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https://www.courtlistener.com/api/rest/v3/opinions/8312873/ | MEMORANDUMA. Richard Caputo, United States District Judge *432This case raises the question of whether a public school can lawfully remove a student from an extracurricular activity for her profanity, transmitted off school grounds on a Saturday to fellow students. Plaintiff B.L., a student at Mahanoy Area High School, was dismissed from the cheerleading squad for uttering "fuck school, fuck softball, fuck cheer, fuck everything" off school grounds on a Saturday. I hold that B.L.'s words were constitutionally protected by the First Amendment.Indeed, I granted B.L.'s motion for a preliminary injunction for this reason and suggested that holding otherwise would "allow school children to serve as Thought Police-reporting every profanity uttered-for the District." B.L. by Levy v. Mahanoy Area Sch. Dist. , 289 F.Supp.3d 607, 613 (M.D. Pa. 2017). The District now proffers one Dr. Mussoline as an expert, and moves for summary judgment on the ground that the undisputed evidence gathered since the preliminary injunction hearing proves the District did not violate B.L.'s rights. B.L. cross-moves for summary judgment, arguing just the opposite; B.L. also moves to oust Dr. Mussoline. All three motions are presently before me. Because the undisputed evidence shows the District violated B.L.'s rights, her motion for summary judgment will be granted. The District's motion will accordingly be denied, and B.L.'s motion to exclude the expert report and testimony of Dr. Mussoline will be denied as moot.I. BackgroundBoth sides agree on the facts. The Mahanoy Area School District is located in Mahanoy City, a small borough in Schuylkill County, Pennsylvania. (Doc. 40 at ¶ 5 (Defendant's Statement of Undisputed Facts) ). B.L. is a junior at Mahanoy Area High School, which is a part of the District. (Id. ¶ 2).In her freshman year, B.L. joined the junior varsity cheerleading squad led by Coaches Nicole Luchetta-Rump (a math teacher at the High School) and April Gnall (a third-grade teacher in the District). (Id. ¶¶ 6-9). The squad held tryouts for the next school year in May of B.L.'s freshman year. (Id. ¶ 12). Before she could try out, however, B.L. was required to agree to a number of rules that would apply to her if she made the squad again. (Id. ¶¶ 16-23). These rules-the "Cheerleading Rules" or "Rules"-state: "Please have respect for your school, coaches, teachers, other cheerleaders and teams. Remember you are representing your school when at games, fundraisers, and other events. Good sportsmanship will be enforced, this includes foul language and inappropriate gestures." (Id. ¶ 19 (the "Respect Provision") ). The Rules also warn: "There will be no toleration of any negative information regarding cheerleading, cheerleaders, or coaches placed on the internet." (Id. ¶ 23 (the "Negative Information Rule") ). Coaches Luchetta-Rump and Gnall adopted these Rules from their predecessor, and did not need the District's permission to adopt or enforce them. (Id. ¶¶ 15, 24, 45).B.L. and her mother reviewed the Rules prior to tryouts, and signed a document acknowledging B.L. would be bound by them. (Id. ¶ 18). Unfortunately for B.L., *433tryouts did not go so well-she was placed on the junior varsity squad again for her sophomore year. (Id. ¶ 34). And, to add insult to injury, an incoming freshman made the varsity squad. (Id. ¶ 35).In frustration, B.L. took to Snapchat that Saturday. (See id. ¶¶ 37, 40). (Snapchat is a social media application for smartphones that allows users to send private text, photo, and video messages to other users-but these messages are limited in duration, cannot be accessed from the web, and can only be viewed temporarily, see B.L. by Levy v. Mahanoy Area Sch. Dist. , 289 F.Supp.3d 607, 610 n.1 (M.D. Pa. 2017) ). Posing in street clothes with a friend, middle fingers raised, B.L. took a "selfie" at the Cocoa Hut, a local store and student stomping ground. (See id. ¶¶ 37-40). On top of the photo, B.L. added the following text: "fuck school fuck softball fuck cheer fuck everything." (Id. ). B.L. then posted the captioned photo-the "Snap"-on her private Snapchat account, where it could have been viewed briefly by about two-hundred and fifty (250) of her friends. (Id. ¶¶ 37-42). She posted a follow-up Snap just after, reading: "Love how me and [my friend] get told we need a year of jv before we make varsity but that[ ] doesn't matter to anyone else?" (Id. ¶ 41). Many of B.L.'s friends on Snapchat are students at District schools; some are fellow cheerleaders. (Id. ¶¶ 42-43).One of those cheerleaders, Coach Gnall's daughter, came across the Snaps, took screen shots of them (as they were not publicly viewable), and brought them to the coaches' attention. (Id. ¶ 43). Meanwhile, with the weekend now over, word of B.L.'s Snaps spread through the school. (See id. ¶¶ 57-60). Several students, "both cheerleaders and non-cheerleaders[,] approached Coach Luchetta-Rump to express their concerns that the Snaps were inappropriate." (Id. ¶ 59). "Students were visibly upset and voiced their concerns to [Coach] Luchetta-Rump repeatedly for several days." (Id. ¶ 60). Accordingly, "Coaches Gnall and Luchetta-Rump jointly decided to suspend B.L. from the cheerleading team for one year for violating the Cheerleading Rules by posting the offensive Snaps." (Id. ¶ 44). Specifically, "B.L. was disciplined for violating the Respect Provision and the Negative Information Rule of the Cheerleading Rules...." (Id. ¶ 57). Even though electronic squabbling amongst cheerleaders at the High School "is a fairly typical occurrence," the coaches felt the need to enforce the Rules against B.L. "to 'avoid chaos' and maintain a 'team-like environment.' " (Id. ¶¶ 55-56). "The cheerleading coaches would not have suspended B.L. from the team if her Snaps had not referenced cheerleading," though. (Id. ¶ 58).B.L.'s father appealed to the School Board, but the Board declined to get involved. (Id. ¶ 49-51). Accordingly, B.L., through her parents, filed suit against the District for declaratory and injunctive relief. (See Doc. 1; Doc. 33-1 (giving up her claim for damages) ). B.L. contemporaneously filed a motion for a temporary restraining order and preliminary injunction (Doc. 2); I granted the TRO pending resolution of the preliminary injunction motion (Doc. 5). After holding a hearing, I issued a preliminary injunction, finding that, among other things, B.L. was likely to succeed on the merits. See B.L. by Levy v. Mahanoy Area Sch. Dist. , 289 F.Supp.3d 607 (M.D. Pa. 2017). The District subsequently answered the complaint (Doc. 16), discovery ensued, and both sides have moved for summary judgment. (Docs. 33, 37). B.L. also moves to exclude the expert report and testimony of Dr. Lawrence J. Mussoline, whom the District retained to opine on a number of matters related to cheerleading, school discipline, and sports teams. (Doc. 135).*434All three motions have been fully briefed and are now ripe for review.II. Legal StandardSummary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A court may grant a motion for summary judgment if, after it considers all probative materials of record, with inferences drawn in favor of the non-moving party, the court is satisfied that there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law." Chavarriaga v. N.J. Dep't of Corr. , 806 F.3d 210, 218 (3d Cir. 2015) (citing Celotex Corp. v. Catrett , 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Brooks v. Kyler , 204 F.3d 102, 105 n.5 (3d Cir. 2000) ). "A fact is 'material' under Rule 56 if its existence or nonexistence might impact the outcome of the suit under the applicable substantive law. A dispute over a material fact is 'genuine' if 'a reasonable jury could return a verdict for the nonmoving party.' " Santini v. Fuentes , 795 F.3d 410, 416 (3d Cir. 2015) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). "In determining whether the dispute is genuine, the court's function is not to weigh the evidence or to determine the truth of the matter ...." American Eagle Outfitters v. Lyle & Scott Ltd. , 584 F.3d 575, 581 (3d Cir. 2009) (citing Anderson , 477 U.S. at 248-49, 106 S.Ct. 2505 ).The moving party bears the initial burden to identify "specific portions of the record that establish the absence of a genuine issue of material fact." Santini , 795 F.3d at 416 (citing Celotex , 477 U.S. at 323, 106 S.Ct. 2548 ). If this burden is satisfied by the movant, the burden then "shifts to the nonmoving party to go beyond the pleadings and 'come forward with specific facts showing that there is a genuine issue for trial.' " Id. (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ). The non-movant's burden is not satisfied by "simply show[ing] that there is some metaphysical doubt as to the material facts." Chavarriaga , 806 F.3d at 218 (quotation omitted).Although the parties have filed cross-motions for summary judgment, this legal standard remains the same. Auto-Owners Ins. Co. v. Stevens & Ricci, Inc. , 835 F.3d 388, 401 (3d Cir. 2016). Normally, a court considers each motion independently, Marciniak v. Prudential Fin. Ins. Co. of Am. , 184 F. App'x 266, 270 (3d Cir. 2006), and the denial of one does not imply the granting of the other. Bacon v. Avis Budget Grp., Inc. , 357 F.Supp.3d 401, 412-13 (D.N.J. 2018). But where, as here, "review of [the] cross-motions reveals no genuine issue of material fact, then judgment may be entered in favor of the party deserving of judgment in light of the law and undisputed facts." Transguard Ins. Co. of Am., Inc. v. Hinchey , 464 F.Supp.2d 425, 430 (M.D. Pa. 2006) (citing Iberia Foods Corp. v. Romeo , 150 F.3d 298, 302 (3d Cir. 1998) ).III. DiscussionA.Courts have discussed the landscape of First Amendment law in public schools at length. See, e.g. , Layshock ex rel. Layshock v. Hermitage Sch. Dist. , 650 F.3d 205, 211-14 (3d Cir. 2011). A brief discussion of the major school speech precedents suffices here.The Supreme Court established in the landmark case of Tinker v. Des Moines Independent Community School District that public school students do not shed their speech rights at the "schoolhouse *435gate." 393 U.S. 503, 506, 89 S.Ct. 733, 21 L.Ed.2d 731 (1969). The plaintiffs in that case, students who wore black armbands to protest the Vietnam War, were suspended by their school after ignoring its ban on the armbands. Id. at 504, 89 S.Ct. 733. The Court held the school violated the students' First Amendment rights because the students' expression did not "materially and substantially disrupt the work and discipline of the school," and because school officials did not reasonably forecast such disruption. Id. at 513, 89 S.Ct. 733. Tinker thus sets the baseline for what student speech is protected: anything that does not, or in the view of reasonable school officials, will not cause material and substantial disruption at school. Later cases set out exceptions to this broad dictate.Hazelwood School District v. Kuhlmeier , 484 U.S. 260, 108 S.Ct. 562, 98 L.Ed.2d 592 (1988) established the next Tinker exception. In Kuhlmeier , the Court held that schools may "exercis[e] editorial control over the style and content of student speech in school-sponsored expressive activities so long as [its] actions are reasonably related to legitimate pedagogical concerns." Id. at 273, 108 S.Ct. 562. Under the Kuhlmeier exception, schools "are entitled to exercise greater control" over "school-sponsored ... expressive activities that students, parents, and members of the public might reasonably believe to bear the imprimatur of the school." Id. at 270-21, 108 S.Ct. 562. Justice Brennan, joined by Justices Marshall and Blackmun, criticized the majority opinion for "abandoning Tinker ," creating a new "distinction between personal and school-sponsored speech," and relying on "the school's pedagogical message" as a "constitutionally sufficient justification for the suppression of student speech." Id. at 280, 282, 108 S.Ct. 562 (Brennan, J., dissenting). It appears that of the Court's student speech precedents, only Kuhlmeier holds a court can balance a student's speech against "legitimate pedagogical concerns;" however, this balancing is limited to situations in which a reasonable observer would conclude the speech is essentially that of the school itself. See Rosenberger v. Rector & Visitors of Univ. of Va. , 515 U.S. 819, 834, 115 S.Ct. 2510, 132 L.Ed.2d 700 (1995).Under the Supreme Court's student speech precedents, there are thus four rules: (1) "Under Fraser , a school may categorically prohibit lewd, vulgar or profane language[;]" (2) "Under [ Kuhlmeier ], a school may regulate school-sponsored speech ... on the basis of any legitimate pedagogical concern[;]" (3) Under Morse , a school may categorically prohibit speech that can reasonably be regarded as encouraging illegal drug use; and (4) "Speech falling outside of these categories is subject to Tinker 's general rule: it may be regulated only if it would substantially disrupt school operations or interfere with the right of others." Saxe v. State Coll. Area Sch. Dist. , 240 F.3d 200, 214 (3d Cir. 2001) (Alito, J.).The Third Circuit has provided further clarification with regard to student speech in the digital era. In J.S. ex rel. Snyder v. Blue Mountain School District and Layshock ex rel. Layshock v. Hermitage School District , students were suspended for creating websites that lampooned school officials using vulgar language. See J.S. ex rel. Snyder , 650 F.3d 915, 920-22 (3d Cir. 2011) (en banc); Layshock ex rel. Layshock , 650 F.3d 205, 208-10 (3d Cir. 2011) (en banc). In decisions handed down the same day, the Third Circuit held that (1) student speech uttered off-campus is not rendered "on-campus speech" simply because it eventually reaches inside the school; (2) Fraser is inapplicable to off-campus speech; and (3) Tinker might apply to off-campus speech. See J.S. ex rel. Snyder , 650 F.3d at 926, 930-32 ; Layshock ex rel. Layshock , 650 F.3d at 215-19.With this background in mind, I turn to the applicable legal framework and the parties' arguments. It is not clear if student speech claims are meant to be addressed under the three-step First Amendment retaliation framework. Compare Monn v. Gettsyburg Area Sch. Dist. , 553 F. App'x 120, 122 (3d Cir. 2014) (applying the First Amendment retaliation framework to students' claims of school officials' punishment for speech) and Pinard v. Clatskanie Sch. Dist. 6J , 467 F.3d 755, 770 (9th Cir. 2006) (same), with J.S. ex rel. Snyder v. Blue Mountain Sch. Dist. , 650 F.3d 915, 928-33 (3d Cir. 2011) (en banc) (analyzing the student's speech under Tinker and Fraser without reference to the First Amendment retaliation framework). I assume that they are-with the caveat that Tinker places the burden on the school to show its action was constitutionally permissible. Tinker v. Des Moines Indep. Cmty. Sch. Dist. , 393 U.S. 503, 509, 89 S.Ct. 733, 21 L.Ed.2d 731 (1969) ("[the State] must be able to show *437that its action was caused by something more than a mere desire" to suppress unpopular speech); see United States v. Playboy Entm't Grp., Inc. , 529 U.S. 803, 816-17, 120 S.Ct. 1878, 146 L.Ed.2d 865 (2000) (citing Tinker for the proposition that "[w]hen the Government restricts speech, the Government bears the burden of proving the constitutionality of its actions"). Under the First Amendment retaliation framework, the student's speech must first be "protected." Mitchell v. Horn , 318 F.3d 523, 530 (3d Cir. 2003). Next, the school must have punished her, Walker-Serrano ex rel. Walker v. Leonard , 325 F.3d 412, 419 (3d Cir. 2003), or took "an adverse action ... sufficient to deter a person of ordinary firmness from exercising h[er constitutional rights,]" Mitchell , 318 F.3d at 530 (quotation omitted). Finally, there must be a "causal link" between the student's protected speech and the school's punishment or sufficiently adverse action. Rauser v. Horn , 241 F.3d 330, 333 (3d Cir. 2001) (quotation omitted).Although the parties have not referenced this standard in their briefing, their arguments are primarily focused on the first step-that is, whether B.L.'s speech was protected. If, on the undisputed facts, B.L.'s speech was unprotected, then the District's motion for summary judgment must be granted; however, if B.L.'s speech was protected, then her motion for summary judgment will prevail.B.I need to clear away some argumentative brush before getting to the root of the dispute, though. The District first argues that B.L. waived her First Amendment rights when she joined the cheerleading squad. (Doc. 55 at 10-12). The District maintains that both B.L. and her mother voluntarily waived B.L.'s First Amendment rights by signing the "Application for Cheerleading Tryouts" (which conditioned participation on abiding by the Cheerleading Rules). (Id. ). B.L. responds that there is no evidence to support a finding of waiver, and regardless, the District cannot condition extracurricular participation on a waiver of constitutional rights. (Doc. 49 at 27-30).The District has not produced sufficient evidence that B.L. waived her speech rights. Courts must "indulge every reasonable presumption against waiver of fundamental constitutional rights." Johnson v. Zerbst , 304 U.S. 458, 464, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938) (quotation omitted). The voluntary, knowing, and intelligent waiver of one's First Amendment rights must be shown by "clear and compelling" evidence. Curtis Publ'g Co. v. Butts , 388 U.S. 130, 145, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967). "Such volition and understanding are ... present[ ] where the parties to the contract have bargaining equality and have negotiated the terms of the contract, and where the waiving party is advised by competent counsel and has engaged in other contract negotiations." Erie Telecomms., Inc. v. City of Erie , 853 F.2d 1084, 1096 (3d Cir. 1988). But see Yoder v. Univ. of Louisville , 526 F. App'x 537, 546-47 (6th Cir. 2013) (granting qualified immunity to the defendant based on a looser waiver standard). There is no evidence that any of these factors is present here: neither B.L. nor her mother had bargaining equality with the coaches or the school; the Cheerleading Rules were not subject to negotiation; and B.L. and her mother were not represented by counsel when they agreed B.L. would abide by the Rules. Additionally, conditioning extracurricular participation on a waiver of a constitutional right is coercive. See Moran v. Burbine , 475 U.S. 412, 421, 106 S.Ct. 1135, 89 L.Ed.2d 410 (1986) (waiver is involuntary if it is coerced); cf.*438Capua v. City of Plainfield , 643 F.Supp. 1507, 1521 (D.N.J. 1986) (conditioning continued employment on agreeing to urine testing "coerced a waiver of any rights" employees had). B.L. did not, therefore, waive her First Amendment rights.Next, the District contends that it cannot be liable because the coaches' actions are not vicariously attributable to it, see Monell v. Dep't of Soc. Servs. of City of New York , 436 U.S. 658, 690-91, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). (Doc. 51 at 23-26). B.L. has not shown, the District argues, that, consistent with the rule established in Monell , the District "implement[ed] an official policy, practice or custom" that violated B.L.'s constitutional rights. Losch v. Borough of Parkesburg, Pa. , 736 F.2d 903, 910 (3d Cir. 1984) (citation omitted). This argument can be dismissed out of hand because the District admits it "approved or ratified" the Cheerleading Rules pursuant to which B.L. was punished, (Doc. 16 at ¶ 18), and delegated its authority over the cheerleading team to Coaches Luchetta-Rump and Gnall, (see, e.g. , Doc. 40 at ¶ 45 ("The cheerleading coaches did not need-and did not receive-authorization from [the District] to suspend B.L. from the team."); id . ¶ 51 ("The School Board decided that it should not get involved in the minutiae of extracurricular activities, and that coaches must be permitted to hold students accountable for their actions.") ). See Seamons v. Snow , 206 F.3d 1021, 1029 (10th Cir. 2000) ("[T]he record indicates that Coach Snow, and only Coach Snow, was vested by the school district with the authority to make final decisions regarding membership on the ... football team. Because of this delegation of authority, the school district can be held liable for Coach Snow's actions on team membership." (citing Pembaur v. City of Cincinnati , 475 U.S. 469, 483, 106 S.Ct. 1292, 89 L.Ed.2d 452 (1986) ) ).Finally, the District argues that because students have no constitutional right to participate in extracurricular activities like cheerleading, B.L.'s mere removal from the squad could not have violated her rights. (Doc. 38 at 16-20; Doc. 55 at 4-7). In response, B.L. argues that whether she has a constitutional right to participate in extracurricular activities or whether her coaches' sanction was "harsh enough" is irrelevant to First Amendment analysis. (Doc. 34 at 19-20; Doc. 49 at 23).I agree with B.L. What the District's argument does is put the constitutional cart before the horse. The court in Johnson v. Cache County School District (which the District relies on) made the same mistake. 323 F.Supp.3d 1301, 1321 (D. Utah 2018) ("The court finds the cases recognizing the distinction between school suspension and participation in an extracurricular activity to be more persuasive given that there is no constitutional right to participate in an extracurricular activity."). The issue with this reasoning, which assumes all student athlete speech is ipso facto less protected, see Lowery v. Euverard , 497 F.3d 584, 605 (6th Cir. 2007) (Gilman, J., concurring in the judgment) is two-fold: it muddies the First Amendment analysis, and conflates it with Due Process analysis.As to the first point, the threshold inquiry under standard First Amendment analysis is whether speech is protected-considering the speech at issue and the context in which it was uttered. See Rauser v. Horn , 241 F.3d 330, 333 (3d Cir. 2001). Take Tinker , for example. Student speech that would not materially disrupt school or invade the rights of others is protected. Tinker v. Des Moines Indep. Cmty. Sch. Dist. , 393 U.S. 503, 513-14, 89 S.Ct. 733, 21 L.Ed.2d 731 (1969). That standard does not ask courts to consider the punishment the school doled out or its *439effect on independent constitutional interests in determining whether student speech was protected in the first place. See id. Contra Lowery v. Euverard , 497 F.3d 584, 588 (6th Cir. 2007) ("The Court must consider the content and context of the speech, and the nature of the school's response. " (emphasis added) ). Whether a school's chosen punishment was constitutionally impermissible is a separate question, with a hair trigger for liability. See Walker-Serrano ex rel. Walker v. Leonard , 325 F.3d 412, 419 (3d Cir. 2003) (a school cannot engage in "punishment for expression, a significant pattern of concrete suppression, or some other form of clear suppression of the expression of [students]"); Rauser , 241 F.3d at 333 (retaliation is actionable if it is "sufficient to deter a person of ordinary firmness from exercising his [constitutional] rights" (quotation omitted) ); see also Rutan v. Republican Party of Ill. , 497 U.S. 62, 76 n.8, 110 S.Ct. 2729, 111 L.Ed.2d 52 (1990) ("[T]he First Amendment ... protects state employees ... from even an act of retaliation as trivial as failing to hold a birthday party for a public employee ... when intended to punish her for exercising her free speech rights." (quotation omitted) ). And whether the government, in retaliation, revoked something the speaker was not constitutionally entitled to is irrelevant to either question. Rauser , 241 F.3d at 333.That is the second point. First Amendment analysis is distinct from Due Process analysis under the Fourteenth Amendment, which does measure constitutional interests against government actions, see Isbell v. Bellino , 983 F.Supp.2d 492, 509-10 (M.D. Pa. 2012). As far as the First Amendment is concerned, though, that there is no general constitutional right to cheerlead, see Blasi v. Pen Argyl Area Sch. Dist. , 512 F. App'x 173, 175 (3d Cir. 2013), is just a truism. Students do not shed their First Amendment rights at the schoolhouse gate despite having no general constitutional right to public education, either. Plyler v. Doe , 457 U.S. 202, 221, 102 S.Ct. 2382, 72 L.Ed.2d 786 (1982) ; Tinker v. Des Moines Indep. Cmty. Sch. Dist. , 393 U.S. 503, 507, 89 S.Ct. 733, 21 L.Ed.2d 731 (1969). The right a public school infringes by punishing a student for protected speech is not the right to education or to play a sport, it is the right to freedom of speech. See Tinker , 393 U.S. at 511-14, 89 S.Ct. 733 ; T.V. ex rel. B.V. v. Smith-Green Cmty. Sch. Corp. , 807 F.Supp.2d 767, 780 (N.D. Ind. 2011). By analogy, a school district violates the Constitution by discriminating against applicants for teaching positions on the basis of race, Hazelwood Sch. Dist. v. United States , 433 U.S. 299, 309 n.15, 97 S.Ct. 2736, 53 L.Ed.2d 768 (1977), even though applicants do not have a constitutional right to or a property interest in a government job, see Bd. of Regents of State Colls. v. Roth , 408 U.S. 564, 588, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972) (Marshall, J., dissenting). The constitutional problem in both cases is not the government's actions themselves, but the reasons why they were taken. See Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle , 429 U.S. 274, 283-84, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977) ; Perry v. Sindermann , 408 U.S. 593, 597, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972).Take Doninger v. Niehoff , 527 F.3d 41 (2d Cir. 2008), for example, which the District relies on for the proposition that "exclusion from extracurricular activities does not require the same scrutiny as a suspension or expulsion from school." (Doc. 55 at 7). Doninger explains (albeit indirectly) the distinction between First Amendment and Due Process claims in this context. The Doninger court, after holding the student's speech likely unprotected under Tinker , noted that "given the posture of th[e] case," it "ha[d] no occasion to consider *440whether a different, more serious consequence than disqualification from student office would raise constitutional concerns." Id. at 53 (emphasis added). For that proposition, Doninger cited Wisniewski v. Board of Education of the Weedsport Central School District , which in turn declined to decide whether the First Amendment or Fourteenth Amendment would apply to a "distinct challenge to the extent of the [school's] discipline" for a student's speech. 494 F.3d 34, 40 (2d Cir. 2007) (citing Graham v. Connor , 490 U.S. 386, 395, 109 S.Ct. 1865, 104 L.Ed.2d 443 (1989) ). In other words, if a student challenges her school's punishment as excessive, the rubric of Due Process might be more appropriate in resolving that claim. In that case, it would be relevant that the law recognizes a student's property interest in public education but not in participation in extracurricular activities. See, e.g. , Dominic J. v. Wyoming Valley W. High Sch. , 362 F.Supp.2d 560, 572 (M.D. Pa. 2005). But just as in Doninger , B.L. is not mounting that sort of challenge, so First Amendment standards apply.And the Third Circuit has made the applicable standard clear: a public school's "punishment" for a student's protected expression opens the courthouse doors. Walker-Serrano ex rel. Walker v. Leonard , 325 F.3d 412, 419 (3d Cir. 2003). Accordingly, students have been found likely to succeed in First Amendment challenges to seemingly minor discipline. See, e.g. , K.A. ex rel. Ayers v. Pocono Mountain Sch. Dist. , 710 F.3d 99, 102 (3d Cir. 2013) (upholding preliminary injunction against school that denied the plaintiff's request to "distribut[e] invitations to her classmates to a Christmas party at her church"). If telling a student "Don't distribute invitations" can be unconstitutional, surely kicking a student off the team can be too-as the Ninth and Tenth Circuits implicitly hold. See Pinard v. Clatskanie Sch. Dist. 6J , 467 F.3d 755, 771 (9th Cir. 2006) (remanding for a determination as to whether the coach's "decision to suspend [the plaintiffs] permanently from the team" was motivated by the plaintiffs' protected speech); Seamons v. Snow , 206 F.3d 1021, 1028 (10th Cir. 2000) (concluding plaintiff produced enough evidence to support his First Amendment claim against his coach, who suspended then dismissed him from the football team).Contrary to what the District suggests, courts have not held that mere exclusion from an extracurricular activity reduces or fails to raise constitutional concerns. The dicta from Doninger and Wisniewski regarding Due Process do not imply a school's punishment must exceed removal from an extracurricular activity in order to offend the First Amendment. In fact, the Second Circuit expressly rejected that implication later in the Doninger litigation. Doninger v. Niehoff , 642 F.3d 334, 351 (2d Cir. 2011) ("To be clear, we do not conclude in any way that school administrators are immune from First Amendment scrutiny when they react to student speech by limiting students' participation in extracurricular activities."). Even the Sixth and Eighth Circuits, while noting that dismissal from an extracurricular activity does not impact a student's "regular education," did not go so far as holding such dismissal unactionable. See Lowery v. Euverard , 497 F.3d 584, 600-01 (6th Cir. 2007) (holding the plaintiffs' speech unprotected under Tinker ); Wildman ex rel. Wildman v. Marshalltown Sch. Dist. , 249 F.3d 768, 772 (8th Cir. 2001) (holding "no basis for a claim of a violation of free speech" existed where the plaintiff's speech was unprotected under Tinker or Fraser and where the coach dismissed the plaintiff for refusing to apologize for that unprotected speech). To the extent Lowery or Wildman could be read to hold a dismissed athlete's rights *441are not infringed because she may still attend class and is free to continue her protected speech elsewhere-which is a stretch-that reading is inconsistent with First Amendment principles. Compare Ward v. Rock Against Racism , 491 U.S. 781, 791, 109 S.Ct. 2746, 105 L.Ed.2d 661 (1989) (whether "ample alternative channels for communication" exist despite a reasonable government time, place, or manner restriction is relevant for forum analysis ), with K.A. ex rel. Ayers v. Pocono Mountain Sch. Dist. , 710 F.3d 99, 112 (3d Cir. 2013) (forum analysis is inapplicable in student speech cases governed by Tinker ); see id. at 102 (a student prohibited from distributing invitations in school, though not excluded from class and free to distribute invitations elsewhere, was still likely to succeed on a First Amendment claim); see also Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle , 429 U.S. 274, 283-84, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977) (a public school may not fire a teacher "by reason of his exercise of constitutionally protected First Amendment freedoms," even though he is free to continue speaking and seek employment elsewhere).In sum, the fact that this case involves cheerleading is only appropriately considered in determining whether B.L.'s speech was protected. See Doninger v. Niehoff , 527 F.3d 41, 52 (2d Cir. 2008) ; T.V. ex rel. B.V. v. Smith-Green Cmty. Sch. Corp. , 807 F.Supp.2d 767, 781 (N.D. Ind. 2011). "By choosing to 'go out for the team,' " student athletes like B.L. do "voluntarily subject themselves to a degree of regulation even higher than that imposed on students generally." Vernonia Sch. Dist. 47J v. Acton , 515 U.S. 646, 657, 115 S.Ct. 2386, 132 L.Ed.2d 564 (1995). But "players do not completely waive their rights when they join a team[,]" Lowery v. Euverard , 497 F.3d 584, 600 (6th Cir. 2007), as the First Amendment also reaches "the playing field," Tinker v. Des Moines Indep. Cmty. Sch. Dist. , 393 U.S. 503, 512, 89 S.Ct. 733, 21 L.Ed.2d 731 (1969).C.On to the substance. The District argues its punishment was permissible (and, conversely, that B.L.'s speech was unprotected) for three reasons: first, as a threshold matter, schools can punish students for off-campus speech, (Doc. 38 at 11-12); second, Tinker allows schools to punish student speech that has the potential to disrupt an athletic team, and speech that, in the absence of punishment, would likely result in "substantial disruption of the [school's] educational mission," (id. at 15; Doc. 51 at 12-17); and third, Fraser permitted the District's discipline, (Doc. 38 at 21-26). B.L. counters that her speech caused no substantial disruption and was thus protected under Tinker , and that Fraser cannot apply to off-campus speech. (Doc. 49 at 12-23).The District's concession that B.L.'s speech occurred off-campus is all but fatal. The Third Circuit held in J.S. ex rel. Snyder v. Blue Mountain School District that a school cannot punish a student for off-campus speech that is merely profane. 650 F.3d 915, 932-33 (3d Cir. 2011) (en banc). The Fraser exception to Tinker , the Third Circuit explained, "cannot be extended to justify a school's punishment ... for use of profane language outside the school, during non-school hours." Id. at 932 (footnote omitted). In so holding, the Third Circuit rejected the school's argument that the student's speech was punishable because it was "lewd, vulgar, and offensive [and] had an effect on the school and the educational mission of the District. " Id. (emphasis added).J.S. ex rel. Snyder thus forecloses nearly all the District's arguments. Fraser cannot *442justify its punishment. B.L. "spoke," through Snapchat, in street clothes, at the Cocoa Hut, on a Saturday; the District does not and cannot claim that constitutes on-campus speech. Nor can Tinker justify the District's punishment, even if the District rephrases its concern as "disruption of the educational mission" of the team or the school. As Justice Brennan made clear in his Kuhlmeier dissent, Tinker is not concerned with the disruption of a school's educational mission. See Hazelwood Sch. Dist. v. Kuhlmeier , 484 U.S. 260, 280-82, 108 S.Ct. 562, 98 L.Ed.2d 592 (1988) (Brennan, J., dissenting). Moreover, a school cannot circumvent Tinker , Fraser , and J.S. ex rel. Snyder by simply defining its educational mission in a way that prohibits off-campus vulgarity. See J.S. ex rel. Snyder , 650 F.3d at 932 (implicitly rejecting this argument); see also Morse v. Frederick , 551 U.S. 393, 405, 127 S.Ct. 2618, 168 L.Ed.2d 290 (2007) ("Had Fraser delivered the same [lewd] speech in a public forum outside the school context, it would have been protected."); id. at 423, 127 S.Ct. 2618 (Alito, J., concurring) (school officials cannot simply "censor any student speech that interferes with a school's 'educational mission' "). If that were the law, public schools would "possess absolute authority over their students" and become "enclaves of totalitarianism." Tinker v. Des Moines Indep. Cmty. Sch. Dist. , 393 U.S. 503, 511, 89 S.Ct. 733, 21 L.Ed.2d 731 (1969) ; see J.S. ex rel. Snyder , 650 F.3d at 933 ("Under this standard, two students can be punished for using a vulgar remark to speak about their teacher at a private party, if another student overhears the remark, reports it to the school authorities, and the school authorities find the remark 'offensive.' "); Layshock ex rel. Layshock v. Hermitage Sch. Dist. , 650 F.3d 205, 216 (3d Cir. 2011) (en banc) ("It would be unseemly and dangerous precedent to allow the state, in the guise of school authorities, to reach into a child's home and control his/her actions there to the same extent it can control that child when he/she participates in school sponsored activities."); B.L. by Levy v. Mahanoy Area Sch. Dist. , 289 F.Supp.3d 607, 614 (M.D. Pa. 2017) ("school children" may not "serve as Thought Police-reporting every profanity uttered-for the District"). Therefore, neither Tinker (as uniquely interpreted by the District) nor Fraser can justify B.L.'s punishment.That this is a cheerleading case does not change the result. Yes, context matters. Student athletes can expect a greater degree of regulation than students generally. Vernonia Sch. Dist. 47J v. Acton , 515 U.S. 646, 657, 115 S.Ct. 2386, 132 L.Ed.2d 564 (1995). And "[t]he narrower goals of an athletic team ... are not always consistent with the freewheeling exchange of views that might be appropriate in a classroom debate." Blasi v. Pen Argyl Area Sch. Dist. , 512 F. App'x 173, 175 (3d Cir. 2013) ; see Dambrot v. Cent. Mich. Univ. , 55 F.3d 1177, 1190 (6th Cir. 1995) ("The plays and strategies are seldom up for debate."). Consequently, the same speech that is protected in the classroom might not be on the playing field. Compare Layshock ex rel. Layshock , 650 F.3d at 208-09, 219 (online, off-campus criticism of school principal protected), with Lowery v. Euverard , 497 F.3d 584, 585-86, 600-01 (6th Cir. 2007) (plaintiffs' petition criticizing their coach, apparently created off-campus, not protected).But there is nothing unique about athletics that would justify a broader application of Tinker or Fraser to a student athlete's off-the-field profanity. For one, "[t]he examples given by the Court in Vernonia of increased regulation over student-athletes" do not support "similar restriction[s] on free-speech rights," Lowery , 497 F.3d at 605 (Gilman, J., concurring)-especially *443restrictions on speech uttered beyond the coach's bailiwick. More importantly, however, even though "[e]xecution of the coach's will is paramount," Dambrot , 55 F.3d at 1190, punishing speech that would not undermine the coach's will or the team's functioning serves no legitimate purpose. See Seamons v. Snow , 206 F.3d 1021, 1030 (10th Cir. 2000) ("[C]oaches may not penalize players for engaging in peaceful speech activity which does not create substantial disorder, materially disrupt class work, or invade the rights of others."); cf. Tinker v. Des Moines Indep. Cmty. Sch. Dist. , 393 U.S. 503, 514, 89 S.Ct. 733, 21 L.Ed.2d 731 (1969) ; Blasi v. Pen Argyl Area Sch. Dist. , 512 F. App'x 173, 175 (3d Cir. 2013) ("School officials have a legitimate interest in affording student athletes 'an educational environment conducive to learning team unity and sportsmanship and free from disruptions that could hurt or stray the cohesiveness of the team.' " (quoting the school district's brief in Wildman ex rel. Wildman v. Marshalltown Sch. Dist. , 249 F.3d 768, 771 (8th Cir. 2001) ) ). The interest that a school or coach has in running a team does not extend to off-the-field speech that, although unliked, is unlikely to create disorder on the field. Cf. Flaherty v. Keystone Oaks Sch. Dist. , 247 F.Supp.2d 698, 704 (W.D. Pa. 2003) ("While [the school principal] believes that he can discipline a student [athlete] for bringing 'disrespect, negative publicity, [and] negative attention to our school and to our volleyball team,' this is simply not sufficient to rise to the level of 'substantial disruption' under Tinker ."); Killion v. Franklin Reg'l Sch. Dist. , 136 F.Supp.2d 446, 448-49, 455 (W.D. Pa. 2001) (student athlete's online criticism of his school's athletic director was protected because, although "upsetting" to the athletic director, the speech was not threatening and led to no actual disruption). Nor does that interest encompass discipline for discipline's sake, as the District suggests. See Killion , 136 F.Supp.2d at 456 ("We cannot accept, without more, that the childish and boorish antics of a minor could impair the administrators' abilities to discipline students and maintain control."); Klein v. Smith , 635 F.Supp. 1440, 1442 n.4 (D. Me. 1986) ("[T]he future course of the administration of discipline [will not] dissolve, willy-nilly, in the face of the digital posturing of [a] splenetic, bad-mannered little boy."). High school athletics are not reserved for the popular and the unfailingly polite.On the other hand, a coach would have a legitimate interest in regulating student athlete speech that bears the imprimatur of the team or the school. See Hazelwood Sch. Dist. v. Kuhlmeier , 484 U.S. 260, 271-73, 108 S.Ct. 562, 98 L.Ed.2d 592 (1988). It is unclear to me, though, how a student athlete's off-the-field speech bears such an imprimatur, or how athletics constitute the sort of "vehicle[s] of student expression" Kuhlmeier was concerned with. See id. at 273, 108 S.Ct. 562. To the extent the District argues Kuhlmeier justifies its discipline because profanity conflicts with the coaches' legitimate pedagogical concerns, the District has not produced any evidence that B.L.'s speech bore the imprimatur of the school or the squad, or that a reasonable observer would so conclude. A passing reference to cheerleading on B.L.'s private social media account does not equate to an imprimatur. Cf. Morse v. Frederick , 551 U.S. 393, 405, 127 S.Ct. 2618, 168 L.Ed.2d 290 (2007) (" Kuhlmeier does not control this case because no one would reasonably believe that Frederick's banner [which read 'BONG HiTS 4 JESUS'] bore the school's imprimatur.").The District is thus left to rely on Tinker (as it is normally applied), but it has not shown that B.L.'s speech created any substantial disorder or likelihood thereof. The most it can muster is "student concerns"*444over B.L.'s Snaps and an admittedly brief disruption of Coach Luchetta-Rump's math class, even though squabbling amongst squad members is a "fairly typical occurrence." (See Doc. 40 at ¶¶ 56, 59, 60; Doc. 40-13 at 59:23-25; 60:1-10). Such "general rumblings" do not amount to substantial disruption. J.S. ex rel. Snyder v. Blue Mountain Sch. Dist. , 650 F.3d 915, 922-23 (3d Cir. 2011) (en banc); see B.H. v. Easton Area Sch. Dist. , 725 F.3d 293, 321-22 (3d Cir. 2013) (en banc) ("Student expression may not be suppressed simply because it gives rise to some slight, easily overlooked disruption[.]").The coaches did not reasonably predict any substantial disruption, either. True, Coach Luchetta-Rump raised the specter of potential "chaos." (Doc. 40-13 at 32:4-22). But her understanding of "chaos" is at odds with the "substantial disruption" standard. The only prior example of "chaos" Coach Luchetta-Rump could give (which again, she described as a "fairly typical occurrence") was a situation where one cheerleader texted another "something mean," so she spoke with both of them to "put the fire out" without resorting to punishment. (Id. at 32:4-22). And the only other time the "Negative Information Rule" was enforced was against Coach Gnall's own daughter, who was suspended from a few games for speaking ill of a rival school's cheerleading uniforms online-without any finding of actual or likely disruption. (Id. at 30:9-25; 31:1-19). Thus, even viewing Coach Luchetta-Rump's talismanic incantation of chaos in the light most favorable to the District, Tinker remains unsatisfied. "Undifferentiated fear or remote apprehension of disturbance" does not suffice. Sypniewski v. Warren Hills Reg'l Bd. of Educ. , 307 F.3d 243, 257 (3d Cir. 2002) ("It may be argued the school was entitled to conclude the T-shirt was likely to lead to disruption because [plaintiff's] wearing of the ["redneck"] shirt amounted to a promotion of values consistent with the items and activities that had caused racial unrest [in the past.] Again, mere association is not enough."); cf. Saxe v. State Coll. Area Sch. Dist. , 240 F.3d 200, 212 (3d Cir. 2001) ("[I]f a school can point to a well-founded expectation of disruption-especially one based on past incidents arising out of similar speech-the restriction may pass constitutional muster."). The vague similarity of B.L.'s Snaps to speech that caused little disruption in the past is no ground for predicting substantial disruption in the future. Moreover, Coach Luchetta-Rump testified, at both the preliminary injunction hearing and at her deposition, that she punished B.L. for profanely referencing cheerleading, not because of any possibility of disruption. (See Doc. 40-13 at 47:2-11; 53:10-24; 62:8-11). She would have punished B.L.-under the same Rules-if B.L.'s Snap read: "Cheerleading is fucking awesome." (Id. at 47:7-11). The District cannot sidestep these admissions and have me theorize what a reasonable coach could have concluded about B.L.'s speech. B.L.'s mere off-campus profanity is what upset Coach Luchetta-Rump, not the potential for chaos about which the District's evidence, at best, raises "metaphysical doubt." Chavarriaga v. N.J. Dep't of Corr. , 806 F.3d 210 (3d Cir. 2015) (quotation omitted).All of this discussion can be distilled into a single point: Coaches cannot punish students for what they say off the field if that speech fails to satisfy the Tinker or Kuhlmeier standards. See Tinker , 393 U.S. at 514, 89 S.Ct. 733 ; Kuhlmeier , 484 U.S. at 273, 108 S.Ct. 562. Even then, whether Tinker applies to speech uttered beyond the schoolhouse gate is an open question. See J.S. ex rel. Snyder v. Blue Mountain Sch. Dist. , 650 F.3d 915, 926 (3d Cir. 2011) (en banc) (assuming without deciding that Tinker applies to off-campus *445speech); id. at 936 (Smith, J., concurring) ("[T]he First Amendment protects students engaging in off-campus speech to the same extent it protects speech by citizens in the community at large."). I need not weigh in on that question, though. The undisputed evidence shows that neither of these standards has been met, so B.L.'s speech was protected. Accordingly, the District violated B.L.'s rights when Coach Luchetta-Rump dismissed her from the cheerleading squad. And because B.L. concedes all the relief she seeks can be granted on this basis alone, I decline to address her alternative arguments regarding the Cheerleading Rules' vagueness or viewpoint discrimination. (Doc. 53 at 16).D.That leaves Dr. Mussoline. B.L. raises a panoply of reasons why Dr. Mussoline should be excluded from this case. (See Doc. 36). But the fact is that Dr. Mussoline's testimony and report would not save the District from summary judgment even if I had considered it. The District asked Dr. Mussoline to provide his opinions on immaterial matters. (See Doc. 36-1 at 2). For example, Dr. Mussoline was asked to opine on "how communities view cheer squads in general ...[,]" "the reasonableness of the [Cheerleading Rules,]" and "how the conduct in which B.L. displayed [sic ] impacts the interscholastic nature of sportsmanship and team bonds in a sport like cheerleading[.]" (Id. ). Again, Coach Luchetta-Rump admitted she punished B.L. for off-campus profanity, in violation of the Constitution. Nothing Dr. Mussoline could say changes that. B.L.'s motion to exclude Dr. Mussoline will therefore be denied as moot. See Logory v. Cty. of Susquehanna , No. 3:09-CV-1448, 2013 WL 5201571, at *11 (M.D. Pa. Sept. 13, 2013).IV. ConclusionFor the foregoing reasons, B.L.'s motion for summary judgment will be granted, and the District's motion for summary judgment will be denied. B.L.'s motion to exclude Dr. Mussoline's expert report and testimony will be denied as moot.An appropriate order follows. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/1320636/ | 385 S.C. 506 (2009)
685 S.E.2d 612
In the Matter of FORMER NEWBERRY COUNTY ASSOCIATE PROBATE JUDGE Rebecca A. ALLEN, Respondent.
No. 26738.
Supreme Court of South Carolina.
Submitted October 20, 2009.
Decided November 9, 2009.
*507 Lesley M. Coggiola, Disciplinary Counsel, and Joseph P. Turner, Jr., Assistant Disciplinary Counsel, both of Columbia, for Office of Disciplinary Counsel.
Paulette Edwards, of Law Office of Paulette Edwards, PA, of Columbia, for respondent.
PER CURIAM.
In this judicial disciplinary matter, respondent and the Office of Disciplinary Counsel (ODC) have entered into an Agreement for Discipline by Consent (Agreement) pursuant to Rule 21, RJDE, Rule 502, SCACR. In the Agreement, respondent admits misconduct and consents to the imposition of a public reprimand pursuant to Rule 7(b), RJDE, Rule 502, SCACR.[1] The facts as set forth in the Agreement are as follows.
FACTS
On or between April 19, 2007, and December 21, 2007, respondent embezzled public funds while working as a Newberry County Associate Probate Judge. In mitigation, respondent submits that she took the money to pay for medical expenses and to pay deposits needed for surgery and medical testing. Further, respondent submits that, at the time she took the money, she hoped to repay the funds at a later time. When confronted by agents from the South Carolina State Law Enforcement Division (SLED), respondent confessed and accepted responsibility for her actions.
On April 28, 2008, respondent was arrested and charged with embezzlement of public funds over $1,000.00. Respondent *508 entered Pre-Trial Intervention (PTI) and, as a condition of PTI, made full restitution. Respondent has successfully completed PTI and her criminal record has been expunged.
LAW
By her misconduct, respondent admits she has violated the following Canons of the Code of Judicial Conduct, Rule 501, SCACR: Canon 1 (judge shall uphold the integrity of the judiciary); Canon 1A (judge should participate in establishing, maintaining, and enforcing high standards of conduct and shall personally observe those standards so that the integrity and independence of the judiciary will be preserved); Canon 2 (judge shall avoid impropriety and the appearance of impropriety in all of the judge's activities); and Canon 2A (judge shall respect and comply with the law and shall act at all times in a manner that promotes public confidence in the integrity and impartiality of the judiciary). Respondent also admits she has violated Rule 7(a)(1) (it shall be ground for discipline for judge to violate the Code of Judicial Conduct) and Rule 7(a)(9) (it shall be ground for discipline for judge to violate the Oath of Office) of the Rules for Judicial Disciplinary Enforcement, Rule 502, SCACR.
CONCLUSION
We accept the Agreement for Discipline by Consent and issue a public reprimand. Respondent shall not apply for, seek, or accept any judicial position whatsoever in this State without the prior express written authorization of this Court after due service on ODC of any petition seeking the Court's authorization. Respondent is hereby reprimanded for her misconduct.
PUBLIC REPRIMAND.
NOTES
[1] Respondent no longer holds judicial office. A public reprimand is the most severe sanction the Court can impose when a judge no longer holds judicial office. See In re O'Kelley, 361 S.C. 30, 603 S.E.2d 410 (2004); In re Gravely, 321 S.C. 235, 467 S.E.2d 924 (1996). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320627/ | 215 S.E.2d 30 (1975)
287 N.C. 448
Fred J. STANBACK, Jr.
v.
Vanita B. STANBACK.
No. 18.
Supreme Court of North Carolina.
June 6, 1975.
*34 Walser, Brinkley, Walser & McGirt by Walter F. Brinkley, Lexington, for defendant-appellant.
Norwood Robinson and George L. Little, Jr., of Hudson, Petree, Stockton, Stockton & Robinson, Winston-Salem, Clarence Kluttz, Salisbury, for plaintiff-appellee.
HUSKINS, Justice:
In her first assignment defendant wife alleges the Court of Appeals erred in allowing an immediate appeal from the four interlocutory orders of the trial court.
Ordinarily, an appeal from an interlocutory order will be dismissed as fragmentary and premature unless the order affects some substantial right and will work injury to appellant if not corrected before appeal from final judgment. Currin v. Smith, 270 N.C. 108, 153 S.E.2d 821 (1967); Steele v. Hauling Co., 260 N.C. 486, 133 S.E.2d 197 (1963); see 2 McIntosh, North Carolina Practice and Procedure § 1782 (1956); Annotation, Appealability of Order Pertaining to Pretrial Examination, Discovery, Interrogatories, Production of Books and Papers, or the Like, 37 A.L.R. 2d 586 (1954). However, the appellate courts of this State in their discretion may review an order of the trial court, not otherwise appealable, when such review will serve the expeditious administration of justice or some other exigent purpose. See Howland v. Stitzer, 240 N.C. 689, 84 S.E.2d 167 (1954); Ward v. Martin, 175 N.C. 287, 95 S.E. 621 (1918); Trust Co. v. Morgan, Attorney General, 9 N.C.App. 460, 176 S.E.2d 860 (1970); 2 McIntosh, North Carolina Practice and Procedure § 1782(7) (Phillips Supp. 1970), and cases cited therein. Such discretion is not intended to displace the normal procedures of appeal, but inheres to appellate courts under our supervisory power to be used only in those rare cases in which normal rules fail to administer to the exigencies of the situation. When discretionary review is allowed, the question of appealability becomes moot. Furr v. Simpson, 271 N.C. 221, 155 S.E.2d 746 (1967).
Such is the case here. The Court of Appeals determined that a trial on the merits of this protracted controversy would be *35 facilitated by allowing immediate appeal from the pretrial orders. Accordingly, it reviewed the merits of the orders pursuant to its supervisory authority contained in G.S. § 7A-32(c). The issue of premature appeal thereupon became moot and arguments on the point were rendered feckless. Hence, we consider the opinion of the Court of Appeals on the merits of this controversy, expressing no opinion on the appealability of the interlocutory orders.
Assignment five, raising a second procedural point, alleges that Judge Crissman correctly dismissed plaintiff's appeal for failure to serve the statement of case on appeal within the time provided by law. Therefore, it is contended by defendant wife that the Court of Appeals should not have reached the merits of this cause.
The facts found by Judge Crissman in his order of dismissal show the following: Judge Exum held a hearing on 27 March 1974 to consider defendant's motion for the allowance of $2,000.00 to defray the expenses of preparing for the hearing on the motions pending at that time. In open court he announced that defendant's motion would be allowed and the parties agreed that the order allowing said motion could be signed at a subsequent time. The order was actually signed after the adjournment of that session of court, but was antedated 27 March 1974 and filed on 10 April 1974. Plaintiff gave notice of appeal in open court, and appearing upon Judge Exum's written order is a recital of that fact, to wit: "The plaintiff excepts to the foregoing order and gives notice of appeal from the entry of said order in open court at the time of the announcement of the decision of the court." Judge Exum's signature follows that recital.
Plaintiff's notice of appeal, given in open court following the announcement of the order, was sufficient to comply with the "taking of appeal" and "notice of appeal" requirements of G.S. §§ 1-279 and 1-280. While this record is silent regarding the formal entry of this appeal on the judgment docket, such deficiency is not fatal under G.S. § 1-280 since the taking of the appeal is not denied and notice has, in fact, been served in time. Simmons v. Allison, 119 N.C. 556, 26 S.E. 171 (1896); Atkinson v. R. R., 113 N.C. 582, 18 S.E. 254 (1893). "The requirement that the appeal should be entered on the record is to furnish indisputable proof of the fact, and is immaterial when the fact of the appeal having been taken is not denied, and notice of appeal has, in fact, been served in time, or waived." Barden v. Stickney, 130 N.C. 62, 40 S.E. 842 (1902).
Although the date of entry of the appeal on the judgment docket, if in fact so entered, does not appear on the face of this record, we are asked to determine whether plaintiff's statement of case on appeal was served within fifteen days from the entry of the appeal taken as required by G.S. § 1-282. Defendant wife contends the fifteen days began to run on 27 March 1974 when plaintiff gave notice of appeal in open court and that plaintiff's service of case on appeal on 23 April 1974 was not timely. We find this contention unsound.
There was an agreement "that counsel for the parties would prepare and submit to the Court orders carrying out the rulings which were made by the Court." In a letter to the trial judge dated 4 April 1974 counsel for defendant admitted that he had been instructed to prepare the orders. The record further reveals several other letters (written to the trial judge after the 27 March 1974 hearing) which point to disagreement over the substance of the court's ruling. This disagreement is substantiated by Judge Exum's letter of 12 April 1974 to the parties in which he scheduled a hearing to settle the controversy "with regard to the form and perhaps the substance of the various recent orders." Clearly, at the time the judgment was "announced" on 27 March 1974 both the form and substance of the order to be drafted by counsel and mailed to Judge Exum for signing at some later date were unsettled.
*36 On these facts this case is readily distinguishable from Land Co. v. Chester, 170 N.C. 399, 87 S.E. 111 (1915), cited by defendant wife. In that case judgment was rendered upon a jury verdict before adjournment of the court and the trial judge signed the judgment after adjournment. By agreement appellants were allowed ninety days to serve their case on appeal. Under the facts of that case the time for serving a statement of case on appeal was said to run from the adjournment of the term of court during which the judgment was rendered.
Here, there was no agreement for serving the case on appeal and more than the perfunctory signing of the order was required after the hearing was adjourned. The form and substance of the order, which was being prepared by the attorney for defendant wife, were in no sense final as of the 27 March 1974 hearing. Under these circumstances, "the careful and experienced lawyer cannot decide what to do until he has seen and read the judgment." Fisher v. Fisher, 164 N.C. 105, 80 S.E. 395 (1913). Therefore, we hold that under the facts of this case the time for serving a statement of case on appeal pursuant to G.S. § 1-282 began to run when the order, and the notice of appeal endorsed thereon, were filed on 10 April 1974. Plaintiff's service was thus within the period contemplated by that statute.
We next consider whether the Court of Appeals erred, as defendant contends, in holding plaintiff had a right to have this case transferred to the district court division.
This action was properly instituted in superior court prior to the establishment of the district court in the Nineteenth Judicial District which embraces Rowan County. After numerous proceedings in superior court a custody and support judgment, filed 10 May 1968, was entered following a hearing during the 11 March 1968 Civil Session of Rowan Superior Court. The present proceeding arises from defendant's motion in the cause to modify that judgment pursuant to G.S. § 50-13.7.
A judicial decree in a child custody and support matter is subject to alteration upon a change of circumstances affecting the welfare of the child and, therefore, is not final in nature. Crosby v. Crosby, 272 N.C. 235, 158 S.E.2d 77 (1967); Teague v. Teague, 272 N.C. 134, 157 S.E.2d 649 (1967). Consequently, the jurisdiction of the court entering such a decree continues as long as the minor child whose custody is the subject of the decree remains within its jurisdiction. Spence v. Durham, 283 N.C. 671, 198 S.E.2d 537 (1973), cert. denied 415 U.S. 918, 94 S. Ct. 1417, 39 L. Ed. 2d 473 (1974); Stanback v. Stanback, 266 N.C. 72, 145 S.E.2d 332 (1965). The Superior Court of Rowan County rendered the original support and custody judgment in this action and under the above principles maintained continuing jurisdiction over further proceedings. Unless that court was somehow divested of its continuing jurisdiction, it was the only court which could modify the earlier judgment upon a motion in the cause and a showing of a change of circumstances. Tate v. Tate, 9 N.C.App. 681, 177 S.E.2d 455 (1970); 3 Lee, North Carolina Family Law § 222 (Supp.1974).
Plaintiff contends that under the Judicial Department Act of 1965, codified in Chapter 7A of the General Statutes, the district court is now the only proper division for hearing child custody and support matters. While G.S. § 7A-244 unquestionably allocates such matters to the District Court Division of the General Court of Justice, we are not persuaded that statute requires the district court to hear the motion in the cause filed in this case.
Under the Judicial Department Act of 1965 both trial divisions concurrently possess the aggregate of original civil trial jurisdiction reposed in the General Court of Justice excepting only matters involving claims against the State and probate and administration of decedents' estates as to which exclusive original jurisdiction is vested *37 in the Supreme Court and the superior court division respectively. G.S. §§ 7A-240 to -242 (1969). The Act further provides for the administrative allocations of case loads between the divisions. G.S. § 7A-242 et seq. (1969). It is plain these allocations are not jurisdictional since a judgment is not void or voidable for reason that it was rendered by a court of the trial division which by the statutory allocation was the improper division for hearing and determining the matter. G.S. § 7A-242 (1969); see Report of the Courts Commission to the North Carolina General Assembly at 23 (1965). Hence, G.S. § 7A-244 is merely an administrative allocation of annulment, divorce, alimony, child support and child custody actions to the district court division, and does not divest the Rowan Superior Court of jurisdiction to hear the motion in the cause filed by defendant in this action.
Although the case allocations of Chapter 7A are merely administrative directives, a party may move, as a matter of right, for transfer of a case in accordance with the proper statutory allocation. G.S. §§ 7A-257, 258 (1969). However, this right may be waived by consent or by failure to move for transfer within the prescribed time limits. An order erroneously transferring or refusing to transfer is ordinarily not immediately appealable, even for abuse of discretion, and will not result in a new trial unless prejudice is shown. G.S. § 7A-260 (1969).
Plaintiff's motion to transfer this action to district court was made pursuant to G.S. § 7A-258 and the Court of Appeals held he had the right under that section to make the motion. We find that holding erroneous.
G.S. § 7A-258(a) provides that a party may move to transfer a civil action or special proceeding to the proper division when the case is pending in an improper division or when the parties consent to the transfer and the judge deems the transfer will facilitate the efficient administration of justice. Here, consent is absent. G.S. § 7A-258(c) requires a plaintiff to file a motion for transfer within twenty days after the filing of a pleading which justifies the transfer. That subsection contains the following statement: "In no event is a motion to transfer made or determined after the case has been called for trial." Thus, it appears the General Assembly did not intend that cases called for trial or cases already tried and reduced to judgment, as here, be transferred under G.S. § 7A-258 as a matter of right. That section clearly applies only to cases in the pleading stage.
This point is further illustrated by G.S. § 7A-259(b) which is the only section of Chapter 7A speaking directly to the point of transfer due to the establishment of the district court division. It reads: "When a district court is established in a district, any superior court judge authorized to hear and determine motions to transfer may, on his own motion, subject to the requirements of subsection (a), transfer to the district court cases pending in the superior court." (Emphasis added.) Subsection (a) allows any such superior court judge to order a transfer upon his own motion for the efficient administration of the trial divisions "at any time before the case is calendared for trial." (Emphasis added.) Therefore, even a judge on his own motion is not authorized to order a transfer once the case has reached the trial stage and has been calendared.
Defendant's motion in the cause was not a new and independent proceeding. Instead, the motion was a continuation of the original action for child custody and support. See 3 Lee, North Carolina Family Law § 226 (1963). The original case had been called for trial, and had in fact been tried in the superior court. Under these circumstances G.S. § 7A-258 does not warrant a transfer of the action to district court as a matter of right. Accordingly, we hold the Court of Appeals erred in reversing the order of the trial court denying plaintiff's motion to transfer.
Defendant wife next contends the Court of Appeals erred in reversing the trial *38 court's order requiring plaintiff husband to produce for defendant's examination all of his check stubs, bank statements and cancelled checks during the period 1 March 1968 to date of defendant's motion.
Whether the trial court shall grant an order for the inspection of writings upon a sufficient affidavit rests in its sound discretion. Tillis v. Cotton Mills, 244 N.C. 587, 94 S.E.2d 600 (1956); Dunlap v. Guaranty Co., 202 N.C. 651, 163 S.E. 750 (1932). However, if an order requiring inspection is based upon an insufficient affidavit, the order is invalid and will be set aside on appeal. Patterson v. R. R., 219 N.C. 23, 12 S.E.2d 652 (1941). "If the requirements are not complied with, or if the order of the court goes beyond the powers contemplated and conferred by law, the order will be set aside." Dunlap v. Guaranty Co., supra; Ross v. Robinson, 185 N.C. 548, 118 S.E. 4 (1923).
The discovery order contested in this assignment is governed by the requirements of Rule 34 of the North Carolina Rules of Civil Procedure, as it read prior to the 1973 amendment which became effective 1 January 1975. G.S. § 1A-1, Rule 34 (1969). Under Rule 34 as then written a trial court may order the discovery and production of documents and things for inspection, copying or photographing upon the motion of any party showing good cause therefor. Unlike Rules 26 and 33, Rule 34 requires a party invoking the rule to show "good cause" for the production of the items sought. We note that Rule 34 of the Federal Rules of Civil Procedure was amended in 1970 so as to delete the good cause requirement because of the confusion created by vagueness of the term. The fact that good cause remains a requirement under our Rule 34 after its 1973 amendment demonstrates that, in this jurisdiction, the requirement is not a mere formality which may be overlooked.
The basis of defendant's Rule 34 motion is the relevance of the check stubs, bank statements and cancelled checks in determining the amount of child support which plaintiff must pay under G.S. § 50-13.4(c). In her motion she states: "One of the relevant facts which is material in determining this motion is the amount which the plaintiff has customarily expended to provide for his personal living expenses and for the living expenses of said three minor children while they have visited with him as well as the personal living expenses of his present wife and her children. . . . The best evidence of the amount expended by plaintiff for these purposes is found in the cancelled checks and bank statements of plaintiff." It seems defendant is equating good cause with relevance.
While relevance is one of the factors to be considered under Rule 34, the provision for that factor is found in subsection (1) of Rule 34 and not in the good cause provision. Subsection (1) provides for the determination of relevance in accordance with Rule 26(b) which allows the examination of any matter, not privileged, relevant to the subject matter of the pending action. Consequently, a demonstration that the desired materials are relevant to the subject matter of the litigation does not by itself satisfy the good cause requirement. Guilford National Bank of Greensboro v. Southern Ry. Co., 297 F.2d 921 (4th Cir. 1962), cert. denied 375 U.S. 985, 84 S. Ct. 518, 11 L. Ed. 2d 473 (1964). "The difficulty with the relevance-is-good-cause approach is that it interprets a portion of Rule 34 as redundant and thereby violates elementary canons of construction." Crowe v. Chesapeake and Ohio Railway Company, 29 F.R.D. 148, 150 (E.D.Mich.1961); see Schlagenhauf v. Holder, 379 U.S. 104, 85 S. Ct. 234, 13 L. Ed. 2d 152 (1964). Therefore, good cause is something more than mere relevance.
As illustrated by the federal courts' experience with the term, good cause often depends upon the facts of the individual case and upon considerations of practical convenience and, therefore, is not susceptible to a universal definition. However, Professor Moore does advance the following general test for good cause:
*39 "Generally speaking, however, it was held that the moving party must demonstrate that inspection of documents to be produced is in some way necessary to the adequate preparation of its case. . . In short, any showing that failure to order production would unduly prejudice the preparation of the party's case, or cause him hardship or injustice, would support the order." 4A Moore's Federal Practice § 34.08 (1974).
By the better view, necessity, as well as relevance, is an element of good cause under Rule 34. United States v. R. J. Reynolds Tobacco Co., 268 F. Supp. 769 (D.N.J. 1966).
When these principles are applied to the facts of this case, it becomes apparent that defendant wife did not make a sufficient showing of need to fulfill the good cause requirement of Rule 34. The only showing in her motion is the statement that the materials were the "best evidence" of plaintiff's expenditures. It is well established that a mere statement that an examination is material and necessary is not sufficient to support a production order. Patterson v. R. R., 219 N.C. 23, 12 S.E.2d 652 (1941); see Bentz v. Cities Service Tankers Corp., 41 F.R.D. 294 (S.D.N.Y.1966); Archer v. Cornillaud, 41 F. Supp. 435 (W.D.Ky. 1941). Here, the showing of need to inspect plaintiff's checks, check stubs and bank statements for a period of over six years is minimal and falls short of good cause.
Furthermore, defendant admits the trial court required plaintiff to answer an interrogatory setting forth his income and his net worth. Nothing else appearing, this financial information should be sufficient for the purpose of determining plaintiff's estate, earnings, conditions and accustomed standard of living in accordance with G.S. § 50-13.4(c). There is nothing in defendant's motion or in the trial court's order suggesting that plaintiff husband has been evasive or has otherwise sought to avoid his support obligation under North Carolina law. When the need for production of materials is not shown, as here, the law will not sanction the use of Rule 34. This is so in order to prevent litigants from engaging in mere fishing expeditions to discover evidence or using the rule for harassment purposes.
Defendant wife having failed to carry her burden of showing good cause, we hold the Court of Appeals correctly reversed the trial court's order granting her Rule 34 motion.
Finally, defendant wife contends the Court of Appeals erred in reversing the trial court's order requiring plaintiff to pay $2,000.00 for her use in preparing for the hearing on the various motions pending before the court.
The trial court's order required plaintiff to pay $2,000.00 to defendant's attorneys to defray the "reasonable and necessary expenses incurred by the defendant or her counsel in making preparations for the hearing on the motions pending in this action." Defendant's attorneys were required to account for expenditures and refund any excess. Such an order is proper when authorized by statute. Winfield v. Winfield, 228 N.C. 256, 45 S.E.2d 259 (1947); Green v. Green, 210 N.C. 147, 185 S.E. 651 (1936).
We find appropriate authority for the order in G.S. § 50-13.6. That statute provides that in a proceeding for custody or support, or both, including a motion in the cause for the modification of an existing order, the trial court may order payment of reasonable attorney's fees to an interested party acting in good faith who has insufficient means to defray the expense of the suit.
Apparently conceding this grant of authority in G.S. § 50-13.6, plaintiff argues the trial court failed to make appropriate findings in accordance with the second sentence of that statute which reads, in pertinent part: "Before ordering payment of a fee in a support action, the court must find as a fact that the party ordered to furnish *40 support has refused to provide support which is adequate under the circumstances existing at the time of the institution of the action or proceeding . . . ." (Emphasis added.) While it is true that such a finding does not appear in the trial court's order, we hold such a finding unnecessary in this case.
The general grant of authority to award attorney's fees under G.S. § 50-13.6 applies to actions or proceedings "for the custody or support, or both, of a minor child, including a motion in the cause for the modification or revocation of an existing order for custody or support, or both." (Emphasis added.) On the other hand, the duty to make the required finding under the second part of that statute is imposed only in a support action. Consequently, these provisions fall within the purview of the maxim expressio unius est exclusio alterius, meaning the expression of one thing is the exclusion of another. In re Taxi Co., 237 N.C. 373, 75 S.E.2d 156 (1953). The General Assembly, having limited the second provision to support actions, apparently did not intend the requirement to apply to custody or custody and support actions. It follows, therefore, that the second provision of G.S. § 50-13.6 is inapplicable to this order since defendant's motion in the cause prays for modification of both the custody and support aspects of the previous judgment.
Under G.S. § 50-13.6 the grant of attorney's fees is within the sound discretion of the trial judge. When that discretion has been properly exercised in accordance with statutory requirements, the order must stand on appeal. Rickert v. Rickert, 282 N.C. 373, 193 S.E.2d 79 (1972). Suffice it to say that defendant's uncontested affidavit, stating that due to a number of enumerated factors she was then without funds to meet the costs of preparing for the hearing, sufficiently supports the trial court's finding that defendant did not have sufficient means to defray the expense of this litigation.
For the reasons stated we conclude the Court of Appeals erred in reversing the trial court's order requiring plaintiff to pay this $2,000.00 item.
The case is remanded to the Court of Appeals for further remand to the Superior Court of Rowan County for further proceedings in conformity with this opinion.
Affirmed in part; reversed in part; remanded.
EXUM, J., did not participate in the hearing or decision of this case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320632/ | 685 S.E.2d 555 (2009)
STATE of North Carolina
v.
Donald Kevin WASHBURN, Defendant.
No. COA09-72.
Court of Appeals of North Carolina.
November 17, 2009.
*556 Roy Cooper, Attorney General, by Grady L. Balentine, Jr., Special Deputy Attorney General, for the State.
A. Wayne Harrison, Greensboro, for defendant.
MARTIN, Chief Judge.
Defendant was indicted on charges of felony possession of cocaine pursuant to N.C.G.S. § 90-95(d)(3), possession of drug paraphernalia pursuant to N.C.G.S. § 90-113.22, maintaining a dwelling for keeping or selling controlled substances pursuant to N.C.G.S. § 90-108(a)(7), maintaining a storage unit or a building to keep or sell controlled substances pursuant to N.C.G.S. § 90-108(a)(7), possession with intent to manufacture, sell, or deliver cocaine pursuant to N.C.G.S. § 90-95(a)(1), possession with intent to sell or deliver Dihydrocodeinone pursuant to N.C.G.S. § 90-95(a)(1), trafficking in opium-possession pursuant to N.C.G.S. § 90-95(h)(4), and resisting a public officer pursuant to N.C.G.S. § 14-223. He moved to suppress *557 evidence seized from searches of a rented storage unit and from his residence.
The evidence at the suppression hearing tended to show that on 18 September 2006, Line Sergeant R.K. Smith ("Sergeant Smith") of the Kernersville Police Department received a tip from an informant who had been providing accurate information to him for thirteen years. The informant told Sergeant Smith that defendant kept a large quantity of drugs in a blue toolbox in his garage and rented a climate-controlled storage unit somewhere within the Kernersville town limits. In addition, the informant told Sergeant Smith defendant's name and address, the model and color of defendant's truck, and defendant's license plate number. Sergeant Smith relayed this information to the Kernersville Police Department's Vice and Narcotics Unit. Officer A.B. Cox ("Officer Cox"), a detective with the unit, received the information and contacted Sergeant Smith for more details.
With this information, Officer Cox began an investigation of defendant's activities, conducting surveillance several times at 4612 Clipstone Lane in Kernersville, North Carolina, the address supplied by the informant, and visiting Shields Road Self-Storage ("storage facility"), the only climate-controlled storage facility in town at that time. He confirmed defendant lived at the address supplied by the informant after finding mail addressed to defendant in garbage collected by the Department of Public Works. In addition, Officer Cox confirmed the informant's information regarding defendant's truck, the presence of a blue toolbox in defendant's garage, and defendant's rental of a storage unit at the storage facility.
In the course of his investigation, on 26 October 2006, Officer Cox requested that Detective Kevin Clodfelter ("Detective Clodfelter") of the Kernersville Police Department's Narcotics Unit perform a random sweep of the storage facility with a dog trained in drug detection. After receiving permission from the manager of the facility, Ben Mastin ("Mr. Mastin"), to enter the facility and search with a K-9 unit, Detective Clodfelter began the search. Detective Clodfelter was not provided any information as to which specific unit was the potential storage unit at issue. Once inside the hallway of the building containing defendant's individual unit, the dog indicated the presence of contraband by alerting on the door of unit 4078-C, defendant's unit.
Detective Clodfelter then left to obtain a search warrant for the unit, and upon his return with the warrant, the lock to defendant's unit was drilled off and the officers entered. Inside the unit, the officers discovered, inter alia, drug paraphernalia, a residue of white powder on the floor, and $5,100 in one-hundred-dollar bills. Officer Cox conducted a field test on the white powder, which tested positive for the presence of cocaine. The officers then seized the items found in the storage unit.
After obtaining a warrant based on the evidence seized from the storage unit and information provided by the informant, Officer Cox, accompanied by Detective Clodfelter and Detective Hess, arrived at defendant's 4612 Clipstone Lane residence. Having knocked on defendant's door and receiving no response, the officers entered the residence and found defendant hiding in the attic. The officers then searched defendant's home in accordance with the search warrant.
At the conclusion of the evidence, the trial court denied defendant's motion based on its findings that the hallway outside defendant's storage unit was a public area, the warrants to search the individual unit and residence were properly obtained, and the discovery of drugs in the storage unit combined with other pertinent facts was enough to connect his residence with the possibility of drugs being sold.
Defendant subsequently pled guilty to felony possession of cocaine, possession of drug paraphernalia, maintaining a dwelling for keeping or selling controlled substances, maintaining a storage unit or a building to keep or sell controlled substances, possession with intent to manufacture, sell, or deliver cocaine, and resisting a public officer. The charges of possession with intent to manufacture, sell, or deliver Dihydrocodeinone and trafficking in opium-possession were dropped. Having properly retained his right to appeal the denial of his motion to suppress, *558 defendant now appeals from the order denying the motion to suppress. We affirm.
In defendant's sole argument before this Court, he contends the trial court erred in denying the motion to suppress evidence obtained from all searches and seizures conducted by the Kernersville Police Department. We disagree.
When analyzing a trial court's denial of a motion to suppress, the scope of review is "strictly limited to determining whether the trial judge's underlying findings of fact are supported by competent evidence, in which event they are conclusively binding on appeal, and whether those factual findings in turn support the judge's ultimate conclusions of law." State v. Bone, 354 N.C. 1, 7, 550 S.E.2d 482, 486 (2001) (quoting State v. Cooke, 306 N.C. 132, 134, 291 S.E.2d 618, 619 (1982)), cert. denied, 535 U.S. 940, 122 S. Ct. 1323, 152 L. Ed. 2d 231 (2002). When a defendant has not assigned error to any of the trial court's findings of fact, those findings are conclusive and binding on appeal. State v. Jacobs, 162 N.C.App. 251, 254, 590 S.E.2d 437, 440 (2004). "The trial court's conclusions of law, however, are fully reviewable on appeal." State v. Hughes, 353 N.C. 200, 208, 539 S.E.2d 625, 631 (2000).
Defendant initially contends that the dog sniff of the hallway outside of his locked storage unit constitutes an illegal warrantless search because he had a reasonable expectation of privacy in the storage facility, including the hallway area. We disagree.
The first clause of the Fourth Amendment protects the "right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures." U.S. Const. amend. IV. "[T]he touchstone of the Fourth Amendment analysis has been whether a person has a constitutionally protected reasonable expectation of privacy." State v. Phillips, 132 N.C.App. 765, 770, 513 S.E.2d 568, 572 (internal quotation marks omitted), disc. review denied and appeal dismissed, 350 N.C. 846, 539 S.E.2d 3 (1999). Such an unreasonable search "occurs when an expectation of privacy that society is prepared to consider reasonable is infringed." United States v. Jacobsen, 466 U.S. 109, 113, 104 S. Ct. 1652, 80 L. Ed. 2d 85, 94 (1984).
Official conduct that does not compromise any legitimate interest in privacy is not a search subject to the Fourth Amendment. Id. at 123, 104 S. Ct. 1652, 80 L.Ed.2d at 101. Any interest in possessing contraband cannot be deemed legitimate, and thus, governmental conduct that only reveals the possession of contraband does not compromise any legitimate privacy interest. Id. at 121-23, 104 S. Ct. 1652, 80 L.Ed.2d at 99-101.
The United States Supreme Court discussed the Fourth Amendment implications of a canine sniff in United States v. Place. 462 U.S. 696, 103 S. Ct. 2637, 77 L. Ed. 2d 110 (1983). There, the Court treated the sniff of a well-trained narcotics dog as sui generis because the sniff "disclose[d] only the presence or absence of narcotics, a contraband item." Id. at 707, 103 S. Ct. 2637, 77 L.Ed.2d at 121. As the United States Supreme Court explained in Illinois v. Caballes, since there is no legitimate interest in possessing contraband, a police officer's use of a well-trained narcotics dog that reveals only the possession of narcotics does not compromise any legitimate privacy interest and does not violate the Fourth Amendment. 543 U.S. 405, 408-09, 125 S. Ct. 834, 160 L. Ed. 2d 842, 847 (2005).
In the present case, the officers' use of the dog to sweep the common area of a storage facility, alerting them to the presence of contraband in defendant's storage unit, did not infringe upon defendant's Fourth Amendment rights. As defendant had no legitimate interest in possessing contraband, there has been no legitimate privacy interest compromised which the Fourth Amendment seeks to protect. Id. Therefore, the question before this Court is whether the police were lawfully present in the hallway area of the storage facility in order to permit the dog sniff. See United States v. Brock, 417 F.3d 692, 697 (7th Cir.2005); United States v. Roby, 122 F.3d 1120, 1124-25 (8th Cir.1997); United States v. Venema, 563 F.2d 1003, 1005 (10th Cir.1977).
It is well-settled that when a third party with common authority over a home or other protected area consents to a search, *559 the need for a search warrant is obviated. Georgia v. Randolph, 547 U.S. 103, 106, 126 S. Ct. 1515, 164 L. Ed. 2d 208, 217 (2006) (citing Illinois v. Rodriguez, 497 U.S. 177, 110 S. Ct. 2793, 111 L. Ed. 2d 148 (1990); United States v. Matlock, 415 U.S. 164, 94 S. Ct. 988, 39 L. Ed. 2d 242 (1974)). In United States v. Brock, the officers were granted consent to search the common areas of a residence by a resident with common authority over that area. 417 F.3d at 697. Because of this consent, the entry of the dog into that common space did not infringe on the other roommate's legitimate expectation of privacy. Id. The Court reasoned that consent granted by a third-party to search shared property is based on a "reduced expectation of privacy in the premises or things shared with another." Id. (internal quotation marks omitted). "When someone shares an apartment or a home with another individual, he ordinarily assumes the risk that a co-tenant might consent to a search, at least to all common areas and those areas to which the other has access." Id. (internal quotation marks omitted).
The Eighth Circuit has also concluded that the use of a dog sniff in a common area is not a search. Roby, 122 F.3d at 1124-25. There, the Court considered whether a canine sniff in the common corridor of a hotel intrudes upon a legitimate expectation of privacy. Id. at 1124. The Court determined that, although there is a reasonable expectation of privacy in one's hotel room, a privacy expectation does not extend to the corridor outside the hotel room as that area is traversed by many people. Id. at 1125. The Court also noted that the fact that a dog is more skilled at odor detection than a human does not render the sniff illegal. Id. at 1124-25.
Similarly, in United States v. Venema, the Tenth Circuit held that the dog sniff of the areaway in front of the defendant's rented storage locker did not constitute a search. 563 F.2d at 1005-06. There, the Court reasoned that, while the area inside the locker itself was private, the area in front of the locker was semi-public in nature. Id. at 1005. Since the officers brought the dog on the premises with the owner of the storage company's consent, they were there lawfully, and did not implicate the Fourth Amendment. Id. at 1005-06.
In the present case, the facts are substantially similar to the cases cited above. The police officers were lawfully present in the common hallway outside defendant's individual storage unit. The storage facility, in which renters obtain access into the gated facility by way of a personalized access code, consists of several buildings divided into four or five sections, with each section containing fifteen units. The doors to the individual units line hallways inside the various buildings, and the individual units are secured by the individual renters' locks. The hallway at issue, as with all of the common areas in the facility, was open to every person who had an access code and any invited guests. The police department also had its own access code to the storage facility, which had previously been supplied to it by a person with common authority over the building, the facility manager, Mr. Mastin. On the particular day at issue, Officer Cox and Detective Clodfelter obtained additional permission to access the common areas with a drug dog from Mr. Mastin.
Because this hallway area was open to any individual who rented a storage unit, facility management, guests of renters, and representatives from the police department, it was a common area and defendant could not possibly have possessed a reasonable expectation in the hallway area. Thus, with Mr. Mastin's consent, the officer's were lawfully present in the hallway. Since the police were lawfully present in the common hallway, the use of the drug dog in that area did not infringe on defendant's legitimate privacy interests. Accordingly, a search warrant for the hallway area was not needed.
Defendant argues this case requires a different result and relies on the Second Circuit's decision in United States v. Thomas. 757 F.2d 1359 (2nd Cir.1985). There, the Court rejected the notion that "a sniff can never be a search." Id. at 1366. Basing its decision on the "heightened privacy interest that an individual has in his dwelling place," id., the Second Circuit reasoned that "the defendant had a legitimate expectation that *560 the contents of his closed apartment would remain private, that they could not be `sensed' from outside his door. Use of the trained dog impermissibly intruded on that legitimate expectation." Id. at 1367.
Thomas, however, is criticized in that its proposition "conflicts with the Supreme Court's determination that [n]o legitimate expectation of privacy is impinged by governmental conduct that can reveal nothing about noncontraband items." United States v. Lingenfelter, 997 F.2d 632, 638 (9th Cir.1993) (internal quotation marks omitted). We join the Ninth Circuit's reasoning and hold that defendant had no expectation of privacy in the common hallway of the storage facility, making the dog sniff permissible within the confines of the Fourth Amendment.
In addition, defendant contends the police did not have probable cause or reasonable suspicion to believe contraband was contained in his storage unit before deciding to access the adjoining hallway with a drug dog, thus making the subsequent actions illegal under the Fourth Amendment. We disagree. As we have already determined that the dog sniff was not a Fourth Amendment search, probable cause was not a prerequisite for the entry. See United States v. Whitehead, 849 F.2d 849, 855 (4th Cir.1988) (holding that police were not required to have probable cause before bringing trained dogs into passenger train sleeping compartment to sniff for narcotics). Therefore, defendant's contention fails.
Defendant next argues that because the dog sniff was a violation of his Fourth Amendment rights, the subsequent search warrant of the individual storage unit and the evidence obtained therefrom were invalid. We disagree.
As discussed above, the drug dog was lawfully present in the storage facility, and the information obtained from its sweep was valid. In addition, a positive alert for drugs by a specially trained drug dog gives probable cause to search the area or item where the dog alerts. See United States v. Jeffus, 22 F.3d 554, 557 (4th Cir.1994). As such, the drug dog's alert in the present case provided the requisite probable cause to search defendant's storage unit. Thus, the search warrant for the storage unit was valid and the evidence procured from the subsequent search was properly within the police's possession. Accordingly, defendant's argument to the contrary fails.
Lastly, defendant contends that, even if the evidence from his storage facility was properly obtained, there was no nexus between the presence of drugs in the storage unit and the existence of drugs at his house to provide the requisite probable cause for the search warrant of his residence. Again, we disagree.
The general rule, pursuant to the Fourth Amendment of the United States Constitution and Article I, Section 20 of the North Carolina Constitution, is that issuance of a warrant based upon probable cause is required for a valid search warrant. See State v. Jones, 96 N.C.App. 389, 397, 386 S.E.2d 217, 222 (1989), appeal dismissed and review denied, 326 N.C. 366, 389 S.E.2d 809 (1990). An application for a search warrant must contain a statement supported by allegations of fact that there is probable cause to believe items subject to seizure may be found on the premises sought to be searched. See N.C. Gen.Stat. § 15A-244 (2007). Under the "totality of the circumstances" standard adopted by our Supreme Court for determining the existence of probable cause:
[t]he task of the issuing magistrate is simply to make a practical, common sense decision whether, given all the circumstances set forth in the affidavit before him, including the "veracity" and "basis of knowledge" of persons supplying hearsay information, there is a fair probability that contraband or evidence of a crime will be found in a particular place. And the duty of a reviewing court is simply to ensure that the magistrate had a "substantial basis for ... conclud[ing] that probable cause existed."
State v. Arrington, 311 N.C. 633, 638, 319 S.E.2d 254, 257-58 (1984) (quoting Illinois v. Gates, 462 U.S. 213, 238-39, 103 S. Ct. 2317, 76 L. Ed. 2d 527, 548 (1983)).
When the application is based upon information provided by an informant, the affidavit should state circumstances supporting the *561 informant's reliability and basis for the belief that a search will find the items sought. State v. Crawford, 104 N.C.App. 591, 596, 410 S.E.2d 499, 501 (1991). A showing is not required "that such a belief be correct or more likely true than false. A practical, nontechnical probability is all that is required." State v. Zuniga, 312 N.C. 251, 262, 322 S.E.2d 140, 146 (1984). Further, a magistrate's determination of probable cause should be given great deference, and an "after-the-fact scrutiny should not take the form of a de novo review." Arrington, 311 N.C. at 638, 319 S.E.2d at 258.
In addition, this Court has held that "firsthand information" of contraband seen in one location will support a search of a second location. State v. McCoy, 100 N.C.App. 574, 577-78, 397 S.E.2d 355, 357-58 (1990) (citing State v. Mavrogianis, 57 N.C.App. 178, 291 S.E.2d 163, disc. review denied, 306 N.C. 562, 294 S.E.2d 227 (1982)). However, evidence obtained in one location cannot provide probable cause for the search of another location when the evidence offered does not "implicate the premises to be searched." State v. Goforth, 65 N.C.App. 302, 308, 309 S.E.2d 488, 493 (1983) (holding that conclusory statements in the supporting affidavit that two people were going to a certain location to buy drugs and evidence that these two individuals in fact went to that location was insufficient to implicate the premises and therefore provide probable cause to search that residence); see also State v. Campbell, 282 N.C. 125, 131, 191 S.E.2d 752, 756-57 (1972) (holding that statements that defendants sold drugs in other parts of town and lived in the residence to be searched did not implicate the residence as a place where drugs would likely be found and therefore there was no probable cause for a search warrant of that residence).
In the present case, there was sufficient evidence offered in support of the search warrant for defendant's residence to provide probable cause to believe that contraband would be found in that location. First of all, Officer Cox, in his affidavit, offered proof of illegal drugs, which we have already determined were lawfully seized, found in defendant's storage unit. In addition, Officer Cox provided statements made by an informant that defendant stored additional drugs in a blue tool box at his residence. Assuming the informant is reliable and provides a basis for his belief that illegal drugs would be found, see Crawford, 104 N.C.App. at 596, 410 S.E.2d at 501, his testimony, taken in conjunction with the evidence seized from the storage unit, sufficiently implicates defendant's residence as one where contraband would likely be discovered, providing ample probable cause. Thus, the only issue left for this Court to address is the informant's reliability and basis for his belief. Id.
Though it is true that an informant's statements cannot blindly provide probable cause for a search warrant, there is no reason, given the circumstances in this case, to doubt this informant's reliability and basis of knowledge. See id. at 595-96, 410 S.E.2d at 5 01-02. First of all, the informant's reliability is clearly supported by facts established in Officer Cox's affidavit. Specifically, the affidavit established that Sergeant Smith spoke with a source from whom he had been receiving accurate information for nearly thirteen years. As in Illinois v. Gates, where the letter received from the informant was referred to another officer to pursue the information, 462 U.S. at 225, 76 L.E.2d at 540, Sergeant Smith referred the tip to the narcotics unit for Officer Cox to conduct the investigation. One notable difference, however, is that in Gates the source was anonymous, id., whereas the informant here had been a trusted source of Sergeant Smith's for many years. So while the source may have initially been unknown to Officer Cox, Sergeant Smith believed him to be reliable based on past experiences. Thus, the informant's reliability is clearly evident.
In addition, the affidavit indicates the informant's basis of knowledge. In the present case, the informant told Sergeant Smith that defendant's name was Kevin Washburn, he lived at 4612 Clipstone Lane, drove a white-over-tan Ford pick-up truck with license plate number XL-2269, kept a large quantity of drugs in a blue toolbox in his garage, and had a climate-controlled storage unit. The informant had attained this information by way of a female waitress at Zoe's *562 Restaurant who had been involved with defendant. Sergeant Smith referred this information to Officer Cox who investigated it. Officer Cox went to the Clipstone Lane address, saw the truck and license plate informant had provided, and confirmed that the vehicle belonged to defendant. Officer Cox returned to the residence on several more occasions to conduct surveillance, and on one of those occasions saw a blue toolbox in the corner of the garage. He was eventually able to confirm this location as defendant's address through mail found in the garbage collected outside the residence. He also confirmed that defendant rented a storage unit at Shields Road Self-Storage. Officer Cox later spoke with the informant himself, who reiterated the information previously given to Sergeant Smith. Given the investigation Officer Cox conducted and his ability to confirm the information the informant provided, the informant's basis and veracity of knowledge is established. Therefore, the totality of the circumstances standard set forth by Gates is satisfied.
Accordingly, based on the evidence obtained from the search of defendant's storage unit and the valid statement provided by the informant that drugs were contained in defendant's blue tool box, there was a substantial basis for the magistrate to conclude there was probable cause to believe drugs would be found in defendant's residence. The search warrant of defendant's home is therefore valid and defendant's assignment of error is dismissed.
Thus, we affirm the trial court's denial of defendant's motion to suppress the evidence obtained from both his individual storage unit and his residence.
Affirmed.
Judges HUNTER and BRYANT concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320649/ | 134 Ga. App. 630 (1975)
215 S.E.2d 527
ALODEX CORPORATION
v.
BRAWNER et al.
49972.
Court of Appeals of Georgia.
Argued January 6, 1975.
Decided April 24, 1975.
McHaney & Lynn, Robert L. McHaney, Jr., for appellant.
*632 James, Johnson & Pitts, Robert J. James, for appellees.
BELL, Chief Judge.
Plaintiff brought suit for the recovery of the $5,000 earnest money paid to defendants under a contract for sale of real estate. The contract, which was attached to the complaint, provided in a special stipulation: "It is hereby understood that the $5,000.00 earnest money described herein will be refunded to Purchaser if suitable financing cannot be arranged sixty days prior to the closing date of January 10, 1972, in which event the above contract will become null and void. Should Purchaser not comply with the terms of this contract after obtaining suitable financing, the above described earnest money shall be forfeited to the Seller as full liquidated damages and Purchaser shall have no further obligation to Seller under this contract." The complaint alleged that plaintiff could not obtain suitable financing within the specified time frame; that plaintiff demanded the return of the earnest money, which demand had been refused by defendants.
Defendants, while admitting the written contract alleged that the plaintiff through its agent entered into an oral novation which superseded the written agreement and which provided that in addition to the $5,000 the plaintiff would pay to the defendants an additional sum of $2,000 as earnest money for an extension of time to close the transaction and that all the special stipulations in the written contract would be disregarded. The defendants also counterclaimed for the additional $2,000 earnest money which had not been paid. Plaintiff's motion for summary judgment as to its claim and the counterclaim was denied. The trial court certified the denial for review. Held:
1. We need not reach other questions presented for the contract is null and void as it is lacking in mutuality. *631 The condition "obtaining suitable financing" made the contract contingent upon an event which may or may not happen at the pleasure of the buyer. Until that contingency had occurred no obligation arose. F & C Investment Co. v. Jones, 210 Ga. 635 (81 SE2d 828); McLendon v. McCarthy, 125 Ga. App. 76 (186 SE2d 452).
2. The defendants in their counterclaim rely on the alleged subsequent oral agreement. However, a contract for the sale of land, to be enforceable, must be in writing unless the case falls within an exception to the Statute of Frauds. Code §§ 20-401, 20-402. The defendants contend that they have partially performed the oral contract by withholding the property off the market which takes the contract out of the Statute of Frauds. Code § 20-402 (3). This has no merit. Mere non-action is not performance, either partial or complete, and will not, therefore, take a parol contract out of the Statute of Frauds. Augusta So. R. Co. v. Smith & Kilby Co., 106 Ga. 864 (2) (33 S.E. 28). While an oral contract within the Statute of Frauds may be taken out by part performance where one party performs some act essential to the performance which results in loss to him and benefit to the other, the mere fact that one party attempts performance which results in no loss to one or benefit to the other is not sufficient to take the contract out of the statute. Yarborough v. Hi-Flier Mfg. Co., 63 Ga. App. 725 (2) (12 SE2d 133). There is no evidence or suggestion that the defendants occasioned a loss as the result of their performance in holding the property off the market or benefited plaintiff. Thus, the parol contract is unenforceable. Plaintiff has shown it is entitled to judgment as a matter of law on its claim and on the counterclaim. We reverse with direction to grant the plaintiff's motion for summary judgment.
Judgment reversed with direction. Webb and Marshall, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320646/ | 215 S.E.2d 159 (1975)
26 N.C. App. 33
STATE of North Carolina
v.
Willie Washington ROOK, III.
No. 7510SC76.
Court of Appeals of North Carolina.
May 21, 1975.
*160 Atty. Gen. Rufus L. Edmisten by Asst. Atty. Gen. James E. Magner, Jr., Raleigh, for the State.
Gregory B. Crampton, Raleigh, for defendant-appellant.
MARTIN, Judge.
The bill of indictment charges a violation of G.S. § 20-106. A defendant charged with the violation of a statute or ordinance may challenge the constitutionality of such statute or ordinance by a motion to quash the warrant or indictment. State v. Atlas, 283 N.C. 165, 195 S.E.2d 496 (1973).
G.S. § 20-106 reads: "Any person who, with intent to procure or pass title to a vehicle which he knows or has reason to *161 believe has been stolen or unlawfully taken, receives or transfers possession of the same from or to another, or who has in his possession any vehicle which he knows or has reason to believe has been stolen or unlawfully taken, and who is not an officer of the law engaged at the time in the performance of his duty as such officer, is guilty of a felony."
Defendant argues that the language "or has reason to believe has been stolen or unlawfully taken" creates a matter of conjecture as to what is prohibited and is unconstitutionally vague so as to deprive the defendant of due process of law.
Our Supreme Court, speaking through Huskins, J., in In Re Burrus, 275 N.C. 517, 531, 169 S.E.2d 879, 888 (1969), aff'd., 403 U.S. 528, 91 S. Ct. 1976, 29 L. Ed. 2d 647, said: "It is settled law that a statute may be void for vagueness and uncertainty. `A statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law.' (Citations omitted.) Even so, impossible standards of statutory clarity are not required by the constitution. When the language of a statute provides an adequate warning as to the conduct it condemns and prescribes boundaries sufficiently distinct for judges and juries to interpret and administer it uniformly, constitutional requirements are fully met. (Citation omitted.)"
In passing upon the constitutionality of this statute there is a presumption that it is constitutional, and it must be so held by the courts, unless it is in conflict with some constitutional provision. State v. Hales, 256 N.C. 27, 122 S.E.2d 768 (1961). While a criminal statute must be strictly construed, the court should construe it with regard to the evil at which the statute is directed. State v. Spencer, 276 N.C. 535, 173 S.E.2d 765 (1970).
Clearly, the purpose of the statute is to discourage the possession of stolen vehicles by one who knows it is stolen or has reason to believe that it is stolen.
It is within the power of the Legislature to define and punish any act as a crime, unless limited by constitutional provisions imposed by the State and Federal Constitutions. State v. Hales, supra. Thus, in constructing the statute it was a matter for the lawmaking body to define and establish the degree of scienter upon which to rest the guilt of the accused.
The inclusion in the statute of the phrase, "or has reason to believe", defines and prescribes the boundaries sufficiently distinct to provide an adequate warning as to the conduct it condemns.
The evidence tended to show that the owner of the stolen vehicle parked his Chevrolet in the Mission Valley Shopping Center on 16 June 1974 between 1:00 and 3:00 p.m. and that the car could be started without a key being placed into the ignition because it was an older model automobile.
Defendant was with his brother, John Rook, Cecil Manning and other friends at the Mission Valley Shopping Center on 16 June, between 1 and 3 o'clock. They saw the parked car in question on that day, and there had been talk by Cecil Manning of stealing the car. After this talk the defendant and his brother left the shopping center and walked over to his girl friend's apartment, but defendant's brother returned to the shopping center. The next day, Cecil Manning and a friend, Tommy Ashworth, drove up in the gray Chevrolet automobile, the same one that had been at the Mission Valley Shopping Center. Later, the defendant got into the automobile and while going for beer had mechanical difficulty and pulled it over to the side of the road. A police officer saw the defendant working on the car and recognized it as a stolen vehicle. The officer noticed that there was no key in the ignition of the car. Upon the officer's announcement that the car was stolen and that the defendant would have to come with him, the defendant *162 fled the scene and made good his escape in a nearby wooded area.
Clearly, the evidence was sufficient to establish either knowledge or belief on the part of the defendant of the fact that the vehicle he was driving was stolen by his friends and that they did not have lawful title or possession of the vehicle.
The court properly denied the motion to quash the indictment.
We have carefully reviewed defendant's remaining assignments of error and find them to be without merit.
No error.
BRITT and HEDRICK, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2207133/ | 208 Cal. App. 2d 442 (1962)
MERTON HALL et al., Petitioners,
v.
THE SUPERIOR COURT OF RIVERSIDE COUNTY, Respondent.
Civ. No. 7147.
California Court of Appeals. Fourth Dist.
Oct. 11, 1962.
Shaw, Morgan & Miceli and William W. Shaw for Petitioners.
William O. Mackey, District Attorney, for Respondent. *443
THE COURT.
[1] Petitioners sought a writ of prohibition, praying that the Superior Court of Riverside County be restrained, under Penal Code, section 995, from taking further steps or proceedings under a grand jury indictment charging each with the crime of violating Elections Code, section 29102, by aiding and abetting the city clerk in neglecting to perform her duties, in that she was accused of failing to deliver in person or by mail certain absentee ballots to persons who had signed applications therefor.
The petition for the writ was heretofore denied as to all petitioners except L. Dee Tallent. The only evidence pertaining to him was that he turned over to the city clerk the names of persons desiring the absentee ballots. This was insufficient to support the charge. An order to show cause was issued as to him, and on the hearing the district attorney, counsel for the County of Riverside, agreed that the evidence was insufficient to support the charge as to petitioner L. Dee Tallent.
Petition for writ of prohibition as to L. Dee Tallent granted as prayed for in the petition. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320689/ | 685 S.E.2d 85 (2009)
STATE of North Carolina
v.
PHILIP MORRIS USA INC.; R.J. Reynolds Tobacco Company; Brown & Williamson Tobacco Corporation, individually and as successor by merger to The American Tobacco Company; and Lorillard Tobacco Company.
No. 2A05-4.
Supreme Court of North Carolina.
November 6, 2009.
*86 Douglas F. Gansler, Attorney General of Maryland, by Marlene Trestman, Special Assistant to the Attorney General, pro hac vice, for plaintiff-appellant State of Maryland Certification Entity; and Thomas W. Corbett, Jr., Attorney General of Pennsylvania, by Joel M. Ressler, Chief Deputy Attorney General, pro hac vice, for plaintiff-appellant Commonwealth of Pennsylvania Certification Entity.
Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, by Jim W. Phillips, Jr. and Charles F. Marshall III, Greensboro, for defendant-appellees Philip Morris USA Inc., R.J. Reynolds Tobacco Company, and Lorillard Tobacco Company; and Smith Moore Leatherwood LLP, by Gregory G. Holland, Greensboro, for defendant-appellee Philip Morris USA Inc.
K & L Gates LLP, by William G. Scoggin, Raleigh, for the North Carolina Chamber, amicus curiae.
NEWBY, Justice.
This case requires us to once again review the National Tobacco Grower Settlement Trust. We undertake this review to determine whether defendant tobacco companies may, pursuant to the Tax Offset Adjustment provision of the Trust, offset their financial obligation under the Fair and Equitable Tobacco Reform Act of 2004 against all payments due the Trust. We hold that they may and affirm the Court of Appeals.
I. BACKGROUND
Beginning in 1938 and continuing until the operation of the Fair and Equitable Tobacco Reform Act of 2004 (FETRA), Pub.L. No. 108-357, 118 Stat. 1521 (codified at 7 U.S.C. §§ 518 to 519a (2006)), the United States government largely regulated the production *87 and supply of domestic tobacco through a system of price supports and quotas. This system utilized "price supports [to keep] tobacco prices elevated" and implemented quotas to curtail the amount of tobacco grown and "confine[ ][its] cultivation ... to specific tracts of land." State v. Philip Morris USA Inc. (Philip Morris I), 359 N.C. 763, 765, 618 S.E.2d 219, 220 (2005). The federal government annually adjusted those quota levels to remain responsive to tobacco companies' demand for domestic tobacco. Id. In its final years, the system began collapsing under its own weight. Id. The tobacco farmers toiling under this system experienced shrinking quotas due to a lessening demand for artificially high-priced domestic tobacco, a product of the federal price support system. Id. Growers in Maryland and Pennsylvania, however, did not fully experience the pressure of this collapse because they had chosen to not participate in the federal quota system, a choice that allowed them to grow unlimited quantities of tobacco, without the attendant federal price supports.
The tobacco processing industry also experienced difficulty during the final years of this system. Every state and several other American jurisdictions sued defendant tobacco companies ("Settlors") during the 1990s. 359 N.C. at 765, 618 S.E.2d at 221. These various lawsuits sought to "recover healthcare costs associated with smoking-related illnesses." Id. To dispose of these claims, Settlors entered into individual settlement agreements with four states, 359 N.C. at 765 n. 2, 618 S.E.2d at 221 n. 2, and into the Master Settlement Agreement ("MSA") with the remaining forty-six states and the six other complaining jurisdictions, id. at 765, 618 S.E.2d at 221. The MSA was then entered as a consent decree and final judgment in each of the party jurisdictions. Id.
In addition to settling the pending lawsuits, the MSA imposed certain obligations on Settlors to reduce public demand for tobacco products. As the high cost of managing smoking-related health problems was the basis for the lawsuits settled by the MSA, Settlors were required to engage in various advertising efforts aimed at reducing the consumption of tobacco. 359 N.C. at 765 n. 3, 618 S.E.2d at 221 n. 3. All parties involved understood and indeed hoped that Settlors' efforts would lead to a decreased demand for tobacco. Id. at 765, 618 S.E.2d at 221. However, the parties also comprehended that a decrease in the demand for tobacco would adversely affect the economies of tobacco producing states ("Grower States")[1] and the individual tobacco growers. Id. To remedy this situation, the MSA required Settlors to "meet with the political leadership of the [Grower States]" to create a method by which to mitigate these potentially harsh financial consequences. Id.
The method resulting from negotiations between Grower States and Settlors was the National Tobacco Grower Settlement Trust ("the Trust").[2] Under the Trust, Grower States released Settlors from any claims Grower States might "bring for economic damages suffered as a result of the MSA." Id. at 766, 618 S.E.2d at 221. In exchange, Settlors agreed "to spend approximately $5.15 billion on economic assistance." Id. at 765, 618 S.E.2d at 221. More specifically, Settlors agreed to make scheduled payments to the Trust each year, beginning in 1999 and ending in 2010. National Tobacco Grower Settlement Trust at A-1 to A-2 (July 19, 1999) [hereinafter Trust Agreement]. The amount of Settlors' scheduled base payments could be increased or decreased by certain adjustment provisions contained in the Trust. Philip Morris I, 359 N.C. at 767, 618 S.E.2d at 222 (citing Trust Agreement at A-1 to A-16). It is one of these adjustment provisions that is at issue in this appeal.
The source of the controversy is the Tax Offset Adjustment ("TOA") provision of the Trust. Trust Agreement at A5 to A-11. *88 Because the parties "kn[ew] federal and state governments might take additional measures to aid tobacco farmers," Philip Morris I, 359 N.C. at 767, 618 S.E.2d at 222, the TOA provision was designed to prevent a situation in which Settlors were simultaneously providing aid to tobacco growers under both the Trust and a governmental obligation. The TOA provision of the Trust reads in pertinent part:
Tax Offset Adjustment. Except as expressly provided below, the amounts to be paid by the Settlors in each of the years 1999 through and including 2010 shall also be reduced upon the occurrence of any change in a law or regulation or other governmental provision that leads to a new, or an increase in an existing, federal or state excise tax on Cigarettes, or any other tax, fee, assessment, or financial obligation of any kind ... imposed by any governmental authority ("Governmental Obligation") ... on the Settlors, to the extent that all or any portion of such Governmental Obligation is used to provide:
(i) direct payments to Tobacco Growers or Tobacco Quota Owners;
(ii) direct or indirect payments, grants or loans under any program designed in whole or in part for the benefit of Tobacco Growers, Tobacco Quota Owners or organizations representing Tobacco Growers or Tobacco Quota Owners (including without limitation the stabilization cooperatives, the Farm Bureau or the Commodity Credit Corporation);
(iii) payments, grants or loans to Grower States to administer programs designed in whole or in part to benefit Tobacco Growers, Tobacco Quota Owners or organizations representing Tobacco Growers or Tobacco Quota Owners (including without limitation the stabilization cooperatives, the Farm[ ] Bureau or the Commodity Credit Corporation); or
(iv) payments, grants or loans to any individual, organization, or Grower State for use in activities which are designed in whole or in part to obtain commitments from, or provide compensation to, Tobacco Growers or Tobacco Quota Owners to eliminate tobacco production.
The amount of the Governmental Obligation used for any of the purposes set forth above shall be the "Grower Governmental Obligation."
In the event of such a Governmental Obligation, the amount otherwise required to be paid by each Settlor each year (after taking account of all adjustments or reductions hereunder) shall be reduced by an amount equal to the product of the amount of such Governmental Obligation paid in connection with Cigarettes manufactured by the Settlor (or tobacco or tobacco products used by the Settlor to manufacture Cigarettes) for the same year multiplied by the ratio of the Grower Governmental Obligation divided by the amount of the Governmental Obligation, which reduction amount may be carried forward to subsequent years as necessary to ensure full credit to the Settlor. If the Governmental Obligation results from a law or regulation or other governmental provision adopted by a Grower State, or by a political subdivision within such Grower State, the amount that a Settlor may reduce its payment to the Trust in any one year shall not exceed the product of the amount the Settlor otherwise would have paid to the Trust in that year in the absence of the Tax Offset Adjustment multiplied by the allocation percentage for the pertinent Grower State set forth in Section 1.03.
Trust Agreement at A-5 to A-7.
As the parties anticipated, Congress, by enacting FETRA, placed on Settlors a financial obligation that would allow reduction of their payments to the Trust under the TOA provision. FETRA ended the federal price support and quota system in the United States tobacco market. As we explained in Philip Morris I, FETRA "terminated the price control/quota system for U.S. tobacco beginning with the 2005 tobacco crop." 359 N.C. at 769, 618 S.E.2d at 223. To accomplish this, Congress instructed the "U.S. Secretary of Agriculture to offer tobacco farmers annual payments during each of fiscal *89 years 2005 through 2014 in exchange for ending marketing quotas and related price supports." Id. at 770, 618 S.E.2d at 223 (citing FETRA §§ 622 to 623). The funding for these payments is provided by "[q]uarterly assessments against tobacco manufacturers and importers," a group that includes Settlors. Id. at 770, 618 S.E.2d at 223-24. Moreover, "FETRA payments to tobacco farmers between 2005 and 2014 will approach $9.6 billion." Id. at 769, 618 S.E.2d at 223 (citation omitted). As the Court of Appeals correctly noted, "It is undisputed that the amounts Settlors are required to pay to tobacco farmers under FETRA exceeds" Settlors' remaining obligation to the Trust. State v. Philip Morris USA Inc., ___ N.C.App. ___, ___, 669 S.E.2d 753, 755 (2008).
In Philip Morris I, this Court examined the TOA provision of the Trust in light of Congress's enactment of FETRA in order to determine exactly when Settlors could offset their obligation under FETRA against amounts due the Trust. There, Settlors claimed that the enactment of FETRA imposed a financial obligation on them, requiring application of the TOA provision and relieving Settlors of their duty to the Trust immediately "upon the occurrence of [the] change in ... law." Trust Agreement at A-5. The Trustee claimed, however, that Settlors were not entitled to cease payments to the Trust until Settlors actually started making payments under FETRA. The Trustee stated that the change in law was only the first step leading to the later application of the TOA provision. To support this contention, the Trustee pointed to the entire TOA provision, which states in pertinent part:
In the event of such a Governmental Obligation, the amount otherwise required to be paid by each Settlor each year ... shall be reduced by an amount equal to the product of the amount of such Governmental Obligation paid in connection with Cigarettes manufactured by the Settlor ... for the same year multiplied by the ratio of the Grower Governmental Obligation divided by the amount of the Governmental Obligation, which reduction amount may be carried forward to subsequent years as necessary to ensure full credit to the Settlor.
Id. at A-7 (emphasis added). This language, the Trustee explained, requires, inter alia, the amount of the Governmental Obligation "paid" to be known before the amount by which Settlors may reduce their payments under the TOA provision can be determined.
This Court, after examining the language of the Trust and FETRA, decided that the Trustee's construction of the language of the TOA provision embodied the intent of the parties at the time the Trust was executed. Despite the tension created by the TOA provision's express timing statement that "the amounts to be paid by the Settlors ... shall... be reduced upon the occurrence of any change in a law," id. at A-5 (emphasis added), we concluded that reading these words alone to determine the timing of the offset failed to give other words in the TOA provision their ordinary meaning. 359 N.C. at 775, 618 S.E.2d at 227. The TOA provision clearly explained that Settlors must know the amount they had paid pursuant to a Governmental Obligation before they can determine the amount by which to reduce their payments to the Trust. Id. at 775-76, 618 S.E.2d at 227. Finally, using the Trust's purpose to buttress our construction of the conflicting language found in the TOA provision, we said that applying the TOA provision before Settlors began making payments under FETRA could result in a scenario in which all Settlors made no payments, either under FETRA or the Trust, and all Tobacco Growers and Tobacco Quota Owners received no benefits, either from FETRA or the Trustee. Id. at 779-80, 618 S.E.2d at 229. Thus, we concluded that the TOA provision was not intended to create a gap in payments and could be applied not when FETRA was signed into law, but when Settlors have "actually assume[d] the burden of FETRA." Id. at 781, 618 S.E.2d at 230. Following our decision, Settlors continued funding the Trust until they began making required payments under FETRA. At the time Settlors ceased funding the Trust and began paying FETRA assessments, Settlors had paid nearly $2.7 billion to the Trust, with nearly $25 million of that sum being paid to Maryland and Pennsylvania.
*90 The Maryland Certification Entity and the Pennsylvania Certification Entity ("the States") recognized that FETRA was unlikely to provide benefits to their tobacco growers who were covered by the Trust because those growers had not participated in the federal quota and price support system. The measure originally introduced in the House of Representatives provided no benefits to the States' growers. As the legislation creating FETRA moved through the political process, the bill underwent several revisions. The Senate amended the bill on 15 July 2004 to allow "Tobacco Community Economic Development Grants" of $20 million to Maryland and $14 million to Pennsylvania. Tobacco Market Transition Act of 2004, S. Amend. 3563, amending S. Amend. 3562 to H.R. 4520, 108th Cong. § 380O(c)(1), (2) (2004). The bill signed into law by the President on 22 October 2004, however, did not include those Grants. As a result, on 17 December 2004, the States moved to clarify or modify the Trust so they would continue receiving payments from the Trust for the benefit of their growers. The States supplemented their motion with a Statement of Claim For Continued Payments on 24 June 2005.
The States made two arguments in the Business Court. First, the States claimed that they were entitled to continued benefits from the Trust because none of Settlors' financial obligation under FETRA was being used to benefit their growers. Second, the States claimed that if the Trust allowed Settlors to discontinue payments to the Trust, then the Trust should be modified to require continued payments for the benefit of growers in the States. In support of their modification argument, the States claimed that the parties did not anticipate a situation in which Congress benefitted some tobacco growers and not others. Settlors responded that their payment obligations under FETRA extinguished their obligation to fund the Trust. In granting summary judgment, the Business Court agreed with the States that the Trust, in light of its stated purpose to benefit tobacco farmers, requires Settlors to continue making payments to the Trust for the benefit of the States.
The Court of Appeals disagreed with the Business Court's reading of the Trust. Basing its opinion on this Court's decision in Philip Morris I and on the plain language of the Trust, the Court of Appeals held that the TOA provision allows Settlors to offset the payments made under FETRA against Settlors' obligation to the Trust. State v. Philip Morris USA Inc., ___ N.C.App. at ___, 669 S.E.2d at 757. Relying on a dissenting opinion filed at the Court of Appeals, the States appealed as of right to this Court on the issue of whether Settlors are required to continue making payments to the Trust for the benefit of the States. This Court allowed discretionary review on the issue of equitable modification of the Trust and the derivative issue of what evidence could be considered in determining the propriety of any equitable modification.
II. ANALYSIS
As in Philip Morris I, this is a case of contract interpretation, and our review is de novo. Philip Morris I, 359 N.C. at 773, 618 S.E.2d at 225 (citation omitted).
Further, in our first opinion in this case, we set out the principles of contract interpretation applicable to the Trust:
Interpreting a contract requires the court to examine the language of the contract itself for indications of the parties' intent at the moment of execution. Lane v. Scarborough, 284 N.C. 407, 409-10, 200 S.E.2d 622, 624 (1973). "If the plain language of a contract is clear, the intention of the parties is inferred from the words of the contract." Walton v. City of Raleigh, 342 N.C. 879, 881, 467 S.E.2d 410, 411 (1996) ("A consent judgment is a court-approved contract subject to the rules of contract interpretation."). Intent is derived not from a particular contractual term but from the contract as a whole. Jones v. Casstevens, 222 N.C. 411, 413-14, 23 S.E.2d 303, 305 (1942) ("`Since the object of construction is to ascertain the intent of the parties, the contract must be considered as an entirety. The problem is not what the separate parts mean, but what the contract means when considered as a whole.'") (citation omitted).
*91 Id. (footnote omitted). However, we are also mindful that in reviewing the entire agreement, our task is not "to find discord in differing clauses, but to harmonize all clauses if possible." Peirson v. Am. Hdwe. Mut. Ins. Co., 249 N.C. 580, 583, 107 S.E.2d 137, 139 (1959) (citations omitted). Furthermore, when the terms of a contract "are plain and unambiguous, there is no room for construction. The contract is to be interpreted as written," Jones, 222 N.C. at 413, 23 S.E.2d at 305 (citations omitted), and "enforce[d] ... as the parties have made it," Wachovia Bank & Tr. Co. v. Westchester Fire Ins. Co., 276 N.C. 348, 354, 172 S.E.2d 518, 522 (1970) (citations omitted).
Here, the disagreement among the parties lies in the portion of the TOA provision determining the amount by which Settlors may reduce their obligation to the Trust: specifically, whether Settlors may offset their FETRA obligation against the amount due the Trust for all Grower States, or whether Settlors are entitled to offset their FETRA obligation against only the amount designated for those Grower States actually receiving FETRA benefits. To resolve this dispute, we first examine the language of the Trust.
The TOA provision contains the formula used in determining the amount by which Settlors may reduce their payments to the Trust following the creation of a Governmental Obligation. That formula provides that the amount of the payments otherwise required of Settlors "shall be reduced by an amount equal to the product of the amount of such Governmental Obligation paid ... multiplied by the ratio of the Grower Governmental Obligation divided by the amount of the Governmental Obligation." Trust Agreement at A-7.
Before we interpret this formula, we are constrained to mention several other principles of contract interpretation applicable to the provision at issue. If the parties agreed to define a term, and the Trust "contains a definition of a term used in it, this is the meaning which must be given to that term wherever it appears in the [Trust], unless the context clearly requires otherwise." Wachovia Bank & Tr., 276 N.C. at 354, 172 S.E.2d at 522 (citation omitted). Furthermore, any undefined, nontechnical word is "given a meaning consistent with the sense in which [it is] used in ordinary speech, unless the context clearly requires otherwise." Id. (citing Peirson, 249 N.C. at 583, 107 S.E.2d at 139). "Where the immediate context in which words are used is not clearly indicative of the meaning intended, resort may be had to other portions of the [Trust] and all clauses of it are to be construed, if possible, so as to bring them into harmony." Wachovia Bank & Tr., 276 N.C. at 355, 172 S.E.2d at 522 (citing Peirson, 249 N.C. at 583, 107 S.E.2d at 139).
The TOA provision defines "Governmental Obligation" and "Grower Governmental Obligation." Id. at A-6. Accordingly, we must ascribe to these terms the meanings the parties intended. See, e.g., Wachovia Bank & Tr., 276 N.C. at 354, 172 S.E.2d at 522. The parties defined the term "Governmental Obligation" as, inter alia, a "change in a law ... that leads to a new ... financial obligation of any kind ... imposed by any governmental authority ... on the Settlors." Trust Agreement at A-5 to A-6. The parties described a "Grower Governmental Obligation" as a Governmental Obligation that is used for "any" number of specified purposes, including "direct payments to Tobacco Growers or Tobacco Quota Owners." Id. at A-6 (emphasis added). Further, the parties agreed that the words "`any'" and "`or'" would be read as having the same meaning, and that meaning is "`any one or more or all of.'" Id. para. 4.09 (stating further that words "in the text of this Agreement shall be read as the singular or plural and as the masculine, feminine or neuter as may be applicable or permissible in the particular context"). Thus, so long as the Governmental Obligation is being used to make payments to Tobacco Growers, Tobacco Quota Owners, both Tobacco Growers and Tobacco Quota Owners, or any subset of Tobacco Growers or Tobacco Quota Owners, the TOA provision allows Settlors to offset the total amount of the Governmental Obligation.[3]
*92 The parties also defined the terms "Tobacco Grower" and "Tobacco Quota Owner." Id. para. 4.01. The Trust provides:
"Tobacco Grower" shall mean an individual or entity who, during a base period established by the Certification Entity for the pertinent Grower State, was one or more of the following:
(i) the principal producer of tobacco for use in Cigarettes on a farm where tobacco was produced pursuant to a tobacco farm marketing quota or farm acreage allotment established under the Agricultural Adjustment Act of 1938...;
(ii) a producer who owned a farm that produced tobacco for use in Cigarettes pursuant to a lease and transfer to that farm of all or a part of a tobacco farm marketing quota or farm acreage allotment established under the Agricultural Adjustment Act of 1938;
(iii) a producer who rented farm land to produce tobacco for use in Cigarettes under a tobacco farm marketing quota or farm acreage allotment established under the Agricultural Adjustment Act of 1938;
(iv) an individual or entity in Maryland or Pennsylvania who in connection with the production of Maryland Type 32 tobacco for use in Cigarettes was one of the following:
(a) the principal producer of such tobacco (which may include an operator, tenant, or sharecropper who shared in the risk of producing a crop and who was entitled to share in the revenues derived from marketing the Cigarette tobacco crop from the farm); or
(b) a producer who owned or rented a farm that produced Maryland Type 32 tobacco for use in Cigarettes.
Id. para. 4.01(a) (emphasis added) (internal citations omitted). The Trust further provides: "`Tobacco Quota Owner' shall mean the owner of record of a tobacco farm marketing quota or farm acreage allotment established under the Agricultural Adjustment Act of 1938 during a base period established by the Certification Entity for the Grower State in which the farm is located." Id. para. 4.01(b) (internal citation omitted).
Upon applying these definitions contained in the Trust and the ordinary meaning of nontechnical words, the language of the TOA provision is clear. The TOA provision may be implemented when, for example, a financial obligation on Settlors is used to make payments to "principal producer[s] of tobacco... produced pursuant to a tobacco farm marketing quota or farm acreage allotment established under the Agricultural Adjustment Act of 1938." Id. para. 4.01(a)(i). The offset is then allowed because the financial obligation on Settlors is used to make "direct payments to Tobacco Growers." Id. at A-6. Similarly, the TOA provision may be applied when Settlors' assessments paid pursuant to a Governmental Obligation are used to pay the "owner[s] of record of ... tobacco farm marketing quota[s] or farm acreage allotment[s] established under the Agricultural Adjustment Act of 1938," id. para. 4.01(b), because the assessments are being used to make "payments to ... Tobacco Quota Owners," id. at A-6. Therefore, and controlling in the case sub judice, all financial obligations imposed on and paid by Settlors pursuant to FETRA used to make payments to an individual or entity described in any of the four, alternative categories of Tobacco Grower, or used to make payments to an individual or entity described in the Trust's definition of Tobacco Quota Owner, can be offset against Settlors' obligation to the Trust. An examination of the Trust as a whole has revealed no text that contradicts the meaning of the plain language of the TOA provision.
Since the language of the Trust is clear, we must infer the intent of the parties "from the words of the contract." Walton, 342 N.C. at 881, 467 S.E.2d at 411 (citing Lane, 284 N.C. at 410, 200 S.E.2d at 624-25). The TOA provision is firm in its command that Settlors' obligation to the Trust "shall... be reduced" by the total amount of any *93 financial obligation used to benefit any one of the numerous individuals or entities listed in any of the four disjunctive categories by any method described in the category in which the benefitted individuals or entities are found, even if it be only one type of individual by only one method. Trust Agreement at A-5 to A-6 (emphasis added). The TOA provision's definition of Grower Governmental Obligation reinforces that any benefit flowing from Settlors to any of the individuals or entities listed, without regard to geographic location, in any of the four disjunctive categories, "shall be the `Grower Governmental Obligation.'" Id. (emphasis added). The parties agreed that the words "`any'" and "`or'" would each mean "`any one or more or all of,'" and the language used by the parties indicates that the word "or" as used twice in the definition was given its common, ordinary meaning by the parties. "Given the degree of lawyerly scrutiny each word of the Trust Agreement doubtless underwent, we are not inclined to interpret the terms of Schedule A in a fashion that deviates from the meaning commonly ascribed to them." Philip Morris I, 359 N.C. at 775, 618 S.E.2d at 227. Using the appropriate meanings of these words, the amount of the Governmental Obligation on Settlors under FETRA being used to make payments to any of the four disjunctive categories of Tobacco Growers, or to Tobacco Quota Owners, constitutes the Grower Governmental Obligation. Consequently, we conclude that the parties intended the TOA provision to offset Settlors' entire obligation to the Trust, not only that portion designated for those now receiving FETRA benefits.
Since the plain language of the TOA provision, after examining the Trust as a whole, is clear and unambiguous, it does not permit construction and our inquiry ends here. See Wachovia Bank & Tr., 276 N.C. at 354, 172 S.E.2d at 522 (explaining that if there is no ambiguity the court does not apply rules of construction); Jones, 222 N.C. at 413, 23 S.E.2d at 305 (stating that when contract terms "are plain and unambiguous, there is no room for construction"); Wallace v. Bellamy, 199 N.C. 759, 763, 155 S.E. 856, 859 (1930) ("In the interpretation of contracts the general rule is that a court will not resort to construction where the intent of the parties is expressed in clear and unambiguous language...."); McCain v. Hartford Live Stock Ins. Co., 190 N.C. 549, 551, 130 S.E. 186, 187 (1925) ("Rules of construction are only aids in interpreting contracts that are either ambiguous or not clearly plain in meaning, either from the terms of the contract itself, or from the facts to which it is to be applied."). An examination reaching beyond the face of the whole contract to ascertain the parties' intent is necessary only when construing an ambiguous contract term. Jones, 222 N.C. at 413-14, 23 S.E.2d at 305; Simmons v. Groom, 167 N.C. 271, 275, 83 S.E. 471, 473 (1914) ("It is well recognized that the object of all rules of interpretation is to arrive at the intention of the parties as expressed in the contract...." (citation and internal quotation marks omitted)).
Assuming arguendo, however, that the TOA provision is ambiguous, the parties' intent, illustrated by inferences to be made from the Trust as a whole and the Trust's purpose, accords with the express language of the TOA provision. The plain language of the TOA formula is consistent with other portions of the TOA provision. Realizing that the formula created in the TOA provision broadly defined "Governmental Obligation" to include virtually any obligation imposed by any governmental body, the parties included in the TOA provision a method by which to prevent one Grower State from imposing an obligation on Settlors that would result in decreased payments to other Grower States. See Trust Agreement at A-7. This portion of the TOA provision allows Settlors to offset amounts paid under any obligation imposed by "a Grower State, or by a political subdivision within such Grower State," only by the amount that Grower State would have otherwise received according to the "allocation percentage for the pertinent Grower State set forth in Section 1.03" of the Trust. Id. As the plain language indicates, this portion only applies to obligations imposed at the state or local level. There is no comparable portion of the TOA provision that reduces Settlor payments following a federal Governmental Obligation based on which state is receiving benefits from that Governmental *94 Obligation. As such, like the Court of Appeals, we conclude that the sophisticated parties to the Trust intended to apply the TOA provision to reduce those amounts due the state or states receiving benefits from a Governmental Obligation only when dealing with an obligation created by a state or local government. State v. Philip Morris USA Inc., ___ N.C.App. at ___, 669 S.E.2d at 757 (citing Hartford Accident & Indem. Co. v. Hood, 226 N.C. 706, 710, 40 S.E.2d 198, 201 (1946) ("It must be presumed the parties intended what the language used clearly expresses and the contract must be construed to mean what on its face it purports to mean." (citations omitted))).
Moreover, the parties understood how to express their intention to have Settlors reduce their payments to the Trust based on which states were receiving benefits from a Governmental Obligation and apparently chose not to do so with respect to an obligation imposed by the federal government. However, the States contend that, for our reading of the TOA provision to be correct, there would need to be additional language in the provision stating that the funds paid by Settlors pursuant to a Governmental Obligation used to benefit individuals or entities "IN ANY ONE OR MORE GROWER STATES" would constitute the Grower Governmental Obligation. In the absence of this additional language allowing Settlors to reduce their payments without reference to which states are receiving governmental benefits, the States contend, Settlors are prohibited from reducing their payments in any manner other than by the percentage of those payments to the Trust originally designated for those states now receiving benefits under a Governmental Obligation.
Section 1.03 of the Trust, however, designates the percentage of Settlors' payments each Grower State is to receive. Trust Agreement para. 1.03. The parties explicitly instructed Settlors to consult Section 1.03 when determining the amount by which to reduce their payments to the Trust in several portions of the TOA provision by including express references to Section 1.03. Significantly, however, the parties instructed Settlors to consult Section 1.03 in the TOA provision only when discussing reductions in Settlor payments following an obligation imposed by a state or local government. Id. at A-7 to A-8. That the TOA provision instructs Settlors to consult Section 1.03 only when referring to a financial obligation imposed by a government other than the federal government is consistent with the plain language of the TOA provision that Settlors may offset payments made pursuant to FETRA against their obligation to the Trust without any reference to which states are receiving FETRA benefits. To read the TOA provision otherwise would impermissibly add an additional requirement to consult Section 1.03 that the parties did not choose to include. Hartford Accident & Indem., 226 N.C. at 710, 40 S.E.2d at 201-02 ("The Court, under the guise of construction, cannot reject what the parties inserted or insert what the parties elected to omit." (citations omitted)).
Furthermore, the organization of the Trust document is consistent with an intention for Settlors to not consult Section 1.03 without an explicit instruction to do so. Schedule A of the Trust contains the Trust's "PAYMENT SCHEDULE." Trust Agreement at A-1. This part of the Trust establishes the amounts Settlors must pay to the Trust and the dates by which Settlors must make those payments. Id. at A-1 to A-18. Generally, Schedule A sets forth Settlors' total base payment figures for each of the years 1999 through 2010. Id. at A-2. Schedule A then details various adjustments, including the TOA provision, that must be made to the total base payment figure to determine the actual amount Settlors must pay. Id. at A-4 to A-16. Schedule A also provides the method for determining what percentage of the adjusted total amount must be paid by each Settlor. Id. at A-2 to A-4. Conversely, Section 1.03 of the Trust commands the Trustee to allocate a certain percentage of the Trust funds to each Grower State. Id. para. 1.03. Moreover, this command to the Trustee regarding allocation of disbursements from the Trust is contained in a separate part of the Trust. There is neither an instruction to Settlors to look to Section 1.03 nor a reference to Section 1.03 regarding offsetting payments made pursuant to an obligation imposed by the federal government. Thus, the *95 organization of the Trust document is consistent with the plain language of the TOA provision.
The manner in which the Trust operates also precludes the inference that Settlors may offset their FETRA obligation against only those amounts that would have been disbursed from the Trust to those Grower States now receiving FETRA benefits. Once the Trust was executed and began operation, Settlors no longer engaged the other parties to the Trust on a state-specific basis. Settlors made annual payments to the Trust in an amount representing the benefit all Grower States would receive.[4]Id. at A-1 to A-2. After Settlors made payments to the Trust, the Trustee could then set aside expenses incurred or to be incurred in administering the Trust. Id. para. 1.03. After the Trustee set aside funds for administrative expenses, the Trustee would then allocate the remaining funds among the accounts of the several Grower States. Id. The Trust operated in this manner, with Settlors paying a total sum unaffected by the percentage that any Grower State was to receive, unless the parties provided Settlors a specific contrary instruction. On several occasions, the parties did provide Settlors with a contrary instruction, and Settlors were thus able to reduce the amount of their payment to the Trust by an amount related to a specific Grower State. E.g., Trust Agreement at A-7 (Tax Offset Adjustment) (instructing Settlors to consult Trustee's allocation percentage table following a Grower State-imposed Governmental Obligation); id. at A-8 (Tax Offset Adjustment) (allowing Settlors to consult Trustee's allocation percentage table following a Grower State's imposition of an obligation on Settlors to "purchase or use ... a minimum quantity or percentage of domestically grown tobacco for Cigarettes"); id. at A-11 (MSA Finality Adjustment) (enabling Settlors to consult the Trustee's allocation percentage table and to reduce their payments to the Trust by the amount a Grower State would have been allocated by the Trustee if that Grower State had achieved State-Specific Finality under the MSA). The parties did not instruct Settlors to consult the Trustee's allocation percentage table in determining the amount by which to reduce their payments to the Trust following the imposition of a financial obligation by the federal government. Because the Trust operates in such a manner that Settlors would reduce their total payments to the Trust by the total amount of any Governmental Obligation, unless Settlors were specifically instructed to reduce their payments on a state-specific basis, Settlors can offset their FETRA obligation against the total amount due the Trust. The parties agreed to apply the offset provisions, including the TOA provision, in this manner, and the manner in which the Trust operates only confirms this agreement between the parties and precludes the States' proposed reading of the TOA provision.
Finally, the TOA provision is consistent with the express purpose of the Trust. In Philip Morris I, we noted that "[t]he preamble announces the purpose of the Trust: `[T]o provide aid to Tobacco Growers and Tobacco Quota Owners and thereby to ameliorate potential adverse economic consequences to the Grower States.'" 359 N.C. at 766, 618 S.E.2d at 221 (second alteration in original). The parties, in expressing their purpose, used terms that they defined in the Trust. Trust Agreement para. 4.01. As explained earlier, an "individual or entity" is a Tobacco Grower under the Trust if he, she, or it "was [listed in] one or more" of four categories. Id. (emphasis added). Three of those four categories appear to fall within the definition of "producer of quota tobacco" under FETRA. See 7 U.S.C. § 518(6) (2006). Further, except for a possible difference in the time at which one must own the quota, *96 the Trust's definition of Tobacco Quota Owner accords with the definition of "tobacco quota holder" under FETRA. See id. § 518(9) (2006). As such, the TOA provision is consistent with the Trust's express purpose because Tobacco Growers and Tobacco Quota Owners are receiving benefits under FETRA, thus relieving Settlors of their burden under the Trust.
Notably, the parties did not say their purpose was to ensure all Tobacco Growers and Tobacco Quota Owners received aid. In fact, the parties went to great lengths to ensure that the Trust was not read in such a manner. See Trust Agreement paras. 4.01, 4.09; id. at A-6. As long as Tobacco Growers and Tobacco Quota Owners are receiving benefits under FETRA, the purpose of the Trust is satisfied. In Philip Morris I, we explained, in rejecting Settlors' proposed reading of the TOA provision, that the purpose of the Trust was for Settlors to provide benefits to Tobacco Growers and Tobacco Quota Owners. 359 N.C. at 777, 779, 618 S.E.2d at 228-29. We emphasized the Trust's purpose because Settlors' reading would have allowed Settlors to pay nothing while no Tobacco Grower and no Tobacco Quota Owner received any benefit. Here, the circumstances are such that Settlors are making payments under FETRA, and Tobacco Growers and Tobacco Quota Owners are receiving benefits under FETRAcircumstances resulting in the fulfillment of the very purpose we examined and protected in Philip Morris I.
As the language of the TOA provision is clear and unambiguous, we hold that under the TOA provision, Settlors may offset all of their payments made under FETRA for the benefit of Tobacco Growers or Tobacco Quota Owners without any reference to which states are receiving benefits under FETRA. So long as Settlors' obligation under FETRA exceeds their obligation to the Trust, Settlors owe nothing to the Trust.
The States alternatively contend that the TOA provision is ambiguous and should be construed in their favor. In support of their argument, the States explain that the Business Court and the dissenting opinion at the Court of Appeals interpreted the TOA provision in their favor, while the majority at the Court of Appeals interpreted the provision in Settlors' favor. These facts, however, are not what makes a contract term ambiguous. A contract term is ambiguous only when, "in the opinion of the court, the language of the [contract] is fairly and reasonably susceptible to either of the constructions for which the parties contend." Wachovia Bank & Tr., 276 N.C. at 354, 172 S.E.2d at 522 (citation omitted); see also Walton, 342 N.C. at 881-82, 467 S.E.2d at 412 ("Parties can differ as to the interpretation of language without its being ambiguous...."). As we have explained, the language of the TOA provision of the Trust is clear, and a federal government obligation does not result in application of the TOA provision to offset only those amounts to be remitted to those states that receive benefits under that federal obligation. Since the language of the TOA provision is clear, we are unable to, "under the guise of interpreting an ambiguous provision, remake the contract and impose liability upon [Settlors] which [they] did not assume and for which the [States] did not pay." Wachovia Bank & Tr., 276 N.C. at 354, 172 S.E.2d at 522 (citations omitted).
Furthermore, the TOA provision does not render illusory any promise in the Trust or in any release signed in exchange for the execution of the Trust. The States contend that a reading of the TOA provision other than theirs would allow "Settlors to avoid any obligation to address the economic concerns of Maryland and Pennsylvania growers if FETRA had gone into effect before the first Trust payment became due." This possibility, however, does not render illusory any promise or release from liability. To render a promise illusory, the promisor must reserve "an unlimited right to determine the nature or extent of his performance." Wellington-Sears & Co. v. Dize Awning & Tent Co., 196 N.C. 748, 752, 147 S.E. 13, 15 (1929). Here, Settlors agreed to make base payments, subject to certain adjustments contained in the Trust. Trust Agreement at A-1. The TOA provision, which is one of the adjustments contained in the Trust, allows Settlors to offset payments made under FETRA against payments due the Trust. The parties agreed to include the TOA provision *97 in the Trust, and the States executed releases in exchange for Settlors' promise to pay the amount derived after applying all adjustments to the base payment.
To the extent that the States contend they would not have released potentially valuable claims against Settlors for economic damage resulting from the MSA if Settlors' obligation to the Trust could be eliminated without the States receiving commensurate benefits from the Governmental Obligation, the language of the TOA provision is contrary to their contention. The TOA provision allows Settlors to offset all benefits flowing from them to Tobacco Quota Owners via a Governmental Obligation. Maryland and Pennsylvania growers did not participate in the federal tobacco quota and price support system. Thus, any Governmental Obligation providing benefits only to Tobacco Quota Owners would have necessarily excluded those growers in Maryland and Pennsylvania because those growers did not participate in the federal quota system. The States agreed to the inclusion of the provision that allows Settlors' obligation to the Trust to terminate upon the satisfaction of a Governmental Obligation that provides "direct payments to ... Tobacco Quota Owners." Trust Agreement at A-6. This provision, by the parties' choice, allows the States' benefits from the Trust to end even though the States would not then be receiving any governmental benefits if Congress had chosen to focus its support on only Tobacco Quota Owners.
Moreover, any Governmental Obligation imposed on Settlors is necessarily a result of the political process, which involves representatives of Maryland and Pennsylvania citizens, including growers, at the federal level, and at the state and local levels. While the parties to the Trust may have input in the political process that determines whether a Governmental Obligation is imposed, no party has an unlimited right to determine whether, or to what extent, to perform any obligation resulting in or arising from the Trust. Thus, the TOA provision does not render illusory any promise or release made or executed by the parties.
Finally, the States contend that they are entitled to equitable modification of the Trust to require Settlors to continue making payments for their benefit. The Business Court and the Court of Appeals addressed the States' argument on this point. Though neither cited the section of our General Statutes under which the States make their claim, the Business Court declined to make its decision on equitable grounds, State v. Philip Morris USA, Inc., No. 98 CVS 14377, 2007 WL 2570239, at *6-7 (Wake County Super. Ct. Aug. 17, 2007), and the Court of Appeals rejected the substance of the States' argument on this point, State v. Philip Morris USA Inc., ___ N.C.App. at ___, 669 S.E.2d at 756-57.
The States claim they are entitled to modification of the Trust under N.C.G.S. § 36C-4-412(a). This statute provides that "[t]he court may modify the administrative or dispositive terms of a trust ... if, because of circumstances not anticipated by the settlor, modification ... will further the purposes of the trust." N.C.G.S. § 36C-4-412(a) (2007). To obtain relief under this statute, the States must show, inter alia, an unanticipated circumstance. FETRA, however, is not such a circumstance. As we said in Philip Morris I, "[p]roblems with the tobacco industry prompted members of Congress to introduce more than twenty tobacco buyout bills from 1997 through 2004." 359 N.C. at 769, 618 S.E.2d at 223. Furthermore, the States knew that their tobacco growers did not participate in the federal quota and price support system and thus, may not be included in a federal buyout. Indeed, the portion of the Trust's definition of Tobacco Grower that specifically covers growers in Maryland and Pennsylvania is the only provision that does not include a reference to the Agricultural Adjustment Act of 1938. Trust Agreement para. 4.01(a)(iv). These events indicate that the States knew they were treated differently as a result of their choice to not participate in the federal price control and quota system and knew that they may not be covered by any federal buyout legislation targeting that system. Unfortunately, during the political process resulting in FETRA, the benefits that would have been provided to the States under the Senate amendment to the buyout bill were not included in the final version *98 signed into law. The inclusion of the TOA provision indicates that a federal buyout like FETRA was an anticipated circumstance for which the parties created a plan. Accordingly, the States are not entitled to modification under N.C.G.S. § 36C-4-412(a). Because we hold that the States are not entitled to modification of the Trust, we necessarily do not reach the issue of what evidence may be used in undertaking such a modification.
III. DISPOSITION
The Court of Appeals correctly held that Settlors may, pursuant to the TOA provision, offset all payments made under FETRA against all payments due the Trust, without regard to which states are receiving benefits under FETRA. That decision is therefore affirmed.
AFFIRMED.
Justice TIMMONS-GOODSON DISSENTS.
Justice TIMMONS-GOODSON dissenting.
After citing rules of contract interpretation that require examining all component parts of a contract to determine the parties' intent, the majority devotes substantially all of its analysis to the "plain language" of the TOA, neglecting other provisions of the Trust Agreement that should inform its reading of the TOA. The majority concludes that, at the time of execution, the parties intended that a federal governmental obligation aiding some Grower States' tobacco farmers would completely discharge Settlors' obligation to fund the Trust to support tobacco farmers receiving no benefit from the federal governmental obligation. By so concluding, the majority does a literal about-face from its analysis in Philip Morris I of the very same Trust Agreement and TOA provision. Because I believe the majority disregards other language in the Trust Agreement that necessarily informs the correct interpretation of the TOA, and in doing so departs from its previous interpretation of the same provision, I must respectfully dissent.
"Interpreting a contract requires the court to examine the language of the contract itself for indications of the parties' intent at the moment of execution.... Intent is derived not from a particular contractual term but from the contract as a whole." State v. Philip Morris USA Inc., 359 N.C. 763, 773, 618 S.E.2d 219, 225 (2005) (Philip Morris I) (citing, inter alia, Jones v. Casstevens, 222 N.C. 411, 413-14, 23 S.E.2d 303, 305 (1942) ("Since the object of construction is to ascertain the intent of the parties, the contract must be considered as an entirety. The problem is not what the separate parts mean, but what the contract means when considered as a whole." (citation and internal quotation marks omitted))). Therefore, a true assessment of the parties' intent at the moment they executed an agreement requires a searching evaluation of the entire agreement and not merely the component part that lies at the heart of the dispute. Thus, this Court's duty is to diligently examine all relevant language in the Trust Agreement, including the Master Settlement Agreement (MSA) and individual releases referenced in the Trust Agreement, to arrive at the interpretation that best reflects the parties' intent when they executed the TOA. See Robbins v. C.W. Myers Trading Post, Inc., 253 N.C. 474, 477, 117 S.E.2d 438, 440-41 (1960) ("Individual clauses in an agreement and particular words must be considered in connection with the rest of the agreement, and all parts of the writing, and every word in it, will, if possible, be given effect.") (citation omitted); see also Weyerhaeuser Co. v. Carolina Power & Light Co., 257 N.C. 717, 719, 127 S.E.2d 539, 541 (1962); Westinghouse Elec. Supply Co. v. Burgess, 223 N.C. 97, 100, 25 S.E.2d 390, 392 (1943).
Consistently with the principles noted above, this Court has previously interpreted a contract term that purported to relieve a defendant of a payment obligation, like the TOA in this case, by examining all relevant language in the contract. In Burgess, for example, the Court applied the following rule:
"Great liberality is allowed in construing releases. The intent is to be sought from the whole and every part of the instrument; and where general words are used, if it appears by other clauses of the instrument, or other documents, definitely referred *99 to, that it was the intent of the parties to limit the discharge to particular claims only, courts, in construing it, will so limit it.... In determining the effect of an instrument containing words that taken by themselves would operate as a general release, all the provisions of the instrument must be read together; and if on such reading an intent to limit the scope of the release appears, it will be restricted to conform to such intent."
223 N.C. at 100, 25 S.E.2d at 392 (alteration in original) (citation omitted).
Upon applying the appropriate rule, there is good reason to doubt the majority's interpretation of the parties' intent for the TOA. The first six "WHEREAS" clauses of the Trust Agreement make clear that Settlors' agreement to establish the Trust was a quid pro quo for the Grower States' release of claims for smoking-related health care costs and potential claims resulting from the adverse economic consequences of the MSA. Indeed, the Court acknowledged this quid pro quo in Philip Morris I:
Despite its cost, the Trust appealed to Settlors for financial reasons. Funding the Trust satisfied the requirement of the MSA "to address the economic concerns of the Grower States." In other words, Settlors agreed to the Trust because doing so was a condition of the settlement that had relieved them of potentially bankrupting liability for smoking-related healthcare costs. Additionally, the Trust shields Settlors from claims the Grower States might otherwise bring for economic damages suffered as a result of the MSA.
Philip Morris I, 359 N.C. at 766, 618 S.E.2d at 221 (footnote omitted). Thus, at the very beginning of the Trust Agreement, the parties manifested an intention that the Trust should "provide aid to Tobacco Growers" and "Tobacco Quota Owners" in the several Grower States in exchange for those Grower States releasing Settlors from pending and potential tobacco-related claims.
Settlors bargained for separate releases with Maryland and Pennsylvania to achieve the same quid pro quo. Maryland and Pennsylvania's Attorneys General executed the releases "contemporaneously with and as a condition to the creation of the National Tobacco Grower Settlement Trust." As the Business Court noted, "It makes little sense that Maryland and Pennsylvania would execute releases of substantial claims in return for an agreement that payments to their farmers could be eliminated by payments to farmers in other states who were already receiving the benefits from the federal tobacco quota program." State v. Philip Morris USA, Inc., No. 98 CVS 14377, 2007 WL 2570239, at *5 (Wake County Super. Ct. Aug. 17, 2007).
Also highly relevant, but scantily discussed in the majority opinion, are other provisions in the Trust Agreement and the TOA itself that contemplate a state-by-state application of adjustments and disbursements of the Trust funds. First, it is undisputed that Settlors make base payments to the Trust, which the Trustee then distributes to the several Grower States according to the percentages in Section 1.03, for further distribution to Tobacco Growers and Tobacco Quota Owners in each Grower State. This distribution schedule assigns to each Grower State a percentage of Settlor's allotted base payments, which percentage is distinct from that designated for every other Grower State. Thus, each of the beneficiary Grower States has a unique, quantifiable interest in the Trust funds. The majority's holding that Settlors are entitled to a complete offset of all amounts owed to the Trust because tobacco growers and quota holders in some Grower States receive FETRA assistance is therefore contrary to the Trust Agreement's distribution schedule.
Moreover, aside from the TOA, the parties included an MSA Finality Adjustment in the Trust Agreement that allowed Settlors a state-specific offset against amounts paid to the Trust if one or more Grower States failed to achieve eligibility for Trust payments as anticipated. The MSA Finality Adjustment reads as follows:
MSA Finality Adjustment: In the event that a Grower State that is a Settling State under the MSA does not achieve State-Specific Finality on or before December 31, 2001 (or such later date as extended pursuant to ... the MSA), or if there is an *100 earlier final, non-appealable judicial determination that has the effect of precluding a Grower State from participating in the MBA [sic] (each event a "Non-Finality Event"), each Settlor shall be entitled to reduce its annual payment to the Trust after all other adjustments have been made for the year in which such a Non-Finality Event occurs, and in each subsequent year, by the same percentage as the pertinent Grower State's percentage allocation in Section 1.03. In addition, each Settl[o]r shall be entitled to reduce its annual payment for the year in which such a Non-Finality Event occurs (and, if necessary to obtain full credit, in subsequent years) by the amount of the Settlor's prior payments to the Trust allocated in the manner prescribed in Section 1.03 to the pertinent Grower State plus interest at the T-Bill Rate from the date the amount was paid to the Trust by the Settlor to the date the Settlor takes the credit for the amount.
Trust Agreement at A-12. So the parties clearly contemplated a state-by-state offset for Settlors should one or more Grower States not become eligible to participate in the Trust due to lack of finality under the MSA.
Finally, the parties included in the TOA a state-specific offset when a Grower State imposes on Settlors a governmental obligation. Upon such a Grower State-imposed governmental obligation, a Settlor may reduce its payment to the Trust by the percentage of the Settlor's base payment that is earmarked to that Grower State. Id. at A-8. The omission of a state-by-state offset from the portion of the TOA applying to a federal governmental obligation, however, does not necessarily indicate that the parties did not intend a state-by-state offset to apply to a federal governmental obligation. Particularly in light of other language in the Trust Agreement, the MSA, the individual releases, and the state-by-state application of other offset provisions, the lack of specific language applying a state-by-state offset to a federal governmental obligation only renders that part of the TOA ambiguous. See State v. Philip Morris USA Inc., ___ N.C.App. ___, ___, 669 S.E.2d 753, 760 (2008) (Elmore, J., dissenting) ("The ambiguity, if there is any, arises here only in the context of whether the TOA provision explicitly mandates or prohibits a state-by-state accounting of reductions resulting from Grower Governmental Obligations. When the contract is read as a whole, however, it is clear that the parties intent was to protect tobacco farmers from the economic harm caused by the MSA.").
This Court's analysis of the very same TOA provision in Philip Morris I underscores the ambiguity in the federal component of the TOA. This Court rejected Settlors' argument that the TOA "is triggered whenever a change in law includes a financial obligation on Settlors earmarked to aid tobacco farmers." Philip Morris I, 359 N.C. at 777, 618 S.E.2d at 228. The Court observed that Settlors' argument
"would allow a Tax Offset Adjustment even if the government never collects the assessments due under a qualifying change of law and hence never spends them for the benefit of tobacco farmers. Under those circumstances, tobacco farmers would receive reduced distributions (or no distributions) from the Phase II Trust and nothing from the government. The negative financial implications of this scenario for tobacco farmers are obvious."
Id.
Acknowledging that it was duty-bound to look beyond the "plain language" of the TOA, see 359 N.C. at 778, 618 S.E.2d at 228 (citing Jones, 222 N.C. at 413-14, 23 S.E.2d at 305), the Court rejected a reading of the TOA that was repugnant to the Trust's express purpose. The Court stated:
Certainly the most compelling reason for rejecting the trial court's holding is that, taken to its logical extreme, it could defeat the express purpose of the Phase II Trust. As previously explained, the Trust was crafted to protect tobacco farmers from economic harm caused by the MSA ... [through] a steady stream of supplemental income until at least 2010.
. . . .
... Interpreting the Trust Agreement in a manner that could leave those individuals without this extra income for years runs *101 squarely counter to the express purpose of the Trust.
Id. at 779-80, 618 S.E.2d at 229.
Yet the majority's interpretation of the Trust Agreement in this case has precisely the result the Court found unacceptable in Philip Morris I. Considering all relevant language in the Trust Agreement and the parties' bargain in general, the only reasonable conclusion is that the parties did not intend that a governmental obligation compensating some Grower States' tobacco farmers could cut off Trust payments to tobacco farmers in other Grower States that receive no benefit from that governmental obligation. This outcome is contrary to the express purpose of the Trust and simply not consistent with the quid pro quo negotiated between the parties. To reach this result, the majority examines the TOA in a vacuum, ignoring that Settlors have all along dealt with the Grower States on a state-by-state basis. Accordingly, neither sound contract interpretation nor equity supports leaving tobacco growers in Maryland and Pennsylvania without governmental assistance or "a steady stream of supplemental income" from the Trust. Id. at 779, 618 S.E.2d at 229. Therefore, I respectfully dissent.
Justice HUDSON joins in this dissenting opinion.
NOTES
[1] The Grower States are Alabama, Florida, Georgia, Indiana, Kentucky, Maryland, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia.
[2] The Trust was amended by order of the Business Court entered on 6 April 2004 approving an amendment agreed to by the parties following mediated settlement negotiations. That amendment does not affect our analysis in this case, and all references to the Trust are to the original 19 July 1999 document.
[3] Any number divided by itself is 1. Further, any number multiplied by 1 remains the same. Thus, if the Grower Governmental Obligation equals the Governmental Obligation, i.e., Settlors' payments are entirely used for a purpose stated in the TOA provision, then the formula ratio is 1, and Settlors can reduce their payments to the Trust by the amount they pay under FETRA.
[4] Settlors' total base payment amounts are listed as:
1999 $380,000,000
2000 $280,000,000
2001 $400,000,000
2002 $500,000,000
2003 $500,000,000
2004 $500,000,000
2005 $500,000,000
2006 $500,000,000
2007 $500,000,000
2008 $500,000,000
2009 $295,000,000
2010 $295,000,000
Trust Agreement at A-2. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320694/ | 215 S.E.2d 652 (1975)
D. C. TOMKIES
v.
Charles Elbert TOMKIES, Admr., etc., et al., and the National Bank of Summers, etc.
No. 13143.
Supreme Court of Appeals of West Virginia.
June 17, 1975.
*654 Carney M. Layne, Huntington, Harold B. Eagle, Hinton, for appellant.
Frederick W. Sawyers, Hinton, for appellees.
*653 HADEN, Chief Justice:
This is an appeal by D. C. Tomkies from a final order of the Circuit Court of Summers County denying appellant's claim, asserted as a beneficiary of the estate of Toney C. Tomkies, deceased, that 245 shares of capital stock in The National Bank of Summers, registered in the decedent's name, was the property of the decedent at his death and an asset of his estate. The order appealed from held that the stock in question had been the subject of an inter vivos gift transferred by Toney Tomkies to the appellees, Sarah Frances Blethen, Clara Elizabeth McKeever, Charles E. Tomkies and Frank C. Tomkies, the children of a deceased brother, Frank H. Tomkies.
The overriding issue of the case is whether the evidence supports the trial court's ruling that the bank stock was the subject of a valid inter vivos gift.
Toney C. Tomkies died intestate on February 6, 1967, leaving as his surviving heirs, a brother, D. C. Tomkies, the appellant, two sisters, Naomi Senerad and Frances Rogers, and the four previously named children of the deceased brother, Frank H. Tomkies, appellees. At his death, the decedent was the record owner of 245 shares of stock in The National Bank of Summers, as reflected by four separate stock certificates issued by the Bank at different times in 1956 and 1963. Documentary evidence revealed that the endorsement clause on each certificate contained the signature of Toney Tomkies and the appellees' names, indicative of an assignment to the appellees. Three of the purported assignments, representing 161 shares, had been executed in the presence of Frank H. Tomkies and were dated in 1960 and 1964. The fourth, representing 84 shares, had been witnessed by Harry S. Blethen, Jr., the then husband of Sarah Blethen, in 1959.
Shortly after Toney Tomkies' death, his estate appraisers included the bank stock in the list of assets of the decedent's estate. Thereafter, however, the administrator took the position, ultimately sustained by the trial court, that the stock had been the subject of a valid inter vivos gift and was, therefore, not a part of the estate. Then, at the direction of the administrator, the issuing bank effected a record transfer of the stock shares from decedent's name to *655 the names of the individual appellees. The appellant excepted to the removal of the stock from the assets of the estate, but the commissioner of accounts, to whom the estate had been referred, refused to assume jurisdiction to adjudicate the dispute. Quite properly, the county court later sustained the commissioner's position that the probate arm of the county court was not a proper forum to determine ownership of stock. See In Re Long's Estate, 122 W.Va. 473, 10 S.E.2d 791 (1940). In order to save the point, D. C. Tomkies appealed the decision of the county court to the circuit court and, also, contemporaneously instituted an independent civil action demanding a judicial determination as to the true ownership of the disputed shares. The trial court consolidated the appeal and the civil action, took evidence, and then rendered the decision assailed as erroneous here.
At trial, the appellant introduced uncontroverted evidence that the stock certificates remained in the record ownership of Toney Tomkies from the date of issuance until subsequent to his death in February 1967; that the decedent was the payee of bank drafts which represented all of the dividends paid on these shares of stock during the period of his ownership; and that the decedent consistently voted the shares of stock at shareholders' meetings held during his lifetime. Additionally, the decedent, from 1965 until his death in 1967, served as a member of the Board of Directors of the Bank and received compensation for his services as a director. According to the Bank's bylaws, to be eligible to serve as a director, a person must own not less than 40 shares of stock standing in his own name. The decedent owned no shares of stock in the Bank other than the 245 shares which the lower court later determined were owned by the individual appellees pursuant to the inter vivos gift.
On the other hand, the administrator and, also, individual appellee, Charles Elbert Tomkies, offered evidence from the former husband of Sarah Blethen, Dr. Harry S. Blethen, Jr., who testified, over objection, that the decedent told him that he intended to leave the bank stock to the children of Frank H. Tomkies. Further, that in Blethen's presence on January 31, 1959, Toney C. Tomkies executed an endorsement in favor of Frank H. Tomkies' children on the stock certificate representing 84 shares, and that Frank H. Tomkies took possession of the stock at that time. The administrator also introduced evidence from the executive vice president of the Bank who indicated that Frank H. Tomkies, rather than Toney C. Tomkies, was the "boss of the family" and was the responsible person with whom the Bank dealt in regard to its business and questions of stock ownership and control within the Tomkies family. In that regard, various members of the Tomkies family had been shareholders and members of the Bank's board of directors continuously since the year 1927.
In argument, the appellees also implied that the record ownership of bank stock continued in the name of Toney C. Tomkies merely for the purpose of giving him the right to continue to serve on the Bank's board of directors. Additionally, the appellees consistently maintained that the custody of all of the bank stock had been given to and held by Frank H. Tomkies until his death. Subsequent possession of the certificates was then apparently obtained and transferred through Charles E. Tomkies.
Evidence was also adduced that the dividend checks, although payable to Toney Tomkies, were mailed to Frank H. Tomkies at his Huntington post office box at Frank H. Tomkies' direction. Dr. Blethen testified that his former wife, Sarah, received and paid taxes upon a portion of the dividends for a period of time between 1959 and 1963.
This Court's summary of the relevant evidentiary aspects is perhaps at variance with what was considered important by the trial court. In that regard we note that the disposition of this case was impeded, materially, by the trial court's failure to make adequate findings of fact as required *656 by Rule 52, W.Va.R.C.P. See, Commonwealth Tire Co. v. Tri-State Tire Co., W.Va., 193 S.E.2d 544 (1972). Notwithstanding this deficiency, there appears to be sufficient salient evidence in the record to warrant disposition of this appeal on the merits, without remand. See, City of Morgantown v. Town of Star City, W.Va., 195 S.E.2d 166 (1973).
