by this title in respect to the commission of acts of bankruptcy, the recovery of preferences and the avoidance of liens and transfers shall be suspended while a proceeding under this chapter is pending and until it is finally dismissed.
See also 11 U.S.C. § 661 (substituting phrase "claims and interests" for "claims" in § 791, otherwise language identical).
[71] Lawler cites Barnett v. United Air Lines, Inc., 738 F.2d 358, 362-63 (10th Cir.), cert. denied, 469 U.S. 1087, 105 S.Ct. 594, 83 L.Ed.2d 703 (1984), for the proposition that a state statute of limitations is inapplicable if inconsistent with federal policy. Lawler then argues that application of the Nevada statute of limitations would conflict with the federal bankruptcy policy of waiting to sort out the claims of creditors until it appears that the debtor can pay. Lawler points to Act Rule 306 and 11 U.S.C. § 93(f), which do not limit the time in which objections may be brought, as the sources of this policy. See Lawler's reply brief at 15-16. This argument, the foundation of Lawler's federal bankruptcy policy contention, lacks merit for the reasons discussed in Parts II(C)(1) and (2).
Another reason Lawler's argument must fail is that his malpractice claim was created not by Congress but by state law. Although it was brought in the broader context of a bankruptcy proceeding, the applicable period of limitations was established by the same sovereign (the state of Nevada) that created the substantive right. Cf. Occidental Life Insurance Company of California v. Equal Employment Opportunity Commission, 432 U.S. 355, 367, 97 S.Ct. 2447, 2455, 53 L.Ed.2d 402 (1977). Whether § 29(e) applies or not, the Nevada statute of limitations is relevant in determining whether a claim brought by the debtor on his own account is time-barred. Lawler, 53 B.R. at 171-72.
[72] Lawler urges that Act Rule 306(c), in tandem with 11 U.S.C. § 29(f), grants him an indefinite time to file his malpractice claim. That argument is addressed above in Part II(C)(1) and (2). The court would add here that whether claims under Rule 306(c) are subject to a procedural deadline under the Act Rules does not answer whether a statute of limitations outside those rules may apply to such claims.
[73] Lawler's reply brief at 13-14 (citing Nicholas v. United States, 384 U.S. 678, 683, 86 S.Ct. 1674, 1679, 16 L.Ed.2d 853 (1966)).
[74] Because the court is not persuaded that oral argument would illuminate the issues on this appeal, Lawler's request for oral argument is denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1014065/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BRYANT REAL ESTATE, INCORPORATED;
ROBERT A. WILES AND COMPANY,
INCORPORATED,
Plaintiffs-Appellants,
No. 03-1995
v.
TOLL BROTHERS, INCORPORATED,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Leonard D. Wexler, Senior District Judge, sitting by designation.
(CA-02-1311-A)
Argued: May 6, 2004
Decided: August 10, 2004
Before WILKINS, Chief Judge, WILLIAMS, Circuit Judge,
and C. Arlen BEAM, Senior Circuit Judge of the
United States Court of Appeals for the Eighth Circuit,
sitting by designation.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Elizabeth Anne Keith, ODIN, FELDMAN & PITTLE-
MAN, P.C., Fairfax, Virginia, for Appellants. David Glenn Barger,
WILLIAMS, MULLEN, CLARK & DOBBINS, McLean, Virginia,
2 BRYANT REAL ESTATE v. TOLL BROTHERS
for Appellee. ON BRIEF: Dexter S. Odin, Heather D. Dawson,
ODIN, FELDMAN & PITTLEMAN, P.C., Fairfax, Virginia, for
Appellants. Francis E. Purcell, Jr., WILLIAMS, MULLEN, CLARK
& DOBBINS, McLean, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Bryant Real Estate, Inc. (Bryant) and Robert A. Wiles and Com-
pany, Inc. (Wiles), plaintiffs, appeal the district court’s decision to
enter judgment for defendant Toll Brothers, Inc. (Toll). They argue
the district court erred in basing its decision on defenses that were not
properly before the court. We affirm.
I.
Bryant and Wiles are real estate brokerage firms. They are princi-
pally operated by their namesakes who are licensed real estate brokers
in Virginia. Toll is a large residential real estate developer. In late
1999, Bryant asked Toll if it was interested in purchasing a parcel of
property that was adjacent to a tract already owned by Toll. At that
time, Bryant and Wiles portrayed themselves as brokers for the seller,
though they had not yet been employed by the property owners. Bry-
ant and Wiles said they suspected the property could be purchased for
$26.5 million, including a 6% brokerage commission that would be
paid by the sellers.
In May 2000, Bryant again met with Toll. Bryant said the sellers
would not pay a commission, so Toll would have to pay the brokerage
fee if it wanted Bryant and Wiles’ assistance. Toll agreed to employ
Bryant and Wiles as its brokers (i.e., as buyer-brokers) and agreed to
pay Bryant and Wiles $800,000 for their services if the deal went
BRYANT REAL ESTATE v. TOLL BROTHERS 3
through. A May 10, 2000, fax from Bryant and Wiles to Toll referred
to this fee as a "brokerage fee" and anticipated Toll’s purchase at $25
million, plus the $800,000 fee. The parties did not discuss a termina-
tion date.
A few days later, Toll drafted an "agreement of sale" and sent it to
Bryant and Wiles, with directions to submit the offer to the property
owners. Bryant and Wiles submitted the offer, but it was rejected. A
competing purchaser, Centex, successfully negotiated a sales contract
with the property owners in September or October 2000. Bryant and
Wiles were uninvolved from that point on. In February 2001, the Cen-
tex deal fell through and Toll purchased the property for $26 million
without Bryant and Wiles’ assistance.
After Toll refused to pay Bryant and Wiles the $800,000 that they
felt was due, they filed suit, claiming breach of contract and unjust
enrichment.1 Toll answered by denying the allegations of plaintiffs’
full performance and entitlement to payment under the May 10, 2000,
contract.
In discovery, Bryant and Wiles submitted an interrogatory that
asked Toll to identify its bases for denying the complaint’s operative
contract-claim allegations. On January 9, 2003, Toll deposed Bryant
and Wiles and asked them questions regarding the contract’s termina-
tion date. Toll also asked Wiles if he knew that brokerage relation-
ships expired after ninety days under Virginia law if no definite
termination date was stated in the contract. Discovery closed on Janu-
ary 10, 2003. On January 15, 2003, Toll responded to Bryant and
Wiles’ interrogatory, generally referring Bryant and Wiles to the Jan-
uary 9th deposition of Toll’s agent, but that deposition did not men-
tion the ninety-day statutory sunset provision. On January 29, 2003,
Toll amended its interrogatory answer, stating for the first time its
position that the agreement had terminated because the contract did
not have a definite termination date and, by statute, all brokerage rela-
tionships without such dates terminate after ninety days. Va. Code
Ann. § 54.1-2137(B).
1
Bryant and Wiles have not raised the unjust-enrichment claim in this
appeal.
4 BRYANT REAL ESTATE v. TOLL BROTHERS
On February 6, 2003, Toll moved for summary judgment, asserting
that the contract had terminated under the Virginia statutes before the
brokers performed.2 Because the trial date was scheduled for February
19, 2003, Toll added a motion requesting an expedited hearing or a
continuance. Bryant and Wiles opposed the expedited-hearing/
continuance motion on February 12, 2003, arguing the pleadings did
not raise the statutory defense and there was insufficient time to
address it before trial. The district court denied the motion on Febru-
ary 14, 2003, noting that the defendant’s "underlying summary judg-
ment motion was untimely noticed." Even though it had been denied,
Toll replied to Bryant and Wiles’ opposition to the expedited-
hearing/continuance motion on February 19, 2003 (the original trial
date), and alternatively requested leave to amend or supplement its
answer. The district court never ruled on the underlying summary
judgment motion or the motion to amend.
A three-day bench trial began on February 22, 2003.3 While Bryant
and Wiles argued throughout the case that the statutory defense was
not properly before the court, they made no relevancy objections to
evidence that tended to support the allegations. At the conclusion of
the testimony, the district court instructed the parties to close the case
with briefs. Toll again urged the statutory defense it had included in
its summary judgment motion, and Bryant and Wiles continued to
argue that it was not properly before the court and, even if it was, the
contract between the parties was not a "brokerage agreement," con-
trolled by the statute, but rather a "fee agreement."
The trial court found: the contractual relationship between the par-
ties began on May 10, 2000; the contractual relationship was a "bro-
kerage relationship" under Virginia law; and the brokerage
relationship terminated on August 10, 2000, long before Toll pur-
chased the property or had an enforceable contract to purchase it. The
2
Toll’s summary judgment motion on the contract claim was also
based on the statute of frauds, fraudulent inducement, and breach of stat-
utory and regulatory duties. Bryant and Wiles claimed below and argue
here that all of those defenses were waived because they weren’t pled.
We decline to discuss these other defenses because we find the ninety-
day termination statute dispositive.
3
Trial was delayed three days because of inclement weather.
BRYANT REAL ESTATE v. TOLL BROTHERS 5
trial court also found that Bryant and Wiles had breached several obli-
gations they owed Toll, excusing Toll from any duty to pay.4
Bryant and Wiles appeal. Jurisdiction was proper in the district
court under 28 U.S.C. § 1332, and it is proper here under 28 U.S.C.
§ 1291.
II.
Bryant and Wiles’ appeal does not go to the merits of its contract
claim. Rather, Bryant and Wiles argue that the district court erred in
basing its ruling on arguments and defenses that cannot be found in
Toll’s answer.
First, Bryant and Wiles argue that the district court should not have
allowed Toll to "rely upon a contract other than that pled by Bryant
and Wiles." We find no merit in this argument. Bryant and Wiles’
theory of the case was that they had agreed to provide brokerage ser-
vices to Toll in exchange for an $800,000 "brokerage fee" payable
when Toll purchased the property. They tried to prove that they per-
formed the contemplated services, and that Toll purchased the prop-
erty. Toll countered that this contract was regulated by Virginia law,
and under certain Virginia statutes, Bryant and Wiles could not claim
their fee. See Va. Code Ann. §§ 54.1-2100 to 2144.
There was only one contract involved in this case—a promise to
pay a brokerage fee in return for brokerage services if Toll purchased
the property. The dispute centers on the character of that contractual
relationship. Whether that relationship was a "brokerage relationship"5
implicating the Virginia statutes was a question the district court
properly reached notwithstanding the state of the defendant’s answer.
4
It is unnecessary to evaluate the other defenses the district court relied
on given our disposition of this case.
5
Va. Code. Ann. § 54.1-2130 defines "brokerage relationship" as "the
contractual relationship between a client and a real estate licensee who
has been engaged by such client for the purpose of procuring a seller,
buyer, option, tenant, or landlord ready, able, and willing to sell, buy,
option, exchange or rent real estate on behalf of a client."
6 BRYANT REAL ESTATE v. TOLL BROTHERS
Bryant and Wiles next argue that the district court erred in allowing
Toll to introduce affirmative defenses at the eleventh hour. Specifi-
cally, they object to Toll’s allegation that under Virginia law, a bro-
kerage relationship expires after ninety days unless the parties agree
to some other definite termination date. Va. Code. Ann. § 54.1-
2137(B). There was no mention of a termination date in any contract
related to this case, and the district court thus held that the parties’
contractual relationship had expired. We have heard no argument
questioning the validity of the defense if it was properly raised. So
our inquiry focuses on whether the defense fell within or had been
waived under Federal Rule of Civil Procedure 8(c).
Federal Rule of Civil Procedure 8(b) permits general or specific
denials of a plaintiff’s averments. Under a general or specific denial,
a defendant is entitled to offer evidence that tends to rebut any allega-
tion for which the plaintiff retains the burden of proof.
Rule 8(c), on the other hand, requires that all "avoidance or affir-
mative defense[s]" be affirmatively pled in the answer. We have
defined these defenses as "the defendant’s assertion raising new facts
and arguments that, if true, will defeat the plaintiff’s . . . claim, even
if all allegations in the complaint are true. Generally speaking, affir-
mative defenses share the common characteristic of a bar to the right
of recovery even if the general complaint were more or less admitted
to." Emergency One, Inc. v. American Fire Eagle Engine Co., 332
F.3d 264, 271 (4th Cir. 2003) (citation and quotation marks omitted).
The question of whether the ninety-day statutory provision constitutes
an avoidance or affirmative defense is vexing and, despite the gener-
ality of our definition, turns on a number of factors. See generally 5
Charles Alan Wright & Arthur R. Miller, Federal Practice & Proce-
dure § 1271 (1990 & Supp. 2004). How the defense is treated under
state law is relevant, but not binding, in a diversity case. 5 id. at
§§ 1271 & 1272.
The Virginia state courts have not addressed the statute at issue, so
we have little guidance as to how it operates in a broker’s suit
demanding payment for brokerage services. It is possible that this
ninety-day limitation is not an affirmative defense at all. Three exam-
ples, of many, appear. First, one could read the statute as setting forth
a requirement that must be read into all brokerage contracts. Cf.
BRYANT REAL ESTATE v. TOLL BROTHERS 7
Immer & Co. v. Brosnahan, 152 S.E.2d 254, 257 (Va. 1967) (involv-
ing a workers’ compensation statute that must be read into the
employment contract)(citing Glassco v. Glassco, 77 S.E.2d 843, 844
(Va. 1953)); Am. Bonding Co. v. Am. Surety Co., 103 S.E. 599, 602-
03 (Va. 1920) (involving insurance statutes that must be read into the
parties’ contract). As a contract term, the provision seems to refine
the performance due under the contract by establishing the time frame
in which the broker’s performance will trigger the client’s duty to
pay. Toll denied the plaintiffs’ performance allegation, and this seems
sufficient to put at issue the terms of that performance.
Second, the statutory provision may simply place in repose what-
ever contractual relationship exists, once ninety days has passed. Toll
clearly denied the contract’s existence, and this fairly raised the issue
of whether it had been vitiated by operation of law.
Third, in the brokerage context, it could be that when Toll engaged
Bryant and Wiles, it made an offer for a unilateral contract, accept-
able by performance—procuring a seller willing to sell on the buyer’s
terms.6 See Hummer v. Engeman, 141 S.E.2d 716, 719 (Va. 1965)
(holding that a listing agreement was merely an offer of a unilateral
contract). If that is the case, then the ninety-day statutory provision
seems to extinguish the offer after the period elapses. In any event,
Toll clearly denied the existence of the contract and could surely offer
evidence of lack of acceptance to substantiate that defense.
We need not determine whether this timeliness issue is something
the defendant should be required to affirmatively plead or whether it
is something the plaintiff should be charged with proving as an ele-
ment of (or at least anticipating as an issue in) its cause of action.
Even if the ninety-day statute is an affirmative defense that Toll
should have raised in its answer, a defense is not waived unless the
plaintiff suffers "unfair surprise or prejudice." Brinkley v. Harbour
6
Interestingly, the performance contemplated (whether it be under the
contract or as an acceptance of an offer) involved a purchase price of $25
million plus an $800,000 fee. Bryant and Wiles never did get the seller
to accept those terms. Instead, Toll purchased the property for $26 mil-
lion. But because the parties have framed this appeal around the pleading
issue, we are not inclined to go further.
8 BRYANT REAL ESTATE v. TOLL BROTHERS
Recreation Club, 180 F.3d 598, 612 (4th Cir. 1999) (collecting
authorities). The district court found that Toll’s "defenses were raised
sufficiently before and during trial." Regarding a plaintiff’s prejudice
or a defendant’s delay, the district court is in the best position to
determine the propriety of a particular defense. Thus, our review will
be limited to the question of whether the district court abused its dis-
cretion in concluding that Toll had not waived the ninety-day defense.
Cf. id.; S. Wallace Edwards & Sons, Inc. v. Cincinnati Ins. Co., 353
F.3d 367, 373 (4th Cir. 2003).
Here, there was no abuse of discretion. Bryant and Wiles showed
no unfair surprise or prejudice. Toll first mentioned the ninety-day
limitation in a deposition. It then revised its interrogatory answers to
expressly mention the defense. It later included the defense in a
motion for summary judgment and a motion to amend its answer. At
no time did Bryant and Wiles ask the court for a continuance or seek
further discovery. And Bryant and Wiles had a full opportunity to
argue the issue in the final briefing of the case.
The prejudice our decisions and the Rules contemplate is not pres-
ent in all cases where the defense prevails. Rather, the unfairness
must come from the timing, not the defeat. With regard to the ninety-
day provision, Bryant and Wiles have enumerated no legal arguments
they would have made had they had more time to consider and
respond to the defense. They have also identified no further discovery
that may have enabled them to overcome the defense.7
On the other hand, Toll knew of this defense as early as Wiles’
deposition, yet it did not amend its answer. In fact, there were no facts
that arose in discovery that gave rise to this defense; the plaintiffs
7
We stress that a clearly successful affirmative defense is not beyond
the reach of Rule 8(c) and our waiver jurisprudence. In this case, we sim-
ply hold that the district court did not abuse its discretion. Had the dis-
trict court ruled the defense was waived, it may also have acted within
its discretion.
As a practical matter, we realize that the late introduction of a clearly
successful defense disserves both the parties and the court by prolonging
litigation. But we doubt that, in the run of cases, a rule must be invoked
to encourage parties to promptly raise clearly successful defenses.
BRYANT REAL ESTATE v. TOLL BROTHERS 9
admitted the time of the agreement in their complaint. The amended
interrogatory answers also came quite late in the discovery process.8
And perhaps the most troublesome aspect is that Toll simply points
to the plaintiffs’ lack of prejudice. Toll makes no effort to explain its
delay or to demonstrate that its answer was sufficient because the
defense fell beyond the reach of Rule 8(c).
In sum, we are left with plaintiffs who suffered little (if any) preju-
dice and a defendant who has no excuse for its conduct. While it is
true that a defendant who seeks to introduce an affirmative defense
at the last minute will usually find himself in a perilous position, we
are unwilling to second-guess the district court under the circum-
stances of this case. The district court did not abuse its discretion by
finding that Toll had not waived the ninety-day defense.
One final matter remains: Toll’s answer still does not include the
statutory mandate as a defense. Insofar as this is an affirmative
defense, Rule 15(b) states two methods for amending pleadings. First,
if issues not raised by the pleadings are tried by express or implied
consent of the parties, then the pleadings are simply regarded as being
amended. Fed. R. Civ. P. 15(b) (first two sentences). Second, if a
party objects to evidence at trial (i.e., if a party does not consent to
the trial of the issue), then the trial court is required to amend the
pleadings if, among other things, "the objecting party fails to satisfy
the court that the admission of such evidence would prejudice the
party in maintaining the party’s action . . . upon the merits." Id. (last
two sentences). In this case, we see no evidence in the record that is
relevant to the ninety-day defense to which an objection should have
been made. It would be odd, then, to imply Bryant and Wiles’ consent
from their failure to object. And we do not think the record in this
case otherwise supports a finding of consent, implied or express. But
the lack of prejudice brings this case within the second part of Rule
15(b).
8
Bryant, Wiles, and Toll were also left to wonder about what claims
would be addressed at trial. It appears the court conducted a final pretrial
conference under Rule 16(d) but issued no subsequent order pursuant to
Rule 16(e). Rule 16(e) is mandatory, and generally that order supersedes
the pleadings and sets the issues for trial. We do not think this irregular-
ity inures to the benefit of either party, but the entry of such an order may
have clarified matters substantially.
10 BRYANT REAL ESTATE v. TOLL BROTHERS
Even though the Federal Rules of Civil Procedure do not expressly
give us the power to amend the pleadings, it is not necessary to
remand the case for a formal amendment. Because the district court
was required to make the amendment, and by its disposition treated
the pleadings as having been amended, we regard the defendant’s
answer as having been constructively amended.
AFFIRMED | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1743576/ | 771 So. 2d 89 (2000)
SOUTHERN GENERAL AGENCY, INC.
v.
SAFEWAY INSURANCE COMPANY OF LOUISIANA.
No. 2000-C-2055.
Supreme Court of Louisiana.
October 6, 2000.
Denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2455268/ | 775 S.W.2d 748 (1989)
U.S. FIRE INSURANCE COMPANY, Appellant,
v.
Jackie MANESS, Appellee.
No. 01-88-00531-CV.
Court of Appeals of Texas, Houston (1st Dist.).
July 13, 1989.
Rehearing Denied August 31, 1989.
James B. Galbraith, Otto D. Hewitt, III, Kenneth J. Bower, McLeod, Alexander, Powel & Apffel, P.C., Galveston, for appellant.
Russell G. Burwell, Gregory B. Enos, Burwell & Enos, Texas City, for appellee.
Before WARREN, COHEN and MIRABAL, JJ.
*749 OPINION
COHEN, Justice.
The issue in this appeal is whether the trial court abused its discretion in deeming admitted appellee's requests for admissions.
On September 4, 1987, appellee sued appellant for workers' compensation benefits. Appellant filed a general denial, and both parties proceeded with discovery. On October 22, 1987, appellee sent appellant 29 requests for admissions. Approximately 30 days later, appellant responded to every one of the requests by stating, "Denied due to insufficient information at the present time," accompanied by a letter to appellee's counsel stating:
I am writing to confirm our agreement that you will extend us an additional two weeks in which to respond to your Admissions Request. We are going to file denials as subject to the unavailability of information at the present time, but we will supplement our responses within two weeks.
Appellant made no other response until February 17, 1988, the date of trial, after appellee moved to deem the requests admitted, at which time appellant admitted 12 of the 29 requests. The trial judge, however, deemed the remaining requests admitted and rendered judgment for appellee. Appellant's motions for new trial and to strike admissions were overruled.
Rule 169(1) provides:
Each matter of which an admission is requested shall be separately set forth. The matter is admitted without necessity of a court order unless, within thirty (30) days after service of the request ... the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter ... The answer shall specifically deny the matter or set forth in detail the reasons that the answering party cannot truthfully admit or deny the matter. A denial shall fairly meet the substance of the requested admission, and when good faith requires that a party qualify his answer or deny only a part of the matter of which an admission is requested, he shall specify so much of it as is true, and qualify or deny the remainder. An answering party may not give lack of information or knowledge as a reason for failure to admit or deny unless he states that he has made reasonable inquiry and that the information known or easily obtainable by him is insufficient to enable him to admit or deny.
(Emphasis added.)
Rule 215(4) provides:
(a) Deemed Admissions. Each matter of which an admission is requested shall be deemed admitted unless, within the time provided by Rule 169, the party to whom the request is directed serves upon the party requesting the admissions a sufficient written answer or objection in compliance with the requirements of Rule 169, addressed to each matter of which an admission is requested. For purposes of this subdivision, an evasive or incomplete answer may be treated as a failure to answer....
(b) Motion.... If the court determines that an answer does not comply with the requirements of Rule 169, it may order either that the matter is admitted or that an amended answer be served....
(Emphasis added.)
Appellant argues the trial court had no authority to deem the admissions because all had been denied. We disagree. In our view, appellant's responses attempted to circumvent the operation of rules 169 and 215.
Rule 169 clearly requires that where a party has insufficient information to admit or deny, he must state that he has made reasonable inquiry to discover the information. Appellant failed to do so. Appellant promised to supplement its responses within two weeks. It did not do so. Appellant sought to avoid the duty to make reasonable inquiry by simply saying, in effect, "we deny these requests, even though we have no factual basis to deny them." Rule 169's requirement to make a reasonable inquiry should not be so easily defeated.
Rule 169 requires that "a denial shall fairly meet the substance of the requested *750 admission, and when good faith requires that a party qualify his answer or deny only part of the matter of which admission is requested, he shall specify so much of it as is true and qualify or deny the remainder." Appellant violated this requirement of rule 169. Its blanket denials did not "fairly meet the substance" of the requested admissions. Moreover, "good faith" required appellant to qualify these blanket denials because its excuse, that it had insufficient information to answer, was patently incredible, as discussed below. Not surprisingly, appellant presented no evidence to support this claim.
Appellant is a workers' compensation insurance carrier that admitted in its original answer that it had paid appellee's benefits and medical expenses. It later admitted that its policy was issued to appellee's employer; that the employer was notified of the injury on the date it occurred; that appellant had actual notice of the injury within 30 days after; and that the Industrial Accident Board made a final ruling on the claim before the instant lawsuit was filed.
Appellee's attorney produced uncontradicted evidence that appellant, in its capacity as a workers' compensation carrier, had paid appellee's medical bill, received reports from appellee's doctors, paid appellee weekly compensation benefits, filed numerous reports with the Industrial Accident Board, and participated in a prehearing conference where its agent spoke with appellee about his injury. The evidence also showed that on June 18, 1987, a prehearing conference was held before the Industrial Accident Board, at which appellant's adjuster was present and discussed appellee's medical condition and treatment, interviewed appellee concerning his injury and disability, and made notes. Appellant never produced anything to show that because of "insufficient information at the present time (November 20, 1987)" it had to deny that:
1) appellee was employed by his alleged employer on the date of the injury;
2) it issued a policy of workers' compensation insurance to appellee's alleged employer before the alleged injury occurred;
3) its policy of workers' compensation insurance was in full force and effect when appellee was injured;
4) it had received notice of the injury;
5) appellee had filed a claim with the Industrial Accident Board within a year of the injury;
6) the Industrial Accident Board made a final award;
7) appellee had been treated by certain physicians, and appellant had received their reports; and
8) appellee had worked 210 days for his employer.
Appellant never offered any evidence that it had made a diligent inquiry into the matters covered by the requested admissions. Indeed, at the hearing on the motion to deem the requests admitted, appellant's counsel made an unsworn statement, occupying 59 pages of the record, none of which supported any of the 29 claims of insufficient information. After that argument, appellant's attorney was questioned by appellee's attorney. It would be charitable to characterize his answers as "dodging" the questions, as asserted in appellee's brief on appeal. When asked if the responses "bore your signature," appellant's attorney answered, "That's my understanding." After several indirect and unresponsive answers, appellant's counsel answered the following questions:
Q: Well, the 12 items you've admitted today, couldn't you have admitted them back then if you'd looked at the information?
A: I don't know.
Q: Because you didn't look at the information?
A: Well, I don't know.
We hold that there was ample basis for the trial court to find that appellant's responses were evasive and incomplete and therefore not a "sufficient" answer, within the meaning of rule 215(4)(a). In addition, the trial court had reason to find that the denials did not "fairly meet the substance of the requested admission," and that the denials were not made in "good faith" as required by rule 169.
*751 A party may not guarantee its ignorance by foregoing reasonable inquiry into relevant facts and then refuse to admit the facts due to "insufficient information." The trial judge did not abuse his discretion upon these facts. Downer v. Aquamarine Operators, 701 S.W.2d 238, 241-42 (Tex. 1986).
Points of error one and two are overruled.
In its third point of error, appellant argues that the trial court abused its discretion in overruling a motion for new trial, and in not permitting appellant to amend its responses. Rule 169(2) provides:
[T]he court may permit withdrawal or amendment of responses and deemed admissions upon a showing of good cause for such withdrawal or amendment if the court finds that the parties relying on the responses and deemed admissions will not be unduly prejudiced and that the presentation of the merits of the actions will be subserved thereby.
Appellant contends its mistaken belief that its responses were adequate constituted good cause for withdrawing the deemed admissions. We disagree. The trial judge was not required to believe that appellant had such a belief, in view of the entire record.
Point of error three is overruled.
The judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584967/ | 24 So. 3d 430 (2009)
Sarah MOSLEY
v.
BROOKWOOD HEALTH SERVICES, INC., d/b/a Brookwood Medical Center.
1071533.
Supreme Court of Alabama.
May 22, 2009.
*431 M. Clay Alspaugh of Smith & Alspaugh, P.C., Birmingham, for appellant.
Thomas A. Kendrick and Holly S. Bell of Norman, Wood, Kendrick & Turner, Birmingham, for appellee.
COBB, Chief Justice.
Sarah Mosley appeals from a summary judgment entered by the Jefferson Circuit Court in favor of Brookwood Health Services, Inc., d/b/a Brookwood Medical Center ("Brookwood"). We affirm.
*432 Facts
On March 19, 2003, Mosley was admitted to the intermediate-care unit 2 ("IMCU-2 unit") of the psychiatric department at the Brookwood Medical Center to be treated for depression.
While Mosley was in the IMCU-2 unit, another patient ("patient A") was also receiving treatment there. Patient A had been admitted to the IMCU-2 unit for treatment of schizophrenia, agitation, violent behavior, and paranoia. Patient A's medical records indicate that she was admitted to the hospital in part because she had been "picking fights with almost everyone around her." The staff at Brookwood Medical Center was under instructions to monitor and observe the patients in the IMCU-2 unit at 15-minute intervals and to note their observations. At 9:15 a.m. and again at 9:30 a.m. on March 20, 2003, patient A was at the nurses' station, and she was agitated and combative. Patient A hit, kicked, cursed, and shoved staff members, including Brenda Freeman, a mental-health technician. Patient A was then placed in "time out" (i.e., she was sent to her room to be separate from the other patients for 15 minutes; the door to patient A's room was unlocked). During the staff's 15-minute observations of patient A from 9:45 to 11:45 a.m., patient A remained quiet, staying either in her room or at the nurses' station. Then, at some time between the staff's observation of patient A at 12:00 p.m. and the next scheduled observation of her at 12:15 p.m. on March 20, 2003, patient A attacked Mosley in Mosley's room. Mosley cried out, and patients and staff went to her assistance. Mosley reported that patient A had pulled her hair and smashed her head on the floor. Patient A was subsequently transferred to a different psychiatric unit at Brookwood Medical Center.
Freeman testified in deposition that the procedures in the IMCU-2 unit required the staff to place combative patients in "time out" for 15 minutes. If the patient remained combative after the 15-minute "time out," the staff was to contact the patient's doctor and, if the doctor so ordered, to seclude the patient by placing the patient in a locked room used for that purpose.
Procedural History
On March 21, 2005, Mosley filed the instant medical-malpractice action against Brookwood.[1] On March 27, 2007, Brookwood filed a motion for a summary judgment. The trial court withheld ruling on Brookwood's summary-judgment motion to allow Mosley further time for discovery. On June 23, 2008, after further proceedings and a hearing on the summary-judgment motion, the trial court entered a summary judgment in favor of Brookwood. Mosley appealed.
Standard of Review
"This Court's review of a summary judgment is de novo. Williams v. State Farm Mut. Auto. Ins. Co., 886 So. 2d 72, 74 (Ala.2003). We apply the same standard of review as the trial court applied. Specifically, we must determine whether the movant has made a prima facie showing that no genuine issue of material fact exists and that the movant is entitled to a judgment as a matter of law. Rule 56(c), Ala. R. Civ. P.; Blue Cross & Blue Shield of Alabama v. Hodurski, 899 So. 2d 949, 952-53 (Ala.2004). In making such a determination, we must review the evidence in the light most favorable to the nonmovant. Wilson v. Brown, 496 So. 2d 756, 758 (Ala. *433 1986). Once the movant makes a prima facie showing that there is no genuine issue of material fact, the burden then shifts to the nonmovant to produce `substantial evidence' as to the existence of a genuine issue of material fact. Bass v. SouthTrust Bank of Baldwin County, 538 So. 2d 794, 797-98 (Ala.1989); Ala. Code 1975, § 12-21-12."
