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https://www.courtlistener.com/api/rest/v3/opinions/2259339/
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364 F.Supp. 967 (1973)
David SPATZ et al.,
v.
Frank J. NASCONE and Frank J. Zappala, Jr.
Civ. A. No. 72-847.
United States District Court, W. D. Pennsylvania.
October 12, 1973.
*968 Judd N. Poffinberger, Jr., Pittsburgh, Pa., for plaintiffs.
Walter T. McGough, Pittsburgh, Pa., for defendants.
OPINION
SNYDER, District Judge.
This matter is before the Court on the defendants' Motion for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The action involves an agreement for the sale of real estate located in the State of New York in which the defendants, residents of Pennsylvania, were the sellers, and the plaintiffs' assignee, a resident of Illinois, was the purchaser. It is alleged that, pursuant to the terms of the agreement, the defendants completed their acquisition of the subject premises; completed the construction of a shopping plaza; obtained a lease from S. S. Kresge Company; obtained the requisite mortgage; and conveyed the subject premises as directed to Orchard Park Associates, a joint venture composed solely of the plaintiffs herein. It is further alleged that pursuant to the terms of the agreement, Orchard Park Associates paid to the defendants the full purchase price of $200,000.00, and that, in addition, they performed every other condition precedent to the operation of the agreement.
A dispute arose as to the liability of the defendants to repay the aggregate sum of $72,371.37, being the amount by which the real estate taxes assessed against the parcel for the years 1968 through 1971 exceeded the sum of $20,000.00 per annum. The agreement also provided:
"In addition, after receipt of the fourth of the tax bills (the bill for the fourth of the years described herein-before), the difference between such fourth tax bill and the estimated figure of TWENTY THOUSAND DOLLARS ($20,000.00) capitalized at 10.4% shall be repaid by Seller to Purchaser when such tax is due".
The real estate taxes assessed against the parcel for 1971 were $53,464.49, which capitalized at the rate of 10.4% *969 would be an additional $321,773.94. In 1969 there was an adjustment made on the agreement to increase the estimated tax figure of $20,000.00 to $22,500.00. This was done to reflect the additional minimum rental of $2,500.00 to be received during the last three months of 1969. Further, the estimated $20,000.00 was increased to $30,000.00 for the years 1970 and 1971 to reflect the additional minimum rental of $10,000.00 to be received by the plaintiffs during 1970 and subsequent years of the lease. Because of the changes, the sums presently claimed by the plaintiffs are: (1) the additional taxes for the years 1969, 1970 and 1971 which equal $49,871.37, and (2) the amount due as the capitalized figure of $225,620.09 ($23,464.49 capitalized at the rate of 10.4%). Thus, the plaintiffs claimed that by the end of 1971 the defendants owed the plaintiffs the total sum of $275,491.46 under the terms of the agreement, which sum the defendants repeatedly refused to pay.
Attached to the plaintiffs' Complaint was a copy of the Agreement which was eleven pages in length and which detailed the property to be conveyed, permitted encumbrances and other documents deemed necessary. Paragraph No. 18 of the Agreement, provides as follows:
"MISCELLANEOUS. Risk of loss to the date of closing shall be upon the Seller. This Agreement shall be interpreted under Pennsylvania law and any disputes hereunder shall be tried in the Courts of the Commonwealth of Pennsylvania, the parties hereby waiving the right to a jury trial. Any transfer taxes imposed upon this transaction shall be paid by Seller. Seller shall not be bound by any possible custom or practice of the State of New York in connection with the transfer of title to any real estate, such as a presentation of an abstract of title."
To this Complaint, defendants filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b) on the ground that the Court lacked jurisdiction over either the parties or the subject matter of the action, contending that the above quoted section of the agreement was to be interpreted as limiting "any disputes hereunder" to the Courts of the Commonwealth of Pennsylvania.
On February 12, 1973, Judge Joseph F. Weis, Jr. (then District Judge and now on the Third Circuit Court of Appeals) heard oral arguments and received briefs from the parties, and time was enlarged for the filing of additional memorandums by both plaintiffs and defendants. On March 26, 1973, Judge Weis filed a Memorandum and Order treating the motion to dismiss as one for summary judgment and denying the motion without prejudice to renew after a hearing to resolve the disputed factual issue. This Order is set forth in full below as it is pertinent to the discussion herein contained.
MEMORANDUM AND ORDER
"The question presented to us is whether this Court in a diversity action should decline to exercise jurisdiction because of a contractual provision limiting the forum in which relief can be sought.
Plaintiffs claim that the defendants breached a certain Agreement, dated September 2, 1966 and later amended in October 1969, for the sale of real property located in the State of New York. The defendants moved to dismiss the action under Rule 12(b) of the Federal Rules of Civil Procedure on the ground that Section 18 of the Agreement limits the plaintiffs to maintain their action only in the state courts of Pennsylvania. Section 18 of the Agreement provides:
`. . . This Agreement shall be interpreted under Pennsylvania law and any disputes hereunder shall be tried in the Courts of the Commonwealth of Pennsylvania, the parties hereby waiving the right to a jury trial . . .'
*970 This court finds that the phrase `Courts of the Commonwealth of Pennsylvania' is ambiguous since it is susceptible of either a possessive or geographic connotation. See 29 Words and Phrases, `Of', page 341 (1972) where numerous cited cases held that the preposition `of' does not mean just ownership or possession, but rather has the identical meaning of the preposition `in' which conveys the meaning of location or inclusion within.
Both parties filed opposing affidavits of fact concerning the discussions that had occurred before the execution of the Agreement as to the meaning of Section 18 of the Agreement. Consequently the motion to dismiss will be treated as one for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. See Central Contracting Co. v. Maryland Casualty Co., 367 F.2d 341, 343 (3rd Cir. 1966).
Since Section 18 of the Agreement is ambiguous and there is a genuine factual issue as to its meaning, summary judgment must be denied. See 6 Moore's Federal Practice, § 56.-17(43), page 2590, n.n. 7, 10 (1972); Adickes v. Kress & Co., 398 U.S. 144, 153-161 [90 S.Ct. 1598, 26 L.Ed.2d 142] (1970).
This case will be scheduled for a preliminary hearing to resolve the factual issue, so that the litigation may proceed on the merits in either this court or the state forum.
ORDER
AND NOW, to-wit, this 26th day of March, 1973, upon consideration of the Motion to Dismiss and opposing Affidavits, the Motion to Dismiss will be treated as one for Summary Judgment and for the reasons stated in this Memorandum, IT IS ORDERED that the Motion be denied, without prejudice to renewal after a hearing to resolve the disputed factual issue has been held."
Subsequent to the Court's Order, plaintiffs served on the defendants an interrogatory requesting the defendants to disclose any witness having knowledge of the conversations, discussions or negotiations relating in any way to the subject matter of Paragraph No. 18 of the Agreement. The defendants answered that the other parties having knowledge of any such conversations, discussions or negotiations were the defendants, Richard Zappala, Donald A. Kahan and Jake Jacobs. The depositions of Richard Zappala and Donald A. Kahan were duly filed with the Court. On September 10, 1973, the defendants filed their Motion for Summary Judgment supported by the sworn testimony of Richard A. Zappala at his deposition. In addition, an affidavit was filed by Richard Zappala.
We approach the duty of deciding the very interesting but difficult question posed by the motion within the confines of the law that a summary judgment is proper only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. This is the mandate of the Federal Rule of Civil Procedure 56(c). Furthermore, any doubt as to the existence of a genuine issue of fact must be resolved against the moving party, and documents filed in support of a motion for summary judgment are to be used to determine whether issues of fact exist and not in order to decide the fact issues themselves. United States ex rel. Tyrrell v. Speaker, 471 F.2d 1197 (3rd Cir. 1973); Bowman Steel Corp. v. Lumbermens Mutual Casualty Co., 364 F.2d 246 (3rd Cir. 1966); Janek v. Celebrezze, 336 F.2d 828 (3rd Cir. 1964); Krieger v. Ownership Corporation, 270 F.2d 265 (3rd Cir. 1959). Furthermore, the burden of demonstrating the justification for the motion for summary judgment always lies with the movant. Adickes v. Kress & Co., 398 U.S. 144, 153-161, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1969). To state it another way, the Court is authorized to examine proferred materials extraneous *971 to the pleadings not for the purpose of trying an issue but to determine whether there is a genuine issue of material fact to be tried. If there is no such genuine issue of material fact, the parties are not entitled to a trial and the Court applying the law to the undisputed material facts may render summary judgment. See 6 Moore's Federal Practice, Par. 56.04 (1972 ed.).
As indicated in the above discussion, the complaint and the agreement disclosed that the defendants, real estate developers based in Pennsylvania, sold to the plaintiffs' assignee who was a citizen of Illinois, certain commercial real estate located in the State of New York. Thus, the transaction touched three states. In order to resolve any uncertainty as to which of the three states' laws would govern, or to avoid any uncertainty within a given foreign state as to the proper choice of law, the parties determined that the agreement should be interpreted under Pennsylvania law. Secondly, it prescribed clearly that any dispute was to be tried in Pennsylvania which was the defendants' domicile. Since Judge Weis' previous order declared that the agreement was patently ambiguous, the parties then went through the process of taking additional depositions for any light they might shed on the derivation of the phrase and the intent with which this phrase was used.
We deem it initially necessary to discuss briefly the law applicable to the interpretation of a phrase which is patently ambiguous. It is contended by the plaintiffs, for example, that when the agreement refers to "the Courts of the Commonwealth of Pennsylvania" that the word "of" may be used in a purely geographical sense as synonymous with "in" or "within". Defendants contend that the word has a political connotation referring to courts deriving their authority from the Sovereign Commonwealth of Pennsylvania. In this regard, the plaintiffs assert that there is no apparent reason why the defendants, having once been assured that suit would be brought in their home state (rather than in Illinois or New York) and that Pennsylvania law would be applied, would have had any interest in whether suit was brought in state or federal court within Pennsylvania.
We glean from the deposition of Richard Zappala that he acted as attorney for the defendants in this transaction, and his affidavit shows that the language of the forum selection clause was carried over verbatim from the language of a previous real estate purchase agreement between the principals. During the negotiations resulting in the previous agreement, Richard Zappala had informed Donald A. Kahan, attorney for the plaintiffs, that "Courts of the Commonwealth of Pennsylvania" meant the state courts and that Mr. Kahan voiced no objection to this construction of the forum selection language. Under these circumstances, even in the face of a patent ambiguity, the forum selection language is not to be strongly construed against the defendants because the initial draft of the agreement was prepared by defendants' counsel. There exists a well recognized exception to that rule where a contract is the result of the joint efforts of the attorneys or negotiators for both sides. Kaiser Aluminum & Chemical Corporation v. United States, 388 F.2d 317, 329, 181 Ct.Cl. 902 (1967); United States v. Continental Oil Company, 237 F.Supp. 294, 298 (W. D.Oklahoma 1964); Carter v. Certain-Teed Products Corp., 200 F.2d 754, 757 (8th Cir. 1953).
Under Section 230 of the Restatement of the Law of Contracts, it is stated as follows:
STANDARD OF INTERPRETATION WHERE THERE IS INTEGRATION
"The standard of interpretation of an integration, except where it produces an ambiguous result, or is excluded by a rule of law establishing a definite meaning, is the meaning that would be attached to the integration *972 by a reasonably intelligent person acquainted with all operative usages and knowing all the circumstances prior to and contemporaneous with the making of the integration, other than oral statements by the parties of what they intended it to mean."
Under Comments "a" and "b" to this section of the Restatement, if there is an ambiguity evidence may be received that a particular meaning is given to the language in a particular locality or by those engaged in a particular occupation, subject to the qualification that the viewpoint be the objective one of a third person. This objective third person is assumed to have knowledge of the operative usages as well as all other accompanying circumstances. "But oral statements by the parties of what they intended the written language to mean are excluded, though these statements might show the parties gave their words a meaning that would not be apparent. Such a common understanding may justify reformation, but cannot be the basis of interpretation of an integration." (Comment a.)
The agreement in this case is an integrated agreement within the context of the Restatement of Contracts, Section 228, for it is there stated that "an agreement is integrated where the parties thereto adopt the writing or writings as the final and complete expression of the agreement. An integration is the writing or writings so adopted." Both Sections 228 and 230 of the Restatement of Contracts have been adopted as the law in Pennsylvania. In National Cash Reg. Co. v. Modern Transfer Co. Inc., 224 Pa.Super. 138, 302 A.2d 486 (1973), where the court was required to consider; (1) whether a party to a written contract could introduce parol evidence or prior oral representations inducing the party to enter into the contract but which would be inconsistent with or in addition to the written agreement? and, (2) whether a party may recover consequential damage for an alleged breach of performance under the contract where the parties expressly agreed to an exclusion of damage clause to their agreement?, the following appears at page 488:
"Parties sui juris are free to make their own contracts, which, in the absence of an allegation of fraud, accident, or mistake, will be interpreted and enforced as written, except as to unconscionable provisions. Peter J. Mascaro Co. v. Milonas, 401 Pa. 632, 166 A.2d 15 (1961); Insley v. State Mutual Life Assurance Co., 334 Pa. 368, 5 A.2d 544 (1939). Likewise, a court ordinarily cannot disregard a clause in a contract to which a reasonable meaning can be given. The general rule is that a court will make no inference or give any construction to the terms of a written contract that may be in conflict with the clearly expressed language of the written agreement. Spigelmire v. School District of Borough of North Braddock, 352 Pa. 504, 43 A.2d 229 (1945); General Finance Co. v. Pa. Threshermen & Farmers' Mutual Casualty Ins. Co., 348 Pa. 358, 35 A.2d 409 (1944). Thus, when the language is clear, there is no need for interpretation, and words cannot be added.
In the absence of ambiguity, a written contract is held to express all negotiations and agreements made prior to and leading up to its execution; that is, the negotiations are presumed to be merged in the writing, and oral testimony is inadmissible to explain or vary the writing. Waldman v. Shoemaker, 367 Pa. 587, 80 A.2d 776 (1951). This exclusionary rule has been referred to as the `parol evidence rule'.
Appellant seeks to recover damages from appellee on the basis of oral representations allegedly made by appellee's sales agent prior to execution of the written computer lease agreement, but not contained therein. Despite the existence of an integration clause in the executed contract, appellant argues that existing case law permits us to consider extrinsic and parol evidence to justify its claim.
*973 We believe that Judge Backenstoe ably stated the analysis of the case law and its applicability to the peculiar facts of the instant case:
`In deciding under what circumstances an oral agreement is superseded by a written one, "it is necessary to consider whether the parties situated as were the ones interested in the contract would naturally and normally include the one in the other. If they relate to the same subject matter and are so interrelated that both would naturally be executed at the same time and in the same contract, the scope of the oral agreement must be considered as covered by the writing." Henry On Evidence, Section 604, Page 31. The effect of the integration clause is to make the parol evidence rule "particularly applicable". Henry On Evidence, Section 591, Page 3, Note 3. Williston on Contracts, Section 811, Third Edition.
`In applying these principles to the instant case, we note that this is a contract apparently executed by senior officials of two active corporations. The defendant's officers, while perhaps not familiar with plaintiff's particular product, had direct experience in the computer field, having leased a computer from one of plaintiff's competitors. While the contract is a form lease, prepared by the plaintiff, there is a carefully drafted addendum to it which contains warranties and agreements dealing with most of the allegations contained in defendant's counterclaim. The addendum was signed by the defendant's president. We believe this addendum represents the final negotiations of the parties and supersedes any prior understandings.'
Our Supreme Court has upheld `integration' or `merger' clauses in contracts, and have refused to admit parol or prior written agreements where the language of the contract is clear and unambiguous. In Appeal of Edwin J. Schoettle Co., 390 Pa. 365, 372, 134 A.2d 908, 912 (1957), the Supreme Court said that while a court may take into consideration extrinsic circumstances in certain situations, it `does not mean that where there is an integrated agreement "where the parties thereto adopt a writing or writings as the final and complete expression of the agreement" (from Restatement of the Law of Contracts, § 228) evidence of the negotiations which have led to the formation of this integrated agreement is admissible to show an intent at variance with the language of the written agreement . . .. The language of the instant agreement is clear and unambiguous. The buyer's evidence would tend to prove that in the negotiations leading up to the integrated agreement it was intended that the sellers warrant the company's and its subsidiaries' financial condition, whereas the language of the agreement plainly expresses a contrary intent. The admission of such evidence would vary and change the language of the agreement and its exclusion was eminently proper under the circumstances.'"
In the case of Wilkes-Barre Township School District v. Corgan, 403 Pa. 383, 170 A.2d 97 (1961), the Pennsylvania Supreme Court was called upon to interpret the terms of a deed, and stated the following (at page 99):
". . . . . Further, the standard of interpretation to be applied is the meaning that would be attached by a reasonably intelligent person, acquainted with all operative usages, and knowing all the circumstances prior to and contemporaneous with the making of the contract: Restatement, Contracts § 320 (obviously meaning § 230); Clearfield Development Corp. v. Devonian Co., 1956, 385 Pa. 248, 122 A.2d 718."
Following these rules of interpretation, we have looked to the contract, the affidavits and the depositions, not for the purpose of determining intent, and without consideration of any expressed intent of the parties in these depositions, but to determine whether or not there is contained therein any operative *974 usage or any circumstances which would affect the judgment of a reasonably intelligent person on the matter of interpretation. This is in accordance with the portion of Comment a, Section 230 of the Restatement of Contracts set forth above. Our examination has led us to no defined operative usage or circumstance which would aid us in the interpretation of the language that was used.
In light of this conclusion and upon very careful analysis of the disputed language and all circumstances surrounding the formation and execution of the agreement, we are of the opinion, and so hold, that the agreement is to be interpreted to mean that suit shall be brought only in courts of the Commonwealth of Pennsylvania and not in the federal court, although the latter has jurisdiction within the Commonwealth of Pennsylvania.
Our consideration of this case, however, cannot terminate at this point due to the fact that plaintiffs raised the additional question: Granting that the parties have made a reasonable selection of the place of suit, should a federal court give effect to a cause which purports to bar access to an otherwise available federal court at that place? Counsel for the plaintiffs claim that this is an issue of first impression and strongly urge that the question must be answered in the negative, for two reasons:
1. Any and all legitimate commercial interests of the defendants have been fully served by the institution of suit in the Federal Court for the Western District of Pennsylvania, since suit is now lodged at the defendants' home base and in a court which is bound to apply Pennsylvania law as bargained for. They thus claim that there is no conceivable legitimate commercial interest of the defendants which could be served by requiring the suit to be reinstituted in the Pennsylvania state court, and that such action would serve only to delay the ultimate disposition on the merits.
2. Counsel claims that to close the doors of this Court to the plaintiffs denies them a substantial federal constitutional and statutory right. It is claimed that since the plaintiffs are citizens of Illinois and the defendants are citizens of Pennsylvania that under Article 3 of the Constitution and Title 28 U.S.C. Section 1332, the plaintiffs have been given an absolute right to maintain a suit against the defendants in this court.