The appellant contended below, and now here, that Charles Tomkies violated his fiduciary duties to the estate of Toney C. Tomkies by causing a transfer of said shares of stock from the estate to the inter vivos claimants, and secondly, that he violated his fiduciary duty as Committee for Frances Rogers, a beneficiary of the estate, when he transferred the stock against her interest. The court below did not pass upon these contentions and this Court will not rule upon nonjurisdictional errors presented in this posture. Parker v. Knowlton Construction Company, Inc., W.Va., 210 S.E.2d 918 (1975); Pettry v. Chesapeake & O. Ry. Co., 148 W.Va. 443, 135 S.E.2d 729 (1964).
The main contention of the appellant is that the purported transfer of the bank shares of stock by the decedent within his lifetime to the individual appellees was ineffectual in that (1) there was no transfer of ownership; (2) there was no delivery; and (3) Toney C. Tomkies retained dominion and control over the shares of stock and exercised the rights of ownership until his death.
The appellant also attacks as incompetent, the testimony of Dr. Blethen, as violating the "dead man's statute" in that (1) it was testimony given against the interest of the decedent; (2) it was in the financial interest or favor of Blethen, former husband of one of the inter vivos donees, because a decretal duty required him to pay alimony and child support to that donee; and (3) it concerned transactions against the decedent's interest which occurred during the marriage relation with one who was asserting an interest contrary to that of the decedent. As will appear, our method of resolving this appeal makes it unnecessary to directly pass upon this error assignment. Nevertheless, see the ruling of Sattes v. Sattes, 113 W.Va. 708, 169 S.E. 392 (1933):
"If a husband or wife is incompetent by reason of Code 1931, 57-3-1, to testify with respect to personal transactions or communications between such husband or wife and a decedent, the consort of such husband or wife is also incompetent to testify as to such matters both during the joint lives of the two spouses and thereafter." Syllabus point 1., id.
Inasmuch as the appellant's broadbased attack on the judgment below asserts failure of proof upon every essential element of a valid gift inter vivos, we refer to an accepted definition of such a gift:
"To constitute . . . a gift [inter vivos] the donor must be divested of, and the donee invested with the right of property in the subject of the gift; it must be absolute, irrevocable, without any reference to its taking effect at some future period. The donor must deliver the property and part with all present and future dominion over it. 2 Kent. 589; Carpenter v. Dodge, 20 Vt. 595; Northop [Northrop] v. Hale, 73 Me. 66, 2 Schouler Per. Prop.; Pierce v. Savings Bank, 129 Mass. [425] 432; Pope v. Savings Bank, 56 Vt. [284] 285; Grover v. Grover, 24 Pick 261; Dole v. Lincoln, 31 Me. 422." Dickeschied v. Bank, 28 W.Va. 340, 359 (1886).
The same elements are required to be shown when the subject of the gift is corporate stock. See, 38 Am.Jur.2d Gifts, §§ 49 and 50 (1968).
The law does not presume that the owner of property voluntarily parts with it in absence of valuable consideration. Claytor v. Pierson, 55 W.Va. 167, 172, 46 S.E. 935, 937 (1904). Consequently, the standard of evidence required to establish an inter vivos gift must be clear and convincing on every element necessary to constitute the gift. Raines v. Raines, 96 W.Va. 65, 73, 122 S.E. 437, 440 (1924); Brock v. Brock, 92 Va. *657 173, 23 S.E. 224 (1895); Collins v. Lofftus, 10 Leigh 5 (Va.1839); Brown v. Handley, 7 Leigh 119 (Va.1836); see also, McKimmie v. Postlethwait, 78 W.Va. 273, 276, 88 S.E. 833, 834 (1916); Dickeschied v. Bank, supra, 28 W.Va. at 360. Applying these principles to a review of the evidence of this case reveals a patent failure of proof of the fundamental elements of a valid inter vivos gift.
First and foremost, there is no proof that Toney Tomkies manifested a present and absolute intention to part with the right of property in the stock and to invest the same in the donees who were named in the endorsement clause of the certificates. For example, it was not disputed that the decedent, during his lifetime, retained a position on the board of directors of The National Bank of Summers which, according to the admitted pleadings, required stock ownership. It likewise was uncontroverted that the stock dividends were made payable to Toney Tomkies after the purported assignment, and that he retained and exercised the right to vote the shares. Other cumulative indicia of his retained rights of property in the stock, while not as compelling, are also highly supportive of the appellant's contention. The record transfer of the stock, as noted, was not attempted until after the death of Toney Tomkies, notwithstanding the fact that the purported assignments were executed on January 31, 1959, February 10, 1960, and June 5, 1964.
Moreover, it is to be noted that Dr. Blethen, who witnessed one of the endorsements, testified that on the occasion of that assignment, Toney Tomkies said that he wanted to "leave" the shares to the children of Frank H. Tomkies. On re-cross, Dr. Blethen stated that he understood the word "leave" to mean that Toney wanted the children to inherit the stock. Such testimony, assuming its competency for the moment, tends to refute the testator's present intent to make a gift. The inter vivos gift, to be effective, must take effect at once and completely. Steber v. Combs, 121 W.Va. 509, 5 S.E.2d 420 (1939); Board v. Callihan, 33 W.Va. 209, 10 S.E. 382 (1889); Hogue v. Bierne, 4 W.Va. 658 (1871). As is noted in Steber v. Combs, supra, 121 W.Va. at 513, 5 S.E.2d at 423: "`. . . If it regards the future it is but a promise; and being a promise without consideration it cannot be enforced, and has no legal validity.'" To the same effect, see Grace v. Klein, Admr., 150 W.Va. 513, 147 S.E.2d 288 (1966); Banner Window Glass Co. v. Barriat, 85 W.Va. 750, 102 S.E. 726 (1920); Roberts v. Coleman, 37 W.Va. 143, 16 S.E. 482 (1892).
Secondly, the proof failed to establish that Toney Tomkies delivered the gift at the time of the purported assignment. It is well established that an inter vivos gift must be consummated by delivery. Grace v. Klein, Admr., supra; Board v. Callihan, supra; Miller v. Neff's Adm'r, 33 W.Va. 197, 10 S.E. 378 (1889); Dickeschied v. Bank, supra. The unexplained possession of the stock certificates by the administrator, Charles E. Tomkies, or by Frank H. Tomkies following the death of Toney Tomkies is, itself, insufficient to establish the delivery:
"The mere possession of the subject of the alleged gift, unaccompanied by proof of its delivery by the donor to the donee, is insufficient to establish it as a gift either inter vivos or causa mortis." Syllabus point 5., Dickeschied v. Bank, id.
The meager evidence of delivery consisted of: (1) the hearsay testimony of Mr. McLean, the Bank vice president, that shortly after Toney Tomkies' death, Frank H. Tomkies advised him that he, Frank H. Tomkies, had the shares in his possession before delivering them to Charles Tomkies; and (2) the assailed testimony of Dr. Blethen relating to the decedent's endorsement on one of the stock certificates. Blethen's testimony was that Frank H. Tomkies placed the certificate on a table for Toney's signature, that Blethen signed as a witness, and that, thereafter, Frank H. Tomkies picked up the certificate from the table. We recognize the rule that delivery of an *658 endorsed instrument need not be made to the donee personally, but may be made to a trustee or agent. Payne v. Tobacco Trading Corp., 179 Va. 156, 18 S.E.2d 281 (1942); Johnson v. Colley, 101 Va. 414, 44 S.E. 721 (1903). Further, the transfer of a gift represented by a certificate may be by delivery of symbolic or prima facie evidence of ownership, i. e., the stock certificateMorris v. Westerman, 79 W.Va. 502, 92 S.E. 567 (1917); Swan v. Swan's Ex'r, 136 Va. 496, 117 S.E. 858 (1923). Nevertheless, we are unable to discern in this record clear and convincing evidence of delivery at the times of the assignments.
If we shift our perspective, the question becomes whether there is a justifiable basis in the evidence which would establish a parol gift of the bank shares subsequent to the purported assignment. According to Miller v. Neff's Adm'r, 33 W.Va. 197, 10 S.E. 378 (1889):
"To constitute a valid parol gift, there must be an actual delivery of the thing given, but the delivery must be according to the nature of the thing given, and if the property is at the time in the possession of the donee, as agent for the donor or otherwise, it is not necessary that the donee should surrender to the donor his actual possession, in order that the later (sic) may re-deliver the same to him in execution of the gift; but if the donor relinquishes all dominion over the thing given, and recognizes the possession of the donee as being in his own right, and the latter accepts the gift and retains the possession in virtue thereof, the gift is complete." Syllabus point 3., id.
See also, Morris v. Westerman, 79 W.Va. 502, 511, 92 S.E. 567, 571 (1917). We must answer our query in the negative.
The same evidence, however, which so forcefully defeats the requisite indicia of the gift by the assignment, also precludes any finding of a subsequent completion of the gift by the donor's relinquishment of dominion over the property. Not only was his expressed intent"to leave"per verba de futuro, his consistent conduct thereafter was indicative of the intent to retain the benefits of stock ownership by retaining a seat on the board of directors, and by voting said shares.
While this Court is reluctant to substitute its judgment for that of the trial court upon matters which are essentially factual, we find in this record insufficient evidence to support the trial court's decision. As applied in Bluefield Supply Company v. Frankel's Appliances, Inc., 149 W.Va. 622, 142 S.E.2d 898 (1965):
"When the finding of a trial court in a case tried by it in lieu of a jury is against the preponderance of the evidence, is not supported by the evidence, or is plainly wrong, such finding will be reversed and set aside by this Court upon appellate review." Syllabus point 8., id.
Accord: Work v. Rogerson, 152 W.Va. 169, 160 S.E.2d 159 (1968); J & G Construction Co. v. Freeport Coal Co., 147 W.Va. 563, 129 S.E.2d 834 (1963); Rule 52, W.Va.R.C.P. See Norris v. Barbour, 188 Va. 723, 51 S.E.2d 334 (1949).
For the reasons expressed, we hold the appellees failed to establish, under the proper burden of proof, a gift inter vivos of the stock. The trial court's final judgment, therefore, was clearly erroneous and, accordingly, is reversed and the case is remanded for final disposition consistent with this opinion.
Reversed and remanded with directions. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2565906/ | 4 N.Y.3d 705 (2005)
MATTER OF ELEANORE B.R. v. SHANDY S.
Court of Appeals of the State of New York.
Decided February 15, 2005
Motion for leave to appeal denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1724082/ | 614 S.W.2d 122 (1981)
Marvin Ralph BELL, Appellant,
v.
The STATE of Texas, Appellee.
No. 65653.
Court of Criminal Appeals of Texas, Panel No. 3.
January 28, 1981.
Rehearing Denied April 29, 1981.
*123 Stanley G. Schneider, Murry B. Cohen, Houston, for appellant.
John B. Holmes, Jr., Dist. Atty., Larry P. Urquhart and William Harmon, Asst. Dist. Attys., Houston, Robert Huttash, State's Atty., Austin, for State.
Before ROBERTS, ODOM and CLINTON, JJ.
OPINION
ROBERTS, Judge.
The appellant was found guilty of burglary of a vehicle. The trial court sentenced him to ten years' confinement.
The appellant complains of the following remarks made by the prosecuting attorney during jury argument at the guilt or innocence stage of the trial:
"MR. HARMON: * * *
Mr. Scheve [defendant's counsel] is a criminal defense lawyer. He doesn't have the same duty I do. He represents the criminal. His duty is to see that his client gets off even if it means putting on witnesses who are lying.
"MR. SCHEVE: Your Honor, we object to that.
"THE COURT: I sustain the objection. That is not his duty. It is not his duty to put on any witness that he knows is lying.
"MR. SCHEVE: And furthermore, I would ask for a mistrial.
"THE COURT: I'll deny the mistrial. I have instructed the jury that that's not a correct statement of the law."
The effect of this argument was to instruct the jury that only prosecuting attorneys seek to uphold truth and justice whereas defense counsel have a license to use any means to mislead the jury. Lewis v. State, 529 S.W.2d 533 (Tex.Cr.App.1975). By his argument the prosecutor was striking at the appellant over the shoulders of his counsel in an attempt to prejudice the jury against the appellant. Summers v. State, 147 Tex.Cr. 519, 182 S.W.2d 720 (1944). The argument was improper and the trial court's instruction to disregard was not sufficient to have removed the prejudice it created. Bray v. State, 478 S.W.2d 89 (Tex.Cr.App.1972); Boyde v. State, 513 S.W.2d 588 (Tex.Cr.App.1974). The trial court erred in overruling the appellant's motion for mistrial.
The judgment is reversed and the cause is remanded.
ODOM, J., dissents. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261273/ | 238 P.3d 867 (2008)
WINKLER (GARY)
v.
DIST. CT. (STATE).
No. 51750.
Supreme Court of Nevada.
June 17, 2008.
Decision Without Published Opinion Petition Denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261295/ | 223 F.Supp. 893 (1963)
HARRY F. ORTLIP COMPANY OF PENNSYLVANIA
v.
ALVEY FERGUSON COMPANY.
Civ. A. No. 32068.
United States District Court E. D. Pennsylvania.
November 29, 1963.
Harry J. Bradley, Lewis Weinstock, Philadelphia, Pa., for plaintiff, La Brum & Doak, Philadelphia, Pa., of counsel.
John P. Mason, Philadelphia, Pa., for defendant.
KRAFT, District Judge.
This case presents important questions concerning rights claimed by an unpaid sub-subcontractor against the prime contractor under a Government contract.
Defendant, as prime contractor, entered into a supply contract with the United States Navy Purchasing Office to supply necessary services, labor and material for an automated materials handling system at the Naval Supply Depot, in Philadelphia. Defendant subcontracted a portion of this installation to Electro Nuclear Systems Corporation (Electro) which in turn, entered into a contract with plaintiff to furnish work and material in connection with the subcontract. Plaintiff has fully performed its contract with Electro, and upon the failure of Electro to pay the balance claimed by plaintiff to be due, the plaintiff brought this action against defendant as prime contractor.
Presently before us is defendant's motion for summary judgment.
*894 Plaintiff asserts in Count 1 that defendant failed to furnish the bonds required by the provisions of the Miller Act, 40 U.S.C. § 270a et seq., for the benefit of suppliers of subcontractors, and claims defendant is liable to plaintiff for such failure.
Defendant relies upon a waiver of the bond, as specifically provided for in the Act. 40 U.S.C. § 270e. It avers in its supporting affidavit that "the contract did not require that defendant furnish a bid bond or a bond to secure payment by a surety to sub-subcontractors or suppliers or subcontractors," and no such bonds were furnished.
In its opposing affidavit, plaintiff denies "that the failure to require a bid bond or payment bond was in accordance with the authority granted by 40 U.S.C. § 270e"; and avers "that the contract was for electrical construction and that it provided for a fixed price."
In our view plaintiff attempts to inject issues not properly cognizable in this action. It is provided in 40 U.S.C. § 270e that the Secretary of the Navy, inter alia, may waive the furnishing of a bond with respect to certain designated types of contracts. It is not for us to say, at this juncture, whether the contract here involved fell within the provisions for waiver. The Secretary did waive the furnishing of a payment bond, and, under familiar principles, his action is not open to collateral attack. Hanson v. Hoffman, 113 F.2d 780, 791 (10th Cir. 1940).
Even if defendant did improperly fail to furnish the payment bond required by the Miller Act, it would not be liable to plaintiff, a sub-subcontractor, with whom it had not contractual relations. Seaboard Surety Co. v. Standard Acc. Ins. Co., 277 N.Y. 429, 14 N.E.2d 778, p. 780, 117 A.L.R. 658 (1938), relied on by plaintiff, does state:
"Where the general contractor fails to furnish such a bond, the laborers and materialmen who supply the subcontractors may sue the general contractor and recover from him. Strong v. American Fence Const. Co., 245 N.Y. 48, 156 N.E. 92."
This statement, however, is the merest dictum, and is without support in the case cited. In the Strong case, the contractor expressly promised the Government to furnish, inter alia, a payment bond, but failed to do so. It was held that a beneficiary of the promise, a laborer or materialman for whose protection the promise was given, had a right of action for damages resulting from its breach. In the case at bar there was no promise to give a bond, and the Strong case is clearly not applicable.
In Gallaher & Speck, Inc. v. Ford Motor Company, 226 F.2d 728 (7th Cir. 1955), relied on by defendant, the facts were almost identical with those in the instant case. There, too, an unpaid supplier of a subcontractor sued a prime contractor who had not filed a bond. In its opinion affirming dismissal of the action, the Court of Appeals applied the War Powers Act which granted the president power to exempt certain contracts from the provisions of restrictive laws, including the Miller Act. However, the Court went on to rule that the dismissal was warranted, even were the War Powers Act inapplicable, stating (226 F. 2d p. 731):
"Plaintiffs insist that the case is controlled by the reasoning in Strong v. American Fence Const. Co., 245 N.Y. 48, 156 N.E. 92. There the contractor promised the Government that it would furnish bonds. However, it failed to do so. The Court of Appeals for New York held not that the plaintiffs had a right to sue upon a bond which had not been given, the contract having been broken in that respect, but that they were entitled to sue the contractor for breach of contract to supply the bond. In other words, the promise having been made for the benefit of the material men, under the venerable doctrine of Lawrence v. Fox, 20 N.Y. 268, the beneficiaries had a right to sue as persons for whose benefit the promise had been made. *895 But that is not our case. Here, no promise was broken; no tort committed; no implied agreement on the part of defendant is justified."
In Count 2 of the complaint, plaintiff avers that defendant is liable to plaintiff under the Miller Act for the amount which the subcontractor contracted to pay for the work and material furnished by plaintiff.
We find plaintiff's argument somewhat difficult to follow. Plaintiff states in its brief that "when a surety bond is furnished under the Act, it is merely additional security to the beneficiaries for performance of an obligation of the principal, which does not rest on whether or not the bond has been furnished" (emphasis plaintiff's). To the contrary, we think the prime contractor is under no obligation to a sub-subcontractor, with whom it has had no contractual relation, except that which the prime contractor undertakes when it furnishes a bond in accordance with the requirements of the Miller Act. The language of Cardozo, C.J., in Strong v. American Fence Const. Co., 245 N.Y. 48, 156 N.E. 92, p. 93 (1927) is adequate answer to plaintiff's contention. Speaking with reference to the predecessor of the Miller Act, he stated: "The statutory liability, which in turn is inseparably linked to the statutory remedy, assumes the existence of a bond as an indispensable condition. Till then, there is neither federal jurisdiction nor any right of action that can rest upon the statute."
We conclude that defendant's motion for summary judgment must be granted in respect of plaintiff's Miller Act claims.
Plaintiff further claims in Count 3 that plaintiff is entitled to an equitable lien upon all funds in defendant's possession which are payable to Electro, "under the circumstances of this case".
This contention brings us to what has aptly been described as a doubtful and darkly obscure area of the law. In Pearlman v. Reliance Ins. Co., 371 U.S. 132, Note 10, p. 136, 83 S.Ct. 232, p. 234, 9 L.Ed.2d 190 (1962), the Supreme Court spoke of "the difficulties inherent in phrases like `equitable lien'." We are persuaded that both discussion and decision on this point can best await a full development of the facts. We do not consider, either, the question of the adequacy of remedies at law, suggested by the present pendency of attachment proceedings in the State Courts.
Count 4 charges defendant with fraudulent misconduct. We agree with defendant that plaintiff has failed to comply with Rule 9(b) of the Federal Rules of Civil Procedure, which requires that the circumstances constituting fraud "shall be stated with particularity". However, no motion appropriate to this failure is before us, and our examination of the entire record, together with the briefs of counsel, indicates that a somewhat involved situation may exist. We deem it advisable, therefore, to withhold consideration of the question until the facts have been fully developed.
Plaintiff contends in Count 5 that, by virtue of the acceptance by the United States of the bid and accompanying bid bond submitted by defendant in order to obtain the prime contract, defendant became obligated to make payment for all labor and materials supplied by plaintiff under the latter's subcontract with Electro.
We have already noted that defendant avers in its supporting affidavit that the contract did not require defendant to furnish a bid bond, and that no such bond was furnished. Plaintiff has not denied this averment. Moreover, plaintiff has not favored us with any supporting argument on this point, and our own research indicates its complete want of merit.
ORDER
Now, November 29th, 1963, after due consideration, it is ordered that:
1. Defendant's motion for summary judgment be, and it is, granted as to Counts 1, 2 and 5 of the complaint, and judgment is entered for defendant as to those Counts.
2. Defendant's motion for summary judgment be, and it is, denied as to Counts 3 and 4 of the complaint. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261300/ | 223 F.Supp. 157 (1963)
Luverne IHNEN, Plaintiff,
v.
Anthony CELEBREZZE, Secretary of Health, Education and Welfare, Defendant.
Civ. No. 1338.
United States District Court D. South Dakota, S. D.
November 5, 1963.
*158 Carleton R. Hoy, of Davenport, Evans, Hurwitz & Smith, Sioux Falls, S. D., for plaintiff.
Travis H. Lewin, Asst. U. S. Dist. Atty., Sioux Falls, S. D., for defendant.
MICKELSON, Chief Judge.
This action is brought under 42 U.S. C.A. § 405(g), whereby the plaintiff, after exhaustion of administrative remedies, seeks review of a final decision of the Secretary of Health, Education and Welfare denying disability insurance benefits.
Plaintiff originally filed an application for benefits on October 28, 1958, which was denied on October 19, 1959, because the disability insured status requirements were not met. A subsequent application was filed on February 13, 1961, at which time it was determined that the statutory earnings requirements were met in the quarter of alleged disability (September 13, 1956) and were last met in the quarter ending March 31, 1957. This second application was denied June 6, 1961, on the basis that the claimant was not under a disability as alleged either on March 31, 1957, or the date of determination. The plaintiff then requested a hearing before a hearing examiner. On June 8, 1962, he found that the claimant had failed to establish by medical evidence the necessary disability on, or prior to, March 31, 1957, and therefore was not entitled to benefits. The Appeals Council of the Social Security Administration declined formal review of the hearing examiner's decision, and thereupon the decision of the hearing examiner became the final decision of the Secretary of Health, Education and Welfare.
The plaintiff is now asking for a reversal of such decision on the basis that the decision is clearly erroneous, not being based on substantial evidence on the record as a whole, or in the alternative, remand to the Secretary in the light of new evidence. The defendant alleges that on the record as a whole, there was substantial evidence to support the Secretary's decision, and therefore such findings are binding on this court. The defendant has moved for summary judgment in accordance with the provisions of Rule 56(b) and (c), Rules of Civil Procedure, and asserts that the new evidence proposed to be offered by the plaintiff does not constitute good cause sufficient to warrant remand to the Secretary.
At the hearing, plaintiff testified that he injured his back while lifting a crate of cabbages on September 13, 1956, while employed by Child Bros., Inc., a produce company in California. While being treated for his back injury, cancer was discovered. The diagnosis was carcinoma of prepuce and glans penis, for which plaintiff underwent surgery on November 23, 1956. There was a radical amputation of penis with block dissection of inguinal and femoral lymph nodes and perineal urothrotomy. He was discharged from the hospital on January 10, 1957.
Sometime in the spring of 1957, plaintiff returned from California to his native South Dakota. In July of 1957, he first consulted Dr. Carlos Kemper of Viborg, South Dakota. After his second application *159 for disability benefits, there were many medical examinations in 1961 and 1962, with varied shades of opinion as to his disability. Plaintiff's main complaints were edema of the legs, low abdominal pain, and low back pain. The plaintiff in his applications for disability benefits had claimed cancer was his disabling medical impairment. From the medical reports, it appears that the plaintiff has had his penis excised, and in that area are massive scarring and some skin grafts, causing the area to be tender. There has also been some minor draining from this area.
The hearing examiner at the time of the hearing, May 1, 1962, informed plaintiff that he could be represented by counsel, and was told by plaintiff to "go ahead", that he did not have "any money to spend on an attorney." Also, at the time of the hearing, the records of plaintiff's 1956 operation were not before the examiner.
Because the plaintiff had frequently complained to the doctors of pain in his back, the hearing examiner directed most of his attention thereto. He inquired whether plaintiff had been paid Workmen's Compensation benefits while he was in the hospital. The plaintiff replied that he had been paid some of the time but not all the time. The examiner further inquired whether the compensation benefits were allowed for permanent or temporary disability, and plaintiff stated he did not know. At the close of the hearing, the examiner requested plaintiff to obtain a statement from the hospital in California "relative to the severity of the back condition at the time he was in their hospital", and a statement from the "California Workmen's Compensation Bureau as to whether an allowance was made for a back injury." The record was later reopened for the purpose of entering in evidence the hospital and medical reports which dealt only with the surgery, and also a letter addressed to the Supervisor of the Disability Determination Section at Pierre, South Dakota, from the Industrial Accident Commission of California, which stated in effect that an application was never filed with either the Long Beach district office of the Industrial Accident Commission or the Los Angeles office.
The foregoing is, in essence, the evidence before the hearing examiner.
The final decision of the Secretary that the plaintiff did not sustain his burden of proving disability as of March 31, 1957, must be based on substantial evidence on the record as a whole. Goldman v. Folsom, 246 F.2d 776 (3 Cir. 1957); Foster v. Flemming, 190 F.Supp. 908 (N.D. Iowa 1960), reversed on other grounds 313 F.2d 604 (8 Cir. 1963).
There is a period of time which was not covered in the medical reports except as history given by the plaintiff. This period of time is from November 23, 1956, the date of the surgery, until October 31, 1958, the date of Dr. Carlos Kemper's medical report submitted during the pendency of plaintiff's first application for disability benefits.
Disability acquired after the earnings requirements were last met does not entitle a claimant to the benefits of the act. Feezer v. Ribicoff, 194 F.Supp. 457 (D.C.Md.1961); Bashton v. Flemming, 187 F.Supp. 866 (E.D.Mich.1960). There was not substantial evidence before the hearing examiner that the disability was present on March 31, 1957. This court therefore may not reverse the decision of the Secretary.
The plaintiff, however, has also requested this court in the alternative to remand because of new evidence. 42 U. S.C.A. § 405(g) provides:
"The court * * * may at any time, on good cause shown, order additional evidence to be taken before the Secretary, * * *."
The new evidence plaintiff proposes to offer is seven medical reports from the doctor in California who treated the plaintiff for a back injury in September, October, November and December of 1956. These reports show Zenith National Insurance Company, Los Angeles, California, as insurance carrier, and Child Bros., Inc., as employer. They *160 state that plaintiff was temporarily disabled from a musculoligamentous strain low back with possible disc syndrome. An estimated disability of one to two weeks was made at the date of the original report, September 17, 1956. This was subsequently extended to 12 weeks, or through December 10, 1956. The final report stated that they could not at the time of the last visit, December 6, 1956, make an examination of the back because of the surgery. This final report of December 9, 1956, also indicates that there were complications following the surgery. The doctor stated that "this patient is entitled to this amount of compensation." It therefore appears to this court that the plaintiff did, in fact, receive Workmen's Compensation payments for a period of time in excess of twelve weeks. It also appears that there was no final determination that the back injury was corrected.
The hearing examiner had no medical reports before him in respect to the back injury and its treatment. On page 2 of the Hearing Examiner's Decision it is stated "claimant testified that he entered the Seaside Memorial Hospital of Long Beach, California in October, 1956 because he had injured his back. * * *" This is an incorrect statement of plaintiff's testimony at the hearing. In response to the question on page 4 of the transcript of the hearing, "* * * You put a date here of September 13, '56, as being the date you were last able. Is that the date you went into the hospital?", the plaintiff answered, "No, that's when I had my back injured, and I went into the clinic to get it examined, and during my examination of my back, they discovered my cancer * * *." As previously mentioned, the hearing examiner wanted reports from the Seaside Memorial Hospital in relation to the back injury. In his decision on page 2, it is stated in reference to these reports entered into evidence on the reopening, "There is no mention of any back condition as claimant alleged in his testimony." This is a misstatement of the plaintiff's testimony. The claimant did not testify that he received any hospital treatment for his back. On page 9 of the transcript, in response to the question "Any possibility that you could get me a hospital report showing the seriousness of your back injury at the time that you were in the hospital in California, the Seaside Memorial?", the plaintiff answered, "They weren't taken in the hospital. They were taken in the clinic and I can't remember that clinic." It is after this testimony that the examiner asked the plaintiff for the Seaside Memorial Hospital reports relative to the severity of the back condition.
The hearing examiner included in his decision that the California Industrial Accident Commission stated plaintiff had never filed an application with either the Long Beach or Los Angeles offices. The reports of the doctors treating plaintiff for his back injury were originally made on forms that were required to be mailed to the Division of Labor Statistics and Research at San Francisco under penalty of law. It should also be noted that in the examiner's decision it is stated on page 3, "After claimant's discharge from the hospital, January 10, 1957, the next medical report is from Carlos Kemper, M.D., who in a report dated February 28, 1961, stated he had first seen claimant July 29, 1957." This is a misstatement of the record. On pages 79 and 80 is a medical report dated 10-31-58 signed by Carlos Kemper M.D. which was obviously made while the first application was pending.
The plaintiff was not represented by counsel at the hearing. He was informed of this right at that time and declined. Failure to be represented is not grounds for reversal or remand. Butler v. Folsom, 167 F.Supp. 684 (W.D.Ark. 1958). This plaintiff is a man of only eighth grade education. His letters included in the record clearly bespeak his educational limitations. It appears from the record as a whole that the plaintiff did not fully understand the necessity of proving his disability at the disability freeze date of March 31, 1957. It can hardly be said that when at the time of the hearing, he was apparently first fully *161 advised of the importance of such evidence, that he would know how to prove the disability at and prior to that date. The hearing examiner's request for reports of treatment on his back made at the "hospital" where he only had surgery for cancer could hardly have helped plaintiff understand what was needed as evidence. The latest report from the hospital is dated November 23, 1956, the day of the operation. It contains a statement that post-operative condition was excellent, yet the report of the doctor who was previously treating the back injury stated that there were complications after the operation that prevented him from making a further examination. There are no later reports concerning the plaintiff's hospitalization, even though the plaintiff remained there until January 10, 1957.
These administrative hearings are not adversary proceedings. Blanscet v. Ribicoff, 201 F.Supp. 257 (W.D.Ark. 1962). The question to be determined is whether the plaintiff was or was not disabled on or prior to March 31, 1957.
In light of the new evidence in relation to the decision of the hearing examiner, the plaintiff's educational background, and the plaintiff's lack of understanding perhaps because of lack of counsel of what he needed to prove his case, this court remands to the Secretary of Health, Education and Welfare to receive the evidence offered by the plaintiff in this action, and any other competent evidence as to plaintiff's disability on March 31, 1957, and which was continuing.
It is also noted from the record that all medical testimony revealed some disability at all times after January 10, 1957. There was no evidence submitted as to employment of which the plaintiff was capable in light of his education, past employment history, and then present physical condition. It must appear that there was in existence some substantial, gainful type of employment available to the plaintiff in light of the above mentioned circumstances. Fedor v. Celebrezze, 218 F.Supp. 667 (E.D. Penn.1963); Blanscet v. Ribicoff, supra.
The defendant's motion for summary judgment is denied, and the case is remanded to the Secretary of Health, Education and Welfare to hear further evidence in accordance with this memorandum decision.
Counsel for the plaintiff will prepare and submit to the Court an appropriate order. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261315/ | 223 F.Supp. 845 (1963)
LOOMSKILL, INC., Plaintiff,
v.
Joseph SLIFKA and Sylvia Slifka, doing business under the name of Slifka Fabrics, Defendants.
United States District Court S. D. New York.
November 19, 1963.
Helfat & Helfat, New York City, for plaintiff.
Arnold R. Krakower, New York City, Isidore A. Seltzer, New York City, of counsel, for defendants.
*846 WYATT, District Judge.
Plaintiff moves for summary judgment in its favor (Fed.R.Civ.P. 56) and, if that motion be granted, for the appointment of a special master to determine damages (Fed.R.Civ.P. 53).
The action is for a permanent injunction and for damages based on an asserted infringement by defendant of two statutory copyrights owned by plaintiff, both for "reproductions of works of art (Class H)" under the statute and applicable regulation of the Copyright Office. 17 U.S.C. § 5(h); 37 C.F.R. § 202.11. Plaintiff prints its copyrighted "reproductions", or designs, on textile fabrics which it sells to manufacturers of high grade women's clothing. Plaintiff asserts that defendant has deliberately copied the designs copyrighted by plaintiff, has used these designs to print textile fabrics, and has sold these infringing fabrics to manufacturers of a cheaper grade of women's clothing. Jurisdiction exists under 28 U.S.C. § 1338.
The motion does not state the papers on which it is based. In reaching decision, there have been considered (in addition to the pleadings on file) the affidavits of Joseph Brodie, sworn to September 18, 1963, of Isidore A. Seltzer, sworn to October 5, 1963, of Joseph Samelson, sworn to October 3, 1963, of Herbert Savit, sworn to October 3, 1963, of Bernard Helfat, sworn to October 7, 1963, and of Harold Eisner, sworn to October 7, 1963; the testimony by deposition of Joseph Samelson (pages 1-105A), of Joe Brodie (pages 1-21A), of Harry Weixel (pages 1-21), of Sidney Adler (pages 1-16), of Harold Eisner (pages 1-23) and of Arthur H. Morrow (pages 1-38). There were no exhibits with the depositions and the only depositions signed were those of Samelson and of Brodie. The only deposition filed was that of Samelson (pages 74-105A only); copies of the other depositions were supplied by counsel.
From a consideration of these papers, it appears that there is no genuine issue as to any material fact and that plaintiff is entitled to the relief sought. The motion of plaintiff is granted.
Plaintiff, Loomskill, Inc. ("Loomskill"), is a "style-leader" producer of textiles which it sells to the better women's dress manufacturers.
Sometime before October 1961, Loomskill bought from Weixel Associates (a design studio) an original fabric design of birds and foliage in squares. Plaintiff reproduced this design (with notice of copyright) on fabric under the name "1235 Lovelawn", and registered its claim to copyright; a certificate of registration of the claim as a "reproduction of a work of art" in Class H was issued by the Register of Copyrights under date of November 29, 1961
A few weeks after plaintiff first began using the birds and foliage design, it brought out a variant in which it reproduced the same design on a textile but with a striped overlay. This new effect was called "3618 Madrigal"; notice of copyright was given on it also but the claim to copyright was not then registered.
Defendants are partners doing business as "Slifka Fabrics" and will sometimes be referred to as "Slifka". Their general manager is Joseph Samelson.
In December 1961, Samelson bought several dresses at B. Altman which had been made from fabric printed with the birds and foliage design; beyond any question these dresses had been made by customers of Loomskill from its "Lovelawn" and "Madrigal" fabrics.
Samelson then had the birds and foliage design copied and beginning in March 1962 deliberately used the copied design to print fabric which Slifka began selling under the designation "#1041". From an inspection of Exhibit 2 to the complaint, it appears that Slifka copied the striped overlay "3618 Madrigal" design.
According to Samelson, he "opened up the selvage" and looked "in the selvage" of the dresses bought from Altman and saw no notice of copyright. He says he *847 "looked in the seams" of the dresses and saw no copyright notice. Thus, one of the defenses is that when defendant copied the design, it had no knowledge that the design was copyrighted.
Thereafter Loomskill registered its copyright of the "3618 Madrigal" design as a "reproduction of a work of art" and a certificate of registration of the claim in Class H was issued by the Register of Copyrights under date of May 11, 1962.
Slifka sold substantial quantities of its fabric with the copied designs; some was sold to Puritan Dress Company and made into women's dresses. There is no denial of the statements in the affidavit of Joseph Brodie for Loomskill that these Puritan dresses with the copied design were sold at a cheaper price than those made from Loomskill fabric.
The dresses made by Puritan came to the attention of Loomskill, which promptly commenced an action in this Court against Puritan on May 11, 1962.
It will be seen from the foregoing that in the action against Puritan exactly the same copyrights, exactly the same birds and foliage designs, and exactly the same fabrics were involved as are now involved in the case at bar.
In the action against Puritan, a motion for a preliminary injunction was granted over opposition from Puritan by Judge Metzner, whose order of preliminary injunction with detailed findings of fact ("prima facie shown by clear and convincing facts") and conclusions of law ("shown prima facie") was made on May 29, 1962 and filed on June 5, 1962.
Puritan had obtained leave before answer to make "Slifka Fabrics, Inc." a party to the action and to serve a third-party summons and complaint on it. Fed. R.Civ.P. 14 (which has since been amended, effective July 1, 1963). The third-party summons and complaint were served by Puritan on Slifka Fabrics on May 21, 1962. The findings of fact and conclusions of law made by Judge Metzner on May 29, 1962 in granting a preliminary injunction against Puritan are assumed to be not binding on Slifka Fabrics in the case at bar because, while a party to the action at that time, Slifka was not served with notice of the motion and did not appear at the argument thereof. The findings and conclusions of Judge Metzner are persuasive nonetheless as precedents.
When it appeared from Puritan's papers that it had purchased the fabric described as "birds on twigs" from "Slifka Fabrics, Inc.", plaintiff then on June 15, 1962 commenced this action against "Slifka Fabrics, Inc.". It has been stipulated, however, that Slifka Fabrics is not a corporation but a partnership of Joseph and Sylvia Slifka, who are now the defendants herein. The action against Puritan was settled and discontinued several months after the case at bar had been commenced.
Neither bringing Slifka into the Puritan action nor commencing this action served to halt the sale of the copied design. In late May, in June, and in July of 1962, Slifka continued to ship its "#1041" fabric with the copied design.
In opposing this motion, Slifka raises points which will be separately considered.
Slifka contends that there is an issue of fact as to whether the designs are "sufficiently original" to support a copyright. The contention is based on a claim that the birds and foliage were "derived from pictures and drawings in the public domain" because a "source" of the designs, reproductions of which on fabrics were registered by plaintiff for copyright, was an "Audubon book of birds." The facts are beyond dispute: an artist employed by Weixel Associates (from whom plaintiff bought the design) created the design and used the Audubon book as "a source" but did not copy it. In Audubon there were birds one to a page, or male and female together in watercolor; the Weixel artist used a pen and ink outline, did not use the same foliage as Audubon, got the foliage "out of her head", made up an arrangement of the birds "in odd shapes, angles", and "put in numbers haphazardly just to *848 make it look like it came from a document". These undisputed facts show that the design was "sufficiently original to satisfy the originality requirement of the copyright law". Peter Pan Fabrics, Inc. v. Dixon Textile Corp., 280 F.2d 800, 802 (2d Cir. 1960). Copyright differs markedly from a patent in the degree of invention required. "Presenting old material in a new plan or arrangement is sufficient to lend copyright ability to the resulting work". Amdur, Copyright Law and Practice, 86. Judge Metzner, of course, determined that the copyrights in suit were valid.
Slifka contends that there is an issue of fact as to whether notice of copyright was properly given by plaintiff.
The design was printed on the Loomskill fabric by Brewster Finishing Company in Paterson, New Jersey. Eisner, an employee of Loomskill, swears that he personally instructed Brewster to print a notice of copyright along with the designs here involved; that he personally checked the finished goods and knows that the copyright notice was in fact printed on each repeat of the design in the finished goods. Slifka does not controvert this showing directly. Slifka attempts to raise an issue of fact from the method used by Brewster to print the copyright notice. It appears that one way of printing the copyright notice is to engrave it on the printing rollers so that it is printed at the same time as the design (see for example, H. M. Kolbe Co. v. Armgus Textile Co., 315 F.2d 70, 73 (2d Cir. 1963)). Brewster does not use this method because, according to its plant superintendent, it was found that the cloth did not feed uniformly into the print machine but would get at an angle so that the copyright notice would not always hit the selvage but would sometimes get over into the fabric itself, with consequent damage. Brewster bought a special machine made in England just for printing on the selvage; the machine is used at a stage in finishing the cloth subsequent to the printing; it is mounted on one of the calender units. The affidavits for Slifka say that this is not the usual and customary method in the trade for printing copyright notices on the selvage. This, however, is entirely immaterial. No particular method is required to be used and beyond any doubt Brewster had a method for printing the copyright notice and elaborate procedures for determining that the notice was actually printed.
Slifka next contends that the copyright notice was invalid because it was printed only on the selvage and was not incorporated in the design itself. Samelson in his affidavit says that the copyright notice could have been put into each of the boxes in the design containing birds and foliage; he points out that there is printing in the designs themselves. There are no affidavits on this point from plaintiff, which apparently treats it as a point of law.
In Peter Pan Fabrics, Inc. v. Martin Weiner Corp., 274 F.2d 487 (2d Cir. 1960) it was settled (over Judge Friendly's dissent) that notice on the selvage was sufficient, at least as against a "deliberate copyist", who has the burden to show "that `notice' could have been embodied in the design without impairing its market value" (274 F.2d at 490). This holding has since been cited in this Circuit with continued approval. H. M. Kolbe Co. v. Armgus Textile Co., 279 F. 2d 555 (2d Cir. 1960), 315 F.2d 70, 72 (2d Cir. 1963); Coventry Ware, Inc. v. Reliance Picture Frame Co., 288 F.2d 193, 195 (2d Cir. 1961).
It would be far more reassuring had plaintiff submitted affidavits on this point such as were submitted to Judge Levet in Peter Pan Fabrics, Inc. v. Dixon Textile Corp., 188 F.Supp. 235 (S.D.N.Y. 1960). A statement by counsel that notice "in the body of the textile * * * would destroy its marketability" is no more than an argument. Moreover, it is not a question of law, as contended for plaintiff, nor do the precedents treat it as such. H. M. Kolbe Co. v. Armgus Textile Co., 184 F.Supp. 423 (S.D.N.Y.1960), affirmed 279 F.2d 555 (2d Cir. 1960) was decided on an application for a preliminary *849 injunction and the final decision (315 F.2d 70) was after a trial. Here plaintiff is contending that there should be no trial.
It remains true, however, that the burden on this aspect is with defendant, as already noted. Defendant has submitted no affidavits from dress manufacturers. Samelson says in his affidavit that to put a copyright notice in each of the boxes of the design would not affect the "artistic appeal" or "salability" of the fabric. Samelson is not a dress manufacturer and is, of course, partisan. Looking at the fabric design itself, it is difficult to see how the copyright notice could be put in the relatively small boxes without destroying the effect. The printing in the design is of the names of the birds and is much less distinct than the birds and the foliage. With some misgivings because of the character of the relief here sought summary judgment it is concluded that the affidavit of Samelson does not raise a genuine issue as to a material fact, namely, the feasibility of incorporating notice of copyright in the design without impairing its market value.
The result of upholding notice on the selvage as adequate is that a purchaser of dresses made from the fabric receives no actual notice of copyright because, as Judge Friendly pointed out, the notices "pile up in the cutting rooms" (274 F.2d at 490). Nevertheless "a copier acts at his peril if he takes the design from a finished dress". Peter Pan Fabrics, Inc. v. Dixon Textile Corp., 280 F.2d 800, 803 (2d Cir. 1960). Of course, absence of actual notice can be shown as a defense to a claim for damages, Peter Pan Fabrics, Inc. v. Dixon Textile Corp., 188 F.Supp. 235, 237 (S.D.N.Y.1960), but defendant here made some sales with the copied design after it had actual notice of copyright.
The motion, including the application for reference to a Special Master to hear and report as to the monetary relief to be awarded plaintiff, is granted.
Settle order on notice. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261317/ | 428 A.2d 1184 (1981)
Joseph MADORE
v.
BANGOR ROOF & SHEET METAL COMPANY.
Supreme Judicial Court of Maine.
Argued January 15, 1981.
Decided April 30, 1981.
*1185 Joseph T. Walsh, Jr. (orally), Bangor, for plaintiff.
Mitchell & Stearns, Peter M. Weatherbee (orally), Bangor, for defendant.
Before McKUSICK, C. J., and WERNICK, GODFREY, NICHOLS, ROBERTS and CARTER, JJ.
CARTER, Justice.
Joseph Madore appeals from the proforma decree affirming two decisions of the Workers' Compensation Commission: 1) finding Madore to be 30% partially disabled on Bangor Roof & Sheet Metal Company's Petition for Review of Incapacity; and 2) dismissing[1] Madore's Petition for Award of Compensation for injuries allegedly sustained *1186 by Madore to his left foot. Madore contends on appeal that the Commissioner's findings are not supported by competent evidence, and that the Commissioner abused his discretion by not permitting Madore to recall a witness. We affirm the judgment.
I. Madore's Petition for Award of Compensation
On August 29, 1977, Madore, while working as a roofer for Bangor Roof & Sheet Metal Company (hereafter "Bangor Roof"), fell approximately fifteen feet through roof decking onto a cement floor. Madore and Bangor Roof signed an agreement for payment of compensation for total incapacity on September 23, 1977.[2] On August 17, 1978, Bangor Roof filed a Petition for Review of Incapacity. On January 30, 1979, Madore filed a Petition for Award of Compensation.[3]
On the day of the accident, Madore was examined by Dr. James Izzard, at which time he complained only of neck and shoulder pain. Dr. Izzard testified that on September 2, 1977, he again saw Madore, at which time Madore complained of heel pain. Dr. Izzard noted that while the heel was tender, it was not swollen. Dr. Izzard testified that he saw Madore three more times in September; Madore next mentioned a heel problem on the third visit (September 28). An x-ray revealed a fracture of the proximal fifth metatarsal of uncertain age, and the radiologist's report stated that mild swelling was present, indicating that the fracture may have been subacute. Dr. Izzard, though not a radiologist, testified that "subacute" would mean that the fracture was at least two weeks old, and might be of long-standing duration without union. He also testified that "usually" a fracture is accompanied by initial swelling. When asked if in his opinion the accident caused the fracture, Dr. Izzard noted that Madore was not bedridden after the accident, and stated: "So my opinion would be it would be certainly possible if that's an opinion. I don't know if you can say he probably did it in the accident or not."
Dr. John McGinn examined Madore on November 30, 1977, June 7, 1978, and September 21, 1978. Dr. McGinn had no record of any complaint as to the left foot. Dr. Rowland Pritchard saw Madore four times in 1977, and nearly every month in 1978. On January 24, 1979, Madore first voiced his complaints of pain in his left foot.
Madore first testified on October 3, 1978. When asked what part of his body was injured, he indicated the left shoulder and neck area, and the left arm and hand. Madore testified again on July 18, 1979. He stated that on the day of the accident he complained of foot pain, and that Dr. Izzard checked his feet. He said that on all three visits to Dr. McGinn he complained of foot pain, and that on his first visit to Dr. Pritchard, he complained of foot pain. Madore further testified that throughout the period following the accident his foot problem had hindered his walking. Moreover, he stated that while he was testifying in *1187 October of 1978, his foot had felt like it was "on fire," but he did not then mention it.
The Commissioner found that "the injury allegedly sustained by Joseph Madore to his left foot was not causally related to his work incident of August 29, 1977."
Madore did not ask the Commissioner to make specific factual findings and conclusions of law pursuant to 39 M.R.S.A. § 99. Therefore, we must treat the Commissioner as having made whatever factual determinations could, in accordance with correct legal concepts, support his ultimate decision, and sustain such determinations unless they are clearly erroneous. Chase v. White Elephant Restaurant, Me., 418 A.2d 175, 175-76 (1980).
The issue of causal connection is itself one of fact. Sadler v. Georgia-Pacific Corp., Me., 382 A.2d 1043, 1044 (1978). On his Petition for Award of Compensation, Madore had the burden of proof on this issue. MacLeod v. Great Northern Paper Co., Me., 268 A.2d 488, 489 (1970); see note 3, supra.
The Commissioner could rationally have disbelieved Madore's testimony: the testimony of all three doctors as to if and when Madore complained of foot pain was in conflict with Madore's statements. The Commissioner could rationally have found improbable Madore's testimony that when he first testified his foot felt as if it were on fire, in light of Madore's failure at that time to indicate that he had any foot complaints. See MacKenzie v. H. Tabenken & Company, Inc., Me., 382 A.2d 1047, 1050-51 (1978); see also Qualey v. Fulton, Me., 422 A.2d 773, 776 (1980). Since resolving the question of Madore's credibility against Madore finds rational support in the record and favors the Commissioner's decision, we must so resolve it. Gordon v. Colonial Distributors, Me., 425 A.2d 625, 628 (1981); Chase, 418 A.2d at 175-76.
It is undisputed that Madore did have a fractured foot on September 28, 1977. The Commissioner could rationally have found that the fracture occurred after the accident. Dr. Izzard testified that swelling usually accompanies a fracture, yet no swelling was noted by him on September 2, 1977. He refused to testify, even when invited to do so, that it was more probable than not that the accident caused the fracture.
Again, the Commissioner could rationally have found that the fracture occurred before the accident. Dr. Izzard testified that it might be of long-standing duration. By disbelieving Madore, and accepting the testimony of the doctors, the Commissioner could find that aside from tenderness and mild swelling in September, 1977, perhaps caused by the fall, Madore complained to no one of foot pain until January, 1979. At that time, he complained of pain to Dr. Pritchard, who simply took an x-ray which substantiated the existence of the fracture but revealed no other symptoms or injury. The Commissioner could thus disbelieve Madore and find that any exacerbation of the fracture caused by the accident disappeared after September of 1977, and that the fracture itself, the "injury allegedly sustained by ... Madore to his left foot," occurred before the accident.
While it might be that we would also affirm a finding that Madore's left foot injury was causally related to his accident, we cannot overturn the Commissioner's fact-finding simply because an alternative finding also finds support in the evidence. See Harmon v. Emerson, Me., 425 A.2d 978, 982 (1981). The Commissioner's finding of no causal relationship is not clearly erroneous.
II. Bangor Roof's Petition for Review of Incapacity
After the accident, Madore complained of pain in his left shoulder, neck and back. Surgery was performed on January 20, 1978 Dr. Pritchard performed a resection of the left clavicle designed to relieve shoulder pain. Dr. McGinn examined Madore in June and September, 1978. On both occasions, after examination, Dr. McGinn concluded that Madore "could probably return to his regular work."
*1188 Dr. Pritchard testified that in September of 1978 he advised Madore that he could do "light duty work such as driving a light pick-up truck, something of that nature; but I didn't think that he should go back to his original job with the roofing company...."
Madore testified in July, 1979, that he had not looked for work.
The Commissioner found that Madore was 30% partially disabled and had not made a reasonable effort to obtain work within the tolerance of his physical condition.
The extent of an employee's incapacity is a question of fact. DeRoche v. Bangor Roofing and Sheet Metal Co., Me., 411 A.2d 1026, 1027 (1980). Where total incapacity has been established through a Commission-approved compensation agreement, the employer has the burden of showing, on a petition for review of incapacity, that the employee's incapacity has diminished since the time the agreement was executed. Hafford v. Kelly, Me., 421 A.2d 51, 53 (1980). The employer is required to establish, by comparative medical evidence, that since the time an approved agreement was executed, the condition of total incapacity has diminished or ended. The requirement of comparative medical testimony to show a change in condition is met by a showing that after execution of the compensation agreement the employee has undergone serious remedial surgery followed by a new medical appraisal of his condition. Hamilton v. Dexter Shoe Co., Me., 402 A.2d 854, 855-56 (1979).
Here, the agreement for compensation for total incapacity was executed on September 23, 1977. Serious remedial surgery took place on January 20, 1978, which was followed by medical appraisals by Dr. McGinn and Dr. Pritchard. Their testimony provides competent evidence to support a finding that Bangor Roof met its burden to show that it is more probable than not that Madore has recovered some ability to perform a kind of work ordinarily available for remuneration in the competitive labor market. See Ibbitson v. Sheridan Corp. Me., 422 A.2d 1005, 1008 (1980). Since Madore produced no evidence that he engaged in any work search, Bangor Roof has met its burden of proving that Madore's incapacity is no longer total. Id. The Commissioner's finding that Madore is 30% partially disabled is not clearly erroneous.
III. Commissioner's Refusal to Allow Recall of Dr. Pritchard
Madore argues that the Commissioner refused to allow him to recall Dr. Pritchard to testify. The record does not reflect any such request by Madore or ruling by the Commissioner.[4] Bald factual assertions in a brief are not appropriate substitutes for the record on appeal. State v. Lang, Me., 396 A.2d 1012, 1013 (1979). When an inadequate record is presented to the Law Court to support an issue raised on appeal, such appeal must fail. Id.; Berry v. Berry, Me., 388 A.2d 108, 109 (1978).
The entry is:
Pro forma judgment affirmed.
It is ordered that the employer pay to the employee $550.00 for his counsel fees plus his actual and reasonable out-of-pocket expenses of this appeal.
All concurring.
NOTES
[1] When a petition is decided on its merits, as was this Plaintiff's, it would be better form to deny, rather than to dismiss, the petition. Wing v. A. C. Electric Corp., Me., 408 A.2d 1006, 1007 n.1 (1979).
[2] Notice of approval of the agreement by the Workers' Compensation Commission was sent on March 6, 1978.
[3] The September 23, 1977 Agreement recites that Madore "sustained cuts and various bruises." (Cf. 1979 Workers' Compensation Commission Rules and Regulations 2(b): "The injured member, etc., should be clearly identified on Agreements.") Madore's January 30, 1979 Petition alleges that Madore "injured neck, shoulder, elbow and left foot." Subsequently, at the hearing held on July 18, 1979, the parties told the Commissioner that Madore's Petition was filed to cover injuries to the left foot which had not been covered by the initial agreement. Without objection, the Commissioner: 1) treated the neck and shoulder injuries as having been covered by the initial agreement; thus, his decision on Bangor Roof's Petition for Review recites that Madore sustained a compensable injury to his neck and shoulder on August 29, 1977; and 2) treated Madore's Petition as alleging a compensable injury only to Madore's left foot. Neither party on appeal complains about this treatment. Thus, as a result of the procedure adopted by the parties, Madore had the burden of proving a causal relation between the accident and his alleged left foot injury, see MacLeod v. Great Northern Paper Co., Me., 268 A.2d 488, 489 (1970), while Bangor Roof had the burden of proving that Madore's incapacity due to his neck and shoulder injuries had diminished, see Hafford v. Kelly, Me., 421 A.2d 51, 53 (1980).
[4] The transcript reads in pertinent part as follows:
Commissioner: That concludes Mr. Madore's case?
[Madore's Counsel]: I would like to have the opportunityPeter, do you have Doctor Pritchard's testimony?
[Bangor Roof's Counsel]: He's testified a couple of times.
(Off Record Discussion)
Hearing Concluded at 8:55 a. m. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261321/ | 59 Pa. Commonwealth Ct. 36 (1981)
William J. McDonald, Appellant
v.
Lake Hauto Club et al., Appellees.
No. 29 T.D. 1980.
Commonwealth Court of Pennsylvania.
Argued March 5, 1981.
April 28, 1981.
Argued March 5, 1981, before Judges MENCER, MacPHAIL and PALLADINO, sitting as a panel of three.
*37 William E. McDonald, for appellant.
Robert Lazorchick, with him William Z. Scott, Jr., for appellees.
OPINION BY JUDGE MENCER, April 28, 1981:
William J. McDonald (appellant) has appealed from a decision of the Carbon County Court of Common Pleas which denied injunctive relief in his action against the Lake Hauto Club and its board of directors. We affirm.
The Lake Hauto Club is a nonprofit corporation which owns and operates Lake Hauto, a private recreational area. In 1975, the Lake Hauto Club adopted the following rules concerning the use of boats on its lake:
1. Craft must be registered with the club prior to launching on Lake Hauto annually and must display the Lake Hauto registration emblem. . . .
. . . .
6. Power boats are restricted to a maximum length of 17 feet with a horsepower not to exceed 85 H.P. Power boats registered and operated on Lake Hauto prior to 1975 are excluded.
The appellant has been a member of the Lake Hauto Club for over 20 years. In 1977, he purchased a "Silverline" watercraft with a length of 16 feet 3 inches and an inboard motor. The appellant registered the boat with the Lake Hauto Club and operated it on the lake for several months. The boat motor was described on the registration application as "Equivalent 85 H.P."
*38 In August 1977, the Lake Hauto Club revoked the registration of the appellant's boat after an inspection revealed that the manufacturer's rating of the boat motor was 120 horsepower, well in excess of the 85-horsepower maximum established by the club rules. The appellant instituted this action in equity to compel the Lake Hauto Club to permit him to register his boat and to use it on the lake. The court below denied relief and the case was appealed under Section 762 (a) (5) of the Judicial Code, 42 Pa. C.S. § 762(a) (5).
We agree with Judge LAVELLE of the Court of Common Pleas of Carbon County, writing in this case, that the courts should avoid needless interference in the affairs of private corporations:
[I]t is a well established legal principle that courts should not substitute their judgment for that of the directors of a corporation and will not interfere with the internal management of a corporation unless the acts complained of constitute fraud, bad faith or gross mismanagement or are unlawful or ultra vires. 8A P.L.E. Corporation[s] § 322. Chambers v. Beaver-Advance Corp., 392 Pa. 481, 489, 140 A.2d 808, 812 (1958), Bowman v. Gum, Inc., 327 Pa. 403, 409-410, 193 A. 271, 274 (1937), Gettemy v. Homestead Assoc. of Westmoreland, 29 [West.] 7, 11-12 (1946), aff'd 356 Pa. 475, 52 A.2d 325 (1947). Morris v. Somerset Co. Memorial Park, Inc., 21 Som. 87, 93 (1962). Likewise, courts will not declare a by-law of a corporation invalid unless it is clearly unreasonable. Stewart v. Monongahela Valley Country Club, 177 Pa. Super. 632, 639-640, 112 A.2d 444, 448 (1955).
McDonald v. Lake Hauto Club, 7 Carbon L.J. 245, 251-52 (1980).
*39 The appellant has not challenged the power of the Lake Hauto Club to regulate the size of boats which can be used on its private lake; this exercise of corporate power is clearly within the limits of the charter. Similarly, the appellant has not seriously contended that the 85-horsepower limit is itself unreasonable; some cutoff point could be established and the choice of 85 horsepower was not inherently improper. Instead, the appellant has asserted that the club's method of measuring horsepower is unreasonable and that the rule was applied to him in an arbitrary manner. The evidence produced, however, fails to support these assertions.
The Lake Hauto Club uses the engine manufacturer's horsepower rating to determine whether a boat will be permitted on the lake. While it is true that other methods of measuring horsepower could be adopted, this method provides a quick and efficient way to enforce the regulations.
In this case, the Court is not unmindful that the horsepower rule was promulgated by lay members for lay members of the club and it is lay members who must interpret and enforce it. If `horsepower' as used in the rule should be interpreted as plaintiff contends, an extremely heavy burden would be placed on the defendants to determine each and every boat's actual horsepower rating. Actual horsepower output is subject to such variables as the type of drive mechanism involved, the type of propeller used, hull design and load in the boat. An expert in power boats would have to be employed by the defendants to test each and every boat before registration could be permitted. Under our interpretation of the rule, lay persons can simply look at the theoretical horsepower of the engine as it is stated by the engine's manufacturer. *40 Id. at 250. We conclude that the court below correctly held that the method employed to measure horsepower is not unreasonable.
The appellant also failed to prove that the rule was arbitrarily or unreasonably applied to him. The court below properly found that the only boats exempted from the 85-horsepower limit were those which were registered with the Lake Hauto Club before the rule was adopted in 1975. The appellant identified one other boat, registered after 1975, with an inboard V-8 engine, but he presented no evidence as to the engine manufacturer's rated horsepower.
The Lake Hauto Club did not act improperly in excepting boats registered before 1975 from the 85-horsepower rule. Indeed, this type of "grandfather clause" is frequently employed in legislation and government regulations to avoid interference with vested property rights.[1] The appellant has presented no reason for adopting an unfavorable view of such provisions in the by-laws of a private, nonprofit corporation.
Finally, the appellant argues that the application of the 85-horsepower rule has resulted in "discrimination" against him. The evidence does not support this allegation, but, even if it did, the lack of significant *41 state involvement with the Lake Hauto Club prevents judicial interference. See Moose Lodge No. 107 v. Irvis, 407 U.S. 163 (1972).
Order affirmed.
ORDER
AND NOW, this 28th day of April, 1981, the order of the Court of Common Pleas of Carbon County in the above captioned case, dated February 28, 1980, is hereby affirmed.
Judge WILKINSON, JR. did not participate in the decision in this case.
NOTES
[1] See Hanna v. Board of Adjustment, 408 Pa. 306, 183 A.2d 539 (1962) (grandfather clauses in the context of zoning ordinances); Dublin Water Co. v. Public Utility Commission, 206 Pa. Superior Ct. 180, 213 A.2d 139 (1965) (dealing with Section 1401 of the Public Utility Law, Act of May 28, 1937, P.L. 1053, as amended, formerly 66 P.S. § 1531, repealed by the Act of July 1, 1978, P.L. 598. A similar provision is now found at 66 Pa. C.S. § 103); Howe v. Smith, 203 Pa. Superior Ct. 212, 199 A.2d 521 (1964) (dealing with Section 5 of the Chiropractic Registration Act of 1951, Act of August 10, 1951, P.L. 1182, as amended, 63 P.S. § 605). See also Annot., 4 A.L.R.2d 667 (1949) ("Construction of `grandfather clause' of statute or ordinance regulating or licensing business or occupation"). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261351/ | 286 Pa. Superior Ct. 225 (1981)
428 A.2d 653
Carmel SYLVESTER and Joseph Sylvester, her husband, Appellants,
v.
Angelo PERUSO, Aldis Peruso, Stylecraft Fashions, Inc., Carl DeLuca and Harvey DeLong.
Superior Court of Pennsylvania.
Argued December 4, 1979.
Filed April 20, 1981.
*226 Kevin J. Kelleher, Easton, for appellants.
Robert E. Simpson Jr., Easton, for appellees.
Before PRICE, WATKINS and HOFFMAN, JJ.
WATKINS, Judge:
This is an appeal from the order of the Court of Common Pleas of Northampton County, Civil Division, which granted the defendants' motions for a summary judgment. The court below held that the plaintiff was precluded from maintaining a civil action against appellees because her sole remedy was under the Workmen's Compensation Act.
On May 20, 1977, plaintiff Carmel Sylvester was injured while a passenger in an automobile owned by defendants Angelo Peruso and Aldis Peruso, trading as Stylecraft Fashions, Inc. and operated by Carl DeLuca. Both DeLuca and Carmel Sylvester were employees of Stylecraft and both employees were proceeding to work in the company automobile at the time of the accident which caused plaintiff's injuries. DeLuca picked up Carmel Sylvester regularly to take her to work, at her request. This service was offered *227 as a convenience to DeLuca and Sylvester and neither employee was paid for the time they were being transported to work. Nor was there a contract requiring the employer to provide transportation for its employees. DeLuca would, however, provide transportation to certain employees who requested it pursuant to orders from Mr. Peruso. DeLuca had been driving the plaintiff to work for a period of eight (8) to ten (10) years. Peruso knew that company vehicles were being used to transport certain employees to work and had specific knowledge that plaintiff was one of these employees prior to the date of the accident. As a result of the injuries suffered during the accident, plaintiff received workmen's compensation benefits. She then commenced a civil action against DeLuca and her employers.
An employee is entitled to workmen's compensation benefits from his employer for an injury which occurs while he is engaged in the course of his employment. 77 P.S. 431. In return for receiving the protections of the Workmen's Compensation Act, which require only that a person be injured while in the course of his employment and does not require a finding that the injury was the result of anyone's negligence, the employee gives up the right to maintain a civil action against his employer and/or co-employees unless the injury was an intentional one. 77 P.S. 72. Apple v. Reichert, 443 Pa. 289, 278 A.2d 482 (1971). Thus, the sole issue is whether plaintiff's injury occurred while she was in the course of her employment.
As a general rule the act of going to or returning from work does not constitute a furtherance of the employer's business. As such an employee so engaged is not engaged in the course of his employment. Susman v. Kaufman's Department Store, 182 Pa.Super. 467, 128 A.2d 173 (1957). However, this general rule is subject to exceptions and there is no general formula to determine readily whether an accident off the premises occurred in the course of employment. Cases involving this question must be disposed *228 of on their own peculiar facts. Coleman v. Fischer, 164 Pa.Super. 261, 63 A.2d 687 (1949). In the instant case the employer provided the means of transporting the plaintiff to work. Although, the employer had assumed no contractual obligation to do so it had provided this service to plaintiff for eight (8) to ten (10) years, paid for the gasoline, owned the vehicle, and had directed the driver, another employee, to pick up plaintiff and certain other employees who requested a ride to work. In addition, plaintiff filed for and received Workmen's Compensation benefits thereby asserting her status as an employee engaged in the course of her employment at the time of the accident. To permit her now to disclaim such status so that she is able to pursue other benefits would be grossly unfair and would defeat the legislative purposes of the Workmen's Compensation Act by encouraging employees to attempt to avoid the act and by encouraging employers to deny workmen's compensation benefits to injured employees in cases which are all but crystal clear.
It has been held that where transportation is furnished to an employee by his employer as part of the employment agreement, either expressly or impliedly, and for the interest of the employee, as well as the employer, that the employer is liable for Workmen's Compensation benefits for injuries sustained by the employee while using this means of transportation. Kramer v. Philadelphia, 179 Pa.Super. 129, 116 A.2d 280 (1955); Susman v. Kaufman's Department Store, supra. Because the employer furnished the means of transportation in the instant case and because plaintiff received Workmen's Compensation benefits from her employer we hold that the Workmen's Compensation Act constitutes her sole remedy and that she cannot maintain civil actions against either her employer or her co-employee for injuries she received as a result of the May 20, 1977 accident. The fact that subrogation rights exist under the Act[1] does not impress us as a valid reason to hold otherwise as such a *229 holding would contravene the clear legislative purpose of the Workmen's Compensation Act as discussed above.
Order affirmed.
HOFFMAN, J., files a dissenting opinion.
HOFFMAN, Judge, dissenting:
Because I believe that section 205 of the Pennsylvania Workmen's Compensation Act[1] does not bar this action, I dissent. For the reasons which follow, I would reverse the order of the court below and remand for further proceedings.
The majority concludes that because plaintiff-appellant Carmel Sylvester (plaintiff) received workmen's compensation benefits from her employer for her injuries sustained in the May 20, 1977 accident, she cannot now deny that she was in the course of her employment at the time of the accident. In Flanders v. Hoy, 230 Pa.Super. 322, 326 A.2d 492 (1974), an employee, after receiving workmen's compensation benefits from her employer, brought a tort action against a fellow employee to recover damages for injuries sustained in an automobile accident while riding to a seminar in a car driven by the fellow employee. In alleging that section 205 of the Workmen's Compensation Act barred the action, the defendant argued that the plaintiff's receipt of workmen's compensation benefits constituted an admission that she had been in the course of her employment at the time of the accident. Although our Court did not decide this issue, we suggested that "policy reasons may distinguish the cases which have allowed workmen's compensation payments into evidence as an admission by an employer that a person was an employee in the course of employment at the time of the *230 accident. . . ." Id., 230 Pa.Super. at 325 n. 2, 326 A.2d at 494 n. 2 (citing Sabatini v. Affiliated Food Distributors, Inc., 6 Pa.Cmwlth. 470, 295 A.2d 845 (1972)) (emphasis in original). I agree. There is no indication in the record before us that the course of employment issue was litigated in workmen's compensation proceedings. Under these circumstances, I believe that it would be unfair to plaintiff to hold that by accepting workmen's compensation benefits, she forfeited her right to bring a common law action against her fellow employee.[2]
Moreover, unlike the majority, I believe that allowing plaintiff to maintain this action against her fellow employee is in no way inconsistent with the purposes of the Workmen's Compensation Act. If plaintiff were successful in her tort action, she would not recover the same damages twice because her employer, or its workmen's compensation carrier, would have a right of subrogation against defendant Carl DeLuca to the extent of the workmen's compensation benefits paid to plaintiff. See Act of June 2, 1915, P.L. 736, art. III, § 319, as amended; 77 P.S. § 671. I am therefore not convinced that permitting plaintiff to maintain this action will "contravene the clear legislative purpose of the Workmen's Compensation Act. . . ." 286 Pa.Super. at 229, 428 A.2d at 655.
Having concluded that plaintiff's receipt of workmen's compensation benefits should not bar this action, I must now determine whether plaintiff was in the course of her employment at the time of the accident. As the majority *231 notes, although as a general rule an injury occurring while an employee is going to or returning from work is not compensable under the Workmen's Compensation Act, such an injury is compensable "where transportation, or the means of transportation, is furnished the employe by the employer as a part of the agreement of employment, expressly or impliedly, and for the interest of the employer, as well as the employe. . . ." Susman v. Kaufman's Department Store, 182 Pa.Super. 467, 473, 128 A.2d 173, 176 (1956). See also Davis v. Workmen's Compensation Appeal Board, 41 Pa.Cmwlth. 262, 265, 398 A.2d 1105, 1106 (1979) ("Unless an employment contract includes transportation to and from work or the employee has no fixed placed of work or is on a special mission for his employer, an employee going to and from work is not furthering the affairs of his employer during such journey.").
In this case, there was no express contract requiring the employer to transport plaintiff to work. Consequently, the accident can be deemed to have occurred in the course of plaintiff's employment only if an implied contract of transportation existed. "A contract implied in fact is an actual contract which arises where the parties agree upon the obligations to be incurred, but their intention, instead of being expressed in words, is inferred from acts in light of the surrounding circumstances." Elias v. Elias, 428 Pa. 159, 161, 237 A.2d 215, 217 (1968). I conclude that the record does not support a finding that there was an implied contract to transport plaintiff to work. The employer's awareness that defendant Carl DeLuca had been driving plaintiff to and from work and derivation of some benefit from the practice are insufficient evidence of an intention to be contractually bound. Accordingly, because plaintiff was not in the course of her employment at the time of the accident, a prerequisite to the applicability of section 205 of the Workmen's Compensation Act, I would hold that the lower court erred in concluding that section 205 shielded Carl DeLuca from tort liability.
NOTES
[1] 77 P.S. 671.
[1] Act of June 2, 1915, P.L. 736, art. II, § 205, added by Act of August 24, 1963, P.L. 1175, No. 496, § 1; 77 P.S. § 72. Section 205 provides:
If disability or death is compensable under this act, a person shall not be liable to anyone at common law or otherwise on account of such disability or death for any act or omission occurring while such person was in the same employ as the person disabled or killed, except for intentional wrong.
[2] Although the majority concludes that plaintiff "cannot maintain civil actions against either her employer or co-employee," 286 Pa.Super. at 230, 428 A.2d at 655, I note that the order under review granted judgment in favor of defendant Carl DeLuca (the co-employee) only. Thus, the majority improperly reaches the issue of whether plaintiff can maintain an action against the employer. Consequently, the majority's statement that to allow plaintiff to bring a tort action after receiving workmen's compensation benefits would "encourag[e] employers to deny workmen's compensation benefits to injured employees in cases which are all but crystal clear," 286 Pa.Super. at 230, 428 A.2d at 655, is inappropriate. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261352/ | 223 F.Supp. 346 (1963)
Opal W. RAGER, Plaintiff,
v.
John Boscoe CRAMPES, Defendant and Third-Party Plaintiff,
v.
Hoover WILLIAMS and Edward Panter, Third-Party Defendants.
No. 957.
United States District Court W. D. Kentucky, Bowling Green Division.
October 17, 1963.
Alfred Naff, Hopkinsville, Ky., for plaintiff.
Coleman, Harlan & Orendorf, Bowling Green, Ky., Trimble, Soyars & Breathitt, Hopkinsville, Ky., Charles Gill, Elkton, Ky., for defendant and third-party plaintiff.
Bell, Orr & Reynolds, Bowling Green, Ky., for third-party defendants.
SWINFORD, District Judge.
This is an automobile accident case that was commenced in the Todd Circuit Court. The defendant, a citizen of Georgia, filed a third-party claim against two North Carolina citizens charging that they were either solely responsible for the collision or that they are liable to him to the extent of his liability to the plaintiff. The third-party defendants then filed a petition for removal of the third-party claim to this Court. The case stands submitted on the motion of the defendant and third-party claimant to remand to the State Court.
The basis of the motion is that venue is determined by 28 U.S.C.A. § 1391 which provides that diversity cases shall be brought in the judicial district where all the plaintiffs or all the defendants reside. This does not govern venue in removed cases however, for 28 U.S.C.A. § 1441 provides that an action that has been commenced in a state court may be removed to the federal district court for the division and district where the state *347 action is pending. Polizzi v. Cowles Magazines, Inc., 345 U.S. 663, 73 S.Ct. 900, 97 L.Ed. 1331 (1953).
The real difficulty with this case is that the Court can find no ground for exercising subject matter jurisdiction. The third-party defendants have not sought to remove the whole case but only the third-party claim. Federal jurisdiction can only attach to a case by some express authorization of the Constitution or Acts of Congress. Smith v. Reeves, 178 U.S. 436, 20 S.Ct. 919, 44 L.Ed. 1140 (1900); Chisholm v. Georgia, 2 Dallas 419, 2 U.S. 419, 1 L.Ed. 440 (1793). The third-party defendants have referred to no such authorization for removal jurisdiction over a third-party claim independently of the other phases of the action and the Court can find none.
28 U.S.C.A. § 1441 defines the removal jurisdiction of the federal district courts. In subsections (a) and (b) the subject phrases are "any civil action" and "any other such action". These expressions would seem to comprehend the entire civil action, and not its several parts or phases. Subsection (c) contemplates the division of a civil action into segments as to which federal jurisdiction may attach severally but it does not fit the present context. It provides that:
"Whenever a separate and independent claim or cause of action, which would be removable if sued upon alone, is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters not otherwise within its original jurisdiction."
The third-party claim, at least to the extent that it seeks to impose derivative liability, is not separate and independent of the action brought by the original plaintiff. The third-party complaint charges that the third-party defendant is liable to the third-party plaintiff for whatever amount the original plaintiff recovers in this action. This is a matter that cannot be determined as between the parties which the petition for removal seeks to bring before this Court. The third-party claim is dependent, not independent, of the determination of the issues raised by the pleadings of the original plaintiff and defendant. What the third-party plaintiff should recover on his claim cannot be ascertained until his liability to the original plaintiff is fixed. The Court is confirmed in its view of the matter by the decisions in Manternach v. Jones County Farm Service Co., N.D.Iowa, 156 F.Supp. 574 (1957) and Marshall v. NAVCO, Inc., S.D.Tex., 152 F.Supp. 50 (1957).
An order sustaining the motion of the third-party plaintiff to remand this case to the Todd Circuit Court is this day entered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/524298/ | 876 F.2d 436
1989-1 Trade Cases 68,645
CUERVO RESOURCES, INCORPORATED and Michael Warren,Plaintiffs-Appellants,v.CLAYDESTA NATIONAL BANK, Defendant-Appellee.
No. 88-1609.
United States Court of Appeals,Fifth Circuit.
June 29, 1989.Rehearing Denied Aug. 2, 1989.
Steven L. Woolard, Fort Stockton, Tex., for plaintiffs-appellants.
Mark S. Carder, Cotton, Bledsoe, Tighe & Dawson, Midland, Tex., for defendant-appellee.
Appeal from the United States District Court for the Western District of Texas.
Before KING, GARWOOD, and DAVIS, Circuit Judges.
PER CURIAM:
1
Plaintiffs-appellants Cuervo Resources, Inc. and Michael Warren brought this suit against appellee-defendant Claydesta National Bank (the Bank) for alleged violation of the anti-tying provisions of the Bank Holding Company Act, 12 U.S.C. Secs. 1972, et seq., in connection with the renewal or offer to renew Cuervo's debt to the Bank. The Bank moved for summary judgment both on the merits and on the basis of res judicata. The latter plea was based on a state court judgment in favor of the Bank and against appellants on the indebtedness in question and rejecting appellants' counterclaim against the Bank for tortious interference with business relations in reference to the same general circumstances alleged in the present action. In the state suit, appellants had also filed a counterclaim against the Bank under the anti-tying provisions of the Bank Holding Company Act, asserting essentially the same claims as those made in the present action. However, appellants on their own motion dismissed their referenced Bank Holding Company Act counterclaim from the state suit prior to its trial, despite their recognition that it would be a compulsory counterclaim under state law if the state court had subject matter jurisdiction over it. The district court in the present suit granted the Bank's motion for summary judgment on the basis of res judicata, concluding that the state court had subject matter jurisdiction over the counterclaim under the Bank Holding Company Act, and that it was a compulsory counterclaim in the state suit.
2
Appellants' only claim on appeal is that the judgment in the state court suit is not res judicata because the state court lacked subject matter jurisdiction of claims under the anti-tying provisions of the Bank Holding Company Act in that federal court jurisdiction of such claims is exclusive. The contrary conclusion was reached by the Eleventh Circuit in Lane v. Central Bank of Alabama, 756 F.2d 814 (11th Cir.1985), the only reported case cited by either party, or which we have found, that directly addresses this issue. We agree with Lane, and accordingly affirm the judgment below.
3
AFFIRMED. | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2457869/ | 260 P.3d 201 (2011)
245 Or. App. 300
IN RE C.C.;
DEPARTMENT OF HUMAN SERVICES
v.
S.E.
A147969
Court of Appeals of Oregon.
August 24, 2011.
Affirmed without opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320756/ | 685 S.E.2d 486 (2009)
300 Ga. App. 583
WEST
v.
The STATE.
No. A09A2069.
Court of Appeals of Georgia.
October 23, 2009.
*487 Lisa M. Palmer, Timothy L. Eidson, Adel, Steven W. Czarnota, Lake Park, for appellant.
Denise D. Fachini, Dist. Atty., for appellee.
JOHNSON, Presiding Judge.
On October 5, 2005, an officer with the Cordele Police Department effected a traffic stop on Scottie West because his car had two burned out brake lights. While speaking with West, the officer noticed the odor of alcohol emanating from West and that West had watery eyes. The officer also noticed a can of beer in the center console, a nearly empty bottle of liquor on the seat, and a small child sleeping in the back seat. The officer asked West if he had been drinking, and West responded that he had.
West performed a series of field sobriety tests, each of which he failed, and he continually asked the officer to "cut him a break." The officer arrested West and read him the implied consent warnings. He then requested that West take a breath test. West agreed to a breath test on the Intoxilyzer 5000. West's first test registered a 0.247, and his second test registered a 0.257.
1. West contends the trial court erred in allowing the officer to testify concerning information in the certificates of inspection regarding the Intoxilyzer 5000. Specifically, he argues that the officer should not have been allowed to testify that since the certificates showed that the unit was in good operating order on August 10, 2005 and November 3, 2005, "it still would have been in good working condition" between those dates. However, contrary to West's argument, the officer's testimony was not merely a speculative conclusion, but was an opinion based on the witness's own observations and, therefore, proper.[1]
The officer testified that he had a valid permit issued by the Georgia Bureau of Investigation that certified him to operate the Intoxilyzer 5000, that the machine had been *488 inspected approximately two months prior to West's arrest and one month after West's arrest and found to be in good working order on both occasions, that the machine appeared to be operating properly on the day of West's arrest, and that the machine completed the appropriate self-diagnostic tests on the day of West's arrest. The officer's opinion that the machine was in good working order on the dates between the certificates of inspection was based on his observation of the certificates of inspection as well as his own observations of the machine and its self-diagnostic tests on the day of West's arrest.[2] This evidence belies West's contention that the officer's testimony concerning the machine being in good working order was speculative.[3] The trial court did not err in allowing the testimony.
Moreover, even if we were to assume it was error to allow the officer's testimony regarding the working condition of the Intoxilyzer machine between the dates of the certificates of inspection, West has not shown any harm that resulted from the officer's testimony. In order to constitute reversible error, there must be harm as well as error.[4] Here, the Intoxilyzer machine performed self-diagnostic tests on the day of West's arrest, and no problems with the machine were detected. In addition, "a single certificate, standing on its own, is sufficient to assure the machine was operating properly."[5] Bearing these facts in mind, the officer's testimony that the machine was operating properly between the dates of the two certificates of inspection is cumulative and did not harm West.[6]
2. West next contends the trial court erred in allowing the officer to testify that he checked West's driving history and learned that West had previously been declared a habitual violator. At trial, West objected to this testimony on the ground that it was hearsay. On appeal, however, West asserts that the state failed to lay a proper foundation for the testimony. Issues and objections not raised in the trial court and ruled on by the trial court are deemed waived and cannot be raised for the first time on appeal.[7]
Even assuming that West's objection was proper, West has failed to show any harm.[8] The officer's testimony regarding West being a habitual violator was cumulative. The state tendered a certified copy and return receipt from the Department of Public Safety of West's notice that he was a habitual violator. And the officer's testimony simply showed what he did during the course of his investigation; it was not used to prove that West was, in fact, a habitual violator. The trial court did not err in permitting the testimony.
3. West contends the trial court erred in allowing the state to introduce into evidence the certified copy of West's notice that he was a habitual violator because, according to West, the state did not prove that it was sent to West's last known address. We find no error. The admission of evidence lies within the sound discretion of the trial court and will not be disturbed absent an abuse of that discretion.[9]
OCGA § 40-5-58(b) provides that when a person becomes a habitual violator, notice shall be given by certified mail, with return receipt requested. "For the purposes of [the Code Section], notice given by certified mail or statutory overnight delivery with return receipt requested mailed to the person's last *489 known address shall be prima-facie evidence that such person received the required notice."[10] Since the state provided evidence that notice was sent to West at his last known address and the return receipt clearly had West's printed name and signature under the "received by" section of the return receipt, and since West failed to rebut this evidence, the jury was authorized to conclude that the Department of Public Service complied with the statutory requirements.[11] The trial court did not abuse its discretion in allowing the state to introduce this evidence.
Judgment affirmed.
ELLINGTON and MIKELL, JJ., concur.
NOTES
[1] See generally Roberts v. State, 272 Ga. 822, 827(7), 537 S.E.2d 86 (2000).
[2] See Evans v. State, 230 Ga.App. 728, 731(2), 497 S.E.2d 248 (1998) ("self-tests" indicated Intoxilyzer machine was in proper working order).
[3] Brandon v. State, 236 Ga.App. 203, 204(2), 511 S.E.2d 573 (1999).
[4] See Prather v. State, 275 Ga. 268, 271(3), 564 S.E.2d 447 (2002).
[5] Caldwell v. State, 230 Ga.App. 46, 49, 495 S.E.2d 308 (1997).
[6] See generally Trotter v. State, 256 Ga.App. 330, 333(2), 568 S.E.2d 571 (2002); Smith v. State, 250 Ga.App. 583, 587(2), 552 S.E.2d 528 (2001).
[7] See City of Dalton v. Smith, 210 Ga.App. 858, 859(1), 437 S.E.2d 827 (1993).
[8] Matthews v. State, 268 Ga. 798, 803(4), 493 S.E.2d 136 (1997) (a defendant must show harm as well as error for reversal).
[9] See Verlangieri v. State, 273 Ga.App. 585, 588(1)(c), 615 S.E.2d 633 (2005).
[10] OCGA § 40-5-58(b).
[11] See King v. State, 179 Ga.App. 184, 184-185, 345 S.E.2d 902 (1986). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320760/ | 685 S.E.2d 526 (2009)
STATE of North Carolina, Plaintiff
v.
Edward Craig DUNN, Defendant and
Accredited Surety and Casualty, Surety.
No. COA09-188.
Court of Appeals of North Carolina.
November 3, 2009.
*527 Tharrington Smith, LLP, by Rod Malone and Christine T. Scheef, Raleigh, for plaintiff-appellant Durham Public Schools Board of Education.
Steven A. McCloskey, Winston-Salem, for defendant-appellee Accredited Surety and Casualty.
No brief filed for defendant Edward Craig Dunn.
CALABRIA, Judge.
The State of North Carolina ("plaintiff") and the Durham Public Schools Board of Education ("the Board")[1] appeal an order denying the Board's objection to a Motion to Set Aside Bond Forfeiture by Accredited Surety and Casualty ("Surety") and granting the Surety's motion.[2] We affirm.
On 17 April 2007, Edward Craig Dunn's ("defendant") release from custody in the Durham County Jail was authorized upon a secured bond in the amount of $1,500.00 executed by an agent of the Surety. On 7 June 2007, defendant failed to appear in court for charges of possession of a schedule II controlled substance, possession of drug paraphernalia, and unsealed wine/liquor in a passenger area. As a result of his failure to appear, the trial court issued an order for defendant's arrest. The Surety moved to set aside the bond forfeiture, and the trial court granted this motion. Defendant was subsequently found guilty of possession of drug paraphernalia and sentenced to 45 days in the custody of the Sheriff of Durham County. The trial court suspended defendant's sentence and placed him on supervised probation for twelve months.
*528 On 27 November 2007, the court found defendant willfully violated his probation, and issued another Order for Arrest. On 1 February 2008, defendant's release was authorized upon a secured bond in the amount of $25,000.00. On 14 March 2008, defendant failed to appear as required by the 1 February 2008 release order. When the Surety moved to set aside the bond forfeiture, the trial court granted this motion, and defendant's release was authorized by the Surety's third secured bond in the amount of $25,000.00. On 18 April 2008, defendant failed to appear as required by the 14 March 2008 release order.
On 22 April 2008, an Order for Arrest was issued for defendant, and the trial court issued another Bond Forfeiture Notice for defendant's failure to appear on 18 April 2008. On 22 May 2008, defendant appeared and waived a probation violation hearing. In addition, defendant admitted that he violated each of the conditions of his probation.[3] The trial court revoked defendant's probation, ordered his suspended sentence activated and also ordered him to serve 45 days in the custody of the Sheriff of Durham County.
On 30 May 2008, the Surety filed a Motion to Set Aside Bond Forfeiture for the third bond. On 6 June 2008, the Board filed an Objection to the Surety's motion. On 6 August 2008, a hearing was held regarding the bond forfeiture in Durham County District Court. On 13 October 2008, the trial court entered an order denying the Board's objection and granting the Surety's motion. From this order, the Board appeals.
The Board contends the trial court erred by finding that defendant's probation violation was a new charge and by concluding, as a matter of law, that N.C. Gen.Stat. § 15A-544.5(f) (2007) was inapplicable to the new charge. We disagree.
When the trial court sits without a jury, the standard of review for this Court is whether there was competent evidence to support the trial court's findings of fact and whether its conclusions of law were proper in light of such facts. State v. Lazaro, 190 N.C.App. 670, 670-71, 660 S.E.2d 618, 619 (2008).
In conclusion of law # 2, the trial court cited the relevant section of the statute regarding setting aside a bond forfeiture:
2. N.C. Gen.Stat. § 15A-544.5(f) provides that "[i]n any case in which the State proves that the surety or the bail agent had notice or actual knowledge, before executing a bail bond, that the defendant had already failed to appear on two or more prior occasions, no forfeiture of that bond may be set aside for any reason."
In conclusion of law #3, the trial court referred to the charges as original charges and independent charges:
3. N.C. Gen.Stat. § 15A-544.5(f) is not applicable because the original charge for which the defendant had been bonded was resolved and the probation violation is treated as a new independent charge.
In construing a statute, it is the duty of this Court to "carry out the intent of the legislature." State v. Ward, 46 N.C.App. 200, 206, 264 S.E.2d 737, 741 (1980). See also State v. Partlow, 91 N.C. 550, 552, 49 Am. Rep. 652, 652 (1884) ("It is plainly the duty of the court to so construe a statute, ambiguous in its meaning, as to give effect to the legislative intent, if this be practicable."). "As a cardinal principle of statutory interpretation, `[i]f the language of the statute is clear and is not ambiguous, we must conclude that the legislature intended the statute to be implemented according to the plain meaning of its terms.'" State v. Watterson, ___ N.C.App. ___, ___, 679 S.E.2d 897, 900 (2009) (quoting Hyler v. GTE Prods. Co., 333 N.C. 258, 262, 425 S.E.2d 698, 701 (1993)).
The statute refers to the word "case." The applicable definition of "case" from BLACK'S LAW DICTIONARY ("Black's") is, "Case: a civil or criminal proceeding, action, suit, or controversy at law or in equity." BLACK'S LAW DICTIONARY 243 (9th ed.2009). The trial court concluded that defendant's probation violation was a new independent charge. According to Black's definition, defendant's *529 original case was possession of drug paraphernalia and the bond was resolved when defendant was convicted and placed on probation. Defendant's subsequent probation revocation hearing was a result of an independent charge for violating his probation.
N.C. Gen.Stat. § 15A-1345 (2007) "guarantees full due process before there can be a revocation of probation and a resulting prison sentence." State v. Hunter, 315 N.C. 371, 377, 338 S.E.2d 99, 104 (1986). Specifically, N.C. Gen.Stat. § 15A-1345 (2007) "guarantees notice, bail, a preliminary hearing and a revocation hearing with counsel present." Id. "At the revocation hearing, the trial judge must make findings to support his decision on whether to revoke or extend probation... [and] make a summary record of the proceedings." Id. In State v. Duncan, our Supreme Court stated, "[t]he courts of this State recognize the principle that a defendant on probation ..., before any sentence of imprisonment is put into effect and activated, shall be given notice of the hearing and an opportunity to be heard." 270 N.C. 241, 245, 154 S.E.2d 53, 57 (1967). These due process requirements, although less than the protections guaranteed in a criminal trial, are still sufficiently significant to support the conclusion that a probation revocation hearing is a new case.
Although it is true, as the Board suggests, that a probation revocation hearing is only possible after a defendant has been found guilty of underlying criminal conduct, it is equally true that such underlying conduct is not the focus of the hearing. Rather, the trial court must determine whether the defendant willfully violated one or more conditions of his probation. State v. Dixon, 139 N.C.App. 332, 341, 533 S.E.2d 297, 304 (2000). A probation revocation hearing is a controversy entirely distinct from the underlying criminal conduct.
In the instant case, defendant's underlying criminal conduct was his possession of drug paraphernalia. For this offense, defendant was placed on supervised probation for 12 months. Defendant subsequently violated his probation. In its judgment revoking defendant's probation, the trial court found, inter alia, that defendant "admitted that [he] violated each of the conditions of [his] probation as set forth ... in paragraph[] 1 in the Violation Report or Notice dated 11/27/07." Therefore, defendant's underlying criminal conduct was not the focus of the probation revocation hearing, and the hearing was a new case according to N.C. Gen.Stat. § 15A-544.5(f) (2007). Since it was a new case, the trial court set aside the bond forfeiture.
The Board's remaining assignments of error were not addressed in its brief to this Court and are therefore deemed abandoned. N.C. R.App. P. 28(b)(6) (2009). Having resolved this appeal in favor of the Surety, we decline to address its remaining arguments.
We affirm the trial court's order denying the Board's objection and granting the Surety's motion to set aside the bond forfeiture.
Affirmed.
Judges WYNN and ELMORE concur.
NOTES
[1] The Board's status as appellant in the instant case is due to its status as the ultimate recipient of the "clear proceeds" of the forfeited appearance bond at issue herein, pursuant to Article IX, § 7 of the North Carolina Constitution. State v. Poteat, 163 N.C.App. 741, 744, 594 S.E.2d 253, 254 n. 2 (2004).
[2] Defendant Edward Craig Dunn is not a party to this appeal.
[3] The probation violation report is not part of the record on appeal. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320772/ | 685 S.E.2d 479 (2009)
300 Ga. App. 576
BENEKE
v.
PARKER et al.
No. A08A1504.
Court of Appeals of Georgia.
October 22, 2009.
Mason White, James D. Kreyenbuhl, Brennan, Harris & Rominger, for Appellant.
Richard Phillips, Phillips & Kitchings, Ludowici, Willis H. Blacknall III, Blacknall & Little, Waycross, for Appellees.
BLACKBURN, Presiding Judge.
In Beneke v. Parker,[1] the Supreme Court of Georgia affirmed in part and reversed in part the judgment of this Court in Beneke v. Parker.[2] Therefore, we vacate that portion of Division 1 of our opinion that the Supreme Court reversed and adopt the opinion of the Supreme Court as our own. The remainder of our opinion remains unchanged.
In doing so, we observe that the Supreme Court has emphasized in prior decisions that under OCGA § 16-2-1, "[f]or a violation of a statute to constitute a crime in Georgia, either criminal intention or criminal negligence must be present." Chapman v. State.[3] See Daniels v. State.[4] Yet in its opinion in Beneke, supra, the Supreme Court defined all misdemeanors as crimes, including all misdemeanors that are violations of the traffic code found in Chapter 6 of Title 40 of the Code of Georgia. Supra, at 285 Ga. at 734, 684 S.E.2d 243. This appears to conflict with the various decisions of the Supreme Court and of this Court that have described motor vehicle safety statutes as imposing "strict criminal liability" because they "proscribe a particular act but make no reference to intent." Daniels v. State.[5] See Walden v. State[6] (convictions for violations of the Uniform Rules of the Road "require no proof of culpable criminal intent or criminal negligence"); Augustin v. State[7] ("violations of the offenses set forth in Title 40, Chapter 6, unless otherwise indicated, are strict liability offenses. As such, the State is not required to prove mental fault or mens rea in" the prosecution of such offenses). We cannot opine as to the effect the Supreme Court's Beneke opinion will have on future prosecutions of traffic offenses that were once considered strict liability offenses not requiring the showing of mens rea.
Judgment affirmed.
MILLER, C.J., and ELLINGTON, J., concur.
NOTES
[1] Beneke v. Parker, 285 Ga. 733, 684 S.E.2d 243 (2009).
[2] Beneke v. Parker, 293 Ga.App. 186, 667 S.E.2d 97 (2008).
[3] Chapman v. State, 266 Ga. 356, 358(5), 467 S.E.2d 497 (1996).
[4] Daniels v. State, 264 Ga. 460, 464(2)(b), 448 S.E.2d 185 (1994).
[5] Daniels supra, 264 Ga. at 464(2)(b), n. 4, 448 S.E.2d 185 (1994).
[6] Walden v. State, 273 Ga.App. 707, 710-711(1), n. 1, 616 S.E.2d 462 (2005).
[7] Augustin v. State, 260 Ga.App. 631, 633-634(2), 580 S.E.2d 640 (2003). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2211071/ | 247 Cal.App.2d 548 (1967)
THOMAS F. GAUMER et al., Plaintiffs and Respondents,
v.
COUNTY OF TEHAMA, Defendant and Appellant.
Civ. No. 11297.
California Court of Appeals. Third Dist.
Jan. 3, 1967.
Robert W. Trimble, District Attorney, for Defendant and Appellant.
Rawlins Coffman and Noel Watkins for Plaintiffs and Respondents.
PIERCE, P. J.
The County of Tehama has appealed from a judgment allowing recovery of real property taxes paid under protest.
This case concerns the question whether the failure of an assessor to inform an assessee of an increased assessment of over 25 percent on the assessee's land precludes collection of a tax based on the increase in assessed value. The trial court answered that question affirmatively. We agree with that holding. A statute requiring that such notice be given is mandatory. All administrative remedies having been exhausted, the taxpayers properly brought this action. Our opinion deals in detail with these declarations.
The statute with which the court is concerned is section 619 of the Revenue and Taxation Code. The section was first added to the code in 1961. It required the assessor, with the approval of the board of supervisors, to inform each assessee of real property on the assessment roll of the amount of any increase in the assessed value of such real property if the increase exceeded 10 percent of its assessed value on the preceding roll. The last paragraph of the section, however, as originally written provided that the failure of the assessor to inform the assessee would not affect the validity of any assessment or the validity of any taxes levied pursuant thereto. In short, the code section was directory with no penalty imposed against the taxing authority for a failure to comply with its terms.
The section was amended in 1963. (Stats. 1963, ch. 2109, p. 4386, effective Sept. 20, 1963.) It then read: "The assessor shall, upon or prior to completion of the local roll, either:"
"(a) Inform the assessees of real property on the local secured roll of the amounts at which their respective properties have been or will be assessed thereon; or *550"
"(b) Inform each assessee of real property on such roll of the amount of any increase in the assessed value of such real property if the increase exceeds 25 percent of its assessed value on the roll for the year immediately preceding, or if the increase exceeds some lesser amount when so specified by the board of supervisors."
"The information given by the assessor to the assessee pursuant to subdivisions (a) or (b) shall include a notification of hearings by the county board of equalization, which shall include the period during which assessment protests will be accepted and the place where they may be filed."
"This information shall be furnished by the assessor to the assessee by regular United States mail directed to him at his latest address known to the assessor. The board of supervisors of any county may, in addition, authorize the publication of this information in any newspaper of general circulation within the county."
"The failure of the assessee to receive this information shall not in any way affect the validity of any assessment or the validity of any taxes levied pursuant thereto." (Italics supplied.)
With this background we state the facts.
Plaintiffs, Thomas F. Gaumer, John E. Gaumer and James A. Gaumer, own 7,738 acres of land in Tehama County which were assessed on the 1963-1964 secured local roll (Rev. & Tax. Code, 109) at $20,730. The next year (1964-1965) the property was assessed at $38,740, an 86 percent increase. The assessor at no time complied with the provisions of section 619 requiring notice to the assessee (nor, so far as the record shows, did he make any effort to do so). The first time plaintiffs had notice of the increased assessment was when they received their tax bill in November 1964. The plaintiffs appeared before the board of supervisors sitting as a board of supervisors on November 24, 1964, and presented the matter to it and the protest was denied. They paid their taxes under protest and brought this action to recover the increase. The county, as stated, has appealed from the court's judgment decreeing that the amount of taxes paid representing the excess in assessed valuation over the 1963-1964 valuations be refunded with interest at 4 percent.
[1] Determination of the appeal rests upon the intent of the Legislature in amending section 619. Such "intent" to effectuate the purpose of the law is the fundamental rule of statutory construction. (Select Base Materials v. Board of *551 Equalization, 51 Cal.2d 640, 645 [335 P.2d 672]; Redevelopment Agency v. Malaki, 216 Cal.App.2d 480 [31 Cal.Rptr. 92].) The last paragraph of section 619 as originally enacted in 1961 is clear. By its terms noncompliance with the preceding paragraphs did not invalidate the tax assessed. [2] A statute clear and unambiguous on its face does not permit interpretation to ascertain its meaning. (Redevelopment Agency v. Malaki, supra, pp. 487-488.)
[3] Another rule of interpretation is that by amending an unambiguous statute the Legislature may be assumed to have intended to change the existing law. (California Motor Transport Co. v. Public Utilities Com., 59 Cal.2d 270 [28 Cal.Rptr. 868, 379 P.2d 324]; Learner Co. v. County of Alameda, 234 Cal.App.2d 278, 284 [44 Cal.Rptr. 535].) [fn. 1] [4] The law as it existed in 1961 provided that failure to give notice as well as failure to receive notice did not invalidate the assessment or the taxes levied. The amendment in 1963 eliminated the "validating" provision pertaining to the sending of notice. It now reads that the failure of the assessee to receive notice shall not invalidate the assessment or taxes levied pursuant thereto. One must infer that by deletion of the phrase "nor the failure of the assessor to so inform the assessee" the Legislature intended the sending of notice to be a sine qua non upon which the validity of the assessment and tax based thereon depend.
[5] Since section 619 requires notice, the failure to give notice means that that portion of the tax based on the increased assessment is void (Huntley v. Board of Trustee, 165 Cal. 298, 300-301 [131 P. 859]; see also Birch v. Board of Supervisors, 191 Cal. 235 [215 P. 903]) in the absence of any participation by the taxpayer in any equalization proceedings before the board of supervisors. (De Luz Homes, Inc. v. County of San Diego, 45 Cal.2d 546, 561 [290 P.2d 544].) We will explain this in more detail below.
[6] The county contends that the trial court erred in holding that the taxpayers had exhausted their administrative remedies before bringing this action. It states that plaintiffs *552 "thought they had found a loophole" and that they "were content to 'lay in the grass.' " These statements, under the circumstances of this case, have a resounding bureaucratic tintinnabulation which we find most distasteful--and most inappropriate. Plaintiffs, having been sent no notice, had no knowledge of the fact that the assessed valuation of their lands had been suddenly increased by $18,010 (86 percent). [fn. 2] Unexplained is why the assessor (presumably advised of all statutory changes in this field by the county's district attorney, learned in the law) had ignored both the directory provisions of the 1961 statute and the 1963 mandatory amendment. No inadvertence is claimed. (Of course, it would have made no difference as far as the validity of the assessment is concerned whether the failure to give notice was intentional or inadvertent.) When in November plaintiffs learned for the first time, by receipt of their tax statement, that this exceedingly large assessment increase had occurred, they sought relief immediately from the board of supervisors and were turned down. They then paid the tax under protest and brought this action on November 7, 1964.
The rule that administrative remedies must be exhausted is settled. (City & County of San Francisco v. County of San Mateo, 36 Cal.2d 196 [222 P.2d 860]; Security-First Nat. Bank v. County of Los Angeles, 35 Cal.2d 319 [217 P.2d 946].) The county argues that although the board of supervisors had already sat as a board of equalization on the 1964-1965 taxes before plaintiffs had notice of the increase they should have petitioned the board to call a special meeting to sit as a board of equalization, failing the calling of which they should have sought judicial relief by petition for an extraordinary writ. This plaintiffs were not required to do. The assessment was not merely an overvaluation. Because of the noncompliance with the notice provision it was void. (Stafford v. Riverside County, 155 Cal.App.2d 474 [318 P.2d 172]; Parr-Richmond Industrial Corp. v. Boyd, 43 Cal.2d 157, 164-165 [272 P.2d 16].) The code prescribes the times *553 when the board of supervisors may meet as a board of equalization. (Rev. & Tax. Code, 1603, 1604.) The failure of the assessor to give the notice required by law made it impossible for plaintiffs to apply for a hearing or appeal before the board at the prescribed times. Since that time had expired, it was also then beyond the power of the board of supervisors to sit as a board of equalization. (Rev. & Tax. Code, 1603 (as it then read); Birch v. Board of Supervisors, supra, 191 Cal. at p. 237; Huntley v. Board of Trustees, supra, 165 Cal. 298, 300-301.) Thus, plaintiffs were denied any right of administrative equalization. Plaintiffs, as a matter of fact, did go before the supervisors as soon as they could and, as stated, were there denied relief. [fn. 3] Since the assessment was void and the taxes were properly paid under protest, this action was proper. (Rev. & Tax. Code, 5136-5138.)
The judgment is affirmed.
Regan, J., concurred.
IX That at no time during the year 1964 did the Assesor give notifications of hearings by the County Board of Equalization to Assessees.""
NOTES
[fn. 1] 1. While this court has recognized another principle of interpretation--that a change in a statute may sometimes indicate a legislative intent to clarify the true meaning of a previous statute covering the same subject matter (see Koenig v. Johnson, 71 Cal.App.2d 739, 753 [163 P.2d 746])--that rule can have no possible application where, as here, the language of the 1961 statute was too explicit to permit interpretation and, on the other hand, the 1963 amendment with almost equal directness changes the law.
[fn. 2] 2. The court found (and the findings are not attacked) that no notice of the tax increase was given as required by law. Findings VIII and IX read as follows: "VIII That at no time did the Assessees receive notice of the aforesaid increase in assessed valuation on the local secured roll except upon receipt of the tax notices sent out in the fall of 1964; that said tax notices were received by the Assessees several months after the 1964 Board of Equalization of the County of Tehama had met and conducted its annual statutory session.
[fn. 3] 3. It may be noted that in 1965 section 620 was added to the Revenue and Taxation Code. Under its terms, had it been in effect when these proceedings were brought and tried, it would have permitted plaintiffs to pay the tax under protest and seek relief before the board "at its next annual meeting as an equalization board." The new section did not become effective until July 1, 1966. That was after this case was before this court on appeal; in fact, after the briefs had been written and filed. By then "the next annual meeting" after the invalid assessment had already been completed. We mention the new law, not only in the interests of completeness, but to demonstrate awareness by the Legislature that prior to its adoption no administrative remedy existed by which these plaintiffs could have sought relief other than the one they took--by bringing this action. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261382/ | 223 F.Supp. 731 (1963)
Leon JORDAN, Plaintiff,
v.
C. M. KELLY, Chief of Police, James D. Theisen, Officer, and Albert W. Thomson, Roy P. Swanson, Davis K. Jackson, Clinton W. Kanaga, Jr., H. Roe Bartle, ex officio, as Members of Board of Police Commissioners of Kansas City, Missouri, Defendants.
No. 14439-3.
United States District Court W. D. Missouri, W. D.
November 20, 1963.
Leonard S. Hughes, Jr., and Harold L. Holliday, Kansas City, Mo., for plaintiff.
W. H. Bates, Secretary-Attorney Board of Police Commissioners, Kansas City, Mo., for defendants.
James H. Ottman, of Shook Hardy, Ottman, Mitchell & Bacon, Kansas City, *732 Mo., special counsel for defendant Clinton W. Kanaga, Jr.
DUNCAN, District Judge.
Plaintiff instituted this suit in this court against the defendants to recover the sum of $50,000.00 actual and $50,000.00 punitive damages on Count I for alleged violation of § 1 of the 14th Amendment, and § 1983 Title 42 U.S.C.A. (the Civil Rights statute). Plaintiff alleges among other things:
"3. That defendants, Albert W. Thomson, Roy P. Swanson, Davis K. Jackson, Clinton W. Kanaga, Jr., and H. Roe Bartle, ex officio member, are members of the Board of Police Commissioners, duly appointed by the Governor of the State of Missouri, and that the defendant, C. M. Kelley was appointed by them as the Chief of Police of Kansas City, Missouri and is their agent; that the defendant, James D. Theisen, was and presently is a patrolman, employed by the Kansas City, Missouri Police Department, and at all times mentioned herein was acting in that capacity under the supervision, direction, and the control of the defendant Kelley and the defendant members of the Board of Police Commissioners of Kansas City, Missouri; that the defendants are all citizens and residents of the State of Missouri; that at all times hereinafter mentioned, they were acting under the authority and color of law.
"4. Plaintiff further states that on or about July 10, 1962, while the plaintiff was directing and supervising his affairs as an orderly and law abiding citizen and was conducting his business, he was, without warrant or other legal process, arrested by defendant, James D. Theisen, acting on his own and in the behalf of and under the direction of defendants, C. M. Kelley and the defendant members of the Board of Police Commissioners of Kansas City, Missouri, did wrongfully, maliciously and unlawfully commit an assault upon plaintiff by the use of vile and obscene language toward plaintiff, insulted, frightened, humiliated, and abused him, and in a most cruel and brutal manner did lay violent and forcible hands upon plaintiff and maliciously and unlawfully pushed, touched and jerked this plaintiff; that said acts of the defendants as aforesaid were under color of law but in violation of the privileges and immunities, the equal protection of the laws and the due process clauses of the Constitution of the United States, Amendment 14, and Chapter 21, Title 42, Section 1983, United States Code, and solely because of plaintiff's race and color.
"5. Plaintiff states that defendants had no reasonable grounds for believing that plaintiff had violated any ordinance of the municipality of Kansas City, Missouri or the laws of the State of Missouri, or of the United States and that defendants acted in accordance with a common plan and scheme to deprive plaintiff of rights guaranteed by the Constitution and laws of the United States, solely by reason of his race and color."
Count II seems to allege false imprisonment and seeks damages in the same amounts.
The defendants filed a Motion to Dismiss on the grounds:
"A.
"As a matter of law, plaintiff has no cause of action against defendant Chief C. M. Kelley, and defendants Albert W. Thomson, Roy P. Swanson, Davis K. Jackson, Clinton W. Kanaga, Jr., and H. Roe Bartle, members of the Board of Police Commissioners of Kansas City, Missouri.
"B.
"Plaintiff's complaint for damages fails to state a cause of action or complaint against any of the defendants *733 upon which relief can be granted.
"C.
"Plaintiff, having been properly charged, admitted to bail and released on bond, was afforded due process of law and is precluded from purusing the action and relief sought in plaintiff's complaint for damages."
Each defendant, except Theisen, filed an affidavit in support of said motion. The affidavits of the members of the Board of Police Commissioners are identical, and omitting the names, are as follows:
"Comes now _______, of legal age, having been first duly sworn, and on his oath states:
"(1) That he is one of the named defendants in a law suit entitled Leon Jordan v. C. M. Kelley, Chief of Police, et al., Number 14439-3.
"(2) That at all times pertinent in said law suit, to wit, on July 17, 1962, he was a duly appointed and qualified member of the Board of Police Commissioners of Kansas City, Missouri, having been previously appointed by The Honorable John M. Dalton, Governor of the State of Missouri, and administered the oath of office by a Judge of the Circuit Court of Jackson County, Missouri, at Kansas City.
"(3) Affiant states that he was not present at the time of the arrest of Leon Jordan, the plaintiff in the above captioned cause.
"(4) Affiant states that he has no personal knowledge, by his own observation, of any of the incidents leading up to or relating to the arrest of Leon Jordan, plaintiff in the above captioned cause.
"(5) Affiant states that he at no time directed or ordered the arrest of said Leon Jordan nor at any time did he confer with Officer James D. Theisen in relation to said arrest and prior thereto.
"Further affiant saith not."
The affidavit of the Chief of Police is identical in language to that of the members of the Board of Police Commissioners, except he states that he is the duly appointed and qualified Chief of Police of the Kansas City, Missouri, Police Department.
The Motion to Dismiss is also supported by the affidavit of Robert Gross, a sergeant of the Kansas City, Missouri, Police Department at the time of the alleged arrest on July 17, 1962. On the date of the arrest of the plaintiff, Sergeant Gross was assigned to duty at Police Station No. 3 in Kansas City, Missouri, as desk sergeant. His affidavit is as follows:
"AFFIDAVIT
STATE OF MISSOURI |
> SS
COUNTY OF JACKSON |
Robert Gross, of lawful age, being first duly sworn, on oath states:
That he is a Sergeant on the Kansas City, Missouri, Police Department.
That on July 17, 1962, he was assigned to duty at No. 3 Police Station in Kansas City, Missouri, as a Desk Sergeant.
That on July 17, 1962, one Leon Jordan was arrested at 26th and Prospect at 10:50 p. m., on the charges of disorderly conduct and interfering with a police officer in the performance of his duties.
That the said Leon Jordan was booked in at No. 3 Police Station at 11:15 p. m., on July 17, 1962, on the charges of disorderly conduct in violation of Section 39.120, paragraph 3, Revised Ordinances of Kansas City, Missouri, and interfering with a police officer in the discharge of his official duties in violation of Section 39.530, Revised Ordinances of Kansas City, Missouri.
That the said Leon Jordan posted a cash bail bond from his own money in his possession in the sum of Fifty Dollars ($50.00) on these said *734 charges for appearance in the Municipal Court of Kansas City, Missouri, at 9:00 a. m., July 18, 1962.
That this bonding procedure and execution of this bail bond was completed at approximately 11:30 p. m., July 17, 1962, at the booking desk at No. 3 Police Station.
That the said Leon Jordan was never put in a cell at any time but remained at all times in the vicinity of the booking desk.
That after making the said bond, the said Leon Jordan remained at No. 3 Police Station and talked with some police officers for about fifteen minutes and then left the station.
/s/ Robert Gross "
___________________________
Robert Gross "
A copy of the record incident to the booking of the plaintiff at the station accompanies the affidavit and recites:
"Booked for loitering on the sidewalk at the place of arrest after the arresting officers told subject to move on from the scene. Subject also told other citizens at the scene that they did not have to move from the scene either. Subject had been warned before. Subject was also booked for interefering with the duties after he tried to warn other subjects that they did not have to leave the scene."
This was the charge upon which the plaintiff appeared in police court the morning following his arrest, and was acquitted.
The court is considering defendants' Motion to Dismiss under Rule 12(b) F.R.Civ.P. which provides:
"Every defense, in law or fact, to a claim for relief in any pleading, whether a claim, counterclaim, crossclaim, or third-party claim, shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion: * * * (6) failure to state a claim upon which relief can be granted * * * If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, * * *."
Rule 56(c): "The motion shall be served at least 10 days before the time fixed for the hearing. The adverse party prior to the day of hearing may serve opposing affidavits."
Thereafter the court may render Summary Judgment. The court caused notice to be served upon all the parties in accordance with the requirements of the Rule, and set the matter for hearing on November 2, 1963, on which date, pursuant to notice, counsel for the respective parties appeared before the court, and the following discussion took place between one of the attorneys for the defendants and the attorneys for the plaintiff:
"MR. OTTMAN: I gathered from Mr. Holliday's suggestions which he has filed in the case that he agrees fundamentally with the facts as stated in the affidavits filed.
"MR. HOLLIDAY: Right, but it is my further position that even though they were not present or did not issue orders directly requesting the arrest of this particular plaintiff, that still does not make them exempt from liability.
"THE COURT: That is the purpose of getting it under this particular rule. Ordinarily those things are handled by affidavit and counter-affidavit.
"MR. HOLLIDAY: There is another problem: what the defendant did or did not do is a matter wholly within the defendants' knowledge. This case isn't at issue. We have not taken any interrogatories or any depositions, made any inspection of records, and we are unable to prove what the defendant did or what the *735 defendant did not do, and certainly before any judgment is given on the basis of a self-serving affidavit, we should have an opportunity to bring out the facts."
Pursuing the question further:
"MR. BATES: Pursuing that a moment, in the initial motion I filed, I filed an affidavit at that time to which was attached supporting data concerning the arrest, the times, the charges placed, the admittance or setting of bond, and admittance to bail. Now, do I take it from your statement, Mr. Holliday, you do not dispute those facts? Do you?
"MR. HOLLIDAY: That does not affect the case."
The court further inquired:
"Now, Mr. Holliday, you have not filed any counter-affidavits.
"MR. HOLLIDAY: That is right.
"THE COURT: As I understand, you are not disputing the facts that are alleged in the affidavit, but it is your contention under the law they are still liable.
"MR. HOLLIDAY: Yes.
"THE COURT: So it gets down to a question of law.
"MR. HOLLIDAY: For this reason, your Honor, if the Board or any members of it or the Police Chief issues orders which illegally required officers to arrest members of a class, and if this plaintiff was a member of that class, whether or not the officer went directly to the plaintiff, if the order went to a class of which this plaintiff is a member, then I say they are liable, and there is nothing in this affidavit to indicate whether this is true. Of course, we don't know. I mean we can't prove it. We have information but we can't prove it at this point."
Each of the parties has filed briefs in support of their respective positions.
Before discussing the question of liability, it is deemed desirable to review the statutes governing the Police Department in Kansas City, Missouri. This may be prefaced by stating that the Police Department of the City of Kansas City, Missouri, is not under the supervision or control of the City, but is under the control and supervision of a Board of Police Commissioners appointed by the Governor of the state.
Mo.Rev.Stat. § 84.350 (1959) V.A. M.S., provides for the creation of a Police Board comprised of four commissioners, and provides their qualifications and the salary to be received by them. The Mayor of Kansas City, Missouri, is also an ex officio member of the Board.
Section 84.360 determines how the Board shall be appointed, i. e., by the Governor of the State of Missouri, by and with the consent of the Senate.
Section 84.370 provides that the Commissioners shall take an oath before a judge of a court of record having jurisdiction of the trial of criminals in the county in which the respective cities in which they are appointed to serve shall be located.
Section 84.390 provides that any Commissioner may be removed by the Governor for official misconduct, and the proceedings for removal must conform to the requirements of the statute.
Section 84.420 enumerates and defines the duties and responsibilities of the Board of Police Commissioners, among which are:
"To Preserve the public peace; * * *
* * * * *
"See that all laws relating to elections and to the observance of Sunday, and relating to pawn brokers, intemperance, lotteries and lottery policies, vagrants, disorderly persons, and the public health are enforced;
* * * * *
"They shall also be responsible for the enforcement of all laws and ordinances passed, or which may hereafter be passed, by the common council of such cities, not inconsistent *736 with the provisions of sections 84.350 to 84.860, or any other law of the state which may be properly enforceable by a police force.
* * * * *
"(To) Appoint a chief of police who shall be responsible to the board for the proper execution of the policies, duties, and responsibilities established for the administration of the police department; * * *"
Section 84.480 provides that:
"The board of police commissioners shall appoint a chief of police who shall be the chief police administrative and law enforcement officer of such cities. He shall be chosen by the board solely on the basis of his executive and administrative qualifications and his demonstrated knowledge of police science and administration with special reference to his actual experience in law enforcement leadership and the provisions of section 84.420."
Section 84.500 provides that:
"The chief of police shall be the chief executive officer of the police department. He shall be responsible to the board of police commissioners for the proper administration of police affairs and suppression of crime in such cities and the execution of policy pertaining to police affairs as determined by the board of police commissioners, * * *".
This section also provides that he shall:
"Have the power to appoint, subject to approval of the board, and shall have the power to promote, discipline and suspend all police officers and policemen." [His actions in these respects are subject to review by the board].
Section 84.570 determines the qualifications of the policemen and officers of the police force, and it also provides that, from time to time, competitive examinations or tests for determining the qualifications and fitness for appointment to the police force, shall be provided for, and that a list of those qualifying for such examination shall be established listing those qualified in order of rank. When an appointment is to be made, the appointment shall be made from such eligible list.
Section 84.650 provides that:
"The commissioners of police shall cause all persons arrested by the police to be brought before some magistrate or municipal judge within said cities, to be dealt with according to law."
A review of the statutes clearly reveals that the names of police officers appointed by the Chief of Police are taken from a register which has been prepared pursuant to an examination to determine their qualifications, and that they may be removed only by preferring charges. Any action by the Chief of Police with respect thereto is subject to review by the Board of Police Commissioners.
The statutes clearly provide that the members of the police force are both state and city officers, whose duty it is to enforce the laws of the state and the ordinances of the city, and in the performance of their duties in that respect, they are clearly acting under color of law.
Defendants' brief cites § 39.120 of the Ordinances of the City of Kansas City, Missouri, entitled, "Disorderly Conduct."
"Any person, who, with intent to provoke a breach of the peace or whereby a breach of the peace may be occasioned, commits any of the following acts shall be deemed to have committed the offense of disorderly conduct: * * *.
"(3) Congregates with others on a public street and refuses to move on when ordered by the police."
Also:
"30.530. Obstructing and resisting officer or inspector Any person who shall in any way or manner hinder, obstruct, molest, resist or otherwise interfere with any city *737 officer or inspector or any member of the police force in the discharge of his official duties shall be guilty of a misdemeanor.
"Any person who shall attempt to prevent any member of the police force from arresting any person, or shall attempt to rescue any person in the custody of a member of the police force, or from anyone called to assist the police officer, shall be guilty of a misdemeanor."
[This Ordinance is not cited or referred to by the court for the purpose of determining whether or not the police officer, Theisen, was justified in arresting the plaintiff, or whether or not the plaintiff was guilty of any of the acts mentioned in the Ordinance, or whether or not the arresting officer committed any of the acts of violence alleged in plaintiff's complaint.]
In both counts of the Complaint plaintiff apparently attempts to create the inference at least, that the plaintiff was arrested simply because of his color. I am unable to see what difference it makes what his color may be insofar as his right of action is concerned for the violation of his civil rights, or what difference it makes as to the liability of the defendants in the enforcement of the Ordinances of the City.
The law is designed as a protective shield for citizens of any color, and the violation of the civil rights of any citizen, regardless of color, affords a cause of action to that person under the statute. The complaint does not allege a conspiracy, nor is it a class action. The action is not brought for and on behalf of others, but solely for plaintiff's benefit.
All the court has before it, as far as this motion is concerned, is the affidavit of the desk sergeant indicating the charges made against the plaintiff at the time he was brought into the station by the arresting officer; whether they are true or false is not for the court to consider in a determination of the Motion to Dismiss as to defendant Theisen. The statement of the sergeant contained in his affidavit as to the reasons for plaintiff's arrest are hearsay based upon the report of the arresting officer, Theisen.
A factual controversy exists as to Theisen under the allegations of the Complaint, which may not be determined on a Motion to Dismiss or Motion for Summary Judgment.
Under the authority of Monroe et al. v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.E.2d 492 (Oct. 1960), a cause of action is alleged against Theisen and the Motion to Dismiss as to him is overruled.
We come next to the question of the liability of the defendant Chief of Police. The decisions are not in harmony as to the exact scope of the liability of sheriffs, constables, marshals or other peace officers for acts of their deputies. There is a difference of judicial opinion in the various states. This is the result, to some extent, of statutory provisions and also the question as to whether or not the deputies are acting by virtue of their office and acts done under color of office. 47 Am.Jur. 158; Foley v. Martin, 142 Cal. 256, 71 P. 165; 75 P. 842, 100 Am. St.Rep. 123, State ex rel. to Use of Russell et ux. v. Moore et al., 19 Mo. 369; State of Mo. ex rel. and to Use of DeVault v. Fidelity & Casualty Co. of N. Y., 8 Cir., 107 F.2d 343.
The rule is different however, with respect to the Chief of Police of a municipal police department. Even though he may be charged with the duty of selecting the members of the force, he is not responsible for their acts unless he has directed such acts to be done, or has personally cooperated in the offense, for each police officer, is, like himself, a public servant. Casey v. Scott, 82 Ark. 362, 101 S.W. 1152, 118 Am.St. Rep. 80, 12 Ann.Cas. 184; Baisley v. Henry, 55 Cal.App. 760, 204 P. 399; Michel v. Smith, 188 Cal. 199, 205 P. 113, 12 A.L.R. 980; 34 A.L.R. 561; Pritchard v. Downie, 216 F.Supp. 621 (E.D.Ark, 1963).
*738 The most recent case, Pritchard v. Downie, supra, was a civil rights action against a chief of police of the City of Little Rock, Arkansas, and grew out of the racial disturbances there. Although the case did not come up on a Motion for Summary Judgment or to Dismiss, after trial the court held that the chief of police was not liable, although he was present at the time the alleged wrongful acts were committed.
In Michel v. Smith, supra, the question involved was very similar to the one with which we are dealing here. In that case the chief of police was sued for the alleged wrongful arrest by members of the police force of the City of Los Angeles. The court stated (205 P. 114-115):
"Charter of the City of Los Angeles * * * establishes a department of the government of the city, to be known as the police department, which shall be under the management and control of three commissioners to be known as the board of police commissioners. * * the charter provides that the department shall consist of the chief of police, who shall be appointed by and be subject to removal by the mayor, and as many subordinate officers, and such policemen, detectives and employees as the city council shall by ordinance determine. All appointments in the department shall be made by the chief of police, subject to approval by the board of police commissioners, and subject to such civil service regulation as may be in force at the time the appointments are made."
In determining that the chief of police was not liable for an arrest made by one of the officers, the court states (205 P. 115):
"In this capacity he may not be held liable in damages for the unlawful acts and omissions of the subordinates of the department, selected pursuant to the provisions of the charter, unless it can be shown that he has directed such acts or personally co-operated therein."
Another case in which the liability of the chief of police for the acts of the deputy or police officer was discussed, is Pavish v. Meyers, 129 Wash. 605, 225 P. 633, 34 A.L.R. 561. There the court stated:
"But the courts have very generally drawn a distinction between a sheriff and a chief of police, holding that the deputies of the former are selected by the sheriff and act purely as his representatives, but that police officers are generally not selected exclusively by the chief of police, and are themselves officers and do not act for the chief of police in the performance of their official duties."
Casey v. Scott, supra, 101 S.W. 1152 (Ark.) also involved the question of liability of a chief of police for his police officers. There the court stated:
"A sheriff is responsible for his deputies, for they are acting in his private service in his name and stead, and are only public officers through him. A chief of police may select a police force, but he is not responsible for their acts, as each policeman is a public servant himself. So under this ordinance, the dog catcher was a public servant selected by the chief of police just as a patrolman would be selected by him, or a mayor or other appointing power. There is no liability in such cases, unless the appointing officer fails to exercise reasonable care in the selection of the appointee a question not presented here."
Very clearly the general rule with respect to the liability of a chief of police applies to this case. The statutes clearly require that the officers of the police force of Kansas City be selected by the chief of police from a list of those who have qualified pursuant to an examination, and the chief of police is required under the law to make all selections from that list, and such officers are in no sense *739 the personal appointees of the chief of police.
The police officers are public officials just as the chief of police is a public official, and their duties are prescribed by the authority under which their positions are created.
The only allegation in the complaint is that in making the arrest, he, the arresting officer, "was acting in that capacity under the supervision, direction, and the control of the defendant Kelley and the defendant members of the Board of Police Commissioners."
The only authority cited by the plaintiff is that of Monroe et al. v. Pape, supra. Very clearly the holding in that case may not be accepted as authority for holding the chief of police liable under the general rule as it has been discussed herein.
The chief of police would not be responsible for the wrongful acts of the officer unless he was present or unless it is shown he directed such acts or personally cooperated in them, and there is no dispute but that he was not present, did not direct and did not cooperate in the making of the arrest.
The allegation that the arresting officer was acting under the general supervision, direction and control of the chief of police is not sufficient to render him liable under the statutes and the cases cited. The reasoning and principle of law discussed with reference to the liability of the chief of police applies to the members of the Board of Police Commissioners also.
Under the allegations of the complaint and the undisputed facts as revealed by the affidavits and the statement of counsel, the members of the Board of Police Commissioners cannot be held liable for the wrongful acts committed by the police officer as alleged in plaintiff's complaint. Monroe et al. v. Pape, supra.
The Motion as to the defendant Chief of Police and members of the Board of Police Commissioners, for the reasons aforesaid, is sustained, and summary judgment is rendered against plaintiff as to those defendants. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/382711/ | 631 F.2d 1287
Wendell BILLS et al., Plaintiffs-Appellants,v.Murray HENDERSON et al., Defendants-Appellees.
No. 78-1172.
United States Court of Appeals,Sixth Circuit.
Argued April 2, 1980.Decided Oct. 1, 1980.Rehearing Denied Nov. 13, 1980.
Robert A. O'Connell, Knoxville, Tenn., Carol S. Nickle, Dept. of Interior, Knoxville, Tenn., for plaintiffs-appellants.
Brooks McLemore, Atty. Gen., Henry E. Hildebrand III, Patricia J. Cottrell, Asst. Attys. Gen., Nashville, Tenn., for defendants-appellees.
Before EDWARDS, Chief Judge, and WEICK and KENNEDY, Circuit Judges.
CORNELIA G. KENNEDY, Circuit Judge.
1
Plaintiffs, inmates at Brushy Mountain State Prison in Tennessee, filed this action under 42 U.S.C. § 1983 seeking declaratory and injunctive relief, alleging that procedures used in disciplinary proceedings at Brushy Mountain violated their right to due process under the fourteenth amendment of the Constitution. They appeal the District Court's judgment which granted only partial relief. Plaintiffs claim that the procedures followed when placing them in administrative segregation, punitive segregation, and in revoking their accrued good and honor time abridge their due process rights both by failing to comply with the minimal due process requirements set forth in Wolff v. McDonnell, 418 U.S. 539, 94 S. Ct. 2963, 41 L. Ed. 2d 935 (1974), and by failing to comply with the procedural requirements of the rules and regulations of the Tennessee Department of Correction.
2
The District Judge held that the plaintiffs had protected liberty interests in good and honor time and in not being placed in punitive segregation and the plaintiffs were denied their due process rights to the extent that they were deprived of those liberty interests without the due process requirements set forth in Wolff v. McDonnell, supra. He ruled that plaintiffs had no protected liberty interest requiring a hearing on transfer to administrative segregation. The judge further held that procedural regulations issued by the Tennessee Department of Correction created no protected liberty interests and that the due process clause did not therefore require that Tennessee adhere to its own procedural regulations in connection with the transfer of prisoners to punitive or administrative segregation. Bills v. Henderson, 446 F. Supp. 967 (E.D.Tenn.1978).
I.
3
We first address the question of whether plaintiffs have a protected liberty interest that requires certain due process standards be met prior to a transfer to administrative segregation.1 The first question that must be answered in an analysis of this type is whether the interest claimed by plaintiffs is a life, liberty or property interest within the meaning of the due process clause. Walker v. Hughes, 558 F.2d 1247, 1250 (6th Cir. 1977); Meachum v. Fano, 427 U.S. 215, 223-24, 96 S. Ct. 2532, 2537-38, 49 L. Ed. 2d 451 (1976). Plaintiffs claim a liberty interest in freedom from transfer to administrative segregation. It is clear that the due process clause of the Constitution does not, of itself, make a state prisoner's freedom from transfer to administrative segregation a protected liberty interest.
4
As long as the conditions or degree of confinement to which the prisoner is subjected is within the sentence imposed upon him and is not otherwise violative of the Constitution, the Due Process Clause does not in itself subject an inmate's treatment by prison authorities to judicial oversight.
5
Montanye v. Haymes, 427 U.S. 236, 242, 96 S. Ct. 2543, 2547, 49 L. Ed. 2d 466 (1976). See also Walker v. Hughes, supra, 558 F.2d at 1252.
6
A protected liberty entitlement can also be created by state law, however. When a liberty interest has been created, the due process clause acts to insure that the state-created right is not arbitrarily abrogated. Meachum v. Fano, supra, 427 U.S. at 226, 96 S. Ct. at 2539. Wolff v. McDonnell, supra, 418 U.S. at 557, 94 S. Ct. at 2975. See Vitek v. Jones, 445 U.S. 480, 488, 100 S. Ct. 1254, 1261, 63 L. Ed. 2d 552 (1980). Liberty interests can be created by state rules or mutually explicit understandings as well as by statute. In the area of liberty entitlements claimed by prison inmates, this Court has explicitly ruled that liberty interests can be created by policy statements and other promulgations by prison officials. Walker v. Hughes, supra, 558 F.2d at 1255.
7
Consequently, this Court must determine whether state statutes, mutually explicit understandings, or rules, including prison policy statements or other promulgations, created for plaintiffs a liberty entitlement or expectation that they would not be transferred to administrative segregation except upon the occurrence of specific events. E. g., Wolff v. McDonnell, supra, 418 U.S. at 557, 94 S. Ct. at 2975 (state-created right to "good time" credit by statute which specified that it would only be forfeited based on serious misbehavior); Montanye v. Haymes, supra, and Meachum v. Fano, supra (inmates had no due process rights to a hearing prior to transfer to another state prison where living conditions were substantially less favorable in the absence of a state law or practice conditioning such transfers on proof of serious misconduct or the occurrence of other specific events); Walker v. Hughes, supra, 538 F.2d at 1256 (federal inmates had due process rights not to have segregation, transfer to other prisons, forfeiture of good time credits, or loss of privileges imposed on them absent a finding of major misconduct, based on prison policy statement indicating that these sanctions would not be imposed absent such a finding by an adjustment committee). In determining whether such an expectation exists, the Court must focus on the nature of the interest rather than on its weight. Greenholtz v. Nebraska Penal Inmates, 442 U.S. 1, 7, 99 S. Ct. 2100, 2104, 60 L. Ed. 2d 668 (1979); Meachum v. Fano, supra, 427 U.S. at 223-24, 96 S. Ct. at 2537-38; Walker v. Hughes, supra, 558 F.2d at 1251-52. The plaintiffs must have a legitimate claim of entitlement to the interest, not simply a unilateral expectation of it. Greenholtz v. Nebraska Penal Inmates, supra, 442 U.S. at 7, 99 S. Ct. at 2104; Walker v. Hughes, supra, 598 F.2d at 1251.
8
Rule 4.602 of the Adult Service Policies and Procedures Manual of the Department of Correction (Guidelines) sets forth the purposes of administrative segregation and some of the guidelines to be used in imposing it.
9
Administrative Segregation. Administrative Segregation will be implemented by transferral of the inmate to the adjustment center for an indeterminate period of time. The purpose of administrative segregation is to provide a place of maximum custody to protect an individual, others, and to promote and maintain order. Administrative segregation is recommended for those men with serious problems of maladjustment, mental illness or sexual abnormality to the degree that their safety or the safety of others is threatened in their normal day to day station.
10
Rule 4.602 (emphasis supplied).
11
The question here is whether this section of the rule created a protected expectation that plaintiffs would not be transferred to administrative segregation absent a finding that such transfer was necessary to protect that individual or others or to maintain order or that the transfer was based on problems such as serious maladjustment, mental illness, or sexual abnormality.
12
There are two lines of cases dealing with similar problems which assist in determining the answer to this question. First, there are cases dealing with the analogous condition of punitive segregation. In Walker v. Hughes, supra, 538 F.2d at 1256, this Circuit ruled that a prison policy statement indicating that sanctions such as segregation, transfers to other prisons, forfeiture of good time credits, and loss of privileges could not be imposed absent a finding by an adjustment committee of major misconduct, created an expectation interest in the prisoners that those sanctions would not be imposed in the absence of such a finding. This Court ruled that the fact that these policy statements were created and could therefore be changed by the Bureau of Prisons did not preclude the existence of a protected interest because executive officials cannot create a liberty interest and then provide procedural protections beyond the review of the courts. Walker v. Hughes, supra, 558 F.2d at 1254. The District Court made a similar ruling in the instant case with regard to punitive segregation. Bills v. Henderson, supra, 446 F.Supp. at 973. See also Wolff v. McDonnell, supra, 418 U.S. 544-58, 94 S. Ct. 2969-76; Baxter v. Palmigiano, 425 U.S. 308, 96 S. Ct. 1551, 47 L. Ed. 2d 810 (1976).
13
The other line of cases deals with regulations regarding transfer of inmates to other prisons which leave the matter entirely within the discretion of prison officials and which provide no guidelines regarding transfer. In Meachum v. Fano, supra, and Montanye v. Haymes, supra, the Supreme Court ruled that no expectation or protected liberty interest was created by a statute which allowed prison officials the discretion to transfer prisoners for any reason, not limited to instances of serious misconduct. This was held to be true even though decisions to transfer might often be based on instances of misconduct and even though misconduct might have prompted the decision to transfer in an individual case. Meachum v. Fano, supra, 427 U.S. at 228, 96 S. Ct. at 2540. Montanye v. Haymes, supra, 427 U.S. at 243, 96 S. Ct. at 2547. The Court noted that decisions by prison officials under the statute would often involve no more than "informed predictions as to what would best serve institutional security or the safety and welfare of the inmate". Meachum v. Fano, supra, 427 U.S. at 225, 96 S. Ct. at 2538.
14
The demarcation between these two lines of cases is fairly clear. Where statutes or prison policy statements have limited prison officials' discretion by imposing a specific prerequisite to the forfeiture of benefits or favorable living conditions enjoyed by a prisoner, an expectation or entitlement has been created which cannot be taken away without affording the prisoner certain due process rights. On the other hand, when prison officials have complete discretion in making a decision that will affect the inmate, no expectation or protected liberty interest has been created. It is equally clear that the instant case does not fall easily into either of these situations. The Guidelines in this case give prison officials wide discretion in making what is essentially a predictive decision on what would serve the best interests of the institution and the individual. On the other hand, the Guidelines, by specifically outlining the purpose of administrative segregation and recommending the general situations in which it would be appropriate, seek to set the bounds within which that discretion is to be exercised.
15
The District Court held that the discretion retained by the Warden and the Disciplinary Board in imposing administrative segregation is so broad that no liberty expectations or due process rights were created in the plaintiffs. Since the date of the District Court's opinion, however, additional decisions in the area of procedural due process for prisoners indicate that the discretion of the prison officials in this case was sufficiently restricted to create a liberty expectation.
16
The most persuasive case in support of the creation of such a liberty expectation is Wright v. Enomoto, 462 F. Supp. 397 (N.D.Cal.1976), aff'd, 434 U.S. 1052, 98 S. Ct. 1223, 55 L. Ed. 2d 756. In that case, the District Court held that a prison policy statement created a protected expectation that a prisoner would not be transferred to administrative segregation unless he was found, for clearly documented reasons, to come within its standards. The policy statement in Enomoto was very similar to the one in the instant case.2 The Supreme Court recognized that limited restrictions on prison officials' discretion, such as the ones present in Enomoto, create a very different situation from the unbridled discretion which was present in Meachum v. Fano, supra, and Montayne v. Haymes, supra.
17
Following Meachum v. Fano and Montayne v. Haymes, we continue to recognize that state statutes may grant prisoners liberty interests that invoke due process protections when prisoners are transferred to solitary confinement for disciplinary or administrative reasons. Enomoto v. Wright, 434 U.S. 1052 (1978), aff'g 462 F. Supp. 397 (N.D.Cal.1976).
18
Vitek v. Jones, supra, 445 U.S. at 489, 100 S. Ct. at 1261.
19
In both the instant case and Enomoto, the discretion of prison officials was limited by guidelines specifying that transfers to administrative segregation should take place for the safety and security of inmates or of the institution in general. We see no distinction between the prison guidelines in the instant case and the prison guidelines in Enomoto which were found to create a due process right.
20
This conclusion is reinforced by the decision in Greenholtz v. Nebraska Penal Inmates, supra. In that case, the Court found that Nebraska's discretionary parole statute created an expectation which entitled potential parolees to some measure of constitutional protection. Greenholtz, supra, 442 U.S. at 12, 99 S. Ct. at 2106. Greenholtz made it clear that protected liberty interests may be created even when the prerequisite which limits the discretion of prison officials is a "predictive judgment" based on certain guidelines rather than a specific factual finding. Greenholtz, supra, 442 U.S. at 9-10, 99 S. Ct. at 2104-05. Consequently, the predictive nature of the determination which prison officials are required to make in the instant case does not indicate the absence of a protected liberty interest even though these types of "predictive judgments" inherently involve a large measure of discretion. We conclude that the District Court erred in determining that the retention by prison officials of a large degree of discretion in making decisions regarding administrative segregation precluded the finding of a protected liberty interest. See Winsett v. McGinnes, 617 F.2d 996 (3d Cir. 1980) (en banc).
21
In accordance with the foregoing analysis we hold that the Guidelines in the instant case limited the discretion of prison officials in making decisions regarding administrative segregation and created a legitimate expectation on the part of inmates that they would not be transferred to administrative segregation absent a finding that such transfer was for the purpose of protecting that inmate or other inmates or for the purpose of promoting and maintaining order within the institution.3
II.
22
The second question that must be answered is what process is due prison inmates before they are deprived of this protected liberty interest. Walker v. Hughes, supra, 558 F.2d at 1256. Plaintiffs argue that at the very least they are entitled to the three due process requirements set forth in Wolff v. McDonnell, supra.
23
In Wolff the Court held that there must be a hearing and that at least 24 hours in advance of the hearing the inmate must be given notice of the charges on which the action is based "in order to inform him of the charges and enable him to marshal the facts and prepare a defense." Wolff v. McDonnell, supra, 418 U.S. at 564, 94 S. Ct. at 2979. The Court in Wolff also required that the factfinders must provide a written statement as to the evidence relied on and the reasons for disciplinary action in order to protect the inmate against collateral consequences based on a misunderstanding of the nature of the original proceeding and to help insure that prison personnel will act fairly. 418 U.S. at 564-65, 94 S.Ct. at 2978-79. Wolff also held that an inmate should be allowed to call witnesses and present documentary evidence in his defense when permitting him to do so will not be unduly hazardous to institutional safety or correctional goals. Wolff, supra, 418 U.S. at 566, 94 S. Ct. at 2980.4 See also Baxter v. Palmigiano, supra, 425 U.S. at 320-23, 96 S. Ct. at 1559-1560.
24
Appellees argue that these procedures were accorded the plaintiffs at the administrative segregation hearing in this case. The dispute on this issue arises from the parties' differing interpretations of the nature and extent of the notice and post-hearing explanation requirements in a case of administrative segregation. This case illustrates the difficulties in applying procedural due process requirements in cases where officials retain a great amount of discretion in making a "predictive judgment" and where the limits on that discretion are extremely broad guidelines rather than the finding of specific facts. Plaintiffs argue that they should have been given specific notice of the proposed reasons for placing them in administrative segregation. The notice given to each plaintiff indicated only that there was "sufficient cause to believe that his presence in the general population would constitute a threat to the welfare of other residents and to the good of the institution."In order to properly analyze whether sufficient notice was given in this case it is necessary to review some of the critical differences between punitive and administrative segregation in Tennessee. Punitive segregation is imposed only for a serious infraction of specific prison rules, while administrative segregation may be based on the inmate's entire past record. Disciplinary reports alleging general behavior that requires administrative segregation may only be initiated by the Warden, rather than by prison employees generally. Guidelines, supra, Rules 4.601(5); 4.602. It is also clear, however, that administrative segregation is one of the options available to the Disciplinary Board in response to a finding that the inmate has committed a specific rule infraction. Guidelines, supra, Rule 4.601(5). In a case where the administrative segregation is based on a specific rule infraction, rather than general behavior, its purpose becomes almost identical with that of punitive segregation and there appears to be no reason why the procedural safeguards set forth in Wolff v. McDonnell, supra, and used in Walker v. Hughes, supra, should not apply to the specific rule infraction which triggered the decision.
25
A very different situation occurred in the instant case, however. The Warden issued the disciplinary report in this case because he had been notified on two occasions by informants that the plaintiffs were planning on taking a guard as hostage. Subsequently, when the Warden was informed that the plaintiffs had gathered in the gym, had requested to meet with him, and had responded with some profanity when the Warden sent a message that he would not meet with them at that time, Warden Lane surmised that the hostage taking was about to occur and ordered plaintiffs taken into "custody". Warden Lane also ordered a review of their records for a determination regarding administrative segregation. Consequently, the administrative segregation in this case was based on a "predictive judgment" by the Warden of the need to avoid an attempt at a hostage taking which would threaten the security of the institution. Warden Lane testified that when the plaintiffs' Resident Advisor requested a more specific version of the facts prior to trial, the Warden related his version of what had happened at the gym. Apparently, this information was never submitted to plaintiffs in written form and it is not clear whether the plaintiffs' Resident Advisor was even informed of the suspicion regarding hostage taking.
26
Even though administrative segregation was not used in this case in response to a specific rule infraction, if plaintiffs were to have a meaningful opportunity to marshal evidence in their behalf, they should have been given advance notice of the charges or occurrences which triggered the fear that their presence in general population posed a threat to the security of the institution. This conclusion is consistent with the analysis applied by this Court in deciding the procedural requirements in cases of this kind. Walker v. Hughes, supra, 558 F.2d at 1256-57. Such notice would promote a meaningful hearing and would help to protect inmates from arbitrary government action. The inmates' interests in this regard are not outweighed by the prison's interest in failing to disclose the reasons which triggered a decision regarding administrative segregation. Consequently, we hold that under the present prison Guidelines, inmates who are charged with being a threat to the security of the institution are entitled to notice regarding the facts which triggered those charges. Such notice should be specific enough to enable inmates to marshal evidence in their behalf, but need not disclose the identity of informants, as indicated in the Guidelines. Guidelines, supra, Rule 4.601(5). While this notice must specify the triggering event, it need not review all of the items in the inmate's prior record which the Disciplinary Board might properly consider in placing the inmate in administrative segregation. The notice given to the plaintiffs in this case did not meet these requirements.
27
Plaintiffs also argue that they were denied the due process protections guaranteed by Wolff, supra, when the Disciplinary Board failed to give them a written post-hearing statement containing the reason for the Board's decision and the evidence relied on in reaching that conclusion. Defendants admit that the plaintiffs were not given a copy of the Board's recommendations and the reasons behind them, but argue that this post-hearing statement need not be given to inmates because the purpose of it is to protect an inmate at a subsequent proceeding from a misunderstanding of the nature of the original proceeding.
28
Again it is necessary to distinguish cases in which administrative segregation is used as a response to a specific serious rule infraction and cases in which administrative segregation is based on a general determination that the inmate is a threat in general population. In cases where administrative segregation is in response to charges and a finding of a specific, serious rule infraction, written statements of the evidence relied on and the reasons for the action must be provided as required in Wolff v. McDonnell, supra. However, where administrative segregation results from a determination, based on the inmate's entire record, that he is a threat to the security of the institution, then the determination is essentially a predictive one such as was present in Greenholtz v. Nebraska Penal Inmates, supra, 442 U.S. at 14-16, 99 S. Ct. at 2107-08. Consequently, it is not necessary to provide the inmate with a summary of the evidence relied on such as in a case where a determination of guilt is being made.5 It is sufficient that the Disciplinary Board give the inmate a general statement of the reasons behind the transfer, including a statement regarding the "triggering event", if one exists. As in Greenholtz, supra, this statement of reasons can assist the inmate as a guide for future behavior. We reject defendants' contention that such a statement, although made by the Board, need not be given to the inmate. As stated, in addition to serving the purposes outlined in Wolff v. McDonnell, supra, 418 U.S. at 565, 94 S. Ct. at 2979, the post-hearing statement will assist the inmate in modifying his behavior in the future so as to remain in general population. Further, the failure to give the post-hearing statement to the inmate would create needless difficulty in the enforcement of this requirement.
29
In summary, we hold that a transfer to administrative segregation entitles inmates to the procedures set forth in Wolff v. McDonnell, as reviewed above, where the transfer is in response to a determination of guilt of a specific infraction of the rules. However, when the transfer is based on a determination, considering the inmate's entire record, that the transfer will further the purpose of protecting inmates and maintaining order, then the inmate is entitled to notice which is specific enough to inform the inmate of the facts which triggered the charges and to enable the inmate to marshal evidence in his behalf. In such cases the post-hearing written statement must state the reasons for the decision, but need not state the evidence relied on.6
III.
30
Plaintiffs argue that they are entitled not only to the procedural protections outlined in Wolff v. McDonnell, supra, but also to the extensive procedural protections contained in Rule 4.601(4) of the Guidelines, including the right to call witnesses and the right to cross examine witnesses through the inmate's Resident Discipline Advisor, and the right to have the employee who executed the notice of rule infraction present to testify.7 While the courts do not always view substantive guarantees granted by the state independently of theprocedural ones,8 it is clear that as a general rule the determination regarding what process is due is made according to the balancing test used in Wolff v. McDonnell, supra, 418 U.S. at 556-63, 94 S. Ct. at 2974-78, and reviewed in Walker v. Hughes, supra, 558 F.2d at 1256-57, and not according to state procedural rules.9 The appropriate determination regarding the process due plaintiffs before they could be deprived of their right to be free from transfer to administrative segregation except for reasons of safety and security was made by this Court in Section II of this opinion. Plaintiffs' assertion that state procedural rules are to be given significant weight in this determination is not supported by authority. While these procedural rules were first established pursuant to the decision in Crafton v. Luttrell, 378 F. Supp. 521 (M.D.Tenn.1974), rather than initiated by the state, all the rules may no longer be mandated in view of the decision in Wolff v. McDonnell, supra.
31
Plaintiffs also argue that they are entitled to the procedural protections contained in the Guidelines because those procedures create a protected liberty expectation. Other circuits which have addressed this question have ruled that protected liberty interests are not created by statutes or rules which establish only procedural requirements. Cofone v. Manson, 594 F.2d 934, 938 (2d Cir. 1979); Lombardo v. Meachum, 548 F.2d 13, 15-16 (1st Cir. 1977).
32
Plaintiff's argument is not without appeal, however, because the procedural requirements in question clearly satisfy the first prong of the procedural due process analysis in that they create a legitimate claim of entitlement in their use10 and impose a limitation on the discretion of the Warden and the Disciplinary Board.11
33
After careful consideration, however, we conclude that procedural rules created by state administrative bodies cannot, of themselves, serve as a basis for a separate protected liberty interest. The problem with allowing such a procedural rule to create a protected liberty entitlement is that the procedural due process analysis breaks down when the second prong of the analysis, the determination of what process is due, is applied. If the standard analysis is applied and interests are balanced as required in Wolff v. McDonnell, supra, then the process that is due in a given instance may bear little or no resemblance to the original expectation and so will do little or nothing to protect it. This case is an illustration of this point because the process that is due under the Wolff balancing test, as determined in Section II of this opinion, is far less than the procedural protections provided in the Guidelines themselves. The only alternative to the Wolff balancing determination would be to equate the process due with the original procedural expectations. If that approach were adopted, there would be a constitutional procedural due process right to have states adhere to any procedural rulespromulgated by them. While such adherence is certainly desirable, every deviation from state procedures cannot be viewed as a federal constitutional violation. Such a holding would make a large volume of state proceedings in the prison setting, in executive agency proceedings, and in judicial proceedings subject to complaint in the federal courts on due process grounds. We decline to so expand procedural due process.
34
While it is clear that procedural rules promulgated by departments or agencies within the federal government must be adhered to, Yellin v. United States, supra, 374 U.S. 109, 83 S. Ct. 1828 (1963); Vitarelli v. Seaton, 359 U.S. 535, 539, 79 S. Ct. 968, 972, 3 L. Ed. 2d 1012 (1959), the history of the federal rule is based on federal law. See United States v. Caceres, 440 U.S. 741, 751-52, 99 S. Ct. 1465, 1471-72, 59 L. Ed. 2d 733 (1979).12 Consequently, these cases cannot be relied upon to support a constitutional claim. But see Mabey v. Reagan, 537 F.2d 1036, 1042 (9th Cir. 1976).
35
In accordance with the foregoing analysis, we affirm the determination of the District Court that the procedural rules issued by the Tennessee Department of Correction created no protected liberty interest.
IV.
36
In parts I and II of this opinion, we ruled that the plaintiffs were not afforded their full due process rights prior to transfer to administrative or punitive segregation. Accordingly, we hold that under the present Guidelines promulgated by the Tennessee Department of Correction inmates have a right to the procedural protections outlined in Section II of this opinion prior to transfer to administrative or punitive segregation.
37
At oral argument, plaintiffs requested that their records be expunged. Expungement is not an appropriate remedy in this case for the reasons stated in Wolff v. McDonnell, supra, 418 U.S. at 573-74, 94 S. Ct. at 2982-83.
38
The District Court correctly ruled that restoration of good and honor time in a § 1983 action is foreclosed by Preiser v. Rodriquez, 411 U.S. 475, 93 S. Ct. 1827, 36 L. Ed. 2d 439 (1973). Plaintiffs were properly denied recovery of damages under the rule stated in Procunier v. Navarette, 434 U.S. 555, 98 S. Ct. 855, 55 L. Ed. 2d 24 (1978).
39
Affirmed in part, reversed in part.
40
EDWARDS, Chief Judge, concurring specially.
41
I concur in and join the majority opinion as to all sections except Section III. I cannot agree with the rejection of plaintiffs' claims to procedural rights based on state prison regulations (see Guidelines, Rule 4.601(4)). I believe that these rules do establish a "legitimate claim of entitlement" and may not, as here, be arbitrarily disregarded. Meachum v. Fano, 427 U.S. 215, 226, 96 S. Ct. 2532, 2539 (1976); Wolff v. McDonnell, 418 U.S. 539, 558, 94 S. Ct. 2693, 2975 (1974).
1
Administrative segregation in Tennessee involves the transfer of a prisoner from 'general population' to a segregated unit which is the size of a standard cell. The inmate is entitled the same personal property as inmates in general population except that security razors are provided and items packaged from the commissary in glass or mailable (sic) metal are restricted. Mail privileges, diet and medical care are unrestricted except that inmates in segregation eat in their cells and sick call is conducted in the inmate's cell by medical technicians. Daily exercise is restricted as to time and area and may also be restricted by inclement weather. Visitation is restricted to a 'secure visiting room' provided for segregated inmates. Adult Service Policies and Procedures Manual of the Department of Correction, Rule 4.650
2
§ 3330. General Policy. (a) Inmates must be segregated from others when it is reasonably believed that they are a menace to themselves and others or a threat to the security of the institution. Inmates may be segregated for medical, psychiatric, disciplinary, or administrative reasons. The reason for ordering segregated housing must be clearly documented by the official ordering the action at the time the action is taken
Wright v. Enomoto, supra, 482 F.Supp. at 403 (footnotes omitted) (emphasis added).
The Guidelines in the instant case contains a similar documentation requirement. See n. 7, infra.
3
For other cases regarding administrative segregation, see Mitchell v. Hicks, 614 F.2d 1016 (5th Cir. 1980), and cases cited therein; Raffone v. Robinson, 607 F.2d 1058 (2d Cir. 1979); Four Certain Unnamed Inmates of Mass., Etc. v. Hall, 550 F.2d 1291 (1st Cir. 1977); Kelly v. Brewer, 525 F.2d 394 (8th Cir. 1975); Arsberry v. Sielaff, 586 F.2d 37 (7th Cir. 1978); Gary v. Creamer, 465 F.2d 179 (3d Cir. 1972). See generally Winsett v. McGinnes, supra (Delaware prisoner had protected liberty interest in work release once the specific criteria for work release eligibility had been met)
4
These due process requirements were also applied in Wright v. Enomoto, supra, and Walker v. Hughes, supra
5
Greenholtz v. Nebraska Penal Inmates, supra, 442 U.S. at 15-16, 99 S. Ct. at 2108
6
The transfer may precede the hearing in the case of a genuine emergency and as provided in Rule 4.601(a), (b), or (c) of the Guidelines. See Enomoto v. Wright, supra, 462 F.Supp. at 405
7
Rule 4.601:
4
The disciplinary board hearing procedures are:
(a) That the resident who is accused of the rule infraction be brought into the hearing room first, where he is seated in the witness chair and informed of the nature of the charges brought against him and ask his plea as to the charges. (If he pleads guilty, the resident waives all his rights to witnesses, so forth). He is then confronted with the physical evidence, if any, or a sample thereof. The resident then moves out of the witness chair and on to the bench that is situated in the hearing room. The resident remains in the hearing room until all witnesses and evidence have been heard.
(b) That the employee who wrote up the resident then be called in to give his version of the rule infraction. Both the Discipline Committee and the Resident Advisor be given an opportunity to question the employee. The Discipline Committee questions first, then the Resident Discipline Advisor. The resident or resident advisor may waive the appearance by the reporting employee.
(c) That should the employee who executed the notice of rule infraction have a witness or witnesses, he then will be excused outside the hearing room. His witness or witnesses are then called in to give their version of the rule infraction. The Disciplinary Committee and the Resident Discipline Advisor will then be given an opportunity to question the witness or witnesses. The Discipline Committee questions first, then the Resident Discipline Advisor. Afterwards, the witness is excused outside the hearing room.
(d) Should the resident and/or his advisor have a witness to the alleged rule infraction, this witness shall be permitted to be questioned by the Resident Discipline Advisor without interruption and then be questioned by the members of the Discipline Committee without interruption. After completion of direct examination, cross examination or re-direct examination will be permitted.
(e) The resident accused of the rule infraction may take the witness chair to give his version of the rule infraction after all other witnesses have testified. The Resident Discipline Advisor and the Discipline Committee may question the resident. The Resident Discipline Advisor questions the resident first, then the Discipline Committee. The Resident Discipline Advisor will then be given the opportunity to give his summaration (sic) of the "Facts" presented in the rules infraction to the Discipline Committee. Afterwards, the resident and his Resident Advisor will leave the hearing room until such time as the Discipline Committee reaches a decision in this matter. The Chairman of the Committee must vote last. Committee room will be cleared of all people other than the Committee during the time of voting on guilt or innocence. If the board finds the resident innocent the Disciplinary Report is to be destroyed. If the board finds the resident guilty, the board may review his official institution record to assist in determining punishment; the resident shall be brought back to the Committee Room during the phase of the deliberations and confronted with the relevant portions of his institutional record. He may then make a statement about this record or the punishment which he thinks he should receive.
(f) The Board shall state in writing (a) evidence relied upon including the names of the witnesses; (b) the Board's findings of fact, which may or may not be the same as the reporting employees written complaints; (c) in cases involving indefinite administrative segregation or forfeiture of Good and Honor Time, the reasons supporting the sentencing decision must be given. Specifics must always be given. A mere finding of guilty is not sufficient.