Dow v. Alabama Democratic Party, 897 So. 2d 1035, 1038-39 (Ala.2004).
Analysis
This medical-malpractice action is governed by the Alabama Medical Liability Act, § 6-5-480 et seq. and § 6-5-541 et seq., Ala.Code 1975 ("the AMLA"). See Mock v. Allen, 783 So. 2d 828, 832 (Ala. 2000) (noting that the AMLA "applies `[i]n any action for injury or damages or wrongful death, whether in contract or in tort, against a health care provider for breach of the standard of care.'" (quoting § 6-5-548(a), Ala.Code 1975)). "To prevail on a medical-malpractice claim, a plaintiff must prove `"1) the appropriate standard of care, 2) the [health-care provider's] deviation from that standard, and 3) a proximate causal connection between the [health-care provider's] act or omission constituting the breach and the injury sustained by the plaintiff."'" Giles v. Brookwood Health Servs., Inc., 5 So. 3d 533, 549 (Ala.2008) (quoting Pruitt v. Zeiger, 590 So. 2d 236, 238 (Ala.1991), quoting in turn Bradford v. McGee, 534 So. 2d 1076, 1079 (Ala.1988)).
Mosley alleges that Brookwood negligently failed to seclude patient A by placing her in a locked room used for that purpose after patient A's combative behavior around 9:15 a.m. and negligently failed to contact a doctor for authorization to so seclude patient A. In support of this argument, Mosley relies on Freeman's deposition testimony to establish the standard of care.[2] Freeman testified that the standard of care required staff members in the IMCU-2 unit to place combative patients in "time out" for 15 minutes. According to Freeman, if the patient remained combative after the "time-out" period, the standard of care would have required the staff to contact a doctor to obtain further orders. If the doctor so ordered, the staff was then to seclude the combative patient in a locked room. Mosley produced no evidence indicating that Freeman or any other member of the staff of Brookwood Medical Center failed to follow these procedures. The undisputed evidence demonstrates that the staff placed patient A in "time out" when patient A was combative around 9:15 a.m. and again at 9:30 a.m., that patient A was not combative at the expiration of the "time-out" period, that patient A was monitored and observed at 15-minute intervals, and that patient A remained calm and noncombative until she attacked Mosley between 12:00 and 12:15 p.m. Thus, according to the standard of care as testified to by Freeman, from the time patient A became calm after the *434 "time out" until she attacked Mosley, the staff had no duty to take further steps to isolate patient A from the other patients or to contact a doctor for authorization to seclude patient A in a locked room. Because the undisputed evidence demonstrates that Brookwood acted in accordance with the standard of care in isolating patient A, the trial court's judgment is not due to be reversed on the issue of the standard of care. See Giles, 5 So.3d at 549 (holding that summary judgment was proper when the plaintiff did not present evidence indicating that a physician failed to act in accordance with the applicable standard of care).
Mosley also alleges that Brookwood failed to properly monitor Mosley. Freeman testified that the general practice in the IMCU-2 unit was to monitor the patients every 15 minutes. Mosley accepts this practice as being within the standard of care. The evidence demonstrates that Freeman monitored Mosley at 15-minute intervals on March 20, 2003, including at 12:00 p.m. and 12:15 p.m. Relying on what she perceives as discrepancies in Brookwood's records, Mosley seems to question whether this evidence was fabricated after the fact and whether the staff indeed monitored Mosley at those times. However, Mosley presents no evidence to demonstrate that monitoring her at 15-minute intervals could have prevented the attack, which it is undisputed occurred between 12:00 and 12:15. Accordingly, with regard to Brookwood's alleged negligence in monitoring Mosley, the trial court did not err in entering the summary judgment. See Crutcher v. Williams, 12 So. 3d 631, 648 (Ala.2008)(opinion on return to second remand) ("[T]o prevail on a medical-malpractice claim . . . the plaintiff must prove that a breach of the standard of care . . . proximately and probably caused actual injury to the plaintiff.").
Mosley also alleges that Brookwood breached the standard of care by not responding promptly to the attack. However, Mosley cites no evidence as to the standard of care for responding to such an attack, and no evidence that any alleged delay in coming to Mosley's assistance caused or contributed to her injuries. Therefore, with regard to Brookwood's alleged negligence in responding to the attack, the trial court did not err in entering the summary judgment. See Giles, 5 So.3d at 548 ("To prevail on her medical-malpractice claim . . . [the plaintiff] must prove, among other things, that [the medical-services provider] violated the duty to `"exercise such reasonable care, diligence, and skill as physicians . . . in the same general neighborhood, and in the same general line of practice, ordinarily have and exercise in a like case."'" (quoting Pruitt, 590 So.2d at 238, quoting in turn Ala.Code 1975, § 6-5-484(a))); cf. McAfee v. Baptist Med. Ctr., 641 So. 2d 265 (Ala. 1994) (holding that, absent proof of actual injury caused by alleged delay in the diagnosis and treatment of disease, plaintiffs could not recover on their AMLA claims against medical-services providers).
Conclusion
No genuine issue of material fact exists, and Brookwood is entitled to judgment as a matter of law. Therefore, we affirm the summary judgment for Brookwood. See Rule 56(c), Ala. R. Civ. P.
AFFIRMED.
LYONS, STUART, BOLIN, and MURDOCK, JJ., concur.
NOTES
[1] March 20, 2005, was a Sunday.
[2] Freeman, a mental-health technician, is not a licensed nurse. Brookwood argues that Freeman's testimony cannot be used to establish the standard of care for licensed nurses and the IMCU-2 unit as a whole because, according to Brookwood, Freeman is not a "similarly situated" health-care provider as required under § 6-5-548, Ala.Code 1975. Mosley argues to the contrary. Mosley further argues that, in any event, Freeman may at least testify as to the standard of care governing the mental-health technicians, including Freeman, who Mosley alleges negligently allowed the attack to occur. We need not address these arguments, however, because, as we explain in this opinion, even using the standard of care described by Freeman, Mosley did not produce substantial evidence indicating that any of the staff of Brookwood Medical Center breached that standard of care. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1584957/ | CYCLE SPORT, LLC D/B/A CYCLE SHOP
v.
GARY JONES AND KAY JONES
No. 2009 CA 0654.
Court of Appeals of Louisiana, First Circuit.
October 23, 2009.
Not Designated for Publication
REGEL L. BISSO, Counsel for Plaintiff/Appellant Cycle Sport, LLC d/b/a Cycle Shop.
W. CHRISTOPHER BEARY, JOHN L. FONTENOT, DAVIDE A. ROSIGLIONI, Counsel for Defendants/Appellees Gary Jones and Kay Jones.
Before: WHIPPLE, HUGHES, and WELCH, JJ.
HUGHES, J.
This is an appeal from a summary judgment granted in favor of the defendants in a suit based on a non-competition agreement, upon the trial court's finding that the agreement exceeded the maximum term allowed by statute and was therefore null and void. For the reasons that follow, we vacate the summary judgment and remand for further proceedings.
FACTS AND PROCEDURAL HISTORY
In 2002, plaintiff, Cycle Sport LLC d/b/a Cycle Shop ("Cycle Shop"), along with Robert G. Miller, M.D. and Robert G. Miller, Jr., purchased a motorcycle dealership from J. Gary Jones Cycle Shack, Inc. d/b/a Cycle Shack ("Cycle Shack").[1] In connection with that sale, Cycle Shop entered into a contract with the sole shareholders of Cycle Shack, defendants, Gary Jones and Kay Jones, for consulting services, in exchange for a fee of $200,000.00 to each. Also included in the consulting agreement was a provision prohibiting Gary Jones and Kay Jones from owning, maintaining, operating, engaging in, or having any interest in any business similar to the Cycle Shop, in St. Tammany Parish during the term of the consulting agreement and for a two-year period following termination of the consulting agreement. The agreement further provided that in the event of a default by Gary Jones and Kay Jones, the consulting agreement would terminate and the Joneses would owe plaintiff damages, costs, expenses, attorney fees, and a refund of a percentage of the consulting fees. On July 9, 2004, plaintiff sent written notice of default to the Joneses stating that the Joneses had engaged in selling motorcycles on or about June 9, 2004, in St. Tammany Parish in contravention of the contract between the parties.
On September 1, 2004, Cycle Shop filed the instant lawsuit against Gary Jones and Kay Jones seeking: (1) a refund of a "percentage of the fees paid pursuant to Section II" of the consulting contract "said percentage being equal to the percentage of the term of [the] agreement remaining at the time of termination;" (2) reasonable attorney's fees; (3) legal interest; (4) costs; and (5) "[a] 11 additional and consequential damages as are reasonable in the premises." The Joneses filed an answer, denying the alleged default.
On June 27, 2005, Cycle Shop filed a motion for summary judgment, which asked for service on the defendants "[t]hrough their attorney of record," who was named as "David C. Vidrine, Esq." The Joneses filed no opposition to the motion for summary judgment and made no appearance at the August 11, 2005 hearing. Summary judgment was granted by the trial court and signed on August 18, 2005, ordering the defendants to pay Cycle Shop the amount of $46,785.23, along with litigation expenses in the amount of $5,205.00, costs, interest, and "all attorneys' fees, costs and expenses of collection."
On April 10, 2006, the Joneses filed a motion for new trial, alleging that at the time of service of Cycle Shop's motion for summary judgment, Glenn E. Diaz was their counsel of record, not David C. Vidrine. The Joneses contended that they made no opposition to the motion for summary judgment and did not appear at the hearing because neither they nor their attorney of record, Glenn E. Diaz, had notice of the motion. Nevertheless, the motion for new trial was denied and the defendants appealed, contending the trial court erred in failing to grant a new trial in this case in light of the improper service of the motion for summary judgment. On appeal, this court agreed and vacated the summary judgment. See Cycle Sport, LLC d/b/a Cycle Shop v. Jones, 2006-2402 (La. App. 1 Cir. 9/14/07) (unpublished).
Following remand to the trial court, the defendants filed a motion for summary judgment asserting the invalidity of the non-compete agreement as a matter of law. After a November 12, 2008 hearing, the trial court granted summary judgment in favor of the defendants, finding the agreement null and void on the basis that it exceeded the two-year maximum term of a noncompetition agreement authorized by LSA-R.S. 23:921. Cycle Shop now appeals, urging the following assignments of error: (1) the trial court erred in finding that there was a sale of a business; (2) the trial court erred in applying LSA-R.S. 23:921(B), rather than LSA-R.S. 23:921(C); (3) the trial court erred in finding that the temporal provisions of the agreement extend further than that permitted by LSA-R.S. 23:921; (4) the trial court erred in finding that the agreement's non-compete term was four years; and (5) the trial court erred in applying LSA-R.S. 23:921 "at all."
LAW AND ANALYSIS
Motion for Summary Judgment
The summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action, except those disallowed by LSA-C.C.P. art. 969; the procedure is favored and shall be construed to accomplish these ends. LSA-C.C.P. art. 966(A)(2). Summary judgment shall be rendered in favor of the mover 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 material fact and that mover is entitled to judgment as a matter of law. LSA-C.C.P. art. 966(B).
Appellate courts review summary judgments de novo under the same criteria that govern a district court's consideration of whether summary judgment is appropriate. Samaha v. Rau, XXXX-XXXX, pp. 3-4 (La. 2/26/08), 977 So. 2d 880, 882; Allen v. State ex rel. Ernest N. Morial-New Orleans Exhibition Hall Authority, XXXX-XXXX, p. 5 (La. 4/9/03), 842 So. 2d 373, 377; Boudreaux v. Vankerkhove, 2007-2555, p. 5 (La. App. 1 Cir. 8/11/08), 993 So. 2d 725, 729-30.
In ruling on a motion for summary judgment, the judge's role is not to evaluate the weight of the evidence or to determine the truth of the matter, but instead to determine whether there is a genuine issue of triable fact. All doubts should be resolved in the non-moving party's favor. Hines v. Garrett, XXXX-XXXX, p. 1 (La. 6/25/04), 876 So. 2d 764, 765.
A fact is material if it potentially insures or precludes recovery, affects a litigant's ultimate success, or determines the outcome of the legal dispute. A genuine issue is one as to which reasonable persons could disagree; if reasonable persons could reach only one conclusion, there is no need for trial on that issue and summary judgment is appropriate. Id. at 765-66.
On motion for summary judgment, the burden of proof remains with the movant. However, if the moving party will not bear the burden of proof on the issue at trial and points out that there is an absence of factual support for one or more elements essential to the adverse party's claim, action or defense, then the non-moving party must produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial. If the opponent of the motion fails to do so, there is no genuine issue of material fact and summary judgment will be granted. LSA-C.C.P. art. 966(C)(2).
When a motion for summary judgment is made and supported as provided in LSA-C.C.P. art. 967, an adverse party may not rest on the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in LSA-C.C.P. art. 967, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be rendered against him. LSA-C.C.P. art. 967(B). See also Board of Supervisors of Louisiana State University v. Louisiana Agricultural Finance Authority, XXXX-XXXX, p. 9 (La. App. 1 Cir. 2/8/08), 984 So. 2d 72, 79-80; Cressionnie v. Intrepid, Inc., XXXX-XXXX, p. 3 (La. App. 1 Cir. 5/14/04), 879 So. 2d 736, 738.
Because it is the applicable substantive law that determines materiality, whether a particular fact in dispute is material can be seen only in light of the substantive law applicable to the case. Richard v. Hall, XXXX-XXXX, p. 5 (La. 4/23/04), 874 So. 2d 131, 137; Dyes v. American National Property and Casualty Company, XXXX-XXXX, p. 4 (La. App. 1 Cir. 6/25/04), 886 So. 2d 448, 451, writ denied, XXXX-XXXX (La. 10/29/04), 885 So. 2d 592; Cressionnie v. Intrepid, Inc., XXXX-XXXX at p. 3, 879 So.2d at 738-39.
Louisiana's Limitation on Non-Competition Agreements
Louisiana's limitation on non-competition agreements is found in LSA-R.S. 23:921, which, at the time of the 2002 contracts entered into by the parties in this case, provided in pertinent part as follows:
§ 921. Restraint of business prohibited; restraint on forum prohibited; competing business; contracts against engaging in; provisions for
A. (1) Every contract or agreement, or provision thereof, by which anyone is restrained front exercising a lawful profession, trade, or business of any kind, except as provided in this Section, shall be null and void....
B. Any person, including a corporation and the individual shareholders of such corporation, who sells the goodwill of a business may agree with the buyer that the seller will refrain from carrying on or engaging in a business similar to the business being sold or from soliciting customers of the business being sold within a specified parish or parishes, or municipality or municipalities, or parts thereof, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, not to exceed a period of two years from the date of sale.
C. Any person, including a corporation and the individual shareholders of such corporation, who is employed as an agent, servant, or employee may agree with his employer to refrain from carrying on or engaging in a business similar to that of the employer and/or from soliciting customers of the employer within a specified parish or parishes, municipality or municipalities, or parts thereof, so long as the employer carries on a like business therein, not to exceed a period of two years from termination of employment. An independent contractor, whose work is performed pursuant to a written contract, may enter into an agreement to refrain from carrying on or engaging in a business similar to the business of the person with whom the independent contractor has contracted, on the same basis as if the independent contractor were an employee, for a period not to exceed two years from the date of the last work performed under the written contract.
* * *
G. Any agreement covered by Subsections B, C, D, E, or F of this Section shall be considered an obligation not to do, and failure to perform may entitle the obligee to recover damages for the loss sustained and the profit of which he has been deprived. In addition, upon proof of the obligor's failure to perform, and without the necessity of proving irreparable injury, a court of competent jurisdiction shall order injunctive relief enforcing the terms of the agreement.
(Emphasis added.)
On appeal, Cycle Shop contends that the sale agreement between the parties did not include the "goodwill" of the motorcycle business, and therefore Paragraph (B) of LSA-R.S. 23:921 is not at issue in this case. Rather, Cycle Shop argues that the only portion of the contracts entered into by the parties that may be subject to the provisions of LSA-R.S. 23:921 is the consulting agreement, which is subject to Paragraph (C) of the statute. Thus, Cycle Shop asserts the trial court erred in applying Paragraph (B) of LSA-R.S. 23:921 to the facts of this case. We agree.
The first purchase agreement, signed by the parties on July 11, 2002, named the buyers as "Robert G. Miller, M.D. and Robert G. Miller, Jr.," and provided: "Seller is selling to Buyer and Buyer is buying from Seller the land, improvements and assets of the business known as Cycle Shack, located at 888 Old Spanish Trail in Slidell, Louisiana." This agreement did not state that the "goodwill" of the Cycle Shack business was being sold. In fact, the agreement specifically provided that the name "Cycle Shack" was not being sold, though it was agreed that the buyer could use the word "Cycle" in the name of its business. Thereafter, an amended agreement, signed on December 2, 2002, listed the buyers as "Robert G. Miller, M.D., Robert G. Miller, Jr.[,] Cycle Sport, LLC, a Louisiana Limited Liability Company represented herein by its manager/member, Robert G. Miller, Jr." The amended purchase agreement fixed prices for various items of movable property, including motorcycles, parts, and accessories, being sold, but likewise contained no provision conveying the "goodwill" of the business. The July 2002 purchase agreement did not mention a non-competition agreement between the parties; however, the December 2002 amended agreement stated, in pertinent part:
The purchase agreement is hereby amended to provide that J. Gary Jones and Kay Jones will be hired as independent contractor consultants to assist in the management and operation of the new dealership for a period of two years from the closing of the asset sale. The employment contract shall provide that during that two year period and for a two year period after the employment terminates, J. Gary Jones and Kay Jones and any business entity with which either or both are affliated shall not compete [with] Cycle Sport, LLC in St. Tammany Parish, Louisiana. The compensation paid to J. Gary Jones and Kay Jones is set at TWO HUNDRED THOUSAND DOLLARS, each.
A consulting agreement was signed by the parties on December 3, 2002, and provided, in pertinent part:
WHEREAS, J. Gary Jones Cycle Shack, Inc. ... has operated a motorcycle dealership in Louisiana doing business as the Cycle Shack for approximately thirty-five years; and
WHEREAS, the Cycle Shop is purchasing the assets of J. Gary Jones Cycle Shack, Inc.; and
WHEREAS, Consultants are the sole owners of all of the outstanding shares of stock of J. Gary Jones Cycle Shack, Inc.; and
WHEREAS, as a result of Consultants[`] long years of experience, the Cycle Shop desires to retain the services of Consultants with respect to continuing the operation of the dealership
NOW THEREFORE, the parties hereto agree as follows:
I. DURATION
Except as otherwise provided in this Agreement, the term of this Consultant Agreement shall expire on the second (2nd) anniversary of the date of execution hereof. Consultants [agree] and shall be obligated to provide consulting services and perform hereunder for the full term of this Agreement.
II. FEES
In consideration of the services provided to the Cycle Shop herein, the Cycle Shop shall pay to the Consultants a fee of TWO HUNDRED THOUSAND AND NO/100'S ($200,000.00) DOLLARS each, which Consultants acknowledge receipt.
* * *
IV. COVENANTS
A. Consultants specifically acknowledge that, pursuant to this Agreement, Consultants will receive valuable and confidential information, including without limitation, information regarding the operational, sales, promotional, and marketing methods and techniques of The Cycle Shop and the System. Consultants [covenant] that, during the term of this Agreement, except as otherwise approved in writing by The Cycle Shop, Consultants shall not, either directly or indirectly, or on behalf of, or in conjunction with, any person, persons, partnership, or corporation:
1. Divert or attempt to divert any business or customer of the Cycle Shop to any competitor by direct or indirect inducements or otherwise, or to do or perform, directly or indirectly, any other act injurious or prejudicial to the business operations and/or goodwill associated with The Cycle Shop;
2. Employ or seek to employ any person who is, at that time, employed by The Cycle Shop, or otherwise, directly or indirectly, induce such person to leave his or her employment therewith; or
3. Own, maintain, operate, engage in, or have an interest in any business similar to the Cycle Shop within the Parish of St. Tammany, State of Louisiana.
B. Consultants covenant that, except as otherwise approved in writing by the Cycle Shop, Consultants shall not, regardless, of the cause for termination, either directly or indirectly, for Consultants, or through, on behalf of, or in conjunction with any person, persons, partnership, corporation, limited liability company or other entity:
1. For two (2) years following termination, divert or attempt to divert any business or customer of the Cycle Shop to any competitor by direct or indirect inducements or otherwise, or to do or perform, directly or indirectly, any other act injurious or prejudicial to the business operations and/or goodwill associated with The Cycle Shop; or
2. For two (2) years following termination, employ or seek to employ any person who is, at the time, employed by The Cycle Shop, or otherwise, directly or indirectly, induce such person to leave his or her employment therewith; or
3. For two (2) years following termination, own, maintain, engage in, or have an interest in any business similar to the Cycle Shop which is located within the Parish of St. Tammany, State of Louisiana.
* * *
VII. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
A. This Agreement does not constitute either Consultant to be an agent, legal representative, joint venturer, partner, employee or servant of The Cycle Shop for any purpose whatsoever. It is understood and agreed that Consultants shall be independent contractors and are in no way authorized to make any contract, agreement, warranty, or representation on behalf of The Cycle Shop. The parties further agree that this Agreement does not create a fiduciary relationship between them.
* * *
X. SEVERABILITY AND CONSTRUCTION
A. Except as expressly provided to the contrary herein, each paragraph, part, term, and/or provision of this Agreement shall be considered severable; and if, for any reason, any section, part, term, and/or provision herein is determined to be invalid and contrary to, or in conflict with, any existing or future law or regulation by a court or agency having valid jurisdiction, such shall not impair the operation, or have any other effect upon, such other portions, sections, parts, terms, and/or provisions of this Agreement as may remain otherwise intelligible, and the latter shall continue to be given full force and effect to bind the parties hereto; and said invalid portions, sections, parts, terms, and/or provisions shall be deemed not to be part of this Agreement.
We agree with Cycle Shop that the contractual provisions, along with the other evidence submitted on motion for summary judgment,[2] do not evidence an intent to convey the "goodwill" of the Cycle Shack business, but rather indicate that certain assets of the company were sold and its owners, who continued to run the Cycle Shack business at their Mississippi location, were hired as independent contractors to provide consulting services to Cycle Shop.
On the contrary, the Joneses argue to this court that the consulting agreement entered into by the parties was essentially part and parcel of the sale of the goodwill of the business and therefore subject to the provisions of Paragraph (B) of LSA-R.S. 23:921, asserting that "circumstances establish[] that Plaintiff purchased the probability that the patrons who frequented Cycle Shack prior to the sale would continue to frequent Cycle Shop after the sale."[3] (Original emphasis omitted.)
In support of this argument, the Joneses submitted an excerpt from the deposition of Robert G. Miller, Jr., in which he stated the following:
[Gary Jones] wanted a consulting agreement so he could save on taxes and I wanted a noncompete agreement so he wouldn't come in and raid my employees and set up another dealership or operate out of Slidell.
When asked what type of services the Joneses provided to Cycle Shop as a result of the consulting agreement, Mr. Miller replied, "Not a whole lot. I went up there and met with Gary on one occasion. He was less than helpful."[4]
Despite the Joneses' assertions, Gary Jones stated in his affidavit filed with the trial court that "[p]ursuant to the Consulting Agreement, I was to render services to Cycle Shop in connection with its operation of a motorcycle dealership in Slidell, Louisiana." Further, in Robert G. Miller, Jr.'s affidavit, he stated the following:
[O]n and before December 2, 2002, the Cycle Shack operated from two locations, one in Picayune, Mississippi and the other at 888 Old Spanish Trail, Slidell, Louisiana and also maintained a warehouse. . . . Cycle Shack's assets consisted of the land and improvements at the Mississippi and Louisiana locations and the warehouse, plus the inventory, parts, accessories and furnishings at each location, and the warehouse, plus the personal vehicles of Gary and Kay Jones[.] . . . [O]n December 2, 2002, the Cycle Shop purchased certain assets from the Slidell, Louisiana location of the Cycle Shack. . . . [T]he assets purchased from the Cycle Shack were considerably less than the one-half of the assets owned by the Cycle Shack at the time of the sale, consisting only of some of the inventory, furnishings, parts and accessories located at the Slidell location[.] . . . Cycle Shop did not purchase any of the land and improvements of Cycle Shack at either of the business locations or the warehouse, nor any inventory, parts, accessories and furnishings at the Picayune location or the warehouse, nor any personal vehicles of Gary and Kay Jones, and in particular, Cycle Shop did not purchase the goodwill of the Cycle Shack and in fact, the Cycle Shack has continued to operate continuously under the same name from before the sale through the present under the name Cycle Shack[.] . . . [F]ollowing the sale, Cycle Shack used mass media advertising to inform its customers of the sale and that all customers were requested to do business with the Cycle Shack.
In order to prevail on a motion for summary judgment, the movant, in this case the Joneses, are required by LSA-C.C.P. art. 966 to establish through pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, that there is no genuine issue as to material fact and that mover is entitled to judgment as a matter of law. Herein, the Joneses have failed to show that the sales agreement at issue herein conveyed the "goodwill" of a business, triggering the application of LSA-R.S. 23:921(B).
In support of its position that the non-compete provision of the consulting agreement at issue herein is valid, Cycle Shop cites to this court the case of Newton and Associates, Inc. v. Boss, 2000-889 (La. App. 5 Cir. 10/18/00), 772 So. 2d 793, writ denied, XXXX-XXXX (La. 1/12/01), 781 So. 2d 559, as holding that a non-competition agreement covering a term of employment is not governed by LSA-R.S. 23:921, rather it is only a post-termination non-competition agreement that is subject to the limitations contained in LSA-R.S. 23:921. In Newton, the employment contract entered into contained a covenant that the employee would not compete with the business of his employer during the term of his employment and for two years after its termination. In deciding that the non-competition clause applicable during the term of employment was not subject to LSA-R.S. 23:921, the Fifth Circuit reasoned as follows:
Reading the statute in its entirety, we find that the statute was intended to apply to the time period following the termination of a relationship. Subsection (B) of the statute, pertaining to the sale of corporations, limits non-competition agreements to a period "not to exceed a period of two years from the date of sale." The second part of subsection (C), applicable to this case, limits non-competition provisions for independent contractors to "a period not to exceed two years from the date of the last work performed under the written contract." Subsection (D) addresses non-competition agreements in partnerships and provides that they are "not to exceed a period of two years from the date of dissolution." Subsection (E) relates to franchise agreements and limits the non-competition provisions in those agreements to "a period not to exceed two years following severance of the franchise relationship." And, finally, Subsection (F) relating to the computer software industry limits non-competition agreements to "a period not to exceed two years from the date of the termination of employment."
In all instances addressed by the statute, the statutory limit for the non-competition agreement refers to a time period that commences at the termination of the relationship. Similarly, in this case, concerning employment agreements, we find that the time limit set out in the statute refers to a two year period following termination of employment and does not include time prior to the termination. If the statute were intended, as Boss argues, to limit non-competition to a total of two years whether during employment or following the termination of the employment, it would have simply stopped with the phrase "not to exceed a two year period," without adding "from termination of employment." The addition of that phrase was for a purpose, to specify that the two year period commenced after termination of employment.
Thus, in line with this interpretation, we find no error in the trial court ruling that the time period specified in the agreement between these parties did not violate the law and was valid and enforceable.
Newton and Associates, Inc. v. Boss, 772 So.2d at 795-96 (emphasis added). We agree with this analysis.
The non-compete agreement in the instant case was plainly written in conjunction with an employment contract between Cycle Shop and the Joneses; the agreement did not allow competition during the two-year term of the contract (a matter that, as pointed out hereinabove, is not controlled by LSA-R.S. 23:921) or for a post-termination period of two years. This two-year post-termination non-competition agreement is in compliance with the provisions of LSA-R.S. 23:921(C). Therefore, the Joneses have failed to establish they are entitled to summary judgment invalidating the noncompete provision of their consulting agreement with the plaintiff herein.
Having decided the appeal on the basis stated herein, we find it unnecessary to address the remaining assignments of error.
CONCLUSION
For the reasons assigned, the summary judgment rendered by the trial court in favor of Gary Jones and Kay Jones is hereby vacated, and the matter is remanded for further proceedings in accordance with the foregoing opinion. All costs of this appeal are to be borne by Gary Jones and Kay Jones.
JUDGMENT VACATED; REMANDED TO TRIAL COURT.
NOTES
[1] Although Cycle Shop was purchasing Cycle Shack's business located at 888 Old Spanish Trail in Slidell, Louisiana, the name of the business, "Cycle Shack," was not sold, as evidenced by the following provision in the purchase agreement: "Seller is not selling and buyer agrees not to use the name `Cycle Shack.' More specifically, Buyer agrees not to use the word `Shack,' but may use the word `Cycle' in the name of the business."
[2] In addition to other evidence discussed herein, we note that the affidavit of Gary Jones is contained in the record, and states in pertinent part that: he currently owns the Cycle Shack, Inc. ("Cycle Shack") in Picayune, Mississippi; on June 9, 2004 a Cycle Shack employee (Terrell "Terry" Fox) requested permission to take two "unserviced" motorcycles to "Bike Night" at the Southside Cafe in Slidell, along with another Cycle Shack employee (William Bounds); the employees themselves bore the expense of the trip and were not reimbursed by him (Jones) or Cycle Shack; the bikes taken were not for sale and no supplies required for a sale were provided to these employees; the motorcycles were not serviced and had no fuel or charged batteries; he (Jones) is not authorized by the manufacturers to sell unserviced motorcycles; he (Jones) did not have a license to sell motorcycles in St. Tammany Parish; following Bike Night, the motorcycles were returned to Cycle Shack; he (Jones) never attempted to divert business or customers away from the Cycle Shop; he (Jones) has never attempted to employ or induce away any employee of Cycle Shop; he (Jones) has never committed any acts injurious to the Cycle Shop business; and he (Jones) has not owned, maintained, operated, engaged in, or had an interest in any business similar to the Cycle Shop in St. Tammany Parish. The affidavit of Terrell "Terry" Fox was also filed into the record and stated that: he was the sales manager at Cycle Shack in Picayune, Mississippi, from March of 2004 through January of 2005; Bike Night is an event that allows motorcycle enthusiasts to come together; it was his idea to go to Bike Night; he completed all the necessary paperwork regarding the space used during Bike Night; he paid the rental fee for the space used during Bike Night; he was not paid by Gary Jones to attend Bike Night; he was never reimbursed by Gary Jones for the expenses related to Bike Night; he asked William Bounds to go with him to Bike Night; they used William's personal vehicle to transport two motorcycles from the Cycle Shack showroom to display at Bike Night; these two motorcycles were not serviced; a motorcycle has to be serviced before it can be sold; he did not have a license to sell motorcycles in Louisiana on Bike Night; they did not bring any receipt forms, sales forms, order forms, credit applications, or anything else needed to make a sale; there were no discussions regarding financing, purchase price, or negotiations held with anyone during Bike Night; business cards that he distributed had his name on them; brochures on display were manufacturers' brochures; the two motorcycles were returned to the Cycle Shack; and he has never performed any injurious act with respect to the Cycle Shop business, nor sought to employ any Cycle Shop employees. In contrast to the statements made by Mr. Jones and Mr. Fox, the Cycle Shop introduced the depositions of William Bounds and Joseph Miciello. Mr. Bounds, who was at the time of his affidavit a Picayune, Mississippi police office, asserted that he was instructed by J. Gary Jones "to set-up and operate a sales tent at Southside Cafe ... in Slidell, Louisiana, in connection with Southside's `bike night' on June 9, 2004." Mr. Bounds further stated that two Cycle Shack motorcycles were set up in a tent in Southside's parking lot for purposes of the sales display, and that the tent had a sign on it with Cycle Shack's name and Picayune, Mississippi address. Mr. Bounds stated that on June 9, 2004 he and another Cycle Shack employee "passed out business cards and brochures and solicited sales." Mr. Miciello's affidavit stated that he attended the June 9, 2004 "bike night" and assisted Cycle Shack employees place motorcycles on display in a tent, which was equipped with a Cycle Shack sign. Mr. Miciello observed the two Cycle Shack "salesmen" pass out business cards and brochures and solicit sales during the event.