With respect to the first contention of the plaintiffs, we think it perfectly clear that the parties to the agreement have the right to determine whether or not there is a particular commercial interest which would be served by the institution of suit in a state court as related to suit in a federal court, and consequently that this can not be brushed aside solely on the contention that "there is no conceivable legitimate commercial interest of the defendant which could be served by requiring the suit to be reinstituted in the Pennsylvania state court". We agree with cases cited by counsel for the defendant that the court has discretion to decline jurisdiction where it is appropriate to give effect to parties' bargain. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972); Central Contracting Co. v. Maryland Casualty Co., 367 F.2d 341, 345 (3rd Cir. 1966); Geiger v. Keilani, 270 F.Supp. 761, 765 (E.D.Mich.1967). We hold, thus, that the interpretation of this contract and the appropriate forum to give effect to the parties' bargain is the state court of the Commonwealth of Pennsylvania.
We must then decide upon the plaintiffs' second contention that to close the doors of this Court is to deny them a substantial federal constitutional and statutory right. It is noted that Section 2 of Article 3 of the United States Constitution specifically extends the judicial power of the United States as vested "in the Supreme Court and in the inferior courts as established by Congress, to all *975 cases * * * between citizens of different states * * *".
It is further provided under Section 1332 of Title 28 U.S.C.:
"(a) The district court shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000, exclusive of interest and costs, and is between (1) citizens of different States; * * *"
There is no indication in the wording either of the Constitution or of Section 1332 that there is an absolute right to maintain a suit under the circumstances therein set forth. Counsel for the plaintiffs have failed to cite a single case in which this proposition has been sustained by an appellate court. Counsel argues that the situation of the plaintiffs here is, by reason of diversity, "a classic one for which the diversity jurisdiction was designed". That this is undoubtedly true does not answer the question, however, as to whether or not the bargain of the parties has not eliminated the federal courts as a place in which suit can be brought.
In the case of M/S Bremen, supra, certiorari was granted by the Supreme Court to review a judgment in the United States Court of Appeals for the Fifth Circuit declining to enforce a forum selection clause governing disputes arising under an international towage contract in which an American corporation contracted with a German corporation to tow the American corporation's drilling rig from Louisiana to a point off Ravenna, Italy. Zapata had solicited bids for the towage and several companies, including Unterweser, had responded. Unterweser was the low bidder and Zapata requested it to submit a contract which it did. The contract submitted by Unterweser contained a provision that:
"Any dispute arising must be treated before the London Court of Justice."
While the flotilla was in international waters, a severe storm arose and the rig was seriously damaged. Zapata, ignoring its promise to litigate "any dispute arising" in the English courts, commenced a suit in admiralty in the United States District Court seeking damages against Unterweser in personam, and the Tow Bremen in rem, alleging negligent towage and breach of contract. Unterweser invoked the forum clause and moved to dismiss for lack of jurisdiction or on forum non conveniens grounds, or in the alternative to stay the execution pending submission of the dispute to the "London Court of Justice". After several other matters were disposed of, the District Court finally denied Unterweser's motion to dismiss or stay Zapata's initial action. The District Court relied on the decision of Carbon Black Export v. The S S Monrosa, 254 F.2d 297 (5th Cir. 1958), appeal dismissed 359 U.S. 180, 79 S.Ct. 710, 3 L. Ed.2d 723 (1959). In that case the Court of Appeals had held a forum selection clause unenforceable, reiterating the traditional view of many American courts that "agreements in advance of controversy whose object is to oust the jurisdiction of the courts are contrary to public policy and will not be enforced". 254 F.2d at 300-301. The court then treated the motion to dismiss under normal forum non conveniens doctrine, and concluded that the balance of conveniences there was not strongly in favor of Unterweser, and Zapata's choice of forum should not, therefore, be disturbed. On appeal, the majority of the Circuit held that, following the Carbon Black decision, a forum selection clause "will not be enforced unless the selected state would provide a more convenient forum than the state in which suit is brought." The Court of Appeals affirmed the District Court using its discretion in refusing to decline jurisdiction on the basis of forum non conveniens. In the view of the Court of Appeals, enforcement of such clauses would be contrary to public policy under Bisso v. Inland Waterways Corp., 349 U.S. 85, 75 S.Ct. 629, 99 L. Ed. 911 (1955), and Dixilyn Drilling Corp. v. Crescent T. & S. Co., 371 U.S. 697, 83 S.Ct. 967, 10 L.Ed.2d 78 (1963), *976 but the District Court was entitled to consider that remanding Zapata to a foreign forum, with no practical contact with the controversy, could raise a bar to recovery by a United States citizen which its own convenient courts would not countenance. The Supreme Court, on appeal, in an opinion by Mr. Chief Justice Burger expressing the view of seven members of the court, held that the forum selection clause should be specifically enforced unless Zapata could clearly show that enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or overreaching; that there was nothing in the record which would support a refusal to enforce the forum selection clause; and that the clause provided for an exclusive forum and included even in rem actions. While the entire opinion in the Bremen case is of substantial importance here, we quote only those parts which we deem to be most pertinent, as follows:
"We hold, with the six dissenting members of the Court of Appeals, that far too little weight and effect was given to the forum clause in resolving this controversy. For at least two decades we have witnessed an expansion of overseas commercial activities by business enterprises based in the United States. The barrier of distance that once tended to confine a business concern to a modest territory no longer does so. Here we see an American company with special expertise contracting with a foreign company to tow a complex machine thousands of miles across seas and oceans. The expansion of American business and industry will hardly be encouraged if, notwithstanding solemn contracts, we insist on a parochial concept that all disputes must be resolved under our laws and in our courts. Absent a contract forum, the considerations relied on by the Court of Appeals would be persuasive reasons for holding an American forum convenient in the traditional sense, but in an era of expanding world trade and commerce, the absolute aspects of the doctrine of the Carbon Black case have little place and would be a heavy hand indeed on the future development of international commercial dealings by Americans. We cannot have trade and commerce in world markets and international waters exclusively on our terms, governed by our laws, and resolved in our courts.
Forum-selection clauses have historically not been favored by American courts. Many courts, federal and state, have declined to enforce such clauses on the ground that they were `contrary to public policy', or that their effect was to `oust the jurisdiction' of the court. Although this view apparently still has considerable acceptance, other courts are tending to adopt a more hospitable attitude toward forum-selection clauses. This view, advanced in the well-reasoned dissenting opinion in the instant case, is that such clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances. We believe this is the correct doctrine to be followed by federal district courts sitting in admiralty. It is merely the other side of the proposition recognized by this Court in National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 84 S.Ct. 411, 11 L.Ed.2d 354 (1964), holding that in federal courts a party may validly consent to be sued in a jurisdiction where he cannot be found for service of process through contractual designation of an `agent' for receipt of process in that jurisdiction. In so holding, the Court stated:
`[I]t is settled . . . . that parties to a contract may agree in advance to submit to the jurisdiction of a given court, to permit notice to be served by the opposing party, or even to waive notice altogether.' Id., at 315-316 [84 S. Ct. at 414], 11 L.Ed.2d at 358.
This approach is substantially that followed in other common-law countries including England. It is the view advanced by noted scholars and that adopted by the Restatement of the Conflict of Laws. It accords with ancient concepts of freedom of contract and reflects an *977 appreciation of the expanding horizons of American contractors who seek business in all parts of the world. (407 U.S. 11, 92 S.Ct. 1914, 32 L.Ed.2d 519-521)
* * * * * *
The argument that such clauses are improper because they tend to `oust' a court of jurisdiction is hardly more than a vestigal legal fiction. It appears to rest at core on historical judicial resistance to any attempt to reduce the power and business of a particular court and has little place in an era when all courts are overloaded and when businesses once essentially local now operate in world markets. It reflects something of a provincial attitude regarding the fairness of other tribunals. No one seriously contends in this case that the forum-selection clause `ousted' the District Court of jurisdiction over Zapata's action. The threshold question is whether that court should have exercised its jurisdiction to do more than give effect to the legitimate expectations of the parties, manifested in their freely negotiated agreement, by specifically enforcing the forum clause.
There are compelling reasons why a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power, such as that involved here, should be given full effect. In this case, for example, we are concerned with a far from routine transaction between companies of two different nations contemplating the tow of an extremely costly piece of equipment from Louisiana across the Gulf of Mexico and the Atlantic Ocean, through the Mediterranean Sea to its final destination in the Adriatic Sea. In the course of its voyage, it was to traverse the waters of many jurisdictions. The Chaparral could have been damaged at any point along the route, and there were countless possible ports of refuge. That the accident occurred in the Gulf of Mexico and the barge was towed to Tampa in an emergency were mere fortuities. It cannot be doubted for a moment that the parties sought to provide for a neutral forum for the resolution of any disputes arising during the tow. Manifestly much uncertainty and possibly great inconvenience to both parties could arise if a suit could be maintained in any jurisdiction in which an accident might occur or if jurisdiction were left to any place where the Bremen or Unterweser might happen to be found. The elimination of all such uncertainties by agreeing in advance on a forum acceptable to both parties is an indispensable element in international trade, commerce, and contracting. There is strong evidence that the forum clause was a vital part of the agreement, and it would be unrealistic to think that the parties did not conduct their negotiations, including fixing the monetary terms, with the consequences of the forum clause figuring prominently in their calculations. Under these circumstances, as Justice Karminski reasoned in sustaining jurisdiction over Zapata in the High Court of Justice, `the force of an agreement for litigation in this country, freely entered into between two competent parties, seems to me to be very powerful.'
Thus, in the light of present-day commercial realities and expanding international trade we conclude that the forum clause should control absent a strong showing that it should be set aside." (407 U.S. 15, 92 S.Ct. 1916, 32 L.Ed.2d 521-523)
* * * * * *
Courts have also suggested that a forum clause, even though it is freely bargained for and contravenes no important public policy of the forum, may nevertheless be `unreasonable' and unenforceable if the chosen forum is seriously inconvenient for the trial of the action. Of course, where it can be said with reasonable assurance that at the time they entered the contract, the parties to a freely negotiated private international commercial agreement contemplated the claimed inconvenience, it is difficult to see why any such claim of inconvenience should be heard to render the forum clause unenforceable. We are not here dealing with an agreement between two *978 Americans to resolve their essentially local disputes in a remote alien forum. In such a case, the serious inconvenience of the contractual forum to one or both of the parties might carry greater weight in determining the reasonableness of the forum clause. The remoteness of the forum might suggest that the agreement was an adhesive one, or that the parties did not have the particular controversy in mind when they made their agreement, yet even there the party claiming should bear a heavy burden of proof. Similarly, selection of a remote forum to apply differing foreign law to an essentially American controversy might contravene an important public policy of the forum. For example, so long as Bisso governs American courts with respect to the towage business in American waters, it would quite arguably be improper to permit an American tower to avoid that policy by providing a foreign forum for resolution of his disputes with an American towee.
This case, however, involves a freely negotiated international commercial transaction between a German and an American corporation for towage of a vessel from the Gulf of Mexico to the Adriatic Sea. As noted, selection of a London forum was clearly a reasonable effort to bring vital certainty to this international transaction and to provide a neutral forum experienced and capable in the resolution of admiralty litigation. Whatever `inconvenience' Zapata would suffer by being forced to litigate in the contractual forum as it agreed to do was clearly foreseeable at the time of contracting. In such circumstances it should be incumbent on the party seeking to escape his contract to show that trial in the contractual forum will be gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court. Absent that there is no basis for concluding that it would be unfair, unjust, or unreasonable to hold that party to his bargain." (407 U.S. 17, 92 S.Ct. 1917, 32 L.Ed.2d 524-525)
We are perfectly aware that this Supreme Court decision came only in the context of choice of forum between one in this country and one in England. However, there is no reason that the broad principles announced in that decision would not be applicable to the instant situation. There is support for this interpretation of the Bremen decision in the case of In-Flight Devices Corporation v. Van Dusen Air, Inc., 466 F.2d 220 (6th Cir. 1972) where there was an action for breach of contract and for damages for injuries to a business reputation. There a Minnesota corporation entered into contract negotiations involving a substantial order for manufacture of goods with a firm which it knew was based in Ohio and where its production facilities were located. An Ohio "long-arm" statute was held to apply to a personal jurisdiction over the corporation in an action of tort based on a claim of the Ohio corporation for damage to business reputation because of the act of the Minnesota corporation in stopping payment on the check issued to satisfy outstanding obligations under the purchase contract. In the District Court, Van Dusen moved to dismiss the action on the ground that the court lacked jurisdiction. After considering affidavits and briefs filed by the parties, the District Court granted the defendant's motion and dismissed the case. On appeal, the judgment of the District Court was reversed on the basis that in enacting its "long-arm" statute the Ohio legislature intended to extend the jurisdiction of its courts to the constitutional limits with respect to the section dealing with the transaction of any business in the state. In connection with this opinion, the court made the following statement (pages 233-234):
"One factor which has been identified as making the assertion of jurisdiction over a non-resident unfair in a given case is the sense of surprise the disappointment of expectation which may result from the use of *979 long-arm jurisdiction. A purchaser who engages in an essentially one state operation and occasionally buys an item or two out of state, for instance, is far more likely to be unprepared to deal with out of state litigation than an individual or corporation whose business frequently involves him or it in interstate transactions. The existence of substantial interstate business in general cannot substitute for some direct contacts with the forum state under the first test of Southern Machine [Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374 (6th Cir.)] of course, but where such direct contact consists primarily of the entering of a contract with a resident of the forum state by the non-resident defendant the general interstate involvement of the defendant is suggestive of the latter's expectation that it may be involved in litigation far from its home base. Here, the parent Van Dusen Corporation's in-house operations are spread across state lines with its headquarters in Minnesota and its purchasing operations centered in Missouri. Its dealings with its subsidiaries alone treating such subsidiaries as the independent entities Van Dusen asserts them to be involve dealings with corporate `residents' of states spread across the country. It can hardly surprise Van Dusen or disappoint its general expectations that it is called upon to defend in a forum far from its home base(s)."
And the Court then makes the following statement by way of footnote (Page 234, Footnote 24):
"A party in Van Dusen's position desiring to eliminate the possibility of out of state litigation could do so by avoiding any contractual relationship with an out of state resident, of course. A more practical alternative however might be to stipulate in the contract the forum of choice. In recent years most courts have given effect to such stipulations where the forum chosen is reasonable and the contract involved is not one of adhesion. See, for example, Central Contracting Co. v. Maryland Casualty Co., 367 F. 341 (3d Cir. 1966); but see Indussa Corp. v. S. S. Ranborg, 377 F.2d 200 (2d Cir. 1967). This year it would seem that the Supreme Court gave conclusive sanction to the practice of accepting such stipulations as binding in appropriate circumstances. M/S Bremen and Unterweser, reederei, GMBH v. Zapata Off-Shore Company, 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513, decided June 12, 1972. Although the Supreme Court decision came in the context of a choice between a forum in this country and one in England, the principles announced in it would seem equally applicable to domestic choice of forum questions."
Furthermore, we believe our conclusion that the motion for summary judgment must be granted to be consistent with the opinion of the Third Circuit Court of Appeals in the case of Central Contracting Co. v. Maryland Casualty Co., 367 F.2d 341 (1966), in which the court affirmed the opinion of Chief Judge Rabe F. Marsh, Jr. of this Court. In that opinion it was held that that provision of the subcontract on a Pennsylvania public project, that any suit against the general contractor or surety should be maintained in New York, was not unreasonable, and justified Pennsylvania District Court's declining jurisdiction of the action against the surety, in view, inter alia, of the general contractors' relations with New York, provision that New York law should govern, and provision for arbitration in New York. It is noted further that in this case the defendant moved to dismiss the action under Rule 12(b) (6) on the ground that the complaint failed to state a claim upon which relief could be granted. The appellate court concluded that the motion to dismiss should have been treated as one for summary judgment under Rule 56, and so considered it. The *980 Court stated as follows (at Page 344-345):
"The validity of Section 45 of the subcontractor's contract recently was reviewed by the Supreme Court of Pennsylvania in the action by this plaintiff against the general contractors. The court there reviewed the earlier Pennsylvania decisions and announced the modern rule which is to prevail in Pennsylvania. `The modern and correct rule is that, while private parties may not by contract prevent a court from asserting its jurisdiction or change the rules of venue, nevertheless, a court in which venue is proper and which has jurisdiction should decline to proceed with the cause when the parties have freely agreed that litigation shall be conducted in another forum and where such agreement is not unreasonable at the time of litigation.' Central Contracting Co. v. C. E. Youngdahl & Co., Inc., 418 Pa. 122, 133, 209 A.2d 810, 816 (1965). The court then went on to consider the elements which are relevant in determining the unreasonableness of such a provision. `Such an agreement is unreasonable only where its enforcement would, under all circumstances existing at the time of litigation, seriously impair plaintiff's ability to pursue his cause of action. Mere inconvenience or additional expense is not the test of unreasonableness since it may be assumed that the plaintiff received under the contract consideration for these things. If the agreed upon forum is available to plaintiff and said forum can do substantial justice to the cause of action then plaintiff should be bound by his agreement.' 418 Pa. at 133-134, 209 A.2d at 816.
We need not consider whether in this diversity case we are bound to apply the Pennsylvania rule, for both federal and state courts have increasingly in recent years recognized the same principle which the Supreme Court of Pennsylvania has now adopted. It is becoming more widely recognized that for reasons of business or convenience the parties may have bargained that all litigation arising out of their complex activity under a contract shall be drawn into one jurisdiction. So long as there is nothing unreasonable in such a provision there is no basis for viewing it as an affront to the judicial power, which must be stricken down. On the contrary, it should be respected as the responsible expression of the intention of the parties so long as there is no proof that its provisions will put one of the parties to an unreasonable disadvantage and thereby subvert the interests of justice.
The Pennsylvania rule, therefore, represents the correct principle, and we accept it and apply it here. This brings us to the question whether the provision that the action must be brought only in the courts of New York County is unreasonable.
On the face of it there is no unreasonableness in the provision. Two of the three general contractors were New York corporations. The provision is tied in with the requirement that the rights of the parties should be construed pursuant to the laws of the State of New York and that disputes should be arbitrated in the City of New York subject to the judicial supervision and review of the Supreme Court of New York and the appellate courts of that state. Judge Marsh in the court below noted that the forum in New York is only 400 miles from plaintiff's home office and that this would hardly impose an unreasonable burden upon it. Affidavits by the parties present some fragmentary information on the subject but they are not enough to rise to the dignity of substantial evidence of unreasonableness. Under Pennsylvania law the burden is on the plaintiff to prove the unreasonableness of the provision. *981 Central Contracting Co. v. C. E. Youngdahl & Co., Inc., supra, at 134, 209 A.2d at 816. Even if the Pennsylvania requirement as to the burden of proof is not binding upon us in a diversity case we are satisfied that this is the correct rule. Since the plaintiff had the burden of showing that the provision is unreasonable, the lack of proof is fatal to its claim. We may also add that the construction of the agreement and the arbitration provisions which still surround the litigation must be decided according to the law of New York and that its courts are the most appropriate instruments to carry out this function.