(g) If the resident is found guilty of a major offense and should the board recommend the loss of good and honor time, it will not be submitted to the Commissioner for approval if the board is notified of the resident's wish to appeal. A resident must appeal within three days in writing to the Warden. If the appeal is denied, the board's recommendation will be sent to the Commissioner for approval.
Rule 4.601:
5
Disciplinary Reports alleging general behavior that requires Administrative Segregation may be initiated by the Warden or Deputy Warden, only. In these cases, the same procedures as described in 4.601(3) shall apply except that the resident's past record, as documented in his official file, may be considered by the disciplinary board prior to a decision on guilty or innocence. Confidential information given by inmates may be revealed to the Board without disclosure of the informant's identity. Such information shall be relayed to the committee by any employee having such information. But only if the Warden or Deputy Warden shall certify that disclosure of the informant's identity would jeopardize the safety and security of the informant or the institution. A short summary of such information shall be presented in writing to the Warden or Deputy Warden who shall initial or sign it and cause it to be attached to the initial report. In no case shall any testimony be given to the Board in the absence of the inmate charged. The Warden may countermand a finding of innocence by the Board and order Administrative Segregation for any period up to 10 days following which a new hearing must be held. This action should be taken only in emergency or unusual cases, and the Warden should give due weight to the findings of the Board
The Disciplinary Board has no power to pursue any course of action other than:
(a) Dismissal of charges (report destroyed)
(b) Verbal reprimand (report destroyed)
(c) Written warning
(d) Restriction of recreational privileges up to 60 days
(e) Punitive segregation up to 30 days
(f) Administrative Segregation (see 4.602)
(g) Reference to District Attorney for criminal prosecution (requires Warden's approval), see 4.603
(h) Recommendation to transfer to another institution
(i) Recommendation for reclassification
(j) Recommend loss of good and honor time
(k) Refer to one or more treatment programs for intensive counseling
(l) Several possible combinations of the above
8
In Arnett v. Kennedy, 416 U.S. 134, 94 S. Ct. 1633, 40 L. Ed. 2d 15 (1974), a plurality of the Court ruled that the grant of a protected interest which was qualified by limited procedural protections, entitled plaintiffs to no greater procedural protections than those which accompanied the grant of that interest. But see Arnett v. Kennedy, opinion of Powell, J., 416 U.S. at 166-67, 94 S.Ct. at 1650; opinion of White, J. at 177-78, 94 S. Ct. at 1655-56; dissent by Marshall, J. at 209-11, 94 S. Ct. at 1671
9
See generally Mathews v. Eldridge, 424 U.S. 319, 332-35, 96 S. Ct. 893, 901-903, 47 L. Ed. 2d 18 (1976); Smith v. Organization of Foster Families, 431 U.S. 816, 847-49, 97 S. Ct. 2094, 2111-12, 53 L. Ed. 2d 14 (1977)
10
Rule 4.601 provides that departure from the disciplinary procedures may be authorized only by the Commissioner, Deputy Commissioner, or Assistant Commissioner for Adult Services
With regard to the reasonableness of an expectation that a group will adhere to its own procedural rules, see Yellin v. United States, 374 U.S. 109, 123, 83 S. Ct. 1828, 1837, 10 L. Ed. 2d 778 (1962).
11
Rule 4.601, n. 10. Warden Stonney Lane testified at trial that he was not free to deviate from the procedures contained in the Guidelines
12
Where the IRS was not required by the constitution to adopt regulations prohibiting "consensual electronic surveillance" between taxpayers and IRS agents without special prior authorization, the Supreme Court held "that the violations of agency regulations disclosed by the record do not raise any constitutional question." 440 U.S. at 751-52, 99 S.Ct. at 1471-72. It noted that Caceras could not reasonably contend that he relied upon the regulation or that its breach had any effect on his conduct. The same is true of the procedural rule here | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1320883/ | 214 Ga. 289 (1958)
104 S.E.2d 461
COOK et al.
v.
HORN et al.
20094.
Supreme Court of Georgia.
Argued June 9, 1958.
Decided July 11, 1958.
*291 J. H. Napier, Ellsworth Hall, Bloch, Hall, Groover & Hawkins, for plaintiffs in error.
Hitch, Miller & Beckman, John E. Simpson, Smith & Undercofler, Hiram K. Undercofler, contra.
WYATT, Presiding Justice.
1. It is first contended that, under the provisions of the trust instrument, the petitioners take a fee-simple interest in the trust fund rather than a life interest, and that, being sui juris and not spendthrifts (it being conceded by all parties that Code § 108-111.1 does not apply to this instrument), *292 the trust is executed and the petitioners are entitled to have the corpus of the trust distributed to them. While there is language in certain paragraphs of the trust agreement which by themselves could be construed to enlarge the gift to these petitioners into a fee-simple interest, a consideration of all the instrument discloses that this was not the settlor's intent. He provided that the trust should be divided into as many parts as he had children, and that each child was to receive the proceeds from his or her trust for and during his or her natural life. This, without more, would, under the law prior to the enactment of Code § 108-111.1, amount to a gift of a fee-simple interest, the petitioners being sui juris and not spendthrifts. However, the settlor then provided remainders to the issue of his children upon the death of said children, and he set out in detail how the remainders were to be paid and administered. The language appearing in paragraphs F, G, and H of section V, considered in connection with the above, is not sufficient to override the clearly apparent intention of the settlor as determined from the whole instrument. Accordingly, as is held above, the petitioners took a life interest in the corpus of the trust estate with remainders to their issue, and the trusts are executory since the remaindermen will not be determined until the petitioners die.
2. (a) It is next contended that the instrument in question violates the rule against perpetuities, and that, since the limitations beyond the petitioners are void, they are entitled to have the property delivered to them. In order to determine this question, it is necessary first to determine when this instrument took effect, whether at the time it was executed and delivered, or at the death of the settlor. This question is settled by the decision of this court in Wilson v. Fulton National Bank, 188 Ga. 691 (4 S.E.2d 660), where an instrument similar in all material respects to that here under consideration was held to create a valid trust, to convey a present interest, and not to be testamentary in character.
(b) It is contended that, if the trust instrument is effective to convey a present interest at the time it was executed and delivered, as is held above, then the limitations beyond the petitioners are void as violative of the rule against perpetuities, because there was a possibility at that time that the settlor *293 would have additional children born to him thereafter, by whose life the duration of the trust would be limited. This result does not necessarily follow. While there is a scarcity of authority on this question, and none that we have found in Georgia, the prevailing opinion by both the courts of other jurisdictions and recognized text writers is that, when a settlor has the power during his lifetime to revoke or destroy the trust estate for his own exclusive personal benefit, the question whether interests, or any of them, created by an instrument or deed of trust are void, because in violation of the rule against perpetuities, is to be determined as of the date of the settlor's death and not as of the date the instrument is executed and delivered. See Ryan v. Ward, 192 Md. 342 (64 A. 2d 258, 7 A. L. R. 2d 1078); Mifflin's Appeal, 121 Pa. 205 (15 A. 525, 1 L. R. A. 453, 6 Am. St. Rep. 781); Goesele v. Bimeler, 14 How. 589 (14 L. ed. 554); Manufacturer's Life Insurance Co. v. Von Hamm-Young Co., 34 Haw. 288; Pulitzer v. Livingston, 89 Me. 359 (36 A. 635); City Bank Farmers Trust Co. v. Cannon, 291 N.Y. 125 (51 N.E.2d 674, 157 A. L. R. 1424); Equitable Trust Co. v. Pratt, 117 Misc. 708 (193 N. Y. S. 152, affd. on opinion below 206 A.D. 689); Gray, Rule Against Perpetuities, (4th ed.) 510, § 524; 45 Harv. L. Rev. 896; 51 Harv. L. Rev. 638; 86 Univ. of Pa. L. Rev. 221; Restatement of the Law, Property, § 373 and comments (c) and (d).
While none of these authorities is binding upon this court, the conclusion reached by them is in accord with the aim of and reason for the rule against perpetuities, which is to prevent the tying up of property for an unreasonable length of time and to prohibit unreasonable restraint upon the alienation of property. So long as the settlor of an inter vivos trust has the absolute right to revoke or terminate the trust for his own exclusive personal benefit, there is no tying up of property and no restraint upon the alienability of the property in the trust fund, and thus no reason to include this time during which the trust is so destructible in determining whether a limitation is violative of the rule against perpetuities. Restatement, Property, sec. 373 states: "The period of time during which an interest is destructible, pursuant to the uncontrolled volition, and for the exclusive personal benefit of the person having such a power of destruction *294 is not included in determining whether the limitation is invalid under the rule against perpetuities." We conclude that this rule is a sound one, which does no violence to the rule against perpetuities, but is in complete accord with its aim and purpose.
In the instant case, the settlor, during his lifetime, had an absolute right to revoke or terminate the trust, to change the beneficiaries in the policies, and to receive any and all benefits under the policies. Therefore, under the rulings above made, the time from which it will be determined whether any of the limitations in the trust agreement are void for remoteness is the date of the settlor's death. When so considered, it is apparent that none of the limitations in the instrument violate the rule against perpetuities, since all limitations under the instrument will end and all interests vest within twenty-one years after the death of the settlor's children plus the usual period of gestation, and, of course, no children can be born to the settlor after his death plus the usual period of gestation. It follows, the limitations over to the issue of the children of the settlor are valid, and the petitioners are not entitled to have the trust terminated for any reason alleged. The judgment of the court below dismissing the petition on general demurrer was therefore not error.
Judgment affirmed. All the Justices concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320749/ | 97 Ga. App. 801 (1958)
104 S.E.2d 580
W. B. LEEDY & COMPANY
v.
SHIRLEY.
37157.
Court of Appeals of Georgia.
Decided July 3, 1958.
*803 Crenshaw, Hansell, Ware & Brandon, R. W. Crenshaw, Jr., for plaintiff in error.
John L. Westmoreland, John L. Westmoreland, Jr., Claude R. Ross, contra.
QUILLIAN, Judge.
1. Neither count 1 nor count 2 states a cause of action. The basis of these actions, whether for breach of contract or for money had and received, even assuming the latter would lie when recovery for a breach of the written contract would fully compensate the plaintiff, is a commitment to purchase group loans. This contract is as follows:
"W. B. Leedy & Company, Inc.
Birmingham, Alabama
Commitment to Purchase Group Loans.
February 24, 1956.
Cheek & Troutman, Builders.
160 Westminster Drive. FHS No.
Atlanta, Georgia. VA No. CA-89090.
*804 "You are advised that we have approved for purchase loans submitted by you to us to be insured by the Federal Housing Administration or guaranteed by the Veterans Administration in keeping with its existing regulations or amendments thereto, to be executed by you or approved owner occupants, securing the aggregate principal amount of three hundred ninety-seven thousand dollars three hundred fifty dollars if closed in the names of owner occupants approved by this company. Loans to bear interest at the rate of 4 1/2% payable as to principal and interest in equal monthly instalments for terms not to exceed 25 years plus monthly deposits for taxes, hazard insurance and mortgage insurance as estimated by us. If prior to disbursement the allowable rate of interest is increased by the F.H.A. and Veterans Administration or either, then any loans not closed as of that date are to be disbursed by us at the increased interest rate.
"Loans in keeping with the following schedule are to be secured by valid first liens upon real estate situated in the State of Georgia County of DeKalb:
"See CRV attached for sales prices.
"(Rubber stamp). Dept.: Improvement O.K. by WOJ. Page ent. 3-27-56. Date Paid 3-27-56. Check No. 118. $3,973.50.
"Our approval of these loans is subject to your compliance with the following:
"1. Furnish unqualified final FHA or VA compliance inspection report.
"2. The security instrument shall be a first lien on the fee-simple title satisfactory to us. We shall be furnished, without expense to us, with a title policy on a form and by an insurer approved by us, with a complete survey showing the lot lines and location of all buildings. Title, survey and all papers must be approved by us before the loan proceeds are disbursed.
"3. At the time the loans are closed, we shall be furnished with fire insurance, and such other kinds of insurance, in such companies, forms and amounts as we require. The policies with mortgage clauses attached are to be delivered to and held by us.
"4. All taxes and assessments to be paid in full prior to or at the time the loans are closed.
"5. At the time each loan is closed there shall be deposited *805 with us an amount which we estimate to be sufficient to cover the accrued taxes, both general or special, the expired portion of the hazard insurance premium and F.H.A. mortgage insurance premium when loan is to be insured by the F.H.A.
"6. Satisfactory appraisals by approved and designated appraiser of Veterans Administration or F.H.A. to be furnished.
"7. Subject to all requirements and regulations of the Veterans Administration and F.H.A. whichever applicable, or both.
"8. You are to deposit with us upon your acceptance hereof a sum equal to 1% of the total amount of the loan, or $3,973.50. As each loan is closed to an owner occupant you will be refunded an amount equal to 1% of the amount approved by the F.H.A. as builders loan. In the event any loan or loans included in the schedule herein are not for any reason closed to an owner occupant, the 1% deposited in connection therewith is forfeited to us and you relinquish all claim thereto.
"9. Improvements to be completed in accordance with plans and specifications heretofore approved by the F.H.A. or V.A. Compliance with all subdivision requirements as set by the F.H.A. or V.A.
"10. Loan to be closed by attorney or title company designated or approved by us.
"11. Other requirements:
"A. Loans to be closed on basis of 97 with the builder paying the discount.
"B. Each borrower is to pay W. B. Leedy & Company, Inc., 1% origination fee.
"C. In no event is the loan to exceed 98% of the sales price with the borrower to pay closing costs in addition to the 2% down payment.
"D. Subject to approval of credit of borrower by W. B. Leedy & Company, Inc.
"E. We are to be furnished with photographs of the completed improvements before closing the loans.
"12. This approval will expire automatically March 10, 1956, without notice to you and without liability to this company if we have not been notified that it has been accepted. After acceptance this commitment may be canceled at our option without *806 notice to you and without liability to this company, if all loans have not been disbursed by November 1, 1956.
W. B. Leedy & Company, Inc.
Date
Accepted:
By /s/ George L. Bailes, Jr.
George L. Bailes, Jr., Vice President.
/s/ W. D. Shirley Applicant
/s/ Marjorie C. Thurman Notary
Notary
Seal"
As to the first count: It alleges no breach of the contract by the plaintiff in error. Paragraphs 10 and 11 of count one allege:
"During August and September, 1956, plaintiff offered applications for loans pursuant to said commitment for Thomas Randolph Adderholt and Marvin Thomas Griffin and submitted to defendant in connection with such applications credit reports on said applicants. Notwithstanding said applicants were good credit risks, defendant arbitrarily refused and declined to procure loans pursuant to the terms of said commitment, and announced to plaintiff that defendant was not going to accept any more loan commitments at all for plaintiff pursuant to said commitment."
The contract provided for twelve conditions precedent to the acceptance of loans submitted to plaintiff in error. Paragraph 11 alleges only that the applicants were good credit risks. It is too obvious to warrant discussion that this allegation does not allege a breach of the contract. Paragraph 11 alleges that the plaintiff in error announced to the defendant in error that it was not going to accept any more loan commitments as an anticipatory breach of the contract. This might be a sufficient allegation if alone and unqualified by the remainder of count 1, but paragraphs 7, 8 and 9 of count 1 each allege acceptance by the plaintiff in error of commitments subsequently to August and September 1956, the times at which the alleged anticipatory breach occurred. These allegations show that if there had been an anticipatory breach the parties had waived and ignored it and had returned to the mutual performance of the contract, and the last of them was even after the commitment contract had expired under its express terms.
*807 As to count 2: Count 2 is based on the theory that the contract was null and void from its acceptance by the defendant in error and was not binding on either party because the offered contract provided that if it was not accepted by the defendant in error by March 10, 1956, the offer would expire automatically. Notwithstanding this provision the defendant in error accepted the contract in writing on March 27, 1956, paid the plaintiff in error $3,973.50, which it accepted, and both parties operated under the contract until November 19, 1956, 18 days after the expiration date of November 1, 1956. Under these circumstances when the plaintiff in error accepted the money on March 27, 1956, and both parties operated under the contract as aforesaid the defendant in error is estopped to say that the contract was not valid and binding for the reason that the acceptance after March 10th was a counter-offer which was accepted by the plaintiff in error. If such acceptance was not a counter-offer, the plaintiff in error is deemed to have waived by its acceptance the deadline for acceptance of the offer which it put in the offer for its own benefit. Furthermore such a provision in an offer is not a part of the completed contract at all and if with such a provision in an offer the offeror can still accept the acceptance of the offer. If A writes B a letter and offers to hire him for one month for $500 salary and provides in the letter that the offer expired on the last day of the month in which the letter was written, if B, two months after the last day for acceptance, accepts the offer in writing on the very letter containing the offer and begins work for A, it would be unthinkable to conclude that there was no binding contract between the parties. The second count is also otherwise defective in the same respects as the first count. See Estes Lumber Co. v. Palmyra Yellow Pine Co., 29 Ga. App. 15 (113 S.E. 821); Citizens Bank of Tifton v. Willis, 15 Ga. App. 772 (84 S.E. 157).
An acceptance of an offer after the time limited is binding on the offeror if he assents to the acceptance after it is made. 12 Am. Jur. 548, Contracts, § 57 and citations under note 1, Restatement of the Law, Contracts, Vol. 1, p. 79, § 73.
2. Special demurrer 2 attacked paragraph 6 of count 1 of the petition which provides: "The terms and provisions of said commitment *808 provided that defendant would repay to plaintiff an amount equivalent to 1% of the loan on each sale that was made by plaintiff and for which a loan was provided by defendant, thus giving plaintiff an opportunity to recoup the $3,973.50 paid by defendant to plaintiff as aforesaid."
The demurrer should have been sustained because the paragraph alleges that the contract provides that the plaintiff is to receive an amount equivalent to 1% of each loan procured by the plaintiff. This is in conflict with the contract which provides that the plaintiff is entitled to 1% of the amount approved by F.H.A. as builders loan.
3. Special demurrer 3 reads as follows: "Defendant demurs to paragraph 12 of count 1 of the petition as amended and in particular to the allegation that the defendant's actions `were done for the reason and purpose and with the effect of denying plaintiff any further loans pursuant to said commitment to place elsewhere and at the same time retain the money which plaintiff had paid defendant for said commitment' upon the ground that said allegation is a conclusion of the pleader without any pleaded facts in said paragraph or elsewhere in the petition to support said conclusion."
The trial judge erred in overruling this special demurrer.
4. Special demurrers 10, 11, and 12 to the second count of the petition are that the loan contract referred to in that count was not attached as an exhibit, and the count did not disclose whether it was a verbal or a written contract. From the allegations of the count it clearly appears that the contract was in writing. The contract did not constitute the cause of action or the basis upon which relief was prayed. Code § 81-105. These demurrers were properly overruled.
The remaining special demurrers filed by the defendant are without merit.
Judgment reversed. Felton, C. J., and Nichols, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320746/ | 214 Ga. 294 (1958)
104 S.E.2d 451
HUBBARD
v.
HUBBARD.
20096.
Supreme Court of Georgia.
Argued June 9, 1958.
Decided July 11, 1958.
J. A. Mitchell, P. H. Mitchell, for plaintiff in error.
Harold F. Richards, contra.
CANDLER, Justice.
In this divorce and alimony case, where cruel treatment was alleged as the ground therefor, the jury granted the plaintiff a divorce and required the defendant to pay her $126 per month for the support of their three small children, the oldest of whom was born in 1955. The defendant moved for a new trial on the usual general grounds, and by an amendment alleged that a new trial should be granted him because the amount awarded for the support of his children was excessive. His amended motion was denied, and the exception is to that judgment. Held:
1. From the evidence the jury was authorized to find, as it did, in favor of a divorce, and it is not argued in this court that the trial judge erred in refusing to grant a new trial as to that part of the verdict.
*295 2. Since that part of the verdict which made an allowance for the support of the defendant's minor children has the approval of the trial judge, this court has no right to disturb it on the ground of excessiveness where its reasonableness as to the amount awarded has some support in the evidence. Brown v. Pinson, 140 Ga. 14 (78 S.E. 176); Houseman v. Voak, 157 Ga. 122 (121 S.E. 119); Shepherd v. Shepherd, 201 Ga. 525 (40 S.E.2d 382). "A husband may be decreed to pay. . . alimony, although he may not have property either at the time of the filing of the libel for divorce or at the time of the trial, if it appears that he has an earning capacity." Hall v. Hall, 185 Ga. 502, 506 (195 S.E. 731). In the instant case, the evidence shows that the defendant has no property; that he is a diabetic; and that it is unwise for him, because of his physical condition, to operate motor equipment or other machinery, but there is no evidence showing or tending to show that he is physically unable to perform other types of labor from which he could earn an income. And with further reference to his physical condition and his ability to work, Dr. Nash, a witness for the defendant, testified: "I do not think that it is safe for him to work around machinery or to drive a truck. He is subject to spells. They may come at any time. Diabetes is a deterioration of the pancreas. If a person keeps strict diet, he would be able to perform certain types of work. Many people who have diabetes are working every day." Since the evidence shows that the defendant was able to do some types of work, this court cannot say as a matter of law that the jury's allowance for the support of his children was excessive or that the trial judge abused his discretion in approving the verdict. See Braswell v. Braswell, 198 Ga. 753 (32 S.E.2d 773); Burger v. Burger, 196 Ga. 428 (26 S.E.2d 615); West v. West, 155 Ga. 366 (116 S.E. 540).
3. For no reason assigned is the judgment complained of erroneous.
Judgment affirmed. All the Justices concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320753/ | 685 S.E.2d 339 (2009)
300 Ga. App. 605
JOHNSON
v.
The STATE.
No. A09A1141.
Court of Appeals of Georgia.
October 6, 2009.
Reconsideration Denied October 27, 2009.
Allen M. Trapp Jr., Carrollton, for appellant.
*340 Douglas C. Vassy, Solicitor-General, for appellee.
MILLER, Chief Judge.
Following a bench trial, Joshua James Johnson was convicted of driving under the influence of alcohol, per se (OCGA § 40-6-391(a)(5)).[1] On appeal from his DUI conviction, Johnson contends that the trial court erred in denying his motion to suppress because he was unlawfully seized by a police officer who ordered him to leave his home. For the reasons set forth below, we find that Johnson was not unlawfully seized and affirm.
In considering an appeal from a denial of a motion to suppress, this Court construes the evidence in favor of the trial court's ruling, and we review de novo the trial court's application of the law to undisputed facts. Additionally, we must defer to the trial court's determination on the credibility of witnesses, and the trial court's ruling on disputed facts must be accepted unless it is clearly erroneous.
(Citation omitted.) Coursey v. State, 295 Ga.App. 476, 672 S.E.2d 456 (2009).
So viewed, the evidence shows that on the evening of November 25, 2007, a Georgia State Patrol trooper was dispatched to the scene of a reported accident. The trooper located a car that had run off the road and struck a tree, but the driver was not at the scene. A man reported witnessing the driver walking away with blood on his right ear and on his chest. The trooper "ran the tag," which showed that the wrecked car was registered to Johnson and that Johnson's address was approximately half-a-mile from the crash site. The trooper drove to Johnson's address but was unable to locate the exact apartment. In the course of the investigation he was flagged down by Johnson's father, who advised the trooper that his son had been in an accident. Johnson subsequently called his father's cell phone, and the trooper used the phone to speak with Johnson. The trooper learned that Johnson was home and informed him that he would be "down there to get you in just a minute."
The trooper followed Johnson's father to Johnson's apartment. Johnson's father knocked on the door. When Johnson answered, the trooper said "come on out here," and Johnson almost immediately stepped out of the apartment. The trooper did not enter the home or touch Johnson before he exited.
The trooper detected a strong odor of alcohol coming from Johnson's breath and noticed that Johnson's speech was somewhat slurred and that he had bloodshot, glassy eyes. After patting Johnson down on the porch outside the apartment door, the trooper escorted him to the patrol car. The officer explained to Johnson that he was not under arrest, but that he would have to be handcuffed in order to ride in the patrol car.
The officer handcuffed Johnson, drove a short way to Johnson's car, and removed the restraints. With Johnson's consent, the trooper conducted a field sobriety test. After conducting the test, the trooper informed Johnson that he was under arrest for driving under the influence of alcohol and read him the implied consent notice. Johnson later submitted to a blood test, which showed blood alcohol in a concentration of 0.104 grams per 100 milliliters.
As a rule, to "justify a nonconsensual, warrantless intrusion into a person's home, there must exist probable cause for the arrest or search inside the home and a showing of exigent circumstances." (Citations omitted.) Threatt v. State, 240 Ga.App. 592, 595(1), 524 S.E.2d 276 (1999). See generally Payton v. New York, 445 U.S. 573, 576, 100 S. Ct. 1371, 63 L. Ed. 2d 639 (1980) (the Fourth Amendment "prohibits the police from making a warrantless and nonconsensual entry into a suspect's home in order to make a routine felony arrest"). Relying primarily on foreign authority, Johnson argues that he was seized when the officer ordered him to leave his apartment, and that the trooper lacked a warrant or exigent circumstances which would justify a search or seizure within the residence. See, e.g., State v. Dahl, 323 Or. 199, 915 P.2d 979, 986 (1996) (finding that under the Fourth Amendment *341 and the Oregon Constitution, police are not permitted "without a warrant based on probable cause or probable cause plus exigent circumstances, to seize a person inside his house by ordering that person to emerge from his house"). We disagree.
This Court recently touched on this issue in Dade v. State, 292 Ga.App. 897, 666 S.E.2d 1 (2008). There, we concluded that although police never entered the house, the Fourth Amendment required exigent circumstancesand not merely the reasonable suspicion of criminal activity contemplated by Terry[2]for officers to order the defendant from a home at gunpoint. Id. at 901-902, 666 S.E.2d 1. Notwithstanding Dade, Johnson was not unreasonably seized under the circumstances of this case. First, "[w]here a police officer enters upon private property only to the extent of knocking on outer doors, the Fourth Amendment is not violated." (Citation and punctuation omitted.) Pickens v. State, 225 Ga.App. 792, 793(1)(a), 484 S.E.2d 731 (1997). Thus, the trooper was authorized to go to the door of Johnson's apartment in the course of investigating the crash. Id.
Second, Johnson came to the doorway to meet the officer and his father and then almost immediately stepped onto the porch upon the officer's instruction to step outside. We have previously found that if a suspect complies with an officer's request to step outside the home and is arrested on the porch, the detention does not occur inside the home for purposes of Fourth Amendment analysis. See Keyser v. State, 187 Ga.App. 95(1), 369 S.E.2d 309 (1988) ("appellant's arrest... occurred on the front porch of his house, after he had complied with the request of a police officer to step outside. An arrest of appellant under such circumstances would not constitute an arrest which was made inside his home"). See generally United States v. Santana, 427 U.S. 38, 42(II), 96 S. Ct. 2406, 49 L. Ed. 2d 300 (1976) (for Fourth Amendment purposes, the threshold of a dwelling is a public place).
Third, the trooper did not force Johnson to cross the threshold. Our analysis in Dade was in light of "police conduct in ordering a person out of a home at gunpoint." 292 Ga.App. at 901, 666 S.E.2d 1. Here, the officer, who was not brandishing a weapon or otherwise threatening Johnson, simply instructed him to step outside. "Payton keeps the officer's body outside the threshold, not his voice. It does not prevent a law enforcement officer from telling a suspect to step outside his home and then arresting him without a warrant." Knight v. Jacobson, 300 F.3d 1272, 1277 (11th Cir.2002). Compare Dahl, 915 P.2d at 982-985 (appellant, who was ordered by police to come out of the house with his hands up, was seized while in his house).
In view of the foregoing, we conclude that Johnson was not unlawfully seized within his home when the trooper met Johnson at the threshold of his apartment, told him to "come on out," and Johnson chose to comply with the instruction. Although the officer did not have probable cause to arrest Johnson at the time of their initial encounter, the trooper did have reasonable suspicion of criminal activity sufficient to authorize a brief detention for purposes of investigating why Johnson drove his car off the road and into a tree. See OCGA § 40-6-48(1) (requiring driver to maintain lane); State v. Thurmond, 203 Ga.App. 230, 231-232, 416 S.E.2d 529 (1992) (accepting appellee's account of events, which include that he was told in a "forceful" voice by an officer to step outside his home, police nevertheless had articulable suspicion to briefly detain the appellee to investigate a hit and run accident). During that brief detention, the trooper developed probable cause for Johnson's arrest for DUI, and "since the officer[] had probable cause to arrest [Johnson] for the charged offenses, his arrest outside the premises of his home was constitutionally permissible." Id. at 232, 416 S.E.2d 529. It follows that the trial court did not err in denying Johnson's motion to suppress.
Judgment affirmed.
ANDREWS, P.J., and BARNES, J., concur.
NOTES
[1] Johnson was also convicted of failure to report accident (OCGA § 40-6-273), failure to maintain lane (OCGA § 40-6-48), and driving too fast for conditions (OCGA § 40-6-180).
[2] Terry v. Ohio, 392 U.S. 1, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/4516199/ | MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any Mar 13 2020, 10:38 am
court except for the purpose of establishing CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Suzy St. John Curtis T. Hill, Jr.
Marion County Public Defender Attorney General of Indiana
Indianapolis, Indiana
Samantha M. Sumcad
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Eddie Bluitt, March 13, 2020
Appellant-Defendant, Court of Appeals Case No.
19A-CR-1386
v. Appeal from the Marion Superior
Court
State of Indiana, The Honorable Alicia A. Gooden,
Appellee-Plaintiff Judge
Trial Court Cause No.
49G21-1804-F4-12898
Baker, Judge.
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1386 | March 13, 2020 Page 1 of 9
[1] Eddie Bluitt appeals the sentence imposed by the trial court after he was
convicted of Level 4 felony dealing in a narcotic drug and Level 5 felony
dealing in a narcotic drug, arguing that (1) the trial court erred by rejecting
certain proffered mitigators; and (2) his sentence is inappropriate in light of the
nature of the offenses and his character. Finding no error and the sentence not
inappropriate, we affirm.
Facts
[2] On February 13, 2015, the Madison County Drug Task Force conducted a
controlled drug buy with Bluitt after receiving pertinent information from a
confidential informant about Bluitt’s potential involvement in heroin
trafficking. The undercover agent ended up purchasing approximately 2.95
grams of heroin and diphenhydramine from Bluitt. The Task Force conducted a
similar controlled drug buy on June 23, 2015, during which Bluitt sold the
undercover agent .97 grams of fentanyl.
[3] On April 20, 2018,1 the State charged Bluitt with one count of Level 4 felony
dealing in a narcotic drug and one count of Level 5 felony dealing in a narcotic
drug. Additionally, on February 28, 2019, the State alleged that Bluitt was an
habitual offender. At the conclusion of Bluitt’s trial on May 1, 2019, the jury
1
The record does not indicate why it took the State nearly three years to eventually arrest and charge Bluitt.
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1386 | March 13, 2020 Page 2 of 9
found Bluitt guilty as charged. However, the jury found that Bluitt was not an
habitual offender.
[4] Following Bluitt’s May 16, 2019, sentencing hearing, the trial court sentenced
him to an aggregate term of eight years for the two counts, with five years to be
served in the Department of Correction, two years to be served on community
corrections, and one year suspended to probation. The trial court found Bluitt’s
substantial criminal history and past violations of probation and community
corrections to be aggravators. The trial court found no mitigators. Bluitt now
appeals.
Discussion and Decision
I. Mitigators
[5] First, Bluitt argues that the trial court erred by rejecting two proffered
mitigators—namely, the hardship that Bluitt’s incarceration will have on his
minor children and the fact that the quantity of drugs involved was lower than
typical drug offenses. As a general matter, sentencing decisions are left to the
sound discretion of the trial court. Smallwood v. State, 773 N.E.2d 259, 263 (Ind.
2002). We will reverse a sentencing decision regarding certain mitigators only if
the decision is clearly against the logic and effect of the facts and circumstances
before the trial court and all reasonable inferences drawn therefrom. Anglemyer
v. State, 868 N.E.2d 482, 490, clarified on reh’g, 875 N.E.2d 218 (Ind. 2007).
[6] Specifically, the trial court is under no obligation to find and/or use mitigators
in its sentencing analysis. Wingett v. State, 640 N.E.2d 372, 373 (Ind. 1994). In
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1386 | March 13, 2020 Page 3 of 9
fact, the burden is on the defendant to establish that a proffered mitigator is
both significant and “clearly supported by the record,” Anglemyer, 868 N.E.2d
at 493, if he alleges that the trial court failed to identify a mitigating
circumstance.
[7] Simply put, Bluitt’s argument is unavailing for two main reasons. First, most of
Bluitt’s attempts to have us reexamine the proffered mitigators and their import
amount to nothing more than a request that we reweigh the evidence, which we
may not do. It is not the job of this Court to dissect every element of Bluitt’s
case and determine whether he has led a rather modest and crime-free lifestyle
warranting a sentence reduction. Rather, it is the province of this Court to
determine whether the trial court, in its sentencing analysis, erroneously
rejected certain proffered mitigators clearly supported by the record.
[8] And to that point, Bluitt’s argument is similarly unavailing because the trial
court already considered and rejected Bluitt’s proffered mitigators without any
indicia of error. With regards to whether Bluitt’s incarceration would cause a
hardship on his minor children, the trial court found, in pertinent part, as
follows:
The other thing that, you know, and I – I appreciate and
understand that [Bluitt] has children, grandchildren, family
members, that he cares about and obviously by virtue of the letters
that I’ve read and so forth that obviously care about him. I have
no doubt whatsoever that [Bluitt] has not [sic] played a significant
role in their lives. And has – has been there for them and has taken
them to lessons and activities and so forth. Um, I – I don’t dispute
that. However, these children have – were all alive at the time that
this offense were [sic] committed. And I dare say that . . . any of
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1386 | March 13, 2020 Page 4 of 9
his children were aware that the same he might have been taken
[sic] kids at activities and feeding them dinner and watching them
or taking care of them or take [sic] them to the park, he was also
dealing drugs. Um, and – and that is the reason why this court
could not make a finding that there is a mitigating circumstance of
undue hardship on a dependent because that’s a credit to [Bluitt]
that isn’t deserved based on the facts and circumstances that are
present.
Tr. Vol. III p. 103. In other words, the trial court conceded that Bluitt cared
deeply for his minor children, but that the record showcased a very different
parent/child relationship. The trial court found that while Bluitt was parenting
his children, he was nevertheless dealing controlled substances in disregard of
his role as a parent and mentor. It was apparent to the trial court that Bluitt did
not value his children enough to refrain from committing these criminal
actions, and therefore, he was not entitled to use the hardship of his
incarceration as a mitigator during sentencing. In looking at the facts and
circumstances before the trial court, we find that its decision was not erroneous.
[9] With regards to the fact that the quantity of drugs involved was lower than in
typical drug offenses, the trial court found, in pertinent part, as follows:
Um, and the court recognizes that in terms of what [Bluitt] was
found guilty of, um, in the context of what this court sees in terms
of other cases, trials or not, this was a smaller amount of drugs
that were [sic] involved. However, the evidence that was presented
was – by the State, was far more convincing than many other cases
that this court has seen in other trials. Here we had two witnesses
that testified. We had video and audio evidence. We had a police
officer testify. We had significant, um, incredible this court finds
evidence of dealing. And that dealing might be a gram or two but
it’s dealing all the same. The jury found that there was dealing of
fentanyl, um, and whether or not [Bluitt] knew that that’s what
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1386 | March 13, 2020 Page 5 of 9
that was or what fentanyl is to begin with is frankly besides the
point. And, um, is a small piece of, as [State’s counsel] said, small
piece of a very, very large horrible puzzle as to why there are
hundreds of people dying in our community and across our nation
because they’re not aware of what fentanyl is and how deadly it is.
So, the fact that [Bluitt] may have been a small fish in a larger sea
of drug trafficking apparently include – including his son, um,
does not excuse the behavior.
Id. at 102-03. Here, the trial court evaluated the totality of the circumstances
and saw nothing in the record clearly supporting the notion that the smaller
quantity of drugs in Bluitt’s case would be a potential mitigator. The State was,
in fact, required to prove beyond a reasonable doubt that Bluitt possessed the
quantity of drugs required for conviction under the Level 4 and Level 5 felony
statutes. So, as the trial court points out, the fact that Bluitt possessed only a
certain amount of narcotics does not take away from the severity of his crimes
or the concrete proof of both offenses.
[10] In sum, the trial court did not err by rejecting Bluitt’s proffered mitigators.
II. Appropriateness
[11] Next, Bluitt argues that the sentence imposed by the trial court is inappropriate
in light of the nature of the offenses and his character.
[12] Indiana Appellate Rule 7(B) states that a “Court may revise a sentence . . . if,
after due consideration of the trial court’s decision, the Court finds that the
sentence is inappropriate in light of the nature of the offense and the character
of the offender.” The question is not whether another sentence is more
appropriate, but whether the defendant’s specific sentence is inappropriate.
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1386 | March 13, 2020 Page 6 of 9
Steinberg v. State, 941 N.E.2d 515, 535 (Ind. Ct. App. 2011). In determining
whether the sentence is inappropriate, we will consider numerous factors such
as culpability of the defendant, the severity of the crime, the damage done to
others, and a “myriad [of] other factors that come to light in a given case.”
Cardwell v. State, 895 N.E.2d 1219, 1224 (Ind. 2008). The defendant bears the
burden of persuading us that his sentence is inappropriate. Childress v. State, 848
N.E.2d 1073, 1080 (Ind. 2006).
[13] For a Level 4 felony offense, the maximum sentence is twelve years, and the
minimum sentence is two years. Ind. Code § 35-50-2-5.5. The advisory sentence
is six years. Id. For a Level 5 felony offense, the maximum sentence is six years,
and the minimum sentence is one year. I.C. § 35-50-2-6(b). The advisory
sentence is three years. Id. Here, the trial court sentenced Bluitt to an aggregate
term of eight years for the two counts, with five years to be served in the
Department of Correction, two years to be served on community corrections,
and one year suspended to probation.
[14] First, as to the nature of the offenses, Bluitt has committed serious drug crimes.
Despite Bluitt’s attempts to downplay the severity of his actions, controlled
substance transactions and abuse have deleterious effects on a surrounding
community. The Madison County Drug Task Force deliberately set up two
separate controlled drug buys to see if Bluitt would sell drugs in willful defiance
of the law, and he did it both times. Though not the most harmful or grotesque
of criminal actions, Bluitt’s deeds are nevertheless damaging and specifically
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1386 | March 13, 2020 Page 7 of 9
proscribed by Indiana law. Therefore, we find that the nature of the offenses
does not render Bluitt’s sentence inappropriate.
[15] Next, as to Bluitt’s character, Bluitt has a long criminal history. He has
previously been charged with and convicted of carrying a handgun without a
license, possession of cocaine, possession of marijuana, driving with a
suspended license, forgery, theft/receiving stolen property, dealing in
marijuana, and dealing in a narcotic drug with the intent to deliver. See Bailey v.
State, 763 N.E.2d 998, 1004 (Ind. 2002) (holding that a history of criminal
activity can reflect poorly on a defendant’s character at sentencing); see also
Rutherford v. State, 866 N.E.2d 867, 874 (Ind. Ct. App. 2007) (holding that “it is
appropriate to consider such a [criminal] record as a poor reflection on the
defendant’s character, because it may reveal that he . . . has not been deterred
even after having been subjected to the police authority of the State[]”).
[16] More to the point, Bluitt has been convicted of multiple drug crimes very
similar to the crimes he was convicted of in this case, leading us to conclude
that Bluitt has not learned the error of his ways. The fact that Bluitt has
previously violated the terms of his probation and community corrections
further underscores this point. Put another way, despite multiple opportunities
for reform, Bluitt does not seem to understand the severity of his crimes and has
not indicated that he will change his behavior anytime soon. Thus, we find that
Bluitt’s character does not render his sentence inappropriate.
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1386 | March 13, 2020 Page 8 of 9
[17] In sum, we will not revise Bluitt’s sentence pursuant to Indiana Appellate Rule
7(B).
[18] The judgment of the trial court is affirmed.
Riley, J., and Brown, J., concur.
Court of Appeals of Indiana | Memorandum Decision 19A-CR-1386 | March 13, 2020 Page 9 of 9 | 01-03-2023 | 03-13-2020 |
https://www.courtlistener.com/api/rest/v3/opinions/2261275/ | 223 F.Supp. 987 (1963)
SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
GULF INTERCONTINENTAL FINANCE CORPORATION, Limited, Harold Gradsky, Leon Herman Gradsky, Saul M. Liberman et al., Defendants.
Civ. No. 63-40.
United States District Court S. D. Florida.
March 12, 1963.
*988 *989 Edward C. Jaegerman, Trial Counsel, SEC, Washington, D. C., John T. Callahan, Sp. Counsel, SEC, Jule B. Greene, Atty., SEC, Miami, Fla., for plaintiff.
E. David Rosen, Monroe Gelb, E. Coleman Madsen, Miami, Fla., for defendants.
CHOATE, District Judge.
Statement of Case
Bill of Complaint was filed herein January 25, 1963 by the SEC against the various corporate and individual defendants pursuant to Section 17(a) of the Securities Act of 1933, as amended (15 U.S.C. § 77q(a)), and Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, (15 U.S.C. § 78j(b) and 17 C.F.R. 240.10b-5).
Plaintiff sought injunction of the alleged violations pursuant to Section 20 (b) of the 1933 Act, as amended (15 U.S. C. § 77t(b)) and Section 21(e) of the 1934 Act, as amended (15 U.S.C. § 78u (e)). Plaintiff also sought appointment of receiver for and accounting from said defendants of funds and assets of the corporate defendants to conserve and recoup for the benefit of investors such assets as were allegedly obtained by the sale of securities in alleged violation of above cited anti-fraud sections of the Securities and the Securities Exchange Acts.
A 10-day temporary restraining order was entered ex parte upon the complaint and sworn affidavit attached thereto. On Jan. 30, 1963, the plaintiff moved for continuation of the restraining order and sought further issuance of a preliminary injunction and appointment of a receiver. This motion was noticed for hearing on Feb. 4, 1963, and plaintiff submitted additional affidavits in support thereof. The Court extended the restraining order and on Feb. 4, 1963, defendants (with the exception of Chester Maier who has not appeared in the cause) filed a Motion to Dismiss for lack of jurisdiction over the subject matter. On Feb. 8, 1963, defendants filed an additional Motion to Dismiss contending that the SEC did not have jurisdiction over the subject matter, and that the allegations of the complaint and affidavits were insufficient in law and fact. The defendants' motions came on to be heard on Feb. 15, 1963, together with plaintiff's Motion for Preliminary Injunction and Appointment of Receiver which had not previously been ruled upon. At the hearing all defendants with the exception of Maier were present by counsel and upon oral argument, the introduction of certain evidence by plaintiff, a stipulation of facts agreed to by defendants, and on the verified motion and affidavits filed herein by plaintiff, the Court entered an order of Preliminary Injunction and appointed a receiver to take charge of the assets of the defendant corporations to prevent the dissipation of said assets and to insure the best interests of their public investors.
Pursuant to Rule 52(a) F.R.Civ.P. the Court makes the following
FINDINGS AND OPINION
Under Rule 12(b) F.R.Civ.P., the complaint must be construed in favor of the plaintiff, and all well-pleaded allegations therein taken as true. See Guessefeldt v. McGrath, 342 U.S. 308, 310, 72 *990 S.Ct. 338, 96 L.Ed. 342 (1952); Atlantic & Gulf Stevedores, Inc. v. Donovan, 274 F.2d 794, 797 (5th Cir. 1960). No supporting memoranda have been filed in connection with the defendants' motions, and their terse nature is such that the Court is not precisely advised of the grounds upon which they stand. However, giving them a broad construction pursuant to Rules 8(b) and 8(f) F.R. Civ.P., it appears that the attack herein is threefold: (1) this court lacks jurisdiction over the subject matter; (2) the SEC lacks standing to prosecute this complaint; (3) the complaint fails to state a cause of action upon which relief may be granted.
Upon oral argument it was apparent that the principal thrust of defendants' contention as relates to all three objections is premised on the lack of any showing by plaintiff that the securities involved were sold within the borders of the United States. It is to this problem which the Court addresses itself. Defendants do not seriously press the objection based on failure to state a cause of action on other grounds, and do not offer any vigorous opposition to the injunction and appointment of receiver beyond the jurisdictional question.
For the purposes of the Court's interlocutory orders thus far entered in this cause upon the summary hearings, and without prejudice to defendants' rights to controvert same in plenary hearings in this cause or in trial of criminal charges now pending against the individual defendants arising out of the same transaction, the Court does hereby adopt the following findings of fact.
Findings of Fact
1. The individual defendants Harold Gradsky, Leon Gradsky, Saul M. Liberman and Milton H. Spell are and/or have been inhabitants of the Southern District of Florida. All have transacted business within the District, were duly served with process herein, and through counsel have entered a general appearance.
2. The individual defendant Chester Maier is an inhabitant of the Southern District of Florida; service of process herein was made at his residence within this District; he has not yet answered or entered an appearance herein.
3. The corporate defendants, Auto Factors, Southern Motor Sales, New Car Discount, Kane Leasing and Great Western Land are Florida corporations which transact business and are found within the Southern District of Florida; all were duly served with process herein and through counsel have entered a general appearance herein.
4. The corporate defendant Gulf Intercontinental is a Canadian corporation which transacts business both in Canada and within the Southern District of Florida. It owns all the stock of Auto Factors. Gulf Intercontinental was duly served with process herein and through counsel has entered a general appearance herein.
5. The concept of organization and subsequent operation of Gulf Intercontinental originated within the Southern District of Florida, and was implemented by discussions in the Miami, Florida area and in Montreal, Canada during the period September 1962 to date, variously, between Harold Gradsky, Leon Herman Gradsky, Saul M. Liberman and Milton H. Spell. Such discussions included:
(a) A plan of public offer and sale of securities, namely 8½% and 8% notes of Gulf Intercontinental, in Canada to Canadians by means of an extensive advertising campaign in some 63 of the leading daily newspapers published in principal Canadian cities. During the above period some 450 persons purchased some $800,000.00 of these securities primarily as a result of this newspaper solicitation. Several of the leading newspapers in Montreal and Toronto, Canada carried the advertisements of Gulf Intercontinental offering its 8½% and 8% securities and a substantial number of copies of these newspapers circulated in the United States and were available for sale and doubtless were sold at newsstands in the *991 United States, including newsstands within the Southern District of Florida.
(b) The plan included collecting and depositing in a bank or banks in Montreal, Canada the net proceeds of sale of such securities with Saul M. Liberman and Leon H. Gradsky as joint signataries; the transmission of such net funds by wire and by mail from Montreal, Canada to the Miami, Florida area partially via the personal bank account of Harold Gradsky at the Grace National Bank of New York, New York City, New York, and partially directly to the Miami, Florida bank account of Auto Factors at the Miami National Bank, Miami, Florida; and the further transmittal of funds from Grace National Bank and the Auto Factors Miami account to bank accounts in the Miami, Florida area, within the Southern District of Florida, of Southern Motor Sales, New Car Discount, Kane Leasing and Great Western Land. Some $250,000.00 was transmitted from Canada to Miami via interstate and foreign commerce from Gulf Intercontinental to Auto Factors. An additional $85,000.00 was transmitted from Montreal, Canada to New York, New York and then to the Miami, Florida area from Gulf Intercontinental through Harold Gradsky to Great Western Land and New Car Discount by means of mail, wire and other methods of transportation and communication in interstate and foreign commerce.
6. To effect the purposes of the plan, Harold Gradsky, Leon Gradsky, Saul Liberman and Milton Spell travelled one or more times between Miami, Florida and Montreal and Toronto, Canada.
7. To effect the purposes of the plan, there were long distance telephone conversations between Montreal, Canada and the Miami, Florida area between Harold Gradsky and Saul M. Liberman.
8. To effect the purposes of the plan, there were letters, notes and memoranda transmitted by means of the use of the United States mails between the Miami, Florida area and Montreal, Canada, between Harold Gradsky and Saul M. Liberman.
9. Harold Gradsky received a $10,000.00 fee for acting as a consultant and advisor and for his guidance in helping to set up Gulf Intercontinental. He was assisted by his brother, Leon Gradsky. Five thousand dollars was also paid to Harold Gradsky for traveling expenses to Florida, New York, Montreal, Toronto and Hamilton, Canada. Five thousand dollars was paid to Saul M. Liberman re: promotional expenses, organizational, traveling, etc. in addition to his salary at the rate of $17,500.00 a year. One thousand five hundred dollars was paid to Milton H. Spell re: traveling from the United States, promotional expenses, organizational, traveling, etc. Milton Spell also issued to himself $4,800.00 in addition to his salary.
10. The plan has been unable to earn the monthly interest requirements on the 8½% and 8% notes. Interest to date has been paid out of principal.
11. There is presently a substantial principal impairment with respect to the outstanding note obligations of Gulf Intercontinental to its 8% and 8½% note-holders.
12. A petition for a receiving order in bankruptcy against Gulf Intercontinental was filed in Montreal, Canada on February 4, 1963 in the Superior Court for the Province of Quebec, District of Montreal. A petition of intervention in the above bankruptcy proceedings against Gulf Intercontinental was filed on February 6, 1963 in the Superior Court for the Province of Quebec, District of Montreal.
13. On December 21, 1962, the Quebec Securities Commission and the Ontario Securities Commission jointly and severally entered orders prohibiting Gulf Intercontinental from any further trading or dealing in securities and in particular from the issuance, offer or sale of any additional 8½% and 8% notes; the Quebec Securities Commission and the Ontario Securities Commission jointly and severally did seize books, records and documents of Gulf Intercontinental and did seize and attach various bank accounts in different banks and in different branches of such banks of Gulf Intercontinental *992 and said seizure and attachments continues today against the bank accounts, books, records and documents of Gulf Intercontinental in Canada.
14. In addition to the $340,000.00 advanced, as above, by Gulf Intercontinental to Harold Gradsky and the five Florida corporations, the following additional unsecured loans were made by Gulf Intercontinental:
Milton Spell $ 7,900.00
Saul Liberman
(as Harry Green) 6,500.00
Saul Liberman
(as Marion Marshal) 14,000.00
Saul Liberman
(as Elian Fournier) 5,000.00
15. Auto Factors, using funds advanced by Gulf Intercontinental and using checks drawn on Auto Factors' bank account at the Miami National Bank within the Southern District of Florida, paid salaries, travel expenses, telephone bills, advertising bills, etc. of its parent, Gulf Intercontinental.
16. Using funds received in interstate commerce from Gulf Intercontinental, Southern Motor Sales, New Car Discount and Kane Leasing purchased new and used cars in the Miami, Florida area within the Southern District of Florida, rented offices and premises, including new and used car lots, engaged salesmen and sales managers and otherwise attempted to conduct and did purport to conduct business within the Southern District of Florida. No license to transact a used car business was ever granted to any of these companies and one such license was refused to Southern Motor Sales.
17. A substantial amount of assets, including substantial bank accounts and a substantial number of new and used cars, are presently within the Southern District of Florida and covered by a restraining order issued by the United States District Court for the Southern District of Florida. These assets were entirely derived from funds transmitted in interstate and foreign commerce, as above, from Montreal, Canada to the Southern District of Florida.
18. Saul M. Liberman is president of Auto Factors and the only authorized signature on its checking account at the Miami National Bank, Miami, Florida. Leon H. Gradsky is president of Southern Motors and the only authorized signature of its bank account at the Miami National Bank. Harold Gradsky is president of New Car Discount, Kane Leasing and Great Western and the only authorized signature on the bank accounts of said companies. New Car Discount and Great Western maintain checking accounts at the Miami National Bank and Kane Leasing maintains a checking account at the County National Bank of North Miami Beach, North Miami Beach, Florida.
19. During the period November 1, 1962 through January 24, 1963, Auto Factors deposited $250,500.00 received from Gulf Intercontinental, of which $250,000.00 was purportedly a loan and $500.00 for Auto Factors' paid-in capital.
20. During the period November 1, 1962 to December 28, 1962, Harold Gradsky deposited to his personal checking account at Grace National Bank of New York $85,000.00 received from Gulf Intercontinental, $75,000.00 of which was purportedly a loan and $10,000.00 a fee for services. The balance in the account at November 1, 1962 was $25.50. No other deposits were made during the period.
21. During the period November 28, 1962 to January 24, 1963, Auto Factors issued checks, purportedly as loans, to New Car Discount, Southern Motors and Kane Leasing for the amounts of $150,000.00, $70,000.00 and $25,000.00 (totaling $245,000.00), respectively.
22. Of the funds aggregating $350,584.10, checks were issued for a total amount of $245,839.24, leaving a balance of $1.88, $2,821.25, $4,023.42, $57,376.28, $40,312.02 and $209.51 in the checking accounts of Auto Factors, Southern Motors, New Car Discount, Kane Leasing, Great Western and Harold Gradsky's personal checking account at Grace National Bank of New York, respectively.
23. Of the disbursements totaling $245,837.24, Harold Gradsky received *993 $82,240.66 from checks issued to his order totaling $54,540.39, from checks issued for Harold Gradsky's personal expenses totaling $7,150.99, from checks issued to or for Harold Gradsky's wife, Bertha, totaling $14,825.00, from a check issued for salary in the net amount of $2,409.38 and from checks issued purportedly for the purchase of automobiles from Harold Gradsky's wife, Bertha, and Harold Gradsky's sister, Pauline Ablon, totaling $3,314.90, on which checks Harold Gradsky is shown as the last endorsement; Leon H. Gradsky received $14,028.11 from checks issued to his order totaling $10,286.95 and from checks issued for Leon H. Gradsky's personal expenses, totaling $3,741.16; checks were issued purportedly for purchases totaling $132,112.42; for operating expenses totaling $6,284.07; on behalf of Gulf Intercontinental totaling $7,016.98; for telephone and electric deposits totaling $485.00; for furniture totaling $670.00; and a $3,000.00 check was issued, cashed and the proceeds wired by Miami National Bank to Security Exchange Bank at Palm Beach for the account or use of Floridana Enterprises, which never had an account at the Security Exchange Bank.
24. During the period November 13, 1962 to January 24, 1963, the bank accounts of Great Western, Kane Leasing and New Car Discount show no deposits resulting from operating income. The bank account of Southern Motors shows a $7,300.00 sale to New Car Discount and unidentified deposits of $6,616.90; the bank account of Auto Factors shows no operating income and only deposits totaling $1,140.70 from unidentified sources.
25. Because of the withdrawal of funds by the Gradsky brothers, as above, there is a material working capital impairment for the defendant Florida corporations. Disregarding inter-corporate transactions there is no realized net income or any earnings available to meet the interest requirements on funds advanced by Gulf Intercontinental.
26. A substantial portion of the assets of the defendant corporations, derived from payments of noteholders, has been dissipated to pay salaries and living, legal, travel and other expenses of the defendants Harold Gradsky, Leon Herman Gradsky, Saul M. Liberman and Milton H. Spell.
27. New and used cars purchased with funds of the public investors are deteriorating in open storage on lots rented by the defendants Leon and Harold Gradsky.
28. Monies invested by noteholders have been paid to noteholders as purported interest payments, without disclosure to noteholders of the actual source of such payments.
29. There is no present management of competence or integrity or with business or financial ability available to conduct the business and affairs of the defendant corporations. Thep resent Gradsky-Maier-Spell-Liberman management cannot be entrusted to wind up the affairs of the defendant corporations in the best interests of the noteholders of the defendant Gulf Intercontinental Finance Corporation, Limited.
30. A receiver appointed by this Court is necessary to protect the interests of public investors.
Conclusions of Law
The gravamen of the complaint is fraud and use of any means of interstate facilities or the mails to accomplish it either directly or indirectly in the sale of securities.[1] Fraud under the legislation in question is given a broad, remedial definition and is not limited to the common law elements of deceit.[2] The facts set forth above lead inescapably to the conclusion that the defendants, and *994 each of them, are engaged and are about to engage in acts and practices which constitute and will constitute violations of Section 17(a) of the Securities Act of 1933[3] and Section 10(b) of the Securities Exchange Act of 1934[4] together with Rule 10b-5[5] promulgated thereunder.
No opposition has been raised by the defendants to the assertion by plaintiff that the 8½% and 8% notes of the defendant Gulf Intercontinental Finance Corp. are securities.[6]
Jurisdiction over the defendants in this action is invoked pursuant to Section 22(a) of the Securities Act of 1933[7] and Section 27 of the Securities Exchange Act of 1934.[8] All defendants before this court are within the provisions of these sections and no question of jurisdiction or venue exists on this record where all defendants are found and have been personally served within the district.
However, the question of jurisdiction over the subject matter raised by defendants is grounded on the contention that the offer for sale of securities, the actual sales themselves, and the corporate existence of the offering corporation were all limited to the territorial limits of Canada, and that the Congress did not contemplate or authorize the prosecution of an action such as this under the acts in question.[9]
The court agrees that if the transaction alleged in the complaint and affidavits, together with stipulations, could be fragmented, and the Canadian portion of these acts could be isolated from the entirety, there might be merit in defendants' assertion. However, on the basis of the facts found above, it must be concluded that the scheme to defraud, if it existed, operated and was executed in the United States and within the Southern District of Florida, as well as in Canada.
The defendants do not contest the fact that a substantial number of copies of the Canadian newspapers were circulated within the United States, and the offer (contained therein by advertisement of Gulf Intercontinental) was extended to all parties who might be interested. The court takes judicial notice of the fact that south Florida is favored by large numbers of vacationing Canadians yearly and particularly during the winter season. The court further takes judicial notice of the fact that the various Canadian newspapers are offered on the news stands of Miami, Florida as they are in other major cities of the United States. There is no doubt that the American public has been exposed to the offer contained in such newspapers and that such exposure extended to most centers of population of the United States including cities in the Southern District of Florida.[10] The court also takes judicial notice of the fact that the Canadian securities market is one favored by a substantial number of American investors. It is sufficient for subject matter jurisdiction under the Acts that such offers be made within the United States *995 without a showing that such offers were accepted by actual sale,[11] or that the alleged misrepresentations were in fact successful in inducing the sale of such securities by reliance thereon.[12]
Likewise, the defendants do not contest the fact that various interstate facilities were used by the various defendants in the course of the activities described in the complaint. The gist of the complaint taken in its entirety is one of conspiracy to defraud by a plan which operated through the creation of five Florida corporations and one Canadian corporation all under the control of the individual defendants herein. The scheme charged by the plaintiff was all part of a whole.[13] The Canadian sales could not have been brought about without the representations to the investors of the underlying securities in the Florida corporations, nor could the monies received from such sales be siphoned off into the hands of the individual conspirators without the individual or corporate activity taking place within this district.
Looking through the transparent fabric of this promotional scheme, it becomes obvious that the true issuers[14] of the notes of the Canadian company were the Florida defendants both individual and corporate since the purpose of the Canadian company was to purchase the notes of the Gradskys and their control corporations in exchange for the monies which the Canadian corporation received from the public. Gulf Intercontinental was nothing more than a conduit for the securities caused to be issued by the Florida defendants.
The Acts clearly apply to the offer of foreign securities within the United States.[15] On the basis of the foregoing, the Court is not reaching a novel decision in so far as it holds that there has been a prima facie showing of violations of the Acts in question sufficient to support the complaint and the interlocutory remedy sought.
Although the court has been directed to no cases on point and believes that there are none, it would also appear salutary to indicate that even though there had been no showing of offers of such securities within the United States, there is nothing within the Acts in question which would appear to limit the protection offered by Section 17(a) and Section 10(b) and Rule 10b-5 to residents of the United States. It would appear that where the scheme is one which necessarily must be accomplished in part by use of the mails or interstate facilities within the limits of our federal jurisdiction that even though the offer were made entirely outside the nation that the remedial protection of these sections may be invoked. Whether the corpus delicti of Section 17(a) and Section 10(b) and Rule 10b-5 is use of the mails or facilities of interstate commerce or whether it is fraud, it is obvious that the use of interstate facilities either directly or indirectly is the jurisdictional base of a complaint or prosecution under these sections.[16] The courts of this nation have consistently repeated that the acts shall *996 be given a liberal construction to accomplish their purpose.[17]
A major objective of the federal Securities Acts is to prevent fraud in the sale of securities and to minimize or prevent losses to investors. The United States District Courts have jurisdiction to enter injunctive relief and to further grant such ancillary relief inherent in a court of equity.[18] There has been in this record a showing of impossibility of performance by the defendant corporations. It appears clearly that the best interests of public investors is served by the appointment of a receiver and the prompt liquidation of all assets within the jurisdiction of the court, and through proper legal procedure the pro-rata return of monies to the public investors, wherever situated.
NOTES
[1] See, e. g., Hooper v. Mountain States Securities Corp., 282 F.2d 195, 204 (5th Cir. 1960) (§ 10(b) and Rule 10b-5) or United States v. Cashin, 281 F.2d 669, 673 (5th Cir. 1960) (§ 17(a)).
[2] Hooper v. Mountain States Securities Corp., 282 F.2d 195, 301 (5th Cir. 1960).
[3] 15 U.S.C. § 77q(a).
[4] 15 U.S.C. § 78j(b).
[5] 17 C.F.R. 240.10b-5.
[6] In fact there could be none since Section 2(1) of the Securities Act of 1933, 15 U.S.C. § 77b(1), as amended, defines security, inter alia, as "any note" or "evidence of indebtedness."
[7] 15 U.S.C. § 77v(a).
[8] 15 U.S.C. § 78aa.
[9] The only case cited to the court by defendants in oral argument which might be applicable is Kook v. Crang, 182 F. Supp. 388 (S.D.N.Y.1960), a case arising under Section 7(c) of the Securities Exchange Act of 1934 (15 U.S.C. § 78g (c)) and clearly distinguishable from the case at bar. In fact dictum in Kook found at page 391, of 182 F.Supp. would support the conclusion reached in the instant case.
[10] 15 U.S.C. § 77b(7). The definition of interstate commerce therein (as trade or commerce in securities) includes "between any foreign country and any State * * *." See, c. f., Kukatush Mining Corp. v. S. E. C., 114 U.S.App.D.C. 27, 309 F.2d 647, 650 (1962) stating, "The stock of a foreign corporation * * * can be sold in another jurisdiction only on the terms prescribed by that jurisdiction" See also, I Loss, Securities Regulation at 363 (1961).
[11] 68 Stat. 686 (1954) added the words "offer or" before the word "sale", in Section 17(a). See I Loss, Securities Regulation at 512.
[12] See N. Sims Organ & Co., Inc. v. S. E. C., 293 F.2d (2d Cir. 1961) at 80, note 3.
[13] Cf., Errion v. Connell, 236 F.2d 447, 454 (9th Cir. 1956) where the "single fraudulent scheme" involved both a federal violation and a state violation. See also oft cited Kopald-Quinn & Co. v. United States, 101 F.2d 628 (5th Cir. 1939).
[14] Individuals controlling corporate entities are issuers. See Landay v. United States, 108 F.2d 698, 704 (6th Cir. 1939), and Stadia Oil & Uranium Co. v. Wheelis, 251 F.2d 269 (10th Cir. 1957).
[15] See note 10, supra.
[16] The use of the mails or interstate facilities may be entirely incidental or used in any manner. United States v. Cashin, 281 F.2d 669, 673 (5th Cir. 1960); Creswell-Keith, Inc. v. Willingham, 264 F.2d 76 (8th Cir. 1959). See generally, III Loss, Securities Regulation at 1521 (1961) and cases cited therein.
[17] Blackwell v. Bentsen, 203 F.2d 690, 693 (5th Cir. 1953), appeal dism., 347 U.S. 925, 74 S.Ct. 528, 98 L.Ed. 1078 (1954).
[18] III Loss, Securities Regulation at 1508-09 (1961) and the many cases cited therein. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261280/ | 428 A.2d 1189 (1981)
Raymond E. and Gladys M. ANDERSON
v.
Francis F. NEAL, Esq.
Supreme Judicial Court of Maine.
Argued June 4, 1980.
Reargued January 9, 1981.
Decided April 30, 1981.
Cole & Daughan, Francis Daughan, orally, Sheila Fine, orally, Roland A. Cole, Wells, for plaintiff.
Preti, Flaherty & Beliveau, Jonathan S. Piper, orally, Portland, for defendant.
Before McKUSICK, C. J., WERNICK, GODFREY, NICHOLS, GLASSMAN, ROBERTS and CARTER, JJ., and DUFRENSNE, A. R. J.
GLASSMAN, Justice.
In this action for damages for alleged attorney malpractice, the plaintiffs, Raymond and Gladys Anderson, appeal from a summary judgment in favor of the defendant, Francis F. Neal, entered in the Superior Court, York County.
The parties have submitted this appeal on an agreed statement of facts. M.R.Civ.P. 74A(d). The plaintiffs commenced this action on June 1, 1979 by filing the complaint. *1190 The defendant is an attorney who had been hired to do a title examination of a parcel of real estate being purchased by the plaintiffs. In his title opinion letter, dated March 31, 1969, the defendant failed to note the existence of a right-of-way across the property in question. This right had been an encumbrance, in fact, since 1915. The plaintiffs, in reliance on the defendant's title opinion, acquired title to the real estate on March 31, 1969. The plaintiffs did not have actual knowledge of the right-ofway until an unspecified date less than six years prior to the commencement of this action. It was stipulated that the value of the property purchased was diminished by the existence of the right-of-way.
The Superior Court granted the defendant's motion for summary judgment. In a written order it ruled that the plaintiffs' cause of action accrued on March 31, 1969 and was therefore barred by the applicable statute of limitations. 14 M.R.S.A. § 752. We vacate the judgment.
Neal contends that this Court is foreclosed, both by its own decisions and by the Legislature's "adoption" of those decisions, from recognizing a rule that dates accrual of a cause of action for legal malpractice from the date when the malpractice is, or reasonably should have been, discovered. From our reading of our prior cases and of the applicable legislation, we find nothing to impede this Court's freedom to declare when a cause of action accrues in attorney malpractice cases.
Although the Legislature has specified that the general statute of limitations in civil actions, 14 M.R.S.A. § 752, shall run for six years "after the cause of action accrues," it has never defined when a cause of action accrues under this statute but has left that determination to the Judicial Department. This Court has the power to define the time of accrual. See Williams v. Ford Motor Co., Me., 342 A.2d 712, 714 (1975); see also Neel v. Magana, Olney, Levy, Cathcart & Gelfand, 6 Cal.3d 176, 190-91, 98 Cal.Rptr. 837, 846-47, 491 P.2d 421, 430-31 (1971); Franklin v. Albert, ___ Mass. ___, 411 N.E.2d 458, 462 (1980); Hendrickson v. Sears, 365 Mass. 83, 88, 310 N.E.2d 131, 134 (1974); Peters v. Simmons, 87 Wash.2d 400, 405, 552 P.2d 1053, 1056 (1976).
The legislative recognition of the need for a discovery rule of accrual in certain situations, see, e. g., 14 M.R.S.A. § 752-A, does not preclude this Court from giving judicial recognition to such a need in others. See Hendrickson v. Sears, supra, 365 Mass. at 89, 310 N.E.2d at 135. Nor are we precluded from announcing a discovery time of accrual in legal malpractice cases by the so-called doctrine of legislative acquiescence. The Maine Legislature's repeated reenactment of the same statute of limitations since 1821 does not justify the assumption that the Legislature has adverted to and approved the decisions of this Court regarding accrual of causes of action to the extent necessary to foreclose judicial reconsideration of prior cases. See Neel v. Magana, Olney, Levy, Cathcart & Gelfand, supra, 6 Cal.3d at 191, 98 Cal.Rptr. at 847, 491 P.2d at 431.[1]
Even less justifiable is the assumption that the Legislature's simultaneous reduction of the limitations period in medical malpractice actions from six years to two years and retention of the "accrual" date for commencement of the statute's running, *1191 P.L.1931, ch. 62, revealed legislative disapproval of the "discovery" rule and a legislative mandate that a cause of action for professional malpractice shall accrue on the date of injury. In a recent case, the Massachusetts Supreme Judicial Court rejected the assumption that the Massachusetts Legislature's failure to enact a proposed discovery rule precluded contrary judicial interpretation of the word "accrues" in that state's statute of limitations governing medical malpractice actions. See Franklin v. Albert, supra, 411 N.E.2d at 461, announcing a discovery rule and overruling Capucci v. Barone, 266 Mass. 578, 165 N.E. 653 (1929), which defined the time of accrual in medical malpractice cases as the date of the malpractice. Agreeing with the Supreme Court of Oregon that "`no one knows why the legislature did not pass the proposed measures,'" Franklin v. Albert, supra, 411 N.E.2d at 461, quoting Berry v. Branner, 245 Or. 307, 311, 421 P.2d 996, 998 (1966), the highest court in Massachusetts concluded that legislative failure to give statutory recognition to a discovery rule may have resulted from the
"belief that the matter should be left to be handled by the normal processes of judicial development of decisional law, including the overruling of outstanding decisions to the extent that the sound growth of the law requires." Franklin v. Albert, supra, 411 N.E.2d at 461-62, quoting H. Hart & A. Sacks, The Legal Process: Basic Problems in the Making and Application of Law 1395-96 (tent. ed. 1958).
We agree with the Massachusetts Supreme Judicial Court that, absent explicit legislative direction, definition of the time of accrual of causes of action for professional malpractice remains a judicial function. See also Neel v. Magana, Olney, Levy, Cathcart & Gelfand, supra, 6 Cal.3d at 192, 98 Cal.Rptr. at 847, 491 P.2d at 431. Of course, the Legislature has plenary authority to expressly change any rule we announce.
It is true that we have declared, as a general rule, that a cause of action in tort accrues at the time when the plaintiff sustains a judicially cognizable injury. E. g., Bozzuto v. Ouellette, Me., 408 A.2d 697, 699 (1979); Williams v. Ford Motor Co., supra; see Tantish v. Szendey, 158 Me. 228, 182 A.2d 660 (1962), as interpreted in Williams v. Ford Motor Co., supra. Thus, the institutional considerations of uniformity, certainty and finality in the law must figure into any decision to carve an exception from a settled rule. However, the principle of stare decisis is and must be broad enough to require departure from otherwise governing precedent when the case before the court cannot be decided rationally and fairly on the basis of settled law. See Comment, Stare Decisis, 30 Me.L.Rev. 55 (1978); see also Beaulieu v. Beaulieu, Me., 265 A.2d 610, 613 (1970); Franklin v. Albert, supra, 411 N.E.2d at 462. This Court has fulfilled its role of reasoned decision-making by departing from precedent when principles long adhered to have lost their vitality or lack the capacity to produce just results. See, e. g., Black v. Solmitz, Me., 409 A.2d 634 (1979); Davies v. City of Bath, Me., 364 A.2d 1269 (1976); Beaulieu v. Beaulieu, supra.
The general ruleaccrual at the time of judicially cognizable injurygenerally works, and we do not abandon it. In most cases, this rule represents a just balance between a plaintiff's legitimate claim and a defendant's need for an eventual end to potential liability. However, the general rule does not adequately adjust the balance of the parties' rights in situations involving the specific complex of interests represented by a legal malpractice claim and should yield to a more just rule.
We start our analysis with a recognition of the fundamental proposition that attorney and client necessarily share a fiduciary relationship of the highest confidence. See, e. g., Neel v. Magana, Olney, Levy, Cathcart & Gelfand, supra, 6 Cal.3d at 188-89, 98 Cal.Rptr. at 844-45, 491 P.2d at 428-29; Hendrickson v. Sears, supra, 365 Mass. at 90, 310 N.E.2d at 135. See generally 7 Am.Jur.2d Attorneys at Law § 119 (1980). The purchaser of real property who employs *1192 an attorney to search the title must rely absolutely on the attorney's representations regarding the state of the title in deciding whether to purchase the property. In the instant case, the plaintiffs relied on an affirmative, albeit negligently made, misrepresentation by the defendant-attorney.
The parties' agreed statement of facts stipulates that the plaintiffs have sustained damage as a result of an affirmative misstatement by the attorney in the title opinion. Although the amount of the loss is undisclosed, in cases of this type the magnitude of the loss can be catastrophic to the client. To adopt a rule which bars redress of such a loss before the client reasonably should have discovered it is unreasonable and unfair. The exercise of ordinary care could not have led the client to discover the defendant's negligence unless "ordinary care" implies that a prudent person would not rely upon the attorney's title opinion but would hire a second attorney to check the work of the first, "an expensive and impractical duplication, clearly destructive of the confidential relationship between the practitioner and his client." Neel v. Magana, Olney, Levy, Cathcart & Gelfand, supra, 6 Cal.3d at 188, 98 Cal.Rptr. at 844, 491 P.2d at 428.
The essence of the attorney-client relationship in title cases is the faith and trust which the client places in the representations of the attorney regarding the status of the title to the property he is about to purchase. The security of knowing that the title is good and the property is free of encumbrances is what the client purchases when he retains an attorney to search title for him. See, e. g., Family Savings and Loan, Inc. v. Ciccarello, 157 W.Va. 983, 993, 207 S.E.2d 157, 163 (1974). Under such circumstances, fairness, justice and common sense dictate that we join the courts around this country that have recognized that a cause of action for negligent search of a title by an attorney does not accrue until the plaintiff discovers, or reasonably should have discovered, the injury.[2]
Indeed, the Legislature has established a policy that encourages the judiciary to date accrual from the time of discovery in cases of professional malpractice. In Title 14, Section 859 of the Maine Revised Statutes, the Legislature mandated that a fraudulently concealed cause of action does not accrue until discovery of the cause of action. Section 859 represents legislative recognition of the fact that dating accrual of an undiscoverable cause of action from the time of injury works an injustice on injured plaintiffs.
Although there is neither an allegation nor a suggestion of fraudulent concealment in the instant case, the nature of the fiduciary relationship between attorney and client, the reliance placed upon the attorney by the client and the lack of means for discovery place the client in a situation akin to that of one who has had a cause of action fraudulently concealed from him. See Neel v. Magana, Olney, Levy, Cathcart & Gelfand, supra, 6 Cal.3d at 188-89, 98 Cal.Rptr. at 844-45, 491 P.2d at 428-29. In order to align the common law of this state with the well-considered legislative policy of Section 859, we hold that a cause of action based on an allegedly negligent title search accrues at the time the plaintiff discovers, or reasonably should have discovered, his injury.[3]
*1193 The principles we here apply may require a reexamination of Tantish v. Szendey, supra, in the medical malpractice area when the issue is properly before us. See Franklin v. Albert, supra; Annot., 80 A.L.R.2d 368, § 7(b) (1961), and Later Case Service 167 (1979).
The entry is:
Judgment vacated.
Remanded to the Superior Court for further proceedings consistent with the opinion herein.
WERNICK, GODFREY, ROBERTS and CARTER, JJ., concurring.
Dissenting opinion by DUFRESNE, A. R. J., in which McKUSICK, C. J., and NICHOLS, J., join.
DUFRESNE, Active Retired Justice, dissenting, joined by McKUSICK, C. J., and NICHOLS, J.
With due respect to the views of the majority, I firmly believe that the adoption by this Court at this time of the "discovery rule" in legal malpractice cases is tantamount to judicial legislation, and, therefore, I must dissent.
When does the statute of limitations begin to run for an injury suffered as a result of legal malpractice? I conclude that in the instant case it started to run from the time the defendant rendered an erroneous opinion certifying the title to real estate which the plaintiffs were purchasing, and not from the time they discovered the defendant's negligent work in his search of the title. This was also the trial court's conclusion on the basis of which summary judgment was granted in favor of the defendant. Thus, there was no error and I would affirm the Superior Court judgment.
The undisputed facts to be gleaned from this record may be summarily stated. The defendant Neal, a practicing attorney, was hired to do a title examination of real estate which the plaintiffs, the Andersons, were in the process of purchasing. In his letter certificate of title dated March 31, 1969, Neal failed to note and disclose a pre-existing right of way across the reference land, which the Andersons did buy on that date in reliance on the defendant's stated written opinion furnished them at the time. The right of way had been an encumbrance in fact since 1915, but the Andersons did not have actual knowledge of the existence of the right of way prior to April 1, 1976 or thereabouts.[1] The agreed statement further conceded that the existence of the easement did depress the value of the property at the time of purchase.
The critical issue in this appeal is whether, within the meaning of 14 M.R.S.A., § 752, the Andersons' cause of action against the defendant attorney "accrued" at the time he rendered the erroneous certificate of title on March 31, 1969 or on the Andersons' discovery of the existence of the encumbrance in April 1976. If the 1969 date is controlling, then the instant action is barred by the applicable statutory limitations, since it was commenced more than six years after the cause of action is deemed to have accrued. On the other hand, if the date of discovery in 1976 were determined to be the time of accrual of the plaintiffs' cause of action, then the present action would be timely and viable.
Since the Legislature never enacted a specific limitations statute respecting actions for damages on account of legal malpractice as it did in the case of medical malpractice, causes of action based on the wrongful conduct of attorneys, whether in contract or tort, must be commenced, as mandated by 14 M.R.S.A., § 752, within 6 years after the cause of action accrues and not afterwards, since this general provision requires that "all civil actions," except as otherwise provided, be so commenced.
*1194 A cause of action "accrues" as soon as the party in whose favor it arises is entitled to maintain an action thereon and not at the time of discovery of the right of action. This is the construction put upon the stated statute by this Court and by the Legislature. Our recent decisions in Williams v. Ford Motor Co., Me., 342 A.2d 712 (1975) and Bozzuto v. Ouellette, Me., 408 A.2d 697 (1979) so confirm:
"[A]ccrual of a tort cause of action as used [in the statutes of limitation] means exactly what the legal term impliesthe point at which a wrongful act produces an injury for which a potential plaintiff is entitled to seek judicial vindication." Bozzuto, supra, at 699.
This Court specifically rejected the discovery rule, so-called, very early after statehood. In Bishop v. Little, 3 Me. 405 (1825), more than 6 years after the purchase of property, the plaintiff sought to recover the money paid for land to which neither the defendant nor his grantors had title. It was urged in that case by the plaintiff's counsel that, as the want of title was not discovered till within six years of the commencement of the action, the statute of limitations was no bar and that the statute did not commence running until the discovery was made. Recognizing the hardship which the statute created for the plaintiff, Chief Justice Mellen, nevertheless, ruled that such is not the law and that the statute must be administered "without any reference to the question of hardship."
The discovery rule was again repudiated in Betts v. Norris, 21 Me. 314, 38 Am.Dec. 264 (1842), where this Court held that the cause of action against a sheriff for failure to attach sufficient property to satisfy the eventual judgment accrued at the time the sheriff's nonfeasance took place and not when later events brought the injurious consequences of the initial wrong to light. In Bozzuto v. Ouellette, supra, this Court stated in following the Betts rule that the plaintiff's ignorance of the defendant's misfeasance for about seven years did nothing by itself to prevent the running of the statute of limitations, whether it be the special four-year statute applicable to actions against sheriffs or the six-year statute governing limitations in all civil actions (i. e. 14 M.R.S.A., § 752). Thus, the discovery rule was again disapproved by this Court as late as 1979.
The plaintiffs argue that this Court should carve an exception to the traditional rule followed in Bishop, Betts and Bozzuto and adopt the discovery rule in legal malpractice cases on similar grounds as were advanced in Hendrickson v. Sears, 365 Mass. 83, 310 N.E.2d 131 (1974), in which the issue was: when does a client's cause of action against an attorney for negligent certification of title to real estate accrue for purposes of the statute of limitations? See also Neel v. Magana, Olney, Levy, Cathcart & Gelfand, 6 Cal.3d 176, 98 Cal.Rptr. 837, 491 P.2d 421 (1971); McKee v. Riordan, 116 N.H. 729, 366 A.2d 472 (1976).
The reasons given in Hendrickson, supra, for the adoption of the discovery rule in legal malpractice were: 1) the exact case was stated to be of first impression, though the traditional rule had been consistently followed in medical malpractice cases; 2) there existed a growing body of case law which have opted for the discovery rule in legal malpractice; 3) the legislature in general left the definition of accrual of causes of action to judicial rationalization and interpretation; 4) statutory enactments, such as in the case of fraudulent concealment, where the discovery rule is expressly made applicable, do not negate its applicability in other circumstances to which the legislature has not spoken; 5) the lawyer-client relationship is highly fiduciary in its nature, involving, on the part of the lawyer, a duty of full and fair disclosure of facts material to the client's interests, while the client, to the knowledge of the attorney, usually places the greatest reliance on the expertise of his selected professional person; also, the relationship is such that the client is not expected to recognize professional negligence if he sees it, nor is he expected to watch over the professional, nor should the protection of his rights require the retention of a second professional to check on the first.
*1195 Discussing these reasons in inverse order of their listing, I note initially that this Court in the most intimate relationship of doctor and patient refused to apply the discovery rule and affirmed the judgment barring the patient's action, because it was commenced beyond the statutory period of limitations. In Tantish v. Szendey, 158 Me. 228, 182 A.2d 660 (1962), the plaintiff sued her doctor by action commenced on July 20, 1960 for negligently failing to remove a tubing inserted by him in her back in the course of an operation on September 5, 1956. The presence in her body of the foreign substance was not discovered until July 21, 1958. Thus, the action was brought within two years of the time of discovery, but beyond the two-year statutory limitation period, if the time of accrual of the cause of action is the date on which the medical malpractice took place. We presume that the same reasons were presented to this Court in the stated medical malpractice case as were given in Hendrickson in support of the discovery rule in that case of legal malpractice. In Tantish, supra, 182 A.2d at 663, and in Betts, supra, 21 Me. at 324, 38 Am.Dec. 264, when commenting with approval on Wilcox v. Plummer's Executors, 4 Peters 172, 29 U.S. 172, 7 L.Ed. 821 (1830), a case involving legal malpractice, this Court had this to say:
"`From a careful examination of that case [Wilcox, supra] it will seem to be difficult to infer, that the statute of limitations, in any case of nonfeasance or misfeasance, unaccompanied by fraudulent concealment, should be considered as beginning to run from any time, other than that at which the act of nonfeasance or malfeasance actually took place. The substantive cause of action then takes place; and whatever may follow, or flow from it, is but incident thereto, and must follow the fate of the primary cause.'"
Also cited with approval in Betts was the case of Howell v. Young, 5 B. & C. 259, which involved misfeasance or nonfeasance of an attorney. This Court viewed the holding in Howell v. Young to be that
"the damage, subsequently arising, did not constitute a substantive cause of action, of itself; and that the statute of limitations began to run from the time that the cause producing the injury took place."
Furthermore, the same considerations of the victim's inability to recognize or discover professional negligence exist in the legal as well as in the medical malpractice case. The Tantish Court ruled that the possibility of hardship, including its factuality, does not outweigh the need of certainty in establishing the time of accrual of actions, and that any change in the traditional rule must come from the Legislature.
Legislative power is plenary except as it may have been circumscribed expressly or inferentially by the Constitution of the state or nation. Under section 1, part third, of article IV of our State Constitution, the Legislature is vested with full power to make and establish all reasonable laws and regulations for the benefit of the people of the State. See Ace Tire Co., Inc. v. Municipal Officers of City of Waterville, Me., 302 A.2d 90, 96 (1973); Article IV, Part Third, § 1, Constitution of Maine.
Although statutes of limitation of actions deal with the citizens' access to the courts of the realm and thus have considerable impact on the third branch of government, the judiciary, nonetheless, the Legislature has the inherent power to legislate in that area and establish statutes of limitation, provided, as the Constitution mandates, such laws and regulations are reasonable. Garrett v. Raytheon Co., Inc., Ala., 368 So.2d 516 (1979). Our Legislature has over the years exercised that power and from early statehood days, it did fix different periods of limitation for different types of cases. See Laws of the State of Maine, 1821, chapter LXII. Although, in connection with any of the numerous actions for which the Legislature was establishing periods of limitation, the 1821 laws did not formulate such limitations in terms of the present terminology to the effect that the action be commenced within x-number of years next after the cause of action accrues, and not afterwards, but rather used the *1196 indefinite expressionwithin x-number of years next after the cause of such actions or suits, and not after, nevertheless, the intent was clear that the period of limitation was to run from the time when the action accrued.[2] The 1840 revision made it crystal clear by repeating the present formulation with each period of limitation, except where otherwise provided. In the 1840 revision, the Legislature enacted in substantially identical language the present section 859, of title 14, relating to fraud or fraudulent concealment of one's cause of action.[3] See R.S. 1840, c. 146, s. 18. Married women's actions for alienation of affections, first enacted in 1913 (P.L. 1913, c. 33), but now prohibited (P.L. 1973, c. 298), were specifically barred three years "after the discovery of such offense." Thus, the Legislature was ever aware of the fact that with some causes of actions the time of accrual should be tied to the discovery of their existence as a matter of proper legislative policy.
As indicated in Williams v. Ford Motor Co., supra, the Legislature in enacting all statutes of limitation made what it considered a reasonable accommodation between two worthy but competing interests, i. e., that of the plaintiff to have a reasonable time in which to vindicate his claim and that of the defendant to be protected from stale claims, and that this Court's interpretation of the concept of the accrual of a cause of action for more than a century and a half must be read therein by legislative adoption.
When the Legislature, in establishing limitations upon causes of action, wished to depart from the traditional starting point of accrual thereof as construed by the courts, it expressly postponed the running of the period of limitation to the time of discovery, as in cases of fraud, fraudulent concealment and alienation of affections previously stated. Such explains the Tantish holding in construing the 1931 statute (P.L.1931, c. 62), where for the first time the Legislature addressed specifically the question of limiting the bringing of actions for "malpractice of physicians and all others engaged in the healing art," and retained as the starting point for bringing such actions the time of their "accrual" as previously provided generally for all actions except those expressly given different treatment. True, the focus of that legislation was directed at reducing the period of limitation from 6 years to 2 years, but it must be presumed that the Legislature did consider the discovery rule in connection therewith, but opted against it. See also, Paradis v. Webber Hospital, Me., 409 A.2d 672, 676 (1979).
Again, in workers' compensation cases, the Legislature allows the filing of petitions for compensation after the limitation period, if the employee failed to file timely "because of mistake of fact as to the cause and nature of the injury." Likewise, even though passed in 1975, the enactment of section 752-A of title 14 to the effect that civil actions for "design professional" malpractice are outlawed unless commenced within 4 years after such malpractice or negligence is discovered, and in no event after 10 years following the substantial completion of the services, demonstrates an awareness on the part of our Legislators of situations in which as a matter of public policy the traditional rule of "accrual" of causes of action should give way to the discovery rule. They have not as yet decided to compel its application either in medical or legal malpractice.
*1197 The Legislature's more-than-a-century old selective policy application of the discovery rule to only a few chosen causes of action, such as in cases of fraud, fraudulent concealment of the cause of action, alienation of affections and negligence of design professionals, coupled with the consistent use of the traditional rule by the judiciary throughout the years, even in cases of medical malpractice, completely negates the idea that, in anchoring the periods of limitation of actions to the time when the several causes of action accrued, the Legislature merely left it to "judicial rationalization and interpretation" on a case by case basis.
To the contrary, as a general rule of statutory construction, absent a clear purpose to intend otherwise, the Legislature is presumed to have in mind the decisions of this Court and, when using legislative language which has been given a specific meaning by judicial construction, it must be deemed to have adopted the judicially declared interpretation. Statutory words which have acquired a meaning through judicial definition are to be construed in accordance therewith. See Acheson v. Johnson, 147 Me. 275, 86 A.2d 628 (1952). The Legislature must be considered as having entertained a consistent design and policy when it started the running of the several statutes of limitation from the time the respective causes of action accrued. See State v. Beck, 156 Me. 403, 407, 165 A.2d 433, 435 (1960), appeal dismissed 367 U.S. 903, 81 S.Ct. 1919, 6 L.Ed.2d 1249.
After repeated construction of the general statute of limitations, 14 M.R.S.A., § 752, dating back to Bishop v. Little, 3 Me. 405 (1825), the re-enactment of the law in substantially identical language of "accrual of the cause of action" in ten revisions of the statutes throughout the years must be regarded as legislative affirmance of the statute as previously construed by the judiciary. Myrick v. Hasey, 27 Me. 9, 17 (1847); Osgood v. Holyoke, 48 Me. 410, 414 (1861); Cota v. Ross, 66 Me. 161, 165 (1877); Tuxbury's Appeal, 67 Me. 267 (1877); East Livermore v. Livermore Falls Trust & Banking Co., 103 Me. 418, 429, 69 A. 306, 15 L.R.A., N.S., 952 (1907); Sacknoff v. Sacknoff, 131 Me. 280, 161 A. 669 (1932). We note that the 1964 revision followed our Tantish decision by some two years.
As stated in Starks v. New Sharon, 39 Me. 368 (1854), judicial construction of statutes adopted by the Legislature in revisions of statutes
"rests ... no longer upon an opinion of the judicial department. It has a legislative sanction; and judicial tribunals are deprived of any legitimate right to change the law by a new and different construction. This would be to declare, what the law should be, not what it is."
Legislative inaction in addressing specifically the question of the accrual of the cause of action in legal malpractice as it did in design professional malpractice may be deemed a slender reed upon which to lean in determining legislative intent (see Berry v. Branner, 245 Or. 307, 311, 421 P.2d 996, 998 (1966)), nevertheless, considering the total history of our legislation respecting statutes of limitation, together with the repeated rejection by this Court of the discovery rule, we must say that the displacement of the traditional rule through the adoption of the discovery rule must be made by the Legislature and not by the judiciary. We are not dealing merely with a common law rule fashioned entirely and solely by the judiciary. The traditional rule has been solidly imbedded in legislation and should be changed, if so desired, by the body in whom the power of legislation is vested. See Fredette v. State of Maine, Me., 428 A.2d 395 at 401, 1981statutory incorporation of judicially interpreted concept. See also Williams v. Ford Motor Co., supra, at 718; Tantish v. Szendey, 158 Me. 228, 237, 182 A.2d 660, 664 (1962); Starks v. New Sharon, supra, at 370.
Since the parties in their agreed statement of the record disclose the existence of no fact from which a fact finder might conclude that the defendant had been guilty of fraudulent concealment of the plaintiffs' cause of action, which would call for the application of the discovery rule, the Superior Court was required by law to grant *1198 summary judgment for the defendant. See Millett v. Dumais, Me., 365 A.2d 1038, 1042 (1976); Bozzuto v. Ouellette, supra, at 699.
I would deny the appeal and affirm the judgment of the Superior Court in favor of the defendant.
NOTES
[1] In 1962 in the case of Tantish v. Szendey, 158 Me. 228, 237, 182 A.2d 660, 664 (1962), this Court held that a cause of action for medical malpractice accrued at the time of the negligent act. Quoting from Betts v. Norris, 21 Me. 314, 324 (1842), this Court rejected any suggestion that a cause of action for negligence did not accrue until injury was sustained. Tantish v. Szendey, supra, 158 Me. at 235, 182 A.2d at 663. In 1964, the Maine statutes were revised, and the language of the statute of limitations applicable to medical malpractice was unchanged. P.L.1963, ch. 402, sec. 170. In 1975, by way of dictum, we interpreted Tantish as holding that a cause of action for medical malpractice accrues when the plaintiff sustains injury. Williams v. Ford Motor Co., supra, 342 A.2d at 716. How can such reinterpretation of an earlier holding be squared with a strict application of the so-called doctrine of legislative acquiescence? Did the Legislature in 1964 acquiesce in Tantish as written or as subsequently interpreted? Of course, the answer is that the Legislature did neither.
[2] See, e. g., Pioneer Nat'l Title Ins. Co. v. Sabo, 432 F.Supp. 76 (D.Del.1977); Child, Inc. v. Rodgers, 377 A.2d 374 (Del.Super.1977), aff'd in part and rev'd in part on other grounds, 401 A.2d 68 (Del.1979); Mumford v. Staton, Whaley & Price, 254 Md. 697, 255 A.2d 359 (1969); Hendrickson v. Sears, supra; Family Sav. & Loan, Inc. v. Ciccarello, supra. For cases applying the "discovery rule" to other types of attorney malpractice, see, e. g., Yazzie v. Olney, Levy, Kaplan & Tenner, 593 F.2d 100 (9th Cir. 1979) (applying Arizona law); Woodruff v. Tomlin, 511 F.2d 1019 (6th Cir. 1975) (applying Tennessee law); Neel v. Magana, Olney, Levy, Cathcart & Gelfand, supra; Edwards v. Ford, 279 So.2d 851 (Fla.1973); Kohler v. Woollen, Brown & Hawkins, 15 Ill.App.3d 455, 304 N.E.2d 677 (1973); Cameron v. Montgomery, 225 N.W.2d 154 (Iowa 1975); Sorensen v. Pavlikowski, 94 Nev. 440, 581 P.2d 851 (1978); McKee v. Riordan, 116 N.H. 729, 366 A.2d 472 (1976); Mills v. Killian, 273 S.C. 66, 254 S.E.2d 556 (1979); Peters v. Simmons, supra. See Annot., 18 A.L.R.3d 978 (1968 and Supp.1980).
[3] Years ago Dean Pound and Chief Justice Stone recognized the propriety of courts reasoning by analogy from statutes. See Pound, Common Law and Legislation, 21 Harv.L.Rev. 383, 385-86 (1908); Stone, The Common Law in the United States, 50 Harv.L.Rev. 4, 12-15 (1937). The same point was made more recently by Chief Justice Traynor. See Traynor, Statutes Revolving in Common-Law Orbits, 17 Cath.U. of A.L.Rev. 401, 402-05 (1968).
[1] This encumbrance was the subject of litigation which was finally resolved in this Court in Stevens v. Anderson, Me., 393 A.2d 158 (1978).
[2] Laws of Maine, 1821, c. LXII, s. 8.
Be it further enacted, that any action of the case ..., which shall be actually declared upon in a proper writ, returnable according to law, purchased therefor, within the term of six years next after the cause of such action accrued; shall be deemed and taken to be duly commenced and sued within the meaning of this Act.
[3] R.S. 1840, c. 146, s. 18.
If a person, liable to any action mentioned, fraudulently conceals the cause thereof from the person entitled thereto, or if a fraud is committed which entitles any person to an action, the action may be commenced at any time within 6 years after the person entitled thereto discovers that he has just cause of action. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261283/ | 223 F.Supp. 265 (1963)
Ara DERDIARIAN, on behalf of himself and all other persons similarly situated, Plaintiff,
v.
The FUTTERMAN CORPORATION et al., Defendants.
United States District Court S. D. New York.
November 6, 1963.
*266 Herman Odell, New York City, for plaintiff.
Robinson, Silverman, Pearce & Aronsohn, New York City, Leonard B. Sand, New York City, of counsel, for The Futterman Corporation.
Freedman, Levy, Kroll & Simonds, Washington, D. C., Milton Kroll, Washington, D. C., of counsel, for Kurt H. Grunebaum and New York Hanseatic Corporation.
Halpert & Burger, New York City, Israel Halpert, New York City, of counsel, for Aaron M. Schreiber and Samuel Futterman as Executors of Estate of Robert A. Futterman.
Bondy & Schloss, New York City, David Nierenberg, New York City, of counsel, for Leonard L. Steiner.
David H. Shapiro, New York City, for Richard K. McIntyre.
FEINBERG, District Judge.
Does an action for damages under the federal securities acts survive the death of the alleged wrongdoer? This is the chief issue raised by the motion before the Court. The action is brought under Section 17(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. § 77q(a), and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78j(b), and Rule 10b-5 thereto, against a corporation, a number of its directors and officers, a brokerage firm which served as its financial adviser, and the executors of a deceased corporate officer. The deceased officer is Robert A. Futterman, who died in November 1961. Futterman, before his death, was president and chairman of the board of directors of Futterman Corporation.
Plaintiff sues in his individual capacity as a purchaser of Futterman Corporation stock and as a representative of other purchasers. He alleges that defendants *267 made false and misleading statements or omitted to state material facts which caused the stock of the corporation to be sold at inflated prices to the public, including plaintiff. The amended complaint also states that, on or about November 1, 1960, as a result of dealings with the corporation, Robert A. Futterman and his wife acquired 181,464 shares of its Class A stock and 105,000 shares of Class B stock[1], the latter at a consideration of $1 per share. The corporation sold 660,000 shares of Class A stock to the public on July 19, 1960, at $12 a share and, on June 8, 1961, one million shares of Class A stock at $13.125 a share. Plaintiff alleges that the false and misleading statements and failure to disclose material facts caused the stock to sell at inflated prices up to at least early 1962. Damages for the class are alleged to be between $5 million and $25 million.
The Futterman estate argues that it should be dropped as a defendant because (1) any cause of action against Robert A. Futterman abated upon his death, and (2) the complaint contains no allegation of wrongdoing on the part of Robert A. Futterman personally or his executors.
I
The estate contends that a cause of action abates when there is no unjust enrichment of the decedent or when the statute relied on for recovery is essentially "penal" in nature. Further, the executors argue that if there is unjust enrichment, recovery should be limited to that amount. Plaintiff contends that unjust enrichment is not the test of whether an action abates, and, in any event, claims that there is unjust enrichment in this case: the amount that the value of the stock owned by Robert A. Futterman was increased by the alleged misrepresentations and omissions.
This action is based upon the Securities Act and the Exchange Act. These two statutes make no reference to survival, and there is no general federal statute concerning abatement of actions.[2] When a federal statute creates a cause of action, the courts generally have ruled that federal law determines whether the cause of action abates or survives upon death. E. g., Heikkila v. Barber, 308 F.2d 558, 561 (9 Cir. 1962); Cinnamon v. Abner A. Wolf, Inc., 215 F.Supp. 833 (E.D.Mich.1963); Armstrong v. Emerson Radio & Phonograph Corp., 132 F.Supp. 176 (S.D.N.Y.1955); but compare Pritchard v. Smith, 289 F.2d 153, 88 A.L.R.2d 1146 (8 Cir. 1961); Brazier v. Cherry, 293 F.2d 401 (5 Cir.), cert. denied, 368 U.S. 921, 82 S.Ct. 243, 7 L.Ed. 2d 136 (1961). Thus, whether an action based on the two federal statutes involved here abates upon death is to be determined on federal common law principles.[3] Kirk v. Comm'r, 179 F.2d 619, 15 A.L.R. 2d 1031 (1 Cir. 1950); Barnes Coal Corp. v. Retail Coal Merchants Ass'n, 128 F.2d 645 (4 Cir. 1942); Armstrong v. Allen B. Dumont Labs., 137 F.Supp. 659 (D.Del. 1955).
The common law treatment of abatement of actions on the death of a tortfeasor is an illustration of the growth and change of law. At one time all tort actions abated. This was perhaps attributable to early notions of a tort as an outgrowth of a criminal wrong and the consequent view that punishment or blame could not survive death. Winfield, Death as Affecting Liability in Tort, 29 Colum. L.Rev. 237, 241-50 (1929). After a fourteenth century statute[4] and subsequent judicial gloss over hundreds of years, a differentiation between those torts affecting property rights and those affecting the person alone was made. If the injury upon which the *268 cause of action was based affected property rights, it survived; if it affected the person alone, such as assault and battery or false imprisonment, it abated. Heikkila v. Barber, supra; Barnes Coal Corp. v. Retail Coal Merchants Ass'n, supra; Sullivan v. Associated Billposters & Distribs., 6 F.2d 1000, 1004-05, 42 A.L.R. 503 (2 Cir. 1925). If the suit was brought against the estate of the tortfeasor, the common law at one time imposed an additional requirement: the plaintiff must seek to recover property, or the proceeds or value of property appropriated by the decedent and added to his estate. Thus, in a suit against the executors of a deceased marshal for damages resulting from the filing of false returns by his deputy, the Court stated:
"If the person charged has secured no benefit to himself at the expense of the sufferer, the cause of action is said not to survive; but where, by means of the offense, property is acquired which benefits the testator, there an action for the value of the property shall survive against the executor. * * * If the deputy marshal, in the misfeasance complained of, received money or property, the marshal being responsible for such acts, the cause of action survived against his executors."
United States v. Daniel, 6 How. 11, 13, 47 U.S. 11, 13, 12 L.Ed. 323 (1848). See Iron Gate Bank v. Brady, 184 U.S. 665, 22 S.Ct. 529, 46 L.Ed. 739 (1902); Kirk v. Comm'r, 179 F.2d 619, 15 A.L.R. 2d 1031 (1 Cir. 1950). Thus, it was not sufficient to prevent an action from abating that the deceased caused plaintiff's property to be diminished. There also had to be a corresponding benefit to the deceased.
Two cases decided by the Second Circuit dealt with the concept of benefit in this context, United Copper Sec. Co. v. Amalg. Copper Co., 232 F. 574 (2 Cir. 1916) and Sullivan v. Associated Billposters & Distribs., 6 F.2d 1000, 42 A.L.R. 503 (2 Cir. 1925). In United Copper, it was held that a cause of action under the Sherman Act would not survive unless the decedent secured some benefit at the expense of the person wronged. However, whether there was a benefit and the nature of the benefit was left to be determined at trial.
Sullivan, some nine years later, was also a suit under the Sherman Act. Plaintiff there sought lost profits caused by an alleged conspiracy of defendants. One defendant died during the suit, and plaintiff moved to substitute the estate as a party defendant. Judge Learned Hand, then sitting in the District Court, denied the motion. He stated that the United Copper case "did no more than follow the existing law" and that "where no definite property has passed to the tort feasor I can find no suggestion anywhere that the cause of action survives."[5] The Court of Appeals reversed. It found sufficient a claim that profits had been diverted to the tortfeasor from plaintiff's business on the ground that under the Sherman Act a claim of damage to one's business, rather than to one's property, survives a defendant's death. The Court reached this result even though it recognized that the action would not have survived under the orthodox property benefit rule because no property had passed from plaintiff to the decedent. Sullivan v. Associated Billposters & Distribs., supra, 6 F.2d at 1011-12, 42 A.L.R. 503. See Moore v. Backus, 78 F.2d 571, 101 A.L.R. 379 (7 Cir.), cert. denied, 296 U.S. 640, 56 S.Ct. 173, 80 L.Ed. 455 (1935).
Since these decisions, other cases have marked a departure from the rule that a benefit to the tortfeasor is necessary in order for a cause of action to survive against his estate. This is particularly true in cases involving deficiency additions under the internal revenue laws. In Kirk v. Comm'r, supra, the Government sued for a fifty per cent addition to a tax deficiency because of fraud in the filing of a tax return. The estate of the deceased taxpayer argued that the action *269 did not survive as to the fifty per cent addition, because, even though the Government had been wronged, there was no corresponding benefit to the taxpayer's estate. The Court of Appeals for the First Circuit held that a benefit to defendant's estate was not necessary to avoid abatement. It based its decision on general principles and not on the fact that the case involved the revenue laws, stating (179 F.2d at 621, 15 A.L.R.2d 1031):
"[W]e are satisfied that the modern rule as to the survival of tort actions against decedents' estates is that although actions to recover penalties do not survive, actions to recover compensation for monetary losses or injuries inflicted by a decedent do, without regard to any enrichment of the decedent's estate.
* * *
"In the second place we feel at liberty to abandon enrichment of a decedent's estate as any criterion of survivability in cases like this because it is evident from the cases cited last above, and those cited therein, that the enrichment concept of the early law of survival was the product of archaic legal preconceptions identifying the representative personally with the estate in his charge which have little or no place in the law today, and the law of survival is not static but dynamic, capable of growth and development to meet present-day needs in conformity with modern concepts. Van Beeck v. Sabine Towing Co., 300 U.S. 342, 57 S.Ct. 452, 81 L.Ed. 685; Barnes Coal Corp. v. Retail Coal Merchants Ass'n, 4 Cir., 128 F.2d 645. In short, we think the general rule today with respect to the survival of tort actions against decedents' estates is that actions essentially for penalties do not survive for the reason that a decedent is beyond punishment, but that actions to recompense or compensate a plaintiff for a harm inflicted upon him by a decedent do survive, for an estate can, and we think should, compensate for injury to the same extent as the decedent had he lived."
The Kirk decision has been accepted by a number of other Circuits. Estate of Rau v. Comm'r, 301 F.2d 51 (9 Cir.), cert. denied, 371 U.S. 823, 83 S.Ct. 41, 9 L.Ed.2d 62 (1962) (two grounds are mentioned: the absence of the need for a benefit to the estate, and the importance of taxes to the Government); Lee v. Comm'r, 227 F.2d 181 (5 Cir. 1955), cert. denied, 351 U.S. 982, 76 S.Ct. 1048, 100 L.Ed 1497 (1956) (without discussion of the benefit rule); Reimer's Estate v. Comm'r, 180 F.2d 159 (6 Cir. 1950) (the Kirk decision was cited without discussion).
This Circuit has also accepted the Kirk decision. Scadron's Estate v. Comm'r, 212 F.2d 188 (2 Cir.), cert. denied, 348 U.S. 832, 75 S.Ct. 55, 99 L.Ed. 656 (1954). It was there argued that the Kirk and Reimer cases discarded the benefit rule, were contrary to the Sullivan case,[6] and should not be followed. Nevertheless, the Court per curiam said "[t]he filing of a fraudulent return by the deceased taxpayer for each of the taxable periods was amply proved and the decision of the Tax Court is affirmed on the authority of Kirk v. Commissioner, 1 Cir., 179 F.2d 619 [15 A.L.R.2d 1031], and Reimer's Estate v. Commissioner, 6 Cir., 180 F.2d 159."
More recently, Judge Levet of this Court, in Banana Distribs., Inc. v. United Fruit Co., 27 F.R.D. 403 (S.D.N.Y.1961), squarely held that an antitrust action survives when there has been injury to plaintiff, but no allegation of benefit or enrichment to defendant.[7] That case was a private antitrust action for treble damages, alleging both loss of profits and the decreased capital value of plaintiff's *270 business. The estate of the deceased president of the corporate defendant opposed, on the basis of United Copper and Sullivan, its substitution as defendant. There was no allegation that the corporate officer personally benefited from the alleged wrongs. In holding that the law had gone beyond the United Copper and Sullivan cases (although in the same liberalizing direction as the latter), the Court noted the lapse of time since they were decided, a new liberal trend to survivability as represented by the Kirk case, and the approving recognition by the Supreme Court[8] of the growing tendency of state law toward survival of causes of action against deceased tortfeasors.
The law in this Circuit on whether a benefit to a decedent is necessary for a cause of action against the decedent to survive is not clear. Contributing to the uncertainty are the length of time since the decisions in United Copper and Sullivan, the difficulty of assessing the full implications of Sullivan, the acceptance by the Court of Appeals in Scadron's Estate v. Comm'r, supra, of the Kirk decision, which explicitly held that the benefit rule was no longer the criterion of survivability, and the modern trend of decision in favor of survivability. The duty of the District Court to its Circuit Court of Appeals includes, where appropriate, anticipation of changed thinking by the appellate court. See Banana Distribs., Inc. v. United Fruit Co., supra, 27 F.R.D. at 414-15. I believe this to be such a case to the extent that the changed thinking has not been made explicit. Upon balancing the interests of prospective heirs and of a plaintiff who would be compensated for his injuries but for the death of the tortfeasor, I conclude that the action here under the federal securities acts survives, even if there was no benefit to the decedent. The other rule was a product of archaic legal thinking[9] inconsistent with modern notions of the basis of tort liability. Kirk v. Comm'r, supra.
As further support for its position that the action against Futterman has abated, the estate urges that the action is "penal" in nature. The courts have held that if an action is "penal" rather than "remedial," it abates at death, although what is and what is not penal in this connection is not always clear. See Survival of Actions Brought Under Federal Statutes, 63 Colum.L.Rev. 290, 300-03 (1963). The estate cites Wogahn v. Stevens, 236 Wis. 122, 294 N.W. 503, 133 A.L.R. 1033 (1940) for the proposition that the action in this case is penal.[10]
The Wogahn case was a suit under Section 11 of the Securities Act by a trustee to whom claims of purchasers of common stock had been assigned. The court characterized liability under Section 11 as penal. It concluded, therefore, that an action based upon this section would not survive the death of a plaintiff and consequently was not assignable. Accordingly, it affirmed dismissal of the complaint. The estate argues that this case presents an even stronger situation for characterization of the action as penal rather than remedial. It points out that Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act do not explicitly create civil liability (as did Section 11 in the Wogahn case), but clearly do create criminal liability for violations thereof.
Two District Courts have rejected the Wogahn decision. Mills v. Sarjem Corp., 133 F.Supp. 753 (D.N.J.1955) was a *271 suit for profits allegedly made in violation of Section 10(b) of the Exchange Act (one of the bases of the action in this case) in which the executor of a deceased plaintiff sought substitution. After noting the Wogahn decision, the Court said (133 F.Supp. at 761-62):
"It is further contended by these defendants that the action is penal in nature and as such cannot survive the death of a party thereto. However, 15 U.S.C.A. § 78bb clearly limits recovery under any section of the 1934 Securities Exchange Act to the actual damages sustained by a plaintiff. This relief appears to be remedial and actions for similar damages have been held to be assignable and capable of survival. See Auslen v. Thompson, 1940, 38 Cal. App.2d 204, 101 P.2d 136; Spiller v. Atchison, Topeka & Santa Fe Ry. Co., 1920, 253 U.S. 117, 135, 40 S.Ct. 466, 64 L.Ed. 810."
This language was quoted with approval by Judge Dimock of this Court in holding assignable causes of action under the same statutory provisions involved in the instant case. International Ladies' Garment Workers' Union v. Shields & Co., 209 F.Supp. 145, 149 (S.D.N.Y. 1962). See also Hooper v. Mountain States Sec. Corp., 282 F.2d 195, 206 (5 Cir. 1960), cert. denied, 365 U.S. 814, 81 S.Ct. 695, 5 L.Ed.2d 693 (1961); Shonts v. Hirliman, 28 F.Supp. 478, 482 (S.D.Cal.1939). But see Knapp v. Kinsey, 249 F.2d 797, 804 (6 Cir. 1957), cert. denied, 356 U.S. 936, 78 S.Ct. 778, 2 L.Ed.2d 812 (1958).
The use of labels such as "penal" or "remedial" is, of course, unsatisfactory unless it is recognized as a shorthand way of expressing relevant considerations. Quite clearly the statutes relied on here are meant to deter bad practices in the sale of securities, as well as to afford compensation to persons injured thereby. Judge McGohey of this Court, in an analagous situation, made the common sense observation that an inquiry as to whether such a statute is penal or remedial seems bound to result in the conclusion that it is both.[11] Damages in an action under Section 10(b) of the Exchange Act are clearly limited to the loss incurred by plaintiff,[12] and, in any event, the complaint, which invokes that section and Section 17(a) of the Securities Act, seeks only actual damages (Amended Complaint, paras. 26, 27). The action is analagous to the private antitrust suit held to be remedial for purposes of survival in the Sullivan case. Cf. Armstrong v. Emerson Radio & Phonograph Corp., 132 F.Supp. 176, 179 (S.D.N.Y.1955) (characterizing even multiple damages under the Patent Act as "inherently remedial" even though "in some aspects punitive."). Since the Congressional policy is, in part at least, an attempt to recompense defrauded purchasers of stock, this purpose is furthered by a liberal rule of survival under the securities acts. Therefore, policy, as well as precedent, justifies application of the "remedial" label.
Accordingly, the estate's motion to dismiss on the ground that the action against it has abated is denied. In view of the holding that benefit to the decedent from the alleged fraud need not be shown to prevent abatement, there is no need to rule on plaintiff's contention (which may, indeed, have some force) that there was such benefit to the extent of the increased value of decedent's shares of stock in the corporation.[13]
*272 II
The estate also claims that the complaint should be dismissed as to it because no claim is stated against Robert A. Futterman personally. Essentially its argument is as follows: plaintiff alleges that defendants either authorized, knew, or should have known, in the exercise of reasonable care, of the false statements and since Robert A. Futterman is not a defendant only his estate is no claim is made against Robert A. Futterman.[14] This argument, which apparently is an afterthought,[15] is over technical. It is perfectly evident from a reading of the amended complaint that plaintiff indicates that Robert A. Futterman, while he was alive, was a party to the making of certain false statements. However, since the complaint will have to be amended again to incorporate other rulings of the Court,[16] the amended complaint should aver that Robert A. Futterman personally authorized, knew, or should have known of their falsity.
Accordingly, the estate's motion to dismiss the complaint as to it is denied. Settle order on notice incorporating the rulings on the other motions heard at the same time and not heretofore set forth in formal orders of the Court.
NOTES
[1] Class B stock under certain conditions is convertible into Class A stock.
[2] See 28 U.S.C. § 2404 providing for survivability where the Government is a party and the suit is for damages.
[3] Rule 25, Fed.R.Civ.P., which provides for substitution of parties, states that the court may order substitution if a party dies and "the claim is not thereby extinguished * * *."
[4] Statute de Bonis Asportatis in Vita Testatoris, 1330, 4 Edw. III, c. 7.
[5] Record on Appeal, Sullivan v. Associated Billposters & Distribs., supra, at p. 46.
[6] Reply Brief for Petitioner on Review, Scadron's Estate v. Comm'r, supra, at p. 7.
[7] Leave to file an interlocutory appeal under 28 U.S.C. § 1292(b) was granted, but the Circuit Court refused to hear the appeal.
[8] See Cox v. Roth, 348 U.S. 207, 210, 75 S.Ct. 242, 99 L.Ed. 260 (1955) (holding that an action under the Jones Act survives against the deceased tortfeasor).
[9] Cf. Sperbeck v. A. L. Burbank & Co., 190 F.2d 449, 450 (2 Cir. 1951).
[10] The estate also cites Martin v. Hull, 67 App.D.C. 284, 92 F.2d 208 (1937), a suit under § 11 of the Securities Act, 15 U.S.C. § 77k, in which there is a statement that the suit abated as to one of the defendants upon his death. The opinion, however, does not disclose the basis for the abatement.
[11] Epstein v. Shindler, 200 F.Supp. 836, 837 (S.D.N.Y.1961) (suit against a deceased "insider" under § 16(b) of the Exchange Act to recover short term profits).
[12] Section 28 of the Exchange Act, 15 U.S.C. § 78bb; Meisel v. No. Jersey Trust Co., 216 F.Supp. 469 (S.D.N.Y. 1963).
[13] The estate concedes that if Robert A. Futterman personally sold his substantial stock interest at the inflated price levels, this would be sufficient benefit under the traditional rule. Amended Memorandum of Executors, p. 14. There is no such allegation in the complaint. It may be, however, that benefit is sufficiently shown by an increase in the value of decedent's stock, even though the stock was not sold at the inflated value and the price of the stock (and, therefore, the value) subsequently declined.
[14] Amended Memorandum of Executors, pp. 5-7.
[15] The original notice of motion dated June 27, 1963, and brief dated June 28, 1963, made no mention of this argument. It first appeared in the amended notice of motion dated July 2, 1963.
[16] Motions were made by plaintiff under Rule 34 for production of documents, and by defendants to strike the allegation that the suit was brought as a class action and for a more definite statement. These motions have already been disposed of. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261302/ | 238 P.3d 798 (2008)
BRYANT
v.
CARTIER.
No. 48200.
Supreme Court of Nevada.
May 9, 2008.
Decision Without Published Opinion Reversed/Remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261329/ | 223 F.Supp. 766 (1963)
Reed JOHNSTON, Regional Director of the Eleventh Region of the National Labor Relations Board, for and on behalf of the NATIONAL LABOR RELATIONS BOARD, Petitioner,
v.
Sidney H. EVANS, Trading as Both Evans Manufacturing Company and Grifton Clothing Company, Evans Manufacturing Company, Incorporated, and Sidney H. Evans, Individually and as an Officer and Principal of the Foregoing, Respondents, and
Grifton Clothing Company Employees Union, Party to Contract and now Respondent Intervenor.
Civ. No. 529.
United States District Court E. D. North Carolina, Washington Division.
October 25, 1963.
*767 Thomas C. Bradley, Jr., N. L. R. B., Winston-Salem, N. C., for petitioner.
Jay D. Barsky, of Silver & Barsky, Philadelphia, Pa., for respondent, Sidney H. Evans, t/a both Evans Manufacturing Company and Grifton Clothing Co.
Robert D. Wheeler, Grifton, N. C., Sherman T. Rock, Morehead City, N. C., for party to contract and now respondent intervenor, Grifton Clothing Co., Employees Union.
LARKINS, District Judge.
This proceeding is on a Petition for Temporary Injunction filed by the Regional Director of the Eleventh Region of the National Labor Relations Board (hereinafter referred to as the Board) pursuant to Section 10(j) of the National Labor Relations Act, as amended (29 U. S.C.A. § 160(j); herein called the Act). Said petition was filed on September 18, 1963, seeking an order directing the original Respondents to show cause why an injunction should not be granted as prayed in said petition and an Order was entered by this Court made returnable on October 2, 1963, before this Court at Trenton, North Carolina. This Court treats the Order to Show Cause, or Rule Nisi, as a simple motion, which is preferred to a formal Order to Show Cause and is treated as a motion under the rules. Application of Tracy, 106 F.2d 96 (2nd C.C.A., 1939), certiorari denied 308 U.S. 597, 60 S.Ct. 129, 84 L.Ed. 500. This matter is before the Court upon the return to the Show Cause Order, or Rule Nisi.
The Board seeks a temporary injunction pending the final disposition on the merits of the matters herein pending on a charge and amended charges filed by the International Ladies' Garment Workers' Union, AFL-CIO (hereinafter referred to as the ILGWU) alleging that the original Respondents, Evans, et al., have violated Section 8(a) (1), (2), and (3) of the Act. These sections proscribe an employer from interfering with, restraining or coercing employees in the exercise of their right to engage in certain collective activities, from dominating or assisting and supporting a labor organization, and from discriminating against employees to discourage membership in a labor organization.
Both the ILGWU and the Grifton Clothing Company Employees Union (hereinafter referred to as the GCCEU) filed motions to intervene.
The hearing on the merits is scheduled to be conducted before a Trial Examiner of the Board at the Lenoir County Courthouse in Kinston, N. C. on October 29, 1963.
FINDINGS OF FACT
1. Petitioner is Regional Director of the Eleventh Region of the Board, an *768 Agency of the United States, and files this petition for and on behalf of the Board, upon Complaint filed by ILGWU.
2. Respondents, Sidney H. Evans, Trading as both Evans Manufacturing Company and Grifton Clothing Company; Evans Manufacturing Company, Inc.; and Sidney H. Evans, individually and as an officer and principal of the foregoing (herein called original Respondents) are engaged within this judicial district in transacting business.
3. GCCEU is party to a collective bargaining agreement with original Respondents, Evans, et al., covering wages, hours, and conditions of employment of the employees of original Respondents, Evans, et al., at its Grifton, North Carolina plant. The Petition of GCCEU to Intervene as Party Respondent was allowed by the Court and they have participated in these proceedings.
4. ILGWU orally moved the Court for permission to intervene and subsequent to the hearing reduced its motion to writing and submitted briefs in support thereof. They too have been permitted to participate in said proceedings, although said motion was taken under advisement.
5. On June 21 and June 29, 1963, the ILGWU filed charges of unfair labor practices by original Respondents, Evans, et al., with the Board. These charges were subsequently amended on August 9, and August 19, 1963, by the ILGWU. Said charges were referred to the Petitioner as Regional Director of the Eleventh Region of the Board. Thereafter, the General Counsel of the Board, on behalf of the Board, by Petitioner, issued an order consolidating the cases and a consolidated complaint pursuant to Section 10(b) of the Act was issued on September 17, 1963, alleging that original Respondents, Evans, et al., have engaged in, and are engaging in, unfair labor practices within the meaning of Section 8(a) (1), (2), and (3) of the Act, and affecting commerce within the meaning of Sections 2(6) and (7) of the Act.
6. Original Respondents are engaged at Grifton, North Carolina, in the manufacture and sale of children's wearing apparel and in the operation and conduct of its business the original Respondents annually ship finished products to points outside the State of North Carolina valued in excess of $50,000.00.
7. The ILGWU and the GCCEU, both unincorporated associations, are organizations in which employees participate and which exist for the purpose in whole or in part of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment or conditions of work, and are labor organizations within the meaning of Sections 2 (5) and 8(a) of the Act. Both, at all times material herein, have been engaged in this judicial district in promoting and protecting the interests of employee members.
8. No labor organization has been certified by the Board pursuant to the provisions of Section 9 of the Act as the collective bargaining representative of the production and maintenance employees of original Respondents' Grifton, North Carolina, operation.
9. The Court upon reading the Petition, the Response of the original Respondents, the Response of the Intervenor, the affidavits submitted by the parties, and considering the oral testimony taken at the hearing finds that there is reasonable cause to believe that the original Respondents, Evans, et al., have committed, and are committing unfair labor practices within the meaning of Section 8(a) (1) and (2) of the National Labor Relations Act, as amended.
CONCLUSIONS OF LAW
This Court has jurisdiction of the parties and of the subject matter of this proceeding, and under Section 10(j) of the Act is empowered to grant injunctive relief. Section 10(j) provides:
"(j) The Board shall have power, upon issuance of a complaint as provided in subsection (b) charging that any person has engaged in or is engaging in an unfair labor practice, to petition any district court, of the United States * * *, within *769 any district wherein the unfair labor practice in question is alleged to have occurred or wherein such person resides or transacts business, for appropriate temporary relief or restraining order. Upon the filing of any such petition the court shall cause notice thereof to be served upon such person, and thereupon shall have jurisdiction to grant to the Board such temporary relief or restraining order as it deems just and proper."
There are three steps required by Section 10(j) before a district court may issue an injunction. They are as stated by Hunter, D. J., in Lebus for and on Behalf of N. L. R. B. v. Manning, Maxwell and Moore, Inc., 218 F.Supp. 702, 705 (W.D.La.1963), citing Douds v. International Longshoremen's Ass'n, 241 F. 2d 278 (2nd C.A., 1957):
"First, there must be a charge alleging that some person has engaged in or is engaging in an unfair labor practice. The second step is the issuance of a `complaint' by the National Labor Relations Board. The third step is a hearing to determine:
(a) If there is reasonable cause to believe that the unfair labor practice stated in the complaint was committed; and
(b) If, under the circumstances, a temporary injunction would be `just and proper.'"
Here, the charges were filed. The complaints were consolidated and issued. A hearing was held to determine whether there was reasonable cause to believe that the unfair labor practices stated in the complaint were committed and to determine whether, under the circumstances, a temporary injunction would be "just and proper". Thus, all prequisites to the issuance of an injunction have been complied with.
Petitioner contends, and the Court has reasonable cause to believe, that the facts developed in the supporting affidavits and in oral testimony presented in open court show violations of Section 8 (a) (1) and (2) of the Act but have not shown sufficient evidence of a violation of Section 8(a) (3) of said Act as alleged in the Petition.
The Act provides, as follows:
"Sec. 8.(a) It shall be an unfair labor practice for an employer
(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7;
(2) to dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it * * *;
(3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization: * * *;"
A continuation of these practices will impair the policies of the Act as set forth in Section 1(b) thereof. Lebus for and on Behalf of N. L. R. B. v. Manning, Maxwell and Moore, Incorporated, (W D.La.1963), 218 F.Supp. 702.
This court, to determine whether injunctive relief is warranted, needs only find that the Regional Director has reasonable cause to believe that an unfair labor practice has been committed. Douds v. Milk Drivers and Dairy Employees Union, 248 F.2d 534 (2nd C.A., 1957); and Douds v. International Longshoremen's Association, 241 F.2d 278 (2nd C.A., 1957). Such a finding has been made in this case.
To preserve the issues for the orderly determination as provided in the Act, and to maintain the status quo as it existed before the acts complained of began, it is appropriate, just and proper that, pending the final disposition of the matters herein involved pending before the Board, the following order be entered:
It is Ordered, Adjudged and Decreed:
(1) That the Respondents, Sidney H. Evans, Trading as both Evans Manufacturing *770 Company and Grifton Clothing Company; Evans Manufacturing Company, Incorporated; and Sidney H. Evans, Individually and as an Officer and Principal of the foregoing, and their officers, agents, representatives, servants, employees, attorneys and all persons advising with them, acting in concert with them, participating with them or inducing or persuading or influencing them in any manner whatsoever be, and they, and each of them, are hereby restrained and enjoined from:
(a) Rendering or contributing assistance or any financial or other support to the GCCEU or otherwise recognizing said union as the collective bargaining representative of any of their employees unless and until the GCCEU has been certified by the Board as the collective bargaining representative of such employees.
(b) Maintaining, enforcing or giving effect, or attempting to maintain, enforce or giving effect, to its collective bargaining agreement with GCCEU entered into on or about July 9, 1963, without abrogating same, or to any extension, renewal, modification, or supplement thereof, or to any superseding agreement.
(c) Discouraging membership in the ILGWU, or any other labor organization, by discharging employees or otherwise discriminating in regard to the hire or tenure or any other term or condition of employment of employees.
(d) Coercively or otherwise interrogating employees concerning their membership in or activities on behalf of the ILGWU, or any other labor organization, or interrogating employees concerning their union membership or activities or sympathies of other employees.
(e) Threatening employees with discharge or other reprisals or promising them benefits to discourage their affiliation with or support of the ILGWU, or any other labor organization, or surveilling employees at union meetings or other union activities.
(f) In any manner or by any means discriminating in regard to hire or tenure or any term or condition of employment of their employees in order to encourage membership in GCCEU or any other labor organization, or discourage membership in the ILGWU, or any other labor organization.
(g) In any other manner interfering with, restraining, or coercing employees in the exercise of their rights to self-organization, to form, join, or assist any labor organization, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection or to refrain from any or all of such activities.
(2) That the Respondent Intervenor, GCCEU, and its officers, agents, representatives, servants, employees, attorneys and all persons advising with them, acting in concert with them, participating with them or inducing or persuading or influencing them in any manner whatsoever be, and they, and each one of them, are hereby restrained from:
(a) Maintaining, enforcing or giving effect, or attempting to maintain, enforce or give effect, to its collective bargaining agreement with Respondents, Sidney H. Evans, Trading as both Evans Manufacturing Company and Grifton Clothing Company; Evans Manufacturing Company, Incorporated; and Sidney H. Evans, Individually and as an Officer and Principal of the foregoing, entered into on or about July 9, 1963, without abrogating same, or to any extension, renewal, modification, or supplement thereof, or to any superseding agreement.
(3) The Motion of Grifton Clothing Company Employees Union, Party to the Contract, For Leave to Intervene having been presented to the Court on October 2, 1963, and it appearing to the Court that petitioner has shown good cause for the granting of the Motion and Petition to Intervene, said motion and petition be, and the same hereby is granted, and Grifton Clothing Company Employees Union is hereby named a Respondent herein.
(4) That, the Motion of International Ladies' Garment Workers' Union For *771 Leave to Intervene having been considered, and it appearing to the Court that good cause has not been shown therefor, said motion be, and the same is hereby denied.
A copy of this Opinion and Order has been served upon all counsel of record. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2565800/ | 4 N.Y.3d 796 (2005)
PEOPLE v. BANDY.
Court of Appeals of the State of New York.
February 24, 2005.
Application in criminal case for leave to appeal denied. (Graffeo, J.) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1062323/ | 685 S.E.2d 192 (2009)
55 Va. App. 234
Matthew J. SHIEMBOB
v.
Susan Wren SHIEMBOB.
Record No. 0135-09-1.
Court of Appeals of Virginia.
November 24, 2009.
*194 J. Roger Griffin, Jr. (Christie, Kantor, Griffin, Smith & Shepherd, P.C., on brief), Virginia Beach, for appellant.
Diane Pomeroy Griffin (Diane Pomeroy Griffin, P.C., on brief), Portsmouth, for appellee.
Present: FELTON, C.J., FRANK and POWELL, JJ.
WALTER S. FELTON, JR., Chief Judge.
Matthew J. Shiembob ("husband") appeals from a judgment of the Portsmouth Circuit Court ("trial court"). He contends the trial court erred in ruling that the funds he deposited during the marriage into Susan Wren Shiembob's ("wife") investment account to replace funds he removed without her permission or knowledge, was a gift between spouses and wife's separate property; erred in ruling restricted stock shares received by husband in 2008 and 2009 pursuant to the Restricted Stock Award Agreement with husband's employer were marital property; erred in vacating a protective order against disclosure by either party of documents acquired during the divorce; erred in vacating its prior order sealing the court file; and erred in awarding wife $10,000 toward attorney's fees and costs at trial. Wife also seeks an award of her attorney's fees and costs on appeal. For the following reasons, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.
BACKGROUND
On appeal, "[w]e review the evidence in the light most favorable to wife, the party prevailing below and grant all reasonable inferences fairly deducible therefrom." Anderson v. Anderson, 29 Va.App. 673, 678, 514 S.E.2d 369, 372 (1999). The evidence established that the parties married on June 10, 1995 and separated on January 20, 2007. Three children were born of the marriage, ages nine, five, and one at the time the parties separated. The parties agreed that wife would be the children's primary caregiver while husband supported the family financially.
Wife's father and brother were financial advisors employed by Scott and Stringfellow. In 1999, husband joined wife's father and brother at Scott and Stringfellow as a financial advisor. Husband became a licensed financial advisor in February 2000.
In February 2000, husband, unbeknown to wife or her father, named himself manager of wife's personal investment account ("Raymond James account").[1] At that time, wife's account had a value of $61,807.11. In 2001, when wife learned of the change in the management of her account, husband had depleted that fund to $1,495.89 as a result of his unsuccessful stock trading.
In 2004, Towne Bank negotiated a contract with wife's father, brother, and husband to purchase their partnership. As a result of this purchase and pursuant to an employment contract with Towne Bank, they each received $450,000. For tax reasons, wife's brother and husband negotiated with Towne Bank to receive their respective shares of the purchase price in a partial cash payment, *195 with payment of the balance in Towne Bank stock pursuant to the Restricted Stock Award Agreement. Under that agreement, husband received 12,264 shares of restricted stock in Towne Bank. The agreement provided that 2,452 shares would vest to husband on January 30, 2005, and for the next 4 years, 2,453 shares would vest on each January 30th until the final vesting date of January 30, 2009. After the first shares vested, husband sold all 2,452 shares for approximately $75,000.
In March 2006, wife discovered that husband held an undisclosed credit card. She also discovered he carried undisclosed charges on an additional credit card. He had a total balance due of approximately $34,000 on the two cards. Thereafter, wife, husband, and wife's brother met to assess the parties' finances and to create a plan to pay down his credit card debt. During that meeting, wife learned that husband had lost approximately $50,000 received from his sale of the 2005 vesting of his Towne Bank stock "in the market." Husband then informed her, for the first time, that he had joined a country club, which had an initiation fee of $5,000, and a $334 monthly membership fee. Husband also told wife that he had $25,000 in a previously undisclosed personal checking account. The record does not reveal the source of the funds in that account.
As a result of that meeting, husband agreed to take a leave of absence from the country club. The parties agreed to use the proceeds of the sale from the 2006 vesting of Towne Bank stock to pay off his credit card debts. Husband also agreed to put
$25,000 back into [wife's] account as a way to kind of safeguard so he wouldn't feel tempted to trade that money in the stock market or shuffle it around to pay credit card bills that [she] didn't know about. So it was put away for safekeeping in an effort [for husband] to rebuild trust with [wife].
On May 2, 2006, husband deposited a total of $37,000 into wife's Raymond James account. The $37,000 check was drawn on a Towne Bank account in husband's name. Husband testified that $25,000 came out of a BB & T account held in his name and $12,000 from another unspecified account.
Following the parties' separation on January 20, 2007, wife learned that husband had a separate post office box that he had maintained since 2003. She also discovered that he had obtained an unsecured loan from Towne Bank for $81,000 in April 2006.
An ore tenus hearing was held on October 8-9, 2008. The trial court entered its final decree of divorce on December 12, 2008. It "awarded" the Raymond James account to wife as her separate property, finding husband's $37,000 deposit into that account consisted of marital funds and was a "gift." It also ordered husband to pay $10,000 toward wife's attorney's fees and costs incurred at trial. It found all 12,264 shares of restricted stock received as part of husband's employment with Towne Bank to be marital property.
ANALYSIS
On appeal, "[a] decision regarding equitable distribution rests within the sound discretion of the trial court and will not be disturbed unless it is plainly wrong or without evidence to support it." Holden v. Holden, 31 Va.App. 24, 26, 520 S.E.2d 842, 844 (1999). "`Unless it appears from the record that the trial judge has not considered or has misapplied one of the [equitable distribution] statutory mandates, this Court will not reverse on appeal.'" Id. at 27, 520 S.E.2d at 844 (quoting Ellington v. Ellington, 8 Va.App. 48, 56, 378 S.E.2d 626, 630 (1989)).
I. Raymond James Account
Husband contends the trial court erred "in ruling that funds [he] deposited in the Raymond James account as a gift between spouses during the marriage were [wife's] separate property." He further contends that the trial court erred in finding the $37,000 he deposited into that account was a gift because it is "contradictory to the statutory definitions of separate and marital property."
The trial court gave no basis for its determination that husband's deposit, of what it found to be marital funds, into the Raymond *196 James account was a gift. Moreover, the record is silent as to whether husband retained any access to that account after he deposited the $37,000, or whether he intended to relinquish all title and interest to those funds, or whether the transfer of those funds was unconditional. Husband testified that he deposited the $37,000 into wife's separate pre-marital account "as a way to kind of safeguard so he wouldn't feel tempted to trade that money in the stock market or ... to pay credit card bills ... [that] it was put away for safekeeping." The record is unclear as to whether the trial court found the transfer of the $37,000 in marital funds into the Raymond James account transmuted the funds into wife's separate property pursuant to Code § 20-107.3(A)(3)(d), or found it to be marital property which it "awarded" to wife as part of its equitable distribution award.
Accordingly, we remand to the trial court for clarification of whether it found the Raymond James account to be wife's separate property, not subject to equitable distribution, or whether it classified that account as marital property which it distributed to wife. The final decree simply reflects that the trial court "awarded" that account to wife.
II. Towne Bank Stock
Husband also contends the trial court erred in finding that the 2008 and 2009 shares of Towne Bank stock were marital property. He contends those shares had not yet vested pursuant to his employment agreement at the time the parties separated and, therefore, were his separate property.
"Generally, the character of property at the date of acquisition governs its classification pursuant to Code § 20-107.3." Stratton v. Stratton, 16 Va.App. 878, 881, 433 S.E.2d 920, 922 (1993).
All property including that portion of pensions, profit-sharing or deferred compensation or retirement plans of whatever nature, acquired by either spouse during the marriage, and before the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent, is presumed to be marital property in the absence of satisfactory evidence that it is separate property.
Code § 20-107.3(A)(2).
The record shows that, as part of his agreement with Towne Bank, husband was to receive $450,000 from that financial institution. Rather than accepting the full amount in cash, he entered into a "Restricted Stock Award Agreement" with the bank. That agreement awarded husband 12,264 shares of restricted stock. It specifically provided that the "[s]hares awarded ... shall vest in annual increments beginning on January 30, 2005, in accordance with the following schedule (the first vesting date of January 30, 2005 and each subsequent January 30th up to and including January 30, 2009 shall be a Vesting Date ...)." The agreement also provided that, while husband could not transfer the shares until they "vested," he was entitled to receive dividends and had full voting rights as to those shares. However, the agreement provided that if husband's employment was terminated "for any reason other than retirement, death, or Disability ... before the Vesting Dates ... all Shares that are not then vested shall be forfeited."
Because the vesting of the 2008 and 2009 restricted stock shares were conditioned on husband's continued employment, his right to these shares did not vest until after the parties' separation on January 20, 2007. Accordingly, the trial court erred in determining those shares were marital property. See Code § 20-107.3(A)(2); Cirrito v. Cirrito, 44 Va.App. 287, 605 S.E.2d 268 (2004) (holding funds received by husband, consistent with non-compete agreement signed before marriage were marital funds because right to receive those funds was contingent on husband's compliance with agreement which husband fulfilled while married).
We conclude that the trial court erred in finding that, pursuant to the terms of the stock agreement, husband acquired all 12,264 shares of Towne Bank stock prior to the separation of the parties on January 20, 2007, and that the shares received in 2008 and 2009 were marital property.
*197 III. Protective Order
Husband also contends the trial court erred in its final decree in vacating its protective order, entered under Rule 4:9 to facilitate discovery, which prohibited either party from divulging any information or documents provided during the divorce proceedings. Husband presents no legal authority in his brief to support his argument that the trial court erred. The protective order was entered to facilitate the discovery process because husband refused to provide responses to discovery requests.
Rule 5A:20(e) provides, in part, that the opening brief shall include "[t]he principles of law, the argument, and the authorities relating to each question presented." "`Statements unsupported by argument, authority, or citations to the record do not permit appellate consideration.'" Parks v. Parks, 52 Va.App. 663, 664, 666 S.E.2d 547, 548 (2008) (quoting Cirrito, 44 Va.App. at 302 n. 7, 605 S.E.2d at 275 n. 7). The Supreme Court concluded that "when a party's `failure to strictly adhere to the requirements of Rule 5A:20(e)' is significant, `the Court of Appeals may ... treat a question presented as waived.'" Parks, 52 Va.App. at 664, 666 S.E.2d at 548 (quoting Jay v. Commonwealth, 275 Va. 510, 520, 659 S.E.2d 311, 317 (2008)). "If the parties believed that the circuit court erred, it was their duty to present that error to [the Court of Appeals] with legal authority to support their contention." Fadness v. Fadness, 52 Va.App. 833, 851, 667 S.E.2d 857, 866 (2008). Because husband provides no legal authority in his brief to support his argument, his claim that the trial court erred in vacating its earlier order prohibiting either party from divulging information or documents acquired during the divorce is waived under Rule 5A:20(e).
IV. Sealed Court Records
Husband also contends the trial court erred in vacating its order sealing the trial court record to protect financial disclosures of the parties made part of the record and the personal and professional privacy of the parties. We find no error on the part of the trial court in unsealing the trial record.
Code § 17.1-208 provides, in part, "Except as otherwise provided by law, any records and papers of every circuit court that are maintained by the clerk of the circuit court shall be open to inspection by any person." Code § 20-124 provides that upon motion of a party in a divorce action, a trial court may order all or part of the record sequestered. Husband argues that once the trial court sequestered the record pursuant to Code § 20-124, it must remain sealed except to the parties and to those designated by the trial court. He further contends that the trial court exceeded its powers under Code § 20-124 in vacating its own order but provides no authority for that proposition other than Boone v. City of Suffolk, 79 F.Supp.2d 603 (E.D.Va.1999) (involving unsealing settlement agreement under Federal Rules of Civil Procedure), which we conclude is inapplicable here.
Husband argues that once the record is sealed, it can only be unsealed piecemeal pursuant to Code § 20-124. However, "the desire of the litigants [to seal the record of the trial court proceedings] is not sufficient reason to override the presumption of openness. Nor do we believe that risks of damage to professional reputation, emotional damage, or financial harm, stated in the abstract, constitute sufficient reasons to seal judicial records." Shenandoah Publishing House, Inc. v. Fanning, 235 Va. 253, 259, 368 S.E.2d 253, 256 (1988); see also Perreault v. Free Lance-Star, 276 Va. 375, 392, 666 S.E.2d 352, 361 (2008) (holding records in wrongful death case should be unsealed where parties' fears of "emotional damage or financial harm when stated `in the abstract, [do not] constitute sufficient reasons to seal judicial records'" (alteration in original) (quoting Shenandoah Publishing, 235 Va. at 259, 368 S.E.2d at 256)).[2]
The order sealing the record recites the trial court did so after consideration of husband's motion. However, wife's written motion *198 to vacate the order, made a part of the record, recites that she agreed to have the record sealed because husband refused to respond to discovery requests under Rule 4:9. Husband's written response to that motion recites that, because the record was sealed, he "conducted himself accordingly" during the discovery phase and trial.
Here, the information husband does not want publicly exposed relates to certain decisions made by him during his employment. Husband's undefined concern for his professional reputation does not rebut the presumption of openness of judicial records. See Perreault, 276 Va. at 391-92, 666 S.E.2d at 361; Shenandoah Publishing, 235 Va. at 259, 368 S.E.2d at 256. Other states have treated the presumption of openness attendant to court records similarly. See Burkle v. Burkle, 135 Cal.App.4th 1045, 37 Cal.Rptr.3d 805, 819 (2006) ("Indeed, the issues distinguishing divorce cases from other civil cases such as psychological evaluations in child custody disputes and the likeare often the subject of statutory exceptions to the general rule of public access, in which the Legislature has already engaged in the necessary balancing of privacy rights and public access rights. Nothing about these exceptions contradicts the conclusion that both historical tradition and the institutional value of open proceedings mandate a presumption of openness in divorce proceedings just as in other civil cases."); In re Berg, 152 N.H. 658, 886 A.2d 980 (2005) (sealing of children's therapy records from father's view in contentious custody proceeding warranted to protect welfare of children); Douglas v. Douglas, 146 N.H. 205, 772 A.2d 316, 318 (2001) (holding trial court "properly balanced the parties' competing interests during an in camera hearing and ordered the financial affidavits be made public" by ordering certain information, i.e., social security numbers, redacted); Smith v. Smith, 379 N.J.Super. 447, 879 A.2d 768, 774 (Ch. Div.2004) (holding "[t]he desire of movants to preserve their reputations, and to prevent the dissemination of what may prove at the end of trial to be unsupported innuendo, is entirely understandable" but insufficient to overcome the "strong presumption of open judicial proceedings"); Thomas v. Thomas, 128 N.M. 177, 991 P.2d 7, 14 (Ct.App.1999) (holding husband's motion to seal failed to show that wife's "outrageous, unsubstantiated allegations" against him constituted an "extraordinary case" warranting sealing entire record); In re Marriage of Treseler, 145 Wash.App. 278, 187 P.3d 773, 776 (2008) (holding husband failed to show compelling need for sealing record to overcome the presumption of openness because "`[j]ustice in all cases shall be administered openly'" (alteration in original) (quoting Wash. Const. art. I, § 10)), review denied, 165 Wash.2d 1026, 203 P.3d 381 (2009).
Based on the record on appeal, we conclude the trial court did not abuse its discretion when it vacated its earlier order sealing the entire record.
V. Attorney's Fees in the Trial Court
Husband contends the trial court erred in ordering him to pay a portion of wife's attorney's fees and costs incurred by her in the trial court. However, the only basis for his argument is contained in the transcript of the December 12, 2008 hearing that was not timely filed.
Rule 5A:8(a) provides that
[t]he transcript of any proceeding is a part of the record when it is filed in the office of the clerk of the trial court within 60 days after entry of the final judgment. Upon a written motion filed within 60 days after entry of the final judgment, a judge of the Court of Appeals may extend this time for good cause shown.
"If ... the transcript is indispensable to the determination of the case, then the requirements for making the transcript a part of the record on appeal must be strictly adhered to. This Court has no authority to make exceptions to the filing requirements set out in the Rules." Turner v. Commonwealth, 2 Va.App. 96, 99, 341 S.E.2d 400, 402 (1986).
Here, husband did not request, nor did the Court grant, an extension of time for filing the transcript of the December 12, 2008 hearing. Because the arguments raised by husband are wholly contained within the untimely-filed transcript and are indispensable *199 to the determination of this issue, this question is waived on appeal.
VI. Attorney's Fees on Appeal
Wife also seeks an award of her attorney's fees and costs incurred on appeal.
"The rationale for the appellate court being the proper forum to determine the propriety of an award of attorney's fees for efforts expended on appeal is clear. The appellate court has the opportunity to view the record in its entirety and determine whether the appeal is frivolous or whether other reasons exist for requiring additional payment."
Rice v. Rice, 49 Va.App. 192, 204, 638 S.E.2d 702, 708 (2006) (quoting O'Loughlin v. O'Loughlin, 23 Va.App. 690, 695, 479 S.E.2d 98, 100 (1996)). Here, husband substantially prevailed on appeal. We find no reason to award wife attorney's fees and costs on appeal and deny her request.
CONCLUSION
For the reasons set forth above, we reverse the trial court's equitable distribution award, concluding that it erred in determining that the 2008 and 2009 shares of restricted Towne Bank stock were marital property. We are unable to ascertain from the record the basis on which the trial court found husband's deposit of $37,000 into wife's pre-marriage account was a "gift," and remand for clarification as to whether the trial court found that the transfer of the $37,000 in marital funds into the Raymond James account transmuted the funds into wife's separate property pursuant to Code § 20-107.3(A)(3)(d), or if the trial court classified the account as part of the marital estate which it "awarded" to wife. As to husband's additional grounds of appeal, we affirm the trial court's judgment for the reasons stated. We deny wife's request for attorney's fees and costs incurred on appeal.
Affirmed in part, reversed in part, and remanded.
NOTES
[1] Wife's father started the Raymond James account for wife during her teenage years, prior to her marriage. The account was held at Scott and Stringfellow where wife's father managed and continued to contribute to the account.
[2] However, sequestering portions of the record containing social security numbers, account numbers, and sensitive information relative to children are common occurrences in divorce cases. | 01-03-2023 | 10-09-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261676/ | 180 Conn. 54 (1980)
STATE OF CONNECTICUT
v.
WILLIAM PICKERING
Supreme Court of Connecticut.
Argued December 13, 1979.
Decision released March 4, 1980.
COTTER, C. J., LOISELLE, BOGDANSKI, PETERS and HEALEY, JS.
*55 Richard F. Jacobson, assistant state's attorney, with whom, on the brief, were Donald A. Browne, state's attorney, and Eugene J. Callahan, assistant state's attorney, for the appellant (state).
Ralph L. Palmesi, for the appellee (defendant).
COTTER, C. J.
The issue presented to us on this appeal is whether General Statutes § 53-21 as applied to the facts of this case is so vague and indefinite as to violate the due process provisions of article first, § 8 of the state constitution and the fourteenth amendment of the federal constitution.[1]*56 The constitutionality of this statute has not been raised before in this court. As it pertains to this appeal the statute provides: "Any person who... does any act likely to impair the ... morals of any such child [under the age of sixteen years], shall be fined not more than five hundred dollars or imprisoned not more than ten years or both."[2]
The defendant was tried to a jury on a three count information charging two counts of conduct likely to impair the morals of a minor in violation of General Statutes § 53-21 and one count of sexual assault in the second degree in violation of General Statutes § 53a-71. The first count alleging a violation of § 53-21 involved conduct which occurred between February, 1975, and September, 1975, at the home of the victim's parents. The second count under § 53-21 concerned acts which took place between October, 1975, and October, 1976, at the residence of the defendant.
The jury found the defendant guilty of both counts of violating § 53-21, but were unable to reach a verdict on the sexual assault count which resulted in a declaration of a mistrial by the trial court as to that count. Immediately after the rendition of the verdict, the defendant filed numerous motions *57 all challenging the constitutionality of § 53-21; the trial court granted the defendant's motions in arrest of judgment and to dismiss the information on the grounds that § 53-21 is unconstitutionally vague as applied to the facts of this case. The state requested and was granted permission to appeal the trial court's decision.
I
As a general rule, the constitutionality of a statutory provision being attacked as void for vagueness is determined by the statute's applicability to the particular facts at issue. United States v. Powell, 423 U.S. 87, 92, 96 S. Ct. 316, 46 L. Ed. 2d 228; United States v. Mazurie, 419 U.S. 544, 550, 95 S. Ct. 710, 42 L. Ed. 2d 706; United States v. National Dairy Products Corporation, 372 U.S. 29, 32-33, 83 S. Ct. 594, 9 L. Ed. 2d 561; United States v. Raines, 362 U.S. 17, 21, 80 S. Ct. 519, 4 L. Ed. 2d 524. To do otherwise, absent the appearance that the statute in question intrudes on fundamental constitutional guarantees, particularly first amendment freedoms,[3] would be to put courts in the undesirable position of considering every conceivable situation which might possibly arise in the application of complex legislation. United States v. Raines, supra; Barrows v. Jackson, 346 U.S. 249, *58 256, 73 S. Ct. 1031, 97 L. Ed. 1586. The delicate power of deciding that legislation is unconstitutional would be exercised by adjudicating the rights of parties not before the court. Hence, that a statutory provision may be of questionable applicability in speculative situations is usually immaterial if the challenged provision applies to the conduct of the defendant in the case at issue. United States v. Petrillo, 332 U.S. 1, 7, 67 S. Ct. 1538, 91 L. Ed. 1877.
From the evidence presented concerning the first count in the indictment charging a violation of § 53-21 the jury could have found: The victim, the defendant's daughter, was born on April 12, 1963. On several Saturday mornings between February and April, 1975, while the defendant was living in the same apartment with his daughter, he sexually molested her in his room at a time when the victim's mother habitually went shopping. We do not think it appropriate in this opinion to delineate in detail the full extent of the defendant's bodily contact with and lewd touching of his daughter which was described with specificity by her to the jury. From April of 1975 until the defendant moved from the address named in the first count of the information in August of 1975, the defendant repeatedly came *59 into the victim's room when no one else was up and about and attempted to have sexual intercourse with the victim.
The evidence presented on the second count charging a violation of § 53-21 concerned events after the defendant moved from the address named in the first count of the information to a dwelling named in the second count of the information in September of 1975. The victim tried to avoid going to her father's and when she did go she tried to bring someone along so that her father's actions might be thwarted. Nonetheless, on some occasions at her father's while her younger brother was left watching television downstairs, the victim was asked upstairs and the defendant would attempt to have sexual intercourse with her. In October of 1975, the defendant took a Polaroid picture of the victim naked in his upstairs bedroom. Also on about eight or nine occasions over a period of four months the defendant sketched the victim nude in his apartment after initially stating he would pay her $5 for each picture. Between July, 1976 and October 26, 1976, the defendant on several occasions sexually abused the victim. On October 26, 1976, the defendant took numerous lurid pictures of the victim while she was naked and again attempted sexual intercourse. The victim told her mother of her father's actions the next day.
II
A long line of United States Supreme Court decisions have established a basic principle to be considered when a statute is under attack as void for vagueness. It may be described as a fair warning principle which mandates that as a matter of due process a penal statute must be sufficiently definite *60 to enable a person to know what conduct he must avoid. "That the terms of a penal statute creating a new offense must be sufficiently explicit to inform those who are subject to it what conduct on their part will render them liable to its penalties, is a well-recognized requirement, consonant alike with ordinary notions of fair play and the settled rules of law. And a statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law." Connally v. General Construction Co., 269 U.S. 385, 391, 46 S. Ct. 126, 70 L. Ed. 322. Accord, Hynes v. Mayor of Oradell, 425 U.S. 610, 620, 96 S. Ct. 1755, 48 L. Ed. 2d 243; Rose v. Locke, 423 U.S. 48, 49, 96 S Ct. 243, 46 L. Ed. 2d 185; United States v. Mazurie, 419 U.S. 544, 553, 95 S. Ct. 710, 42 L. Ed. 2d 706; Smith v. Goguen, 415 U.S. 566, 572 n.8, 94 S. Ct. 1242, 39 L. Ed. 2d 605; United States v. Harriss, 347 U.S. 612, 617, 74 S. Ct. 808, 98 L. Ed. 989; Winters v. New York, 333 U.S. 507, 515-16, 68 S. Ct. 665, 92 L. Ed. 840; Lanzetta v. New Jersey, 306 U.S. 451, 453, 59 S. Ct. 618, 83 L. Ed. 888. See generally note, "The Void-For-Vagueness Doctrine in the Supreme Court," 109 U. Pa. L. Rev. 67 (1960); comment, "Recent Supreme Court Developments of the Vagueness Doctrine," 7 Conn. L. Rev. 94 (1974). See also Stolberg v. Caldwell, 175 Conn. 586, 610-11, 402 A.2d 763; State v. Chetcuti, 173 Conn. 165, 167, 377 A.2d 263; Mitchell v. King, 169 Conn. 140, 142-43, 363 A.2d 68.
This notion of fair warning is intended to ensure that vague laws do not become a trap for the innocent. Hynes v. Mayor of Oradell, supra, 622; Grayned v. City of Rockford, 408 U.S. 104, 108, *61 92 S. Ct. 2294, 33 L. Ed. 2d 222; Papachristou v. City of Jacksonville, 405 U.S. 156, 162-63, 92 S. Ct. 839, 31 L. Ed. 2d 110. As Mr. Justice Holmes explained in McBoyle v. United States, 283 U.S. 25, 27, 51 S. Ct. 340, 75 L. Ed. 816: "Although it is not likely that a criminal will carefully consider the text of the law before he murders or steals, it is reasonable that a fair warning should be given to the world in language that the common world will understand, of what the law intends to do if a certain line is passed. To make the warning fair, so far as possible the line should be clear."
It has been recently stated that "[a]ll the Due Process Clause requires is that the law give sufficient warning that men may conduct themselves so as to avoid that which is forbidden." Rose v. Locke, supra, 50. Thus, a penal statute may survive a vagueness attack solely upon a consideration of whether it provides fair warning.[4]United States *62 v. Powell, supra; Rose v. Locke, supra; Colten v. Kentucky, 407 U.S. 104, 92 S. Ct. 1953, 32 L. Ed. 2d 584; State v. Chetcuti, 173 Conn. 165, 166-67, 377 A.2d 263. Since we decide that an innocent defendant has not been denied fair warning, the words of General Statutes § 53-21 at issue avoid unconstitutional vagueness.
III
If the meaning of a statute can be fairly ascertained a statute will not be void for vagueness since "[m]any statutes will have some inherent vagueness, for `[i]n most English words and phrases there lurk uncertainties.' Robinson v. United States, 324 U.S. 282, 286, 54 S. Ct. 666, 89 L. Ed. 944." Rose v. Locke, supra, 49-50. References to judicial opinions involving the statute, the common law, legal dictionaries, or treatises may be necessary to ascertain a statute's meaning to determine if it *63 gives fair warning. Id. Thus, prior decisions of this court which delineate a statute's reach can constitute sufficient notice of the acts prohibited to render the statute constitutional as applied to the particular facts of a case. See Colten v. Kentucky, supra; Musser v. Utah, 333 U.S. 95, 97, 68 S. Ct. 397, 92 L. Ed. 562. See also Wainwright v. Stone, 414 U.S. 21, 23, 94 S. Ct. 190, 38 L. Ed. 2d 179. ("When a state statute has been construed to forbid identifiable conduct so that `interpretation by [the state court] puts these words in the statute as definitely as if it had been so amended by the legislature [Winters v. New York, 333 U.S. 507, 514, 68 S. Ct. 665, 92 L. Ed. 840],' claims of impermissible vagueness must be judged in that light." In Wainwright the Florida court had previously held that the acts committed were covered by the statute which proscribed "crime against nature.")