[3] On this point, the Joneses cite the case of Godwin v. Godwin, 533 So. 2d 1009, 1010 (La. App. 1 Cir. 1988), writ denied, 537 So. 2d 1165 (La. 1989), which they contend holds that "goodwill" is defined as "the probability that customers of an established business will continue to patronize the business." However, we do not find the Godwin case authoritative with respect to the issue before this court, as the ownership of the "goodwill" at issue in Godwin case was not in dispute (each spouse/litigant owned a part). Contrarily, in the case before this court, the argument turns on whether "goodwill" of a business was conveyed in a sale. Such a fact must be proven and not inferred. Nor do we find jurisprudence cited by the Joneses (Gold & Suckle, Inc. v. Suckle, 335 So. 2d 713 (La. App. 2 Cir.), writ denied, 338 So. 2d 700 (1976) and Marshall Brown Insurance Agency, Inc. v. Toledano, 292 So. 2d 266, 268 (La. App. 4 Cir. 1974)) to be authoritative, as both cases were decided prior to significant amendments to LSA-R.S. 23:921.
[4] We do not find the fact that the Joneses purportedly breached their agreement to provide consulting services to Cycle Shop dispositive of the nature of the agreement between the parties in this case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1546659/ | 38 F.2d 45 (1930)
LEE
v.
STATE BANK & TRUST CO.
No. 180.
Circuit Court of Appeals, Second Circuit.
February 10, 1930.
*46 Lesser Bros., of New York City (David Haar, of New York City, of counsel), for plaintiff-appellant.
Max Silverstein, of New York City (Abraham Rickman and Murray Jacobs, both of New York City, of counsel), for defendant-appellee.
Before MANTON, L. HAND, and MACK, Circuit Judges.
MACK, Circuit Judge.
Appellant, trustee for the Perfect Shoe Manufacturing Company, adjudicated bankrupt on April 26, 1927, sought to set aside as fraudulent a series of assignments of accounts receivable given to secure 35 demand notes made by bankrupt to defendant bank from October 15, 1926, to the date of bankruptcy, and as to accounts assigned in April, 1927, to recover as a preference the excess of such assigned accounts over money actually borrowed during that month. The District Court, on defendant's motion, dismissed the bill at the close of the plaintiff's case. Since the court wrote no opinion, but confined itself to a dismissal on the merits, the issues presented on this appeal require that we re-examine the entire record, ascertain the facts, and determine their legal effect.
1. We may at the outset eliminate any question of preference. The evidence on this issue showed that about two days before the involuntary petition was filed a representative of defendant visited bankrupt's premises and discovered that the operation of the plant had been somewhat curtailed. He did not, however, make any detailed examination of the books, even though he thought the prospects unfavorable "judging from the way the plant was then conducted, plus reports we had gotten from the trade outside." Plaintiff contends that as a result of this visit defendant was put on inquiry, and was chargeable with knowledge of bankrupt's insolvent condition. The difficulty, however, is that plaintiff has not satisfactorily established the date of this last visit. The sole witness, defendant's credit manager, insisted that he was there "a day or two before the bankruptcy was filed." Taking this in its strongest light, it would place the visit on April 24th, and the last of the series of notes and assignments had been made on the preceding day, April 23d. On this record, there is nothing to show that even at that late date defendant had any reasonable cause to believe the company insolvent, and we must hold that the elements of a preference have not been established.
2. The validity of the assignments turns upon the practice as to returned goods. Out of the total of $96,150.91 of assigned accounts representing merchandise sold, some $6,600 worth of shoes had been returned by the buyers and accepted by bankrupt. The collateral agreement under which the accounts were assigned provided "that in the event of the rejection and return of all or any part of the merchandise so sold, shipped and delivered, that we [the bankrupt] will receive the same in trust for the said The State Bank under advice to them and surrender it, or the proceeds thereof if sold, upon demand. * * *" Rudawsky, the president of the company, testified that the bank had been given duplicate invoices and receipts signed by the buyers, and that once each week he personally notified it, either orally or in writing, that certain of the merchandise had been returned. This was denied by defendant's vice president. As Rudawsky *47 further testified, the returned goods were put back upon the shelves, bankrupt's officers segregated them, and considered that they "practically do not belong to us."
Despite this statement, there is on this record a clear prima facie showing that these returned goods were in practice taken back without consultation with the bank and freely sold, not as the property of or on behalf of the bank, but as the property of the shoe company; no other goods or accounts were substituted therefor, and new loans were obtained, secured by the assignment of accounts representing this returned and resold merchandise. In this respect, the practice differed from that adopted by the parties in Re Bernard & Katz, Inc., 38 F.(2d) 40, decided February 3, 1930. There the accounts covering all returned merchandise were promptly replaced by the assignment of other accounts to the original assignee. In the case at bar, the above-mentioned practice was continued throughout November, December, and January, and, so far as appears from the record now before us, was carried on down to the date of the petition.
3. The rights of the parties are governed by the law of New York. Hiscock v. Varick Bank, 206 U.S. 28, 27 S. Ct. 681, 51 L. Ed. 945. Under that law it has been settled, since at least 1837, that a chattel mortgage under which the mortgagor, not only remains in possession, but is authorized to sell the goods and use the proceeds for his own purposes, is a fraud on creditors. Wood v. Lowry, 17 Wend. (N. Y.) 492. We recently had occasion to review the extent and limitations of this doctrine in Brown v. Leo (C. C. A.) 12 F. (2d) 350, 351. We there held that reservation of dominion must be established by an actual agreement creating that power and that mere acquiescence of the mortgagor is not enough. Gardner v. McEwen, 19 N.Y. 123; Frost v. Warren, 42 N.Y. 204. While such agreement may be dehors the mortgage (Southard v. Benner, 72 N.Y. 424; Potts v. Hart, 99 N.Y. 168, 1 N.E. 605), and contrary to the express terms thereof, the imputation of fraud is met if the actual agreement of the parties is that the mortgagor must turn over the proceeds of any sale to the mortgagee.
The assignment of an open account as security for a debt is, of course, different in many respects from a mortgage or pledge of chattels; theoretically the legal title to the chose in action cannot be assigned. See Williston, Is The Right of an Assignee of a Chose in Action Legal or Equitable? 30 Harvard Law Review, 97; 31 Id. 822. If, as was formerly thought, the imputation of fraud because of retained full control over a mortgaged chattel was based solely upon reputed or ostensible ownership, it would seem to be inapplicable to the assignment of accounts receivable. In re Hub Carpet Co., 282 F. 12 (C. C. A. 2d). But, on appeal (Benedict v. Ratner, 268 U.S. 353, 45 S. Ct. 566, 569, 69 L. Ed. 991), the Supreme Court held, in this New York case involving an agreement under which the assignor retained control over the assigned accounts, that the rule "rests not upon seeming ownership because of possession retained, but upon a lack of ownership because of dominion reserved. It does not raise a presumption of fraud. It imputes fraud conclusively because of the reservation of dominion inconsistent with the effective disposition of title and creation of a lien."
That case determined that there is no distinction to be drawn between a mortgage or pledge of chattels and an assignment of book accounts in respect to the reservation of unrestricted power of disposition for the mortgagor's or assignor's own purposes; in both, the transaction is deemed conclusively fraudulent irrespective of whether or not additional credit was thereby obtained. Cf. Brown v. Leo (C. C. A.) 12 F. (2d) 350, 351, and cases cited. The chattel cases make clear that, while reservation of dominion must in fact be agreed upon, the intent need not be found in express words (Gardner v. McEwen, Frost v. Warren, supra); it may be either oral or written (Southard v. Benner, Potts v. Hart, supra), and may be deduced from the acts of the parties notwithstanding a written agreement expressly excluding it. Moreover, even though the reserved right of disposition extends to but a part of the property transferred, the entire transfer is thereby vitiated. Potts v. Hart, 99 N.Y. 168, 171, 1 N.E. 605.
4. So much for the law; the principal problem is its application to the case at bar. If, as testified, the bank had weekly notice of returned merchandise as a regular course of the business beginning in October, it knew that these goods or their proceeds should be in bankrupt's possession and held in trust for it in accordance with the provisions of the collateral agreement. *48 At no time during the entire six months period, did bankrupt make any statement to defendant in respect to the accounts or the returned goods, or the new accounts arising from the sale of such returned goods. The bank itself made no inquiry or demands at any time; it not merely acquiesced in the bankrupt's acts, but displayed an absolute indifference as to the manner in which bankrupt dealt with the accounts, the returned merchandise, or the proceeds of any sales thereof. Clearly, on this record, the court should, or at least may, well find that the bank did not believe that the debtor had kept all the returned goods throughout the entire period. And it certainly knew that, if the debtor had sold some of them, it had neither substituted new accounts nor turned over the proceeds to the bank. In these circumstances, the inference is, if not inevitable, at least justifiable that the bank knew before April, 1927, and by its failure to act, sanctioned the breach by the debtor of its trust agreement.
While its acquiescence in a practice contrary to the written agreement would not, under the chattel cases above cited, invalidate the assignments theretofore made, it does clearly indicate an intention that such practice, rather than the terms of the agreement, should govern assignments made thereafter. In other words, it clearly indicates that the written words of trust do not express, but, on the contrary, cover up, the real agreement of the parties.
It is unnecessary to determine on this appeal when the bank in fact knew and sanctioned bankrupt's methods of dealing with returned goods; it suffices that it must have been some time before the bankruptcy. Therefore, at least as to the later transactions, the bank at the time of the assignments in fact agreed, contrary to the written trust agreement, that its assignor could exercise full dominion over both the accounts and the returned goods, within the rule of Benedict v. Ratner, supra, since any or all of the merchandise represented by such accounts might have been returned, accepted by bankrupt, and used for its own purposes. Therefore, on the present record, this case is clearly to be differentiated from In re Bernard & Katz, Inc., supra. In that case, we said as to the proof:
"The most that can be inferred is that the lender was content to let the borrower dispose of the returns if he substituted therefor new accounts. There is nothing to prove that the borrower did not abide by the terms of the collateral note and hold the returned merchandise in trust until new accounts were substituted. The proof falls short of showing that the borrower was permitted to use the returns without accountability, or that in fact he did so use them. We cannot assume the borrower to have been faithless to his trust. Neither Bernard nor Katz was called to testify and Ritter expressly denied knowledge of any such faithlessness. The borrower's privilege of disposition of returned goods was conditioned upon substituting new accounts; therefore, the borrower did not reserve unfettered dominion over the returned goods, and `fraud,' such as vitiated the transaction in Brown v. Leo, was not present."
In view of defendant's denial of any weekly notices of returned merchandise and the meagerness of the evidence, we are of the opinion that in the present case the better course, if allowable, will be to grant defendant the opportunity to offer evidence in support of its defense. On the entire record, the trial judge will then determine whether or not defendant had sufficient knowledge, and, if so, at what time, of bankrupt's practice in regard to the returned merchandise, to justify or compel a finding that it in fact authorized the continuance of such practice in subsequent assignments in lieu of adherence to the course of trust procedure expressed in the documents. The ultimate burden of proof of fraud is on the plaintiff trustee; we hold only that he has shown enough to put upon defendant the burden of going forward.
5. While no lien would arise merely by virtue of assignments, dominion over which was agreed to be retained by the assignor, nevertheless, if the loans made by the bank were not given with intent to hinder or delay creditors, the transaction was not void; as to moneys actually collected on the accounts prior to the date of the bankruptcy, the bank would be in the same position as any creditor to whom payments had been made at the times of collection; that is, the payments would be recoverable only if the elements of unlawful preference were established. But, as heretofore stated, the evidence fails to sustain plaintiff in this respect. It follows, therefore, that moneys collected before bankruptcy may be retained; moneys collected by defendant *49 thereafter, through payment of these accounts, are subject to the further determination of the court on the entire case.
6. The final question of practice remains, whether an appellate court may send an equity case back for further evidence, where defendant's motion to dismiss on the merits at the close of plaintiff's case was granted. While an appellate court will ordinarily dispose finally of an equity case, we see no reason why it must necessarily do so. The doubt arises because there was in equity no motion to dismiss on the merits at the close of the plaintiff's case. At law, if the motion were erroneously granted, the reviewing court, in reversing, would grant a new trial; if, on the other hand, the motion were denied, defendant would proceed to offer evidence. Originally, in equity, no oral evidence was taken at the hearing, but testimony was taken by deposition in answer to formal written interrogatories. See Smith, Chancery Practice (3d Ed.) 540-553. The first Judiciary Act, that of 1789, provided that the mode of proof in federal cases, both at law and in equity, should be the same, by oral testimony and examination of witnesses in open court. 1 Stat. 73, 88, c. 20, § 30. But the act of 1802 repealed this provision, and, following the English system, provided that in all suits in equity the court might, in its discretion, upon the request of either party, order evidence to be taken by deposition. 2 Stat. 156, 166, c. 31, § 25. The first Equity Rules, those of 1822, effected no change in the practice which had grown up by that time of taking testimony by deposition (7 Wheat. xx, rule xxv); and, under the Rules of 1842, examination by deposition and commission was the usual course; oral testimony in court was allowable only when the judge in his discretion deemed it advisable. 17 Pet. lxii, rules lxvii-lxviii. By a new rule, adopted in 1861, oral testimony was transferred from open court to hearing before an examiner, but was made available to either party on giving written notice to the other. 1 Black 7, rule 67. Meanwhile the English chancery practice had been completely changed, so as to make viva voce testimony the rule and deposition the infrequent exception. See Loreburn, Reformed Equity Procedure in England, 36 Harvard Law Review, 99, 104. A similar modification was adopted by the revised Equity Rules of 1912; rule 46 required that testimony in equity cases be taken in open court, except in special cases. 226 U. S. (Append.) 13 (28 USCA § 723, p. 23).
This brief historical survey is necessary for the proper consideration of an earlier decision of this court. Of course, when no witnesses were examined in open court, there was no occasion for a defendant to move for dismissal at the close of plaintiff's evidence, and no case has been found in which this was done under the strict old practice. In Alexander v. Redmond, 180 F. 92 (C. C. A. 2d), a jury was impaneled in an equity case to try the issues of fact; after plaintiff rested, defendant's motion for a directed verdict was granted. On appeal, this court reviewed fully the facts as well as the law, reversed the decree, and remanded the cause, with instructions to enter a decree for plaintiff. Defendant's request that a new trial be allowed was denied, on the ground that in equity an appellate tribunal finally disposes of the case as presented by the record. It was pointed out that the confusion undoubtedly resulted from the identity of practice at law and in equity in the state courts.
If such a motion be denied in the trial court, it is for that court to determine whether or not leave should be given defendant to offer evidence. But if it be granted, and the decree dismissing the bill on the merits be reversed on appeal, a gross miscarriage of justice may result, if a decree for plaintiff be entered without giving defendant an opportunity to go forward with his evidence. In such a case, Alexander v. Redmond, supra, does not necessarily require this court to dispose of the cause on what may be an entirely unsatisfactory record. The Redmond Case was decided in 1910, before the new Equity Rules as to taking of testimony in open court. The hearing in an equity case now closely resembles a trial at law, the similarity between the equity practice in state and federal courts is greater, and the possibility of confusion in the matter of motions has increased. In substance and effect there is but little difference between a motion to dismiss a bill in equity on the merits at the conclusion of plaintiff's evidence, and a motion to dismiss the bill for want of equity on the face of it supplemented, as frequently happens, particularly in the patent cases, by a stipulation that some matters not apparent on the face of the bill shall be considered on such motion. Cf. Deitel v. La Minuette Trading Co. (C. C. A.) *50 37 F.(2d) 41, decided January 6, 1930, Moreover, the power to remand a case for the taking of further evidence is not infrequently exercised in admiralty. In our judgment, there is nothing in the statutes or present Equity Rules to prohibit its use in equity in a proper case.
Reversed and remanded for further proceedings in conformity with this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/589967/ | 973 F.2d 1033
61 USLW 2160, 24 U.S.P.Q.2d 1161
BRISTOL-MYERS SQUIBB COMPANY, Plaintiff-Appellee, Cross-Appellant,v.McNEIL-P.P.C., INC., Defendant-Appellant, Cross-Appellee.
Nos. 1387, 1492, Docket 92-7212, 92-7260.
United States Court of Appeals,Second Circuit.
Argued April 30, 1992.Decided Aug. 21, 1992.
Gregory L. Diskant, New York City (Stephen P. Younger, Lisa C. Cohen, Mary E. Mulligan, Patterson, Belknap, Webb & Tyler, of counsel), for appellant.
Lawrence I. Weinstein, New York City (Alfred T. Lee, Samuel D. Rosen, Brendan J. O'Rourke, Milgrim Thomajan & Lee, of counsel), for appellee.
Before: MESKILL, Chief Judge, NEWMAN, Circuit Judge, and ZAMPANO,* District Judge.
MESKILL, Chief Judge:
1
This is an appeal from a preliminary injunction entered in the United States District Court for the Eastern District of New York, Spatt, J., in an action brought under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and various state unfair competition laws. The preliminary injunction prevents the appellant, McNeil-P.P.C., Inc. (McNeil) from marketing its product, "Tylenol PM," in the trade dress that it had been using prior to the injunction. Also before us is a cross-appeal by Bristol-Myers Squibb Company (Bristol) from the denial of preliminary injunctive relief preventing McNeil from using the term "PM" in connection with a combination analgesic/sleep aid.
2
As in any case under section 43(a) of the Lanham Act, the ultimate question here is whether, because of the challenged markings, consumers are likely to be confused as to the origin or sponsorship of goods. Because we believe that the district court erred in finding that the "Tylenol PM" trade dress was likely to cause confusion among purchasers due to its similarity to Bristol's "Excedrin PM" trade dress, we reverse the preliminary injunction. Because we agree with the district court's denial of Bristol's request preliminarily to enjoin McNeil's use of the term "PM," we affirm as to the cross-appeal.
3
Affirmed in part and reversed in part.
BACKGROUND
4
Bristol is a major pharmaceutical company that produces and markets "Excedrin," a nationally known over-the-counter analgesic pain reliever. Since 1968 Bristol has manufactured and distributed "Excedrin PM," a product that combines an analgesic with a sleep aid.
5
Although there have been some alterations over the years, the packaging of "Excedrin PM" has remained fairly constant. That packaging consists of an outer carton with a solid deep blue background, white lettering for the name "Excedrin PM," which appears on a single line, with "Excedrin" in lower case lettering except for the initial "E" and "PM," which are in capital letters. In the lower right portion of the face of the box is a depiction of two light blue tablets, each marked "PM." In 1988, Bristol introduced a caplet form of "Excedrin PM." The trade dress for this caplet form is similar to that of the tablet form except that the background is a solid dark green and there is a depiction of two caplets each displaying the full name "Excedrin PM." On both packages the word "Excedrin" occupies approximately one-third of the total face of the package.
6
McNeil is also a major pharmaceutical company. Among McNeil's products is "Tylenol," which, like "Excedrin," is a nationally famous over-the-counter analgesic. In 1991 McNeil introduced "Tylenol PM," which, like "Excedrin PM," is a combination analgesic/sleep aid. Although there are slight differences in the composition of the two products, it is undisputed that those differences are not material and that the two products are functionally interchangeable. Like "Excedrin PM," "Tylenol PM" comes in two forms: tablet and caplet.
7
The packaging for the tablet form of "Tylenol PM" consists of a box with a green background that shifts from dark green at the top of the box to light green at the bottom and the name "Tylenol" in white capital letters with "PM" in yellow capital letters on the same line. In addition, the package depicts two tablets on the lower right face of the package, one of which is imprinted with the word "Tylenol" and the other of which is marked "PM." The trade dress for the caplet form of "Tylenol PM" resembles that of the tablet form except that the background fades from dark to light blue rather than green and two caplets, each of which reads "Tylenol PM," are depicted instead of the tablets. On both forms of the "Tylenol PM" trade dress, the word "Tylenol" occupies approximately one-third of the total area of the face of the package.
8
Shortly after "Tylenol PM" was introduced, Bristol filed this action before Judge Spatt in the United States District Court for the Eastern District of New York, seeking relief under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and on various state law grounds. Bristol moved for a preliminary injunction to prevent McNeil from using the term "PM" in connection with a combination analgesic/sleep aid and to prevent McNeil from marketing an analgesic/sleep aid in the "Tylenol PM" packaging described above.
9
Judge Spatt referred the matter to Magistrate Judge Orenstein pursuant to 28 U.S.C. § 636(b)(1)(B). The magistrate judge heard evidence and examined exhibits and the results of discovery. The magistrate judge filed a report in the district court in which he made certain findings of fact and ultimately recommended that the preliminary injunction be denied. Both parties made timely objections to various portions of the magistrate judge's report and the district court addressed the matter de novo pursuant to 28 U.S.C. § 636(b)(1).
10
The district court denied Bristol's request for an injunction preventing McNeil from using the term "PM" in connection with an analgesic/sleep aid, finding that "PM" in this context did not qualify for protection under section 43(a) of the Lanham Act. The district court granted, however, Bristol's request for an injunction with regard to the "Tylenol PM" trade dress because it found that Bristol had demonstrated that the similarities between the two packages were likely to cause consumer confusion 786 F. Supp. 182. Both parties appealed and a panel of this Court stayed the preliminary injunction pending appeal.DISCUSSION
I. PRELIMINARY INJUNCTION
11
In order to obtain a preliminary injunction, the moving party must demonstrate both (1) irreparable harm in the absence of the requested relief, and (2) either (a) a likelihood that it will succeed on the merits of the action, or (b) a sufficiently serious question going to the merits combined with a balance of hardships tipping decidedly in favor of the moving party. See Jackson Dairy v. H.P. Hood & Sons, 596 F.2d 70, 72 (2d Cir.1979) (per curiam). In the context of a Lanham Act claim both the likelihood of success on the merits and the potential for irreparable harm in the absence of preliminary relief may be demonstrated by a showing that a significant number of consumers are likely to be misled or confused as to the source of the products in question. Western Publishing Co. v. Rose Art Industries, 910 F.2d 57, 59 (2d Cir.1990).
12
We have jurisdiction to review the grant or denial of a preliminary injunction pursuant to 28 U.S.C. § 1292(a)(1). We review a district court's decision whether to issue a preliminary injunction only for an abuse of discretion. Doran v. Salem Inn, 422 U.S. 922, 931-32, 95 S. Ct. 2561, 2567-68, 45 L. Ed. 2d 648 (1975). "Applying legal standards incorrectly or relying upon clearly erroneous findings of fact may constitute an abuse of discretion." Haitian Centers Council v. McNary, 969 F.2d 1326, 1338 (2d Cir.1992) (citation omitted). We are not, however, limited to "reversing only when the lower court's action exceeds any reasonable bounds and to rubber-stamping with the imprimatur of an affirmance when it does not." Coca-Cola Co. v. Tropicana Products, 690 F.2d 312, 315 (2d Cir.1982) (citation omitted). Although our scope of review is limited, if we are left with " 'the definite and firm conviction that a mistake has been committed' " we will reverse the grant or denial of a preliminary injunction. See Standard & Poor's Corp. v. Commodity Exchange, 683 F.2d 704, 708 (2d Cir.1982) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525, 542, 92 L. Ed. 746 (1948)). With these principles in mind, we turn to the parties' specific claims.
II. THE LANHAM ACT CLAIMS
13
Neither the "PM" designator nor the "Excedrin PM" trade dress is a registered trademark. Bristol, therefore, relies on that part of the Lanham Act that addresses unregistered marks. Section 43(a) of the Lanham Act prohibits any person from using
14
in connection with any goods ... or any container for goods, ... any word, term, name, symbol, or device, or any combination thereof ... which ... is likely to cause confusion, or to cause mistake, or to deceive ... as to the origin, sponsorship, or approval of his or her goods ... by another person.
15
15 U.S.C. § 1125(a).1 "[I]t is common ground that § 43(a) protects qualifying unregistered trademarks and that the general principles qualifying a mark for registration under § 2 of the Lanham Act are for the most part applicable in determining whether an unregistered mark is entitled to protection under § 43(a)." Two Pesos, Inc. v. Taco Cabana, Inc., --- U.S. ----, ----, 112 S. Ct. 2753, 2757, 120 L. Ed. 2d 615 (1992) (citations omitted). As the words of the statute indicate, the central inquiry is whether the use of a marking is likely to cause consumer confusion.
16
Bristol makes two related claims under section 43(a). First, Bristol claims that the use by McNeil of the term "PM" in connection with its combination analgesic/sleep aid is likely to cause confusion as to the source, sponsorship or approval of "Tylenol PM." Second, Bristol claims that the overall look of the "Tylenol PM" packaging, its trade dress, is so similar to the trade dress of Bristol's "Excedrin PM" that consumers will confuse the two.
17
Before we will address whether an allegedly infringing mark is likely to cause consumer confusion, the plaintiff must show that its trademark or trade dress is of the type that deserves protection under section 43(a). See Thompson Medical Co. v. Pfizer, Inc., 753 F.2d 208, 213 (2d Cir.1985). The plaintiff then must demonstrate that the use by the defendant of a mark or dress is likely to cause consumer confusion because of the similarity between the defendant's mark or dress and the mark or dress of the plaintiff. See id.
18
A. Trademark Infringement: The "PM" Designator
19
To facilitate our analysis, we will deal first with the cross-appeal. Bristol appeals from the district court's refusal to grant preliminary injunctive relief preventing McNeil from using the term "PM" appended to its "Tylenol" trade name to designate its combination analgesic/sleep aid. Under the terms of the preliminary injunction, McNeil remains free to market "Tylenol PM" in a trade dress that does not resemble the "Excedrin PM" trade dress. The district court agreed with the magistrate judge that the term "PM" as used by Bristol did not warrant protection under section 43(a).
20
In making the preliminary inquiry into whether a particular mark is eligible for protection under section 43(a), we have established several categories into which we classify various marks. "Arrayed in an ascending order which roughly reflects their eligibility to trademark status and the degree of protection accorded, these classes are (1) generic, (2) descriptive, (3) suggestive, and (4) arbitrary or fanciful." Abercrombie & Fitch Co. v. Hunting World, 537 F.2d 4, 9 (2d Cir.1976). Suggestive, arbitrary and fanciful marks, "because their intrinsic nature serves to identify a particular source of a product, are deemed inherently distinctive and are entitled to protection." Two Pesos, --- U.S. ----, 112 S. Ct. at 2757. Generic marks are never entitled to protection, while a descriptive mark is eligible for protection "if it 'has become distinctive of the [producer's] goods in commerce.' This acquired distinctiveness is generally called 'secondary meaning.' " Id. --- U.S. at ----, 112 S. Ct. at 2757 (citations omitted).
21
Although we have not expressly articulated the standard of review appropriately applied to a district court's classification of a mark, other courts of appeals have found that classification to be a factual question, review of which is limited to whether the district court was clearly erroneous in its determination. See, e.g., Ford Motor Co. v. Summit Motor Products, 930 F.2d 277, 292 n. 18 (3d Cir.) ("The characterization of a mark is a factual issue.") (citations omitted), cert. denied, --- U.S. ----, 112 S. Ct. 373, 116 L. Ed. 2d 324 (1991); G. Heileman Brewing Co. v. Anheuser-Busch, 873 F.2d 985, 992 (7th Cir.1989) ("[T]he district court's classification of a term on the trademark spectrum is a factual determination subject to the 'clearly erroneous' standard of review."); Wiley v. American Greetings Corp., 762 F.2d 139, 141 (1st Cir.1985) ("Whether a design is 'inherently distinctive,' i.e., whether it is arbitrary or merely descriptive, is ordinarily a question of fact.") (citation omitted); Anheuser-Busch v. Stroh Brewery Co., 750 F.2d 631, 635 (8th Cir.1984) ("[T]he categorization of a term for which trademark protection is claimed is considered to be a factual issue and thus is to be reviewed under the clearly erroneous standard of Fed.R.Civ.P. 52(a).") (citations omitted); Soweco, Inc. v. Shell Oil Co., 617 F.2d 1178, 1183 n. 12 (5th Cir.1980) ("Any given term's correct categorization is a factual issue.") (citations omitted), cert. denied, 450 U.S. 981 (1981); cf. In re Northland Aluminum Products, 777 F.2d 1556, 1559 (Fed.Cir.1985) ("Whether a term is a common descriptive name is a question of fact" in context of trademark registration.) (citation omitted). We agree with these courts that the initial classification of a mark to determine its eligibility for protection is a question of fact left to the determination of the district court. We will substitute our own judgment on the matter for that of the district court only if the district court's determination is clearly erroneous. Fed.R.Civ.P. 52(a).
22
The district court classified the "PM" mark as descriptive. Bristol argues that the mark is suggestive. Neither party claims that the mark is generic, arbitrary or fanciful. The question in this case, therefore, is whether "PM," when affixed to an analgesic trade name, is descriptive or suggestive of the product, a combination analgesic/sleep aid.
23
A descriptive mark is one that " 'forthwith conveys an immediate idea of the ingredients, qualities or characteristics of the goods.' " Abercrombie & Fitch, 537 F.2d at 11 (citation omitted). "[A] term can be descriptive in two ways. It can literally describe the product, or it can describe the purpose or utility of the product." 20th Century Wear v. Sanmark-Stardust, 747 F.2d 81, 88 (2d Cir.1984), cert. denied, 470 U.S. 1052, 105 S. Ct. 1755, 84 L. Ed. 2d 818 (1985). A term is suggestive " 'if it requires imagination, thought and perception to reach a conclusion as to the nature of goods.' " Abercrombie & Fitch, 537 F.2d at 11 (citation omitted).