We are mindful that cases may be imagined in which the requirement of a contract limiting resort to a single forum may be the instrument of injustice. But such a provision does not oust the jurisdiction of the courts; in effect it merely constitutes a stipulation in which the parties join in asking the court to give effect to their agreement by declining to exercise its jurisdiction. There will always be open to either party the opportunity to present whatever evidence will move a court in the particular circumstances not to decline to exercise its undoubted jurisdiction. No such showing has been made in the present case."
It is, therefore, our considered opinion that the defendants' motion for summary judgment must be granted. The plaintiffs in this case do not even argue with any degree of force that trial in the contractural forum is either gravely difficult or inconvenient so that for all practical purposes they would be deprived of their day in court. There is nothing in the record, therefore, which forms any basis for a conclusion that our holding would be unfair, unjust, or unreasonable by enforcing the terms of the contract.
An appropriate order will be entered.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2258764/
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883 A.2d 429 (2005)
Robert John SCALICE, Appellant
v.
PENNSYLVANIA EMPLOYEES BENEFIT TRUST FUND, Appellee.
Supreme Court of Pennsylvania.
Argued March 7, 2005.
Decided September 28, 2005.
*430 James D. Belliveau, Pittsburgh, for Robert John Scalice, appellant.
Richard Kirschner, for Pennsylvania Employees Benefit Trust Fund (PEBTF), appellee.
Before: CAPPY, C.J., NIGRO, NEWMAN, SAYLOR, EAKIN and BAER, JJ.
OPINION
Chief Justice CAPPY.
This appeal raises a question under the Employee Retirement Income Security Act of 1974 ("ERISA" or "Act"), 29 U.S.C. § 1001 et seq. Specifically, we consider whether the Superior Court correctly affirmed the trial court's order granting summary judgment to Appellee Pennsylvania Employees Benefit Trust Fund ("PEBTF") on a counterclaim for subrogation. The grant of summary judgment was premised on the threshold determination that PEBTF was not a governmental plan excluded from the Act's coverage on October 30, 1997, see 29 U.S.C. §§ 1002(32), 1003(b)(1), but rather, was an ERISA plan that could claim ERISA's preemption of the anti-subrogation provision in the Pennsylvania Motor Vehicle Responsibility Law ("MVFRL"), 75 Pa. C.S. § 1720. Because we conclude that PEBTF was not entitled to summary judgment, we hold that the Superior Court erred. Accordingly, we reverse the Superior Court's order and remand to the trial court for further proceedings.
The relevant facts and procedural history are as follows. Appellant Robert Scalice was an employee of the Commonwealth of Pennsylvania, and as such, received health care benefits from PEBTF. On October 30, 1997, Appellant was injured in a motor vehicle accident, and was treated for the injuries he sustained. PEBTF paid a number of Appellant's medical and hospital bills, some in 1997, and others in 1998. In connection with the accident, Appellant pursued an allegedly negligent third party, and secured a settlement of $100,000. PEBTF made a subrogation claim against the settlement for $43,795.96. Appellant refused the claim on the grounds that under the MVFRL, 75 Pa. C.S. § 1720, PEBTF did not have a right of subrogation.[1]
*431 Appellant commenced a federal action under the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, requesting a determination that the MVFRL barred PEBTF from seeking subrogation. PEBTF filed a motion to dismiss, raising subject matter jurisdiction. Appellant responded that jurisdiction was based on the federal question that PEBTF would raise in the case by asserting a preemption defense under ERISA to the MVFRL's prohibition against subrogation.[2] The district court ruled that Appellant's expectation that PEBTF would assert ERISA preemption did not provide the court with subject matter jurisdiction, and thus, granted PEBTF's motion to dismiss. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-4, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).
On March 1, 2000, Appellant commenced the present action by filing a Complaint for Declaratory Judgment ("Complaint") in the court of common pleas. In his Complaint, Appellant alleged that PEBTF was exempted from ERISA, having been created as a governmental plan under 29 U.S.C. § 1002(32), and that therefore, PEBTF could not assert ERISA's preemption of the MVFRL.[3] Appellant asked the court to declare whether PEBTF was a governmental plan and whether it had a right to subrogation; to enter a judgment barring PEBTF from subrogation under the MVFRL; and to award him the appropriate counsel fees, costs, and interest. In its Answer to the Complaint and New Matter, PEBTF alleged that at all relevant times, it was an ERISA plan, and that as such, it had the benefit of ERISA preemption and the right to pursue Appellant for subrogation. In a Counterclaim, PEBTF requested that a judgment for $43,795.96 be entered in its favor.
On August 22, 2002, PEBTF filed a Motion for Summary Judgment And/Or Judgment On The Pleadings ("Motion for Summary Judgment" or "Motion").[4] PEBTF's legal argument was as follows. When established in 1988, PEBTF was a governmental plan within the meaning of ERISA and excluded from the Act's coverage. From March 1994 until January 1, 1998, however, PEBTF became an ERISA plan due to private employer participation. Because PEBTF was an ERISA plan at the time of Appellant's accident on October 30, 1997, the MVFRL, and more specifically, *432 its anti-subrogation provision, was preempted. Therefore, PEBTF was able to pursue its right to subrogation against Appellant, which arose out of a provision that the trustees who administer PEBTF adopted in 1995.
As evidence of the undisputed material facts on which its legal argument was premised, PEBTF pointed to the allegation of jurisdiction in Appellant's federal complaint and to three exhibits attached to the Motion. Exhibit A consisted of two "Affidavits" of Tommy Teague, the Executive Director of PEBTF ("Teague Exhibit"); Exhibit B was the "Affidavit" of William Schantzenbach, the Chief Financial Officer of PEBTF ("Schantzenbach Exhibit"); and Exhibit C was a letter to the Fund's attorney from Robert E. Ribic, Jr., the Director of Litigation Support for the Certified Public Accounting Firm of Brown, Schultz, Sheridan Fritz ("Ribic Exhibit").[5]
The Teague Exhibit stated: that PEBTF is a health and welfare trust fund that is administered by trustees who are appointed by the Governor and certain unions; that PEBTF receives its funding from bi-weekly contributions made by the Commonwealth and Commonwealth-related agencies; that when PEBTF was originally established in October 1988, only Commonwealth and Commonwealth-related agencies submitted contributions; that on March 1, 1994, PEBTF began to permit private employers to participate in PEBTF and accepted contributions from them; that the United States Department of Labor ("DOL") sent PEBTF a letter dated July 12, 1996 confirming PEBTF's ERISA status based upon increased private employer contributions; that in 1996 and 1997, PEBTF filed a form ("Form 5500") with the DOL that ERISA requires; and that by January 1, 1998, most of the private employers contributing to PEBTF had withdrawn, causing PEBTF to relinquish ERISA status and resume as a governmental plan. No plan document or other writing evidencing the terms of PEBTF was included in the record. The only documents attached to the Teague Exhibit were a copy of the DOL's July 1996 letter and copies of the Forms 5500.
The Schantzenbach Exhibit included summaries of contributions made to PEBTF from 1993 to 1999, and stated that a review of PEBTF financial records showed that prior to March 1994, private employer contributions amounted to approximately $12,000 per month; that beginning in March 1994, the private employer contributions increased to approximately $270,000 per month; and that by January 1, 1998, the private employer contributions decreased to approximately $82,000 per month.
*433 The Ribic Exhibit summarized contributions made to PEBTF in schedules and charts, and stated that PEBTF's general ledger records showed that private contributions were $842,112 in 1994; $2,468,253 in 1995; $2,745,227 in 1996; $1,589,358 in 1997; $336,670 in 1998; and $173, 924 in 1999.
Appellant filed a Brief in Opposition to PEBTF's Motion. Appellant's argument centered on the dates that PEBTF paid his medical and hospital bills, and relied on the analysis in Wimer v. Pennsylvania Employees Benefit Trust Fund, No. 5322 of 2001 (C.P.Westmoreland, March 11, 2002), in which the court of common pleas ruled that PEBTF was entitled to subrogation for medical treatment payments made in 1997, while it was an ERISA plan, but not in 1998, after it had resumed governmental plan status. Id. at 8-10.[6] Focusing on the statement in the Teague Exhibit that as of January 1, 1998, private employer participation in PEBTF had diminished, Appellant argued that under Wimer, PEBTF's governmental plan status as of January 1998 rendered summary judgment improper because there was no evidence of record as to when PEBTF made the payments that would give rise to a subrogation claim against him. Appellant also contended that nothing in his federal complaint amounted to a judicial admission of PEBTF's ERISA status and that his entitlement to counsel fees should have operated to reduce PEBTF's judgment. Thereafter, Appellant supplemented the record with copies of statements of account and argued that even if PEBTF was an ERISA plan in 1997, it did not have a right to subrogation for payments made in 1998, and that the amount of PEBTF's alleged subrogation claim was open to question.
In an opinion and order, the trial court granted PEBTF's Motion. The trial court determined that at the time of Appellant's accident, the Fund was an ERISA plan because the Teague Exhibit stated that "`the PEBTF continued to maintain its ERISA status [from at least 1996 when the DOL confirmed the [Fund's] ERISA status] through, and until January 1, 1998, when most of the private employers voluntarily withdrew with only de minimis private employer participation thereafter.'" Trial Court Opinion at 21 & n. 2 (alteration in original). The trial court also determined that as of January 1, 1998, PEBTF relinquished its ERISA status and became a governmental plan based on the statements to that effect in the Teague and Schantzenbach Exhibits and Appellant's Brief. Id. at 21 & n. 3. Next, concluding that the date of Appellant's accident, being "manipulation free," dictated PEBTF's entitlement to subrogation, the trial court rejected the analysis in Wimer and Appellant's argument that summary judgment was improper because no documentation existed in the record to indicate precisely when PEBTF paid for Appellant's medical treatment. Id. at 22-25. Therefore, the trial court held that since PEBTF was an ERISA plan on October 30, 1997, it had a right to subrogation against all payments it made on behalf of Appellant in connection therewith, and entered an order granting PEBTF's Motion, dismissing Appellant's Complaint, and entering judgment in PEBTF's favor on its Counterclaim in the amount of $43,795.94. Id. at *434 26 and Trial Court Order dated March 23, 2003.
Appellant filed a timely appeal in the Superior Court. In a published opinion, a majority of the Superior Court panel upheld the trial court. Scalice v. Pennsylvania Employees Benefit Trust Fund, 854 A.2d 987 (Pa.Super.Ct.2004).[7]
The Superior Court first determined that the record established: that PEBTF was deemed a governmental plan and exempt from ERISA's coverage in 1988 inasmuch as it operated as a health and welfare plan, originated to provide health benefits to Commonwealth employees; that after extending coverage to private employees in 1994 and receiving the DOL's letter, PEBTF concluded that it was an ERISA plan as evidenced by its Form 5500 filings; that the DOL voiced no concern to PEBTF's filings and would have raised a challenge had it questioned PEBTF's ERISA status; and that when significant private sector employees left PEBTF, it reverted to an ERISA-exempt governmental plan. Id. at 990. As to PEBTF's status on October 30, 1997, the Superior Court concluded that PEBTF was an ERISA plan because the "documentation of the DOL's involvement in the trustee's decision to transition the PEBTF from a governmental plan to an ERISA plan provided the trial court with evidence to make the legal determination [that PEBTF] was indeed an ERISA-qualified plan at the time of Appellant's October 30, 1997 accident[,]" and Appellant offered no contradictory evidence on the matter. Id.
Considering next whether PEBTF was entitled to subrogation for payments made after January 1, 1998, when it had resumed governmental plan status, the Superior Court agreed with the trial court that "to conclude that for insurance purposes that the date the right to subrogation arises is at the time of payment, rather than the date of injury would cause legal and bureaucratic chaos." Id. at 992. Last, in light of the supplemental exhibit PEBTF placed in the record, the Superior Court rejected Appellant's argument that the amount of PEBTF's subrogation claim was unsettled and determined that Appellant's challenge to PEBTF's subrogation claim was unreasonable, negating any arguable right he had under equitable principles to an award of counsel fees for securing the settlement. Id. at 992-93. Accordingly, the Superior Court affirmed the trial court's March 23, 2003 Order granting PEBTF's Motion for Summary Judgment. Id. at 993.
Judge Kate Ford Elliot filed a Dissenting Statement, and would have followed Triplett v. United Behavioral Health Systems, Inc., 1999 WL 238944 (E.D.Pa. March 29, 1999) (memorandum opinion). 854 A.2d at 993-94. In Triplett, the federal district court concluded, inter alia, that the origins of PEBTF supported the proposition that it was "`established ... for its employees ... by the government of ... any State,'" and that therefore, it was a governmental plan not covered by ERISA. 1999 WL 238944 at *2-3 (quoting 29 U.S.C. § 1002(32)).
Appellant filed a petition for allowance of appeal, which was granted. Scalice v. Pennsylvania Employees Benefit Trust Fund, 581 Pa. 680, 863 A.2d 1148 (Pa. 2004).
We begin with the Pennsylvania Rules of Civil Procedure that govern summary judgment. The Rules instruct in relevant part that the court shall enter *435 judgment whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense that could be established by additional discovery. Pa.R.C.P. 1035.2(1). Under the Rules, a motion for summary judgment is based on an evidentiary record that entitles the moving party to a judgment as a matter of law. Note to Pa.R.C.P. 1035.2. For purposes of summary judgment, the record includes any pleadings, interrogatory answers, depositions, admissions, and affidavits. Pa.R.C.P. 1035.1. An appellate court may reverse the granting of a motion for summary judgment if there has been an error of law or an abuse of discretion. Atcovitz v. Gulph Mills Tennis Club, Inc., 571 Pa. 580, 812 A.2d 1218, 1221 (2002).[8] In considering the merits of a motion for summary judgment, a court views the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Jones v. SEPTA, 565 Pa. 211, 772 A.2d 435, 438 (2001). Finally, the court may grant summary judgment only where the right to such a judgment is clear and free from doubt. Marks v. Tasman, 527 Pa. 132, 589 A.2d 205, 206 (1991).
We continue with ERISA, and observe that it was enacted to remedy long-standing abuses and deficiencies in the private pension system. Rose v. Long Island Railroad Pension Plan, 828 F.2d 910, 913 (2d Cir.1987); see also 29 U.S.C. § 1001. Generally speaking, ERISA applies to "any employee benefit plan." 29 U.S.C. § 1003(a). Under 29 U.S.C. § 1003(b)(1), however, certain employee benefit plans are excluded from the Act's substantive and procedural requirements. See supra n. 3. One such exclusion is the governmental plan, which, as we noted, is defined in 29 U.S.C. § 1002(32). See id.
We now turn to PEBTF's Motion for Summary Judgment. The threshold issue upon which PEBTF's entitlement to a judgment as a matter of law was premised was that PEBTF had the benefit of ERISA's preemption of the MVFRL's anti-subrogation provision. So as to assert ERISA's preemption of the MVFRL, PEBTF contended that from March 1, 1994 until January of 1998, it was an ERISA plan because it was no longer subject to the governmental plan exclusion.[9] PEBTF argued in the trial court and continues to argue on appeal that three purported facts are conclusive of this issue: Appellant's judicial admission in his federal complaint that the district court had federal question jurisdiction; PEBTF's decision to view and conduct itself as an ERISA plan due to increased private sector employer participation; and the DOL's confirmation of that decision.
We disagree. Neither PEBTF's characterization of the record, nor its position that the record establishes that it was no longer a governmental plan and thereby *436 covered by ERISA on October 30, 1997, has merit. First, Appellant's allegation of federal question jurisdiction in his federal complaint, based on his anticipation of PEBTF's assertion of ERISA preemption, is not a judicial admission that PEBTF was an ERISA plan. See Tops Apparel Manufacturing Co. v. Rothman, 430 Pa. 583, 244 A.2d 436, 438 & n. 8 (1968) (reiterating that the term "judicial admission" refers to an advantageous allegation of fact that is made by a party in a pleading or stipulations or the like). Furthermore, contrary to PEBTF's assertion, the label that PEBTF assigned itself under ERISA is irrelevant. PEBTF's status as a governmental plan is a matter for the court to decide by construing 29 U.S.C. § 1002(32) and determining whether or not it applies. See, e.g., Hightower v. Texas Hospital Ass'n, 65 F.3d 443 (5th Cir.1995) (construing the meaning of 29 U.S.C. 1002(32) and applying that construction to the plan at issue); Silvera v. Mutual Life Ins. Co. of New York, 884 F.2d 423 (9th Cir.1989) (same); Roy v. Teachers Ins. and Annuity Ass'n, 878 F.2d 47 (2nd Cir.1989) (same); Rose, 828 F.2d at 910 (same).[10] And finally, despite PEBTF's description of the DOL's actions, the agency did not confirm PEBTF's declaration of its ERISA plan status. There is no authority to support the proposition that the DOL's silence in the face of PEBTF's Form 5500 filings has any legal significance in this context. In addition, the DOL's correspondence to PEBTF in July of 1996 was only an information letter, setting forth the DOL's previously stated view in connection with other inquiries "that the inclusion of more than a de minimis number of private sector employees as participants in an otherwise governmental plan will result in the plan no longer having the status of a governmental plan within the meaning of section 3(32) of ERISA[;]" it did not address PEBTF's status under ERISA one way or the other.[11] Therefore, we conclude that PEBTF failed to show that the record established that on October 30, 1997, it was an ERISA plan entitled to ERISA's preemption of the MVFRL's anti-subrogation provision and that it was entitled to a judgment as a matter of law. See Pa. R.C.P. 1035.2(1). Accordingly, we hold that the Superior Court erred in affirming the trial court's March 23, 2003 Order.
For these reasons, we reverse the order of the Superior Court affirming the trial court's order granting PEBTF's motion for summary judgment and entering judgment in favor of PEBTF, and remand this *437 case to the trial court for further proceedings consistent with this opinion.[12]
Justice CASTILLE did not participate in the consideration or decision of this case.
Justice NEWMAN files a concurring opinion.
Justice NEWMAN, concurring.
While I join the Majority Opinion, I write separately to further develop my reasoning in reaching this result. In particular, the argument of the Pennsylvania Employees Benefit Trust Fund (PEBTF) concerning the guidance given by the Department of Labor (DOL) in the shifting of a governmental plan from exempt to non-exempt pursuant to the Employees Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq., is unsubstantiated.