In the present case, the meaning of the words "acts likely to impair the ... morals of any child [under the age of sixteen years]" have been repeatedly and explicitly elucidated through several opinions of this court. In State v. Coulombe, 143 Conn. 604, 124 A.2d 518 (1956), the offense involved the touching of the private parts of a nine year old girl. The defendant had "`pulled up [her] dress and put down [her] pants ... and then put his hands in [her] pants ... [b]etween her'" and he had "touched her flesh and moved his hands back and forth for a short while, hurting her." Id., 605-606. In State v. Anderson, 152 Conn. 196, 197, 205 A.2d 488 (1964), the defendant performed fellatio on the victim, a ten year old boy, who cried when subjected to this act. In a number of other cases involving the statutory words at issue in § 53-21, this court's opinions disclose that the conduct in *64 question concerned indecent acts perpetrated on the victim. See State v. Silver, 139 Conn. 234, 237, 93 A.2d 154 (1952); State v. Blake, 157 Conn. 99, 100, 249 A.2d 232 (1968); State v. Gelinas, 160 Conn. 366, 367, 279 A.2d 552 (1971). Furthermore, in State v. Dennis, 150 Conn. 245, 250, 188 A.2d 65 (1963), this court defined the parameters of the risk of injury statute after discussing its history and derivation: "The apparent legislative purpose in combining the two parts in a single section was to proscribe two general types of behavior likely to injure physically or to impair the morals of a minor under sixteen years of age: (1) deliberate indifference to, acquiescence in, or the creation of situations inimical to the minor's moral or physical welfare; see State v. Smith, 149 Conn. 487, 181 A.2d 446; and (2) acts directly perpetrated on the person of the minor and injurious to his moral or physical well-being. See State v. Coulombe, 143 Conn. 604, 124 A.2d 518; State v. Silver, 139 Conn. 234, 93 A.2d 154."
In light of this extensive judicial gloss on the words "act likely to impair the morals of any child [under the age of sixteen years]," if a person were to consult the statute and the cases, they would give fair warning that the acts the defendant perpetrated in relation to the first count were proscribed at the time he committed those acts. This court's opinions pursuant to § 53-21 make it clear that the deliberate touching of the private parts of a child under the age of sixteen in a sexual and indecent manner is violative of that statute. The conduct of the defendant during the time period encompassed by the first count involved, at the very least, deliberate touching of this nature. This is not a situation where the state is holding an individual "criminally responsible *65 for conduct he could not reasonably understand to be proscribed." United States v. Harriss, supra, 617. On the contrary, this is an instance where the statute "as authoritatively construed [applies] without question to certain activities." Smith v. Goguen, supra, 578. The defendant's "behavior rendered him a hard-core violator as to whom the statute was not vague, whatever its implications for those engaged in different conduct." Id., 577. Section 53-21 has been given a core by the opinions of this court which serve as an authoritative judicial gloss on the provision. See Freund, "The Supreme Court and Civil Liberties," 4 Vand. L. Rev. 533, 541 (1951).
The conduct of the defendant during the time period covered by the second charge also included a number of acts of deliberate touching identical in nature to those involved in the first count. Thus, this court need not decide at this point whether § 53-21 and the cases decided under it would give adequate warning that the taking of lurid naked photographs and naked sketches (with the offer of payment for each) of a twelve or thirteen year old child alone was proscribed by § 53-21 at the time those acts were committed.[5] The taking of the photographs and the sketches are, in this instance, only additional, superfluous facts which were unnecessary to the jury's reaching a verdict of guilty on the second count in light of their guilty verdict on *66 the first count. The acts of deliberate touching involved in the second count were a sufficient basis for the jury to conclude the defendant was guilty of the second count and this court need not address the defendant's illogical contentions that the defendant may have been found guilty in the second count on a possibly unconstitutional ground (the taking of sketches and photographs) when a constitutional ground (the sexual acts of touching) existed that the jury had already necessarily relied on in reaching a verdict on the first count. Thus, as to the second count charged, the defendant is also, in the words of Smith v. Goguen, supra, 577, a "hard-core violator" of § 53-21, and as such the statute may constitutionally be applied to him.
There is error, the judgment of the trial court is set aside, the jury verdict is reinstated, and the case is remanded with direction to render judgment that the defendant is guilty and that sentence be imposed.
In this opinion the other judges concurred.
NOTES
[1] The due process provisions of the federal and Connecticut constitutions have a common meaning so as to permit us to treat the questions on appeal as a single issue. Miller v. Heffernan, 173 Conn. 506, 516, 378 A.2d 572; Roundhouse Construction Corporation v. Telesco Masons Supplies Co., 170 Conn. 155, 157, 365 A.2d 393; State v. Kyles, 169 Conn. 438, 442, 363 A.2d 97.
[2] General Statutes § 53-21 reads in full: "INJURY OR RISK OF INJURY TO, OR IMPAIRING MORALS OF, CHILDREN. Any person who wilfully or unlawfully causes or permits any child under the age of sixteen years to be placed in such a situation that its life or limb is endangered, or its health is likely to be injured, or its morals likely to be impaired, or does any act likely to impair the health or morals of any such child, shall be fined not more than five hundred dollars or imprisoned not more than ten years or both."
[3] In the cases where such first amendment guarantees as free speech and assembly are at issue, an indefinite statute may impermissibly inhibit the exercise of those freedoms. "Those ... sensitive to the perils posed by ... indefinite language, avoid the risk ... only by restricting their conduct to that which is unquestionably safe. Free speech may not be so inhibited." Baggett v. Bullitt, 377 U.S. 360, 372, 84 S. Ct. 1316, 12 L. Ed. 2d 377. See also Hynes v. Mayor of Oradell, 425 U.S. 610, 620, 96 S. Ct. 1755, 48 L. Ed. 2d 243; Lewis v. New Orleans, 415 U.S. 130, 94 S. Ct. 970, 39 L. Ed. 2d 214; United States v. National Dairy Products Corporation, 372 U.S. 29, 36, 83 S. Ct. 594, 9 L. Ed. 2d 561; Winters v. New York, 333 U.S. 507, 509, 68 S. Ct. 665, 92 L. Ed. 840; note, "The Void-For-Vagueness Doctrine in the Supreme Court," 109 U. Pa. L. Rev. 67, 80 (1960). Due to this "chilling effect" which vague statutes can exert on first amendment liberties, when those freedoms are at stake, the statute's constitutionality is tested for vagueness on its face. Smith v. Goguen, 415 U.S. 566, 573, 94 S. Ct. 1242, 39 L. Ed. 2d 605; Grayned v. City of Rockford, 408 U.S. 104, 108-109, 92 S. Ct. 2294, 33 L. Ed. 2d 222; Winters v. New York, supra. Thus, in a first amendment context, a defendant may challenge the validity of a statute's application to marginal situations even though his own conduct may clearly fall within the statute's proscriptions. See note, supra, 109 U. Pa. L. Rev. 67, 97.
[4] United States Supreme Court opinions have indicated that a second principle of the void-for-vagueness doctrine is also considerednamely, whether a statute provides adequate standards for its enforcement and administration by police, prosecutors, judges and jurywhen first amendment guarantees are explicitly or potentially at issue; e.g., Grayned v. City of Rockford, 408 U.S. 104, 108, 92 S. Ct. 2294, 33 L. Ed. 2d 222; Coates v. Cincinnati, 402 U.S. 611, 614, 91 S. Ct. 1686, 29 L. Ed. 2d 214; Interstate Circuit, Inc. v. Dallas, 390 U.S. 676, 684-85, 88 S. Ct. 1298, 20 L. Ed. 2d 225; Ashton v. Kentucky, 384 U.S. 195, 200, 86 S. Ct. 1407, 16 L. Ed. 2d 469; or when the result is the striking down of a provision as void for vagueness. Smith v. Goguen, 415 U.S. 566, 94 S. Ct. 1242, 39 L. Ed. 2d 605; Papachristou v. City of Jacksonville, 405 U.S. 156, 92 S. Ct. 839, 31 L. Ed. 2d 110.
When the statute threatens such a fundamental right as freedom of speech under the first amendment, the void-for-vagueness doctrine "demands a greater degree of specificity than in other contexts." Smith v. Goguen, supra, 573. See also Hynes v. Mayor of Oradell, 425 U.S. 610, 620, 96 S. Ct. 1755, 48 L. Ed. 2d 243; Smith v. California, 361 U.S. 147, 151, 80 S. Ct. 215, 4 L. Ed. 2d 205, reh. denied, 361 U.S. 950, 80 S. Ct. 399, 4 L. Ed. 2d 383. This requirement of more specificity involves a testing of a statute's validity on its face; see footnote 3 supra; as well as an examination of whether reasonably definite standards are provided by a statute for its application.
Relatively recent opinions of the United States Supreme Court such as Smith v. Goguen, supra (where the majority eschews a potential first amendment issue, see concurring opinion of White, J., at 583), and Papachristou v. City of Jacksonville, supra, suggest that a two part inquiry is indicated if there is an initial determination that a statute does not provide fair warning. But see Lanzetta v. New Jersey, 306 U.S. 451, 59 S. Ct. 618, 83 L. Ed. 888 (striking down statute solely on principle of lack of fair warning). This further inquiry in cases where fair warning is not found would comport with the well-settled doctrine of the Supreme Court and this court that a strong presumption of constitutionality attaches to acts of a legislature. See, e.g., United States v. National Dairy Products Corporation, 372 U.S. 29, 32, 83 S. Ct. 594, 9 L. Ed. 2d 561; Jordan v. DeGeorge, 341 U.S. 223, 231, 71 S. Ct. 703, 95 L. Ed. 886, reh. denied, 341 U.S. 956, 71 S. Ct. 1011, 95 L. Ed. 1377; United States v. Petrillo, 332 U.S. 1, 7, 67 S. Ct. 1538, 91 L. Ed. 1877; Eielson v. Parker, 179 Conn. 552, 557-58, 427 A.2d 814; State v. Darden, 171 Conn. 677, 678, 372 A.2d 99; State v. Warren, 169 Conn. 207, 217, 363 A.2d 91.
[5] It is noteworthy, however, that two months after the last of the acts in question in the second count took place, this court issued its opinion in State v. Hauck, 172 Conn. 140, 374 A.2d 150. In Hauck, supra, this court upheld a judgment of guilty of two counts of injury or risk of injury to a minor child in violation of § 53-21; the conduct primarily involved in the case was the defendant's taking of nude photographs of a student after promising her a "C" grade in science. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320794/ | 104 S.E.2d 829 (1958)
248 N.C. 678
J. W. GRIFFIN
v.
G. L. TURNER and wife, Amelia S. Turner; Willie E. Turner and wife, Ethel W. Turner; E. R. Turner (unmarried); Odette T. Webb and husband, L. G. Webb; H. D. Turner and wife, Maude B. Turner; Olla T. Spruill and husband, Phillip Spruill; Bessie T. Hyatt and husband, T. D. Hyatt; C. P. Turner and wife, Maidie Turner.
No. 28.
Supreme Court of North Carolina.
September 17, 1958.
*831 LeRoy & Goodwin, Elizabeth City, for plaintiff appellant.
W. S. Privott, Edenton, for defendant appellee L. G. Webb.
Worth & Horner, Elizabeth City, for all defendants other than L. G. Webb.
RODMAN, Justice.
Plaintiff offered evidence sufficient to establish the execution of the writings of 6 April and 11 April, a demand for performance, and defendants' refusal to convey. He likewise offered evidence tending to show that subsequent to the institution of the action defendants had cut and removed timber. No evidence was offered to show that the defendants, other than L. G. Webb, W. E. Turner, and G. L. Turner, authorized the execution of the paper writings on which plaintiff relies.
Plaintiff, in his brief filed here, concedes that the judgment of nonsuit is correct as to the defendants other than the defendants Webb and W. E. and G. L. Turner. This concession, correctly made, leaves for decision these questions: (1) Are defendants Webb and Turner liable for breach of an implied warranty of authority to convey the interest of their codefendants, and (2) Is plaintiff entitled to enforce the contract as to the shares of defendants W. E. and G. L. Turner.
The answer to the first question is found by an examination of the writings on which plaintiff predicates his right to relief. These writings show that Webb was acting as agent for the administrators. It was the administrators who appointed Webb as their agent. In the writing of 6 April there is nothing which purports to assert authority to act for the heirs individually. Plaintiff knew that Webb was acting only as agent for the administrators. He knew that the paper which appointed Webb as agent came from the makers as administrators and not as agents for the heirs.
Title to real estate, upon the death of an owner, vests in the heirs and not in the administrators. The personal representative has no power as such to convey. Parker v. Porter, 208 N.C. 31, 179 S.E. 28; Floyd v. Herring, 64 N.C. 409. Plaintiff was aware of this fact when he paid his $10 to Webb. The receipt given by Webb calls for payment of the balance of the purchase price when good and sufficient deed was tendered by the heirs at law and not by the administrators for whom Webb acted.
Plaintiff does not assert that any express warranty of authority existed to bind the heirs. His position is that when one contracts as an agent to convey land, the law will imply a warranty of authority to act. The law does imply a warranty when the party with whom the contract is made does not know the true facts and does not know that in truth and in fact the person sought to be bound is lacking in authority. When, however, the person who claims to be protected knows that the person in whose name and behalf the contract is made in fact has no authority to act, the law will not imply a warranty to act. It would be palpably unjust to create a fiction for the benefit of one who acted with knowledge of facts which are at complete variance with the proposed fiction. Hence, we have heretofore held that when one contracts as administrator to convey land, who has no personal right therein, he is not liable on an implied warranty because the heirs at law are not bound by the contract. Hedgecock v. Tate, 168 N.C. 660, 85 S.E. 34, Ann.Cas.1916D, 449. For the same reason a guardian who contracts to convey the property of his ward is not liable on an implied warranty of authority. Leroy v. Jacobosky, 136 N.C. 433, 48 S.E. 796, 67 L.R.A. 977. These cases but illustrate the principle which finds full support in numerous other cases. Joyner v. Crisp, 158 N.C. 199, 73 S.E. 1004; Love v. Harris, 156 N.C. *832 88, 72 S.E. 150, 36 L.R.A., N.S., 927; Hite v. Goodman, 21 N.C. 364; Potts v. Lazarus, 4 N.C. 180; Fuller v. Melko, 5 N.J. 554, 76 A.2d 683, 3 C.J.S. Agency § § 211, 212, pp. 117 and 118; 2 Am.Jur. 249.
Application of the law to the facts of this case brings a negative answer to the question propounded with respect to the liability of defendants on the asserted implied warranty to represent the heirs.
This leaves for determination the force and effect of the writings with respect to the shares of the defendants W. E. Turner and G. L. Turner.
As noted above, the reason for denying the implication of a warranty is knowledge that the contracting party has neither right nor the power to act, but the law is well settled that when one enters into a contract it will be presumed that he did so in good faith and will, so far as lies in his power, comply with his contract.
So when one purporting to act in a representative capacity contracts to convey, the law will imply that so far as his individual interest in the property is concerned he has authority to act in his representative capacity. Woody v. Pickelsimer, 248 N.C. 599, 104 S.E.2d 273, illustrates the rule. If he would exclude individual responsibility he should do so by clear and express language. Bessire & Co. v. Ward, 209 N.C. 266, 183 S.E. 534; Banking Co. v. Morehead, 116 N.C. 410, 21 S.E. 190; Banking Co. v. Moorehead, 116 N.C. 413, 21 S.E. 191.
It is said in 24 C.J. 153: "In the absence of some power contained in the will, or of authority derived from statute or an order of court, neither an executor nor an administrator has any power whatever to sell the real estate of a decedent. An unauthorized conveyance may be enjoined at the suit of heirs or devisees, and a deed made by the representative without authority is void, except as it may operate to pass his own interest in the land as heir or devisee, and cannot affect the rights of other heirs or devisees who seasonably undertake to assert such rights." (Italics supplied.) See also 33 C.J.S. Executors and Administrators § 269, pp. 1285, 1286.
"The deeds to the railroad company, under which complainant claims, were executed by three executors and they contained covenants of warranty by them in their representative capacities. One of the executors was the widow of the deceased owner of the lands and under the will she took a half interest therein. The deeds were void as executors' conveyances because no authority to make them had been procured from the court having jurisdiction; but they nevertheless operated as conveyances of the widow's individual interest." Rannels v. Rowe, 8 Cir., 145 F. 296, 298.
In Parks v. Knox, 61 Tex. Civ. App. 493, 130 S.W. 203, 209, the court said: "But assuming that the conveyance of Boyd and Mrs. Parks, in which they undertook to transfer the land in controversy to Beard and Ezell, was void in so far as it operated upon any title held by them as executors of the estate of W. S. Parks, it does not follow that it was ineffectual for any purpose. Mrs. Parks was not only an executrix, but a joint owner of the land described in her deed; and while she might not be able to transfer any title, acting in her fiduciary capacity, because she had none, her deed would nevertheless invest her grantees with such interest as she owned in her individual right."
Moffitt v. Rosencrans, 136 Cal. 416, 69 P. 87, involved the validity of a lease and option executed by plaintiff as executrix. The court said: "* * * plaintiff's testator died seised of the land in question, leaving a will under which she is the * * * sole beneficial owner of the land in question, and, as she was not empowered by the court to sell the land, her contract with the defendant was binding on her personally."
*833 Dial v. Martin, Tex.Civ.App., 37 S.W.2d 166, 168; Shaw v. Clements, 1 Call., Va., 429; Phillips v. Hornsby, 70 Ala. 414; Millican v. McNeill, 102 Tex. 189, 114 S.W. 106, 21 L.R.A.,N.S., 60, furnish other illustrations of the application of this salutary rule.
On the facts developed at the trial defendants W. E. Turner and G. L. Turner are, as to their respective one-eighth interest, bound by their contract.
As to the defendants W. E. Turner and G. L. Turner: Reversed.
As to remaining defendants: Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320807/ | 214 Ga. 170 (1958)
104 S.E.2d 87
UNITED JEWELERS, INC., et al.
v.
EMANUEL BURTON DIAMOND COMPANY.
20017.
Supreme Court of Georgia.
Argued April 15, 1958.
Decided May 7, 1958.
Rehearing Denied June 4, 1958.
*171 Frank E. Blankenship, Augustine Sams, Grigsby H. Wotton, for plaintiffs in error.
Marvin P. Nodvin, contra.
HEAD, Justice.
1. Where separate judgments are rendered and excepted to, the only judgment which requires consideration by this court is that judgment which overruled the demurrers to the petition as finally amended, and to the last amendment. "This is true for the reason that, when the original petition was amended after being demurred to, the questions raised by the first demurrer became moot, and the demurrer became extinct or nugatory, and when the petition as then amended was demurred to and again amended, the second demurrer likewise became extinct or nugatory." Holliday v. Pope, 205 Ga. 301, 308 (53 S.E.2d 350); Hunter v. Ogletree, 212 Ga. 38 (89 S.E.2d 891); Hancock v. Wilson, 214 Ga. 60 (102 S.E.2d 551).
In the present case, when the amendment to the "redrafted" petition was filed, all of the defendants, with the exception of R. M. Graves, demurred specially to the petition on the ground that it contained a misjoinder of parties defendant and of causes of action. If the defendants wanted to demur specially on the ground of misjoinder, such demurrers should have been filed to the amendment naming them as parties defendant. The amendment to the "redrafted" petition in no wise changed or added to its material allegations, and, therefore, the special demurrers on the grounds of misjoinder were not filed in time, and properly *172 should have been dismissed. Tucker v. Howard L. Carmichael & Sons, 208 Ga. 201, 207 (65 S.E.2d 909). There was no motion to dismiss, and the trial judge did not, in fact, dismiss these special demurrers, but ruled on the merits, and this being true, the plaintiff waived the time of filing. Mayo v. Owen, 207 Ga. 641, 642 (63 S.E.2d 649). The fact that the trial judge ruled on the merits of these special demurrers, rather than dismissing them, can not, however, benefit these defendants.
"There is no misjoinder of parties or of causes of action, even if the petition concerns things of a different nature against several defendants whose rights are distinct, if it sets forth one connected interest among them all, centering in the point in issue in the case." Hermann v. Mobley, 172 Ga. 380 (3) (158 S.E. 38); Goodroe v. C. L. C. Thomas Warehouse, 185 Ga. 399 (195 S.E. 199); Grant v. Hart, 192 Ga. 153, 155 (14 S.E.2d 860); Lyle v. Keehn, 195 Ga. 508, 514 (24 S.E.2d 655); Briarcliff, Inc. v. Kelley, 198 Ga. 390, 395 (31 S.E.2d 586); Williamon v. Williamon, 209 Ga. 494, 495 (3) (74 S.E.2d 71).
The petition having stated a cause of action against all of the defendants, the special demurrers on the ground of misjoinder were properly overruled, since the petition set forth a connected interest of all of the defendants in the main issue set forth.
It was not error to overrule the general demurrers of the defendants, and the written motion to dismiss in the nature of a general demurrer. The petition clearly having stated a cause of action, no error or abuse of discretion is shown in the order appointing a receiver. Code § 55-305; Crockett v. Wilson, 184 Ga. 539 (192 S.E. 19).
2. When the amendment naming R. M. Graves as a party defendant was filed in November, 1954, a rule nisi was duly issued, and this defendant filed only a general demurrer. R. M. Graves can not now complain that the amendment making him a party did not have attached thereto any process. Appearance and pleading is a waiver of the absence of process and the service thereof. Code § 81-209. Any defect as to process is waived by the filing of a general demurrer asserting that the petition sets forth no cause of action. Wilson v. City Council of Augusta, 165 Ga. 520 (141 S.E. 412); Herring v. Herring, 208 Ga. 146 (3) (65 S.E.2d 584).
*173 On February 29, 1956, the general demurrer of the defendant R. M. Graves was sustained "with leave for the plaintiff to amend the petition within 15 days from this date." No amendment was filed within the 15-day period, and no further order was entered by the court prior to an amendment filed to the petition on March 22, 1956. To this amendment R. M. Graves filed a general demurrer and motion to dismiss.
"`Where the court sustains any or all demurrers to pleading, and allows time for the filing of an amendment, such judgment or order shall not be subject to exception or review, but the court shall render a judgment on the sufficiency of the pleadings after the expiration of the time allowed for amendment which shall supersede the judgment allowing time for amendment.' Ga. L. 1952, p. 243 (Code, Ann. Supp., § 81-1001). The trial court having rendered no judgment on the sufficiency of the pleadings after the expiration of the time allowed for amendment, and after the amendment filed by the plaintiff, the ruling on the demurrers here excepted to can not be reviewed in this court. Myers v. Grant, 212 Ga. 182 (91 S.E.2d 335); Adams v. Ricks, 91 Ga. App. 494, 498 (86 S.E.2d 329); Norton v. Hamilton, 92 Ga. App. 2 (87 S.E.2d 442)." Jacoby v. Jacoby, 212 Ga. 295 (92 S.E.2d 7).
The defendant R. M. Graves having failed to apply for and procure a final order of dismissal prior to the amendment which was later offered, and to which he again demurred, he will not now be heard to complain of his own failure to apply for a proper formal order of dismissal as to him. Particularly is this true since the plaintiff could not except to the original order until a final order of dismissal was entered.
To the petition as finally amended, the defendant R. M. Graves filed only a general demurrer, wherein it is stated that he "renews each and every ground of his general and special demurrers heretofore filed." He did not file any special demurrer attacking the petition on the grounds of misjoinder of parties defendant or causes of action, and questions as to misjoinder or nonjoinder can not be made by general demurrer. Farmers & Merchants Bank of Manchester v. Gibson, 211 Ga. 270 (85 S.E.2d 513). The ruling heretofore made as to the *174 sufficiency of the petition, as amended, to state a cause of action for the relief sought, is applicable to this defendant.
Judgment affirmed. All the Justices concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1743241/ | 301 So. 2d 828 (1974)
Julius SAND and Consolidated Mutual Insurance Company, a Foreign Corporation, Appellants,
v.
Shari Anna GOLD et al., Appellees.
No. 74-664.
District Court of Appeal of Florida, Third District.
October 8, 1974.
Rehearing Denied November 5, 1974.
*829 Wicker, Smith, Pyszka, Blomqvist & Davant, Miami, for appellants.
Horton, Perse & Ginsberg, Fuller, Brumer, Moss, Cohen & Rodgers, Miami, for appellees.
Before HENDRY, HAVERFIELD and NATHAN, JJ.
PER CURIAM.
Defendant-appellants appeal a partial summary judgment as to liability in favor of the plaintiffs.
Plaintiff, Shari Gold, and defendant's daughter, Karen, both nine years, were friends. Approximately once a week plaintiff went over to Karen's house to play. Defendant had two German Shepherd dogs which often followed Karen and Shari around and on these occasions never manifested any act of meanness. On one of the occasions when plaintiff went to Karen's house, she was bitten by one of defendant's Shepherd dogs. Thereafter, plaintiff filed suit for damages against the defendant, Julius Sand. Plaintiff in her deposition testified that one of the Shepherd dogs just jumped on her for no apparent reason and started biting her. Defendant's daughter in an affidavit alleged that she was feeding the dogs when plaintiff arrived and said she wanted to feed them too and then went over and took a milk bone out of the dog's dish whereupon the dog bit her. The trial judge awarded partial summary judgment as to liability and defendants effected this interlocutory appeal therefrom.
Defendant-appellants contend there was a question of fact as to how the accident occurred and thus, it was error to find them liable. We disagree.
Subject to the following exception, a dog owner's liability for his dog biting anyone is based upon § 767.04, Fla. Stat., F.S.A.
"Provided, however, no owner of any dog shall be liable for any damages to any person or his property when such person shall mischievously or carelessly provoke or aggravate the dog inflicting such damages."
Reviewing the record in the light most favorable to the defendant, Julius Sand, we conclude that the taking of a milk bone out of the dog's dish by the minor plaintiff who wished to feed the dog would not constitute a provocation to except the defendants from liability under the above statute.
Accordingly, the partial summary judgment herein appealed is affirmed.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2271723/ | 326 S.W.3d 543 (2010)
Michael W. MURRAY, Respondent,
v.
Susan J. MURRAY, Appellant.
No. ED 94260.
Missouri Court of Appeals, Eastern District, Division Three.
November 23, 2010.
*544 Jody H. Wolff, Clayton, MO, for appellant.
Michael W. Murray, St. Louis, MO, pro se.
Before SHERRI B. SULLIVAN, P.J., CLIFFORD H. AHRENS, J., and LAWRENCE E. MOONEY, J.
PER CURIAM.
Susan Murray, n/k/a Susan May ("Mother") appeals from the judgment of the trial court denying her first amended motion for judgment of contempt against Michael Murray ("Father"). Mother raises four points on appeal.[1] We summarily deny two of these claims and find that no jurisprudential purpose would be served by an exposition of the detailed facts and law.[2] Rule 84.16(b).
Mother and Father were married on August 21, 1976, and divorced on February 26, 1998. During the course of the marriage, three children were born: Colleen, d.o.b. September 26, 1978; Heather, d.o.b. February 25, 1981; and Erin, d.o.b. December 13, 1984. At the time of the dissolution, Heather and Erin were still minors. The dissolution decree ("Dissolution Decree"), which incorporated the separation agreement of Mother and Father, provided, in part, that Father would pay child support for Heather and Erin until they were twenty-three years old, provided that they were still pursuing a post-secondary education. The Dissolution Decree also provided that Mother and Father would each pay half of the medical expenses not covered by insurance, and that Father and Mother would divide the cost of post-secondary education for the children on a 60-40 basis, unless and until Mother re-married, at which time the educational obligation *545 would become 50-50. The educational provisions were subject to several limitations, which included the following:
The maximum cost each party shall be responsible for in any given school year will be in an amount of no more than their respective percent of the cost of an education at any school the parties find mutually acceptable, but in no event, more than their respective percent of the cost of the primary state school or university (currently the University of Missouri-Columbia) in the state where the minor children may reside at the time he has been accepted.
Time passed. The children went to college. Mother remarried. Father remarried. Father did not pay for the post-secondary education of his children. After Erin turned twenty-three years old, Father sent mother a letter stating that he had overpaid child support, and that he believed that Mother owed him that excess sum. Whereupon Mother retained counsel and on February 29, 2008, filed an application for order to show cause and motion for judgment of contempt, subsequently amended. In the application/motion, Mother alleged that Father had failed and refused to pay "those sums" required for their children's post-secondary education as ordered in the Dissolution Decree, and had failed to pay her any portion of the children's uncovered medical expenses since the date the Dissolution Decree had been granted in 1998 up to the date of the filing of the application/motion. She also claimed that Father had the ability to comply with the Dissolution Decree, and that she lacked an adequate remedy at law, and accordingly requested that the trial court hold Father in contempt and order him to pay "the amounts owed" to her and her attorney's fees. Father then filed a motion to recover overpaid support and a motion to dismiss order to show cause, later followed by a motion for contempt and for sanctions. Mother in turn filed her first amended motion for order to show cause and motion for judgment of contempt ("Amended Motion").
The trial court held a hearing on all of the pending motions. Mother and Father testified, as did all of their children. Mother attempted to introduce into evidence a "tub" of purported carbon copies of her checks over the years indicating expenses that she paid for which Father was allegedly obliged to pay for the children, along with her self-created summary of the information from the carbon copies of the checks. Mother had not produced either the collection of carbon copies or the summary in response to Father's request for production of documents during discovery. The trial court excluded these items from evidence, although it did permit Mother to use them to refresh her recollection. Two exhibits, AA and MM, which related to the college expenses of Erin and Heather respectively, were admitted into evidence without any objection from Father.
The trial court issued findings of fact, conclusions of law, and its judgment on September 15, 2009. It ultimately denied Father's motion to recover "overpaid" child support, denied his motion for contempt, and denied Mother's Amended Motion.
Mother now appeals from this judgment.
Our review is governed by Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). We will sustain the trial court's judgment unless it is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or misapplies the law. Id. at 32. Dissolution decrees and the property agreements incorporated therein are enforceable like any other judgment. Booher v. Booher, 125 S.W.3d 354, 356 (Mo. *546 App.2004). This Court defers to the trial court's determinations of credibility, and views the evidence and the inferences that may reasonably be drawn therefrom in the light most favorable to the judgment. Neal v. Neal, 281 S.W.3d 330, 337 (Mo. App.2009). In reviewing bench trials, this Court will uphold the judgment of the trial court if there is any tenable basis for the result. State v. Entertainment Ventures I, Inc., 44 S.W.3d 383, 388 (Mo. banc 2001).
We will first examine Mother's second point on appeal as it is dispositive. In her second point relied on, Mother argues that the trial court misstated the law and facts in denying her Amended Motion for failure to state a claim because a paragraph of her motion "specifically requests that a sum certain be determined by the Court" and she presented evidence from which the trial court could calculate the amount due and owing, thereby stating a claim for relief.
Mother avers that a number of the trial court's findings are "contrary to the law" and the evidence adduced at trial. She is correct in stating that the title of a motion is not dispositive; rather, the contents of the motion must be considered. Dunkle v. Dunkle, 158 S.W.3d 823, 831-32 (Mo.App.2005). As Mother states, paragraph 13 of her amended motion avers that:
[Mother] has no adequate remedy at law and therefore seeks this Court's Judgment holding [Father] in Contempt for the reasons set forth above; and order [Father] to pay the amounts owed to [Mother] and [Mother]'s attorney's fees; and enter judgment against [Father] for all sums due to [Mother], including interest, if any.
Broadly construed, this would appear to be a request to reduce sums to judgment, and the record suggests that this issue was tried before the trial court, by consent if not by pleading. With that in mind, the trial court did in paragraph 11(f) of its judgment find that "a proper motion would have been a motion to reduce sums to Judgment, and the record in this case is unclear as to what sums have been adduced and what sums have been paid by [Mother], if any." The trial court is correct in this statement about the proper motion; however, it did not decide the matter based on the style of Mother's Amended Motion, which would be an error. The remainder of the trial court's findings and conclusions reflect that the trial court in effect treated Mother's Amended Motion as a joint motion to reduce sums to judgment and motion for contempt. In paragraph 16 of its findings and conclusions, the trial court found that "[Mother]'s Motion for Contempt cannot be reasonably construed as a Motion to Reduce Sums to Judgment, as the record is devoid of any facts which would allow the Court to make the determination of the sums that are due and owing by [Father]." (Emphasis added). Essentially, the trial court found that there was insufficient substantial, competent, credible evidence for it to reduce the sums to judgment, not that it refused to treat Mother's Amended Motion as a request to reduce sums to judgment. Mother stated a claim for which relief could be granted, but the trial court, the finder of fact, was not persuaded by her evidence. It specifically found that Mother's testimony "lacks credibility and is not supported by the testimony of the parties or the evidence adduced therein." It found that that she failed to show that she ever made demand for any payment of medical-related bills for the children to Father, and that her own testimony on the subject was contradictory. The trial court found that Mother testified that she had not spoken to Father in years, but also stated that she had made *547 demand on him in writing, but she could not produce any evidence submitted in the record that she made a demand on Father, and that she failed to show the actual expenses incurred, whether they were covered partially or totally by health insurance, or when those expenses were incurred or that she paid those expenses.
We note that Erin testified that she did not recall bringing Father any letters from Mother, or recall being given letters by Mother with instructions to give them to Father so he could give her money. Heather testified that she never gave Father a bill that he refused to pay. Their testimony is in marked contrast to that of Mother, who claimed to have sent letters and bills to Father through the two young women.
There is a lack of substantial, credible evidence regarding the medical expenses of the children that were not covered by insurance. The trial court did not err in concluding that Mother failed to prove her claim for those expenses.
Regarding college expenses, the trial court found that Mother testified to different amounts regarding college expenses for the children, "was unclear" as to the amounts she had actually paid, what amounts were loans to the children, what amounts of loans she had paid, and what the children had paid. The trial court found that the Dissolution Decree required specifically that Mother and Father mutually choose an acceptable educational institution for the children, but there was no evidence that there was ever such a mutual agreement, "and the evidence of the parties' lack of communication would indicate that the parties at no time reached a consensus on where to send the then minor children to college." The trial court also found that despite Father's request for production of evidence showing payments for college expenses, no such evidence was produced, and that the only records produced regarding bills were not contemporaneous records or records submitted by the appropriate custodian of records under affidavit.
The trial court is incorrect in its findings and conclusions regarding the children's post-secondary education expenses. Father admitted that he was aware the children were going to the University of Missouri and Truman State University, both state schools. Father testified he went up to Truman, and every January his daughters gave him copies of their class schedules. Father acknowledged that he knew his children had college expenses, and did not know who was paying them. Father stated that the reason he did not pay the college expenses was that he "didn't have the money" and he thought the girls would play sports. When he talked to the children about school costs, they said their mother was taking care of it. Exhibits AA and MM were admitted into evidence without objection by Father, and in fact apparently subpoenaed from the University of Missouri-Columbia and Truman State University respectively by Father. Exhibit AA has accompanying affidavits from the custodians of records.[3] These exhibits show the charges and credits for the education of Erin and Heather in considerable detail. While it is true that these exhibits are not, in and of themselves, bills and do not show who paid the charges, other than through student loans, they do provide competent and substantial evidence of the children's post-secondary educational expenses. *548 There is sufficient information contained therein, when coupled with the terms of the Dissolution Decree regarding the payment of post-secondary education expenses, for the trial court to determine Father's portion of the expenses, given that Father testified that he paid nothing towards their education. The Dissolution Decree states that "costs and expenses shall include books, tuition, fees, and dormitory costs" with the costs payable by Mother and Father reduced by scholarships and financial aid that reduces the actual costs. It further provides that "loans to the student shall not be considered scholarship or other aid" that would reduce "costs." The Dissolution Decree also specifies what percentages of the educational expenses were to be borne by Father. The trial court erred in its judgment on the claim for educational expenses.[4] Point denied in part and sustained in part.
We need not address Mother's first point relied on, as our holding on her second point relied on is dispositive regarding the trial court's judgment.
The judgment of the trial court is affirmed in part and reversed and remanded in part with instructions to the trial court to determine the sum that Father owes based on Exhibits AA and MM pursuant to the terms of the Dissolution Decree for the educational expenses of Erin and Heather.
NOTES
[1] Father has not favored this court with a Respondent's brief on appeal.
[2] The parties have been furnished with a memorandum, for their information only, setting forth the reasons for our decision pursuant to Rule 84.16(b).
[3] The record reflects that the records from Truman State University had an accompanying affidavit from the custodian of records when sent to Father's counsel, but that affidavit does not appear as part of Exhibit MM. However, Exhibit MM was admitted into evidence without objection by Father.
[4] The trial court was correct in finding that the record was unclear as to what Mother paid towards the post-secondary educational expenses of Erin and Heather. However, the issue is what Father is obligated to pay towards educational expenses under the Dissolution Decree, not what Mother paid. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261356/ | 180 Conn. 85 (1980)
JOSEPH HALPERIN
v.
PINE PLAZA CORPORATION ET AL.
Supreme Court of Connecticut.
Argued January 11, 1980.
Decision released March 11, 1980.
COTTER, C. J., LOISELLE, BOGDANSKI, PETERS and HEALEY, JS.
Samuel J. Henderson, for the appellant (plaintiff).
William B. Fitzgerald, Jr., with whom, on the brief, was John C. Bullock, for the appellees (defendants).
PER CURIAM.
This is an action to recover a real estate broker's commission which the plaintiff claimed to have earned by producing a lessee for the defendant's commercial property.[1]
The trial court found, in part, as follows: In the summer and fall of 1968, the defendant Henry Santa Barbara, president of the Pine Plaza Corporation, had been engaged in discussions with James Troy, a vice-president of the Waterbury National Bank, with respect to the bank's interest in leasing the defendant's property for a branch site. Other officials of the Waterbury National Bank were informed of the discussions between Troy and *86 Santa Barbara. As late as December 3, 1968, the defendant was told by Troy that the bank was interested in leasing his property.
There was no meeting between the plaintiff and Santa Barbara with regard to the subject property prior to December 17, 1968. On December 17, 1968, the plaintiff urged the defendant to let him show the property to interested parties. Santa Barbara expressed a willingness to talk to anyone the plaintiff might produce as a lessee, but specifically instructed Halperin not to bring any banks and especially not the Waterbury National Bank because he was already engaged in conversations with the bank as a possible lessee. Halperin had no written agreement with the defendant, did not seek one, and had no exclusive listing.[2]
On December 18, 1968, nevertheless, the plaintiff brought Harold Sullivan, a vice-president of the Waterbury National Bank, to view the defendant's property. Sullivan was unaware of the site location the plaintiff was seeking to show him but was cognizant that bank officials had discussed the defendant's property as a desirable site for the bank to lease for a branch. When Sullivan and the plaintiff met the defendant Santa Barbara on the site on December 18, 1968, a dispute immediately arose between Santa Barbara and the plaintiff. Santa Barbara rebuked the plaintiff for bringing him a representative of the Waterbury National Bank as a prospective lessee. Sullivan, then realizing and recalling that the site had been previously brought to his attention, immediately withdrew from any *87 further discussions as to the property with the plaintiff and reported his meeting with the plaintiff to the bank's president.
From January, 1969, to August, 1969, the Waterbury National Bank carried on negotiations with the defendant Santa Barbara through his attorney; these negotiations resulted in a twenty year lease. Shortly after the December 18, 1968 incident, the plaintiff was informed by the president of the Waterbury National Bank and the defendant Santa Barbara's attorney that he was not the broker of either the bank or the defendant and was to make no further efforts on their behalf. The plaintiff did not participate in any way in the negotiations between the bank and the defendant which took place between January, 1969, and August, 1969.
The plaintiff, on appeal, claims that the trial court erred in including twenty-three paragraphs in the finding without evidence and in failing to include fifty-eight paragraphs of the draft finding in the finding. This court has repeatedly indicated that it disfavors such wholesale challenges to the findings which result in attempts to have this court retry issues of fact. See, e.g., Toffolon v. Avon, 173 Conn. 525, 527, 378 A.2d 580; Kateley v. Kateley, 172 Conn. 361, 362, 374 A.2d 1049; Southern New England Contracting Co. v. State, 165 Conn. 644, 646, 345 A.2d 550. In the present case the attack on the findings is unavailing: the facts found are either supported by the evidence or based on inferences reasonably drawn from the evidence; New Haven v. United Illuminating Co., 168 Conn. 478, 483, 362 A.2d 785; Schurgast v. Schumann, 156 Conn. 471, 475, 242 A.2d 695. It is futile to assign error where the weight of the testimony or the *88 credibility of the witnesses is involved because these matters are for the determination of the trier of fact. Toffolon v. Avon, supra; Scott v. General Iron & Welding Co., 171 Conn. 132, 138, 368 A.2d 111. Similarly, the facts the plaintiff would have us add to the finding are either immaterial or not admitted or undisputed. Such facts cannot be added to the finding. See, e.g., Cutler v. MacDonald, 174 Conn. 606, 609, 392 A.2d 476; El Idrissi v. El Idrissi, 173 Conn. 295, 297, 377 A.2d 330; Practice Book, 1978, § 3039. That a witness has testified to a fact without direct contradiction is in itself insufficient to demonstrate that the fact was admitted or undisputed. Klepp Wood Flooring Corporation v. Butterfield, 176 Conn. 528, 531, 409 A.2d 1017; Martin v. Kavanewsky, 157 Conn. 514, 515, 255 A.2d 619.
A real estate broker is entitled to recover a commission when he has met the burden of proving his employment as a broker to sell or lease the owner's real estate upon certain named terms, and when, but only when, he produces a customer willing, ready and able to purchase or lease upon those terms. Menard v. Coronet Motel, Inc., 152 Conn. 710, 711, 207 A.2d 378; Rosenfield v. Wall, 94 Conn. 418, 419-20, 109 A. 409. In a case like the present one, when the agency of a broker is not exclusive, his "efforts must be the predominating producing cause of the sale." Marshall v. Sturgess & Jockmus, Inc., 150 Conn. 59, 62, 185 A.2d 472. The trial court, applying this law, concluded that the plaintiff was not the agent of the defendants in securing the lease, had not been the predominating procuring cause of the lease agreement entered into by the defendant Santa Barbara and the Waterbury National Bank, and that therefore judgment should enter for the defendants. Since the trial court's conclusions *89 are neither inconsistent with the facts found, as the plaintiff's wide-ranging attack on the trial court's finding implicitly acknowledges, nor a violation of law, logic, or reason, they must stand. Mystic Marinelife Aquarium, Inc. v. Gill, 175 Conn. 483, 491, 400 A.2d 726; Bell v. Planning & Zoning Commission, 174 Conn. 493, 496, 391 A.2d 154.
Finally, the factual findings fail to support the plaintiff's claim grounded on Freda v. Smith, 142 Conn. 126, 134, 111 A.2d 679, that an implied-in-law contract existed because, inter alia, the plaintiff rendered services he expected to be paid for and the defendant availed himself of those services. The defendant Santa Barbara cannot possibly, under the facts of this case, be deemed to have availed himself of the plaintiff's services.
There is no error.
NOTES
[1] The parties stipulated that any liability accruing against the defendant corporation by reason of the acts of the defendant Henry Santa Barbara, its president and majority stockholder, would attach to the defendant Santa Barbara.
[2] The events upon which this action is based took place prior to the enactment of General Statutes § 20-325a (b) in 1971. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261357/ | 223 F.Supp. 552 (1963)
MAGNAFLUX CORPORATION, a Delaware corporation, Plaintiff,
v.
Friedrich FOERSTER, etc., et al., Defendants.
No. 62 C 1419.
United States District Court N. D. Illinois, E. D.
October 18, 1963.
*553 Theodore C. Diller, Charles H. Weiland and Barnet C. Engler, Lord, Bissell & Brook, Chicago, Ill., for plaintiff.
Victor P. Kayser and George R. Hooper, Chadwell, Keck, Kayser, Ruggles & McLaren, Richard S. Oldberg and Hamilton Smith, McDermott, Will & Emery, Chicago, Ill., for defendants.
DECKER, District Judge.
This case involves a lawsuit by Magnaflux Corporation, a Delaware corporation licensed to do business and with its principal place of business in the State of Illinois, (hereinafter referred to as Magnaflux). Magnaflux sues Dr. Friedrich Foerster (hereinafter referred to as Foerster) for breach of a contract executed November 5, 1954, and subsequently amended July 14, 1961.
Foerster is a citizen of the Federal Republic of Germany, and he maintains his residence in the City of Reutlingen in West Germany.
Also joined as defendants in the one count complaint are three other parties alleged to have entered into a conspiracy to induce Foerster to breach his contract with Magnaflux. The three other parties are: Hoover Ball and Bearing Company, a Michigan corporation with its principal *554 place of business in Michigan (hereinafter referred to as Hoover Ball); Forster/Hoover Electronics, Inc., a Michigan corporation with its principal place of business in Michigan (hereinafter referred to as Forster/Hoover); and Rudolph G. Hentschel, a citizen of the State of Michigan, residing in Ann Arbor (hereinafter referred to as Hentschel).
The complaint is founded on the diversity jurisdiction of this Court. Equitable relief is sought against all four defendants, including a declaratory judgment that the contract between Foerster and Magnaflux prevents Foerster from selling his products to Forster/Hoover, an injunction of Foerster from making any further sales to Forster/Hoover, an injunction of Hoover Ball and Forster/Hoover and Hentschel from further inducing Foerster to further breach the contract, and for an accounting for damages against all of the defendants.
This matter has come on for decision on the following motions:
(1) A motion filed by the defendants Foerster, Forster/Hoover and Hentschel to dismiss the action pursuant to Federal Rule 12 on the ground that the Court lacks jurisdiction over the person of these defendants.
(2) A motion filed by Hoover Ball to dismiss the action or in the alternative to quash the return of the service of summons on the ground that the Court lacks jurisdiction over the person of the defendant.
(3) All four defendants also moved to dismiss on the ground that the complaint fails to state a claim on which relief can be granted.
The motions to dismiss for want of jurisdiction over the persons of the defendants will be discussed first. The defendants have filed a number of affidavits in support of their motions to dismiss for want of jurisdiction. Plaintiff has filed counter-affidavits in opposition to the same motions. Depositions have been taken by the plaintiff and by the defendants, and references have been made by both plaintiff and defendants to statements contained therein relating to the issue of jurisdiction.
Disposition of these motions requires individual treatment of the service of summons on each of the four defendants, and accordingly, because of the complex facts surrounding the service, each will be dealt with individually.
Foerster
Foerster was served, by special order of court under Federal Rule 4(e), personally at his home in Germany. Foerster's service is sought to be upheld under Section 17(1) (a) of the Illinois Civil Practice Act (Illinois Revised Statutes, Chapter 110, § 17(1) (a)). Service was effected on Foerster by one Roland Willmitzer, who was specially appointed by this Court to serve the summons.
Foerster argues that to subject him to service of process pursuant to the Illinois statute would: (1) Violate Rule 4(f) which prohibited service of process out of the forum state, which in this case is Illinois, unless a statute of the United States so provided; and (2) would be improper even under the Illinois statute, since he had not "transacted any business" in Illinois, and to subject him to extra-territorial service of process without his having had more substantial minimal contacts with the State of Illinois would violate both the due process and the commerce clauses of the United States Constitution.
Foerster's contacts with the State of Illinois are as follows:
(1) Prior to April 24, 1952, Foerster did maintain office facilities in Illinois to market his own products by himself. Subsequent to that date, he removed all of his own facilities pursuant to the contract with plaintiff Magnaflux, whereby it was given the exclusive distribution rights in the United States to Foerster's products.
(2) Foerster executed and personally delivered in Illinois the contract in suit on November 5, 1954. This contract was also to be performed in Illinois, and it is *555 being performed here, at least in part, presently.
(3) Paragraph 22 of this contract, which is attached as Exhibit B to the complaint, and which remains unamended, reads:
"This agreement shall be construed in accordance with the laws of the State of Illinois."
(4) On July 14, 1961, the 1954 contract was amended (the execution and delivery of this amendment took place entirely in Germany).
Foerster now contends that the 1954 contract was cancelled and superseded by the 1961 contract. However, paragraph U. of the 1961 amendment reads:
"Except as specifically amended by the foregoing paragraphs A. through T. inclusive, said agreement of November 5, 1954, shall remain unchanged and, as thus amended, shall be and remain in full force and effect between the parties hereto."
The Court finds that the 1954 contract was not cancelled, as Foerster contends, but rather it was amended.[1]
(5) Performance of this amended contract has continued, at least in part, in Illinois down to the present.
(6) Negotiations for the 1954 agreement took place at plaintiff's place of business in Illinois, with Foerster personally present and actively engaged in the negotiations from October 27, 1954, through November 5, 1954.
(7) As a part of the immediate performance of this 1954 contract, plaintiff delivered to Foerster a check for $22,000.00, which Foerster cashed on November 6, 1954, in Chicago, by endorsing it to The First National Bank of Chicago.
(8) During the period from 1951 to 1962, Foerster spent a total of approximately 54 days at the plaintiff's plant in Illinois. These 54 days were divided among thirteen separate visits, at all of which Foerster discussed problems of manufacture and sale of Foerster equipment with plaintiff's engineers in furtherance of the 1954 agreement, as amended in 1961, and under which the plaintiff now sues. The last of these visits was on March 15 and 16, 1962, when Foerster discussed performance of the contract with Magnaflux and with some of the other defendants.
Opinion
(1) As for Foerster's contention that Rule 4(f) prohibits reference to the law of Illinois in order to sustain service of process made extra-territorially, reference to the amendments to the Rules of Federal Procedure which became effective July 1, 1963, should suffice.
Rule 4(f) has now been clarified to specifically authorize the service of process on an out-of-state individual or corporation, "* * * in the manner prescribed by the law of the state in which the district court is held * * *," as outlined in Rule 4(d) (7).
The Supreme Court Advisory Committee on Civil Rules in a comment states that this clarification did not change the prior law, but rather more explicitly stated and adopted "the salutary results" of those cases which sustained out-of-state service pursuant to statute such as Section 17 of the Illinois Civil Practice Act[2]*556 by "reading paragraph (7) as not limited by subdivision (f)."
It is also interesting to notice in the comments of the Supreme Court Advisory Committee on Civil Rules relating to paragraphs (e), (f) and (i) of Rule 4, it is stated that "the Party seeking to make the service may proceed under the Federal or the State law, at his option." Further, regarding service on a defendant in a foreign country, specifically referring to the Illinois Civil Practice Act, the Supreme Court Advisory Committee expressly commends the manner in which service was made on Foerster here:
"Foreign service by personal delivery on individuals and corporations, partnerships and associations, provides for a manner of service that is not only traditionally preferred, but also is most likely to lead to actual notice."
And, as regards the order of this Court specifically appointing Willmitzer to make service in Germany, the Supreme Court says:
"* * * by permitting the court by order to tailor the manner of service to fit the necessities of a particular case or the peculiar requirements of the law of the country in which the service is to be made * * this alternative increases the possibility that the plaintiff will be able to find a process server who can proceed unimpeded in the foreign country * * *."[3]
Therefore, I hold that Rule 4(d) (7) prior to the July 1, 1963, amendment, rather than Rule 4(f), establishes the mode of effecting service on a defendant outside the state in which this Court sits. Therefore, we must look to the law of Illinois to determine whether service of process on Foerster was sufficient to give this Court jurisdiction over his person.
(2) In regard to Foerster's contention that even if Section 17 of the Illinois Civil Practice Act does apply, its requirements have not been satisfied, I think the law is to the contrary. There have been numerous Illinois and Seventh Circuit cases on this question, all of which I believe establish beyond any doubt that Foerster's contacts with Illinois are substantial enough to subject *557 him to service of process consistent with due process.
Rather than summarize all of these cases, I will refer to the latest Illinois authority, which exhaustively reviews all of the previous authorities. The case is Kropp Forge Co. v. Jawitz, 37 Ill.App. 2d 475, 186 N.E.2d 76 (1962). Briefly, there the plaintiff and the defendant conducted negotiations by correspondence by mail between New York and Chicago; on January 15, 1958, defendant came from New York to plaintiff's plant in Chicago, where he spent one morning conversing with plaintiff's employees, inspecting plaintiff's plant facilities, and measuring the equipment which was the subject of the contract under negotiation. The Court concluded that by his acts in the plaintiff's plant on that one morning, the defendant accepted plaintiff's offer and a contract was consummated. On the strength of these "contacts" with Illinois, the Court held that the United States Supreme Court test, as set forth in Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), was satisfied, and that service was properly made on defendant in New York pursuant to Sections 16 and 17 of the Illinois Civil Practice Act. The test, as quoted in Kropp Forge, is:
"`* * * it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" (At p. 479, 37 Ill.App.2d, at p. 78, 186 N.E.2d.)
The defendant in that case argued that one visit alone to Illinois does not satisfy the "minimum contacts" test for jurisdiction. The Court distinguished all previous cases which held that "contracting from outside the State" was not transacting business in Illinois sufficient to give an Illinois court jurisdiction over the person of the defendant.
The Court held that the performance of one of the four jurisdictional acts set out in Section 17 by a non-resident or by his agent, "while physically present in Illinois," is essential. The one morning visit to the plaintiff's plant by the defendant at which, it was held, defendant by his conduct accepted plaintiff's offer and formed a contract, was further held sufficient by the Illinois Court to satisfy the test of the "transaction of any business within this State" as set out in Section 17(1) (a) of the Illinois Civil Practice Act.
Certainly, considering the findings set out above regarding Foerster's contacts with Illinois, service of process on Foerster in Germany pursuant to the Illinois statute should be upheld under the Kropp Forge case.
Hoover Ball
Hoover Ball is a Michigan corporation which is not licensed to do business in the State of Illinois, but which does maintain a sales office for soliciting orders for its products in Illinois. No contracts are made at this office and all orders are forwarded to Michigan where they are accepted or rejected. Hoover Ball's business can be best described by quoting from an advertising pamphlet published by it, which is attached as an exhibit to the "Diller Affidavit" filed by Magnaflux:
"Hoover Ball and Bearing Company serves more than 5,000 customers with a wide variety of industrial and consumer products. The company is a well-known producer of precision metal balls, ball and roller bearings, cold drawn steel and wire, automotive and furniture seat springs, blowmolded plastic containers, bulk material handling systems and metal containers, electric motor commutators, plumbing and automotive die castings and special machine tools."
Hoover Ball was served at this office which it maintains at 8581 South Chicago Ave., Chicago, Illinois. Plaintiff Magnaflux contends that by having this office in Chicago, Hoover Ball was "doing business" in Illinois and therefore subject to service at that office. Plaintiff Magnaflux also argues that Hoover Ball "transacted business" under Section 17 of the Illinois *558 Civil Practice Act, which would alternatively make it subject to service of process.
Hoover Ball moves to dismiss the complaint or to quash service of summons on the grounds that:
(1) The Chicago office is used merely for soliciting orders for acceptance at its home office in Michigan, and that no orders solicited in Illinois are accepted in the Chicago office;
(2) All of the products so ordered and accepted are delivered in Illinois by shipment from Michigan or Tennessee in interstate commerce only, f. o. b. the points of shipment;
(3) No discussions or transaction of any kind relating to Foerster, Hentschel or Forster/Hoover have occurred in the Chicago office which Hoover Ball maintains;
(4) None of the salesmen nor the office girl who use Hoover Ball's Chicago office have ever had any contact with Foerster or the other defendants; and
(5) Hoover Ball is not qualified as a foreign corporation to do business in Illinois.
The contacts of Hoover Ball with Illinois are as follows:
(1) It maintains an office in Chicago.
(2) It staffs this office with one office girl, Miss Killeen, who acts as a secretary-receptionist, and with the Sales Manager of the Central Zone of the United States, Mr. McGregor, and several other salesmen who have intermittently used the office (Messrs. Merren, Lawrence and Maschek). The Central Zone encompasses eleven midwestern states, including Illinois.
(3) In addition to working as salesmen, the employees at the Chicago office perform the additional activities of furnishing engineering services for customers, handling complaints of customers regarding the performance of Hoover Ball products and attend trade shows to exhibit such products.
(4) It lists its Chicago office in the Chicago telephone directory, the "Red Book", as "Hoover Ball and Bearing Co., Central Zone Sales Office."
(5) It purchased a full page advertisement in Fortune Magazine, which has a national circulation, and listed its Chicago office as one of its three "Zone Sales Offices."
Opinion
(1) As regards plaintiff's contention that Hoover Ball "transacted business" in Illinois under Section 17(1) (a) of the Illinois Civil Practice Act, plaintiff misconstrues the import of Section 17.
First, even if it is assumed arguendo that what Hoover Ball did through its Chicago sales office satisfies the standard of "transaction of any business," Section 17 specifically qualifies its coverage in subsection (3):
"Only causes of action arising from acts enumerated herein [one of which is the transaction of business] may be asserted against a defendant in an action in which jurisdiction over him is based upon this section."
The Act does not confer jurisdiction upon a defendant unless it does two things: (a) enters into Illinois, and (b) to transact the business from which the cause of action arises. If a defendant transacts business with A, which has absolutely no relation with its dealings with B, B cannot obtain jurisdiction over the person of the defendant under the Illinois statute on the specific theory that the defendant has transacted business.
Here the plaintiff has not alleged a cause of action against Hoover Ball arising out of the transaction of any business between Hoover Ball and plaintiff. On the contrary, plaintiff's cause of action against Hentschel, Forster/Hoover and Hoover Ball is grounded solely upon the allegation of a conspiracy to induce Foerster to breach his contract with plaintiff. This is an allegation sounding in tort, and in order to satisfy Section 17 of the Illinois Civil Practice Act, plaintiff would have to establish "the commission of a tortious act within this State" under Section 17(1) (b).
*559 Section 17(1) (a) is inapposite as to all defendants except Foerster, the only defendant alleged to have transacted business, by entering into a contract, with Magnaflux. All that plaintiff has shown is that Hoover Ball, by maintaining an office in Chicago, has transacted business with some unnamed third persons who have no relationship to this lawsuit. There is no allegation that Hoover Ball has transacted business with plaintiff in Illinois and that this cause of action arises out of that transaction of business with the plaintiff.
Secondly, and more basically, Section 17 deals with out-of-state service on parties whose conduct within Illinois makes them subject to the jurisdiction of Illinois courts. Here service was made in Illinois on Hoover Ball by serving personally an agent of the corporation found in Illinois. The return of service reads:
"Served this writ together with a copy of complaint on the within named Hoover Ball and Bearing Co., a corporation, by delivering copies thereof to Mr. Higgins, salesman an [sic] agent, of such corporation, this 30th day of July A.D. 1962.
"The president of said corporation not found in my district."
The return is prima facie evidence of proper service and is not to be set aside except on clear and satisfactory evidence. Marnik v. Cusack, 317 Ill. 362, 148 N.E. 42 (1925); Cannata v. White Owl Express, Inc., 339 Ill.App. 79, 81, 89 N.E.2d 56 (1949). Therefore, though the parties in their briefs extensively argue the applicability of Section 17 as if this were out-of-state service of process, the appropriate sections of the Illinois Civil Practice Act are Sections 13.1 and 13.3.
(2) Sections 13.1 and 13.3 allow summons to be served on any private corporation by serving a copy of the process on any "agent" of the corporation found anywhere in the State. Such in-state service may be effected on either a domestic or foreign corporation; and regarding foreign corporations, no distinction is made between those that have qualified to do business, appointing a registered agent for service of process, and those that do some business in the state without qualifying. Consolidated Cosmetics v. D-A Pub. Co., 186 F.2d 906 (7 Cir. 1951); Johnson v. Hanover Fire Insurance Co., 15 F. 97 (D.C.Ill.1883); Phillips v. Interstate Motor Freight System, 45 F.Supp. 1 (E.D.Ill.1942); Canright v. General Finance Corporation, 33 F.Supp. 241 (E.D.Ill.1940); Craig v. Sullivan Mach. Co., 344 Ill. 334, 176 N.E. 353 (1931); Hall v. Metropolitan Life Ins. Co., 298 Ill.App. 83, 18 N.E.2d 388 (1938).
Due process of law, however, requires that a foreign corporation served with process in Illinois under Section 13.3 "* * * have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945), quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940). Illinois courts have typically construed "fair play" to require that the foreign corporation so served must be doing some amount of business in Illinois.
Three recent Seventh Circuit cases are instructive. In Riverbank Laboratories v. Hardwood Products Corp., 220 F.2d 465 (1955), the Seventh Circuit, following its decisions in two earlier cases, Roberts v. Evans Case Co., 218 F.2d 893 (1955), and Canvas Fabricators, Inc., v. William E. Hooper & Sons Co., 199 F.2d 485 (1952), held that the defendant was not doing business in Illinois, and therefore its motion to dismiss should have been granted. In Riverbank the defendant was a non-resident corporation, not licensed to do business in Illinois, nor had it authorized an agent for service of process there. Defendant maintained a sales office in Illinois, where service of process was made, for the purpose of soliciting orders for goods manufactured by defendant in Wisconsin. Sales orders were transmitted to Wisconsin for acceptance or rejection. Defendant's name appeared *560 on the door of its Chicago office, and also in the Chicago Telephone directory. The District Court upheld service of summons on the defendant's salesman in charge of its Chicago sales office under the predecessor to Section 13.3 of the Civil Practice Act.
In Canvas Fabricators, the defendant's Chicago-based sales representative also used stationery bearing the defendant's name and address of the Chicago office, and the defendant maintained a Chicago bank account where it had deposited the plaintiff's checks for the purchase of merchandise. In Roberts, in addition to fitting all of the facts above describing Riverbank and Canvas Fabricators, the defendant filed a personal property schedule with the Assessor of Cook County, Illinois, for "merchandise on hand."
The Seventh Circuit refused to distinguish its prior holdings because of the additional facts that the defendant in Riverbank received royalty payments as the licensor of its product in Illinois, and that the Chicago-based sales representative investigated complaints concerning the functioning of defendant's products in Illinois. The Court held that:
"* * * [t]he law of Illinois must control and that decisions by the Illinois Supreme Court * * * establish the rule that a defendant is not subject to process in Illinois if it was not engaged in business in that state in any way other than the solicitation of orders to be accepted or rejected elsewhere." (Ibid., 220 F.2d, at p. 467.)
The Supreme Court of the United States reversed Riverbank in a terse per curiam opinion: "The Court is of the opinion that the District Court correctly found there was proper service upon the defendant in this case." (350 U.S. 1003, 76 S.Ct. 648, 100 L.Ed. 866 (1956).) Since the Supreme Court gave no reasons for its reversal, one can only speculate as to the error in the Seventh Circuit. A reasonable presumption is that the Court of Appeals erred in its failure to give proper regard to the District Court's finding that the Chicago salesman, who was served with process, investigated complaints of customers in addition to soliciting orders, since this fact was absent in the two earlier Seventh Circuit cases. In any event, this fact would constitute one of those "sufficient additional activities" mentioned in International Shoe, 326 U.S. 310, 314, 66 S.Ct. 154, 90 L.Ed. 95, which when added to regular and systematic solicitation of orders in a state, render a foreign corporation amenable to service of process.
Here there is no doubt that the Hoover Ball salesmen stationed at the Midwest Zone sales office located in Chicago regularly and systematically solicited orders for acceptance by Hoover Ball in Michigan. Depositions of four of the salesmen at the Chicago office establish the following additional activities in Illinois (although it is not established quantitatively how substantial the activities are):
(1) McGregor testified that the salesmen are equipped to give engineering advice to customers regarding simple calculations of loads and stresses on Hoover Ball products.
(2) McGregor testified that typically when a customer would call the Chicago office to report a bearing that was not giving proper service, one of the salesmen would suggest something like a change of lubricant to the customer.
(3) McGregor testified to having displayed samples of Hoover Ball products at the Design Engineers Show at McCormick Place, Chicago, in the spring of 1962.
(4) Lawrence testified that he handled a complaint by a customer in Chicago concerning a ball which the customer had rejected because of a pit in it.
(5) Lawrence testified that he personally attended the Design Engineers Show at McCormick Place, Chicago, during its entire three days in June, 1962.
(6) Merren testified that he assisted the engineers employed by customers *561 of Hoover Ball in the design, selection and proper application of bearings.
(7) Merren testified that when he received a complaint from a customer he submitted a report to McGregor and then returned to the customer with a solution if it lay within his technical understanding.
(8) Maschek testified that he confers with Hoover Ball customers regarding their complaints.
(9) Maschek testified that as the Chicago representative of Hoover Ball, he worked at the Home Builders Show at McCormick Place, Chicago, for five days in December, 1961, where he had a booth displaying the Hoover Ball products.
These additional contacts with Illinois are sufficient to sustain service of process under Section 13.3. The Seventh Circuit in Riverbank stated it was governed by Illinois law in testing the validity of service of process, and cited Booz v. Texas and Pacific Railway Co., 250 Ill. 376, 95 N.E. 460 (1911), in support of the proposition that solicitation of orders for acceptance outside Illinois is insufficient contact with Illinois. It did not mention American Hide & Leather Co. v. Southern Railway Co., 310 Ill. 524, 529, 142 N.E. 200 (1924), which expressly distinguished Booz. In American Hide, service on the defendant, which maintained an office and track in Illinois, was made on an employee of the defendant, employed to solicit freight orders for the defendant's acceptance elsewhere:
"He was not employed as soliciting agent for any other company. He made no contracts on behalf of defendant, issued no bills of lading, sold no tickets, and collected no money for defendant." (Id. 310 Ill. at p. 528, 142 N.E. at p. 201.)
In Booz, service was made on a purported "agent" of the defendant, which maintained neither track nor office in Illinois, who was employed by two independent contractors who represented several foreign railroads and solicited orders for all of them. I think the jurisdictional facts of the case at bar fit American Hide more closely than Booz.
Other pertinent authorities on Illinois law lead to the same conclusion. Pergl v. United States Axle Co., 320 Ill.App. 115, 50 N.E.2d 115 (1943), sustained jurisdiction over a foreign corporation, which was served through a local warehouse company which solicited orders for the defendant, on the ground that, in addition to continuous solicitation of orders and shipment of goods into Illinois, there was a stock of goods maintained in Illinois from which customers were sold. (The depositions in the case at bar establish that the salesmen maintained samples of Hoover Ball products in Illinois from which customers were sold.)
Olshansky v. Thyer Mfg. Corp., 13 F.R.D. 227 (N.D.Ill.1952), relying on the Booz case, held service on the employee of an independent contractor, who solicited orders in Illinois for several corporations' out-of-state acceptance, was insufficient. The District Court emphasized that the independent contractor had no authority to place the name of the defendant on the door of her office (for which she paid her own rent) or in any telephone directories. (There is no question in the case at bar that the person served was an employee of the defendant, using an office maintained as the defendant's Chicago office and at the defendant's expense.)
Further, as regards the attendance of defendant's salesmen at business conventions in McCormick Place, Chicago, Scene-In-Action Corp. v. Knights of Ku-Klux-Klan, 261 Ill.App. 153 (1931), indicates that this is an important contact with Illinois for purposes of testing validity of service:
"The question whether the holding of a general convention by a foreign corporation constitutes `doing business' within the meaning of the rule here under consideration, is one upon which we have been unable to find authority. * * * Our opinion is that after defendant had sent its agent into the State of Illinois to *562 hold a general convention, which is in the exercise of its charter powers, it is not in a position to say that it has never been in the State of Illinois, and we hold that the service made in this case gave the court jurisdiction over defendant." (Id. 261 Ill.App. at p. 158.)
Finally, it must be noted that as a matter of common sense "doing business" does not consist solely of the final act of business, i. e. consummating a deal by a sale. Customers must be solicited, sold, pacified when dissatisfied with the product purchased, and constantly advised in the use of the product in order to retain their patronage, in addition to the myriad other activities connected with the manufacture and distribution of a product. That Hoover Ball has been "doing business" in Illinois in this sense is demonstrated in Consolidated Cosmetics v. D-A Pub. Co., 186 F.2d 906 (7 Cir. 1951). That case involved service on the defendant, who edited a magazine in New York, in Illinois through its agent which was selected to print the magazine in Illinois in order to qualify for second-class mailing privileges. The Court said:
"The functions of a magazine publishing company, obviously, include gathering material to be printed, obtaining advertisers and subscribers, printing, selling and delivering the magazines for sale. Each of these, we think, constitutes an essential factor of the magazine publication business. Consequently if a non-resident corporation sees fit to perform any one of those essential functions in a given jurisdiction, it necessarily follows that it is conducting its activities in such a manner as to be subject to jurisdiction." (Id. 186 F.2d at p. 908.)
It is interesting to note that while Section 17 expressly limits jurisdiction of Illinois courts, obtained under its provisions for out-of-state service of process, to "[o]nly causes of action arising from acts enumerated" therein, Section 13 contains no such limitation. Subsection (4) of Section 17 (see footnote 2 above) preserves the right to use any other manner of service of process on non-resident defendants authorized by law. Thus, even though Hoover Ball's business in Illinois was not transacted with Magnaflux, in-state service of process under Section 13.3 may still be sustained. I find that the service of summons on Hoover Ball is sufficient to satisfy both the tests of Section 13.3 of the Illinois Civil Practice Act and the due process clause of the United States Constitution.
Forster/Hoover
Forster/Hoover is a Michigan corporation. It was served in Illinois by service of summons on its vice-president, one Norman H. Sonderman, who is an Illinois resident. Mr. Sonderman was served at his home in Lake Zurich, Illinois.
Forster/Hoover carries on all of its activities in the State of Michigan, with the exception of some activities in Illinois by Sonderman. Although plaintiff alleges and argues that Forster/Hoover uses the office of Hoover Ball at 8581 South Chicago Ave., in Chicago, Illinois, the affidavits filed by Forster/Hoover clearly refute this charge, and plaintiff's affidavits do not challenge Forster/Hoover on this point at all.
Forster/Hoover's contacts with Illinois are as follows:
(1) Sonderman, Forster/Hoover's vice president, lives in Illinois and has spent 15% of his working time for Forster/Hoover in Illinois.
(2) Sonderman has the authority to accept orders for the sale of Forster/Hoover products.
(3) Sonderman admits to having obtained two orders for Forster/Hoover equipment from Illinois customers.
(4) Plaintiff has filed an affidavit by one James E. Harrer, a field engineer employed by Magnaflux in the Chicago metropolitan area. The affiant states, on the basis of hearsay information which he has obtained, that Sonderman has made numerous calls on customers of Magnaflux with whom he may have formerly *563 done business during his fourteen years with Magnaflux. During these calls he demonstrated Forster/Hoover equipment and sought to build good will for his company and to harm the customer relations of plaintiff. Forster/Hoover does not deny these remarks by affidavit but merely states that they are hearsay and should be disregarded for that reason. Since the Harrer affidavit has not been denied, if he is to be believed, Sonderman's calls on Magnaflux's customers in Illinois amount to overt acts by Forster/Hoover in furtherance of the conspiracy alleged in the complaint.
(5) The same Harrer affidavit states that on one occasion in July, 1962, Dr. Foerster's son and business associate, Martin Foerster, arrived in this country for training with Forster/Hoover, and that he was taken by Sonderman on customer calls in Illinois.
Again, Forster/Hoover does not contradict the charges in this affidavit, and if they are to be believed, Sonderman was providing training for an employee of Forster/Hoover's business partner and fellow conspirator, Dr. Friedrich Foerster.
These acts would amount to inducement of Foerster within the State of Illinois to breach the contract between Foerster and Magnaflux under which Magnaflux was granted exclusive sales rights to Foerster's products.
Opinion
Plaintiff's argument is directed, as it was in the case of Hoover Ball, to establishing that the service of process on Forster/Hoover by personally serving Sonderman, its vice-president, in Illinois, was proper because Forster/Hoover was "doing business" and "transacting business" in Illinois. The return of service is identical to that quoted above regarding Hoover Ball, with the exception that "Forster/Hoover Electronics" and "Mr. Norman Sonderman" appear in the appropriate blanks.
As for both of these contentions, the same reasoning would apply to Forster/Hoover as to Hoover Ball above. Sonderman's admissions that he spends 15% of his working time for Forster/Hoover in Illinois, that he has authority to accept orders for the sale of Forster/Hoover products and that he has obtained at least two such orders from Illinois customers, are sufficient to satisfy the requirements of Section 13.3.
In addition, since Forster/Hoover is alleged to have committed a tort in Illinois by engaging in a conspiracy to induce Foerster to breach his contract with Magnaflux, the case of Cannata v. White Owl Express, Inc., 339 Ill.App. 79, 89 N.E.2d 56, is in point. There in-state service of process, under the predecessor of Section 13.3, on the truck driver who killed the plaintiff's deceased was held sufficient to obtain jurisdiction over the foreign corporation in a wrongful death action.
Even if service on Forster/Hoover had been made out-of-state and thus Section 17 were to be controlling, as the parties erroneously assume in their briefs, plaintiff has alleged, shown by affidavit and argued in its briefs that Forster/Hoover also committed tortious acts in Illinois, to-wit: Forster/Hoover's vice-president Sonderman is alleged to have done overt acts in furtherance of the conspiracy to induce Foerster to breach his contract with Magnaflux. I think that these contacts with Illinois are sufficient to bring Section 17(1) (b) into play and to give the Court jurisdiction over the person of Forster/Hoover as a non-resident tort feasor who committed the tort of conspiracy to induce the breach of contract out of which the cause of action here arose in Illinois. See Nelson v. Miller, 11 Ill.2d 378, 143 N.E.2d 673 (1957), and Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961).
In the Nelson case, jurisdiction over a Wisconsin corporation was upheld on the theory that it had committed a tort in Illinois when its employee, while delivering an appliance purchased in Wisconsin to the purchaser's home in Illinois, negligently let the appliance slip and fall upon the hand of the plaintiff in Illinois.
*564 In the Gray case, the most recent opinion of the Illinois Supreme Court on the interpretation of Section 17 of the Illinois Civil Practice Act, an Ohio corporation was held to have submitted to the jurisdiction of Illinois courts by committing a tortious act in the State of Illinois. The Ohio corporation manufactured in Ohio a safety valve which it sold to a Pennsylvania corporation; the Pennsylvania corporation incorporated the valve in a water heater which it manufactured in Pennsylvania and then sold the finished product. The plaintiff who purchased the finished product was injured in Illinois, and alleged that his injuries were due to the negligent manufacture of the safety valve by the Ohio corporation. Both of these cases are adequate authority to establish the propriety of personal jurisdiction over a non-resident defendant whose agent commits a tortious act in the State of Illinois.
I find that under either the "doing business" tests of Section 13.3 for instate service of process, or "tort" tests of Section 17(1) (b) for out-of-state service of process, jurisdiction over Forster/Hoover has been established, and further that such conduct amounted to sufficient minimal contact with the State of Illinois to satisfy the due process clause of the United States Constitution.
Hentschel
Hentschel is a vice-president of Forster/Hoover. He was served under Section 17 of the Illinois Civil Practice Act at his home in Ann Arbor, Michigan, by leaving a copy of the summons and complaint with his sister, who was a member of his household. The theory of the plaintiff for upholding service is that Hentschel "transacted business" in Illinois and "committed torts" in Illinois.
The following are Hentschel's contacts with Illinois:
(1) From December 17, 1956, until June 23, 1961, Hentschel worked as an employee of Magnaflux in Chicago.
(2) Since July 5, 1961, Hentschel has come to Chicago a couple of times on weekend pleasure excursions; and in addition he came to Chicago to participate, either as a vice-president of Forster/Hoover or at the personal request of Dr. Friedrich Foerster, in discussions relating to the performance of the 1954 contract, as amended, between Foerster and Magnaflux. This latter trip to Illinois lasted for two days March 15 through 16, 1962.
Opinion
So far as the plaintiff relies on the theory that Hentschel "transacted business" in Illinois to sustain service of summons under Section 17 of the Illinois Civil Practice Act, I think that my previous reasoning regarding Hoover Ball and Forster/Hoover above would require a dismissal of the complaint or a quashing of summons as to this defendant.
Again the cause of action against Hentschel does not arise out of any business which he may have transacted in the State of Illinois but rather depends upon the allegations that he is a co-conspirator in committing the tort of inducing Foerster to breach his contract with Magnaflux.
Insofar as the complaint alleges that Hentschel acted as a co-conspirator with two of the other defendants in a plan designed to induce Foerster to breach his contract with Magnaflux, the jurisdictional issue is whether it has been sufficiently alleged that Hentschel's conduct amounted to the commission of tortious acts in Illinois. Can Hentschel's mere attendance at, and participation in, the conference between Foerster and Magnaflux, at the latter's plant in Chicago, on March 15 and 16, 1962, amount without more to the commission of the tort of conspiracy to induce a breach of contract?
Hentschel by affidavit attached to his motion to dismiss denies that he came to the conference as a vice-president of Forster/Hoover. Rather, he states that:
"I did not attend those meetings as Vice-President of Foerster/Hoover. In fact, the Magnaflux people initially objected to my presence on account *565 of my Foerster/Hoover association. My presence was solely in response to the personal request of Dr. Foerster."
Plaintiff argues that from this statement it should be inferred that the conspiracy must have been pretty well established by March, 1962, if Foerster would not even attend a conference relating to the performance of his contract with Magnaflux without calling in to assist him the employee of a competitor of Magnaflux.
Hentschel continues his affidavit by describing what transpired at the conference in Chicago:
"After a short opening session with the Magnaflux executives, we were turned over to the sales group. This discussion with the sales group was concerned with Magnaflux plans and its comments with respect to Foerster equipment. After that discussion, we continued for the next day and a half with the Magnaflux executives. The subject of the conversations with the executives was Foerster/Hoover and the 1961 contract between Foerster and Magnaflux. We discussed the meaning of and compliance with the 1961 agreement. And the Magnaflux executives asked various questions about Foerster/Hoover."
Further, by the affidavit of Wylie D. Reid, a vice-president of Magnaflux, it appears that Hentschel took a rather active part in this conference at one point attempting to prevent Dr. Foerster from answering questions asked by plaintiff regarding the relationship between Foerster and Forster/Hoover. But are the allegations concerning Hentschel's conduct comparable to the conduct of the defendant's servant in Nelson, supra, in dropping an appliance on the plaintiff's hand in Illinois, or to the conduct of the defendant in Gray, supra, in manufacturing a defective valve which while being used in Illinois caused an explosion which injured the plaintiff? I think not. Plaintiff neither alleges, nor introduces by way of affidavit, any facts purporting to show how Hentschel's conduct at the Chicago conference was in furtherance of the alleged conspiracy to induce breach of the Foerster-Magnaflux contract. Under the rule of McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1936), plaintiff must bear the burden of proof of the essential jurisdictional facts whenever the jurisdiction is challenged.
Also, plaintiff argues that other inferences about his conduct in Illinois can be made from Hentschel's admission that he quit his employment with Magnaflux about one week before the amendment to the 1954 agreement was renegotiated in Germany in 1961, and from the fact that Hentschel took employment with Hoover Ball while the negotiations between Magnaflux and Foerster were continuing in Germany in 1961, and from the further fact that Hentschel was made a vice-president of the newly formed Forster/Hoover immediately after it was incorporated.
The difficulty I have with finding these latter facts sufficient to establish jurisdiction over the person of Hentschel is that they are so heavily based upon inference as regards a finding that any of Hentschel's conduct, which is alleged to have been in furtherance of the conspiracy, took place in Illinois. It can be agreed that Hentschel's employment record and his close relationship with Foerster and Hoover Ball suggest that he was conspiring with them, but there is absolutely no evidence by way of affidavit that any of this took place in Illinois. Except for his attendance at the March 15-16, 1962, conference in Chicago, there is no evidence that any of Hentschel's conduct took place in Illinois. Regarding that Chicago conference, I find that the allegations of Magnaflux concerning Hentschel's conduct are insufficient to support the requisite jurisdictional finding that Hentschel committed a tortious act in Illinois.
Accordingly, Hentschel's motion to dismiss the complaint as to him for want of jurisdiction must be granted in that the *566 allegations of jurisdiction fail to satisfy the requirements of Section 17(1) (b) of the Illinois Civil Practice Act.
I now consider the motions to dismiss the complaint for failure to state a claim upon which relief can be granted filed by the remaining defendants, Dr. Foerster, Hoover Ball and Forster/Hoover.
The crux of the matter is, as the defendants' motion succinctly states:
"The complaint stands or falls on a single proposition which is that Forster/Hoover is not a `Foerster Group' as that expression is used in the 1961 agreement. Everything else is ancillary or subordinate to that proposition."
Perhaps it is well before considering this motion to review briefly what is charged in the complaint.
Dr. Friedrich Foerster is charged with a breach of his 1954 contract, as amended in 1961, with Magnaflux in that contrary to his promise not to sell Foerster instruments in the United States or Canada, except directly or through a "Forster group," as defined in the contract, he has in fact sold his products to Forster/Hoover, which does not qualify as a "Forster group" as defined.
A "Forster group" is defined as:
"1. An employee of Institut Dr. Friedrich Forster (or a group of such employees) located and operating in the United States;
"2. A corporation organized and operating in the United States sufficient of the voting stock of which is owned by Institut Dr. Friedrich Forster or by Dr. Friedrich Forster or by the heirs, executors or personal representatives of Dr. Friedrich Forster to enable such owner to elect at least a majority of the directors of such corporation."
The Articles of Incorporation of Forster/Hoover Electronics, Inc., are appended to the complaint as Exhibit A. They provide that the corporation shall have a total authorized capital stock of 20,000 Class A Common shares of a par value of $1. and 82,000 Class B Common shares of a par value of $1. Further, it is provided that, "The Class A Common Stock and the Class B Common Stock shall have equal privileges, preferences and rights, except that until January 1, 1965 the Class A Common Stock shall have exclusive voting power with respect to the election of directors. Effective on January 1, 1965, the Class A Common Stock and the Class B Common Stock shall have equal privileges, preferences, rights and voting powers, without distinction."
The Articles further provide that Friedrich Foerster owns 10,200 shares of Class A and that Hoover Ball owns 9,800 shares of Class A Common Stock; Foerster owns none of Class B, while Hoover Ball owns 71,800 Class B shares, Norman Sonderman owns 5,100 of the Class B shares and Rudolph Hentschel owns 5,100 of the Class B shares.
The complaint alleges on information and belief that there have been no transfers of stock since the original subscription outlined above in the Articles of Incorporation, and the same parties still own the same percentages of the two classes of stock.
The contract between Foerster and Magnaflux expires on December 31, 1964, provided that a notice of termination is given at least one year prior to that date. So that it appears, and plaintiff so alleges, that the temporary suspension of the voting rights in the Class B Common Stock until January 1, 1965, was designed to give Foerster voting control of the corporation only as long as he was contractually bound not to sell his products through any corporation other than a "Forster group."
It is clear that after January 1, 1965, Hoover Ball will have the voting control of Forster/Hoover by a comfortably wide margin.
Forster/Hoover is alleged, in brief, to have induced Foerster to breach his contract with Magnaflux by acting in concert with its co-conspirators, Hoover Ball and Rudolph Hentschel. The complaint alleges that in addition to breaching his *567 contractual obligation to sell his products in the United States only through a "Forster group," defendant Foerster was guilty of fraud in the inducement of the 1961 amendments to the 1954 contract, in that, "At no time during the July 1961 negotiations did Foerster or his representatives state that he had made any plans or arrangements to sell his products in the United States. During these negotiations Foerster expressly denied that he had any arrangement whatever with anyone other than Magnaflux to sell or manufacture his instruments in the United States." (Paragraph 34)
Further, "Foerster concealed from Magnaflux during said negotiations of July 1961, that he had previously negotiated with Hoover Ball to supersede Magnaflux as his exclusive representative in the United States for the sale and distribution of Foerster type equipment. When Foerster executed the 1961 agreement he intended to immediately join Hoover Ball in organizing a new corporation to sell and manufacture Foerster type instruments in the United States." (Paragraph 37)
The succeeding paragraphs of the complaint allege that Hoover Ball induced Foerster beginning prior to July 14, 1961, to terminate his business relations with Magnaflux at the first opportunity and to divert all or as much as possible of Foerster's American business from Magnaflux to Hoover Ball and the subsidiary Hoover Ball proposed to form for that purpose. Sonderman and Hentschel, officers and directors of the firm to be organized as Forster/Hoover, and former employees of the plaintiff Magnaflux, are alleged to have been brought into this conspiracy, and all of them are alleged to have conspired to deprive Magnaflux of its lawful rights under the 1954 contract as amended in 1961. (Paragraph 38)
It is also alleged that, "Forster/Hoover entered into a secret contract with Foerster for the sale and distribution of Foerster instruments and parts therefor and for the manufacture of Foerster type instruments by Forster/Hoover. This secret contract also regulates other matters between Forster/Hoover and Foerster and directly or indirectly aids Hoover Ball in the maintenance of its control over the business of defendant Forster/Hoover. Defendants have refused to disclose to plaintiff this secret contract or any of the provisions thereof or any of the amendments or supplements thereto or any of the correspondence relating thereto, and plaintiff will remain ignorant thereof unless aided by the discovery procedures of this Court." (Paragraph 41)
Plaintiff alleges alternatively that even if Forster/Hoover were a "Forster group," which plaintiff does not concede for a moment, Foerster has further breached his contract with Magnaflux in that under paragraph 2 F. of the 1954 agreement, as amended, Foerster had the duty to notify Magnaflux promptly of any installation of any new or improved Foerster instruments in the United States or Canada, and Magnaflux was to have the right to visit such installation and discuss it with Foerster or the "Forster group." The complaint further charges that Foerster has made such installations through Forster/Hoover, and that notwithstanding his contractual duty of notification, Foerster has failed to supply any information in regard to such installations, or to discuss any of the equipment installed by Forster/Hoover. Further, Foerster is alleged to have violated paragraph 4 of the 1954 contract, which provides that when Foerster instruments are sold through a "Forster group," that they must be sold at a discount of at least 50% below that price to Magnaflux.
There are a variety of other ancillary breaches also alleged.
In short then, the complaint alleges a breach of his contractual duties by Foerster in that Foerster either is selling his products through a corporation which is not a "Forster group," or if he is selling through a "Forster group," he has not properly notified plaintiff of such sales nor has he given plaintiff the 50% discount *568 below the price at which sales are made through such "Forster group." The complaint further alleges that Forster/Hoover, along with the other two alleged co-conspirators, conspired to induce Foerster to make the above-described breaches of his contract with Magnaflux.
The gist of the defendants' argument that a claim has not been stated against them is that no breach of contract is alleged because on the face of the complaint and on the face of the contract appended thereto, Forster/Hoover is a "Forster group."
There is no doubt that the Illinois law is that to state a claim alleging inducement to breaching a contract, the following elements are essential: (1) Defendant's knowledge of the existing contract; (2) inducement of one of the parties to the contract to breach it; (3) subsequent breach by one of the parties; and (4) damage to the plaintiff. See Northern Ins. Co. of New York v. Doctor, 23 Ill.App.2d 225, 161 N.E.2d 867, and Hardy v. Bankers Life & Casualty Co., 19 Ill.App.2d 75, 153 N.E.2d 269.
To sustain either the claim for breach of contract against Foerster, or the claim for conspiracy to induce a breach of contract against Hoover Ball and Forster/Hoover, Magnaflux must allege a breach of the 1954 agreement, as amended in 1961. The question is, therefore, whether Magnaflux has sufficiently pleaded a breach of that contract by alleging Forster/Hoover is not such a "Forster group," as contemplated by the parties to the agreement, through which Foerster could legitimately sell his products independently of Magnaflux. The answer to this question is not as simple as defendants assert it to be.
It is uncontradicted that until January 1, 1965, Foerster will have sufficient control of the "voting stock" of Forster/Hoover to enable him to elect a majority of directors. However, Magnaflux argues that it was intended by the parties that control of the voting stock should be "permanent and not temporary." Defendants contend that however temporary Foerster's voting control might be, it is at least as long as his contractual obligations with Magnaflux; and, therefore, since the contract between Foerster and Magnaflux gives no rights whatsoever after its termination on December 31, 1964, Foerster's loss of voting control after that date should have no bearing on this case at all.
Both parties seek to introduce by way of their briefs statements as to what the respective intentions of the parties were during the 1961 negotiations. Magnaflux argues that the intention of the parties was that a "Forster group" be permanently controlled by Foerster in order to qualify. Foerster, Hoover Ball and Forster/Hoover contend that it was the intention of Magnaflux to make the 1961 amendments "for tax purposes," although this is not further amplified. Both sides also accordingly assert that the parol evidence rule should bar consideration of the other side's statement as to what its intentions were at the time of integrating their agreement in a written contract on July 14, 1961.
The rule, of course, is when a contract has been integrated and reduced to writing prior or contemporaneous oral statements of intention by the parties are irrelevant and cannot be considered by the court in interpreting that contract, when the contract terms are not ambiguous or uncertain. See, among others, Oddie v. Ross Gear & Tool Co., 305 F.2d 143, 148 (6 Cir. 1962), Standard Oil Co. v. Ogden and Moffett Co., 242 F.2d 287, 292 (6 Cir. 1957), and The Restatement of Contracts, (1932) § 237.
However, the crucial point in the operation of the parol evidence rule is that the contract terms must be unambiguous.
Agreements prior to or contemporaneous with the integration are admissible in evidence to establish the meaning of the integrated contract when its terms are ambiguous or to prove facts in a suit for reformation. See Restatement of Contracts, §§ 230, 231 and 238 (a) and (c).
*569 In Martindell v. Lake Shore Nat. Bank, 15 Ill.2d 272, 154 N.E.2d 683 (1958), in answer to a complaint for specific performance of a contract of sale of "Who's Who," the defendants sought to justify their refusal to sell by asserting a narrow construction of the contract, emphasizing one clause of the contract over all others. The contract gave the plaintiff the option to purchase 67% of certain corporate debentures ten years after they were issued by the new corporation which was formed as part of the sale. In apparent limitation of plaintiff's option rights, the clause on which defendants relied stated: "`Debentures paid and discharged by the new corporation shall not thereafter be available for purchase by the Buyer under this option.'" If one of the sellers (Wheeler Sammons, Sr.) died before ten years elapsed, a clause further provided for acceleration of the election date for plaintiff's option to a date coincidental with issuance of letters in his estate. Sammons, Sr., died and on the same day that letters were issued in his estate, the other defendants caused the "new corporation" to redeem the debentures outstanding. The issue was whether the above-quoted clause limiting plaintiff's option rights was intended by the parties to the contract to have the same limiting effect even after the date for plaintiff's election had been accelerated.
The Illinois Supreme Court upheld the trial court's summary judgment for the plaintiff, granting a decree of specific performance of the contract, and in so doing considered evidence of negotiations prior to the integration of the agreement in a writing. Among the evidence extrinsic to the written contract itself which the trial court considered were letters written by Sammons, Sr., prior to the formal execution in which he indicated that he wanted plaintiff to be his successor:
"A contract, however, is to be construed as a whole, giving meaning and effect to every provision thereof, if possible, since it will be presumed that everything in the contract was inserted deliberately and for a purpose. Hartley v. Red Ball Transit Co., 344 Ill. 534, 176 N.E. 751. The intention of the parties is not to be gathered from detached portions of a contract or from any clause or provision standing by itself, but each part of the instrument should be viewed in the light of the other parts. Chicago Home for Girls v. Carr, 300 Ill. 478, 133 N.E. 344; 12 I.L.P., Contracts, § 215.
"The primary object of the construction of a contract is to give effect to the intention of the parties, greater regard being given to such intent, when clearly revealed, than to any particular words used in expression thereof. United States Trust Co. of New York v. Jones, 414 Ill. 265, 111 N.E.2d 144; Guhl v. Guhl, 376 Ill. 100, 33 N.E.2d 185; 12 I.L.P., Contracts, § 212. In general, the intention of the parties is to be determined from the final agreement executed by them, rather than from preliminary negotiations and agreements (Clark v. Mallory, 185 Ill. 227, 56 N.E. 1099) but previous agreements, negotiations and circumstances may be considered in determining the meaning of specific words and clauses. Koelmel v. Kaelin, 374 Ill. 204, 29 N.E.2d 106; 12 I.L.P., Contracts, § 215. Similarly, under well recognized exceptions to the parol evidence rule, extrinsic evidence is admissible to show the meaning of words used in a contract where there is an ambiguity, or when the language is susceptible of more than one meaning. Adams v. Gordon, 265 Ill. 87, 106 N.E. 517; Evans v. Gerry, 174 Ill. 595, 51 N.E. 615; Hogan v. Wallace, 166 Ill. 328, 46 N.E. 1136; Restatement of Contracts, sec. 238(a)." (Id. 15 Ill.2d at pp. 283-284, 154 N.E.2d at p. 689.)
Is "voting stock" such an ambiguous term? Other courts in other contexts have found it so. Although involving an admittedly distinguishable question, in problems of Federal taxation of corporations, two courts have considered the *570 term "voting stock" and found it not to be without ambiguity. Wurlitzer Co. v. Commissioner of Internal Revenue, 81 F.2d 971 (6 Cir. 1936), and Helvering v. Southwest Consolidated Corp., 315 U.S. 194, 62 S.Ct. 546, 86 L.Ed. 789 (1942).
Here it is not clear on the face of the 1954 agreement, as amended, that when the parties provided that Foerster should own "sufficient of the voting stock" of a corporation in order "to elect at least a majority of the directors of such corporation," what they would have thought of a corporate capitalization in which Foerster owned 51% of the voting stock but only for a period of some two and one-half years. One could also speculate as to what the parties would have thought of a corporation in which Foerster was only one of five directors, and the other four were employees of a competitor of Magnaflux, which is the case with the Forster/Hoover corporation.
Further, paragraph 14 of the 1954 agreement, as amended by paragraph M. in 1961, provides:
"This agreement as amended shall run for a first term to and including December 31, 1964, and shall be renewed automatically from year to year thereafter, provided, however, that either party may terminate this agreement on the 31st day of December in the year 1964 or in any year thereafter by written notice to the other party at least one year before the desired effective date of termination."
Thus, at the time the contract was originally executed, and later at the time of its amendment in 1961, the parties were not certain of the length of the contract's life. Under the automatic year-to-year renewal clause, the contract could have continued Magnaflux's modified exclusive sales rights beyond December 31, 1964, as long as a termination notice was not given at least one year before that date. The same is true today, as the record is barren of any evidence that either party has given such notice. Under these circumstances, it is difficult to understand how Forster/Hoover's capital structure could satisfy the test of a "Forster group" should the present contract be automatically renewed. Dr. Foerster's 51% control of the voting stock expires according to the Articles of Incorporation on December 31, 1964, at which time Hoover Ball will possess more than 80% of the voting stock. Consequently, Dr. Foerster may not even have voting control of Forster/Hoover during the life of his agreement with Magnaflux.
The possibility that Foerster entered into a contract to sell his products to or through a corporation, a majority of whose voting stock he might not control during the period of his contractual obligation to Magnaflux, when considered with the plaintiff's allegation that Foerster fraudulently induced the execution of the 1961 amendments to the 1954 agreement by concealing from Magnaflux his dealings with Hentschel and Hoover Ball and his intention to create with them Forster/Hoover, raises substantial questions of fact regarding Foerster's good faith in performing under the contract.
It is interesting to note that the Court held in Martindell that Illinois law implies obligations of good faith and fair dealing from all parties to a contract:
"When the instrument is construed in light of all its provisions and with a view to the intent to be gathered from the extrinsic evidence, we cannot agree that the limiting sentence in the option provision was intended by the parties to reduce the agreement to a security arrangement or to shrink the rights expressly granted plaintiff to the status of an offer revocable at the pleasure of the new corporation. Every contract implies good faith and fair dealing between the parties to it, and where an instrument is susceptible of two conflicting constructions, one which imputes bad faith to one of the parties and the other does not, the latter construction should be adopted. 12 I.L.P., Contracts, § 217. In the present case the only limitation on plaintiff's *571 option to purchase is that debentures `paid and discharged by the new corporation' would not thereafter be available for purchase under his option. From the entire record, it is our opinion that this limitation has reference only to bona fide redemptions made by the corporation in the normal course of business. Otherwise, as is demonstrated by the result reached in the Appellate Court, the new corporation, even though it was not a party to the agreement, must be said to have remained in a position to accomplish a complete forfeiture of plaintiff's rights even after the time to exercise such rights had been reached. Most certainly no concept of good faith or fair dealing permits a construction that the limitation was intended to reach corporate redemptions financed by the sellers for the sole purpose of avoiding the plaintiff's options rights." (Id. 15 Ill.2d at p. 286, 154 N.E.2d at p. 690.)
Evidence will be required to determine whether Forster/Hoover qualifies as a "Forster group" as defined by the contract itself. I am not satisfied with the sufficiency of the affidavits before me to decide this question on summary judgment, as did the Illinois Court in Martindell. Moreover, defendants' motions ignore the allegations of other breaches of the contract (alleged in the alternative, should Forster/Hoover be found to be a "Forster group"), described above, which will also require the reception of more evidence.
Therefore, it would appear that plaintiff has sufficiently pleaded ultimate facts alleging a breach of its contract with Foerster. Whether the term "voting stock" is considered ambiguous, and plaintiff is correspondingly allowed to introduce parol evidence to explain the term, or whether plaintiff relies upon its allegations of fraudulent inducement of the contract by Foerster, it cannot be said as a matter of law that plaintiff has not stated a claim upon which relief can be granted. Further, as regards plaintiff's allegations that Forster/Hoover in conspiracy with two others induced Foerster to make this breach of contract, it would also appear that all the elements required for stating a claim for inducement to breach a contract have been stated.
Accordingly, the motion of the defendants, Dr. Friedrich Foerster, Hoover Ball and Bearing Company and Forster/Hoover Electronics, Inc., to dismiss the complaint for failure to state a claim upon which relief can be granted is denied.
Therefore, it is the conclusion of this Court that:
(1) The motion of Dr. Friedrich Foerster to dismiss the complaint for want of jurisdiction over his person is denied.
(2) The motion of Forster/Hoover Electronics, Inc., to dismiss the complaint for want of jurisdiction over its person is denied.
(3) The motion of Hoover Ball and Bearing Company to dismiss the complaint for want of jurisdiction over its person is denied.
(4) The motion of Rudolph G. Hentschel to dismiss the complaint for want of jurisdiction over his person is granted.
(5) The motion of Rudolph G. Hentschel to dismiss the complaint for failure to state a claim on which relief can be granted is moot, the complaint having been dismissed for lack of jurisdiction over his person.
(6) The motion of Dr. Friedrich Foerster, Hoover Ball and Bearing Company and Forster/Hoover Electronics, Inc., to dismiss the complaint for failure to state a claim upon which relief can be granted is denied.
(7) Defendants, Dr. Friedrich Foerster, Hoover Ball and Bearing Company and Forster/Hoover Electronics Inc., are given twenty days from the date of the receipt of this opinion for filing their answers to the complaint.
NOTES
[1] The amendment had the effect of abrogating plaintiff Magnaflux's exclusive distribution rights to Foerster's products in the United States to the extent that either Foerster's employees or a corporation in which Foerster owned sufficient of the voting stock to be able to elect a majority of the board of directors could also distribute Foerster's products in the United States. Such a corporation is designated by the contract as a "Forster group." It is the sale of Foerster's products by Forster/Hoover that has given rise to this lawsuit. The issue on the merits is whether Forster/Hoover is a "Forster group."
[2] The pertinent provisions of the Illinois Civil Practice Act (Ill.Rev.Stats.1961, ch. 110) for determination of this case are as follows:
"§ 13.1 * * * (2) Summons may be served upon the defendants wherever they may be found in the State, by any person authorized to serve writs. * * *" "§ 13.3 * * * A private corporation may be served (1) by leaving a copy of the process with its registered agent or any officer or agent of said corporation found anywhere in the State; or (2) in any other manner now or hereafter permitted by law. * * *"
"§ 16 * * * (1) Personal service of summons may be made upon any party outside the State. If upon a citizen or resident of this State or upon a person who has submitted to the jurisdiction of the courts of this State, it shall have the force and effect of personal service of summons within this State; otherwise it shall have the force and effect of service by publication."
"§ 17 * * * (1) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits said person, and, if an individual, his personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of said acts:
"(a) The transaction of any business within this State;
"(b) The commission of a tortious act within this State; * * *"
"(2) Service of process upon any person who is subject to the jurisdiction of the courts of this State, as provided in this section, may be made by personally serving the summons upon the defendant outside this State, as provided in this Act, with the same force and effect as though summons had been personally served within this State.
"(3) Only causes of action arising from acts enumerated herein may be asserted against a defendant in an action in which jurisdiction over him is based upon this section."
"(4) Nothing herein contained limits or affects the right to serve any process in any other manner now or hereafter provided by law."
[3] Plaintiff has cited authority which states that the personal service effected by Willmitzer here is the manner preferred by German law. Foerster does not contest this proposition. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261359/ | 121 N.H. 258 (1981)
JAMES F. McCUSKER
v.
VALLEY NEWS.
No. 80-197.
Supreme Court of New Hampshire.
April 3, 1981.
*259 Brown & Nixon P.A., of Manchester (Stanley M. Brown & a. on the brief and Mr. Brown orally), for the plaintiff.
Bell, Falk & Norton, of Keene (Ernest L. Bell, III, on the brief and orally), for the defendant.
PER CURIAM.
The issue in this libel case is whether the trial court erred in denying the defendant's motion for summary judgment. We uphold the trial court.
On October 8, 1976, the defendant published an article written by one of its staff writers, Jan Slusmon, who reported that certain unnamed legislators had alleged that the plaintiff, who at that time was 78 and the brother of the then sheriff of Sullivan County, was "being paid $9,000 a year as a part-time deputy sheriff, plus *260 an undetermined amount of money in per diem fees, despite the fact that he is barely ambulatory."
The plaintiff brought suit alleging that the statements were untrue and libelous. The defendant moved for summary judgment, on the grounds that the plaintiff is, and has been since 1944, a public official, that the article related to his official conduct, that the publication is actionable only on a showing of "actual malice," and that there are no facts that would establish such malice. Jan Slusmon also filed a supporting affidavit claiming that he had accurately reported the legislators' statements and that he had no reason to doubt that the statements were substantially true. The Trial Court (Temple, J.) found that there were genuine issues of fact as to whether the plaintiff was a public official and as to whether proof of "actual malice" was required in order for the plaintiff to recover, and therefore denied summary judgment. The defendant appealed.
[1, 2] If the plaintiff was a public official or a public figure, then, in order to recover for injury to reputation, he would have to prove not only that the defamatory statement was false but also that the defendant published it with knowledge that it was false or with reckless disregard for the truth. Gertz v. Robert Welch, Inc., 418 U.S. 323, 342 (1974); Curtis Publishing Co. v. Butts, 388 U.S. 130, 162-65 (1967) (Warren, C.J., concurring); New York Times Co. v. Sullivan, 376 U.S. 254, 279-80 (1964). If the plaintiff was neither a public official nor a public figure, then he need not prove knowing falsehood or recklessness. Gertz v. Robert Welch, Inc., 418 U.S. at 343-48. Instead, he may recover compensatory damages upon a showing that the defendant was negligent in publishing a defamatory falsehood. See id. at 349-50.
[3-5] Not all government employees are public officials within the meaning of New York Times Co. v. Sullivan. In order to show that the plaintiff is a public official under New York Times, the defendant must prove that the plaintiff's "position in government has such apparent importance that the public has an independent interest in the qualifications and performance of the person who holds it, beyond the general public interest in the qualifications and performance of all government employees...." Rosenblatt v. Baer, 383 U.S. 75, 86 (1966). In the Rosenblatt case, the United States Supreme Court "remarked" that the decision as to whether the plaintiff in a defamation action is a public official is "for the trial judge in the first instance." Id. at 88. However, in Baer v. Rosenblatt, 108 N.H. 368, 370-71, 237 A.2d 130, 132-33 (1967), *261 decided after remand from the Supreme Court, we held that the Constitution of this State, N.H. CONST. pt. I, arts. 14 and 20, entitled the plaintiff to a jury trial on this issue with proper instructions from the court. We reinforced this position in Thomson v. Cash, 119 N.H. 371, 378, 402 A.2d 651, 656 (1979).
[6] In remarking that the issue of whether an individual is a public official was in the first instance for the trial judge, the United States Supreme Court was concerned with the possibility that a jury, in making the determination, would be influenced by its view of the defendant and his publication. See Rosenblatt v. Baer, 383 U.S. at 88 n.15. This concern is not unlike that expressed in Jackson v. Denno, 378 U.S. 368 (1964), with respect to the determination of the voluntariness of confessions. We are of the opinion, however, that this concern can be dispelled by careful instructions to the jury and by the use of a special verdict on the public official issue. See Baer v. Rosenblatt, 108 N.H. at 371, 237 A.2d at 133. Whether this issue should be "tried separately and in advance of other issues" is a matter best left to the sound discretion of the trial court. Id.
[7, 8] What we have said with regard to the public official issue also applies to the issue of whether the plaintiff was a public figure as defined in such cases as Wolston v. Reader's Digest Assn. Inc., 443 U.S. 157, 164 (1979); Time, Inc. v. Firestone, 424 U.S. 448, 453 (1976); and Gertz v. Robert Welch, Inc., 418 U.S. at 344-47.
The plaintiff in this case was the sheriff of Sullivan County, an elective office, from 1943 to 1966. At the time of the publication in question, he was a deputy sheriff under an appointment of his brother, then the sheriff. In his capacity as deputy sheriff, the plaintiff's duties consisted of serving process, interviewing complainants, doing investigative work, and acting as bailiff for the superior court. The plaintiff has served as president of the New Hampshire Sheriffs' Association. In 1955, he organized the Sullivan County Peace Officers' Association. In the late 1930's, he was the president of the Permanent Fireman's Association, and in 1939 he authored a legislative bill providing for firemen's retirement. He has been active over the years in political campaigns and has spoken to service and women's clubs.
The plaintiff's position as a deputy sheriff does not place him in the category of a public official as a matter of law. Neither can we say that the plaintiff was a public figure as a matter of law. The trial court was correct in holding that genuine issues of fact existed which required the denial of summary judgment for the defendant.
*262 [9] We also agree with the plaintiff that, even assuming that the New York Times test of "actual malice" does apply, there are genuine issues of fact in this case. Even if there may be cases in which summary judgment would be appropriate, this is not one of them. See Hutchinson v. Proxmire, 443 U.S. 111, 120 n.9 (1979); Thomson v. Cash, 119 N.H. 371, 402 A.2d 651 (1979).
Exceptions overruled; remanded.
GRIMES, C.J., did not sit. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261330/ | 121 N.H. 296 (1981)
SALVATRICE ANN MARTIN CARTELLI
v.
ALAN JAMES MARTIN.
No. 80-211.
Supreme Court of New Hampshire.
April 17, 1981.
William B. Cullimore, of Farmington, waived brief for the plaintiff.
Decker, Hemeon, Fitzgerald & Sessler P.A., of Laconia (David R. Decker on the brief), by brief for the defendant.
*297 PER CURIAM.
The issue on this appeal is whether the superior court properly declined to exercise jurisdiction under RSA ch. 458-A (Supp. 1979), the Uniform Child Custody Jurisdiction Act, over a cross-petition filed by the defendant to modify a Connecticut decree pertaining to the custody of the parties' children. We affirm the court's dismissal of the defendant's cross-petition to modify.
The defendant, in his answer to plaintiff's petition to enforce the Connecticut decree of custody dated November 21, 1979, admitted the following facts. The plaintiff was divorced from the defendant by judgment and decree of the Superior Court of Connecticut on April 5, 1974; the decree awarded to the plaintiff the custody and education of Kristy Eleanor, born to the parties November 9, 1968, and Douglas Arthur, born to the parties on August 5, 1970; the Connecticut court granted the defendant a right of reasonable visitation, which that court later modified on October 10, 1975, to provide "that in 1977 the Defendant shall have the children for the entire month of July and each odd year thereafter." In accordance with that modified decree, on or about July 1, 1979, the minor children were delivered to their father, the defendant, who resided in New Hampshire.
The defendant in his answer to the petition for enforcement of decree of custody sought permanent custody of the children. He alleged that the children have lived with him in Alton since the beginning of the summer of 1979, that they desire to live with him rather than with their mother, that there has been a change in circumstances requiring the change in custody, and that the best interest of the minor children is that their custody be awarded to him.
On the pleadings, without a hearing, the Marital Master (Linda Stewart Dalianis, Esq.) made the following recommendations:
"The Court finds sufficient undisputed facts in the pleadings to decline to exercise jurisdiction under RSA ch. 458-A. Defendant's Answer with Request to Modify Custody dismissed. Plaintiff's Petition for Enforcement and Motion for Judgment on the pleadings granted.
The children shall be forthwith returned to plaintiff's custody."
The master's recommendations were approved by the Superior Court (Batchelder, J.), and an order in accordance therewith was issued.
It has been said that "[t]here are four types of custody cases. The `best' are those in which both parents want their children, but care enough not to fight over them. Then there are cases where only one *298 parent wants the children, and the other does not interfere. Next are the cases in which both parents want the children and fight over them. Truly sad are those cases in which neither parent wants the children." H. KRAUSE, FAMILY LAW IN A NUTSHELL § 21.1 (1977).
In order to relieve this almost intractable problem of disputed child custody, wherein children are innocent subjects of a conflict they can seldom understand, the legislature enacted RSA ch. 458-A (Supp. 1979) entitled "Uniform Child Custody Jurisdiction Act" to take effect September 1, 1979. RSA 458-A:1 (Supp. 1979) lists the following among its general purposes: "(a) Avoid jurisdictional competition and conflict with courts of other states in matters of child custody which have in the past resulted in the shifting of children from state to state with harmful effects on their well-being...; (c) Assure that litigation concerning the custody of a child take place ordinarily in the state with which the child and his family have the closest connection ... and that courts of this state decline the exercise of jurisdiction when the child and his family have a closer connection with another state."
RSA 458-A:7 I (Supp. 1979), "Inconvenient Forum," reads as follows:
"A court which has jurisdiction under this chapter to make an initial or modification decree may decline to exercise its jurisdiction any time before making a decree if it finds that it is an inconvenient forum to make a custody determination under the circumstances of the case and that a court of another state is a more appropriate forum."
[1] Among the factors to be considered by the court in making the decision of inconvenient forum, one is whether "[a]nother state is or recently was the child's home state." RSA 458-A:7 III(a) (Supp. 1979). The domicile of the children in the case before us was Connecticut because that was the domicile of their mother to whom their custody had been granted. See Luoma v. Keene School District, 106 N.H. 488, 491, 214 A.2d 120, 122 (1965); In re Sagan, 396 A.2d 450, 452 (Pa. Super Ct. 1978). Furthermore, there was no allegation that the children had been abandoned or that some emergency existed that made it necessary for this State to assume jurisdiction for their protection. RSA 458-A:3 I(c); see Mattison v. Mattison, 379 So. 2d 677, 680 (Fla. App. 1980). See generally Bodenheimer, Progress Under the Uniform Child Custody Jurisdiction Act and Remaining Problems: Punitive Decrees, Joint Custody, and Excessive Modifications, 65 CAL. L. REV. 978 (1977); Bodenheimer, *299 The Uniform Child Custody Jurisdiction Act: A Legislative Remedy for Children Caught in the Conflict of Laws, 22 VAND. L. REV. 1207 (1969).
[2] "A finding of inconvenient forum may be made upon the court's own motion or upon motion of a party or a guardian ad litem or other representative of the child." RSA 458-A:7 II (Supp. 1979). The record supports the master's ruling that the undisputed facts in the pleadings warranted a declination to exercise jurisdiction under RSA ch. 458-A (Supp. 1979). The orders recommended by the master and approved and decreed by the superior court were proper.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261336/ | 121 N.H. 130 (1981)
JOHN E. ARNOLD & a.
v.
GEORGE B. CHANDLER & a.
No. 79-221.
Supreme Court of New Hampshire.
March 11, 1981.
*131 Brown and Nixon, of Manchester (David W. Hess on the brief and orally), for the plaintiffs.
Stark & Peltonen, of Manchester (John E. Peltonen on the brief and orally), for the defendants E. Leo Kanteres and MacArthur, Inc.
BROCK, J.
The plaintiffs in this case appeal from the denial of their petition for equitable relief and an injunction to enforce certain land use restrictions which they claim apply to the residential subdivision in which they and the defendant Chandlers reside. Specifically, the Arnolds sought to enjoin their neighbors, the Chandlers, from conveying a fifty-foot right-of-way across their lot to the other defendants, who would use the right-of-way for an access road to five residential building lots which they wish to develop adjacent to, but outside, the subdivision. Trial, with a view, was held before a Master (Earl J. Dearborn, Esq.) and resulted in a recommendation that injunctive relief be denied. Randall, J., approved the master's recommendation and the plaintiffs appealed to this court. We affirm.
The Chandlers' property is located in a housing development known as the "Jamestown" subdivision in Bedford. The plaintiffs Arnold, Roy and Dieter own adjacent lots in the subdivision. According to the record, the area is a secluded, residential neighborhood, and the road on which the parties reside comes to a dead-end.
The Jamestown subdivision was originally owned and developed by Armand and Shirley Rivard. In 1970, the Rivards recorded a declaration of restrictions purporting to place restrictions on the use of land in the subdivision. Although the Rivards were the record owners of the land, the restrictions were recorded under the name of a corporation that they owned, Ardon Corporation. At the time when the Rivards intended to develop a lot, they would convey it to the corporation, which would build the home and sell it to the home buyer. Five lots were developed in this manner. Because *132 the declaration of restrictions was recorded before the corporation took title to any of the lots in the subdivision, the conveyancing procedures employed by the Rivards were, at best, questionable. Further complicating things, the Rivards also sold two lots directly to individual buyers before the restrictions had been recorded. In addition, even after the declaration of restrictions had been recorded, the Rivards sold another five lots directly to individuals desiring to build their own homes, without conveying them first to Ardon Corporation. Thus, as to at least twelve of the thirty-six lots in the Jamestown subdivision, serious questions arise as to the applicability of the declaration of restrictions recorded in the name of Ardon Corporation.
On June 5, 1973, the Rivards elected to employ a more practical procedure and recorded, under their own names, a second declaration of restrictions. This declaration specifically applied to all of their lots in the Jamestown subdivision which remained unsold on that date. Five months thereafter, the Rivards sold the lot that now belongs to the defendant Chandlers to Harold and Frances Mokler. The deed from the Rivards to the Moklers, however, made no reference to either the restrictions or any instrument that referred to them. This same lot was conveyed a number of times before the Chandlers acquired title to it in 1976, but none of the intervening deeds ever referred to the declaration of restrictions. In addition, the master found that the Chandlers never had actual notice of the restrictions.
The deeds by which the plaintiffs Roy, Arnold and Dieter acquired title to their respective lots, however, all refer to the declaration of restrictions recorded by the Rivards on June 5, 1973.
In 1978, the Chandlers decided that they would like to build a tennis court on their lot. In order to build the tennis court, it was necessary that they apply for a variance from the provisions of the Bedford zoning ordinance because their lot was undersized and their plan did not comply with side-lot requirements. The Chandlers applied for a variance but the abutting landowners, the plaintiffs Arnold, objected and the requested variance was denied.
Shortly thereafter, on December 20, 1978, the Chandlers entered into an agreement with the defendants, Leo Kanteres and MacArthur, Inc., who own approximately 190 acres of land adjoining the Chandlers and the Jamestown subdivision, to sell a fifty-foot right-of-way across their property in return for sufficient land to enable the Chandlers to build a tennis court without having to seek a variance. The Kanteres-MacArthur, Inc., land is not otherwise land-locked, *133 but the right-of-way would provide a much more economical means of access to part of their acreage than any other alternative.
Upon learning of this agreement, the plaintiffs brought this action, asserting that both of the recorded declarations of restrictions bar the proposed conveyance of the right-of-way.
[1] Because the first declaration of restrictions was recorded under the name of Ardon Corporation, which never had title to the Chandlers' land, we conclude that it is not relevant to the issues to be decided in this case.
[2] The declaration of restrictions recorded in the name of the Rivards in June 1973 is another matter. It was recorded at a time when the Rivards held title to the lot in question and the grantor's index clearly indicates that it is a declaration of restrictions applicable to the Jamestown subdivision. A title search would have revealed not only the existence of the restrictions, but also their application to the lot in question. See Frost v. Polhamus, 110 N.H. 491, 493, 272 A.2d 596, 597 (1970).
Reference to the declaration shows that its purpose "is to insure the use of the Jamestown subdivision ... for attractive private residential purposes only...." It applies to all of the lots in Jamestown not sold by the Rivards prior to June 5, 1973. Specific provisions prohibit the subdivision of existing lots but allow for adjacent lot owners to modify their common boundaries so long as the total area of the individual lots remains the same. Numerous other restrictions, not relevant to the case before us, are set forth in the declaration. In addition, the declaration purports to restrict the uses to which the lots may be put even if the deeds conveying them do not specifically refer to the declaration.
[3, 4] The plaintiffs argue that the restrictions are enforceable both as real covenants and as equitable servitudes. "Broadly speaking, a `covenant' is an agreement between two or more persons to do or permit the doing of a particular act. Strictly speaking, it is an agreement by deed to do or not to do some particular act." 7 G. THOMPSON ON REAL PROPERTY § 3150 (1962 Replacement) (emphasis added); see Hanslin v. Keith, 120 N.H. 361, 363, 415 A.2d 329, 330 (1980). Because no such agreement appears in any of the deeds conveying the land now owned by the defendants, we hold that the restrictions are not enforceable as restrictive or "real covenants" running with the land. See Traficante v. Pope, 115 N.H. 356, 358-59, *134 341 A.2d 782, 784 (1975). An equitable servitude, however, may arise when there is a "general scheme of development and binds an owner who acquired the land with notice of a restriction on it." Hanslin v. Keith, supra at 363, 415 A.2d at 330. See Traficante v. Pope, supra at 359, 341 A.2d at 784. Thus, even in the absence of an agreement by deed, the restrictions may still be enforced as an equitable servitude against the purchaser or subsequent purchasers if they "acquired the land with notice of the restrictions on it. [Citations omitted.]" Traficante v. Pope, supra at 359, 341 A.2d at 784.
Here, the Rivards recorded the "Jamestown" restrictions and later conveyed the lot to the Chandlers' predecessors in title, the Moklers. The deed made no reference to the restrictions, nor does the evidence presented establish that the Moklers and Rivards made a mutual promise concerning the restrictions. Indeed, the evidence before the trial judge did not compel a finding that the Moklers had actual notice of the restrictions, and the master made no such finding. However, because the restrictions related to a general scheme of development and we are dealing with a "subsequent taker who acquired the land with [constructive] notice of the restrictions on it ..." an equitable servitude is created. See Traficante v. Pope, supra at 359, 341 A.2d at 784.
[5] "Enforcement of such a right in equity is clearly permissible." Johnson v. Shaw, 101 N.H. 182, 187, 137 A.2d 399, 402 (1957). The decision to enforce an equitable servitude by granting injunctive relief, however, "is a matter within the sound discretion of the [trial court] exercised upon a consideration of all the circumstances of each case and controlled by established principles of equity." Varney v. Fletcher, 106 N.H. 464, 467-68, 213 A.2d 905, 908 (1965); see Johnson v. Shaw, supra at 188-89, 137 A.2d at 403-04 (1957). "Sound discretion means `a discretion in consonance with well established principles of law, one that is neither arbitrary, vague nor fanciful.'" Hanslin v. Keith, supra at 364, 415 A.2d at 331. We will uphold the master's decision unless it is apparent from the record that he abused his discretion.
[6, 7] In this case, after a view and hearing all the evidence, the master found that the proposed roadway, if limited to serve a maximum of five residential lots, would not "interfere with the carrying out of the general plan of the area and the purposes of the restrictions." He also found that an earlier plan of the development *135 showed a road would eventually be built in the same vicinity as the one now proposed. While these findings are sufficient to support the result reached by the master, there remains a flaw in his decision. The master ruled that the Chandlers' lot was not subject to an equitable servitude, and we have held otherwise herein. The determinative question in cases where a party seeks to enforce an equitable servitude is whether the injunctive relief requested "would be equitable in view of all the circumstances of the particular case." See Johnson v. Shaw, 101 N.H. 182, 184, 137 A.2d 399, 403-04 (1957), and the trial court did not expressly make such a finding here. It did, however, order that the proposed access road be limited to serve a maximum of five residential lots, concluding that a limited access road would not "interfere with the carrying out of the general plan of the area and the purposes of the restrictions." We regard this finding and order as being the equivalent of a determination by the trial court that its order was "equitable in view of all the circumstances" of the case. Based upon our review of the record, we can find no fault in such a determination. Accordingly, we affirm.
Affirmed.
KING, J., did not sit; the others concurred. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261338/ | 223 F.Supp. 866 (1963)
IDEAL TOY CORPORATION, Plaintiff,
v.
ADANTA NOVELTIES CORP., Ella Singer and Gustav Dreyfus, Defendants.
United States District Court S. D. New York.
November 22, 1963.
Amster & Levy, New York City, for plaintiff.
H. Jordan Lee, New York City, for defendants; Michael F. Mayer, New York City, of counsel.
WYATT, District Judge.
This is an application for a preliminary injunction in an action for infringement of copyright (17 U.S.C. § 101) and for unfair competition. Jurisdiction of both claims appears from 28 U.S.C. § 1338(a) and (b).
The competing articles are dolls, in respect of which the most recent learning seems to be in Ideal Toy Corp. v. Sayco Doll Corp., 302 F.2d 623 (2d Cir. 1962).
The same plaintiff ("Ideal") is plaintiff in the case at bar. It has been making and selling dolls for over 50 years.
In March 1962, plaintiff offered for sale and thus "published" a new 12 inch doll (girl) to which it affixed notice of copyright on the shoulder blades and just below the hairline on the neck at back.
The claim to copyright was registered much later in two classes. The Register of Copyrights issued two certificates of registration. One was in the class "[w]orks of art; models or designs for works of art" (17 U.S.C. § 5(g)); apparently this was the doll itself, with hair and without clothing. The other was in the class "[p]rints and pictorial illustrations including prints or labels used for articles of merchandise" (17 U.S.C. § 5(k)); what was claimed and deposited in this class cannot be determined from the material submitted. As to each certificate the date of publication was given as March 1, 1962; the date of receipt of application and copies was shown as April 15, 1963; the "title" in each certificate was given as "Tammy".
Beyond question the "Tammy" doll as merchandised by plaintiff was an outstanding success. It became widely and favorably known. It represents a "teen age" girl and has always been sold dressed in a "basic outfit", which is a distinctive blue, white trimmed, short sleeved, turtle neck playsuit with white tennis shoes; the playsuit has shorts instead of a skirt. The Tammy doll so dressed has been sold in a rectangular box, with illustrations, name, and descriptive or advertising material on the box. The most prominent color is light purple on which appears two scroll borders of a running wavy black or blue line.
Plaintiff has also offered separately a variety of other clothes and accessories for use with the Tammy doll. Plaintiff *867 has also created a family of dolls for Tammy brothers, sisters, mother and father. Plaintiff devotes a separate catalog exclusively to "Tammy and her family of dolls".
It appears without contradiction that in 1962 Ideal spent over $200,000 in advertising and promoting the Tammy doll; we are told that in 1963 such spending will be above $1,250,000. Television has been used extensively; advertising has been in trade magazines and elsewhere; other promotional material has been employed.
In 1962, more than 500,000 Tammy dolls were sold, in dollar volume above $1,500,000. In eight months of 1963, more than 1,250,000 Tammy dolls were sold, in dollar volume above $3,750,000. Plaintiff has published a newsletter called "Tammy Topics" for children who are present or potential purchasers. There has been much correspondence with children and their mothers about "Tammy".
Plaintiff shows a reasonable probability that it can establish at trial not only that the Tammy doll has become widely and favorably known but that it has become identified with, and as made by, the plaintiff.
Defendant Adanta Novelties Corp. ("Adanta") is said to be controlled by the individual defendants but they need not be referred to herein. Adanta is sometimes here called "defendant".
Defendant is making and selling a doll of the same sort as Tammy but in a cheaper price range. When plaintiff learned of the dolls of defendant does not appear. It is also not clear when defendant first began making its dolls. The affidavit of Singer for Adanta states that "it was in the early months of 1962". Theoretically this could be either before or after the "publication" of Tammy on March 1, 1962. There is no way to establish from this record except so far as may be done by comparison of the dolls themselves whether the doll of Adanta was created from the example of the Tammy doll. A comparison of the dolls as dressed leads to the conclusion that defendant began making its dolls after the Tammy doll was on the market and with knowledge of the Tammy doll.
The doll of Adanta has no name. It is sold as part of a "Mix and Match Set" in a large square box, the top being of a clear material so that the contents can be plainly seen. The bottom of the box (seen through the clear material), the sides of the box and the lettering are all in a light purple color which, while not of exactly the same shade as that of the Tammy boxes, is so close as to seem the same at a quick glance. The similarity of the colors, considering the wide range available to defendant, leads to the strong suspicion of deliberate imitation. This is reinforced by the fact that defendant superimposes on the light purple background a line with scroll effect which resembles the running wavy line in the light purple background on the Tammy box.
The defendant's doll is roughly the same size as Tammy and is sold in exactly the same "basic outfit" playsuit as plaintiff uses in selling Tammy and with the same white tennis shoes. While some of the doll suits of defendant are of a different color from that of Tammy, many of the dolls are sold by defendant with a playsuit of exactly the same color as Tammy's.
The "Mix and Match set" as sold by defendant contains not only the doll dressed in a playsuit but also other items of clothing and accessories so displayed as to be seen through the clear top. Unlike Tammy whose hair is permanently fixed to her head, the dolls of defendant have no hair and are sold with three detachable wigs; some of the wigs of defendant are of the same color as the hair of Tammy. When its Mix and Match Sets leave defendant, apparently one of the wigs is on the doll; the combination could be the same blue playsuit and hair as are found on Tammy.
So far as the action is based on copyright infringement, the comparison to determine similarity must be between the Tammy doll unclothed (marked defendant's exhibit "5" at argument) and the Adanta doll unclothed (marked defendant's *868 exhibit "4" at argument). The copyright of defendant extends only so far, judging from the description "doll" in the claim as registered.
There is no evidence from which similarity or copying can be determined except the dolls themselves. The affidavits of plaintiff point to no copied features but contain mere conclusions, such as "blatant copying", "outright copying" and "piratical copy".
There is no contradiction of the assertion for defendant that both dolls are in "an ordinary and common doll size utilized by many companies * * * for many years".
Looking at the Tammy doll and the Adanta doll, similarities and differences can be seen. The nose, bow mouth, pink on cheeks, eye brows, shape of eyes, eyelashes at side seem similar. On the other hand, Tammy has hair while Adanta has none; the necks differ; the flesh color is different; breast development is different.
Considering the total effect and remembering that features of the human body are involved, it is not possible to reach an assured conclusion that there is such a similarity as would justify the issuance of a preliminary injunction on the basis of infringement. The doubts are strongly confirmed when the doll is examined which is made by American Doll and Character Company; this doll was offered in evidence by defendant (marked defendant's exhibit "6" at argument). This doll seems much closer to Tammy than does the doll of Adanta. In this connection, see Judge Clark's dissent in Ideal Toy Corp. v. Sayco Doll Corp., above (302 F.2d at pages 627, 628).
So far as the action is based on unfair competition, the situation seems to be different.
When defendant offers its doll with a playsuit exactly the same in design as used by plaintiff (with the same white tennis shoes) and especially when the playsuit is the same blue color as Tammy's, there is not only a misappropriation of the business ideas of plaintiff; present also is the likelihood of confusion created by defendant, meaning that purchasers of the dolls of defendant "would believe that they came from the same source" as the Tammy doll. Chas. D. Briddell, Inc. v. Alglobe Trading Corp., 194 F.2d 416, 419 (2d Cir. 1952).
Whether the misappropriation of plaintiff's business ideas would alone support a cause of action for unfair competition is doubtful. The use by defendant of the light purple color on its packages and of scroll effect lines, while imitative, seems permissible. There is no evidence of deliberate encouragement to substitute the product of defendant for that of plaintiff, as was seen in Upjohn Co. v. Schwartz, 246 F.2d 254 (2d Cir. 1957). There is no evidence that defendant "has indulged in one of the proscribed practices which equity will enjoin", the second category of Judge Moore in Norwich Pharmacal Co. v. Sterling Drug, Inc., 271 F.2d 569, 571 (2d Cir. 1959).
The situation here does seem, however, to fit into the first category of Judge Moore in the Norwich Pharmacal case, namely, "secondary meaning plus likelihood of confusion" (271 F.2d at 571).
Plaintiff appears to show a reasonable probability of success on the issue of "secondary meaning" as applied to its doll dressed in the "basic outfit" playsuit trimmed in white.
The number of such dolls sold, the amount spent in advertising, the promotion of Tammy as a figure for children, the far spreading acceptance of the doll and her family all point strongly to an identification of the Tammy doll with a single source, the plaintiff.
The likelihood of confusion seems apparent from the similar appearance of the dolls with hair and when dressed in the white trimmed playsuit. This is made more likely because the doll of defendant has no name and therefore could be more easily substituted for Tammy than would be the case if it were named, for example, *869 "Barbara" or any other name differing from Tammy. Doubtless also the prospective customers, children, are more easily confused than a more sophisticated buying public.
If it were assumed that plaintiff has no reasonable probability of success as to secondary meaning, even so plaintiff would seem entitled to a preliminary injunction because of "palming off". This seems to follow from the following language of Judge Kaufman in Hygienic Specialties Co. v. H. G. Salzman, Inc., 302 F.2d 614, 620 (2d Cir. 1962):
"The absence of secondary meaning does not always preclude recovery on a claim for unfair competition, because competition must be `fair' to the trade as well as to the consumer. Thus, the law recognizes a right of relief against certain practices having destructive effect primarily on a producer's competitive position, to wit, actual deception of purchasers, palming off, and appropriation of property rights."
To establish "palming off" it does not appear necessary to show efforts by defendant to cause substitution, such as were present in Upjohn Co. v. Schwartz, above, or other actual deception. Judge Kaufman in the quoted passage distinguishes between "actual deception of purchasers" on the one hand and "palming off" on the other. He later quotes from an English decision that a seller is not allowed to use names, marks, etc. or "other indicia, by which he may induce purchasers to believe, that the goods which he is selling are the manufacture of another person" (302 F.2d at 620-621). In other words, the "fraud" is found in the mere similarities of the "indicia", without more.
Accordingly the motion is granted to the extent indicated, namely, with respect to the sale by defendants of its dolls dressed in the white trimmed playsuit similar to that used by plaintiff on its Tammy dolls when sold; the motion is otherwise denied.
The findings of fact and conclusions of law are contained herein. Fed.R.Civ.P. 52(a).
Settle order on notice, observing the requirements of Fed.R.Civ.P. 65(d) and suggesting the amount of security to be given under Fed.R.Civ.P. 65(c). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261344/ | 286 Pa. Superior Ct. 135 (1981)
428 A.2d 609
COMMONWEALTH of Pennsylvania
v.
Jerome HARRIS, Appellant.
Superior Court of Pennsylvania.
Submitted November 14, 1980.
Filed April 10, 1981.
*136 John Halley, Pittsburgh, for appellant.
Robert L. Eberhardt, Deputy District Attorney, Pittsburgh, for Commonwealth, appellee.
Before PRICE, DiSALLE and MONTEMURO, JJ.
MONTEMURO, Judge:
Appellant, Jerome Harris, was convicted by a jury of aggravated assault and attempted murder on March 29, 1976. His conviction was affirmed by the Superior Court on May 16, 1978. Subsequently, appellant filed a post-conviction petition alleging ineffective assistance of counsel for failing to preserve the issue of speedy trial for appeal. The lower court denied relief on July 12, 1979 and appellant now appeals this denial.
The original trial date should have been in mid-January of 1976. On January 5, 1976, the Commonwealth obtained an order from the trial court extending the run date to April 15, 1976. Appellant contends that neither he nor his counsel was given notice and therefore no opportunity to be heard on the extension petition until after it had already been signed and granted. Trial counsel subsequently filed a motion to dismiss premised on the Commonwealth's failure to comply with Rule 1100(c). The motion was denied and the trial commenced on March 23, 1976. Appellant's counsel *137 failed to raise the Rule 1100(c) issue in his post-verdict motion and thus did not preserve this issue for appeal.
The standard of review involving claims of ineffective assistance of counsel is well settled. As the Pennsylvania Supreme Court has stated:
"In order to determine whether counsel's assistance was effective, we must be `able to conclude that the particular course chosen by counsel had some reasonable basis designed to effectuate his client's interests.' Comm. ex rel, Washington v. Maroney, 427 Pa. 599, 604, 235 A.2d 349, 352 (1967). (Emphasis in original.) However, counsel cannot be found ineffective for failing to assert a meritless claim. Only when an abandoned claim is of arguable merit must we inquire into counsel's basis for not pursuing it. Commonwealth v. Sherard, 483 Pa. 183, 394 A.2d 971 (1978); Commonwealth v. Hubbard, 472 Pa. 259, 372 A.2d 687 (1977)."
Commonwealth v. Weathers El, 485 Pa. 28, 32, 400 A.2d 1295, 1297 (1979).
In the case before us, the petition to extend was granted to the Commonwealth without giving appellant the opportunity to contest it. Rule 1100(c) necessitates notice and a hearing before the grant of an extension of the run date. Therefore, appellant's claim that the extension was procedurally deficient is obviously of arguable merit.
Next we must consider whether counsel had any reasonable basis designed to effectuate appellant's interests by not preserving the issue for appeal.
At the post-conviction hearing, trial counsel could not state a reason for his failure to preserve the issue on appeal. He said that at the time he was furious that the order had been issued ex parte, and that the Rule 1100 issue had more merit than other issues preserved for appeal. It is, therefore, evident that there was no reasonable basis for trial counsel's failure to preserve the issue for appeal.
Our finding that counsel was ineffective does not necessarily mean that the contention would have prevailed if it *138 had been pursued. The Commonwealth has alleged that the extension was warranted because of a crowded court docket. However, this allegation, in the absence of evidence in the record, is insufficient to show that the Commonwealth used due diligence in bringing the accused to trial.
It is therefore necessary to remand this case to the trial court with the instruction that an 1100(c) hearing be held, at which time, the parties will be given an opportunity to create a record on the question of the Commonwealth's due diligence. Commonwealth v. Patrick, 487 Pa. 16, 407 A.2d 382 (1979). If it is determined that the Commonwealth failed to exercise due diligence, the judgment of sentence shall be vacated and appellant discharged without prejudice to the Commonwealth's right of appeal. If the lower court determines that the Commonwealth exercised due diligence, appellant may appeal that decision.
Accordingly, this case is remanded for proceedings consistent with this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261348/ | 223 F.Supp. 129 (1963)
Frank ENTEL and Goldie Entel, Plaintiffs,
v.
Ira GUILDEN et al., Defendants.
United States District Court S. D. New York.
October 30, 1963.
Abraham I. Markowitz, New York City, for plaintiffs.
Jacobs, Persinger & Parker, New York City, for defendants Waldo M. Hatch and John C. Paige & Company, Inc.
Simpson, Thacher & Bartlett, New York City, for defendants Oswald L. Johnston, Eugene S. Northrop and David A. Stretch.
Stroock, Stroock & Lavan, New York City, for defendant Ira Guilden.
Bisco, Winkler & Higgiston, New York City, for defendant Atlas Corp.
TYLER, District Judge.
Plaintiffs Frank and Goldie Entel are, and during the period complained of were, holders of warrants issued by defendant Atlas Corporation ("Atlas"), an investment company which, at all times pertinent to the complaint, was registered under the Investment Company Act of *130 1940.[1] These warrants entitle holders to purchase shares of Atlas common stock at a fixed price ($6.25), with no limit on the period during which the option may be exercised.
The warrants are negotiable; indeed, they are listed and actively traded on the American Stock Exchange and are also traded on the Pacific Coast Stock Exchange. When the market price of the stock is higher than the warrant price, therefore, the market value of the warrants is close to the difference between the market price of Atlas common and the fixed price for which Atlas common can be purchased with the warrant.[2] If the value of Atlas common declines, the value of the warrant declines by substantially the same sum until the stock sells on the market for near or under its warrant price,[3] at which point the value of the warrant is solely dependent upon expectations of a future rise in value of the stock. An Atlas warrant, thus, can be fairly described as a "distilled" share of Atlas common the sweet liquor of speculation concentrated with some of the dregs of investment "responsibility" left behind.[4]
Plaintiffs seek to recover, for the benefit of Atlas, commissions on insurance contracts which were made by Atlas and its subsidiaries. These commissions were received by the defendant Waldo M. Hatch, and by John C. Paige & Company, Inc. ("Paige"), an insurance brokerage company of which Hatch was president, a director, and a substantial stockholder, and which acted as broker for Atlas in placing the insurance contracts. Plaintiffs allege that Hatch and the other individual defendants constituted the board of directors of Atlas at the times complained of, that thus the receipt by Hatch and Paige of commissions from the insurers for their services was unlawful under Section 17(e) (1) of the Investment Company Act of 1940 ("the Act") [15 U.S.C. 80a-17(e) (1)], and that the amount of such commissions should be accounted for and returned to Atlas.
It is further alleged that all members of the Atlas board of directors knew or should have known of the illegality of the payments, and that therefore they violated their fiduciary duties by permitting the insurance contracts for which the commissions were paid to be made; no request for relief, however, is made against the directors other than Hatch.
Upon the basis of answers made by plaintiffs to interrogatories, which show plaintiffs to be warrant holders only, and not stockholders, defendants other than Atlas[5] have moved to dismiss under Rules 12(c) and 23(b) of the Federal *131 Rules of Civil Procedure, or, in the alternative, for summary judgment under Rules 56 and 23(b) of the Federal Rules of Civil Procedure. The theories relied upon by defendants in making these motions are that there is no private right of action for the benefit of an investment company under Section 17(e) of the Act, and that if there be such a right, it cannot be exercised in a derivative suit by those who do not hold stock.
First there will be considered defendants' contention that plaintiffs' claim is vitiated by the plain language of Rule 23 of the Federal Rules of Civil Procedure. Rule 23(b) states in part:
"In an action brought to enforce a secondary right on the part of one or more shareholders in an association, incorporated or unincorporated * * the complaint * * * shall aver (1) that the plaintiff was a shareholder at the time of the transaction of which he complains or that his share thereafter devolved on him by operation of law * * *."
Defendants' reliance upon Rule 23(b) of the Federal Rules of Civil Procedure for the proposition that plaintiffs must be stockholders is misplaced. Plaintiffs' claim for relief is essentially based upon substantive law enacted by Congress. Whether the law accords warrant holders a right to sue on behalf of an investment company is a matter not substantially affected by the Federal Rules, which do not "abridge, enlarge or modify any substantive right."[6] Thus, it has been held that, notwithstanding Rule 23(b), the question of who is a stockholder for the purpose of suit is to be determined by substantive state law,[7] and that stock ownership need not have existed at the time of the wrong sued upon if such law does not so require.[8]
Any significance of Rule 23(b) to this question, therefore, would be not that it rules out a derivative action by a warrant holder but that it is an expression of the generally accepted proposition that only shareholders may bring derivative suits.[9]
The rationale, of course, for this rule is that, since each shareholder has a separate right to a share of corporate property upon dissolution, the interest of each shareholder in corporate assets, including choses in action, is "proprietary". Because the shareholder thus "owns" pro rata his share of the corporate assets, he may sue to protect his proprietary interest when corporate management fails or refuses to do so. This rationale for derivative litigation, however, is weakened, if not vitiated, by the fact that, prior to liquidation at least, one of the few direct incidents of proprietorship over corporate assets which a shareholder may exercise is that of maintaining such derivative suits; thus, to speak of proprietorship tends merely to describe the practice in different words.
A more meaningful reason for allowing derivative suits by shareholders is that such suits provide a means of protection against "insiders" who wrongfully injure the corporation, but who, because of their controlling positions, are capable of preventing the corporation itself from bringing suit. It is in this context, then, that it is necessary to inquire further into the distinctions between stock and these warrants in order to determine whether a similar or a different degree of such protection is appropriate.
One of the chief economic functions of a corporation, obviously, is to facilitate aggregations of capital. To further this function, there has developed a broad range of modes of investment within the corporate framework. Each such mode *132 is a bundle of legal rights and duties; the market price for each bundle is no doubt determined at least in part by what the bundle contains. Thus, courts should act with conservatism in changing the content of any of these bundles in ways which would give the holders of some bundles less, and holders of other bundles more, than was bargained for in the marketplace.
Thus, however tautological the dogma that shareholders are the only "owners" of a corporation, and hence the only class of security holders who may bring derivative actions for the benefit of the corporation, the exercise of this dogma is presumably a factor in the price differentials between stock prices and those of other securities such as warrants. It is to protect those who relied upon this state of the law, rather than to protect any legal fiction, that the law should remain stable in this area, and should, moreover, when entering analogous areas, achieve a like allocation of rights in the absence of strong countervailing considerations.
On the other hand, warrants are used, as they are by Atlas Corporation, as a separate form of equity in corporations. Presumably, this usage stems from a desire of the investment community for what here has been called "distilled stock", offering more risk and more potential gain per dollar than common stock. The creation of varied modes of investment different sized bundles of rights which are calculated to encourage the total flow of capital into corporate aggregations should be facilitated in a society which depends largely upon the gathering of private capital to achieve economic expansion. Therefore, if equity content is poured into the mold of warrants by investors and investment bankers, the courts should not be reluctant to deny a measure of protection to holders of warrants which is adequate to sustain such use of the form. In other words, some protection should be afforded to a class which provides permanent capital in an enterprise as against wrongful acts by those who manage the enterprise. The economic function of this protection is to retain and encourage the availability of such capital. The facts that warrants traditionally, albeit somewhat loosely, have been deemed more akin to options than to shares of stock and that only holders of the latter class of security have usually instituted derivative suits cannot and should not bar this court from assessing the features of these warrants which render them essentially equity securities and the concomitant legal rights of their owners.
The inquiry, then, perforce leads us to consideration of the nature and purposes of the Investment Company Act of 1940 in order to determine whether there is a right enforceable by private action under Section 17(e), and whether, if there is such a right, the vindication thereof is so analagous to the typical derivative suit coming under Rule 23(b) that the sanctions of that Rule ought to apply here as a matter of policy.
Section 17(e) (15 U.S.C. § 80a-17(e)) provides, in part, that:
"It shall be unlawful for any affiliated person of a registered investment company, or any affiliated person of such person
"(1) acting as agent, to accept from any source any compensation (other than a regular salary or wages from such registered company) for the purchase or sale of any property to or for such registered company or any controlled company thereof, except in the course of such person's business as an underwriter or broker; * * *."
Section 43 (15 U.S.C. § 80a-44) provides, in part, that:
"The district courts of the United States and the United States courts of any Territory or other place subject to the jurisdiction of the United States shall have jurisdiction of violations of this subchapter or the rules, regulations, or orders thereunder, and, concurrently with State and Territorial courts, of all suits in equity and actions at law brought to enforce any liability or duty created *133 by, or to enjoin any violation of, this subchapter or the rules, regulations, or orders thereunder."
Thus, neither § 17(e) nor the general jurisdictional section expressly limit the vindication of rights and the enforcement of duties created by the Act to actions by the Securities and Exchange Commission. When a private duty is created by statute to benefit those engaged in certain activities, a member of the benefited class may maintain an action to enforce the duty. There is no doubt but that Section 17(e) was designed to protect such a special class; this may be seen from the declaration of policy in Section 1(b) of the Act:
"[I]t is declared that the national public interest and the interest of investors are adversely affected
* * * * * *
"(2) when investment companies are organized, operated, managed, * * * in the interest of directors, * * * or other affiliated persons thereof * * * or persons engaged in other lines of business, rather than in the interest of all classes of such companies' security holders;
* * * * * *
"(4) * * * when investment companies are managed by irresponsible persons;
* * * * * *
"It is declared that the policy and purposes of this subchapter, in accordance with which the provisions of this subchapter shall be interpreted, are to mitigate and, so far as is feasible, to eliminate the conditions enumerated in this section which adversely affect the national public interest and the interest of investors. * * *"
There are, moreover, repeated instances of private actions being allowed generally under the Securities Acts and Rules in the absence of specific statutory provisions therefor.[10] It seems clear, then, that a private right of action can arise under Section 17(e) (1).
From the face of the Act itself, as quoted above, the purpose in making certain actions, including those in Section 17, "unlawful" was to protect the interests of those risking their capital in investment companies who would be hurt by the overreaching of insiders. As noted at the outset, warrant holders could be damaged in their investment by about the same dollar value per share as stockholders; indeed, it can be said that such a damage would be a greater proportion of their total investment than in the case of stockholders. Moreover, the definition of "security" in Section 2(a) (35) of the Act (15 U.S.C. § 80a-2(a) (35)) explicitly includes any "warrant or right to subscribe to or purchase" any stock.
The Act is broadly remedial, and circumscribes the investment company business with laws and regulations to an extent exceptional even in the highly controlled securities field. The law of investment companies is, therefore, now a specialized subject, and is generally recognized as such. General expectations as to the rights otherwise allocated to stock and warrant holders thus should not have carried over to the investment company area as strongly as they may have in other areas, especially in light of the identical treatment given to stocks and warrants as "securities" by the plain terms of the 1940 Act.
Particularly in view of the strongly expressed intent of the Investment Company Act to benefit "investors" and "all classes of security holders", the balance of economic policy lies with permitting this claim to be heard. I hold, then, that Section 17(e) creates a private right of action for the benefit of an investment company which may be exercised secondarily by plaintiffs as the holders of the warrants in question.
The motions to dismiss and for summary judgment are denied. So ordered.
NOTES
[1] Atlas has since become an "operating" rather than an "investment" company, and on July 16, 1962, terminated its registration under the 1940 Act.
[2] Various factors other than mere "stickiness" of the marketing system account for a failure of an exact equation. Thus, the capital outlay required to buy the stock is greater, but this may, or may not, be counterbalanced by expectations of dividends.
[3] On October 28 of this year Atlas common closed at 3½ on the New York Stock Exchange, and the warrants closed at 1½ on the American Stock Exchange, according to the New York Times of October 29.
[4] The Atlas Corporation has for many years used perpetual warrants as a major means of acquiring equity capital. The latest Standard & Poor Standard Corporation Descriptions report (Oct.-Nov. 1963 at 2451-52) indicates that of a total of 17,500,000 outstanding shares of common, 5,023,213 were reserved for possible distribution to holders of the perpetual warrants.
The Marvin Scudder collection at Columbia University's Butler Library shows the following history of these warrants: In 1956, pursuant to mergers and a stock split, 1,386,164 outstanding $25 warrants were split to 5,544,656 of the present $6.25 warrants. It would seem that at least since 1933 and until the split in 1956 there were well in excess of 1,000,000 of the $25 warrants outstanding at all times, with Atlas either buying some on the market and re-issuing them later, or issuing new warrants as some old ones were exercised, or doing both. The American Stock Exchange listing of the warrants dates to 1940.
[5] With the exception of George E. Allen and Robert L. Stearns, who seem not to have been served in this case.
[6] 28 U.S.C. § 2072.
[7] Gallup v. Caldwell, 120 F.2d 90 (3d Cir., 1941), Bankers Nat. Corporation v. Barr, 7 F.R.D. 305 (S.D.N.Y.1945).
[8] Fuller v. American Machine & Foundry Co., 95 F.Supp. 764 (S.D.N.Y.1951); See 3 Moore's Federal Practice at 3500. Kaufman v. Wolfson, 136 F.Supp. 939 (S.D.N.Y.1955), holds contra.
[9] See Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 321, 56 S.Ct. 466, 80 L.Ed. 688 (1936).
[10] See the discussion of these cases in Brown v. Bullock, 194 F.Supp. 207 (S.D. N.Y.1961), aff'd. 294 F.2d 415 (2d Cir., 1961), in which the court found private actions to lie under several sections of the Investment Company Act of 1940. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261386/ | 110 Cal.Rptr.2d 914 (2001)
91 Cal.App.4th 853
In re CHRISTOPHER K., a Person Coming Under the Juvenile Court Law.
The People, Plaintiff and Respondent,
v.
Christopher K., Defendant and Appellant.
No. G027388.
Court of Appeal, Fourth District, Division Three.
August 21, 2001.
*915 David L. Polsky, under appointment by the Court of Appeal, Fallbrook, for Defendant and Appellant.
Bill Lockyer, Attorney General, David P. Druliner, Chief Assistant Attorney General, Gary W. Schons, Assistant Attorney General, Laura Whitcomb Halgren, Supervising Deputy Attorney General and Holley A. Hoffman, Deputy Attorney General, for Plaintiff and Respondent.
OPINION
MOORE, J.
When is possession more than possession? When an unconstitutional statute creates a legal presumption that possession means a great deal more.
A petition filed under Welfare and Institutions Code section 602 alleged appellant Christopher K. possessed a firearm (Pen.Code, § 12101, subd. (a); count I), and obliterated the identification of a firearm (Pen.Code, § 12090; count II). The court found true both allegations, reduced count I to a misdemeanor, and ordered appellant to serve 120 days in custody followed by probation. Appellant appeals the court's finding on the second count only, contending the presumption set forth in Penal Code section 12090 is unconstitutional. We agree and reverse the finding on count II.
I
FACTS
The Anaheim police were dispatched to a motel to investigate a report of a man with a gun. The door to a motel room was open, and the officers found appellant sitting on the bed. During a search, the officers found a semi-automatic pistol in a nightstand drawer. The firearm's serial number had been filed off, but the officers did not see appellant filing the serial number nor did they find any instruments in the room capable of doing so. Appellant was arrested. In the adjacent room, the officers found approximately nine people, including appellant's brother.
During an interrogation, appellant stated the two adjacent motel rooms were being used for a party. Appellant stated he had arrived with his brother and another individual earlier in the evening, and his brother and the other person had brought the gun. He said the guests moved back and forth between the rooms all night long. Appellant admitted handling the gun and placing it in the drawer, but denied obliterating the serial number.
II
DISCUSSION
Appellant contends the only basis for the court's finding that the allegations of count II were true was the presumption set forth in Penal Code section 12091, and without the presumption, the evidence is insufficient to support the court's finding. The presumption should be ignored, he argues, because it is unconstitutional. Respondent admits the evidence is insufficient, but does not squarely address the *916 constitutional issue. We conclude section 12091 is unconstitutional.
Penal Code section 12091
Under Penal Code section 12090, any person who "changes, alters, removes or obliterates the name of the maker, model, manufacturer's number, or other mark of identification" on a firearm without the permission of the Department of Justice is guilty of a felony. Penal Code section 12091 creates a presumption relevant to section 12090: "Possession of any pistol or revolver upon which the name of the maker, model, manufacturer's number or other mark of identification has been changed, altered, removed, or obliterated, shall be presumptive evidence that the possessor has changed, altered, removed, or obliterated the same."
No direct or circumstantial evidence connects appellant to the offense, and the juvenile court judge stated that the reason for finding the allegation true was the presumption under section 12091. Appellant presented evidence to the contrary. He stated he did not remove the identification number, a statement to which the court accorded "slight" weight because of its "self-serving" nature. In this situation, however, we wonder what other evidence appellant could have produced to rebut the presumption; to demand evidence other than appellant's denial would have required appellant to prove a negative. Nonetheless, the parties agree that the court's only basis for finding the allegation true was the presumption. We therefore turn to the question of whether the presumption withstands constitutional scrutiny.
Penal Code section 12091 is an unconstitutional mandatory presumption.
A mandatory presumption requires the trier of fact to conclude the presumed fact is true if it finds the underlying fact true. (Ulster County Court v. Allen (1979) 442 U.S. 140, 157, 99 S.Ct. 2213, 60 L.Ed.2d 777.) In the instance of Penal Code section 12091, the underlying fact is possession of a weapon with altered or obliterated identifying marks. The presumed fact is that defendant altered or obliterated the marks. Absent evidence to the contrary, possessing an altered weapon "shall be presumptive evidence" (Pen. Code, § 12091) that defendant is the person who altered or obliterated the identifying marks. Section 12091 is therefore a mandatory presumption. (See also People v. Henderson (1980) 109 Cal.App.3d 59, 62, 167 Cal.Rptr. 47.)
In 1944, the California Supreme Court upheld the constitutionality of Penal Code section 12091. (People v. Scott (1944) 24 Cal.2d 774, 151 P.2d 517; see also People v. Nelson (1969) 2 Cal.App.3d 738, 741, 83 Cal.Rptr. 6.) Thereafter, however, the United States Supreme Court analyzed the constitutionality of a similar presumption in Ulster County Court v. Allen, supra, 442 U.S. 140, 99 S.Ct. 2213, 60 L.Ed.2d 777. The court held that in a criminal case, the constitutional validity of a mandatory presumption turns on whether the presumption relieves the prosecution of its burden to prove the ultimate facts beyond a reasonable doubt. Because "the prosecution bears the burden of establishing guilt, it may not rest its case entirely on a presumption unless the fact proved is sufficient to support the inference of guilt beyond a reasonable doubt." (Id. at p. 167, 99 S.Ct. 2213.)
Applying this standard to Penal Code section 12091, unless the underlying fact (possession) alone satisfies the reasonable doubt standard with regard to the charged offense (obliteration), the presumption is constitutionally invalid. Two districts of the Court of Appeal have already reached the conclusion that proving possession of an altered weapon is not sufficient to prove *917 that defendant obliterated the identifying marks.
The Second District was the first appellate court to review Penal Code section 12091 after Ulster County Court v. Allen, supra, 442 U.S. 140, 99 S.Ct. 2213, 60 L.Ed.2d 777. In People v. Henderson, supra, 109 Cal.App.3d 59, 167 Cal.Rptr. 47, the court held it was error to instruct the jury it was required to find the defendant guilty of violating section 12091 unless other evidence created a reasonable doubt as to defendant's guilt. (Id. at p. 62, 167 Cal.Rptr. 47.) The court noted, "It seems too clear to warrant extended discussion that possession does not prove obliteration with the strength required by the reasonable doubt standard." (Id. at p. 65, 167 Cal.Rptr. 47, fn. omitted.)
Eleven years later, the Fifth District Court of Appeal reached the same conclusion in People v. Wandick (1991) 227 Cal. App.3d 918, 278 Cal.Rptr. 274. In Wandick, the People conceded that instructing the jury regarding the Penal Code section 12091 presumption was error, but argued it was harmless under Chapman v. California (1967) 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705. The court disagreed, distinguishing presuming a state of mind from the underlying fact with presuming an act: "It is one thing to infer intent from a criminal act. It is another matter to infer a criminal act (obliteration of identifying numbers) from another act which may or may not be criminal (possession of a weapon with obliterated identifying marks). Even if the jury found defendant possessed the revolver, that fact standing alone is not sufficient to support a finding beyond a reasonable doubt that defendant obliterated the numbers. Since there was no evidence, other than circumstantial evidence of possession, that defendant obliterated the identifying numbers on the revolver, the erroneous instruction cannot be found harmless. . . ." (People v. Wandick, supra, 227 Cal.App.3d at p. 925, 278 Cal.Rptr. 274.)
We see no principled distinction between a jury's reliance on the presumption and the court's when the court is acting as the trier of fact. The challenged jury instructions in Wandick and Henderson were modeled on the statute's language, and the same analysis applies to a direct challenge of the statute. If neither the court nor the jury as trier of fact is constitutionally permitted to apply the presumption, there is simply no reason to uphold the constitutionality of the statute itself. It is clearly unconstitutional under the standard set forth in Ulster County Court v. Allen, supra, 442 U.S. 140, 99 S.Ct. 2213, 60 L.Ed.2d 777, and today we add our voice to the two appellate courts that have previously reached the same conclusion in the context of jury instructions. We urge the Legislature to repeal or amend section 12091, and in the interim, trial courts must disregard it.
III
DISPOSITION
The finding that appellant obliterated the identification of a firearm in violation of Penal Code section 12090 is reversed, and the case is remanded to the juvenile court for further proceedings. The judgment is affirmed in all other respects.
SILLS, P.J., and RYLAARSDAM, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1726859/ | 735 N.W.2d 194 (2007)
2007 WI App 162
DAGGETT
v.