24
Although the line between descriptive and suggestive may be difficult to discern, see id. at 10-11, the consequence of the classification is important. A descriptive term is subject to protection under section 43(a) only if the proponent of protection demonstrates that, in addition to the ordinary common meaning of the word or words, the term has acquired a secondary meaning in its particular market--that the consuming public primarily associates the term with a particular source. See Centaur Communications, Ltd. v. A/S/M Communications, 830 F.2d 1217, 1221 (2d Cir.1987); Thompson Medical, 753 F.2d at 212-13. The public presumably will not be confused by a descriptive term, but if the proponent of protection can show that the descriptive term is primarily associated with a single producer, a sufficient question is raised to justify further inquiry into the likelihood of confusion. In contrast, if its mark is suggestive a plaintiff need not prove such secondary meaning in order to qualify for trademark protection. Id. at 213.
25
In this case, the "PM" acts as a modifier to the analgesic brand name. Both "Tylenol" and "Excedrin" are well known brand names for analgesics; the "PM" modifies each to show that they are a particular type of analgesic. "PM," usually abbreviated "p.m." or "P.M." (for "post meridiem"), is a common term that refers to the period of time between noon and midnight. It is often associated with the time when most people go to sleep.
26
As used here, "PM" does not literally describe the presence of a sleep aid in the product. The "PM" refers to the purpose or utility of the product--it is an analgesic that should be used at night. The issue, therefore, is whether the connection between "PM" and a nighttime sleep aid is direct enough that the term may be categorized as descriptive or whether the connection is more indirect, requiring categorization as suggestive.
27
Bristol argues that "PM" is suggestive because a consumer must engage in a multi-step analysis before coming to the conclusion that it denotes the presence of a sleep aid in the analgesic. Bristol asserts that the consumer first must eliminate possible alternate meanings for "PM"--e.g., "Pre-Menstrual" or "Pain Medication"--before arriving at "Post Meridiem." Next, Bristol argues, the consumer must make a leap from all the post meridiem hours to those at night, and a further intellectual leap from nighttime to sleeping.
28
The magistrate judge found that several other over-the-counter products are designated as nighttime products by the use of some close variant of "PM." The magistrate judge held in that context that "[t]he direct connotation of 'PM' is nighttime. There is no 'multi-stage reasoning process' that a consumer must indulge in to associate the term 'PM' with a nighttime product."We cannot say that the district court's adoption of this finding was clearly erroneous. The focus in categorizing a mark is on how the words are used in context rather than their meaning in the abstract. See Abercrombie & Fitch, 537 F.2d at 12. One of the leading commentators has offered the following example to demonstrate the context-dependent nature of the classification: "[T]he word 'apple' would be arbitrary when used on personal computers, suggestive when used in 'Apple-A-Day' on vitamin tablets, descriptive when used in 'Tomapple' for combination tomato-apple juice and generic when used on apples." 1 J.T. McCarthy, Trademarks and Unfair Competition § 11:22, at 498-99 (2d ed. 1984). There was sufficient evidence before the magistrate judge to support the finding that several nighttime products were sold using some variant of "PM." Given that context, the conclusion that "PM" describes rather than suggests a nighttime product was not clearly erroneous. Once the consumer arrives at an awareness that the product is useful at nighttime, the "purpose or utility" of the product has been conveyed, even though the consumer is not aware of why the product is useful at night. See Thompson Medical, 753 F.2d at 216 & n. 15 ("Sportscreme" descriptive of cream useful in sports even though inadequately descriptive as to significance of product). Therefore, the consumer need not conclude that the analgesic contains a sleep aid.
29
Given the deferential standard of review, and the fact that this matter is before us at the preliminary injunction stage, we will not disturb the district court's finding that "PM" is descriptive.
30
Because "PM" is a descriptive term it is not entitled to trademark protection unless Bristol demonstrates secondary meaning. The district court found that Bristol had not established that the "PM" designator had acquired secondary meaning. We agree with the district court.
31
"To establish secondary meaning, a manufacturer must show that, in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product itself." Inwood Laboratories v. Ives Laboratories, 456 U.S. 844, 851 n. 11, 102 S. Ct. 2182, 2187 n. 11, 72 L. Ed. 2d 606 (1982) (citation omitted). Secondary meaning is an essentially factual determination, proof of which " 'entails vigorous evidentiary requirements.' " Thompson Medical, 753 F.2d at 217 (citation omitted); see Coach Leatherware v. AnnTaylor, Inc., 933 F.2d 162, 169 (2d Cir.1991). We will reverse the district court's determination that a term has not acquired secondary meaning only if that determination is clearly erroneous. See Murphy v. Provident Mut. Life Ins., 923 F.2d 923, 928 (2d Cir.1990), cert. denied, --- U.S. ----, 112 S. Ct. 65, 116 L. Ed. 2d 40 (1991); 815 Tonawanda Street Corp. v. Fay's Drug Co., 842 F.2d 643, 647 (2d Cir.1988).
32
Among the factors that we have found relevant to this inquiry in the past are advertising expenditures, consumer studies, sales success, unsolicited media coverage, attempts to plagiarize and length and exclusivity of use. Thompson Medical, 753 F.2d at 217. There are undoubtedly other types of evidence that would also be relevant to a claim of secondary meaning. The fundamental question, however, is whether " 'the primary significance of the term in the minds of the consuming public is not the product but the producer.' " Centaur Communications, 830 F.2d at 1221 (citations omitted).
33
"The existence of secondary meaning is a question of fact with the burden of proof on the party claiming exclusive rights in the designation." PaperCutter, Inc. v. Fay's Drug Co., 900 F.2d 558, 564 (2d Cir.1990) (citation omitted). The district court found that Bristol had not presented sufficient evidence that consumers recognized the source of "Excedrin PM" by the "PM" designator and that there was no evidence that Bristol had ever marketed the product as "PM."
34
Bristol suggests two grounds in support of its contention that the district court's finding that the "PM" mark had not acquired secondary meaning was clearly erroneous. First, Bristol argues that McNeil's intentional copying of its mark is indicative of secondary meaning. Although imitative intent can help support a finding of secondary meaning, see Centaur Communications, 830 F.2d at 1224, it does not necessarily mandate one, see American Footwear Corp. v. General Footwear Co., 609 F.2d 655, 663 (2d Cir.1979) ("[N]o single factor is determinative."), cert. denied, 445 U.S. 951, 100 S. Ct. 1601, 63 L. Ed. 2d 787 (1980). Therefore, we believe that, even assuming McNeil's imitative intent, the district court was not bound to find that the "PM" designator had acquired secondary meaning.
35
Second, Bristol argues that the fact that each "Excedrin PM" tablet is imprinted with "PM" shows that the consuming public must associate "PM" with Bristol. However, "[a]lthough the mark owner strives to create a secondary meaning for its product, it is the consuming public which, in effect, determines whether that effort has succeeded." Centaur Communications, 830 F.2d at 1221 (citations omitted). The mere fact that Bristol places the name "PM" on its tablets does not persuade us that the consuming public associates that term with Bristol. Moreover, on the larger caplet version of the product, Bristol placed the entire "Excedrin PM" mark.
36
The district court was not clearly erroneous in classifying "PM" as a descriptive term in these circumstances. Because "PM" had not become primarily associated with a single producer in these circumstances, "PM" as used by Bristol is not by itself subject to protection under the Lanham Act. The district court therefore properly declined to enjoin McNeil from using the "PM" designator in connection with its combination analgesic/sleep aid.
B. Trade Dress Infringement
37
McNeil appeals from the entry of a preliminary injunction preventing it from marketing "Tylenol PM" in the packaging that the district court found to have infringed on Bristol's trade dress. The "trade dress" of a product " 'involves the total image of a product and may include features such as size, shape, color or color combinations, texture, [or] graphics.' " LeSportsac, Inc. v. K mart Corp., 754 F.2d 71, 75 (2d Cir.1985) (citation omitted). In examining trade dress the focus is on the entire look of the product or packaging. Individual aspects of a trade dress may be eligible for trademark protection in their own right, but in an action for trade dress infringement each aspect should be viewed in relation to the entire trade dress. The inquiry is whether the trade dress of a "junior user"--one who has adopted its mark or dress later than the "senior user"--is likely to cause consumer confusion as to the source of the product. As in the trademark arena, we must first determine whether a particular trade dress is eligible for protection under the Lanham Act.
38
The district court proceeded on the assumption, formerly the law in this Circuit, that, unlike trademarks, a trade dress was always ineligible for protection under section 43(a) in the absence of proof of secondary meaning. See, e.g., LeSportsac, 754 F.2d at 75. The Supreme Court, however, recently rejected this distinction between trademarks and trade dress. Two Pesos, --- U.S. at ----, 112 S. Ct. at 2760 ("We see no basis for requiring secondary meaning for inherently distinctive trade dress protection under § 43(a) but not for other distinctive words, symbols, or devices capable of identifying a producer's product.").
39
The district court made no finding as to whether the "Excedrin PM" trade dress was "inherently distinctive." However, if the district court was correct in determining that the trade dress had acquired secondary meaning, that dress is eligible for protection under section 43(a).
1. Secondary Meaning
40
The secondary meaning inquiry is the same for trade dress as it is for a trademark. Bristol must show that the primary significance of its "Excedrin PM" trade dress is to identify the source of the product rather than the product itself. See Inwood Laboratories, 456 U.S. at 850-51 n. 11, 102 S. Ct. at 2187 n. 11. The question whether a mark or dress has acquired secondary meaning is a factual one that we will not reverse unless it is clearly erroneous. See Murphy, 923 F.2d at 928; 815 Tonawanda Street Corp., 842 F.2d at 647. The district court properly examined the Thompson Medical factors and concluded that Bristol's "Excedrin PM" trade dress had acquired secondary meaning. See Thompson Medical, 753 F.2d at 217.
41
The district court found that Bristol's advertising expenditures in connection with "Excedrin PM" and its sales success weighed in favor of a finding of secondary meaning for the trade dress. It further held that consumer survey evidence introduced by Bristol, "though problematic in terms of some of its methodology," supported Bristol's claim of secondary meaning. The district court finally found that McNeil intentionally copied the "Excedrin PM" trade dress.
42
Given the deferential standard of review, we cannot say that the district court clearly erred in determining that the overall trade dress of "Excedrin PM" had acquired secondary meaning. This conclusion is strengthened by the well known trade name "Excedrin" prominently displayed on the "Excedrin PM" box as an integral part of the whole trade dress. That name strongly supports the district court's determination that consumers associate the trade dress, taken as a whole, with a particular producer.
2. Likelihood of Confusion
43
Having determined that the district court did not err in finding that the "Excedrin PM" trade dress is eligible for protection under section 43(a), we turn to the central question in this case: Whether McNeil's use of the "Tylenol PM" trade dress is likely to cause confusion as to the "origin, sponsorship, or approval" of "Tylenol PM" with "Excedrin PM." See 15 U.S.C. § 1125(a)(1).
44
Whether the public is likely to confuse two products is a question that is not easily answered. Our cases, however, have established an analytical framework designed to add structure to this nebulous inquiry and to guide judicial decisions toward some degree of predictability and uniformity.
45
In Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492 (2d Cir.), cert. denied, 368 U.S. 820, 7 L. Ed. 2d 25 (1961), we examined similar marks used for dissimilar products. We set forth the following nonexclusive list of factors relevant to success on a Lanham Act claim:
46
the strength of [the prior owner's] mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap [between the two products], actual confusion, and the reciprocal of defendant's good faith in adopting its own mark, the quality of defendant's product, and the sophistication of the buyers.
47
Id. at 495. We have subsequently held that these factors are appropriately considered when examining the likelihood of confusion between two competing products. See, e.g., Thompson Medical, 753 F.2d at 213-14.
48
The standard of appellate review of a district court's conclusion regarding the likelihood of confusion between two products has split the courts of appeals. See Euroquilt, Inc. v. Scandia Down Corp., 475 U.S. 1147, 106 S. Ct. 1801, 90 L. Ed. 2d 346 (1986) (White, J., dissenting from the denial of certiorari to resolve whether the determination of likelihood of confusion under section 43(a) is subject to de novo review as a conclusion of law or "clearly erroneous" review as a question of fact). In this Circuit, a district court's determination of the individual Polaroid factors are subject to review as findings of fact, subject to reversal only if clearly erroneous, while the ultimate balancing of all the Polaroid factors to determine the likelihood of confusion in any given case is done de novo by this Court. See Murphy, 923 F.2d at 928; Western Publishing, 910 F.2d at 61.
49
Some earlier cases in this Circuit have held that to the extent that the Polaroid factors rest on a comparison of the marks themselves we are in as good a position to evaluate them as the district court and thus will evaluate those factors de novo. See, e.g., McGregor-Doniger v. Drizzle, 599 F.2d 1126, 1133 (2d Cir.1979). However, Rule 52(a) of the Federal Rules of Civil Procedure was amended in 1985 to require that "[f]indings of fact, whether based on oral or documentary evidence, ... not be set aside unless clearly erroneous." Fed.R.Civ.P. 52(a). The Notes of the Advisory Committee on Rules accompanying that amendment emphasize that even where the appellate court is in as good a position as the trial court to make a given factual determination, the factfinding function should be left to the district courts because of "the public interest in ... stability and judicial economy." Notes of Advisory Committee on Rules, 1985 Amendment. Thus, each of the Polaroid factors should be reviewed under Rule 52(a). Cf. Johnson & Johnson v. GAC International, 862 F.2d 975, 979 (2d Cir.1988) (finding of falsity in advertisement, formerly reviewed de novo, reviewed under amended Rule 52).
50
The only case that applies a de novo review to any Polaroid factor since the amendment to Rule 52(a) is Centaur Communications, 830 F.2d at 1226 ("Unlike the other factors, this finding [with regard to similarity of the marks] is reviewed de novo because an appellate court is in as good a position to evaluate this factor as is a trial court.") (citations omitted). In that case, the Court did not examine the amendment to Rule 52, and its statement that we review similarity of the marks de novo was not necessary to its holding. Therefore, we do not find that statement controlling.
51
Despite the existence and importance of the Polaroid factors, we must remember that they are merely tools "designed to help grapple with the 'vexing' problem of resolving the likelihood of confusion issue," and that "the ultimate conclusion as to whether a likelihood of confusion exists is not to be determined in accordance with some rigid formula." Lois Sportswear v. Levi Strauss & Co., 799 F.2d 867, 872 (2d Cir.1986) (citation omitted).
52
We now turn to an examination of the Polaroid factors. In the case of competing products, one of the Polaroid factors, proximity of the products in the marketplace, is necessarily answered in favor of the senior user, and another factor, the likelihood of bridging the gap, is not a relevant inquiry. Where, as here, the competitive products are of nearly identical quality, a comparison of the quality of the products is not particularly helpful in determining the likelihood of confusion. The remaining factors, however, require additional discussion.
53
a. Strength of the "Excedrin PM" Trade Dress
54
The strength of a particular mark or dress is measured by its distinctiveness or the degree to which it indicates the source or origin of the product. McGregor-Doniger, 599 F.2d at 1131; Banff, Ltd. v. Federated Dep't Stores, 841 F.2d 486, 491 (2d Cir.1988). The strength of a mark should be examined in its commercial context. Centaur Communications, 830 F.2d at 1226.
55
We agree with the district court that the "Excedrin PM" trade dress, taken as a whole, strongly indicates the source of the product. The presence of the "Excedrin" trade name prominently displayed as an integral part of the trade dress demonstrates beyond question that the entire trade dress indicates the origin of the product.
56
b. McNeil's Good Faith
57
Evidence of intentional copying by a junior user may be indicative of an intent to create a confusing similarity between the products. Charles of the Ritz Group v. Quality King Distrib., 832 F.2d 1317, 1322 (2d Cir.1987). "Although this factor alone is not dispositive, it bolsters a finding of consumer confusion." Id.
58
The district court here found that McNeil intentionally copied elements of Bristol's trade dress. There is evidence in the record to support that finding. McNeil concededly was aware of Bristol's trade dress. There was evidence that the target market for "Tylenol PM" was the "Excedrin PM" user. Evidence also existed tending to show that the similarities in the trade dresses were raised by McNeil employees during the design process. There were many proposed trade dresses that did not incorporate substantial aspects of the "Excedrin PM" trade dress yet, as the district court noted, "every choice [McNeil] made brought it closer to the EXCEDRIN PM trade dress." An internal memorandum regarding the text to be placed on the package stated that it should appear "as in Excedrin PM." Based on this and other evidence in the record, the district court was not clearly erroneous in finding that McNeil had not exercised good faith in adopting its trade dress.
59
Although there was sufficient evidence in the record to support the district court's finding with regard to McNeil's good faith, McNeil argues that the district court erred in rejecting, without receiving additional evidence, the findings of the magistrate judge, who had found that McNeil acted in good faith. District courts may designate a magistrate judge to conduct hearings and to submit to the district court proposed findings of fact and dispositions. 28 U.S.C. § 636(b)(1)(B). If a party files objections to those findings, as both parties did in this case, the district court is to
60
make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made. [The district court] may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate. The judge may also receive further evidence.
61
Id. at 636(b)(1). McNeil argues that before a district court may reject credibility findings of a magistrate judge it must recall witnesses and hear and observe them itself. We disagree.
62
McNeil's reliance on dicta from United States v. Raddatz, 447 U.S. 667, 681 n. 7, 100 S. Ct. 2406, 2415 n. 7, 65 L. Ed. 2d 424 (1980), is unavailing. In that case, a criminal prosecution, the Court expressed skepticism as to whether a district court could reject dispositive findings of credibility without seeing and hearing the witnesses. Arguably, the rejection of the magistrate judge's conclusion by the district court was not based on witness credibility in this case. Moreover, we have indicated that the Raddatz dicta may be inapplicable outside the criminal context, see Moore v. Ross, 687 F.2d 604, 609 n. 5 (2d Cir.1982), cert. denied, 459 U.S. 1115, 103 S. Ct. 750, 74 L. Ed. 2d 969 (1983), and where, as here, the civil party has raised no objection on those grounds before the trial court we will not reverse the district court's findings on that ground.
63
c. Evidence of Actual Confusion
64
Before the magistrate judge, Bristol presented evidence of actual confusion that included two different types of consumer surveys, the results of McNeil's own television advertisement survey and questions from McNeil's employees regarding the similarity in the two trade dresses. The magistrate judge reviewed all of the evidence presented and found that Bristol had not demonstrated any actual confusion between the two products.
65
The district court addressed only the consumer surveys and found that they did not demonstrate any meaningful actual confusion between the products. The district court had before it evidence critical of the manner in which the surveys were conducted. Bristol has not demonstrated to us on appeal that the district court was clearly erroneous in placing little credence in those surveys. Nor has Bristol given us any reason to supplant the finding of the magistrate judge with regard to the other evidence of actual confusion. Therefore, Bristol has not demonstrated any meaningful instances of actual confusion resulting from the "Tylenol PM" trade dress.
66
d. The Similarity of the Trade Dresses
67
The district court found that the two trade dresses were strongly similar. After examining the two trade dresses, we conclude that, although they share many similar elements, the prominence of the trade names on the two packages weighs heavily against a finding of consumer confusion resulting from the overall look of the packaging. Therefore, we find that the district court's finding on this issue was clearly erroneous.
68
Undeniably, the "Tylenol PM" trade dress shares many attributes with the "Excedrin PM" trade dress. The color scheme used by the two products is similar. Both products have the "PM" designator on the same line as the trade name. The text on the packaging is also similar. However, in a trade dress infringement case the question is not how many points of similarity exist between the two packages but rather whether the two trade dresses "create the same general overall impression." RJR Foods v. White Rock Corp., 603 F.2d 1058, 1060 (2d Cir.1979). The issue is whether the similarity between the two trade dresses will contribute to consumer confusion as to the origin of the product. See Western Publishing, 910 F.2d at 61 (" 'Ultimately, the crucial question is whether the similarity is likely to create confusion.' ") (citations omitted); McGregor-Doniger, 599 F.2d at 1133 (" 'Similarity in and of itself is not the acid test. Whether the similarity is likely to provoke confusion is the crucial question.' ") (quoting 3 R. Callman, The Law of Unfair Competition, Trademarks and Monopolies § 82.1(a), at 601-02 (3d ed.1969)).
69
The presence and prominence of markings tending to dispel confusion as to the origin, sponsorship or approval of the goods in question is highly relevant to an inquiry concerning the similarity of the two dresses. When prominently displayed it can go far towards eliminating any possible confusion, see, e.g., American Rolex Watch Corp. v. Ricoh Time Corp., 491 F.2d 877, 879 (2d Cir.1974) ("Rolex's reliance upon [section 43(a) ] appears to be misplaced in view of the prominent display of 'Ricoh' on the challenged watch."); Bose Corp. v. Linear Design Labs, 467 F.2d 304, 310 (2d Cir.1972) ("[T]here is hardly likelihood of confusion or palming off when the name of the manufacturer is clearly displayed.") (footnote omitted), even though the appearance of the junior user's name does not in all cases eliminate the possibility of consumer confusion, see Banff, 841 F.2d at 492 ("Bloomingdale's attachment of its company name below its standard typestyle 'B Wear' mark does not offset the marks' similarity because the name is in very small letters and may actually increase the misappropriation by linking defendant's name to plaintiff's goodwill.") (citation omitted).
70
In this case, by far the most prominent feature of the "Excedrin PM" trade dress is the trade name "Excedrin." At least as prominent on the "Tylenol PM" packaging is the trade name "Tylenol." These trade names are the major features of otherwise ordinary boxes. The "Tylenol" trade name is displayed in the same typeface used on other "Tylenol" products. In fact, except for the color of the box and the presence of "PM," the "Tylenol PM" trade dress is extremely similar to the trade dress of the other "Tylenol" analgesic products. The differences between the two trade dresses are therefore significant.
71
Despite the similarity between certain aspects of the two trade dresses, when taken as a whole, including the prominently displayed names, they are not similar in any manner that is likely to cause consumer confusion; in fact, the prominent presence of well known trade names goes far toward countering any suggestion of consumer confusion arising from any of the other Polaroid factors.
72
e. Sophistication of the Purchasers
73
Generally, the more sophisticated and careful the average consumer of a product is, the less likely it is that similarities in trade dress or trade marks will result in confusion concerning the source or sponsorship of the product. See Centaur Communications, 830 F.2d at 1228. The district court found that consumers of non-prescription analgesic/sleep aids were not typically careful or sophisticated in making their purchases. Given the expert testimony available to the district court that over-the-counter analgesics were "low involvement" purchases, and given the fact that these products are relatively inexpensive, we cannot say that the district court was clearly erroneous in this regard. Thus, consumer sophistication in making a purchase of these products militates toward a likelihood of confusion.
74
f. Ultimate Likelihood of Confusion
75
Having reviewed the district court's findings with regard to the Polaroid factors, we now engage in a de novo balancing of those factors in order to determine whether McNeil's use of the "Tylenol PM" trade dress is likely to cause confusion among consumers because of its similarity to the "Excedrin PM" trade dress. See Murphy, 923 F.2d at 928.
76
Although the overall trade dress of "Excedrin PM" strongly identifies the product with a particular source, it does so largely because the word "Excedrin" is emblazoned over almost half the package. The "Tylenol PM" trade dress differs significantly from the "Excedrin PM" trade dress in that it does not include the word "Excedrin." The absence of the name "Excedrin" from McNeil's product is a significant difference. Additionally, that absence is replaced by a different prominent name. The origin-indicating name "Tylenol" appears at least as prominently on the "Tylenol PM" trade dress as does "Excedrin" on the "Excedrin PM" trade dress. McNeil did not appropriate the aspect of the "Excedrin PM" trade dress that most strongly indicates the origin of the product and McNeil supplied the "Tylenol PM" trade dress with a marking that strongly indicated that the product emanated from a different source.
77
Even McNeil's bad faith in adopting many elements of the "Excedrin PM" trade dress does not alter that conclusion. Absence of good faith, like the other Polaroid factors, is not by itself dispositive in any given case. See Centaur Communications, 830 F.2d at 1228 (" '[I]f comparison of the [marks] reveals no fair ... issue concerning the likelihood of confusion, then intent to copy, even if found from the proffered evidence, would not establish a Lanham Act violation.' ") (quoting Warner Brothers v. American Broadcasting Co., 720 F.2d 231, 247 (2d Cir.1983)). The prominent placement of the "Tylenol" name goes far toward countering any suggestion that McNeil intended to confuse its customers as to the source of its product. We believe that even "low involvement" consumers will have a hard time missing the famous names that form the most prominent feature of the trade dress in each case. It is thus not surprising that Bristol was unable to present any meaningful evidence of actual confusion between the two products.
78
We do not mean to intimate that the distinctive elements of any trade dress may be freely appropriated as long as the junior user clearly identifies the source of the goods. In many cases, the distinctive elements of a trade dress may themselves be eligible for trademark protection. In other cases the trade name may be a less dominant feature of the entire trade dress and thus have less force in countering other similarities between two trade dresses. Also, the junior user's trade name may less strongly identify a particular source than the "Tylenol" name at issue here.
79
In this case, however, the trade name is the most prominent and distinctive feature in each of the two trade dresses. The fact that they each are nationally prominent names and are different on the respective packages outweighs the evidence that tends to demonstrate a likelihood of confusion.
80
Because there is no likelihood of confusion between these two products resulting from any similarities in their overall trade dress, we are left with a " 'definite and firm conviction,' " see Standard & Poor's, 683 F.2d at 708, that the district court erred in preliminarily enjoining McNeil from marketing "Tylenol PM" in the proposed trade dress. Thus we reverse the decision to grant preliminary relief on the Lanham Act claim.III. STATE UNFAIR COMPETITION CLAIMS
81
The district court also enjoined McNeil's use of its trade dress on the basis of New York and Florida common law of unfair competition. In order to prevail under New York law, a plaintiff must demonstrate a likelihood of confusion between the two products. See Coach Leatherware, 933 F.2d at 169. Similarly, likelihood of confusion is a necessary element of an unfair competition claim under Florida law. See American Bank of Merritt Island v. First American Bank and Trust, 455 So. 2d 443, 445-46 (Fla. Dist. Ct.App.), review denied, 461 So. 2d 114 (Fla.1984). As we have determined with regard to the Lanham Act claim, there is no likelihood of consumer confusion arising from McNeil's use of the "Tylenol PM" trade dress. Therefore, Bristol is not entitled to relief under its common law unfair competition theory.
82
Bristol also claims on appeal that it is entitled to a preliminary injunction, notwithstanding absence of confusion, under New York state common law under a theory of "misappropriation." Bristol seizes on our language in Flexitized, Inc. v. National Flexitized Corporation, 335 F.2d 774, 781-82 (2d Cir.1964), cert. denied, 380 U.S. 913, 85 S. Ct. 899, 13 L. Ed. 2d 799 (1965), to the effect that New York law will prevent a party from misappropriating " 'the results of the skill, expenditures and labors of a competitor.' " Id. at 781 (citations omitted). Bristol claims that the district court's finding of bad faith, without more, entitles it to relief under this theory.
83
We disagree. In Flexitized, we were faced with one party that had appropriated the name of another. Relief was unavailable under the Lanham Act because the name "Flexitized" was deemed descriptive and had not acquired secondary meaning. Because the appropriating party had exhibited bad faith and because the name had acquired some familiarity among the consuming public, we held that use of the name constituted unfair competition. We later clarified that this "misappropriation" theory still requires some confusion, if not as to source at least as to sponsorship or permission. See American Footwear Corp., 609 F.2d at 662. That type of confusion has not been demonstrated here.
84
More troubling is the application of New York law to Bristol's request to enjoin use of the "PM" mark. New York law, unlike federal law, does not conclusively presume that there is no likelihood of confusion if a descriptive mark has not acquired secondary meaning. See Coach Leatherware, 933 F.2d at 169. Although it may be very difficult to show a likelihood of confusion where the senior mark is not associated in the public mind with a particular producer, under New York law it is not impossible. The district court did not analyze the Polaroid factors with regard to the use of the "PM" designator and thus we can make no determination to that effect. We note only that, under New York law, an absence of secondary meaning in a descriptive mark does not necessarily result in defeat for the owner. The district court should consider this issue in the first instance.
IV. THE NEW YORK ANTI-DILUTION STATUTE CLAIM
85
Bristol also appeals from the refusal of the district court to enter an injunction against McNeil on the basis of New York's "Anti-Dilution" statute, New York Gen.Bus.Law § 368-d. That statute states:
86
Likelihood of injury to business reputation or of dilution of the distinctive quality of a mark or trade name shall be a ground for injunctive relief in cases of infringement of a mark registered or not registered or in cases of unfair competition, notwithstanding the absence of competition between the parties or the absence of confusion as to the source of the goods or services.
87
New York Gen.Bus.Law § 368-d. As the plain language of the statute indicates, relief is available under section 368-d even when there is no likelihood of confusion as to the source of the product. See Sally Gee, Inc. v. Myra Hogan, Inc., 699 F.2d 621, 624 (2d Cir.1983); Allied Maintenance v. Allied Mechanical Trades, 42 N.Y.2d 538, 545, 399 N.Y.S.2d 628, 632, 369 N.E.2d 1162, 1166 (1977).
88
The district court denied relief under section 368-d because Bristol and McNeil are direct competitors and the district court determined that section 368-d applied only to non-competing goods. Whether section 368-d applies to products in direct competition is a question that has split the district courts in this Circuit. See E.P. Lehmann Co. v. Polk's Modelcraft Hobbies, 770 F. Supp. 202, 206 (S.D.N.Y.1991) (collecting and discussing cases). New York courts have not directly addressed this issue.
89
We need not resolve this conflict over New York law because, even assuming arguendo that the statute applies to competitors, under the appropriate legal standard Bristol cannot prevail on its claim under section 368-d. "[O]nly those trade names which are truly of distinctive quality or which have acquired a secondary meaning in the mind of the public should be entitled to protection under the anti-dilution statute." Allied Maintenance, 42 N.Y.2d at 546, 399 N.Y.S.2d at 633, 369 N.E.2d at 1166. In interpreting this New York statute, we have held that it "protects only extremely strong marks." Sally Gee, Inc., 699 F.2d at 625. The "PM" designator appended to the analgesic trade name does not qualify as an "extremely strong mark." Nor do the aspects of the "Excedrin PM" trade dress that are common to both products constitute "extremely strong marks." Thus, Bristol is not entitled to protection under section 368-d.
V. DISMISSAL OF THE ACTION
90
Although this is an interlocutory appeal from a preliminary injunction, McNeil argues that we should dismiss Bristol's action in its entirety. The Supreme Court has cautioned that "it is generally inappropriate for a federal court at the preliminary-injunction stage to give a final judgment on the merits." University of Texas v. Camenisch, 451 U.S. 390, 395, 101 S. Ct. 1830, 1834, 68 L. Ed. 2d 175 (1981) (citations omitted). Although in the past we have dismissed Lanham Act cases on appeal from the grant or denial of a preliminary injunction, see, e.g., American Cyanamid v. Connaught Laboratories, 800 F.2d 306, 307 (2d Cir.1986), we do not believe that this case appropriately lends itself to such extraordinary summary disposition.
91
On this record, the balancing of the Polaroid factors does not convince us that Bristol is likely to succeed in its claim. However, findings of fact at the preliminary injunction stage are not binding at a trial on the merits. See Camenisch, 451 U.S. at 395, 101 S.Ct. at 1834. There remains the possibility, albeit slight, that Bristol will present evidence at trial--numerous instances of actual confusion between the two products by actual customers for example--that might lead to a change in the ultimate conclusion regarding the likelihood of consumer confusion. We therefore decline to dismiss Bristol's action in its entirety.