As noted by the Majority, Appellant did not raise the disjunctive language in the statute governing the instant matter, 29 U.S.C. § 1002(32), in the court below. Maj. Op. at ___ _ ___ n. 10, 883 A.2d at 436 n. 10. As such, the issue is waived. If this issue is raised in the future, it may render moot the discussion of the DOL's apparent allowance of the change in categorization of a plan from governmental to non-governmental. See Triplett v. United Behavioral Health Systems, Inc., 1999 WL 238944 (E.D.Pa.1999) (holding that, based upon the plain language of 29 U.S.C. § 1002(32), a plan formed as a governmental plan must remain a governmental plan). However, until that time, I note that the interpretation of an agency concerning a regulation within its scope is entitled to deference. See Uniontown Area School District v. Pennsylvania Human Relations Commission, 455 Pa. 52, 313 A.2d 156, 169 (1973) (citing American Telephone & Telegraph Co. v. United States, 299 U.S. 232, 57 S.Ct. 170, 81 L.Ed. 142 (1936)). As such, the guidance given by the DOL in determining the criteria for becoming a non-governmental plan should be heeded.
In 1996, Appellee requested information from the DOL regarding its planned extension of coverage to private sector employees and asked how that would affect its status under the governmental plan exemption of ERISA. The DOL responded in an Opinion Letter (Letter), which Appellee argues states that covering more than a de minimis number of private sector employees would result in a loss of the governmental plan exemption and ERISA qualification. Appellee relied on the Letter as showing that Appellee was indeed ERISA qualified until January of 1998, when it voluntarily relinquished its ERISA status and its right to subrogation. Both the trial court and the Superior Court used the Letter, as well as the lack of challenge from the DOL of the filing of ERISA required documents, as proof that Appellee had gained ERISA status.
At the heart of Appellee's argument is the Letter's reference to a 1995 DOL Opinion Letter (Letter 95-27A), which implies that a non-governmental employee coverage of approximately eight percent still amounts to de minimis coverage of private sector employees. See http:// www.dol. gov/ebsa/programs/ ori/advisory95/95-27a.htm (last visited 7/26/05). In Letter 95-27A, the DOL stated that 270 private sector employees out of 3500 participants in the plan, approximately 7.7%, was insufficient to exceed the de minimis criterion; as such, the plan was still considered a governmental plan for failing to *438 meet the de minimis standard concerning non-governmental employee coverage. Although opinion letters are not necessarily binding, and refer only to the factual situation related therein, a material issue of fact arises as to whether or not Appellee falls within the governmental plan exemption. Moreover, the DOL's interpretation should be given weight when determining the status of a party pursuant to ERISA. See Uniontown Area School District, supra.
In the present case, PEBTF, by its own admission, had more than 85,000 participants, of which approximately 1,000, or 1.2%, were private sector employees. It should be noted that Appellant submits his own criteria stating that in 1997, total Commonwealth contributions to PEBTF amounted to $285,066,966.00, and private contributions in 1997 were a mere $1,589,358.00. Using these figures, the non-government employee contributions totaled a little more than one-half of one percent (0.5%). The Letter did not address the particular situation of Appellee, but merely stated that a plan must include more than a de minimis number of private sector employees. By virtue of the reference to Letter 95-27A, it is reasonable to interpret the Letter as stating that Appellee was still a governmental plan. However, Appellee argues that the sheer number of employees, although small by percentage, may be the deciding factor in determining whether a plan still falls within the governmental plan exemption. Appellee cites no case law or opinion letter to support its solely numeric or percentage based criterion for determining ERISA status.
Additional research would have revealed supplementary DOL guidance. In Letter 95-15A, the DOL concluded that a two percent composition of private sector employees did not exceed the de minimis standard, which is a greater percentage than the one in the instant matter. The generic Letter sent to Appellee, combined with a reading of the two other DOL opinion letters, suggests that the trial court and Superior Court were hasty in classifying Appellee as ERISA qualified. Accordingly, we must determine the tipping point in terms of percentages or numbers of non-government employees covered that will cause the governmental plan exemption to be lost.
I am sympathetic to the argument by Appellee that it would be a breach of fiduciary duty pursuant to ERISA, subjecting its members and the funds itself to fines, if Appellee failed to file the appropriate ERISA forms when ERISA qualified. As a result of this duty, Appellee argues that it is in the best position to determine its status pursuant to ERISA and should not be penalized for attempting to avoid the harsh consequences, labeled draconian by Appellee, imposed by ERISA for failure to comply with its terms. However, as noted by Triplett, supra, and the dissent in the Superior Court, a litigant's attempt to classify itself, even if believed to be correct, does not make it true. "[T]here is no reason to think that a plan's determination of its status under ERISA is any more meaningful than any litigant's determination of its status under any statute. I thus find that Appellee's interpretation of itself as a non-governmental plan is not relevant." Triplett, 1999 WL 238944 at *3.
Moreover, an additional letter asking for clarification from the DOL, or a commonsense interpretation of the DOL's approach to the de minimis standard, would have led to the conclusion that PEBTF was still a governmental plan pursuant to ERISA and, therefore, exempt and subject to the MVFRL. The generic response was not an invitation to Appellee to interpret itself as it saw fit. In the case sub *439 judice, PEBTF covered a mere 1.2% of private sector employees contributing approximately one-half of one percent (0.5%) in monetary terms. As such, the mathematical data available to PEBTF, which the DOL brought to its attention, clearly indicate that its coverage of private sector employees did not exceed the de minimis threshold.
Although the DOL has not promulgated an exact number required to remove a plan from the definition of a governmental plan, as stated above, the DOL has found that two percent private sector coverage is insufficient. DOL Opinion Letter 95-15A. Moreover, the district court in Triplett, supra, addressed PEBTF's ERISA categorization as being a governmental plan and, therefore, non-ERISA qualified. In addition, other jurisdictions have addressed the topic of de minimis for purposes of removing a plan from the governmental plan exemption. In Kirkpatrick v. Merit Behavioral Care Corp., 70 F.Supp.2d 443 (D.Vt.1999), the Vermont District Court stated that, in a case involving 7.6% private employees, "[m]oreover, given the small number of non-governmental employees involved, the governmental plan exception's purpose is not violated and its scope is not unduly broadened by placing the Schools Plan within the exception." Id. at 448. Furthermore, the United States District Court for the District of Maine addressed the issue in Hall v. Maine Municipal Employees Health Trust, 93 F.Supp.2d 73 (D.Me.2000):
In this case, MMEHT has allowed the employees of a small number of non-profit organizations who perform municipal functions to participate in the Trust since 1990. Of the 16,399 employees participating in MMEHT, 609, or 3.7, are non-governmental employees. The Court is satisfied that this number of non-governmental employees is de minimis.
Id. at 81 (citing Kirkpatrick and Triplett) (footnotes deleted).
I find the reasoning of these courts to be persuasive and conclude that, because of the DOL letters addressing de minimis in prior scenarios and the small percentage of non-governmental employees at stake here, PEBTF was a governmental plan exempt from ERISA during the period in question. Accordingly, state law applies pursuant to Section 1720 of the MVFRL, 75 Pa.C.S. § 1720, and Appellee is not entitled to subrogation.
NOTES
[1] The MVFRL provides:
§ 1720. Subrogation
In actions arising out of the maintenance or use of a motor vehicle, there shall be no right of subrogation or reimbursement from a claimant's tort recovery with respect to workers' compensation benefits, benefits available under section 1711 (relating to required benefits), 1712 (relating to availability of benefits) or 1715 (relating to availability of adequate limits) or benefits paid or payable by a program, group contract or other arrangement whether primary or excess under section 1719 (relating to coordination of benefits).
75 Pa.C.S. § 1720.
[2] In FMC Corp. v. Holliday, 498 U.S. 52, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990), the United States Supreme Court held that ERISA preempted the application of § 1720 of the MVFRL to a self-funded health care plan that was an employee welfare benefit plan within the meaning of ERISA under 29 U.S.C. § 1002(1). Id. at 65, 111 S.Ct. 403.
[3] ERISA provides that "[t]he provisions of this subchapter shall not apply to any employee benefit plan if(1) such plan is a governmental plan (as defined in section 1002(32) of this title)[,]" and defines "governmental plan" to mean "a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing...." 29 U.S.C. §§ 1002(32), 1003(b)(1).
[4] PEBTF's Motion was not based solely on the pleadings and documents properly attached thereto. Therefore, it was not a motion for judgment on the pleadings under Pa. R.C.P. 1034, and was not treated as such.
[5] We note that although PEBTF designated these three exhibits as "affidavits," they do not satisfy the requirements of an affidavit under the Pennsylvania Rules of Civil Procedure. Not one of them is based on personal knowledge, as is required under Pa.R.C.P. 1035.4; not one of them is sworn, affirmed or made subject to the penalties of 18 Pa.C.S. § 4904, as is required under Pa.R.C.P. 76. We also note that for the most part, verified or certified copies of the documents referred to in the exhibits are not attached, as Pa. R.C.P. 1035.4 requires. Lastly, we note that the exhibits are largely testimonial in nature, which may run afoul of the rule announced in Nanty-Glo v. American Surety Co., 309 Pa. 236, 163 A. 523 (1932). See Penn Center House, Inc. v. Hoffman, 520 Pa. 171, 553 A.2d 900, 903 (1989) ("Testimonial affidavits of the moving party or his witnesses, not documentary, even if uncontradicted, will not afford sufficient basis for the entry of summary judgment, since the credibility of the testimony is still a matter for the jury.") (quotation omitted). Appellant, however, did not raise any such issues in the trial court. Therefore, any objections to the exhibits were waived. See Pa.R.A.P. 302(a); see also Harber Philadelphia Center City v. LPCI Limited Partnership, LCCO, 764 A.2d 1100, 1104-05 (Pa.Super.Ct.2000).
[6] In Wimer, the status of PEBTF was a matter of stipulation. The parties in that case filed Joint Stipulations of Fact, in which they stipulated that at the time of plaintiff's motor vehicle accident on October 3, 1997, PEBTF was an ERISA plan and that as of January 1, 1998, PEBFT relinquished its ERISA status and resumed the status of governmental plan. Id. at 8.
[7] At this point, PEBTF was permitted to supplement the record on appeal with an "Affidavit In Support of Payments by Highmark Blue Cross Blue Shield to Altoona Hospital" to show the amount of payments it made on Appellant's behalf
[8] As the issue as to whether there are no genuine issues as to any material fact presents a question of law, our standard of review is de novo; thus, we need not defer to the determinations made by the lower tribunals. Our scope of review, to the extent necessary to resolve the legal question before us, is plenary. Buffalo Township v. Jones, 571 Pa. 637, 813 A.2d 659, 664 n. 4 (2002).
[9] We note that the record reveals that for purposes of PEBTF's entitlement to ERISA preemption, the only dispute between the parties is PEBTF's status during this time period. The parties do not dispute that PEBTF was an employee benefit plan under 29 U.S.C. § 1003(a), and that PEBTF was excluded from ERISA's coverage under 29 U.S.C. § 1003(b)(1) as a governmental plan within the meaning of 29 U.S.C. § 1002(32), from 1988 until March 1, 1994, and beginning again in January of 1998.
[10] For the first time on appeal in the Superior Court, Appellant raised that ERISA's definition of a governmental plan in 29 U.S.C. § 1002(32), which speaks of "a plan established or maintained" for its employees by the government of any state, rendered summary judgment in PEBTF's favor improper. See supra. n. 3. In this regard, Appellant pointed out that 29 U.S.C. § 1002(32) is written in the disjunctive, and argued that since PEBTF admitted that it was established in 1988 as a governmental plan, federal case law would hold that PEBTF satisfied the Act's definition, regardless of how it was maintained thereafter. Appellant did not raise this issue on summary judgment in the trial court. See supra. p. ___ _ ___, 883 A.2d p. 433. Therefore, the issue was waived in connection with PEBTF's entitlement to summary judgment. Pa.R.A.P. 302(a); see also Harber Philadelphia Center City, 764 A.2d at 1104-05.
[11] We observe that PEBTF placed no proof in the record as to number of its participants who were private sector employees at any given point in time.
We also make clear that we take no position on the merits of PEBTF's interpretation of the DOL's position that PEBTF could establish that it was an ERISA plan and no longer a governmental plan under 29 U.S.C. § 1002(32) on October 30, 1997 by proving that it had more than a de minimis number of private sector employees at some point between March 1, 1994 and January of 1998.
[12] In light of our disposition, we need not and do not consider the merits of any of the other issues resolved on summary judgment by the trial court and affirmed on appeal by the Superior Court.
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714 F.Supp. 1218 (1989)
SONCO STEEL TUBE DIV., FERRUM, INC., Plaintiff,
v.
The UNITED STATES, Defendant,
and
Lone Star Steel Co., Defendant-Intervenor.
Court No. 86-07-00899.
United States Court of International Trade.
May 18, 1989.
*1219 Dow, Lohnes & Albertson, Washington, D.C., (William Silverman, Carrie A. Simon and Douglas J. Heffner), Washington, D.C., for plaintiff.
John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Platte B. Moring, III, Civil Div., U.S. Dept. of Justice, for defendant, Craig L. Jackson, Atty. Advisor, Office of the Chief Counsel for Import Admin., U.S. Dept. of Commerce, Washington, D.C., for defendant.
Dewey, Ballantine, Bushby, Palmer & Wood, Michael H. Stein, Washington, D.C., for defendant-intervenor.
OPINION AND ORDER
RESTANI, Judge:
Plaintiff, Sonco Steel Tube Division, Ferrum, Inc. (Sonco) brings this action challenging the final determination by the Department of Commerce, International Trade Administration (ITA) that oil country tubular goods (OCTG) from Canada are being sold in the United States at less than fair value. Oil Country Tubular Goods from Canada, 51 Fed.Reg. 15,029 (Apr. 22, 1986), as amended, 51 Fed.Reg. 29,579 (Aug. 19, 1986). In its opinion of August 18, 1988, Sonco Steel Tube Div., Ferrum, Inc. v. United States, 12 CIT ___, 694 F.Supp. 959 (1988), the court remanded this action to ITA for (1) a reconsideration and a fuller explanation of the agency's reasons for treating limited service OCTG as a fully-costed co-product of prime OCTG in its calculations of constructed value, (2) an explanation of why certain U.S. sales, which appeared unrepresentative of plaintiff's selling practices in the U.S., were *1220 included in the fair value comparison, and (3) a fuller explanation of why early payment discounts provided to Sonco's customers were treated as reductions in U.S. price while no adjustments for such discounts were made to foreign market value. In its remand determination, dated November 1, 1988, ITA determined that the sales which plaintiff alleged were unrepresentative of its selling practices in the U.S. were in fact unrepresentative and excluded such sales from the fair value comparison. As a result of this exclusion, ITA calculated a new less than fair value margin of 3.18%. Upon remand, ITA adhered to its previous determination with regard to the remaining two issues. Plaintiff presently challenges these remand results.
I. ITA'S TREATMENT OF LIMITED SERVICE OCTG
Plaintiff's arguments concerning ITA's treatment of limited service OCTG are essentially identical to those made by Ipsco, Inc., another Canadian producer of OCTG subject to this same investigation, in its challenge to ITA's final determination. Accordingly, the court's views on plaintiff's proposed by-product accounting methodology and on the accounting methodology actually employed by ITA as expressed in Ipsco, Inc. v. United States, 13 CIT ___, 714 F.Supp. 1211 (1989) are equally applicable in this case and need not be repeated in detail here.
In summary, the court found Ipsco's proposed methodology which simply assigns limited service OCTG a cost of production and/or constructed value equal to its actual net realizable value or estimated market value to be contrary to both the statute and ITA regulations. Additionally, the court found the methodology employed by ITA to be unreasonable because it failed to account for significant differences in value between the prime and limited service product in its calculations of foreign market value. In this case, as in Ipsco, this matter is remanded to ITA so that the agency may adopt a methodology for calculating foreign market value which eliminates the unfairness of failing to account for significant differences in value between the two types of simultaneously produced products subject to investigation.
II. ITA'S TREATMENT OF EARLY PAYMENT DISCOUNTS
In the previous opinion, the court questioned ITA's decision to treat early payment discounts provided to Sonco's U.S. customers as reductions in U.S. price while making no adjustments to foreign market value to account for similar discounts offered on home market sales of the same general class of merchandise as OCTG. Specifically, ITA was ordered to:
clarify whether it is agency policy to account for differing early payment discounts in the respective markets using a circumstances of sale adjustment, and if so under what circumstances. If a circumstances of sale adjustment could have been made here, ITA should indicate why plaintiff has not demonstrated entitlement to such an adjustment. If it is not agency policy to make circumstances of sale adjustments for early payment discounts, ITA must explain why it has made no other adjustment to constructed value.
Sonco, 12 CIT at ___, 694 F.Supp. at 965. In connection with its clarification of these points, ITA was directed to explain its decision in Tool Steel from the Federal Republic of Germany, 51 Fed.Reg. 10071 (Mar. 24, 1986), a previous determination in which the agency permitted early payment discount adjustments to foreign market value based on constructed value.
In the remand determination, ITA has provided the clarification requested by the court, stating that it does not have a policy of treating early payment discounts as circumstances of sale for which adjustments to foreign market value may be made and that it has been substantially consistent in following a policy of treating such discounts as reductions in price. In response to the court's concerns regarding the Tool Steel determination, ITA states, inter alia, "[t]o the extent that the case does indicate that the Department treated a discount as a circumstances of sale adjustment, the *1221 case is simply wrong." Remand Determination at 13. On the other hand, plaintiff argues that ITA's statements to the contrary notwithstanding, the agency does have a policy of granting circumstances of sale adjustments for early payment discounts and that ITA's actions in this case were unreasonable.
Initially, it should be noted that discounts generally provided to customers in either the U.S. or home market do lower the final price to such customers and it is therefore not per se unreasonable for ITA to treat certain discounts as reductions in price in its calculations of foreign market value and U.S. price.[1] Although it remains unclear as to whether the adjustment made in Tool Steel was, in fact, a circumstances of sale adjustment,[2] ITA in its remand determination clearly repudiates the treatment of early payment discounts in this manner. See Remand Determination at 13. Furthermore, it is clear that ITA's policy of treating early payment discounts as reductions in price has been followed in most of its determinations. See Remand Determination at 13 n. 10 (listing previous determinations in which ITA treated early payment discounts as reductions in price).[3] Given ITA's definitive statement of its present *1222 policy and the extent of its consistent past practice, the court does not find that ITA acted unreasonably or arbitrarily in this case based on the existence of the relatively few previous determinations cited in which the department may appear to have acted inconsistently.[4]
The court also notes an additional problem with plaintiff's request that the ITA grant a circumstances of sale adjustment for the difference between "the discounts provided by Sonco in the United States and the discounts that Sonco provided in Canada on the same class or kind of merchandise." Plaintiff's Comments on the Remand Determination at 22. As stated in ITA's remand determination, ITA "does not consider discounts to be actual expenses borne by a manufacturer, and as such did not include them in figure for general expenses when calculating constructed value." Remand Determination at 16 n. 11. Had ITA treated these discounts as expenses, the agency presumably would have utilized discount rates provided by Sonco in the home market on "merchandise of the same general class or kind as the merchandise under consideration," pursuant to 19 U.S.C. § 1677b(e)(1)(B), in its calculation of constructed value. It might be argued that in such a situation, a circumstances of sale adjustment would be appropriate to factor out differences between the United States discount rate and the home market discount rate utilized in the constructed value calculation. This is precisely the method by which ITA calculated differences in credit expenses provided in each market for which a circumstances of sale adjustment was granted. Remand Determination at 16 n. 11. Because, however, ITA determined that discounts are not expenses to be included in its calculation of constructed value, and because plaintiff has failed to demonstrate that this decision was in any way contrary to law,[5] ITA was not obligated to consider discounts made on sales of the same general class or kind of merchandise in the home market or make the sort of adjustment requested here by plaintiff, but rather could treat the discounts as reductions in price.