LUEDEKE.
No. 2006AP2887.
Court of Appeals of Wisconsin.
May 24, 2007.
Unpublished opinion. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1727048/ | 970 So. 2d 841 (2007)
STEWARD
v.
McDONOUGH.
No. 3D07-3084.
District Court of Appeal of Florida, Third District.
December 13, 2007.
Decision without published opinion. Hab.Corp. denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2271736/ | 326 S.W.3d 302 (2010)
Wendell Marquise WASHINGTON, Appellant,
v.
The STATE of Texas, State.
Nos. 2-08-442-CR, 2-08-443-CR, 2-08-444-CR.
Court of Appeals of Texas, Fort Worth.
August 31, 2010.
*304 Richard Alley, Fort Worth, TX, for Appellant.
Joe Shannon, Jr., Criminal District Attorney, Charles M. Mallin, Chief Appellate Section, and Danielle A. Kennedy, Sarah E. Burner, and Brock H. Duke, Assistant District Attorneys, Fort Worth, TX, for The State of Texas.
PANEL: LIVINGSTON, C.J.; GARDNER and MEIER, JJ.
OPINION
ANNE GARDNER, Justice.
I. Introduction
Appellant Wendell Marquise Washington appeals his convictions and sentences for assault causing bodily injury to a public *305 servant, evading arrest or detention, and delivery of a controlled substance. He contends in five points that the evidence is factually insufficient to sustain his convictions, that his conviction and sentence for evading arrest or detention violates his rights against double jeopardy, and that the trial court erred by sentencing him as a first-degree felon for the state jail felony of evading arrest. We affirm.
II. Background
A grand jury indicted Appellant for two counts of assault causing bodily injury to a public servant, two counts of evading arrest using an automobile, and one count of delivery of a controlled substance. The State waived one count of the evading arrest charge, and Appellant pleaded not guilty to all remaining charges.
Officer Ronald Jeter, an undercover officer with the narcotics division of the Fort Worth Police Department, testified that he routinely participates in narcotics buy-bust operations. Officer Jeter testified that a buy-bust operation targets a location where drugs are sold in open areas, that an undercover officer will attempt to purchase narcotics, and that the undercover officer will leave the area and signal other officers to move in and arrest the individual who sold the narcotics.
During a buy-bust operation on April 23, 2008, Officer Jeter drove an undercover vehicle to a convenience store on East Rosedale Street in Fort Worth. When he arrived, he saw a white Cadillac with a person in the driver's seat and another person standing at the passenger window. As he passed the white Cadillac, the black male at the passenger window said, "Hey, man, what do you want?" Officer Jeter testified that he told the man, "I'm looking for a 20." Officer Jeter testified that Appellant then said, "I got you," stepped out of the driver's side of the white Cadillac, and walked to the passenger side of Officer Jeter's undercover vehicle. Officer Jeter gave Appellant a twenty dollar bill, and Appellant gave Officer Jeter a blue baggie containing what appeared to be crack cocaine.[1]
Appellant then returned to the white Cadillac and sat in the driver's seat. A woman that had been across the street got into the white Cadillac on the passenger's side. Officer Jeter drove away slowly and gave the arrest signal. Some of the arrest team arrived on foot, and Sergeant Steven Enright and Corporal Charles Combs parked an unmarked, blue vehicle behind the white Cadillac to block its exit. As he watched the arrest team converge on the white Cadillac, Officer Jeter observed the white Cadillac back into the blue vehicle, turn around, and speed away.
On cross-examination, Officer Jeter testified that although the blue vehicle that Sergeant Enright and Corporal Combs used to block the white Cadillac was an unmarked car without lights on top, Sergeant Enright and Corporal Combs wore black boots, blue jeans, and "a raid vest with State's Gang Unit on one side, Police on the other, large police letters on the back." Officer Jeter prepared his report within hours of the incident and used the name "Kevin Jackson" in the report based on information received from other officers,[2] but he identified Appellant as the person that sold him the crack cocaine from a photograph the next day.
Officer Jeter testified that he later learned that the white Cadillac had *306 wrecked in a ditch. After arriving at the scene of the wreck, Officer Jeter went into a nearby convenience store, spoke with the convenience store clerk, and retrieved the twenty dollar bill he had given Appellant to purchase the crack cocaine.[3] Officer Jeter also testified, however, that video footage from the convenience store showed a black female, not a black male, giving the twenty dollar bill to the clerk.
Corporal Combs testified that he wore a metal badge, a weapon, and his "raid gear" on April 23, 2008; his raid gear has "POLICE" prominently displayed on one shoulder and "gang unit" on the other shoulder. He and Sergeant Enright, who was dressed in the same manner, were parked around the corner from the convenience store when Officer Jeter signaled that he had purchased the crack cocaine from Appellant; Corporal Combs was driving, and Sergeant Enright was in the passenger seat. With the red and blue lights flashing, Corporal Combs pulled the unmarked, blue police car into the convenience store parking lot and parked approximately fifteen to twenty feet behind Appellant's white Cadillac. Officer Allen approached the white Cadillac on foot, with his weapon drawn, yelling "Fort Worth Police."
Sergeant Enright exited the vehicle and stood outside the police car, behind the door. Corporal Combs testified that he was exiting the vehicle, with one foot outside the door, when Appellant drove the white Cadillac backward "at a high rate of speed." He stated, "[Appellant] hit the front of our car, and it threw me up over the front steering wheel because I was kind of stepping to get out of the car, so I did not even see the car coming at us." He said the collision was hard enough to throw him over the steering wheel, wedge his head between the windshield and dash, and slam him back into the seat; he testified, "I was dazed[,] and it knocked the wind out of me." Corporal Combs testified that he felt pain in his chest, that he could not breathe, and that he hit his head hard enough that he "couldn't realize exactly just what had happened." Corporal Combs did, however, watch the white Cadillac drive away and testified that "it was probably on its way to well over a hundred miles an hour."
On cross-examination, Corporal Combs agreed that someone in front of the unmarked, blue vehicle could not see what was written on the back of his raid gear and probably could not see the writing on the front of his raid gear because the dashboard was still in front of him. Corporal Combs testified, however, that Sergeant Enright had completely exited the vehicle and was standing up at the time of the collision. Corporal Combs testified that he and Sergeant Enright arrived before Officer Allen approached the white Cadillac from the front, that he could see Officer Allen, the wording on his vest, and his firearm, and that he could hear Officer Allen yelling at Appellant. He also testified that Appellant turned as he was backing up and looked directly at him and Sergeant Enright.
Sergeant Enright testified that once Corporal Combs pulled the unmarked, blue police car into the parking lot, he started exiting the vehicle, saw Officer Larry Carnes approaching the white Cadillac on foot with his weapon drawn, and heard Officer Carnes yelling, "Fort Worth Police. Show me your hands."[4] Sergeant *307 Enright testified that as he exited the car, he saw the Cadillac's reverse lights come on and the driver look backward over his right shoulder and accelerate the Cadillac toward the blue police car. Sergeant Enright testified that he was still standing behind the door of the police car and that the impact between the Cadillac and the police car caused the door to hit him and throw him backward three or four feet.[5] After being knocked backward, Sergeant Enright ran forward toward the Cadillac, saw that the passenger window was open, drew his weapon toward Appellant, and told Appellant to stop. Sergeant Enright testified that he was six to seven feet from Appellant when he told him to stop, that Appellant ducked down and raised his arm in a defensive position as if he were about to be shot, that Appellant did not stop, and that Appellant instead accelerated the Cadillac and drove away at a high rate of speed. He testified that the white Cadillac's tires were squealing, that the car was kicking up dirt, and that the speed was dangerously excessive.
Officer Mark Reese testified that following Appellant's arrest on April 24, 2008, he transported Appellant to jail. Officer Reese testified that during the transport, Appellant initiated conversation with him and said, "I was nervous. I don't know why I ran. Probably because I was going to catch a delivery charge."
At the conclusion of the guilt-innocence phase, the jury found Appellant guilty of both counts of assault causing bodily injury to a public servant, the sole count of evading arrest using an automobile with an affirmative deadly weapon finding, and the sole count of delivery of a controlled substance. Appellant elected to have the trial court determine his punishment, and the trial court sentenced Appellant to thirty years' confinement for each count of assault, forty years' confinement for evading arrest or detention,[6] and ten years' confinement for delivery of a controlled substance, with all sentences to run concurrently. Appellant timely filed notice of these appeals.
III. Sufficiency of the Evidence
In his third, fourth, and fifth points, Appellant contends that the evidence is factually insufficient to sustain his convictions. Although Appellant does not differentiate between legal and factual sufficiency within his arguments, Appellant cites cases addressing only the factual sufficiency of evidence. See Clewis v. State, 922 S.W.2d 126 (Tex.Crim.App.1996); Ward v. State, 48 S.W.3d 383 (Tex.App.-Waco 2001, no pet.). Thus, we address only the factual sufficiency of the evidence. See Tex. R.App. P. 38.1, 47.1.
A. Standard of Review
When reviewing the factual sufficiency of the evidence to support a conviction, we view all the evidence in a neutral light, favoring neither party. Steadman v. State, 280 S.W.3d 242, 246 (Tex.Crim. App.2009); Watson v. State, 204 S.W.3d 404, 414 (Tex.Crim.App.2006). We then ask whether the evidence supporting the conviction, although legally sufficient, is nevertheless so weak that the factfinder's determination is clearly wrong and manifestly *308 unjust or whether conflicting evidence so greatly outweighs the evidence supporting the conviction that the factfinder's determination is manifestly unjust. Steadman, 280 S.W.3d at 246; Watson, 204 S.W.3d at 414-15, 417. To reverse under the second ground, we must determine, with some objective basis in the record, that the great weight and preponderance of all the evidence, although legally sufficient, contradicts the verdict. Watson, 204 S.W.3d at 417.
Unless we conclude that it is necessary to correct manifest injustice, we must give due deference to the factfinder's determinations, "particularly those determinations concerning the weight and credibility of the evidence." Johnson v. State, 23 S.W.3d 1, 9 (Tex.Crim.App.2000); see Steadman, 280 S.W.3d at 246. Evidence is always factually sufficient when it preponderates in favor of the conviction. Steadman, 280 S.W.3d at 247; see Watson, 204 S.W.3d at 417.
B. Assault
Appellant argues in his third point that the evidence is factually insufficient to support his convictions for assault causing bodily injury to a public servant. Specifically, he contends that the white Cadillac was backing up "to avoid a civilian vehicle which had blocked its path and in the words of one of the officers was `unintentional.'"
1. Applicable Law
A person commits the offense of assault on a public servant if he intentionally, knowingly, or recklessly causes bodily injury to a person the actor knows is a public servant while the public servant is lawfully discharging an official duty. See Tex. Penal Code Ann. § 22.01(a)(1), (b)(1) (Vernon Supp. 2009). Here, the jury found Appellant guilty of recklessly causing bodily injury to Corporal Combs and Sergeant Enright.
2. The Evidence is Factually Sufficient
Given Appellant's contention that he "unintentionally" backed into the police vehicle, we note that the record is unclear as to whether Officer Jeter testified that Appellant unintentionally backed into the police vehicle or that the civilian vehicle unintentionally blocked Appellant's white Cadillac. During the State's direct examination of Officer Jeter, and referring to a blue car drawn onto an aerial photograph of the convenience store parking lot, the following exchange occurred:
Q. And there is an additional car that is drawn in on that photo, and do you know what that car represents?
A. That was a citizen that was attempting to pull out of the parking lot. And when he attempted to leave at first, they unintentionally blocked him; therefore, he backed up into the police car.
And during cross-examination by Appellant's counsel, Officer Jeter testified:
Q. Now, earlier when you were being asked questions about the blue vehicle on State's Exhibit 29 that backed out, you indicated the other vehicle that was still there basically unintentionally moved back to avoid striking the vehicle that was pulling out; is that right?
A. Sir? I'm sorry.
Q. Well, on State's Exhibit 29 there's a blue vehicle that's parked face-in to one of the stores?
A. Yes, sir.
Q. ... You indicated that when the blue vehicle in [State's Exhibit] 29 pulled back that this vehicle moved back so as to avoid a contact of the vehicle pulling out unintentionally; is that right?
A. Was that my wording?
*309 Q. That's what I'm asking you.
A. The white Cadillac.
Q. Pulled back?
A. Backed up, yes, sir.
Q. Just unintentionally to avoid the collision, right?
A. I have no idea if it was unintentional or not.
Q. I'm just asking you, did you ever use that word "unintentional"?
A. I might have, yes, sir.
A neutral reading of Officer Jeter's testimony could possibly suggest either that the blue civilian vehicle unintentionally blocked Appellant's white Cadillac by backing up or that Appellant unintentionally backed the white Cadillac into the police car parked behind him. Further, the jury heard other testimony that Appellant may not have known Corporal Combs and Sergeant Enright were police officers before he backed the white Cadillac into their unmarked police car. For example, Corporal Combs agreed that someone in the white Cadillac probably could not see what was written on the back of his raid gear and probably could not see the writing on the front of his raid gear because of the dashboard.
However, the jury heard other testimony that supports Appellant's convictions. The jury heard testimony that Corporal Combs and Sergeant Enright were wearing their "raid gear," that they parked fifteen to twenty feet behind Appellant's white Cadillac with the unmarked car's red and blue lights flashing, that both officers had exited or partially exited the car before the collision, that Officers Allen and Carnes were approaching Appellant's vehicle from the front yelling, "Fort Worth Police" and "Show me your hands," that Corporal Combs and Sergeant Enright parked before Officer Allen approached the white Cadillac from the front, and that Appellant looked over his right shoulder at Corporal Combs and Sergeant Enright as he was backing up. Corporal Combs testified that the white Cadillac "backed up at a high rate of speed and hit the front of our car."
Viewing the evidence in a neutral light, we conclude the jury could have found beyond a reasonable doubt that Appellant recklessly caused bodily injury to Sergeant Enright and Corporal Combs, persons Appellant knew to be public servants lawfully discharging an official duty. See Tex. Penal Code Ann. § 22.01(a)(1), (b)(1). Therefore, we cannot say that the evidence is so weak that the jury's determination is clearly wrong or manifestly unjust or that the conflicting evidence so greatly outweighs the evidence supporting the convictions that the jury's determination is manifestly unjust. See Lancon v. State, 253 S.W.3d 699, 704 (Tex.Crim.App.2008); Watson, 204 S.W.3d at 414-15, 417. Accordingly, we hold that the evidence is factually sufficient to support the jury's verdict, and we overrule Appellant's third point.
C. Evading Arrest
Appellant contends in his fourth point that the evidence is factually insufficient to support his conviction for evading arrest or detention. Specifically, Appellant argues that, at the time of his arrest, he "displayed injuries and informed the police that these had been recently given to him when he had been kidnapped, shot at and pistol whipped [sic] by several other persons because he had been unable to pay them what he owed them." He further contends that "[n]o effort to discredit that story was ever made."
1. Applicable Law
A person commits the state jail felony offense of evading arrest if he intentionally flees, in a vehicle, from a person that he *310 knows is a peace officer lawfully attempting to arrest or detain him. See Tex. Penal Code Ann. § 38.04(a), (b)(1) (Vernon Supp. 2009); Guillory v. State, 99 S.W.3d 735, 741 (Tex.App.-Houston [1st Dist.] 2003, pet. ref'd).
2. The Evidence is Factually Sufficient
Officer Smith testified that he obtained information from Appellant's wife suggesting that Appellant had been kidnapped and pistol-whipped, but he also testified that Appellant was not able to provide any information about the make, model, size, or color of the vehicle he was allegedly thrown into and that Appellant did not provide any description of the alleged kidnapper. The jury could have found the information about the alleged kidnapping to not be credible.
The jury also heard testimony that Sergeant Enright exited the unmarked, blue police car wearing raid gear as the arrest team converged on Appellant's white Cadillac; that Appellant backed the white Cadillac into the unmarked vehicle, turned around, and sped away; that Sergeant Enright ran toward the white Cadillac, saw that the passenger window was open, drew his weapon toward Appellant, and told Appellant to stop; and that Appellant did not stop and instead drove away at a dangerously excessive speed. Moreover, Officer Reese testified that Appellant told him, "I was nervous. I don't know why I ran. Probably because I was going to catch a delivery charge."
Viewing all the evidence in a neutral light, we conclude the jury could have found beyond a reasonable doubt that Appellant, using a vehicle, intentionally fled from Sergeant Enright, a person Appellant knew to be a peace officer lawfully attempting to arrest or detain him. See Tex. Penal Code Ann. § 38.04(a), (b)(1); Guillory, 99 S.W.3d at 741. Therefore, we cannot say that the evidence is so weak that the jury's determination is clearly wrong or manifestly unjust or that the conflicting evidence so greatly outweighs the evidence supporting the conviction that the jury's determination is manifestly unjust. See Lancon, 253 S.W.3d at 704; Watson, 204 S.W.3d at 414-15, 417. Accordingly, we hold that the evidence is factually sufficient to support the jury's verdict, and we overrule Appellant's fourth point.
D. Delivery of a Controlled Substance
Appellant argues in his fifth point that the evidence is factually insufficient to support his conviction for delivery of a controlled substance because "[t]he record reveals that when [Officer] Jeter dealt drugs[,] he did so with the driver of the vehicle. The driver of the vehicle then went into the store and was never seen again."
1. Applicable Law
A person commits the state jail felony of delivery of a controlled substance if the person knowingly possesses with intent to deliver a controlled substance in the amount of less than one gram. See Tex. Health & Safety Code Ann. § 481.112(a), (b) (Vernon 2010). Cocaine is a controlled substance. See id. § 481.102(3)(D) (Vernon 2010).
2. The Evidence is Factually Sufficient
Officer Jeter testified that as he arrived at the convenience store, he saw a white Cadillac with a person in the driver's seat and a person standing at the passenger window, conversing with the person inside the Cadillac. The black male at the passenger window said, "Hey, man, what do you want?" Officer Jeter told the man, "I'm looking for a 20," and Appellant said, "I got you" and stepped out of the driver's *311 side of the Cadillac, walked to the passenger side of Officer Jeter's vehicle, and gave Officer Jeter a blue baggie containing crack cocaine after Officer Jeter gave him a twenty dollar bill. Appellant then returned to the white Cadillac and got in on the driver's side. Officer Jeter made an in-court identification of Appellant as the person who sold him the cocaine. The jury also heard testimony that Appellant told Officer Reese, "I don't know why I ran. Probably because I was going to catch a delivery charge." The record does not support Appellant's contention that the driver of the white Cadillac "went into the store and was never seen again."
Viewing all the evidence in a neutral light, we conclude the jury could have found beyond a reasonable doubt that Appellant intentionally or knowingly delivered less than one gram of cocaine to Officer Jeter. See Tex. Health & Safety Code Ann. §§ 481.102(3)(D), .112(a), (b). Therefore, we cannot say that the evidence is so weak that the jury's determination is clearly wrong or manifestly unjust or that the conflicting evidence so greatly outweighs the evidence supporting the conviction that the jury's determination is manifestly unjust. See Lancon, 253 S.W.3d at 704; Watson, 204 S.W.3d at 414-15, 417. Accordingly, we hold that the evidence is factually sufficient to support the jury's verdict, and we overrule Appellant's fifth point.
IV. Collateral Estoppel and Double Jeopardy
Appellant contends in his first point that collateral estoppel and double jeopardy bar his conviction for evading arrest. He argues that the trial court erred by adjudicating him guilty of evading arrest because the evading arrest offense occurred simultaneously with, and was subsumed within, the assault convictions.[7]
A. Applicable Law
The Double Jeopardy Clause of the United States Constitution provides that no person shall be subjected to twice having life or limb in jeopardy for the same offense. U.S. Const. amend. V. Generally, this clause protects against (1) a second prosecution for the same offense after acquittal, (2) a second prosecution for the same offense after conviction, and (3) multiple punishments for the same offense. Brown v. Ohio, 432 U.S. 161, 165, 97 S. Ct. 2221, 2225, 53 L. Ed. 2d 187 (1977); Ex parte Cavazos, 203 S.W.3d 333, 336 (Tex. Crim.App.2006).
To determine whether both offenses are the same, we must examine the elements of the applicable statutes to determine whether each statute "requires proof of an additional fact which the other does not." Blockburger v. United States, 284 U.S. 299, 304, 52 S. Ct. 180, 182, 76 L. Ed. 306 (1932); see United States v. Dixon, 509 U.S. 688, 696, 113 S. Ct. 2849, 2856, 125 L. Ed. 2d 556 (1993); Parrish v. State, 869 S.W.2d 352, 353-55 (Tex.Crim. App.1994). When resolving whether two offenses are the same for double jeopardy purposes, we focus on the elements alleged in the charging instrument. Bigon v. State, 252 S.W.3d 360, 370 (Tex.Crim.App. 2008). Separate convictions for different *312 offenses arising from a single criminal transaction do not violate the prohibition against double jeopardy. See Haight v. State, 137 S.W.3d 48, 50-51 (Tex.Crim. App.2004); see also Hobbs v. State, 175 S.W.3d 777, 779 (Tex.Crim.App.2005) (discussing continuous offense of evading arrest).
B. Analysis
1. Collateral Estoppel
Citing Ashe v. Swenson, Appellant argues that the doctrine of collateral estoppel bars his conviction for evading arrest. See 397 U.S. 436, 443-45, 90 S. Ct. 1189, 1194-95, 25 L. Ed. 2d 469 (1970). However, "the Ashe doctrine of collateral estoppel only applies where there are two trials, and not where a single trial involving two counts is involved." Ward v. State, 938 S.W.2d 525, 528 (Tex.App.-Texarkana 1997, pet. ref'd) (citing Hite v. State, 650 S.W.2d 778, 784 n. 7 (Tex.Crim. App.1983)). Appellant was tried for multiple offenses in a single trial. Thus, collateral estoppel does not apply. See Hite, 650 S.W.2d at 784 n. 7; Ward, 938 S.W.2d at 528.
2. Double Jeopardy
Appellant also argues that double jeopardy bars his conviction because "the evading arrest was completely subsumed and was part and parcel of the assault[s]." The State counters that double jeopardy does not bar the convictions because the assault offenses and the evading arrest offense are different offenses and require proof of several different elements.
We focus on the elements alleged in the charging instrument to determine whether two offenses are the same for double jeopardy purposes. Bigon, 252 S.W.3d at 370. Under the charging instruments, the assault-on-a-public-servant convictions required proof that Appellant intentionally or knowingly caused bodily injury to Corporal Combs and Sergeant Enright by using an automobile, that Corporal Combs and Sergeant Enright were public servants lawfully discharging an official duty, and that Appellant knew Corporal Combs and Sergeant Enright were public servants. The evading arrest conviction required proof that Appellant used a vehicle to intentionally flee from Sergeant Enright and that Appellant knew that Sergeant Enright was a peace officer attempting to lawfully arrest or detain him. The assault convictions required proof of bodily injury to Corporal Combs and Sergeant Enright, but the evading arrest conviction did not. The evading arrest conviction required proof that Appellant intentionally fled, but the assault convictions did not. Thus, each offense required proof of at least one fact that the other offense did not. See Ortega v. State, 171 S.W.3d 895, 899-900 (Tex. Crim.App.2005) (holding offenses of assault on a public servant and resisting arrest were not the same for double jeopardy purposes because they each required proof of at least one fact that the other did not).[8] We hold that the offenses of assault *313 on a public servant and the offense of evading arrest were not the same in this case. See id.; see also Mallett v. State, 65 S.W.3d 59, 68 (Tex.Crim.App.2001) (holding that convictions for aggravated assault against a public servant and criminal mischief did not violate double jeopardy because each offense required proof of an element that the other did not). We overrule Appellant's first point.
V. Sentencing
Appellant argues in his second point that the trial court erred by improperly sentencing him as a first degree felon for the state jail felony of evading arrest. He also contends that he could not be sentenced as a first-degree felon because the indictment gave notice of enhancement to only a second degree felony, not a first degree felony.
As applied in this case, evading arrest or detention is a state jail felony because Appellant used a vehicle to flee and had not been previously convicted of evading arrest. See Tex. Penal Code Ann. § 38.04(b)(1)(B). Appellant cites three cases and argues that he was improperly sentenced as a first-degree felon because state jail felonies cannot be enhanced to habitual felonies. However, two of the cited cases did not involve an aggravating element such as the deadly weapon finding in this case, and the third case was later overruled by the issuing court. See Ester v. State, 941 S.W.2d 297, 300 (Tex.App.-Tyler 1996, pet. ref'd) (op. withdrawn on denial of reh'g) (holding the appellant's sentence could not be enhanced because there was no deadly weapon finding, and the habitual offender enhancement did not apply); State v. Warner, 915 S.W.2d 873, 879 (Tex.App.-Houston [1st Dist.] 1995, pet. ref'd) (holding "that the legislature did not intend for state jail felonies to be enhanced to habitual offender status pursuant to section 12.42(d)"), overruled by Smith v. State, 960 S.W.2d 372, 375 (Tex. App.-Houston [1st Dist.] 1998, pet. ref'd); State v. Mancuso, 903 S.W.2d 386, 387-88 and 387 n. 3 (Tex.App.-Houston [1st Dist.] 1995) (holding state jail felony could not be enhanced for habitual offender and noting absence of evidence of deadly weapon or applicable prior convictions), aff'd, 919 S.W.2d 86 (Tex.Crim.App.1996). Thus, these cases do not support Appellant's contention.
Appellant was convicted of the state jail felony offense of evading arrest, the jury made an affirmative deadly weapon finding, and the trial court found the habitual offender allegation true. Appellant argues that his sentence is illegal because "[e]nhancement of [s]tate [j]ail felonies is solely had under Tex. Penal Code [sections] 12.35(c) and 12.42(a) and not under [section] 12.42(d)." To address Appellant's argument, it is necessary to consider the text of penal code sections 12.35(a), 12.35(c)(1), 12.42(a), and 12.42(d).
Penal code section 12.35(a) states: "(a) Except as provided by Subsection (c), an individual adjudged guilty of a state jail felony shall be punished by confinement in a state jail for any term of not more than two years or less than 180 days." Tex. Penal Code Ann. § 12.35(a) (Vernon Supp. 2009) (emphasis added). Penal code section 12.35(c)(1) states:
(c) An individual adjudged guilty of a state jail felony shall be punished for a third degree felony if it is shown on the trial of the offense that:
(1) a deadly weapon as defined by Section 1.07 was used or exhibited during the commission of the offense or during immediate flight following *314 the commission of the offense, and that the individual used or exhibited the deadly weapon or was a party to the offense and knew that a deadly weapon would be used or exhibited.
Id. § 12.35(c)(1) (emphasis added). Appellant could not be punished under 12.35(a) because the deadly weapon finding made section 12.35(c)(1) the applicable punishment provision. See id. § 12.35(a), (c)(1). Thus, the trial court properly enhanced the applicable punishment range of Appellant's state jail felony to that of a third degree felony under section 12.35(c)(1). See id. § 12.35(c)(1).
The next issue is whether the trial court should have sentenced Appellant under section 12.42(a) or section 12.42(d). Penal code section 12.42(a) states:
(1) If it is shown on the trial of a state jail felony punishable under Section 12.35(a) that the defendant has previously been finally convicted of two state jail felonies, on conviction the defendant shall be punished for a third-degree felony.
(2) If it is shown on the trial of a state jail felony punishable under Section 12.35(a) that the defendant has previously been finally convicted of two felonies, and the second previous felony conviction is for an offense that occurred subsequent to the first previous conviction having become final, on conviction the defendant shall be punished for a second-degree felony.
(3) Except as provided by Subsection (c)(2),[9] if it is shown on the trial of a state jail felony punishable under Section 12.35(c) or on the trial of a third-degree felony that the defendant has been once before convicted of a felony, on conviction he shall be punished for a second-degree felony.
Id. § 12.42(a) (Vernon Supp. 2009) (emphasis added). Subsections 12.42(a)(1) and (a)(2) do not apply because they expressly apply to persons convicted under section 12.35(a), and Appellant could not be sentenced under section 12.35(a) because of the deadly weapon finding. See id. §§ 12.35(a), (c)(1), 12.42(a)(1), (2). In addition, section 12.42(a)(3) does not apply because Appellant had been previously convicted of more than one felony. See id. § 12.42(a)(3). Thus, contrary to Appellant's contention, he could not be sentenced under section 12.42(a).
Next, we must determine whether the trial court properly sentenced Appellant under penal code section 12.42(d), which provides:
Except as provided by Subsection (c)(2),[10] if it is shown on the trial of a felony offense other than a state jail felony punishable under Section 12.35(a) that the defendant has previously been finally convicted of two felony offenses, and the second previous felony conviction is for an offense that occurred subsequent to the first previous conviction having become final, on conviction he shall be punished by imprisonment in the Texas Department of Criminal Justice for life, or for any term of not more than 99 years or less than 25 years.
Id. § 12.42(d) (Vernon Supp. 2009) (emphasis added). The trial court found that Appellant had been convicted of two felony offenses meeting the requirements of section 12.42(d), and as stated, Appellant could not be punished under section *315 12.35(a) because of the deadly weapon finding. See id. § 12.35(a), (c)(1). Moreover, section 12.42(d) does not exclude any state jail felonies other than those punishable under 12.35(a). See id. § 12.42(d). Thus, the trial court properly enhanced Appellant's punishment range to that of a first degree felony by applying section 12.42(d). See id. § 12.42(d).
The court in Bunton v. State addressed a similar scenario. See 136 S.W.3d 355, 361-62 (Tex.App.-Austin 2004, pet. ref'd). There, a grand jury indicted Bunton for the state jail felony of evading arrest while using a motor vehicle. Id. at 361. The indictment also alleged the use of a motor vehicle as a deadly weapon and an habitual criminal notice for two prior felony convictions. Id. at 362. Bunton argued that the trial court erred by authorizing the jury to assess his punishment under section 12.42(d) of the penal code. Id. at 360-61. The court disagreed, stating,
the legislature could have exempted all state jail felonies from the habitual criminal status in section 12.42(d). The legislature, however, expressly exempted only those state jail felonies punishable under section 12.35(a), often described by case law as non-aggravated offenses. By doing so, the legislature made aggravated state jail felonies punishable under the provisions of section 12.35(c) subject to the habitual criminal provisions of section 12.42(d).
Id. at 363; see also Smith, 960 S.W.2d at 374 (holding that "an aggravated state jail felony may be enhanced by two prior convictions in the proper sequence to habitual offender status" under penal code section 12.42(d)). Thus, the Bunton court held that there was "no merit in [Bunton's] claim that fundamental error occurred in the jury charge at the punishment phase of the trial when the trial court instructed the jury on the range of punishment under section 12.42(d)." Bunton, 136 S.W.3d at 363. We hold that the trial court did not err by sentencing Appellant under penal code section 12.42(d) in this case.
To the extent Appellant contends that the habitual offender notice in the indictment did not give him sufficient notice that the State sought to enhance his punishment to that of a first degree felony because the indictment stated, "State Jail Felony Enhancement2nd Degree Felony Notice," we note that the remainder of the habitual offender paragraph alleged two prior felony offenses and that the indictment also included a deadly weapon allegation. The habitual offender and deadly weapon allegations, if proven, removed the possibility that Appellant could be punished as a second-degree felon. See Tex. Penal Code Ann. § 12.42(a)(2), (3). In Ex parte Beck, the court of criminal appeals stated,
The penal laws are fraught with offenses that have a higher penalty range when an additional fact, which is not necessary to prove the offense, is pled in the charging instrument. Although the additional fact must be pled in the indictment... the effect of that fact on punishment need not be pled.
769 S.W.2d 525, 527 n. 2 (Tex.Crim.App. 1989). Because the face of the indictment alleged two prior felony offenses and the use of a deadly weapon, and because Appellant was not eligible for punishment under sections 12.35(a) or 12.42(a)(2) and (3) if the habitual offender and deadly weapon allegations were proven true, we hold that Appellant had sufficient notice that the State sought enhancement of his punishment to that of a first degree felony. See Bunton, 136 S.W.3d at 364 (noting precedent that alleging two prior felony convictions on face of indictment provides sufficient notice in non-state jail felony *316 cases). We overrule the remainder of Appellant's second point.
VI. Conclusion
Having overruled each of Appellant's five points, we affirm the trial court's judgments.
NOTES
[1] The substance in the blue baggie was later confirmed to be 0.14 grams of cocaine.
[2] Corporal Combs testified that the registered owner of the white Cadillac was Kevin Jackson.
[3] Officer Jeter confirmed the serial number on the twenty dollar bill by comparing it to a photocopy of the original bill.
[4] Officer Carnes testified that as he approached the white Cadillac, a citizen's vehicle backed out of a parking space and was between him and the white Cadillac in a way that blocked the forward movement of the Cadillac.
[5] Sergeant Enright said he did not initially feel any pain but later felt pain and stiffness in his chest, neck, and shoulder from the impact.
[6] The trial court enhanced the punishment range for the evading arrest conviction first with the deadly weapon finding and second with the habitual offender finding.
[7] To the extent Appellant argues that he was punished multiple times for the same conduct, we overrule his argument as inadequately briefed. See Tex.R.App. P. 38.1(i). We also note that evading arrest is not a lesser-included offense of assault on a public servant and that both the assault and evading arrest statutes specifically authorize multiple prosecutions if the conduct violates that and another provision of the penal code. See Warren v. State, 98 S.W.3d 739, 743-44 (Tex. App.-Waco 2003, pet. ref'd); see also Tex. Penal Code Ann. §§ 22.01(g), 38.04(d).
[8] In Ortega, the court of criminal appeals stated:
The offense of assault required proof of at least one fact that the offense of resisting arrest did not: that the appellant caused bodily injury. The offense of resisting arrest required proof of a fact that the offense of assault did not: that the appellant prevented or obstructed a peace officer from effecting an arrest.
By the Blockburger rule, the offenses were not the same. There was no violation of the Double Jeopardy Clause.
Id. at 900; see also Blockburger, 284 U.S. at 304, 52 S. Ct. at 182 ("The applicable rule is that, where the same act or transaction constitutes a violation of two distinct statutory provisions, the test to be applied to determine whether there are two offenses or only one, is whether each provision requires proof of a fact which the other does not.").
[9] Section 12.42(c)(2) does not apply here because Appellant was not convicted of an offense listed under that subsection. See id. § 12.42(c)(2).
[10] See supra note 9. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/846964/ | Order Michigan Supreme Court
Lansing, Michigan
February 8, 2006 Clifford W. Taylor,
Chief Justice
Michael F. Cavanagh
127718(51(54) Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman,
CHERYCE GREENE, as Personal Justices
Representative of the Estate of
Keimer Easley, Deceased,
Plaintiff-Appellee,
SC: 127718
v COA: 249113
Wayne CC: 01-125094-NP
A.P. PRODUCTS, LTD., and REVLON
CONSUMER PRODUCTS CORPORATION,
Defendants-Appellants,
and
SUPER 7 BEAUTY SUPPLY, INC.,
f/k/a PRO CARE BEAUTY SERVICE,
INC, f/k/a PRO CARE BEAUTY
SUPPLY,
Defendants-Appellees,
and
RAANI CORPORATION,
Defendant.
______________________________________
On order of the Chief Justice, motions by defendants-appellant and by
plaintiff-appellee for extension of time for filing their briefs on appeal are considered and
they are GRANTED.
I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
February 8, 2006 _________________________________________
Clerk | 01-03-2023 | 03-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/767885/ | 205 F.3d 597 (3rd Cir. 2000)
STANLEY SMITH, Appellantv.ROBERT CONTINI; JOHN BARNES; JOHN KROMMENHOEK; RICHARD MULLER; JERRY MCCORMICK; LAWRENCE MCDERMOTT; JOHN DOE (name being fictitious); TEAMSTERS LOCAL 641 PENSION FUND; PETER VAN LENTEN; ROBERT CIRONE, as Trustee of the Teamsters Local 641 Pension Fund; THOMAS FLANNERY, Trustee of the Teamsters Local 641 Pension Fund
No. 99-5293
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
Argued January 25, 2000Filed March 9, 2000
On Appeal from the United States District Court for the District of New Jersey (D.C. Civ. No. 97-2692) District Judge: Hon. William H. Walls[Copyrighted Material Omitted]
David Tykulsker (argued) David Tykulsker & Associates 161 Walnut Street Montclair, NJ 07042, Attorneys for Appellant
Gary A. Carlson (argued) Lynch Martin Kroll 300 Executive Drive, Suite 010 West Orange, NJ 07052, Attorneys for Appellees
BEFORE: GREENBERG, ROTH, and ROSENN, Circuit Judges
OPINION FOR THE COURT
GREENBERG, Circuit Judge.
I. INTRODUCTION
1
This matter is before the court on an appeal by Stanley Smith in this Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. SS 1001 et seq., benefits case.1 Smith filed a complaint in the district court on May 23, 1997, after the defendants denied him retirement benefits. Smith asserted that defendants' construction of the pension plan they managed violated ERISA, and thus he brought this action seeking an injunction and other appropriate equitable relief to bring their construction of the plan into compliance with the statute. Of course, his ultimate goal is to obtain a pension.
2
The Teamsters Local 641 Pension Fund (the "Local 641 Fund") plan is a multi employer, defined benefits pension plan within the meaning of 29 U.S.C. S 1002(2)(A)(37). The individual defendants are trustees and officers of the Local 641 Fund who, by virtue of their positions, owe a fiduciary duty to Smith and the other beneficiaries of the Local 641 Fund plan.
3
The Local 641 Fund plan provides an array of retirement benefits to employees covered by the plan. As is relevant herein, the Local 641 Fund pension plan provides for two types of benefits to covered employees upon their reaching their normal retirement age. The first, a "Deferred Pension," is available to employees who accumulate at least ten years of vesting service under the Local 641 Fund. See Local 641 Fund plan S 3.15, app. at 27. The second, a "Pro-rata Pension," is available to certain employees who have been members of other Teamsters locals, but did not attain a minimum of ten years of employment with employers within the jurisdiction of the Local 641 Fund so as to qualify for a Deferred Pension. The Local 641 Fund entered into reciprocal agreements with the pension funds of other locals to provide for Pro-rata Pensions to certain employees who then could accumulate service credits in more than one fund so as to qualify for a pension.
4
With respect to its Pro-rata Pension provisions, the Local 641 Fund plan provides:
5
The Fund has a number of reciprocal agreements with other pension funds under which service in the jurisdiction of any of the reciprocating funds is considered as service under this Fund for the purpose of determining eligibility for benefits under the Fund.
6
* * * *
7
If an employee would meet the eligibility rules under this Plan if his Related Credit was considered, but does not meet the eligibility rules of the last Fund in whose jurisdiction he worked, a Pro-rata pension based on the time worked under this Plan only will be payable even if the Employee has less than 10 Pension Credits under this Plan.
8
Local 641 Fund plan S 3.21, app. at 28.
9
Generally, the Local 641 Fund plan calculates a Pro-rata Pension based on the amount of the pension to which an employee would have been entitled under the Local 641 Fund plan if he had earned all of his combined pension credits under the jurisdiction of the Fund. See Local 641 Fund plan, Addendum A, app. at 37. The Local 641 Fund then pays a pro-rata share, or percentage, of the pension to the employee that equals the percentage of the combined pension credits earned by the employee within the jurisdiction of the Local 641 Fund. See id.2 Under this plan, however, a Pro-rata Pension generally is paid only to those employees who had earned a minimum of 15 years of combined service credits. See id. at 28.
10
As is relevant here, the Local 641 Fund maintains reciprocal agreements with the Teamsters Local 202 Fund and the Teamsters Local 816 Fund. Under these agreements, the Local 641 Fund agreed to apply service credits earned by employees with the Local 202 and 816 Funds toward service credits earned in the Local 641 Fund plan.
11
Smith, who was employed as a truck driver, earned two quarters of service credits with the Local 202 Fund between May and December 1966. From February of 1967 through December of 1973, Smith was employed by Eastern Express, Inc. ("Eastern Express") in New York City, earning 26 quarters of service credits with the Local 816 Fund. Then Eastern Express moved to Elizabeth, New Jersey, and its employees came under the jurisdiction of the Local 641 Fund. Smith, whom Eastern Express continued to employ after the move, earned 16 quarters of service credits with the Local 641 Fund between January 1974 and May 1977.
12
Pursuant to its reciprocal agreements with the Local 202 and 816 Funds, the Local 641 Fund accepted the service credits Smith had earned within the jurisdiction of those funds. Thus, when Smith terminated his covered employment in 1977, he had earned a total of 44 service credits (the equivalent of 11 years) -42 service credits (ten and one-half years) as an Eastern Express employee.
13
On November 11, 1993, Smith, having turned 65, applied for a pension from the Local 641 Fund. By letter dated June 21, 1994, the Local 641 Fund acknowledged that Smith had earned 11 years of service credits, but informed him that he needed 15 years of service credits before he could receive pension benefits. See id. at 85. Smith appealed this decision on the ground that the Fund could require only ten, not 15, years of service before an employee was guaranteed pension benefits. The Fund denied Smith's appeal by a letter dated September 22, 1994. See id. at 86.
14
Smith then brought this suit in the district court under 29 U.S.C. S 1132(a)(3), alleging that the defendants' adherence to the 15-year service credit requirement was contrary to ERISA and constituted a breach of their fiduciary duty. In particular, Smith sought a declaration that the defendants had breached their fiduciary duties and an order enjoining them to conform the rules and regulations of the Local 641 Fund plan to ERISA's maximum ten-year vesting requirement. See app. at 7. He also sought restitution by the award of a pension.
15
Ultimately, after proceedings that we need not describe, the parties filed cross-motions for summary judgment. By an opinion and order dated April 8, 1999, the district court denied Smith's motion but granted the defendants' motion. See Smith v. Contini, No. 97-2692 (D.N.J. Apr. 8, 1999). In its opinion, the district court examined the Local 641 Fund's pension plan and determined it complied with ERISA guidelines. The court noted that the ERISA provision Smith thought applicable to this case, 29 U.S.C. S 1053(a)(2)(A), required plans to provide that an employee's right to his normal retirement benefit be nonforfeitable upon the attainment of his normal retirement age, provided that the employee have at least ten years of qualifying service. See id. at 9-10. But the court determined that the Deferred Pension offered by the Local 641 Fund plan complied with ERISA's vesting provisions. See id. at 10 -11.
16
The district court also noted that the Local 641 Fund plan provided a pension for those employees who had performed less than ten years of vesting service within the jurisdiction of the Local 641 Fund, but who had accumulated service credits with a reciprocating fund. See id. But under the reciprocal pension, an employee would not receive any benefits unless he had a minimum of 15 years of combined service within the jurisdiction of the various reciprocating funds. See id. It is undisputed that Smith did not meet that threshold.
17
The district court concluded that the Pro-rata Pension offered by the Local 641 Fund pursuant to its reciprocity agreements with other funds was not governed by ERISA's ten-year vesting requirements. See id. at 11. The court stated:
18
Defendants are correct in their argument that ERISA does not require them to provide pro-rata pensions or reciprocal agreements with other funds. Under 29 U.S.C. S 1053(b)(1), defendants may disregard years of service performed for an employer during a period in which that employer did not maintain a pension plan with the Local 641 Fund or a predecessor plan. The pro-rata provisions in the Local 641 Fund's pension plan do not violate the vesting requirements of ERISA, 29 U.S.C. S 1053(a)(2). Because neither the pro-rata provisions nor the vesting schedule of the Local 641 Fund's pension plan violate ERISA, defendants' motion for summary judgment to dismiss the complaint is granted.
19
Id. at 11.
20
In addition to contending that the Pro-rata Pension was subject to a ten-year maximum vesting requirement, Smith argued that the Local 641 Fund should recognize his ten and one-half years of service with Eastern Express as vesting service under its plan, thereby entitling him to a Deferred Pension. The district court found that"[a]lthough plaintiff 's argument may have merit, the Court may not consider it at this point because it deals with the application of the terms of the pension plan to plaintiff, not whether the terms of the pension violate ERISA. The Court may not consider this argument unless and until plaintiff brings an action under 29 U.S.C. S 1132(a)(1)(B) to challenge his denial of benefits under the Local 641 Fund's pension plan." See id. at 12. Smith appeals.
II. DISCUSSION
21
We exercise plenary review with respect to the district court's decision on the cross-motions for summary judgment. See Seibert v. Nusbaum, Stein, Goldstein, Bronstein & Compeau, 167 F.3d 166, 170 (3d Cir. 1999); Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1230 (3d Cir. 1993). We will affirm only if we conclude that the pleadings, depositions, answer to interrogatories and admissions on file, together with the affidavits, show that the defendants were entitled to judgment as a matter of law on the basis of the undisputed facts. See Fed. R. Civ. P. 56(c).
22
We start our discussion of the issues by recognizing that ERISA neither mandates the creation of pension plans nor in general dictates the benefits to be afforded once a plan is created. See Dade v. North American Philips Corp., 68 F.3d 1558, 1561 (3d Cir. 1995) (citing Hlinka v. Bethlehem Steel Corp., 863 F.2d 279, 283 (3d Cir. 1988); H.R. Rep. No. 93-807, 93d Cong., 2d Sess., reprinted in 1974 U.S.C.C.A.N. 4670, 4677). Thus, ordinarily only the plan can create an entitlement to benefits. Consequently, "we are required to enforce the Plan as written unless we can find a provision of ERISA that contains a contrary directive." Dade, 68 F.3d at 1562.
23
One of the areas in which ERISA requires express provisions in benefit plans concerns the nonforfeitability, often referred to as "vesting," of normal retirement benefits3 payable to an employee who reaches the normal retirement age.4 In this regard, ERISA section 203(a), 29 U.S.C. S 1053(a), provides in relevant part:
24
Each pension plan shall provide that an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age and in addition shall satisfy the requirements of paragraphs (1) and (2) of this subsection.
25
(1) A plan satisfies the requirements of this pa ragraph if an employee's rights in his accrued benefit derived from his own contributions are nonforfeitable.
26
(2) A plan satisfies the requirements of this pa ragraph if it satisfies the requirements of subparagraph (A), (B), or (C).
27
(A) A plan satisfies the requirements of this subparagraph if an employee who has completed at least 10 years of service has a nonforfeitable right to 100 percent of the employee's accrued benefit derived from employer contributions.5
28
The minimum vesting standards to which an employee benefit plan is obligated to adhere are based upon "years of service" as defined in ERISA section 203(b)(1). That section provides:
29
In computing the period of service under the plan for purposes of determining the nonforfeitable percentage under subsection (a)(2) of this section, all of an employee's years of service with the employer or employers maintaining the plan shall be taken into account, except that the following may be disregarded:
30
* * * *
31
(C) years of service with an employer during any period for which the employer did not maintain the plan or a predecessor plan, defined by the Secretary of the Treasury
32
29 U.S.C. S 1053(b)(1).
33
Defendants successfully argued in the district court that the Pro-rata Pension provided by the Local 641 Fund plan to an employee who had not earned the requisite ten years of service credit under its plan was not subject to the ERISA ten-year vesting requirement even though the employee overall had more than ten years of service credits. Thus, they assert on this appeal that "ERISA's minimum vesting standards [i.e., 29 U.S.C. S 1053] do not apply to pro-rata pension benefits." See Appellees Br. at 24. In support of this argument, defendants cite ERISA section 203(b)(1)(C), 29 U.S.C. S 1053(b)(1)(C), quoted above, for the proposition that years of service earned under other plans may be disregarded for the purposes of vesting. See id. at 19-20.
34
While we seem not to have had the opportunity to address the specific question presented on this appeal, in Hoover v. Cumberland, Maryland Area Teamsters Pension Fund, 756 F.2d 977 (3d Cir. 1984), in an analysis instructive here, we did consider whether pro-rata pensions were subject to other limitations imposed by ERISA. In Hoover, the plaintiffs, as members of Teamsters Local 453, participated in the Cumberland Fund, a multiemployer pension plan established by the local union and employers engaged in collective bargaining with the local. See id. at 979. The Cumberland Fund was a qualified plan subject to the vesting, funding, and participation requirements of the Internal Revenue Code of 1954 and ERISA. See id. Starting in 1967, the trucking companies employing the plaintiffs began moving their terminals to Pittsburgh, Pennsylvania, because of changes in interstate highway routes. See id. The drivers affected by these relocations, including the plaintiffs, moved with their employers to Pittsburgh and transferred to Teamsters Local 249 whose members participated in the Western Pennsylvania Teamsters and Employers Pension Fund (the "Western Fund"). As a result of the move, these drivers terminated their participation in the Cumberland Fund and joined the Western Fund, although the same company continued to employ them and they remained members of the same international union. See id.
35
Responding to the disruption in local union jurisdiction and pension fund affiliation, a number of teamster pension funds prepared a reciprocal agreement which the trustees of the Cumberland Fund signed in 1968. See id. The purpose of the reciprocal agreement was to provide full pensions for workers with continuous membership in the international union, but who, because of transfers to different locals, might not accrue sufficient work credit under any one plan to entitle them to full pension benefits. See id. at 979-80. Under the reciprocal agreement, a union member who transferred from the Cumberland Fund to the Western Fund could cumulate his service credit from each fund, and if his total combined service credit was sufficient on retirement, he would receive proportional pension benefits from each fund. See id. at 980. The reciprocal agreement did not specify a particular benefit rate, but rather required each fund to include in its plan documents a method for calculating the partial pensions. See id. The trustees of the Cumberland Fund triggered the dispute in Hoover by amending the plan in a way that reduced the pensions payable from the level in effect prior to the amendment.
36
In response to the amendment, the Hoover plaintiffs brought their suit alleging violations of ERISA section 204(g), 29 U.S.C. S 1054(g). See Hoover , 756 F.2d at 981. Section 204(g) states that the "accrued benefit of a participant under a plan may not be decreased by an amendment of the plan, other than an amendment described in section [302(c)(8)]." 29 U.S.C. S 1054(g)(1) (emphasis added). Thus, we indicated in Hoover that "the focus of our inquiry is whether the partial pension benefits [under the reciprocal agreement involved in that case] qualif[ied] as accrued benefits within the meaning of that term under ERISA" so that section 204(g) precluded their reduction. See Hoover, 756 F.2d at 981.
37
A reading of both the Cumberland Fund plan and the legislative history of ERISA led us to conclude that the plaintiffs' partial pension benefits earned pursuant to reciprocity clauses satisfied ERISA's definition of an accrued benefit. See id. at 982. Accordingly, we determined that pension benefits provided pursuant to the reciprocity agreements were subject to the section 204(g) amendment limitations. See id. It was inherent in our determination that the benefits provided pursuant to the reciprocity agreements were provided under a covered plan for purposes of ERISA because the restriction in ERISA section 204(g), 29 U.S.C. S 1054(g), is only on amendments of a plan as ERISA defines that term.
38
ERISA section 203(a) is similar to the ERISA provision at issue in Hoover because it sets forth nonforfeitability requirements for pension plans. See 29 U.S.C. S 1053(a). As in Hoover, we hold that the benefits provided to employees pursuant to the Pro-rata Pension provisions of the Local 641 Fund plan are provided in a pension plan within the meaning of ERISA. See 29 U.S.C. S 1002(2)(A) (defining pension plan as any plan, fund or program that provides retirement income to employees regardless of the method of calculating contributions, benefits or method of distributing benefits). Accordingly, the Pro-rata Pension is subject to the vesting requirements set forth in ERISA section 203 and thus an employee must be provided with a nonforfeitable right to his normal retirement benefit if the employee has completed ten years of service. See ERISA section 203(a)(2)(A), 29 U.S.C. S 1053(a)(2)(A).
39
Defendants' argument that the vesting requirements of ERISA are not applicable here because the Local 641 Fund was not required to provide its employees with a Pro-rata Pension is misplaced. As we mentioned, a plan is not required to provide any particular benefits to its employees and thus the ERISA provisions become applicable only after benefits are provided. See Dade, 68 F.3d at 1562. The Prorata Pension provision here seeks to provide normal retirement benefits to plan participants who reach normal retirement age. ERISA sets forth clear vesting requirements for the provision of such benefits. See ERISA section 203(a), 29 U.S.C. S 1053(a).
40
Defendants argue, however, that even if ERISA section 203(a) is found to be applicable, section 203(b)(1)(C) allows the Local 641 Fund to disregard service with an employer for any period in which the employer did not maintain the Local 641 Fund plan. We reject this argument. The underlying policy goal of ERISA is the protection of retirement benefits. Congress's chief purpose in enacting the statute was to ensure that workers receive promised pension benefits upon retirement. See Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 375, 100 S. Ct. 1723, 1733 (1980). In constructing ERISA, Congress perceived the statute's accrual and vesting provisions as being at the heart of that protection. See Hoover, 756 F.2d at 985.
41
Unless an employee's rights to his accrued pension benefits are nonforfeitable, he has no assurance that he will ultimately receive a pension. Thus, pension rights which have slowly been stockpiled over many years may suddenly be lost if the employee leaves or loses his job prior to retirement. Quite apart from the resulting hardships, ... such losses of pension rights are inequitable, since the pension contributions previously made on behalf of the employee may have been made in lieu of additional compensation or some other benefit which he would have received.
42
S. Rep. No. 93-383, 93d Cong., 2d Sess., reprinted in 1974 U.S.C.C.A.N. 4890, 4930.
43
Although the concepts of accrued benefits and vested benefits are distinct, the concerns expressed by this court in Hoover have force here. In fact, a district court, relying on the reasoning of Hoover, recently determined that the vesting requirements set forth in ERISA section 203 applied to service credits earned pursuant to reciprocity clauses. See Helms v. Local 705 Int'l Bhd. of Teamsters Pension Plan, 1999 WL 965230, at *10-12 (N.D. Ill. Sept. 30, 1999) (finding that plan that offered both a standard deferred pension and a pension based upon reciprocity agreements was required to adhere to ERISA's vesting provisions for both pensions). This conclusion is consistent with our reasoning in Hoover and with the concerns expressed by Congress regarding the protection of accrued benefits and vested rights.
44
The establishment of reciprocal pension agreements promotes transfers of employees between employers within funds that are parties to reciprocity agreements and provides the employees with the apparent security that they will receive a pension based upon their combined years of service. See Helms, 1999 WL 965230, at *12. It would be inconsistent with the purpose of ERISA to allow funds to promote movement by employees in these circumstances while at the same time subjecting such employees to "penalties" for having so moved.
45
Further, by opting to provide pension benefits based upon years or service earned under other funds, the Local 641 Fund chose not to avail itself of the provisions of ERISA section 203(b) for the purposes of the Pro-rata Pension. Section 203(b) is permissive in that it states that a plan may disregard service with an employer during any period in which the employer did not maintain the plan. See 29 U.S.C. S1053(b)(1)(C). Thus, ERISA does not require a plan to disregard such service. Having chosen to provide a pension plan expressly based upon years of service earned with certain employers not within the Local 641 Fund jurisdiction, the Local 641 Fund is barred from disregarding those years of service for the purposes of vesting under ERISA Section 203(a).
46
We reiterate that we agree with the defendants and the district court that the defendants were under no obligation under ERISA to provide for reciprocal agreements and Prorata Pensions. Nevertheless, once having made the determination to provide for such pensions, the defendants were obliged to formulate a plan providing for vesting in accordance with ERISA section 203(a)(2)(A), 29 U.S.C. S 1053(a)(2)(A). Thus, this case represents a situation, not unusual in the law, that an actor`s discretion in how it engages in certain conduct is circumscribed, even though it was not obliged to engage in the conduct in the first instance.
47
Finally, the defendants argue that they cannot be required to grant Smith a Pro-rata Pension because he brought this action under ERISA section 502(a)(3), 29 U.S.C. S 1132(a)(3), rather than ERISA section 502(a)(1)(B), 29 U.S.C. S 1132(a)(1)(B). See Ream v. Frey, 107 F.3d 147, 151-53 (3d Cir. 1997). Smith contends, however, that he appropriately did not bring this action under 29 U.S.C. S 1132(a)(1)(B) because that section applies to actions brought "under the terms of the plan" and he acknowledges that the defendants acted consistently with the terms of the plan. Yet in his view they nevertheless breached their fiduciary duties because the plan as written does not comply with ERISA.
48
Our recent opinion in Harte v. Bethlehem Steel Corp., No. 98-2052, 204 F.3d 442, 446-47 (3d Cir. Feb. 29, 2000), supports Smith's position that a fiduciary acting consistently with a plan nevertheless may breach its fiduciary duty. Smith thus proceeded properly in this case under ERISA section 502(a)(3). But we will not linger on the question of whether Smith sued under the wrong subsection of ERISA section 502, as we expect that the defendants now will apply the plan in accordance with the ERISA ten-year vesting requirements. Moreover, we would be reluctant to order benefits granted, a remedy that might be appropriate relief under ERISA section 502(a)(1)(B), as we do not know whether there is any impediment aside from the ten-year vesting requirement to Smith's recovering Pro-rata Pension benefits. For example, Smith may be entitled to a Deferred Pension, and we doubt that he will be entitled to obtain both pensions. Of course, in light of our disposition, we are acting without prejudice to Smith's taking such other steps as may be necessary to recover Pro-rata Pension benefits.
49
In view of our foregoing conclusions, we will reverse the summary judgment of the district court to the extent that it held the Local 641 plan did not violate ERISA with respect to the statute's ten-year vesting requirement. The Pro-rata Pension requirements violate the vesting requirements by making benefits contingent on obtaining service credits beyond ERISA's permitted forfeiture periods and defendants have a fiduciary obligation to comply with the law.
50
In addition to arguing that the Local 641 Fund's Pro-rata Pension violated ERISA's vesting provisions, Smith also contends that by reason of his ten and one-half years of service with Eastern Express, he was entitled to a Deferred Pension from the Local 641 Fund plan. The district court found that while this argument may have merit, it concerns the application of the terms of the plan to Smith and not whether the terms violate ERISA. The district court concluded that such a challenge must be brought pursuant to ERISA section 502(a)(1)(B), 29 U.S.C. S 1132(a)(1)(B), dealing with the denial of benefits, and not in an action seeking equitable relief to remedy a breach of fiduciary duty under ERISA section 502(a)(3), 29 U.S.C. S 1132(a)(3). We agree with the district court on this point and consequently we will affirm the order for summary judgment to that extent without further discussion and without prejudice to a later action under section 502(a)(1)(B), if that should be appropriate.
III. CONCLUSION
51
For the reasons set forth above, the order for summary judgment of April 8, 1999, will be reversed in part and affirmed in part. The district court erred when it concluded that the Local 641 Fund plan's 15-year service credit requirement for a Pro-rata Pension did not violate ERISA. Accordingly, to the extent Smith sought to challenge the propriety of the 15-year requirement, this matter will be remanded to the district court for the entry of judgment in favor of Smith and the fashioning of appropriate relief pursuant to ERISA section 502(a)(3), 29 U.S.C. S 1132(a)(3). The decision of the district court will be affirmed, however, to the extent it held that Smith cannot proceed pursuant to ERISA section 502(a)(3), 29 U.S.C. S 1132(a)(3), to assert his rights to a Deferred Pension under the Local 641 Fund plan.
Notes:
1
The district court exercised jurisdiction pursuant to 28 U.S.C. S 1331 and 29 U.S.C. S 1132(e)(1) and (f). We have jurisdiction pursuant to 28 U.S.C. S 1291. The defendants assert that the case is not ripe for appellate review because the district court granted summary judgment "dismissing the complaint" and not dismissing the action. See Appellee Br. at 12 (citing Newark Branch, N.A.A.C.P. v. Harrison, 907 F.2d 1408, 1416 (3d Cir. 1990)). While it is true that the dismissal of a complaint without prejudice in some circumstances may not be a final and appealable order because a court can grant leave to amend a complaint even after dismissal, see id. at 1416, in this case the district court did not dismiss the complaint without prejudice and it did not grant leave to amend. Moreover, Smith has stood on his complaint. See Shapiro v. UJB Fin. Corp., 964 F.2d 272, 278 (3d Cir. 1992). Thus, we have jurisdiction.
2
Apparently the employee obtains the full pension from all of the funds, but we are not certain as to the mechanics of the program.
3
ERISA defines normal retirement benefits as "the greater of the early retirement benefit under the plan, or the benefit under the plan commencing at normal retirement age." 29 U.S.C.S 1002(22).
4
ERISA allows the normal retirement age to be defined by the plan or sets the age as the later of the time a plan participant reaches the age of 65 or reaches his or her fifth anniversary of participation in the plan. See 29 U.S.C. S 1002(24). The parties do not dispute that Smith had attained the normal retirement age at the time he requested benefits under the Local 641 Fund.
5
The ten-year vesting requirement we set forth reflects the version of ERISA section 203 in effect at all times relevant to the instant appeal. Because the Local 641 Fund plan was ratified before March 1, 1986, the parties agree that the current vesting limits do not apply. | 01-03-2023 | 04-18-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/2261405/ | 111 Cal. Rptr. 2d 598 (2001)
91 Cal. App. 4th 1344
BERKELEY KEEP JETS OVER THE BAY COMMITTEE, Petitioner and Appellant,
v.
BOARD OF PORT COMMISSIONERS of the City of Oakland, Defendant and Appellant.
City of San Leandro et al., Plaintiffs,
v.
Board of Port Commissioners of the City of Oakland, Defendant.
City of Alameda et al., Plaintiffs and Appellants,
v.
Board of Port Commissioners of the City of Oakland, Defendant and Appellant.
Nos. A086708, A087959, A089660.
Court of Appeal, First District, Division Two.
August 30, 2001.
As Modified on Denial of Rehearing September 26, 2001.
Review Denied November 20, 2001.
*601 John R. Shordike, Berkeley, Shute, Mihaly & Weinberger, E. Clement Shute, Jr., San Francisco, for Petitioner and Appellant.
Carol A. Korade, City Attorney, David Brandt, Deputy City Attorney, McDermott, Will & Emery, Steven F. Pflaum, for Plaintiffs and Appellants.
Steven R. Meyers, City Atty., Meyers, Nave, Riback, Silver & Wilson, Andrea J. Sultzman, Rick W. Jarvis and Amrit S. Kulkari, for Plaintiff City of San Leandro et al.
McCutchen, Doyle, Brown & Enersen, Stephen L. Kostka, Barbara J. Schussman, *602 Peter S. Hayes, Geoffrey L. Robinson, Walnut Creek, Brecher & Volker, Joseph J. Brecher, David L. Alexander, Oakland, for Defendant and Appellant.
Certified for Partial Publication.[*]
RUVOLO, J.
I.
This appeal reviews the decision of the Board of Port Commissioners for the Port of Oakland (the Port Commissioners) for the City of Oakland to certify the environmental impact report (EIR) analyzing the environmental consequences of the proposed Airport Development Plan (ADP) for the Metropolitan Oakland International Airport (the Airport). The ADP is a multi-faceted, long-range expansion proposal for the Airport that will provide increased capacity for both air cargo and passenger operations.
The trial court issued a peremptory writ of mandate ordering the Port Commissioners to set aside approval and certification of the EIR until a supplement to the EIR was prepared and circulated that complied with the requirements of the California Environmental Quality Act (Pub. Resources Code, §§ 21000 et seq.) (CEQA).[1] The trial court held that the EIR prepared for the ADP violated CEQA by failing to analyze a reasonable range of alternatives, and by failing to evaluate the cumulative impacts of the ADP in combination with other reasonably foreseeable projects.
The judgment granting a peremptory writ of mandate is reversed in part and affirmed in part. We affirm the portion of the superior court's judgment directing that a revised EIR be prepared to include further discussion of project alternatives and cumulative impacts. However, we conclude that the EIR prepared for the ADP did not comply with CEQA in its treatment of several other critical issues. Specifically, the EIR (1) failed to analyze adequately the noise impacts from planned additional nighttime flights; (2) erred in using outdated information in assessing the emission of toxic air contaminants (TACs) from jet aircraft; (3) failed to support its decision not to evaluate the health risks associated with the emission of TACs with meaningful analysis; and (4) improperly deferred devising a mitigation plan for the western burrowing owl.
Because there are several significant environmental issues that have not been adequately addressed in the EIR's discussion of potential impacts from the project, a new supplemental EIR must be prepared, submitted for public review and comment, and certified in accordance with CEQA. We therefore direct that the trial court issue a new writ of mandate in accordance with the views expressed herein.
II.
A. Project Overview
The project site for the ADP comprises approximately 2,445 acres and is located in the southwestern portion of the City of Oakland in Alameda County. To the north are the City of Alameda, San Leandro Bay, and Airport Channel; to the east are the cities of San Leandro and Oakland; and to the south and west is the San Francisco Bay.
The ADP is designed to reduce congestion, inconvenience, and delay at the Airport and to accommodate, at acceptable levels of service, anticipated growth in passenger and cargo activity through the year 2000[2]. The proposed passenger components *603 of the ADP include consolidating the two existing terminals, adding 12 new gates, reconfiguring ticket counters, enlarging waiting and other public areas, and adding baggage-handling space. Roads on and near the Airport will be widened and reconfigured, and a new 6,000 space parking garage will be built. The ADP responds to the projected growth in cargo demand by expanding the Federal Express Metroplex, the United States Postal Service Airmail Distribution Center, the North Airport cargo facilities, and constructing a multi-tenant facility.[3]
While the ADP is only designed to accommodate activity expected in the year 2000, the EIR forecasted the highest level of aircraft operations that might occur through 2010 if activity at the Airport continues to grow at the same pace as in the early 1990s. The EIR projected that, with implementation of the ADP, the number of aircraft operations will increase from about 470,000 in 1994 to over 600,000 in 2000, and to over 800,000 in 2010. Thus, by 2010, approximately 2,200 aircraft will take off and land at the Airport each day.
The Port of Oakland (the Port), as lead agency under CEQA, prepared a draft EIR, studying the significant environmental effects of the ADP. The draft EIR was published and made available for public review from September 10, 1996, to December 30, 1996.[4] The Port received over 500 comments on the draft document from public agencies, businesses, organizations, and individuals. Public hearings were held on November 6, 1996, at which written and oral comments were received. The comments ranged from one-page letters to multi-volume comment reports. The Port was occupied for a full year in preparing written responses to the comments received and to completing modifications to the draft EIR.
On December 3, 1997, the Port issued a final EIR for review by interested persons and public agencies. The final EIR was comprised of 617 pages, plus another 2,612 pages in appendices, comment letters, and responses to comments. The final EIR identified the ADP's significant environmental effects. Significant impacts that can be mitigated to a less-than-significant *604 level were found in each of the following areas: social, air quality, water quality, cultural resources, biotic communities, wetlands, flooding and floodplains, hazardous materials and waste, transportation and circulation, geology and seismicity, and public services and utilities. Significant and unavoidable impacts were found in each of the following areas: noise, air quality, hazardous materials and waste, and transportation and circulation.
On December 16, 1997, the Port Commissioners adopted Resolution No. 97376, certifying the final EIR and approving the ADP. Shortly thereafter, four writ petitions were filed in the superior court challenging the Port Commissioners' decision to certify the EIR and approve the project.
On February 2, 1999, the Alameda County Superior Court entered its judgment, granting a peremptory writ of mandate. The court found that the EIR was inadequate under CEQA because it failed to analyze several alternatives to the ADP that had been identified in the early stages of the environmental review process, and because it failed to evaluate the cumulative impacts of the ADP in combination with other reasonably foreseeable projects. Specifically, the trial court found that (1) two alternatives mentioned in a notice of preparation of the EIR should have been discussed in the EIR (the "Air Passenger Dominant Alternative" and the "Air Cargo Dominant Alternative"); and (2) an analysis of the cumulative impacts of three potential future projects was required (a new runway, an extension of Runway 11/29, and construction of a high-speed taxiway). The court rejected a host of other claims made with regard to the adequacy of the EIR.
A writ of mandate issued that conformed to these rulings, and which ordered the Port Commissioners to set aside approval and certification of the EIR until a supplement to the EIR was prepared and circulated that complied with the requirements of CEQA by containing an adequate analysis of project alternatives and cumulative impacts. The court also issued an injunction prohibiting the Port from taking any action to implement the ADP until it had fully complied with CEQA. Following briefing and hearing, the court issued an order jointly granting petitioners $180,000 in attorney fees.
The trial court's resolution of this controversy has spawned several appeals, which reach us after a somewhat serpentine procedural history. We first consider Appeal No. A086708, which is composed of separate appeals by the City of Alameda and two citizens organizations, Berkeley Keep Jets Over the Bay Committee (KJOB), and Citizens League for Airport Safety and Serenity (CLASS) (hereafter collectively referred to as petitioners).[5] Petitioners primarily argue that the EIR's project description failed to disclose the full magnitude of the project, and that the EIR did not fully address many significant environmental issues associated with the proposed expansion of the Airport's operations and facilities, including noise impacts, emission of toxic air pollutants, and adverse impacts on threatened species such as the burrowing owl. The Port cross-appealed, claiming the trial court erred in requiring a supplemental analysis of project alternatives and cumulative impacts.[6]
*605 In Appeal No. A089660, we review the trial court's order discharging the peremptory writ of mandate issued in Appeal No. A086708. In Appeal No. A087959, we review the court's order awarding petitioners $180,000 in attorney fees pursuant to Code of Civil Procedure section 1021.5, to be divided by stipulation or subsequent court order. Before we address the multitude of issues raised by each of the parties in Appeal No. A086708, we review briefly the law that guides our resolution of these important issues.
B. General Overview of CEQA and Standard of Review Relating to Claims that An EIR Omitted Relevant Information
Certain basic principles regarding the adequacy of an EIR are relevant to much of our discussion. The statutory scheme of CEQA rests on the fundamental requirement of section 21151 that "[a]ll local agencies shall prepare . . . an environmental impact report on any project that they intend to carry out or approve which may have a significant effect on the environment." The EIR serves to provide public agencies and the public in general with information about the effect that a proposed project is likely to have on the environment and to "[i]dentify ways that environmental damage can be avoided or significantly reduced." (Cal.Code Regs., tit. 14, § 15002, subd. (a)(2) (Guidelines).)[7] "Its purpose is to inform the public and its responsible officials of the environmental consequences of their decisions before they are made. Thus, the EIR `protects not only the environment but also informed self-government.' [Citation.]" (Citizens of Goleta Valley v. Board of Supervisors (1990) 52 Cal. 3d 553, 564, 276 Cal. Rptr. 410, 801 P.2d 1161.)
In addition to "provid[ing] public agencies and the public in general with detailed information about the effect which a proposed project is likely to have on the environment" (§ 21061), the EIR must "describe feasible measures which could minimize significant adverse impacts" and "describe a range of reasonable alternatives to the project." (Guidelines, §§ 15126.4, subd. (a)(1); 15126.6, subd, (a).) Among the alternatives, the report must evaluate "[t]he specific alternative of `no project[.]'" (Guidelines, § 15126, subd. (e)(1).) These sections reflect the legislative policy "that public agencies should not approve projects as proposed if there are feasible alternatives or feasible mitigation measures available which would substantially lessen the significant environmental effects of such projects. . . ." (§ 21002.)
To effectuate this policy, Public Resources Code section 21081 requires a public agency to make certain specific findings attesting to its consideration of the need for the mitigation measures identified in the EIR. The findings must be supported by substantial evidence on the record. (Guidelines, § 15091.) If the project has a significant effect on the environment, the agency may approve the project only upon *606 finding that it has "[e]liminated or substantially lessened all significant effects on the environment where feasible" and that any unavoidable significant effects on the environment are "acceptable due to overriding concerns" specified in section 21081. (Guidelines, § 15092, subds.(b)(2)(A) & (b)(2)(B).)
"[T]he EIR is the heart of CEQA" and the integrity of the process is dependent on the adequacy of the EIR. (County of Inyo v. Yorty (1973) 32 Cal. App. 3d 795, 810, 108 Cal. Rptr. 377.) "`An evaluation of the environmental effects of a proposed project need not be exhaustive, but the sufficiency of an EIR is to be reviewed in the light of what is reasonably feasible. . . .' [Citations.] Technical perfection is not required; the courts have looked not for an exhaustive analysis but for adequacy, completeness and a good-faith effort at full disclosure. [Citations.]" (Rio Vista Farm Bureau Center v. County of Solano (1992) 5 Cal. App. 4th 351, 368, 7 Cal. Rptr. 2d 307, quoting Guidelines, § 15151.)
The absence of information from the EIR "`does not per se constitute a prejudicial abuse of discretion. [Citation.]'" (Al Larson Boat Shop, Inc. v. Board of Harbor Commissioners (1993) 18 Cal. App. 4th 729, 749, 22 Cal. Rptr. 2d 618.) A prejudicial abuse of discretion occurs "`if the failure to include relevant information precludes informed decisionmaking and informed public participation, thereby thwarting the statutory goals of the EIR process.' [Citation.]" (San Joaquin Raptor/Wildlife Rescue Center v. County of Stanislaus (1994) 27 Cal. App. 4th 713, 722, 32 Cal. Rptr. 2d 704; Galante Vineyards v. Monterey Peninsula Water Management Dist. (1997) 60 Cal. App. 4th 1109, 1117, 71 Cal. Rptr. 2d 1; County of Amador v. El Dorado County Water Agency (1999) 76 Cal. App. 4th 931, 946, 91 Cal. Rptr. 2d 66.)
In making that assessment, our Supreme Court has cautioned that a reviewing court is not to decide "whether the studies are irrefutable or whether they could have been better." (Laurel Heights I, supra, 47 Cal.3d at p. 409, 253 Cal. Rptr. 426, 764 P.2d 278.) By the same token, the reviewing court is not to "uncritically rely on every study or analysis presented by a project proponent in support of its position. A clearly inadequate or unsupported study is entitled to no judicial deference." (Id. at p. 409, fn. 12, 253 Cal. Rptr. 426, 764 P.2d 278.) "Our role here, as a reviewing court, is not to decide whether the board acted wisely or unwisely, but simply to determine whether the EIR contained sufficient information about a proposed project, the site and surrounding area and the projected environmental impacts arising as a result of the proposed project or activity to allow for an informed decision. . . . [Citation.]" (San Joaquin Raptor/Wildlife Rescue Center v. County of Stanislaus, supra, 27 Cal. App.4th at p. 718, 32 Cal. Rptr. 2d 704.)
In sum, the determination of EIR adequacy is essentially pragmatic. Whether an EIR will be found in compliance with CEQA involves an evaluation of whether the discussion of environmental impacts reasonably sets forth sufficient information to foster informed public participation and to enable the decision makers to consider the environmental factors necessary to make a reasoned decision. Preparing an EIR requires the exercise of judgment, and the court in its review may not substitute its judgment, but instead is limited to ensuring that the decision makers have considered the environmental consequences of their action.
The only role for this court in reviewing an EIR is to ensure that the public and responsible officials are adequately informed "`of the environmental consequences *607 of their decisions before they are made.'" (Laurel Heights Improvement Assn. v. Regents of University of California (1993) 6 Cal. 4th 1112, 1123, 26 Cal. Rptr. 2d 231, 864 P.2d 502 (Laurel Heights II), original italics.) There, our Supreme Court has described the standard of review in these cases: "In reviewing an agency's determination, finding or decision under CEQA, a court must determine whether the agency prejudicially abused its discretion. ([Pub. Resources Code] § 21168.5.) `Abuse of discretion is established if the agency has not proceeded in a manner required by law or if the determination or decision is not supported by substantial evidence.' (Ibid., italics added.) The Guidelines further define `substantial evidence' as `enough relevant information and reasonable inferences from this information that a fair argument can be made to support a conclusion, even though other conclusions might also be reached.' (Guidelines, § 15384, subd. (a).)" (See also §§ 21168; 21168.5.)
"In applying the substantial evidence standard, `the reviewing court must resolve reasonable doubts in favor of the administrative finding and decision.' (Topanga Association for a Scenic Community v. County of Los Angeles (1974) 11 Cal. 3d 506, 514, 113 Cal. Rptr. 836, 522 P.2d 12. . . .)" (Laurel Heights I, supra, 47 Cal.3d at p. 393, 253 Cal. Rptr. 426, 764 P.2d 278.) We may not overturn an agency's approval of an EIR on the ground that an opposite conclusion would have been equally or more reasonable. Neither may we weigh conflicting evidence and determine who has the better argument. (Ibid.) "Our limited function is consistent with the principle that `The purpose of CEQA is not to generate paper, but to compel government at all levels to make decisions with environmental consequences in mind. CEQA does not, indeed cannot, guarantee that these decisions will always be those which favor environmental considerations.' [Citation.]" (Ibid.)
With these principles in mind, we turn to the express concerns raised by petitioners, who contend the trial court'sruling which was limited to the EIR's discussion of alternatives and cumulative impacts failed to correct many other deficiencies in the EIR.
III.
A. Project Definition
Petitioners claim the EIR's analysis of environmental impacts is premised on an inadequate project description that severs portions of the Port's on-site expansion plans, including the construction of a new runway, a new high-speed taxiway, and an extension of Runway 11/29 from the ADP's project description.[8] As such, they contend this is a classic case of "segmentation," in which an agency splits a large project into small pieces in order to avoid detailed environmental review. (See Orinda Assn. v. Board of Supervisors (1986) 182 Cal. App. 3d 1145, 1171, 227 Cal. Rptr. 688.) They argue, "Because the Port did not proceed in the manner required by law when it excluded the new runway and the runway extension from the [final EIR's] project description and then analyzed environmental impacts based upon its truncated project description, the *608 writ of mandate and judgment should be amended to require the Port to prepare a revised EIR. . . ."
In support of this contention, petitioners point to draft planning documents, prepared over a decade ago, which evaluate the feasibility of adding a new runway as part of an effort to develop a 20-year Master Plan for the Airport, a plan which the Port never completed or adopted. Petitioners also emphasize that the Port, at one time, intended to include the highspeed taxiway and the extension of Runway % as part of the proposed project described in the EIR. However, the Port ultimately decided not to proceed with these projects. The Port explains that its decision "was influenced in part by the fact that continued efforts toward a longer range plan presented significant institutional and political problems and stirred a great deal of controversy." In the end, the Port decided to focus "on those improvements that are clearly needed in Phase I. These include terminal expansion, new terminal support facilities, air cargo expansion, miscellaneous airfield improvements, general aviation facilities development, and improved instrumentation."
There is no dispute that CEQA forbids "piecemeal" review of the significant environmental impacts of a project. This rule derives, in part, from section 21002.1, subdivision (d), which requires the lead agencyin this case, the Portto "consider[ ] the effects, both individual and collective, of all activities involved in [the] project." It has been recognized that "`[a] curtailed or distorted project description may stultify the objectives of the reporting process. Only through an accurate view of the project may affected outsiders and public decision-makers balance the proposal's benefit against its environmental cost, consider mitigation measures, assess the advantage of terminating the proposal . . . and weigh other alternatives in the balance. An accurate, stable and finite project description is the sine qua non of an informative and legally sufficient EIR.' [Citation.]" (Sacramento Old City Assn. v. City Council (1991) 229 Cal. App. 3d 1011, 1023, 280 Cal. Rptr. 478, original italics; Stanislaus Natural Heritage Project v. County of Stanislaus (1996) 48 Cal. App. 4th 182, 201, 55 Cal. Rptr. 2d 625.)
Under the Guidelines, the term "project" is defined as "the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably forseeable indirect physical change in the environment. . . ." (Guidelines, § 15378, subd. (a).) At the other end of the spectrum, long-range planning proposals are exempt from EIR requirements: "A project involving only feasibility or planning studies for possible future actions which the agency, board, or commission has not approved, adopted, or funded does not require the preparation of an EIR. . . ." (Guidelines, § 15262.)[9]
*609 Consequently, like so many other matters in life, timing in EIR preparation is essential. It is desirable that "EIRs and negative declarations should be prepared as early as feasible in the planning process to enable environmental considerations to influence project program and design and yet late enough to provide meaningful information for environmental assessment. . . ." (Guidelines, § 15004, subd. (b); see also Bozung v. Local Agency Formation Com. (1975) 13 Cal. 3d 263, 282, 118 Cal. Rptr. 249, 529 P.2d 1017; Stand Tall on Principles v. Shasta Union High Sch. Dist. (1991) 235 Cal. App. 3d 772, 780, 1 Cal. Rptr. 2d 107; Mount Sutro Defense Committee v. Regents of University of California (1978) 77 Cal. App. 3d 20, 35, 143 Cal. Rptr. 365.) Environmental review which comes too late runs the risk of being simply a burdensome reconsideration of decisions already made and becoming the sort of "post hoc rationalization[] to support action already taken," which our high court disapproved in Laurel Heights I, supra, 47 Cal.3d at page 394, 253 Cal. Rptr. 426, 764 P.2d 278 (original italics).
Petitioners primarily rely on Laurel Heights I, supra, 47 Cal. 3d 376, 253 Cal. Rptr. 426, 764 P.2d 278, to support their argument that the appropriate time to introduce environmental considerations related to the construction of a new runway, new high speed taxiway, and extension of Runway 11/29 into the decision-making process was when the EIR was being prepared. Because Laurel Heights I is the leading case in determining to what extent an EIR must consider potential future expansion of existing proposals, we consider it in some detail.
The project in Laurel Heights I was defined in the EIR as "`mov[ing] the School of Pharmacy basic science research units from the [University of California, San Francisco (UCSF)] Parnassus campus to Laurel Heights.'" (Laurel Heights I, supra, 47 Cal.3d at pp. 389, 393, 253 Cal. Rptr. 426, 764 P.2d 278.) The building at Laurel Heights was located in a mixed residential and commercial neighborhood. (Id. at p. 388, 253 Cal. Rptr. 426, 764 P.2d 278.) It was purchased by the Regents in 1985, and consisted of approximately 354,000 square feet, of which only 100,000 was then available for relocation of the UCSF School of Pharmacy research units. The rest of the building was occupied by the California Department of Transportation (Caltrans) under a lease that was to expire in 1990, with an option for an additional five years. (Id. at p. 393, 253 Cal. Rptr. 426, 764 P.2d 278.) However, the Regents acknowledged that UCSF would occupy the entire building when the Caltrans space became available, with the only uncertainty being the precise use of the additional space. (Id. at pp. 396-397, 253 Cal. Rptr. 426, 764 P.2d 278.) Proposals for the expansion included development of "`. . . a biomedical research facility, with cross disciplinary programs from all UCSF schools,'" as well as relocation of the UCSF's Office of the Dean. (Id at pp. 396-397, 253 Cal. Rptr. 426, 764 P.2d 278.) The Laurel Heights Neighborhood Improvement Association, Inc. (the Association), filed a petition for writ of mandate alleging, among other things, that the EIR for the project was inadequate because it failed to discuss the various proposals for expansion once the additional space became available and the environmental effects of those activities. (Id. at pp. 387, 389, 253 Cal. Rptr. 426, 764 P.2d 278.)
After framing the central issue for decision as "what circumstances require consideration in an EIR of future action related to the proposed project" (Laurel Heights I, supra, 47 Cal.3d at p. 395, 253 Cal. Rptr. 426, 764 P.2d 278), the Supreme Court in Laurel Heights I concluded as follows: "We hold that an EIR must include *610 an analysis of the environmental effects of future expansion or other action if: (1) it is a reasonably foreseeable consequence of the initial project; and (2) the future expansion or action will be significant in that it will likely change the scope or nature of the initial project or its environmental effects. Absent these two circumstances, the future expansion need not be considered in the EIR for the proposed project. Of course, if the future action is not considered at that time, it will have to be discussed in a subsequent EIR before the future action can be approved under CEQA." (Id. at p. 396, 253 Cal. Rptr. 426, 764 P.2d 278.)
This standard, the Laurel Heights I court explained, "is consistent with the principle that `environmental considerations do not become submerged by chopping a large project into many little ones each with a minimal potential impact on the environmentwhich cumulatively may have disastrous consequences.' [Citation.] The standard also gives due deference to the fact that premature environmental analysis may be meaningless and financially wasteful. Under this standard, the facts of each case will determine whether and to what extent an EIR must analyze future expansion or other action." (Laurel Heights I, supra, 47 Cal.3d at p. 396, 253 Cal. Rptr. 426, 764 P.2d 278, quoting Bozung v. Local Agency Formation Com., supra, 13 Cal.3d at pp. 283-284, 118 Cal. Rptr. 249, 529 P.2d 1017.)
Applying the foregoing principles, the Laurel Heights I court found it "indisputable that the future expansion and general type of future use is reasonably foreseeable," and irrelevant that the Regents had not yet decided "precisely how they will use the remainder of the building." (Laurel Heights I, supra, 47 Cal.3d at pp. 396-397, 253 Cal. Rptr. 426, 764 P.2d 278, original italics.) The Supreme Court held that the EIR was inadequate in its failure to discuss the anticipated future uses of a planned research facility, and the likely environmental impacts of those uses. (Id. at p. 399, 253 Cal. Rptr. 426, 764 P.2d 278.)
On a cautionary note, the court stated: "We do not require prophecy. The Regents are not required by our decision to commit themselves to a particular use or to predict precisely what the environmental effects, if any, of future activity will be. Afar do we require discussion in the EIR of specific future action that is merely contemplated or a gleam in a planner's eye. To do so would be inconsistent with the rule that mere feasibility and planning studies do not require an EIR. (Guidelines, § 15262.)" (Laurel Heights I, supra, 47 Cal.3d at p. 398, 253 Cal. Rptr. 426, 764 P.2d 278, italics added.)
We believe there are factors present in the Laurel Heights I case that distinguish it from the case before us. First, the evidence cited in Laurel Heights I as creating "reasonable foreseeability" that the future expansion would occur does not compare favorably to the evidence relied on by petitioners here. In Laurel Heights I, evidence that future expansion was "reasonably foreseeable" included an acknowledgment in the draft EIR that the university would occupy the entire facility when the remaining 254,000 square feet became available. (Id. at p. 393, 253 Cal. Rptr. 426, 764 P.2d 278.) The university's plans were sufficiently definite that it estimated the number of faculty, staff, and students who would occupy the building before (460) and after (860) the expansion. (Laurel Heights I, supra, 47 Cal.3d at p. 396, 253 Cal. Rptr. 426, 764 P.2d 278.) The final EIR also referred to the future expansion as a certainty, as did newsletters, minutes of the planning committee, and correspondence between the Pharmacy Dean and the Chancellor. These documents also described *611 with specificity how the additional space would be used. (Id. at p. 397, 253 Cal. Rptr. 426, 764 P.2d 278.) The court concluded: "In short, there is telling evidence that the University, by the time it prepared the EIR, had either made decisions, or formulated reasonably definite proposals as to future uses of the building. At a minimum, it is clear that the further expansion and the general types of future activity at the facility are reasonably foreseeable." (Ibid.)
By contrast, here the only evidence petitioners offer to support their assertion that the plans for a new runway are inseparable from the whole of the Airport's master plan for expansion appear in dated, longrange planning documents of the Port. With respect to a high-speed taxiway and extension of Runway 11/29, petitioners rely on documents showing that these projects were deleted from the proposed ADP very early in the planning process. However, to conclude that these documents irreversibly committed the Port to a particular course of action would be to ignore the fact that large public transportation projects, such as the one involved here, are in the planning and development stage over a long period of time and customarily undergo many changes in design and scope before they are actually built. In reviewing the ADP's project definition, we are mindful that planning officials need flexibility to allow for modifications without being found committed to projects simply being contemplated in preliminary planning documents.
In essence, these runway projects existed only as concepts in long-range plans that were subject to constant revision. The record is silent with regard to any meaningful planning, decisionmaking, or any other activity by the Port moving forward with implementation of any such long-range plans. These are simply statements that at some undefined point in the future, the Port might try to undertake these projects. It is, of course, not necessary that plans for future use be final, or that the precise details of the future use be known, before an analysis of environmental impacts are required. (Laurel Heights I, supra, 47 Cal.3d at p. 398, 253 Cal. Rptr. 426, 764 P.2d 278; see also City of Antioch v. City Council (1986) 187 Cal. App. 3d 1325, 1338, 232 Cal. Rptr. 507.) However, the mere fact that a lead agency acknowledges that it contemplates such a long-range goal is not, by itself, sufficient to conclude that it is a "reasonably foreseeable consequence of the initial project." (Laurel Heights I, supra, at p. 396, 253 Cal. Rptr. 426, 764 P.2d 278.)
Furthermore, the result in Laurel Heights I turned on the fact that occupying the rest of the building was linked to occupying the initial 100,000 square feet, in that the expansion would fulfill the Regents' stated planning objectives. The record reveals that the various runway projects are not similarly "linked" to the ADP either functionally or as part of the Port's concrete planning objectives for the airport.
As an example, the record fully supports the Port's assertion that the existing runways at the airport are operated below capacity and can accommodate the Port's worst-case long-term operation forecasts at least through the year 2010. In fact, twice as many flights could be accommodated on the existing runway system. Thus, the ADP does not depend on a new runway and would be built whether or not runway capacity is ever expanded. As the Port explained: "There is no way to foresee whether worst-case long term projections will be reached by 2010, or some number of years later. Future demand for air service out of Oakland obviously will be affected by a variety of factors *612 which cannot be predicted, such as overall market demand, the availability of expanded capacity at the San Francisco and San Jose airports, development of high speed rail service within the state and technological changes affecting business travel patterns."
On this record, the stated long-range goal of expanded runway capacity is entirely speculative, and only "a gleam in a planner's eye." (See Laurel Heights I, supra, 47 Cal.3d at p. 398, 253 Cal. Rptr. 426, 764 P.2d 278.) Therefore, failure to analyze a new runway, the high-speed taxiway, and runway extension doesn't violate the underlying policy against "piecemealing," because the facts do not support the conclusion that these contemplated longrange projects are a reasonably foreseeable consequence of the project under review. The EIR's project description was adequate.
Petitioners remind us that the EIR treated the extension of Runway 11/29 and construction of a high-speed exit taxiway as "reasonably anticipated future projects" for purposes of assessing potential cumulative impacts of the proposed ADP in 2010. (Former Guidelines, § 15130, subd. (b)(1)(A); see current Guidelines, § 15355, subd. (b) [discussion of cumulative impacts limited to past, present, and "probable future projects"].) However, they were discussed in the EIR's cumulative impact analysis because they were explored in the past, and the Port might foreseeably pursue them again at some point in the future.[10] By law, therefore, the runway work must have been included in the EIR's cumulative impacts analysis. However, this requirement does not mandate that all possible future projects had to be included in the current ADP project description.
Similarly, because the extension of Runway 11/29 and the high-speed exit taxiway could proceed independently and be implemented by 2010; they were included in the analysis of the EIR's no project alternative in 2010. We reject petitioners' related argument that "[b]y including the future extension of Runway 11/29 at MOIA in its analysis of the noproject alternative, the [final EIR] indisputably fails to analyze the effects of the property remaining in its existing state." CEQA requires that the EIR's no project alternative address existing conditions as well as what would reasonably be expected to occur in the foreseeable future if the project were not approved, based on current plans and consistent with available infrastructure and community services. (Guidelines, § 15126.6, subd. (e)(2).) As succinctly explained in Planning & Conservation League v. Department of Water Resources (2000) 83 Cal. App. 4th 892, 911, 100 Cal. Rptr. 2d 173, "[t]he existing conditions supplemented by a reasonable forecast, are characterized as the no project alternative." (Italics added.) The "no project" and project description requirements operate independently of one another, and impose requirements using different threshold tests. Thus, the inclusion of the extension of Runway 11/29 in its discussion of the no-project alternative did not per se also obligate that it be incorporated as part of the ADP project description.
*613 B. Toxic Air Contaminants
Petitioners next contend the EIR failed to (1) utilize the best available data to assess the increased emission of toxic air contaminants (TACs) from airplane engines; (2) analyze meaningfully the health risks associated with the emission of TACs; and (3) discuss adequately the ADP's inconsistency with the state implementation plan, which contains the strategy to be used by the State of California to make sure that national ambient air quality standards will be met. (See 42 U.S.C. § 7410.)
Because the Airport expansion will result in a dramatic increase in the number of aircraft operations, a concomitant increase in air pollutants is expected. The exhaust from aircraft engines and ground support equipment contains many TACs. The Port describes TACs as "a fractional component of the reactive organic gases that are released when any fuel is burned." TACs are emitted into the air and dispersed into adjacent areas whenever aircraft idle, taxi down the runway, take off and land, and whenever group support equipment service these aircraft at the gates. The TACs that have been detected in aircraft exhaust include acetaldehyde, benzene, 1,3-butadiene, benzo(a)pyrene, acrolein, and styrene.
1. The EIR's Use of the 1991 Speciation Profile to Estimate TACs
The final EIR acknowledged that TACs associated with airport operations would increase with the contemplated airport expansion. Specifically, expanded operations at the Airport will result in increased levels of numerous TACs including acrolein, benzene, chlorobenzene, formaldehyde, and xylenes. The EIR also expressly conceded, "TACs may cause both carcinogenic and adverse noncarcinogenic health effects." (Italics added.)
The EIR estimated TAC emissions from jet aircraft for the years 2000 and 2010 based on a speciation profile contained in a document entitled Identification of Volatile Organic Compound Species Profiles (2d ed. 1991), published by the California Air Resources Board (CARB) (profile # 508 or the 1991 profile). Using this speciation profile, various organic compounds emitted from airplane engines were computed. In addition, the EIR compared the estimated increase in countywide TAC emissions forecast to occur under the ADP with the emissions forecast for the no project alternative.
Notwithstanding these analyses, the EIR concluded that the environmental effects of TAC increases due to the ADP are unknown because there is no approved, standardized protocol for determining the risks associated with mobile-source TACs, such as aircraft, and there are no significance criteria associated with mobilesource emission of TACs.
The EIR then considered mitigation of TACs. The Port's air quality experts determined that TAC emissions associated with the ADP would be reduced through the nine mitigation measures established for criteria pollutants[11] because those measures would reduce organic gas emissions, of which TACs are a fractional component. These proposed mitigation measures were limited to efforts to control emissions of ground service equipment, to install ground power equipment at new gates, to encourage ground transportation systems management, to purchase emissions credits to offset emissions from stationary sources, and to ensure that required permits are obtained from the Bay Area Air Quality Management District *614 (BAAQMD). However, once again the EIR concluded that, "[a]s there are no standards of significance for mobile-source TAC emissions, the significance of this impact after mitigation is unknown."
At the time the EIR was written, the 1991 profile was CARB's most recently published profile. After the draft EIR was circulated for public review and comment, the use of this speciation profile was criticized as "outdated" in a comment letter from an expert in air quality analysis, Dr. J. Phyllis Fox. Dr. Fox explained that this profile was no longer used by CARB and that it had been replaced by a 1994 speciation profile (profile # 586 or the 1994 profile), which is the average of three profiles published by the EPA.
Dr. Fox provided data indicating that the TAC emissions from the project would substantially increase if CARB profile # 586 were used to estimate emissions from jet aircraft. For example, relying on the 1991 profile, the EIR reported that jet aircraft exhaust contains only two types of TACs: benzene and xylene. However, the analysis conducted by Dr. Fox using the 1994 profile measures jet aircraft exhaust for six other TACs (acetaldehyde, acrolein, 1,3-butadiene, formaldehyde, propylene and toluene), each of which can cause cancer or other severe health problems.
In reaction to Dr. Fox's public comment on the draft EIR, the Port published a response claiming that CARB profile # 586 should not be used to estimate toxic emissions because CARB had not yet published that newer profile. Furthermore, citing a 1997 conversation with Paul Allen, an air pollution research specialist with CARB, the Port made the following statement: "CARB staff has expressed concern regarding the accuracy of some of the particular compounds contained in specifies [sic ] profile # 586. . . . CARB has not determined what speciation profile will be included for jet exhaust when it releases its third edition of the reference manual cited above for public review sometime next year."
A declaration from Paul Allen was then submitted in connection with petitioners' legal challenge below to the final EIR.[12] In his declaration, Mr. Allen corrects the misleading impression given in the Port's response to public comments by averring: "On November 7, 1997, I spoke with [a Port representative]. He said that he was calling about the EIR for the Oakland airport expansion. He asked about speciation profile # 586 for jet exhaust. I told him that, in my opinion, speciation profile # 586 is the best profile available. I told him that the fraction for formaldehyde seemed high, but not necessarily inaccurate. I did not say that I doubted the overall accuracy of speciation profile # 586. I did say that the older species profile # 508 should not be used to characterize jet exhaust speciation. . . . . Although profile # 586 is based on data published by the [EPA], it has not been adopted by CARB for use in the VOC speciation manual. However, the CARB staff believe that this profile is the most accurate characterization of jet exhaust available." (Italics added.)
The record also contains a letter dated December 15, 1997, from Linda C. Murchison, chief of CARB's Emission Inventory Branch. A copy of this letter was submitted to the Port Commissioners prior to certification of the final EIR. In pertinent part, the letter stated: "The Port of Oakland used profile # 508 for the speciation of the organic gases from jet exhaust. *615 Profile # 508 is contained in a report published by the California Air Resources Board (CARB) in 1991. Because organic gas speciation profiles are being continually updated and improved, we routinely encourage the use of the best information available for the evaluation of emissions of toxic air contaminants. For jet exhaust, we believe that the best data available are the EPA 1097, 1098 and 1099 profiles contained in the `Air Emissions Species Manual' EPA-450/2-88-003a. The CARB profile # 586 is an average of the three EPA profiles. We believe that profile # 586 is a more accurate and comprehensive profile of the organic species contained in jet exhaust than what is contained in profile #508." (Italics added.)
Therefore, in reply to public criticism that the EIR failed to use the most recent CARB speciation profile in estimating TAC emissions from jet aircraft, the Port created the misleading impression that a CARB official had discouraged the Port from utilizing speciation profile #586 because it had not yet been officially adopted by CARB and that CARB staff had questions about the accuracy of its methodology. The omission of the CARB official's opinion that "the older species profile # 508 should not be used to characterize jet exhaust speciation" and that speciation profile # 586 "is the most accurate characterization of jet exhaust available" is a serious one, and is such as to prevent a decisionmaker and the public from gaining a true understanding of one of the most important environmental consequences of increasing the number of flights.[13]
The Port raises the illusory argument that the Port Commissioners, in fact, had "the opportunity to consider emissions data from both the official and draft speciation profiles in making its decision to approve the EIR." For support it refers us to Dr. Fox's comment letter in which she questioned the Port's reliance on CARB's 1991 speciation profile # 508. As we have noted, Dr. Fox recalculates TAC emissions using CARB's 1994 speciation profile # 586, which indeed shows an increase in TAC emissions far greater than reported in the draft EIR. But in making its argument, the Port fails to point out that Dr. Fox's views were perfunctorily discredited in the Port's published response to her letter without any contrary analysis being made by the Port.
For these reasons, the use in the final EIR of data extrapolated from CARB's 1991 speciation profile # 508 for measuring aircraft emission of TACs did not meet the standard of "a good faith effort at full disclosure" required by CEQA. (Guidelines, § 15151.) "`"[W]here comments from responsible experts or sister agencies disclose new or conflicting data or opinions that cause concern that the agency may not have fully evaluated the project and its alternatives, these comments may not simply be ignored. There must be good faith, reasoned analysis in response."'" (Cleary v. County of Stanislaus (1981) 118 Cal. App. 3d 348, 357, 173 Cal. Rptr. 390, original italics.) By using scientifically outdated information derived from the 1991 profile, we conclude the EIR was not a reasoned and good faith effort to inform decision makers and the public about the increase in TAC emissions that will occur as a consequence of the Airport expansion.
2. Failure to Prepare Health Risk Assessment
In addition to challenging the Port's quantification of TACs using the 1991 speciation profile, petitioners also *616 claim the Port failed to assess the health effect of TACs from mobile sources on persons who live in close proximity to the Airport. In response to these concerns, the final EIR simply stated that the public health impact of the TAC emissions was "unknown."
To support this conclusion, the EIR made the following claims: "There is no approved, standardized protocol for assessing the risk associated with mobile source emissions of TACs, as there is for stationary-source emissions. . . . Furthermore, there is no standard for evaluating the significance of the risk associated with mobile-source emissions of TACs. Therefore, while the potential risk associated with mobile-source TAC emissions can be qualitatively discussed and can be considered by decision makers, a formal determination of the significance of the impact would be speculative and would not be based on accepted scientific principles or methodologies. The significance of this impact is thus considered unknown."
Voluminous documentary evidence was submitted to the Port supporting the assertion that an approved and standardized protocol did exist which would enable the Port to conduct a health risk assessment. For instance, the Port was cited to eight studies performed by the EPA on TAC emissions from mobile sources, including an EPA study of TAC emissions generated from aircraft and related vehicular sources at Midway Airport in southwest Chicago.
The Port was also referred to a study prepared by Environmental Science Associates contained in the EIR for the San Jose International Airport. Environmental Science Associates is the same consulting firm that prepared the EIR in this case. In that document, the EIR relied upon an evaluative methodology in determining that emissions from the San Jose project would result in a significant effect on the environment if they caused a net increase of more than one percent of countywide mobile-source emissions.
At the public hearing prior to certification of the final EIR, the Port was also provided with a letter from an environmental consultant who was in the process of performing a study quantifying the exposure and associated risk from toxic compounds generated from both mobile and fixed sources at the Santa Monica Municipal Airport. The letter set out in great detail the regulatory guidance the consultant has received from numerous agencies, including the EPA's Office of Mobile Sources as well as the Office of Air Quality Planning and Standards (OAQPS).
The consultant explained he had adopted the Industrial Source Complex Short Term (ISCST3) methodology used by the EPA in its study of TAC emissions at Midway Airport in southwest Chicago for assessing the probability of adverse health effects from toxic emissions at the Santa Monica Airport. After setting out all of the technical aspects of the methodology, the consultant touted the Midway study as offering "a robust architecture with a unique level of refinement whereby the user is allowed the flexibility to program detailed source and operational profiles that effectively characterize the downwind extent of contaminant emissions generated from the airport." The letter concludes by stating, "[A]n approved and standardized protocol does exist to permit the applicant to conduct an HRA [human health risk assessment]. It is clear that the process of risk assessment is well-defined and not simply limited to `stationary sources' as suggested by [the Port]. In addition, significance criteria for toxic exposure is [sic ] also readily available."
In addition, consultants retained by petitioners prepared a sample health risk assessment to assess the significance of exposure *617 to increases in toxic emissions from aircraft and ground support equipment exhaust. Their work contained detailed tables and maps and was complemented by narrative explanations of the reasons that certain methodologies were chosen and the conclusions reached. This sample health risk assessment, which was submitted to the Port prior to certification of the EIR, indicated that off-site health impacts of the project will be significant and would increase the incidence of cancer and respiratory disease in residential neighborhoods around the airport and among employees at the airport itself.
While comments on the draft EIR should have alerted the Port to a need to consult with or, at a minimum, confirm its views with pertinent public agencies, the text of the final EIR contains virtually no reference to any material supplied by the public challenging the draft EIR's conclusion that no methodology or standards of significance existed for assessing the health risk from TAC exposure. In essence, it simply repeats the generic statement throughout the EIR's text that no adequate analytical tools are currently available for performing a health risk assessment for aircraft emissions. In embracing this conclusion, the Port cites a single sentence from the FAA's Emissions and Dispersion Modeling System (EDMS) released to the public in April 1997, which states that hazardous air pollutants (i.e. TACs) are not included in the emissions inventory or dispersion analysis because "`the data required to include these emissions is simply not available and in most cases there is no approved methodology for considering these pollutants.'"
The Port also relied on a letter from BAAQMD, which was received during the early scoping stage before the draft EIR was released for public comment (Guidelines, §§ 15082-15083) which did not take issue with the Port's characterization of the impact from TAC emissions as "unknown." However, the manager of the BAAQMD's Air Toxic Evaluation Section, Brian Bateman, was contacted by petitioners and was quoted as stating that the significance criteria in the BAAQMD CEQA Guidelines and the California Air Pollution Control Officers' Association (CAPCOA) Risk Assessment Guidelines apply to mobile sources. In a document submitted at the public hearing before the final EIR was certified, he was quoted as stating, "`these guidelines are generally applicable to any source, but special considerations in the area of dispersion modeling apply to mobile sources.'" Mr. Bateman further indicated "that the CAPCOA guidelines are applicable to airports and that it is technically feasible to perform a health risk assessment for an airport. He stated that the preparation of risk assessment for an airport `is certainly a doable exercise from a technical standpoint. You can't argue that it cannot be done.'"[14]
The Port has not cited us to any reasonably conscientious effort it took either to collect additional data or to make further inquiries of environmental or regulatory agencies having expertise in the matter. These failures flout the requirement that the lead agency consult "with all responsible agencies and with any other public agency which has jurisdiction by law over natural resources affected by the project . . . ."(§ 21080.3, subd. (a).) At the very least, the documents submitted by the *618 public raised substantial questions about the project's effects on the environment and the unknown health risks to the area's residents. When this matter was argued before the superior court, the Port's lawyer indicated that the omission of a health risk assessment should be excused because "there is no methodology universally accepted as to what's significant." Alternatively, in the absence of these efforts, the Port has not offered any justification why more definitive information could not have been provided.
The fact that a single methodology does not currently exist that would provide the Port with a precise, or "universally accepted," quantification of the human health risk from TAC exposure does not excuse the preparation of any health risk assessmentit requires the Port to do the necessary work to educate itself about the different methodologies that are available. The Guidelines recognize that "[d]rafting an EIR . . . involves some degree of forecasting. While foreseeing the unforeseeable is not possible, an agency must use its best efforts to find out and disclose all that it reasonably can." (Guidelines, § 15144, italics added.) "If, after thorough investigation, a lead agency finds that a particular impact is too speculative for evaluation, the agency should note its conclusion and terminate discussion of the impact." (Guidelines, § 15145, italics added.)
We also find unpersuasive the Port's argument that the absence of a health risk assessment can be excused because the Port Commissioners, in approving the EIR, found that the effect of TACs would be significant but that overriding considerations warranted proceeding with the project anyway. This approach has the process exactly backward and allows the lead agency to travel the legally impermissible easy road to CEQA compliance. Before one brings about a potentially significant and irreversible change to the environment, an EIR must be prepared that sufficiently explores the significant environmental effects created by the project. The EIR's approach of simply labeling the effect "significant" without accompanying analysis of the project's impact on the health of the Airport's employees and nearby residents is inadequate to meet the environmental assessment requirements of CEQA.
In summary, the defects disclosed by the record in the EIR's treatment of TACs are substantial. The Port's response fell far short of the "good faith reasoned analysis" mandated by CEQA for responding to significant conflicting information generated by the public. (Laurel Heights II, supra, 6 Cal.4th at p. 1124, 26 Cal. Rptr. 2d 231, 864 P.2d 502; Cleary v. County of Stanislaus, supra, 118 Cal.App.3d at p. 358, 173 Cal. Rptr. 390.) Much information of vital interest to the decision makers and to the public pertaining to toxic air contamination was simply omitted. In other instances, the information provided was either incomplete or misleading. The dispute in this regard goes beyond a disagreement of qualified experts over the reasoned conclusions as to what the data reveals. The EIR failed to acknowledge the opinions of responsible agencies and experts who cast substantial doubt on the adequacy of the EIR's analysis of this subject. The conclusory and evasive nature of the response to comments is pervasive, with the EIR failing to support its many conclusory statements by scientific or objective data. These violations of CEQA constitute an abuse of discretion. The Port must meaningfully attempt to quantify the amount of mobile-source emissions that would be emitted from normal operations conducted as part of the ADP, and whether these emissions will result in any significant health impacts. If *619 so, the EIR must discuss what mitigation measures are necessary to ensure the project's conformance with all applicable laws, ordinances, standards, and regulations related to public health protection.
C. Consistency with the State Implementation Plan[**]
D Noise Impacts
Petitioners next contend that the EIR failed to address adequately the potential disturbance to area residents resulting from increased nighttime air cargo operations. Specifically, they claim the EIR omitted significant information about the ADP's potential interference with sleep, including physiological response and annoyance from increased nighttime overflights.[16] We conclude that this contention has merit.
1. Environmental Conclusions Reached in the EIR About Noise Impacts Resulting from the Airport Expansion
The ADP responds to the anticipated growth in air cargo demand by proposing to construct a Federal Express Metroplex, air cargo facilities for Burlington Air Express and Emery Worldwide Freight, and a multi-tenant air cargo sorting and administrative office. The ADP also proposes to expand the United States Postal Service handling facilities. With this expansion would come an accompanying projected increase in aircraft operations. As already noted, the EIR projected that, with the implementation of the ADP, annual aircraft operations will increase from about 470,000 in 1994 to over 600,000 in the year 2000, and to over 800,000 in 2010. Moreover, once the ADP is fully implemented in 2010, there would be almost a three-fold increase in the number of flights attributable to air cargo operations. Specifically, air cargo operations are projected to increase from 1994 levels of 50,426 flights to 146,144 flights in 2010.
The EIR recognized that air cargo activity generally takes place during the noise-sensitive nighttime hours: "The vast majority of commercial nighttime operations at [the Airport] are air cargo operations. Air cargo carriers conduct many of the aircraft operations at nighttime for business reasons, such as providing overnight and faster delivery of their customers' cargo." Although the exact number of nighttime flights directly attributable to the implementation of the ADP is not consistently defined in the EIR, one document generated by the Port indicated that during the year 2010, at least 65,000 additional nighttime flights are expected at the Airport annually, 27,000 of which would result from the ADP. These figures are used to support petitioners' statement that by 2010, there will be an additional 178 nighttime flights each day, 73 of which would be directly attributable to the expansion in the air cargo business as described in the ADP.
The EIR studied the aviation noise that would be generated from the increased passenger and cargo flights resulting from implementation of the ADP using a cumulative noise descriptor called the Community Noise Equivalent Level (CNEL). The CNEL is the 24-hour average sound level, in decibels, obtained from the accumulation of all sound sources. The CNEL calculates the total sound exposure, in decibels, at a given location and then divides the total by 24 hours to derive an average. To this is added 10 decibels to sound levels in the night from 10:00 p.m. *620 to 7:00 a.m., and the addition of 5 decibels to sound levels in the evening from 7:00 p.m. to 10:00 p.m. This additional weighting of nighttime sound is intended to take into account the usual increased interfering effects of noise during the nighttime hours.
The EIR contained a fixed standard of 65 CNEL for measuring when aircraft noise was considered to create a significant environmental effect. This definition is critical, because once "significant effects" have been identified in the EIR, an agency must explore implementing feasible mitigation measures or alternatives to avoid or reduce the effect. (§§ 21081; 21002.1.) The EIR concluded that noise impacts would only be significant if, over a 24-hour period, the average noise levels either (1) increased by more than 1.5 CNEL in those areas already experiencing noise levels greater than 65 CNEL, or (2) caused the noise levels in an area to exceed 66.5 CNEL.[17] The EIR explained that the CNEL methodology for determining the significance of aircraft noise on residential areas is based on the research and recommendations of the Federal Interagency Committee on Noise (FICON), the FAA's standard residential noise compatibility criteria, and the State of California's Airport Noise Standards for compatibility with residential land uses.[18]
Using the CNEL data, the EIR contained maps of land uses in the Airport vicinity, with noise contours superimposed on the maps that show exactly which areas will experience aircraft noise at 65, 70 and 75 CNEL in 2000 and 2010. The noise contour maps also compare future noise levels under the ADP both to existing conditions and to future conditions without the ADP. Using 65 CNEL as the threshold of measuring a significant noise impact, the EIR came to several conclusions:
In 2000 (the EIR assumed the ADP would be constructed by 2000 [see fn. 3]) the number of residences experiencing aircraft noise at or above 65 CNEL, even with the greater number of flights forecast with the ADP, would actually decrease from over 1,000 in 1994 to only 12. Because the Port holds avigation easements[19] for all of these residences, no mitigation measures were proposed.
The EIR concluded that the noise levels would decrease, despite the substantial increase in flights, because jet aircraft are becoming quieter, and federal law requires air carriers to convert their noisier "Stage 2" jet engines to quieter "Stage 3" engines by 2000.[20] As *621 a result, in 2000 even with the ADP, there would be no aircraft noise impacts that qualified as significant.
By 2010, even with implementation of the ADP and the maximum amount of passenger and air cargo activity that could occur, the total number of residences within the 65 CNEL boundary would still be fewer than the number of residences significantly impacted by noise in 1994. In 2010, there would be 288 residences significantly impacted by noise on Bay Farm Island (the area immediately adjacent to the Airport's northern boundary and the site closest to Runway 11/29), 259 in San Leandro, and 10 in Alameda.
Because the Port holds avigation easements for all 10 of the affected residences in Alameda, and 233 of the 288 residences on Bay Farm Island, no mitigation measures were offered to mitigate the project's noise impacts on these homes.
2. Requests for Supplementary Noise Analysis
"The purpose of requiring public review [of an EIR] is to `"`demonstrate to an apprehensive citizenry that the agency has, in fact, analyzed and considered the ecological implications of its action.'" [Citation.]' . . ." (Schoen v. Department of Forestry & Fire Protection (1997) 58 Cal. App. 4th 556, 573-574, 68 Cal. Rptr. 2d 343.) It is fair to say that the disposition of the citizenry who attended public hearings, signed petitions, and wrote letters in response to the draft EIR's noise analysis went beyond "apprehensive" and could more aptly be described as "incredulous."
One commenter implored: "How can the document claim that only 10 homes [in Alameda] will be affected by noise in the year 2010 when currently there are hundreds of homes negatively affected by noise . . . ? Such a statement calls into question the truthfulness of the Draft EIS/ EIR." Residents, whose homes fell well outside the 65 CNEL threshold limitation defined by the EIR, reported often being awakened in the middle of the night by aircraft noise, and being unable to talk on the telephone or carry on ordinary conversations when planes fly overhead.
Over 1,000 Berkeley residents registered their concern over the proposed ADP, declaring the significant increase in noise caused by jet overflights has "fundamentally transformed our quiet residential neighborhoods, disrupting sleep, study, work and our peaceful enjoyment of our homes, gardens, and parks." The Berkeley City Council and City Manager noted the "intolerable" existing noise issues arising from the Airport and urged the Port to implement specific mitigation measures before expanding the volume of air traffic. Despite this outcry, the Port, in its draft EIR, does not even mention, much less analyze, Berkeley noise impacts because that city falls significantly outside the 65 CNEL corridor.
Numerous citizens complained that the EIR failed as an information document because it bypassed any analysis of the ADP's impact on residents' sleep even though the project would substantially increase nighttime noise levels in noise-sensitive areas. The Port's response to these comments was steadfast and consistent: "The noise analysis is based on the CNEL descriptor which was developed to reflect the greater annoyance posed by noise events that occur during evening and nighttime periods relative to those that occur during the daytime. Also, since aircraft noise impacts are evaluated in the Draft EIS/EIR in terms of increases over 65 CNEL, and since 65 CNEL correlates with the maximum amount of aircraft noise exposure generally compatible with residential *622 uses, the analysis implicitly takes into account the potential for such effects as speech and sleep interference."
In discussing the impacts of aircraft noise on their normally quiet neighborhoods, members of the public submitted more than their subjective, anecdotal accounts of how aircraft overflights had disrupted their normal nocturnal lives. Their first-party accounts were supported by the opinions from several experts who criticized the draft EIR for failing to discuss the impact of individual noise events, such as a single aircraft flyover, in addition to the ADP's effect on average noise levels. These experts urged the Port to conduct a meaningful analysis of the direct effects of single-event noise levels on speech communication and sleep disturbance in normally quiet residential neighborhoods areas that fell outside the 65 CNEL noise contour.
Acoustical engineer James Nelson, Ph.D. performed a detailed noise sampling and modeling in a Berkeley hills neighborhood. Dr. Nelson's data revealed that existing flights over Berkeley had already caused significant impacts to sleep disturbance. He opined: "A significant number of aircraft over-flights (20%) appear to produce maximum noise levels in excess of 65 dBA, roughly 20 dBA higher than the median sound level during the day, and 30 dBA higher than the median sound level occurring during the late-night and early morning hours. [¶] Twenty percent of existing aircraft over-flights may produce single event levels in excess of SEL 61 [Single Event Level] in bedrooms with open windows. . . . The Draft EIS/EIR for the Oakland Development Project indicates that a single noise event with SEL 61 or higher will disturb the sleep of about 30% or more of those people exposed to such noise. About 17% or more of those people so exposed may be awakened from sleep, if only briefly, and possibly without remembering." Based on this data, Dr. Nelson concludes that "a disproportionate increase in the number of late night overflights over Berkeley resulting from the Oakland Airport Development Program could adversely affect the existing noise environment," and urged further analysis of single-event noise to fill the gaps in the EIR's noise analysis.
Acoustical consultant John Freytag, who was retained by petitioners, offered this opinion: "An analysis of sleep interference, speech interference and single event noise is required for the residential communities of Alameda which are and will continue to be impacted by the Airport. . . . The sleep interference assessment must consider the Single Event Levels (SEL values) of the individual flyovers occurring during the nighttime (sleeping period), and the frequency of occurrence of these events."
In considering the criticism that the draft EIR had unreasonably failed to quantify with any precision the effect of single noise events on area residents, the Port retreated to the CNEL methodology for measuring acceptable noise limits for the residential neighborhoods surrounding the Airport. The Port responded: "The CNEL is the FAA-endorsed descriptor for evaluating airport noise impacts. Single-event descriptors, such as the SEL or TA values, are supplementary to the CNEL and help to characterized [sic ] the noise environment, but are not an independent basis for determining significant effect. The fact that some residents would characterize a 3-CNEL change in the 60 to 65 range as a degradation of the noise environment does not mean that the change is `significant' for the purposes of CEQA or NEPA [federal National Environmental Policy Act]."
The Port also clarified its position with regard to residential uses outside the 65 *623 CNEL contour that would experience a change in noise due to the ADP: "The Draft EIS/EIR discloses the impact and the perception by some that a 3-CNEL change below 65 CNEL represents a degradation of their noise environment, but does not conclude that such impacts would be significant." On December 16, 1997, the Port Commissioners voted to certify the EIR without conducting any supplemental noise analysis.
3.Use of CNEL Methodology as Sole Indicator of Significant Effects from Noise
On appeal, petitioners revive the claim made below that the EIR's exclusive reliance on the cumulative CNEL metric does not provide a true or complete picture of the noise environment resulting from the increase in nighttime flights that would result if the ADP were adopted. At the outset, it is important to clarify petitioners' position in this appeal. The Port characterizes petitioners' position as advocating that "the EIR should have based its noise significance criteria, and therefore its noise analysis, on individual noise events rather than on the cumulative noise measure provided by CNEL." Petitioner CLASS explains its position: "[T]he flaw in the EIR's noise analysis is its failure to provide, in addition to the CNEL analysis, the most fundamental information about the project's noise impacts, specifically the number of additional nighttime flights that will occur under the ADP, the frequency of those flights, and their effect on sleep. In view of the huge increase in nighttime cargo flights that will occur under the ADP, an analysis of the project's impact on sleep is critical to enable nearby residents to understand how the ADP will affect their lives." (Italics added.)
Petitioners' argument derives substantial support from the case of Davison v. Department of Defense (S.D.Ohio 1982) 560 F. Supp. 1019, a case which parallels this one in numerous respects. In Davison, the plaintiffs challenged the sufficiency of an EIS prepared in connection with the addition of civilian air cargo operations at Rickenbacker Air National Guard Base. The "greatest single environmental impact" occasioned by the proposed night-time air cargo flights was on the sleep of the people who lived near the airfield. (Id. at p. 1033.) Like the EIR here, the EIS prepared for the project set 65 Day Night Average Sound Level (DNL)[21] as the threshold for significant noise exposure and identified which houses would be significantly affected. The court held that DNL, even when coupled with a timeabove analysis, did not adequately inform the public about how an increase in nighttime flights would affect sleep in a nearby residential area. The court concluded that while the nighttime "penalty" in cumulative noise calculations gave some indication of the increase in nighttime flights, "the great magnitude of this difference should have been made plain in the EIS." (Id.) at p. 1036.) The court stated, "The reader . . . cannot gain any real appreciation of the potential disruption simply by being told the number of minutes that aircraft noise will occur when all of the overflight peak level events are strung together." (Id. at p. 1037.)
The Davison court cited several technical deficiencies in the EIS. First, the study did not state the number of night flights that traditionally had taken off or landed *624 at Rickenbacker. (560 F.Supp. at p. 1037.) Second, it did not estimate the number of times a nearby resident could be awakened by overflights during "normal" or "worst case" nights. Third, the study did not discuss whether residents' sleep disturbance would diminish over time. Finally, the EIS did not address the issue of whether long-term exposure to noise-induced sleep disturbance would result in any important physiological effects. The court pointed out that because these issues would be vital considerations to a decisionmaker analyzing the proposal, the EIS did not meet NEPA's mandate to explore unavoidable environmental consequences "`to the fullest extent possible.'" (Ibid.) The EIR under review in this case suffers from the identical deficiencies as the document reviewed in Davison.
We need not discuss in depth the numerous federal decisions analyzing federal requirements under NEPA that have approved the use of the sound methodology used in this case for assessing aircraft noise. Those decisions were guided by factors not present here. (See, e.g., Morongo Band of Mission Indians v. Federal Aviation (9th Cir.1998) 161 F.3d 569, 578-579 [upholding use of CNEL in evaluating noise impacts on undeveloped rural areas]; Seattle Community Council Federation v. F.A.A. (9th Cir.1992) 961 F.2d 829, 833-834 [upholding use of CNEL for project involving changes in flight paths]; Communities, Inc. v. Busey (6th Cir.1992) 956 F.2d 619 624-625 [EIS did in fact analyze the impact of increased single-event noise]; Valley Citizens for a Safe Environment v. Aldridge (1st Cir.1989) 886 F.2d 458, 469 [failure to challenge CNEL methodology for measuring noise impacts during comment period barred attacking it after EIS was complete]; Sierra Club v. United States Dept. of Transp. (D.C.Cir. 1985) 753 F.2d 120, 128-129 [upheld noise analysis which included information about individual noise events and imposed noise abatement conditions on airport to alleviate noise problem].)
Nor is the case of Bakman v. Department of Transportation, supra, 99 Cal. App. 3d 665, 160 Cal. Rptr. 583, instructive. The issue in Bakman concerned homeowners' challenges to a Department of Transportation (DOT) approval of an amended airport permit for the Fresno Air Terminal. The amended permit was necessitated by the acquisition of properties by the Fresno terminal for airport expansion outside the Fresno city limits. (Id. at pp. 674-675, 160 Cal. Rptr. 583.) One of the challenges alleged DOT failed to consider the impact of Fresno terminal's noise on nearby residents. (Id. at p. 675, 160 Cal. Rptr. 583.) The court concluded that DOT did not violate either state law or regulations in accepting the adequacy of the CNEL analysis used by DOT to evaluate airport noise for permitting purposes. (Id. at p. 684, 160 Cal. Rptr. 583.) However, like the federal cases relied on by the Port, Bakman did not involve a challenge relating to noise impacts under CEQA.
In addition, unlike here and in Davison, the effect on sleep patterns from a proposed increase in overnight flights over noise-sensitive residential areas was not in issue in these cases. Moreover, while federal authority interpreting environmental requirements under NEPA and residential land use planning standards may be helpful to the issue before us, it is important to stress that this is a case brought under CEQA, which imposes its own requirements for assessing environmental impacts from noise. Our Supreme Court has counseled that we "need not follow federal precedent [under NEPA] . . . when the federal provisions cannot fairly be said to parallel ours. [Citations.]" (Mountain Lion Foundation v. Fish & Game Com. (1997) 16 Cal. 4th 105, 121, 65 Cal.Rptr.2d *625 580, 939 P.2d 1280.) We find there are important distinctions between the requirements imposed by CEQA and by NEPA in assessing noise impacts that allow us to depart from the federal cases on this subject.
The Legislature has declared in CEQA that "it is the policy of the state" to "[t]ake all action necessary to provide the people of this state with . . . freedom from excessive noise." (§ 21001, subd. (b).) The Legislature has further declared that it is the state's policy to "[r]equire governmental agencies at all levels to consider qualitative factors as well as economic and technical factors . . . ." (§ 21001, subd. (g), italics added.) Thus, through CEQA, the public has a statutorily protected interest in quieter noise environments.
CEQA analysis is directed toward identifying any substantial adverse changes in physical conditions (§§ 21060.5; 21100, subd. (d)). An impact is considered "significant" for purposes of CEQA if it will effect a "substantial, or potentially substantial, adverse change in the environment." (§ 21068; Guidelines, § 15002.) At the time the EIR was certified, CEQA's significance criteria for evaluating noise were primarily derived from Appendices G and I of the CEQA Guidelines. Appendix G presented different scenarios where a "project will normally have a significant effect on the environment. . . ." It defined a significant noise effect as an action with the potential to "increase substantially the ambient noise levels for adjoining areas; . ." (Lewis v. Seventeenth Dist. Agricultural Assn. (1985) 165 Cal. App. 3d 823, 829, fn. 7, 211 Cal. Rptr. 884.) Appendix I, the initial study checklist, stated that any proposal which results in increases in existing noise levels or exposure of people to severe noise levels may require mitigation measures.
By contrast, in implementing NEPA, the FAA has developed specific quantitative significance criteria for measuring aviation noise. (See generally 40 C.F.R. § 1501.3(a) (2001).) The FAA has determined that a significant noise impact would occur if a noise analysis indicates "the proposed action results in an increase within the DNL 65 db contour of DNL 1.5 dB or greater on any noise sensitive area." (U.S. Dept. of Transportation Federal Aviation Admin., Policies and Procedures for Considering Environmental Impacts (June 14, 1999), p. 45.)[22]
We find it noteworthy that CEQA Appendices G and I could have defined significant noise impacts simply in terms of whether a project would violate applicable local, state, or federal noise standards. Instead, by adopting a site-sensitive threshold of significance for noise, the Guidelines mirror the proposition that "[a]n ironclad definition of significant effect is not always possible because the significance of an activity may vary with the setting. For example, an activity which may not be significant in an urban area may be significant in a rural area." (Guidelines, § 15064, subd. (b); see Comment, Reconciling Environmental Protection with the Need for Certainty: Significance Thresholds for CEQA (1995) 22 Ecology L.Q. 213, 234-236, 273.)
Given the uniqueness of the CEQA standard, the fact that residential uses are considered compatible with a noise level of 65 decibels for purposes of land use planning is not determinative in setting a *626 threshold of significance under CEQA. For example, in Oro Fino Gold Mining Corp. v. County of El Dorado (1990) 225 Cal. App. 3d 872, 274 Cal. Rptr. 720, the court ruled that citizens' personal observations about the significance of noise impacts on their community constituted substantial evidence that the impact may be significant and should be assessed in an EIR, even though the noise levels did not exceed general planning standards. (Id. at pp. 881-882, 274 Cal. Rptr. 720.)
As a further example, the State Airport Land Use Planning Handbook, which the Port is required to use "as a technical resource" in assessing "noise problems" for purposes of EIR preparation (§ 21096), specifically addresses the shortcoming of exclusive reliance on the CNEL metric for assessing changes in aircraft-related noise levels in quieter environments. The pertinent section of the Handbook states: "[A] standard application of cumulative noise exposure metrics is to predict the effects of increased noise resulting from proposed or projected physical or operational changes at an airport. Addressing these anticipated effects is one of the functions of environmental impact documents prepared for airport-related projects." After discussing the standards of significance established for cumulative noise metrics, the Handbook states: "Not reflected in these screening criteria is that noise increases of several decibels may also be significant in quieter environments (ones below DNL 60)."
In summarizing the EIR's analysis with regard to nighttime flights, the Port concedes that implementation of the ADP will increase the existing noise levels for quiet East Bay neighborhoods. Despite this acknowledgement, the EIR contained no quantitative discussion of ambient noise levels in any nearby community. Instead, as explained in a written response to public comment on the draft EIR's noise analysis, the significance criteria used in the EIR automatically excluded "all residential uses within the 65 CNEL contour regardless of the change in noise" due to the ADP. (Italics added.) Consequently, implementation of the ADP could increase a community's nighttime noise level to 64.9 CNEL, and under the sole criterion of the CNEL metric, this increase would not create a significant impact for purposes of CEQA. This conclusion is derived without any meaningful analysis of existing ambient noise levels, the number of additional nighttime flights that will occur under the ADP, the frequency of those flights, to what degree single overflights will create noise levels over and above the existing ambient noise level at a given location, and the community reaction to aircraft noise, including sleep disturbance.
The probability of being repeatedly awakened by multiple single-event sounds can be calculated, given sufficient data. The appendix to the EIR included a technical treatise entitled "Description of Noise and its Effects on People." This document describes a supplementary single-event noise analysis used for predicting what percentage of the population is expected to be awakened by an aircraft overflight. The treatise explains, "[T]he sound exposure level [SEL] has been found to be the most appropriate and useful descriptor for most types of single event sounds including aircraft fly-bys." (Italics added.) Included is a table in which "the frequency of sleep disruption (as measured by changes in sleep stage, including behavioral awakening) is plotted as a function of the Sound Exposure Level." Unfortunately, the Port's expertise was never utilized to conduct such an analysis.[23]
We believe the potential noise impact of increased nighttime flights mandates further study. The Guidelines provide that *627 the level of detail required in addressing particular impacts should be "in proportion to their severity and probability of occurrence." (Guidelines, § 15143.) Using this standard, the Port cannot simply ignore the CEQA standard of significance for assessing noise, the credible expert opinion calling for further evaluation of the impact of single-event-noise, and public concern over the noise created by increased nighttime flights. CEQA requires that the Port and the inquiring public obtain the technical information needed to assess whether the ADP will merely inconvenience the Airport's nearby residents or damn them to a somnambulate-like existence.
Furthermore, a supplementary analysis will provide more accurate information than was given the public in late 1996, when the EIR was made available for public review. On this point, the record reveals that the EIR assumed 100 percent compliance with the phaseout of noisy Stage 2 aircraft for both analysis years (2000 and 2010). The EIR went on to hypothesize, "The continued phase-out of Stage 2 aircraft would be expected to more than offset the increase in late night departures through 2000. With the elimination of Stage 2 aircraft, the noisiest existing late-night aircraft events at [the Airport] would be eliminated." Given that we are past the 2000 deadline for the phasing out of Stage 2 aircraft, we believe that this hypothesis can be tested and a more accurate assessment of the existing noise levels around the airport can be made. "In some cases, conditions closer to the date the project is approved are more relevant to a determination whether the project's impacts will be significant. [Citation.]" (Save Our Peninsula Committee v. Monterey County Bd. of Supervisors (2001) 87 Cal. App. 4th 99, 125, 104 Cal. Rptr. 2d 326.) This is such a case.[24]
E.-H[***]
IV.-V.[***]
VI.
Disposition
In Appeal No. A086708, the judgment granting a peremptory writ of mandate is reversed in part and affirmed in part. The matter is remanded to the superior court with directions that the court issue a new writ of mandate consistent with this opinion. Such order shall include only those mandates necessary to achieve compliance with CEQA in accordance with this opinion. Pursuant to section 21168.9, subdivision (b), the court shall determine whether portions of the ADP are severable and may proceed pending the additional environmental review required pursuant to the court's mandate.
Appeal No. A089660 has been rendered moot by the court's lack of jurisdiction to enter an order discharging the writ. The matter is remanded to the superior *628 court with directions that the court order the Port Commissioners to vacate the certification of the supplement to the EIR entered on June 29, 1999. The Port Commissioners shall be ordered not to take any further action to approve the project without the preparation, circulation and consideration under CEQA of a legally adequate EIR with regard to the issues discussed in this opinion.
In Appeal No. A087959, the superior court's order awarding $180,000 attorney fees is hereby reversed. On remand, the court is to issue a new order awarding petitioners legal fees under Code of Civil Procedure section 1021.5 in accordance with the views expressed in this opinion.
Petitioners are awarded their costs on appeal.
KLINE, P.J., and HAERLE, J., concur.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of sections III. C, III.E., III.F., III.G., III.H., IV. and V.
[1] All undesignated statutory references are to the Public Resources Code.
[2] The EIR assumed that the ADP would be approved, constructed, and operational by 2000. After the EIR was completed and subjected to public review, it was clear that the EIR process and project construction could not possibly be accomplished by that date. Members of the public, noting the unrealistic time frame for the project, requested that the entire ADP be reevaluated "to occur within a realistic time frame and using an up-to-date baseline." The Port responded: "[T]he Port has reviewed regularly changes in baseline information that could affect the discussion of significant impacts in the Draft EIS/EIR and has determined that such changes, where they have occurred at all, do not substantially affect the analysis presented in the Draft EIS/EIR."
[3] The ADP also includes an Airport Roadway Project. The Airport Roadway Project realigns and widens some of the road between the freeway and the Airport and extends a road across the Airport to the Bay Farm Island portion of the City of Alameda. Approval of the Airport Roadway Project is not an issue on appeal because the lower court's judgment allows the roadway project to proceed and no party has challenged that ruling.
[4] The draft document purports to fulfill all state CEQA and federal requirements under the National Environmental Policy Act of 1969, 42 U.S.C. § 4321 et seq., and makes numerous references to being a joint EIR/EIS prepared by the Port in conjunction with the Federal Aviation Administration (FAA). CEQA provides that when a project will require both an EIS (environmental impact statement) and an EIR, the lead agency "shall, whenever possible, use the environmental impact statement as [the] environmental impact report. . . ."(§ 21083.7.) However, according to the Notice of Review issued by the Port, the final document is solely an EIR under CEQA. Because the FAA did not participate in or approve the finalization of this document, we refer to it as simply as an EIR.
[5] Although the City of San Leandro was one of the entities that challenged the Port Commissioners' certification of the EIR below, it was satisfied with the trial court's decision and did not appeal.
[6] When the matter was briefed, the Port elected not to pursue its cross-appeal from that portion of the court's judgment requiring a supplemental analysis of project alternatives.
[7] All references to the Guidelines are to the current CEQA Guidelines, which were revised in 1998, unless otherwise noted. (Cal.Code Regs., tit. 14, § 15000 et seq.) Where the current Guidelines differ significantly from the Guidelines in effect when the EIR was approved, the nature of the change will be noted and the superceded Guidelines govern. (See Guidelines, § 15007.) The Guidelines "are binding on all public agencies in California." (Guidelines, § 15000.) Our Supreme Court has stated that "[a]t a minimum, . . . courts should afford great weight to the Guidelines except when a provision is clearly unauthorized or erroneous under CEQA. [Citation.]" (Laurel Heights Improvement Assn. v. Regents of University of California (1988) 47 Cal. 3d 376, 391, 253 Cal. Rptr. 426, 764 P.2d 278, fn. 2 (Laurel Heights I).)
[8] A longer runway would (1) enable cargo planes on long transoceanic flights to take off fully loaded, rather than partially loaded as they do now; (2) improve operational safety and efficiency; and (3) speed up runway maintenance by making it easier to close a portion of the runway. The purpose of the high-speed taxiway is to increase efficiency during certain weather conditions when landings are from the north rather than from the south.
[9] Despite petitioners' argument to the contrary, nothing in section 15165 of the Guidelines suggests that a proposal not deemed a part of a larger undertaking which an agency is not ready to pursue, and may never pursue, be added to an EIR on an existing project that the agency is proposing to approve. "Where individual projects are, or a phased project is, to be undertaken and where the total undertaking comprises a project with significant environmental effect, the lead agency shall prepare a single program EIR for the ultimate project as described in Section 15168. . . ." (Guidelines, § 15165.) The fact that the Guideline refers to "projects . . . to be undertaken" confirms that it is intended to apply only to project components that an agency is proposing to implement. It does not extend to preliminary plans, feasibility studies or contemplated development the agency is not proposing to approve or undertake. (See also Guidelines, §§ 15167 [staged EIRs]; 15168 [program EIRs].)
[10] The trial court's judgment granting the writ of mandate finds this portion of the EIR deficient and requires a more complete discussion of the cumulative impacts generated by the extension of runway 11/29, and the construction of a high-speed taxiway. The court's ruling also requires the EIR to discuss cumulative impacts relating to a new runway. The Port has filed a cross-appeal from this ruling, claiming that the EIR's discussion of cumulative impacts was adequate. We will discuss the Port's cross-appeal in a later section of this opinion.
[11] Criteria pollutants are six pollutants listed in the Clean Air Act that are regulated by the Environmental Protection Agency (EPA) because of their health and/or environmental effects. They are nitrogen dioxide, sulfur dioxide, carbon monoxide, ozone, particulate matter, and lead.
[12] We take judicial notice of Mr. Allen's declaration even though it was not part of the administrative record at the time the Port approved the project and certified the EIR. (Barthelemy v. China Basin Mun. Water Dist. (1995) 38 Cal. App. 4th 1609, 1621, 45 Cal. Rptr. 2d 688.)
[13] We also note that this court may properly be skeptical as to whether the EIR's myriad environmental conclusions have a substantial basis in fact in light of the overwhelming evidence that, in this particular instance, the Port chose simply to ignore and then to mischaracterize the view of CARB, the agency having the pertinent expertise. (See Sierra Club v. United States Army Corps of Eng. (2d Cir.1983) 701 F.2d 1011, 1030.)
[14] On petition for rehearing, the Port contends that this document, as well as the other documents received at the public hearing on the certification of the final EIR, was submitted too late in the environmental review process to be considered. However, it has been held that objections are timely raised anytime before certification of the final EIR. (Galante Vineyards v. Monterey Peninsula Water Management Dist., supra, 60 Cal.App.4th at pp. 1119-1121, 71 Cal. Rptr. 2d 1 [petitioners could maintain action despite their failure to participate in public comment period for second supplemental draft EIR because they raised concerns before certification of final EIR].) In any event, in our case, the material submitted during the public hearing on the certification of the final EIR only supplemented comments already made on the draft EIR and did not raise any new issues.
[**] See footnote *, ante.
[16] Noise interference with human communications is also mentioned by petitioners, although clearly the focus of concern has been, and is, on the impact the increase in overnight cargo flights will have on sleep patterns of residents in the neighboring communities.
[17] The EIR also contained some time above (TA) figures in addition to the CNEL-based criteria. The TA descriptor addresses the issue of peak noise levels by providing an estimate of the cumulative amount of time over the course of a day when aircraft noise would exceed a given noise level. However the EIR made it clear that "TA values are also used to characterize noise impacts but are not used as an independent criterion for significance."
[18] California Code of Regulations, title 21, section 5012, setting California airport noise standards, states: "The standard for the acceptable level of aircraft noise for persons living in the vicinity of airports is hereby established to be a community noise equivalent of 65 decibels." (See Bakman v. Department of Transportation (1979) 99 Cal. App. 3d 665, 681-684, 160 Cal. Rptr. 583 [in reviewing Department of Transportation's decision to issue an amended airport permit for the purpose of proposed airport expansion, there was no showing airport was violating airport noise standards].)
[19] Avigation easements are private agreements that subject property to conditions caused by aircraft noise.
[20] The EIR acknowledged that Stage 3 requirements do not apply to privately owned jets or other jets with a maximum takeoff weight of 75,000 pounds or less, and no reduction in noise from these types of jets was assumed in the EIR's analysis.
[21] The DNL indicator, which has been adopted by the EPA and the Federal Aviation Administration, is a time-weighted cumulative noise metric which averages noise levels over a 24-hour period. It is substantially similar to the CNEL, which is used in California.
[22] However, the FAA's directions for preparing environmental documents also recognizes that "If conditions warrant, additional analysis to supplement DNL may be necessary and will be considered on a case-by-case basis. Supplemental noise analyses are most often used to determine aircraft noise impacts at specific noise-sensitive locations or for noise-sensitive situations." (U.S. Dept. of Transportation Federal Aviation Admin., Policies and Procedures for Considering Environmental Impacts (June 14, 1999), supra, p. 47, italics added.)
[23] At oral argument on this matter, the Port directed this court's attention to the Noise Appendix in the EIR which contained a table of single-event noise levels generated from the takeoff of four different aircraft types (two Stage 2 aircraft and two Stage 3 aircraft) measured at four different locations near the airport. While the Port claims this data fulfills any duty it might have under CEQA to conduct a supplementary single-event noise analysis, it is obvious this table was not compiled in an attempt to measure how many high-noise events will take place during the noise-sensitive nighttime hours or to describe the effects of noise on normal nighttime activities, such as sleep. Instead, the table was compiled to substantiate the EIR's conclusion that a phaseout of noisy Stage 2 aircraft could reasonably be expected to offset a doubling of overall aircraft operations. Significantly, none of the information from this table is analyzed or even reflected in the text of the EIR's noise section.
[24] Petitioners have raised several other arguments challenging other aspects of the EIR's treatment of the noise-related impacts from the project and the proposed mitigation. Our determination that the noise analysis contained in the EIR was inadequate has rendered these issues moot. However, petitioners' additional challenges can be raised again depending on the Port's action on remand.
[***] See footnote *, ante. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261410/ | 111 Cal. Rptr. 2d 292 (2001)
91 Cal. App. 4th 1147
The PEOPLE, Plaintiff and Appellant,
v.
Orlando JAMES, Defendant and Respondent.
No. B146548.
Court of Appeal, Second District, Division Two.
August 27, 2001.
*293 Steve Cooley, District Attorney, Brent Riggs and William Woods, Deputy District Attorneys, for Plaintiff and Appellant.
Christan L. Ayers, Long Beach, for Defendant and Respondent.
BOREN, Presiding Judge.
Defendant, Orlando James, was charged with possession of marijuana for sale (Health & Saf.Code, § 11359), sale or transportation of marijuana (Health & Saf. Code, § 11360, subd. (a)), and resisting, obstructing or delaying a peace officer in the performance of the officer's duty (Pen. Code, § 148, subd. (a)(1)). He was also charged with having two prior serious or violent felony convictions (strikes) within the meaning of the three strikes law (Pen. Code, §§ 667, subds.(b)-(i), 1170.12), assault with a firearm (Pen.Code, § 245, subd. (a)(2)) and shooting at an inhabited dwelling house, occupied building, occupied motor vehicle, occupied aircraft, inhabited house car, or inhabited camper (Pen.Code, § 246), and with having served one prior prison term (Pen.Code, § 667.5, subd. (b)).
The second amended information alleged that the current offenses were committed on March 17, 2000. It also alleged that the prior convictions for assault with a firearm and violation of Penal Code section 246 occurred on February 10, 1994. On that date and in 1993, when those prior offenses were committed, the offenses of assault with a firearm and violation of Penal Code section 246 were serious felonies under Penal Code section 1192.7 only if the defendant personally used a firearm or inflicted great bodily injury. (Cf. People v. Rodriguez (1998) 17 Cal. 4th 253, 261-262, *294 70 Cal. Rptr. 2d 334, 949 P.2d 31 [discussing Pen.Code, § 245, subd. (a)(1) ]; People v. Williams (1996) 50 Cal. App. 4th 1405, 1411-1412, 58 Cal. Rptr. 2d 517 [same].)
In the March 7, 2000, Primary Election, the voters approved an initiative measure designated on the ballot as Proposition 21. Proposition 21 is known as the Gang Violence and Juvenile Crime Prevention Act of 1998. Proposition 21 amended Penal Code section 1192.7 and added Penal Code sections 667.1 and 1170.125, making assault with a firearm in violation of Penal Code section 245, subdivision (a)(2) (Pen. Code, § 1192.7, subd. (c)(31)) and "discharge of a firearm at an inhabited dwelling, vehicle, or aircraft, in violation of [Penal Code] Section 246" (Pen.Code, § 1192.7, subd. (c)(33)) serious felonies within the meaning of the three strikes law. Proposition 21 took effect on March 8, 2000.
Penal Code section 667.1 provides: "Notwithstanding subdivision (h) of Section 667, for all offenses committed on or after the effective date of this act, all references to existing statutes in subdivisions (c) to (g), inclusive, of Section 667, are to those statutes as they existed on the effective date of this act, including amendments made to those statutes by this act." Similarly, Penal Code section 1170.125 provides: "Notwithstanding Section 2 of Proposition 184, as adopted at the November 8, 1994 General Election, for all offenses committed on or after the effective date of this act, all references to existing statutes in Section 1170.12 are to those statutes as they existed on the effective date of this act, including amendments made to those statutes by this act."
Concluding that application of Penal Code sections 667.1 and 1170.125 to prior convictions suffered before the effective date of Proposition 21 would violate the prohibition against ex post facto laws, the trial court struck the allegations that defendant had two prior strikes. Under a plea agreement, defendant then pled no contest to possession of marijuana for sale, and the court sentenced defendant to a three-year prison term. In their plea agreement, the parties specified that if an appeal by the People challenging the court's ruling striking either or both of the prior strike allegations was successful, the plea agreement would be vacated, and the case would proceed to trial or to a new case disposition.
The People appeal from the order striking the prior strike allegations and from the subsequent sentence. The People contend that because the alleged current offenses occurred after the effective date of Proposition 21, defendant's prior convictions of assault with a firearm and violation of Penal Code section 246 are strikes.
We hold that if a defendant's current offense was committed on or after the effective date of Proposition 21, a determination whether the defendant's prior conviction was for a serious felony within the meaning of the three strikes law must be based on the definition of serious felonies in Penal Code section 1192.7, subdivision (c) in effect on March 8, 2000.
We were faced with a similar issue in People v. Green (1995) 36 Cal. App. 4th 280, 42 Cal. Rptr. 2d 249 (Green), People v. Moenius (1998) 60 Cal. App. 4th 820, 70 Cal. Rptr. 2d 579 (Moenius), and People v. O'Roark (1998) 63 Cal. App. 4th 872, 73 Cal. Rptr. 2d 924 (O'Roark). In Green, the defendant contended that the three strikes law did not apply to convictions incurred before the enactment of the three strikes law. We construed the clause in Penal Code section 667, subdivision (d)(1) that "`[t]he determination [as to whether a prior offense qualifies as a "strike"] . . . shall *295 be made upon the date of that prior conviction' to mean that the court is presently required to look backward to see if, at the time of the conviction of the past offense, such past offense qualified as a serious or violent offense under section 1192.7, subdivision (c) or section 667.5, subdivision (c)." (Green, supra, 36 Cal.App.4th at p. 283, 42 Cal. Rptr. 2d 249.) We explained that to construe Penal Code section 667 in the manner urged by the defendant would "lead to an irrational result and frustrate the intent of the Legislature to initiate an immediate plan of severe punishment for repeat offenders." (Green, supra, 36 Cal. App.4th at p. 283, 42 Cal. Rptr. 2d 249.)
In Moenius, the defendant's 1974 conviction for residential burglary was alleged as a prior strike. The defendant contended that his conviction for residential burglary did not constitute a strike because the conviction occurred before the effective date of Penal Code section 1192.7. Penal Code section 1192.7 was added by passage of the initiative measure Proposition 8 in the June 8, 1982, Primary Election. We rejected the defendant's contention, noting that Penal Code section 667, subdivision (h) and section 2 of Proposition 184 of the November 8, 1994, General Election provided that all references to existing statutes were to statutes as they existed on June 30, 1993. (Moenius, supra, 60 Cal.App.4th at pp. 826-827, 70 Cal. Rptr. 2d 579.) In O'Roark, we held that a prior serious felony conviction sustained before the offense resulting in that prior conviction was added to the list of serious felonies in Penal Code section 1192.7, subdivision (c) may qualify as a strike if the felony was in the list of serious felonies in section 1192.7, subdivision (c) on June 30, 1993. (O'Roark, supra, 63 Cal.App.4th at pp. 878-879, 73 Cal. Rptr. 2d 924.) As Division Five of this court held, use of a prior conviction suffered before the effective date of the three strikes law as a prior strike does not violate the prohibition in either the California or United States Constitution against ex post facto laws. (People v. Hatcher (1995) 33 Cal. App. 4th 1526, 1527-1528, 39 Cal. Rptr. 2d 801; accord, People v. Gray (1998) 66 Cal. App. 4th 973, 995, 78 Cal. Rptr. 2d 191.)
Proposition 21 added "assault with a deadly weapon, firearm, machinegun, assault weapon, or semiautomatic firearm or assault on a peace officer or firefighter, in violation of Section 245" (Pen.Code, § 1192.7, subd. (c)(31)) and "discharge of a firearm at an inhabited dwelling, vehicle, or aircraft, in violation of Section 246" (Pen.Code, § 1192.7, subd. (c)(33)) to the definition of "serious felony" in section 1192.7. (Ballot Pamp., Primary Elec. (Mar. 7, 2000) text of Prop. 21, § 17, pp. 124-125.) Section 2 of Proposition 21 states that the purpose of Proposition 21 is to increase public safety (Ballot Pamp., Primary Elec. (Mar. 7, 2000) text of Prop. 21, § 2, subd. (k), p. 119). In light of that purpose, we conclude that Penal Code sections 667.1 and 1170.125 require that, if the current offense was committed on or after March 8, 2000, a determination whether a prior conviction alleged as a serious felony is a prior strike must be based on whether the prior offense resulting in that conviction was a serious felony within the meaning of the three strikes law on March 8, 2000.
On March 8, 2000, assault with a firearm in violation of Penal Code section 245, subdivision (a)(2) was a serious felony within the meaning of the three strikes law. Thus, the trial court erred in striking the allegation that defendant's 1994 conviction for violation of Penal Code section 245, subdivision (a)(2) was a strike. On March 8, 2000, violation of Penal Code section 246 was a strike if the prior conviction was for shooting at "an inhabited *296 dwelling, vehicle, or aircraft." (Pen.Code, § 1192.7, subd. (c)(33).) Thus, the trial court also erred in striking the allegation that defendant's conviction for violation of Penal Code section 246 was a strike.
The judgment and the order striking the allegations that defendant was previously convicted of two serious or violent felony convictions are reversed.
NOTT, J. and TODD, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261428/ | 111 Cal. Rptr. 2d 194 (2002)
91 Cal. App. 4th 819
Diana M. BONTA', as Director, etc., Plaintiff and Appellant,
v.
Nathaniel J. FRIEDMAN et al., Defendants and Respondents.
No. B143552.
Court of Appeal, Second District, Division Five.
August 16, 2001.
Rehearing Denied September 5, 2001.
*195 Bill Lockyer, Attorney General of the State of California, John H. Sanders, Tammy Chung Ryu, Sandra L. Goldsmith, and Richard T. Waldow, Deputy Attorneys General, for Plaintiff and Appellant.
Nathaniel J. Friedman, for Defendants and Respondents.
ARMSTRONG, J.
This is an action under Welfare and Institutions Code [1] section 14124.70 et seq. Under that statutory scheme, "[w]hen benefits are . . . provided . . . to a beneficiary . . . because of an injury for which another person is liable . . . the director [of the Department of Health Services] shall have a right to recover from such person . . . the reasonable value of benefits so provided." (§ 14124.71, subd. (a).) The statutory scheme also provides that the Director of the Department of Health Services (Director) has a direct right of action, assertable as a lien against judgment or settlement proceeds, for recovery of monies spent to treat indigent tort victims. (§§ 14124.74, 14124.78; Wright v. Department *196 of Benefit Payments (1979) 90 Cal. App. 3d 446, 452-453, 153 Cal. Rptr. 474.)
Here, the Director, appellant Diana Bonta, sought to recover from respondents Nathaniel J. Friedman and the Law Offices of Nathaniel J. Friedman the sum of $16,258, which the Department of Health Services (Department), through the MediCal program, paid for the medical care of Keyna Day (Day). Respondents represented Day in a malpractice action which was partially settled in the amount of $825,000.[2] Respondents demurred on the ground that Day had not suffered an "injury" under the statute, but a birth defect, spina bifida. The trial court agreed and granted the demurrer without leave to amend. Judgment was entered for respondents. We reverse.
FACTS
The Director's complaint brought causes of action for violation of statute, unjust enrichment, fraud, and breach of fiduciary duty. Factually,[3] the complaint alleged that Day was born on June 7, 1990 with multiple birth defects and that the Department, through the Medi-Cal program, paid $16,258 for her medical care. Since respondent Friedman had advised the Department that he represented Day in a malpractice action for damages, the Director sent him a Notice of Lien. In 1997, after learning that the malpractice action had been partially settled, the Director demanded payment of $16,258 for the sums paid for Day's medical care. Respondent refused.
Copies of the Day malpractice complaint and the stipulation regarding good faith settlement were attached to the complaint, as was the Notice of Lien and a statement of the amounts paid by Medi-Cal, which included payment for prescription drugs, medical equipment, and physical therapy.
The malpractice action, in which Day was the plaintiff, brought causes of action for wrongful life and spoliation of evidence against Beaver Medical Clinic and Joseph Mayo, M.D. It alleged that Day's mother Glinda Day was a patient at the Medical Clinic and that the Clinic and Dr. Mayo diagnosed a pregnant Glinda Day with rubella, but did not inform her of the "virtual certainty" that Day would be born with birth defects. The complaint also alleged that Day was born with "multiple systemic abnormalities including, but not limited to, neurological damage, hearing loss, and cerebral palsy," and that as a result of the defendants' negligence or wrongful conduct she would incur medical expenses and custodial care throughout her life. Day sought damages for past and future medical expenses and custodial care, and for a lifetime of impaired earning capacity.
The stipulation regarding good faith settlement reveals that the settlement was with Dr. Mayo, in the amount of $825,000. It is signed by respondents, Day's representatives, and representatives for Dr. Mayo and for the Clinic.
Respondents demurred to the Director's complaint. On the causes of action for violation of statute and unjust enrichment, they contended that sections 14124.70 et seq. did not apply, since Day had not suffered an injury, but rather a birth defect. Respondents demurred to the cause of action for fraud on the ground that no claim was stated, and demurred to the cause of action for breach of fiduciary duty on the ground that there was no such duty.
*197 The trial court took judicial notice of the underlying complaint and sustained the demurrer, finding that the Legislature did not intend to include a wrongful life award within the scope of sections 14124.70 et seq. The case was dismissed as to all defendants.
DISCUSSION
We may first speedily dispense with respondents' argument that this case is moot, since the Director "probably" obtained a default judgment against Day and levied on the judgment. There is no support in the record for the allegation, and the allegation itself can hardly render this appeal moot.
We now turn to the substance. We review the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory (Cantu v. Resolution Trust Corp. (1992) 4 Cal. App. 4th 857, 879, 6 Cal. Rptr. 2d 151) and find that the trial court erred in its interpretation of section 14124.71. In interpreting a statute, we use the ordinary common-sense meaning of words, given "the evident purpose for which the statute was adopted." (In re Rojas (1979) 23 Cal. 3d 152, 155, 151 Cal. Rptr. 649, 588 P.2d 789.) In ordinary use, "injury" means "harm done or sustained" (Random House College Diet. (rev. ed. 1975)), "an act that damages, harms, or hurts" or "a violation of another's rights for which the law allows an action to recover damages or specific property or both." (Webster's 3d New Internat. Diet. (1981) p. 1164.) Black's Law Dictionary (7th ed.1999) defines "injury" as "The violation of another's legal right, for which the law provides a remedy; a wrong or injustice." Further, when we spread the statute as a whole (Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal. 3d 1379, 1386-1387, 241 Cal. Rptr. 67, 743 P.2d 1323), we learn that the injury referred to must be one for which the Department will provide benefits.
The evident purpose of the statute is clear. "The basic intent of [section 14124.71] was succinctly stated in an appellate decision written nearly 20 years ago. `When the state Medi-Cal program pays for medical services rendered to an injured person who has a claim for damages for the injury for which he is treated, the state is granted a lien upon the injured person's recovery, whether by judgment or settlement, to the extent of the Medi-Cal benefits it has provided. [Citation.]' (Neil D. Reid, Inc. v. Department of Health Care Services (1976) 55 Cal. App. 3d 418, 420, 127 Cal. Rptr. 685.)" (Kizer v. Hirata (1993) 20 Cal. App. 4th 841, 844, 25 Cal. Rptr. 2d 19.)