CONCLUSION
92
For the reasons stated above, the district court erred in preliminarily enjoining McNeil from marketing its combination analgesic/sleep aid in the "Tylenol PM" trade dress. The injunction is therefore vacated and the matter is remanded to the district court.
*
Honorable Robert C. Zampano, United States District Judge for the District of Connecticut, sitting by designation
1
This language was added in 1988 by P.L. 100-667, Title I, § 132, and replaced the original section 43(a) which had been enacted in 1946. The Senate Report accompanying the amendment indicates that the intent of the new language was "to codify the interpretation [section 43(a) ] has been given by the courts." Senate Report No. 100-515, reprinted in 1988 U.S.Code Cong. & Admin.News 5577, 5603; see Two Pesos, Inc. v. Taco Cabana, Inc., --- U.S. ----, ----, n. 18, 112 S. Ct. 2753, 2765 n. 18, 120 L. Ed. 2d 615 (1992) (Stevens, J., concurring). Thus our precedents predating the new language remain in force | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1645173/ | 994 So.2d 309 (2008)
C.C.B.
v.
STATE.
No. 2D07-4902.
District Court of Appeal of Florida, Second District.
October 31, 2008.
Decision without published opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918889/ | 106 B.R. 95 (1989)
GRUNDY NATIONAL BANK, Plaintiff,
v.
Harold D. JOHNSON, et al., Defendants.
Civ. A. No. 89-0089-A.
United States District Court, W.D. Virginia, Arlington Division.
October 12, 1989.
John E. Kieffer, Bristol, Va., for plaintiff.
John Lamie, Abingdon, Va., Jo S. Widener, Bristol, Va., for defendants.
MEMORANDUM OPINION
GLEN M. WILLIAMS, Senior District Judge.
This matter is before the court on appeal from the United States Bankruptcy Court for the Western District of Virginia. Grundy National Bank ("Bank") appeals from the order of the bankruptcy court entered April 14, 1989, confirming the Chapter 13 plan ("Plan") of Harold D. and Adalene Marie Johnson ("Debtors"), and from the orders denying Bank's motion to dismiss and motion for relief from the stay. This court has jurisdiction pursuant to 28 U.S.C. § 158(a).
FACTUAL BACKGROUND
On December 28, 1978, the Debtors borrowed $23,665.20 from the Bank ("Loan") and agreed to pay it back over the next ten years with the final payment due in February, 1988. The Loan is secured by a deed *96 of trust on real estate and a lien on a mobile home. The Bank does not allege that the Loan is secured by the Debtor's primary residence.
In 1983, the Debtors filed for Chapter 13 and their proposed plan was confirmed. On September 14, 1987, the Debtors filed for a hardship discharge, which was granted on October 21, 1987. On February 11, 1988, the bankruptcy court granted the Bank relief from the stay to permit foreclosure on the Loan.
On September 20, 1988, prior to foreclosure by the Bank, the Debtors filed for Chapter 7, which was subsequently converted to Chapter 13 on January 20, 1989. The Debtor's Plan proposed that the Loan be repaid over ten years at the rate of approximately $117 per month. Over the objections of the Bank, the bankruptcy court confirmed the Plan on April 14, 1989.
CHAPTER 13 PLAN LIMITED TO FIVE YEARS
The statutory limit on the repayment period under a Chapter 13 plan is five years.[1] The Plan provides for payments on the Loan over ten years.
Chapter 13 does allow the curing of a default on long term debt and the reinstatement of the original payment schedule for the debt, even if it exceeds five years, if "the last payment is due after the date on which the final payment under the plan is due." 11 U.S.C. § 1322(b)(5); Pierro v. Taddeo (In re Taddeo), 685 F.2d 24 (2d Cir.1982). The pertinent date is the date of the last payment under the note. Matter of Clark, 738 F.2d 869, 874 (7th Cir.1984). The date of the last payment originally scheduled for the Loan was February 1988. Because the due date of the last payment on the Loan occurred before even the first payment under the Plan is due, the Loan does not qualify for § 1322(b)(5) treatment.
Chapter 13 provides also for modification of the rights of holders of secured claims. See 11 U.S.C. § 1322(b)(2). However, such modification cannot violate the five year time limit. Id.[2] Because the Plan proposes to modify the repayment terms the Loan to provide a ten year payback period, in violation of the statutory five year limit, the bankruptcy judge's confirmation of the Plan was improper.
SECURED CREDITOR'S PREVIOUSLY DISCHARGED DEBT SUBJECT TO CHAPTER 13
The Bank asserts that its right to foreclose on the deed of trust and lien on personal property securing the Loan, on which the Debtors were allegedly personally discharged in the prior Chapter 13 hardship discharge, may not be modified or impaired by the current Chapter 13 proceeding.[3] The first issue presented by this assertion is whether a debtor is prohibited by law from first obtaining a discharge of all personal liability on a secured debt in a previous bankruptcy proceeding and subsequently using Chapter 13 to obtain a modification of that debt under § 1322(b)(2). This issue has not been addressed in any reported decision of this court or of the Fourth Circuit Court of Appeals. However, *97 this issue is very closely related to the issue which was exhaustively and excellently discussed in In re Ligon, 97 B.R. 398 (Bkrtcy.N.D.Ill.1989).
The issue addressed in Ligon was whether a debtor is prohibited, as a matter of law, from first obtaining a discharge of all personal liability on a home mortgage in a Chapter 7 case and then using Chapter 13 to force the mortgagee to accept a cure of default and a reinstatement of the original payment schedule under § 1322(b)(5). Id. at 400. The only difference between the two issues is that in the instant case the debt is not secured only by the debtor's residence; thus, the debtor is not limited, under Chapter 13, to cure and reinstatement under § 1322(b)(5), but may also use § 1322(b)(2) to modify the terms of the debt. Id. at 401, n. 4. The court in Ligon noted that in regard to the issue it addressed, there is a clear split of authority. Id. at 400.
One line of cases holds that a secured debt on which the debtor has been personally discharged under a bankruptcy proceeding would not be subject to a subsequent Chapter 13 plan because the creditor in such a case would not be a Chapter 13 creditor.[4] The court in McKinstry reasoned that the mortgagee would not be a Chapter 13 creditor, as defined in 11 U.S.C. § 101(9), because it has no claim on the note accompanying the mortgage.[5] The court asserted that it had no claim on the note because "[i]n effect, the discharge extinguishes the debt."[6]
Another line of cases arrives at the opposite conclusion that the lienor in such a case is a Chapter 13 creditor.[7] A "creditor" is defined as an "entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor."[8]Id. at § 101(9)(A). The term "claim against the debtor" includes a claim against the property of the debtor. Id. at 102(2). This provision is designed to include non-recourse debt, under which the debtor has no personal liability.[9]
It is settled that creditors may enforce a valid lien after the underlying debt has been discharged. See Lindsey v. Fed. Land Bank of St. Louis (Matter of Lindsey), 823 F.2d 189, 191 (7th Cir.1987); Chandler Bank of Lyons v. Ray, 804 F.2d 577, 579 (10th Cir.1986). In 1984, the Code was amended by the Bankruptcy Amendments and Federal Judgeship Act of 1984, which eliminated "or from property of the debtor" from § 524(a)(2), the provision preventing acts of collection by the creditor of discharged debt, in order to emphasize that the discharge forbids only attempts "to collect, recover or offset any such debt as a personal liability." 2 Collier on Bankruptcy, paragraph 102.03 (quoting § 524(a)(2)) (emphasis mine).[10]
*98 The 1984 Amendment makes clear that the underlying debt of a mortgage is not extinguished when it is discharged. Rather, it is, in effect, converted into non-recourse debt. Saylors, 869 F.2d at 1436; Metz, 820 F.2d at 1498; Hagberg, 92 B.R. at 814; Klapp, 80 B.R. at 542; Lagasse, 66 B.R. at 43. This conclusion avoids a conflict with the frequently stated principle that anything which operates to extinguish a debt necessarily operates to discharge any related liens. 55 Am.Jur.2d Mortgages § 394 (1971).
Because a holder of nonrecourse debt is a Chapter 13 creditor, a secured creditor whose debtor is discharged under Chapter 7 from personal liability on the debt underlying the lien, is also a "creditor" for purposes of a subsequent Chapter 13 plan and is therefore subject to that plan. Saylors, 869 F.2d at 1436; Metz, 820 F.2d at 1498; Ligon, 97 B.R. at 402; Klapp, 80 B.R. at 542; Lagasse, 66 B.R. at 43. As the court in Ligon does, this court finds this line of reasoning more persuasive than the McKinstry reasoning and concludes that it is just as applicable to the situation where the debt was discharged in a prior Chapter 13 proceeding rather than a Chapter 7 proceeding.
Some cases hold that, even if it were technically permissible to subject a creditor to a Chapter 13 plan calling for a cure and a reinstatement of his debt after a Chapter 7 discharge of the debtor's personal liability on the debt, such a course of action is not to be allowed because it is, in effect, a reaffirmation of debt and is an end run around the policy contained in §§ 524(c) and (d) of not forcing a mortgagee to accept a reaffirmation of debt under Chapter 7. McKinstry, 56 B.R. at 193; Binford, 53 B.R. at 309; Brown, 52 B.R. at 7. One case holds that because this course of action can result in an otherwise impermissible scale-down of secured debt in a situation where the creditor is undersecured, it should not be allowed.[11] These lines of cases do not point to prohibitions in the Code against the course of action, rather they enunciate policy objections to it. The courts in Metz and Ligon conclude, and this court concurs in their conclusion, that these objections are dealt with more appropriately in the determination of whether each plan was proposed in good faith rather than through judicially created blanket prohibitions. Metz, 820 F.2d at 1498; Ligon, 97 B.R. at 403-5.
This court holds that, as a matter of law, a debtor which has been discharged from personal liability in a previous bankruptcy proceeding in regard to a secured debt is not prohibited from including the secured debt in a subsequent Chapter 13 plan that provides for the modification of the repayment terms of the debt pursuant to § 1322(b)(2). However, this course of action is to be allowed only if the plan is found by the bankruptcy court to have been proposed in good faith. Thus, the Loan is subject to modification of its terms by a Chapter 13 plan properly confirmed by the bankruptcy court. Of course, findings by the bankruptcy court that the plan is feasible and was proposed in good faith are prerequisites to the confirmation of the plan.
Finally, the Bank incorrectly asserts that the court in In re Bell, 700 F.2d 1053 (6th Cir.1983), held that installment redemption is not permissible under the Bankruptcy Code. The court in that case held, instead, that a Chapter 7 debtor may not redeem through installment payments. Id. at 1055-56. In fact, that court observed that "Chapter 13 authorizes redemption by installment over an objection by the creditor. . . ." Id. at 1057 (citations omitted).
FINDING THAT PLAN WAS PROPOSED IN GOOD FAITH
The Bank claims that the bankruptcy court erroneously ruled that the Plan was *99 not proposed in good faith as required by 11 U.S.C. § 1325(a)(3). Whether a plan has been proposed in good faith is a finding of fact to be made by the bankruptcy judge. Saylors, 869 F.2d at 1438; Metz, 820 F.2d at 1497; Public Finance Corp. v. Freeman, 712 F.2d 219, 221 (5th Cir.1983). See also In re Baker, 736 F.2d 481, 482 (8th Cir.1984) (debtor's intentions in filing Chapter 13 plan is a question of fact for the bankruptcy court).
The judge is not to impose "any per se limitations or requirements in respect to `good faith'" that are not contained in the Code. Johnson v. Vanguard Holding Corp. (In re Johnson), 708 F.2d 865, 868 (2d Cir.1983). Rather, he should review each case in the "totality of [its] circumstance," to determine whether there has been an "abuse of the provisions, purpose or spirit" of Chapter 13 by the proposed plan. Deans v. O'Donnell, 692 F.2d 968, 972 (4th Cir.1982) (citations omitted).
Congress has recently addressed the issue of repetitive bankruptcies by specifically prohibiting certain repetitive filings. Bankruptcy Amendments and Federal Judgeship Act of 1984, 11 U.S.C. § 109(g). Thus, the fact of successive filings, by itself, would not constitute an abuse. 5 Collier on Bankruptcy, paragraph 1300.40[4]. Because Congress has addressed that issue and other issues which courts have used to give "good faith" a broader meaning, it has shown that it intends that the term good faith should not be expanded beyond its traditional meaning and that any abuse by the debtor should be serious before a Chapter 13 plan is found not to have been proposed in good faith. Id. at paragraph 1325.04[3]. See also Handeen v. LeMaire (In re Le-Maire), 883 F.2d 1373 (8th Cir. 1989); In re March, 83 B.R. 270 (Bkrtcy.E. D.Pa.1988).
Therefore, the bankruptcy court in the instant case, before it confirms any new plan submitted by the Debtors, is to make a finding of whether the plan is a serious abuse of the provisions, purpose, or spirit of Chapter 13, reviewing and taking into account the totality of circumstances, including the past behavior of the Debtors. Because this court is vacating the order confirming the Plan, it will not review the bankruptcy court's finding that the Plan was proposed in good faith or that it is feasible.
CONCLUSION
Accordingly, the order below confirming the Plan is VACATED, and this case is REMANDED to the bankruptcy court for further proceedings consistent with this opinion. The orders below denying the Bank's motion to dismiss and its motion for relief from the stay are AFFIRMED; however, the Bank is not prohibited from renewing those motions during the subsequent proceedings.
IT IS SO ORDERED.
The Clerk is directed to send certified copies of this Memorandum Opinion and Order to counsel of record and to the United States Bankruptcy Court for the Western District of Virginia.
NOTES
[1] 11 U.S.C. § 1322(c) provides that: "The plan may not provide for payments over a period that is longer than three years, unless the court, for cause, approves a longer period, but the court may not approve a period that is longer than five years."
[2] See also In re Ramirez, 62 B.R. 668 (Bkrtcy.S. D.Cal.1986) (use of § 1322(b)(2) in conjunction with § 1322(b)(5) to extend maturity date of note beyond the term of the plan, where note did not otherwise qualify for § 1322(b)(5) treatment, is not permitted).
[3] A discharge of a secured debt is not permitted in a hardship discharge. 5 Collier on Bankruptcy, paragraph 1328.01[c]. Compare 11 U.S.C. § 1328(a) (regular discharge provides for a discharge of "all debts provided for by the plan") with § 1328(c) (hardship discharge provides for a discharge of only "all unsecured debts provided for by the plan.") (emphasis mine). However, the Bank asserts, and the Debtor does not contest, that the Debtor was discharged on the Loan in the previous Chapter 13 proceeding through the hardship discharge. The record is unclear on this matter. This court assumes, for the purposes of this Opinion, that the Debtor has been discharged on the Loan. Even if the Debtor has not been personally discharged, the conclusions reached in this Opinion and the resulting Order issued would still be applicable and appropriate.
[4] In re Johnson, 96 B.R. 326, 329-30 (D.Kan. 1989); In re Hundley, 99 B.R. 306, 307 (Bkrtcy E.D.Va.1989); In re Russo, 94 B.R. 127, 130 (Bkrtcy.N.D.Ill.1988); In re McKinstry, 56 B.R. 191, 193 (Bkrtcy.D.Vt.1986); In re Binford, 53 B.R. 307, 309 (Bkrtcy.W.D.Ky.1985); In re Brown, 52 B.R. 6, 7 (Bkrtcy.S.D.Ohio 1985).
[5] Id. (citing In re Brown, 52 B.R. 6 (Bkrtcy.S.D. Ohio 1985); In the Matter of Fryer, 47 B.R. 180 (Bkrtcy.S.D.Ohio 1985)).
[6] Id. (citing House Report No. 95-595, 95 Cong., 1st Sess. 365-6 (1977); Senate Report No. 95-989, 95th Cong., 2d Sess. 80 (1978), U.S.Code Cong. & Admin.News 1978, pp. 5787, 5866, 5963, 6320).
[7] Jim Walter Homes, Inc. v. Saylors (In re Saylors), 869 F.2d 1434, 1435 (11th Cir.1989); Downey Savings and Loan Assn. v. Metz (Matter of Metz), 820 F.2d 1495, 1498 (9th Cir.1987); In re Smith, 94 B.R. 216, 217-18 (Bkrtcy.M.D.Ga. 1988); Matter of Hagberg, 92 B.R. 809, 814 (Bkrtcy.W.D.Wis.1988); In re Klapp, 80 B.R. 540, 542 (Bkrtcy.W.D.Okl.1987); Matter of Lagasse, 66 B.R. 41, 43 (Bkrtcy.D.Conn.1986); In re Lewis, 63 B.R. 90, 92 (Bkrtcy.E.D.Pa.1986).
[8] The definitions in Chapter 1 apply in a case under Chapter 13. 11 U.S.C. § 103(a).
[9] 2 Collier on Bankruptcy at paragraph 102.03 (15th ed. 1989) (citing H.R.Rep. No. 595, 95th Cong., 1st Sess. 315 (1977); S.Rep. No. 989, 95th Cong., 2d Sess. 27 (1978) U.S.Code Cong. & Admin.News 1978, pp. 5812, 6272).
[10] Before the 1984 amendment, § 524(a)(2) of the Code read as follows: "A discharge in a case under this title . . . operates as an injunction against . . . any act, to collect, recover or offset any such debt as a personal liability of the debtor, or from the property of the debtor, whether or not discharge of such debt is waived. . . ."
[11] In re Russo, 94 B.R. 127, 129 (Bkrtcy.N.D.Ill. 1988). An example of a scaledown is as follows. Assume that debtor's loan is for $100,000 but the home (the collateral) is worth only $50,000. The debtor may remove any personal liability on the debt and eliminate the unsecured portion of the debt by obtaining a discharge in Chapter 7, yet may retain the mortgage through cure and reinstatement in a subsequent Chapter 13 proceeding. Thus, he may convert a $100,000 loan on which he has personal liability into a $50,000 non-recourse loan. No attempt at such a scaledown is alleged in the instant case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918920/ | 106 B.R. 396 (1989)
In re Joseph F. KLEIN, Barbara A. Klein, Debtors.
Bankruptcy No. 89-10119S.
United States Bankruptcy Court, E.D. Pennsylvania.
October 19, 1989.
*397 Jacquelyn A. Barnes, Philadelphia, Pa., for debtors.
Edwin Seave, Philadelphia, Pa., for Mid-Penn Nat. Co.
Edward Sparkman, Philadelphia, Pa., Standing Chapter 13 Trustee.
OPINION
DAVID A. SCHOLL, Bankruptcy Judge.
A. INTRODUCTION.
At issue herein are Objections of a holder of a second mortgage on the residential real estate of the Debtors, Mid-Penn National Co. (hereinafter "Mid-Penn"), to confirmation of the Debtors' Chapter 13 Plan. Because Mid-Penn's loan secured by its mortgage matures under its original terms prior to the date on which the Debtors' final payment under their Plan is due, Mid-Penn argues that 11 U.S.C. § 1322(b)(2) bars the Debtors from purportedly "modifying" its rights by proposing a Plan which fails to require the Debtors to make at least their regular monthly payments under the terms of the loan.
We reject Mid-Penn's contentions for three separate reasons: (1) The loan is secured by property other than the Debtors' real estate, rendering § 1322(b)(2) inapplicable; (2) The original terms of the loan and its security documents merged into a pre-petition judgment, payment of which is not subject to the loan terms; and (3) The Debtors' Plan proposing to cure the loan delinquency by paying it off does not affect a "modification" of Mid-Penn's claim, especially since we find that the full value of Mid-Penn's claim must be paid to it pursuant to 11 U.S.C. § 1325(a)(5)(B)(ii). However, because it appears that Mid-Penn possibly justifiably relied on the Debtors' making current payments to it in filing its proof of claim, we shall delay confirmation to allow Mid-Penn an opportunity to file an amended proof of claim in light of our conclusions reached herein.
B. PROCEDURAL HISTORY.
The Debtors, JOSEPH F. KLEIN and BARBARA KLEIN, filed a voluntary joint petition for relief under Chapter 13 of title 11, United States Code, on January 9, 1989. With their petition, the Debtors filed a Plan calling for forty-five (45) payments of $220 per month which would be distributed to their creditors through the Trustee. Under the Plan, Mid-Penn was to receive payments against "its secured judgment [sic] in full in the amount of $6112.78 plus interest." The last payment under the Plan would be made in September, 1992.
On April 11, 1989, Mid-Penn[1] filed its Amended Proof of Claim. Therein, it *398 claimed arrearages totalling $4,767.21, made up of Principal of $2,850, Interest of $1,081.94, Legal costs of $247, and "additional interest" of $588.77.[2] It further recited, in the Amended Proof of Claim, that this sum was to be paid "inside" the Plan, and that the sum of $5,415.00 was to be paid "directly to [Mid-Penn]."[3]
On May 31, 1989, Mid-Penn filed an Objection to confirmation of the Debtors' Plan. The Objection was a boiler-plate statement, identical to that asserted by Mid-Penn in In re Ford, 84 B.R. 40, 41 (Bankr.E.D.Pa.1988), that "[t]he debtor's [sic] Plan calls for [Mid-Penn] to receive regular monthly payments on account of its secured debt from the date of filing of the bankruptcy petition," and that the Debtors had failed to make all such payments to date. It can be noted that, in fact, the Plan did not provide for Mid-Penn to receive its regular monthly payments and that therefore the recitations in the Objection were, at least in part, misplaced.
On June 8, 1989, Mid-Penn filed a motion for relief from the automatic stay in order to allow it to foreclose on its mortgage because the Debtors had failed to make the regular post-petition payments. The Debtors answered that they were current on Plan payments under a confirmable plan and that therefore Mid-Penn's motion failed to state a cause of action. In the absence of the undersigned, this matter was heard by our colleague, the Honorable Bruce Fox, on July 6, 1989. On July 11, 1989, Judge Fox issued an Order and Memorandum denying Mid-Penn's motion. Although Judge Fox acknowledged the possible validity of Mid-Penn's argument that inconsistency of the Debtors' Plan with 11 U.S.C. § 1322(b)(2) might compel denial of confirmation, he noted that a skimpy factual record rendered him incapable of determining whether the loan was secured by only the Debtors' realty (and hence whether § 1322(b)(2) was applicable) and whether the Debtors' obligation was in fact merged in a prepetition judgment (which might have precluded reliance on § 1322(b)(2)). The Memorandum closed by expressly declining to rule on whether Mid-Penn might succeed in objecting to confirmation if "[a] complete factual record" were developed in the confirmation process.
As might have been expected considering the foregoing, Mid-Penn appeared at the confirmation hearing on September 7, 1989, poised to press its Objections to confirmation based on the Plan's alleged inconsistency with § 1322(b)(2). After an extended colloquy, we accorded Mid-Penn the opportunity to raise these Objections, despite the fact that they were quite different from those set forth in the written Objection filed of record by it. We also allowed each party to admit into the record a designated list of documents and other materials which each contended were pertinent for purposes of deciding these Objections. The parties were accorded until October 6, 1989, to simultaneously file Briefs supporting their respective positions, with any of the documents deemed significant by either party to be attached to their respective Briefs. These submissions were timely filed.
C. PERTINENT FACTS.
The Brief of Mid-Penn, by far the more comprehensive submission, recites the pertinent facts in a fashion which we adopt, with certain necessary additions and changes. The Debtors entered into a secondary mortgage[4] loan contract with Mid-Penn *399 on August 1, 1985. The contract contemplated payments of $285.00 monthly for sixty (60) months, the first payment being due September 10, 1985, and the final payment being due on August 10, 1990.
The Debtors executed a note, a Truth-in-Lending disclosure statement (hereinafter designated as "DS"), and a second mortgage on their home as evidence of their obligation. The mortgage contained the following clauses:
"The Condition of this Obligation is such, That if the Obligee shall:
. . . . .
3. With respect to the premises described in the Mortgage accompanying this Obligation:
(a) Maintain and deliver to Obligee, as further security for this Obligation, insurance (with non-contributory mortgagee clauses, in form and companies approved by Obligee) against such hazards and in such amounts as Obligee at any time requires; Obligee may, as irrevocable attorney for and with joinder of Obligor, claim, settle and receive all payments thereunder, or under any condemnation proceedings, which payments it may apply to this indebtedness (even if not due) or to remedy the damage; . . .
. . . . .
Then the above Obligation to be void, or else remain in full force and effect."
. . . . .
NOW THIS INDENTURE WITNESSETH, that the Mortgagor, in consideration of the principal sum and for securing performance of all provisions of the said Obligation, intending to be legally bound, does hereby grant and convey unto the Mortgagee:
. . . . .
TOGETHER with all and singular the Buildings, Streets, Alleys, Passages, Ways, Waters, Water Courses, Rights, Liberties, Privileges, Improvements, Hereditaments and Appurtenances whatsoever thereunto belonging, or in any wise appertaining, and the Reversions and Remainders, Rents, Issues and Profits thereof; and also together with all plumbing, heating and lighting equipment, or machinery [the previous five words are crossed off] now or hereafter installed upon the above described premises, notwithstanding any of such are capable to severance without harm to the real estate . . . (emphasis added).
The DS contained the following recitation as to security interests taken by Mid-Penn:
SECURITY: You are giving a Security Interest In:
___ Your Household goods
x Your Real Estate located at: 2551 SOUTH 62ND STREET, PHILADELPHIA, PENNSYLVANIA 19142
COLLATERAL SECURING OTHER LOANS WITH US MAY ALSO SECURE THIS LOAN.
The Debtors last made a payment to Mid-Penn on March 28, 1988, which was the payment due on March 10, 1988. Mid-Penn responded by filing a civil lawsuit on the note on September 15, 1988, in the Philadelphia County Court of Common Pleas, September Term 1988, No. 1723. Therein, Mid-Penn obtained a default judgment on or about October 25, 1988, in the amount of $6,112.78. The Debtors have made no post-petition payments to Mid-Penn pursuant to the terms set out in the loan documents. However, they are current in all required Plan payments.
D. BECAUSE MID-PENN HAS TAKEN SECURITY INTERESTS IN PROPERTY OF THE DEBTORS OTHER THAN THEIR REAL PROPERTY, 11 U.S.C. § 1322(b)(2) IS INAPPLICABLE.
The Bankruptcy Code sections, interpretation of which are in issue here are 11 U.S.C. §§ 1322(b)(2), (b)(3), (b)(5), which provide as follows:
(b) Subject to subsections (a) and (c) of this section, the plan may
(2) modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor's principal residence, or of holders of *400 unsecured claims, or leave unaffected the rights of holders of any class of claims;
(3) provide for the curing or waiving of any default; . . .
(5) notwithstanding paragraph (2) of this subsection, provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any unsecured claim or secured claim on which the last payment is due after the date on which the final payment under the plan is due; . . . (emphasis added).
Although neither party cites to Ford, supra, in their Briefs, the issues here were addressed in dictum there on similar facts, 84 B.R. at 42-45.
As in Ford, we conclude that § 1322(b)(5) is inapplicable, because the last payment of the Debtors is due on Mid-Penn's obligation on August 10, 1990, a date before the contemplated date of the last plan payment, September, 1992. Id. at 43.
However, § 1322(b)(2) is quite clearly also inapplicable because Mid-Penn has taken a security interest in, inter alia, hazard insurance proceeds, any personalty supplying heating to the Debtors brought into the premises, and, possibly, undesignated collateral securing other loans.
In its Brief, Mid-Penn, anticipating a non-existent argument on this point from the Debtors, concentrates on contending that its taking security in "rents, issues, and profits" does not extend the security taken beyond the Debtors' realty, citing In re Hougland, 93 B.R. 718, 720-21 (D.Ore. 1988). In that case, the court concluded that "the `rents, profits, and issues' language, without more, . . . is a benefit incident to ownership of the property [which] could not be distinguished from the lien on the property." Id. (emphasis added). Therefore, such language, standing alone, is there held insufficient to remove a mortgagee from the protection of § 1322(b)(2).
In so holding, the Hougland court distinguishes our decisions in In re Caster, 77 B.R. 8, 11-12 (Bankr.E.D.Pa.1987); In re Crompton, 73 B.R. 800, 805-06 (Bankr.E. D.Pa.1987); and In re Jablonski, 70 B.R. 381, 386 (Bankr.E.D.Pa.1987), aff'd, 88 B.R. 652 (E.D.Pa.1988), because the mortgages there included language evidencing a security interest in appliances and furniture as well as rents, issues, and profits of the realty.
Here, however, Mid-Penn has taken a security interest in "all plumbing, [and] heating . . ." (emphasis added) in the premises, as well as "Rents, Issues, and Profits thereof." Clearly, this recitation would sweep into the category of secured property any heating devices, including space heaters, at the premises, as well as a home's central heating plant. Therefore, the instant mortgage includes at least certain "appliances," and would not qualify under § 1322(b)(2) under the Hougland court's analysis.
We also must confess that we are, in any event, unable to agree with the Hougland court's analysis. The added terms, "rents, issues, and profits thereof" must mean that security is taken in something other than the realty itself or they would not be included in the documents.[5] If Mid-Penn wished to forego any such security interest, it clearly could have done so by striking same, as it did the reference to lighting equipment and machinery at the premises. Therefore, we can only conclude that "rents, issues, and profits" from the premises are property in which Mid-Penn has chosen to take a security interest in addition to the Debtors' realty itself.
Mid-Penn does not discuss the security interest which it has taken in hazard-insurance proceeds. This alone is enough to take the mortgage out of the realm of § 1322(b)(2).
We concede that there is a pregnant contingency in the security which Mid-Penn *401 may have taken from the Debtors in other loans to them. We are unaware of whether the Debtors had or have any other loans with Mid-Penn or what the scope of security taken therein might be. However, again, we cannot assume that the language included in the DS, by specifically adding it to the form, is meaningless. This potential security interest is disclosed by Mid-Penn on the DS for some purpose. We note that an additional inchoate or contingent security interest in certain property is sufficient to remove a mortgage from the scope of § 1322(b)(2). See Caster, supra, 77 B.R. at 12. Cf., e.g., Bizier v. Globe Financial Services, Inc., 654 F.2d 1, 3 (1st Cir.1981); In re Cervantes, 67 B.R. 816, 819 (Bankr.E. D.Pa.1986) (per GOLDHABER, CH. J.).
Finally, we note that Mid-Penn has taken a pre-petition judgment against the Debtors. The lien upon the Debtors' realty effected by this judgment may also be sufficient additional security in itself to remove Mid-Penn's instant security interest from the scope of § 1322(b)(2). See In re Arnold, 40 B.R. 144, 146-47 (Bankr.N.D. Ga.1984). The significance of this judgment shall be revisited, from another angle, shortly hereafter.
For all of the foregoing reasons, we conclude that the security interest taken by Mid-Penn against the Debtors, as evidenced by the pertinent loan documents, is not within the very narrow scope of § 1322(b)(2). Therefore, that Code section is inapplicable. The foundation of Mid-Penn's only argument in support of its Objections is thus cut from under it.