Having found that ITA may treat the early payments discounts at issue here as reductions in price and that ITA is not required to make the requested circumstances *1223 of sale adjustment under the facts of this case, there remains the question of whether some other type of adjustment or deduction to foreign market value to account for the early payment discounts was necessary. Neither defendant's nor plaintiff's comments on the Tool Steel case have convinced the court that an adjustment of any type to foreign market value was necessary to account for the early payment discounts under the facts of this case. In fact, plaintiff has not explained what the statutory basis for such an adjustment to constructed value might be, other than a circumstances of sale adjustment, and the necessity of such an adjustment has already been rejected as a basis for relief.[6] Accordingly, the court does not find that ITA erred in failing to make an adjustment to foreign market value to account for early payment discounts.
CONCLUSION
This matter is remanded. ITA shall issue a determination on remand within thirty days utilizing a methodology which eliminates the unfairness of failing to account for substantial differences in value of the two types of simultaneously produced products subject to investigation. Within ten days thereafter the parties shall advise the court whether post-remand briefing is necessary, in which case a briefing schedule shall be proposed by plaintiff after consultation with opposing counsel. If ITA finds it necessary to reopen the investigation it shall so advise the court within 20 days hereof and shall, after consultation with the parties, propose a new schedule.
SO ORDERED.
NOTES
[1] Plaintiff argues that ITA's policy on early payment discounts as expressed in the remand determination is inconsistent with the decision of the Court of Appeals for the Federal Circuit in Smith-Corona Group, Consumer Prods. Div., SCM Corp. v. United States, 713 F.2d 1568 (Fed. Cir.1983), cert. denied 465 U.S. 1022, 104 S.Ct. 1274, 79 L.Ed.2d 679 (1984). Plaintiff's reliance on Smith-Corona is misplaced. Smith-Corona deals with the issue of whether certain periodic and monthly rebates based on sales volume were directly related to the sales under consideration. See 19 C.F.R. § 353.15 (1988). On its face, the case does not appear to address directly the more general issue of whether circumstances of sale adjustments may properly be made to foreign market value for rebates and discounts. Nonetheless, in Zenith Radio Corp. v. United States, 9 CIT 110, 115-16, 606 F.Supp. 695, 700-01 (1985) aff'd 783 F.2d 184 (Fed.Cir. 1986), Smith-Corona is interpreted as standing for the proposition that circumstances of sale adjustments under 19 U.S.C. § 1677b(a)(4)(B) may be made for rebates. The distinction between reduction in price and circumstances of sale apparently was important because of certain limitations on home market sales price reductions. In any case, neither Smith-Corona nor Zenith can be read to require ITA to treat all discounts or rebates in this manner. Likewise, neither case addresses the specific issue before this court, namely, whether ITA may properly treat early payment discounts as reductions in price. Plaintiff's Smith-Corona argument also assumes that all rebate and discount programs are analogous. In fact, such programs may have different effects requiring different treatments.
[2] Defendant suggests that the fact that there were home market sales (which were found to be made at prices below the cost of production) in Tool Steel for which discounts may have been granted, whereas there were no home market sales of OCTG in this case and, hence, no home market discounts, may explain why an adjustment was made to constructed foreign market value in Tool Steel and not here. In actuality, ITA is uncertain as to the meaning of Tool Steel. It should be noted, however, that there is no clear authority under which ITA may calculate constructed value one way in cases where there are no home market sales, and another way in cases where home market sales are disregarded because they were made at prices below the cost of production.
Additionally, the court is somewhat disturbed by ITA's inability to explain fully the agency's own previous determinations. Although the agency is not necessarily bound by its previous determinations, a finding as to the reasonableness of the agency's actions in a given case may depend, in part, on the agency's treatment of similar issues in previous cases. Whether or not ITA's inability to explain Tool Steel is understandable given changes of personnel, such inability may be prejudicial to the opposing party. Here, ITA's calculation seems to be essentially fair and non-arbitrary. Thus, plaintiff is not prejudiced.
[3] Plaintiff cites Cyanuric Acid and Its Chlorinated Derivatives from Japan, 49 Fed.Reg. 7424 (Feb. 29, 1984) in support of its position that a circumstances of sale adjustment should be made for early payment discounts. In that determination, ITA stated that in calculating foreign market value based on home market prices it "made deductions, where appropriate, for after-sales rebates and discounts based upon competitive circumstances." Id. at 7425. In the remand determination in this case, ITA states that Cyanuric Acid, in fact, supports its position in this case. Remand Determination at 14.
Upon examination of the cited determination, it appears that it does not provide conclusive support for either plaintiff's or ITA's position. The rebates and competitive discounts at issue in Cyanuric Acid consisted of home market after-sale cash rebates and additional merchandise shipped at no extra cost. In order to account for these rebate and discount programs, ITA adjusted foreign market value downwards. Although ITA's response to petitioner's comment 6, 49 Fed.Reg. at 7428, at least, implies a circumstances of sale adjustment was made, most likely the distinction at issue here was not of consequence under the facts of the case. That is, an allowable reduction in price applicable to foreign market value may have the same effect as a downward adjustment to foreign market value based on a difference in circumstances of sale.
In Monsanto Co. v. United States, 12 CIT ___, 698 F.Supp. 285 (1988), which dealt with later cyanuric acid determinations, a program involving shipment of additional merchandise is referred to as a "rebate," for which a circumstances of sale adjustment is allowed. In actuality, the court simply upheld ITA's treatment of the program as a "deduction to foreign market value." Distinctions between mandatory and permissible treatment of such programs, between price reductions and circumstances of sale adjustments, and among various discount and rebate programs were not addressed.
[4] Only two cases appear to fall into this category, Tool Steel and Carbon Steel Wire Rod from Brazil, 49 Fed.Reg. 14,156 (Apr. 10, 1984). The remaining cases cited for this proposition are inconclusive. See also note 3.
Plaintiff also argues that ITA's claim that it does not grant circumstances of sale adjustments for early payment discounts directly contradicts statements made by the Department of Commerce in a November 1985 report submitted to Congress entitled, Study of Antidumping Adjustments Methodology and Recommendations for Statutory Change. As defendant notes, however, the section of the report cited by plaintiff is not a discussion of circumstances of sale adjustments and, in fact, immediately precedes the section of the report devoted to circumstances of sale adjustments.
[5] Plaintiff's argument that Sonco's early payment discounts should be viewed as expenses to the producer rather than as reductions in price is not persuasive. Foregoing sales revenue, under any circumstances, may be loosely characterized as a cost to a producer. While plaintiff correctly notes that ITA has treated certain types of imputed or opportunity costs as real expenses in previous determinations, see, e.g., Industrial Phosphoric Acid from Belgium, 52 Fed.Reg. 25,436, 25,438-39 (Jul. 7, 1987) (finding the opportunity cost of holding inventory to be a real expense which may be deducted from exporter's sales price), it has failed to cite any authority indicating that ITA has a practice of treating discounts in this manner or which would require ITA to treat discounts as general expenses which must be included in ITA's calculation of constructed value under 19 U.S.C. § 1677b(e)(1)(B).
[6] If in this case, actual home market sales were being used as the basis for foreign market value, and early payment discounts were also given on those sales, ITA, for the reasons discussed supra, could treat discounts as reductions in price on both sides of the fair value equation. Here, however, the only "prices" used are U.S. prices, thus home market "prices" cannot be reduced. Although Timken Co. v. United States, 11 CIT ___, 673 F.Supp. 495, 507-8 (1987) indicates that circumstances of sale adjustments may be made even when foreign market value is based on constructed value, see also Funai Elec. Co. v. United States, 13 CIT ___, 713 F.Supp. 420, 423-425 (1989), it does not stand for the considerably broader proposition that any type of calculation or adjustment that can be made to price-based foreign market value must also be made to constructed value-based foreign market value.
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37 Cal.Rptr.3d 915 (2006)
135 Cal.App.4th 1251
The PEOPLE, Plaintiff and Respondent,
v.
Clinton Duane CRITES, Defendant and Appellant.
No. B178046.
Court of Appeal, Second District, Division Six.
January 25, 2006.
*916 Sylvia Whatley Beckham, under appointment by the Court of Appeal, for Defendant and Appellant.
Bill Lockyer, Attorney General, Robert R. Anderson, Chief Assistant Attorney General, Pamela C. Hamanaka, Senior Assistant Attorney General, Victoria B. Wilson, Supervising Deputy Attorney General, Sharon E. Loughner, Deputy Attorney General, for Plaintiff and Respondent.
Certified for Partial Publication.[*]
PERREN, J.
Clinton Duane Crites appeals the judgment after his conviction for first degree murder (Pen.Code,[1] §§ 187, subd. (a), 189). Among other enhancement findings, the jury made true findings on separate allegations that Crites had personally used two deadly or dangerous weapons in the commission of the murder. (§ 12022, subd. (b)(1).) Crites contends there was insufficient evidence of premeditation and deliberation to support a first degree murder conviction. He also claims that the trial court erred in denying his Marsden[2] motion and in staying, rather than striking, one of the two section 12022, subdivision (b)(1) enhancements. We hold that the trial court properly imposed a one-year section 12022, subdivision (b) enhancement for use of one deadly weapon and imposed, but stayed, an additional enhancement under the same statute for use of a second weapon. We affirm.
FACTS
In July and August 2003, appellant's wife Christy Crites was living in the apartment of victim Douglas Okashima. Crites and his wife had separated but he continued to visit her and their children at Okashima's apartment. Mrs. Crites moved out of the apartment in late August or early September 2003.
Crites believed that his wife was having an affair with Okashima and, in statements to friends, threatened to kill Okashima for having the affair. In September 2003, Crites told one friend that he "might have to fuck . . . up" the man his wife was staying with. About a week before the murder, he told another friend he was going to "smash" the person who was sleeping with his wife. Mrs. Crites also told the police that Crites had said "Doug's gonna get his" prior to the murder.
During the night of September 17, 2003, Crites drove to Okashima's apartment and killed him. Okashima died of multiple stab wounds to the head, and multiple skull fractures inflicted when he was kicked by Crites who was wearing steel-toed boots. Crites had bought the boots a week before the murder.
*917 On September 18, 2003, after the murder, Crites told a third friend or acquaintance that he had "smashed someone." Crites also returned to Okashima's apartment for the purpose of cleaning up evidence of the crime, retrieving and disposing of the knife used in the killing, and moving Okashima's body to another location. Crites placed the body in a blue recycling bin or dumpster that was kept in the alley between a restaurant and Okashima's apartment. A still photograph from the restaurant's surveillance cameras shows that the recycling bin was in the alley at 5:22 a.m. on September 18, but another photograph showed that it had disappeared three hours later. The second photograph showed Crites climbing over the fence with something in his hands.
Crites later loaded the recycling bin containing Okashima's body onto a truck and drove the bin to the location where it was found by the police. Crites threw the knife and steel-toed boots into the ocean.
Okashima was reported to the police as missing on September 19, 2003. That evening, the police found the dumpster and Okashima's body.
Crites testified on his own behalf at trial. He testified that he drove to Okashima's apartment to collect some of his wife's belongings that she had left at the apartment when she moved out. Crites testified that when he returned to the apartment a second time to finish picking up his wife's belongings, he was greeted by an angry Okashima. After a hostile exchange of words, Okashima attacked Crites with a kitchen knife. Okashima was cut during the struggle over the knife. The knife broke when both men fell to the floor. Crites testified that he got up and kicked Okashima in the head with his steel-toed boots when Okashima grasped his leg as Crites tried to leave. Crites admitted that he may have continued to kick Okashima after he was released from Okashima's grasp. Crites considered calling an ambulance but, instead, ran from the apartment. He admitted that he returned to the apartment shortly thereafter to retrieve the knife and some of his family's property, and to clean up the apartment.
DISCUSSION
[[/]][**]
Second Weapons Enhancement Properly Stayed
The People alleged that Crites personally used two deadly or dangerous weapons (a knife and steel-toed boots) as separate section 12022, subdivision (b) enhancements. The jury found both allegations true, and the trial court imposed a one-year sentence for use of a knife and imposed, but stayed, a one-year sentence for use of steel-toed boots. Crites contends that two "identical" enhancements under section 12022, subdivision (b) cannot be imposed on the same offense against the same victim. Crites argues that, although stayed, imposition of the second enhancement was unauthorized. We disagree.
Section 1170.1, subdivision (f) provides that, "[w]hen two or more enhancements may be imposed for being armed with or using a dangerous or deadly weapon or a firearm in the commission of a single offense, only the greatest of those enhancements shall be imposed for that offense. . . ." This language prevents execution of sentences for multiple enhancements, but not the procedure of imposing but staying all but the greatest *918 enhancement falling within the statute. (People v. Jones (2000) 82 Cal.App.4th 485, 492-493, 98 Cal.Rptr.2d 329; People v. Espinoza (1983) 140 Cal.App.3d 564, 567, 189 Cal.Rptr. 543.)
In the Jones case, the trial court imposed enhancements for personal use of a handgun (§ 12022.5) and personal use of a knife (§ 12022, subd. (b)) with respect to the same offense against the same victim. The appellate court concluded that section 1170.1 required the court to stay the lesser section 12022, subdivision (b) enhancement. (People v. Jones, supra, 82 Cal.App.4th at p. 493, 98 Cal.Rptr.2d 329.)
Crites concedes that Jones applies when one enhancement is lesser than the other, but argues that, when the enhancements are equal, one must be stricken, and not stayed. Crites presents no persuasive argument for this distinction, and it is not supported by legal authority. "`A stay is a temporary suspension of a procedure in a case until the happening of a defined contingency . . .,'" whereas striking an enhancement "'. . . implies that the enhancement is legally insupportable, and must be dismissed. . . .'" (People v. Carrillo (2001) 87 Cal.App.4th 1416, 1421, 105 Cal.Rptr.2d 360.) Here, there is no basis to reject the jury's factual findings as to both personal use allegations, and a reversal on appeal of one enhancement is a "defined contingency" where imposition of a term of imprisonment for the other would be warranted. The trial court properly imposed both enhancements, but stayed execution of one of them.
The judgment is affirmed.
We concur: GILBERT, P.J., and COFFEE, J.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for partial publication. The portions of this opinion to be deleted from publication are identified as those portions between double brackets, e.g., [[/]].
[1] All statutory references are to the Penal Code unless otherwise stated.
[2] People v. Marsden (1970) 2 Cal.3d 118, 84 Cal.Rptr. 156, 465 P.2d 44.
[**] See footnote * ante.
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714 F.Supp. 1324 (1987)
UNITED STATES of America
v.
Donald W.D. RAKOWSKI a/k/a Walter Douglas.
Cr. No. 87-55-1.
United States District Court, D. Vermont.
November 27, 1987.
*1325 *1326 R. Jeffrey Behm, Asst. U.S. Atty., Burlington, Vt., for the U.S.
David Miller, Brown, Cahill, Gawne and Miller, St. Albans, Vt., for defendant.
OPINION AND ORDER
COFFRIN, Chief Judge.
Defendant Donald Rakowski is charged under a two count indictment with offenses concerning the unlawful, knowing receipt through the mail of sexually explicit depictions of minors. Defendant filed three motions to suppress evidence and statements obtained as a result of a roadside questioning and the subsequent search of his residence on May 13, 1987 pursuant to a search warrant. In addition, defendant *1327 moved to suppress the search warrant upon which the search of defendant's residence was based and the fruits of that search. A hearing was held on the motions on October 26, 1987. Decision was reserved. The court now denies these motions for the reasons below.
FINDINGS OF FACT
On May 12, 1987, special agent for the United States Customs Service at Rouse's Point, New York, Dennis Harrison, submitted a written affidavit and application for a search warrant to Magistrate Niedermeier. Harrison had prepared the affidavit with the assistance of two Assistant United States Attorneys and a United States Postal Inspector. The parties are familiar with the affidavit and its contents are not set forth here.
On May 12, 1987, Magistrate Niedermeier issued a warrant to Harrison to search defendant's residence on Decker Road on the basis of the written affidavit prepared by Harrison, including aerial photographs and a description of the Rakowski residence on Decker Road. Harrison proposed to supplement the affidavit with oral testimony after a controlled delivery, that is, delivery under surveillance, of the Japanese magazine was completed. The Magistrate advised that the affidavit alone was sufficient to establish probable cause and further testimony was unnecessary. Harrison planned to conduct the search on the same day that defendant picked up the magazine, and he arranged with the Vermont State Police to assist in a stop on Route 7 of defendant's vehicle and established surveillance outside the post office. On the same day, Harrison placed the magazine in the box, removing the magazine at the end of the business day when it was not picked up.
On the following day, May 13, Harrison again established surveillance and put a notice in the box that there was a package to be picked up. Defendant picked up the magazine and two additional magazines at about 4 p.m. and drove away in a cream colored Toyota, under surveillance. After two stops, defendant continued along Route 7 and drove to a gas station on the left side of the road. The State police were notified, and they drove into the gas station lot without lights or sirens, in one or two unmarked cars, with their police lights concealed.
State Police Sergeant William Northrup approached the car, told defendant that a United States Customs Agent wanted to speak to him, and asked defendant to drive his car to the edge of the gas station lot. It is unclear how many officers approached defendant's car or where the officers parked relative to defendant's vehicle, but it is irrelevant to this decision. The officers did not draw their guns. Northrup asked defendant to drive to the edge of the lot, and defendant did so and got out of his car. Harrison approached defendant, and identified himself. He told defendant that he believed defendant had in his possession magazines prohibited from entering the United States, whereupon defendant said "you must mean this," reached into his car, and removed the unwrapped Japanese magazine from the front seat. Harrison then advised defendant that he believed defendant had other materials. Defendant at that point removed other magazines from the seat, stating "you mean these." This additional material included nudist colony photographs, including nude children photographs. Harrison next asked defendant for identification, and defendant produced identification for Donald Walter Rakowski. Harrison then informed defendant that he had a search warrant for material in defendant's residence. Defendant requested and read it. Harrison advised defendant that he would be going to the residence and defendant could accompany him if he liked and that it would be more convenient for all if defendant assisted. Defendant said that he did want to accompany the search and asked if he could first put gas in his car. Defendant got into his car alone, drove to the pumps, put gas in the car, and drove to the edge of the lot. He then got into Harrison's customs vehicle.