We thus find that the statutory phrase "an injury for which another person is liable," (§ 14124.71, subd. (a)) means some harm to a person, for which the Department will provide benefits, and for which legal recompense can be sought. It is manifest that Day's injuries here were such injuries. She was "damaged, harmed, and hurt" in a manner which entitled her to Medi-Cal benefits. And, as established by the settlement, another person paid damages for that harm.
Respondents argue that Day did not suffer an injury, citing Turpin v. Sortini (1982) 31 Cal.3d 220,182 Cal. Rptr. 337, 643 P.2d 954. We see nothing in that case which supports the argument. In Turpin, our Supreme Court considered California law on wrongful life causes of action and determined that "while a plaintiff-child in a wrongful life action may not recover general damages for being born impaired as opposed to not being born at all, the childlike his or her parentsmay recover special damages for the extraordinary *198 expenses necessary to treat the hereditary ailment." (Id. at p. 239, 182 Cal. Rptr. 337, 643 P.2d 954.) Turpin reasoned that general damages could not be recovered in such a case because it would be impossible to determine whether a child in fact suffered an injury through being born impaired, rather than not being born at all, and impossible to determine the amount of those damages. Respondents seem to draw from this a holding that a child born with a defect has not suffered an injury. Turpin does not so hold. To the contrary, the case holds that such a child has suffered an injury, and may recover special damages. Under that authority, Day sought and recovered such damages here.
Respondents also argue that the Day malpractice action did not seek compensation for an injury, but for the defendants' failure to advise Day's mother of the consequences of her illness, that is, for the negligent act of a healthcare provider. This is a meaningless distinction. The Day malpractice complaint alleged that the negligent acts of the defendants caused injury to Day. It could hardly have alleged anything else.
Equally without import is respondents' attempt to draw a distinction between this case and a case in which injury is the result of a car accidentin which case respondents agree that sections 14124.70 et seq. apply. The cases are the same, insofar as they involve injury caused by the negligent acts of another. In either case, if the Department provides benefits for the tort victim's medical care, the Director has the right to recover the reasonable value of those sums expended if "another person is liable." (§ 14124.71, subd. (a).)
Finally, at respondents' request, we have read and considered Kain v. Department of Health Services (2001) 91 Cal. App. 4th 325, 109 Cal. Rptr. 2d 891, after the close of briefing in this case. That case held that an award under the National Vaccine Injury Compensation Program (42 U.S.C.A. § 300aa-1 et seq.) is a judgment from which a Medi-Cal lien under section 14124.70 et seq. may be recovered. We see nothing in the opinion which supports respondents' argument that the case supports the theory that Day was not injured. Further, contrary to respondents' argument, we see nothing in the opinion which holds that the Director should have sought reimbursement from Day, not her lawyers.
The Director's complaint also included causes of action for fraud and for breach of fiduciary duty. In the fraud cause of action, the Director alleged that respondents intentionally concealed the settlement of the Day lawsuit and the disbursement of funds with the intent to deprive the Director of the opportunity to satisfy the lien. Respondents argued that the complaint did not state the elements of fraud, in that it did not allege actual reliance. Leave to amend should have been granted to cure any such defect.
In the cause of action for breach of fiduciary duty, the Director cited Business and Professions Code sections 6068, subdivisions (a) and (c). That statute holds that "It is the duty of an attorney to do all of the following: (a) To support the Constitution and laws of the United States and of this state . . . . (c) To counsel or maintain those actions, proceedings, or defenses only as appear to him or her legal or just. . . ." The complaint alleged that respondents breached those duties by misleading the Director about the existence of a settlement and by disbursing settlement funds without giving the Director an opportunity to satisfy the lien. We agree that these allegations do not state a cause of action for breach of fiduciary duty, since the cited statutes do not establish *199 that respondents owed a fiduciary duty to the Director.
However, "`[w]here a demurrer is sustained . . . as to the original complaint, denial of leave to amend constitutes an abuse of discretion if the pleading does not show on its face that it is incapable of amendment.' [Citation.]" (Garni v. Mullikin Medical Center (1993) 18 Cal. App. 4th 870, 877, 22 Cal. Rptr. 2d 819.) We cannot say that this complaint shows that it is incapable of amendment. Thus, leave to amend should have been granted.
DISPOSITION
The judgment is reversed. Appellant to recover costs on appeal.
GRIGNON, Acting P.J., and WILLHITE, J.,[*] concur.
NOTES
[1] All further statutory references are to that code unless otherwise indicated.
[2] The Department also sued Day, who apparently defaulted.
[3] On this review of a demurrer, we accept the allegations of the complaint as true. (Blank v. Kirwan (1985) 39 Cal. 3d 311, 318, 216 Cal. Rptr. 718, 703 P.2d 58.)
[*] Judge of the Los Angeles County Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261301/ | 131 Cal.Rptr.2d 524 (2003)
106 Cal.App.4th 1359
Peter REED, et al., Plaintiffs and Appellants,
v.
MUTUAL SERVICE CORPORATION, et al., Defendants and Respondents.
No. B157086.
Court of Appeal, Second District, Division Eight.
February 21, 2003.
*526 Timothy A. Canning, Artcata, for Plaintiffs and Appellants.
Jones, Bell, Abbott, Fleming & Fitzgerald, L.L.P., G. Thomas Fleming III and Catherine L. Dellecker, for Defendants and Respondents.
*525 BOLAND, J.
Private investors petitioned the trial court to vacate an arbitration award after a panel of arbitrators concluded the investors' claims against their securities brokers were not eligible for arbitration. The trial court denied that petition and granted the brokers' counter-petition to confirm the award. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
This is an appeal from a judgment granting a motion to confirm an arbitration award. The essential facts are undisputed. Beginning in 1990, appellants Peter and Lonnie Reed made several investments through securities accounts they maintained with respondent Mutual Service Corporation ("MSC," formerly known as Titan/Value Equities Group).[1] The Reeds' final investment was made in January 1991. At the time they opened their accounts, the Reeds each signed standard, preprinted agreements stating he "agree[d] that any controversy between [him] and [MSC] arising out of or relating to [his] account, transactions with or for [him] or the agreement or the breach thereof shall be settled by arbitration in accordance with the rules, then obtaining, of the National Association of Securities Dealers, Inc."
The Reeds initiated the underlying contractual arbitration proceeding with the National Association of Securities Dealers, Inc. (NASD). They claimed MSC lured them into investing in high risk, high commission securities by misrepresenting the nature and safety of those investments, *527 both before and after they were made. At the time they submitted their claims, the Reeds signed Uniform Submission Agreements stating they had read "the procedures and rules of the [NASD] relating to arbitration," and acknowledging that the proceeding would be governed by the "Constitution, By-Laws, Rules, regulations and/or Code of Arbitration Procedure of the [NASD]."
In May 2001, MSC filed a motion in the NASD arbitration proceeding to dismiss the Reeds' case arguing that, among other things, the claim was barred by the six-year rule of the NASD Code of Arbitration Procedure, which bars the arbitration of any matter in which more than six years have elapsed since the event that gave rise to the dispute.[2] The Reeds filed a written opposition to that motion.[3]
On June 4, 2001, a panel of three arbitrators conducted a telephonic "pre-hearing" conference in which the parties' attorneys, but not the parties themselves, participated. In late June 2001, "after considering the pleadings, testimony, and evidence presented at the pre-hearing conference," the arbitrators issued an award in which they granted MSC's motion to dismiss the claim with prejudice.
The Reeds filed a petition to vacate the arbitration award arguing: (1) the arbitrators exceeded their powers by dismissing their claim with prejudice and without a hearing; (2) two of the arbitrators, Charles Graham and Robert Sether, created a "reasonable impression of bias" by failing to disclose information regarding their participation in other arbitrations; and (3) the contractual six-year time-bar provision on which the award was based was void and contrary to public policy. MSG filed a counter-petition to confirm the award. The trial court denied the Reed's petition, and granted MSC's counter-petition. This appeal followed.
DISCUSSION
The Reeds contend the court erred when it granted MSC's counter-petition to confirm the arbitration award because: (1) the arbitrators exceeded their powers by dismissing their claim without a hearing; (2) two arbitrators failed to disclose potentially material information; and (3) the award was based on an unconscionable arbitration provision which is contrary to public policy.
1. The standard of review.
As a preliminary matter, the parties dispute the appropriate standard of review for this case. According to the Reeds, because the issues on appeal involve undisputed facts and/or questions of law, our review is de novo as to each. (See Maggio v. Windward Capital Management Co. (2000) 80 Cal.App.4th 1210, 1214, 96 Cal.Rptr.2d 168 [review of arbitration clause is de novo if no extrinsic evidence is presented]; Flores v. Transamerica HomeFirst, Inc. (2001) 93 Cal.App.4th 846, 851, 113 Cal.Rptr.2d 376 [as to the question of unconscionability, de novo *528 standard applies if extrinsic evidence is undisputed].)
Relying primarily on Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 36 Cal.Rptr.2d 581, 885 P.2d 994, and Pierotti v. Torian (2000) 81 Cal.App.4th 17, 96 Cal.Rptr.2d 553, MSC insists our review is much more limited, and we must accept the trial court's findings of fact if they are supported by substantial evidence, and are bound to draw every reasonable inference to support the arbitration award. (Advanced Micro Devices, Inc., supra, 9 Cal.4th at pp. 376-380, 36 Cal.Rptr.2d 581, 885 P.2d 994; Pierotti supra, 81 Cal.App.4th at p. 24, 96 Cal. Rptr.2d 553.)
In large measure, the Reeds are correct. The primary questions in this case whether the award was made in excess of the arbitrators' contractual powers, and whether the six-year time-bar provision is unconscionable are questions of law. (See Maggio, supra, 80 Cal.App.4th at p. 1214, 96 Cal.Rptr.2d 168; Flores, supra, 93 Cal.App.4th at p. 851, 113 Cal.Rptr.2d 376 [if the extrinsic evidence is undisputed, the question of unconscionability is one of law].) However, the issue whether the arbitrators had a duty to disclose information about decisions made by other arbitration panels on which they served which might indicate bias, is a question of fact. Our review as to that issue is deferential. (Betz v. Pankow (1993) 16 Cal.App.4th 919, 20 Cal.Rptr.2d 834.)
2. The arbitrators did not exceed their powers.
In Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 10 Cal.Rptr.2d 183, 832 P.2d 899, the California Supreme Court made it clear that the grounds for judicial review of a contractual arbitration award are extremely limited. Under Moncharsh, we are not free to review the merits of the controversy, the arbitrators' reasoning, or the sufficiency of the evidence on which the award is based. (Id. at p. 11, 10 Cal.Rptr.2d 183, 832 P.2d 899.) Indeed, even "an error of law apparent on the face of the award that causes substantial injustice does not provide grounds for judicial review." (Id. at p. 33, 10 Cal.Rptr.2d 183, 832 P.2d 899.) The exclusive grounds on which an award may be challenged are contained in Code of Civil Procedure sections 1286.2 and 1286.6.
Of those grounds, the one pertaining here requires the court to vacate an arbitration award if "[t]he arbitrators exceeded their powers." (Code Civ. Proc., § 1286.2, subd. (a)(4).)[4] The Reeds contend the arbitrators exceeded their powers by dismissing their case based solely on the parties' pleadings and documentary evidence, and without a formal arbitration hearing. In dismissing the Reeds' claim, the arbitrators relied on Rule 10304 of the NASD's Code of Arbitration Procedure (Rule 10304). That Rule provides:
"No dispute, claim, or controversy shall be eligible for submission to arbitration under this Code where six (6) years have *529 elapsed from the occurrence or event giving rise to the act or dispute, claim or controversy. This Rule shall not extend applicable statutes of limitation, nor shall it apply to any case which is directed to arbitration by a court of competent jurisdiction."[5]
Preliminarily, we note the Reeds have not raised the oft-presented issues regarding who decides the question of arbitrability the court or arbitrators themselves or whether the dispute at issue is arbitrable. Rather, the parties agree that their dispute, if viable, must be arbitrated. Accordingly, as we understand it, the question we must address is not whether the arbitrators had the power to decide the issue of the timeliness of the presentation of the Reeds' claims, but only whether they were empowered to decide that issue in the manner in which they did. The answer is yes.
Rule 10321 of the NASD Code of Arbitration Procedure, which governs NASD arbitrations, specifically provides that, upon the request of a party or an arbitrator, a telephonic pre-hearing conference, such as the one at issue, must be convened. Such conferences give the parties an opportunity to exchange documents, information, witness lists, etc., and to address "any other matters which will expedite the arbitration proceedings." (Id., rule 10321, subds. (a), (d)(1).) Rulings on issues raised in the course of the prehearing conference may be issued by one or more members of the arbitration panel, and "shall be made upon the papers submitted by the parties, unless the arbitrator calls a hearing."[6] (Id., rule 10321, subd. (e).) The NASD's arbitration process clearly anticipates that dispositive issues may arise in advance of the arbitration hearing itself which will require the arbitrators' attention. To that end, NASD training materials specifically address the presumably common circumstance that occurred here the panel's need to address a dispositive pre-hearing motion arguing that the claims presented are stale and therefore ineligible for submission to arbitration under Rule 10304. In response to the Reeds' petition to vacate the award, MSC presented the trial court with an excerpt from the NASD's Arbitrator Training Manual.[7] The Manual provides that "[although arbitration is an informal process, any party may file a dispositive motion that is, a motion to dismiss all or part of a claim prior to hearing." (NASD Rule on Dispositive Motions (1996), italics omitted.) The Manual also notes that "eligibility" (viz., the contention that a claim is no longer arbitrable under Rule 10304 because at least six years have elapsed since the occurrence of the event which gave rise to the dispute), is one of the three "most common arguments for dismissing a claim."
When presented with a Rule 10304 motion, the arbitrator is urged to ensure each party is given a chance to respond and the arbitrator is urged to discuss the matter with his or her copanelists. If the panel concludes a genuine question of the eligibility of a claim has been raised, it is *530 instructed to "ask the parties to brief the issue," because it may conclude there is a factual question as to whether there is a continuing occurrence or event that gave rise to the dispute, which would remove what would otherwise be a stale claim from the six-year time bar. If, after reviewing the facts, the panel concludes "a claim was filed after the six-year eligibility window," it is instructed to "dismiss the claim without prejudice," but only after "review[ing] Rule 10304, the pleadings, motions, and responses," and "carefully considering] each party's arguments."
This procedure is consistent with the NASD's Arbitration Procedures which vests arbitrators with the power "to interpret and determine the applicability of all provisions under this Code," including, of course, the final determination regarding eligibility issues raised pursuant to Rule 10304. (Ibid., rule 10324; see Howsam v. Dean Witter Reynolds (2002) 537 U.S. 79, 86, 123 S.Ct. 588, 593, 154 L.Ed.2d 491 [Rejecting the argument that the court, not the arbitrator, must decide the "procedural gateway" question of the applicability of the NASD's six-year rule, in part, because NASD Rule 10324 specifically empowers arbitrators to interpret and determine applicability of all provisions of the NASD Code.].)
The pre-hearing procedure at issue here is also consistent with case law interpreting Rule 10304 and its identical predecessor "Section 15" of the NASD Code of Arbitration Procedure. Those cases have uniformly concluded the NASD's six-year rule is a rule of eligibility which determines whether an arbitration panel has subject matter jurisdiction to consider a claim in the first instance. Rule 10304 erects a barrier through which every potentially arbitrable claim must pass to be deemed eligible for an arbitration hearing. (See e.g., Edward D. Jones & Co. v. Sorrells (7th Cir.1992) 957 F.2d 509, 512 ["Section 15 . . . serves as an absolute bar to claims submitted for arbitration more than six years after the event which gave rise to the dispute"]; Prudential Securities, Inc. v. LaPlant (D.C.Kan.1993) 829 F.Supp. 1239, 1243 [same]; Dean Witter Reynolds, Inc. v. McCoy (D.C.Tenn.1994) 853 F.Supp. 1023, 1030 [six-year time limit of Section 15 is a substantive eligibility requirement and NASD arbitration panel has no subject matter jurisdiction over any claim submitted for arbitration more than six years after the event in dispute occurred].) In other words, ". . . Section 15 goes to the Very power' . . . of NASD to arbitrate a claim. . . . Under that Section, NASD may not process, i.e., has no jurisdiction over, any claim submitted for arbitration more than six years after the `event in dispute.' [Citations.]" (Merrill Lynch, et al. v. Jana (D.C.Ill.1993) 835 F.Supp. 406, 410.) In sum, if a question is raised at the outset as to whether the claims presented are too stale to proceed to arbitration, that question must be resolved by the arbitrators before the panel or parties may move forward with the hearing itself.
We are not swayed by the failure of the NASD's Code to make explicit provision for the prehearing motion at issue here. The lack of explicit authorization does not mean dispositive motions are precluded. Implicit in the arbitrators' express power to deem a claim ineligible for arbitration is the corresponding authority to make that determination in advance of and without the necessity for a full hearing on the merits. (See Schlessinger v. Rosenfeld, Meyer & Susman (1995) 40 Cal. App.4th 1096, 1104, 47 Cal.Rptr.2d 650 [even in the absence of express authorization for summary judgment motions in the applicable arbitration rules or the parties' agreement, the arbitrator has implicit authority to rule on such motions].) Logic *531 and necessity dictate this result. Once a question about a claim's eligibility to proceed to arbitration has been raised, a determination that the claim is indeed eligible is a condition precedent which must be satisfied before a full-blown arbitration hearing may be held.
In both their initial Agreement to Arbitrate and in the Uniform Submission Agreements they signed at the time they instituted the arbitration proceedings, the Reeds declared their familiarity with and their agreement to be bound by these and other Rules which govern the NASD's arbitration procedures. Those Rules, expressly incorporated into the Reeds' agreements, make explicit provision for the arbitrators to make the gateway determination of ineligibility of any claim over six years old. (See Rules 10304, 10324, 10331.) State and federal courts and legislatures have embraced a "strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution." (Moncharsh, supra, 3 Cal.4th at p. 9, 10 Cal.Rptr.2d 183, 832 P.2d 899.) Consistency with those principles dictates that, in a case such as this, in which the age of the claims at issue is not disputed, the issue of eligibility should and must be made at the outset by those charged with the power to make that determination. (Rules 10304, 10324; see also Merrill Lynch, Pierce, Fenner & Smith v. Jana (D.C.Ill.1993) 835 F.Supp. 406, 409 ["Having chosen to arbitrate this case with NASD, the [investors] have chosen that the case be governed by the DASD Code as well."].)[8]
In sum, we conclude there is no merit to the Reeds' contention that, by disposing of their case at the pre-hearing stage, the arbitrators exceeded their authority and "employed a decision-making procedure to which [they] never agreed, and which is expressly prohibited by the arbitration agreement."
Further, we are not troubled by the fact that the dismissal was "with prejudice." The Reeds insist the arbitrators also exceeded their authority, and violated Rule 10305, when they prematurely dismissed their claim with prejudice and without informing the Reeds of their available remedies. Rule 10305 provides:
"At any time during the course of an arbitration, the arbitrators may either upon their own initiative or at the request of a party, dismiss the proceeding and refer the parties to their judicial remedies, or to any dispute resolution forum agreed to by the parties, without prejudice to any claims or defenses available to any party." (Id., rule 10305, subd. (a).)
We reiterate, Rule 10304 expressly contemplates any dispute older than six years is not eligible for arbitration. If, as the Reeds suggest, Rule 10305 means the arbitrators lacked the authority to determine at the pre-hearing stage and without the need to convene a full-blown arbitration that undisputed evidence showed the claims were not viable, Rule 10304 would be rendered meaningless.
Moreover, the Reeds suffered no harm because of the "with prejudice" dismissal. If their NASD action was stale, *532 the Reeds had no further "claims or defenses available to [them]" in that forum. In that case, the arbitrators'"with prejudice" dismissal simply stated the obvious i.e., that the arbitration panel could not proceed to decide the Reeds' claims because it lacked jurisdiction. Recognizing that fact, the Reeds immediately sought judicial review of the arbitrators' decision by filing a petition to vacate. The record reflects the trial court fully considered the merits of their arguments and came to a reasoned conclusion. Technically, the arbitrators were required to specify their award was "without prejudice," and to notify the Reeds' of their judicial remedies. (Rule 10305(a).) They failed to do so. Nevertheless, it is clear the Reeds were aware of the import of the arbitrators' ruling and the judicial remedies available to them, and took full advantage of those remedies. They suffered no harm due to the arbitrators' mistake, and the trial court was correct to confirm the award.[9]
3. There is no basis to vacate the award on the ground of arbitrator bias.
An arbitrator's failure to disclose information indicative of bias may constitute grounds to vacate the award either under Code of Civil Procedure section 1286.2, subdivision (a)(1) ("award was procured by corruption, fraud or other undue means"), or Code of Civil Procedure section 1286.2, subdivision (a)(2) "(corruption in any of the arbitrators.)" A neutral arbitrator must disclose "dealings that might create an impression of possible bias." Failure to do so constitutes misconduct and creates a ground to set aside the award. (Commonwealth Coatings Corp. v. Continental Cos. Co. (1968) 393 U.S. 145, 149, 89 S.Ct. 337, 21 L.Ed.2d 301; Ray Wilson Co. v. Anaheim Memorial Hosp. Assn. (1985) 166 Cal.App.3d 1081, 1087, 213 Cal.Rptr. 62; see also Code Civ. Proc., § 1281.9, subd. (a) [an individual selected as a neutral arbitrator must disclose "all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial"].)
Whether an award is tainted by bias because an arbitrator failed to disclose a particular relationship is a factual determination made by the court reviewing the award. (Figi v. New Hampshire Insurance Co. (1980) 108 Cal.App.3d 772, 776, 166 Cal.Rptr. 774.) The party claiming bias bears the burden of establishing facts supporting its position. (See Betz v. Pankow (1993) 16 Cal.App.4th 919, 926, 20 Cal.Rptr.2d 834.) The test is objective, i.e., whether the relationship would create an impression of bias in the mind of a reasonable person. (Michael v. Aetna Life & Casualty Ins. Co. (2001) 88 Cal.App.4th 925, 936-937, 106 Cal.Rptr.2d 240.)
Referring to these standards, the Reeds insist the court should have vacated the award because two members of the arbitration panel failed to disclose they "had previously granted prehearing motions in at least two other arbitrations." They argue this nondisclosure represents a kind of "corruption" because "[a] person aware of those facts might reasonably entertain a doubt that such an arbitrator would be able to be impartial in deciding *533 whether such motions were permitted under the NASD Code." We disagree.
The evidence of potential bias the Reeds presented to the court showed only that, in two completely unrelated matters decided in 1998, two separate panels of three arbitrators agreed cases presented to them should be terminated, in whole or in part. In the first, in which arbitrator Graham participated, the panel granted a motion to enforce the parties' settlement agreement as to some issues involved in their employment dispute. In the other, arbitrator Sether was a member of a panel that granted a motion to dismiss an arbitration without prejudice, after the claimant failed to prosecute the matter for over three years.[10]
Nothing in any of this "evidence" is remotely indicative of bias or potential bias on the part of either arbitrator about which the Reeds complain. (See Luster v. Collins (1993) 15 Cal.App.4th 1338, 1345, 19 Cal.Rptr.2d 215 ["To support a claim of bias, a party must demonstrate the arbitrator had an interest in the subject matter of the arbitration or a preexisting business or social relationship with one of the parties which would color the arbitrator's judgment"]; cf. Pacific Etc. Conference of United Methodist Church v. Superior Court (1978) 82 Cal.App.3d 72, 86, 147 Cal.Rptr. 44 ["bias" exists where the judge evidences a "predisposition to decide . . . an issue in a certain way, which does not leave the mind perfectly open to conviction"].) Moreover, this information does not indicate either panelist "has a firm opinion or belief as to the subject of an action for which she/he is an arbitrator," such that he would be vulnerable to a challenge for cause under the NASD's procedures on the ground he might be precluded "from rendering an objective or impartial determination." (See NASD Rule 10312; NASD Arbitration Procedures (Jan.2001), p. 15.)
4. The public policy argument has been waived.
In their final contention of error, the Reeds assert the award should have been vacated because any rule which prohibits the arbitration of any claim over six-years old is an unconscionable contractual provision and void as against public policy.[11] The "public policy" on which the Reeds rely is embodied in Civil Code section 1668, which states:
"All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or *534 property of another, or violation of law, whether willful or negligent, are against the policy of the law."
The Reeds contend the NASD's six-year rule is unconscionable because it provides immunity from liability to brokers who are successful in concealing their malfeasance, or in otherwise discouraging investors from bringing an arbitration claim for six years.
We decline to address the Reeds' contention of unconscionability. Normally, the question of the enforceability of an arbitration clause must be raised before the parties proceed to arbitration. The parties cannot, as the Reeds did here, willingly accede to and participate in the arbitration process without even raising the public policy issue, only to raise the question before the trial court later. "A party who questions the validity of the arbitration agreement may not proceed with arbitration and preserve the issue for later consideration by the court after being unsuccessful in the arbitration." (Bayscene Resident Negotiators v. Bayscene Mobilehome Park (1993) 15 Cal.App.4th 119, 129, 18 Cal.Rptr.2d 626.)[12]
Any claim of illegality must be raised before the arbitrator or it is deemed waived. A contrary rule might tempt a party to "play games" with the arbitration and not raise the issue of illegality until and unless it lost. (Moncharsh, supra, 3 Cal.4th at p. 32, 10 Cal. Rptr.2d 183, 832 P.2d 899.) The record contains no indication the Reeds attempted to address the question of the unconscionability of Rule 10304 either when they initiated the arbitration, or in response to MSC's motion to dismiss. Accordingly, that issued is deemed waived.[13] (Ibid.)
DISPOSITION
The judgment is affirmed.
We concur. COOPER, P.J., and RUBIN, J.
NOTES
[1] Respondent Glen Biener was a securities broker employed by MSC. Hereafter, we shall refer to Biener and MSC, collectively, as MSC.
[2] MSC asserts and the Reeds do not dispute that the six-year rule began to run either at the time the investments were made, or no later than July 1992 when a bankruptcy filing by the issuer of the Reeds' investments put them on notice of the risks and losses associated with their investments. In either case, more than six years passed before the Reeds initiated the arbitration proceedings.
[3] The petitions submitted by the parties to the trial court did not include the papers filed in the NASD proceeding in connection with MSC's motion to dismiss. As a result, we cannot ascertain the precise content of either party's arguments there.
[4] The Federal Arbitration Act (9 U.S.C. § 1 et seq., "FAA") preempts state laws which interfere with the enforcement of arbitration agreements that involve interstate commerce, such as the one involved here. (Southland Corp. v. Keating (1984) 465 U.S. 1, 13-16, 104 S.Ct. 852, 79 L.Ed.2d 1; Lewis v. Prudential Bache-Securities, Inc. (1986) 179 Cal.App.3d 935, 940, 225 Cal.Rptr. 69 [holding arbitration clause in securities investor's agreement is part of a contract evidencing commerce and thus, within the ambit of the FAA].) The FAA is similar, however, to Code of Civil Procedure section 1286.2, subdivision (a)(4), in providing for vacation of an arbitration award if "the arbitrators exceeded their powers." (9 U.S.C. § 10(a)(4).) Accordingly, for the purposes of our analysis we see no conflict and will cite persuasive federal or state authorities.
[5] MSC asserts the arbitrators also dismissed the Reeds' claims on the grounds they were barred by applicable state and federal statutes of limitation. The Reeds do not dispute this assertion, but the absence of the relevant documents from the record prevents our independent verification of that fact.
[6] The record contains materials submitted by the Reeds which indicate their awareness that the arbitrators could conduct a pre-hearing conference, which might be held telephonically, on the parties' written submissions, or in person.
[7] The Reeds did not deny their awareness, nor object to the submission, of these materials, and do not take issue with any statement therein.
[8] Again, we note that, at least until the filing of their reply brief herein, the Reeds have not argued the arbitrators lacked the power to decide issue of arbitrability. Instead, they argue only that the arbitrators exceeded their powers by deciding that issue without convening a formal arbitration hearing on the merits. To state this contention is to reveal its flaw: Rule 10304 would be meaningless if it did not require an arbitration panel to first conclude the claim with which it was presented was "live" (i.e., that the panel had subject matter jurisdiction), before proceeding to address its merits.
[9] We do not decide whether, in light of the fact that the dispute is not "eligible" for arbitration under Rule 10304, the Reeds would be entitled to pursue their claims in superior court, subject to the applicable statute of limitations. The provision that dismissals under the six year rule are to be "without prejudice" lends some credence to the argument, but the parties did not brief the issue, nor is it necessary to the disposition of this appeal.
[10] The Reeds also allege Graham failed to disclose his participation in a third arbitration, Wong v. Charles Schwab. However, the record contains no information which would enable the court to assess the merits of their contention that Graham's participation therein evidences his potential bias.
[11] In their reply brief, for the first time, the Reeds raise the issue of whether the arbitrators had the authority to decide the eligibility issue. Fairness militates against our consideration of any arguments an appellant has chosen not to raise until its reply brief, and the authorities holding to that effect are numerous. (See e.g., Lester v. Lennane (2000) 84 Cal.App.4th 536, 595, 101 Cal.Rptr.2d 86 [contentions raised for the first time in a reply brief are deemed waived]; Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 763-765, 60 Cal.Rptr.2d 770 [an issue that has not been discussed in an opening brief cannot be raised for the first time in a reply brief); Heiner v. Kmart Corp. (2000) 84 Cal.App.4th 335, 351, 100 Cal.Rptr.2d 854.)
In any event, the issue of who has the authority to decide the question of eligibility was recently put to rest in Howsam, supra, 537 U.S. at p. 84, 123 S.Ct. at p. 592, in which the Supreme Court resolved a conflict among the Circuits and held that the question of eligibility under Rule 10304 is for the arbitrator, not the court, to decide.
[12] This rule applies even if the party does not discover the basis for opposing arbitration until after arbitration proceedings have begun. In such a case, the objecting party must withdraw from the arbitration process, and commence litigation on the issue of enforceability. At that point, the adverse party could petition to compel arbitration, thereby freeing the court to consider at the outset the issue of the enforceability of the allegedly offending clause. (See Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 982, 64 Cal.Rptr.2d 843, 938 P.2d 903.)
[13] MSC's Motion for Sanctions is denied. Although we disagree with the Reeds' contentions, their arguments are not so wholly lacking in merit as to justify the imposition of sanctions. (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650, 183 Cal.Rptr. 508, 646 P.2d 179 [holding that sanctions are justified only if an appeal is prosecuted for an improper motive, such as to harass the respondent or delay an adverse judgment, or indisputably lacks merit].) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261339/ | 130 Cal.Rptr.2d 887 (2003)
106 Cal.App.4th 736
The PEOPLE, Plaintiff and Respondent,
v.
Frank DANIELS, Defendant and Appellant.
No. B158974.
Court of Appeal, Second District, Division Six.
February 27, 2003.
Review Denied May 14, 2003.
*888 Jolene Larimore, Pine Mountain Club, 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, Margaret E. Maxwell, Supervising Deputy Attorney General, Jim E. Hart, Deputy Attorney General, for Plaintiff and Respondent.
PERREN, J.
Here we hold that conduct credits against a defendant's prison sentence attributable to a jail term served as a condition of probation are limited by Penal Code section 2933.1, subdivision (c) (section 2933.1(c)).[1] Frank Daniels was convicted of residential burglary and placed on probation. When probation was revoked and Daniels was sentenced to state prison, the trial court limited conduct credits against his prison sentence to 15 percent of his actual custody time. (§ 2933.1, subd. (c).) Daniels contends that conduct credits he was awarded for time spent in local custody as a condition of his probation must be determined without the section 2933.1(c) limitation. We affirm.
*889 PROCEDURAL HISTORY
After pleading no contest, Daniels was convicted of two counts of first degree residential burglary. (§§ 459, 460.) The charge alleged that a person other than an accomplice was present in the residence during the commission of the burglary. (See § 667.5, subd. (c)(21).) The trial court suspended imposition of sentence and placed Daniels on three years probation. One of the conditions of probation was that he serve 365 days in county jail. In addition to the time spent in actual custody prior to his conviction, the trial court awarded Daniels conduct credits as determined under section 4019. Subsequent to his conviction, the sheriff computed additional credits for actual time served under section 4019 and released him from custody under an early release program 22 days before the term of confinement would have actually been served.
Daniels violated probation by committing new offenses. His probation was revoked and the trial court imposed a seven-year-four-month state prison sentence for the two burglaries. At the time Daniels was sentenced to prison, the trial court determined the total number of days to be credited against his sentence. (§ 2900.5, subd. (d).) In making this determination, the court added the number of days Daniels had spent in custody, including days in custody before his conviction, while he was in jail as a condition of probation, and after his arrest for violating probation. The court then calculated the section 4019 conduct credits Daniels earned during these three periods of custody. The court credited Daniels' prison sentence with his days in actual custody and with conduct credits limited to 15 percent of his custody days as set forth in section 2933.1(c). Daniels received no credit for the 22 days "awarded" under the sheriffs early release program. Daniels appeals the sentencing order.
DISCUSSION
Daniels contends that he is entitled to credit against his prison sentence for the entire 365-day jail term imposed as a condition of his probation. He claims that he completed that term before his probation was revoked by serving time in custody and earning section 4019 conduct credits. Daniels argues that these section 4019 credits were irrevocably earned and could not be reduced by a recalculation under section 2933.1(c) at the time he was sentenced to state prison. We disagree.
This case illustrates how perplexing the computation of custody credits may be for the trial court. The initial order awarding credits for time served as a condition of probation applied the general rules set forth in sections 2900.5 and 4019. In substance, Daniels received six days of credit for every four days actually spent in local custody.
Section 2933.1(c) generally limits presentence credits to 15 percent of actual time served when a defendant, like Daniels, is convicted of a violent felony listed in section 667.5, subdivision (c). But, section 2933.1(c) only applies when the judgment results in the defendant's incarceration in state prison, and not when a defendant is on probation even if he or she was convicted of a section 667.5, subdivision (c) felony. (In re Carr (1998) 65 Cal.App.4th 1525, 1535-1536, 77 Cal.Rptr.2d 500.)
Here, since imposition of sentence was suspended and Daniels was granted probation at the initial sentencing hearing, he was properly awarded six for four credits under section 4019. Thereafter, however, Daniels violated probation and was placed "in the custody of the Department of Corrections." (§ 2933.1, subd. (c).) We hold that, when there is a violation of probation and the defendant is committed *890 to state prison, the defendant is entitled only to credits computed according to the 15 percent limitation set forth in section 2933.1(c).
Section 2900.5 provides that a defendant sentenced to county jail or state prison is entitled to credit against the term of imprisonment for days spent in custody before sentencing or as a condition of probation, and requires the sentencing court to determine the number of days of custody and any conduct credits earned pursuant to section 4019. (§ 2900.5, subds.(a) & (d); see also People v. Sage (1980) 26 Cal.3d 498, 508-509, 165 Cal.Rptr. 280, 611 P.2d 874.) Section 4019 provides that a defendant may earn conduct credits during custody in a county jail or a comparable local facility "prior to the imposition of sentence," including custody imposed "as a condition of probation after suspension of imposition of a sentence or suspension of execution of sentence." (§ 4019, subds.(a)(2) & (a)(4).) If all credits are earned, "a term of six days will be deemed to have been served for every four days spent in actual custody." (§ 4019, subd. (f).)
Section 2933.1(c) limits the maximum conduct credits that can be awarded to a defendant convicted of a section 667.5 felony to 15 percent of his or her actual time in custody. "Notwithstanding Section 4019 or any other provision of law," the maximum credit a person convicted of a violent felony listed in section 667.5 may earn against a period of confinement in county jail or similar facility "following arrest and prior to placement in the custody of the Department of Corrections, shall not exceed 15 percent of the actual period of confinement ...."(§ 2933.1, subd. (c).)
Here, the requirements for application of section 2933.1(c) were satisfied. Daniels was convicted of a violent felony listed in section 667.5, subdivision (c)(21), and was placed in the custody of the Department of Corrections when he was sentenced to state prison. But, before the state prison sentence was imposed, Daniels was placed on probation and ordered to serve a 365day term in county jail as a condition of probation.
In In re Carr, supra, 65 Cal.App.4th at page 1535, 77 Cal.Rptr.2d 500, the court held that the section 2933.1(c) limitation on conduct credits does not apply when a defendant is placed on probation rather than sentenced to prison. In Carr, the trial court placed the defendant on probation conditioned on serving a term in county jail, and applied section 2933.1(c) to limit the defendant's conduct credits for that jail term. The Court of Appeal held that section 2933.1(c) did not apply to the defendant's conduct credits earned while he was on probation. The court concluded that, based primarily on legislative history, the section 2933.1(c) phrase "`following arrest and prior to placement in the custody of the Director of Corrections' " requires that a defendant must be sentenced to state prison before that; section applies. (Id. at pp. 1535-1536, 77 Cal.Rptr.2d 500.)
Here, the trial court followed the: dictates of Carr in determining Daniels' conduct credits against his jail term imposed as a condition of probation. The record shows that Daniels was awarded full section 4019 credits for his pre-probation custody and was accruing full section 4019 credits while serving his jail term.
In effect, Daniels asks us to extend Carr to cover situations where a defendant is initially placed on probation but sentenced to state prison when probation is revoked. He argues that section 4019 conduct credits against a jail term imposed as a condition of probation are necessarily retained as conduct credits against a sentence to state prison.
*891 Daniels' position is contrary to the language and purpose of section 2933.1(c) and is not supported by the reasoning of Carr. Statutory language and legislative history establish that section 2933.1(c) applies in every situation where a defendant is sentenced to state prison. (See In re Carr, supra, 65 Cal.App.4th at pp. 1532-1535, 77 Cal.Rptr.2d 500.) Similarly, Carr focuses on the imposition of a prison sentence as the trigger for application of section 2933.1(c). Under Carr, section 2933.1(c) would apply to custody following arrest and prior to the imposition of a sentence to state prison regardless of whether the prisoner had been a probationer before the prison sentence was imposed. (Ibid.) No other construction of the statutory scheme would be faithful to the language of section 2933.1(c), or produce a fair and reasonable result. (See People v. Buckhalter (2001) 26 Cal.4th 20, 28-29, 108 Cal.Rptr.2d 625, 25 P.3d 1103.)
Contrary to Daniels' argument, there is nothing unfair in awarding more credits for a jail term imposed as a condition of probation than for a sentence to state prison. Section 4019 may be intended to encourage good behavior through a reduction in the period of a person's incarceration, but section 2933.1(c) is intended to delay the release of defendants convicted of violent felonies and ensure longer prison sentences for those who commit violent felonies. (People v. Van Buren (2001) 93 Cal. App.4th 875, 880, 113 Cal.Rptr.2d 510.)
In addition, the benefit of previously-earned conduct credits is not being taken away from a former probationer like Daniels when he or she is sentenced to state prison. Daniels received the full benefit of section 4019 credits against his jail term because he was released from jail sooner than he would have been if the section 2933.1(c) limitation had been applied. Daniels' own conduct in violating probation resulted in the loss of that freedom. He cannot now complain that he lost something he previously earned. His term of imprisonment was properly determined by his conduct and the dictates of applicable statutes.
We also reject Daniels' argument that section 2933.1(c) does not apply because that section covers only presentence custody whereas a probation order is a sentence. (See People v. Buckhalter, supra, 26 Cal.4th at pp. 29-30, 108 Cal. Rptr.2d 625, 25 P.3d 1103.) Although courts sometimes refer to it as a "sentence," probation is not a sentence even if it includes a term in the county jail as a condition. (People v. Carter (1975) 48 Cal. App.3d 369, 375, 121 Cal.Rptr. 677.) In granting probation, the court suspends imposition or execution of sentence and issues a revocable and conditional release as an act of clemency. (§ 1203, subd. (a); People v. Cushway (1987) 193 Cal.App.3d 776, 778, 238 Cal.Rptr. 527.) In any event, characterizing probation as a sentence does not support the conclusion that a defendant sentenced to state prison after probation is granted and revoked is entitled to a different calculation of conduct credits than a defendant sentenced to state prison directly after conviction.
The judgment (order) is affirmed.
We concur: GILBERT, P.J., and YEGAN. J.
NOTES
[1] All statutory references are to the Penal Code. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261349/ | 130 Cal.Rptr.2d 483 (2003)
106 Cal.App.4th 73
Rowdy ELSNER, Plaintiff and Respondent,
v.
Carl UVEGES, Defendant and Appellant,
State Compensation Insurance Fund, Intervenor and Appellant.
No. D037761.
Court of Appeal, Fourth District, Division One.
January 13, 2003.
*485 Bonesteel & Associates, Summers & Shives, Scott M. Bonesteel, San Diego, Jodi E. Lambert for defendant and appellant.
Singleton & Associates, Terry Singleton, Escondido, Horatio Barraza; Daniel U. Smith, Los Angeles, for plaintiff and respondent.
Marguerite I. Delbourgo, Santa Ana, for Intervenor and Appellant. *484
*486 O'ROURKE, J.
In this case we are asked to decide whether the Legislature, when it amended Labor Code section 6304.5[1] in 1999, repealed the long-standing rule prohibiting consideration of regulations of the California Occupational Safety and Health Act (Cal-OSHA) in tort actions by employees against parties other than their own employers for injuries suffered in the workplace. Defendant Carl Uveges appeals a judgment entered in favor of plaintiff Rowdy Eisner and intervenor State Compensation Insurance Fund (State Fund) on Eisner's complaint for personal injuries stemming from a construction site accident. Uveges contends the trial court prejudicially erred by (1) permitting into evidence purported violations of Cal-OSHA standards under a misinterpretation and improper retroactive application of sections 6304.5 and 6400; (2) misinstructing the jury on the definition of employer; and (3) denying his motion in limine seeking to exclude reference to Cal-OSHA standards, and on that basis improperly excluding Uveges's proposed evidence of industry custom and practice. State Fund also appeals the judgment, contending the damage award in its favor does not correctly reflect medical expense damages to which it is statutorily entitled under section 3852.
Based on our interpretation of the statute, we conclude section 6304.5 does not permit introduction of Cal-OSHA safety standards or orders into evidence in employee third party personal injury actions,[2] and that the trial court therefore erred in allowing use of such regulations to prove the standard of care and establish a presumption of negligence in this case. We conclude the court's error was prejudicial because it resulted in the exclusion of evidence pertaining to the custom and practice of scaffold assembly in the single family residential construction industry, depriving Uveges of a critical defense to Eisner's negligence claim based on Uveges's common law duties of care. Accordingly, we reverse the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
On December 3, 1998, Eisner, a roofer employed by Hoffman Roofing, was injured when a scaffold failed beneath him at a construction site in the city of Coronado. Uveges was the general contractor for the projecta pair of two-story, single family homes. The day before the accident, Sean Frey, a carpenter employed by Uveges, had constructed the temporary wood plank scaffold to assist his installation of plywood panels to the second story of the structure. Frey used an approximately 14-foot-long, two-by-ten-inch plank, attaching one end to a sloping roof by a single three-and-one-half inch-long nail and the other end to a window ledge with another single nail. Frey did not drive the nails in fully, leaving one of them approximately five-eighths of an inch up, so that he could later pry them up in order to remove the scaffold. He supported the scaffold with a center support consisting of a 12-foot-long two-by-four resting on an overturned truss lying on the ground below; he attached the base of the support to the truss using a single nail driven at an angle.
*487 Uveges acknowledged he had the direct responsibility to supervise and control the work in order to ensure required safety practices were followed, by either talking to the subcontractors' employees or otherwise ensuring the subcontractors took required safety precautions. On this job, he did not have a written safety program nor did he conduct formal safety meetings with his workers, instead he would say something only if he saw unsafe activities. Because Uveges considered Frey an experienced carpenter, Uveges did not feel he had to check his work for safety purposes; he expected Frey to be able to build a scaffold correctly. Uveges did not see Frey build the scaffold and he did not inspect it before the accident. According to Frey, Uveges did not have a practice of inspecting scaffolds he had built.
Eisner sued Uveges and Uveges's joint venturer on the project asserting causes of action for negligence, premises liability, breach of non-delegable duty, failure to provide a safe place of work and peculiar risk. State Fund intervened in the lawsuit seeking reimbursement for workers' compensation benefits paid to Eisner.
Before trial, Uveges moved in limine for an order to exclude references to OSHA regulations and their alleged violation. He argued expert or other testimony that the scaffolding violated Cal-OSHA regulations or safety orders was inadmissible for any purpose in an employee's third party action under section 6304.5 as applied by Spencer v. G.A. MacDonald Construction Co. (1976) 63 Cal.App.3d 836, 134 Cal.Rptr. 78, and Mackey v. Campbell Construction Co. (1980) 101 Cal.App.3d 774, 162 Cal. Rptr. 64. He also argued the mention of a Cal-OSHA violation without supporting evidence would unduly prejudice him by permitting the jury to impermissibly infer wrongdoing. The trial court denied the motion.
The matter proceeded to jury trial against Uveges only. Based on its in limine ruling, the court permitted testimony by Eisner's experts as to how the scaffold violated Cal-OSHA requirements. Having granted a separate evidentiary motion made by Eisner during trial, the court also prevented Uveges from eliciting expert testimony that the scaffold as constructed was customary and met the standard of care for such construction jobs. It gave the jury special instructions based on provisions of the Labor Code (sections 6400, 6401 and 6403[3]), including an instruction defining the term employer as used in those sections for multiemployer worksites,[4] as well as portions of particular Cal-OSHA *488 regulations relating to housekeeping at the site and requirements for nailing, anchoring, size and railing of scaffolds. (Cal.Code Regs, tit. 8, §§ 1513, 1637, 1640.) The court instructed the jury with a modified version of BAJI No. 3.45 as follows: "If you find that a party to this action violated Labor Code sections 6400, 6401, 6403, 7151, [Cal-]OSHA Regulations 1513, 1637 and/or 1640, the statutes and regulations just read to you and that any such violation was a cause of injury to another, you will find that such violation was negligence unless defendant proves by a preponderance of the evidence that he did what might reasonably be expected of a person of ordinary prudence, acting under similar circumstances, who desired to comply with the law. In order to sustain such burden of proof, such party must prove by a preponderance of the evidence that he was faced with circumstances which prevented compliance or justified noncompliance with the statute or regulation."
The jury returned a special verdict finding Uveges 100 percent negligent and his negligence a cause of Eisner's injuries. It found Eisner's employer was not negligent. In addition to costs, the jury awarded Eisner $131,254 in economic and $500,000 in noneconomic damages. It awarded State Fund $52,867.71. Both Uveges and State Fund appeal.
DISCUSSION
I. OSHA Standards Remain Inadmissible in Third Party Actions under Section 6304.5
Uveges contends the trial court prejudicially erred by interpreting section 6304.5 as permitting admission of OSHA safety standards and orders into evidence in this third party action for purposes of establishing the standard of care and creating a presumption of negligence for violation of those standards. In part, he maintains the court's interpretation is contrary to the statute's plain language and to legislative history that demonstrates the Legislature, while it originally considered permitting use of such evidence, in the end preserved the rule barring admission of such evidence in third party civil actions. As we explain, although the statute suffers from ambiguity, section 6304.5's legislative history compels us to agree with Uveges and reject the trial court's interpretation.
A. Background
We begin with an overview of the law leading up to the Legislature's introduction of Assembly Bill (AB) 1127, which amended several provisions of the Labor Code, including section 6304.5 addressing admissibility of Cal-OSHA regulations and orders in personal injury and wrongful death actions. Former section 6304.5, applicable to personal injury or wrongful death actions arising after April 1, 1972, provided: "It is the intent of the Legislature that the provisions of this division [Division 5, sections 6300 through 9000 et seq, entitled "Safety in Employment"] shall only be applicable to proceedings against employers brought pursuant to the provisions of Chapter 3 (commencing with Section 6500) [entitled "Responsibilities and Duties Between Employers and Employees"] and 4 (commencing with Section 6600) [entitled "Appeal Proceedings"] of Part 1 of this division for the exclusive purpose of mamtaining and enforcing employee safety. [¶] Neither this division nor any part of this division shall have any *489 application to, nor be considered in, nor be admissible into, evidence in any personal injury or wrongful death action arising after the operative date of this section, except as between an employee and his own employer." (Stats.1971, ch. 1751 (A.B.676), § 3, p. 3780, eff. April 1, 1972; Arbaugh v. Proctor & Gamble Mfg. Co. (1978) 80 Cal.App.3d 500, 511, fn. 5, 145 Cal.Rptr. 608.)[5]
Under the plain language of former section 6304.5, reference to and introduction of Cal-OSHA standards and safety orders were expressly limited to actions between employers and their own employees; this court and others interpreting the section logically concluded such regulations and their violation specifically could not be considered in evidence in an employee's third party action. (Widson v. International Harvester Co. (1984) 153 Cal.App.3d 45, 51-52, 200 Cal.Rptr. 136 ["Every appellate court in the State of California which has considered the question of legislative intent of this section has concluded Cal-OSHA regulations are not applicable to nor admissible in an employee's action against a third person not his or her employer"]; Salinero v. Pan (1981) 124 Cal. App.3d 120, 130-131, 177 Cal.Rptr. 204 ["The language of [former] section 6304.5 is abundantly clear; the provisions of division 5 of the Labor Codewhich include the statute appellant sought to have admitted into evidenceare not admissible in any third party actions by an employee"]; Rodriguez v. McDonnell Douglas Corp. (1978) 87 Cal.App.3d 626, 651, fn. 14, 151 Cal.Rptr. 399; Brock v. State of California (1978) 81 Cal.App.3d 752, 757-758, 146 Cal.Rptr. 716; Spencer v. G.A. Mac-Donald Construction Co., supra, 63 Cal. App.3d at p. 857, 134 Cal.Rptr. 78; Vallas v. City of Chula Vista (1976) 56 Cal. App.3d 382, 387, 128 Cal.Rptr. 469 [presumption of negligence arising from violation of safety orders not applicable except as between employee and employer], disapproved on other grounds in Peterson v. City of Long Beach (1979) 24 Cal.3d 238, 245, fn. 5, 155 Cal.Rptr. 360, 594 P.2d 477.)
The rationale behind the Legislature's actions was most thoroughly discussed in Spencer v. G.A. MacDonald Construction Co., supra, 63 Cal.App.3d 836, 134 Cal. Rptr. 78, in response to arguments by amici curiae that section 6304.5 violated *490 the equal protection and due process provisions of the federal and state Constitutions. (Id. at p. 852, 134 Cal.Rptr. 78.) There, the court explained: "Division 5 of the Labor Code ("Safety in Employment") reduces or eliminates the need for the parties to resort to common law negligence to prove liability in certain cases because in those cases violations of safety orders found in the Administrative Code are admissible in evidence and could constitute negligence per se. [Citation.] However, section 6304.5 makes obvious the Legislature's intent to restrict the admissibility of those safety code orders only to safety cases (Lab.Code, § 6500 et seq. and § 6600 et seq.), and to personal injury or wrongful death cases between an employee and the party most directly concerned with his safetyhis own employer. In other suits brought by the employee, he, like other personal injury litigants, must prove his case under the rules of common law negligence. To allow the admissibility of safety code orders to carry over to the latter kind of suit would discriminate against other personal injury plaintiffs for, by reducing or eliminating the need to prove his case under common law negligence, it would place an employee in a special, protected status vis-a-vis third persons, although employees are not a suspect classification, nor is the admissibility of safety orders a fundamental right." (Spencer v. G.A. MacDonald Construction Co., 63 Cal.App.3d at pp. 854-855, 134 Cal.Rptr. 78, italics added.) The California Supreme Court later agreed with Spencer's reasoning and its resultant holding that section 6304.5 was not unconstitutional on equal protection grounds. (Griesel v. Dart Industries, Inc. (1979) 23 Cal.3d 578, 588, 153 Cal.Rptr. 213, 591 P.2d 503, overruled on other grounds in Privette v. Superior Court (1993) 5 Cal.4th 689, 696, 702, 21 Cal.Rptr.2d 72, 854 P.2d 721.)
Former section 6304.5's prohibition on admission of Cal-OSHA standards extended to theories beyond negligence to that of nondelegable duty; thus, an injured employee was prohibited from suing a third party general contractor or premises owner for breach of any nondelegable duty to comply with applicable Cal-OSHA requirements. (See, e.g., Felmlee v. Falcon Cable TV (1995) 36 Cal.App.4th 1032, 1039, 43 Cal.Rptr.2d 158; Smith v. ACandS, Inc. (1994) 31 Cal.App.4th 77, 89-91, 37 Cal.Rptr.2d 457.) But that did not prevent the employee from maintaining an action against the third party for breach of other non-OSHA-based nondelegable duties, or breach of its common law duties of due care. (See Felmlee v. Falcon Cable TV, at p. 1040, 43 Cal.Rptr.2d 158 [notwithstanding plaintiffs inability to rely on non-delegable duty doctrine, jury was "free to consider whether [general contractor] was directly negligent in failing to correct any foreseeable, dangerous condition ... which may have contributed to the cause of [plaintiffs] injuries"]; Smith v. ACandS, Inc., supra, 31 Cal.App.4th at p. 97, 37 Cal.Rptr.2d 457 [court of appeal reversed judgment against premises owner PG & E for injuries sustained by plaintiff who was not PG & E's own employee due to errors concerning claims of negligence per se and vicarious liability but remanded for retrial on general contractor's general negligence], disapproved on other grounds in Camargo v. Tjaarda Dairy (2001) 25 Cal.4th 1235, 1242-1245, 108 Cal.Rptr.2d 617, 25 P.3d 1096.)
B. Assembly Bill No. 1127
AB 1127, signed into law in October 1999, amended Cal-OSHA in several significant ways, including to substantially expand civil and criminal penalties for willful, serious and repeated violations of Cal-OSHA regulations and safety orders. (Stats.1999, c. 615 (A.B.1127), § 2.) Pertinent *491 here are the amendments to sections 6304.5 and 6400. As amended, section 6304.5, entitled "Applicability of division to proceedings on employee safety; evidence in personal injury and wrongful death actions," provides:
"It is the intent of the Legislature that the provisions of this division, and the occupational safety and health standards and orders promulgated under this code, are applicable to proceedings against employers for the exclusive purpose of maintaining and enforcing employee safety.
"Neither the issuance of, or failure to issue, a citation by the division shall have any application to, nor be considered in, nor be admissible into, evidence in any personal injury or wrongful death action, except as between an employee and his or her own employer. Sections 452 and 669 of the Evidence Code shall apply to this division and to occupational safety and health standards adopted under this division in the same manner as any other statute, ordinance, or regulation. The testimony of employees of the division shall not be admissible as expert opinion or with respect to the application of occupational safety and health standards. It is the intent of the Legislature that the amendments to this section enacted in the 1999-2000 Regular Session shall not abrogate the holding in Brock v. State of California (1978) 81 Cal.App.3d 752, [146 Cal.Rptr. 716]."
Section 6400 is entitled "Safe and healthful employment and place of employment." The Legislature made nonsubstantive changes to section 6400's general statement of the employer's statutory duty of care with respect to a safe workplace: "Every employer shall furnish employment and a place of employment that is safe and healthful for the employees therein." (§ 6400, subd. (a).) The Legislature created new subdivision (b), incorporating almost verbatim a Cal-OSHA regulation designating citable employers at multiemployer worksites. (Cal.Code Regs. tit. 8, § 336.10.[6]) Subdivision (b) of section 6400 provides: "On multiemployer worksites, both construction and non-construction, citations may be issued only to the following categories of employers when the division has evidence that an employee was exposed to a hazard in violation of any requirement enforceable by the division: [¶] (1) The employer whose employees were exposed to the hazard (the exposing employer). [¶] (2) The employer who actually created the hazard (the creating employer), [¶] (3) The employer who was responsible, by contract or through actual practice, for safety and health conditions on the worksite; i.e., the employer who had the authority for ensuring that the hazardous condition is corrected (the controlling employer). [1] (4) The employer who had the *492 responsibility for actually correcting the hazard (the correcting employer). [¶] The employers listed in paragraphs (2) through (4), inclusive, may be cited regardless of whether their own employees were exposed to the hazard." (§ 6400, subd. (b).)
New subsection (c) of section 6400 expresses the Legislature's intent behind this addition: "(c) It is the intent of the Legislature, in adding subdivision (b) to this section, to codify existing regulations with respect to the responsibility of employers at multiemployer worksites. Subdivision (b) of this section is declaratory of existing law and shall not be construed or interpreted as creating a new law or as modifying or changing an existing law." (§ 6400, subd. (c).)
C. Analysis
With this background, we turn to the question at hand: whether section 6304.5 as amended now permits introduction of Cal-OSHA regulations or safety orders in evidence against a third party tortfeasor. Resolution of this issue turns on statutory construction. "Our fundamental task in construing a statute is to ascertain the intent of the lawmakers so as to effectuate the purpose of the statute. [Citation.] We begin by examining the statutory language, giving the words their usual and ordinary meaning. [Citation.] If there is no ambiguity, then we presume the lawmakers meant what they said, and the plain meaning of the language governs. [Citations.] If, however, the statutory terms are ambiguous, then we may resort to extrinsic sources, including the ostensible objects to be achieved and the legislative history. [Citation.] In such circumstances, we `"select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences." [Citation.]' [Citation.]" (Day v. City of Fontana (2001) 25 Cal.4th 268, 272, 105 Cal.Rptr.2d 457, 19 P.3d 1196.)
Section 6403.5 contains two separate unnumbered paragraphs, each having express statements of Legislative intent. In the first, the Legislature manifested its intent that provisions of Division 5 and Cal-OSHA standards and orders be applicable to "proceedings against employers" for the sole purpose of maintaining and enforcing employee safety. Section 6304, directly preceding section 6304.5, defines the term "employer" for purposes of Cal-OSHA and provides it shall have the same meaning as in section 3300. Section 3300 broadly defines "employer" in the workers compensation law to mean: "(a) The State and every State agency, (b) Each county, city, district, and all public and quasi public corporations and public agencies therein, (c) Every person including any public service corporation, which has any natural person in service, (d) The legal representative of any deceased employer." Eisner does not contend Uveges falls under section 6304's definition of employer and, indeed, Uveges' status as general contractor (not Eisner's employer) takes him outside the provision's definition.[7] In view of the *493 Legislature's unambiguous definition of "employer" under section 6304, we are compelled to conclude Eisner's action against Uveges is not a "proceeding against [an] employer[]" within the meaning of the Labor Code and thus, Cal-OSHA standards and orders are generally not "applicable" to the action.
Turning to the second paragraph of section 6304.5, we encounter ambiguity. One might argue that the separate paragraphs of section 6304.5 indicate the Legislature meant to set forth separate evidentiary standards for different proceedingsone (in the first paragraph) for administrative proceedings against employers (i.e., proceedings against employers "for the sole purpose of enforcing employee safety"), and another (in the second paragraph) for personal injury and wrongful death actions. Thus, section 6304.5's second paragraph might be interpreted as a provision limited to personal injury or wrongful death actions, essentially providing that in such actions: (1) neither the issuance of, or failure to issue, a citation by the division shall have any application to, nor be considered in, nor be admissible into, evidence, except as between an employee and his or her own employer; and (2) Evidence Code sections 452 and 669 shall apply [to those actions] in the same manner as any other statute, ordinance, or regulation. As we explain, however, this interpretation would conflict with the Legislature's second expression of intent in that paragraph, namely, that its amendments shall not abrogate the holding of Brock v. State of California, supra, 81 Cal.App.3d 752, 146 Cal.Rptr. 716 (Brock).
Brock arose out of an explosion at a plant resulting in the injury or death of several employees. The plaintiffs filed personal injury actions against certain defendants including the State of California, in part alleging the State had a mandatory, non-delegable duty to inspect the plant to ensure it was a reasonably safe place to work but failed to do so in violation of Labor Code regulations and other Cal-OSHA provisions. (Brock, supra, 81 Cal. App.3d at pp. 755-756, 146 Cal.Rptr. 716.) The State successfully demurred to the complaint on the ground former section 6304.5 prevented reliance on Cal-OSHA provisions as a basis for a personal injury or wrongful death action. (Brock, at pp. 755-756, 146 Cal.Rptr. 716.)
*494 Pointing to former section 6304.5's language and case law limiting the applicability, consideration or admissibility of Cal-OSHA standards and safety orders to actions between an employee and his or her own employer, the Court of Appeal affirmed. It stated: "The fact that the state has a mandatory duty to inspect and to enforce CAL/OSHA provisions is irrelevant to the issue of whether those provisions can be relied upon in a personal injury action against the state when the state is not the employer. It is evident that the purpose of [former] section 6304.5 is to prevent the technical CAL/OSHA safety provisions from enlarging the personal injury liability of third parties beyond basic common law liability." (Brock, supra, 81 Cal.App.3d at p. 757, 146 Cal. Rptr. 716, italics added.) The court reasoned that the Legislature did this because day-to-day operating control over safety conditions rests with the employer alone: "Since third parties, including the state, are not in control of such day-to-day operations, and cannot be (even if hordes of inspectors were to be hired), the Legislature sensibly limited the applicability of the CAL/OSHA safety provisions to actions involving employers alone. [¶] This has nothing to do with sovereign immunity, upon which plaintiffs premise their argument. [Former] section 6304.5 does not undertake by its terms to immunize the state from suits by injured employees based on common law liability (or even based on violations of duty under statutes other than CAL/OSHA). It merely requires that the provisions of CAL/OSHA shall have no `application to, nor be considered in, nor be admissible into, evidence ... `in such suits, or other third party suits." (Brock, at pp. 757-758, 146 Cal. Rptr. 716, italics added.) Because the plaintiffs' allegations against the state were based on CAL/OSHA provisions, the court ruled the demurrers were properly sustained. (Id. at p. 758, 146 Cal.Rptr. 716.)
We read section 6304.5's second paragraph in context with its first paragraph, and to comport with Brock. (Pacific Gas & Electric Co. v. County of Stanislaus (1997) 16 Cal.4th 1143, 1152, 69 Cal. Rptr.2d 329, 947 P.2d 291 [when statutory language is ambiguous, the court may examine the context in which the language appears, adopting the construction that best harmonizes the statute internally and with related statutes]; Moyer v. Workmen's Comp. Appeals Bd. (1973) 10 Cal.3d 222, 230, 110 CalRptr. 144, 514 P.2d 1224 [statutory language must be viewed in context keeping in mind the nature and obvious purpose of the statute where the words appear]; In re Cathey (1961) 55 Cal.2d 679, 689, 12 Cal.Rptr. 762, 361 P.2d 426 [rules of statutory construction will not be utilized to contradict or vary a clear expression of legislative intent].) In so doing, we interpret its references to Evidence Code sections 452 (judicial notice) and 669 (failure to exercise due care) as reflecting an intent that these evidentiary standards govern the introduction into evidence of Cal-OSHA violations in those proceedings in which Cal-OSHA regulations and orders applyproceedings against employers as defined in section 6304. This interpretation is consistent with the Legislature's aim to preserve Brock's holding, under which personal injury liability of parties not having day-to-day control over safety is confined to basic common law liability. Further, since it is in keeping with a long-standing, judicially sanctioned, exception to the general rule permitting evidence of governmental regulations and ordinances to prove negligence, construction of section 6304.5 in this manner cannot lead to an absurd or unintended result.[8]
*495 Eisner contends the Legislature only intended to preserve Brock's "narrow holding"that Cal-OSHA provisions are inadmissible in a suit against the state. He further maintains that had the Legislature intended to bar reference to safety violations by any defendant and not just the state, it would have expressly retained the holdings of the cases relied upon by Brock. We are not persuaded by these arguments for several reasons. First, Brock's language makes plain that the court's holding did not turn on the fact the State was a governmental entity having any particular duty under Cal-OSHA. (Brock, supra, 81 Cal.App.3d at p. 758, 146 Cal.Rptr. 716 ["This has nothing to do with sovereign immunity"].) Rather, its holding turned solely on the fact the State was not the plaintiffs' employer having day-to-day operating control over safety, and under those circumstances, section 6304.5 prevented provisions of Cal-OSHA from being considered or admitted in the plaintiffs' personal injury action. In our view, the decision contains no other rational holding the Legislature could have intended to preserve by its reference to Brock. Second, we will not read from Legislative silence an intent to overturn a substantial line of authority in line with Brock; to the contrary, had the Legislature intended to abrogate decisions such as Spencer v. G.A MacDonald Constr. Co., supra, 63 Cal. App.3d 836, 134 Cal.Rptr. 78, as respondents' urge it did, it would have so stated, as it has in other contexts. (See, e.g. Civ.Code, § 1714, subd. (a).) Third, Elsner's interpretation of the statement of legislative intent to preserve Brock's holding would carve out an exception tending to conflict with the Legislature's concurrent repeal of a provision immunizing the State from civil penalties. (Stats.1999, c. 615 (A.B.1127), § 11, p. 3513.) Until the Legislature rewrote the provision in 1999, former section 6434 provided: "The civil penalties provided for in this chapter shall not be assessed against employers that are governmental entities." Following AB 1127's passage, the State is subject to civil penalties for its safety violations as are other employers and third parties, and nothing in the statute exempts it from the effects of section 6304.5 as long as it is an employer as defined in section 6304.
D. Legislative History does not Compel a Different Result
Our consideration of the relevant legislative history does not change our conclusion. To the contrary, in our view it indicates lawmakers were ultimately persuaded to reject the expansion of civil negligence liability to third party defendants based on an alleged violation of Cal-OSHA regulations.
As originally drafted, Assembly Bill No. 1127 amended section 6304.5 pertaining to admissibility of Cal-OSHA standards and orders to expressly permit such standards and orders (but not evidence of citations or the lack of citations) to be introduced into evidence in any personal injury and wrongful death action. (Assem. Bill. No. 1127 *496 (1999-2000 Reg. Sess.) as introduced Feb. 25, 1999.) In part, the initial version of section 6304.5 read: "Neither the issuance of, or failure to issue, a citation by the division shall have any application to, nor be considered in, nor be admissible into, evidence in any personal injury or wrongful death action except as between an employee and his or her own employer. This division and the occupational safety and health standards and orders promulgated under this code may have application to, be considered in, or be admissible into, evidence in any personal injury or wrongful death action." (Ibid., some italics and strikeouts omitted.) The plain effect of the italicized language, as reflected by an Assembly Bill analysis dated April 14, 1999, was to repeal the law barring admission of Cal-OSHA safety regulations and standards into evidence for purposes of establishing the standard of care. (Assem. Com. on Labor and Employment, Analysis of Assem. Bill No. 1127 (1999-2000 Reg. Sess.) as introduced February 25, 1999, p. 6.)[9]
In August 1999, the Senate deleted the above italicized language and replaced it with the following provision: "Sections 452 and 669 of the Evidence Code shall apply to this division and to occupational safety and health standards adopted under this division in the same manner as any other statute, ordinance, or regulation." (Sen. Amend, to Assem. Bill No. 1127 (1999-2000 Reg. Sess.) August 23, 1999.) Neither the text of the amendment, nor the legislative history provided by the parties, sheds light on the reason for this change.
On September 2, 1999, the Senate added the following language to the amended text of section 6304.5: "The testimony of employees of the division shall not be admissible as expert opinion or with respect to the application of occupational safety and health standards." The next day, the Senate made its final amendment to the bill, adding the statement: "It is the intent of the Legislature that the amendments to this section enacted in the 1999-2000 Regular Session shall not abrogate the holding in Brock v. State of California (1978) 81 Cal.App.3d 752, 146 Cal.Rptr. 716." The Legislative Council's Digest in the chaptered text of the bill gives no guidance as to the impetus for this final addition. Indeed the Legislative Counsel's Digest fails to mention Brock at all.
This sequence of events persuades us the Legislature, ultimately, decided to maintain the prohibition on use of Cal-OSHA safety orders and standards in employees' personal injury cases against third party defendants. We focus on the fact lawmakers once proposed a provision unambiguously stating otherwise, but deleted it when the bill was passed: "`The rejection by the Legislature of a specific provision contained in an act as originally introduced is most persuasive to the conclusion that the act should not be construed to include the omitted provision.'" (Beverly v. Anderson (1999) 76 Cal. App.4th 480, 485-486, 90 Cal.Rptr.2d 545; see also California Mfrs. Assn. v. Public Utilities Com. (1979) 24 Cal.3d 836, 845-846, 157 Cal.Rptr. 676, 598 P.2d 836.) "Similarly, `[t]he fact that the Legislature chose to omit a provision from the final version of a statute which was included in *497 an earlier version constitutes strong evidence that the act as adopted should not be construed to incorporate the original provision.'" (Beverly v. Anderson, at p. 486, 90 Cal.Rptr.2d 545.) Id. Eisner points out that at the same time this provision was deleted, the Legislature inserted other language (the provision as to Evidence Code, sections 459 and 669) stating the same principle in another way. While one could argue under this circumstance the established rule regarding deletion of a provision does not govern (See El Dorado Palm Springs, Ltd. v. City of Palm Springs (2002) 96 Cal.App.4th 1153, 1170, 118 Cal.Rptr.2d 15), we believe the Legislature put any such notion to rest by its later reference to Brock. Further, the final Legislative Council's Digest omitted the statement that the bill repealed the long-standing exception to the rule permitting use of government regulations and ordinances to prove negligence.[10]
Nor does a later opinion by the Legislative Counsel as to the meaning of Assembly Bill No. 1127's amendments change our conclusion. In April 2000, six months after the Governor signed Assembly Bill No. 1127 into law, the Office of Legislative Counsel issued an opinion on the effect of the amendments to sections 6304.5 and 6400. (Ops. Cal. Legis. Counsel, No. 6490 (April 5, 2000) Cal-OSHA: Employer Liability, pp. 1, 4.) Legislative counsel opined (1) as to section 6304.5, the Legislature authorized Cal-OSHA statutory and regulatory standards to be admissible under sections 452 and 669 of the Evidence Code in actions by injured workers against his or her own employer, "including a separate employer at a multiemployer worksite, or against a third-party defendant, where the action is otherwise permitted by law"; and (2) "codif[ied] existing regulatory law governing employer liability at multiemployer worksites, as set forth in Section 336.10 of Title 18 [sic] of the California Code of Regulations." (Id at pp. 4, 8-9.) Relying on California Assn. of Psychology Providers v. Rank (1990) 51 Cal.3d 1, 270 Cal.Rptr. 796, 793 P.2d 2 (California Assn.), Eisner contends this opinion is persuasive evidence of the Legislature's intent; Uveges disagrees, pointing out the opinion is merely an ex post facto interpretation of legislative intent and should not be given weight because, not having been presented to lawmakers during the legislative process, it cannot be viewed as an indication of the Legislature's understanding of the effect of its measure.
We agree with Uveges. In California Assn., supra, 51 Cal.3d at p. 17, 270 Cal. Rptr. 796, 793 P.2d 2, the California Supreme Court noted that opinions of the Attorney General, while not binding, are entitled to great weight, and applied that rule to Legislative Counsel opinions. The court's statement, however, was premised on its understanding that such opinions *498 were prepared while the subject legislation was pending. (Ibid, ["While we have found no cases extending that rule to constructions by the Legislative Counsel, the logic is the same. Indeed the rule is particularly compelling as to opinions of the Legislative Counsel, since they are prepared to assist the Legislature in its consideration of pending legislation"]; see also North Hollywood Project Area v. City of Los Angeles (1998) 61 Cal.App.4th 719, 723, 71 Cal.Rptr.2d 675.) We decline to consider this post hoc material evidence of legislative intent. (E.g., El Dorado Palm Springs, Ltd. v. City of Palm Springs, supra, 96 Cal.App.4th at pp. 1173-1174, 118 Cal.Rptr.2d 15.)
E. Prejudice
Having concluded section 6430.5 only authorizes admission of Cal-OSHA regulations or violations into evidence in proceedings by an employee against his or her own employer and that the court erred in permitting the jury to consider evidence of applicable Cal-OSHA regulations and Uveges's violations, we turn to whether the trial court's error prejudiced Uveges. Uveges contends he was severely prejudiced by the erroneous introduction of this evidence, which resulted in (a) improper instructions advising the jury that violation of the Cal-OSHA standards established a presumption of negligence; (b) an erroneous instruction defining "employer" for purposes of section 6304.5 by reference to section 6400's multiemployer workplace provision; (c) the exclusion of standard of care evidence by his own experts; and (d) counsel's repeated arguments highlighting these issues. He argues these errors combined to deprive him of a fair trial and resulted in a miscarriage of justice. Eisner argues the court's ruling regarding the Cal-OSHA regulations, even if error, caused no prejudice" because (1) the jury's negligence finding rests on substantial evidence of Uveges's negligence unrelated to Cal-OSHA violations; (2) Uveges retained a "defense" to negligence per se liability, namely, that he did what might reasonably be expected of a person of ordinary prudence, acting under similar circumstances, who desired to comply with the law; and (3) Uveges's conduct was in any event subject to Cal-OSHA multiemployer workplace regulations. (Cal.Code Regs, tit. 8, § 336.10.)
In assessing prejudice from these errors, we apply settled rules. In particular, we presume the judgment to be correct. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564, 86 Cal.Rptr. 65, 468 P.2d 193.) Uveges has the burden of affirmatively demonstrating prejudice, that is, that the errors have resulted in a miscarriage of justice. (Cal. Const, art. VI, § 13; Code Civ. Proc. § 475; Cucinella v. Weston Biscuit Co. (1954) 42 Cal.2d 71, 82, 265 P.2d 513; Paterno v. State of California (1999) 74 Cal.App.4th 68, 105, 87 Cal. Rptr.2d 754 [appellant bears the duty of spelling out in his brief exactly how the error caused a miscarriage of justice].) "`[A] "miscarriage of justice" should be declared only when the court, "after an examination of the entire cause, including the evidence," is of the "opinion" that it is reasonably probable that a result more favorable to the appealing party would have been reached in the absence of the error.'" (Seaman's Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d 752, 770, 206 Cal.Rptr. 354, 686 P.2d 1158, overruled in part on other grounds by Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal.4th 85, 102-103, 44 Cal.Rptr.2d 420, 900 P.2d 669 and Delia Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393, fn. 5, 45 Cal. Rptr.2d 436, 902 P.2d 740.)
*499 We first address Eisner's contention that regardless of any possible error in admitting evidence of Cal-OSHA standards and giving negligence per se instructions on those standards, there was in any event substantial evidence on which the jury could conclude Uveges breached his common law duty of due care.[11] He relies on the proposition: "If one count is not affected by error and there is substantial evidence to support a verdict with respect to it, it is immaterial that there may have been errors committed in connection with another count.... [Citations.] One count sustained by sufficient evidence and free from error is all that is required to support a verdict." (Leoni v. Delany (1948) 83 Cal.App.2d 303, 309, 188 P.2d 765; see also Berger v. Southern Pac. Co. (1956) 144 Cal.App.2d 1, 6, 300 P.2d 170; Wells v. Brown (1950) 97 Cal.App.2d 361, 365, 217 P.2d 995.) Eisner po
ints out his expert McDowell testified that the scaffold at issuea single plank spanning 15 feet from one side of a patio area to a roof, anchored in the center with a two-by-four strut nailed to an unstable pile of lumberwas the most "abysmal," substandard installation he had seen in his 40 years of experience; a "widowmaker" in his terms. The expert explained Uveges did not meet his obligation to anchor the center support securely in that the center support was only three and a half inches wide and was used to support a nine-and-a-quarter-inch-wide plank; the center support's base was nailed through a corner with a single nail and did not sit flat upon the truss below; and the center support was set on an unstable pile of lumber. McDowell also noted the plank was attached to the roof with a single nail within three quarters of an inch from the end of the plank, and would have penetrated the plywood "just slightly."
Had the trial court limited its evidentiary rulings to admission of OSHA standards and regulations based on its erroneous interpretation of section 6304.5, we would agree this evidence would be sufficient to uphold the jury's finding of negligence based on Uveges's common law duty of due care. But the court reasoned custom and practice evidence is inadmissible when it contradicts a law or ordinance, namely the Cal-OSHA standards. It therefore excluded any expert testimony offered by Uveges that the scaffold Frey constructed met the standard of care for single family residential construction, or was in keeping with custom and practice for that type of job. Thus, the trial court's error did affect *500 Eisner's case based on Uveges's general duty of due care unrelated to Cal-OSHA standards. In the absence of the trial court's error in interpreting section 6304.5, evidence of custom and practice would be admissible to rebut Eisner's contention that the scaffold construction fell below the standard of care and violated Uveges's duty to provide safe equipment. (See McKown v. Wal-Mart Stores, Inc., supra, 27 Cal.4th at p. 225, 115 Cal. Rptr.2d 868, 38 P.3d 1094 ["when a hirer of an independent contractor, by negligently furnishing unsafe equipment to the contractor, affirmatively contributes to the injury of an employee of the contractor, the hirer should be liable to the employee for the consequences of the hirer's own negligence"]; Mackey v. Campbell Construction Co., supra, 101 Cal.App.3d at pp. 789-790, 162 Cal.Rptr. 64 [court correctly excluded expert testimony based on Cal-OSHA regulations, but properly allowed expert testimony on custom and practice of scaffold assembly in California].) The ruling deprived Uveges of an essential defense against Eisner's claim he breached his common law duty of due care. Because the ruling prevented him from fully presenting his case, it denied him a fair trial. (E.g., Kelly v. New West Fed, Savings (1996) 49 Cal.App.4th 659, 677, 56 Cal.Rptr.2d 803 [effect of granting in limine motions was to prevent plaintiffs from offering evidence to establish their case; this exclusionary error resulted in denial of a fair trial and was reversible per se]; see also Southern Pacific Transportation Co. v. Santa Fe Pacific Pipelines, Inc. (1999) 74 Cal.App.4th 1232, 1246-1248, 88 Cal. Rptr.2d 777 [court's ruling excluding all evidence of a particular valuation method for calculating easement rents based on an erroneous application of contract interpretation principles was prejudicial per se].)
Eisner contends Uveges cannot complain of the court's ruling on appeal because he failed to make the required offer of proof under Evidence Code section 354, providing an appellant show the trial court the "substance, purpose, and relevance of the excluded evidence ...." We reject Eisner's offer of proof contention for two reasons. First, an exception to the general requirement of an offer of proof under Evidence Code section 354 applies here; an offer of proof is not a prerequisite to an argument of improper exclusion of evidence "[w]here ... an entire class of evidence has been declared inadmissible or the trial court has clearly intimated that it will receive no evidence of a particular type or class, or upon a particular issue...." (Lawless v. Calaway (1944) 24 Cal.2d 81, 91, 147 P.2d 604; Castaneda v. Bornstein (1995) 36 Cal. App.4th 1818, 1827, 43 Cal.Rptr.2d 10, overruled on other grounds in Bonds v. Roy (1999) 20 Cal.4th 140, 147-148, 83 Cal.Rptr.2d 289, 973 P.2d 66.) Here, the trial court declared an entire class of evidence inadmissiblenamely, expert opinion on the standard of care or custom and practice in the single family residence construction industry. The excluded testimony, which was relevant to Eisner's claim under general negligence principles, obviously fell within that class. The court's evidentiary ruling was the natural consequence of its previous determination that Cal-OSHA standards were relevant and admissible to prove standard of care; in view of the court's final determination on that issue it would have been futile for Uveges to extend an offer of proof. (Evid. Code, § 354, subd. (b); see, e.g., Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co. (1968) 69 Cal.2d 33, 36, 69 Cal.Rptr. 561, 442 P.2d 641, fn. 1;3 Witkin, Cal. Evidence (4th ed. 2000) Presentation at Trial, § 404, p. 493.)
Second, Evidence Code section 354 was satisfied as to the excluded testimony without a formal offer of proof. Eisner made clear the substance of the expert's testimony *501 in his motion; he sought to prevent the expert, Edward Martinet, from testifying Frey's scaffold met the standard of care for smaller construction jobs and attached a portion of Martinet's deposition testimony in which Martinet set forth his conclusion the temporary scaffold was very common on single family projects and met the standard of care for this industry. Because the record establishes that the substance, purpose, and relevance of the excluded testimony was known to the court (Evid.Code, § 354, subd. (a)), Uveges was not required to make a formal offer of proof to preserve his claim of evidentiary error.
Although we need not address them, we reject Elsner's other arguments pertaining to prejudice. Because Elsner could not assert a theory of negligence per se based on Cal-OSHA regulations under section 6304.5, it is irrelevant that Uveges purportedly could have proved a defense to that claim, namely, that he did what might reasonably be expected of a person of ordinary prudence, acting under similar circumstances, who desired to comply with the law. Elsner asserts: "Uveges presented such evidence through the testimony of Edward Martinet." We disagree with Elsner's characterization of the record. The trial court's evidentiary ruling essentially prevented Martinet from testifying that the scaffold was built in a reasonable manner, i.e., in keeping with scaffolds of the sort used in similar projects. Indeed Martinet's testimony was confined to his opinions that certain Cal-OSHA violations did not cause Elsner's injuries, and the scaffold's construction and the placement of a scrap pile underneath nevertheless complied with Cal-OSHA standards as he interpreted them.
Finally, we reject Elsner's argument that Uveges was not prejudiced because he was in any event subject to Cal-OSHA standards at multiemployer worksites. As we have explained, section 6400 does not subject its defined employers to civil liability in damages; that provision only gives the government the ability to issue citations to those identified employers. It provides no basis for us to conclude Uveges was not prejudiced by the trial court's ruling.
The trial court's interpretation of section 6304.5 naturally resulted in other errors that we need only mention briefly, including in subjecting Uveges to liability under negligence per se principles and defining "employer" not by section 6304's definition, but in terms of section 6400's multiemployer worksite regulations. As we have explained, the codification of multiemployer worksite regulations does not expand civil liability, nor does it give rise to actionable claims for nondelegable duties against third parties based on Cal-OSHA standards; indeed, such claims are prohibited under our interpretation of section 6304.5. If the court's exclusion of Uveges's expert's testimony was not sufficient in itself to establish prejudice, we would conclude based on these additional errors that their cumulative impact requires that we reverse the judgment.
II. State Fund's Appeal
Because we reverse the judgment and remand the matter to the trial court for further proceedings, we need not address State Fund's contention relating to inadequate damages.
DISPOSITION
The judgment is reversed and the matter remanded for further proceedings. Uveges shall recover his costs on appeal.
WE CONCUR: McDONALD, Acting P.J. and McCONNELL, J.
NOTES
[1] All statutory references are to the Labor Code unless otherwise specified.
[2] By the term "third party action," we refer to an action for work-related personal injuries by an employee against a defendant that is not the employee's own employer, often referred to as a third party tortfeasor. (See Draper v. Aceto (2001) 26 Cal.4th 1086, 1088, 113 Cal.Rptr.2d 61, 33 P.3d 479.)
[3] The special instructions based on sections 6400, 6401 and 6403 respectively, provided:
"Every employer shall furnish employment and a place of employment ... that is safe and healthful for the employees therein ..."
"Every employer shall furnish and use safety devices and safeguards, and shall adopt and use practices, means, methods, operations, and processes which are reasonably adequate to render such employment and place of employment safe and healthful. Every employer shall do every other thing reasonably necessary to protect the life, safety, and health of employees."
"No employer shall fail or neglect to do any of the following: [¶] (a) To provide and use safety devices and safeguards reasonably adequate to render the employment and place of employment safe. [¶] (B) To adopt and use methods and processes reasonably adequate to render the employment and place of employment safe. [¶] (c) To do every other thing reasonably necessary to protect the life, safety, and health of employees."
[4] That special instruction provided: "On multiemployer worksites, employers as used in Labor Code sections 6400, 6401 and 6403 include the following: [¶] (1) The employer whose employees were exposed to the hazard. [¶] (2) The employer who actually created the hazard. [¶] (3) The employer who was responsible, by contract or through actual practice, for safety and health conditions on the worksite, which is the employer who had the authority for ensuring that the hazardous condition is corrected. [¶] (4) The employer who had the responsibility for actually correcting the hazard."
[5] As Eisner points out, before the 1971 enactment of former section 6304.5, courts held under various factual scenarios that Labor Code safety provisions and orders were admissible for purposes of proving liability under a negligence per se theory. (See Armenta v. Churchill (1954) 42 Cal.2d 448, 455, 267 P.2d 303 [trial court erred in prohibiting introduction of construction safety order against defendant who backed up his truck over another worker at a jobsite; order established a minimum standard of care in the safe operation of the truck and its violation would constitute negligence per se]; Porter v. Montgomery Ward & Co., Inc. (1957) 48 Cal.2d 846, 847-849, 313 P.2d 854 [Labor Code industrial safety orders can be received in evidence to establish negligence liability by not only employees, but by general members of the public who are entitled to the benefit of the safety order]; De Cruz v. Reid (1968) 69 Cal.2d 217, 229-232, 70 Cal.Rptr. 550, 444 P.2d 342 [general industry safety order pertaining to transportation of employees on flatbed trucks was appropriately considered by the jury in determining whether it gave rise to a presumption of negligence; evidence established defendant fell within the Labor Code definition of "employer" as one having control over the place of employment [former section 6304] and that the truck therefore was transporting an "employee" for purposes of applying the safety order]; see also Solgaard v. Guy F. Atkinson Co. (1971) 6 Cal.3d 361, 366-367, 99 Cal. Rptr. 29, 491 P.2d 821 [in a case against a building contractor by a doctor injured while attempting to treat employees trapped on a worksite, trial court properly gave instructions on Labor Code provisions and safety order requiring an employer to furnish a safe means for workmen to enter and leave an evacuated area].)
[6] Adopted by the Director of Industrial Relations in December 1997, section 336.10 of the California Code of Regulations, entitled "Determination of Citable Employer," provides: "On multiemployer worksites, both construction and non-construction, citations may be issued only to the following categories of employers when the Division has evidence that an employee was exposed to a hazard in violation of any requirement enforceable by the Division: [¶] (a) The employer whose employees were exposed to the hazard (the exposing employer); [¶] (b) The employer who actually created the hazard (the creating employer); [¶] (c) The employer who was responsible, by contract or through actual practice, for safety and health conditions on the worksite; i.e., the employer who had the authority for ensuring that the hazardous condition is corrected (the controlling employer); or [¶] (d) The employer who had the responsibility for actually correcting the hazard (the correcting employer). [¶] Note: The employers listed in subsections (b) through (d) may be cited regardless of whether their own employees were exposed to the hazard." (Cal. Code Regs., tit. 8, § 336.10.)
[7] Indeed, the Legislature expressly eliminated entities such as general contractors who exercise control over subcontractors' employees from that definition. This court has observed that "[b]efore 1971, Labor Code section 6304 provided: `"Employer" shall have the same meaning as in section 3300 and shall include every person having direction, management, control or custody of any employment, place of employment, or any employee.' (Italics added.) However, a 1971 amendment of the statute deleted the italicized language." (Lopez v. University Partners (1997) 54 Cal.App.4th 1117, 1126, fn. 4, 63 Cal.Rptr.2d 359, citing Historical Note, 45 West's Ann. Lab.Code (1989 ed.) § 6304, p. 251 & Spencer v. G.A. MacDonald Constr. Co., supra, 63 Cal.App.3d at pp. 847, fn. 5, 848, fn. 7, 134 Cal.Rptr. 78; see also Smith v. ACandS, Inc., supra, 31 Cal.App.4th at p. 90, 37 Cal.Rptr.2d 457, disapproved on another ground in Camargo v. Tjaarda Dairy, supra, 25 Cal.4th at p. 1245, 108 Cal.Rptr.2d 617, 25 P.3d 1096.) In De Cruz v. Reid, supra, 69 Cal.2d at p. 228, 70 Cal.Rptr. 550, 444 P.2d 342, the court addressed the pre-1971 Labor Code definition of "Employer," and other terms, stating: "These sections which are found in division 5 of the Labor Code dealing with `Safety in Employment' were originally enacted `as part of a broad legislative program .. . designed to improve the position of the working man. The legislative program was two-pronged; it sought increased safety on the job by imposing duties that were greater than those prescribed by the common law [citations], and, if injury occurred, it sought mitigation of hardship by a system of loss-shifting that was largely unknown under the common law. [Citation.]' [Citation.] In line with this objective the definition in section 6304 is obviously intended to enlarge the meaning of `employer' beyond its usual meaning. . . .' [Citation.]" (Italics added.) Under the pre 1971 expanded definition of employer, courts recognized an employer-employee relationship between the person injured and the owner of a place of employment was not essential for application of the Labor Code. (Markley v. Beagle (1967) 66 Cal.2d 951, 956, 59 Cal.Rptr. 809, 429 P.2d 129; Kuntz v. Del E. Webb Constr. Co. (1961) 57 Cal.2d 100, 106, 18 Cal.Rptr. 527, 368 P.2d 127; Porter v. Montgomery Ward & Co., supra, 48 Cal.2d at pp. 847-849, 313 P.2d 854.)
[8] Indeed, interpreting the statute as Eisner proposes would result in the following disparity: In an employee's personal injury action against his or her own employer, the employee would be permitted to introduce evidence of the employer's violations of Cal-OSHA regulations to establish a presumption of that employer's negligence. The employer in that circumstance could attempt to rebut the presumption by introducing evidence that the Cal-OSHA inspector in fact did not issue a citation. A third party defendant, on the other hand, faced with an employee's claim it violated the same Cal-OSHA standards, would be prohibited from rebutting the presumption with evidence the inspector failed to cite it for any violation. We fail to see any compelling reason for this disparate treatment, and we believe it is further evidence that the Legislature did not intend such an inequitable result.
[9] This Analysis, prepared when the bill was in its original form, explains: "Under current law, government regulatory standards are generally admissible into evidence in negligence and wrongful death actions. They are typically used in such cases to establish a standard of care. In 1971, the Legislature barred the admission into evidence of occupational health and safety standards, and thereby created an exception to the general rule. This bill repeals that exception." (Assem. Com. on Labor and Employment, Analysis of Assem. Bill No. 1127 (1999-2000 Reg. Sess.) as introduced February 25, 1999, p. 6.)
[10] The Legislative Counsel's Digest to the chaptered bill simply states: "Existing law provides that the provisions of the California Occupational Safety and Health Act of 1973 (hereafter the act) have no application to, may not be considered in, and may not be admitted into, evidence in any personal injury or wrongful death action arising after January 1, 1972, except as between an employee and his or her employer, [¶] This bill instead would provide that neither the issuance of, or failure to issue, a citation by the Division of Occupational Safety and Health (hereafter the division) has any application to, nor may be considered in, nor may be admitted into, evidence in any personal injury or wrongful death action, except as between an employee and his or her employer. The bill also would provide that Sections 452 and 669 of the Evidence Code would apply to the act and the occupational safety and health standards and orders promulgated under the Labor Code in the same manner as any other statute, ordinance, or regulation." (Legis. Counsel's Dig., Assem. Bill No. 1127 (1999-2000 Reg. Sess.).)
[11] There is no question that Uveges's own employee, Frey, caused the allegedly hazardous condition. Consequently, this is not a situation where Eisner seeks to impute negligence to Uveges; that is, hold him vicariously or derivatively responsible for the negligence of another. It appears Eisner did not proceed on his theory of peculiar risk. Thus we do not delve into considerations raised by Privette v. Superior Court, supra, 5 Cal.4th 689, 21 Cal.Rptr.2d 72, 854 P.2d 721 (failure to take precautions against peculiar risks), 7bland v. Sunland Housing Group, Inc. (1998) 18 Cal.4th 253, 74 Cal.Rptr.2d 878, 955 P.2d 504 (negligent hiring), and Camargo v. Tjaarda Dairy, supra, 25 Cal.4th 1235, 108 Cal. Rptr.2d 617, 25 P. 3d 1096 (same). Because this case involves Uveges's own fault in creating the alleged dangerous scaffolding, Eisner was free to establish so-called "direct" liability under standard common law negligence principles, including by applying the general contractor's duty to provide safe equipment when it undertakes to do so or to avoid affirmatively contributing to an employee's injuries by its retained control over safety conditions at a worksite. (Hooker v. Dept. of Transportation (2002) 27 Cal.4th 198, 202, 115 Cal.Rptr.2d 853, 38 P.3d 1081; McKown v. Wal-Mart Stores, Inc. (2002) 27 Cal.4th 219, 225, 115 Cal.Rptr.2d 868, 38 P.3d 1094; McDonald v. Shell Oil Co. (1955) 44 Cal.2d 785, 788-789, 285 P.2d 902; see Ray v. Silverado Constructors (2002) 98 Cal.App.4th 1120,1128, 120 Cal.Rptr.2d 251.) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1370/ | 601 F.3d 763 (2010)
Thomas H. HOLMAN, Jr.; Kim D.L. Holman, Donors, Appellants,
v.
COMMISSIONER OF INTERNAL REVENUE, Appellee.
No. 08-3774.
United States Court of Appeals, Eighth Circuit.
Submitted: September 22, 2009.
Filed: April 7, 2010.
*764 John William Porter, argued, (Stephanie Loomis-Price, on the brief), Houston, TX, on the brief, for appellant.
*765 Anthony T. Sheehan, argued, (Jonathan S. Cohen, on the brief), Washington, DC, for appellee.
Before MELLOY, BEAM, and GRUENDER, Circuit Judges.
MELLOY, Circuit Judge.
Thomas H. Holman, Jr. and Kim D.L. Holman (the "donors") created a limited partnership, funded it with common stock of Dell, Inc., and gifted limited partnership shares to their children. In a gift-tax return, the donors asserted lack-of-marketability and minority-interest discounts to claim a value for the gifts substantially below the value of the underlying Dell stock. In doing so, the donors relied in part on transfer restrictions contained in the partnership agreement, asserting that the transfer restrictions would depress the value of the partnership shares relative to the value of the underlying assets.
The Commissioner challenged the return, characterizing the gifts as gifts of Dell stock rather than gifts of limited partnership shares. In addition, the Commissioner applied Internal Revenue Code § 2703 and disregarded the partnership agreement's transfer restrictions for valuation purposes. Finally, the Commissioner agreed that lack-of-marketability and minority-interest discounts should apply but asserted that the discounts should be smaller than claimed by the donors.
The Tax Court[1] held that the gifts were gifts of limited partnership shares. The Tax Court also held that the Commissioner correctly applied I.R.C. § 2703 and properly disregarded the partnership agreement's transfer restrictions. Finally, the Tax Court applied smaller lack-of-marketability and minority-interest discounts than claimed by the donors.
In doing so, the Tax Court adopted the lack-of-marketability discount as asserted by the Commissioner's expert based on historical studies of restricted stock sales. The Tax Court noted that the partnership held only highly liquid, easily valued assets and that the agreement contained a consensual dissolution provision and granted broad management discretion to the general partners. According to the Tax Court, because economically rational actors would take advantage of the dissolution provision to dissolve and reconstitute the partnership or otherwise buy out a departing partner, there was a natural cap on any lack-of-marketability discount.
On appeal to our court, the Commissioner does not challenge the determination that the gifts were gifts of partnership shares. The donors challenge the Tax Court's application of I.R.C. § 2703, its determination of marketability and minority-interest discounts, and its overall valuation determination. We affirm the judgment of the Tax Court.
I. Background
The donors amassed wealth primarily in the form of Dell stock during Thomas's tenure as a Dell employee. They sought to transfer wealth to their children, preserve wealth within their family, and prevent their children from dissipating assets. At the same time, they sought to teach their children basic investing principles and impart to their children a general understanding of responsibility attendant to wealth. As part of an overall estate-planning process seeking to achieve these goals, Thomas and Kim met with counsel and developed an estate and gifting plan that involved execution of wills, creation of the limited partnership, transfer of Dell stock into the limited partnership, and transfer of limited partnership shares to a trustee and conservator for the children. The children, who already owned some *766 Dell stock through the trustee and conservator or in accounts under different states' versions of the Uniform Transfers to Minors Act, transferred their Dell stock into the partnership in exchange for additional partnership shares.
Several provisions of the partnership agreement are material to the issues in this appeal. Section 3.1 lists the purposes of the partnership:
3.1 Purposes. The purposes of the Partnership are to make a profit, increase wealth, and provide a means for the Family to gain knowledge of, manage, and preserve Family Assets. The Partnership is intended to accomplish the following:
(1) maintain control of Family Assets;
(2) consolidate fractional interests in Family Assets and realize the efficiencies of coordinated investment management;
(3) increase Family wealth;
(4) establish a method by which gifts can be made without fractionalizing Family Assets;
(5) continue the ownership of Family Assets and restrict the right of non-Family persons to acquire interests in Family Assets;
(6) provide protection to Family Assets from claims of future creditors against Family members;
(7) provide flexibility in business planning not available through trusts, corporations, or other business entities;
(8) facilitate the administration and reduce the cost associated with the disability or probate of the estates of Family members; and
(9) promote the Family's knowledge of and communication about Family Assets.
Section 6.1 grants the general partners "exclusive management and control of the business of the Partnership" including "the power and authority ... to determine the investments and investment strategy of the Partnership." Sections 8.4 and 9.1 provide that limited partners may not withdraw from the partnership or involuntarily or voluntarily assign or encumber their limited partnership interests except as permitted by the agreement. Section 9.2 describes various permitted assignments such as assignments to family members or assignments to trusts or to certain custodians where such trusts or custodians hold the partnership interests exclusively for the benefit of family members. Section 9.3, which we address in more detail below, describes conditions under which the partnership may acquire partnership interests that are lawfully assigned in a manner prohibited by the agreement. Finally, section 12.1 provides that the partnership may be dissolved by the written consent of all partners.
Section 9.3 provides that the partnership has an option to purchase at an appraised value any partnership interest assigned in a manner that is prohibited by the agreement but that is otherwise lawful. Specifically, section 9.3 provides that the partnership may purchase such an interest over a five-year period at a determined interest rate with a ten-percent down payment. Further, the partnership may assign the right to acquire such an interest to one or more current partners. Finally, the partners may consent to let the prohibited assignee become a limited partner. If the partners refuse such consent and elect not to exercise the right to acquire the assigned shares, the otherwise impermissible holder of the assigned shares does not gain the rights of a limited partner. Rather, such a holder gains merely the limited right to receive distributions to which the assignor-partner would have been entitled.
The gifts of partnership shares occurred in 1999, 2000, and 2001. In gift tax returns for these years, the donors claimed *767 overall discounts of slightly over 49% relative to then-prevailing market prices for the underlying Dell stock. These discounts were based on appraisal recommendations that considered minority status and lack of marketability. These discounts also took into consideration the perceived impact of sections 8.4 and 9.1-9.3 upon the value of limited-partnership shares. In notices of deficiency, the Commissioner initially asserted that it would be proper to allow an overall discount of 28% for minority status and lack of marketability. The Commissioner based this lower discount on the view that the partnership units "should be valued without regard to any restriction on the right to sell or use the partnership interest within the meaning of [I.R.C. § 2703(a)(2)]."
Ultimately, when the case progressed before the Tax Court, the Commissioner employed an appraiser and argued that an even smaller discount should apply. The donors also employed an appraiser, and the appraisers' methods were detailed and require some discussion. We describe their methods and their detailed opinions below in the section of our analysis addressing the valuation.
In testimony before the Tax Court, the donors described their purposes for creating and funding the partnership, gifting shares to their children, and including transfer restrictions in the partnership agreement. Neither donor claimed an intent to maintain Dell stock as the sole asset of the partnership nor described any particular investment strategy they intended to employ, other than a future intent to diversify the portfolio's holdings. Neither donor claimed an intent to hold anything other than passive investments in the partnership nor described any business activity related to the partnership. Between formation of the partnership and the submission of the case, the partnership held only Dell stock. The total amount of stock the partnership held represented approximately 0.28 % of the outstanding stock of Dell, and the parties agree that the broader market could easily absorb this amount.
Mr. Holman testified as to the goal of asset preservation, and the Tax Court interpreted this to mean protection of assets from dissipation by the children. Mr. Holman explained his understanding of sections 9.1-9.3 and how these sections would preclude the children from assigning or giving away their interests. Mrs. Holman testified that the purpose of the partnership was "to be able to teach ... [the] children about wealth and the responsibility of that wealth."
In light of the purposes stated in section 3.1 of the Agreement, and in light of the donors' testimony, the Tax Court concluded:
We believe that paragraphs 9.1 through 9.3 were designed principally to discourage dissipation by the children of the wealth that Tom and Kim had transferred to them by way of the gifts. The meaning of the term "bona fide business arrangement" in section 2703(b)(1) is not self apparent. As discussed supra, in Estate of Amlie v. C.I.R., [91 T.C.M. (CCH) 1017, 2006 WL 995337], we interpreted the term "bona fide business arrangement" to encompass value-fixing arrangements made by a conservator seeking to exercise prudent management of his ward's minority stock investment in a bank consistent with his fiduciary obligations to the ward and to provide for the expected liquidity needs of her estate. Those are not the purposes of paragraphs 9.1 through 9.3. There was no closely held business here to protect, nor are the reasons set forth in the Committee on Finance report as justifying buy-sell agreements consistent with petitioners' goals of educating their children as to wealth management and *768 "disincentivizing" them from getting rid of Dell shares, spending the wealth represented by the Dell shares, or feeling entitled to the Dell shares.
We find that paragraphs 9.1 through 9.3 do not serve bona fide business purposes. Those paragraphs do not constitute a bona fide business arrangement within the meaning of section 2703(b)(1).
Holman v. C.I.R., 130 T.C. 170, 195, 2008 WL 2189089 (2008).
The Tax Court also concluded that the restrictions were merely a testamentary device such that the donors failed to satisfy § 2703(b)(2). The Tax Court did not reach the arms-length transaction test of § 2703(b)(3). Having determined that the transfer restrictions of sections 9.1-9.3 were to be disregarded for valuation purposes, the Tax Court assessed the remaining aspects of the competing experts' valuation opinions. The Tax Court accepted lack-of-marketability discounts of 12.5% for each tax year and minority-interest discounts of 4.63-14.34%, all as asserted by the Commissioner's expert. The donors appeal.
II. Discussion
a. I.R.C. § 2703
Restrictions on the sale or use of property generally tend to depress the value of the property. Oftentimes, such restrictions serve legitimate business purposes, impose actual and meaningful limitations on the use or transferability of property, and are accepted by parties dealing with one another in arms-length transactions. When carefully crafted and applied in certain circumstances, however, such restrictions can minimize the tax consequences of gifts or transfers without imposing substantial additional limitations on the transferability or use of the property. This is particularly true in the context of family transfers where a donor may hold some degree of practical control over a recipient's actions, even in the absence of formal restrictions, and where transactions often do not occur at arms length. In this context and in others, Congress has expressed concern over the abusive use of such restrictions. See, e.g., Explanatory Material Concerning Committee on Finance 1990 Reconciliation Submission Pursuant to House Concurrent Resolution 310, 136 Cong. Rec. S 15629-04, S15681 (1990) ("Finance Committee Report") ("[T]he committee is aware of the potential of buy-sell agreements for distorting transfer tax value. Therefore, the committee establishes rules that attempt to distinguish between agreements designed to avoid estate taxes and those with legitimate business agreements. These rules generally disregard a buy-sell agreement that would not have been entered into by unrelated parties acting at arm's length.").
In attempting to sort between permissible and impermissible uses of such restrictions, Congress repealed an earlier Code provision, I.R.C. § 2036(c) (1987) because "the committee [was] concerned that the statute's complexity, breadth, and vagueness posed an unreasonable impediment to the transfer of family businesses." Finance Committee Report, 136 Cong. Rec. S15680. In 1990, Congress enacted in its place a statute that broadly prohibits consideration of restrictions for valuation purposes, see I.R.C. § 2703(a), but allows taxpayers to prove eligibility for an exception that permits valuation based on such restrictions, see I.R.C. § 2703(b).
To be eligible for the exception and gain the benefit of having such restrictions considered for valuation purposes, the taxpayer must satisfy a three-part test: the restriction must be "a bona fide business arrangement," it must not be "a device to transfer such property to members of the decedent's family for less than full and adequate consideration," and its terms *769 must be "comparable to similar arrangements entered into by persons in an arms' length transaction."[2] Because we conclude that the Tax Court correctly held the present restrictions are not "a bona fide business arrangement" in accordance with § 2703(b)(1), we address only that first part of the test.
The ultimate question of whether there was a bona fide business arrangement is a question of fact to be reviewed for clear error. See Estate of True v. Comm'r, 390 F.3d 1210, 1218-19 (10th Cir. 2004) (holding that the question of whether an "agreement was entered into for bona fide business reasons and is not a testamentary substitute" is a question of fact reviewed for clear error); cf. St. Louis County Bank v. United States, 674 F.2d 1207, 1210-11 (8th Cir.1982) (affirming a finding that stock-purchase agreement "had a bona fide business purpose" but finding an outstanding question of fact as to whether it was merely a testamentary transfer).
As noted, the Tax Court in the present case viewed the restrictions as failing the "bona fide business arrangement" test. The Tax Court emphasized Mr. Holman's testimony in which he failed to identify any current or planned activity by the partnership other than holding passive investments without a clearly articulated investment strategy. In addition, he made clear that asset preservation meant preservation from dissipation by the children, not the pursuit of any particular investment strategy. Mrs. Holman emphasized the personal goals of educating the children as to financial responsibility.
In support of the opposite conclusion, the donors cite several Tax Court cases addressing the business-purpose element of § 2703(b)(1) or similar clauses in other provisions of the Tax Code. The donors argue the Tax Court in the present case applied an overly restrictive definition for the phrase "business arrangement" and effectively imposed an "operating business nexus" or requirement that the underlying partnership be an actively managed enterprise. The donors also argue that the "business arrangement" test should be applied looking solely at the taxpayer's stated intentions and at the language of the restrictions in the partnership agreement without considering the actual context of this case and the nature of the underlying assets. The donors sum up their position in their brief, asserting that "the nature of the assets of the Partnership is irrelevant for purposes of determining whether the restrictions in paragraphs 9.1 and 9.3 constitute a bona fide business arrangement. There is no dispute that the Partnership was an enterprise with the business purpose of generating profits through long-term growth."
We agree with the Tax Court's conclusion and reject the donor's attempt to characterize the Tax Court's opinion as creating an "operating business nexus." *770 In answering the question of whether a restriction constitutes a bona fide business arrangement, context matters. Here that context shows that the Tax Court correctly assessed the personal and testamentary nature of the transfer restrictions. Simply put, in the present case, there was and is no "business," active or otherwise. The donors have not presented any argument or asserted any facts to distinguish their situation from the use of a similar partnership structure to hold a passbook savings account, an interest-bearing checking account, government bonds, or cash. We and other courts have held that "maintenance of family ownership and control of [a] business" may be a bona fide business purpose. St. Louis County Bank, 674 F.2d at 1207; see also Estate of Bischoff v. Comm'r, 69 T.C. 32, 39-40, 1977 WL 3667 (1977). We have not so held, however, in the absence of a business.[3]
That is not to say we necessarily believe it will always be easy to apply § 2703(b)(1) or that investment-related activities cannot satisfy the subsection (b)(1) test. When the restrictions at issue, however, apply to a partnership that holds only an insignificant fraction of stock in a highly liquid and easily valued company with no stated intention to retain that stock or invest according to any particular strategy, we do not view this determination as difficult. See, e.g., Higgins v. Comm'r, 312 U.S. 212, 217-18, 61 S.Ct. 475, 85 L.Ed. 783 (1941) (holding in another context that merely keeping records and collecting interest and dividends did not amount to "carrying on a business"); Estate of Thompson v. Comm'r, 382 F.3d 367, 380 (3d Cir.2004) ("Other than favorable estate tax treatment resulting from the change in form, it is difficult to see what benefit could be derived from holding an untraded portfolio of securities in this family limited partnership with no ongoing business operations.").
One case the donors cite in support of their position is Estate of Amlie v. C.I.R., 91 T.C.M. (CCH) 1017, 2006 WL 995337 (2006). There, the Tax Court found that a buysell agreement was a bona-fide business arrangement where a fiduciary had entered into the agreement to ensure the ability to sell stock that represented an otherwise illiquid minority interest in a closely held bank. Id. at *12. The Tax Court viewed this purpose as patently business oriented and likely necessary to ensure that the fiduciary could fulfill his duty of protecting the beneficiary by ensuring the ability to sell the underlying assets. Id.
Here, in contrast, the donors did not enhance the liquidity of an otherwise illiquid asset through their actions nor do they claim their actions were necessary as a matter of business necessity to ensure a market for the assets. The underlying Dell stock is widely held, easily valued, and highly liquid. The donors placed it into the partnership thereby burdening it with illiquidity as part of an overall estate and *771 gift planning process. As such the donor's reliance on Amlie is misplaced.
In Estate of Bischoff v. Comm'r, 69 T.C. 32, 1977 WL 3667 (1977), the question was whether the price contained in a buy-sell agreement regarding limited-partnership shares was controlling for valuation purposes. In that case, the Tax Court stated, "the cases have held that the maintenance of family ownership and control constituted a legitimate business consideration." Id. at 39-40. The underlying asset in Bischoff was "a pork processing business organized, controlled, and managed by three families" who sought "to assure their continuing ability to carry on their pork processing business without outside interference, including that of a dissident limited partner." Id. at 40. In Bischoff then, there was a perceived risk of an outsider interfering with management.
There is no similarity between the facts of Bischoff and the present case because limited partners in the Holman partnership held little-to-no ability to interfere with asset management. Further, the donors have made no allegation that they, as the general partners, are skilled or savvy investment managers whose expertise is needed or whose investment philosophy needs to be conserved or protected from interference as might justify placement of stock assets into the partnership. Finally, the assets of the partnershippassively held Dell stockare not assets with which an outsider or dissident owner might interfere. In the quantities held by the partnership, the value of the underlying assets are largely unaffected by the individual actions of the general partners or other owners of relatively insignificant fractions of outstanding stock (unlike the actions of potentially dissenting co-owners of a pork-processing enterprise).
Arguably, the strongest cases for the donors are a line of cases involving investment entities with restrictions imposed to ensure perpetuation of an investment model or strategy. See Estate of Black v. Comm'r, 133 T.C. 15, 2009 WL 4796690 (2009); Estate of Murphy v. United States, No. 07-CV-1013, 2009 WL 3366099 (W.D.Ark. Oct. 2, 2009); Estate of Schutt v. Comm'r, 89 T.C.M. (CCH) 1353 (2005). The donors cite Schutt for the proposition that relatively inactive investment trusts or shells involving restricted rights may nevertheless involve legitimate business purposes and gain favored tax treatment. In making this point, the donors again attempt to portray the present Tax Court opinion as imposing an "operating business nexus" arguably contrary to Schutt. These cases, however, are more nuanced than the donors assert, and each involves unique facts not present in our case.[4]
In Schutt, the Tax Court addressed a different code section, but one of the underlying questions at issue was similar: whether the transfer of publicly traded stock into a business trust was a bona fide sale for full and adequate consideration. Id. at *18 (discussing the "bona fide sale" exception to 26 U.S.C. § 2036(a)). Under relevant Third Circuit authority, the Tax Court viewed this requirement as having a good faith element and also a "legitimate business purpose" element. Id. at * 19-20 (applying Estate of Thompson, 382 F.3d at 383). Regarding the legitimate business purpose, the Tax Court ultimately concluded that the maintenance and perpetuation of a specific buy-and-hold investment strategy was, in that case, a legitimate *772 business purpose. Id. at *25. The court based its decision on an express factual finding that the transferor's primary objective was to preserve his very specific investment strategy. Id. In so holding, however, the Tax Court appeared to recognize that it was approaching an outside limit as to the meaning of legitimate business purpose and noted the "unique circumstances of this case." Id. In fact, the court noted the general position that "the mere holding of an untraded portfolio of marketable securities weighs negatively in the assessment of potential nontax benefits." Id.
The facts of Schutt did not end up being as unique as suggested, and the Tax Court and a district court subsequently reached similar results in Murphy and Black. In Estate of Erickson v. Comm'r, 93 T.C.M. (CCH) 1175 (2007), however, the Tax Court distinguished Schutt, effectively illustrating an important difference between cases like Schutt and the present case:
We have found a significant nontax purpose where the justification for the transaction was the decedent's personal views and concerns regarding the operation of an income-producing activity and not a business exigency. There is no significant nontax purpose, however, where a family limited partnership is just a vehicle for changing the form of the investment in the assets, a mere asset container.
Id. at *10 (internal citations omitted).
Here, as in Erickson, the family partnership is "a mere asset container." Id. The donors do not purport to hold any particular investment philosophy or possess any particular investing insight. The present partnership agreement does not require that the general partners retain the Dell stock held by the partnership and the donors apparently intend to diversify their investments, although they have articulated no time frame or strategy for doing so. The donors admit that holding Dell stock as the exclusive asset of the limited partnership is not part of an overall, long-term plan. Here, then, unlike Schutt, the family membership, educational, and tax-reduction purposes overshadow any claim of a business purpose for the restrictions.
If anything, the important rule that we believe may be taken from Schutt and cases like it is that context matters such that it is appropriate to defer to the reasoned judgment and fact-finding ability of the Tax Court. In this regard, we note that in St. Louis County Bank, our case that set forth two of the three steps that Congress subsequently adopted in § 2703(b), we clearly emphasized the importance of context in this factually intense inquiry. We emphasized that the transaction at issue had taken place in the context of a donor who was facing a present heart condition and had a history of heart conditions suggesting a predominately testamentary motive to the transactions. St. Louis County Bank, 674 F.2d at 1210. In the present case, looking at the entirety of the surrounding transactionsincluding the contemporaneous execution of wills, Mr. Holman's understanding of the potential tax benefits of his actions, Mrs. Holman's educational goals, and the absence of any business activitywe find ample support for the Tax Court's determination. When viewed in this context, there is little doubt that the restrictions included in the Holmans' limited partnership agreement were not a bona fide business arrangement, but rather, were predominately for purposes of estate planning, tax reduction, wealth transference, protection against dissipation by the children, and education for the children.[5]
*773 b. Valuation
In the Tax Court, the parties disagreed as to the value of the underlying Dell stock on the dates of the gifts as well as the appropriate marketability and minority-interest (lack-of-control) discounts. On appeal, aside from the § 2703 issue, the donors challenge only the Tax Court's determination of a marketability discount. The determination of an appropriate discount is a question of fact that we review for clear error. Estate of Ford v. Comm'r, 53 F.3d 924, 926-27 (8th Cir.1995).
The donor's expert, Mr. Ingham, and the Commissioner's expert, Mr. Burns, employed methodologies that were similar in part. They looked to studies comparing the private sales of restricted, unregistered stock in public companies with contemporaneous, unrestricted sales of registered stock in those same companies. According to the experts, although these studies were not perfect analogs for sales of partnership interests, they did serve as examples providing insight as to price discrepancies between freely transferable stock in publicly traded companies and less marketable versions of the same stock, thereby illustrating pricing discounts that could be attributed to the absence of ready market.
The Tax Court agreed with the experts that the studies were useful, and we also agree. In general, Securities and Exchange Commission (SEC) rules limit owners' ability to sell unregistered stock in public companies other than (1) sales to institutional buyers, or (2) sales subject to certain holding periods. Rule 144, adopted in 1972, imposed a two-year holding period on the resale of restricted stock. 17 C.F.R. § 230.144 (1972); 37 Fed.Reg. 591 (Jan. 14, 1972). Rule 144A, adopted in 1990, permits qualified institutional buyers to buy and sell unregistered, restricted stock. 17 C.F.R. § 230.144A (1990); 55 Fed.Reg. 17933-01 (April 30, 1990). In 1997, the SEC amended Rule 144 to reduce the holding period from two years to one year. 17 C.F.R. § 230.144 (1997); 62 Fed.Reg. 9242-01 (Feb. 28, 1997).
The experts' opinions in the present case differed in the degree of detail with which they discussed these evolving rules and the general inferences about marketability discounts that might be drawn from sales throughout the years that these rules were in effect. Mr. Ingham studied a sample of transactions with median and mean discounts of 24.8% and 27.4%, respectively. He then concluded, without additional quantitative explanation, that qualitative differences between the restricted-stock studies and the present, limited partnership situation justified a marketability discount of 35%. Mr. Burns criticized this upward adjustment as speculative and unsupported. The Tax Court agreed with Mr. Burns and rejected Mr. Ingham's conclusion, noting that it "need not rely on the *774 unsupported assumption of an expert witness."
Mr. Burns examined restricted-stock sales with greater detail. He looked at sales during separate windows of time corresponding to the SEC's adoption of its different regulations. Mr. Burns explained that marketability discounts as per the studies included holding-period components and liquidity components.[6] He observed that for sales of restricted stock between 1972 and 1990, when there was a two-year holding period and no institutional-buyer market, the sale price for restricted shares was, on average 34% lower than sales of corresponding unrestricted shares. He then noted that between 1990 and 1997, when a limited market was created among institutional buyers, the average price difference between restricted stock and corresponding non-restricted stock was 22%. He opined that the 12% difference in these two periods of time was reflective of the fact that buyers demanded a 12% discount to account for the lack of a secondary market. He concluded that the remaining portion of the discounts observed in the studies were due to holding-period restrictions not applicable in the context of the Holman partnership shares. He concluded, therefore, that the 12% lack-of-market or liquidity discount was similar to what private buyers of the limited-partnership shares would demand.
Mr. Burns continued his analysis by explaining why he believed it was appropriate to accept a marketability discount in the range of 12% rather than adjusting this amount substantially upward. Looking at the terms of the Agreement, he found a natural limit or cap on any discounts. He discussed the fact that the Agreement permitted all shareholders, by unanimous agreement, to dissolve the partnership and that it permitted partners or the partnership to buy out an exiting partner. He also noted the ease with which the value of the underlying assets could be determined on any given day. He opined that if outside buyers were to demand too great a discount relative to the then-prevailing price of Dell stock, economically rational insiders would have a clear incentive to step into the void and purchase the exiting partner's shares at a lesser discount, thereby providing a cap or ceiling to any potential discount.
The donors on appeal do not vigorously defend their expert's opinion regarding a 35% discount based on studies of restricted-stock sales. They do not claim that their expert disagreed with Mr. Burns's characterization of marketability discounts as including holding-period and liquidity components. Nor do they discuss their expert's failure to address this distinction. They do note that their expert's opinion is commensurate in scope with the discounts Mr. Burns cited for restricted stock sales between 1972 and 1990. They do not point to anything in the record, however, suggesting that Mr. Ingham based his overall recommendation on the prevailing discount from that era.
The donor's primary argument on appeal focuses on the later aspect of Mr. Burn's opinion discussing what insiders likely would do in the face of potentially large discounts in partnership share price relative to Dell stock prices. The donors argue that this line of reasoning violates the hypothetical willing buyer/willing seller test by asking what the partnership or particular family members in this case would do rather than asking what hypothetical buyers and sellers would do. See Treas. Reg. § 25.2512-1 ("The value of the property is the price at which such property would change hands between a *775 willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts."); id. § 2512-3 ("The fair market value of any interest in a business, whether a partnership or a proprietorship, is the net amount which a willing purchaser, whether an individual or a corporation, would pay for the interest to a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts.").
When assessing hypothetical transactions between hypothetical buyers and sellers, it is improper to ascribe motivations that are personal and reflective of the idiosyncracies of particular individuals. See Estate of Jung v. Comm'r, 101 T.C. 412, 438, 1993 WL 460544 (1993) (refusing to cast a family corporation as the willing buyer where the attempt to do so was based on the non-economic-based view that the family corporation would purchase an interest merely to keep ownership within the family); Propstra v. United States, 680 F.2d 1248, 1251-52 (9th Cir.1982) (refusing to cast executor and beneficiaries as hypothetical willing sellers to avoid "delicate inquiries into the feelings, attitudes, and anticipated behavior of those holding undivided interests in ... property."). Rather, it is necessary to view such persons as economically rational actors possessing all relevant information and seeking to maximize their gains. See Estate of Jameson v. Comm'r, 267 F.3d 366, 370 (5th Cir. 2001) ("The buyer and seller are hypothetical, not actual persons, and each is a rational economic actor, that is, each seeks to maximize his advantage in the context of the market that exists at the date of valuation."); Curry's Estate v. United States, 706 F.2d 1424, 1431 (7th Cir.1983) ("[T]he sole relevant consideration in determining whether the company here should be valued as liquidated or as a going concern is which alternative could be expected to yield the profit-maximizing result .... [T]he subjective intention or `idea' of this particular plaintiff corporation... is irrelevant.... To hold otherwise would be to command future juries to wade into the thicket of personal corporate idiosyncrasies and non-market motives as part of their valuation quest ....") (emphasis added); Estate of Newhouse v. Comm'r, 94 T.C. 193, 218, 1990 WL 17251 (1990) ("The hypothetical willing buyer and seller are presumed to be dedicated to achieving the maximum economic advantage.").
Here, we believe the Tax Court's approach in adopting Mr. Burns's analysis comports with this general rule of casting the potential buyer merely as a rational economic actor. A buyer possessed of all relevant information would know that (1) the underlying assets are highly liquid and easily priced; (2) the amount held by the partnership could be absorbed by the broader market and represents but a small fraction of the total outstanding market capitalization of Dell corporation; (3) the partnership agreement permits the buying out of exiting partners or dissolution upon unanimous consent of all partners; and (4) there would be little or no economic risk and likely no additional capital infusion necessary for remaining partners to buy out an exiting partner.
Against this backdrop, it is not necessary to look at the personal proclivities of any particular partner or the idiosyncratic tendencies that might drive such a specific person's decisions. Rather it is only necessary to examine what is technically permissible in accordance with the agreement and forecast what rational actors would do in the face of a pending sale at a steep discount relative to net asset value. Simply put, the Tax Court did not ascribe personal non-economic strategies or motivations to hypothetical buyers; it merely *776 held that, presented with the opportunity, rational actors would not leave money on the table.
We affirm the judgment of the Tax Court.
BEAM, Circuit Judge, dissenting.
Because I would reverse the Tax Court's applications of I.R.C. § 2703's property valuation rules and Treasury Regulation § 25.2512-1's willing buyer/willing seller test, I respectfully dissent.
I. I.R.C. § 2703
I.R.C. § 2703(a)(2) provides that the value of any property shall be determined without regard to "any restriction on the right to sell or use such property." As an exception to this general rule, § 2703(b) provides that a restriction is considered for property valuation purposes if it meets each of the following requirements:
(1) It is a bona fide business arrangement.
(2) It is not a device to transfer such property to members of the decedent's family for less than full and adequate consideration in money or money's worth.
(3) Its terms are comparable to similar arrangements entered into by persons in an arms' length transaction.
The court majority halted its analysis after its discussion of § 2703(b)(1), holding that the Holman partnership restrictions were not bona fide business arrangements. I, however, would hold that the restrictions safely satisfy § 2703(b)(1)'s bona fide business arrangement test as well as the remaining tests in § 2703(b)(2) and (3).
A. Bona Fide Business Arrangement Test§ 2703(b)(1)
The Holman family limited partnership was created to maintain family control over family assets, coordinate investment management, protect family assets from future creditors and other third parties, and to educate the Holman children as to wealth management. See ante at 766. To aid in achieving these goals, the partnership agreement includes transfer restrictions and a right of first refusal (the "restrictions"). The agreement also grants the general partners, Thomas and Kim Holman, exclusive control over the partnership's business, including the power to determine the investments and investment strategy of the partnership.
Despite conceding that the partnership agreement's restrictions "aid in control of the transfer" of partnership interests, Holman v. Commissioner, 130 T.C. 170, 194, 2008 WL 2189089 (2008), the Tax Court concluded that the provisions did not satisfy § 2703(b)(1)'s "bona fide business arrangement" test. After reviewing case law and § 2703's legislative history, the Tax Court reasoned that partnership restrictions aimed at maintaining family control over a partnership and its assets do not serve a "bona fide business purpose" where, as here, "the partnership carried on little activity other than holding shares of [publicly-traded stock]." Id. Moreover, the Tax Court concluded that § 2703(b)(1)'s legislative history did not list educating children or preventing children from dissipating family assets as legitimate business purposes. Id. at 195.
As a preliminary matter, I disagree with the court majority's decision to review the Tax Court's application of § 2703(b)(1) for clear error based on its conclusion that "[t]he ultimate question of whether there was a bona fide business arrangement is a question of fact." Ante at 769. To be sure, the ultimate determination of whether restrictions are bona fide business arrangements is likely a question of fact. However, the fundamental question before us is whether the Tax Court employed the correct criteria, framework, or test to *777 make this factual determination. This is a question of law, subject to de novo review. Cf. Estate of Palmer v. Comm'r, 839 F.2d 420, 423 (8th Cir.1988) (while "the ultimate determination of fair market value is a finding of fact ... [t]he question of what criteria should be used to determine value is a question of law"); IHC Health Plans, Inc. v. Comm'r, 325 F.3d 1188, 1193 (10th Cir.2003) ("The appropriate legal standard for determining whether an organization operates for a `charitable' purpose is a legal question, which we review de novo."). Moreover, this question requires a review of the Tax Court's interpretation of § 2703(b)(1), and we review the Tax Court's statutory interpretations de novo. Scherbart v. Comm'r, 453 F.3d 987, 989 (8th Cir.2006). Thus, we are presented with at least a mixed question of law and fact, if not a pure question of law. Either way, our precedent requires de novo review. Blodgett v. Comm'r, 394 F.3d 1030, 1035 (8th Cir.2005).
While interpreting § 2703(b)(1), our ultimate goal is to "give effect to the Congressional intent behind the statute's enactment." Estate of Farnam v. Comm'r, 583 F.3d 581, 584 (8th Cir.2009). Where, as here, the statute's language is ambiguous,[7] it is appropriate to examine legislative history to determine legislative intent. Id. In light of § 2703(b)(1)'s legislative history, the court's interpretation and application of § 2703(b)(1) does not give effect to the statute's legislative intent.
The court, like the Tax Court, essentially holds that "maintaining family control" is a legitimate business purpose for partnership restrictions only when the "control" being preserved is the right to manage an operating business or an actively-managed asset. See ante at 770. While the court narrowly reads Estate of Bischoff v. Commissioner, 69 T.C. 32, 39-41, 1977 WL 3667 (1977) to bolster its holding, congressional committees cited Bischoff to support much broader propositions. First, the Joint Committee on Taxation cited Bischoff for the proposition that maintaining family control is a legitimate business purpose for buy-sell agreements, "even when the `control' being preserved is a right to receive income from investment assets." Staff of Joint Comm. on Taxation, 101st Cong., 2d Sess., Federal Transfer Tax Consequences of Estate Freezes 14 (Comm. Print 1990). Furthermore, the parenthetical following the Committee's Bischoff citation explains that "maintenance of control is [a] business purpose even if the interest being sold is a limited partnership interest in a holding company." Id. at 14 n. 44. Finally, the Senate Finance Committee cited Bischoff for the proposition that "[c]ontinuation of family ownership" is a legitimate business purpose for buy-sell agreements "even when the `control' being preserved is only the right to participate as a limited partner." Explanatory Material Concerning Committee on Finance 1990 Reconciliation Submission Pursuant to House Concurrent Resolution 310, 136 Cong. Rec. 30,488, 30,538 (1990) [hereinafter Finance Committee Report]. Accordingly, I think the Holman partnership restrictions served the congressionally-recognized legitimate business purposes of maintaining family control over the right to participate as a limited partner and the right to receive income from the partnership's investment assets.
Next, the court attempts to distinguish the value-fixing agreement in Estate of Amlie v. C.I.R., 91 T.C.M. (CCH) 1017, 2006 WL 995337 (2006), from the restrictions in the present case. In Amlie, the *778 Tax Court determined that a conservator's value-fixing agreement qualified as a bona fide business arrangement, in part, because it aided in "planning for future liquidity needs" of the ward's estate. Id. at *12. To support it's holding, the Tax Court in Amlie cited to a portion of the Finance Committee Report that provides:
The committee believes that buy-sell agreements are common business planning arrangements and that buy-sell agreements generally are entered into for legitimate business reasons that are not related to transfer tax consequences. Buy-sell agreements are commonly used to control the transfer of ownership in a closely held business, to avoid expensive appraisals in determining purchase price, to prevent the transfer to an unrelated party, to provide a market for the equity interest, and to allow owners to plan for future liquidity needs in advance.
Finance Committee Report, 136 Cong. Rec. at 30,539 (emphasis added); Amlie, 2006 WL 995337, at *12 (citing the same); see also Holman, 130 T.C. at 193-94 (quoting the same). Notably, the Tax Court recognized planning for future liquidity needs as a legitimate business purpose for the agreement despite the fact that the ward's stock "was not an actively managed business interest but merely an investment asset."[8]Amlie, 2006 WL 995337, at *12.
The court asserts that Amlie is distinguishable from the present case because the Holman partnership restrictions were not created to provide for the future liquidity needs of the partnership. This is a distinction without merit. Here, the Tax Court conceded that the Holman partnership restrictions aided in controlling the transfer of partnership interests to third parties. The court majority's attempt to distinguish the present case from Amlie ignores that the same portion of legislative history cited by the Tax Court in Amlie, and quoted by the Tax Court in the present case, recognizes that buy-sell agreements serve the legitimate business purpose of "prevent[ing] the transfer to an unrelated party." Finance Committee Report, 136 Cong. Rec. at 30,539. If the absence of an "actively managed business interest" was irrelevant in Amlie, it is unclear why an actively managed business interest is required in the present case to legitimize the Holman partnership restrictions.
In light of Amlie and § 2703(b)(1)'s legislative history, the Holman partnership restrictions serve the legitimate business purpose of protecting partnership assets from unrelated parties.[9] Protecting partnership assets from creditors is surely a *779 legitimate business purpose for transfer restrictions, regardless of whether the partnership manages an operating business or merely holds publicly-traded stock. Cf. Estate of Mundy v. Comm'r, 35 T.C.M. (CCH) 1778, 1976 Tax Ct. Memo LEXIS 8, at *46, 1976 WL 3573 (1976) (finding that insulating corporate assets from possible liabilities was a valid business purpose for restricting transferability of stock). Similarly, protecting partnership assets from the Holman daughters' potential future ex-spouses is a legitimate business purpose for the restrictions. Cf. Keller v. United States, No. V-02-62, 2009 WL 2601611, at *19 (S.D.Tex. Aug. 20, 2009) (recognizing protecting family assets from depletion by ex-spouses through divorce proceedings as a "legitimate business purpose" for the creation and funding of a partnership).
Additionally, the Holman partnership restrictions serve the legitimate business purpose of preserving the partners' fundamental right to choose who may become a partner.[10]See In re Schick, 235 B.R. 318, 324 (Bankr.S.D.N.Y.1999) (recognizing that, although arguably more important in the general partnership context, the right to choose partners "still provides the underlying rationale for restricting the admission of new or substitute limited partners"). As the Holmans' partnership expert explained:
Partnership agreements contain [transfer] restrictions because persons who join together as partners generally desire a high degree of certainty as to who their partners are and will be, especially where they establish the entity with commonly-shared investment goals and the intention that the entity be closely-held. They want the ability to limit who may become their partner without their agreement that such person may take a place at the table.
Without restrictions on who may become a limited partner, Thomas and Kim Holman, as general partners, could find themselves owing obligations[11] and fiduciary duties to third parties to whom they never envisioned owing such obligations and duties e.g., the Holman daughters' future spouses. Such obligations and duties exist regardless of whether the Holman limited partnership operates a lemonade stand or holds Dell stock. And, as the Holmans' partnership expert explained, "[h]aving an unwanted partner or assignee of a partnership interest is likely to increase the general partner's risk of personal liability."
Finally, I think the court's decision is contrary to the underlying purposes of § 2703. Section 2703 is one of several special valuation rules Congress enacted, in part, "to allow business owners who are not abusing the transfer tax system to freely engage in standard intrafamily transactions without being subject to severe transfer tax consequences." Finance Committee Report, 136 Cong. Rec. at 30,538. Congress enacted § 2703, in particular, to "distinguish between agreements designed to avoid estate taxes and those with legitimate business agreements." Id. at 30,539. This legislative history suggests that the bona fide business arrangement test was designed to determine whether restrictions are created primarily to avoid transfer taxes.
*780 Here, the Tax Court made the express factual determination that the partnership agreement restrictions were "designed principally" to protect family assets from dissipation by the Holman daughters. Holman, 130 T.C. at 195 (emphasis added). In other words, the Tax Court determined that the restrictions were designed primarily to serve a non-tax purpose. Notably, the Tax Court did not find that the Holmans merely paid lip service to legitimate business purposes for the restrictions while, in reality, using the restrictions for the primary purpose of avoiding taxes.[12] Additionally, the Tax Court did not find that the restrictions failed to match the partnership's legitimate, non-tax goals.[13] The underlying purposes of § 2703 are not served where, as here, the bona fide business arrangement test is applied in a manner that discourages partners in family partnerships from creating restrictions principally to achieve non-tax, economic goals.
Thus, I would hold that the Holman partnership agreement restrictions are "bona fide business arrangements" because they were not created for the primary purpose of avoiding taxes, and they served the following legitimate business purposes: (1) maintaining family control over the right to participate as a limited partner; (2) maintaining family control over the right to receive income from the partnership's investment assets; (3) protecting partnership assets from creditors and potential future ex-spouses; and (4) preserving the partners' fundamental right to choose who may become a partner.
B. Device Test § 2703(b)(2)
Having determined that the partnership restrictions satisfy § 2703(b)(1), I now turn to § 2703(b)(2)'s "device" test. Under this test, the Holman partnership restrictions must not be a "device to transfer such property to members of the decedent's family for less than full and adequate consideration in money or money's worth." I.R.C. § 2703(b)(2) (emphasis added). Treasury Regulation § 25.2703-1(b)(1)(ii) excises the phrase "members of the decedent's family" found in § 2703(b)(2) and substitutes in its place the phrase "natural objects of the transferor's bounty," apparently because the Secretary of the Treasury interprets § 2703(b)(2) to apply to both inter vivos transfers and transfers at death. Holman, 130 T.C. at 195-96. Applying this regulation, the Tax Court held that the Holman partnership restrictions operate as a device to transfer property to the natural objects of the Holmans' bounty. The Holmans argue that Treasury Regulation § 25.2703-1(b)(1)(ii) is invalid because it fails to give effect to § 2703(b)(2)'s plain language. I agree.
The validity of a treasury regulation is a question of law, which we review de novo. Walshire v. United States, 288 F.3d 342, 345 (8th Cir.2002). We afford treasury *781 regulations interpreting the Internal Revenue Code "substantial deference." Mayo Found. for Med. Educ. & Research v. United States, 568 F.3d 675, 679 (8th Cir. 2009). That said, our first question in reviewing an agency's interpretation of a statute is "whether Congress has directly spoken to the precise question at issue." Chevron, U.S.A., Inc. v. Natural Res. Def. Council Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). If so, we, "as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 843, 104 S.Ct. 2778. If, however, "the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." Id.
The parties primarily dispute whether § 2703(b)(2) is ambiguous. The Holmans assert that the term "decedent" unambiguously refers to a deceased person and, therefore, § 2703(b)(2) asks only whether restrictions operate as a device to transfer property to family members at death. The Holmans point out that only the term "decedent," not the broader term "transferor," is used throughout § 2703(b)(2)'s legislative history. Conversely, the Commissioner argues that the term "decedent" is ambiguous due to § 2703's location in the Internal Revenue Code. Specifically, § 2703 is located in Subtitle B of the Code, which includes three transfer taxesthe estate, gift and generation-skipping transfer taxes. More precisely, § 2703 is located in Subtitle B, Chapter 14. In Chapter 14, § 2703 joins a set of special valuation rules targeting transfer tax avoidance schemes.
It is clear that the phrase "members of the decedent's family" unambiguously limits § 2703(b)(2)'s application to transfers at death. First, the term "decedent" is itself unambiguous. Black's Law Dictionary 465 (9th ed.2009) plainly defines "decedent" as "[a] dead person." Moreover, the phrase "members of decedent's family" is not ambiguous when read in the greater context of Chapter 14. While Congress used the term "decedent" in § 2703(b)(2), it used the broader term "transferor" in Chapter 14's other valuation statutes. See I.R.C. §§ 2701(a)(1) & 2702(a)(1). And, as the Holmans point out, the term "decedent" consistently appears in § 2703(b)(2)'s legislative history. Finally, I find it telling that members of Congress have failed in their attempts to amend § 2703(b)(2) by substituting the legislative phrase "members of the decedent's family" with the Commissioner's phrase "natural objects of the transferor's bounty." See Smith v. United States, No. C.A. 02-264 ERIE, 2004 WL 1879212, at *6 n. 3 (W.D.Pa. June 30, 2004). Thus, although Congress enacted Chapter 14 to generally address transfer tax avoidance schemes, § 2703(b)(2) applies specifically to transfers at death.
Therefore, Treasury Regulation § 25.2703-1(b)(1)(ii) is invalid because it does not give effect to the plain language of § 2703(b)(2). Since the Holmans are living persons, they are, by definition, not "decedents" and § 2703(b)(2)'s device test is satisfied.
C. Comparable Terms Test-§ 2703(b)(3)
Since the Holman partnership restrictions satisfy § 2703(b)(1) and (2), I now analyze the restrictions under § 2703(b)(3). Under § 2703(b)(3)'s "comparable terms" test, the Holman partnership restrictions' terms must be "comparable to similar arrangements entered into by persons in an arms' length transaction." While the Tax Court did not decide whether the restrictions satisfied the comparable terms test, it noted that both parties' experts "agree that transfer restrictions comparable to *782 those found in [the Holman partnership agreement] are common in agreements entered into at arm's length."[14]Holman, 130 T.C. at 198-99. The Tax Court explained that this "would seem to be all that [the Holmans] need to show to satisfy section 2703(b)(3)." Id. at 199. I agree, and I would hold that the Holman partnership restrictions satisfy § 2703(b)(3)'s comparable terms test.
Thus, because the partnership restrictions satisfy all three of § 2703(b)'s tests, I would reverse and remand to the Tax Court for a valuation of the limited partnership interests that does not disregard the partnership restrictions.
II. MARKETABILITY DISCOUNT CALCULATION
As a preliminary matter, I also disagree with the court's decision to review the Tax Court's marketability discount calculation for clear error. "The mathematical computation of fair market value is an issue of fact, but determination of the appropriate valuation method is an issue of law that we review de novo." Estate of Jelke v. Comm'r, 507 F.3d 1317, 1321 (11th Cir. 2007) (quotation and alteration omitted); see also Palmer, 839 F.2d at 423 (the "question of what criteria should be used to determine value is a question of law subject to de novo review"). Since the real issue here is whether the Tax Court used a proper valuation methodi.e., properly applied the willing buyer/willing seller test to calculate an appropriate marketability discount, I would review this legal issue de novo.
Under Treasury Regulation § 25.2512-1, the value of property for gift tax purposes is "the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts." While the hypothetical willing seller and willing buyer "are presumed to be dedicated to achieving the maximum economic advantage," Estate of Newhouse v. Commissioner, 94 T.C. 193, 218, 1990 WL 17251 (1990), "the Commissioner cannot tailor `hypothetical' so that the willing seller and willing buyer [are] seen as the particular persons who would most likely undertake the transaction." Morrissey v. Comm'r, 243 F.3d 1145, 1148 (9th Cir.2001) (internal quotation omitted).
While assessing the partnership interests' marketability for valuation purposes, the Tax Court conceded that the private market for such interests was "thin." Holman, 130 T.C. at 214. However, the Tax Court adopted the opinion of the Commissioner's expert that this "thin" market did not justify a substantial marketability discount because the wishing-to-assign partner could convince the remaining partners to voluntarily dissolve the partnership and buy him out. Specifically, the Tax Court reasoned:
[G]iven the significant minority interest and marketability discounts from an LP unit's proportional share of the partnership's [net asset value] that each expert would apply in valuing the gifts, it would appear to be in the economic interest of both any limited partner not under the economic necessity to do so but wishing to make an impermissible assignment of LP units and the remaining partners to strike a deal at some price between the discounted value of the units and the dollar value of the units' proportional share of the partnership's [net asset value]. *783 The wishing-to-assign partner would get more than she would get in the admittedly "thin" market for private transactions, and the dollar value of each remaining partner's share of the partnership's [net asset value] would increase.
Id. at 214.
The Tax Court's analysis violates the hypothetical willing buyer/willing seller test because it assumes the hypothetical buyers own Holman limited partnership interests. See Estate of Jung v. Comm'r, 101 T.C. 412, 438, 1993 WL 460544 (1993). The court majority asserts that the Tax Court properly cast the hypothetical willing buyer "merely as a rational economic actor," but the Tax Court did more than that. Ante at 775 (emphasis added). The Tax Court effectively plucked rational economic actors out of the existing "thin" private market,[15] placed Holman limited partnership shares in their pockets, and asked them what they would pay for a wishing-to-assign partner's interest in light of the partnership's dissolution provisions. In fact, the Tax Court's analysis is essentially based on the idea that a mere rational economic actor in the existing market would pay less than rational actors who already hold Holman limited partnership interests.[16] Courts commit legal error where, as here, they substitute hypothetical buyers for "particular possible purchasers" based on "imaginary scenarios as to who a purchaser might be." Estate of Simplot v. Comm'r, 249 F.3d 1191, 1195 (9th Cir.2001).
That is not to say that courts err whenever they consider partnership agreements' dissolution provisions while calculating an appropriate marketability discount. For example, if the Holman limited partnership had a significant history of dissolving and buying out wishing-to-assign partners, a hypothetical willing buyer would consider this fact while assessing the partnership interests' marketability. See, e.g., Estate of Neff v. Comm'r, 57 T.C.M. (CCH) 669, 1989 Tax Ct. Memo LEXIS 278, at *27, 1989 WL 59828 (1989) (determining that "the hypothetical willing buyer would certainly take into account the [corporation's history of] stock repurchases, at premium prices, in valuing the stock"). Indeed, hypothetical willing buyers and willing sellers are considered to have "reasonable knowledge of relevant facts" surrounding the hypothetical sale. Treas. Reg. § 25.2512-1.
Here, the Commissioner's expert never determined the actual likelihood of the Holman limited partnership executing a dissolution and buy-out scheme. Holman, 130 T.C. at 214. The expert merely opined that he could not "envision an economic reason why" the partnership would not engage in such a scheme. Id. (quotation omitted). This analysis is not helpful because it does not consider the fact that the Holman limited partnership has never engaged in such a scheme, see Jung, 101 T.C. at 437 n. 9, or whether the Holman limited partnership or limited partnership owners do or do not have sufficient liquidity to buy out a wishing-to-assign partner. The expert's analysis also does not consider that *784 dissolving and buying out a wishing-to-assign partner may be contrary to the partnership's stated goalsmaintaining control of family assets, continuing ownership of family assets, and restricting the ability of unrelated parties to acquire interests in family assets. Against this factual backdrop, the hypothetical willing buyer may find that the actual probability of the remaining partners unanimously consenting to a dissolution and buy-out scheme is quite low.
Thus, the Tax Court's misapplication of the willing buyer/willing seller test constitutes reversible error. Accordingly, I would also reverse and remand to the Tax Court for a new marketability discount determination.
For the foregoing reasons, I respectfully dissent.
NOTES
[1] The Honorable James S. Halpern, United States Tax Court.
[2] Section 2703 provides:
(a) General rule.For purposes of this subtitle, the value of any property shall be determined without regard to
(1) any option, agreement, or other right to acquire or use the property at a price less than the fair market value of the property (without regard to such option, agreement, or right), or
(2) any restriction on the right to sell or use such property.
(b) Exceptions.Subsection (a) shall not apply to any option, agreement, right, or restriction which meets each of the following requirements:
(1) It is a bona fide business arrangement.
(2) It is not a device to transfer such property to members of the decedent's family for less than full and adequate consideration in money or money's worth.
(3) Its terms are comparable to similar arrangements entered into by persons in an arms' length transaction.
[3] In St. Louis County Bank, for example, the transferred interests were shares in a family company that had started out as a moving, storage, and parcel-delivery business and evolved into a real estate management company. St. Louis Bank, 674 F.2d at 1208-09. When engaged in the moving and storage business, the company had created a stock-purchase agreement based on a valuation formula keyed to income. Id. at 1209. Later, the family exited the moving and storage business but kept the business structure as a vehicle for renting real estate. Id. With this new activity, the formula resulted in a dramatically lower value. Id. We stated, "We have no problem with the District Court's findings that the stock-purchase agreement provided for a reasonable price at the time of its adoption, and that the agreement had a bona fide business purposethe maintenance of family ownership and control of the business. Courts have recognized the validity of such a purpose." Id. at 1210.
[4] These cases address a slightly different, albeit similar, question under I.R.C. § 2036(a), the presence of a "legitimate business purpose." We, nevertheless, feel compelled to comment on these cases because they do not stand for the apparently broad proposition the donors would have us adopt, namely, that holding investments for gain necessarily satisfies the "bona fide business arrangement" test.
[5] Given our resolution of the "business arrangement" issue, we need not address the additional requirements of § 2703. Our election not to address these issues, however, should not be interpreted as implicit agreement with the dissent. We note that the Tax Court elected not to decide the § 2703(b)(3) requirement regarding the comparability of terms to those found in arms-length transactions. The dissent, however recites limited agreement between the parties' experts on this issue as recognized in dicta from the Tax Court. We are compelled, therefore, to note that we do not believe the parties' experts were as aligned on this issue as suggested by the dissent. For example, the Commissioner's expert opined that "when you look at the overall context ... the issue of [transfer restrictions] wouldn't arise, because nobody at arm's length would get into this deal." He later stated, "[B]ased on my experience ... I couldn't find anybody who would do this deal, who would let their client into a deal like this as a limited partner without writing a very large CYA memo, saying: `We advise against this.'" Given this disagreement and the absence of a Tax Court ruling, we believe it is prudent not to address the § 2703(b)(3) requirement on appeal.
[6] Mr. Ingham appears to have conceded that Mr. Burns was correct in this qualitative explanation for different components of overall marketability discounts.
[7] The Tax Court noted that § 2703 "contains no definition of the phrase `bona fide business arrangement,'" Holman, 130 T.C. at 192, and acknowledged that "[t]he meaning of the term `bona fide business arrangement' ... is not self apparent," id. at 195. I agree.
[8] In Amlie, the Commissioner argued that the agreement could not satisfy § 2703(b)(1) unless the stock was an actively managed business interest. The Tax Court explained: "We rejected such an argument in Estate of Bischoff v. Commissioner, 69 T.C. 32, 40-41, 1977 WL 3667 (1977), and find it equally unpersuasive here." Amlie, 2006 WL 995337, at *12.
[9] The Tax Court acknowledged that the Holman partnership agreement restrictions were intended, in part, to place "strong limitations on what the limited partners can do in assigning or giving away their interests to other people" and to provide a "`safety net' if an impermissible person obtained an assignment of a limited partner interest from one of the girls." Holman, 130 T.C. at 194 (quotation omitted). Indeed, the partnership agreement provides that the Holman partnership was created to "restrict the right of non-Family persons to acquire interests in Family Assets" and to "provide protection to Family Assets from claims of future creditors against Family members." Id. at 176. Moreover, at trial, Thomas Holman testified: "[W]e were worried that the assets that the girls would eventually come into would be sought after by third-party people, friends, spouses, potential creditors."
[10] At trial, Thomas Holman explained that the partnership allowed the Holmans "to give [their] daughters a seat at the table, to become real partners in the operation of [the] business." Moreover, one of Thomas Holman's long-term goals was to have his daughters "become more and more engaged in the partnership over time."
[11] For example, section 6.1 of the Holman partnership agreement provides: "The General Partners shall use their best efforts to carry out the purposes and business of the Partnership in a prudent and businesslike manner."
[12] While the Tax Court determined that Thomas Holman understood the tax benefits of creating a partnership, it did not determine that tax avoidance was the principal purpose of the partnership restrictions. Indeed, understanding tax benefits and using transfer restrictions for the primary purpose of avoiding taxes are two different things.
[13] The court majority states that restrictions on the sale or use of property, "[w]hen carefully crafted and applied in certain circumstances... can minimize the tax consequences of gifts or transfers without imposing substantial additional limitations on the transferability or use of the property." Ante at 768. Here, however, there is apparently no question that the Holman partnership restrictions imposed actual, substantial limitations on the transfer of partnership interests. Indeed, even the Commissioner's expert recognized that "[i]n virtually every material respect" the Holman partnership agreement "blocks for 50 years the limited partners' ability to sell or use their respective limited partner interests." Holman, 130 T.C. at 197.
[14] The court in footnote 5 appears to import language from one of the Commissioner's experts to impeach the Tax Court's statements concerning the requirements of § 2703(b)(3). At best, the cited emanations of this particular witness are barely relevant to a proper interpretation of this portion of the statute.
[15] A rational actor "seeks to maximize his advantage in the context of the market that exists at the date of valuation." Estate of Jameson v. Comm'r, 267 F.3d 366, 370 (5th Cir.2001) (emphasis added).
[16] The Tax Court reasoned that the remaining partners and the wishing-to-assign partner could "strike a deal at some price between the discounted value of the units and the dollar value of the unit's proportional share of the partnership's [net asset value]" and, as a result, "[t]he wishing-to-assign partner would get more than she would get in the admittedly `thin' market for private transactions." Holman, 130 T.C. at 214 (emphasis added). | 01-03-2023 | 04-08-2010 |
https://www.courtlistener.com/api/rest/v3/opinions/445320/ | 749 F.2d 1541
UNITED STATES of America, Plaintiff-Appellee,v.John Albert KELLY, D.J. Dorn, and Miguel Falcon,Defendants-Appellants.UNITED STATES of America, Plaintiff-Appellee,v.Evasio GARCIA, George Garcia, and Jon Taute, Defendants-Appellants.
Nos. 83-8261, 83-8267.
United States Court of Appeals,Eleventh Circuit.
Jan. 10, 1985.
Amanda Maxwell, South Miami, Fla., for J.J. Dorn.
Richard Hersch (court-appointed), South Miami, Fla., for Falcon.
Dennis W. Hartley, Colorado Springs, Colo., for Kelly and D.J. Dorn.
Frank A. Rubino, Coconut Grove, Fla., for George Garcia.
Highsmith & Strauss, Ronald I. Strauss, Phillip Glatzer, Coconut Grove, Fla., for Evasio Garcia and Taute.
Joseph D. Newman, Asst. U.S. Atty., Savannah, Ga., Sara Criscitelli, U.S. Dept. of Justice, Washington, D.C., for the U.S. in both cases.
Frances J. Martin, Washington, D.C., for the U.S. in No. 83-8267.
Margaret Miller, Washington, D.C., for the U.S. in No. 83-8261.
Appeals from the United States District Court for the Southern District of Georgia.
Before HENDERSON and HATCHETT, Circuit Judges, and NICHOLS*, Senior Circuit Judge.
HATCHETT, Circuit Judge:
1
This appeal reviews the appellants' convictions for conspiracy to possess, import, and distribute marijuana, as well as convictions for possession and importation of marijuana. We reverse the conviction of one appellant; the convictions of the other appellants are affirmed.
I.
2
At 2 a.m. on November 23, 1982, a "concerned citizen" telephoned Officer Dwayne Swygert, a supervisor with the United States Customs Patrol in Savannah, Georgia, relating that "Jerome Brown was supposedly organizing a smuggling venture in the McIntosh area. Jerome Brown had allegedly approached a local McIntosh resident, Bruce Townsend." The caller provided information leading to the location of the "Gigi" in the Eulonia, Georgia, area on Cedar Creek at Jacob's Dock. From the time of the location of the "Gigi" on the afternoon of November 23rd, the Customs agents conducted surveillance on the "Gigi" continuously, except for a period of nine hours on November 26. Surveillance ceased thirty minutes after the "Gigi" left the dock at 3:45 a.m. on November 28th.
3
The government's chief witness was Webster Tyrone "Jerome" Brown.1 During Thanksgiving week in 1982, Brown received a telephone call from George Garcia. Garcia requested that Brown locate "a car," which Brown took to mean a shrimp boat. Pursuant to that conversation, Brown contacted Bruce Townsend, the owner of a shrimp boat named the "Gigi." Brown, Townsend, Bud Thomas, and Evasio Garcia boarded the "Gigi." Evasio Garcia inspected the engine, checked for evidence of water seepage, measured certain storage compartments on the boat, and conducted an inventory of the electronic equipment on board. On November 23, Joseph Saunds met with Brown and Wilfredo Cejas in a local motel to discuss Saunds's role as captain of the "Gigi."2 Cejas told Saunds that the "Gigi" should rendezvous with a freighter named the "Largo Izabal" at 12 Noon on November 28th. Further, Cejas identified a rendezvous point on a nautical chart and instructed Saunds on how to tie up the "Gigi" with a larger ship so that the marijuana could be transferred to the "Gigi" in rough seas. Saunds was instructed to take his cargo to Belvedere Landing where a crew would offload the marijuana into trucks.
4
On Saturday, November 28, at about 3:30 a.m., Brown delivered to the dock the "Gigi's" crew, including John Dorn, Dennis Dorn, John Kelly, and Miguel Falcon. Brown then drove Cejas back to a motel and then went to meet Saunds for the purpose of delivering "front money" to him prior to the voyage of the "Gigi." Brown returned to the motel, picked up Cejas, and they returned to Brown's home where they met with George Garcia, Evasio Garcia, Jon Taute, and another unidentified individual.
5
The "Gigi" departed for its rendezvous with the "Largo Izabal." The U.S. Coast Guard ship "Cape Upright" waited off the mouth of Sapelo Sound, ready to follow the "Gigi." At approximately 9:30 a.m., radar contact was made with the "Gigi" as it left the Sound. At 12 Noon the "Gigi" reached the appointed rendezvous spot about thirty-five miles offshore and anchored to await arrival of the mother ship. While waiting, Saunds showed Kelly the radar readings and received instructions that the mother ship would arrive at the rendezvous point by 5 o'clock.3 At 5 o'clock, Saunds received a radio message from the freighter announcing its arrival. Once the shrimp boat and the freighter were secured together, the "Gigi's" crew spent approximately two hours transferring the bales of marijuana to the "Gigi."
6
On shore, a group of Cubans staying at Brown's house prepared to go to Belvedere Landing to assist in the offloading operation. A few hours before dawn on November 28, Brown drove the Cubans in a van to the entrance of Harris Neck Road near Highway 31. Equipped with a walkie-talkie, Brown maintained a look-out position while the Cubans drove on to the offload site at Belvedere Landing.
7
After the transfer of the marijuana, the "Gigi" headed back to Sapelo Sound. Once the "Gigi" entered the channel, a Customs vessel seized and boarded the boat, arresting all of its crew. The Coast Guard seized the mother ship after fifteen hours in which the Coast Guard fired fifteen warning shots and a series of disabling shots.
8
On shore, Drug Enforcement Administration agents arrested Cejas and George Garcia at a camper parked near the Bell Bluffs Campground. As Agent Craig approached the camper, he heard a warning over the radio to the effect that "Charlie's got company ... the monkeys are out."4 As Agent Craig got out of his vehicle, Cejas exited the camper. George Garcia was discovered inside the camper at the sink. Both men were arrested. The camper contained "a large amount of radio equipment." Customs agents also arrested Evasio Garcia and Jon Taute while they were sitting in a car parked near the driveway of Brown's house. State agents seized the two trucks to be used in the offloading operation and arrested the occupants. Other members of the offload crew were arrested on Harris Neck Road and in the nearby woods. A GMC van and an abandoned radio and hunter's stool were seized near the offload area.