E. THE OBLIGATIONS OF THE DEBTORS TO MID-PENN ARE MERGED IN ITS PRE-PETITION JUDGMENT AGAINST THEM, WHICH DOES NOT CONTAIN ANY PAYMENT TERMS, THUS ELIMINATING ANY CLAIM THAT MID-PENN COULD RELY UPON § 1322(B)(2).
There is, moreover, another, independent, alternative basis upon which it can be concluded that Mid-Penn is incapable of invoking § 1322(b)(2) here. As Judge Fox stated in his Memorandum, from which Mid-Penn has not appealed and which hence remains the law of this case, see, e.g., In re Cole, 89 B.R. 433, 436 (Bankr.E.D.Pa.1988), if Mid-Penn in fact had a judgment embracing the entire obligation secured by the mortgage, then Mid-Penn is confined, by the doctrine of merger, to status as a judgment creditor, the payment of whose obligation is not called for at any particular time. This is the sole argument made by the Debtors in their very short Brief.[6]
Mid-Penn does not dispute the principles set down by Judge Fox, nor the principle that an obligation, even if totally accelerated pre-petition and the subject of a judgment for the entire balance due subsequent to acceleration, may be cured in a Chapter 13 Plan. It also does not dispute that a mortgage merges with a judgment in a foreclosure proceeding. See In re Rorie, 98 B.R. 215, 218-19 (Bankr.E.D.Pa.1989) (FOX, J.); In re Ocasio, 97 B.R. 825, 826 n. 1 (Bankr.E.D.Pa.1989) (TWARDOWSKI, CH. J.); In re Smith, 92 B.R. 127, 129-31 (Bankr.E.D.Pa.1988), rev'd in part on other grounds sub nom. Smith v. Kissell Co., 98 B.R. 708 (E.D.Pa.1989); and In re Herbert, 86 B.R. 433, 436-37 (Bankr.E.D.Pa. 1988), aff'd sub nom. Herbert v. Federal National Mortgage Ass'n, 102 B.R. 407 (E.D.Pa.1989). Rather, it argues that, since its judgment was obtained in an action on the note accompanying the mortgage instead of on the mortgage itself, the mortgage is not merged with the instant judgment on the note.
Mid-Penn cites no authority for this argument, and we could not locate any authority to support it either. In fact, ample authority establishes that the obligation set forth in a note merges with a judgment on the note, just as a mortgage obligation merges with a foreclosure judgment. See, *402 e.g., In re Crane Automotive, Inc., 98 B.R. 233, 236 (Bankr.W.D.Pa.1989); Lance v. Mann, 360 Pa. 26, 28, 60 A.2d 35, 36 (1948); Sykes v. Gerber, 98 Pa. 179, 182-84 (1881); 46 AM.JUR.2d 551-58 (1969); and 1 RESTATEMENT (SECOND) OF JUDGMENTS, § 18 (1982). Moreover, the limited authority directly on point holds that the obligation of a note merges with a judgment on a mortgage accompanying the note, Yeomans v. Rexford's Executor, 35 Pa. 273, 274 (1860), and that, as here, the obligation of a mortgage apparently merges with a judgment on a note accompanying the mortgage. In re Schlecht, 36 B.R. 236, 240-41 (Bankr.D.Alas.1983).
The existence of the judgment, now clearly spread out on this record as opposed to being merely mentioned, as in the contested matter before Judge Fox, also renders § 1322(b)(2) totally inapplicable. The Debtors have undertaken to liquidate their obligation to Mid-Penn in full in their Plan. See Rorie, supra, 98 B.R. at 218-19; and Smith, 92 B.R. at 130-31. Therefore, they are obliged, as they seem to recognize, to compensate Mid-Penn with interest for the right to defer this obligation. See 11 U.S.C. § 1325(a)(5)(B)(ii); Smith, supra, 92 B.R. at 130;[7] and Jordan, supra, 91 B.R. at 677-78. The rate of interest to be paid, upon confirmation of the Plan, must be the lower of the contract rate or the "market rate" of interest. In re Mitchell, 77 B.R. 524, 529 (Bankr.E.D.Pa.1987). The upshot is that a creditor such as Mid-Penn must be compensated for being obliged to allow a debtor to extend the time of making full payment of its judgment debt to it. See n. 7 supra. There is no just basis for refusing to recognize the debtor's right to do so. Since a pre-petition judgment is in place here, causing the note, the mortgage, and all concurrent obligations to merge in it, the Debtors are clearly entitled to cure their obligation to Mid-Penn over the full length of their Plan.
F. PAYING AN OBLIGATION IN FULL OVER A PLAN IS, IN ANY EVENT, A "CURE," NOT A "MODIFICATION" BARRED BY § 1322(b)(2).
In the prior two discussions, we have concluded, on separate alternative bases, that Mid-Penn is not entitled to invoke § 1322(b)(2) against the instant Debtors. However, assuming arguendo that § 1322(b)(2) did apply, we conclude, as we did in Ford, supra, 84 B.R. 42-44, that the "modification" of the rights of a secured creditor proscribed by § 1322(b)(2) does not include the "curing" of an obligation by paying it in full, subject to § 1325(a)(5), in particular § 1325(a)(5)(B)(ii), as the Debtors have opted to do here.
In Ford, we reached the following conclusions, 84 B.R. at 43-44:
At the outset, we reiterate our statement in In re Small, 65 B.R. 686, 689 (Bankr.E.D.Pa.1986), aff'd, 76 B.R. 390 (E.D.Pa.1987), that the interplay of §§ 1322(b)(2) and (b)(5) is less than clear. However, we also reiterate our one definitive statement therein regarding their interplay: "there is a significant difference between the `curing of any default,' which is the subject matter of § 1322(b)(5), and `modification of the rights of holders of secured claims,' which is the subject matter of § 1322(b)(2)." Our principle sources of authority for this statement were opinions of two Court of Appeals, Grubbs v. Houston First American Savings Ass'n, 730 F.2d 236, 240-42 (5th Cir.1984) (en banc); and In re Taddeo, 685 F.2d 24, 27-28 (2d Cir.1982). Particularly convincing to us was the detailed historical analysis presented by the Grubbs court, in a decision adopted by a 10-4 vote by the court en banc.
Subsequent to our decision in Small, supra, our own Court of Appeals has decisively spoken twice on the same subject. *403 In In re Roach, 824 F.2d 1370, 1374-77 (3d Cir.1987) the court, citing Grubbs and Taddeo with approval, concurred with their common conclusion as to the interplay between §§ 1322(b)(2) and (b)(5). The Court concluded as follows, 824 F.2d at 1376:
"Based upon the foregoing, we conclude that Congress did not view a cure of a home mortgage as a modification of the holder's rights within the meaning of § 1322(b)(2) and, accordingly, that neither the power to cure under § 1322(b)(3) nor the power to cure under § 1322(b)(5) is limited by the provision of § 1322(b)(2) prohibiting modification of home mortgages. Accord, e.g., In re Taddeo, 685 F.2d at 27; Grubbs, 730 F.2d at 241-42, 247 [sic should be 246]-47. Nothing in § 1322(b)(3) limits its authority to cure to pre-acceleration defaults and the Court of Appeals for the Second circuit relied upon that fact in holding that § 1322(b)(3) authorized a post-acceleration cure of a longterm mortgage. In re Taddeo, 685 F.2d at 28. Although we are inclined to view the relationship between § 1322(b)(3) and § 1322(b)(5) somewhat differently, we agree that the authority conferred by § 1322(b)(3) cannot be limited to pre-acceleration cures and we believe that fact is important in evaluating the argument that the concluding clause of § 1322(b)(5) limits the authority therein conferred to unaccelerated mortgage obligations.
Based on text legislative history, we believe § 1322(b)(5) was intended to make it clear that the power to cure extends to longterm obligations that will survive beyond the life of the plan. When § 1322(b)(5) is so viewed, the function of § 1322(b)(3) is to provide authority for curing obligations that will be paid off during the life of the plan. See Grubbs, 730 F.2d at 243-45."
Moreover, the Court of Appeals reiterated the substance of its aforesaid holding of Roach in In re Capps, 836 F.2d 773 (3d Cir.1987), wherein it affirmed the substance of our holding that a secured creditor could not demand interest on mortgage arrearages in Small. There, the Court noted that, in Roach, "we concluded that Congress did not see cure as effecting a modification of creditors' interests."
We agree with the Objector's assertion that § 1322(b)(5) is not authority for the Debtor's attempt to cure his defaults in the obligation owed to the Objector, since the last payment on the obligation is due before the final payment due under the Plan. However, we disagree with its assertion that the prohibitory language of § 1322(b)(2), relating solely to attempts to "modify" secured claims rather than "curing" defaults in their payment, is applicable. The Code section which we think is applicable here is § 1322(b)(3), which simply allows a Chapter 13 debtor to provide for curing and waiving any default. The passage quoted from Roach at page 43 supra clearly holds that the broad language of § 1322(b)(3) is not limited at all by § 1322(b)(2), and is further not limited by § 1322(b)(5) when the last payment on the obligation in issue is due prior to the last payment under the plan. Therefore, we believe that the Debtor's efforts to cure his rather modest post-petition defaults are within from the broad scope of plan provisions expressly authorized by § 1322(b)(3).
A result contrary to that which we reached in Ford appears anomalous. Irrespective of § 1322(b)(2), a debtor is always entitled to cure a mortgage obligation which has been accelerated, but not reduced to judgment, pursuant to 11 U.S.C. § 1322(b)(3). Roach, supra, 824 F.2d at 1374-77. A cure is permitted even where a state court mortgage foreclosure judgment reduces the accelerated loan balance to judgment if, under state law such as that of Pennsylvania, the judgment does not terminate the mortgagor's rights of redemption. See In re Brown, 75 B.R. 1009, 1011-12 (Bankr.E.D.Pa.1987). Also, as we held in the discussion in the last headnote, at pages 401-02 supra, a debtor can generally cure an obligation reduced to judgment. *404 Therefore, it would make no sense to preclude the cure of an obligation just because, under its original terms, prior to acceleration, it happened to fall due prior to the termination of the plan. It should, moreover, be recalled that the obligee will be compensated for the deferral of its obligation.
Many courts have agreed with our reasoning in Ford, even in the somewhat more difficult context of a cure of an obligation under which, pursuant to its original terms, all of the payments were due as of the date of the debtor's filing of a Chapter 13 petition. See In re Spader, 66 B.R. 618, 620-22 (W.D.Mo.1986); In re Larkins, 50 B.R. 984, 987 (W.D.Ky.1985); In re Dochniak, 96 B.R. 100, 102 (Bankr.W.D.Ky.1988); Arnold, supra, 40 B.R. at 146-47; and In re McSorley, 24 B.R. 795, 797-99 (Bankr.D. N.J.1982).
We acknowledge some authority to the contrary, most examples of which we cited in Ford, supra, 84 B.R. at 44, e.g., In re Seidel, 752 F.2d 1382, 1384-87 (9th Cir. 1985); and In re Palazzolo, 55 B.R. 17, 18 (Bankr.E.D.N.Y.1985).[8]See also In re Halley, 70 B.R. 283, 285 (E.D.Pa.1987);[9]In re Davis, 91 B.R. 477, 478-79 (Bankr.N. D.Ill.1988);[10] and Annot., Bankruptcy: Chapter 13 Plan Delaying Payment of Unaccelerated Matured Modification of Creditor's Rights Under 11 U.S.C. § 1322(b)(2), 91 A.L.R.FED. 512 (1989).[11] We conclude, however, that, in this district, we are bound by the holding in Roach, supra, 824 F.2d at 1376. Here, a cure of an obligation, like the instant one, which matures during the course of a Plan should surely not be deemed to present a "modification" prohibited by § 1322(b)(2).
As the interested party adversely affected by our unappealed decision in Ford, Mid-Penn was surely aware of Ford's existence and the need to present us with strong arguments to cause us to reconsider our decision there. Suffice it to say that it has presented very little which we did not already consider in Ford. We therefore decline to change the reasoning expressed there. Consequently, we conclude that there is a third alternative reason why Mid-Penn cannot succeed here: § 1322(b)(2) does not preclude a "cure" (which is not a "modification") of an obligation secured by only real estate, and such a cure is expressly authorized by § 1322(b)(3).
G. SINCE OUR CONCLUSION MAY HAVE REASONABLY BEEN UNANTICIPATED BY MID-PENN IN FILING ITS PROOF OF CLAIM, WE SHALL ACCORD MID-PENN A BRIEF OPPORTUNITY TO FILE AN AMENDED PROOF OF CLAIM AND THE DEBTOR WITH A BRIEF OPPORTUNITY THEREAFTER TO OBJECT TO MID-PENN'S CLAIMS.
The Amended (and last filed) Proof of Claim by Mid-Penn, asserting $4,767.11 in arrearages and $5,415.00 in direct payments, see pages 397-98 & nn. 2 and 3 supra, obviously does not contemplate the Debtors' paying Mid-Penn's claim in full over the course of the Plan. It might be argued that, since that is what the Plan provides and such Plan provisions were deemed permissible in Ford, supra, this is what Mid-Penn should have anticipated and to what it should have responded in filing its proof of claim. However, our *405 examination of the Debtors' Budget, included in their Chapter 13 Statement, reflects the Debtors' own schizophrenic treatment of Mid-Penn's claim. Among the Debtors' alleged monthly expenditures in this Budget is a payment noted as "2nd mortgage-Mid-Penn" at $285 monthly. This entry suggests that the Debtors contemplated paying Mid-Penn its regular monthly payments outside of the Plan.[12]
Therefore, we shall allow Mid-Penn to file any further Amended Proof of Claim in a period of approximately ten (10) days following the filing of this Opinion. We shall also give the Debtors a similar period thereafter to object to any further Amended Proof of Claim or the current Amended Proof of Claim. Then, after another period of approximately 10 days, we shall reschedule the Debtors' confirmation hearing.
H. CONCLUSION.
Our Order so providing will be entered.
ORDER
AND NOW, this 19th day of October, 1989, after a colloquy with counsel for the parties at the Objection of Mid-Penn National Co. (hereinafter "Mid-Penn") to Confirmation of the Debtors' Chapter 13 Plan in open court on September 7, 1989, at which it was determined that Objections and certain documents would be considered and upon careful review of the parties' Briefs filed thereafter, it is hereby ORDERED AND DECREED as follows:
1. In light of the Conclusions expressed in the foregoing Opinion, Mid-Penn is accorded the opportunity to file a further Amended Proof of Claim not inconsistent with this Opinion on or before October 31, 1989.
2. In the same light, the Debtors are accorded the opportunity to file any Objections to any further Amended Proof of Claim or the present Amended Proof of Claim of Mid-Penn on or before November 9, 1989.
3. A Final Confirmation Hearing is scheduled in this case on
TUESDAY, NOVEMBER 21, 1989, at 10:00 A.M. in Courtroom No. 2 (Room 3718), United States Court House, 601 Market Street, Philadelphia, PA 19106.
NOTES
[1] The claimant was, probably erroneously, designated on the Amended Proof of Claim as "Mid-Penn Consumer Discount Company."
[2] It is not clear how sum was calculated and it may be impermissible, if objected to, on the basis of the holdings in In re Capps, 836 F.2d 773 (3d Cir.1987); and/or In re Jordan, 91 B.R. 673, 677-78 (Bankr.E.D.Pa.1988).
[3] It is unclear to us whether Mid-Penn means to make a total claim for the sum of these figures, or $10,182.71. Our uncertainty concerning Mid-Penn's assumptions in filing this Proof of Claim cause us to allow it to further amend its Proof of Claim. See pages 404-05 infra.
[4] The Debtors are apparently current on their first mortgage, owed to Germantown Savings Bank, and are continuing to make these payments outside of the Plan, as is permissible. See In re Waldman, 81 B.R. 313, 314 (Bankr.E. D.Pa.1987); and In re Evans, 66 B.R. 506, 509-10 (Bankr.E.D.Pa.1986), aff'd, 77 B.R. 457 (E.D. Pa.1987).
[5] The law of Pennsylvania regarding a mortgagee's security interest in rents of the mortgagor is, for example, highly complex. See In re TM Carlton House Partners, Ltd., 91 B.R. 349, 352-55 (Bankr.E.D.Pa.1988); and In re DiToro, 17 B.R. 836, reconsidered, 22 B.R. 392 (Bankr.E.D. Pa.1982). The text of the mortgage is significant in determining the rights of the mortgagee. Cf. In re Panas, 100 B.R. 734, 738-40 & n. 9 (Bankr.E.D.Pa.1989) (discusses rights of a mortgagee in possession to rents in a lease given by a mortgagor).
[6] In all fairness to the Debtors, it is apparent, from a review of the Debtors' Plan, that they at all times perceived Mid-Penn's claim as that of a judgment creditor and they dealt with it accordingly. The only filings made by the Debtors which are inconsistent therewith were the figures in the Budget contained in their Chapter 13 Statement. See page 405 & n. 12 infra.
[7] We would note one error in the reasoning of Smith, 92 B.R. at 131; and Herbert, 86 B.R. at 438, which, although not raised therein, should be corrected. If a creditor is oversecured, it should, by virtue of 11 U.S.C. § 506(b), receive post-judgment interest through the date of confirmation of the Plan. The deferral rate would be effective after confirmation. Therefore, there should be no lapse in the period in which an oversecured creditor is compensated, at least to some degree, for the delay in satisfaction of its claim.
[8] In re LaPaglia, 8 B.R. 937 (Bankr.E.D.N.Y. 1981), also cited by Mid-Penn, was overruled by the decision in Taddeo, supra, 685 F.2d at 28.
[9] Although this is a decision issued by our district court, we note that the ruling was issued on a number of grounds which would have justified the result irrespective of the applicability of § 1322(b)(2). Consequently, the discussion of § 1322(b)(2) included therein was superficial. Also, this decision preceded Roach and is, we submit, no longer good law in this Circuit.
[10] This decision was also based upon § 1322(b)(5), 91 B.R. at 479-82, which is inapplicable here. See page 400 supra.
[11] As its title indicates, this Annotation collects only cases where the obligation is entirely matured pre-petition and there has been no pre-petition acceleration by the creditor. Here, the obligation did not totally mature pre-petition and there was an acceleration. Nevertheless, the note concludes that "[a] split of authority exists" in cases presenting even this more questionable scenario. 91 A.L.R.FED. at 513.
[12] Unless they had another loan from Mid-Penn which is not mentioned by either party, this entry also casts doubt on whether the Debtors have met the requirement of providing that all of their disposable income is paid into the Plan, as contemplated by 11 U.S.C. § 1325(b)(1)(B). The "expenditures" in the Budget, unless another loan exists, obviously include the payment of a sizable sum which the Debtors are not actually paying. Of course, such an objection would have to be raised in timely fashion by the Trustee or an unsecured creditor, not by Mid-Penn or this court sua sponte, to preclude confirmation. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1918949/ | 106 B.R. 125 (1989)
In re James A. WILSON, Fay W. Wilson, Debtors.
Joe CASTLEN, Trustee, Plaintiff,
v.
OHIO VALLEY NATIONAL BANK, Defendant.
Bankruptcy No. 4-88-00087(3)7, Adv. No. 4-88-0028.
United States Bankruptcy Court, W.D. Kentucky.
February 27, 1989.
Harry Mathison, Henderson, Ky., for defendant.
Joseph W. Castlen, III, Owensboro, Ky., Trustee.
MEMORANDUM-OPINION
J. WENDELL ROBERTS, Bankruptcy Judge.
This adversary proceeding came before the Court on January 6, 1989 for trial, at which time the issue was raised as to whether this proceeding was commenced within the applicable statute of limitations. The Court requested the parties to brief the issue, and we have reviewed same. For the following reasons, we find that the Trustee's action was timely filed.
The facts are briefly stated as follows. On July 10, 1987, the debtors, James A. and Fay W. Wilson, ("debtors") executed a promissory note in favor of Ohio Valley National Bank in the amount of $146,000. More than a year later, on August 14, 1987, the debtors gave the bank a security interest in the debtors' restaurant equipment and furnishings to secure repayment of the note. Financing statements were filed in the County Clerk's office on October 14, 1987. Subsequently, the debtors filed for Chapter 7 relief on February 11, 1988, and received their discharge on June 16, 1988. On July 27, 1988, the Trustee brought this preference action under 11 U.S.C. § 544(b) to avoid the lien on the equipment and furnishings made by the debtors to the bank which the Trustee alleges is voidable pursuant to K.R.S. 378.060.
K.R.S. 378.060 provides that any transfer of property in contemplation of insolvency or with the design to prefer a creditor over other creditors, shall operate as an assignment for the benefit of all creditors. The cause of action created by the statute must be filed within six (6) months of the filing of the mortgage. K.R.S. 378.070. Before the six (6) month limitation had run, the debtors filed their Chapter 7 bankruptcy petition.
The bank contends that the Trustee's complaint, which was filed on July 27, 1988, is barred by 11 U.S.C. § 108(c). That section states as follows:
Except as provided in § 524 of this title, if applicable non-bankruptcy law, an order entered in a non-bankruptcy proceeding, or an agreement fixes a period for commencing or continuing a civil action in a Court other than a bankruptcy court on a claim against the debtor, or against an individual with respect to which such individual is protected under § 1201 or § 1301 of this title, and such period has not expired before the date of the filing of the petition, then such period does not expire until the later of
*126 (1) the end of such period, including any suspension of such period occurring on or after the commencement of the case; or
(2) thirty (30) days after notice of the termination or expiration of the stay under § 362, 722, 1201, or 1301 of this title, as the case may be, with respect to such claim.
Under § 108(c) of the Code, if a creditor is stayed from commencing an action against the debtor because of the debtor's pending bankruptcy, then the creditor's right to bring the action is extended for thirty (30) days after notice of the termination of the stay. The bank argues that since the Trustee did not file the preference action within thirty (30) days from the date of the discharge or by July 16, 1988, he is forever barred from bringing this action.
The Trustee argues that the statute of limitations is governed by 11 U.S.C. § 546(a), rather than § 108(c) of the Code. That section provides:
(a) an action or proceeding under § 544, 545, 547, 548, or 553 of this title may not be commenced after the earlier of
(1) Two years after the appointment of a Trustee under § 702, 1104, 1163, 1302 or 1202 of this title; or
(2) The time the case is closed or dismissed.
For the following reasons, the Court agrees with the Trustee's position.
The extension of the statute of limitations provided for under § 108(c) of the Code strictly applies to a creditor having a claim against the debtor who is stayed from commencing or continuing an action on that claim during the pendency of the bankruptcy case. We do not interpret that section to also apply to preferential transfer actions instituted by the Trustee. While it is true that the Trustee is acting on behalf of the creditors when filing a preferential transfer case, such an action is always against a third party creditor and not the debtor. On the other hand, § 546(a) speaks directly to the question of the appropriate statute of limitations in a case pursued under 11 U.S.C. § 544(b). Under § 546(a), the Trustee may file the preference action within two (2) years from the date of his appointment or before the case is closed or dismissed.
The holding in the case of Scott-Frederick Motor Co., 177 F.Supp. 758 (E.D.Ky. 1959) supports this Court's position. In that case, the Court held that the six (6) month limitation provided by the Kentucky Statutes (K.R.S. § 378.070) for the filing of an action to void preferences under K.R.S. § 378.060 is extended by § 11(e) of the Bankruptcy Act of 1898 (presently 11 U.S.C. § 546) to a period of two (2) years subsequent to adjudication in bankruptcy. Finally, the Court takes note of the case of In re Baird, 63 B.R. 60 (W.D.Ky.1986) cited to us by the bank, but finds it factually distinguishable from the case at bar.
In summary, we find that 11 U.S.C. § 546(a) governs the statute of limitations in a preference action filed pursuant to § 544(b) of the Code. Accordingly, the Court concludes that the Trustee has timely filed this preference action and, therefore, the case shall be set for trial.
An order consistent with this Opinion will be entered this day.
This Memorandum-Opinion constitutes findings of fact and conclusions of law in accordance with Fed.R.Bankr.Pro. 7052. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3036465/ | FILED
NOT FOR PUBLICATION APR 19 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 08-10425
Plaintiff - Appellee, D.C. No. 4:07-CR-00707-DLJ
v.
MEMORANDUM *
VICTOR GUSTAVO ROMERO-
ABRAJAN,
Defendant - Appellant.
Appeal from the United States District Court
for the Northern District of California
D. Lowell Jensen, District Judge, Presiding
Submitted April 5, 2010 **
Before: RYMER, McKEOWN, and PAEZ, Circuit Judges.
Victor Gustavo Romero-Abrajan appeals from the 60-month sentence
imposed following his guilty-plea conviction for being a deported alien found in
the United States, in violation of 8 U.S.C. § 1326. We have jurisdiction pursuant
to 28 U.S.C. § 1291, and we affirm.
*
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).
Romero-Abrajan contends that the district court erred when it applied a 16-
level “crime of violence” adjustment under U.S.S.G. § 2L1.2(b)(1)(A)(ii), based on
his prior conviction for inflicting corporal injury on a spouse, in violation of
California Penal Code § 273.5. Romero-Abrajan’s argument is foreclosed by
United States v. Laurico-Yeno, 590 F.3d 818, 823 (9th Cir. 2010) (holding that a
conviction under California Penal Code § 273.5 is categorically a “crime of
violence” under the Guidelines because the offense requires the intentional use of
physical force against the person of another).
AFFIRMED. | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1584976/ | 147 Mich. App. 649 (1985)
382 N.W.2d 839
OMEGA CONSTRUCTION COMPANY, INC.
v.
ALTMAN
Docket No. 82564.
Michigan Court of Appeals.
Decided December 16, 1985.
Tolley, Fisher & Verwys, P.C. (by Mark H. Verwys and Paul L. Nelson), for plaintiff.
Loomis, Ewert, Ederer, Parsley, Davis & Gotting (by Jack C. Davis, Jeffrey W. Bracken and Terry A. Dake), for defendants.
Before: J.H. GILLIS, P.J., and CYNAR and R.L. EVANS,[*] JJ.
CYNAR, J.
On October 2, 1984, the plaintiff, Omega Construction Company, Inc., filed a complaint in Ingham County Circuit Court. The first count of the complaint sought a declaratory judgment, finding that disputes arising out of the construction contracts with defendants were subject to arbitration. The second and third counts sought, as an alternative to the first count, damages for breach of contract and contract-related torts. On November 9, 1984, the defendants filed a motion for summary judgment pursuant to GCR 1963, 117.2(3) [now MCR 2.116(C)(10)]. On January 10, 1985, Ingham County Circuit Court Judge Thomas L. Brown granted the defendants' motion for summary judgment on Count I, holding that the defendants had not waived in the contract documents their right to judicial process and trial and the parties are stayed from arbitration in Michigan. The parties voluntarily dismissed the other two counts; and on January 23, 1985, Judge Brown filed his final order. The plaintiff now appeals as of right.
*652 The only issue raised on appeal is whether the trial court properly granted summary judgment to the defendants on Count I of the complaint. The trial court granted defendants summary judgment based on GCR 1963, 117.2(3), finding that there was no material issue of fact and that defendants were therefore entitled to summary judgment as a matter of law.
The standard for granting motions for summary judgment brought under subrule 117.2(3) is well settled. In determining whether such motions should be granted, reference must be made to any evidence in the case, including depositions, affidavits, admissions and pleadings. Once these documents are reviewed, the court must ascertain whether there is a dispute as to any material fact. Anderson v Kemper Ins Co, 128 Mich. App. 249; 340 NW2d 87 (1983). The court should give the benefit of any reasonable doubt to the nonmoving party, being liberal in finding a question as to a material fact. Rizzo v Kretschemer, 389 Mich. 363; 207 NW2d 316 (1973). The Court must be satisfied that no factual development is possible which would support the nonmoving party's claim. Royal Globe Ins Co v Great American Ins Corp, 118 Mich. App. 735; 325 NW2d 556 (1982).
The relevant evidence in this case consists primarily of the contract documents.
On November 29, 1983, Omega entered into a contract with defendants, Joel Altman, as president of Altman Development Company, and the Arbor Club. The contract stated that it was "being signed based on plans and drawings prepared by the architect". The contract further stated:
"Seciton [sic] 1.03. Master Drawings and Specifications A master set of the aforesaid Drawings and Specifications, initialled by the parties hereto and by the *653 Development's Architect, and the contractor's Surety or Guarantor will be placed on file with the Architect, and such master set hereof shall govern in all matters which arise with respect to such Drawings and Specifications."
Similarly, the construction contract between Omega and Altman, on behalf of defendant Lakepointe, provided that it was "being signed based on preliminary plans and drawings prepared by the Architect". The contract between Omega and Lakepointe further stated:
"Section 1.01, Contract Documents. * * * At such time as the final working drawings and specifications are arrived at, they shall be considered part of the Contract Documents for purposes of this Agreement, and shall be initialled by all the parties to this agreement, and the Architect, at the closing of the Mortgage being entered into to finance the construction of the above-referenced Development.
* * *
"Section 1.03. Master Drawings and Specifications. A master set of the aforesaid Drawings and Specifications, initialled by the parties hereto and by the Development's Architect, and the Contractor's Surety or Guarantor will be placed on file with the Architect, and such master set, as amended from time to time pursuant to Section 1.05 hereof shall govern in all matters which arise with respect to such Drawings and Specifications."
On appeal, the defendants admit that these provisions incorporate the architect's specifications and plans into the parties' contracts.
The architect's specifications and plans were contained in the "Project Manual" which was drafted by the architect, rather than by any of the parties to this appeal.
The title page of the project manual was signed by the parties. The parties agree that the project manual, § 00700, states:
*654 "August 1976 Thirteenth Edition of `General Conditions of Contract for Construction' A.I.A. Document A201, as published by American Institute of Architects, is hereby made a part of these specifications."
Article 7, Miscellaneous Provisions, of AIA Document A201 provided for arbitration of disputes:
"7.9.1 All claims, disputes and other matters in question between the Contractor and the Owner arising out of, or relating to, the Contract Documents or the breach thereof, except as provided in Subparagraph 2.2.11 with respect to the Architect's decisions on matters relating to artistic effect, and except for claims which have been waived by the making or acceptance of final payment as provided by Subparagraphs 9.9.4 and 9.9.5, shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise."
Defendant Joel Altman stated by affidavit that it was never the intent of Lakepointe or the Arbor Club to have disputes under the contract arbitrated. Harold DeYoung, the president of the plaintiff corporation, stated by affidavit that it was his understanding that the documents incorporated AIA document A201. The defendants' brief asserts that the architect stated by affidavit that reference to AIA general conditions (document A201) was not for the purpose of incorporating the arbitration clause. However, the only affidavit contained in the trial record signed by the architect does not support defendants' assertion.
Plaintiff contends that the arbitration clause set forth above was incorporated by reference into the parties' contract when the parties signed the cover sheet of the project manual. Defendants claim that an arbitration agreement cannot be incorporated by reference unless there is clear and unambiguous *655 language contained in the contract stating that this is the intent of the parties. Neither the project manual nor the contracts state that the arbitration clause was to be incorporated into the contracts.