It is unclear whether Harrison requested defendant to ride with him, but defendant's understanding was that he had to ride over *1328 with Harrison. Tr. at 92. Under either version there was nothing coercive about the arrangements in view of the fact that defendant wished to participate in the search of the house. Defendant heard Harrison state on a police radio that Harrison had the "subject in custody" and would arrive at the house soon. The two drove to defendant's residence. While in the car, Harrison did not read defendant Miranda warnings. On the way to defendant's residence, defendant asked if he was under arrest. Harrison told defendant that he was not then under arrest, and arrest would depend on what the residence search revealed.
Upon Harrison's and defendant's arrival, defendant unlocked the house and two customs agents, one state police officer (who had arrived earlier), Harrison and defendant went inside the house. One agent remained downstairs, while Harrison, the other agent, and defendant proceeded upstairs. At that point, defendant made a call to his children's baby-sitter in the presence of the agents and a call to his wife. Defendant phoned his wife out of the agents' earshot by calling from an outside deck with the glass doors closed.
Defendant then returned to the inside of the house. Defendant began to look for a phone book to call his attorney, but Harrison advised him he wanted to start the search. There is no indication that Harrison intended to interfere with defendant calling his attorney or that he knew that he wished to do so. Likewise, there is no indication that Harrison would have prevented defendant from calling his attorney had defendant made it known that he wished to do so.
Before starting the search, Harrison advised defendant of his Miranda rights, reading from a card. Harrison then asked defendant if he understood his rights and defendant said "yes." It is not clear whether Harrison again told defendant that he was not under arrest, but it is clear that he never told defendant that he was under arrest. It is also not clear whether defendant told Harrison that he would not waive his rights, as defendant testified, or defendant did not expressly decline to waive his rights, as Harrison testified. Either version does not affect the outcome of defendant's motions.
Harrison did tell defendant that the warrant authorized them to take the house apart panel by panel if necessary and that he would search with or without defendant's help. Defendant understood that he had the option to help or not with the search.
In response to a question by Harrison as to where he was hiding the material described in the search warrant, defendant said nothing and took the agents to a file cabinet in another room, where he pulled out materials involving adult spanking. Harrison then told defendant that the agents were looking for pornography involving children, and defendant showed the agents a bookcase with several child behavior books. Harrison then told defendant that he wanted any child pornography that defendant had received through the mail, that they would search the house with or without defendant's assistance, and that they would take the house apart panel by panel if necessary. Defendant asked "just the stuff in the mail?", and Harrison said "yes."
Defendant then led the agents to the basement. At that point Harrison stopped defendant, told him his assistance was not required and would make no difference to the search and advised defendant that he was helping them voluntarily. Defendant obtained a ladder, removed a ceiling panel, and removed 35 magazines, two 8-millimeter movies, and five video tapes. He informed the agents that the video tapes were not child pornography and were tapes about which his wife knew nothing. The agents then asked defendant if he had revealed all. Defendant answered "yes." The agents then asked if defendant wanted to answer any questions. The defendant said no, that he wanted to call his attorney. The agents then followed defendant upstairs, he called an attorney, and the attorney arrived as the agents continued to search.
*1329 Throughout the search an officer remained beside defendant at all times to assure that he did not destroy evidence. At no time was defendant frisked or patted down, although he was asked for the key to the post office box after the search of the residence. Defendant knew what the searchers were looking for, that receiving child pornography was illegal, and that he possessed those types of photographs in the house.
Defendant has been an engineer for IBM for 17 years. He received a bachelors degree in engineering. His job involves the manufacture of memory and logic chips. Defendant had had no prior experience with law enforcement. Defendant signs his name Donald W.D. Rakowski.
DISCUSSION
1. Motion to Suppress Search Warrant
Defendant argues that the affidavit in support of the search warrant did not contain sufficient facts to establish probable cause the evidence sought was in defendant's residence. In addition, he asserts that the information concerning the November 6, 1986 magazine was stale by the time the warrant was issued. Defendant further argues that if the warrant fails for lack of probable cause, it was based on an affidavit "so lacking in indicia of probable cause as to render official belief in its existence entirely unreasonable" and, because the agent was the affiant, he could not rely in good faith on the warrant. United States v. Leon, 468 U.S. 897, 923, 104 S.Ct. 3405, 3422, 82 L.Ed.2d 677 (1984).
A valid search warrant may only be issued upon an affidavit or complaint which sets forth facts establishing probable cause. U.S. Const. amend. IV; Fed.R. Crim.P. 41(c). Probable cause exists where the facts and circumstances within an officer's knowledge and of which he or she has reasonably trustworthy information are "`sufficient in themselves to warrant a [person] of reasonable caution in the belief that' an offense has been or is being committed." Brinegar v. United States, 338 U.S. 160, 175-76, 69 S.Ct. 1302, 1310-11, 93 L.Ed. 1879 (1949) (quoting Carroll v. United States, 267 U.S. 132, 162, 45 S.Ct. 280, 288, 69 L.Ed. 543 (1925)). A law enforcement officer is entitled to assess the facts in light of his or her experience detecting the unlawful conduct. See United States v. Brignoni-Ponce, 422 U.S. 873, 885, 95 S.Ct. 2574, 2582, 45 L.Ed.2d 607 (1975) (citing Terry v. Ohio, 392 U.S. 1, 27, 88 S.Ct. 1868, 1883, 20 L.Ed.2d 889 (1968)). The Supreme Court has stated that "only the probability, and not a prima facie showing, of criminal activity is the standard of probable cause," Spinelli v. United States, 393 U.S. 410, 419, 89 S.Ct. 584, 590, 21 L.Ed.2d 637 (1969) (citing Beck v. Ohio, 379 U.S. 89, 96, 85 S.Ct. 223, 228, 13 L.Ed.2d 142 (1964)), and has applied a totality of the circumstances analysis to determine probable cause. Illinois v. Gates, 462 U.S. 213, 233, 103 S.Ct. 2317, 2329, 76 L.Ed.2d 527 (1983). Finally, the fourth amendment does not proscribe the introduction of evidence obtained by officers reasonably relying on a warrant issued by a detached and neutral magistrate even if the warrant is later found to be unsupported by probable cause. United States v. Leon, 468 U.S. 897, 922, 104 S.Ct. 3405, 3420, 82 L.Ed.2d 677 (1984).
Probable cause must exist at the time the government seeks to make the search; if the information is too old, it is considered stale and probable cause no longer exists. Sgro v. United States, 287 U.S. 206, 210-12, 53 S.Ct. 138, 140-41, 77 L.Ed. 260 (1932). To determine whether the affidavit establishes that objects probably connected with criminal activity can currently be found at a particularly described place, a court should look not only at the number of days between the facts relied upon in the affidavit and the time the warrant is issued, but also at the character of the crime and the thing to be seized. See, e.g., United States v. Forsythe, 560 F.2d 1127, 1132 (3d Cir.1977) (evidence that documents would be preserved and operation of business was continuous); United States v. Dauphinee, 538 F.2d 1, 5 (1st Cir.1976) ("hand grenades ... do not lend themselves to rapid disposition in the market place.").
*1330 To establish probable cause to search a residence, two factual showings are necessary. The facts must show that "a crime was committed, and ... that there is probable cause to believe that evidence of such crime is located at the residence." United States v. Travisano, 724 F.2d 341, 345 (2d Cir.1983). In sum, there must be "a fair probability that the premises will yield the objects specified in the search warrant." Id. at 346 (citations omitted). See also United States v. Peacock, 761 F.2d 1313, 1315 (9th Cir.) ("The magistrate need only conclude that it would be reasonable to seek the evidence in the place indicated in the affidavit.") (citations omitted), cert. denied, 474 U.S. 847, 106 S.Ct. 139, 88 L.Ed.2d 114 (1985).
Once a magistrate has made a determination on the issue of probable cause, a reviewing court should pay "great deference" to that determination. Spinelli, 393 U.S. at 419, 89 S.Ct. 584 (citing Jones v. United States, 362 U.S. 257, 270-71, 80 S.Ct. 725, 735-36, 4 L.Ed.2d 697 (1960)). The Supreme Court has stated that "the traditional standard for review of an issuing magistrate's probable-cause determination has been that so long as the magistrate had a `substantial basis for ... conclud[ing]' that a search would uncover evidence of wrongdoing, the Fourth Amendment requires no more." Gates, 462 U.S. at 236, 103 S.Ct. at 2331 (quoting Jones, 362 U.S. at 271, 80 S.Ct. at 736). The magistrate's probable cause finding is itself a substantial factor tending to uphold the warrant's validity. Travisano, 724 F.2d at 345.
We conclude that the magistrate had sufficient underlying facts before him to make it a fair probability that a crime had been committed and that the items sought would be found in defendant's residence. Harrison knew that the package intercepted in November, 1986, at the "Douglas" post office box in Milton was from a known foreign distributor of child pornography and upon consultation with the Federal Bureau of Investigation that the photographs were prohibited by statute. Monitoring the post office box disclosed two additional packages from known importers or distributors of child pornography. Another package of photographs received at the box in April 1987 was verified by Harrison with a pediatrician as being of children and Harrison and the postal inspector concluded that the children were photographed in poses proscribed by statute. Given these circumstances, the magistrate could reasonably have concluded that the crime of knowing receipt of sexually explicit depiction of minors had been committed.
In addition, the magistrate could reasonably have concluded, although the question is closer, that there was an "articulable connection," Travisano, 724 F.2d at 346, between the crime and defendant's residence. The affidavit recited that at least four packages including sexually explicit depictions of minors had been mailed to Box 155. The affidavit recited that defendant opened the box, listing Walter Douglas as co-owner, a white male appeared to be the only one to pick up mail from the box, and an individual who removed mail addressed to Walter Douglas from the box was observed to drive a car registered to defendant directly to the defendant's residence in May 1987. No drivers licenses had been issued to individuals named Walter Douglas that lived in or near Milton, Walter Douglas appeared to receive no household mail, that is, bills, and defendant's middle name was Walter. The affidavit recited that defendant appeared to receive all mail addressed to him at his residence on Decker Road. The affiant, an experienced customs agent, stated that those who collect child pornography often open up post office boxes, listing fictitious owners. The affidavit also revealed another experienced agent's conclusions that those who collect child pornography keep the pornography, do not destroy their collections, and keep the pornography accessible. The magistrate could reasonably have concluded on these facts that defendant set up the box for the purpose of receiving child pornography and other sexually explicit materials and that defendant stored these materials at his residence.
*1331 We also find that the magistrate could reasonably have concluded that probable cause was not stale in May because of the character of the crime and the evidence to be seized. The affidavit described a continuing offense of receiving child pornography and the enduring utility of the materials to their holder. The affidavit recited that at least four packages had been mailed to Box 155, in November and December 1986 and January and April 1987, and provided a substantial basis for concluding that the defendant set up the box to receive one genre of mail under a fictitious name. The affidavit also stated an experienced agent's conclusion that a collector of such materials would not destroy the collection.
Furthermore, even if the magistrate did not have a substantial basis for finding probable cause, the agents and searching officers' actions were in good faith on a warrant which they reasonably believed to be valid. There is no evidence that the agent made false statements in the application or that the magistrate abandoned his role as a neutral and detached decisionmaker. The warrant is not facially deficient or so lacking in indicia of probable cause to make agent Harrison's reliance on the magistrate's determination unreasonable. On the contrary, facts and circumstances within Harrison's knowledge and of which he gained trustworthy information could have warranted a person of reasonable caution to conclude that probable cause existed to search defendant's home. In addition, Harrison relied on the advice of two Assistant United States Attorneys in preparing the affidavit.
2. Motion to suppress automobile evidence
Defendant has moved to suppress all evidence found in defendant's automobile as the product of an unlawful arrest. Defendant argues that agent Harrison took defendant into custody, without a warrant or probable cause, in the parking lot of the gas station. Defendant asserts that because there was no probable cause or valid arrest, evidence seized from his car should be suppressed.
When officers detain an individual for the purpose of requiring him or her to identify himself or herself or answer questions, they perform a seizure of the person subject to the fourth amendment's requirement that the seizure be reasonable. Brown v. Texas, 443 U.S. 47, 50, 99 S.Ct. 2637, 2640, 61 L.Ed.2d 357 (1979). The Supreme Court has recognized that in some circumstances officers may detain a suspect briefly for questioning although they lack probable cause, as is required for a traditional arrest. United States v. Hensley, 469 U.S. 221, 226, 105 S.Ct. 675, 679, 83 L.Ed.2d 604 (1985) (citing Dunaway v. New York, 442 U.S. 200, 207-11, 99 S.Ct. 2248, 2253-56, 60 L.Ed.2d 824 (1979)). The Court has required, however, that the officers have a reasonable suspicion, based on specific and articulable facts, that the individual is involved in criminal activity. Id. (citing Delaware v. Prouse, 440 U.S. 648, 653-55, 99 S.Ct. 1391, 1395-97, 59 L.Ed.2d 660 (1979)). One important factor in finding reasonable suspicion existed is the personal experience and expertise the law enforcement officer brings to the investigation. United States v. Oates, 560 F.2d 45, 61 (2d Cir.1977) (citations omitted).
If a detention is valid, "the officer may ask the detainee a moderate number of questions to determine his identity and to try to obtain information confirming or dispelling the officer's suspicions. But the detainee is not obliged to respond. And, unless the detainee's answers provide the officer with probable cause to arrest him, he must then be released." Berkemer v. McCarty, 468 U.S. 420, 439-40, 104 S.Ct. 3138, 3149-50, 82 L.Ed.2d 317 (1984) (citing Adams v. Williams, 407 U.S. 143, 148, 92 S.Ct. 1921, 1924, 32 L.Ed.2d 612 (1972); Terry v. Ohio, 392 U.S. 1, 34, 88 S.Ct. 1868, 1886, 20 L.Ed.2d 889 (1968) (White, J. concurring)). Officers "do not violate the Fourth Amendment by merely approaching an individual on the street or in another public place, by asking him if he is willing to answer some questions, by putting questions to him if the person is willing to listen, or by offering in evidence in a criminal prosecution his voluntary answers to such questions." Florida v. Royer, 460 *1332 U.S. 491, 497, 103 S.Ct. 1319, 1323, 75 L.Ed.2d 229 (1983) (citing Dunaway, 442 U.S. at 210, n. 12, 99 S.Ct. at 2255, n. 12; Terry, 392 U.S. at 31, 32-33, 88 S.Ct. at 1885, 1885-86 (Harlan, J., concurring); id. at 34, 88 S.Ct. at 1886 (White, J., concurring)).
During a legal detention, officers can request to search defendant and his or her belongings, and if, under the totality of the circumstances, the court finds that defendant's consent was voluntary, the evidence will be admissible in a criminal prosecution against the defendant. Schneckloth v. Bustamonte, 412 U.S. 218, 219, 226, 93 S.Ct. 2041, 2047, 2055, 36 L.Ed. 2d 854 (1973). Coercive law enforcement conduct, however, can invalidate a manifestation of consent, but the mere fact of custody or the presence of many officers will not alone invalidate consent. Schneckloth, 412 U.S. at 233-34, 93 S.Ct. at 2050-51 (citations omitted); United States v. Vasquez, 638 F.2d 507 (2nd Cir.1980), cert. denied, 454 U.S. 847, 102 S.Ct. 165, 70 L.Ed.2d 135 (1981).
An investigative detention may become unreasonable and ripen into an illegal arrest, however, if probable cause is absent and the stop is not temporary and limited in duration to the time period necessary to effectuate the purpose of the stop. Royer, 460 U.S. at 500, 103 S.Ct. at 1325. The Supreme Court stated in United States v. Sharpe, "[i]n assessing whether a detention is too long to be justified as an investigatory stop, we consider it appropriate to examine whether the police diligently pursued a means of investigation that was likely to confirm or dispel their suspicions quickly, during which time it was necessary to detain the defendant." 470 U.S. 675, 686, 105 S.Ct. 1568, 1575, 84 L.Ed.2d 605 (1985) (citations omitted).
We conclude that the initial detention of defendant was justified. We find that agent Harrison testified to specific, articulable facts which, in light of his experience, gave rise to a reasonable inference that defendant had committed a crime. In addition to the facts we noted above which justified Harrison's reasonable inference that probable cause existed to search defendant's residence for evidence of defendant's criminal activity, we note that Harrison intercepted a magazine addressed to Walter Douglas, a pediatrician told Harrison that he believed the magazine's photographs were of children, and Harrison and Postal Inspector Dunn concluded that the photographs were prohibited by statute. Harrison placed the magazine in box 155 and observed defendant take mail from the box. Harrison followed defendant and approached the defendant at a gas station where defendant had stopped to buy gas. We find that these specific facts justified the detention.
In addition, we find that the detention was brief and did not ripen into an illegal arrest; the Vermont State Police officer told defendant that a United States Customs agent wished to speak with defendant, and Harrison asked defendant for identification and the materials in his car, showed defendant the search warrant for defendant's residence, and told defendant that defendant could choose whether or not to accompany Harrison to search. Thus after a brief exchange, defendant was told that he was free to leave. We find that no delay here was unnecessary to Harrison's legitimate investigation and that defendant has produced no evidence that Harrison was dilatory in his investigation.
We also find that defendant was not in custody or subjected to custodial interrogation when agent Harrison asked him for his identification or the materials Harrison had observed defendant taking from P.O. Box 155. Defendant had stopped and stepped out of his car, unaware of a planned stop of his vehicle. The detention was in public, defendant stood outside his car with Harrison, and no officers showed guns or told defendant that he was under arrest. Although the stop cannot be characterized as an ordinary traffic stop, as the government suggests, the detention was nevertheless less "police dominated" than that surrounding the kinds of interrogation at issue in Miranda v. Arizona, 384 U.S. 436, 467, 86 S.Ct. 1602, 1624, *1333 16 L.Ed.2d 694 (1966), discussed below. Thus, defendant's removal of the magazines from the car and statements "you must mean this" and "you mean these" did not result from custodial interrogation in that no significant deprivation of freedom had occurred. Indeed, we find that defendant voluntarily produced the evidence in response to two questions, which could hardly be characterized as coercive.
Finally, we find that defendant's removal of the magazines from his car after a minimum of questioning constituted a consensual search. There is no evidence that Harrison or any of the officers reached into the car, visually inspected the car interior, or asked for defendant's car keys. There is no claim that defendant's car was searched after defendant left the car in the gas station lot. Defendant is an educated adult with a bachelors degree, was not under arrest at the time he gave consent, was not intoxicated, was not overpowered by officers or physically restricted by handcuffs or a show of guns, or was not frisk searched, had not yet been told that the officers had a search warrant for defendant's home, did not appear hesitant in agreeing to the search, and never asked to speak to a lawyer before reaching into the car and giving the agent the magazines. We can only conclude that defendant acted "voluntarily in a spirit of apparent cooperation with the officer's investigation." Sibron v. New York, 392 U.S. 40, 63, 88 S.Ct. 1889, 1903, 20 L.Ed.2d 917 (1968).