II.
9
Appellants, George Garcia, Miguel Falcon, Jon Taute, Evasio Garcia, John Kelly, and Dennis Dorn were indicted on December 3, 1982 in the Southern District of Georgia.5 All defendants, except Falcon, were charged with conspiracy to possess marijuana with intent to distribute, in violation of 21 U.S.C.A. Secs. 846 and 841(a)(1) (1982), and conspiracy to import marijuana in violation of 21 U.S.C.A. Secs. 963 and 960 (1981).6 In addition, Dorn and Kelly were charged with possession with intent to distribute and aiding and abetting, in violation of 21 U.S.C.A. Sec. 841(a)(1) (1982) and 18 U.S.C.A. Sec. 2 (1982), and importation in violation of 21 U.S.C.A. Sec. 952(a) and 18 U.S.C.A. Sec. 2; Falcon was charged with importation.7
10
The jury found George Garcia, Jon Taute, and Evasio Garcia guilty of conspiracy to possess with intent to distribute and conspiracy to import; it found Miguel Falcon guilty of importation; and it found John Kelly and Dennis Dorn guilty of possession with intent to distribute, conspiracy to possess with intent to distribute, importation, and conspiracy to import.
11
The six appellants raise five issues on appeal. First, they raise the issue of sufficiency of the evidence, each claiming that the evidence, even taken in a light most favorable to the government, was insufficient to convict him. Second, Jon Taute claims that the trial court erred in refusing to suppress his incriminating statements obtained in violation of his sixth amendment right to counsel. Third, John Kelly claims that his right to assistance of counsel was violated through the denial of his motion for continuance to change counsel. Fourth, John Kelly and Dennis Dorn claim that their right to conflict-free assistance of counsel was violated because their lawyer, Ryland, was a "target" of government investigation in this case. Fifth, John Kelly and Dennis Dorn also claim that the trial court abused its discretion in failing to hold a mid-trial hearing to explore whether a juror had indicated hostility toward drug offenders generally. We will address each of these claims in turn.
III.
Sufficiency of the Evidence
12
We must determine whether, in the light most favorable to the government, a reasonable trier of fact could find that the evidence established guilt beyond a reasonable doubt as to each appellant. United States v. Vera, 701 F.2d 1349, 1357 (11th Cir.1983); see Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942).
13
All reasonable inferences from the evidence must be drawn in favor of the jury's verdict. United States v. Johnson, 713 F.2d 654, 661 (11th Cir.1983). A reversal is in order only if 'the evidence, viewed in the light most favorable to the Government, is such that a reasonably minded jury must have a reasonable doubt as to the existence of the essential elements of the crime charged.' United States v. Barrera, 547 F.2d 1250, 1255 (5th Cir.1977) (emphasis in original). The government need not prove that the facts of the case are inconsistent with the defense's theory of the case. The jury is free to choose among alternative reasonable constructions of the evidence. United States v. Bell, 678 F.2d 547, 549 (5th Cir. Unit B 1982) (en banc ), aff'd on other grounds, 462 U.S. 356, 103 S.Ct. 2398, 76 L.Ed.2d 638 (1983).
14
'To support a conviction of conspiracy, the government must prove that an agreement existed between two or more persons to commit a crime and that the defendant knowingly and voluntarily joined or participated in the conspiracy.' Vera, 701 F.2d at 1357. For the government to prevail on a charge of possessing, the possession need not be actual, but may be constructive; nor need it be exclusive, it may be shared. United States v. Marx, 635 F.2d 436, 440 (5th Cir. Unit B 1981). Intent to distribute may be inferred from the amount of cocaine involved. United States v. Grayson, 625 F.2d 66, 67 (5th Cir.1980).
15
United States v. Sarmiento, 744 F.2d 755, at 761 (11th Cir.1984). "In order to prove that a defendant imported controlled substances in violation of 21 U.S.C.A. Sec. 952(a), the government must establish that the defendant imported such substances 'into the United States from any place outside thereof.' United States v. Miranda, 593 F.2d 590, 596 (5th Cir.1979). Proof of that element may be by circumstantial evidence. Id. at 596-97." United States v. Phillips, 664 F.2d 971, 1033 (5th Cir. Unit B 1981). To convict for aiding and abetting, in violation of 18 U.S.C.A. Sec. 2, it is enough that a person "willfully associates himself in some way with the criminal venture and willfully participated in it as he would in something he wished to bring about." United States v. Barker, 735 F.2d 1280, 1281 (11th Cir.1984) (quoting United States v. Phillips, 664 F.2d 971, 1010 (5th Cir. Unit B 1981), cert. denied, 457 U.S. 1136, 102 S.Ct. 2965, 73 L.Ed.2d 1354 (1982).
1. George Garcia
16
Garcia was convicted of conspiracy to possess with intent to distribute and conspiracy to import marijuana. Garcia contends that as the only evidence in the record regarding him is that he made a telephone call to Jerome Brown and was later seen in a camper at the Bell Bluff Campground, such evidence is insufficient basis to prove that he knew the "Gigi" would be used to import marijuana into the United States, or that he knew or participated in any scheme to distribute the marijuana.
17
More than enough evidence exists from which a reasonable jury could have concluded that Garcia was a participant in the conspiracies to import and to possess with intent to distribute. Garcia's participation in the importation scheme is borne out principally by his telephone call to Brown asking that Brown locate a "car." Garcia concedes that "car" does mean boat, but argues that he did not know that the "Gigi" was to be used to import the marijuana. Far more circumstantial evidence exists, however, linking Garcia to the importation activity. Brown testified that the smugglers needed a small boat which could navigate the narrow and shallow passage of the Sapelo Sound and the inland waterway. Further, Brown was aware that the boat was to be used to import marijuana. Accordingly, Brown took Evasio Garcia to inspect the boat to see whether it would be useful in furthering the importation objectives. The next day, Wednesday, the 25th, Brown accompanied Cejas on a shopping expedition to pick up canvas tops to cover the marijuana while on the "Gigi." George Garcia met with Evasio Garcia, Cejas, and Taute at Brown's house immediately after Brown had driven the "Gigi's" crew to the dock. To this point, the jury could have reasonably concluded that (1) George Garcia was interested in purchasing a boat; (2) the individual whom he asked to locate the boat was involved with other persons in securing equipment to be used in marijuana importation; (3) George Garcia met with other persons who were involved in preparing the "Gigi" for the importation effort. Brown also testified that George Garcia was given the code name "Sunshine" to be used while broadcasting over the walkie-talkies by the offloading crew and the other on-land participants in the importation scheme. A reasonable jury, therefore, could have found that George Garcia was a co-conspirator in the importation scheme.
18
Similarly, a reasonable jury could have found that George Garcia was also a co-conspirator in the distribution scheme. In addition to the evidence above, of particular note is his having received a code name for the use of the walkie-talkies and his presence in the camper at Bell Bluff Campground. The code name connects him to the purpose of the facilitation of the offloading of the imported marijuana. Further, George Garcia's presence in the camper is not mere presence in a climate of suspicious activity. Agent Craig testified that as he approached the camper, he heard radio traffic to the effect that "Charlie's got company ... the monkeys are out." No one suggests that the coded message meant any less than that the police were getting close to "Charlie," the code name for Saunds. George Garcia was inside the camper at the time this warning came over the walkie-talkies. Given the other evidence of Garcia's involvement with procurement of the "Gigi," his conference with other persons involved in the importation and distribution scheme, the existence of a code name especially for Garcia to be used in communicating on the walkie-talkies, and his presence in the camper at the time the warning was broadcast over the walkie-talkies, a reasonable jury could have concluded that George Garcia was a conspirator in the on-land distribution scheme.
2. Miguel Falcon
19
Miguel Falcon was convicted of importation of marijuana. He contends that insufficient evidence exists to show that he had either the intent to participate in the importation or knowledge of the illegality of the actions of those around him. Falcon notes that the only evidence of his conduct prior to his boarding the "Gigi" was his association with Brown. While aboard the "Gigi" he was unable to speak to anyone on the boat. He reasons that the only appropriate inference regarding his role in the importation scheme is that Falcon knew nothing of the importation prior to the rendezvous of the mother ship. Once the rendezvous was effected, "disassociation was impossible."
20
Even assuming that the only evidence supporting Falcon's conviction for importation derives from his activities on the "Gigi," such conviction was the conclusion of a reasonable jury. While Falcon did not speak with the other crew members of the "Gigi," he, first, waited in the hold of the "Gigi" and, second, assisted with the loading of the bales of marijuana into the hold of the "Gigi." Falcon does not claim that he was coerced into loading the marijuana into the "Gigi." His participation was a voluntary and knowing act, and as such, was the kind of activity specifically proscribed by the importation statute.
3. Jon Taute
21
The jury convicted Jon Taute of conspiracy to import and conspiracy to possess with intent to distribute. Taute argues that insufficient evidence existed to convict him for conspiracy to import or to convict him of conspiracy to possess with intent to distribute.
22
The cumulative effect of the circumstantial evidence belies Taute's contention of insufficiency. As to his involvement in the importation, there is Brown's testimony that Taute and another individual carried the "lead boat" to Harris Neck Dock. This boat was to be used to meet the "Gigi" and direct it to the offload site after it was loaded with marijuana. Saunds testified that he met Taute and another man at the Eulonia intersection at which time Taute had a truck and the speedboat. Just prior to that meeting, Saunds had met with Cejas at which time he received instructions on which channel on the hand-held radio he was to use to communicate with the speedboat when he reached the Sound. Brown was also at this meeting at the Eulonia intersection. It was Brown, a key participant in the conspiracies, who spoke with Taute and the other person. Finally, Taute admitted to Saunds, while they were both in the Glyn County Jail, that Taute had been in the speedboat at the time that the "Gigi" was seized in the channel.8 From this evidence alone, a reasonable jury could have concluded that Taute was a willing participant in the importation scheme.
23
The evidence as to the conspiracy to possess with intent to distribute is also sufficient. Taute argues that no evidence exists of his having exercised dominion or control over the marijuana, and, therefore, he could not be reasonably convicted of conspiracy to import with intent to distribute. The charge on which he was convicted was conspiracy to import with intent to distribute. As this circuit has found, "possession can be either actual or constructive. Constructive possession of contraband may be shown by proof of dominion and control over a vehicle containing contraband." United States v. Clark, 732 F.2d 1536, 1540 (11th Cir.1984) (citing United States v. Brunty, 701 F.2d 1375, 1382 (11th Cir.1983). Possession by one co-conspirator can be imputed to another. Clark, 732 F.2d at 1540. As a result, if evidence exists that any of the co-conspirators possessed the marijuana with intent to distribute, such possession can be imputed to Taute. United States v. Newbern, 731 F.2d 744, 750 (11th Cir.1984). The jury could have found Saunds's acts of possession to be imputed to Taute, a co-conspirator. In addition, a jury could reasonably have found an intent to distribute based on the possession of 28,000 pounds of marijuana. United States v. Ceballos, 706 F.2d 1198, 1202 (11th Cir.1983); United States v. Miller, 693 F.2d 1051, 1054 (11th Cir.1982). The conviction of Taute for conspiracy to import and conspiracy to possess with intent to distribute was supported by substantial evidence.
4. Evasio Garcia
24
The jury convicted Evasio Garcia of conspiracy to import and conspiracy to possess with intent to distribute. Garcia characterizes the evidence regarding him as mere presence in a suspicious climate of activity. Garcia reasons that his inspection of the "Gigi" to determine its seaworthiness is consistent only with the conclusion that he was a surveyor of the boat for Brown. Further, his presence at Brown's home after the inspection, as well as his presence in the car parked near the driveway of Brown's house contemporaneous with the boarding of the "Gigi" by government agents, is insufficient to support a conclusion of conspiratorial intent. The government argues that Garcia "inspected the "Gigi" to ascertain if it suited the smugglers' needs." Further, the government attributes to Garcia participation in the "arrangements to dispose of their cargo."
25
We find that the evidence was insufficient for a jury to conclude that Evasio Garcia was guilty of conspiracy to import and conspiracy to possess with intent to distribute. The relevant acts of Evasio Garcia are his inspection of the "Gigi," his presence at a meeting of Cejas, George Garcia, Taute, and one other person, and his presence in a vehicle with Taute near Brown's driveway. His acts differ substantially from those of the other appellants. He has not been connected to instrumentalities of the distribution and importation schemes such as would have suggested that he was a conspirator. In this regard, he is unlike George Garcia who had a special code name for use of the walkie-talkie and used a telephone to ask Brown to locate a shrimp boat. He is unlike Falcon, Kelly, and Dennis Dorn who were on the boat loading the marijuana; and he is unlike Jon Taute who was on the lead boat and admitted that he was part of the importation and distribution scheme. As Garcia argues, all the record shows is that he was an acquaintance of Brown. The more reasonable inference from Garcia's acts in this case are that Brown requested that Garcia inspect the boat without making him aware of its ultimate purpose. As well, Garcia could have been present in Brown's house as a social guest. No evidence exists that the affairs of the importation and distribution schemes were discussed with Evasio Garcia. Finally, his presence in the car in the early hours of November 28 is mere presence. No inference of guilt can be reached based on his prior acts. A reasonable jury could not conclude that Evasio Garcia was a co-conspirator in the importation and distribution schemes. Accordingly, insufficient evidence exists to sustain the jury's verdict of guilty of conspiracy to import and conspiracy to possess with intent to distribute.
5. John Kelly and Dennis Dorn
26
Neither Kelly nor Dorn have raised sufficiency of the evidence claims before this court. While ordinarily we would not address a claim not raised, "a reversal for insufficient evidence would preclude a retrial." United States v. Romano, 736 F.2d 1432, 1439 (11th Cir.1984). See Hudson v. Louisiana, 450 U.S. 40, 101 S.Ct. 970, 67 L.Ed.2d 30 (1981). Accordingly, therefore, the sufficiency of the evidence claims with respect to Kelly and Dorn will be addressed.
27
The jury convicted Kelly and Dorn of conspiracy to import and importation, conspiracy to possess with intent to distribute, and possession with intent to distribute. Sufficient evidence existed for the jury to conclude that Kelly and Dorn were integrally involved in the importation scheme. Brown drove Kelly and Dorn to the dock. Both men boarded the "Gigi" and assumed their respective roles. Kelly acted as a supervisor, giving the pilot, Saunds, instructions as to how long to wait for the mother ship, and receiving from Saunds navigation readings with respect to their proximity to the rendezvous point. Dorn was responsible for staying on deck and passing the bales of marijuana to Falcon who was down in the hold of the "Gigi." As well, Dorn and Kelly were seen near the camper at the Bell Bluff Campground a day before the operation began. Given this quantum of contact with the importation scheme, a reasonable jury could conclude, first, that Kelly and Dorn had possession of the marijuana and, second, that given the quantity of the marijuana imported, an intent to distribute existed. Accordingly, sufficient evidence existed for the jury to conclude that Kelly and Dorn were guilty of the conspiracy and the substantive charges.
Fourth and Sixth Amendments
28
Taute and Evasio Garcia claim that the court committed error in admitting evidence that Garcia and Taute were seen by Agent Swygert near Brown's driveway, and by admitting incriminating statements made by Taute to Saunds.
29
They argue, first, that the identification of Garcia and Taute was derived from an admittedly illegal arrest and, as such, should have been excluded as fruit of that illegal arrest. The trial court, during the suppression hearing, found that Agent Swygert's observation of Garcia and Taute was "independent" of the arrest and, thus, was not tainted by its illegality. We agree. Agent Swygert observed Garcia and Taute in the car before he arrested them. While Agent Swygert lacked probable cause to arrest Garcia and Taute, he, nonetheless, had authority to stop the car and ask the occupants to identify themselves. As a result, therefore, the agent could properly testify to seeing Garcia and Taute in the car on November 28.
30
Taute next argues that incriminating statements made by him to Saunds were improperly admitted as fruit of the illegal arrest and, as the product of a government interrogation in violation of his right to counsel.9 The trial court fully evaluated Taute's claims with respect to the inadmissibility of the incriminating statements. It held, as do we, that such statements were neither tainted by the illegal arrest, nor were they obtained in violation of Taute's right to counsel.
Motion for Continuance
31
Kelly and Dorn make three claims arising from the court's denial of Kelly's motion for a continuance. Kelly claims the trial court abused its discretion in denying his motion for a continuance; both Kelly and Dorn make separate claims that the status of Ryland, original counsel for Kelly, Dennis Dorn, and John Dorn, as an object of a continuing criminal investigation, denied Dorn and Kelly their rights to conflict-free assistance of counsel, due process, and fundamental fairness. On review of the record, we find that (1) the trial court did not abuse its discretion in denying Kelly's motion for continuance for change of counsel and (2) that Kelly and Dorn's rights to conflict-free assistance of counsel, due process, and fundamental fairness were not violated.
32
On February 5, the Saturday before trial, Ryland, Kelly's lawyer, told the court that Kelly intended to retain a new lawyer. When questioned by the court about his reasons for desiring to change lawyers, Kelly answered that (1) he was upset that Ryland had failed to warn him that the newspaper would print his suppression hearing testimony admitting that he was an offloader of the "Gigi"; and (2) that he also objected to Ryland's failure to object to Kelly's being asked to "point other people out." When the trial began that Monday, Steve Kermisch, a lawyer, appeared representing Kelly. At that time, Kermisch made a motion for a continuance. Kermisch intimated that some conflict between Ryland and Kelly existed:
33
There was a book found in the trailer, the camper, that had someone's--Mr. Ryland's name was in it, and I think that Mr. Kelly and someone felt responsible for that, felt he had to take the stand. I'm not sure there wasn't some pressure of some of those things on Mr. Kelly that perhaps we are getting close to conflict, and I don't think the appearance of that should even be given.
34
This was the first suggestion of a possibility that a conflict of interest existed between Kelly and Ryland. The court denied the motion. The next day, Ryland informed the court that he had just recently learned that he was a "target" of the government's investigation. This was because a book containing a magazine subscription form had been filled out in the name of a woman with a last name of "Ryland," an airline ticket receipt for a flight from Miami, Florida, to Savannah, Georgia, on November 25, 1982, revealed an address which was Ryland's law office, and a gun which Ryland had given Cejas as a gift were all found in the camper pursuant to the arrest and searches in this case. Ryland was made aware, however, of the existence of these personal items as early as December 28, 1982, at a discovery conference. The government agent in charge of the continuing investigation into the marijuana operation testified that although Ryland was a "potential target" in this investigation, there was not enough evidence to bring an indictment. Ryland asked for a brief continuance during which he asked his clients, Dennis Dorn and John Dorn, whether they wanted him to continue as their counsel. Both expressed their desire to have him continue to represent them. In addition, in response to a question put to him by the court, Ryland stated that he was not "intimidated" by the government's suspicions.
35
These proceedings do not indicate that the court abused its discretion in denying the motion for a continuance, or that Kelly and Dorn's right to conflict-free assistance of counsel was violated. When the motion for a continuance was formally made at trial on the first day, Kermisch did not provide the court with any more information than that provided the trial court during the suppression hearing. Although Kermisch made some intimation that conflict of interest might exist between Ryland and Kelly, he did not elaborate nor press that contention. The substance of the motion, therefore, was a request for time for new counsel to prepare because Kelly differed with Ryland's strategy during the suppression hearing. Ryland's revelation on the next day, that he was a "target," was not such compelling evidence of his inability to provide effective assistance that the trial court's failure to grant the motion for a continuance after that revelation was an abuse of its discretion. Indeed, much suggests that the timing of the revelation may have had as its object the delay of the trial. Ryland knew in December, 1982, that personal items seized in the marijuana investigation suggested a possible connection with the marijuana importation-distribution scheme. Further, the decision by Dennis Dorn and John Dorn to retain Ryland as their lawyer undercuts any assertion that they felt intimidated by Ryland's revelations. As to Kelly, neither he nor Kermisch made a specific objection of ineffective assistance of counsel relating to Ryland's ability to have performed adequately in the past.10 We hold that the trial court did not abuse its discretion in denying Kelly's motion for a continuance.
36
Dennis Dorn claims for the first time on appeal that his right to conflict-free assistance of counsel was violated because of Ryland's status as an object of the government's investigation. Even though Dennis Dorn was given an opportunity to raise a conflict free assistance claim during trial, he declined to do so, thereby, suggesting that he was satisfied with both Ryland's past assistance and Ryland's ability to render such effective assistance throughout the trial. As this claim was not made at trial, it is not reviewable for the first time before this court. See Harden v. United States, 688 F.2d 1025, 1032 (5th Cir. Unit B 1982); Brookhaven Landscape & Grading Co., Inc. v. J.F. Barton Contracting Co., 676 F.2d 516, 523 (11th Cir.1982).
Juror Bias
37
Kelly and Dennis Dorn contend that the court abused its discretion in failing to hold a hearing to examine juror bias. They contend that it was not enough for the trial court to hold a hearing in which a member of the venire testified to jury statements of bias. They argue that the jurors should have been individually questioned to determine whether they were influenced by the statements made. Because credibility determinations are within the sound discretion of the trial court, the trial court did not abuse its discretion in finding that the dismissed juror's claims of jury hostility and bias were not credible.
38
Towards the end of the trial, Kermisch informed the court that a member of the venire who had not been selected for the jury reported to him a conversation of venire persons indicating jury bias. Bruce McDonald testified that at a lunch of prospective jurors, one person stated "if it was a black male raping a white lady, or if it was a drug trial, they should take them out back and shoot them."11 The others at the table nodded their agreement. McDonald, however, could not state that the juror making the statement had been selected, but he did indicate that a member of the current jury had stated that "he was opposed to drugs." The court found McDonald's testimony to be incredible.
39
THE COURT: [I] do not find this witness worthy of belief. He is too biased. He has already compromised himself so many times. Even assuming that conversation was had, there was no indication to show that the people were anything--or the person who made the statement, and the acquiescence in it, according to this witness, by the other people who were at the table had nothing--they demonstrated nothing but being against what the law also abhors, that is rape. Of course, they gave the connotation of it being in the racial context. And, also against drugs. Obviously, the law does prohibit each one of them.
40
What we are seeking, of course, is someone who comes into court honestly and fairly, and who will agree to try it. Over and over, a member of a panel has been questioned [whether] he [is] against whatever is being charged, and if he says yes, that certainly does not disqualify him. It only disqualifies him if he says he cannot be fair and impartial because of the magnitude of his offense to that particular charge.
41
It is within the trial court's discretion to question jurors about alleged bias, United States v. Yonn, 702 F.2d 1341 (11th Cir.1983). As McDonald's testimony was found to be incredible, the trial court did not abuse its discretion in failing to hold a separate hearing in which it would interrogate jurors as to their bias. See, e.g., United States v. Barshov, 733 F.2d 842 (11th Cir.1984).
42
Motion for Continuance and for Substitution of Counsel
43
At oral argument, the panel was made aware, prior to the call of the calendar, that a motion for continuance and for substitution of counsel was to be made in this case. Frank Petrella, counsel of record for John Kelly and Dennis Dorn, hand-delivered a letter to this court indicating that as of the close of business on October 30, 1984, John Kelly filed a pro se motion for a continuance. The letter also stated that Dennis Dorn telephoned Petrella that evening and advised him that he was "no longer to represent his interests in this case in any manner." Prior to the call of the calendar, the court questioned Petrella about his hand-delivered letter and about the pro se motion for continuance and substitution of counsel filed by Ester Kelly on behalf of John Kelly.12 When questioned about this matter, Petrella asked the court to agree to the substitution of counsel request made by Dennis Dorn to Petrella by telephone. The court agreed, but asked that Petrella remain at the proceeding during oral arguments. Ester Kelly's motion for continuance, however, was denied as being both untimely and presenting claims more appropriate in a collateral proceeding.
44
The motion for continuance asked for a ten-day delay on grounds which include:
45
1. The failure of Mr. Petrella to bring all issues on appeal.
46
2. Failure of counsel to follow instructions given by Kelly.
47
3. Prejudice caused by the fact that other trial counsel, Stephen Kermisch, was part of a witness protection program and as a result access to files relative to this case in Kermisch's custody was not possible.
48
4. Mr. Kermisch was an agent for the United States from 1980 through 1983.
49
We note, first, that the motion for continuance is directed at postponing oral argument. Kelly does not have a right to oral argument. The decision to schedule oral argument is in the discretion of the court. See 11th Cir.R. 23 and 24. In addition, we find that this motion for continuance is untimely. The grounds for the motion for continuance and substitution of counsel were known to Kelly well before the scheduling of oral argument. See United States v. McDonald, 672 F.2d 864 (11th Cir.1982). In addition, Kelly's claims regarding Petrella's performance in handling the trial and the appeal are more appropriately addressed in a collateral proceeding. We hold, therefore, that Kelly's motion for a continuance and for substitution of counsel is frivolous and, therefore, will not be addressed by this court. See 11th Cir.R. 18.
Conclusion
50
For the foregoing reasons, we conclude that the claims of George Garcia, Miguel Falcon, Jon Taute, John Kelly, and Dennis Dorn are all without merit. Their convictions are affirmed. Evasio Garcia's claim, however, has merit. His conviction is reversed.
51
AFFIRMED IN PART and REVERSED IN PART.
*
Honorable Philip Nichols, Jr., U.S. Circuit Judge for the Federal Circuit, sitting by designation
1
Brown testified as a government witness pursuant to a plea agreement in which Brown pleaded guilty to one count of conspiracy to import marijuana
2
Saunds pleaded guilty to importation of marijuana and testified for the government. Cejas also pleaded guilty to conspiracy to possess with intent to distribute marijuana
3
On cross-examination, Saunds testified that while he received his instructions and orders from Brown and Cejas, it was, nevertheless, apparent to him that John Kelly "just knew more than anybody else did."
4
While stationed as a lookout at the entrance to the Belvedere Landing, Brown heard the same warning over his walkie-talkie. He fled the scene, but was arrested at a local motel the next day
5
Appellants, John Dorn, Miguel Falcon, and John Kelly, were indicted in case number CR 282-29, while appellants, George Garcia, Evasio Garcia, and Jon Taute, were indicted in case number CR 282-30. We have consolidated the cases for argument and decision
6
Title 21 U.S.C.A. Sec. 846 (1982) provides:
Sec. 846. Attempt and conspiracy
Any person who attempts or conspires to commit any offense defined in [18 U.S.C.A. Secs. 801-904; Drug Abuse Prevention and Control, Control and Enforcement] is punishable by imprisonment or fine or both which may not exceed the maximum punishment prescribed for the offense, the commission of which was the object of the attempt or conspiracy.
Title 21 U.S.C.A. Sec. 841(a)(1) (1982) provides:
Sec. 841. Prohibited Acts A
(a) Unlawful Acts
Except as authorized by this subchapter, it shall be unlawful for any person knowingly or intentionally--
(1) to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance[.]
Title 21 U.S.C.A. Sec. 963 (1981) provides:
Attempt and conspiracy
Any offense defined in this subchapter is punishable by imprisonment or fine or both which may not exceed the maximum punishment prescribed for the offense, the commission of which was the object of the attempt or conspiracy.
Title 21 U.S.C.A. Sec. 960 (1981) provides in relevant part:
Sec. 960. Prohibited Acts A
Unlawful Acts
(a) Any person who--
(1) contrary to section 952, 953, or 957 of this title, knowingly or intentionally imports or exports a controlled substance,
(2) contrary to section 955 of this title, knowingly or intentionally brings or possesses on board a vessel, aircraft, or vehicle a controlled substance, or
(3) contrary to section 959 of this title, manufactures or distributes a controlled substance,
shall be punished as provided in subsection (b) of this section.
7
Title 18 U.S.C. Sec. 2 (1982) provides:
Sec. 2 Principals
(a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.
(b) Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States is punishable as a principal.
Title 21 U.S.C.A. Sec. 952(a) provides:
Importation of controlled substances
Controlled substances in schedules I or II and narcotic drugs in schedules III, IV, or V; exceptions
(a) It shall be unlawful to import into the customs territory of the United States from any place outside thereof (but within the United States), or to import into the United States from any place outside thereof, any controlled substance in schedule I or II of subchapter I of this chapter, or any narcotic drug in schedule III, IV, or V of subchapter I of this chapter ....
8
Taute makes a separate claim concerning the admissibility of these statements. We discuss this issue further in the Fourth and Sixth Amendments portion of this opinion
9
At trial, Evasio Garcia's lawyer, Clark, objected to Saunds's testimony regarding the statements of Jon Taute made at the Glyn County Jail. Clark reasoned that such statements were hearsay and were inadmissible as statements of co-conspirators because the conspiracy had ended at the time Taute was in jail. Without determining whether the conspiracy had, indeed, ended and absent any objection from the government, the trial court ruled that Saunds's testimony as to Taute's statements would be admissible only as to Taute and not to any of the other defendants. A limiting instruction was given to the jury
10
The government suggests that to the degree that the conflict-free assistance of counsel claim was raised during the motion for a continuance, that claim was not a valid objection raised at trial and, therefore, was not reviewable on appeal. We do not decide that issue because, to the degree that an objection was made as to the right to conflict-free assistance of counsel, the court did not abuse its discretion in denying the motion for a continuance and, thereby, rejecting the claim that Kelly and Dorn's right to conflict-free assistance was violated
11
McDonald was disqualified from being eligible for jury selection because he had been recently arraigned in state court on a drug charge. In addition, examination of McDonald during this hearing revealed that (1) he was favorably disposed towards marijuana; (2) he was a good friend of Kelly's wife; (3) his car had been searched and taken apart by Agent Swygert, the case agent at this trial, who had thought that McDonald was "hauling something" illegal; and (4) he, nonetheless, bore no grudge or ill will against Agent Swygert
12
We assume that Ester Kelly is the authorized agent of John Kelly | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1667166/ | 774 N.W.2d 476 (2009)
2009 WI App 141
STATE
v.
ULLRICH.
No. 2009AP88-CR.
Court of Appeals of Wisconsin.
August 27, 2009.
Unpublished opinion. Reversed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2262386/ | 900 F.Supp. 54 (1995)
In the Matter of TLC MARINE SERVICES, INC., as Owner of the M/V Miss Angie, in a cause of Exoneration from or Limitation of Liability.
No. 1:95-CV-0096.
United States District Court, E.D. Texas, Beaumont Division.
June 28, 1995.
Thad Heartfield, Sr., Beaumont, TX, Gary Joseph Gambel, Peter Brooks Sloss, Murphy Williams Rogers & Sloss, New Orleans, LA, for plaintiff.
Paul R. Miller, The Chaffin Law Firm, Houston, TX, for claimant.
MEMORANDUM
COBB, District Judge.
On July 12, 1994, Tracy Cantrelle was employed by T.L.C. as a seaman and member of the crew of the M/V MISS ANGIE, a vessel owned and operated by T.L.C. Plaintiff alleges he slipped on an exterior stairway aboard the vessel. At the time of plaintiff's alleged accident, the M/V MISS ANGIE was on the Ouachita River near Camden, Arkansas. The other crew members of the M/V MISS ANGIE, the likely principal fact witnesses in this case, are, as is the plaintiff, residents of Lafourche Parish, Louisiana.
Plaintiff, Tracy Cantrelle, is a citizen and resident of Lafourche Parish, Louisiana. Defendant/limitation plaintiff, T.L.C., is a *55 company incorporated in Louisiana with its principal and only place of business in Lafourche Parish, Louisiana. Lafourche Parish is within the federal Eastern District of Louisiana.
Plaintiff received emergency room treatment in Camden, Arkansas, on the day of his alleged accident, and he returned to his home in Lafourche Parish, Louisiana, the following day. Since that time, plaintiff has been evaluated and/or treated by at least five doctors and/or chiropractors, all located in Lafourche Parish or New Orleans, Louisiana.
Plaintiff retained a New Orleans attorney, who referred this matter to the Chaffin law firm in Houston, Texas, who on November 7, 1994, filed suit on plaintiff's behalf against T.L.C. in the 60th Judicial District Court for Jefferson County, Texas. T.L.C. filed a special appearance seeking dismissal of plaintiff's Texas state court lawsuit for lack of in personam jurisdiction, arguing that T.L.C. lacks the constitutionality mandated "continuous and systematic" general business contacts with Texas to support in personam jurisdiction in this case, which has no connection to Texas. That motion is pending in state court.
On February 9, 1995, T.L.C. filed this proceeding seeking exoneration from or limitation of liability under 46 U.S.C.App. § 183 et seq., and Rule F of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure. T.L.C. filed this limitation action in the United States District Court for the Eastern District of Louisiana. Although the limitation of liability venue provision, Supplemental Rule F(9) facially required T.L.C. file its limitation petition in this district because plaintiff had sued T.L.C. in Texas state court in this district, T.L.C. maintained in its limitation petition that it could not be compelled to file for limitation in a state in which it could not be subjected to personal jurisdiction. T.L.C. further maintained that, because plaintiff's Texas state court suit against it was in an improper forum, Supplemental Rule F(9) did not preclude T.L.C. from filing for limitation in the Eastern District of Louisiana, where the vessel was then located. Nevertheless, constrained by the provisions of Supplemental Rule F(9), the United States District Court for the Eastern District of Louisiana transferred T.L.C.'s limitation action to this court on February 15, 1995. Only plaintiff has filed a claim against T.L.C. in this limitation proceeding.
T.L.C. now moves this court to transfer this limitation action back to the United States District Court for the Eastern District of Louisiana. Supplemental Rule F(9) permits a court to transfer a limitation action to any other district for the convenience of the parties and witnesses. In this case, all of the parties and witnesses are located within the Eastern District of Louisiana, whereas no parties, witnesses, or evidence is located in Texas, and Texas has no interest in this dispute.[1] The Eastern District of Louisiana is therefore a far more convenient and appropriate forum for this limitation action.
Plaintiff's Texas state court action has been stayed pursuant to this Court's March 13, 1995, order under Supplemental Rule F(3). Plaintiff filed an answer and claim in this limitation action on or about May 10, 1995.
The transferor court had no option but to transfer this case to the Eastern District of Texas under the Admiralty Rules, since Cantrelle had a pending suit here. However, venue in a limitation of liability action is governed by Supplemental Rule F(9), which provides, in pertinent part:
For the convenience of parties and witnesses, in the interest of justice, the court may transfer the action to any district....
The sole issue before this court is the return of the case to the Eastern District of Louisiana pursuant to Supplemental Rule F(9).
In a similar case, plaintiffs filed a claim against vessel owners in Texas state court in Galveston, which is in the Southern District of Texas. In re American River Transp. Co., 864 F.Supp. 554, 556 (E.D.La.1994). The vessel owners then sought a limitation of *56 liability determination in the United States District Court for the Eastern District of Louisiana. The district court recognized that the Southern District of Texas held the appropriate venue for this case because of the pending state court action against the vessel. Id. The court then transferred the case to the Southern District of Texas pursuant to Supplemental Rule F(9). Id. The court also noted that the case "may be transferred back to the Eastern District of Louisiana for Forum Non Conveniens reasons, as the parties are from Louisiana, the alleged incident occurred in Louisiana, and the witnesses, records, and physicians are allegedly all located in Louisiana." Id. at 556. n. 1.
The United States District Court for the Eastern District of Louisiana transferred the present case to this court pursuant to the specific terms of Supplemental Rule F(9). In support of its motion to transfer the case to the Eastern District of Louisiana, whence it came, T.L.C. states all the parties and witnesses are located within the Eastern District of Louisiana, and no interested parties, witnesses, or evidence is in the Eastern District of Texas.[2]
The factors to be considered by this court in determining whether a transfer is appropriate under Supplemental Rule F(9) are the same as those developed by the federal transfer statute, 28 U.S.C. § 1404(a). In re Alamo Chem. Transp. Co., 323 F.Supp. 789, 791 (S.D.Tex.1970); see also Wright & Miller, Federal Practice and Procedure: Civil § 3253 n. 15. These criteria include: (1) the convenience of the parties; (2) the convenience of material witnesses; (3) the availability of process to compel the presence of witnesses; (4) the cost of obtaining the presence of witnesses; (5) the relative ease of access to sources of proof; (6) calendar congestion; (7) where the events in issue took place; and (8) the interests of justice in general. Gundle Lining Const. v. Fireman's Fund Ins., 844 F.Supp. 1163, 1165 (S.D.Tex. 1994) (citing St. Cyr. v. Greyhound Lines, Inc., 486 F.Supp. 724, 727 (E.D.N.Y.1980)).
In the present case, the plaintiff, the defendant, all the witnesses, as well as all relevant documentary evidence are located in the Eastern District of Louisiana. Nothing connected with this case is in the Eastern District of Texas other than plaintiff's state court proceeding. Plaintiff's choice of forum is the only factor in favor of keeping this case in the Eastern District of Texas. However, plaintiff's choice of forum should be given little weight if, as in this case, the plaintiff does not reside in the district in which his suit is pending. Fletcher v. Exxon Shipping Co., 727 F.Supp. 1086, 1087 (E.D.Tex.1989).[3]
The jurisprudence interpreting 28 U.S.C. § 1404(a) guides this motion to transfer this limitation action under Supplemental Rule F(9). 28 U.S.C. § 1404(a). Complaint of Bankers Trust Co., 640 F.Supp. 11, 14 (E.D.Pa.1985) (quoting In re Alamo Chemical Transportation Co., 323 F.Supp. 789 (S.D.Tex.1970) (citing Norwood v. Kirkpatrick, 349 U.S. 29, 75 S.Ct. 544, 99 L.Ed. 789 (1955))).
The Fifth Circuit has held that transfer is appropriate under § 1404 based on lack of personal jurisdiction, as well as the convenience of the parties and witnesses. Bentz v. Recile, 778 F.2d 1026, 1027-28 (5th Cir.1985) (citing Aguacate Consolidated Mines, Inc. v. Deeprock, Inc., 566 F.2d 523 (5th Cir.1978)). See also Blanks v. Taos Ski Valley, Inc., 706 F.Supp. 515 (E.D.Tex.1988); Radio Santa Fe, Inc. v. Sena, 687 F.Supp. 284 (E.D.Tex. 1988).
Considering all of the appropriate factors, this Court finds an Eastern District of Louisiana forum best serves the interests of the parties, witnesses, and the judicial system. Therefore, this Court GRANTS T.L.C.'s Motion to Transfer, and this case is hereby *57 TRANSFERRED to the Eastern District of Louisiana for further disposition.
NOTES
[1] Of some interest, if not significance, is the fact that Cantrelle has not filed a response opposing the return of the case to the Eastern District of Louisiana.
[2] Supplemental Rule F(9) states that:
[f]or the convenience of the parties and witnesses, in the interests of justice, the court may transfer the action to any district; if venue is wrongly laid the court shall dismiss or, if it be in the interest of justice, transfer the action to any district in which it could have been brought.
Supplemental Rule F(9), FED.R.CIV.P.
[3] Using 28 U.S.C. § 1404(a), the Supreme Court lessened the decisive weight that plaintiff's choice of forum once enjoyed. See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 253, 102 S.Ct. 252, 264, 70 L.Ed.2d 419 (1987). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321156/ | 126 Ga. App. 90 (1972)
190 S.E.2d 83
BOORSTINE
v.
THE STATE.
47076.
Court of Appeals of Georgia.
Argued April 5, 1972.
Decided April 17, 1972.
Calhoun & Kernaghan, William C. Calhoun, for appellant.
EBERHARDT, Presiding Judge.
From a conviction for receiving stolen goods defendant appeals enumerating as errors (1) failure to give the Miranda warning when a deputy sheriff went to defendant's place of business (a pawn shop) to ascertain whether the merchandise (five watches and seven rings) might be there, (2) permitting a State's witness to testify, over objection, that he had been to defendant's place on a previous occasion with an unknown *91 man to sell a tape recorder, (3) permitting a State's witness to testify, over objection, that on a previous occasion defendant had purchased some stolen Masonic rings, (4) refusing to allow testimony on behalf of the defendant that most of his customers were low income people who generally pawn merchandise with price tags remaining thereon, (5) refusing to permit testimony that merchandise which defendant purchased had turned out to be stolen, (6) the court's remarks relative to the use of hearsay by the defendant in his testimony, (7) refusing to permit proof by defendant that 40 to 50 percent of the pawns or purchases from his customers was new merchandise, (8) refusing to permit testimony that defendant had made reports to the police department covering merchandise left in pawn, (9) refusing to permit a police captain to testify that defendant had in the past cooperated with the department in recovering stolen property, (10) refusing to permit the police captain to testify that defendant had, on previous occasions, reported to the department items of stolen merchandise which came to his place of business, (11) refusing to permit testimony as to defendant's cooperation with the police in recovering stolen merchandise in connection with the presentence hearing, (12) refusing to give certain requested charges. Held:
1. A mere inquiry by the police as to whether defendant may have in his pawn shop certain merchandise thought to have been stolen does not present a situation requiring the Miranda warnings. At that stage it did not amount to the interrogation of the defendant as a suspected criminal.
2. 3. Testimony concerning receipt by defendant of stolen items (by way of purchase or pawn) with the connotation that he did so knowing of the facts that the items were stolen, is impermissible unless there appears a logical connection between them. Bacon v. State, 209 Ga. 261 (71 SE2d 615). No such connection appeared here.
4, 5, 7. Defendant's chief defense was that he had acquired the merchandise in a normal course of business, in good *92 faith, and that he had not wrongfully or unlawfully, with knowledge of its character, purchased or received the merchandise which the State alleged to have been stolen. We think that evidence as to the manner in which defendant's business was operated, the character of his trade and of his customers and their practice of bringing merchandise for pawn while yet having price tags affixed was relevant to the defense, and should have been admitted.
8, 9, 10. In like manner we regard testimony in behalf of the defendant that he had in the past cooperated with the police in identifying and recovering stolen merchandise as tending to support his defense that he had come into possession of the merchandise without knowledge of its stolen character, and it should have been admitted.
11. Testimony as to prior cooperation with the police in recovering stolen merchandise should have been admitted for consideration in determining the sentence.
12. A charge of Code Ann. § 26-1806 (a) should include the whole of this section; a deletion or omission of the portion "unless the property is received, disposed of, or retained with intent to restore it to the owner," is error under the facts here.
6. Since we are reversing the judgment and a new trial is to be had it is not likely that the matter referred to in the sixth enumeration will occur again, and we make no ruling as to it.
Judgment reversed. Deen and Clark, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321158/ | 126 Ga. App. 268 (1972)
190 S.E.2d 556
FOSKEY
v.
THE STATE.
47103.
Court of Appeals of Georgia.
Submitted April 4, 1972.
Decided April 28, 1972.
Rehearing Denied May 11, 1972.
J. Laddie Boatright, for appellant.
Dewey Hayes, District Attorney, for appellee.
BELL, Chief Judge.
The defendant was convicted of Counts 2 and 3 of a three-count indictment and sentenced to twelve months confinement on each count. Held:
1. Count 2 purports to charge the defendant with a violation of Code § 58-209. Error is enumerated on the failure of the trial court to charge the substance and principles of that statute. This enumeration has merit. Count 2 in pertinent part reads as follows: "... with the offence of possession of distillery apparatus for that the said Billy Foskey, Jr. ... did then and there unlawfully and with force and arms, did unlawfully control, and possess an apparatus for distilling and manufacturing of whiskey, commonly known as an illegal moonshine whiskey still." The trial court during its charge read Count 2 to the jury, charged on Code Ann. § 58-210, which has no relevancy to this prosecution, and furnished the jury a definition of apparatus. Code § 58-209 provides that "It shall be unlawful for any corporation, firm or individual to knowingly permit or allow anyone to have or possess or locate on his premises any apparatus for the distilling or manufacturing of the liquors and beverages specified in § 58-201." The gravamen of the offense is knowingly having upon one's premises apparatus for the illegal manufacturing of alcoholic beverages. This statute does not make penal the possession of the apparatus other than on the premises of the defendant. Johnson v. State, 79 Ga. App. 210 (53 SE2d 498). Upon the trial of a criminal case the trial judge with or without request should instruct them as to the general principles of the law which of necessity must be applied in reaching a correct verdict on the issues. Sledge v. State, 99 Ga. 684 (1) (26 SE 756). The failure to charge the essential elements of the purported crime requires the reversal of the judgment of conviction and the sentence as to Count 2.
In connection with Count 2, although the issue is not raised for decision here, we are constrained to suggest that the *269 count itself is void because it does not contain allegations concerning knowledge or that the offense occurred on the premises of the defendant. See Johnson v. State, supra; Hilliard v. State, 87 Ga. App. 769 (75 SE2d 173).
2. After the hearing of testimony of witnesses at trial, the defendant objected to certain testimony and to the receipt in evidence of the State's exhibits, jugs of whiskey, on the grounds of an unlawful search and seizure. The defendant made no written motion to suppress the evidence. Failure to comply with provisions of Code Ann. § 27-313 by interposing a timely written motion to suppress amounts to a waiver of the constitutional guarantee. Lane v. State, 118 Ga. App. 688 (165 SE2d 474).
3. No cause for reversal has been shown by the trial court's refusal to permit defendant's counsel to ask a witness on cross examination an argumentative and repetitious question.
Judgment of conviction and sentence as to Count 2 reversed; affirmed as to Count 3. Evans and Stolz, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261539/ | 237 P.3d 263 (2010)
Cal Coburn BROWN and Jonathan Gentry, Appellants,
v.
Eldon VAIL, Secretary of Washington Department of Corrections (in his official capacity); Stephen Sinclair; Marc Stern; Cheryl Strange; Washington State Department of Corrections, and Does 1-50, Respondents.
Darold Stenson, Appellant,
v.
Eldon Vail, Secretary of Washington Department of Corrections (in his official capacity); Stephen Sinclair; Marc Stern; Cheryl Strange; Washington State Department of Corrections, and Does 1-50, Respondents.
Nos. 83474-1, 83828-3.
Supreme Court of Washington, En Banc.
Argued March 18, 2010.
Decided July 29, 2010.
*264 Sherilyn Christine Peterson, Perkins Coie, L.L.P., Diane Marie Meyers, Graham & Dunn, Seattle, WA, for Appellants.
*265 Sara J. Di Vittorio, John Joseph Samson, Office of the Attorney General, Olympia, WA, for Respondents.
Sarah A. Dunne, Nancy Lynn Talner, ACLU of Washington Foundation, Beth Marie Andrus, Skellenger Bender PS, Seattle, WA, amicus counsel for ACLU of Washington Foundation.
Scott Jeffrey Engelhard, Suzanne Lee Elliott, Gilbert Henry Levy, Attorneys at Law, Seattle, WA, amicus counsel for Interested Parties.
STEPHENS, J.
¶ 1 This case began mainly as a constitutional challenge by three death row inmates, Darold Stenson, Cal Brown, and Jonathan Gentry (Appellants), to Washington's three-drug lethal injection protocol for carrying out a sentence of death. The Thurston County Superior Court dismissed some claims on summary judgment and held a five-day bench trial in May 2009 to consider whether the three-drug protocol violated the Eighth Amendment prohibition against "cruel and unusual punishment" or Washington's constitutional ban on "cruel punishment" in article I, section 14. The trial court upheld the lethal injection protocol, and this appeal followed.
¶ 2 Before this court heard oral argument, however, the Washington Department of Corrections (Department) abandoned the three-drug method of execution and adopted a new, one-drug protocol, effective March 8, 2010. The Department now moves to dismiss the Appellants' constitutional challenge as moot, leaving for review only claims concerning the legislative delegation of authority to the Department to develop a lethal injection protocol, and the Department's handling of the lethal injection substances under state and federal law governing controlled substances. In addition, the Department cross-appeals the trial court's refusal to dismiss this case as time barred.[1]
¶ 3 For the reasons that follow we affirm the trial court, both as to the statute of limitations question and its dismissal of the claims concerning legislative delegation and the state and federal controlled substances acts. With respect to the Appellants' constitutional challenge and related claims, we grant the Department's motion to dismiss these claims as moot.
FACTS AND PROCEDURAL HISTORY
¶ 4 The Appellants in this matter were sentenced to death following murder convictions. In this civil action, they challenge the Department's protocol for carrying out a death sentence by lethal injection. Below and in their initial briefs in this court, the Appellants did not challenge the imposition of the death penalty generally or the use of some lethal injection protocol to impose death; rather, their claim focused on the particular three-drug protocol the Department followed. See Opening Br. of Appellant Stenson at 25 (Br. of Appellants) (arguing one-drug execution method is preferable).[2]
A. Procedural History
¶ 5 In September 2008, Stenson brought an action against the Department challenging the adequacy of the Department's lethal injection policy under the state and federal constitutions. Br. of Appellants at 7. He also alleged the Department lacked a proper delegation of legislative authority to develop the policy. See Clerk's Papers (CP) at 3381 (dismissing claim on summary judgment). In 2009, Brown and Gentry brought a separate action, which was later consolidated with Stenson's. Opening Br. of Resp'ts/Cross-Appellants (Br. of Resp'ts) at 10-11. Upon consolidation, Brown and Gentry agreed to *266 pursue only their constitutional challenge and dismiss for trial their claims that the Department lacked legislative authority to develop the protocol and that the Department's handling of the lethal injection substances violated the federal controlled substances act. Id. Brown and Gentry did not waive their right to appeal the pretrial dismissal of those claims. Id. at 11.
¶ 6 In April 2009, Stenson filed a second amended complaint seeking a declaratory judgment and injunctive relief to enjoin the Department from carrying out executions under the 2008 lethal injection protocol, as written and as implemented by the Department. CP at 1148-66. The complaint alleged that the protocol violates the Appellants' rights under the Eighth Amendment to the United States Constitution and article I, section 14 of our state's constitution. The complaint also alleged the protocol violates the state and federal controlled substances acts. CP at 1165.
¶ 7 Prior to trial, the Appellants unsuccessfully moved for a preliminary injunction in order to get a temporary stay of execution. CP at 558-61. That decision was appealed to this court, which entered a temporary stay of execution. Wash. Supreme Court Order, Brown v. Vail, No. 82832-6 (Mar. 12, 2009).[3] The Appellants request for permanent injunctive relief on the basis of various alleged constitutional and statutory violations proceeded to a trial on the merits.
¶ 8 Before trial, having already dismissed the Appellants' unlawful delegation claim, the trial court additionally granted summary judgment dismissal of the Appellants' claim regarding the alleged violation of the state and federal controlled substances acts. CP at 2941-42.
¶ 9 A bench trial commenced on the remaining constitutional claims on May 21, 2009 and lasted five days. At its conclusion, the trial court ruled in favor of the Department. CP at 3191-207 (Findings of Fact and Conclusions of Law); Br. of Appellants, Ex. 4 (appending trial court's findings of fact and conclusions of law).
¶ 10 The Appellants appealed directly to this court, and we retained the matter, setting oral argument for March 18, 2010. On March 4, 2010, the Department filed a motion to dismiss as moot the claims that the three-drug protocol is unconstitutional. The Department represented that it was poised to adopt a new protocol allowing for execution by a single dose of sodium thiopental, rather than the three-drug combination, which it argued would render the Appellants' constitutional claims moot. On March 8, 2010, the Appellants filed a response to the Department's motion, arguing that even if this court were to find the Appellants' constitutional claims moot, "that would not necessarily require their dismissal, but might instead call for further proceedings to assess the constitutionality of the amended policy" under the state and federal constitutions. Pet'rs' Resp. to Resp'ts' Mot. to Dismiss as Moot the Claims that the Three-Drug Protocol is Unconstitutional at 7 (Resp. to Mot. to Dismiss as Moot). That same day, on March 8, 2010, the Department officially adopted the one-drug protocol. On March 9, 2010, the court entered an order passing the Department's motion to dismiss to the merits.
B. The Death Penalty Protocol
¶ 11 The Department implements the death penalty through a written policy, DOC 490.200, to which the Department makes periodic revisions. Br. of Appellants at 5. The secretary of the Department must approve changes. Id. In one revision, the Department established a three-drug protocol for lethal injection to be administered in the following order: sodium thiopental, pancuronium bromide, and potassium chloride. CP at 3425 (1998 version of protocol). This protocol was revised in 2008 following the United States Supreme Court opinion in Baze v. Rees, 553 U.S. 35, 128 S.Ct. 1520, 1532, 170 L.Ed.2d 420 (2008) (upholding Kentucky's three-drug protocol against an Eighth Amendment challenge). I Verbatim Report of Proceedings (VRP) at 71.
¶ 12 As noted, when we retained review in this case, the 2008 protocol was in effect and *267 the Appellants challenged this protocol as impermissible under state and federal constitutional provisions prohibiting cruel and/or unusual punishment. Under the 2008 three-drug protocol, an execution is carried out via intravenous injection of three lethal substances: sodium thiopental, pancuronium bromide, and potassium chloride. Sodium thiopental is an anesthetic that induces a deep, coma-like unconsciousness. II VRP at 272-74. The second drug, pancuronium bromide, is a paralytic agent that inhibits muscular-skeletal movements and stops respiration by paralyzing the diaphragm, therefore bringing about the death of the inmate by asphyxiation. II VRP at 275, 281. The third drug, potassium chloride, a heart attack-inducing agent, interferes with the electrical signals that stimulate heart contractions. II VRP at 276-77. Without the unconsciousness produced by the sodium thiopental, the condemned inmate would experience a very painful death as a result of the effects of pancuronium bromide and potassium chloride. II VRP at 281-82.
¶ 13 Prior to oral argument in this case, the Department amended its protocol so that a condemned inmate is now put to death with a single dose of sodium thiopental. Testimony at trial established that in large doses, roughly three grams or above, sodium thiopental will likely stop an individual from breathing. III VRP at 483. The 2010 protocol calls for the administration of a five gram dose. Resp. to Mot. for Continuance of Oral Argument, App. B at 10. For this discussion, the pertinent differences between the 2008 and 2010 protocols are that that 2010 protocol adopted the single-drug method of execution and it also expressly incorporated a checklist used by the superintendent in preparing for an execution. Id. at 1 (summary of revision/review).
¶ 14 Aside from these changes, many aspects of the 2010 protocol are similar to the 2008 protocol. For example, like the 2008 protocol, the 2010 protocol assembles an injection team that operates under the supervision of the superintendent. Trial Ex. (Tr. Ex.) 1, at 9 (2008 protocol); IV VRP at 617-18; Resp. to Mot. for Continuance of Oral Argument, App. B at 8-10 (2010 protocol). The injection team members are required to have sufficient training or experience to carry out the lethal injection process without any unnecessary pain to the inmate. Resp. to Mot. for Continuance of Oral Argument, App. B at 9; Tr. Ex. 1, at 8. Minimum qualifications include one or more years of professional experience as a certified medical assistant, phlebotomist, emergency medical technician, paramedic, military corpsman, or similar occupation. Id. The injection team positions the intravenous lines (IV) into the inmate, mixes the chemicals, prepares the syringes, and eventually injects the drugs through 14 1/2 feet of IV tubing. Id.; Tr. Ex. 1, at 9; IV VRP at 618.[4] After the inmate is brought into the execution chamber and placed on the execution table under restraints, the injection team enters the chamber to insert two IVs into the inmate and begin a flow of saline through each line. Id. The team then returns to an adjacent room behind one-way glass. Tr. Ex. 1, at 9; II VRP at 228. Upon notification from the superintendent, the team introduces the lethal solution. Resp. to Mot. for Continuance of Oral Argument, App. B at 10. The injection team signals the superintendent when all of the solutions have been administered. Id. At a time deemed appropriate by the superintendent, the curtains are closed and the superintendent calls for the physician to examine the body and make a pronouncement of death. Id.
¶ 15 During trial on the 2008 protocol, the superintendent testified that, although it was not part of the protocol as written, the Department would not use a "cutdown" procedure, wherein a vein is surgically accessed. IV VRP at 694. He also testified that, although the policy as written does not so specify, the Department would not seek to access an inmate's veins via the neck. Id. The trial court found this testimony to be credible. CP at 3196 (Finding of Fact 25). At oral argument, the Department represented that it was bound by this testimony in *268 the implementation of the 2010 protocol. Wash. Supreme Court Oral Argument, Brown v. Vail, No. 83474-1 (Mar. 18, 2010), at 32 min., 21 sec. through 33 min., 24 sec., audio recording by TVW, Washington State's Public Affairs Network, available at http://www.tvw.org.
ANALYSIS
¶ 16 As noted, this case does not present a challenge to the death penalty generally or even to all methods of lethal injection. We are asked to consider whether the Department's lethal injection protocol was drafted without legislative authority and whether the protocol violates the state and federal controlled substances acts. These claims do not turn on whether the protocol at issue employs a three-drug or one-drug execution method, and the Department does not argue they should be dismissed as moot. Thus, while the briefing in this case as to the nonconstitutional issues cites to the three-drug 2008 protocol, the arguments are equally applicable to the newly enacted 2010 one-drug protocol. We also consider whether the Appellants' constitutional claims are moot in light of the new protocol. To begin with, however, we must address the Department's cross appeal alleging that the Appellants' claims are barred by a statute of limitations.
A. Is the Appellants' challenge time barred?
¶ 17 Washington law imposes a catch-all, three-year statute of limitations for "injury to the person or rights of another not hereinafter enumerated." RCW 4.16.080(2). At trial, the Department moved to dismiss the Appellants' challenge as time barred by RCW 4.16.080(2). CP at 563. The trial court denied the motion, reasoning that "the statute of limitations period was reset when [the Department] amended its policy in June 2007 and again on October 25, 2008." Id.
¶ 18 The Department renews its argument here, asking this court to hold that the three-year statute of limitations began to run when the Appellants' sentences became final.[5] The Department points out that lethal injection has been the primary method of execution since 1996. Br. of Resp'ts at 48 (citing CP at 3423-25; I VRP at 33). Thus, the Appellants knew, or should have known,[6] since the mid-1990s that the Department would carry out their sentences using that method. Id. Under the Department's argument, the three-year statute of limitations expired nearly a decade before the Appellants filed this lawsuit in 2008.
¶ 19 The trial court properly rejected the Department's argument. The Appellants' challenge to the method of execution used in Washington State turns mainly on whether the Department's lethal injection protocol satisfies state and federal statutory and common law requirements. To make such a determination, the protocol itself must be analyzed in its most current form. The three-year statute of limitations to file a claim challenging an execution protocol amended in 2007, again in 2008, and again in 2010, did not run by the time the Appellants filed this lawsuit in 2008.
¶ 20 We hold that the Appellants' challenge to the protocol is not time barred.
B. Legislative Delegation of Authority Concerning Death Penalty Protocols
¶ 21 The Appellants contend that the legislature did not delegate to the Department the authority to make policy such as the death penalty protocol. Br. of Appellants at 27. The trial court dismissed this claim on summary judgment. CP at 3381. The Appellants do not appear to argue that there *269 are issues of material fact that the court should have reviewed, but rather that the trial court erred as a matter of law when it concluded that the Department acted with authority. Br. of Appellants at 27-30. We review the trial court's ruling de novo.
¶ 22 A proper delegation of legislative authority requires that the legislature "`provide standards or guidelines which indicate in general terms what is to be done and the administrative body which is to do it.'" In re Pers. Restraint of Powell, 92 Wash.2d 882, 891, 602 P.2d 711 (1979) (quoting Barry & Barry, Inc. v. Dep't of Motor Vehicles, 81 Wash.2d 155, 163-64, 500 P.2d 540 (1972)). In addition, "`adequate procedural safeguards must be provided, in regard to the procedure for promulgation of the rules and for testing the constitutionality of the rules after promulgation.'" Id. (emphasis omitted).
¶ 23 As to the first requirement, by statute the secretary of the Department shall manage the Department, administer correctional programs, and oversee operation of all state correctional facilities. RCW 72.09.050. The secretary "may delegate any of his or her functions or duties to department employees." Id. Moreover, the superintendent of each correctional facility, subject to approval from the director of the division of prisons and the secretary, "shall make, amend, and repeal rules for the administration, supervision, discipline, and security of the institution." RCW 72.02.045(4). Finally, "[a]ll executions ... shall be carried out within the walls of the state penitentiary," RCW 10.95.180(2), and the superintendent is charged with the supervision of punishment by death, which is to be accomplished by either hanging or "intravenous injection of a substance or substances in a lethal quantity sufficient to cause death and until the defendant is dead." RCW 10.95.180(1).
¶ 24 Pointing specifically to RCW 10.95.180, the Appellants contend that it provides merely that the superintendent will supervise the execution, with "no express delegation of authority to [the Department]." Br. of Appellants at 28.
¶ 25 The Appellants' argument fails. A delegation of authority need not be express. "Administrative agencies have those powers expressly granted to them and those necessarily implied from their statutory delegation of authority.... [I]mplied authority is found where an agency is charged with a specific duty, but the means of accomplishing that duty are not set forth by the Legislature." Tuerk v. Dep't of Licensing, 123 Wash.2d 120, 124-25, 864 P.2d 1382 (1994) (citations omitted). The Department, through the superintendent of the state penitentiary, is charged with the duty to supervise executions by lethal injection under RCW 10.95.180(1), necessarily including the authority to establish the protocol by which lethal injection will be administered. The Appellants underestimate the plain meaning of "supervise." They seem to believe the superintendent's statutory supervisory duty is one of passive observer. Br. of Appellants at 28. But "supervise" means "to coordinate, direct, and inspect continuously and at first hand the accomplishment of: oversee with the powers of direction and decision the implementation of one's own or another's intentions." WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 2296 (2002). Thus, the superintendent's supervisory role as to executions plainly encompasses decision-making powers about how lethal injection is to be accomplished. The legislature provided sufficient standards or guidelines about what is to be done and about which administrative body is to do it. See Powell, 92 Wash.2d at 891, 602 P.2d 711.
¶ 26 The second requirement for proper legislative delegation is that adequate procedural safeguards be present for the promulgation of rules and to test their constitutionality once promulgated. Id. Simply put, the legislature cannot delegate wholesale its obligation to declare public policy within a legislative process containing important procedural safeguards. See Diversified Inv. P'ship v. Dep't of Soc. & Health Servs., 113 Wash.2d 19, 24, 775 P.2d 947 (1989) ("The Legislature is prohibited from delegating its purely legislative functions ... [such as] the power to declare general public policy."). When reviewing whether authority has been properly delegated to an agency to promulgate *270 rules subjecting individuals to criminal sanctions, we have focused on the safeguard requirement. This requirement is satisfied where rules are promulgated pursuant to the Administrative Procedure Act (APA), chapter 34.05 RCW, and include an appeal process before the agency, or judicial review is available, and the procedural safeguards normally available to a criminal defendant remain. State v. Simmons, 152 Wash.2d 450, 457, 98 P.3d 789 (2004); State v. Crown Zellerbach Corp., 92 Wash.2d 894, 900-01, 602 P.2d 1172 (1979).
¶ 27 The Department's development of the state death penalty protocol meets this test insofar as it is applicable. The protocol is subject to judicial review, as made plain by our review of this case. Further, the protocol itself is not a criminal sanction independent of the trial and sentencing process, so the third safeguard is not implicated.[7] It is true the death penalty protocol was not promulgated pursuant to the APA and cannot be appealed before the agency, but this is not determinative of the Department's authority to draft such a policy. For one, the Department is exempt from the APA. RCW 34.05.030(1)(c) (excluding the Department from the APA "with respect to persons who are in their custody"). Moreover, the protocol is not akin to a "rule" under the APA requiring an avenue for agency review. RCW 34.05.010(16) defines "rule" as "any agency order, directive, or regulation of general applicability" that subjects a person to penalty or sanction, or relates to administrative hearings, or relates to the enjoyment of a benefit or privilege conferred by law, or relates to licensing for a commercial, trade, or professional activity, or regulates standards for the distribution or sale of materials or products. The death penalty protocol does not fall into any of these categories. The protocol itself is not an order or directive subjecting a person to a penalty or sanction, but rather a procedure for carrying out an already imposed penalty. Thus, the Department was not required to draft the death penalty protocol within the administrative rule-making process. The opportunity for judicial review and the presence of adequate safeguards during the proceedings resulting in each appellant's judgment and sentence satisfy the delegation requirement that adequate procedural safeguards underpin the agency action.
¶ 28 We hold that the Department's authorship of the protocol governing lethal injection is permitted by a legislative delegation of powers arising from RCW 10.95.180(1) and related provisions.[8]
C. Federal and State Controlled Substances Act Violations
¶ 29 Count III of the Appellants' complaint asserts that the Department's handling of the substances necessary for lethal injection violates the state and federal controlled substances acts, chapter 69.50 RCW, Washington's Uniform Controlled Substances Act (UCSA), and 21 U.S.C. §§ 801-971, the federal Drug Abuse Prevention and Control Act (DAPCA). CP at 1165. Specifically, the Appellants contend the Department is in violation of these acts because it uses sodium thiopental without a prescription as required by RCW 69.50.308(b) and 21 U.S.C. § 829.
¶ 30 In the trial court below, the Department moved for summary judgment on Count III, arguing in part that the UCSA and the DAPCA create no private cause of action. The trial court agreed and dismissed the claim. The Appellants challenge that summary judgment ruling.
¶ 31 At oral argument, the Appellants made it clear they are seeking a declaratory judgment under the Uniform Declaratory Judgments Act (UDJA), chapter 7.24 RCW, *271 that the Department's use of sodium thiopental is unlawful. Wash. Supreme Court Oral Argument, Brown v. Vail, No. 83474-1 (Mar. 18, 2010), at 17 min., 17 sec. through 19 min., 5 sec., audio recording by TVW, Washington State's Public Affairs Network, available at http://www.tvw.org. Declaratory relief requires a showing of standing, but not the existence of a private cause of action. Therefore, it is unnecessary for us to decide whether the trial court erred by holding that there is no private cause of action under the state and federal controlled substances acts.
¶ 32 Nevertheless, we decline to issue a declaratory judgment based on the alleged violations of the UCSA or the DAPCA. "`[B]efore the jurisdiction of a court may be invoked under the [UDJA], there must be a justiciable controversy.'" To-Ro Trade Shows v. Collins, 144 Wash.2d 403, 411, 27 P.3d 1149 (2001) (quoting Diversified Indus. Dev. Corp. v. Ripley, 82 Wash.2d 811, 814-15, 514 P.2d 137 (1973)). A justiciable controversy involves
"(1) ... an actual, present and existing dispute, or the mature seeds of one, as distinguished from a possible, dormant, hypothetical, speculative, or moot disagreement, (2) between parties having genuine and opposing interests, (3) which involves interests that must be direct and substantial, rather than potential, theoretical, abstract or academic, and (4) a judicial determination of which will be final and conclusive."
Id. It is the fourth requirement that concerns us here. A declaratory judgment "has no direct, coercive effect." 15 Karl B. Tegland, Washington Practice: Civil Procedure § 42:1 (2d ed. 2009). Moreover, the decision to enforce provisions of a controlled substances act is left to the discretion of agencies overseeing the statute. See Heckler v. Chaney, 470 U.S. 821, 824-25, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985) (noting that the secretary of the federal Food and Drug Administration would not exercise discretion to enforce alleged violations in the acquisition and use of lethal substances for a state's execution proceedings). The Appellants have not established that any declaratory judgment in this matter would produce a final and conclusive determination. Such a judgment would look very much like an advisory opinion, which we issue only in rare circumstances. To-Ro Trade Shows, 144 Wash.2d at 416, 27 P.3d 1149.
¶ 33 Below, the Appellants attempted to distinguish Heckler by noting that the court there explained that an agency's decision not to enforce the laws it oversees is discretionary. CP at 1901. Here, in contrast, the Appellants are "not attempting to compel [an agency] to enforce its own regulations; [they are] seeking declaratory and injunctive relief for violations of federal and state law." Id. But we cannot see what purpose a judgment declaring a violation would serve when enforcement of the alleged violations remains in the discretion of the agency, and no party is bound to act in accord with such judgment. "The court may refuse to render or enter a declaratory judgment or decree where such judgment or decree, if rendered or entered, would not terminate the uncertainty or controversy giving rise to the proceeding." RCW 7.24.060. We invoke our discretion to so refuse such a judgment here.[9]
¶ 34 In addition, we decline to issue a declaration that the Department's actions violate the state UCSA or the federal DAPCA in the absence of a showing that either the UCSA or the DAPCA overrides statutory law governing executions. A Washington statute directs correctional facilities to carry out executions. RCW 10.95.180. Washington law chooses lethal injection as the primary method of execution, and a sentence of death in the federal system is to be carried *272 out "in the manner prescribed by the law of the State in which the [death] sentence is imposed." 18 U.S.C. § 3596(a). Thus, both our state legislature and Congress have approved a method of execution that requires the use of substances otherwise classified as controlled substances under state and federal laws. Those laws make no mention of a government's need to secure a prescription in order to carry out its execution duties. It is a dubious proposition to conclude that either our legislature or Congress intended that the policy codified in state and federal controlled substances actspreventing drug abuseapplies to execution procedures. As one court has observed, such a conclusion "would risk frustrating the [state legislature's] considered decision to adopt execution by lethal injection as the primary method of execution." Abdur'Rahman v. Bredesen, 181 S.W.3d 292, 314 (Tenn.2005) (refusing to enjoin state's execution practices based on DAPCA). We decline to grant a declaratory judgment on this matter.[10]
D. Is the Appellants' Constitutional Challenge Moot?
¶ 35 The posture of this case changed significantly on March 2, 2010, when the Department filed a motion to dismiss the Appellants' constitutional challenge to the three-drug execution protocol and all related issues[11] as moot in light of the Department's adoption of a one-drug lethal injection protocol. On March 8, 2010, the Department adopted its revised lethal injection protocol, which now provides for use of a single drugsodium thiopental.
¶ 36 This change in policy goes to the crux of the Appellants' constitutional challenge, which focuses on the risk of a very painful death if the sodium thiopental does not fully produce unconsciousness when the pancuronium bromide and potassium chloride take effect. II VRP at 282. The Department argues that the Appellants' claims are now moot because execution by sodium thiopental alone does not pose this risk, so "there is no cruel punishment," ergo "no constitutional violation." Reply to Resp. to Mot. to Dismiss as Moot at 3.
¶ 37 Issues are moot when the court can no longer provide effective relief. In re Pers. Restraint of Mattson, 166 Wash.2d 730, 736, 214 P.3d 141 (2009); In re Cross, 99 Wash.2d 373, 376-77, 662 P.2d 828 (1983). In a similar case, the Sixth Circuit Court of Appeals held that a challenge to Ohio's three-drug lethal injection protocol became moot upon that state's adoption of the one-drug protocol. Cooey v. Strickland, 588 F.3d 921, 923 (6th Cir.2009). The same conclusion must follow here: the Appellants' constitutional *273 claim regarding the Department's use of three drugs in its lethal injection protocol is moot in light of the Department's abandonment of that protocol.
¶ 38 A question remains, however, as to whether the Appellants' constitutional challenge may be addressed to the 2010 one-drug protocol. It is true that the Appellants' evidence at trial raised concerns about the maladministration of sodium thiopental through, for example, faulty siting of intravenous lines (IV) or deficient training. See, e.g., Br. of Appellants at 11-15 (citing to testimony discussing execution team's training on IV siting). On its face, this concern would appear to apply equally to the 2008 protocol and the 2010 protocol. But, in the context of the trial below, the Appellants' concern was that such maladministration would result in pain because the condemned inmate would not be sufficiently unconscious when he or she received the dose of pancuronium bromide and potassium chloride. See, e.g., id. at 11 (citing III VRP at 334) (noting that expert testimony at trial described how the protocol as implemented "creates a substantial risk of maladministration of the first drug, sodium thiopental, which risks `the inmate being conscious for the delivery of the pancuronium bromide'" (quoting VRP at 334)). It is apparent, too, from the trial court's findings of fact below that the court believed the operative inquiry was the extent to which the prisoner might be conscious enough to feel pain as a result of the pancuronium bromide or potassium chloride. See, e.g., CP at 3196 (Finding of Fact 24) (noting the Appellants asserted that several factors "can compromise the delivery of an adequate dosage of sodium thiopental or the consciousness of the inmate"); CP at 3202 (Finding of Fact 54) ("The proper insertion of the intravenous line... ensures the three grams of sodium thiopental will be introduced into the inmate's circulatory system. The Plaintiffs' expert agrees, however, that even if an error results in some of the sodium thiopental leaking into the surrounding tissue rather than the vein, the introduction of less than three grams of sodium thiopental will likely still be sufficient to render the person unconscious." (emphasis added)).
¶ 39 We also recognize that some evidence at trial established a degree of pain associated with a maladministered single drug, such as swelling or burning around an improperly inserted IV site. See, e.g., CP at 3202 (Finding of Fact 52) (noting that "[i]f sodium thiopental is injected into the subcutaneous tissue, it will cause discomfort of a burning sensation"). But again, such evidence was elicited in the context of a challenge to the three-drug protocol and concerned the extent to which it is possible to ensure that the condemned inmate receives a sufficient quantity of sodium thiopental to render him unconscious before delivery of the other two drugs. The evidence was not presented to show that the swelling or burning of maladministered sodium thiopental alone presented a constitutionally impermissible risk of pain. See, e.g., II VRP at 344-45, 353-54; III VRP at 433-37, 442, 497-98, 521-22; IV VRP at 691. There was no evidence presented by the Appellants at trial, nor is any argument made on appeal, that pain associated with the maladministration of sodium thiopental rises to the level of cruel or unusual punishment. In short, there has been no trial on the constitutionality of the new one-drug protocol, and we cannot hold such a trial on appeal.
¶ 40 In light of the foregoing, the record in this case provides no basis for the constitutional issues raised by the Appellants. Cf. Mattson, 166 Wash.2d at 736, 214 P.3d 141. We therefore grant the Department's motion to dismiss the Appellants' constitutional claims and related issues and do not reach their merits.
¶ 41 Given our resolution of this case, Brown's stay of execution entered by this court on March 12, 2009, pending the decision in this matter is lifted.[12]
CONCLUSION
¶ 42 It is the policy of the State of Washington to execute inmates condemned to death by use of lethal injection, now under a *274 one-drug protocol. The legislature properly delegated authority to the Department to develop and implement the death penalty protocol. And we decline to issue a declaratory judgment invalidating the Department's use of the substances involved in lethal injection on the basis of state and federal controlled substances acts. As a result of the Department's adoption of a one-drug lethal injection protocol instead of three-drug protocol on March 8, 2010, the Appellants' constitutional challenge to the protocol is moot. Accordingly, though this lawsuit is timely brought, we affirm the trial court's dismissal of the Appellants' nonconstitutional claims and dismiss their constitutional claims as moot.
WE CONCUR: BARBARA A. MADSEN, Chief Justice, CHARLES W. JOHNSON, GERRY L. ALEXANDER, RICHARD B. SANDERS, TOM CHAMBERS, MARY E. FAIRHURST, JAMES M. JOHNSON, Justices, and TERESA C. KULIK, Justice Pro Tem.
NOTES
[1] When originally retained, this matter also included a dispute about deposition costs. The Department agreed that the costs awarded for transcripts should be vacated and that issue is no longer before us. See Opening Br. of Appellant Stenson at 49-50 (arguing that the trial court erred in awarding the Department deposition costs); Resp'ts' Mot. to Dismiss as Moot the Claims that the Three-Drug Protocol is Unconstitutional at 10 n.3 (agreeing that costs should be vacated).
[2] Appellants Brown and Gentry adopted Appellant Stenson's briefing before this court as their own. Br. of Appellants Brown and Gentry at 1. Stenson's opening brief will therefore hereinafter be cited as Brief of Appellants.
[3] The temporary stay affected only Brown. Order, supra. Gentry's execution was previously stayed by a federal court, and Stenson's by a Clallam County court.
[4] The superintendent testified at trial as to the length of the tubing as 14 1/2 feet. IV VRP at 618. The length is not included in either the 2008 or 2010 written protocol. The Department has not indicated any intention to use a different tubing length with the new protocol.
[5] Gentry's sentence became final in 1995. State v. Gentry, 125 Wash.2d 570, 888 P.2d 1105, cert. denied, 516 U.S. 843, 116 S.Ct. 131, 133 L.Ed.2d 79 (1995). Brown's sentence became final in 1998. State v. Brown, 132 Wash.2d 529, 940 P.2d 546 (1997), cert. denied, 523 U.S. 1007, 118 S.Ct. 1192, 140 L.Ed.2d 322 (1998). Stenson's sentence became final in 1998. See State v. Stenson, 132 Wash.2d 668, 940 P.2d 1239 (1997), cert. denied, 523 U.S. 1008, 118 S.Ct. 1193, 140 L.Ed.2d 323 (1998).
[6] "[A] cause of action accrues when the injured party knows or should know, by the exercise of due diligence, all the facts necessary to establish the elements of the party's claim." In re Estates of Hibbard, 118 Wash.2d 737, 743 n. 15, 826 P.2d 690 (1992).
[7] Appellants were subjected to the penalty of death only after a criminal trial attendant with all due process afforded to criminal defendants, and their convictions and sentences were upheld on appeal.
[8] The Appellants take issue with the superintendent's ability to informally supplement the death penalty protocol. Br. of Appellants at 29-30. To the extent this line of argument is intended to show that the legislature has improperly delegated authority directly to the Department's superintendent rather than to the secretary, it must also fail. Appellants cite no authority that prohibits the legislature from delegating authority consistent with the requirements of Powell to a department employee who is subordinate and accountable to the secretary.
[9] We are aware that a federal district court in a Missouri case opined that the apparent resignation of a Washington Department of Corrections employee over alleged violations of controlled substances laws suggests the Department would likely adhere to a declaratory judgment. Ringo v. Lombardi, ___ F.Supp.2d ___, ___, 2010 WL 750055, at *4 (W.D.Mo.2010) (discussing facts surrounding these execution proceedings). Citing Franklin v. Massachusetts, 505 U.S. 788, 803, 112 S.Ct. 2767, 120 L.Ed.2d 636 (1992), the Ringo court was satisfied that it could assume an agency would comply with a declaratory judgment finding violations of the federal DAPCA in Missouri's lethal injection protocol. Ringo, ___ F.Supp.2d at ___, 2010 WL 750055, at * 4. We believe such an assumption is too tenuous a basis on which to rest a judgment.
[10] In any event, we are not convinced the Department is in violation of the acts at issue. The Department's activities appear to be exempted from Washington's UCSA. RCW 69.50.506(c) states that "[n]o liability is imposed by this chapter upon any authorized state, county or municipal officer, engaged in the lawful performance of his duties." Further, it is not clear that the Department is in violation of the federal DAPCA, which exempts from civil or criminal liability state officers "lawfully engaged in the enforcement of any law or municipal ordinance relating to controlled substances." 21 U.S.C. § 885(d). We further note that, according to the Department, a complaint regarding a violation of the UCSA and the DAPCA was previously made with the state Department of Health (DOH) and the federal Drug Enforcement Agency (DEA), respectively, alleging that the Department's use of controlled substances for execution violated state and federal law. Wash. Supreme Court Oral Argument, Brown v. Vail, No. 83474-1 (Mar. 18, 2010), at 32 min., 02-20 sec., audio recording by TVW, Washington State's Public Affairs Network, available at http://www.tvw.org. The DEA declined to investigate the matter, and the DOH determined there was no violation of the law. Id.
[11] When originally retained, this appeal challenged several of the trial court's rulings regarding discovery and trial management, particularly with regard to the trial court's decision not to allow discovery about past executions and execution teams. Br. of Appellants at 3-4. However, these rulings impacted the Appellants' ability to build their constitutional challenge, id. at 31-35, and are therefore linked to the Appellants' constitutional claim; because the constitutional claims are moot, a challenge to these rulings is also moot. In any event, the Appellants failed to preserve their argument regarding the trial court's rulings. Although they assign error to these rulings, Appellants have offered no briefing or argument as to why the rulings were in error. A party that offers no argument in its opening brief on a claimed assignment of error waives the assignment. Cowiche Canyon Conservancy v. Bosley, 118 Wash.2d 801, 809, 828 P.2d 549 (1992).
[12] Stenson's stay and Gentry's stay were issued by a county court and a federal court respectively, thus this court is not in a position to act on those orders. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1863242/ | 318 So.2d 43 (1975)
Walter SMITH
v.
WESTSIDE TRANSIT LINES, INC. and Liberty Mutual Insurance Company.
No. 56556.
Supreme Court of Louisiana.
September 11, 1975.
Writ denied. The judgment is not final. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2263685/ | 24 Cal.App.4th 488 (1994)
29 Cal. Rptr.2d 348
MARY P. JERNIGAN, Plaintiff and Appellant,
v.
FORD MOTOR COMPANY, Defendant and Respondent.
Docket No. B073926.
Court of Appeals of California, Second District, Division Five.
April 26, 1994.
*489 COUNSEL
Lawrence J. Huthens and Rodolfo A. Aguirre for Plaintiff and Appellant.
Harrington, Foxx, Dubrow & Canter, Mark A. Juhas, Mark W. Flory and Judith T. Alvarado for Defendant and Respondent.
OPINION
ARMSTRONG, J.
This appeal presents a single question regarding the interpretation of the Song-Beverly Consumer Warranty Act (the Act), Civil Code[1] section 1790 et seq. Specifically, we are asked to determine whether, in an action concerning a new motor vehicle, the buyer can recover civil penalties from the manufacturer for a willful violation of the Act if the manufacturer maintains a qualified third party dispute resolution process pursuant to statute. The trial court found that in those circumstances civil penalties may not be recovered. We disagree, and reverse the judgment.
*490 Factual and Procedural Summary
Appellant Mary Jernigan bought a new motor vehicle from Ford in 1990. In 1991 she filed this lawsuit, alleging that the motor vehicle did not conform to the warranty, that the motor vehicle had not been brought into conformity with the warranty after a reasonable number of attempts at repair, and that Ford willfully violated the Act by failing to replace or repurchase the motor vehicle. Jernigan sought actual damages, a civil penalty of two times the actual damages, and attorney fees.
Prior to trial, the parties sought a ruling on the claim for civil penalties. Their positions before the trial court were identical to their positions on appeal. Jernigan contends that the Act provides for civil penalties in two circumstances: civil penalties are available on a showing that the Act was willfully violated; and, in an action concerning a new motor vehicle, civil penalties are available without a showing of willfulness if the manufacturer does not maintain a qualified dispute resolution process pursuant to other provisions of the Act.[2]
(1) Ford argues that in an action concerning a new motor vehicle the Act allows civil penalties only against those manufacturers who do not maintain a qualified dispute resolution process.
The parties agree that Ford maintained a qualified third party dispute resolution process.
The trial court agreed with Ford, ruling that Jernigan was not entitled to recover civil penalties. After the trial court ruled, the parties stipulated to damages. Under the stipulation, Ford agreed to pay Jernigan $28,707.89, and Jernigan agreed to return the car to Ford.
Discussion
On a question of statutory interpretation, we independently determine the proper interpretation, and are not bound by the trial court's ruling. The objective of statutory interpretation is to ascertain and effectuate legislative intent. In determining that intent, we look first to the language of the statute. Where the words of the statute are clear, we may not add to or alter them. (Burden v. Snowden (1992) 2 Cal.4th 556, 562 [7 Cal. Rptr.2d 531, 828 P.2d 672].)
*491 This case presents a question about the interpretation of section 1794, subdivisions (c) and (e). In order to understand those subdivisions, we briefly review the statutory scheme. (DeYoung v. City of San Diego (1983) 147 Cal. App.3d 11, 17 [194 Cal. Rptr. 722].)
Overall, the Act concerns the warranty obligations of manufacturers of consumer goods, as defined, including new motor vehicles. Section 1794, subdivision (a) provides for a civil cause of action by "[a]ny buyer of consumer goods who is damaged by a failure to comply with any obligation under this chapter or under a ... warranty or service contract." Section 1794, subdivision (b) sets out "[t]he measure of the buyer's damages in an action under this section." Those damages include "the rights of replacement and reimbursement as set forth in subdivision (d) of Section 1793.2," and other damages.
Section 1793.2, subdivision (d) figures in our analysis. Under section 1793.2, subdivision (d)(1), a manufacturer of consumer goods must replace goods which cannot be repaired after a reasonable number of attempts, or reimburse the buyer for the value of those goods. Section 1793.2, subdivision (d)(2) contains similar replace-or-reimburse provisions, applicable to manufacturers of new motor vehicles. Subparts further define the manufacturer's duty.
At the heart of this case, section 1794, subdivision (c) provides that: "If the buyer establishes that the failure to comply was willful, the judgment may include ... a civil penalty which shall not exceed two times the amount of actual damages." Section 1794, subdivision (e) provides that: "(1) Except as otherwise provided in this subdivision, if the buyer establishes a violation of paragraph (2) of subdivision (d) of Section 1793.2 [the replace-or-reimburse requirements for new motor vehicle manufacturers], the buyer shall recover reasonable damages and attorney's fees and costs, and may recover a civil penalty of up to two times the amount of damages. [¶] (2) If the manufacturer maintains a qualified third-party dispute resolution process ..., the manufacturer shall not be liable for any civil penalty pursuant to this subdivision." Subparagraphs (3) and (4) of subdivision (e) set forth other circumstances under which the manufacturer is not be liable for a civil penalty "under this subdivision." And, section 1794, subdivision (e)(5) provides that: "If the buyer recovers a civil penalty under subdivision (c), the buyer may not also recover a civil penalty under this subdivision for the same violation."
The trial court ruled that section 1794, subdivision (e) is the exclusive damage provision for actions concerning new motor vehicles, and thus that *492 the section 1794, subdivision (e)(2) exemption for manufacturers with qualified dispute resolution processes means that such a manufacturer is not liable for a civil penalty, regardless of the willfulness of its violation of the Act.
However, the plain language of the statute is to the contrary. Under that language, where there is a dispute resolution process "the manufacturer shall not be liable for any civil penalty under this subdivision." (Italics added.) Consistent with usage throughout the Act, "subdivision" can refer only to subdivision (e) of section 1794. By use of the phrase "under this subdivision," the Legislature limited the exemption. It applies only to the civil penalties for nonwillful violations recoverable under section 1794, subdivision (e), and does not apply to penalties which may be available under another subdivision, i.e., 1794, subdivision (c).
We cannot agree that section 1794, subdivision (e) is the exclusive damage provision for actions on new motor vehicles, because the statute itself provides otherwise. Paragraph (5) of section 1794, subdivision (d), which prohibits a buyer who brings an action against a new vehicle manufacturer from recovering civil penalties under both section 1794, subdivision (c) and section 1794, subdivision (e), clearly anticipates that a buyer bringing such an action can request a civil penalty under subdivision (c). And, section 1794, subdivision (b), setting forth the measure of damages for all actions under the Act, specifically refers to section 1793.2, subdivision (d), which, as we have seen, includes the remedies available to new car buyers.
Although we know of no case authority directly on point, related case law supports our decision. Under Ford's analysis, civil penalties under section 1794, subdivision (c) for willful violations of the Act could never be available in actions on new motor vehicles. However, case law has allowed such penalties. (See Ibrahim v. Ford Motor Co. (1989) 214 Cal. App.3d 878, 893 [263 Cal. Rptr. 64] and Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 Cal. App.4th 174 [28 Cal. Rptr.2d 371] [both concerning the applicable definition of "willful."].)
Also illuminating is Suman v. BMW of North America, Inc. (1994) 23 Cal. App.4th 1 [28 Cal. Rptr.2d 133], an action on a new motor vehicle. The issue before the court was whether under section 1794, subdivision (e), civil penalties may be had where the violation is not willful. The court determined that willfulness is not required. In analyzing the statute, the court noted that "there are two separate means by which a plaintiff in a section 1794 suit might recover a civil penalty against the defendant. Subdivision (c) of section 1794 covers civil penalties for suits concerning any type of `consumer goods,' as that term is used in the Act. Subdivision (e) of section 1794 is *493 more limited in its application, and permits such penalties when the consumer goods at issue are new motor vehicles." (23 Cal. App.4th at pp. 6-7.) Thus, in actions on all consumer goods civil penalties may be had for willful violations. In actions on new motor vehicles only, civil penalties may be had without a showing of willfulness, unless the manufacturer maintains a qualified dispute resolution process.
Finally, we note that both parties argue in support of their positions the legislative intent to encourage new vehicle manufacturers to maintain dispute resolution processes, and to confer a benefit on manufacturers for doing so. That intent is apparent from the statute, but is not in itself illuminating, since it does not tell us how much of a benefit the Legislature intended to confer exemption from all civil penalties, or merely exemption from civil penalties for nonwillful violations. The answer is contained in the language of the statute. The Legislature expressed its intent in the statute, and we need not and do not delve further into the legislative history.
Disposition
The judgment is reversed. Appellant shall recover costs and attorney fees on appeal. (Morcos v. Board of Retirement (1990) 51 Cal.3d 924, 927 [275 Cal. Rptr. 187, 800 P.2d 543].)
Turner, P.J., and Grignon, J., concurred.
A petition for a rehearing was denied May 12, 1994.
NOTES
[1] All further statutory references are to the Civil Code.
[2] Section 1793.22, applicable to manufacturers of new motor vehicles only, sets forth the requirements for a qualified dispute resolution process, and provides a benefit to a manufacturer who maintains such a process, relating to the application of a statutory presumption defining "a reasonable number of attempts to repair." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2263721/ | 24 Cal.App.4th 1619 (1994)
29 Cal. Rptr.2d 840
STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff and Respondent,
v.
ROBERT JIORAS et al., Defendants and Appellants.
Docket No. D015431.
Court of Appeals of California, Fourth District, Division One.
April 13, 1994.
*1622 COUNSEL
Brown, Pearson & Judd, Floyd R. Brown and Joan L. Pearson for Defendants and Appellants.
Hill, Genson, Even, Crandall & Wade, Tod M. Castronovo, Horvitz & Levy, Mitchell C. Tilner and Douglas G. Benedon for Plaintiff and Respondent.
OPINION
FROEHLICH, J.
Robert and Charlene Jioras (appellants) purchased a house built by a partnership composed of four individuals.[1] Appellants later sued the partners, claiming the house was defective. The partners sought coverage under certain policies issued by respondent State Farm Fire and Casualty Company (insurer). Insurer accepted the defense, subject to a reservation of rights, and later sued, seeking a declaration that it had no duty to defend or indemnify. Appellants, as assignees of any rights held by the partners under the policies, appeal from the judgment which declared that insurer had no duty to indemnify under the policies.
Appellants do not contest the determination that the relevant policies did not provide coverage for their claims. Instead, they claim insurer must nevertheless provide coverage under estoppel principles because it allegedly failed adequately to reserve its rights under the "umbrella" policy. We conclude there is substantial evidence to support the trial court's determination that insurer's reservation of rights was timely, adequate and effective as to all of the partners, and hence we affirm.
I
FACTUAL BACKGROUND
A. Genesis of the Lawsuit
We review the facts in the light most favorable to the judgment. (Dwyer v. Crocker National Bank (1987) 194 Cal. App.3d 1418, 1426 [240 Cal. Rptr. *1623 297].) The four aforementioned partners formed a partnership which built a certain home, later rented, and then sold, to appellants. Khosrovani and Lindquist obtained (and were the named insureds) under a "rental dwelling policy" issued by insurer. They canceled this policy when the home was sold to appellants. Additionally, Khosrovani personally held two other policies: a standard homeowners policy, and a personal liability umbrella policy providing excess liability coverage. Lindquist was not a named insured under either the homeowners or the umbrella policy. Mamaghani and Rakshani were not named insureds under any of the three policies.
The court concluded these policies did not afford coverage for appellants' claim.[2] The court's conclusions as to noncoverage are not challenged on appeal.
B. The Conduct Alleged as Grounds for Estoppel
Because this appeal argues solely that insurer's conduct created coverage by estoppel, we must focus particular attention on how insurer conducted itself after receiving the tender of the defense.
In April 1987 appellants sued the partners for negligent construction. Khosrovani reported the claim in early May, and on May 27 Mr. Galey, a claims representative for insurer, received the file.
Both before receiving the file and thereafter on May 28, Mr. Galey spoke with Mark Bordi, who was "looking after [the] situation" for Khosrovani. Bordi was the son-in-law of Khosrovani, as well as an experienced attorney whose firm had done work for insurer in the past. Galey told Bordi there were coverage questions under all of the policies. On May 29 Galey spoke to Khosrovani and reiterated that there were coverage questions under all three of the policies. During subsequent conversations with Khosrovani and Bordi, Galey consistently reiterated that the same coverage problems existed as were raised in their early conversations.
Galey also sent a series of letters to Khosrovani and Lindquist regarding coverage for the claim. On June 10 Galey sent a letter stating the insurer was *1624 reserving its right to contest coverage under the rental policy, and that insurer's investigation of the claim was not a waiver of any available policy defenses. A similar letter was sent to Khosrovani and Lindquist on October 27.
On October 27 Galey sent a letter to Khosrovani specifically referencing the homeowners policy. That letter stated that the claim appeared to fall under the "business pursuits" exclusion; that insurer was not accepting or rejecting the defense at that time; and that insurer was not waiving the right to rely on any other policy exclusions.
In November insurer accepted the defense of Khosrovani and Lindquist. However, insurer informed Khosrovani and Lindquist, both orally and in writing, that it was accepting the defense subject to a reservation of rights, and that the same coverage questions remained outstanding. The attorney assigned to represent the partners, Greg Konoske, met with Khosrovani, Bordi and Lindquist on December 3 and told them the umbrella policy contained a "business pursuits" exclusion on which insurer might rely.
Neither Mamaghani nor Rakshani was a named insured under any of the policies. However, a few months after accepting the defense of Khosrovani and Lindquist, insurer also accepted their defense under the rental dwelling policy. The personal lawyers for Mamaghani and Rakshani requested insurer defend these two partners in the partnership since insurer had already undertaken the defense of the two other partners. Insurer agreed but informed them it would defend Mamaghani and Rakshani subject to the same reservation of rights and coverage questions to which the defense of their partners was subject. Mamaghani and Rakshani understood the terms of their defense. The same lawyer, Mr. Konoske, was assigned to handle the defense of Mamaghani and Rakshani.
C. The Lawsuit
Shortly before filing its declaratory relief action, insurer sent an additional "reservation of rights letter" stating there was a question of whether there was any duty to defend or indemnify under the umbrella policy. The letter mentioned the exclusions for "business pursuits" as well as the question of whether the loss was either property damage or personal injury as required by the policy.
*1625 Thereafter, in September 1989 insurer filed its declaratory relief action, alleging it had no duty to defend or indemnify against the claims. In April 1990, the partners and appellants settled the underlying lawsuit.[3]
The trial court ruled the policies did not provide coverage for appellants' claims, a conclusion not challenged on appeal. The court also found (1) insurer did not by its conduct waive, either expressly or impliedly, any policy defenses; (2) insurer adequately reserved its rights by the combined oral and written communications with the partners and their attorneys; and (3) appellants had failed to show insurer's conduct created a reasonable expectation of coverage or induced any detrimental reliance by the partners.
D. Contentions on Appeal
On appeal, appellants claim there is no substantial evidence to support the finding that insurer provided a defense subject to a timely reservation of rights as to the umbrella policy, or that there was any reservation of rights as to Mamaghani or Rakshani, and hence appellants claim insurer waived the right to contest, or is estopped from denying, coverage.
II
ANALYSIS
A. Standard of Review
(1) Because most of appellants' contentions challenge the sufficiency of the evidence, we are constrained to reiterate the appropriate standard of review.[4] When a factual conclusion is attacked as lacking evidentiary support, our power is limited to determining whether the record contains substantial evidence, contradicted or uncontradicted, to support the decision. (Bowers v. Bernards (1984) 150 Cal. App.3d 870, 873-874 [197 Cal. Rptr. *1626 925].) The testimony of a single witness is sufficient.[5] (In re Marriage of Mix (1975) 14 Cal.3d 604, 614 [122 Cal. Rptr. 79, 536 P.2d 479].) All conflicts, in either the evidence or the inferences to be drawn therefrom, are to be resolved in favor of the prevailing party. (Hasson v. Ford Motor Co. (1977) 19 Cal.3d 530, 544 [138 Cal. Rptr. 705, 564 P.2d 857, 99 A.L.R.3d 158].)
B. The Evidence Supports the Conclusion That Insurer Adequately Reserved Its Rights as to All Policies
(2a) Appellants' principal challenge is that because the reservation of rights letters sent to Khosrovani and Lindquist did not specifically mention the umbrella policy, insurer provided them a defense under the umbrella policy without informing them it was reserving its right to contest coverage under that policy, and hence is estopped under Miller v. Elite Ins. Co. (1980) 100 Cal. App.3d 739 [161 Cal. Rptr. 322] from contesting coverage under the umbrella policy. This argument is without merit.
First, as a factual matter, there is no evidence that insurer provided a defense to any partner under the umbrella policy. To the contrary, the evidence showed that insurer provided a defense to the four partners under the rental dwelling policy and to Khosrovani under the homeowners policy. (3) An insurer can be estopped from raising coverage defenses if, knowing of the grounds of noncoverage, it provides a defense under the policy without a reservation of rights, and the insured reasonably relies on this apparently unconditional defense to his detriment. (Miller v. Elite Ins. Co., supra, 100 Cal. App.3d 739 at pp. 754-755.) (2b) Here, because insurer informed the partners it was providing a defense under the primary (not the umbrella) policy, the predicate for estoppel is absent.
Moreover, as a legal matter, there was neither a duty to provide any defense under the umbrella policy nor any obligation to respond to an alleged tender of the defense even had one been made, because an umbrella policy has no duty of defense until the primary policy is exhausted. (Signal Companies, Inc. v. Harbor Ins. Co. (1980) 27 Cal.3d 359, 367 [165 Cal. Rptr. *1627 799, 612 P.2d 889, 19 A.L.R.4th 75].) Since no duty to defend arose under the excess policy, no obligation to reserve rights arose. (Phoenix Ins. Co. v. United States Fire Ins. Co. (1987) 189 Cal. App.3d 1511, 1527-1528 [235 Cal. Rptr. 185] [insurer's coverage was primary as to some periods and excess as to earlier periods; providing a defense for claims spanning both periods, without reservation of rights under excess policy, did not estop insurer from contesting excess coverage because defense was provided under primary policy and no duty to defend under excess had arisen at time defense was provided].) Since insurer had no obligation to reserve its rights under the umbrella policy, its failure to do so in writing cannot operate to its detriment. (Accord, St. Paul Fire and Marine Ins. v. Childrens Hosp. (D.D.C. 1987) 670 F. Supp. 393, 402 [insurer under both primary and excess policies provided unconditional defense under primary policy without mentioning excess; held: insurer not estopped from contesting excess coverage because defense was provided under primary, and until duty to defend under excess had arisen there was no obligation to reserve rights under excess].)
Finally, even assuming this defense conducted under the primary policy must as a matter of law be deemed a defense under the excess policy, the evidence supports the conclusion that insurer nevertheless adequately reserved its rights under all policies. Galey orally informed Khosrovani on several occasions, including those when discussions were held in the presence of Khosrovani's son-in-law lawyer who was sophisticated in such matters, that insurer questioned coverage under the umbrella policy and was reserving all of its rights. Moreover, Galey's letters accepted the defense subject to a "global" reservation of rights. A generalized reservation of rights has been deemed adequate by the courts. (See generally, California Union Ins. Co. v. Poppy Ridge Partners (1990) 224 Cal. App.3d 897, 901-902 [274 Cal. Rptr. 191].) There is substantial evidence to support the conclusion the reservation of rights under the umbrella policy was adequately conveyed to the partners.[6]
C. There Is Substantial Evidence to Support the Trial Court's Conclusion That Estoppel Was Unavailable to Appellants
(4) Estoppel was the only theory on which to base coverage.[7] The trial court concluded appellants had failed to show that insurer's conduct caused *1628 either (1) a "reasonable" belief that insurer was providing coverage or (2) any detrimental reliance on such conduct, both of which are essential to an estoppel claim.[8]
The record supports the inapplicability of estoppel because nothing in it suggests how the partners detrimentally relied on insurer's failure to mention the umbrella policy in the letters to the partners. Appellants claim "detrimental reliance" is shown merely by their failure to hire separate counsel to represent their interests. The record does not support this assertion from a factual standpoint.[9] An equally plausible inference is that appellants did not hire counsel simply because of the cost of litigation.[10]
*1629 Furthermore, failure to retain separate counsel does not by itself show any detriment. (Hartford Fire Ins. Co. v. Spartan Realty International, Inc. (1987) 196 Cal. App.3d 1320, 1327 [242 Cal. Rptr. 462].) Even assuming insurer had given an earlier written reservation of rights under the umbrella policy and the partners had retained separate counsel, there is no showing this separate counsel would have generated anything for the partners other than additional attorney fees. There is no showing separate counsel might have obtained a more advantageous settlement. To the contrary, the attorney representing the partners on behalf of insurer testified he never received any settlement offer below $100,000, and hence there is no evidence the partners lost any opportunity to settle for less than the $10,000 settlement they ultimately made. No claim has been asserted that if separate counsel had known of the denial of coverage under the umbrella policy, separate counsel might have structured the defense differently from the defense actually structured.[11] In short, the evidence and inferences support the conclusion there was no detrimental reliance by the partners.
D. There Is Substantial Evidence to Support the Conclusion That Mamaghani and Rakshani Were Notified That Insurer Was Providing a Defense Subject to a Reservation of Rights
(5) Mamaghani and Rakshani were never personally sent a letter specifying that the defense provided them under the rental dwelling policy was subject to a reservation of rights. However, the court concluded the reservation of rights letters sent to their partners, Khosrovani and Lindquist, were sufficient to place Mamaghani and Rakshani on notice of the limitations of the defense. Appellants claim this was error.
There is certainly substantial evidence showing that Mamaghani and Rakshani were given actual notice of the limits on the defense insurer was providing. Galey testified he told the personal lawyers for both Mamaghani and Rakshani that insurer was undertaking their defense subject to the same reservation of rights applicable to Khosrovani. Mamaghani testified he knew he was being defended on the same terms as was Khosrovani, and admitted he was told of the reservation of rights letter sent to Khosrovani. Rakshani admitted in his deposition testimony that at his first meeting with Mr. Konoske, the attorney assigned to represent the partners, Konoske told him *1630 the insurer was contesting coverage under the policies covering the house. Konoske confirmed he likewise informed both Rakshani and Rakshani's personal lawyer that the insurer's defense was subject to the reservation of rights.[12]
Although the actual notice given to Mamaghani and Rakshani suffices, we note the trial court also concluded the letters given to Khosrovani and Lindquist placed Mamaghani and Rakshani, the other two members of the partnership, on notice of the reservation of rights, apparently adopting insurer's argument that notice to one partner as to partnership business is constructive notice to all partners. On appeal, appellants do not dispute the validity of this general proposition. Instead, they argue constructive notice is inapplicable, claiming there was no evidence the partnership existed at the time the letters were sent.[13] We would be entitled to dismiss this contention peremptorily because it was not raised below. Appellants' closing argument at trial implicitly conceded a partnership existed, and asserted that Mamaghani and Rakshani qualified as additional insureds as partners and thus were entitled to separate notice in their individual capacities. Because of the position appellants took at trial, principles of either waiver or invited error cause appellants' contention to fail.
However, reaching the substantive claim would yield no different result, because there was evidence to permit a trier of fact to infer the partnership had not dissolved. First, Mamaghani testified he sought and obtained coverage under the rental dwelling policy because he was a partner in the partnership; neither Mamaghani nor any of the other partners ever referred to themselves as "former partners." Second, the dissolution was to occur only after the proceeds were divided and distributed; there was no evidence this occurred before the reservation of rights was sent.[14] (See Credit Bureaus of Merced County v. Fuller (1962) 199 Cal. App.2d 495, 496-498 [18 Cal. Rptr. *1631 668] [when former partner claims no liability for partnership debt based on dissolution of partnership prior to the debt, burden of proof is on former partner to prove dissolution].) Finally, the evidence showed insurer provided a defense to the individuals as partners. A partner can bind his former partners, even after dissolution, if the partnership fails to publish notice of dissolution and a person extends credit knowing a partnership had existed and not knowing of its dissolution. (Corp. Code, § 15035, subd. (1)(b)II.) It was the former partners' burden to prove the notice was published (Epley v. Hiller (1954) 128 Cal. App.2d 100, 104 [274 P.2d 696]), and no such evidence was produced below.
In brief, there are several bases for upholding the trial court's conclusion that Mamaghani and Rakshani were actually and constructively notified of the reservation of rights.
DISPOSITION
The judgment is affirmed.
Benke, Acting P.J., and Huffman, J., concurred.
NOTES
[1] The four partners were Bahman Khosrovani, Frank Lindquist, Esmail Rakshani and Mahmoud Mamaghani.
[2] The rental policy covered losses manifested during the policy period, and was inapplicable because the damage (a defective slab in the home) became manifest only after the rental policy had been canceled. Both personal policies held by Khosrovani were inapplicable because they excluded coverage for injuries arising from "business pursuits," and the sale of the home was such a pursuit. Additionally, the homeowners policy excluded coverage for claims arising from any premises other than the insured premises, here defined as Khosrovani's personal residence. Also, the umbrella policy did not extend to real property damage, but was limited to personal injury and tangible property injury.
[3] The partners paid $10,000 and stipulated to a judgment for $500,000. Appellants covenanted not to execute against the partners, and received an assignment of all of the partners' rights as against insurer. Importantly, there is no evidence appellants made any better settlement offer to the partners prior to that time.
[4] We remind appellants of the standard because their brief violates two of the most basic precepts of appellate law. First, it purports to review the facts but is almost entirely unsupported by citation to the record, in violation of California Rules of Court, rule 15(a). Second, and more importantly, appellants fail to state the facts and inferences in the light most favorable to respondent, instead stating the facts in the light most favorable to appellants. This alone would entitle us to treat appellants' claim of lack of substantial evidence as waived. (Oliver v. Board of Trustees (1986) 181 Cal. App.3d 824, 832 [227 Cal. Rptr. 1].) In the interests of justice, we will reach the issue.
[5] This rule dooms a major element of appellants' claims. Appellants argue there is no evidence Galey ever reserved any rights under the umbrella policy. However, Galey testified he orally informed one or more of the partners, on numerous occasions, that coverage questions existed for all of the policies including the umbrella policy. Appellants claim this is not substantial evidence because it is not credible. However, an appellate court may not reweigh the evidence and may not reject evidence as lacking credibility unless it is physically impossible (People v. Huston (1943) 21 Cal.2d 690, 693 [134 P.2d 758], overruled on other grounds in People v. Burton (1961) 55 Cal.2d 328, 352 [11 Cal. Rptr. 65, 359 P.2d 433]) or inherently implausible (Fortman v. Hemco, Inc. (1989) 211 Cal. App.3d 241, 254 [259 Cal. Rptr. 311]). No discussion is necessary to explain that Galey's testimony as to his oral statements is neither physically impossible nor inherently implausible.
[6] We cannot overlook that appellants effectively argue for application of a double standard. They urge that the written acceptance of the defense must be deemed to include a defense under the umbrella policy, but that the writings communicating the limitations on the defense so provided must be deemed to exclude the defense provided under such umbrella policy.
[7] Although appellants framed the issues as waiver and estoppel, the doctrine of waiver simply has no evidentiary support. Waiver exists when the insurer intentionally relinquishes its right to rely on an exclusion. (Prudential-LMI Com. Insurance v. Superior Court (1990) 51 Cal.3d 674, 689 [274 Cal. Rptr. 387, 798 P.2d 1230].) Waiver depends solely on the intent of the waiving party, and is not established merely by evidence the insurer failed to specify the exclusion in a letter reserving rights. (Velasquez v. Truck Ins. Exchange (1991) 1 Cal. App.4th 712, 722 [5 Cal. Rptr.2d 1].) There is no evidence insurer intended to sacrifice its rights under the umbrella policy, and hence any claim must be evaluated under estoppel principles. (Accord, Insurance Co. of the West v. Haralambos Beverage Co. (1987) 195 Cal. App.3d 1308, 1318-1322 [241 Cal. Rptr. 427]; Intel Corp. v. Hartford Acc. & Indem. Co. (9th Cir.1991) 952 F.2d 1551, 1559-1560.)
[8] Despite the well-established law that the insured has the burden of pleading and proving that the insurer's assumption of the defense gives rise to waiver or estoppel (see Insurance Co. of the West v. Haralambos Beverage Co., supra, 195 Cal. App.3d at p. 1320), appellants complain they did not have such burden of proof. Appellants base their contention on a misreading of J.C. Penney Casualty Ins. Co. v. M.K. (1991) 52 Cal.3d 1009 [278 Cal. Rptr. 64, 804 P.2d 689]. They claim J.C. Penney holds an insured has no obligation to prove estoppel until the insurer first proves an adequate and timely reservation of rights. The court in J.C. Penney, however, addressed a quite different issue: whether an express reservation of rights could be forfeited by subsequent conduct creating waiver or estoppel. (Id. at pp. 1017-1018.) We do not read J.C. Penney as changing the general rule. To the contrary, it cited with approval Insurance Co. of the West, supra, a central holding of which was to allocate to the insured the burden of proof on these issues. (J.C. Penney, supra, at p. 1017.) Further, if appellants' interpretation of J.C. Penney were correct, waiver and estoppel would be eliminated. Under appellants' view, if the insurer did not reserve its rights the insured would automatically receive coverage without showing either reliance (for estoppel) or intentional relinquishment (for waiver). That is not the law in California.
[9] In particular, appellants claim (1) Khosrovani and Lindquist, relying on the assumption they had coverage under the umbrella policy, never hired separate attorneys, and (2) Rakshani and Mamaghani, relying on the same assumption, fired their separate attorneys. The evidence, viewed in the light most favorable to the judgment, does not support this factual assertion. Lindquist did not testify at trial; hence, we have no knowledge of why he did not retain counsel. Neither Mamaghani nor Rakshani testified that he and the other fired their personal lawyers based on their belief they were covered under the umbrella policy; to the contrary, they testified they believed they were being defended by insurer under the rental dwelling policy. Khosrovani did not testify as to why he chose not to hire a personal lawyer.
[10] We must draw this inference since it supports the judgment. Moreover, this inference is reasonable in light of the fact appellants knew of an existing reservation of rights on the precise policies insurer identified as those under which a defense was being provided, and yet still chose not to hire separate counsel.
[11] We are convinced the partners would not have benefited from any change in tactics. Here, insurer specified the "business pursuits" exclusion in the homeowners policy was one obstacle to coverage. A substantively identical exclusion in the umbrella policy for "business operations" was held to bar coverage under that policy. Since the insured thus knew (in conducting a defense) that "business pursuits" was a major obstacle to coverage, the conduct of the defense would seem unaffected by whether or not the insured was informed that the same exclusion existed under two policies.
[12] Appellants complain the oral notice on which the trial court relied was inadequate because it was neither in writing nor sufficiently specific. The former complaint is without legal authority, and we are unpersuaded that actual notice of a reservation of rights is ineffective without a confirming letter. As to the alleged lack of specificity, appellants' argument is premised on the inference that the information conveyed to Mamaghani, Rakshani and their lawyers concerning the reservation of rights was vague. However, contrary to appellants' approach, we draw inferences in favor of the judgment; hence, we must infer that some or all of the communications specified the scope of that reservation of rights.
[13] Appellants claim the partnership was dissolved on the basis that the partnership agreement (exhibit 7) specified the partnership would continue until the property was developed, sold and the proceeds divided. Appellants argue that since the property was sold in early 1985, the partnership had been terminated for over two years prior to the time letters reserving insurer's rights were sent to Khosrovani.
[14] There was evidence the money from the sale was "divided," but no evidence of when this occurred. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261347/ | 428 A.2d 11 (1981)
BOULEVARD ELECTRIC SALES, Employer-Appellant,
v.
Thomas WEBB, Claimant-Appellee.
Supreme Court of Delaware.
Submitted December 10, 1980.
Decided March 11, 1981.
John J. Schmittinger (argued) and Douglas W. Lundblad of Schmittinger & Rodriguez, Dover, for employer-appellant.
Robert W. Ralston (argued) of Prickett, Jones, Elliott & Kristol, Wilmington, for claimant-appellee.
Before HERRMANN, C. J., and DUFFY and McNEILLY, JJ.
*12 McNEILLY, Justice:
This Workmen's Compensation case is before the Court a second time on an appeal by Boulevard Electric Sales ("employer"). Following an injury to his lower back during the course of his work for the employer, Thomas Webb ("claimant") filed a petition for compensation with the Industrial Accident Board ("Board"). The Board held a hearing on the petition and issued an award of temporary total disability compensation to the claimant in July, 1975. The Superior Court affirmed the award on appeal, but this Court, 385 A.2d 144, remanded the case for supplementation of the record on the issue of "unusual exertion" in light of the then recently rendered opinion in General Motors Corporation v. Veasey, Del.Supr., 371 A.2d 1074 (1977). The Board held a remand hearing in June, 1978, and issued its supplemental findings of fact in July, 1978. In its second opinion, the Board essentially affirmed its prior award finding that the claimant had made a proper showing of "unusual exertion" under the Veasey standard. The Superior Court once again affirmed, and that decision is now before the Court for review. We affirm in part but must reluctantly remand the case for further proceedings.
I
The facts relating to the occurrence of the claimant's injury are not seriously disputed by the parties. On the day of the incident, while working in his normal capacity as an appliance repairman, the claimant had gone to a residence to repair a customer's washing machine. In order to gain access to the back of the machine the claimant found it necessary to first move an adjacent refrigerator-freezer (on coasters) away from the wall and then move the washer-dryer away from the wall. In the course of so doing the claimant also had to move a 50 lb. sack of potatoes from in front of the appliances. Upon inspecting the washing machine, the claimant found a defective transmission which he removed from the machine, intending to take the part back to his employer's premises for repair. He then replaced the appliances against the wall and carried his 40-50 lb. tool box out to his truck. Upon returning to the house, the claimant bent over to pick up the transmission and felt a sudden painful stinging sensation in his lower back. He hesitated momentarily and then proceeded to pick up the transmission and carry it out to the truck. It is this occurrence upon which claimant's application for compensation was based.
In its first decision the Board made three central findings of fact: that the claimant did not suffer from a back condition or weakness prior to the injury which was the subject of this action; that, assuming arguendo the claimant did suffer from a pre-existing back problem, he was nonetheless entitled to compensation as the activities which led to the injury constituted "unusual exertion" under the decisional law of Delaware; and that the injury rendered the claimant physically incapable of working as of the time of the first hearing. In affirming on the first appeal, the Superior Court primarily focused on the latter two findings and held that there was sufficient evidence to support the award by the Board. When the first appeal reached this Court, we were concerned that an improper rule of law might have been applied below in the determination of "unusual exertion" and, therefore, remanded the case for supplementation of the record and application of the rule announced in the intervening case of General Motors Corporation v. Veasey, supra.
At the second hearing, held almost three years after the first hearing, the Board understandably but erroneously interpreted the remand order as limiting the scope of its inquiry solely to the issue of "unusual exertion." The employer sought to introduce evidence tending to show that the claimant was no longer totally physically incapacitated from working, but the Board essentially ruled the matter irrelevant under the terms of the remand order. Thus, the evidence at this hearing was limited to testimony by the claimant concerning his normal employment activities and his activities *13 on the day of the injury, and testimony by the claimant's supervisor concerning the activities normally required of appliance repairmen.
In its second decision the Board, apparently crediting the claimant's testimony that he had never before had to move a sack of potatoes in order to gain access to an appliance which he was to repair, concluded "that the unusual exertion of moving the bag of potatoes preceded the moving of the refrigerator and the `clumsy' washer and dryer causing the claimant's back injury." The Board believed this finding was sufficient to satisfy the Veasey rule and to support the award of compensation to the claimant.
On the second appeal, the Superior Court affirmed the Board's finding of "unusual exertion" within the scope of the Veasey rule. The Superior Court implicitly recognized, however, that if the Board's earlier finding of no pre-existing back condition was supported by the evidence, then the claimant was entitled to compensation upon showing an injury resulting from "unusual exertion" during the course of his employment, citing Veasey, 371 A.2d at 1076. The Superior Court further found at least arguable merit in the employer's contention that the Board at the second hearing should have considered the state of the claimant's disability through the date of that hearing, given the lengthy passage of time since the initial award. However, the Superior Court also construed this Court's remand order as limiting the scope of inquiry solely to the Veasey "unusual exertion" issue.
Following this tortured history, the case is back before this Court for full appellate review.
II
As indicated, the Board in its first decision found as fact that the claimant was not suffering from a pre-existing back condition. "[U]nder the law of this State, a showing of unusual exertion is a prerequisite of compensability where the injury is due, in part at least, to the aggravation of a pre-existing physical weakness." Milowicki v. Post and Paddock, Inc., Del.Supr., 260 A.2d 430, 432 (1969). On the other hand, where "a claimant is not suffering from a pre-existing condition, ... a showing of `usual exertion' is sufficient for recovery." General Motors Corporation v. Veasey, supra, 371 A.2d at 1076. Therefore, if the instant record contains substantial evidence to support the Board's finding of no pre-existing back condition, then the claimant need not have proved "unusual exertion" leading to an injury in order to establish his entitlement to compensation.
Although the employer introduced documentary evidence, in the form of somewhat ambiguous hospital records, to show that the claimant had, in the past, suffered from back problems, the claimant vigorously disputed the accuracy of the information in those records and unequivocally denied ever having any notable problems with his lower back. Thus, a question as to the claimant's credibility on this factual issue was presented, and it was for the Board as the trier of fact to resolve the credibility question. Since the Board obviously decided to believe the claimant's testimony, there was substantial evidence to support its finding of no pre-existing back condition. Consequently, no showing of "unusual exertion" was required, and the Board's 1975 award of temporary total disability compensation must be affirmed.[*]
*14 III
Having determined that the 1975 award must be affirmed, there remains but one issue to be considered on this appeal. As noted previously, the second hearing before the Board was held almost three years after the 1975 award was entered by the Board. At the second hearing the employer sought to contest the claimant's continued status as totally disabled. In support of this claim, the employer was prepared to introduce evidence tending to show that in the interim since the first hearing the claimant had been substantially employed in various capacities. In fact, a limited amount of evidence on this issue came in at the hearing, despite the ruling by the Board that it would only consider the Veasey "unusual exertion" issue because that was the sole issue to which this Court's remand order was expressly directed. Consequently, the Board made no findings in its second decision as to whether the claimant then continued to be totally disabled, either physically (as was established at the first hearing) or economically. See Franklin Fabricators v. Irwin, Del.Supr., 306 A.2d 734 (1973).
In affirming the Board's second decision, the Superior Court recognized that the claimant's continued disability status was a viable issue in the case. However, that Court also construed our remand order as limiting the scope of its inquiry to the Veasey "unusual exertion" question and, therefore, declined to remand the case to the Board on the question of the claimant's continued disability status.
Although our remand order expressly directed the attention of the Board and the Superior Court to reconsideration of the "unusual exertion" issue, nothing in that order expressly or by necessary implication prohibited either of those tribunals from considering any other relevant issues which might arise during the course of the remand proceedings. The limited construction applied to our remand order was, under the circumstances, understandable, and we do not intend to be critical of the Board or the Superior Court for their reading of the order. But in fairness to the employer, we are compelled to hold that the Board and the Court below erred in so construing the remand order and in refusing to consider the issue of the claimant's continued disability status.
Turning now to the substantive issue, we note the following:
At the first hearing in 1975, the employer's medical expert testified that the claimant was physically capable of performing some kind of work in the marketplace. However, the claimant's medical expert, his treating physician, testified that as a result of the injury to his back the claimant was totally disabled from working, although he could not make an assessment of the extent of any permanent disability at that time. This testimony provided substantial evidence on which the Board could find, as it did, that the claimant was entitled to temporary total disability compensation as of the 1975 hearing. At the second hearing in 1978, the employer sought to show that the claimant was no longer totally disabled, but the Board refused to consider the employer's evidence on this issue.
Clearly, the mere fact that the claimant was found in 1975 to be temporarily totally disabled is not sufficient, in and of itself, to conclude that as of 1978 he continued to be so disabled. Depending on developments which may have occurred in the interim between the two hearings, the claimant may or may not have continued to be totally *15 disabled. Given the length of time between the two hearings and the employer's evidence tending to show a termination or lessening of the claimant's disability at the time of the second hearing, we hold that it was error for the Board to refuse to consider this question. Therefore, the case must be remanded for a further hearing before the Board at which both parties will be permitted to present any relevant evidence in support of their respective positions as to the continuation, since the 1975 award, of the claimant's total disability. Such evidence may include (but is not necessarily limited to) expert medical testimony concerning the extent of the claimant's physical disability as well as evidence concerning the claimant's possible economic disability under the "displaced worker" doctrine. See Franklin Fabricators v. Irwin, supra. The Board is directed to make all necessary findings of fact and conclusions of law pertinent to this question and to enter whatever award it deems appropriate under the circumstances. Also, given the lengthy legal gauntlet through which this case has already run, we direct the Board and the Superior Court (if there be a further appeal by either party) to give this case priority attention to the greatest extent possible.
The Superior Court's affirmance of the 1975 award of temporary total disability compensation is hereby AFFIRMED, and the case is REMANDED to the Superior Court with instructions to remand to the Board for further proceedings consistent herewith.
So ordered.
NOTES
[*] Although it is not necessary for this Court to reach the "unusual exertion" question in this case, we take the opportunity to comment on the findings on this issue in order to provide future guidance to the Board in applying the Veasey rule. The Veasey test states:
"that, in order to meet the `unusual exertion' test, the claimant must show that his exertion was beyond that ordinarily required for the performance of his duties."
371 A.2d at 1076.
The evidence before the Board showed that the claimant was regularly required to move heavy appliances in order to repair them, and that he often had to lift heavy objects, including such things as his tool boxes and bulky appliance parts, in the course of his job. In light of this undisputed evidence, the Board's conclusion that the exertion expended by the claimant in moving a 50 lb. bag of potatoes and the appliances was unusual in his job as a repairman does not appear to be sound. Accepting the claimant's testimony that he had never before had to lift and move a 50 lb. bag of potatoes in the course of his employment, that was, an unusual activity; but the crux of the Veasey test is the exertion ordinarily required on a given job as compared to the exertion which leads to an injury on a particular occasion. In other words, while the activity that causes an injury on the job may be unusual in light of the activities normally required of the worker, if the exertion expended in the unusual activity is no more than the exertion normally required of the worker in the course of his usual duties, the Veasey test is not satisfied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321019/ | 124 S.E.2d 827 (1962)
256 N.C. 658
Randolph B. DENSON and wife, Theo J. Denson, and Joyce D. Smithdeal
v.
James M. DAVIS.
No. 242.
Supreme Court of North Carolina.
April 11, 1962.
*828 Bourne & Bourne by Henry C. Bourne, Tarboro, for plaintiff appellant.
Battle, Winslow, Merrell, Scott & Wiley by Robert M. Wiley, Rocky Mount, for defendant appellee.
RODMAN, Justice.
The record evidence shows:
(1) The one acre was, in November 1925, allotted to Maggie Battle Daughtry in the division of the estate of her father, Israel Battle. The other tract was allotted in that division to Jim Battle.
Daughtry and her husband conveyed the one-acre tract to defendant and his wife in 1946. By deed dated 8 December 1953 Maggie Daughtry and husband conveyed the 20.9-acre tract to defendant. This deed recited that Jim Battle had agreed in 1925 to convey it to the Daughtrys. He had not done so. Pursuant to the agreement to purchase, the Daughtrys had taken possession in 1925 and had been in exclusive adverse possession since that date, thereby acquiring good title. Defendant secured the purchase price of the 20.9 acres by deed of trust which was duly recorded. It secured three notes payable in November of the years 1954, 1955, and 1956. This deed of trust has not been cancelled.
(2) On 3 April 1956 defendant and his wife executed a deed of trust to M. L. Cromartie to secure an indebtedness to V-C, *829 payable 1 October 1956. The deed of trust conveyed the land here in controversy, the crops to be grown thereon, and some other personalty. It contained the usual provisions authorizing the trustee to sell upon default in the payment of the debt secured.
(3) A foreclosure deed dated ______ 1957, acknowledged 26 November 1957, from Cromartie, trustee, to V-C. This deed recites it was executed pursuant to and in compliance with the power of sale contained in the deed of trust to Cromartie. It conveys both tracts for a recited consideration of $1200, the amount bid at the sale.
(4) A deed from V-C to plaintiffs dated 6 January 1960, describing both tracts, for a recited consideration of $1000. The granting clause of the deed reads: "* * * SAID party of the first part * * * has remised, released and quit claimed by these presents doth forever remise, release, and quit claim unto * * * parties of the second part * * * all right, title, claim and interest of the said Virginia-Carolina Chemical Corporation * * *" The habendum reads: "TO HAVE AND TO HOLD the aforesaid tracts or parcels of land, with all privileges and appurtenances thereunto belonging, unto them * * * parties of the second part * * free and discharged from all right, title, claim, or interest of the said Virginia-Carolina Chemical Corporation, party of the first part, or anyone claiming by, through or under it."
Cromartie, trustee in the deed of trust, a witness for defendant, testified: "I supervise credit and loans * * * Most likely Mr. Delbridge, our dealer negotiated with James Davis for extending the credit secured in that Deed of Trust, submitted it to me and I approved the same for the Virginia-Carolina Chemical Corporation * * * The loan was never repaid and I foreclosed it. He had had sufficient time to make the payment. I haven't the explicit right to foreclose. I have the right to extend credit and did, but when it comes to foreclosure its different. I was ordered to do that. I foreclosed it. Mr. Clarence Brown, a V-C Fertilizer dealer in Tarboro bid in the property. Mr. Brown was an agent of V-C at the time he bid in the property. At the time I sold the property as Trustee I was an agent of the Virginia-Carolina Chemical Corporation * * * Mr. Brown is a peanut dealer in Tarboro and sells V-C fertilizer. He buys fertilizer from us and sells it. He is not a subordinate of mine. He was buying for the Virginia-Carolina Chemical Corporation at this sale. The decision to foreclose was made in the Norfolk office and I was instructed to foreclose."
The court charged the plaintiffs had the burden of establishing they were, as alleged, the owners of the land in controversy. This is true in actions to try title when the parties assert title under different sources, but the rule has no application when plaintiff traces title to defendant by instruments valid on their face and the asserted invalidity of these instruments is based on matters dehors the record. The invalidity due to such matters is an affirmative defense, placing the burden on one who asserts it. Chisholm v. Hall, 255 N.C. 374, 121 S.E.2d 726; DeBruhl v. L. Harvey & Son Co., 250 N.C. 161, 108 S.E.2d 469; Kelly v. Kelly, 246 N.C. 174, 97 S.E.2d 872; Hayes v. Ricard, 245 N.C. 687, 97 S.E.2d 105; Jones v. Percy, 237 N.C. 239, 74 S.E.2d 700.
The court told the jury that courts look with jealousy upon the exercise of the power of sale in a mortgage or deed of trust. Then he charged: "Neither the mortgagee nor the trustee is permitted to bid in and purchase the property at his own sale either directly or indirectly but if he does so the sale is not void but voidable and the mortgagor or trustor, the one who executed the mortgage or deed of trust, may set aside such sale or may bring suit to do so, or sue for wrongful foreclosure regardless of good faith or absence of fraud. * * * The law is, and I instruct you *830 that one who is the agent of someone else and acting as agent is acting for his principal, and if one in the employ of someone else, a company or corporation or an individual, sells land at a foreclosure sale then he is the agent if he is doing it for the folks by whom he is employed, then he is the agent and the acts of an agent are the acts of the agent's principal. And one who buys at a foreclosure sale, if he is an agent of the principal, then his acts are his principal's acts, and the one who sells, if he is the trustee, if he is also an employee and agent for the company for whose advantage the sale is made or to pay off an indebtedness to that person, his acts are the acts of the principal, and the law is in this state a trustee who is acting as agent for a cestui que trust, if in doing so he sells land at a foreclosure sale to his employer for whom he is agent then that is a voidable sale. That is also so if another agent for the same principal purchases the property at that sale, the law looking at it that the principal is doing all of it."
Based on the testimony, the court's charge amounted to a peremptory instruction to find for defendant. The fact that defendant's debt was in default, that the parties acted in good faith, and without any fraud, was, according to the court's charge, immaterial. All that was necessary was to show that the trustee was an employee of the cestui que trust, that the person who appeared and bid for the property was another agent or employee of the cestui que trust, and was acting for his employer in making the bid. The fact that the trustee was without power and authority to direct foreclosure was, under the charge, immaterial. Under the charge, the cestui que trust, a corporation, could not, in order to protect its interest, bid for the property.
This charge does not conform to the law as previously declared by this Court. Graham v. Graham, 229 N.C. 565, 50 S.E.2d 294; Hare v. Weil, 213 N.C. 484, 196 S.E. 869; Hill v. Albemarle Fertilizer Co., 210 N.C. 417, 187 S.E. 577; Elkes v. Interstate Trustee Corporation, 209 N.C. 832, 184 S.E. 826; Monroe v. Fuchtler, 121 N.C. 101, 28 S.E. 63; see annotation 138 A.L.R. 1013; 59 C.J.S. Mortgages § 578, p. 979.
Defendant cites, to support the charge as given, Warren v. Virginia-Carolina Joint Stock Land Bank, 214 N.C. 206, 198 S.E. 624; Davis v. Doggett, 212 N.C. 589, 194 S.E. 288; and Mills v. Mutual Building & Loan Ass'n, 216 N.C. 664, 6 S.E.2d 549. A comparison of the facts in this case with the facts in the cases relied upon by defendant will show the reason for the differing results.
In Warren v. Virginia-Carolina Joint Stock Land Bank, supra, the trustee had authorized an agent of the creditor to handle the foreclosure. The notice of sale which the agent published gave no information as to where the sale would be made. As a result, an agent of the creditor was able to purchase the property for less than its fair value. The land bank only bid $2400 for the property, and the day after it got the deed, it sold the land for $3500.
In Davis v. Doggett, supra, and Mills v. Mutual Building & Loan Ass'n, supra, the trustee acted for the creditor in bidding for the property. The vitiating facts in those cases are summarized by Barnhill, J., in the Mills case, where he said: "The evidence in this record indicates that the trustee, in fact, acted both for himself, as trustee, and for the creditor, as chief executive officer. He, as the chief executive officer, demanded of himself, as trustee, that the property be foreclosed. As trustee, he advertised and sold. As manager of the creditor, he determined the amount to be bid and directed himself, as trustee, to place a bid in that amount. Then, as trustee, he placed the bid for the creditor and made the sale thereon. Prior to the sale he prepared a memorandum in his own handwriting, which was signed by his subordinate, at his direction, authorizing bids at five separate foreclosure sales to be made on the same date. As to four of these he gave himself discretion to bid from a minimum to a maximum amount. While the *831 written memorandum designates only one amount to be bid at the foreclosure of the instrument under consideration, it cannot be gainsaid that if he had the authority to vest in himself discretionary power prior to the sale, he possessed that same discretion at the sale so that he could have bid more if he deemed it wise to do so."
In the present case defendant's evidence does not show that Cromartie had power to order a foreclosure. There is no suggestion that he had any power to fix the amount which would be bid. In fact he placed no bid on the property.
The court erred in instructing the jury that the creditor could not designate an agent to bid for and purchase property merely because the trustee was also an employee of the creditor.
As the court informed the jury, a purchase by a mortgagee at his own sale is not void. It is merely voidable and can be ratified. When the mortgagor or trustor, with knowledge of the defects, does some act which constitutes a recognition of the validity of the sale, he ratifies the sale. Fowler v. Nationwide Insurance Co., N.C., 124 S.E.2d 520; Wolfe v. North Carolina Joint Stock Land Bank, 219 N.C. 313, 13 S.E.2d 533; Council v. Greensboro Joint Stock Land Bank, 213 N.C. 329, 196 S.E. 483; Hill v. Albemarle Fertilizer Co., supra. It is said in Jones on Mortgages, 8th ed., vol. 3, sec. 2145: "By claiming the right to redeem from a sale, one affirms the validity thereof, and is estopped to assail it." Here there is evidence on behalf of plaintiffs that defendant recognized the title of V-C, assumed the position of tenant for a year, and paid rent. Defendant denies that he rented, but he alleged and testified that he negotiated for a purchase from V-C of a part of the property, that they reached an agreement, and he paid $150 on the purchase price. That agreement, according to him, would leave title to the one-acre tract in V-C, and he, upon payment of the balance, would acquire title to the 20.9 acres.
The burden of establishing a ratification is on plaintiffs.
It would seem impossible to correctly charge on the issue submitted by the court in this case. It is suggested there should be an issue with respect to the validity of the foreclosure and another issue with respect to the ratification of the sale, if it be found that the foreclosure was voidable.
This conclusion renders it unnecessary to determine whether plaintiffs, because of the form of the deed to them, stand in the shoes of V-C, and hence subject to all defenses which defendant could have asserted against V-C, if it had not sold. See Hayes v. Ricard, supra.
New trial.
SHARP, J., took no part in the consideration or decision of this case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321015/ | 240 S.C. 75 (1962)
124 S.E.2d 602
W. A. FULLER, Respondent,
v.
EASTERN FIRE & CASUALTY INSURANCE COMPANY and Donald Eugene Gillespie, Defendants, of whom Eastern Fire & Casualty Insurance Company is, Appellant.
17889
Supreme Court of South Carolina.
March 15, 1962.
*76 Messrs. Cooper & Gary and William A. Dallis, of Columbia, and Leatherwood, Walker, Todd & Mann and Wesley M. Walker, of Greenville, for Appellant.
*77 Messrs. Thomas A. Wofford and Theodore A. Snyder, Jr., of Greenville, for Respondent.
March 15, 1962.
MOSS, Justice.
W.A. Fuller instituted this action against Eastern Fire & Casualty Insurance Company, the appellant herein, and *78 Donald Eugene Gillespie, seeking damages for the breach of a contract of automobile liability insurance issued by the appellant to the respondent. The Court below sustained a demurrer interposed by the defendant, Donald Eugene Gillespie, and he was thereby eliminated as a party to this action.
The complaint alleges that Donald Eugene Gillespie was a salesman of automobile liability insurance and that on May 1, 1959, the respondent and the said Gillespie agreed on all material terms of a liability insurance policy, including the limitations of liability, various types of coverage, the description of the automobile to be insured, the premium to be paid for said insurance, and the term during which the policy was to be in force was from May 1, 1959 to May 1, 1960. It is further alleged that Gillespie agreed to procure for the respondent an automobile liability insurance policy on such agreed terms and that the respondent signed an application therefor embodying the terms relative to such policy and paid to the said Gillespie the sum of $25.00 by way of down payment to be applied to the agreed insurance premium of $83.00. The complaint further alleges that Gillespie told the respondent that he was covered with insurance from that day forward, and that the said respondent could then begin driving his automobile because he had insurance. It is further alleged that based on the representations of Gillespie, the respondent proceeded to operate his automobile, confident that he was covered by insurance, and that on May 2, 1959, while driving said car, was involved in a collision with an automobile driven by one Hudson; that subsequently Hudson instituted an action for damages against the respondent and attached his insured automobile. It is then alleged that the respondent made demand upon the appellant and Gillespie to defend the said action under the terms of the insurance policy heretofore referred to. The appellant refused to defend. The complaint alleges that the respondent, by reason of the failure of the appellant to defend the aforesaid action, employed attorneys to defend said suit in his behalf, and *79 that on August 7, 1959, a judgment was awarded against him for the sum of $858.90, and costs; that the respondent's automobile was sold to satisfy said judgment and a deficiency judgment resulted which is still owed by the respondent.
The complaint alleges that on May 8, 1959, there was issued and delivered to him an automobile liability insurance policy by the appellant; that the policy so issued was in all respects that which he had bargained for with Gillespie, except that the said policy had an effective date between May 5, 1959 and May 5, 1960, rather than an effective date of May 1, 1959 to May 1, 1960, as had been contracted for with Gillespie. It is then alleged that the policy should have been effective between the dates contracted for; that the appellant was obligated to provide the respondent with coverage from May 1, 1959, and the oral promise of Gillespie was binding on the appellant; and that pursuant to said oral promise and representations, the respondent was protected by said policy from May 1, 1959, even though the policy, as issued had a commencing date of May 5, 1959. The complaint then alleges that Gillespie was an authorized agent of the appellant in procuring insurance for the respondent; that he collected the premium therefor and forwarded the same to the appellant; that he delivered the policy for it to the respondent; and that since Gillespie was an agent of the appellant it was bound by the promises of said agent to provide him with automobile liability insurance protection from May 1, 1959. It is then alleged that the appellant intentionally and fraudulently refused to defend the aforementioned lawsuit brought against the respondent and that he was entitled to be defended by the appellant and held harmless within the limitations of the policy. It is then alleged as a direct consequence of the appellant's intentional and fraudulent refusal to defend said action in breach of the said contract of insurance, the respondent has been damaged in the sum of $1,119.15, plus $5.00 for each day he was deprived of his automobile, commencing on July 10, 1959, and $10,000.00 punitive damages.
*80 The appellant, by way of answer, in addition to a general denial, alleged that Donald Eugene Gillespie was not its duly authorized and licensed agent and had no authority to bind it by his actions on May 1, 1959. It is alleged that an application was received by Universal Underwriters, Inc., in Columbia, South Carolina, from Donald Eugene Gillespie, requesting the issuance of a liability insurance policy to the respondent; that the principal owner of Universal Underwriters, Inc. was Nelson M. Dangel, a duly authorized and licensed agent of the appellant; that upon receipt of said application, the said Dangel issued to the respondent a policy of the appellant, with effective dates of said policy for one year commencing May 5, 1959 and ending May 5, 1960. It is then alleged that the policy issued by the appellant was not in eeffct on May 2, 1959, and the appellant owed no duty to the respondent to defend any action instituted against him for any collision, or to pay any sums recovered against the respondent arising out of an automobile collision on said date.
This case came on for trial before the Honorable Steve C. Griffith, Presiding Judge, and a jury, at the 1961 January term of the Court of Common Pleas for Greenville County, South Carolina. During the trial, the respondent, over objection of the appellant, was permitted to testify as to conversations which he had with the said Gillespie. At the close of the testimony in behalf of the respondent, a motion was made by the appellant to strike all of the testimony as it relates to any promises or agreements arrived at between the respondent and Gillespie, on the ground that the said Gillespie was not an agent for the appellant on May 1, 1959, and by reason of such fact any promises or statements that he made would not be binding on the appellant. There was a motion made by the appellant for a nonsuit on the following grounds: (1) That the respondent failed to prove that Gillespie was an agent of the appellant at the time he made application to Gillespie for the insurance here involved; (2) That the respondent failed to prove that Gillespie had authority *81 to bind the appellant; (3) That the attempt on the part of Gillespie to bind the appellant was ineffectual since it appears from the evidence that Gillespie made only an oral binder without designating the company which would issue a policy of liability insurance; and (4) That the respondent failed to prove there was coverage under the policy of liability insurance issued by the appellant for the accident which occurred on May 2, 1959, for the reason that such occurred before the effective date of the policy, which was May 5, 1959, and hence there was no duty upon the appellant to defend said action nor pay any judgment recovered therein against the respondent. The appellant also moved for a nonsuit as to the claim for punitive damages on the ground that there was no evidence of any act of fraud on the part of the appellant, which accompanied the alleged breach of the insurance contract. These motions were refused. At the close of all the testimony, a motion for direction of a verdict was made on behalf of the appellant on the same grounds as was the motion for a nonsuit. The trial Judge granted the motion for direction of a verdict as to punitive damages for fraudulent breach of the contract, but otherwise denied the motions of the appellant and submitted the case to the jury, which rendered a verdict for the respondent in the amount of $1,864.15, which amount was divided under the instructions of the court to $1,119.15 actual damages, $145.00 for loss of the use of the automobile, and $600.00 for attorney fees. Timely motions for judgment non obstante veredicto, or in the alternative for a new trial, or a new trial nisi, were made. The trial Judge denied all motions, with the exception of the motion for a new trial nisi, and he directed that a new trial be granted unless the respondent remit upon the record all of the verdict in excess of $1,264.15. The respondent complied with the nisi order. The appellant, preserving by its exceptions, the questions heretofore stated, and also the question of damages that could be awarded in this case, has duly appealed to this Court.
*82 It is admitted that Donald Eugene Gillespie had previously been an agent for the appellant, but his license, as such, expired on March 31, 1959. Hence, he was not a licensed agent of the appellant on May 1, 1959, at the time he solicited and took an application from the respondent for the insurance here involved. Section 37-231 of the 1952 Code of Laws of South Carolina, provides that no person shall act as an agent for any insurance company unless a license so to do has been issued to him by the Insurance Commissioner. However, a policy of insurance is not rendered void nor is the insured precluded from recovery upon such policy by reason of the fact that the person soliciting or issuing it was not duly licensed. This result has followed where such person was originally licensed but failed to keep his certificate renewed. Appleman On Insurance Law and Practice, Vol. 16, Section 8635, page 9. In the case of Slater v. General Casualty Company of America, 344 Pa. 410, 25 A. (2d) 697, it was held that where an automobile liability policy was written by insurer's general agent, the fact that the solicitor of said insurance was unlicensed at the time of obtaining the application for the insurance and collecting the premium therefor, did not relieve the insurer of liability on the policy. Cf. Brunson v. Bankers' National Life Insurance Co., 140 S.C. 31, 138 S.E. 522.
In the case of Taylor v. United States Casualty Co., 229 S.C. 230, 92 S.E. (2d) 647, it was held that agency may be created by law as well as by the real act of the principal, and that, with respect to third parties who deal with one as an agent of another, the relation of the principal and agent may arise because of estoppel of the principal to deny an apparent agency relied upon by such third persons.
Section 37-233 of the 1952 Code defines an agent of an insurance company as any person who solicits insurance in its behalf, takes or transmits, other than for himself, any application for insurance or any policy of insurance to or from such company, advertises or gives notice that he will receive or transmit any such application or policy, shall receive *83 or deliver a policy of insurance of any such company, or shall receive, collect or transmit any premium of insurance, or shall do or perform any other act or thing in the making or consummating of any contract of insurance for or with such company.
It is true that agency may not be established solely by the declarations and conduct of the alleged agent, but such declarations and conduct are admissible as circumstances in connection with other evidence tending to establish the agency. Drayton v. Industrial Life & Health Insurance Co., 205 S.C. 98, 31 S.E. (2d) 148. Mebane v. Taylor, 164 S.C. 87, 162 S.E. 65.
The evidence in this case shows that Gillespie contacted the respondent on May 1, 1959, and solicited and obtained from him an application for a policy of automobile liability insurance. The application was addressed to Universal Underwriters, Inc., Columbia, South Carolina, admitted by appellant to be its duly authorized and licensed agent. The terms of the policy were agreed upon, including the premium therefor in the amount of $83.00, with a down payment of $25.00, the remaining premium to be paid in five equal installments of $14.00 each. The requested policy period was from "May 1, 1959 to May 1, 1960." This application was signed by the respondent and by "Gene Gillespie", designating himself as "Agent submitting."
Gillespie testified at the time he took the application from the respondent he advised him that "he was insured as of that time." This is undisputed in the record. After Gillespie had received the application and the $25.00 premium he went to the South Carolina National Bank and got a bank money order made out to Universal Underwriters, Inc. for the premium so collected, less the agent's commission. He mailed such bank money order and the application to Universal Underwriters, Inc. in Columbia, South Carolina, and such bank money order and application were received by Universal Underwriters, Inc. on May 5, 1959. On the same date, *84 a policy of liability insurance was issued by the appellant upon the automobile of the respondent and said policy, in all respects, conformed to the application except the policy period was stated to be "May 5, 1959 to May 5, 1960." The policy so issued by the appellant was mailed to Gillespie for delivery to the respondent, and it was so delivered. Endorsed on the policy was a notation that "Gene Gillespie, 207 Brookside Avenue, Greenville, S.C.", along with Universal Underwriters, Inc. were the agents of the appellant. It further appears that by letter, dated May 5, 1959, the respondent was directed to make payments of the contract balance of premium to Universal Premium Association at Post Office Box 942, Columbia, South Carolina, this being the same Post Office address as that of Universal Underwriters, Inc. In this letter it was stated: "We appreciate the opportunity to be of service and suggest that if you have need of other insurance, you contact the agent who sold you this policy." There was a postscript to this letter, which read: "Since Mr. Gillespie did not have one of our contracts for you to sign, we are enclosing one and ask that it be signed where checked and returned in the enclosed envelope." It further appears that the appellant did, on May 7, 1959, make application to the Insurance Commissioner of South Carolina for a renewal of the agent's license for Gillespie. However, the appellant later on withdrew this request. Gillespie also testified that after he had received the policy in question, that the appellant sent him a supply of application blanks and rate sheets.
The initial part of the premium for the policy in question, after deduction of Gillespie's commission, was, on May 1, 1959, converted into a bank money order. The application received by Universal Underwriters, Inc. showed on its face that the policy desired and applied for was to take effect on May 1, 1959. We think these facts made it a question for the jury to determine whether the appellant was put on notice that Gillespie had agreed upon a policy with a coverage commencing on May 1, 1959.
As is heretofore stated, the respondent had an automobile collision with one Hudson on May 2, 1959, and he promptly *85 notified Gillespie of the collision. Gillespie testified that after he got such information he notified the appellant and Universal Underwriters, Inc. of such fact on Thursday, or possibly Wednesday, after he had received and delivered the policy in question to the respondent. It is reasonable to conclude that the respondent was attempting to comply with the provision of the requirement of the insurance policy that when an accident occurs, notice shall be given by the insured to the company, or its authorized agent. If the respondent was not insured by the policy, there was no necessity for the giving of such notice, nor was there any reason for Gillespie to transmit such notice to the appellant. The evidence shows that the appellant accepted premium installments as they became due after notice of the fact that the respondent had had a collision. The appellant, with this knowledge, kept the policy in force until August 4, 1959, at which time the said policy was canceled. The appellant did not repudiate the contract of insurance but returned only the unearned premium, retaining the portion of the premium claimed by it to have been earned.
It is the contention of the appellant that Gillespie was not its authorized agent and had no authority to bind it by making any agreement with the respondent fixing the time for the commencement of the contract of liability insurance. The trial Judge submitted to the jury, as a question of fact, whether the appellant had ratified and was bound by the agreement made by Gillespie with the respondent, even though the said Gillespie was acting without proper authority.
In 44 C.J.S., Insurance, § 273, page 1088, it is said:
"An insurance company, like other principles, may ratify and thereby become bound by a contract of insurance entered into on its behalf by one who at the time was acting without proper authority, provided the contract is not one which is void ab initio. After ratifying, the company must bear all the burdens of the contract; it becomes bound by representations *86 made by the agent in the course of the transaction, and is chargeable with any fraud or mistake of the agent in making the contract; further, the company is bound by its ratification, with knowledge of the facts; of the unauthorized acts of an agent, or person assuming to be an agent, in soliciting and receiving an application, fixing the time for the commencement of the contract, delivering a policy, waiving a condition as to the delivery of the policy, or accepting a promissory note for the first premium."
Ratification as it relates to the law of agency may be defined as the express or implied adoption and confirmation by one person of an act or contract performed or entered into in his behalf by another who at the time assumed to act as his agent. Whether or not there has been a ratification of an unauthorized act by acceptance or retention of benefits thereof is usually a question of fact for the jury and not one of law for the court. Barber v. Carolina Auto Sales, 236 S.C. 594, 115 S.E. (2d) 291.
Assuming that Gillespie was an unlicensed and unauthorized agent of the appellant to solicit or take an application from the respondent, we think the subsequent conduct of the appellant, under the evidence heretofore recited, was sufficient to take to the jury the issue of whether or not the appellant expressly or impliedly ratified the acts of the said Gillespie. In Greene et al. v. Spivey et al., 236 N.C. 435, 73 S.E. (2d) 488, it was held that ordinarily an insurance company may not ratify that part of an unauthorized contract made by an agent which is favorable to the company and reject the rest, but the company must ratify or reject as a whole, and the ratification will extend to the entire transaction.
The appellant asserts that the oral binder made by Gillespie with the respondent was ineffective against the appellant for the reason that it was not designated as the insurance company to which the application of the respondent was directed. The appellant asserts that the failure *87 to designate any company is fatal to the validity of the oral binder. We have held that the failure to designate any company is fatal to the validity of an oral binder, Dubuque Fire & Marine Ins. Co. of Dubuque v. Miller et al. 219 S.C. 17, 64 S.E. (2d) 8; but where no specific insurance company is designated by the parties, the omission is fully taken care of and the identity of the insurance company ascertained, when the policy is actually issued, as was done in this case. Aiken Petroleum Co. v. National Petroleum Underwriters, etc., 207 S.C. 236, 36 S.E. (2d) 380.
We think there was no error on the part of the trial Judge in refusing the motion of the appellant to strike the testimony relating to the promises or agreements arrived at between the respondent and Gillespie. Such declarations, promises or agreements alone would not have been admissible to establish agency, but such were admissible in connection with the other evidence tending to establish agency. We, likewise, think that the trial Judge was correct in refusing the motions of the appellant for a nonsuit, directed verdict, judgment non obstante veredicto, or in the alternative for a new trial, on the four grounds heretofore set forth. We shall herein discuss the exceptions relating to the amount of the verdict. We think there was no error in the charge of the trial Judge on the question of ratification or waiver; there was evidence to support a verdict on either theory.
The final question for determination is whether the trial Judge committed error in his instructions to the jury on the question of damages and whether his order granting a new trial nisi, resulting in a reduction of the verdict as found by the jury, correctly disposed of the issue of damages.
In considering this last question, we do so on the basis that a valid contract of liability insurance existed between the appellant and the respondent, as was found by the jury.
The respondent alleged in paragraph 11 of his complaint that as a consequence of the appellant's breach of its contract *88 of insurance with him, he has been damaged in the sum of $1,119.15, plus $5.00 for each day he has been deprived of the use of his automobile, commencing on July 10, 1959, as actual damages. The respondent alleged in paragraph 7 of his complaint that he had been put to great expense for attorneys' fees because of the failure of the appellant to defend the action brought against him by one Hudson.
The trial Judge instructed the jury if it concluded that the respondent was entitled to recover against the appellant for a breach of the insurance contract, he would be entitled to recover the fair value of his automobile, which he lost by attachment and sale to satisfy the judgment of Hudson against him. The jury was further charged that if the respondent was entitled to recover, he would be entitled to the reasonable rental value of an automobile for the period that he was deprived of the use of the insured automobile because the same was attached. He further charged that the respondent would be entitled to recover reasonable compensation for his attorneys in defending the Hudson suit. In instructing the jury as to the form of the verdict, in the event they found for the respondent, they were directed to divide the damages so found. The jury, in accordance with the form of verdict submitted to them found for the respondent $1,119.15 actual damages, $145.00 for the loss of the use of respondent's automobile, and $600.00 as attorney's fees, making a total verdict of $1,864.15. This verdict was by order granting a new trial nisi reduced to $1.264.15. In other words, the verdict was reduced by the amount found as attorneys' fees, and in the order nisi the trial Judge held that the respondent was limited, in his recovery of damages, to the amounts claimed in paragraph 11 of the complaint, to which we have heretofore referred. The right to recover attorneys' fees was not alleged in paragraph 11 of the complaint. The trial Judge stated in his charge to the jury "There is no evidence in this case as to the amount of the attorneys' fees", nor was such alleged as an element of respondent's damage. The appellant charges *89 the trial Judge with error in instructing the jury that they could assess and award an amount for attorneys' fees when there was no evidence as to the value of the services rendered by the attorneys for the respondent. It becomes unnecessary for us to pass upon this exception for the reason that the trial Judge has, by his order nisi, relieved the appellant from the payment of any attorneys' fees.
The appellant charges the trial Judge with error in instructing the jury that they could find damages in the amount of the fair market value of the automobile of the respondent.
This being an action for the breach of contract, the burden was upon the respondent to prove the contract, its breach, and the damages caused by such breach. Baughman v. Southern Railway Co., 127 S.C. 493, 121 S.E. 356. The general rule is that for a breach of contract the defendant is liable for whatever damages follow as a natural consequence and a proximate result of such breach. National Tire & Rubber Co. v. Hoover, 128 S.C. 344, 122 S.E. 858; and Smyth v. Fleischmann, 214 S.C. 263, 52 S.E. (2d) 199. Where an insurer refuses to undertake the defense of an action against the insured based upon a claim within the coverage of the insurance policy, it thereby breaches the contract of insurance and is liable to the insured for all damages resulting to such insured as a direct result of such refusal and breach. Liberty Mutual Ins. Co. v. Atlantic Coast Line Ry. Co., 66 Ga. App. 826, 19 S.E. (2d) 377. Butler Bros. v. American Fidelity Co., 120 Minn. 157, 139 N.W. 355, 44 L.R.A., N.S., 609.
It is undisputed that the Chevrolet automobile of the respondent, which was insured by the appellant, was attached and sold to satisfy the judgment which Hudson had obtained against him. The respondent testified that this automobile was worth $1,100.00.
In the case of Pennsylvania Threshermen & F. Mut. Cas. Ins. Co. v. Messenger, 181 Md. 295, 29 A. (2d) 653, the insurance company wrongfully refused to *90 defend an action brought against its insured. A judgment was obtained against the insured and his truck and trailer were sold at a Sheriff's sale to satisfy such judgment. The insured then brought an action against the insurance company for damages for the loss of his truck and trailer. The Court held that the insurer was liable for such damages because it breached the insurance contract in failing to defend the insured, and the measure of damages for said breach are those which follow as a natural consequence and a proximate result thereof. It was further held where the insurer refuses to perform the obligation required by the liability insurance contract of defending a suit in behalf of the insured or paying a judgment against him, in consequence of which the insured suffers loss, the Court can compel the insurer to respond in damages therefor.
We think that since there was a breach of the insurance contract by the appellant, it was liable for whatever damages followed as a natural consequence and as a proximate result of such breach, and this included the fair market value of the automobile which the respondent lost because of the failure of the appellant to perform its obligation under the automobile liability insurance policy. It follows that the trial Judge committed no error in his charge to the jury in this respect.
Where an insurer wrongfully refuses to defend an action against the insured on the ground that the claim upon which the action was based, was not within the coverage of the policy, it is liable for the court costs taxed or incurred in such suit. Carolina Veneer & Lumber Co. v. American Mut. Liability Ins. Co., 202 S.C. 103, 24 S.E. (2d) 153. The judgment rendered against the respondent in the action against him by Hudson showed taxed costs of $10.25. The appellant is liable for such taxed costs.
The appellant charges that it was error for the court to instruct the jury that it could find a verdict for the respondent *91 for loss of the use of his automobile. The jury was instructed that if the respondent lost the use of his automobile for any period of time, he would be entitled to the reasonable rental value of an automobile for the period of time that he was deprived of the use of his automobile. The appellant asserts that there was no testimony presented by the respondent as to the reasonable rental value.