Michigan's public policy favors arbitration in the resolution of disputes. Arbitration clauses in contracts are to be liberally construed. Any doubts about the arbitrability of an issue should be resolved in favor of arbitration. Campbell v Community Service Ins Co, 73 Mich. App. 416, 419; 251 NW2d 297 (1977).
It is well settled that arbitration is a matter of contract. A party cannot be required to arbitrate an issue which he has not agreed to submit to arbitration. Kaleva-Norman-Dickson School Dist v Kaleva-Norman-Dickson School Teachers' Ass'n, 393 Mich. 583, 587; 227 NW2d 500 (1975); Grand Rapids v Grand Rapids Lodge No 97, Fraternal Order of Police, 415 Mich. 628, 635; 330 NW2d 52 (1982).
In the present case the disputed arbitration clause was not contained in the contract, but in a separate document, the project manual.
Our Supreme Court, in Arrow Sheet Metal Works, Inc v Bryant & Detwiler Co, 338 Mich. 68, 78; 61 NW2d 125 (1953), was confronted with a subcontract entered into between the defendant general contractor and plaintiff subcontractor which provided that the work was to be done according to the plans and specifications of the architects and engineers. The plans and specifications were incorporated into the general contract between Ford Motor Company and defendant general contractor and indicated in detail the manner in which the construction work was to be performed. A dispute arose between the defendant general contractor and the plaintiff subcontractor *656 concerning whether the "time is of the essence" clause contained in the general contract was incorporated by reference into the subcontract. After determining the reason why the parties referred to the drawings and specifications in the subcontract, the Court concluded that the "time is of the essence" provision was not incorporated into the subcontract. The Court held that "in the case of subcontracts, as in other cases of express agreements in writing, a reference by the contracting parties to an extraneous writing for a particular purpose makes it a part of their agreement only for the purposes specified". 338 Mich. 78.
Applying the holding of Arrow to the facts presented, we find that the parties referred to the architect's drawings and specifications for a limited purpose. The parties did not agree to incorporate the architect's dispute resolution procedures, nor any other matters contained in the project manual except the architect's drawings and specifications. Defendants were therefore entitled to summary judgment on Count I.
When the trial court granted summary judgment on Count I, thereby denying arbitration, it did not issue an opinion explaining the reasons for its decision. The trial court, however, did orally indicate that arbitration in Michigan was to be stayed because defendants had not waived in the contract documents their right to judicial process and trial.
The defendants were entitled to summary judgment as a matter of law on the ground that the parties' contracts did not incorporate the arbitration clause in the project manual. We reject the reasoning used by the trial court in support of its granting summary judgment. The trial court's reasoning in support of its ruling was incorrect because the trial court had to assume that the *657 arbitration clause in the project manual was also incorporated by reference before reaching the question whether there was a waiver of a constitutional right of judicial process and trial.
Affirmed on the basis of reasons stated herein.
NOTES
[*] Recorder's court judge, sitting on the Court of Appeals by assignment. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585011/ | 382 N.W.2d 452 (1986)
PEOPLES NATURAL GAS COMPANY, DIVISION OF INTERNORTH, INC., Appellee,
v.
IOWA STATE COMMERCE COMMISSION, Appellant, and
Office of Consumer Advocate, Intervenor-Appellant.
No. 85-750.
Supreme Court of Iowa.
February 19, 1986.
*453 Philip E. Stoffregen, Gen. Counsel, Patrick J. Nugent, Deputy Counsel, and Daniel J. Hanson, Asst. Gen. Counsel, for appellant.
James R. Maret and William A. Haas, Des Moines, for intervenor-appellant.
Penelope B. Tvrdik, Council Bluffs, for appellee.
Considered by REYNOLDSON, C.J., and McGIVERIN, LARSON, CARTER and WOLLE, JJ.
CARTER, Justice.
The Iowa State Commerce Commission (the commission) and the Office of Consumer Advocate (the consumer advocate) appeal from orders of the district court which interpret Iowa Code section 476.6(7) (1983) to require a contested case hearing procedure for reconciliation of automatic pass-through adjustments to the gas cost component of utility rate structures. Because we disagree with the district court's interpretation of the applicable statutes, we reverse its orders and remand the action to the district court for further proceedings.
The issues involved in the present appeal all relate to the procedures to be employed in the application of the automatic adjustments of charges permitted utilities under Iowa Code section 476.6(11). The adjustments involved in the present case relate to pass-through adjustments of the gas cost component of the rate structure of Peoples Natural Gas Company (Peoples), the appellee herein. A gas utility's rates consist of two components: (1) a gas cost component, and (2) a component consisting of operating costs and profits. The latter component must be established through the general rate case process and contested case procedure specified in Iowa Code section 476.6(7). The gas cost component is determined through an annual mechanism called a "purchased gas adjustment" or "PGA." See 250 Iowa Admin.Code § 19.10.
The primary issue presented on this appeal is whether, in connection with the annual reconciliation of the automatic PGA pass-through, a contested case hearing procedure is required when disagreements arise between the utility and the commission with respect to that reconciliation and its effect upon the rate structure for the next twelve-month period. Subsection (7) of section 476.6 requires that a contested case hearing procedure be employed with respect to "an application for new or changed rates." The district court interpreted the PGA automatic adjustment procedure specified in subsection (11) of section 476.6 as an "application for new or changed rates" as that term is specified in subsection (7) of that statute.
The commission and the consumer advocate challenge this ruling on this appeal. They urge that the automatic PGA is not an application for new or changed rates so as to trigger the hearing requirements of subsection (7). In addition, they urge that no other statute, agency rule, or constitutional mandate requires the utilization of a contested case hearing procedure to resolve disagreements between the commission and the utility concerning quantitative determinations arising in the PGA reconciliation. The commission and the consumer advocate urge that when such disagreements arise they may be finally resolved at the agency level based entirely upon the documents required to be filed by the utility under 250 Iowa Admin.Code § 19.10. In addition, they urge that, because judicial review of agency action is available to the utility *454 under Iowa Code section 17A.19(8), the utility's due process rights are not violated. Peoples responds to these arguments by asserting that the district court correctly found that a contested case hearing was required under section 476.6(7) and, in the alternative, that failure to afford such a hearing in the present case to resolve the differences of the parties is a denial of due process.
I. Whether Subsection (7) of Section 476.6 Requires that Differences Between a Utility and the Commission Concerning PGA Reconciliations Must be Settled by Contested Case Hearing Procedures.
The first issue which we must determine is whether the district court was correct in interpreting subsection (7) of section 476.6 as requiring that a contested case hearing procedure be invoked to settle differences between a utility and the commission over proposed PGA reconciliations. The district court's determination that such procedures are mandatory was the result of its conclusion that the automatic PGA adjustment of charges authorized under subsection (11) of the statute constituted "an application for new or changed rates" within the contemplation of the formal hearing requirements established in subsection (7) of the statute. The commission and the consumer advocate vigorously assert that rather than being subsection (7) rate applications, PGA reconciliations are the complete antithesis thereof. Support for the appellants' contention is found in the following discussion contained in J.R. Simplot Co. v. Intermountain Gas Co., 102 Idaho 341, 630 P.2d 133, 134 (1981):
As to the first issue, Intermountain Gas simply seeks to maintain its authorized rate of return by passing through to its customers the increased cost of natural gas. Where, as in this case, a utility has no control over substantially increased costs, a pass-through rate increase to cover the additional costs will not impact the authorized rate of return. In such situations, the common utility regulation practice is to permit a scaled down proceeding focusing only on the particular increase. California Manufacturers Ass'n v. P.U.C., 24 Cal. 3d 251, 155 Cal. Rptr. 664, 667, 595 P.2d 98, 101 (1979); Montana Consumer Council v. Public Service Comm'n, 168 Mont. 180, 541 P.2d 770, 774 (1975); Railroad Comm'n v. City of Fort Worth, 576 S.W.2d 899, 902 (Tex.Civ.App.1979). "Little purpose is served by requiring the commission to hold a general rate proceeding, recalculating all expenses, revenues, rate base, and rate of return, when the only substantial issues are extraordinary changes in fuel costs...." California Manufacturers Ass'n v. P.U.C., supra. With a view to constitutional considerations, it is clear that within the regulatory context, due process is a flexible concept permitting expert administrative agencies broad latitude to adapt procedures to the specific regulatory needs of their jurisdictions. City of Los Angeles v. Public Utilities Comm'n, 15 Cal. 3d 680, 125 Cal. Rptr. 779, 791, 542 P.2d 1371, 1383 (1975); see Federal Power Comm'n v. Pipeline Company, 315 U.S. 575, 586, 62 S. Ct. 736, 743, 86 L. Ed. 1037 (1941). Consequently, we find that the commission addressed all the issues pertinent to the "tracker" application and that the commission acted properly in conducting an abbreviated proceeding on this matter.
As indicated in the discussion of the Idaho court, the primary purpose of PGA reconciliations is to avoid the necessity of formal rate hearings and allow the utility a pass-through of fuel cost increases. Recognition of this principle is more fully developed in Associated Gas Distributors v. Federal Energy Regulatory Commission, 706 F.2d 344, 345-46 (D.C. Cir.1983) where the court states:
In the early 1970's, long before the passage of the NGPA, it became apparent that the lengthy and complicated procedures of full-scale section 4 review were not the most efficient method of handling the growing volume of rate increase filings. Accordingly, in 1972, the Commission created a streamlined alternativethe PGA proceedingwhich allows *455 a pipeline to facilitate recovery of costs by including a purchased gas cost adjustment clause in the rates it files with the Commission. See 18 C.F.R. § 154.38(d)(4) (1982). The stated purpose of this time-saving proceeding was to prevent rate increase filings from becoming "pancaked," i.e., piled up on top of one another such that new ones were filed before the old ones were approved.
Accord, California Manufacturers Association v. Public Utilities Commission, 24 Cal. 3d 251, 256, 595 P.2d 98, 101, 155 Cal. Rptr. 664, 667 (1979); National Fuel Gas Distribution Corp. v. Pennsylvania Public Utility Commission, 81 Pa. Cmwlth. 148, 473 A.2d 1109, 1120-21 (1984).
Based upon those considerations which favor the utilization of automatic pass-through adjustment of charges, we agree with the contention of the commission and consumer advocate that it was not the intention of the legislature to embrace automatic adjustment procedures authorized by subsection (11) of section 476.6 within the hearing requirements contained in subsection (7) of that statute. Further support for this view is to be found in the fact that the provisions which are now contained in subsection (11) were, when originally enacted, located in a different section of the Code than subsection (7), which contained no reference to formal hearing procedures. We hold that the district court erred in determining that the hearing requirements of subsection (7) apply to disputes over PGA reconciliation.
II. Whether a Hearing is Required Under Iowa Code Section 17A.2(2).
We next consider whether the definitional statute defining "contested case" under the Iowa Administrative Procedure Act affords any basis for the district court's determination that a contested hearing was required to resolve differences between the commission and the utility concerning the proposed PGA reconciliation. Section 17A.2(2) provides:
"Contested case" means a proceeding including but not restricted to ratemaking, price fixing, and licensing in which the legal rights, duties or privileges of a party are required by Constitution or statute to be determined by an agency after an opportunity for an evidentiary hearing.
In order to qualify the present dispute as a "contested case" under the foregoing definition, Peoples must point to some statutory or constitutional requirement which mandates an evidentiary hearing. For reasons stated in the the preceding division, we find no such statutory requirement in section 476.6. Peoples does not suggest any other statutory provision which mandates that a contested case hearing be held, but it does suggest that the failure to require a hearing would violate its due process rights. This argument is primarily based upon its contention that the dispute which it has with the commission over its proposed PGA reconciliation involves issues of fact which cannot be fairly resolved in the absence of an evidentiary hearing. For reasons which will subsequently appear, we disagree with this contention.
The issue in dispute in the present action concerns the proposed 1984 PGA reconciliation filed by Peoples on or about October 1, 1984, to be effective November 1, 1984. In the matters filed with the commission with respect to that proposed reconciliation, Peoples sought to recapture an under recovery of $439,029 from general service town plant customers for the period between September 1, 1982, and August 31, 1983. The commission refused to permit recapture of these costs during the ensuing twelve-month period because of Peoples' failure to include this information in the PGA reconciliation filed for the previous year. Peoples sought reconsideration of the commission's ruling on this issue in a petition for rehearing filed in compliance with the commission's rules. That petition was summarily denied by the commission on the basis of the documentation which had been furnished in connection with the original PGA reconciliation and the petition for reconsideration.
*456 In its attempt to show that a factual dispute exists which requires an evidentiary hearing, Peoples disputes the commission's determination that (a) the proposed PGA adjustment should have been made prospectively and not retrospectively; (b) the proposed PGA adjustment arose from a change in Peoples' methodology for assigning costs; and (c) in failing to seek recapture of these costs in its prior year's PGA reconciliation, Peoples failed to collect the short-fall by its own choice. We believe that in its efforts to convert the foregoing issues into factual disputes Peoples is exalting form over substance. It has documented in its filings with the commission exactly what occurred in regard to the $439,029 short-fall and exactly how it proposes to recapture same.
Regardless of how the commission's findings and conclusions are labeled, there is nothing to indicate that they were arrived at as a result of disbelieving or failing to accept Peoples' version of the facts. It is readily apparent in comparing the documentation supplied by Peoples with the rationale employed by the commission in denying the proposed short-fall recapture in the 1984 PGA adjustment that such denial was the result of the commission's belief with respect to controlling principles of law. Peoples was accorded, under the commission's rehearing rules, an opportunity to fully challenge the legal conclusions which led to the denial of the proposed recapture. Because the primary issue was one of law and not of fact, a contested case hearing was not necessary. See Zachary v. Federal Energy Regulatory Commission, 621 F.2d 155, 158 (5th Cir.1980); Allegheny-Ludlum Steel Corp. v. Pennsylvania Public Utility Commission, 501 Pa. 71, 459 A.2d 1218, 1220-21 (1983).
III. Whether a Contested Case Hearing is Required in Order to Satisfy Due Process.
We next consider Peoples' argument that the failure of the commission to afford it a hearing on its proposed PGA reconciliation constituted a denial of due process of law. We considered a similar issue in Allegre v. Iowa State Board of Regents, 349 N.W.2d 112, 115-16 (Iowa 1984). We determined in that decision that due process does not require an evidentiary hearing with respect to controversies "in which there is no relevant factual dispute between the agency and the party." Id. at 116 (quoting Bonfield, The Definition of Formal Agency Adjudication Under the Iowa Administrative Procedure Act, 63 Iowa L.Rev. 285, 330 (1977)). Based upon those considerations discussed in the preceding division of this opinion, we find that this is such a case. We also note in regard to Peoples' due process claim that the failure to hold an administrative hearing does not preclude the utility from seeking judicial review of the final agency action pursuant to Iowa Code section 17A.19(1).
In its petition for judicial review filed in the district court, Peoples coupled its challenge to the agency's refusal to afford it a hearing with a direct challenge to the merits of its order pursuant to section 17A.19(1). In view of the position which the district court took on the failure to afford a hearing, it did not deem it necessary to consider the legality of the commission's order on the merits. Because we find that the court erred in its determination that an evidentiary hearing was required, we reverse the judgment of the district court and remand this matter to that court for consideration of the remaining issues presented in Peoples' petition for judicial review.
Because the stay order previously entered in this action by the district court fails to comply in several respects with our decision in Teleconnect Co. v. Iowa State Commerce Commission, 366 N.W.2d 511, 513-14 (Iowa 1985), we direct that that order shall cease to be effective upon issuance of the procedendo from this court.
REVERSED AND REMANDED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1585048/ | 24 So. 3d 47 (2009)
In re AMENDMENTS TO THE FLORIDA RULES OF JUDICIAL ADMINISTRATION, THE FLORIDA RULES OF JUVENILE PROCEDURE, AND THE FLORIDA RULES OF APPELLATE PROCEDUREIMPLEMENTATION OF THE COMMISSION ON DISTRICT COURT OF APPEAL PERFORMANCE AND ACCOUNTABILITY RECOMMENDATIONS.
No. SC08-1724.
Supreme Court of Florida.
November 12, 2009.
John G. Crabtree, Chair, Appellate Court Rules Committee, Jacksonville, FL, John S. Mills, Past Chair, Jacksonville, FL, and David K. Miller of Broad and Cassel, Tallahassee, FL; Charles H. Davis, Chair, Juvenile Court Rules Committee, Jacksonville, FL, and David Neal Silverstein, Past Chair, Tampa, FL; Judge Lisa Davidson, Chair, Judicial Administration Committee, Eighteenth Judicial Circuit, Viera, Florida, Scott M. Dimond, Past Chair, Miami, FL, and Katherine E. Giddings of Akerman Senterfitt, Tallahassee, FL; John F. Harkness, Jr., Executive Director, The Florida Bar, for Petitioner.
Anthony C. Musto, Special Counsel, Hallandale Beach, FL and Jeffrey Dana Gillen, Statewide Appeals Director, West Palm Beach, FL on behalf of Florida Department of Children and Families; John Walsh and William W. Booth, Legal Aid Society of Palm Beach County, Inc., West Palm Beach, FL; Thomas Wade Young, Winter Park, FL, and Richard C. Komando, Jacksonville, FL, on behalf of Guardian ad Litem Program; Judge William A. Van Nortwick, Chair, Commission on District *48 Court of Appeal Performance and Accountability, First District Court of Appeal, Tallahassee, FL, Responding with Comments.
PER CURIAM.
This matter is before the Court for consideration of proposed amendments to the Florida Rules of Judicial Administration, the Florida Rules of Juvenile Procedure, and the Florida Rules of Appellate Procedure.[1] The proposed amendments implement recommendations of the Commission on District Court of Appeal Performance and Accountability (Commission) concerning its study of delay in dependency and termination of parental rights appeals.
BACKGROUND
In June 2007, the Commission submitted to this Court its Supplemental Report and Recommendations Regarding the Study of Delay in Dependency/Parental Termination Appeals (Supplemental Report). The Supplemental Report contained a number of recommendations and discussion of the changes needed to reduce delay, with a proposed 195-day timeline for processing these appeals from rendition of a final judgment to rendition of an opinion on appeal. The Commission identified two areas in which improvements would be essential to the success of the proposed timeline: reduction in the time for appointment of appellate counsel and reduction in the time for securing the transcript of proceedings. To achieve these improvements, the Commission made the following recommendations: (1) require that an adjudication of dependency or final judgment of termination of parental rights set forth all of the specific days on which the hearing occurred; (2) provide that a parent's indigent status shall be presumed to continue for purposes of appeal unless revoked by the trial court; (3) require that a motion for appointment of appellate counsel and authorization of payment of transcription costs be filed with the notice of appeal and that the trial judge be served with a copy of the notice of appeal and motion for appointment of appellate counsel; (4) require that directions to the clerk and designations to the court reporter be filed with the notice of appeal and that the designations be served on the court reporter; (5) require that the designation to the reporter include the name of the court reporter and provide twenty days for transcription; (6) require that transcription of hearings for appeals of dependency and parental termination orders be given priority over transcription of all other proceedings; (7) require the clerk of the court to complete and file the record on appeal within five days after receiving the transcript on appeal and serve copies of the record on the parties; (8) require that the initial brief be filed within twenty days of service of the record on appeal, the answer brief within twenty days of service of the initial brief, and the reply brief within ten days of service of the answer brief; (9) provide that motions for extension of time be granted only for good cause shown and only for the necessary amount of time; (10) require that a request for oral argument be served with the party's first brief; (11) permit fifteen days to file a motion for rehearing and require no response unless ordered by the court; and (12) eliminate the additional time for issuance of mandate after the denial of rehearing. The Commission also recommended that the juvenile rules cross-reference the appellate rule applicable to dependency and termination of parental rights appeals so that trial attorneys are aware of the specific requirements in filing these appeals, that the judicial administration rules be amended *49 to set forth a sixty-day time standard for decisions by the district courts of appeal in dependency and parental termination cases, and that appellate courts be required to follow the procedure set forth in N.S.H. v. Florida Dep't of Children and Family Serv's, 843 So. 2d 898 (Fla.2003), when allowing appellate counsel to withdraw.[2]
By letter dated October 9, 2007, former Chief Justice Lewis referred the Commission's recommendations, along with a set of draft rule amendments, to the Appellate Court Rules Committee, the Juvenile Court Rules Committee, and the Rules of Judicial Administration Committee. The rules committees were asked to work together to analyze the draft amendments and Commission recommendations, and to propose any amendments to the rules or forms deemed necessary to implement the Commission's recommendations.
On July 15, 2008, the rules committees filed a joint report proposing amendments based on the Court's suggested draft amendments and the Commission's recommendations. The committees' proposals were in accord with the Commission's recommendations, with one exception. In addition to proposed rule amendments implementing the Commission's recommendations, the committees also proposed an amendment to Florida Rule of Appellate Procedure 9.146 to list specific types of appealable final and nonfinal orders in dependency and termination of parental rights cases.[3] Although such an approach was disfavored by the Commission, the stated purpose of this amendment was to promote consistency and lessen confusion in the handling of dependency and parental termination cases in the district courts, thus serving the objectives of expediting the disposition of these cases.
The proposed amendments were published for comment in The Florida Bar News. Comments were filed by the Legal Aid Society of Palm Beach County, Inc. (Legal Aid), the Statewide Guardian Ad Litem Program (GAL), and the Florida Department of Children and Families (DCF). The Commission and the rules committees filed responses to the comments.
AMENDMENTS
Upon consideration of the Commission's Supplemental Report, the rules committees' joint report, the comments filed with regard to the proposed amendments and the responses thereto, and the presentations of the parties at oral argument, which was heard in this matter on Tuesday, May 5, 2009, we amend the Florida Rules of Judicial Administration, the Florida Rules of Juvenile Procedure, and the Florida Rules of Appellate Procedure as explained below.
Florida Rules of Judicial Administration
First, consistent with the Commission's recommendation and the rules committees' proposal, Rule of Judicial Administration 2.250(a)(2) is amended to state that a district court of appeal should render a decision *50 in juvenile dependency and termination of parental rights cases within sixty, rather than the standard one hundred eighty, days of oral argument or submission of the case to the court panel for a decision without oral argument. We agree with the Commission that "[p]roviding a limited time standard for preparation of a decision provides a policy statement that the expedition of these cases is important to the judiciary of the state."
Additionally, Rule of Judicial Administration 2.535(i) is amended to require that transcription of hearings for appeals of dependency and termination of parental rights orders be given priority over transcription of other proceedings unless the court orders otherwise. In response to the Commission's recommendation in this regard, the Rules of Judicial Administration Committee proposed an amendment providing that transcripts in dependency and termination of parental rights cases "should, to the extent possible," be given priority. However, given the importance the Commission placed on this feature of its overall recommendations, we conclude that requiring priority for such transcripts, unless otherwise ordered by a court, is the appropriate measure.
Florida Rules of Juvenile Procedure[4]
New Rule of Juvenile Procedure 8.276, Appeal Proceedings, is adopted, stating that appeals in dependency and termination of parental rights cases are governed by Rule of Appellate Procedure 9.146. This amendment was proposed by the rules committees in response to the Commission's recommendation that the juvenile rules cross-reference the applicable appellate rule so that trial attorneys and parties are aware of the requirements in filing appeals in these cases.
Next, Rule of Juvenile Procedure 8.525, Adjudicatory Hearings, form 8.983, Adjudication Order and Judgment of Involuntary Termination of Parental Rights, and form 8.984, Judgment of Voluntary Termination of Parental Rights, are amended in response to the Commission's recommendation that an adjudication of dependency or a final judgment of termination of parental rights should set forth all of the specific days on which the hearing occurred. A sentence is added to subdivision 8.525(i)(1), Terminating Parental Rights, providing that the court must include the dates of the adjudicatory hearing in an order terminating parental rights. Similarly, forms 8.983 and 8.984[5] are amended to require that all dates of the adjudicatory hearing be provided in the order.
Florida Rules of Appellate Procedure
In response to the Commission's recommendations with regard to specific procedures for appeals in dependency and *51 termination of parental rights cases, the committees proposed and we adopt several amendments to Rule of Appellate Procedure 9.146, Appeal Proceedings in Juvenile Dependency and Termination of Parental Rights Cases and Cases Involving Families and Children in Need of Services. Most importantly, new subdivision (g), Special Procedures and Time Limitations Applicable to Appeals of Final Orders in Dependency or Termination of Parental Rights Proceedings, is added setting forth new procedures intended to expedite appeals of final orders in dependency and termination of parental rights cases. The new procedures implement the Commission's recommendations with regard to motions for appointment of appellate counsel, preparation of transcripts and the record on appeal, times for filing and service of briefs, requests for oral argument, motions to withdraw by appellate counsel, motions for rehearing, and issuance of mandate.[6]
Due to the many concerns raised by the comments filed in this case, we decline to adopt the proposed amendments that would have created new subdivisions 9.146(c)(1) and (2), setting forth lists of appealable final and nonfinal orders. As noted, this approach, at least with regard to a listing of appealable nonfinal orders, was expressly disfavored by the Commission, and we conclude that at this point, preservation of the status quo is the preferable resolution. Similarly, due to concerns raised in the comments, we also decline to adopt the proposed amendments to the stay provisions in rule 9.146.
Finally, rule 9.430, Proceedings by Indigents, is amended to add new subdivision (d), providing that an appellate court may, in its discretion, presume that a party in juvenile dependency and termination of parental rights cases who has been declared indigent in the lower court remains indigent for purposes of appeal. This amendment was proposed in response to the Commission's recommendation that in order to expedite appointment of appellate counsel and obtaining the transcript on appeal, a parent's indigent status be presumed to continue for purposes of appeal unless revoked by the trial court.
CONCLUSION
Accordingly, the Florida Rules of Judicial Administration, the Florida Rules of Juvenile Procedure, and the Florida Rules of Appellate Procedure are hereby amended as set forth in the appendix to this opinion. New language is underscored; deleted language is struck through. Committee notes are offered for explanation only and are not adopted as an official part of the rules. The amendments shall become effective immediately.
We thank the Commission, the rules committees, and the interested parties filing comments in this case for their hard work and valuable input in this very important area.
It is so ordered.
QUINCE, C.J., and PARIENTE, LEWIS, CANADY, POLSTON, LABARGA, and PERRY, JJ., concur.
PARIENTE, J., concurs with an opinion, in which CANADY, LABARGA, and PERRY, JJ., concur.
*52 PARIENTE, J., concurring.
I wholeheartedly concur with the Court's adoption of the recommendations of the Commission on District Court Performance and Accountability to address ongoing issues of unnecessary delay in dependency and termination of parental rights appeals.[7] The Commission's recommendations and this Court's adoption of these amendments are based on the recognition that for every day of delay on appeal, which is added to the length of the prior ongoing court proceedings, the future of the child is in limbo to his or her potential detriment. See, e.g., N.S.H. v. Fla. Dep't of Children & Family Servs., 843 So. 2d 898, 903 (Fla.2003) (recognizing that any delay in the disposition of a case concerning the termination of parental rights could result in potential detriment to the child). As the Commission stated:
While courts, Congress, and state legislatures have become more cognizant of the harmful effects of delay in dependency and parental termination trial proceedings on the welfare of children, recently that inspection has included the time delay on appeal. Children are affected by delay in court proceedings far more than are businesses or adults, because their sense of time is different than adults and the need for attachment to promote healthy children is great.
Report of the District Court of Appeal Performance & Accountability Commission on Delay in Child Dependency/Termination of Parental Rights Appeals at 1 (footnote omitted). Without sacrificing the goal of deciding cases correctly, and with due regard for the interests of the parents whose rights are being terminated, those of us on the appellate courts and the Supreme Court must also endeavor to decide these cases in "child time."
Although each district court and this Court have previously had their own procedures in place for expediting child cases, with the adoption of these amendments, we take significant steps in ensuring uniformity statewide and ensuring that cases involving children proceed as promptly as possible while on appeal. However, these rules will work only as long as all concernedthe litigants, the court reporters, and the appellate courtsmake a commitment to track these cases and truly embrace the notion that each day, each week, and each month of delay on appeal is time that the child's future remains uncertain that the child remains in limbo to his or her potential long-lasting detriment.[8]
CANADY, LABARGA, and PERRY, JJ., concur.
APPENDIX
RULE 2.250. TIME STANDARDS FOR TRIAL AND APPELLATE COURTS AND REPORTING REQUIREMENTS
(a) Time Standards. The following time standards are hereby established as a presumptively reasonable time period for the completion of cases in the trial and appellate courts of this state. It is recognized that there are cases that, because of their complexity, present problems that cause reasonable delays. However, most cases should be completed within the following time periods:
*53 (1) [No change]
(2) Supreme Court and District Courts of Appeal Time Standards: Rendering a decisionwithin 180 days of either oral argument or the submission of the case to the court panel for a decision without oral argument, except in juvenile dependency or termination of parental rights cases, in which a decision should be rendered within 60 days of either oral argument or submission of the case to the court panel for a decision without oral argument.
(3) [No change]
(4) [No change]
(b) [No change]
RULE 2.535. COURT REPORTING
(a)-(i) [No change]
(j) Juvenile Dependency and Termination of Parental Rights Cases. Transcription of hearings for appeals of orders in juvenile dependency and termination of parental rights cases shall be given priority, consistent with rule 2.215(g), over transcription of all other proceedings, unless otherwise ordered by the court based upon a demonstrated exigency.
Committee Note
[No change]
RULE 8.276. APPEAL PROCEDURES
Florida Rule of Appellate Procedure 9.146 generally governs appeals in juvenile dependency and termination of parental rights cases.
RULE 8.330. ADJUDICATORY HEARINGS
(a)-(d) [No change]
(e) Motion for Judgment of Dismissal. In all proceedings, if at the close of the evidence for the petitioner the court is of the opinion that the evidence is insufficient to warrant a finding of dependency, it may, and on the motion of any party shall, enter an order dismissing the petition for insufficiency of the evidence or find that allegations in the petition have not been sustained. If the court finds that allegations in the petition have not been sustained but does not dismiss the petition, the parties, including all parents, shall continue to receive pleadings, notices, and documents and to have the right to be heard.
(f) Dismissal. If the court shall find that the allegations in the petition have not been sustained, it shall enter an order dismissing the case for insufficiency of the evidence or find that allegations in the petition have not been sustained. If the court finds that allegations in the petition have not been sustained but does not dismiss the petition, the parties, including all parents, shall continue to receive pleadings, notices, and documents and to have the right to be heard.
(g) Findings and Orders. In all cases in which dependency is established:
(1) The court shall enter a written order stating the legal basis for a finding of dependency, specifying the facts upon which the finding of dependency is based, and stating whether the court made the finding by a preponderance of the evidence or by clear and convincing evidence.
(2) The court shall advise the parents that if the parents fail to substantially comply with the case plan, their parental rights may be terminated.
(3) If the child is in out-of-home placement, the court shall inquire of the parents whether the parents have relatives who might be considered as placement for the child. The parents shall provide to the court and all parties identification and location information for the relatives.