3. Motion to suppress statements made and evidence found at defendant's residence
Defendant seeks to suppress any statements or testimonial communication made to the searching officers during the search of defendant's residence. Defendant asserts that although he was not formally arrested, he was subject to custodial interrogation after he had expressly declined to waive his right to remain silent. Defendant contends that he reasonably felt that he was not free to leave his residence during the search because law enforcement officials blocked his vehicle at the gas station, at least three officers confronted him at the station, Harrison ordered defendant into Harrison's car and told defendant that he would not be able to pick up his children from the baby-sitter, defendant heard Harrison state on his police radio that he had the subject in custody, an officer remained by defendant's side from the gas station until the search of his residence was completed, defendant was the target of a criminal investigation, and the officers told defendant that without his cooperation they would take his residence apart panel by panel. He argues that all evidence obtained as a result of the alleged violation of his right to remain silent should be suppressed as the "fruit" of the illegality. Wong Sun v. United States, 371 U.S. 471, 485-87, 83 S.Ct. 407, 416-17, 9 L.Ed.2d 441 (1963).
In Miranda v. Arizona, the Supreme Court held that the prohibition against compelled self-incrimination, as contained in the fifth and fourteenth amendments, requires that custodial interrogation be preceded by advice to the defendant that he or she has the right to remain silent and the right to the presence of an attorney. 384 U.S. 436, 467-69, 86 S.Ct. 1602, 1624-25, 16 L.Ed.2d 694 (1966). If the accused indicates that he or she wishes to remain silent or requests counsel, interrogation must cease. Id. at 473-74, 86 S.Ct. at 1627-28. The Miranda Court recognized that confessions and admissions made during custodial interrogation are presumptively products of coercion and therefore a form of compelled self-incrimination, and therefore require special safeguards in cases of "incommunicado interrogation of individuals in a police-dominated atmosphere." Id. at 445, 86 S.Ct. at 1612.
Since Miranda, the Court has "specifically stressed that it was the custodial nature of the interrogation which triggered the necessity for adherence to the specific requirements of its Miranda holding." Beckwith v. United States, 425 U.S. 341, 346, 96 S.Ct. 1612, 1616, 48 L.Ed.2d 1 (1976) (emphasis original) (citing Orozco v. Texas, 394 U.S. 324, 89 S.Ct. 1095, 22 L.Ed. 2d 311 (1969); Mathis v. United States, 391 *1334 U.S. 1, 88 S.Ct. 1503, 20 L.Ed.2d 381 (1968)). More than "a coercive atmosphere" is required to determine whether or not an individual is in custody, Oregon v. Mathiason, 429 U.S. 492, 495, 97 S.Ct. 711, 714, 50 L.Ed.2d 714 (1977) (per curiam); the defendant must be "deprived of his freedom of action in any significant way," id. at 494, 97 S.Ct. at 713 (citing Miranda, 384 U.S. at 444, 86 S.Ct. at 1612), or deprived of freedom of action to a degree associated with formal arrest. California v. Beheler, 463 U.S. 1121, 1125, 103 S.Ct. 3517, 2520, 77 L.Ed.2d 1275 (1983) (per curiam) (citing Mathiason, 429 U.S. at 495, 97 S.Ct. at 714). Custodial interrogation is not defined by the officer's or the defendant's subjective intent or by the officer's unarticulated purposes; rather, courts should evaluate "how a reasonable man in the suspect's position would have understood the situation." Berkemer v. McCarty, 468 U.S. at 442, 104 S.Ct. 3151. If a reasonable individual in the suspect's position would believe he or she was not free to go, the interrogation is custodial for Miranda purposes.
Lower courts rarely find custody where interrogation is conducted outside a police station or vehicle, and almost universally hold that questioning in a suspect's home is not custodial because individuals in a familiar environment are less likely to be intimidated by law enforcement officers. See, e.g., Beckwith, 425 U.S. at 342, 347, 96 S.Ct. at 1614, 1616; United States v. Hall, 421 F.2d 540, 544-45 (2d Cir.1969), cert. denied, 397 U.S. 990, 90 S.Ct. 1123, 25 L.Ed.2d 398 (1970); Hicks v. United States, 382 F.2d 158, 161 (D.C.Cir.1967); Thompson v. United States, 382 F.2d 390, 393 (9th Cir.1967). But see Orozco v. Texas, 394 U.S. 324, 89 S.Ct. 1095, 22 L.Ed.2d 311 (1969) (incommunicado interrogation by four police officers at 4:00 a.m. in suspect's bedroom after arrest was in-custody interrogation). In addition, courts often find that questioning following law enforcement officers' statements that the individual is not under arrest is noncustodial, especially where there is insufficient evidence to show that the defendant did not believe the officer's statement. See, e.g., United States v. Semkiw, 712 F.2d 891, 892-93 (3d Cir.1983); United States v. Wallraff, 705 F.2d 980, 992 (8th Cir.1983); United States v. Jones, 630 F.2d 613, 616 (8th Cir.1980); Lucas v. United States, 408 F.2d 835, 836 (9th Cir.1969). Of course, where the circumstances undermine the sincerity of the officer's reassurances to the suspect that he or she is not under arrest, courts may find that the setting was a "custodial" one despite the officer's assertions. See, e.g., United States v. Glen-Archila, 677 F.2d 809, 812, 814 n. 12 (11th Cir.), cert. denied, 459 U.S. 874, 103 S.Ct. 165, 74 L.Ed.2d 137 (1982).
The Court has refused to extend Miranda to cover interrogation in noncustodial circumstances even after a police investigation has focused on the suspect, Beckwith, 425 U.S. at 345, 96 S.Ct. at 1615, because "[a]ny interview of one suspected of a crime by a police officer will have coercive aspects to it." Mathiason, 429 U.S. at 495, 97 S.Ct. at 714. The Court has recognized, however, that in some noncustodial situations, law enforcement officials may "`overbear petitioner's will to resist and bring about confessions not freely self-determined.'" Beckwith, 425 U.S. at 348, 96 S.Ct. at 1617 (quoting Rogers v. Richmond, 365 U.S. 534, 544, 81 S.Ct. 735, 741, 5 L.Ed.2d 760 (1961)). In these situations, proof that warnings were given would be relevant evidence on the issue of whether the questioning was coercive. Id. (citing Frazier v. Cupp, 394 U.S. 731, 739, 89 S.Ct. 1420, 1424, 22 L.Ed.2d 684 (1969); Davis v. North Carolina, 384 U.S. 737, 740-41, 86 S.Ct. 1761, 1763-64, 16 L.Ed.2d 895 (1966)).
We find that defendant was not in custody and therefore that the searching officers were not required to administer Miranda warnings. Defendant contends that he was in custody from the initial stop at the gas station throughout the entire search. The circumstances suggest, however, that a reasonable person in defendant's position had every reason to believe Harrison's statements that defendant was not under arrest. In addition, we find no indication that the questioning took place in *1335 a context where defendant's freedom to depart was restricted.
We find that defendant was not in custody at the gas station or in Harrison's vehicle. Defendant was questioned briefly and told that he was not under arrest and that he could choose whether or not to accompany the officers to search his residence. The officers showed no guns, did not frisk or handcuff defendant, and allowed him to drive his car in the lot unaccompanied. There is some disagreement as to whether Harrison invited defendant into Harrison's car or whether defendant assumed he should ride in the agent's car. Yet even if Harrison suggested that defendant ride with him, it appears that defendant could have driven his own car or driven away, but that he never asked or attempted to do either. If he entered the vehicle at his own initiative, clearly the custody requirement has not been met. He voluntarily accompanied the officers to his home after having been informed that he was not under arrest and that he could choose whether or not to accompany Harrison. In addition, although defendant testified that he overheard Harrison state on his police radio that he had the "subject in custody," Harrison's previous statements to defendant that he was not under arrest, could choose to accompany the search, and would not be arrested unless the searchers found unlawful materials would have indicated to a reasonable individual that he was free to leave. The court considers the language "subject in custody" to be police jargon that defendant was with Harrison and not language intended to imply that defendant was not free to leave.
We also find that defendant was not in custody during the search of his residence. Once at his residence, defendant was allowed to make two phone calls, including one private call, although he remained in view through a glass door. It is unclear whether he could have left the house from the deck. He was again told that he was not under arrest and was advised of his right to remain silent and to have an attorney present. The record shows that defendant received the Miranda warning, indicated he understood his rights, and immediately upon questioning began to show the searchers materials in his residence. In addition, defendant was told at least three times that he did not need to assist in the search. Furthermore, defendant is an educated, experienced engineer. Defendant was in familiar surroundings and although there were at least three law enforcement officers in the house, only Harrison appeared to question defendant and not all of the officers appeared to be present at one time. It was defendant's personal choice to stay and assist with the search in view of Harrison's statement that the warrant authorized the searchers to take apart the house panel by panel. His freedom to leave was not restricted, and we have no doubt he could have done so, even though in the circumstances it may have been more prudent for him to stay.
Although a noncustodial situation can be coercive and bring about involuntary self-incriminations, we also find that the questioning of defendant was not coercive. The number of officers, the officer remaining with defendant, and the officer's threat to take apart defendant's residence are factors that would support a finding that the questioning was coercive. These circumstances alone, however, cannot be characterized as a situation in which "the behavior of ... law enforcement officials was such as to overbear [defendant's] will to resist and bring about confessions not freely self-determined." Rogers, 365 U.S. at 544, 81 S.Ct. at 741. Defendant was advised that he had the right to remain silent and have counsel present. He was not in unfamiliar surroundings or unable to communicate with outsiders. We can only conclude, given defendant's education, occupation, and background, that he was fully made aware of his constitutional rights which he was free to exercise at any relevant time if he chose to do so.
Conclusion
This court denies defendant's three motions to suppress.
Defendant's Motion in Limine
Defendant's motion in limine is denied as premature. Upon timely objection by defendant *1336 at trial, the court will rule upon the admissibility of the evidence in question.
This case is scheduled for trial as the No. 2 case for Tuesday, December 8, 1987.
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38 Cal.Rptr.3d 13 (2005)
135 Cal.App.4th 931
The PEOPLE, Plaintiff and Respondent,
v.
HARCO NATIONAL INSURANCE COMPANY, Defendant and Appellant.
No. B178992.
Court of Appeal, Second District, Division One.
December 28, 2005.
Nunez & Bernstein and E. Alan Nunez for Defendant and Appellant.
Raymond G. Fortner, Jr., County Counsel, and Syna N. Dennis, Deputy County Counsel for Plaintiff and Respondent.
ROTHSCHILD, J.
Harco National Insurance Company appeals from an order denying its motion *14 to set aside a summary judgment forfeiting bail issued when Francisco Gonzalez, a criminal defendant for whom Harco issued a bail bond, failed to appear at his arraignment. (Pen.Code, §§ 1305-1308; all further section references are to the Penal Code.) Harco contends that the trial court erred in forfeiting the bond and denying its motion. We agree, reverse the order and the underlying judgment, and remand for the court to grant the motion, vacate the forfeiture, and exonerate the bond.[1]
FACTS
Harco issued a $30,000 bail bond guaranteeing Gonzalez' appearance at his September 26, 2003 initial arraignment. On September 26, a Friday, neither Gonzalez nor his attorney, Edward Pacheco, appeared. The trial court stated: "Apparently, Mr. Pacheco has contacted the court and . . . indicated that he cannot appear today and requested that any bench warrant issued be held. [¶]. . . . [¶] The bench warrant is issued and held until this coming Monday, September the 29th, pursuant to counsel's request."
Pacheco, but not Gonzalez, appeared on September 29. Pacheco said he could not find Gonzalez. This colloquy followed: "The Court: Did he post a $30,000 bond? Did he ever check in? If I am not mistaken, he was supposed to be here on 9/26. [¶] Someone appeared for you; isn't that true? [¶] Mr. Pacheco: Yeah, I think somebody stood in and trailed it until today. [¶] The Court: So I had a bench warrant held until today. [¶] Mr. Pacheco: I am still in that trial, and . . . [m]y office is moving, so everything was out of the office. We had no phone service or anything for the weekend. [¶] The Court: That still doesn't explain Mr. Gonzalez's failure-to-appear not only on 9/26, but here we are, 9/29. [¶] Mr. Pacheco: Let me make a call. I will be right back. [¶] The Court: All right, but I am not intending to hold the warrant again."
After a brief recess, the court recalled the case and, speaking to Pacheco, stated: "As I indicated earlier, [Gonzalez] was not here on Friday. Somebody representing you because you were in trial asked if I would hold the warrant to see if they could get him in here today. I said I would. [¶] He is not here. You have had no contact with him. So, at this time, I will forfeit his bond and issue a bench warrant for his arrest."
After the County notified Harco of the forfeiture and waited the required statutory period, the County obtained a summary judgment forfeiting the bond. Harco moved to set aside the summary judgment, discharge the forfeiture, and exonerate the bond, arguing that the court lost jurisdiction to forfeit the bond when it failed to do so on September 26, 2003. The trial court denied the motion.
DISCUSSION
Harco contends that the trial court erred in forfeiting bail on September 29, and in denying the motion to set aside the forfeiture, because the court's failure to forfeit bail on September 26, when Gonzalez failed to appear without sufficient excuse, deprived it of jurisdiction to do so later. In response, the County argues that sufficient evidence supports the conclusion that the court reasonably believed *15 on September 26 that a sufficient excuse existed for Gonzalez' failure to appear. Harco's contention has merit.
Sections 1305-1308, which govern forfeiture of bail bonds, must be strictly construed because of the traditional abhorrence of forfeitures. (People v. United Bonding Ins. Co. (1971) 5 Cal.3d 898, 906, 98 Cal.Rptr. 57, 489 P.2d 1385; People v. Ranger Ins. Co. (2003) 108 Cal.App.4th 945, 950-951, 134 Cal.Rptr.2d 199.) Section 1305, subdivision (a)(1) requires that the court "shall in open court declare forfeited the undertaking of bail . . . if, without sufficient excuse, a defendant fails to appear for" arraignment. "[A] forfeiture of a bail bond, where required, must be timely declared." (People v. United Bonding Ins. Co., supra, 5 Cal.3d at p. 906, 98 Cal.Rptr. 57, 489 P.2d 1385.)
Section 1305.1, however, creates an exception to section 1305, subdivision (a)(1): "If the defendant fails to appear for arraignment . . . but the court has reason to believe that sufficient excuse may exist for the failure to appear, the court may continue the case for a period it deems reasonable to enable the defendant to appear without ordering a forfeiture of bail or issuing a bench warrant. [¶] If, after the court has made the order, the defendant, without sufficient excuse, fails to appear on or before the continuance date set by the court, the bail shall be forfeited and a warrant for the defendant's arrest may be ordered issued." (People v. Ranger Ins. Co., supra, 108 Cal.App.4th at p. 951, 134 Cal.Rptr.2d 199, italics added.)
"Because each case presents its own unique set of circumstances the issue whether the showing of excuse is sufficient is decided on a case-by-case basis. The determination whether an excuse is sufficient is a matter within the trial court's discretion." (People v. Ranger Ins. Co., supra, 108 Cal.App.4th at p. 952, 134 Cal.Rptr.2d 199, fns. omitted; People v. United Bonding Ins. Co., supra, 5 Cal.3d at pp. 906-907, 98 Cal.Rptr. 57, 489 P.2d 1385.) A failure to appear is presumed to be without excuse and the burden to prove otherwise is on the party seeking to enforce a later forfeiture. (People v. United Bonding Ins. Co., supra, 5 Cal.3d at p. 907, 98 Cal.Rptr. 57, 489 P.2d 1385.)
In Ranger Ins. Co., supra, 108 Cal.App.4th at p. 949, 134 Cal.Rptr.2d 199, a defendant who previously had made every appearance failed to appear. His attorney asked to trail the case and issue and hold a bench warrant so he could continue to try and contact the defendant. The trial court agreed because the defendant "`hasn't missed in the past. There is no reason to think otherwise yet.'" When the defendant failed to appear at the next hearing, the trial court issued the warrant and forfeited bail, and later denied the surety's motion to vacate the forfeiture. Division Seven of our District affirmed, holding the trial court's finding of good cause was sufficiently supported by the record. (Id. at p. 953, 134 Cal.Rptr.2d 199.)
In contrast, Division Five of our District reversed a bail forfeiture order where the defendant failed to appear at the first hearing after posting bond. The trial court stated the defendant "`either [was] not coming or forgot.'" The trial court then agreed to hold the warrant for a few days so his attorney "`could endeavor to have him brought in.'" (People v. Surety Ins. Co. (1984) 160 Cal.App.3d 963, 965, 206 Cal.Rptr. 836.) Division Five held this record insufficiently supported a finding that the defendant's failure to appear was with sufficient excuse. (Id. at p. 969, 206 Cal.Rptr. 836.)
Applying these principles to our facts, we agree with Harco that insufficient evidence supports the trial court's implied *16 finding on September 26 that Gonzalez' failure to appear was sufficiently excused to justify not forfeiting bail on that date. As in People v. Surety Ins. Co., supra, 160 Cal.App.3d 963, 206 Cal.Rptr. 836, Gonzalez' counsel requested the court to hold the warrant so he could attempt to get his client to court on a later date. We do not agree with the County's argument that considering all of the facts known to the trial court on September 26, that court rationally could have concluded that Gonzalez did not come to court that day because he was "likely told" his attorney could not appear. Indeed, the trial court itself apparently understood that Gonzalez's failure to appear on September 26 was because counsel had lost contact with him rather than because counsel had told his client not to appear. As the court explained to counsel on September 29, the case was continued on September 26 "because you were in trial [and] asked if I would hold the warrant to see if they could get [Gonzalez] in here today [September 29th]." Thus, unlike in People v. Ranger Ins. Co., supra, 108 Cal.App.4th 945, 134 Cal.Rptr.2d 199, upon which the County relies, Gonzalez had no prior history of consistent appearances implying that his absence on September 26 was sufficiently excused. In fact, September 26 was his first appearance.
Because insufficient evidence supports the finding of sufficient excuse for Gonzalez' failure to appear on September 26, the trial court erred in (1) forfeiting bail on September 29, (2) entering summary judgment forfeiting Harco's bond, and (3) denying the motion to set aside the judgment.
DISPOSITION
The summary judgment forfeiting Harco's bond and the order denying the motion to set aside that judgment are reversed. The case is remanded for the trial court to enter orders granting the motion, vacating the forfeiture, and exonerating the bond. Harco is awarded its costs on appeal.
SPENCER, P.J., and VOGEL, J., concur.
NOTES
[1] An order denying a motion to set aside a bail forfeiture is appealable. (§ 1308.) Moreover, a summary judgment forfeiting bail is appealable when, as Harco contends, "`the judgment was not entered in accordance with the consent given in the undertaking.' [Citation.]" (People v. American Contractors Indemnity Co. (2004) 33 Cal.4th 653, 664, 16 Cal.Rptr.3d 76, 93 P.3d 1020.)