*54 Committee Notes
[No change]
RULE 8.332. ORDER FINDING DEPENDENCY
(a) Finding of Dependency. In all cases in which dependency is established, the court shall enter a written order stating the legal basis for a finding of dependency, specifying the facts upon which the finding of dependency is based, and stating whether the court made the finding by a preponderance of the evidence or by clear and convincing evidence. The court shall include the dates of the adjudicatory hearing, if any, in the order.
(b) Adjudication of Dependency. If the court finds that the child named in the petition is dependent, the court shall enter an order adjudicating the child dependent if the child is placed or will continue to be placed in an out-of-home placement. The court may enter an order adjudicating the child dependent if the child remains in or is returned to the home. The court shall conduct a disposition hearing.
(c) Withhold of Adjudication of Dependency.
(1) If the court finds that the child named in the petition is dependent, but finds that no action other than supervision in the child's home is required, it may enter an order briefly stating the facts on which its finding is based, but withholding an order of adjudication and placing the child in the child's home under the supervision of the department. The department shall file a case plan and the court shall review the case plan pursuant to these rules.
(2) If the court later finds that the parents of the child have not complied with the conditions of supervision imposed, including the case plan, the court may, after a hearing to establish the noncompliance, but without further evidence of the state of dependency, enter an order of adjudication and shall thereafter have full authority under this chapter to provide for the child as adjudicated. If the child is to remain in an out-of-home placement by order of the court, the court must adjudicate the child dependent. If the court adjudicates the child dependent, the court shall then conduct a disposition hearing.
(d) Failure to Substantially Comply. The court shall advise the parents that if the parents fail to substantially comply with the case plan, their parental rights may be terminated.
(e) Inquiry Regarding Relatives for Placement. If the child is in out-of-home placement, the court shall inquire of the parents whether the parents have relatives who might be considered as placement for the child. The parents shall provide to the court and all parties identification and location information for the relatives.
RULE 8.525. ADJUDICATORY HEARINGS
(a)-(h) [No change]
(i) Final Judgment.
(1) Terminating Parental Rights. If the court finds after all of the evidence has been presented that the elements and one of the grounds for termination of parental rights have been established by clear and convincing evidence, the court shall enter a final judgment terminating parental rights and proceed with dispositional alternatives as provided by law. The order must contain the findings of fact and conclusions of law on which the decision was based. The court shall include the dates of the adjudicatory hearing in the order. The parties may stipulate, or the court may order, that parents or relatives of the parent whose rights are terminated be allowed to maintain *55 some contact with the child. If the court orders continued contact, the nature and frequency of this contact must be stated in a written order. The visitation order may be reviewed on motion of any party, including a prospective adoptive parent, and must be reviewed by the court at the time the child is placed for adoption.
(2)-(3) [No change]
FORM 8.983. ADJUDICATION ORDER AND JUDGMENT OF INVOLUNTARY TERMINATION OF PARENTAL RIGHTS
ORDER OF ADJUDICATION AND JUDGMENT OF INVOLUNTARY TERMINATION OF PARENTAL RIGHTS
THIS CAUSE came before this court on.....(all dates of the adjudicatory hearing)..... for an adjudicatory hearing on the Petition for Termination of Parental Rights filed by .....(name)...... Present before the court were:
.....(Name)....., Petitioner
.....(Name)....., Attorney for the petitioner
.....(Name)....., Attorney for the department
.....(Name)....., Department caseworker
.....(Name)....., Child
.....(Name)....., Attorney for Child
.....(Name)....., Mother
.....(Name)....., Attorney for mother
.....(Name)....., Father of
.....(child).....
.....(Name)....., Attorney for father
.....(Name)....., Guardian ad litem
.....(Name)....., Attorney for guardian
ad litem
.....(Name)....., Legal custodian
.....(Name)....., Attorney for legal custodian
.....(Name)....., Other
...................
The court has carefully considered and weighed the testimony of all witnesses. The court has received and reviewed all exhibits.
COMMENT: Add the following only if necessary.
The petitioner has sought termination of the parental rights of. ... (parent(s)) who is/are subject of petition.........
The court finds that the parent(s),.....(name(s))....., has/have .....(list grounds proved)....., under chapter 39, Florida Statutes. The grounds were proved by clear and convincing evidence. Further, the court finds that termination of parental rights of the parent(s),.....name(s)....., is clearly in the manifest best interests of the child(ren). The findings of fact and conclusions of law supporting this decision are as follows:
1. At all stages of these proceedings the parent(s) was/were advised of his/her/ their right to legal counsel, or was/were in fact represented by counsel.
2. On or about.....(date(s))....., the following occurred: .....(acts which were basis for dependency or TPR, if filed directly)......
3. The mother has .....(grounds for TPR)..... the minor child(ren) within the meaning and intent of section 39.806, Florida Statutes, in that: .....(findings that form the statutory basis for grounds)......
4. The father has .....(grounds for TPR)..... the minor child(ren) within the meaning and intent of section 39.806, Florida Statutes, in that: .....(findings that *56 form the statutory basis for grounds)......
5. The minor child(ren) to whom.....(parent's(s') name(s))..... parental rights are being terminated are at substantial risk of significant harm. Termination of parental rights is the least restrictive means to protect the child(ren) from harm.
6. Under the provisions of sections 39.810(1)-(11), Florida Statutes, it is in the manifest best interests of the child(ren) for parental rights of.....(name(s))..... to be terminated for the reasons below. The court has considered all relevant factors and finds as follows:
(a) Regarding any suitable permanent custody arrangement with a relative of the child, the court finds.....................
(b) Regarding the ability and disposition of the parent or parents to provide the child with food, clothing, medical care, or other remedial care recognized and permitted under state law instead of medical care, and other material needs of the child, the court finds.....................
(c) Regarding the capacity of the parent or parents to care for the child to the extent that the child's safety, well-being, and physical, mental, and emotional health will not be endangered upon the child's return home, the court finds.....................
(d) Regarding the present mental and physical health needs of the child and such future needs of the child to the extent that such future needs can be ascertained based on the present condition of the child, the court finds.....................
(e) Regarding the love, affection, and other emotional ties existing between the child and the child's parent or parents, siblings, and other relatives, and the degree of harm to the child that would arise from the termination of parental rights and duties, the court finds....................
(f) Regarding the likelihood of an older child remaining in long-term foster care upon termination of parental rights, due to emotional or behavioral problems or any special needs of the child, the court finds.....................
(g) Regarding the child's ability to form a significant relationship with a parental substitute and the likelihood that the child will enter into a more stable and permanent family relationship as a result of permanent termination of parental rights and duties, the court finds.....................
(h) Regarding the length of time that the child has lived in a stable, satisfactory environment and the desirability of maintaining continuity, the court finds.....................
(i) Regarding the depth of the relationship existing between the child and present custodian, the court finds.....................
(j) Regarding the reasonable preferences and wishes of the child, if the court deems the child to be of sufficient intelligence, understanding, and experience to express a preference, the court finds....................
(k) Regarding the recommendations for the child provided by the child's guardian ad litem or the legal representative, the court finds.........................
(l) Regarding other relevant factors including........................., the court finds.........................
*57 COMMENT: Add items 7, 8, and 9 as applicable.
7. Under section 39.811(6)(.....), Florida Statutes, the court terminates the parental rights of only.....(parent whose rights are being terminated)..... as to the minor child(ren), .....(child(ren)'s name(s))...... Specifically, the court finds that ......(specific findings of fact under section 39.811(6), Florida Statutes)......
8. Under sections 39.509(5) and 39.811(7)(a), Florida Statutes, the court finds that continued grandparental visitation is not in the best interests of the child(ren) or that such visitation would interfere with the permanency goals for the child(ren) for the following reasons.....................
9. Under section 39.811(7)(b), Florida Statutes, the court finds that although parental rights are being terminated, the best interests of.....(names of child(ren) to which this provision applies)..... support continued communication or contact by .....(names of parents, siblings, or relatives of the parent whose rights are terminated and to which this provision applies).....except as provided above. The nature and frequency of the communication or contact shall be as follows.........................It may be reviewed on motion of any party or an identified prospective adoptive parent.
THEREFORE, after weighing the credibility of the witnesses, weighing all statutory factors, and based on the findings of fact and conclusions of law above, the court hereby ORDERS AND ADJUDGES THAT:
1. The petition filed by.....(name)..... is granted as to the parent(s),.....(name(s))......
2. The parental rights of the father,.....(name)....., and of the mother,.....(name)....., to the child,.....(name)....., are hereby terminated under section 39.806(.....), Florida Statutes.
COMMENT: Repeat the above for each child and parent, as necessary.
3. Under sections 39.811(2) and (5), Florida Statutes, the child(ren),.....(name(s))....., are placed in the custody of .....(agency)..... for the purpose of subsequent adoption.
4. The 30-day permanency plan required by section 39.811(8), Florida Statutes, shall be filed and heard at.....(time)..... on .....(date)..... in.....(location)......
DONE AND ORDERED on.....(date)....., in .....(city and county)....., Florida.
________________________
Circuit Judge
NOTICE
Under section 39.815, Florida Statutes, any child, any parent, guardian ad litem, or legal custodian of any child, any other party to the proceeding who is affected by an order of the court, or the department may appeal to the appropriate District Court of Appeal within the time and in the manner prescribed by the Florida Rules of Appellate Procedure, which is 30 days from the date this order is rendered (filed).
Copies to: ______________
FORM 8.984. JUDGMENT OF VOLUNTARY TERMINATION OF PARENTAL RIGHTS
ADJUDICATORY ORDER AND FINAL JUDGMENT OF TERMINATION OF PARENTAL RIGHTS AND GUARDIANSHIP
THIS CAUSE came before this court on....(all dates of the adjudicatory hearing) *58..... for an adjudicatory hearing on the petition for termination of parental rights filed by .....(name)..... Present before the court were: ..................................
.....(Name)....., Petitioner
.....(Name)....., Attorney for the petitioner
.....(Name)....., Attorney for the department
.....(Name)....., Department/agency
caseworker
.....(Name)....., Child
.....(Name)....., Attorney/Attorney ad
litem for Child
.....(Name)....., Mother
.....(Name)....., Attorney for mother
.....(Name)....., Father of
.....(child).....
.....(Name)....., Attorney for father
.....(Name)....., Guardian ad litem
.....(Name)....., Attorney for guardian
ad litem
.....(Name)....., Legal custodian
.....(Name)....., Attorney for legal custodian
.....(Name)....., Other.....
The mother, .....(name)....., and the father(s), .....(name(s))....., executed voluntary surrenders of their parental rights for the minor child(ren),.....(name(s))....., which are accepted by the court without objection.
____ The mother, .....(name)....., executed a voluntary surrender of her parental rights for the minor child(ren),.....(name(s))....., which is accepted by the court without objection.
COMMENT: Repeat the following as necessary.
____ The father, .....(name)....., executed a voluntary surrender of his parental rights for the minor child(ren),.....(name(s))....., which is accepted by the court without objection.
The court has carefully considered the testimony of witnesses, reviewed the exhibits, reviewed the file, heard argument of counsel, and considered recommendations and arguments of all parties. The court finds by clear and convincing evidence that the parents, .....(names)....., have surrendered their parental rights to the minor child(ren) under section 39.806(1)(a), Florida Statutes, and that termination of parental rights is in the manifest best interest of the child(ren). The specific facts and findings supporting this decision are as follows:
1. That the mother, .....(name).....,.... was ..... was not personally served with the summons and the petition.
COMMENT: Service is not required if surrender was signed before filing of petition.
2. That the father, .....(name).....,.... was ..... was not personally served with the summons and the petition.
COMMENT: Service is not required if surrender was signed before filing of petition.
3. That the parents were advised of their right to counsel in all prior dependency court proceedings which they attended. The mother has been represented by legal counsel, .....(name)....., starting on or about .....(date)...... The father has been represented by legal counsel,.....(name)....., starting on or about .....(date).....
4. The mother, .....(name)....., freely, knowingly, voluntarily, and ..... with ..... without advice of legal counsel executed an affidavit and acknowledgment of surrender, consent, and waiver of notice *59 on .....(date)....., for termination of her parental rights to the minor child(ren), under section 39.806(1)(a), Florida Statutes.
5. The father, .....(name)....., freely, knowingly, voluntarily, and ..... with..... without advice of legal counsel executed an affidavit and acknowledgment of surrender, consent, and waiver of notice on.....(date)....., for termination of herhis parental rights to the minor child(ren), under section 39.806(1)(a), Florida Statutes.
6. That at all times relevant to this action the interests of this/these child(ren) has/have been represented by a guardian ad litem. The guardian ad litem,.....(name)....., ..... agrees ..... does not agree that it is in the best interest of the child(ren) for parental rights to be terminated in this cause.
COMMENT: Guardian ad litem not required in voluntary surrender.
7. Under the provisions of sections 39.810(1)-(11), Florida Statutes, it is in the manifest best interest of the child(ren) for parental rights to be terminated for the following reasons: .....(findings as to each statutory factor).....
(a) Regarding any suitable permanency custody arrangement with a relative of the child, the court finds...................
(b) Regarding the ability and disposition of the parent or parents to provide the child with food, clothing, medical care or other remedial care recognized and permitted under state law instead of medical care, and other materials needs of the child, the court finds.....................
(c) Regarding the capacity of the parent or parents to care for the child to the extent that the child's safety, well-being, and physical, mental, and emotional health will not be endangered upon the child's return home, the court finds......................
(d) Regarding the present mental and physical health needs of the child and such future needs of the child to the extent that such future needs can be ascertained based on the present condition of the child, the court finds....................
(e) Regarding the love, affection, and other emotional ties existing between the child and the child's parent or parents, siblings, and other relatives, and the degree of harm to the child that would arise from the termination of parental rights and duties, the court finds.....................
(f) Regarding the likelihood of an older child remaining in long-term foster care upon termination of parental rights, due to emotional or behavioral problems or any special needs of the child, the court finds....................
(g) Regarding the child's ability to form a significant relationship with a parental substitute and the likelihood that the child will enter into a more stable and permanent family relationship as a result of permanent termination of parental rights and duties, the court finds.....................
(h) Regarding the length of time that the child has lived in a stable, satisfactory environment and the desirability of maintaining continuity, the court finds.....................
(i) Regarding the depth of the relationship existing between the child and present custodian, the court finds.....................
(j) Regarding the reasonable preferences and wishes of the child, if the court deems the child to be of sufficient intelligence, understanding, and experience to *60 express a preference, the court finds.....................
(k) Regarding the recommendations for the child provided by the child's guardian ad litem or the legal representative, the court finds.....................
(l) Regarding other relevant factors including...................., the court finds.....................
THEREFORE, it is ORDERED AND ADJUDGED that:
1. The petition for termination of parental rights is GRANTED.
2. The parental rights of the parents,.....(name(s))....., to the child,.....(name)....., are terminated. The parental rights of the father,.....(name)....., and of the mother,.....(name)....., to the child,.....(name)....., are hereby terminated under section 39.806(.....), Florida Statutes.
COMMENT: Repeat the above for each child and parent on petition.
3. The child(ren),.....(name(s))....., is/are hereby placed in the permanent care and custody of .....(agency name)..... for subsequent adoption.
4. A hearing for the department to provide a plan for permanency for the child(ren) shall be held on.....(date)....., within 30 days of rendering of order, at .....(time)......
DONE AND ORDERED on.....(date) ....., in .......... County, Florida.
_____________________
Circuit Judge
Copies furnished to:....................
NOTICE
Under section 39.815, Florida Statutes, any child, any parent, guardian ad litem, or legal custodian of any child, any other party to the proceeding who is affected by an order of the court, or the department may appeal to the appropriate District Court of Appeal within the time and in the manner prescribed by the Florida Rules of Appellate Procedure, which is 30 days from the date this order is rendered (filed).
RULE 9.146. APPEAL PROCEEDINGS IN JUVENILE DEPENDENCY AND TERMINATION OF PARENTAL RIGHTS CASES AND CASES INVOLVING FAMILIES AND CHILDREN IN NEED OF SERVICES
(a) Applicability. Appeals proceedings in juvenile dependency and termination of parental rights cases and cases involving families and children in need of services shall be as in civil cases except as modified byto the extent those rules are modified by this rule.
(b) Who May Appeal. Any child, any parent, guardian ad litem, or legal custodian of any child, any other party to the proceeding affected by an order of the lower tribunal, or the appropriate state agency as provided by law may appeal to the appropriate court within the time and in the manner prescribed by these rules.
(c)-(f) [No change]
(g) Special Procedures and Time Limitations Applicable to Appeals of Final Orders in Dependency or Termination of Parental Rights Proceedings.
(1) Applicability. This subdivision applies only to appeals of final orders to the district courts of appeal.
(2) The Record.
*61 (A) Contents. The record shall be prepared in accordance with rule 9.200, except as modified by this subdivision.
(B) Transcripts of Proceedings. The appellant shall file a designation to the court reporter, including the name(s) of the individual court reporter(s), if applicable, with the notice of appeal. The designation shall be served on the court reporter on the date of filing and shall state that appeal is from a final order of termination of parental rights or of dependency, and that the court reporter shall provide the transcript(s) designated within 20 days of the date of service. Within 20 days of the date of service of the designation, the court reporter shall transcribe and file with the clerk of the lower tribunal the original transcripts and sufficient copies for the Department of Children and Family Services, the guardian ad litem, and all indigent parties. If extraordinary reasons prevent the reporter from preparing the transcript(s) within the 20 days, the reporter shall request an extension of time, shall state the number of additional days requested, and shall state the extraordinary reasons that would justify the extension.
(C) Directions to the Clerk, Duties of the Clerk, Preparation and Transmittal of the Record. The appellant shall file directions to the clerk with the notice of appeal. The clerk shall transmit the record to the court within 5 days of the date the court reporter files the transcript(s) or, if a designation to the court reporter has not been filed, within 5 days of the filing of the notice of appeal. When the record is transmitted to the court, the clerk shall simultaneously serve copies of the record to the Department of Children and Family Services, the guardian ad litem, the indigent parties or counsel appointed to represent indigent parties, and shall simultaneously serve copies of the index to all non-indigent parties, and, upon their request, copies of the record or portions thereof at the cost prescribed by law.
(3) Briefs.
(A) In General. Briefs shall be prepared and filed in accordance with rule 9.210(a)-(e), (g), and (h).
(B) Times for Service. The initial brief shall be served within 20 days of service of the record on appeal or the index to the record on appeal. The answer brief shall be served within 20 days of service of the initial brief. The reply brief, if any, shall be served within 10 days of the service of the answer brief.
(4) Motions.
(A) Motions for Appointment of Appellate Counsel; Authorization of Payment of Transcription Costs. A motion for the appointment of appellate counsel, when authorized by general law, and a motion for authorization of payment of transcription costs, when appropriate, shall be filed with the notice of appeal. The motion and a copy of the notice of appeal shall be served on the presiding judge in the lower tribunal. The presiding judge shall promptly enter an order on the motion.
(B) Motions to Withdraw as Counsel. If appellate counsel seeks leave to withdraw from representation of an indigent parent, the motion to withdraw shall be served on the parent and shall contain a certification that, after a conscientious review of the record, the attorney has determined in good faith that there are no meritorious grounds on which to base an appeal. The parent shall be permitted to file a brief pro se, or through subsequently retained counsel, within 20 days of the issuance of an order granting the motion to withdraw.
*62 (C) Motions for Extensions of Time. An extension of time will be granted only for extraordinary circumstances in which the extension is necessary to preserve the constitutional rights of a party, or in which substantial evidence exists to demonstrate that without the extension the child's best interests will be harmed. The extension will be limited to the number of days necessary to preserve the rights of the party or the best interests of the child. The motion shall state that the appeal is from a final order of termination of parental rights or of dependency, and shall set out the extraordinary circumstances that necessitate an extension, the amount of time requested, and the effect an extension will have on the progress of the case.
(5) Oral Argument. A request for oral argument shall be in a separate document served by a party not later than the time when the first brief of that party is due.
(6) Rehearing; Rehearing En Banc; Clarification; Certification. Motions for rehearing, rehearing en banc, clarification, and certification shall be in accordance with rules 9.330 and 9.331, except that no response to these motions is permitted unless ordered by the court.
(7) The Mandate. The clerk shall issue such mandate or process as may be directed by the court as soon as practicable.
(gh) Expedited Review. The court shall give priority to appeals under this rule.
Committee Notes
1996 Adoption. The reference in subdivision (a) to cases involving families and children in need of services encompasses only those cases in which an order has been entered adjudicating a child or family in need of services under chapter 39, Florida Statutes.
Subdivision (c) requires the parties to use initials in all references to the child and parents in all briefs and other papers filed in the court in furtherance of the appeal. It does not require the deletion of the names of the child and parents from pleadings and other papers transmitted to the court from the lower tribunal.
2006 Amendment. The title to subdivision (b) was changed from "Appeals Permitted" to clarify that this rule addresses who may take an appeal in matters covered by this rule. The amendment is intended to approve the holding in D.K.B. v. Department of Children & Families, 890 So. 2d 1288 (Fla. 2d DCA 2005), that non-final orders in these matters may be appealed only if listed in rule 9.130.
2009 Amendment. The rule was substantially amended following the release of the Study of Delay in Dependency/Parental Termination Appeals Supplemental Report and Recommendations (June 2007) by the Commission on District Court of Appeal Performance and Accountability. The amendments are generally intended to facilitate expedited filing and resolution of appellate cases arising from dependency and termination of parental rights proceedings in the lower tribunal. Subdivision (g)(4)(A) authorizes motions requesting appointment of appellate counsel only when a substantive provision of general law provides for appointment of appellate counsel. Section 27.5304(6), Florida Statutes (2008), limits appointment of appellate counsel for indigent parents to appeals from final orders adjudicating or denying dependency or termination of parental rights. In all other instances, section 27.5304(6), Florida Statutes, requires appointed trial counsel to prosecute or defend appellate cases arising from a dependency *63 or parental termination proceeding in the lower tribunal.
RULE 9.340. MANDATE
(a) [No change]
(b) Extension of Time for Issuance of Mandate. Unless otherwise provided by these rules, iIf a timely motion for rehearing, clarification, or certification has been filed, the time for issuance of the mandate or other process shall be extended until 15 days after rendition of the order denying the motion, or, if granted, until 15 days after the cause has been fully determined.
(c) [No change]
Committee Notes
[No change]
RULE 9.430. PROCEEDINGS BY INDIGENTS.
(a)-(c) [No change]
(d) Parties in Juvenile Dependency and Termination of Parental Rights Cases; Presumption. In cases involving dependency or termination of parental rights, an appellate court may, in its discretion, presume that any party who has been declared indigent for purposes of proceedings by the lower tribunal remains indigent, in the absence of evidence to the contrary.
Committee Notes
[No change]
NOTES
[1] We have jurisdiction. See art. V, § 2(a), Fla. Const.
[2] In N.S.H., the Court held:
[W]here appellate counsel seeks leave to withdraw from representation of an indigent parent in a termination of parental rights case, the motion to withdraw shall be served on the client and contain a certification that after a conscientious review of the record the attorney has determined in good faith that there are no meritorious grounds on which to base an appeal. The parent shall then be provided the opportunity to file a brief on his or her own behalf.
N.S.H., 843 So.2d at 904.
[3] The Juvenile Court Rules Committee did not concur with the proposal to amend rule 9.146 to list types of appealable nonfinal orders.
[4] In addition to amendments based on the Commission's recommendations, the Juvenile Court Rules Committee also proposed several other amendments to the Rules of Juvenile Procedure. The committee proposed amending rule 8.330, Adjudicatory Hearings, to clarify dismissals in dependency proceedings and proposed new rule 8.332, Order Finding Dependency, to govern orders finding dependency and create a procedure for the court when withholding adjudication in a dependency case, as allowed by section 39.507(5), Florida Statutes (2008). We adopt new rule 8.332 as proposed by the Committee, and we adopt the amendments to rule 8.330 with minor modifications.
[5] Form 8.984 is also amended to conform with amendments made to form 8.983 in 2006. See In re Amendments to the Florida Rules of Juvenile Procedure, 939 So. 2d 74, 89 (Fla.2006). Changes include a check-off list of those present for the hearing, breaking the finding on execution of voluntary surrenders into separate paragraphs for the mother and father, and adding each specific finding that the court is required to make under section 39.810(1)-(11), Florida Statutes (2008). A style correction is also made.
[6] As proposed, we also amend subdivision 9.146(a), Applicability, and subdivision 9.146(b), Who May Appeal. Subdivision (a) is reworded and subdivision (b) is amended to delete the term "legal custodian of the child." Additionally, rule 9.340(b), Extension of Time for Issuance of Mandate, is amended to accommodate the amendment to rule 9.146 requiring the clerk, in dependency and termination of parental rights appeals, to issue mandate as soon as practicable.
[7] I also commend the hard work of everyone involved, including the Commission's initial Chair, Judge Martha Warner, and its present Chair, Judge William Van Nortwick.
[8] For example, one recurring problem is that of delay in obtaining the transcript of the proceedings in the trial court, which clearly is unacceptable. With the adoption of these rules, we take important steps toward solving this problem. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2398621/ | 86 F. Supp. 2d 1035 (2000)
UNITED STATES of America, Plaintiff,
v.
Tracy Neil LOMAX, Defendant.
No. CR 92-158-1-JO.
United States District Court, D. Oregon.
February 3, 2000.
Gary Y. Sussman, Assistant United States Attorney, District of Oregon, United States Attorney's Office, Portland, OR, for Plaintiff United States of America.
Tracy Neil Lomax, Lompoc, CA, Defendant Pro Se.
ORDER
ROBERT E. JONES, District Judge.
This matter is before me on motion of defendant Tracy Neil Lomax to vacate, set aside, or correct sentence pursuant to 28 U.S.C. § 2255 (# 106), filed January 7, 1999. Because the motion is untimely and the parties' submissions conclusively show that defendant is entitled to no relief, the motion is denied without an evidentiary hearing.
PROCEDURAL HISTORY
In April 1992, defendant was indicted on one count of distributing crack cocaine, in violation of 21 U.S.C. § 841(a)(1). Following a jury trial in November 1992, the jury returned a verdict of guilty. Defendant was sentenced on March 5, 1993. The judgment of conviction was entered on March 10, 1993 (# 54), and affirmed on direct appeal by the Ninth Circuit in an unpublished memorandum disposition filed August 23, 1995. United States v. Lomax, 65 F.3d 177 (Table), 1995 WL 501505 (9th Cir.1995).
On January 11, 1996, defendant filed a motion for a new trial. On October 25, *1036 1996, defendant filed a supplemental motion for a new trial. Judge Redden denied both motions on December 12, 1996, and that ruling also was affirmed on appeal. United States v. Lomax, 132 F.3d 41 (Table), 1997 WL 759138 (9th Cir.1997).
On August 5, 1998, defendant filed a document he titled "Audita Querela Motion to the Ninth Circuit District Court," in which he sought an order vacating his indictment and/or his conviction based on the court's alleged lack of jurisdiction. By order dated September 29, 1998, this court denied the motion (# 103), and on November 4, 1998, denied what was construed to be a motion for reconsideration (# 104).
On January 7, 1999, defendant filed the pending § 2255 motion,[1] in which he asserts two grounds for relief: (1) because the government paid a co-conspirator/informant (Tredwell) for his services, his testimony should have been suppressed; and (2) trial counsel was ineffective in failing to move to suppress Tredwell's testimony. In response, the government contends that defendant's motion is both untimely and successive, and in any event fails on the merits.
DISCUSSION
The government first contends that the present motion is a second or successive motion and is barred because defendant did not and cannot obtain the certification required by § 2255. The government's argument is based on this court's earlier decision to construe defendant's "Audita Querela" motion as a § 2255 motion. That decision turned, in part, on defendant's failure to identify the authority under which he brought the motion. See Order (Sept. 29, 1998)(# 103).
The Ninth Circuit recently questioned whether the common law writ of audita querela "survives at all," particularly with § 2255 available to challenge the lawfulness of a conviction. Doe v. I.N.S., 120 F.3d 200, 204 and n. 5 (9th Cir.1997). Although I believe the decision to recharacterize defendant's audita querela motion was appropriate when made,[2] I agree with the Third Circuit's recent observation, in U.S. v. Miller, 197 F.3d 644 (3rd Cir.1999), that because of the sharp limitations on second or successive petitions imposed by the Antiterrorism Effective Death Penalty Act ("AEDPA"), courts should, at the very least, be reluctant to recharacterize a pro se prisoner's poorly drafted post-conviction motion as a § 2255 motion without first advising the prisoner of the potential effect. See U.S. v. Miller, 197 F.3d at 646; see also Adams v. U.S., 155 F.3d 582, 583-84 and n. 2 (2nd Cir.1998)(in dealing with a possible recharacterization, district judges must be sensitive to problems arising under the AEDPA). Consequently, although I decline to revisit the characterization of defendant's earlier motion, I also decline to find that the present motion is successive within the meaning of § 2255.
Nevertheless, I agree with the government that defendant's present § 2255 motion is time-barred. The AEDPA one-year limitation period applies to defendant's § 2255 motion, which he filed after the AEDPA's effective date of April 24, 1996. U.S. v. Valdez, 195 F.3d 544, 546 (9th Cir.1999). Although § 2255(1) provides that the limitations period runs from the date a prisoner's conviction becomes final, those prisoners whose convictions became final before the effective date of the AEDPA "had a one-year period from its effective date, i.e., until April 23, 1997, to file timely motions under § 2255(1)." Valdez, 195 F.3d at 546 (citing Tworivers v. Lewis, 174 F.3d 987, 996 n. 7 (9th Cir. *1037 1999)). In this case, because defendant's conviction became final before the effective date of the AEDPA, he had until April 23, 1997, to file the present motion. Because he did not even attempt to file it until December 1999, he cannot benefit from the one-year grace period. Valdez, 195 F.3d at 546. Moreover, defendant has not pointed to any applicable exception to the one-year limitation period that would permit his petition to be considered.
I find, therefore, that defendant's motion is time-barred and that he is not entitled to an evidentiary hearing. Although I do not reach the merits of defendant's motion, I note that his primary argument, that the government violated 18 U.S.C. § 201(c)(2) in paying for Tredwell's services, has been firmly rejected by circuits that have considered it. See U.S. v. Singleton, 165 F.3d 1297 (10th Cir.1999)(en banc); U.S. v. Mattarolo, 191 F.3d 1082, 1089 (9th Cir.1999)(rejecting same argument); see also U.S. v. Flores, 172 F.3d 695, 700 (9th Cir.1999)(collecting cases).
CONCLUSION
Defendant's motion to vacate, set aside, or correct sentence under 28 U.S.C. § 2255 is DENIED.
NOTES
[1] In a letter dated December 31, 1998 (# 107), defendant explained that he first submitted his motion to the Bureau of Prisons-Lompoc on December 9, 1998, but that it was returned to him due to an incorrect address on December 28, 1998. He then resubmitted it for filing.
[2] In Adams v. U.S., 155 F.3d 582, 583 (2nd Cir.1998), the Second Circuit noted that district courts routinely convert motions of prisoners who unsuccessfully seek relief under some other provision of law to motions under § 2255, then address them accordingly. | 01-03-2023 | 10-30-2013 |
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