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687 A.2d 220 (1997)
DISTRICT OF COLUMBIA, Appellant,
v.
Richard A. GREEN, Appellee.
No. 95-CV-1429.
District of Columbia Court of Appeals.
Argued December 11, 1996.
Decided January 9, 1997.
*221 Charles L. Reischel, Deputy Corporation Counsel, with whom Charles F.C. Ruff, Corporation Counsel, and Edward E. Schwab, Assistant Corporation Counsel, for appellant.
Robert E. Deso, Washington, DC, for appellee.
Before FERREN, FARRELL, and REID, Associate Judges.
FARRELL, Associate Judge.
In District of Columbia Metro. District of Columbia Metropolitan Police Dep't v. Broadus, 560 A.2d 501 (D.C.1989), we held that the filing of a criminal indictment for offenses committed by an off-duty police officer was "cause" for suspension without pay from the police force under D.C.Code § 1-617.1(d)(16) (1981). The question this appeal presents is whether the arrest of an officer upon a warrant, together with consideration by police officials of the investigative documents underlying the warrant, may similarly provide cause for suspension under the statute. We hold that it may, and that in the circumstances of this case the police had reasonable cause to suspend appellee, who had been arrested on charges of sexual assault, while the criminal process took its course. We further hold that subsequent events did not undermine, but rather confirmed, the validity of the suspension decision. We therefore reverse the decision of the Superior Court upholding an award of back pay to appellee by the Office of Employee Appeals (OEA) for the period of the suspension.
I. The Facts
On February 21, 1986, appellee Green, a member of the Metropolitan Police Department (MPD), surrendered to the Bladensburg, Maryland police pursuant to a warrant for his arrest. The warrant, issued by a judicial officer of the District Court of Maryland for Prince George's County, contained a statement of charges alleging that Green had sexually assaulted Sarah W. in the parking lot of a restaurant in Prince George's County on February 16, 1986. On being notified of the arrest, the MPD placed Green on administrative leave with pay. On February 24, 1986, the MPD Internal Affairs Division issued a preliminary report and recommendation that, "[i]n view of the facts and circumstances contained [t]herein," Green be suspended indefinitely without pay. On March 14, Green received a formal Advance Notice of Proposed Suspension Without Pay alleging conduct on his part that brought discredit upon the MPD and informing him of his right to reply to the proposed suspension. Green replied to the notice through counsel on March 18. The next day, he was indicted in the Circuit Court for Prince George's County on six counts including assault with intent to rape and assault and battery.
On March 31, 1986, the MPD issued its Final Notice of Decision to Suspend Without Pay, effective April 1, stating that the justification in the Advance Notice was "fully supported and warrants [Green's] suspension." On April 10, 1986, Green appealed the suspension to OEA. At a pre-hearing conference, the OEA hearing examiner inquired whether the MPD's decision was based upon any information other than that set forth in the arrest warrant application. In response, the MPD submitted four documents prepared during the Maryland police investigation which had formed the basis for the decision to suspend Green. These included the police offense report of February 17, 1986, recounting the victim's statement as follows:
On 2-17-86 at approx. 01.15 hrs victim advised [the report] writer that on 02-16-86 at approx. 0300 hrs while at the Cross Roads restaurant/bar with some friends[,] victim advised her friends to go ahead and leave[,] that she was going to wait awhile because she (victim) had been drinking and did not want to drive. At that point the suspect introduced himself and said he *222 would let victim sit in his car and showed a police badge. Victim then got into suspect's veh. and suspect drove victim to her veh. parked in the back alley portion of the parking lot. Victim then got into her veh. and started it up. Victim then got back into suspect's veh. while hers (victim's) was warming up. Suspect then started trying to kiss the victim, victim advised suspect to stop. Suspect then started grabbing victim's breast, then got on top of victim and placed his hand on victim's vaginal area. Victim started yelling and was able to open car door and victim and suspect fell out. Victim got up[,] got into her veh.[,] locked door and pulled off. Suspect followed her[-] victim in his veh. but victim lost suspect.
Victim believes suspect said he was a D.C. police officer.
A second document, the victim's statement in her own hand, confirmed inter alia that "this guy ... introduced himself, said he would let me sit in his car and showed my friends his police badge"; the friends "looked at [the badge] and said something to the effect that this guy looks o.k." She described Green's actions in then feeling her breast, forcing her seat back, climbing on top of her and putting his hand between her legs despite her yells for him to stop. When she managed to escape his hold and flee to her own car, locking the door, "he started toward [her]," and as she drove away "he started following [her]." When she got away from him she wrote down the plate number of his truck, and in a subsequent photo identification identified him as her assailant.
Green's own statement to the Bladensburg police at the time of his arrest was memorialized in the Report of Investigation also relied on by the MPD. He admitted that he had met the woman outside the Crossroads Restaurant and that she had sat in his truck. He had been drinking but was not drunk. He "displayed his ID folder to the lady's companions and told her he was a police officer[,] because he wanted to insure [them] that she would be in good hands." He admitted kissing her and "remarked[:] It just happened." While denying that he had touched her breasts or groin and forcing the seat back and lying on top of her, he admitted that he "had sex on my mind, probably... what else would I have on my mind, I am married...."
At the OEA hearing on October 21, 1987, Carl F. Profater, Assistant Chief of Police and Administrative Service Officer for the MPD, testified that the decision to suspend Green was based upon his conduct as reflected in these documents, not merely his arrest. The investigative reports of the Bladensburg police, together with Green's response to the proposed suspension, satisfied the MPD "that a crime had been committed" so as to trigger its duty to suspend him under § 1-617.1(d)(16): "based on the official documents of [another] police agency, we hold that to be evidence enough that a misconduct has occurred based on their investigation and obtaining statements from witnesses and so forth."
Some eight months before the OEA hearing took place, appellee had gone to trial on the criminal charges in the Circuit Court for Prince George's County. He waived jury trial and stipulated to the evidence the state would present, including the victim's testimony. The trial judge found him not guilty as to assault with intent to rape, but, as to the assault and battery and one of the fourth-degree sex offenses, concluded:
[A]s to assault and battery, touching, grabbing, and assaulting, battering of the victim without her consent obviously from the stipulated facts she did not consent to any of this. There was the touching of the breasts, and the hand in the vaginal area. I think that I am convinced beyond a reasonable doubt, and I think the [d]efendant is guilty of the assault and battery... and I also think that his actions also constitute a fourth degree sex offense ... so on [those two counts] I find him guilty beyond a reasonable doubt.
The judge sentenced Green to concurrent terms of eighteen months and one year in prison, but suspended execution of the sentence. Five months later, the judge reconsidered the sentence and instead imposed probation before judgment under Article 27, *223 § 641 of the Maryland Code.[1] At the OEA hearing, the hearing examiner received in evidence the transcript of the criminal trial stating that he would, "if it is considered relevant, give it whatever weight I can assign it." Green himself also testified at the hearing, and while admitting to having kissed and petted with Sarah W., denied forcing himself upon her.
The OEA hearing examiner recommended reversal of the suspension, concluding that he could "find no other basis upon which [the MPD] suspended [Green] except the arrest itself." The examiner discounted the victim's stipulated testimony at the criminal trial as he could not "examine her demeanor and evaluate her credibility," in contrast to Green's "credible" testimony denying the offenses. The examiner took note of this court's intervening decision in Broadus, supra, that an indictment suffices to establish cause for suspension, but found that decision beside the point because Broadus "did not address the issue of whether an arrest is sufficient grounds."
An OEA reviewing panel reversed and remanded the case to the hearing examiner. It recognized that, in light of Broadus and the intervening indictment, the MPD "had cause to suspend [Green] and its action must, therefore, be sustained." But the panel questioned whether the MPD could "permanently deprive [Green] of back pay" in view of two factors. One, the Maryland court had not entered a judgment of conviction against Green but instead had placed him on probation before judgment. Two, the MPD had not terminated Green in the wake of the criminal proceeding but instead had reinstated him. The panel had reference here to the fact that, although an MPD trial board had recommended Green's termination following an evidentiary hearing at which Green, the victim, and others testified, an arbitrator had ordered reinstatement after finding that dismissal was too harsh given Green's fifteen-year MPD record and his recent efforts at alcoholic rehabilitation notwithstanding that he had committed the criminal offenses.[2] On remand with instructions to reconsider the back pay issue, the hearing examiner a new one again found Broadus inapplicable (despite the OEA panel's apparent contrary determination) because the record contained neither an assertion nor evidence that the MPD in fact had relied on the indictment in suspending Green. The examiner endorsed the first hearing examiner's decision to credit Green's live testimony over the documentary evidence submitted by the MPD, and again recommended reversal of the suspension and award of back pay. The OEA reviewing panel accepted the recommendation, reversed the suspension, and directed reimbursement to Green of "all pay and benefits lost during his suspension without pay." The full OEA Board affirmed, as did the Superior Court on the District's petition for review.
II. Discussion
A.
Green's suspension was an "adverse action," which meant that he could be suspended without pay only for "cause." D.C.Code § 1-617.1(b) (1992). Like the police *224 officer in Broadus, he was suspended on the authority of § 1-617.1(d)(16), which provided at the time of the suspension:
[C]ause shall be defined as ... [o]ther failure of good behavior [by an employee] during duty hours which is of such a nature that it causes discredit to his or her agency or his or her employment. Notwithstanding the foregoing, the provisions of this paragraph shall be applicable to uniformed members of the Metropolitan Police Department during both on-duty and off-duty hours.[3]
In Broadus, as explained earlier, we held that "the fact of an indictment ... constitutes sufficient evidence to establish cause under ... § 1-617.1(d)(16) to support an adverse action by the police department against one of its officers." 560 A.2d 501. In part quoting from Brown v. Department of Justice, 230 U.S.App. D.C. 188, 193, 715 F.2d 662, 667 (1983), we stated:
Certainly, at some point along the continuum of an employee's involvement in the criminal justice system, evidence of that involvement alone gives rise to reasonable cause to believe the employee has committed a crime.
At one end of the continuum, conviction of a crime would most certainly constitute cause for suspension for a failure of good behavior, even where the agency lacked any actual evidence of the alleged criminal acts.... At the other end of the continuum, mere questioning or investigation by police officers into the alleged criminal acts of an employee would seem to constitute insufficient evidence "of a failure of good behavior" to support a suspension.
Broadus, 560 A.2d at 505 (citations and footnotes omitted). In concluding that the fact of indictment lay comfortably within these extremes in supporting suspension for cause, we stressed that if an indictment were insufficient, "[p]resumably ... an independent formal hearing, in effect a `mini-trial,' [would be] necessary" to justify suspension, which could be prejudicial to both the officer-defendant and the government in the criminal case. Id. at 507. We further pointed out that indictments must be supported by probable cause and are not "issue[d] on abstract charges," and that the grand jury's role "serves to protect citizens against unfounded criminal prosecutions." Id. at 504-05.[4]
In the present case, the Maryland indictment concededly had been issued before Green was suspended, but the OEA review panel discounted this fact because (accepting the examiner's finding on remand) it concluded that the indictment had played no actual part in the decision to suspend. The District urges rejection of this analysis: the test of "cause," it argues, should be the objective basis which the MPD had to suspend Green at the time it did so, including the fact of indictment, when the only plausible reason it did not rely on the indictment (or at least did not say it was doing so in the suspension decision) was OEA's erroneous pre-Broadus understanding of the statute that an indictment was not cause. See Broadus, 560 A.2d at 502-03 (noting agency's previous interpretation of statute). There is merit to this argument, but we choose not to rest our decision on it. OEA committed a more basic error by concluding that the documentary evidence undeniably relied on by the MPD, including but not limited to the arrest warrant issued by a Maryland judge, was insufficient to justify the suspension.
Broadus held that an indictment is sufficient cause for suspension under § 1-617.1(d)(16); it did not hold that it is a necessary cause. Whether evidence short *225 of the fact of indictment will justify suspension depends, first of all, on where it places the employee's conduct "`along the continuum of ... involvement in the criminal justice system.'" 560 A.2d at 505 (quoting Brown, supra). Had Green been suspended as a result of "mere questioning or investigation by police officers into the alleged criminal acts," cause probably would not have been established. Id. But Green had been arrested for the crimes based upon a warrant issued by a neutral and detached judicial officer, see Illinois v. Gates, 462 U.S. 213, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983), who found probable cause to believe he had committed the crimes. Furthermore, the Internal Affairs Division of the MPD had reviewed the documents generated by the Bladensburg police investigation, spoken with the primary investigating officer, and weighed this information against Green's response to the proposed suspension. The documents relied on contained strong internal evidence of the reliability of the charges. Green admitted meeting the victim, kissing her with "sex on [his] mind" ("It just happened"), and displaying his police badge with the avowed intent to reassure her and her companions. He thus corroborated material aspects of the victim's detailed description of how he assaulted her after assuring her with his badge that she could safely wait in his car. She had written down his license tag number and reported the assault to the police within a day. Identity was not an issue.
Given the seriousness of the crimes charged and their obvious bearing on Green's fitness to remain on duty pending their resolution,[5] we hold that the information considered by the MPD before suspending him was enough to establish cause for the suspension. That information included more than the arrest or issuance of an arrest warrant; indeed, "[w]e are not prepared to conclude ... that the issuance of an arrest warrant [a typically ex parte process] ... is the equivalent to more formal proceedings" such as the grand jury indictment in Broadus. Dunnington v. Department of Justice, 956 F.2d 1151, 1157 (Fed.Cir.1992). But, as did the government agency in Dunnington, the MPD went beyond the fact of the arrest warrant and "assure[d] itself that the surrounding facts [were] sufficient to justify [the] summary action [of suspension]." Id. The Dunnington court held that the agency was not bound to conduct its own "factfind[ing]" but instead could rely on the "additional factual material culled from the [criminal] complaints and supporting allegations," including "the supporting statements from the complaining witnesses." Id. at 1157-58. We agree, and hold that the supporting material here together with the warrant established reasonable cause.
B.
The remaining question in this back-pay dispute is whether events subsequent to the suspension cast doubt on its validity up to the point when Green, pursuant to the arbitration award, was reinstated. We hold they do not.
In Brown, supra, the court stated that "the final disposition of the charges is vitally important to an analysis of the relief due" the employee-petitioner, since a suspension based "on work-related charges must necessarily be a conditional suspension, conditioned on the outcome of the employee's involvement in the criminal justice system." 230 U.S.App. D.C. at 194-95, 715 F.2d at 668-69 (emphasis in original). In Broadus we agreed that if the officer is subsequently acquitted of the criminal charges, the MPD must either reinstate him with back pay or "have a new adverse action hearing to determine whether the underlying facts supported a failure of good behavior." 560 A.2d at 508; see also Brown, 230 U.S.App. D.C. at 195, 715 F.2d at 669. ("When an employee ... is acquitted and the agency chooses to reinstate him or her, it would be unfair to penalize the employee for having become a target of the criminal justice system"). In the present case, the OEA treated the ultimate disposition of the Maryland charges on the basis of *226 "probation before judgment" as the legal equivalent of an acquittal. That is wrong as a matter of law. On the basis of a stipulation as to what the state's proof would be, the Maryland trial judge found Green guilty beyond a reasonable doubt of two charges, including assault and battery. By its terms, the Maryland statute requires a finding of guilt (or a plea of guilty or nolo contendere) before probation without verdict may be imposed. Note 1, supra; see Myers v. State, 303 Md. 639, 496 A.2d 312, 315-16 (1985). The fact that, absent revocation and imposition of judgment, no "conviction" results from this procedure and that the guilty finding may be given only limited effect in Maryland administrative proceedings, Powell v. Maryland Aviation Admin., 336 Md. 210, 647 A.2d 437 (1994) (guilty finding underlying probation before judgment is admissible as evidence in administrative proceeding but may not be given preclusive effect), is beside the point here. Nothing in the Maryland criminal proceeding cast doubt on the original decision by the MPD that Green had committed misconduct warranting suspension. For similar reasons, the arbitrator's decision reinstating Green is inapposite: while noting that live testimony at the police trial board hearing on termination confirmed the Maryland finding of guilt, the arbitrator concluded, in effect, that appellant's then-2½ year suspension without pay was penalty enough in view of his rehabilitation and prior exemplary record as an officer. The termination proceeding, far from impeaching the suspension, effectively ratified it.
The order awarding Green back pay is, therefore,
Reversed.
NOTES
[1] MD.CODE ANN. OF 1957, Art. 27, § 641 reads in pertinent part:
(a) Probation after plea or finding of guilt; terms and conditions; waiver of right to appeal from judgment of guilt (1)(i)1. Whenever a person accused of a crime pleads guilty or nolo contendere or is found guilty of an offense, a court exercising criminal jurisdiction, if satisfied that the best interests of the person and the welfare of the people of the State would be served thereby, and with the written consent of the person after determination of guilt or acceptance of a nolo contendere plea, may stay the entering of judgment, defer further proceedings, and place the person on probation subject to reasonable terms and conditions as appropriate.
[2] In this regard the arbitrator stated:
The record before me contains a judicial decision, based on stipulations offered by the State of Maryland and the Grievant, that the Grievant was guilty, beyond a reasonable doubt, of assault and battery and a fourth degree sexual offence. The Panel at the Police Trial Board, after hearing witnesses and examining documents, accepted Ms. W's testimony concerning the incident and found that "something truly offensive or objectionable had in fact happened to her". Even if I were to ignore the judicial and Panel findings, the transcript makes it clear that at some point the Grievant persisted in unwelcome advances which caused Ms. W to scream and to open the truck door in an effort to get away from him.
[3] The paragraph was revised in 1990 and now defines cause to include "[o]ther conduct during and outside of duty hours that would affect adversely the employee's or the agency's ability to perform effectively."
[4] In Broadus we recognized and did not take issue with OEA's standard requiring an agency to prove cause for suspension under § 1-617.1(b) by a preponderance of the evidence, but we implicitly held that the fact of an indictment meets that burden. 560 A.2d at 507. We thereby rejected Green's contention here that the hearing examiner could properly refuse to accept evidence offered without opportunity for cross-examination as capable of demonstrating cause when contrary live testimony (here Green's) is presented. We have rejected such categorical dismissal of hearsay evidence in other administrative contexts as well. See, e.g., James v. District of Columbia Dep't of Employment Servs., 632 A.2d 395 (D.C.1993).
[5] As the arbitrator stated in the termination proceedings, "[Green's] misconduct was serious. He used his status as a police officer to gain Ms. W's confidence to the extent that she went into his truck."
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| "687 A.2d 967 (1996)\nWilmer HAFFORD, et al.\nv.\nGREAT NORTHERN NEKOOSA CORP.\nSupreme Judicial Cou(...TRUNCATED)
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| "546 Pa. 616 (1996)\n687 A.2d 1112\nCOMMONWEALTH of Pennsylvania, Appellee,\nv.\nLawrence COLLINS, A(...TRUNCATED)
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