In the case of Coleman v. Levkoff, 128 S.C. 487, 122 S.E. 875, this Court held that the question of the value of the use of property, of which the owner was deprived, the expense of hiring a substitute for that of which he was deprived, is a pertinent consideration. In the case of Newman v. Brown et al., 228 S.C. 472, 90 S.E. (2d) 649, 55 A.L. R. (2d) 929, this Court approved a charge that a jury could award a reasonable sum of money to compensate the owner of an automobile for the loss of use of such automobile for a reasonable length of time during which it was being repaired. In the case of Scott v. Southern Ry. Co., 231 S.C. 28, 97 S.E. (2d) 73, a recovery was allowed for the loss of use of an automobile where there was testimony that the rental value of a substitute car was $5.00 per day.
As to damages in this respect, the sole testimony thereabout was given by the respondent, as follows:
"Q. During the time you didn't have an automobile, how did you get from place to place?
"A. By taxi and by my neighbors.
"Q. What all varied purposes had you used your car for?
"A. Well, transportation back and forth to my work.
"Q. Did you use it for anything else?
"A. That's all."
There was no adequate proof of damages for the loss of use of the respondent's automobile. The damages claimed for the loss of use are uncertain and unascertained. We think the trial Judge should have disallowed the $145.00 found by the jury as damages for the loss of use of respondent's automobile, because there was no adequate proof of such.
*92 This Court may affirm nisi where damages improperly allowed can be segregated. Padgett v. Calvert Fire Ins. Co., 223 S.C. 533, 77 S.E. (2d) 219. We think that the judgment of the respondent against the appellant should be affirmed in the amount of $1,100.00 as damages for the loss of respondent's automobile, together with $10.25 court costs, making a total of $1,110.25. It is, therefore, the judgment of this Court that unless the respondent remit upon the record, within ten days after the filing of the remittitur herein, with the Clerk of Court for Greenville County, the sum of $153.90, the judgment of the lower Court be reversed and a new trial granted; but if he so remits the sum of $153.90, the judgment is affirmed for $1,110.25. It is so Ordered.
TAYLOR, C.J., LEWIS and BUSSEY, JJ., and LEGGE, Acting Associate Justice, concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320998/ | 229 Ga. 281 (1972)
190 S.E.2d 897
OWENS
v.
GEORGIA POWER COMPANY.
26940.
Supreme Court of Georgia.
Argued April 10, 1972.
Decided June 19, 1972.
Rehearing Denied June 28, 1972.
Shi & Raley, Trammell F. Shi, F. Robert Raley, for appellant.
Jones, Cork, Miller & Benton, Wallace Miller, Jr., for appellee.
GRICE, Presiding Justice.
This case arose when Charlie *282 Owens, by his mother Mrs. Ruth Brooks as next friend, filed a complaint in the Superior Court of Bibb County against the Georgia Power Company seeking damages for severe injuries received from an electrical current while he was in the backyard of his home immediately adjacent to the right of way and power lines of the power company. The defendant's answer denied the essential allegations of the plaintiff's complaint.
Upon the trial before a jury a substantial verdict was rendered for the plaintiff. The trial court overruled the defendant's motions for directed verdict, for judgment notwithstanding the verdict and for new trial.
On appeal to the Court of Appeals that court reversed, holding that the motions for directed verdict and for judgment notwithstanding the verdict should have been granted, which would end the case without another trial. Georgia Power Company v. Owens, 124 Ga. App. 660 (186 SE2d 294) (two judges dissenting). The application for certiorari to this court was granted.
In our view there was ample evidence to support the jury's verdict. It is not necessary to review the evidence here because its salient features were given extensive treatment in the well-written opinions of both the majority and minority in the Court of Appeals.
A careful review of the record reveals that there was evidence to support findings of negligence on the part of the defendant as to installation, inspection and maintenance of its transmission lines and grounding system along the right of way involved here, and to refute the conclusion that the plaintiff's injuries were attributable solely to an act of God. At any rate, the evidence presented substantial questions of fact which were totally within the province of the jury to resolve, and did not demand a verdict for the defendant.
Our Code declares that a motion for directed verdict shall be granted only "If there is no conflict in the evidence as to any material issue and the evidence introduced, with all reasonable deductions therefrom, shall demand a particular verdict ... " Code Ann. § 81A-150 (a).
*283 Subsection (b) of that section provides that a motion for judgment notwithstanding the verdict may be made when the trial court denies a party's motion for directed verdict. Therefore it is obvious that the legal principles surrounding the one motion are pertinent to the other.
It was stated by this court as to motions for directed verdict in Northwestern University v. Crisp, 211 Ga. 636, 647 (88 SE2d 26) that "`In any case where the evidence may be subject to more than one construction, or where more than one inference may be drawn, even from undisputed facts, the duty of solving the mystery should be placed upon the jury.' Marshall v. Woodbury Banking Co., 8 Ga. App. 221 (68 S.E. 957)."
We therefore hold that the trial court properly overruled the defendant's motions for directed verdict and for judgment notwithstanding the verdict: and also that the Court of Appeals erred in overruling the trial court's judgment.
Judgment reversed. All the Justices concur, except Jordan, J., disqualified. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261419/ | 286 Pa. Super. 271 (1981)
428 A.2d 987
COMMONWEALTH of Pennsylvania
v.
Sherril HOBSON, Appellant.
Superior Court of Pennsylvania.
Submitted November 14, 1980.
Filed April 16, 1981.
*273 Philip P. Lope, Zelienople, for appellant.
Robert F. Hawk, Assistant District Attorney, Butler, for Commonwealth, appellee.
Before SPAETH, JOHNSON and POPOVICH, JJ.
POPOVICH, Judge:
This is an appeal from an order of the Court of Common Pleas, Butler County, summarily denying a petition for post-conviction relief filed by appellant. Because appellant did not receive the assistance of counsel in preparing his Post-Conviction Hearing Act[1] (PCHA) petition, we vacate the lower court's order and remand for proceedings consistent with this opinion.
Appellant was convicted of robbery by a jury.[2] Post-trial motions were denied[3] and appellant was sentenced to three to eight years imprisonment. A direct appeal was taken[4] to *274 this Court and we affirmed by per curiam order. Commonwealth v. Hobson, 286 Pa.Super. 271, 428 A.2d 987 (1978). The Supreme Court denied allocatur on November 29, 1978.
On July 16, 1979, appellant filed a pro se PCHA petition[5] wherein he alleged indigency and the ineffectiveness of trial counsel. He also requested the appointment of counsel. The court below dismissed this petition without an evidentiary hearing or the appointment of counsel on the grounds that the ineffectiveness issue was waived and the claims attendant thereto were no longer viable, having been finally litigated.[6] We do not agree.
To begin with, as to the question of waiver, our Supreme Court has held that a post-conviction petition cannot be summarily disposed of, without appointment of counsel, on such ground. Commonwealth v. Minnick, 436 Pa. 42, 258 A.2d 515 (1969). The rationale being:
"The question of waiver is often a complicated legal one. There may be `extraordinary circumstances' which will justify petitioner's failure to raise the issue. There may have been an intervening change in the law which will now entitle him to relief. And failure to raise an issue constitutes only a `rebuttable presumption' of waiver. These are not the kinds of issues which we can expect an uncounseled petitioner to adequately deal with." (Citations omitted) Id., 436 Pa. at 45, 258 A.2d at 516-17.
Instantly, inasmuch as appellant alleged indigency and requested the appointment of counsel in the PCHA petition, the lower court erred in dismissing same without first assigning counsel to assist appellant. Commonwealth v. Alvarado, 488 Pa. 250, 412 A.2d 492 (1980). Given such omission, the normal procedure would be "to remand to the hearing *275 court for a determination of whether an evidentiary hearing, and/or other relief, should be granted." Commonwealth v. Minnick, supra, 436 Pa. at 45, 258 A.2d at 517. However, before doing so, the Court thinks it in the interest of judicial economy, id., to address one of appellant's claims. "We take this course because it is clear on this record that [the] issue which petitioner . . . raise[s] on his direct appeal has already been finally determined against him." Id. To-wit, the Rule 1100 issue. The fact that such point has been presented in an unsuccessful appeal to this Court, as well as to the Pennsylvania Supreme Court in the form of a petition for allocatur, renders it finally litigated. 19 P.S. § 1180-4(a)(2) & (3) (Supp. 1979-80); Commonwealth v. Gardner, 250 Pa. Super. 86, 378 A.2d 465 (1977). As for the second of appellant's claims, i.e., counsel's failure to subpoena alibi witnesses, the same result does not obtain.[7]
A review of the record reveals that neither this Court nor the Supreme Court considered, on its merits, whether appellant's counsel was ineffective for failing to subpoena named alibi witnesses. Accordingly, such issue, raised in appellant's post-conviction petition, has not been finally litigated.[8]See Commonwealth v. Alvarado, supra; *276 see generally Commonwealth v. Rhodes, 272 Pa.Super. 546, 556, 416 A.2d 1031, 1035-36 (1979). Moreover, even if arguendo the contention of counsel's ineffectiveness were deemed waived, the lower court would still be unable to dismiss summarily a pro se petition on such ground. Commonwealth v. Minnick, supra; see Commonwealth v. McClinton, 488 Pa. 598, 413 A.2d 386 (1980) (court erred in dismissing initial PCHA petition without a hearing where counsel was not appointed to assist petitioner in the proceedings); Commonwealth v. Miller, supra (summary dismissal of uncounseled petition without appointment of counsel by court is error); Commonwealth v. Cochran, 261 Pa.Super. 236, 396 A.2d 375 (1978) (court below erred in summarily dismissing petitioner's uncounseled petition, even if it were the third one filed); see also Commonwealth v. Schmidt, 436 Pa. 139, 259 A.2d 460 (1969) (summary disposition of a petition, without appointing counsel, is permitted only "`when a previous petition involving the same issue or issues has been finally determined adversely to the petitioner and he . . . was represented by counsel in proceedings thereon.' Pa.R. Crim.P. 1504."); cf. Commonwealth v. Mitchell, 266 Pa.Super. 45, 402 A.2d 1070 (1979) (issues waived by failure to raise them in prior PCHA petition filed by petitioner, where counsel was appointed and a hearing held).
Since we find that in the case sub judice the dismissal of the appellant's petition without the appointment of counsel was error, because the issue alleged therein was neither finally litigated nor waived, we remand to the lower court without reaching the merits of the issue. Commonwealth v. Miller, supra (appellate court reviewed the record and agreed with the lower court that the allegations in the petition were completely lacking in merit. Nevertheless, the *277 summary dismissal of the PCHA petition without appointment of counsel being error, the case was remanded). Such action is consistent with our prior case law. As was stated by our Supreme Court in Commonwealth v. Adams, 465 Pa. 389, 350 A.2d 820 (1976):
"Without reaching the merits of appellant's substantive claims, we hold that the summary dismissal of the petition in this case [, which dealt with guilty pleas from which no appeal was taken,] without appointment of counsel was error. Pa.R.Crim.P. 1503(a) suspending in part and superseding Section 12 of the Post-Conviction Hearing Act, places an affirmative duty on the hearing court to appoint counsel for an indigent petitioner before disposition of his petition. Commonwealth v. Schmidt [supra]; accord, Commonwealth v. Conner, 462 Pa. 282, 341 A.2d 79 (1975); Commonwealth v. Minnick, [supra]. Summary disposition of a petition, without appointment of counsel, is permitted only `when a previous petition involving the same issue or issues has been finally determined adversely to the petitioner and he . . . was represented by counsel in proceedings thereon.' Pa.R.Crim.P. 1504. See Commonwealth v. Smith, 459 Pa. 583, 330 A.2d 851 (1975); Commonwealth v. Haynes, 234 Pa.Super. 556, 340 A.2d 462 (1975)." (Footnote omitted) Id., 465 Pa. at 391, 350 A.2d at 821-22. Accord Commonwealth v. Miller, supra (direct appeal affirmed and allocatur denied prior to filing of uncounseled petition which was summarily denied); see also Commonwealth v. McClinton, supra; Commonwealth v. Alvarado, supra; Commonwealth v. Brown, 261 Pa.Super. 240, 396 A.2d 377 (1978); Commonwealth v. Irons, 254 Pa.Super. 251, 385 A.2d 1004 (1978); Commonwealth v. Bostic, 251 Pa.Super. 224, 380 A.2d 459 (1977); see generally Commonwealth v. Padgett, 485 Pa. 386, 402 A.2d 1016 (1979).
Further, in Commonwealth v. Brochu, 249 Pa.Super. 526, 378 A.2d 420, 422 (1977), our Court focused on the requirement that an indigent PCHA petitioner receive the assistance of a trained attorney. "`Pa.R.Crim.P. 1503(a) . . . places an affirmative duty on the hearing court to appoint *278 counsel for an indigent petitioner before disposition of his petition.'" The reason behind the insistence upon the appointment of counsel was succinctly stated by us in Commonwealth v. Irons, supra, viz.:
"`"[C]ounsel's ability to frame the issues in a legally meaningful fashion insures the trial court that all relevant considerations will be brought to its attention . . . . It is a waste of valuable judicial manpower and an inefficient method of seriously treating the substantive merits of applications for post-conviction relief to proceed without counsel for the applicants who have filed pro se . . . . Exploration of the legal ground for complaint, investigation of the underlying facts, and more articulate statement of the claims are functions of an advocate that are inappropriate for a judge, or his staff." Commonwealth v. Mitchell, 427 Pa. 395, 397, 235 A.2d 148, 149 (1967).'" Id. 254 Pa.Super. at 254, 385 A.2d at 1006, quoting Commonwealth v. Brochu, supra.
In the case at bar, the lower court dismissed appellant's pro se petition without appointing counsel and without a hearing.[9] As a result, since appellant did allege indigency and did request the appointment of counsel, it was incumbent upon the hearing court to determine whether Hobson was indigent and, if so, whether counsel should have been appointed to assist him. Commonwealth v. Blair, 470 Pa. 598, 601, 369 A.2d 1153, 1154 (1977); Commonwealth v. Miller, supra.
Consequently, we have no choice but to vacate the order of the lower court and remand with instructions to afford appellant the opportunity to be represented by counsel in *279 filing an amended PCHA petition and in any further proceedings thereon.
Order vacated and case remanded for proceedings consistent with this opinion.
NOTES
[1] Act of January 25, 1966, P.L. (1965) 1580, § 1 et seq., 19 P.S. § 1180-1 et seq. (Supp. 1979-80).
[2] The case proceeded to trial after the court refused to approve a plea bargain agreement entered into by the appellant and the Commonwealth. Thereafter, on Feb. 9, 1977, appellant's petition to dismiss for the Commonwealth's failure to comply with Pa.R.Crim.P. 1100 was likewise denied. Record Nos. 14 and 18.
[3] These included, inter alia, the claim that the Commonwealth violated appellant's right to a speedy trial under Rule 1100. Record No. 45.
[4] This action was commenced by trial counsel, who was replaced by privately retained counsel after trial counsel had filed the initial appeal to this Court. Additionally, private counsel raised the Rule 1100 issue in his petition for allocatur to our Supreme Court. Record No. 66.
[5] This petition was the second filed by appellant. February 8, 1978, the time during which the appeal was pending before this Court, was when the first was filed. Given the pendency of the appeal, it was properly dismissed by the lower court without an evidentiary hearing. Commonwealth v. Miller, 275 Pa.Super. 236, 418 A.2d 700 (1980); Pa.R.A.P. 1701(a).
[6] Only after the lower court denied the PCHA petition did it assign counsel to represent appellant on the present appeal.
[7] This issue was set forth in appellant's pro se PCHA brief. Record No. 69, at 21. The fact that the lower court was cognizant of such brief is evident from the Order, dated August 2, 1979, dismissing the PCHA petition, in which the court directed that the "pro se brief be filed with the papers." Record No. 70, at 2. As such, the lower court's remark in its memorandum opinion that there were only "two areas that [were] the subject of [appellant's] request for post-conviction relief," i.e., "(a) that he was illegally extradited from the State of Arkansas and (b) that the court erred in refusing to dismiss the charges under Rule 1100," Record No. 73, at 2, is erroneous. Thus, the court's summary dismissal of the PCHA petition on the grounds that all the issues in support of the ineffective counsel claim were either finally litigated or waived is specious. See, e.g., Commonwealth v. Sinwell, 259 Pa.Super. 544, 547 & n. 5, 393 A.2d 959, 961 & n. 5 (1978).
The Court notes that the extradition question was presented under the rubric of a Rule 1100 violation at pre-trial, post-trial and on the first appeal to this Court. Thus, the point is finally litigated. 19 P.S. § 1180-4(a)(2) (Supp. 1979-80).
[8] This determination undermines the Commonwealth's contention that the appellant's failure to raise the alibi question in the appeal to the Supreme Court, during which time counsel other than trial counsel represented the accused, precludes him from doing so thereafter. See generally Commonwealth v. Sinwell, supra; Commonwealth v. Minnick, supra. In fact, the point that the alibi question is of first impression is conceded by the Commonwealth in its brief, wherein it states that the alibi issue "was not raised in post-trial motions or on previous appeals filed in this case." See Commonwealth's Brief, at 5.
[9] In light of the strict construction to be given to Rule 1504, Commonwealth v. Sinwell, supra, this action was error. Appellant's PCHA claim regarding his alibi witnesses, having not been previously determined adversely against him at a counseled proceeding, was not finally litigated. Moreover, the fact that the petition filed was uncounseled prevented the issue from being considered waived. Commonwealth v. Minnick, supra. Therefore, the summary dismissal of the petition without first appointing counsel was improper. Commonwealth v. High, 260 Pa.Super. 120, 393 A.2d 1041 (1978). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261427/ | 428 A.2d 1 (1981)
OCEANIC EXPLORATION COMPANY, Defendant Below, Appellant,
v.
Jack J. GRYNBERG, Celeste C. Grynberg, Celeste C. Grynberg, as sole trustee, Celeste C. Grynberg and Dean Smernoff, as co-trustees, and Oceanic Holding Company, Plaintiffs Below, Appellees.
Supreme Court of Delaware.
Submitted October 21, 1980.
Decided February 26, 1981.
*2 Edward B. Maxwell, II, of Young, Conaway, Stargatt & Taylor, Wilmington, and Steven M. Umin (argued) and David D. Aufhauser, of Williams & Connolly, Washington, D. C., for defendant-appellant.
David A. Drexler and Lawrence A. Hamermesh of Morris, Nichols, Arsht & Tunnell, Wilmington, and David J. Freeman (argued), Myer Feldman and Alan S. Weitz, of Ginsburg, Feldman, Weil & Bress, Washington, D. C., for plaintiffs-appellees.
Before DUFFY, McNEILLY, QUILLEN and HORSEY, JJ., constituting the Court en banc.
QUILLEN, Justice:
This appeal comes before this Court on a challenge to an interlocutory order. Notwithstanding the stage of the proceedings, however, the case already has a lengthy legal history in the Court of Chancery and has been the subject of two lengthy opinions by the Vice Chancellor. Grynberg v. Burke, Del.Ch., 378 A.2d 139 (1977); Grynberg v. Burke, Del.Ch., 410 A.2d 169 (1979). We rely heavily on the opinions below for the statement of the facts and the statement of the issues before us.
Plaintiffs, individually and as trustees, are the owners of 76 per cent of the outstanding stock of the defendant Oceanic Exploration Company (Oceanic). In particular, the beneficial ownership of the stock interest is with Jack J. Grynberg and members of his family, the majority shareholder group. On February 10, 1976, plaintiffs entered into a written agreement whereby 51 per cent of the company's stock was placed into a "voting trust agreement" which gave their voting rights in the stock to others. The "voting trust agreement" was to expire four years later on February 9, 1980.
On June 2, 1976 this "voting trust agreement" was "amended", again by written instrument, as a result of which all of plaintiffs' stock, 76 per cent of the company's stock, totaling some 5,222,558 shares, was placed in this trust. The "Amendment to Voting Trust Agreement and Purchase Option Agreement" took the form of an agreement between the depositing shareholders and the corporation. It was not signed by the voting trustees. The June 2 instrument also added to the "voting trust agreement" an option in favor of the corporation which gave it the right for a period of 5 years to purchase "all or any part" of plaintiffs' stock. The term of the trust was amended to correspond with the option period ending 5 years from June 2, 1976. The purchase price under the option was fixed at $2.87 per share (or one-half of the then current market price of the stock) for the first year, with this price increasing by 10 per cent on each anniversary date thereafter for the term of the option. The agreement further provides that during the term of the option plaintiffs may not "`sell, hypothecate, pledge or otherwise encumber said shares of their interests therein'." 378 A.2d at 140. The "amendment" also required Grynberg to resign as a Director and Chairman of the Board and from positions with subsidiaries, to release the company from an employment contract, and to agree not to compete with the company to a substantial extent. It further recited a general plan for the internal management of the company including a proposal to enlarge the Board of Directors. The voting trustees were to possess and be entitled "to exercise all stockholders' rights of every kind." It is fair to say that the "amendment" radically changed the nature of the agreement. Indeed, in substance it was not the same agreement.
Basically this lawsuit, filed on October 26, 1976, involves plaintiffs' attempt to have the "voting trust agreement and purchase option agreement" declared void so as to regain control of the corporation. The pretrial attack thus far has had several prongs.
The plaintiffs first moved for summary judgment on the theory that the agreements were invalid because they imposed an illegal restraint on their right to alienate their stock interests. The Court below rejected this attack at the summary judgment stage. 378 A.2d at 143-44. It is not presently before us.
*3 Some twenty-one months after the filing of the complaint, on July 11, 1978, by a second motion for partial summary judgment, plaintiffs mounted a threefold attack upon the validity of the trust. They took the position that, first, the June 2 agreement was invalid since it attempted, not within two years prior to the time of the expiration of the February agreement, to extend the duration of a voting trust in violation of 8 Del.C. § 218(b).[1] Second, they argued that no voting trust was validly constituted by the June 2 agreement since it called for a deposit of some shares into the trust which, at the time, were held by others as a pledge of security for debts of the corporation. Thus, the statutory requirement for a deposit of the stock could not occur.[2] Third, plaintiffs took the position that even if the first two impediments could be overcome, they, comprising all the settlors, nonetheless effectively terminated any voting trust by a letter of revocation sent by them to the corporation and the defendant voting trustees under date of October 15, 1976. 410 A.2d at 171, 174.
The Vice Chancellor found the "voting trust" portion of the agreement was governed by 8 Del.C. § 218 and that the June 2 "extension" agreement was invalid in that it was executed in violation of extension restrictions of § 218(b). 410 A.2d at 174-79.[3] As noted, extensions under the statute *4 are only permitted within the last two years of the term of the voting trust.
The Vice Chancellor went on to hold that, since the June 2 agreement on its face showed the majority of the covered shares were pledged and thus were incapable of being deposited in the trust, the terms of the agreement violated the mandatory certificate deposit provisions of 8 Del.C. § 218(a). Thus, for this additional reason, the Vice Chancellor concluded the June 2 agreement failed to create a valid statutory voting trust of the shares described therein. 410 A.2d at 179-82.[4]
As to the third contention of the plaintiffs in their second motion, revocation, the Vice Chancellor, relying on H. M. Byllesby & Co. v. Doriot, Del.Ch., 12 A.2d 603 (1940), said "it would be improper to hold that the plaintiffs were entitled to revoke as a matter of law in the absence of a clear factual record that would negate the existence of any representations on their part as to the duration of the trust upon which others may have relied to their detriment." 410 A.2d at 183. This contention is not before us in this interlocutory appeal.
Oceanic brings this appeal arguing: (1) the June 2 agreement is not a § 218 voting trust; (2) the June 2 agreement is validated by § 218(e); and (3) the June 2 agreement must be validated by general principles of equity. The plaintiffs counter that the statutory provisions relating to voting trusts govern this case and the Trial Court should be affirmed.
Some financial background is necessary to understand the appeal. "By February 1976, Oceanic was in deep financial trouble, several large loans were overdue, and, as to one such loan, Morgan Guaranty Trust Company of New York had filed suit for recovery. It was at this point that the original voting trust concept was suggested and put into effect. Without going into the contested details at this point, it is sufficient to note that with the surrender of voting control of the corporation to three outside directors by means of the voting trust, Morgan Guaranty Trust Company withdrew its lawsuit and extended the loan." 410 A.2d at 171-72.
While the Vice Chancellor found it unnecessary to go into the facts surrounding the execution of the June 2 document, it should be noted generally that the background facts and the reasons for the execution of that document are hotly contested and indeed constitute the heart of the dispute between the opposing sides, at least factually. The company says that, despite the February agreement, Grynberg remained in control and the financial situation worsened. As summarized in the appellants' brief, the company was on the brink of bankruptcy, was failing to meet its obligations, was facing a renewal of the Morgan suit, and was threatened by a minority shareholder suit. It was in this atmosphere, the company says, that Grynberg and his family, fully advised, entered the June 2 agreement relinquishing control and granting the option in exchange for valuable benefits including indemnity for large liabilities. Having reaped the benefit of the contract debt elimination and stock resurrection, the company says Grynberg now seeks to escape his legitimate burden under the contract.
Plaintiffs' view is different. They say they were given 24 hours notice to agree to changes in the February agreement on the fraudulent representations that a partner in a Greek venture was willing to purchase a certain interest in a Greek concession, sufficient to solve the company's financial crisis, if the amendments were made. This fraudulent inducement appears to be the major contention of the original complaint.
The Vice Chancellor, with customary precision, isolated a threshold question, namely: Is the "voting trust agreement" here governed by § 218? He concluded that it *5 was and, in so doing, as a matter of law, voided the trust for the reasons noted above, thereby eliminating the conflicting factual equities argued by the parties as to the voting trust. He did not disturb at this stage the option in the June 2 agreement. We are unable to agree to that disposition and therefore we are compelled to reverse. But we do not do so with ease and we candidly find our position difficult to express and regretfully perhaps less clear than the view so positively expressed below. Stated as directly and simply as possible, there are prominent facts which weigh against our conclusion. The February and June agreements were expressly labeled "VOTING TRUST AGREEMENT" and "AMENDMENT TO VOTING TRUST AGREEMENT AND PURCHASE OPTION AGREEMENT" and both were filed in the registered office of the corporation in Delaware as required by § 218(a). The description used and action taken by the parties thus brings the role of statute directly into play.
While the statute, § 218(a) and (b) does not expressly state it is exclusive, the case law rather pointedly supports the view that § 218 of the Delaware General Corporation Law provides the exclusive method for creating voting trusts of stock of a Delaware corporation. See Abercrombie v. Davies, Del.Supr., 130 A.2d 338 (1957); Smith v. Biggs Boiler Works Co., Del.Ch., 82 A.2d 372 (1951); Appon v. Belle Isle Corp., Del. Ch., 46 A.2d 749, 756 (1946), aff'd sub nom. Belle Isle Corp. v. Corcoran, Del.Supr., 49 A.2d 1 (1946); Ringling v. Ringling Bros.-Barnum & Bailey Combined Shows, Inc., Del.Ch., 49 A.2d 603, 608 (1946), modified, Del.Supr., 53 A.2d 441 (1947); Perry v. Missouri-Kansas Pipe Line Co., Del.Ch., 191 A. 823 (1937); In re Chilson, Del.Ch., 168 A. 82 (1933).
But our decision can neither rest blindly on the form elected by the parties to the June agreement without regard to the substance of the whole contract nor on the exclusivity of the statute without regard to its scope or intended purpose. Deciding the case on such bases would constitute an abstraction divorced from the facts of the case and the intent of the law. The term voting trust as used in our law is a concept which flows from our statute and is specifically defined by our statute and case law. See, e. g., Abercrombie, 130 A.2d at 344. Case comment as to statutory exclusivity has to be related to that definition. In determining the applicability of § 218(a) and (b), the test is whether the substance and purpose of the stock arrangement is "sufficiently close to the substance and the purpose of [the statute] to warrant its being subject to the restrictions and conditions imposed by that statute". Lehrman v. Cohen, Del. Supr., 222 A.2d 800, 806 (1966). As did the Vice Chancellor, we take a frontal tack and direct our attention to the same threshold question. Is the voting trust arrangement here governed by § 218(a) and (b)?
Without attempting to resolve factual disputes, we note the defendant alleges, with some record support, evidence of the following factors:
(1) The final overall contract is one of internal corporate reorganization with integrated portions of which the voting trust is merely one.
(2) The final contract here, including the voting trust feature, is an agreement between the majority shareholder group and the corporation.
(3) While the voting trust portion of the contract is important, it is basically an enforcement provision to a purchase option agreement involving the sale of the majority interest and incidents connected with such sale such as change in management and an agreement not to compete.
(4) The contract is open and notorious within the corporation. Not only was the contract with the corporation itself and not only did it occasion fundamental changes in corporate management but it was prominently featured and positively represented in the proxy statement dated October 14, 1976 and in the 1975 annual report. The operations of the company and the involvement of minority shareholders, officers and employees proceeded in reliance on the contract.
*6 (5) The contract serves a valid corporate purpose, being designed to end financial hardship, and perhaps to end financial ruin.
(6) The contract has been significantly performed by the corporation, its officers and employees.
(7) A substantial benefit has been conferred on the depositing majority shareholder group.
(8) The contemplated benefit to the corporation and the minority shareholders remains largely executory.
(9) The party seeking a declaration that the agreement is void is the depositing majority shareholder group itself.
In such a factual setting, if established or substantially established at trial, we do not find that the Vice Chancellor should be legally prohibited from specifically enforcing the "voting trust agreement" in issue here as a consequence of the statutory provisions contained in § 218(a) and (b).[5] Our reasons are simple: statutory language, statutory purpose and public policy.
First, even viewed historically, § 218, from its original enactment in 1925, was designed to regulate agreements by "[o]ne or more stockholders". 34 Del.Laws Ch. 112, § 6 (1925). Not all trusts of corporate stock which, either expressly or by implication, give voting rights to a trustee are voting trusts. Aldridge v. Franco Wyoming Oil Co., Del.Ch., 7 A.2d 753, 764 (1939), aff'd, Del.Supr., 14 A.2d 380 (1940). As was noted in Fixman v. Diversified Industries, Inc., Del.Ch., 1 Del.J.Corp.Law 171, 178-79 (1975), the statutory language contemplates an association of stockholders whether it be created by way of individual agreements or joint agreements.[6] The Court of Chancery defined a voting trust in Peyton v. William C. Peyton Corp., Del.Ch., 194 A. 106, 111 (1937), rev'd on other grounds, Del.Supr., 7 A.2d 737 (1939) in the following manner:
"A voting trust as commonly understood is a device whereby two or more persons owning stock with voting powers, divorce the voting rights thereof from the ownership, retaining to all intents and purposes the latter in themselves and transferring the former to trustees in whom the voting rights of all the depositors in the trust are pooled."
This definition has been adopted in several cases. Smith, 91 A.2d at 197; Ringling Bros., 49 A.2d at 608; Aldridge, 7 A.2d at 764. Regulation of voting trusts is directed *7 to a class of trusts created to unify voting. See 5 W. Fletcher, Cyclopedia of the Law of Private Corporations, § 2075 at 333 n. 2 (rev. perm. ed. 1976). Fletcher goes on to note in § 2077 at 336 that:
"At the bottom of a voting trust is an agreement among stockholders ...."
Thus, the voting trust statute was not intended to be all inclusive in the sense that it was designed to apply to every set of facts in which voting rights are transferred to trustees incident to or as part of the assignment of other stockholder rights. Rather, a voting trust is a stockholder pooling arrangement with the criteria that voting rights are separated out and irrevocably assigned for a definite period of time to voting trustees for control purposes while other attributes of ownership are retained by the depositing stockholders. Lehrman, 222 A.2d at 805; Peyton, 194 A. at 111. While we do not suggest that the mere fact that the corporation is a party removes a trust from the statute, we do find that the final contract in issue here, with its multifaceted aspects including a stock purchase option agreement running from an already unified majority shareholder group to the corporation may be so foreign to the stockholder voting trust agreement to which the language used by the General Assembly was directed that it is beyond the contemplated scope of the statute. Given the scope of this agreement it may be that the voting rights are not separated from the other retained attributes of ownership. In short, the agreement here may not be a voting trust as that term is used in our law.
Second, our case law makes it clear that the main purpose of a voting trust statute is "to avoid secret, uncontrolled combinations of stockholders formed to acquire control of the corporation to the possible detriment of non-participating shareholders." Lehrman, 222 A.2d at 807. The contract involved in this case, given the factual contentions of the defendants, may be so far divorced from that purpose that it makes the contemplated regulation unnecessary and irrelevant.
Third, it is important to recognize there has been a significant change from the days of our original 1925 statute. Voting trusts were viewed with "disfavor" or "looked upon ... with indulgence" by the courts. See Perry, 191 A. at 827. Other contractual arrangements interfering with stock ownership, such as irrevocable proxies, were viewed with suspicion. The desire for flexibility in modern society has altered such restrictive thinking. E. Folk, The Delaware General Corporation Law, Section 218 at 240-42 (1972). The trend of liberalization was markedly apparent in the 1967 changes to our own § 218.[7] Voting or other agreements and irrevocable proxies were given favorable treatment and restrictive judicial interpretations as to the absolute voiding of voting trusts for terms beyond the statutory limit were changed by statute.[8] The *8 trend was not to extend the voting trust restrictions beyond the class of trust being regulated and beyond the reasons for statutory regulation. That public policy cannot be ignored here.
Thus we are faced with a "voting trust agreement" which: (1) may not fit into the situation contemplated by the language of the restrictive statute, (2) may have little, if any, connection with the purpose for which the statute was enacted, and (3) may have no evil or improper aspects under any current ascertainable public policy. Given such circumstances, we are hard pressed to see why § 218(a) and (b) should be a legal bar to a factual inquiry and a discretionary consideration by the Court of Chancery of full enforcement of the contract in this case. We conclude the Vice Chancellor erred in holding the voting trust aspect of the contract in this case to be, as a matter of law, a § 218(a) and (b) voting trust.
The interlocutory order of the Court of Chancery is reversed and the case is remanded.
NOTES
[1] 8 Del.C. § 218(b) provides:
"(b) At any time within 2 years prior to the time of expiration of any voting trust agreement as originally fixed or as last extended as provided in this subsection, 1 or more beneficiaries of the trust under the voting trust agreement may, by written agreement and with the written consent of the voting trustee or trustees, extend the duration of the voting trust agreement for an additional period not exceeding 10 years from the expiration date of the trust as originally fixed or as last extended, as provided in this subsection. The voting trustee or trustees shall, prior to the time of expiration of any such voting trust agreement, as originally fixed or as previously extended, as the case may be, file in the registered office of the corporation in this State a copy of such extension agreement and of his or their consent thereto, and thereupon the duration of the voting trust agreement shall be extended for the period fixed in the extension agreement; but no such extension agreement shall affect the rights or obligations of persons not parties thereto."
[2] Del.C. § 218(a) provides:
"(a) One or more stockholders may by agreement in writing deposit capital stock of an original issue with or transfer capital stock to any person or persons, or corporation or corporations authorized to act as trustee, for the purpose of vesting in such person or persons, corporation or corporations, who may be designated voting trustee, or voting trustees, the right to vote thereon for any period of time determined by such agreement, not exceeding 10 years, upon the terms and conditions stated in such agreement. The validity of a voting trust agreement, otherwise lawful, shall not be affected during a period of 10 years from the date when it was created or last extended as provided in subsection (b) by the fact that under its terms it will or may last beyond such 10 year period. The agreement may contain any other lawful provisions not inconsistent with such purpose. After the filing of a copy of the agreement in the registered office of the corporation in this State, which copy shall be open to the inspection of any stockholder of the corporation or any beneficiary of the trust under the agreement daily during business hours, certificates of stock shall be issued to the voting trustee or trustees to represent any stock of an original issue so deposited with him or them, and any certificates of stock so transferred to the voting trustee or trustees shall be surrendered and cancelled and new certificates therefor shall be issued to the voting trustee or trustees. In the certificate so issued it shall be stated that they are issued pursuant to such agreement, and that fact shall also be stated in the stock ledger of the corporation. The voting trustee or trustees may vote the stock so issued or transferred during the period specified in the agreement. Stock standing in the name of the voting trustee or trustees may be voted either in person or by proxy, and in voting the stock, the voting trustee or trustees shall incur no responsibility as stockholder, trustee or otherwise, except for his or their own individual malfeasance. In any case where 2 or more persons are designated as voting trustees, and the right and method of voting any stock standing in their names at any meeting of the corporation are not fixed by the agreement appointing the trustees, the right to vote the stock and the manner of voting it at the meeting shall be determined by a majority of the trustees, or if they be equally divided as to the right and manner of voting the stock in any particular case, the vote of the stock in such case shall be divided equally among the trustees."
[3] The Vice Chancellor relied on Appon v. Belle Isle Corp., Del.Ch., 46 A.2d 749; aff'd sub nom. Belle Isle Corp. v. Corcoran, Del.Supr., 49 A.2d 1 (1946). The essence of the voting trust in that case was a pooling of the voting rights of five individual stockholders.
[4] The Vice Chancellor relied on Smith v. Biggs Boiler Works Co., Del.Ch., 82 A.2d 372 (1951) and Smith v. Biggs Boiler Works Co., Del.Ch., 91 A.2d 193 (1952). The essence of the voting trust in that case was a pooling of the voting rights of two individual stockholders.
[5] Obviously, on the defendant's version of the facts, the equities lie totally in the defendant's favor. We have considered several other possible legal approaches on the possibility that the defendant would prevail in the factual disputes. For example, consideration was given to recognizing the general intent of the parties to form a valid voting trust and permitting the Vice Chancellor to frame the precise mechanics; but this approach seems to run counter to both our voting trust law and our rather strict law of contract reformation. See the Perry, Abercrombie, Appon, Chilson, and Smith cases, all cited supra and discussed below by the Vice Chancellor, 410 A.2d at 181. See also Collins v. Burke, Del.Supr., 418 A.2d 999, 1002 (1980) which emphasizes the need for reformation to be in accordance with the parties' own manifestation of intention. Moreover, in the statutory voting trust area, our courts have not generally, nor specifically with relation to illegal time extensions or inability to make stock deposits, been inclined to weigh equities or characterize the illegality as merely malum prohibitum. See nn. 3 & 4, supra. Finally, equitable principles of restitution, estoppel and unclean hands are not particularly helpful in face of case law declaring non-complying voting trusts regulated by the statute to be void. While we are not here called upon to foreclose and do not foreclose consideration of any such approach, all of these indirect approaches seem to us an attempt to hide the real issue which is consequently disclosed and emphasized. Is the "voting trust agreement" in this case the type of agreement the General Assembly intended to regulate in § 218(a) and (b)? Thus, as indicated, we take the frontal approach and address that issue directly.
[6] The Vice Chancellor analyzed in detail the Fixman decision and directed some attention to the statutory authorization for a single shareholder to create a § 218 voting trust and to the lack of distinction between acquiring voting control and surrendering voting control. 410 A.2d at 176-78. It is not necessary to disagree with the Vice Chancellor on these two points in order to satisfy the approach taken in this opinion. It should be noted, however, that in the Byllesby case, the agreement specifically authorized other stockholders, as well as the single depositing corporate shareholder, to participate. 12 A.2d at 604.
[7] As Professor Folk's treatise points out, in the voting trust area, even prior to 1967, some cases "show a marked disposition to uphold transactions rather than strike them down for non-conformity with the voting trust statute." Folk, supra, Section 218 at 235, particularly n. 15 (1972). See also id. at 236 n. 19. Thus, the Delaware courts have on occasion avoided the harshness of the exclusivity by finding the arrangement not to be a voting trust [Lehrman v. Cohen, supra], by specifically enforcing statutory requirements the parties had neglected to implement [In re Farm Industries, Inc., Del.Ch., 196 A.2d 582, 592-94 (1963)] and by "expressly [disaffirming] the suggested proposition that any illegality in a voting trust renders the entire agreement illegal" [Tracey v. Franklin, Del. Supr., 67 A.2d 56, 61 (1949)]. See also Peyton; Aldridge; Ringling Bros., all cited supra.
[8] 8 Del.C. § 218(c), (d) and (e) provide:
"(c) An agreement between 2 or more stockholders, if in writing and signed by the parties thereto, may provide that in exercising any voting rights, the shares held by them shall be voted as provided by the agreement, or as the parties may agree, or as determined in accordance with a procedure agreed upon by them. No such agreement shall be effective for a term or [sic] more than 10 years, but, at any time within 2 years prior to the time of the expiration of such agreement, the parties may extend its duration for as many additional periods, each not to exceed 10 years, as they may desire.
"(d) The validity of any such voting trust or other voting agreement, otherwise lawful, shall not be affected during a period of 10 years from the date when it was created or last extended by the fact that under its terms it will or may last beyond the 10 year period.
"(e) This section shall not be deemed to invalidate any voting or other agreement among stockholders or any irrevocable proxy which is not otherwise illegal." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261486/ | 111 Cal. Rptr. 2d 181 (2002)
91 Cal. App. 4th 1093
JAMES 3 CORPORATION et al. Plaintiffs and Appellants,
v.
TRUCK INSURANCE EXCHANGE, Defendant and Respondent.
No. H020687.
Court of Appeal, Sixth District.
July 25, 2001.
As Modified August 23, 2001.
Review Denied November 14, 2001.[*]
*182 Michael R. Simmonds, Wineberg, Simmonds & Narita, San Francisco, Attorney for Plaintiffs and Appellants.
Ralph E. Mendell, Campbell, Warburton, Fitzsimmons, Smith, Mendell & Pastore, *183 San Jose, Attorneys for Defendant and Respondent.
WUNDERLICH, J.
James 3 Corporation and its president, James R. Stanclift, were sued by a competitor in federal court. They tendered the defense of the lawsuit to their business liability insurer, Truck Insurance Exchange, which accepted the tender subject to a reservation of rights. Truck then retained counsel to provide the insureds with a defense. The insureds objected to being represented by retained defense counsel and, citing an alleged conflict of interest, demanded that Truck allow them to choose their own counsel. Truck refused, and the insureds filed the instant declaratory relief action in the superior court. The trial court granted summary judgment in favor of Truck, finding that there was no actual conflict of interest. The insureds appeal from the ensuing judgment and from an earlier discovery order. We shall affirm the judgment.
FACTS
Plaintiffs James 3 Corporation, doing business as Sugar Sweet Syrup Company, Inc., and Sugar Sweet's president, James R. Stanclift, manufactured and sold beverage syrups to 7-Eleven and other stores for use in frozen carbonated beverages, more commonly known as "Slurpees." From December 28, 1992, to December 15, 1996, plaintiffs were insured by Truck under various commercial general liability insurance policies.
On August 13, 1997, Coca Cola Company, which competed with plaintiffs in supplying soft drink syrups to 7 Eleven franchises in the Bay Area, filed suit against plaintiffs in the United States District Court. In its lawsuit, Coca-Cola alleged that Sugar Sweet was dispensing its generic syrup through dispensers owned by Coca-Cola, thereby misleading the public into believing they were receiving genuine Coca Cola products, and based on these allegations it asserted the following eight causes of action against plaintiffs: (1) trademark infringement under the Lanham Act, (2) contributory infringement, (3) false designation of origin, (4) California trademark infringement, (5) California statutory unfair competition, (6) common law unfair competition, (7) fraud, and (8) accounting. The following month, Coca-Cola filed a first amended complaint.
Plaintiffs retained an attorney who filed an answer to Coca Cola's complaint on September 22, 1997. Two months later, that attorney tendered defense of the Coca-Cola action to Truck. Truck accepted the tender and retained attorney David Miclean of the Ropers, Majeski, Kohn & Bentley law firm to defend the insureds.
On February 6, 1998, Truck notified the insureds that it would provide a defense "`based on the potential that [Coca Cola's] complaint seeks damages within the Advertising Liability definition,'" subject to a reservation of rights to deny coverage in the event Coca-Cola's damages were not sustained as a result of plaintiffs' advertising activities. Truck denied coverage for any breach of contract or punitive damages and reserved its right to seek reimbursement of attorney's fees and costs paid to defend noncovered claims. Truck also informed the insureds that there was no "conflict of interest between you and Truck" and that consequently it would not pay for independent defense counsel.
Subsequently, Miclean, Truck's retained counsel, sent Truck an "initial" evaluation of the case identifying various affirmative defenses, including one for antitrust violations. Miclean noted that it might be in the insureds' best interest to file an affirmative counterclaim alleging Coca-Cola's violation of antitrust laws. Later, however, *184 Miclean told the insureds that he had "only been retained to represent [their] interests as a defendant in this lawsuit and would probably not be able to perform work on an affirmative counterclaim (other than perhaps an indemnity claim.)"
In April 1998, the insureds retained independent counsel (the Wineberg, Simmonds & Narita law firm) to codefend the underlying action and to pursue an affirmative counterclaim against Coca-Cola. In May 1998, independent counsel wrote to Truck, demanding that Truck pay their fees and costs because of a conflict of interest. Independent counsel explained, "Truck has reserved its rights on several issues, the outcome of which can be controlled by counsel first retained by Truck for the defense of the claims asserted, raising potential conflicts of interest between Truck and the insured which require Truck to pay for independent counsel. Those issues include, but are not limited to: the fraud claim asserted by The Coca-Cola Company against the insured; Truck's reservation of the right to allocate any payment between covered and non-covered claims and/or to seek contribution or reimbursement from the insured for any costs, fees or indemnity payments made on non-covered claims; Truck's reservation of rights as to contractual damages; and Truck's reservation of rights as to `advertising activities.'"
In response to the insureds' demand, Truck retained a second attorney, Arthur Schwartz of the Fisher & Hurst law firm, to evaluate and advise whether a disqualifying conflict of interest existed. On June 4, 1998, Schwartz responded to independent counsel, stating that Truck "must respectfully decline [to appoint you as Cumis[1] counsel]. . . . In our opinion, no conflict is created by some of the reservations you've cited. As to the remaining reservations, Truck will waive them." Truck then explained that it would waive its advertising activities reservation, thereby agreeing to indemnify the insureds for compensatory damages arising out of the trademark infringement, unfair competition, and related causes of action. It would also waive its reservation of rights as to damages for breach of contract. Truck, however, reiterated that there was no coverage under the policy for Coca-Cola's fraud claim, its claim for restitution and disgorgement of the insureds' allegedly wrongfully obtained profits, or its request for attorney fees under the Lanham Act. Finally, Truck stated it would defer until after the underlying action was resolved any decision to exercise its right to seek reimbursement of indemnity payments or defense costs allocable to noncovered claims.
On June 17, 1998, plaintiffs filed the instant declaratory relief action, requesting a judicial determination that Truck is obligated to pay for Cumis counsel because "Truck has reserved its rights on several issues, the outcome of which can be controlled by" defense counsel and because of Truck's refusal to pay for prosecuting the insureds' antitrust counterclaim. *185 Plaintiffs filed a motion for summary judgment in October 1998, but that motion was denied.
In April 1999, the insureds filed a motion to compel further responses from Truck to requests for production of Truck's claims files, correspondence, bills, invoices, reports, coverage evaluations, and claim or billing procedures that in any way referred or related to the Coca Cola action. The trial court denied the insureds' motion, noting that "plaintiffs have failed to demonstrate that the discovery is reasonably calculated to lead to the discovery of admissible evidence in this case, which is a limited declaratory relief case. [¶] . . . [¶] . . . In this declaratory relief action, it's [] limited [to] whether or not Cumis counsel should be appointed."
On June 30, 1999, Truck filed a motion for summary judgment on the ground that there was no conflict as a matter of law. While that motion was pending and notwithstanding the earlier discovery order, the insureds' counsel served subpoenas on the Ropers, Majeski, Kohn & Bentley law firm calling for the oral deposition of David Miclean and for production of the entire file in the Coca-Cola action. The insureds opposed Truck's motion for summary judgment, arguing that Truck's refusal to provide discovery required that the motion be denied or continued pursuant to Code of Civil Procedure section 437c, subdivision (h), so that they could compel compliance with the subpoenas.
In its order granting summary judgment, the trial court stated, "Plaintiffs fail to demonstrate the existence of a triable issue of fact material to determining whether Defendant is obligated to provide Plaintiffs Cumis counsel, based either on the theory that appointed counsel is able to control the outcome of a coverage issue to the detriment of Plaintiffs, or on the theory that there is a non-coverage-related conflict of interest which has rendered appointed counsel's representation less effective by reason of his relationship with Truck. See Dynamic Concepts, Inc. v. Truck Ins. Exchange (1998) 61 Cal. App. 4th 999, 1006-1008, 71 Cal. Rptr. 2d 882; Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20 Cal. App. 4th 1372, 1395-1396, 25 Cal. Rptr. 2d 242."
DISCUSSION
A. Entitlement to independent counsel statutory and case law
In the landmark Cumis opinion, the court held that if a conflict of interest exists between an insurer and its insured, based on possible noncoverage under the insurance policy, the insured is entitled to retain its own independent counsel at the insurer's expense. (Cumis, supra, 162 Cal.App.3d at p. 364, 208 Cal. Rptr. 494; see fn. 1, ante.)
The Cumis opinion was codified in 1987 by the enactment of Civil Code section 2860,[2] which "`clarifies and limits'" the rights and responsibilities of insurer and insured as set forth in Cumis. (Buss v. Superior Court (1997) 16 Cal. 4th 35, 59, 65 Cal. Rptr. 2d 366, 939 P.2d 766; San Gabriel Valley Water Co. v. Hartford Accident & Indemnity Co. (2000) 82 Cal. App. 4th 1230, 1234, 98 Cal. Rptr. 2d 807.) Section 2860 provides, in pertinent part: "(a) If the provisions of a policy of insurance impose a duty to defend upon an insurer and a conflict of interest arises which creates a duty on the part of the insurer to provide independent counsel to the insured, the insurer shall provide independent counsel to represent the insured . . . . [¶] (b) For purposes of this section, a conflict of interest does not exist as to *186 allegations or facts in the litigation for which the insurer denies coverage; however, when an insurer reserves its rights on a given issue and the outcome of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim, a conflict of interest may exist. No conflict of interest shall be deemed to exist as to allegations of punitive damages or be deemed to exist solely because an insured is sued for an amount in excess of the insurance policy limits."
"As statutory and case law make clear, not every conflict of interest triggers an obligation on the part of the insurer to provide the insured with independent counsel at the insurer's expense. For example, the mere fact the insurer disputes coverage does not entitle the insured to Cumis counsel; nor does the fact the complaint seeks punitive damages or damages in excess of policy limits. ([] § 2860, subd. (b); [citations].) The insurer owes no duty to provide independent counsel in these situations because the Cumis rule is not based on insurance law but on the ethical duty of an attorney to avoid representing conflicting interests." (Golden Eagle Ins. Co. v. Foremost Ins. Co., supra, 20 Cal. App.4th at p. 1394, 25 Cal. Rptr. 2d 242.) For independent counsel to be required, the conflict of interest must be "significant, not merely theoretical, actual, not merely potential." (Dynamic Concepts, Inc. v. Truck Ins. Exchange, supra, 61 Cal. App.4th at p. 1007, 71 Cal. Rptr. 2d 882.) Some of the circumstances that may create a conflict of interest requiring the insurer to provide independent counsel include: (1) where the insurer reserves its rights on a given issue and the outcome of that coverage issue can be controlled by the insurer's retained counsel (§ 2860, subd. (b); Golden Eagle Ins. Co. v. Foremost Ins. Co., supra, 20 Cal.App.4th at pp. 1394-1395, 25 Cal. Rptr. 2d 242); (2) where the insurer insures both the plaintiff and the defendant (O'Morrow v. Borad (1946) 27 Cal. 2d 794, 800, 167 P.2d 483); (3) where the insurer has filed suit against the insured, whether or not the suit is related to the lawsuit the insurer is obligated to defend (Truck Ins. Exchange v. Fireman's Fund Ins. Co. (1992) 6 Cal. App. 4th 1050, 8 Cal. Rptr. 2d 228); (4) where the insurer pursues settlement in excess of policy limits without the insured's consent and leaving the insured exposed to claims by third parties (Golden Eagle Ins. Co. v. Foremost Ins. Co., supra, 20 Cal.App.4th at p. 1396, 25 Cal. Rptr. 2d 242); and (5) any other situation where an attorney who represents the interests of both the insurer and the insured finds that his or her "representation of the one is rendered less effective by reason of his [or her] representation of the other." (Spindle v. Chubb/Pacific Indemnity Group (1979) 89 Cal. App. 3d 706, 713, Cal.Rptr. 776; Golden Eagle Ins. Co. v. Foremost Ins. Co., supra, 20 Cal.App.4th at p. 1396, 25 Cal. Rptr. 2d 242.)
As we explained in the last paragraph, not every conflict of interest entitles an insured to insurer-paid independent counsel. Nor does "every reservation of rights entitle an insured to select Cumis counsel. There is no such entitlement, for example, where the coverage issue is independent of, or extrinsic to, the issues in the underlying action [citation] or where the damages are only partially covered by the policy. [Citations.] (Dynamic Concepts, Inc. v. Truck Ins. Exchange, supra, 61 Cal.App.4th at p. 1006, 71 Cal. Rptr. 2d 882.) However, independent counsel is required where there is a reservation of rights 'and the outcome of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim.'" (§ 2860, subd. (b), emphasis added; Blanchard v. State Farm Fire & Casualty Co. (1991) 2 Cal. App. 4th 345, 350, *187 2 Cal. Rptr. 2d 884; Truck Ins. Exchange v. Superior Court (1996) 51 Cal. App. 4th 985, 994, 59 Cal. Rptr. 2d 529; Foremost Ins. Co. v. Wilks (1988) 206 Cal. App. 3d 251, 261, 253 Cal. Rptr. 596.)
B. Contentions
The insureds contend they are entitled to independent counsel not because of specific language in section 2860 or in the Cumis opinion but rather because of the policies underlying section 2860 and Cumis. They rely on the following statement from Golden Eagle Ins. Co. v. Foremost Ins. Co., supra, 20 Cal. App. 4th 1372, 25 Cal. Rptr. 2d 242, "Attorney control of the outcome of a coverage dispute is written into . . . section 2860, subdivision (b) as an example of a conflict of interest which may require appointment of independent counsel. It is not, however, the only circumstance in which Cumis counsel may be required. The language of . . . section 2860 `does not preclude judicial determination of conflict of interest and duty to provide independent counsel such as was accomplished in Cumis so long as that determination is consistent with the section.' [Citation.] [¶] . . . [T]he governing principle underlying Cumis and section 2860 is the attorney's ethical duty to the clients. Thus, an attorney representing the interests of the insurer and the insured is subject to the rule a `[c]onflict of interest between jointly represented clients occurs whenever their common lawyer's representation of the one is rendered less effective by reason of his representation of the other.' [Citation.]" (Id. at pp. 1395-1396, 25 Cal. Rptr. 2d 242, fn. omitted, emphasis added.)
1. Refusal to pursue affirmative defense
The insureds contend they have a right to Cumis counsel in this case because the attorney retained by Truck "refusfes] to pursue the affirmative defenses of trademark misuse and violation of the antitrust laws, solely to serve the financial interests of Truck, [thereby] rendering] him substantially `less effective' in defending the Insureds." (Italics added.) We disagree.
This is not a case where the insurer has reserved its right on a coverage issue and outcome of that issue can be controlled by the insurer's counsel. To the contrary, Truck has agreed to defend the insureds against the trademark infringement and related claims without any reservation of rights. The antitrust affirmative defense could potentially reduce Coca-Cola's claim for damages for which Truck is liable under the policy. If Truck decides not to prosecute the antitrust defense, then that decision will not adversely affect the insureds.[3] It is Truck that will be harmed as it will have to indemnify the insureds if they are found liable for damages covered by the Truck policy. (Ivy v. Pacific Automobile Ins. Co. (1958) 156 Cal. App. 2d 652, 320 P.2d 140.)
In this case, the interests of the insureds and Truck do not conflict vis-à-vis defense of the trademark infringement, unfair competition and related causes of action in Coca-Cola's complaint. It is in the interne *188 est of both to be found not liable or, if found liable, to minimize damages. As the court explained in a similar situation in Blanchard v. State Farm Fire & Casualty Co., supra, 2 Cal. App. 4th 345, 2 Cal. Rptr. 2d 884, "Insurance counsel had no incentive to attach liability to appellant. Respondent recognized its liability for certain damages flowing from appellant's liability; thus it was to the advantage of both appellant and respondent to minimize appellant's underlying liability. [Citation.]" (Id, at p. 350, 2 Cal. Rptr. 2d 884.) Here, as in Blanchard, it is in the interest of both Truck and the insured to defeat liability.
Golden Eagle Ins. Co. v. Foremost Ins. Co., supra, 20 Cal. App. 4th 1372, 25 Cal. Rptr. 2d 242, the case upon which the insureds rely for the "less effective" language, is clearly distinguishable. In that case, the insurer provided its insured with a defense without a reservation of rights. Because there was no reservation of rights, the insureds would not normally be entitled to independent counsel under Cumis or section 2860. But the court found that a conflict arose when the insurer's defense counsel, over the insureds' objections, attempted to negotiate a settlement in excess of policy limits, and that settlement would have exposed the insureds to claims by tenants who were not plaintiffs in the underlying action. Defense counsel's attempt to negotiate a settlement in excess of policy limits rendered his representation of the insureds "less effective" and, consequently, the insureds were entitled to advice from independent counsel regarding settlement.
In Golden Eagle, the insurance counsel's representation of the insurance company's interest made his representation of the insureds "less effective," because it exposed them to claims by third parties. Moreover, "one set of clientsthe insurerswas seeking to settle the case with the other clients' money." (Id. at p. 1396, 25 Cal. Rptr. 2d 242.) Here in contrast, Truck's decision not to pursue the antitrust affirmative defense will not expose the insureds to claims by third parties, nor has Truck attempted to settle the case using the insureds' money. Truck's representation of the insureds is not "less effective" because its appointed counsel also represents Truck, as Truck is contractually obligated to indemnify the insureds for any damages awarded in the Coca Cola action based on trademark infringement, unfair competition and related causes of action. Thus, the insureds' reliance on Golden Eagle is misplaced.
2. Refusal to fund and prosecute counterclaim
The insureds also contend they are entitled to Cumis counsel based on Truck's refusal to fund and prosecute the insureds' counterclaims for affirmative relief against Coca Cola. They contend that "[a] reasonable construction of an insurer's agreement to provide a `defense' would encompass" an obligation to file counterclaims for the insureds when such are "factually intertwined with the affirmative defenses being asserted." Again, we disagree.
Insurance policies are contracts and, as such, are subject to the statutory rules of contract interpretation. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal. 4th 1, 18, 44 Cal. Rptr. 2d 370, 900 P.2d 619.) Under the policy, Truck is contractually obligated to provide the insureds with a defense. However, there is nothing in the policy that contractually obligates Truck to fund and prosecute an insured's affirmative relief counterclaims or cross-complaints. As the court observed in Barney v. Aetna Casualty & Surety Co. (1986) 185 Cal. App. 3d 966, 230 Cal. Rptr. 215, "Aetna had no duty under the policy to file a cross-complaint on [the insured's] behalf, for *189 nothing in the policy provisions imposes upon the insurer the duty to prosecute claims of the insured against third parties." (Id. at p. 975, 230 Cal. Rptr. 215.) Likewise in Silva and Hill Constr. Co. v. Employers Mut. Liab. Ins. Co. (1971) 19 Cal. App. 3d 914, 97 Cal. Rptr. 498, the court noted, "The duty to defend could not extend to requiring the insurer to take affirmative action to recover money. . . ." (Id. at p. 927, 97 Cal. Rptr. 498.)
The cases upon which the insureds rely, Safeguard Scientifics, Inc. v. Liberty Mut. Ins.' Co. (E.D.Pa.1991) 766 F. Supp. 324 and Aerosafe Inter., Inc. v. Itt Hartford of Midwest (N.D. Cal.1993), No. 92-1532 MHP, 1993 WL 299372, are again distinguishable. Both of those cases, unlike the instant case, were insurance bad faith cases, and in both the insurers wrongfully refused to defend their insureds in the underlying action. In Safeguard Scientifics, the court held that expenses and fees paid by an insured to bring noncompulsory counterclaims had to be paid by the insurer under its duty to defend because "the pursuit of the counterclaims was inextricably intertwined with the defense of [the claims against the insured] and was necessary to the defense of the litigation as a strategic matter." (Safeguard Scientifics, Inc. v. Liberty Mut. Ins. Co., supra, 766 F.Supp. at p. 334.) However, Safeguard Scientifics was applying Pennsylvania law. Moreover, that opinion was reversed in part by Safeguard Scientifics, Inc. v. Liberty Mutual Ins. Co. (3rd Cir.1992) 961 F.2d 209 and has repeatedly been disagreed with, called into question, and not followed. (See e.g., Sherwood Brands, Inc. v. Hartford Acc. and Indem. Co. (1997) 347 Md. 32, [698 A.2d 1078], TPLC, Inc. v. United Nat. Ins. Co. (10th Cir.1995) 44 F.3d 1484, American Planned Communities, Inc. v. State Farm Ins. Co. (E.D.Pa.1998) 28 F. Supp. 2d 964.)
One opinion that did follow Safeguard Scientifics was the other case cited by the insureds, Aerosafe International, Inc. v. ITT Hartford of the Midwest, supra, 1993 WL 299372. In Aerosafe, after the insurer refused to defend the insured, the insured hired its own counsel. That counsel prepared but never filed a potential federal antitrust action and a state cross-complaint. In the bad faith action, Hartford argued it should not be responsible for fees and costs related to preparing those actions and cross-complaints. The court, applying California law, noted that "Hartford `gave up the right to control the litigation.' [Citation.] It cannot now complain that it will not pay for legal work-product that was prepared as part of Aerosafe's defense strategy simply because it was not filed, [¶ . . . While Hartford may now opine that the preparation of such an action as part of Aerosafe's overall defense strategy was improvident or unreasonable, such an opinion hardly amounts to undeniable evidence. Again, having breached its duty to defend, Hartford cannot now attempt retroactively to dictate the legal strategies of Aerosafe's lawyers, [¶] The court will permit Hartford to provide evidence that the cross-complaint and federal antitrust action were unrelated to the defense of the Systron action. However, under California's undeniable evidence standard, Hartford will have to show that the subject matter of these projects could not arguably be related to the Systron action." (Id. at pp. **5-6, original italics.)
In the instant case, Truck has not breached its duty to defend and therefore has not given up its right to control the litigation. As noted earlier, an insurer has the right to control the defense it provides to its insured provided there is no conflict of interest. (Safeco Ins. Co. v. Superior Court, supra, 71 Cal.App.4th at p. 789, 84 Cal. Rptr. 2d 43; Assurance Co. of America v. Haven, supra, 32 Cal.App.4th *190 at p. 87, 38 Cal. Rptr. 2d 25; Spindle v. Chubb/Pacific Indemnity Group, supra, 89 Cal.App.3d at p. 714, 152 Cal. Rptr. 776.) Here, Truck has no contractual obligation to file a counterclaim against Coca Cola and it has decided not to do so. Truck's decision provides no basis for the appointment of independent counsel for the insureds.
3. Reservation of the right to seek reimbursement of defense costs allocable to noncovered claims
The insureds also contend that "Truck's reservation of the right to seek reimbursement of attorneys fees paid to appointed counsel to defend non-covered claims" is a separate and independent reason why they are entitled to Cumis counsel. Again, we disagree.
In Buss v. Superior Court, supra, 16 Cal. 4th 35, 65 Cal. Rptr. 2d 366, 939 P.2d 766, the California Supreme Court held that in a "`mixed'" action in which some claims are potentially covered and others are not, the insurer must defend the action in its entirety, including those claims for which there is no potential coverage under the policy. This requirement is not a contractual one but rather is prophylactic. "To defend meaningfully," the court explained, "the insurer must defend immediately. [Citation.] To defend immediately, it must defend entirely. It cannot parse the claims, dividing those that are at least potentially covered from those that are not. To do so would be time consuming. It might also be futile: The `plasticity of modern pleading' [citation] allows the transformation of claims that are at least potentially covered into claims that are not, and vice versa." (Id. at p. 49, 65 Cal. Rptr. 2d 366, 939 P.2d 766.)
Although the insurer must defend the action in its entirety, the insurer has an "implied-in-law" right to be reimbursed from the insured for defense costs allocable solely to claims that are not even potentially covered under the policy. (Id. at p. 51, 65 Cal. Rptr. 2d 366, 939 P.2d 766.) The reason is that the insurer has not received premiums and did not bargain to defend such claims; therefore, defending the entire action "unjustly enrich[es]" the insured. (Id. at p. 50, 65 Cal. Rptr. 2d 366, 939 P.2d 766.) In seeking reimbursement, the "insurer bears the burden of proving by a preponderance of the evidence that the claim is not even potentially covered." (State of California v. Pacific Indemnity Co. (1998) 63 Cal. App. 4th 1535, 1547, 75 Cal. Rptr. 2d 69.)
In the instant case, the insureds argue because Truck issued a Buss reservation [reserving its right to seek reimbursement of defense costs on noncovered claims], a Cumis obligation under section 2860 was automatically triggered. They rely on the Buss case itself, where it was noted that Cumis counsel was appointed "[b]ecause of [the insurer's] reservation of rights and the conflict of interests arising therefrom." (Buss v. Superior Court, supra, 16 Cal.4th at p. 42, 65 Cal. Rptr. 2d 366, 939 P.2d 766.)
However, the Buss court was not asked to decide, and did not address, the question of whether an insurer's reservation of the right to seek reimbursement for defense costs of noncovered claims automatically requires appointment of Cumis counsel. That question was raised and answered in Dynamic Concepts, Inc. v. Truck Ins. Exchange, supra, 61 Cal. App. 4th 999, 71 Cal. Rptr. 2d 882, where the court refused to adopt the insured's "proposed per se rule requiring the appointment of an independent counsel whenever a carrier . . . pursuant to Buss v. Superior Court, supra, 16 Cal. 4th 35, 65 Cal. Rptr. 2d 366, 939 P.2d 766, reserves its right to seek reimbursement for defense costs for uncovered claims." (Id. at *191 p. 1007, 71 Cal. Rptr. 2d 882, fn. omitted.) Instead, the court found that a case-by-case analysis was required. "The potential for conflict requires a careful analysis of the parties' respective interests to determine whether they can be reconciled (such as by a defense based on total nonliability) or whether an actual conflict of interest precludes insurer-appointed defense counsel from presenting a quality defense for the insured." (Id. at pp. 1007-1008, 71 Cal. Rptr. 2d 882.) Under section 2860, the focus of the inquiry should be on whether the outcome of a coverage dispute can be controlled by the defense counsel retained by the insurer. (Id. at p. 1006, 71 Cal. Rptr. 2d 882.) The court also noted that it was not deciding "whether an insurer may be estopped from seeking reimbursement from its insured for the defense costs of uncovered claims when it insists upon appointed counsel rather than allowing the insured to control the defense, with its accompanying control and oversight over defense fees and costs." (Id. at p. 1007, fn. 6, 71 Cal. Rptr. 2d 882.)
Notwithstanding the Dynamic Concepts, Inc. v. Truck Ins. Exchange, supra, opinion, which refused to adopt a per se rule, the insureds continue to maintain that a Buss reservation always triggers a Cumis obligation. They point out that under section 2860, subdivision (b), an insurer is obligated to pay for independent counsel whenever it "[1] reserves its rights on a given issue and [2] the outcome of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim." When an insurer reserves its rights to seek reimbursement of defense costs for noncovered claims, the first prong of section 2860, subdivision (b) is clearly satisfied. The insureds claim the second prong (attorney control of the outcome of a coverage dispute) is also satisfied in Buss reservation cases because the insurer's counsel can control how to allocate defense costs to the various claims. As the insureds state, "[s]ince Appointed Counsel decides how to defend the claims, how to bill his services for the defense, how to describe his tasks, how to allocate his time, and how much to chargeall of which is beyond the control of the InsuredsAppointed Counsel can control the outcome of this coverage issue." They point out that section 2860 does not define "coverage issue" or limit it to indemnification coverage.
The trial court found that the insurer's duty to defend the lawsuit did not involve a "coverage issue" within the meaning of section 2860, noting in its order granting summary judgment, "Defendant's reservation of the right to seek reimbursement of defense costs allocable to non-covered claims, standing alone, does not constitute[ ] a `coverage issue,' because it does not involve the possibility that policy coverage will be determined or affected by the nature of Plaintiffs' conduct as developed at trial." We agree with the trial court.
Attorney control of the outcome of a coverage dispute involves insurance coverage, i.e., whether a certain risk or peril is covered under the policy. Furthermore, the coverage dispute must be one that will be litigated in the underlying action. (Foremost Ins. Co. v. Wilks, supra, 206 Cal.App.3d. at p. 261, 253 Cal. Rptr. 596.) "The paradigm case requiring independent counsel is one in which the way counsel retained by the insurance company defends the action will affect an underlying coverage dispute between the insurer and the insured. For example, in Executive Aviation, Inc. v. National Ins. Underwriters [(1971)] 16 Cal. App. 3d 799, 94 Cal. Rptr. 347, a pilot who did not hold a license to fly passengers in common carriage was employed by Executive Aviation *192 to fly potential buyers of an airplane on a demonstration flight. The plane crashed, killing all on board. The passengers' heirs sued Executive Aviation. Its insurer, National, agreed to provide a defense but reserved the right to deny coverage. If National could prove the flight was a commercial carriage flight there would be no coverage under its policy. On the other hand, if the plane was being used in commercial carriage the plaintiffs' burden of proof against Executive Aviation would be reduced because common carriers are held to a higher standard of care. The court held the reservation of rights in this case created a conflict of interest for the attorney retained by National to defend Executive Aviation. Whichever position the attorney took on the issue of the commercial nature of the flight he would be operating directly against the interests of the insurer or the insured." (Golden Eagle Ins. Co. v. Foremost Ins. Co., supra, 20 Cal.App.4th at p. 1395, 25 Cal. Rptr. 2d 242.)
"If the issue on which coverage turns is independent of the issues in the underlying case, Cumis counsel is not required." (Blanchard v. State Farm Fire & Casualty Co., supra, 2 Cal.App.4th at p. 350, 2 Cal. Rptr. 2d 884; see also, McGee v. Superior Court (1985) 176 Cal. App. 3d 221, 227, 221 Cal. Rptr. 421; Foremost Ins. Co. v. Wilks, supra, 206 Cal.App. at p. 261, 253 Cal. Rptr. 596.)
Here, the allocation of defense costs between covered and noncovered claims is not an issue that will be litigated in the underlying Coca-Cola action. Moreover, there is nothing in the record to suggest that defense counsel would violate his ethical duties to completely defend the insureds "as if [they] had retained [him] personally" (Lysick v. Walcom (1968) 258 Cal. App. 2d 136, 146, 65 Cal. Rptr. 406) against all the allegations in the Coca Cola complaint, both covered and uncovered. (Cf. Dynamic Concepts, Inc. v. Truck Ins. Exchange, supra, 61 Cal.App.4th at p. 1008, 71 Cal. Rptr. 2d 882.) Accordingly, the insureds have not rebutted Truck's showing that there is no actual conflict of interest and that, therefore, the insureds are not entitled to insurer-paid independent counsel.
C. Discovery order/request for continuance of hearing on summary judgment motion
Some time before April 1999, the insureds propounded upon Truck a request for production of documents that included all of Truck's claims files, correspondence, bills, invoices, reports, coverage evaluations, and claim or billing procedures that in any way referred or related to the Coca-Cola action. When Truck objected to the request on the ground that the materials sought were not relevant to the issues raised in this declaratory relief action, the insureds brought a motion to compel. After a hearing, the trial court denied the motion to compel, agreeing with Truck that "plaintiffs have failed to demonstrate that the discovery is reasonably calculated to lead to discovery of admissible evidence in this case, which is a limited declaratory relief case. [¶] . . . [¶] . . . In this declaratory relief action, it's . . . limited [to] whether or not Cumis counsel should be appointed."
On appeal, the insureds contend the trial court wrongfully denied their motion to compel production of Truck's claim files and related documents. They claim that the documents requested "would demonstrate that Truck restricted Appointed Counsel's defense, and that Truck and/or Appointed Counsel were aware of the antitrust and trademark misuse defenses and affirmatively chose not to pursue them in order to hold down the costs of defense . . . . [¶] In addition, the Insureds *193 alleged in the complaint that Truck's reservation of the right to seek reimbursement of defense costs for non-covered claims was a coverage issue, the outcome of which can be controlled by Appointed Counsel. The single, best source of evidence for proving that allegation is Appointed Counsel's bills."
In the trial court, Truck argued that the insureds were "putting the cart before the horse" because they had not yet brought a "bad faith" claim where the documents sought by the insureds might be relevant. The only documents relevant to a determination of the Cumis issue, Truck argued, were the complaint in the underlying action and the reservation of rights letter. We agree. The arguments that the insureds raise in support of their contention that they were denied relevant discovery concern tort issues of bad faith and/or legal malpractice. Indeed, both of the cases upon which they rely, Lipton v. Superior Court (1996) 48 Cal. App. 4th 1599, 56 Cal. Rptr. 2d 341 and Dynamic Concepts, Inc. v. Truck Ins. Exchange, supra, 61 Cal. App. 4th 999, 71 Cal. Rptr. 2d 882, were bad faith cases. The arguments the insureds raise as to why the discovery sought is relevant do not deal with the issue raised in this declaratory relief actionwhether Truck is contractually obligated to provide its insureds with independent Cumis counsel because of a conflict of interest. We addressed precisely that issue in section A of this opinion, wherein we concluded there was no disqualifying conflict of interest.
While the documents the insureds sought are not relevant in the instant declaratory relief action, this does not mean they may never become relevant. For example, if defense counsel fails to adequately defend the insureds, or if Truck unreasonably limits the scope of the defense, the discovery in issue could be relevant in a subsequent action for legal malpractice or bad faith. (Safeco Ins. Co. v. Superior Court; supra, 71 Cal.App.4th at p. 788, 84 Cal. Rptr. 2d 43.) Likewise, after the underlying action has been resolved, if Truck asserts its right to reimbursement of a portion of its defense costs, then defense counsel's billings to Truck would be relevant. However, in this declaratory relief action, the billings have no bearing on the issue whether Truck's reservation of the right to seek reimbursement creates a conflict for defense counsel entitling the insureds to independent counsel. We conclude that the trial court did not abuse its discretion in denying the insureds' motion to compel production of documents.
The insureds also contend they were entitled to a continuance of the summary judgment motion pursuant to Code of Civil Procedure section 437c, subdivision (h), in order to complete discovery before the court made its ruling. The discovery they sought included: (1) the deposition of Miclean, who failed to comply with a subpoena served on him; (2) the production of Ropers' files; and (3) a motion to compel further deposition testimony from Truck's claims representative, John Hilson. They contend this discovery would allow them to obtain relevant evidence in support of their arguments that Miclean was not pursuing the antitrust affirmative defense in order to hold down Truck's defense costs, that Miclean was restrained from pursuing the defense by Truck, that Miclean had not disclosed to the insureds the essential facts relating to this conflict, and that Miclean could control the outcome of the reserved coverage issue regarding reimbursement of defense costs. The insureds asserted that the "bills would demonstrate the manner in which Appointed Counsel can control the outcome of the reserved coverage issue relating to reimbursement of defense costs for non-covered claims."
*194 Our conclusions in other parts of this opinion make clear that the discovery the insureds sought to complete was simply not relevant to the issues in this declaratory relief action. As to the arguments that Miclean was not pursuing the antitrust affirmative defense in order to hold down Truck's defense costs and that Miclean was restrained from pursuing the defense by Truck, we earlier explained that an insurer has the right to control the defense it provides its insured so long as there is no conflict of interest. Thus, Truck had the right to pursue or not to pursue the antitrust affirmative defense at its option, provided that its decision did not harm the insureds. As to the argument that Miclean did not disclose to the insureds the essential facts relating to this conflict, we have concluded there was no disqualifying conflict of interest here and consequently nothing to disclose. As to the insureds' final argument that Miclean could control the outcome of the reserved coverage issue regarding reimbursement of defense costs, we have concluded that the reservation of the right to seek reimbursement of defense costs on noncovered claims is not a "coverage" issue.
Since none of the discovery sought was relevant, the trial court did not err in denying the insureds' motion for a continuance.
DISPOSITION
The judgment is affirmed. Costs on appeal to Truck Insurance Exchange.
PREMO, Acting P.J., and BAMATTRE-MANOUKIAN, J., concur.
NOTES
[*] Kennard, J., dissented.
[1] San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal. App. 3d 358, 208 Cal. Rptr. 494 ("Cumis"). In Cumis, the court held that "the Canons of Ethics impose upon lawyers hired by the insurer an obligation to explain to the insured and the insurer the full implications of joint representation in situations where the insurer has reserved its rights to deny coverage. If the insured does not give an informed consent to continued representation, counsel must cease to represent both. Moreover, in the absence of such consent, where there are divergent interests of the insured and the insurer brought about by the insurer's reservation of rights based on possible noncoverage under the insurance policy, the insurer must pay the reasonable cost for hiring independent counsel by the insured." (Id. at p. 375, 208 Cal. Rptr. 494.)
[2] All further statutory references are to the Civil Code unless otherwise specified.
[3] An insurer has the right to control the defense it provides its insured so long as there is not a conflict of interest. (Safeco Ins. Co. v. Superior Court (1999) 71 Cal. App. 4th 782, 789, 84 Cal. Rptr. 2d 43; Assurance Company of America v. Haven (1995) 32 Cal. App. 4th 78, 87, 38 Cal. Rptr. 2d 25; Spindle v. Chubb/Pacific Indemnity Group, supra, 89 Cal.App.3d at p. 714, 152 Cal. Rptr. 776.) This right to control the defense necessarily encompasses the right to determine what measures are cost effective, bearing in mind liability and indemnity exposure. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1863301/ | 769 So. 2d 1182 (2000)
Diana H. LEAL
v.
Shelton DUBOIS and Allstate Insurance Company.
No. 2000-C-1285.
Supreme Court of Louisiana.
October 13, 2000.
Rehearing Denied November 17, 2000.
*1183 PER CURIAM.
Defendants, Shelton Dubois and Allstate Insurance Company, seek review of a judgment of the court of appeal reversing the judgment of the district court in defendants' favor. For the reasons assigned, we now grant the writ, reverse the judgment of the court of appeal, and reinstate the judgment of the district court.
FACTS AND PROCEDURAL HISTORY
On September 14, 1996, plaintiff, Diana Leal, was driving her car eastbound on a two-lane road in Lafayette Parish. Defendant, Shelton Dubois, was proceeding in the opposite direction in a pick-up truck towing a piece of farm equipment known as a hay rake.[1] As plaintiff's car passed defendant's truck, the hay rake crossed over the center line of the road and scraped the driver's side of plaintiff's car, scratching the exterior.
*1184 Subsequently, plaintiff filed suit against defendant and his insurer, Allstate Insurance Company.[2] The matter proceeded to a bench trial. At trial, plaintiff claimed that she was struck by four of the five rollers on the hay rake. Specifically, she testified that the first roller of the hay rake landed on her windshield, the second spun over her hood, the third struck the front of her car, and the fourth scraped along the outside of the car, grabbed the exterior mirror, and came in through the open driver's side window. Plaintiff indicated that at that point, one of the prongs grabbed her on the arm around her left shoulder, jerking her neck and body violently, while another prong tore the driver's side seat. She conceded that the knit T-shirt she was wearing was not torn in the accident, but claimed that she immediately began to experience a burning, itching sensation in her neck and pain in her arm.
Defendant testified that the hay rake extended into plaintiffs lane of travel. He stated that the hay rake was not damaged as a result of the accident, but indicated he saw paint on one of the hay rake's rollers.
Ricky Hebert, a Lafayette Parish sheriff's deputy, happened upon the scene and performed a brief investigation. Consistent with an eyewitness' report, Deputy Hebert noted some scratches on the driver's side of plaintiff's car, but found no glass on the roadway. He found no scratches on plaintiffs arm, nor were her clothes torn. He recalled that plaintiff refused medical care and did not mention any damage to the interior of her car. Additionally, both parties refused to file an accident report.
At the conclusion of trial, the district court rendered judgment in favor of defendants, dismissing plaintiffs suit. The district court found the hay rake came into contact with plaintiff's car, scratching the exterior; however, the court concluded that the evidence did not support a finding that any other part of plaintiff's vehicle sustained damage. The court also found plaintiff did not prove by a preponderance of the evidence that she sustained any personal injuries as a result of the accident.
Plaintiff appealed. A five-judge panel of the court of appeal, with one dissent, reversed that portion of the district court's judgment finding plaintiff did not sustain personal injuries.[3] After conducting a de novo review of the record, the court of appeal concluded that plaintiff was injured as a result of the accident and awarded damages of $53,922.66. One judge dissented and would have deferred to the district court's credibility determination that the accident was far less serious than plaintiff described at trial, and that plaintiff's complaints of pain and injury were less than credible.
Defendants sought review of the court of appeal's judgment in this court. In order to determine whether the court of appeal erred in reversing the district court's ruling, we obtained the record from the court of appeal.
DISCUSSION
It is well settled that the district court's finding of fact may not be set aside on appeal in the absence of manifest error or unless it is clearly wrong. Stobart v. State Through DOTD, 617 So. 2d 880 (La. 1993). Even though an appellate court may feel its own evaluations and inferences are more reasonable than those of the factfinder, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review where conflict exists in the testimony. Rosell v. ESCO, 549 So. 2d 840 (La.1989); Arceneaux v. Domingue, 365 So. 2d 1330 (La.1978). An appellate court should not *1185 substitute its opinion for the conclusions made by the district court, which is in a unique position to see and hear the witnesses as they testify. In re: A.J.F. Applying for Private Adoption, 00-0948 (La.6/30/00), 764 So. 2d 47. The trier of fact is not disadvantaged by the review of a cold record and is in a superior position to observe the nuances of demeanor evidence not revealed in a record. Adkins v. Huckabay, 99-3605 (La.2/25/00), 755 So. 2d 206.
While the court of appeal acknowledged this standard of review, it relied on our opinion in Bloxom v. Bloxom, 512 So. 2d 839 (La.1987), for the proposition that appellate courts may afford less deference to the district court's factual findings when the lower court fails to articulate the theory or evidentiary basis for its conclusions. The court of appeal reasoned that because the district court did not explain its reasons for not attributing plaintiff's injuries to the accident, it was not required to give deference to the district court's findings.
We find the court of appeal misinterpreted our decision in Bloxom. In that decision, we carefully explained that deference should be accorded to the trial court's decision, even if that decision is of less than ideal clarity, if the trial court's path may be reasonably discerned, such as when its findings, reasons and exercise of discretion are necessarily and clearly implied by the record. Bloxom, 512 So.2d at 839.
After review, we conclude the district court's reasons for finding plaintiff did not sustain personal injuries as a result of the accident are necessarily and clearly implied by the record. The record demonstrates that the bulk of the evidence connecting the accident with plaintiff's personal injuries came from plaintiff herself. In written reasons for judgment, the district court clearly implied that it did not find plaintiff to be a credible witness, stating that she "did not prove, by a preponderance of the evidence, that she sustained any personal injuries as a result of this accident." The district court's finding of plaintiff's lack of credibility is further supported by the oral reasons given by the court in connection with its denial of plaintiff's motion for new trial:
I sat and heard the case. This was a caseand it was a case of believability and it was a case of credibility. And I found the plaintiff not to be credible.... I did not believe her testimony. And the injuries were not consistent with the testimony. And, as such, I did not find the plaintiff's injuries to be related to the accident. And, as such, I still don't.
Under these circumstances, the court of appeal erred in failing to give deference to the district court's factual findings, which were unequivocally based on a credibility determination.
In sum, we conclude the court of appeal erred in substituting its own factual conclusions for those made by the district court. The district court's factual finding that plaintiff did not sustain any personal injuries as a result of the accident is supported by evidence in the record and is not manifestly erroneous. Accordingly, we must reverse the judgment of the court of appeal and reinstate the judgment of the district court dismissing plaintiff's suit with prejudice.
DECREE
For the reasons assigned, the writ is granted. The judgment of the court of appeal reversing the judgment of the district court and awarding damages in favor of plaintiff in the amount of $53,922.66 is reversed. The judgment of the district court dismissing plaintiff's suit with prejudice is reinstated.
NOTES
[1] The hay rake consisted of five rollers or wheels, and was approximately thirteen feet wide.
[2] Prior to filing suit, plaintiff settled her property damage claim against Allstate for $1,509.74, the sum necessary to repair the exterior of her car.
[3] Leal v. Dubois, 99-957 (La.App. 3d Cir.4/5/00), 756 So. 2d 684. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2214117/ | 891 N.E.2d 49 (2008)
MILLER
v.
WILLIAMS.
Supreme Court of Indiana.
May 22, 2008.
Transfer denied. All Justices concur, except Sullivan, J., who votes to grant transfer. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2706642/ | [Cite as State v. Davison, 2011-Ohio-1528.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF LORAIN )
STATE OF OHIO C.A. No. 10CA009803
Appellee
v. APPEAL FROM JUDGMENT
ENTERED IN THE
ANDREW J. DAVISON COURT OF COMMON PLEAS
COUNTY OF LORAIN, OHIO
Appellant CASE No. 09CR079282
DECISION AND JOURNAL ENTRY
Dated: March 31, 2011
WHITMORE, Judge,
{¶1} Defendant-Appellant, Andrew Davison, appeals from the judgment of the Lorain
County Court of Common Pleas. This Court affirms.
I
{¶2} In the early morning hours of October 11, 2009, an altercation broke out at a
residence on Route 58. Rodney Cannon sustained a gunshot wound as a result of the incident
and identified Davison as his assailant. The police were able to locate Davison at Elyria
Memorial Hospital, where he was receiving treatment for a gunshot wound to his right leg.
Davison told the police that he sustained the wound in a drive-by shooting on his way home from
a wedding. Davison later admitted this was a lie and that he was shot during the incident that
took place at the residence on Route 58. Davison claimed, however, that he never shot anyone
during the incident and never possessed a firearm.
2
{¶3} On October 20, 2009, a grand jury indicted Davison on nine counts, including
numerous firearm specifications. After Davison succeeded on a motion to suppress, the State
dismissed two counts and severed two other counts, pertaining to having a weapon while under
disability, for trial at a later date. The remaining five counts were tried to a jury. The jury found
Davison not guilty on all five counts.
{¶4} Davison waived his right to a jury trial on the severed counts. The matter then
proceeded to a bench trial on those counts. The trial court found Davison guilty of two counts of
having a weapon while under disability, in violation of R.C. 2923.13(A)(2) and R.C.
2923.13(A)(3), respectively. Subsequently, the trial court concluded that both counts were allied
offenses of similar import. The court sentenced Davison to a single term of five years in prison.
{¶5} Davison now appeals from the trial court’s judgment and raises three assignments
of error for our review.
II
Assignment of Error Number One
“THE TRIAL COURT COMITTED (sic) PREJUDICIAL ERROR IN
CONDUCTING TRIAL PROCEEDINGS WITHOUT THE PRESENCE OF
DEFENDANT.”
{¶6} In his first assignment of error, Davison argues the trial court violated his due
process rights by conducting trial proceedings in his absence. Specifically, he argues that the
court ordered, outside of his presence, that the afternoon session of the trial be continued to the
next morning.
{¶7} “An accused has a fundamental right to be present at all critical stages of his
criminal trial.” State v. Hale, 119 Ohio St.3d 118, 2008-Ohio-3426, at ¶100. Before a defendant
may prevail upon the argument that he was denied due process as a result of his absence,
3
however, (1) “[t]he record must affirmatively indicate the absence of [the] defendant or his
counsel during a particular stage of the trial,” id. at ¶105, quoting State v. Clark (1988), 38 Ohio
St.3d 252, 258; and (2) the defendant must show that the absence prejudiced his defense. State v.
Kiley, 9th Dist. No. 10CA009757, 2011-Ohio-1156, at ¶12-13. Further, defense counsel may
waive his or her client’s presence in certain instances without impinging upon the client’s right
to be present. See, e.g., Hale at ¶103; State v. Frazier, 115 Ohio St.3d 139, 2007-Ohio-5048, at
¶145.
{¶8} The transcript from Davison’s first day of trial merely indicates after the line
reading “[l]unch recess had” that the trial “was adjourned to reconvene [the next morning.]”
There is no discussion regarding the continuance in the record, apart from a statement from
defense counsel the following day that Davison “expressed a disappointment yesterday that he
was not brought into court to continue his trial.” The record does contain an order, however,
which indicates that the court continued the trial at the State’s request “over defendant’s
objection.” The court’s order implies that, at the very least, Davison’s counsel was present to
object when the court decided to continue the matter.
{¶9} Davison makes no attempt to explain how he was prejudiced as a result of the trial
court granting a continuance in his absence. See Kiley at ¶12-13. Indeed, he does not even
challenge the propriety of the continuance itself. The fact that Davison was not present when the
trial court continued this matter does not equate to the conclusion that his absence prejudiced his
defense. Davison’s first assignment of error is overruled.
Assignment of Error Number Two
“THE TRIAL COURT COMMITTED PREJUDICIAL ERROR IN ADMITTING
EVIDENCE OF APPELLANT’S PRIOR CONVICTION AND FURTHER
ERRED IN FAILING TO GRANT APPELLANT’S MOTION PURSUANT TO
CRIM R. 29WHERE (sic) IT DID NOT COMPLY WITH CRIM. R. 32.”
4
{¶10} In his second assignment of error, Davison argues that the trial court erred by
admitting evidence of his prior convictions. Specifically, he argues that the exhibits of the
journal entries upon which the State relied to prove his prior convictions did not comply with
Crim.R. 32(C). Davison has not explained, however, which portion of Crim.R. 32(C) he
believes his prior convictions failed to satisfy. See App.R. 16(A)(7). Additionally, the record
before this Court does not contain any of the trial exhibits, including the journal entries at issue.
As this Court has repeatedly held, it is the duty of an appellant to ensure that the record on appeal
is complete. State v. Daniels, 9th Dist. No. 08CA009488, 2009-Ohio-1712, at ¶22, quoting
Lunato v. Stevens Painton Corp., 9th Dist. No. 08CA009318, 2008-Ohio-3206, at ¶11. It is also
an appellant’s duty to support his or her argument with citations to that record as well as to
applicable legal authority. See App.R. 16(A)(7). Because Davison has failed to present this
Court with a complete record and an argument supported by authority, we conclude that his
assignment of error lacks merit. Therefore, it is overruled.
Assignment of Error Number Three
“THE TRIAL COURT ERRED IN FAILING TO CONSIDER THE FACTORS
SET FORTH IN R.C. 2929.11, ET SEQ. IN SENTENCING APPELLANT.”
{¶11} In his third assignment of error, Davison argues that his sentence is contrary to
law because the court failed to consider the statutory factors set forth in R.C. 2929.11, et seq.,
before imposing his sentence.
{¶12} “Trial courts have full discretion to impose a prison sentence within the
[applicable] statutory range[.]” State v. Foster, 109 Ohio St.3d 1, 2006-Ohio-856, paragraph
seven of the syllabus. In exercising that discretion, “[a] court must carefully consider the statutes
that apply to every felony case[,] *** includ[ing] R.C. 2929.11, which specifies the purposes of
sentencing, and R.C. 2929.12, which provides guidance in considering factors relating to the
5
seriousness of the offense and recidivism of the offender.” State v. Mathis, 109 Ohio St.3d 54,
2006-Ohio-855, at ¶38. Yet, a court is not required to make findings or give its reasons for
imposing a certain sentence. Foster at paragraph seven of the syllabus.
{¶13} There is no dispute that Davison’s five-year sentence falls within the statutory
range for his offense. Davison’s sole argument on appeal is that “there is no indication that the
trial court considered any of the relevant statutory factors in R.C. 2929.11, et seq.” This Court
has recognized, however, that when a trial court issues a sentence that falls within the applicable
statutory range for the particular offense at issue, “it is presumed that the court considered the
relevant statutory sentencing factors.” State v. Estright, 9th Dist. No. 24401, 2009-Ohio-5676, at
¶60, quoting State v. Rutherford, 2d Dist. No. 08CA11, 2009-Ohio-2071, at ¶34. It is the
defendant’s burden to rebut that presumption. Estright at ¶60.
{¶14} Davison’s blanket statement that the trial court failed to consider the relevant
statutory factors here does not suffice to demonstrate that the court did not comply with the
sentencing statutes. The trial court’s judgment entry provides that the court issued Davison’s
sentence “[u]pon consideration of all matters set forth by law.” As such, this Court is not
persuaded by Davison’s unsupported assertion that the court did not consider the relevant
statutory factors. See id. at ¶60-61 (presuming court considered statutory factors upon a wholly
silent record). Davison’s third assignment of error is overruled.
III
{¶15} Davison’s assignments of error are overruled. All other outstanding motions are
denied. The judgment of the Lorain County Common Pleas is affirmed.
Judgment affirmed.
6
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Lorain, State of Ohio, to carry this judgment into execution. A certified copy of
this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(E). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellant.
BETH WHITMORE
FOR THE COURT
CARR, P. J.
MOORE, J.
CONCUR
APPEARANCES:
SARAH A. NATION, Attorney at Law, for Appellant.
DENNIS WILL, Prosecuting Attorney, and MARY R. SLANCZKA, Assistant Prosecuting
Attorney, for Appellee. | 01-03-2023 | 08-04-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/537601/ | 897 F.2d 539
16 U.S.P.Q.2d 1885
Unpublished DispositionNOTICE: Federal Circuit Local Rule 47.8(b) states that opinions and orders which are designated as not citable as precedent shall not be employed or cited as precedent. This does not preclude assertion of issues of claim preclusion, issue preclusion, judicial estoppel, law of the case or the like based on a decision of the Court rendered in a nonprecedential opinion or order.ARNCO, Plaintiff-Appellant,v.SYNAIR CORPORATION and Edward N. Gomberg, Defendants/Cross-Appellants.
Nos. 89-1558, 89-1559.
United States Court of Appeals, Federal Circuit.
Feb. 23, 1990.Suggestion for Rehearing In Banc Declined April 12, 1990.
Before RICH and NIES, Circuit Judges, and BRIAN BARNETT DUFF, District Judge*.
RICH, Circuit Judge.
DECISION
1
Plaintiff-Appellant Arnco appeals from the March 31, 1989 Order (as amended) of the United States District Court for the Eastern District of Tennessee, insofar as it failed to hold Defendant/Cross-Appellants Synair Corporation and Edward N. Gomberg (collectively Synair) liable for infringement of claims 1, 3-5, and 14-25 of U.S. Pat. No. 4,416,844 ('844) after March 3, 1987, and failed to find the infringement of those claims by Synair prior to March 3, 1987 willful. Synair cross-appeals from the Order insofar as it held that Synair had infringed claims of the '844 patent prior to March 3, 1987, and that Arnco had not unfairly competed. We affirm.
OPINION
A. Claim Construction
2
Arnco maintains that the District Court erred in construing claims 1, 3-5, 16, 18-19 and 24 to require the addition of at least 0.1% water. Claim construction is a question of law, and thus freely reviewable by this court. Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861, 866, 228 USPQ 90, 93 (Fed.Cir.1986).
3
We disagree with Arnco's contention that the phrase "water, in amounts sufficient ..." in claim 1 (and the similar language in claims 16, 18-19 and 24) can be construed to mean any amount of intentionally-added water, no matter how small. By its very terms, the phrase implies that it is possible to add water in an amount which is not sufficient to satisfy the stated conditions. Instead, we agree with the District Court's conclusion that the claims require a certain minimum amount of water added.
4
Having reached this conclusion, it is necessary to determine exactly what that minimum amount is. The specification certainly supports a minimum amount of 0.1%, since that is the lowest value recited in the various examples. Likewise, Mr. Wyman's statement made during prosecution of the divisional application is relevant,1 and indicates that a small amount of water is not sufficient to cause the production of urea structures or carbon dioxide, in contrast to the addition of "at least 0.1% water." As to the recitation of 0.1% in various dependent claims, the doctrine of claim differentiation is only a presumption which can be overcome by contrary evidence in the specification and prosecution history. Tandon Corp. v. I.T.C., 831 F.2d 1017, 1023-24, 4 USPQ2d 1283, 1288 (Fed.Cir.1987). In this case, we are convinced that the specification and prosecution history do overcome the presumption of claim differentiation and require that a "sufficient amount" of water be at least 0.1%.
B. Willful Infringement
5
Willful infringement is a question of fact reviewable under the clearly erroneous standard. Shatterproof Glass Corp. v. Libbey Owens Ford. Co., 758 F.2d 613, 628, 225 USPQ 634, 644 (Fed.Cir.), cert. dismissed, 474 U.S. 976 (1985). We find the facts of this case somewhat similar to those of Radio Steel & Mfg. Co. v. MTD Products, Inc., 788 F.2d 1554, 229 USPQ 431 (Fed.Cir.1986), where this court refused to reverse a finding of no willful infringement when the patentee acted upon an oral opinion of counsel obtained without review of the prosecution history. As in Radio Steel, we are not convinced, in view of the totality of the circumstances, that the District Court's determination of no willful infringement was clearly erroneous.
C. Validity--Permatire
6
Synair points to several sales of Arnco's product Permatire where the water present in the material may have exceeded 0.1%, arguing that these sales act as an anticipation under 35 USC 102(b). As discussed in subsection A, supra, we agree with the District Court that the claims require the intentional addition of at least 0.1% water. Thus, any isolated sales of Permatire containing in excess of 0.1% water would not constitute anticipation, since the water present was not, as required by the claims, intentionally added.
7
The District Court also did not err in failing to take the Permatire sales into account in determining obviousness. While isolated batches of Permatire material may have had in excess of 0.1% water, that water amount was neither intentional nor desirable, and so could not provide the motivation necessary to add water to other prior art tire filling compositions such as that disclosed in the prior art Gomberg patent.
D. Inequitable Conduct
8
The underlying issues of materiality and intent are factual questions which we review under the clearly erroneous standard. Kingsdown Medical Consultants Ltd. v. Hollister Inc., 863 F.2d 867, 872, 9 USPQ2d 1384, 1389 (Fed.Cir.1988). The District Court found that the failure to cite Permatire during prosecution was not a material error since the Permatire composition was very similar to that of the prior art Gomberg patent. The District Court further found no intent to mislead with respect to either the failure to cite the British '540 patent or the mislabelling of MPDA in the test results as an "amine catalyst." We do not consider any of these findings to be clearly erroneous.
E. Other Issues
9
With respect to the remaining allegations of error on the part of the District Court brought forth by the parties, we find these arguments equally unpersuasive.
*
District Judge Brian Barnett Duff, of the Northern District of Illinois, sitting by designation
1
The prosecution history is not necessarily limited to the proceedings involved in obtaining the patent in issue. See Caterpillar Tractor Co. v. Berco, S.p.A., 714 F.2d 1110, 219 USPQ 185 (Fed.Cir.1983). In this case, the close relation between the patent in issue and the divisional application warrants the inclusion of the Wyman declaration from the divisional application in the prosecution history of the '844 patent, at least for the purpose of construing the claim language | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1321280/ | 294 S.E.2d 83 (1982)
Matthew L. SNYDER, etc., et al.
v.
Barbara Jean Barker HICKS.
No. 15100.
Supreme Court of Appeals of West Virginia.
June 25, 1982.
*84 Lovett & Cooper, James T. Cooper and Henry R. Glass, III, Charleston, Skeen & Skeen and Larry L. Skeen, Ripley, for appellants.
Joseph C. Hash, Jr., Ravenswood, for appellee.
PER CURIAM:
This is an appeal by Matthew L. Snyder and Harold L. Snyder from an order of the Circuit Court of Jackson County denying their motion to reinstate the civil action they filed against Barbara Jean Barker Hicks. The question presented is whether the trial court abused its discretion in ruling that the appellants did not establish good cause for reinstating the civil action to the docket. We reverse and remand with directions.
This civil action was instituted in June, 1976, by Harold L. Snyder, as the next friend of his infant son, Matthew L. Snyder. The complaint alleged that as a result of defendant's negligent operation of a motor vehicle, the child sustained serious and permanent injuries which will result in the loss of future earnings and a loss of the ability and capacity to enjoy life. The complaint further alleged that plaintiff, Harold L. Snyder, has expended and will be compelled to expend large sums of money in the future for medical expenses relating to his child's injuries.
Shortly after the complaint was filed, the defendant, by and through her insurance carrier, Stonewall Casualty Company, requested from plaintiffs' counsel an extension of time to answer for the purpose of attempting settlement. Plaintiffs' counsel agreed to the extension, but a settlement was not reached and, on March 2, 1977, an answer was filed denying the material allegations of the complaint. Thereafter, no further action was taken in the trial court until March 22, 1979, when the court dismissed the action from the docket pursuant to R.C.P. 41(b) and W.Va.Code, 56-8-9, on the ground that no action had been taken in the case for more than two years. Within three terms of court the plaintiffs filed a motion to reinstate the action under R.C.P. 41(b) and W.Va.Code, 56-8-12.
In support of the reinstatement motion, plaintiffs' counsel filed an affidavit stating that plaintiff Matthew L. Snyder was an infant approximately nine years of age; that although some of the necessary medical information relating to the infant's condition had been available for some time, the medical information presently available was not sufficient for counsel to consummate a settlement agreement; and that no affirmative action had been taken in the trial court because he had agreed with Stonewall Casualty Company that settlement negotiations would be explored before requiring the company to defend the action on the merits in court.
Following a hearing in April, 1980, the circuit court denied the motion to reinstate the action on the docket and ordered that the action be dismissed without prejudice. Plaintiffs then brought this appeal.
We begin by noting that the action of plaintiff, Harold L. Snyder, for medical expenses for his injured child is now barred by the statute of limitations, W.Va.Code, 55-2-12. Consequently, if this action is not reinstated under Rule 41(b), he will be foreclosed *85 from prosecuting his claim. The action of the infant plaintiff, however, is not time-barred as he can bring the action after he reaches majority. For this reason the appellants do not contest the dismissal of the action as to the infant child.
This Court has uniformly held that good cause must be shown before an action can be reinstated under 56-8-12.[*]See, e.g., White Sulphur Springs, Inc. v. Jarrett, 124 W.Va. 486, 20 S.E.2d 794 (1942); Higgs v. Cunningham, 71 W.Va. 674, 77 S.E. 273 (1913). In syllabus point 4 of White Sulphur Springs, Inc., supra, we said in part: "A trial court, upon a motion to reinstate a suit or action... is vested with a sound discretion with respect thereto...." See also, Thomas v. Jones, 105 W.Va. 46, 141 S.E. 434 (1928); Higgs v. Cunningham, supra.
Upon the limited facts and circumstances of record a majority of the Court is of the opinion that good cause was shown for the reinstatement, that denying reinstatement would not serve the ends of justice, and that the trial court abused his discretion in denying reinstatement on the evidence of record. In the affidavit offered in support of the motion to reinstate the action, plaintiffs' counsel not only stated that the medical evidence was not such that he could properly finalize a settlement agreement, but he also represented that he had an agreement with Stonewall Casualty Company that settlement negotiations would be explored before requiring the company to defend the action on the merits. "The law favors and encourages the resolution of controversies by contracts of compromise and settlement rather than by litigation...." Syl. pt. 1, Sanders v. Roselawn Memorial Gardens, 152 W.Va. 91, 159 S.E.2d 784 (1968).
For the foregoing reasons, the judgment of the Circuit Court of Jackson County is reversed and the case is remanded to that court with directions that the case be reinstated on its docket.
Justices McGraw and McHugh are of the opinion that the trial court was correct in its decision to deny reinstatement and would affirm.
Reversed and remanded with directions.
NOTES
[*] The language of W.Va.Code, 56-8-9 and W.Va. Code, 56-8-12 was incorporated almost verbatim in the second paragraph of R.C.P. 41(b). The relationship between the rules of civil procedure and statutory provisions governing the pleading, practice and procedure in civil actions was discussed at some length in Arlan's Department Store of Huntington, Inc. v. Conaty, W.Va., 253 S.E.2d 522, 527 (1979). The Court recognized in that case that good cause has always been required for reinstatement, even though no such requirement is expressly called for by the language of W.Va.Code, 56-8-12. Id. at ___, 253 S.E.2d at 527. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321421/ | 251 Ga. 66 (1983)
303 S.E.2d 19
DEPARTMENT OF TRANSPORTATION
v.
GIBSON.
39276.
Supreme Court of Georgia.
Decided May 25, 1983.
*70 Michael J. Bowers, Attorney General, Alston, Miller & Gaines, G. Conley Ingram, Jack H. Senterfitt, for appellant.
Roy E. Barnes, G. Cleveland Payne III, for appellee.
GREGORY, Justice.
Appellant sought to condemn certain real property owned by appellee Gibson in connection with the federally assisted project to widen Interstate 75 in Atlanta. Gibson Litho-Plate Co., Inc., solely owned by Gibson, operated its business on this property.
Appellant provided Gibson with business relocation assistance in accordance with OCGA § 32-8-1 (Code Ann. § 95A-623), Georgia's version of the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. The record reflects that through this administrative process appellant ultimately paid Gibson over $54,000 in relocation expenses for Gibson Litho-Plate Co., Inc. Being dissatisfied with that award, appellee initiated an administrative appeal under the Georgia Administrative Procedure Act, OCGA § 50-13-1 et seq. (Code Ann. § 3A-101 et seq.), which appeal is still pending.
In the subsequent judicial condemnation proceeding (separate from the administrative award proceedings), Gibson also sought relocation expenses as an element of just and adequate compensation. Appellant moved in limine to exclude all evidence of relocation expenses during the jury trial on the grounds that *67 relocation benefits under OCGA § 32-8-1 (Code Ann. § 95A-623) were totally separate and apart from a determination of just and adequate compensation, and that the condemnee had initiated an administrative appeal of that award. Appellee argued that the expenses of relocating his business were part of the just and adequate compensation to be paid to him, and he was, therefore, entitled to present that issue to the jury in the condemnation action, notwithstanding the pending administrative action.
The trial court denied appellant's motion in limine, reasoning that "...since the Administrative Procedure Act allows only a review by the Superior Court judge of a final decision by the Department, and since the Constitution of the State of Georgia provides that a property owner is entitled to just and adequate compensation for property taken by eminent domain, the property owner should be allowed to try the issue of relocation expenses to the jury in the condemnation action, even though the condemnee has initiated an administrative appeal of the Department's award..." We granted appellant's application for interlocutory review of this ruling in order to consider the questions presented therein.
1. Initially, this case requires us to examine the relationship between business relocation assistance for condemnees as provided under OCGA § 32-8-1 et seq. (Code Ann. § 95A-623 et seq., Georgia's version of the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970), and Art. I, Sec. III, Par. I of the Georgia Constitution (Code Ann. § 2-301; "Private property shall not be taken... without just and adequate compensation being first paid...").
The Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (hereinafter, the "Uniform Act") was enacted by the United States Congress to establish a uniform policy for the equitable treatment of persons displaced as a result of federally assisted programs. 42 USCA § 4621. Under the Uniform Act, the states must make available assistance and payments for relocation expenses to owners of residential, farming or business property whose property is acquired for federally assisted highway projects in order to continue to receive federal funds for those projects. 42 USCA §§ 4630, 4655. Under our version of the Uniform Act, a condemnee whose property is being acquired for federally assisted highway projects may, but is not required to, seek payment of relocation expenses directly from the Department of Transportation in an administrative action. OCGA § 32-8-1 (Code Ann. § 95A-623). If the condemnee is dissatisfied with that award, he may appeal that award under our Administrative Procedure Act, OCGA § 50-13-1 et seq. (Code Ann. § 3A-101 et seq.).
*68 Prior to the enactment of the Uniform Act, we had held that business relocation expenses of the type involved here may be recovered as a part of the "just and adequate compensation" owed to condemnees under our constitutional provision. Bowers v. Fulton County, 221 Ga. 731 (146 SE2d 884) (1966). The enactment of OCGA § 32-8-1 (Code Ann. § 95A-623) does not alter the fact that relocation expenses, whether awarded judicially or administratively, are still a part of the "just and adequate compensation" guaranteed to condemnees under our constitution.[1] The critical question in this case, whether seeking administrative payment of relocation expenses precludes a separate judicial determination of the same relocation expenses in the statutorily authorized condemnation proceedings, can only be answered by analyzing what role OCGA § 32-8-1 (Code Ann. § 95A-623) plays in the overall condemnation process. In making this analysis, we necessarily use caution so that we do not overstep our judicial bounds and encroach on the province of the legislature.
There is no constitutional right to a jury trial in eminent domain cases. Oliver v. Union Point &c. R. Co., 83 Ga. 257, 261 (9 SE 1086) (1889); Mills on Eminent Domain, p. 239 (2d Ed. 1888); 1 Nichols on Eminent Domain (3d Ed. 1981), § 4.105 et seq. See D.O.T. v. Doss, 238 Ga. 480 (233 SE2d 144) (1977), overruled on other grounds 242 Ga. 707. But, were this not a case involving payments under OCGA § 32-8-1 (Code Ann. § 95A-623), condemnee would be able to litigate the question of his business relocation expenses as an element of "just and adequate compensation" in the condemnation proceedings under OCGA § 32-3-1 et seq. (Code Ann. § 95A-601 et seq.). Bowers v. Fulton County, supra. Through our own version of the Uniform Act, OCGA § 32-8-1 (Code Ann. § 95A-623), however, the General Assembly has provided a separate administrative procedure by which condemnees displaced by federally funded programs may seek and receive compensation for their business relocation expenses.[2]
*69 This condemnee chose to seek an administrative determination and accept payment of his business relocation expenses under OCGA § 32-8-1 (Code Ann. § 95A-623). He accepted payments under that award, but being dissatisfied, he elected to appeal the administrative determination. Having accepted the payments, he is committed to an administrative determination of the payments. See OCGA § 32-8-1 (c) (3) (Code Ann. § 95A-623). If he is dissatisfied after exhausting his administrative remedies, then (and only then) may he seek judicial review of the administrative determination. OCGA § 50-13-19 (Code Ann. § 3A-120). This administrative process, subject to judicial review, is the process by which this condemnee will receive "just and adequate compensation" for his business relocation expenses. He may not also litigate this same issue in the statutorily authorized condemnation procedure. To permit this would allow condemnees in such a situation to accept payment of an award in an administrative proceeding while still litigating the same issue in a condemnation jury trial, and require the Department of Transportation to relitigate this same award of "just and adequate compensation." Such an unfair result was not intended under our statutory scheme.
The trial court erred in denying appellant's motion in limine, since the question of appellee's "just and adequate compensation" for business relocation expenses is already being determined administratively. Appellee is not entitled to litigate the claim for business relocation expenses after accepting payment of an administrative award of those same benefits.
2. Both Mr. Gibson individually and Gibson Litho-Plate Co., Inc., participated in the administrative award proceedings. Appellee argues that the trial court ruling is at least correct as it applies to Gibson Litho-Plate Co., Inc., since it has filed no administrative appeal of relocation expenses, that appeal being filed by Mr. Gibson only in his individual capacity. We disagree.
As we stated in Division 1, it is the act of accepting payment of the administrative award which commits the condemnees to an administrative determination of their relocation benefits in this condemnation proceeding. Having accepted payment of the administrative award, both Gibson individually and Gibson Litho-Plate Co., Inc. are committed to an administrative determination of those relocation benefits, notwithstanding the fact that only Gibson individually has sought to appeal that award.
Judgment reversed. All the Justices concur.
NOTES
[1] The Supreme Court of South Carolina reached a similar result in Creative Displays, Inc. v. South Carolina Hwy. Dept., 272 S. C. 68, 74 (248 SE2d 916) (1978), holding, "The plain meaning of this provision is that the act neither adds to not takes from elements of value or damage in the law of eminent domain as developed through the years by the General Assemblies and by the courts of the respective states."
[2] We note, however, that a condemnee in an action involving a federally assisted highway project is not required to accept relocation expenses administratively under this statute. OCGA § 32-8-1 (c) (3) (Code Ann. § 95A-623 (c) (3)) provides in part: "Nothing in this code section shall be construed to deprive the tenant of any rights to reject payment under this code section and to obtain payment for such property interests in accordance with applicable law, other than this code section." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321016/ | 190 S.E.2d 235 (1972)
15 N.C. App. 354
In the Matter of The Imprisonment of Eugene EDISON.
No. 7227SC520.
Court of Appeals of North Carolina.
August 2, 1972.
*238 Atty. Gen. Robert Morgan by Asst. Atty. Gen. Russell G. Walker, Jr., for the State.
Hollowell, Stott & Hollowell, Frank P. Cooke and Steve B. Dolley, Jr. by Grady B. Stott, Gastonia, for petitioner appellant.
BRITT, Judge.
Edison assigns as error (1) the entry by the district court of its order of 17 April 1972 committing Edison to jail for contempt and (2) the failure of Judge Martin to vacate the order and grant Edison's petition for habeas corpus. Our writ of certiorari brings the entire matter before us for review.
The first question for consideration is whether the district court followed the proper procedure in adjudging Edison in contempt. We hold that it did not.
If the facts found by the district court constitute contempt of court under G.S. § 5-1, it is not a direct contempt, therefore, the procedure for indirect contempt must be followed including an order to show cause. The law concerning contempt in North Carolina can become somewhat confusing. Contempts of court are classified in two main divisions known as direct and indirect contempt. A direct contempt consists of words spoken or acts committed in the actual or constructive presence of the court while it is in session or during recess which tend to subvert or prevent justice. Galyon v. Stutts, 241 N.C. 120, 84 S.E.2d 822 (1954). An indirect contempt is one committed outside the presence of the court, usually at a distance from it, which tends to degrade the court or interrupt, prevent, or impede the administration of justice. Galyon v. Stutts, supra.
Proceedings for contempt are further classified as criminal and civil. In Galyon the court said: "With us contempts are defined and classified generally by two statutes: G.S. § 5-1 and G.S. § 5-8. These statutes recognize and preserve the fundamental distinction between civil and criminal contempt in substance but not in name. Acts or omissions which ordinarily constitute *239 criminal contempt as defined in the textbooks are designated by our statute, G. S. § 5-1, as punishable `for contempt,' without further designation; the acts or omissions which ordinarily constitute civil contempt as defined in the books are designated by our statute, G.S. § 5-8, as punishable `as for contempt.' Thus, under our statutes the proceedings for criminal and civil contempt are `for contempt' and `as for contempt', respectively." G.S. § 5-1(6) provides punishment "for contempt" upon "(T)he contumacious and unlawful refusal of any person to be sworn as a witness, or, when so sworn, the like refusal to answer any legal and proper interrogatory."
G.S. § 5-8(4) provides for punishment "as for contempt" "(a)ll persons summoned as witnesses in refusing or neglecting to obey such summons to attend, be sworn, or answer, as such witness."
The court goes on in Galyon to say: "(I)t is thus noted, from the tenor of the latter two statutes, that the refusal of a witness to testify at all or to answer any legal or proper question is made punishable both `as contempt' and `as for contempt'. And since the power of the court over a witness in requiring proper responses is inherent and necessary for the furtherance of justice, it must be conceded that testimony which is obviously false or evasive is equivalent to a refusal to testify within the intent and meaning of the foregoing statutes, and therefore punishable `as contempt' or `as for contempt', depending upon the facts of the particular case." (Emphasis added.)
Since giving "obviously false" testimony can be punishable by contempt civilly or criminally our concern here is whether the contempt, if any, was direct or indirect, without attempting to equate direct or indirect contempt with civil or criminal contempt. We distinguish the facts of this case from direct contempt in that all the facts necessary to establish the false testimony were not before the court, therefore, it is impossible to say that there were words spoken or acts committed in the actual presence of the court which would constitute direct contempt. "When the conduct complained of was before a commissioner or other subordinate officer of the court and the court has no direct knowledge of the facts constituting the alleged contempt, in order for the court to take original cognizance thereof and determine the question of contempt, the proceedings must follow the procedural requirements as prescribed for indirect contempt. . . and be based on rule to show cause or other process constituting an initiatory accusation meeting the requirements of due process as prescribed by our statutes." (Emphasis added.) Galyon v. Stutts, supra.
Assuming, arguendo, that the conduct in question would amount to direct contempt the recent case of Groppi v. Leslie, 404 U.S. 496, 92 S. Ct. 582, 30 L. Ed. 2d 632 (1972) would indicate that regardless of what kind of contempt was involved that under the facts in this case notice and a hearing would be required as is the practice in our state when an order to show cause is issued in an indirect contempt. In Groppi, the Wisconsin legislature cited the petitioner for contempt for conduct on the floor of the State Assembly that occurred two days previous to the contempt resolution. This procedure was held to violate petitioner's due process since he was readily available, but was given no notice before the resolution was adopted or afforded any opportunity to respond by way of defense or extenuation.
Quoting from Groppi, at 404 U.S. 503, at 92 S. Ct. 587, at 30 L. Ed. 2d 639, we find:
A legislature, like a court, must, of necessity, possess the power to act "immediately" and "instantly" to quell disorders in the chamber if it is to be able to maintain its authority and continue with the proper dispatch of its business. (Citations.) Where, however, the contemptuous episode has occurred two days previously, it is much more difficult to *240 argue that action without notice or hearing of any kind is necessary to preserve order and enable a legislative body to proceed with its business.
* * * * * *
Where a court acts immediately to punish for contemptuous conduct committed under its eye, the contemnor is present of course. There is then no question of identity, nor is hearing in a formal sense necessary because the judge has personally seen the offense and is acting on the basis of his own observations. (Emphasis added.) Moreover, in such a situation, the contemnor has normally been given an opportunity to speak in his own behalf in the nature of a right of allocution. (Citations.) . . . . Where, however, a legislative body acts two days after the event, in the absence of the contemnor, and without notice to him, there is no assurance that the members of the legislature are acting, as a judge does in a contempt case, on the basis of personal observation and identification of the contemnor engaging in the conduct charged, nor is there any opportunity whatsoever for him to speak in defense or mitigation, if he is in fact the offender.
In the case of Ex Parte Savin, 131 U.S. 267, 9 S. Ct. 699, 33 L. Ed. 150, 153 (1888) the U. S. Supreme Court said:
Where the contempt is committed directly under the eye or within the view of the court, it may proceed "upon its own knowledge of the facts, and punish the offender, without further proof, and without issue or trial in any form," (Ex parte Terry, 128 U.S. 289, 309, 9 S. Ct. 77, 32 L. Ed. 405) [32:405, 410]; whereas, in cases of misbehavior of which the judge cannot have such personal knowledge, and is informed thereof only by the confession of the party, or by the testimony under oath of others, the proper practice is, by rule or other process, to require the offender to appear and show cause why he should not be punished. 4 Bl.Com. 286.
We hold that the facts in the case at bar, where more than three full weeks elapsed between the conduct charged and the sentencing for contempt, fall sufficiently within the facts in Groppi to render the giving of notice and a hearing to Edison imperative.
The next question that arises is whether the alleged conduct of Edison constitutes contempt of court. In 17 Am.Jur.2d, Contempt, § 33, p. 38, it is said: "Making a false statement under oath may constitute contempt, notwithstanding that the conduct may also be a crime, such as perjury or false swearing." In Galyon v. Stutts, supra, the court indicated that the giving of testimony which is "obviously false" can constitute contempt. However, since we are invalidating the contempt order on procedural grounds, and due to the limited record before us, we do not pass upon this question.
The alleged conduct of Edison and his associates if true was reprehensible and appropriate action should be taken against those implicated in practicing a fraud on the courts. Nevertheless, those guilty or accused of the most reprehensible conduct are entitled to due process and on the record before us we hold that due process requires that Edison have his day in court.
For the reasons stated we declare invalid the order of the district court adjudging Edison in contempt and reverse the order of Judge Martin denying Edison's petition for habeas corpus.
Reversed.
MALLARD, C. J., and CAMPBELL, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321020/ | 259 S.C. 30 (1972)
190 S.E.2d 510
The STATE, Respondent,
v.
Lawrence VICE, Jr., Appellant.
19455
Supreme Court of South Carolina.
July 18, 1972.
Messrs. Harvey M. Spar and Leonard L. Long, Jr., of Long & Townsend, Charleston, for Appellant.
*32 Messrs. Robert B. Wallace, Sol., and A. Arthur Rosenblum, Asst. Sol., of Charleston, for Respondent.
Messrs. Harvey M. Spar, and Leonard L. Long, Jr., of Long & Townsend, Charleston, for Appellant, in Reply.
*33 July 18, 1972.
LEWIS, Justice.
Appellant, Lawrence Vice, Jr., was convicted of voluntary manslaughter under an indictment charging him with the murder of one Robert Farrow, and received a sentence of twenty (20) years. It is argued in this appeal that the trial judge erred (1) in admitting testimony relative to blood spots found in appellant's apartment and pictures taken therein during an entry by the officers without a search warrant; (2) in admitting in evidence a recording of appellant's voice; and (3) in refusing a motion for a directed verdict of not guilty.
Robert Farrow, a colored male, was found dead, lying in the yard, near the porch of the house where he rented a room, at 76 George Street, in Charleston, South Carolina. He was fully clothed and was saturated with blood over his chest and down his left leg. The body was discovered by the newspaper delivery boy about 7:15 a. m., Sunday, March 16, 1969, and police arrived at the scene about 7:25 a. m.
As the result of an autopsy, it was determined that the death occurred between midnight and six o'clock, a. m. on March 16, 1969, from four stab wounds to the chest one of which entered the heart.
The deceased lived in a room on the first floor of a two story house, where several others rented rooms or apartments. Appellant lived on the second floor. The investigating officers were able to locate all of the occupants of the building, except appellant, who disappeared and was not located until he was surrendered to the police by his attorney on March 18, 1969, two days after the body of the deceased was found.
Appellant made no statements concerning the crime and did not testify at the trial. There were no eye witnesses and the State relied largely upon circumstantial *34 evidence to prove the charge. Since one of the issues involves the sufficiency of the evidence to sustain the conviction, we must view the facts and circumstances surrounding the incident in the light most favorable to the State. This rule governs our review of the testimony.
The room of the deceased opened onto a porch, from which a stairway led to the second floor. During the night of March 15,1969, the deceased, who was intoxicated, got into an argument with an adjacent roomer. Shortly thereafter, the deceased was heard arguing and tussling someone near the porch steps. A witness stated that a voice, which sounded like that of appellant, said "he was going upstairs and coming back." This witness then heard the sound of someone going upstairs to the second floor and coming down, followed by more tussling, and then silence. The body of the deceased was found the next morning lying on the ground, near the porch where the witness had heard the argument and tussling the night before.
On March 16th, at about 1:21 a. m., an anonymous telephone call was received at police headquarters. The voice was described as that of a colored male and reported: "I'm down at 76 George Street, downstairs, and a man has been seriously crushed in the damned stomach." This call was automatically recorded. The report was investigated by the police shortly thereafter but no body was found. An officer, who knew appellant, testified that, in his opinion, the voice recorded in the anonymous phone call was that of appellant.
When the officers were subsequently called to the scene, they found blood on the ground, and on the porch near the door to deceased's room. The deceased was crippled and used a walking cane. His hat, walking cane, and medallion showing "praying hands" were found on the porch near a spot of blood. In addition, blood was found on the stairway leading to the second floor. A small neck chain was also found on the stairway.
There was a screen door at the head of the stairway, leading into a hallway from which only the rooms of appellant *35 and his landlady could be entered. The screen door was locked from the outside with a hasp and padlock. Blood was found on this hasp and lock. Upon entering the hallway, blood spots were found just outside the door to appellant's room. His room was locked from the outside by means of a hasp and padlock, to which only appellant and the landlady had keys.
Appellant customarily wore a neck chain with a "praying hands" medallion and was seen wearing the medallion about three weeks prior to the present incident, at which time he also had a four inch pocket knife in his possession. The medallion was similar to the one found at the scene of the crime.
When appellant was surrendered to the police, he was not wearing the chain and medallion; blood was found on keys taken from his person; and there was a bruise on his face and a scratch on his arm which had scabbed over.
Scrapings from under the fingernails of the right hand of the deceased revealed the presence of human blood, but insufficient in quantity to be typed. Hair samples from the appellant and the deceased were found to be Negro in origin, but could not be otherwise identified.
Blood samples were taken from the deceased; from the blood spots on the porch, stairway, hallway and keys taken from appellant and from appellant's body. All the blood was found to be human blood, type O.
Appellant tried to get his landlady to testify at his trial that she sent him downstairs the night of the incident to "quiet some quarrel," but she refused to do so.
When the officers traced the blood spots from the body of the deceased to the door of appellant's locked room, they procured the assistance of appellant's landlady who unlocked the door. Upon gaining entrance, blood spots were also found in the appellant's room. Scrapings were taken from these blood spots and pictures were made of the room, which were later admitted in evidence over appellant's objection. *36 No search warrant was obtained by the officers before entering and appellant contends that the evidence obtained as a result of this search of his room was inadmissible. This presents the first issue for determination.
The evidence procured from the room of appellant was obtained as the result of an unlawful search and was therefore inadmissible. The search was clearly not incident to an arrest and the State does not now rely upon that theory. Rather, the State relies upon the proposition, as set out in Warden v. Hayden, 387 U.S. 294, 87 S. Ct. 1642, 18 L. Ed. 782, that the exigencies of the situation made the search of the room of appellant imperative.
The facts of this case do not bring it within the rule applied in Warden. There a robber was followed from the scene of the robbery to a house. This information was relayed to the police who arrived five minutes later. They were admitted to the home by Mrs. Warden. The defendant was found feigning sleep and was arrested. Certain incriminating evidence was found in various places in the house and was admitted in evidence. The United States Supreme Court held that the entry and search without a warrant was permissible because, under the circumstances of that case, "the exigencies of the situation made that course imperative."
In this case, the officers were engaged in the investigation of a homicide about five hours after discovery of the dead body. Blood spots were traced from the body to the door of the room in which appellant lived. There was nothing to create even a suspicion that appellant was in the room. In fact, it was quite evident that he was not there for the door was locked with a padlock from the outside. Speed was not essential. There was simply no circumstance upon which to base a conclusion that the exigencies of the situation required dispensing with the necessity of a warrant to search appellant's room. The lower Court, therefore, was in error in admitting the evidence obtained as a result of the search without a warrant. Stoner v. California, 376 U.S. 483, 84 S. Ct. 889, 11 L.Ed. (2d) 856.
*37 The State argues, however, that even if the foregoing evidence was inadmissible, it was harmless. We disagree. Testimony as to the presence of blood in appellant's room after the witnesses had traced the blood spots from the dead body to his door, could hardly be held to be harmless. A new trial must, therefore, be granted on this ground.
Although a new trial is granted, the remaining questions are such that they must be decided. The first concerns the admissability of a recording of the defendant's voice.
As previously stated, an anonymous telephone call was made to police headquarters on the morning of the victim's death, advising that a man had been "seriously crushed in the damned stomach" at 76 George Street. The call was automatically recorded. This recording was introduced in evidence along with testimony of an officer that in his opinion it was the voice of appellant.
Prior to the trial, the State served a notice upon appellant and his counsel that the appellant would be required to speak over a telephone connected with the police telephone and recording device so that a recording of appellant's voice could be obtained. The purpose of such a recording was to compare it with the voice of the anonymous telephone caller previously recorded on the night of the crime Appellant refused to speak into a telephone so that a recording of his voice could be made.
During the trial, when the original recording of the anonymous caller was introduced, the court, at the request of the State, required appellant, during a court recess and in the absence of the jury, to speak into a telephone so that his voice could be recorded on the same police dictaphone which recorded the voice of the anonymous caller. The recording so made was admitted in evidence, over appellant's objection and played to the jury, so that they could compare appellant's known voice with that of the voice on the prior recording, for purposes of identification. Although the voice recording was made during the progress of the trial, it was made out *38 of the presence of the jury and, for all practical purposes, was tantamount to a pretrial requirement.
Appellant contends that the admission in evidence of the court directed voice recording violated his privilege against self-incrimination and deprived him of due process.
Questions arising from the requirement that a defendant in a criminal case demonstrate his voice for identification purposes are considered in an Annotation in 24 A.L.R. (3d) 1261. The annotation points out that the courts have generally held that a defendant may not refuse to demonstrate his voice for identification purposes on the ground that his privilege against self-incrimination would be violated
The requirement that appellant speak into the telephone so that his voice could be recorded for identification purposes did not violate his privilege against self-incrimination. "He was required to use his voice as an identifying physical characteristic not to speak his guilt." United States v. Wade, 388 U.S. 218, 87 S. Ct. 1926, 1930, 18 L. Ed (2d) 1149, 1155. State v. McKenna, 94 N.J. Super. 71, 226 A. (2d) 757.
Neither did the admission of the voice recording deprive appellant of due process. The recording was made of appellant's voice while speaking into the telephone and on the same machine that recorded the voice of the anonymous caller. The statement which appellant was required to make and the circumstances surrounding the two recordings were such as to afford the jury a reasonable basis for comparison of the voices recorded. There is nothing to indicate that the admission of the recording deprived appellant of due process or in any way violated his constitutional right to a fair trial.
Finally; appellant maintains that the evidence was insufficient to establish his guilt and that his motion for a directed verdict of not guilty should have been granted by the trial judge. In considering this question, the evidence obtained as a result of the unlawful search of appellant's room must, of course, be disregarded.
*39 The testimony upon which the State relied to prove the charge against appellant has been set forth. Further review of that testimony would serve no useful purpose. We are convinced, however, that the competent evidence and the reasonable inferences to be drawn therefrom were sufficient to sustain the guilt of appellant and required that the issues be submitted to the jury for determination.
The judgment of the lower court is accordingly reversed and the cause remanded for a new trial.
MOSS, C.J., and BUSSEY, BRAILSFORD and LITTLEJOHN, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321037/ | 190 S.E.2d 647 (1972)
Christopher C. CHOW
v.
Walter G. CROWELL, and wife, Florence S. Crowell, et al.
No. 7228SC28.
Court of Appeals of North Carolina.
August 23, 1972.
*648 Roberts & Cogburn, by Max O. Cogburn, and Bennett, Kelly & Long by Robert B. Long, Jr., Asheville, for plaintiff appellee.
*649 Williams, Morris & Golding by James N. Golding, Asheville, for defendant appellants.
Uzzell & Dumont by Harry Dumont, Asheville, for defendants appellees.
PARKER, Judge.
Plaintiff being a nonresident and defendants being residents of North Carolina, the proper venue for trial of this action is a county in this State in which "the defendants, or any of them, reside at its commencement." G.S. § 1-82. None of the defendants resided in Buncombe County, in which this action was commenced. Under G.S. § 1-83 each defendant had the right, by written motion made before time for answering expired, to demand that the action be removed to the county of his own residence.
Appellants contend that their motion to remove to Guilford County having been filed before the filing by their codefendants of the motion to remove to Transylvania County, the trial court should have considered their motion first. Then contend that, had the court done so, it would have been required to grant their motion as a matter of right, the case would then have been transferred to Guilford County, which was a "proper county" within our statutes relating to venue, and the subsequently filed motion to remove to Transylvania County would have failed as a matter of law. In this case, however, both motions were made upon the same grounds and as a matter of right, and we find nothing in our established practice or procedure which required the trial court to consider the motions separately and in the order in which they were filed. Moreover, the record before us fails to disclose any timely objection noted by appellants to the action of the trial court in considering the two motions at the same time. Under the circumstances of this case, therefore, we hold that the trial court committed no error in considering the two motions at the same time and that the court was not required to give precedence to one motion or the other because of the order in which they may have been filed, but was necessarily required to exercise discretion in choosing between the two.
We find error, however, in the trial court's order removing this case to Transylvania County, as nothing in this record supports the court's determination that proper venue of this action is in that county. The unverified motion signed by the attorneys for defendants Crowell contained a statement that they were residents of Transylvania County at the time of the institution of this action, but "[t]he unverified motion did not prove the matters alleged therein and is not evidence thereof." North American Acceptance Corp. v. Samuels, 11 N.C.App. 504, 181 S.E.2d 794. No affidavit or other evidence appears in the record to support the unverified motion. On the contrary, the motion filed by appellants and verified by C. A. Anderson states that defendants Crowell were residents of Macon County. The fact that summons was served on defendants Crowell by the Sheriff of Transylvania County did not establish that they were residents of that county.
The order appealed from being unsupported by the record, the same is vacated, and this cause is remanded to the Superior Court of Buncombe County for further proceedings as provided by law.
Vacated and remanded.
MALLARD, C. J., and MORRIS, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321030/ | 217 Ga. 588 (1962)
124 S.E.2d 269
EUBANKS et al.
v.
THE STATE.
21479.
Supreme Court of Georgia.
Submitted January 8, 1962.
Decided February 8, 1962.
Twitty & Twitty, Frank S. Twitty, Jr., for plaintiffs in error.
Maston O'Neal, Solicitor-General, contra.
HEAD, Presiding Justice.
John Robert Eubanks and Jim Roger Ricks were indicted under the act of 1949 (Ga. L. 1949, pp. 1118-1122; Code Ann. § 26-2213) and charged with "the offense of Burning to Defraud Insurer." Their demurrer to the indictment was overruled, and the exception is to this judgment.
1. The indictment charged the defendants with the crime of "burning to defraud insurer" in the language of the act, and the first ground of demurrer, asserting that the indictment fails to charge the defendants "with the commission of a crime," can not be sustained, unless it be determined that the act of 1949 is unconstitutional and void as contended in grounds 2 and 3 of the demurrer.
In ground 4 of the demurrer it is asserted that the indictment fails to allege who was the owner of the automobile. In ground 5 it is asserted that it fails to allege the number of the insurance policy, the date it was issued, and in whose name the policy was issued. In ground 6 it is asserted that the indictment does not allege payment of the premium and that the policy was in full force and effect at the time the automobile was destroyed by fire, and in ground 7 it is asserted that no loss is shown to have been suffered by the insurance company.
The offense charged against the defendants is in the language of the statute, and this is sufficient under the law. Cohen v. State, 104 Ga. 734 (30 S.E. 932); Bazemore v. State, 121 Ga. 619 (49 S.E. 701); Ramsey v. State, 212 Ga. 381 (92 SE2d 866); Buchanan v. State, 215 Ga. 791 (113 SE2d 609).
*589 2. In ground 2 of the demurrer it is contended that the act of 1949 (Ga. L. 1949, pp. 1118-1122) is unconstitutional and void as being in violation of Art. III, Sec. VII, Par. VIII (Code Ann. § 2-1908) of the Constitution, "in that said act refers to more than one subject matter and contains matter different from what is expressed in the title thereof."
The title of the 1949 act is as follows: "An Act to repeal Sections 26-2208, 26-2209, 26-2210 and 26-2211, relating to the crime of arson and the punishment therefor, and to enact other sections relating to said crime or the attempt thereat and prescribing the punishment therefor; and to enact other laws relating to the kindling of fire on one's land or that of another and prescribing the punishment therefor; and for other purposes."
The only crime mentioned in the title of the 1949 act is arson. Notice is given of the repeal of certain sections and of the intention "to enact other sections relating to said crime." This language is sufficient to meet the requirements of Art. III, Sec. VII, Par. VIII (Code Ann. § 2-1908) of the Constitution. The general object of the law is all that need be indicated by the title or caption of the act, and a synopsis of the law is not required to be in the title. White v. Donaldson, 170 Ga. 432, 436 (153 S.E. 19); Morgan v. Shepherd, 171 Ga. 33, 37 (154 S.E. 780); Cade v. State, 207 Ga. 135, 138 (60 SE2d 763); Complete Auto Transit, Inc. v. Floyd, 214 Ga. 232, 236 (104 SE2d 208).
"Provisions germane to the general subject-matter embraced in the title of an act, and which are designed to carry into effect the purpose for which it was passed, may be constitutionally enacted therein, though not referred to in the title otherwise than by the use of the words `and for other purposes.'" Burns v. State, 104 Ga. 544 (1) (30 S.E. 815); Martin v. Broach, 6 Ga. 21 (50 AD 306); Branson v. Long, 159 Ga. 288, 293 (125 S.E. 500); Inter-City Coach Lines, Inc. v. Harrison, 172 Ga. 390, 394 (157 S.E. 673); Black v. Jones, 190 Ga. 95, 97 (8 SE2d 385).
In ground 3 of the demurrer it is urged that the act is null and void because it "fails to set forth in the caption thereof" that the Code Sections referred to were a part of the Code of 1933. *590 The Sections of the Code repealed by the 1949 act are Sections appearing in the official Code of 1933. In the absence of specific language naming some other Code, the act of 1949 can only refer to the official Code of 1933, since it is the only Code of full force and effect in this State.
Judgment affirmed. All the Justices concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321043/ | 105 Ga. App. 434 (1962)
124 S.E.2d 647
TAYLOR
v.
BOYCE et al.
39324.
Court of Appeals of Georgia.
Decided March 1, 1962.
Vincent P. McCauley, Marilyn W. Carney, for plaintiff in error.
Kelly, Champion & Henson, S. E. Kelly, Jr., contra.
JORDAN, Judge.
1. Where a tenant is injured as a result of defects in a part of the rented premises which he continued to use after knowledge that such part of the premises was in a defective and unsafe condition, the failure on the part of the tenant to exercise ordinary care for his own safety by refraining from the use of such portion of the premises and thus avoiding the consequences to himself caused by the landlord's negligence in failing to repair will be held to be the sole proximate cause of the injuries sustained. Code § 105-603; Ball v. Walsh, 137 Ga. 350 (73 S.E. 585); Donehoe v. Crane, 141 Ga. 224 (80 S.E. 712); Jackson v. Davis, 39 Ga. App. 621 (147 S.E. 913); Harris v. Edge, 92 Ga. App. 827 (2) (90 SE2d 47).
2. Thus where it appears from the uncontradicted facts adduced on motion for summary judgment in a suit by a tenant against her landlord to recover damages for personal injuries sustained by the plaintiff when she fell through the back porch of the rented premises that said porch was in a rotten and unsafe condition, that plaintiff knew of the unsafe condition of the porch and was afraid to walk on it, and that plaintiff had notified the landlord's agent many times that the porch was in need of repair and dangerous to use, a *435 finding is demanded that the plaintiff's fall resulted from a defective and unsafe condition of the premises of which she was aware; and the plaintiff is therefore barred from recovery by reason of her failure to exercise ordinary care for her own safety.
3. There is no merit to the plaintiff's contention that this case is removed from the general rule by reason of the facts appearing from the counter-affidavit of the plaintiff which disclosed that it was necessary for the plaintiff to walk across said porch in order to reach the only source of drinking water on the premises. As stated by the Supreme Court in Clements v. Blanchard, 141 Ga. 311, 312 (80 S.E. 1004, LRA 1917A 993), under the law of this State, the plaintiff ". . . could either have moved out and sued the landlord for damages for failure to keep the premises in repair, or, if the repairs were necessary to render the house tenantable, she could have caused the necessary repairs to have been made, and set them off against the landlord's claim for rent. Her continuance in the house for so long a time after the house was rendered untenantable and the landlord had refused to repair constitutes such negligence as bars her of recovery."
Clearly under the authorities cited in this opinion, the tenant's continued use of the porch with knowledge of its rotten and unsafe condition bars her of any right to recover. The trial court therefore did not err in granting the defendant's motion for summary judgment.
Judgment affirmed. Nichols, P. J., and Frankum, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321039/ | 124 S.E.2d 728 (1962)
256 N.C. 593
STATE
v.
Mack B. THOMPSON.
No. 721.
Supreme Court of North Carolina.
March 28, 1962.
*729 Walter D. Barrett, Graham, M. Hugh Thompson and William A. Marsh, Jr., Durham, for defendant, appellant.
Atty. Gen., Thomas W. Bruton and Asst. Atty. Gen., H. Horton Rountree for the State.
BOBBITT, Justice.
The only assignment of error brought forward and discussed in defendant's brief is based on his exception to the overruling of his motion for judgment as in case of nonsuit. Hence, all other assignments of error are deemed abandoned. Rule 28, Rules of Practice in the Supreme Court, 254 N.C. 783, 810.
The only question presented by a motion under G.S. § 15-173 for judgment as in case of nonsuit is whether the evidence is sufficient to require submission to the jury. State v. Green, 251 N.C. 40, 110 S.E.2d 609. In passing on such motion, "the evidence is to be considered in the light most favorable to the State, and the State is entitled to the benefit of every reasonable intendment thereon and every reasonable inference to be drawn therefrom." State v. Corl, 250 N.C. 252, 108 S.E.2d 608.
Clearly, if the twenty-one pints of whiskey were in the actual or constructive possession of defendant, there was ample evidence to support the verdict. G.S. § 18-32; State v. Rogers, 252 N.C. 499, 114 S.E.2d 355, and cases cited.
Defendant contends the evidence is insufficient to support a finding that the twenty-one pints of whiskey were in defendant's constructive possession.
As to what constitutes constructive possession, Varser, J., in State v. Meyers, 190 N.C. 239, 129 S.E. 600, said: "If the liquor was within the power of the defendant, in such a sense that he could and did command its use, the possession was as complete within the meaning of the statute as if his possession had been actual." This statement has been quoted with approval in later cases, e. g., State v. Harrelson, 245 N.C. 604, 606, 96 S.E.2d 867. It is stated in State v. Taylor, 250 N.C. 363, 366, 108 S.E.2d 629, 632: "* * * if nontaxpaid whiskey is on a person's premises, with his knowledge and consent, he has constructive possession thereof while it remains on premises under his exclusive control."
Even so, defendant contends the circumstantial evidence upon which the State relies is insufficient to show defendant had constructive possession of the twenty-one pints of whiskey in that the facts shown *730 are not inconsistent with defendant's innocence.
In State v. Stephens, 244 N.C. 380, 383, 93 S.E.2d 431, 433, this Court, in opinion by Higgins, J., said: "We are advertent to the intimation in some of the decisions involving circumstantial evidence that to withstand a motion for nonsuit the circumstances must be inconsistent with innocence and must exclude every reasonable hypothesis except that of guilt. We think the correct rule is given in State v. Simmons, 240 N.C. 780, 83 S.E.2d 904, quoting from State v. Johnson, 199 N.C. 429, 154 S.E. 730: `If there be any evidence tending to prove the fact in issue, or which reasonably conduces to its conclusion as a fairly logical and legitimate deduction, and not merely such as raises a suspicion or conjecture in regard to it, the case should be submitted to the jury.' The above is another way of saying there must be substantial evidence of all material elements of the offense to withstand the motion to dismiss. It is immaterial whether the substantial evidence is circumstantial or direct, or both. To hold that the court must grant a motion to dismiss unless, in the opinion of the court, the evidence excludes every reasonable hypothesis of innocence would in effect constitute the presiding judge the trier of the facts. Substantial evidence of guilt is required before the court can send the case to the jury. Proof of guilt beyond a reasonable doubt is required before the jury can convict. What is substantial evidence is a question of law for the court. What that evidence proves or fails to prove is a question of fact for the jury."
Under the rule stated in State v. Stephens, supra, and approved in later decisions, this Court is of opinion, and so decides, that there was substantial and therefore sufficient evidence to support a finding that the twenty-one pints of whiskey were in the constructive possession of defendant and to support a verdict of guilty. Hence, defendant's motion for judgment as in case of nonsuit was properly overruled.
In State v. Hunt, 253 N.C. 811, 117 S.E.2d 752, cited by defendant, decision was based on a materially different factual situation.
No error.
SHARP, J., took no part in the consideration or decision of this case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321060/ | 126 Ga. App. 309 (1972)
190 S.E.2d 607
GIVENS
v.
GRAY.
47049.
Court of Appeals of Georgia.
Argued April 5, 1972.
Decided May 16, 1972.
Rehearing Denied May 16, 1972.
George L. Howell, for appellant.
Schwall & Heuett, Charles E. Leonard, Lee S. Alexander, for appellee.
EBERHARDT, Presiding Judge.
This is the second appearance of this matter in this court. See Givens v. Gray, 124 Ga. App. 152 (183 SE2d 29). It appears that Givens rented an apartment in a newly constructed complex owned by Gray and after approximately a month's occupancy began to make complaints as to certain deficiencies in the apartment and demanded corrective action by the owner. He stopped paying rent, and thereafter the owner instituted dispossessory proceedings. The tenant filed a counterclaim tendering payment of the rent into the registry of the court, and asserting a "failure of consideration" resulting from the claimed deficiencies. After a hearing the court entered an order finding that the plaintiff was entitled to a writ of possession and directed that it issue against the defendant, and further finding that "the defendant has not proved damages, or any measure of damages for which relief can be granted, has prayed for affirmative equitable relief, which is beyond the jurisdiction of this court [Civil Court of Fulton County], and has failed to state a claim upon which relief can be granted, it is hereby ordered and adjudged that judgment be entered in favor of the plaintiff and third-party defendant, Saul Gray d/b/a Daron Village Apartments, with all costs taxed against the defendant in said case." From this judgment Givens appeals. Held:
*310 It appears that all issues made by the pleadings, including the dispossessory proceeding, answer and counterclaim, which were within the jurisdiction of the court in which the cause pended were tried and findings made thereon and judgment accordingly entered in the trial court. The trial was held before a judge without a jury. "[W]here the trial judge, sitting as trior of the facts, hears the evidence, his findings based upon conflicting evidence is analogous to the verdict of a jury and should not be disturbed by a reviewing court if there is any evidence to support it. Kelly v. Kelly, 146 Ga. 362 (91 S.E. 120); Phillips v. Phillips, 161 Ga. 79 (129 S.E. 644); Perkins v. Courson, 219 Ga. 611, 616 (135 SE2d 388); Bass v. Bass, 222 Ga. 378, 388 (149 SE2d 818)." West v. West, 228 Ga. 397, 398 (185 SE2d 763). See also Gravitt v. Employees Loan &c. Corp., 75 Ga. App. 561 (44 SE2d 159). "Where a trial judge hears a case without the intervention of a jury, the credibility of the witnesses is for his determination. Boynton v. State, 11 Ga. App. 268 (75 S.E. 9); Goggans v. State, 14 Ga. App. 822 (2) (82 S.E. 357); Holbrook v. Rodgers, 105 Ga. App. 219, 221 (124 SE2d 443)." Simmons v. State, 111 Ga. App. 553 (1) (142 SE2d 308). After judgment every presumption and inference favors it and the evidence must be construed to uphold rather than to destroy it. Young Men's Christian Assn. v. Bailey, 112 Ga. App. 684, 690 (146 SE2d 324). These principles were applied in Freidenburg & Co. v. Jones, 63 Ga. 612, a landlord-tenant case.
Examining the record of the evidence in this case we find there was evidence to support the judgment entered.
Judgment affirmed. Deen and Clark, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321042/ | 126 Ga. App. 266 (1972)
190 S.E.2d 603
WILKES
v.
RICKS.
47102.
Court of Appeals of Georgia.
Argued April 6, 1972.
Decided April 19, 1972.
Rehearing Denied May 11, 1972.
Sheldon R. Wittner, for appellant.
Claude E. Hambrick, for appellee.
CLARK, Judge.
For decision here is an appeal from denial of a motion by defendant who had filed an answer including a defense based on the Statute of Frauds to set aside a judgment obtained by default which appellant's petition avers was procured without any notice of assignment for trial.
We reverse because the record fails to show compliance with Code Ann. § 81A-140 (c) (Ga. L. 1966, pp. 609, 653; 1967, pp. 226, 245). The pertinent portion reads: "The courts shall provide for the placing of actions upon the trial calendars (1) without request of the parties but upon notice to the parties ..." (Emphasis supplied). The emphasis we supplied in the foregoing quotation is on words which the drafters of the Georgia Civil Practice Act added in undertaking to adapt Rule 40 of the Federal Rules of Civil Procedure. As was said by E. Freeman Leverett in his explanatory article in 3 Georgia State Bar Journal 295 at page 305: "Literally construed this section changes the existing law which is to the effect that parties are `bound to *267 take notice of the time and place of trial and of when their presence is required.' Blanch v. King, 202 Ga. 779, 783; Williams v. Linn, 108 Ga. App. 629, 633 (3)."
We recognize that each court[1] has its own rules dealing with assignment of cases for trial and notice thereof but the case sub judice is similar to Siefferman v. Kirkpatrick, 121 Ga. App. 161, 163, supra, in that "The petition here alleges no notice of trial or the placing of the case on the regular trial calendar." Having made this allegation, defendant is entitled to his day in court on the main case if in fact he proves this essential requirement of assignment notice to have been overlooked or absent. Contra of course if the plaintiff is able to show that the statutory requisite of notice was satisfied.
It should also be noted in the case at bar that the judgment which appellant seeks to set aside states in haec verba: "and no defense having been interposed as provided by law," when in fact there is an answer including the affirmative defense of a plea of the Statute of Frauds.
Judgment reversed. Eberhardt, P. J., and Deen, J., concur.
ON MOTION FOR REHEARING.
On motion for rehearing appellee has submitted a photo copy of an issue of the DeKalb New Era which is the official organ of DeKalb County, Georgia. This photo copy listed the assignment of this specific case. Since this court cannot take judicial cognizance of a local court rule or of a fact which is not in the record on appeal we have no choice excepting to adhere to our previous opinion.
Rehearing denied.
NOTES
[1] For example, Chatham Superior Court and the State Court of Chatham County mail notices of each case with copy retained in the court record, whereas Fulton Superior Court uses as its notice vehicle the Fulton County Daily Report. Many circuits mail as the term approaches complete trial calendars to all counsel of record. Our statute does not designate the manner of notice but expressly requires notice. See Barber v. Canal Ins. Co., 119 Ga. App. 738 (168 SE2d 868). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1321040/ | 190 S.E.2d 871 (1972)
J. H. PATRICK and Wachovia Bank & Trust Company, Executors of the Will of P. P. Gregory, Deceased
v.
Joe L. HURDLE. (Case #67-CVS-8 and Case #70-CVS-179)
No. 721SC545.
Court of Appeals of North Carolina.
August 30, 1972.
*874 Leroy, Wells, Shaw, Hornthal & Riley by Dewey W. Wells and L. P. Hornthal, Jr., Elizabeth City, for plaintiff appellees.
John T. Chaffin and Gerald F. White, Elizabeth City, for defendant appellant.
GRAHAM, Judge.
We first consider the appeal from judgment entered in the principal action on the jury verdict finding items in Hurdle's counterclaim accruing more than three years before the death of Gregory barred by the statute of limitations.
Hurdle assigns as error the court's denial of his motion for a continuance. This assignment of error is overruled. Continuances are not favored. Wilburn v. Wilburn, 260 N.C. 208, 132 S.E.2d 332. This action has been pending since 7 April 1967 and has twice before been the subject of appeals to this Court. See Patrick v. Hurdle, 6 N.C.App. 51, 169 S.E.2d 239, and 7 N.C.App. 44, 171 S.E.2d 58. Both cases were continued twice upon Hurdle's motions based upon contentions that he is physically unable to attend court. When he moved for a continuance on 30 November 1970, an independent medical examination was ordered. This examination tended to show that Hurdle was physically able to come to court and go through trial but not to stand a lot of "abuse on the witness stand." The court nevertheless continued the case upon being advised by Hurdle's counsel that they were not prepared for trial since they had believed their client's illness would prevent his attending court.
The cases were set peremptorily as the first cases for trial at the 25 January 1971 Session of Superior Court. At this session of court, a continuance was again ordered because of Hurdle's physical inability to attend trial. However, Judge Peel, the presiding judge, found at that time that while Hurdle is suffering from a chronic, progressive condition which may prevent his ever attending trial, he may be able to preserve his testimony by deposition. Hurdle was thereupon ordered to preserve his testimony by deposition within sixty days, or to file with the clerk a physician's certificate that substantial risk of harm to his physical condition would arise from his doing so. He did neither.
In denying Hurdle's motion to continue the cases when called at the 29 November 1971 Session, Judge Godwin found that Hurdle "has been physically able to be deposed and that defendant has failed to show, by certificate of physician as required by Judge Peel's order or otherwise, that he could not, within 60 days of such *875 order, give his testimony by deposition without substantial risk of harm to his physical condition." Judge Godwin also found from evidence in the record that Hurdle's physical condition is deteriorating; that he is not likely to improve; and that a further continuance would severely prejudice plaintiffs.
It is well established in this jurisdiction that a motion for a continuance is addressed to the sound discretion of the trial judge and his ruling thereon is not reviewable in the absence of manifest abuse of discretion. 7 Strong, N.C. Index 2d, Trial, § 3, p. 258. The facts appearing in the record fail to show any abuse of discretion on the part of the court. To the contrary, they indicate that defendant has been afforded reasonable opportunity to present by deposition any defenses he may have. Moreover, all of the evidence before the court tended to show that defendant's physical condition is not likely to improve. "Since the purpose of a continuance granted because of the poor health of a party is to postpone the proceedings to a later date when the party will be in a better condition to present his case, the delay will generally be refused unless there is a reasonable likelihood that this purpose will be served, that is, that the party's health will improve." 17 Am.Jur.2d, Continuance, § 18, pp. 139, 140.
Hurdle brings forward several assignments of error to the court's rulings with respect to the admission of evidence and also to certain portions of the court's charge to the jury. These assignments of error have been considered and are overruled.
We move now to Hurdle's contentions with respect to the court's entry of partial summary judgments in each case.
At the outset, a question arises as to whether defendant's appeals from these orders are premature. G.S. § 1A-1, Rule 56(d) clearly contemplates that summary judgment may be entered upon less than the whole case and that the court may make a summary adjudication that is not final. As pointed out by Professor Moore in discussing the identical federal procedure, "[I]n this situation, unless the interlocutory order is appealable and in most instances it will not be, the court has rendered a `partial summary judgment' that is technically not a judgment." 6 Moore's Federal Practice, § 56.20 [3.-0], p. 2746. Final judgments, enforceable against Hurdle, have not been entered. Whether Hurdle is prejudiced by the interlocutory disposition of the issues involved depends upon a determination of issues which are still pending for trial. In the absence of the entry of a final judgment, "any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties . . . shall not then be subject to review either by appeal or otherwise except as expressly provided by these rules or other statutes." G.S. § 1A-1, Rule 54.
While we are of the opinion Hurdle has no right of appeal at this time, G. S. § 1-277, we nevertheless elect to treat the appeals as petitions for certiorari, allow them, and pass upon the merits of the questions raised.
In support of their motion for summary judgment in the principal action, plaintiffs presented substantial and convincing evidence as to the accuracy of the running account alleged. Defendant offered no affidavit or other evidence tending to show that he was improperly charged with any items specified in the amount alleged in plaintiffs' first cause of action.
Hurdle states in his affidavit, and contends in his answer, that Gregory and his bookkeeper "wrongfully failed to reflect credit to me, in said mutual and open running account for the items set forth in my counterclaim." The items in Hurdle's counterclaim not barred by the statute of limitations do not, in our opinion, constitute *876 items that should be considered in connection with the mutual account alleged in plaintiffs' first cause of action. They are at most items which may entitle Hurdle to a set-off. This is so because these items arise out of matters completely unrelated to the business items set forth in the mutual account alleged by plaintiffs. For instance, in his counterclaim, Hurdle alleges he is entitled to recover $110,000.00 for assistance he rendered Gregory in securing proof that a lady, claiming Gregory had promised to marry her, was lying; thus discouraging the lady from suing Gregory for breach of promise. In another allegation, entitled by Hurdle as the "Lonely Millionaire Matter," he contends the estate owes him $27,250.00 for getting Gregory released from pressure being applied by a woman seeking to marry him. Also, a substantial sum is claimed for staying with Gregory and taking him to a doctor and out to eat from time to time. The other allegations tend also to relate to claims for personal services allegedly rendered. It is not difficult to see that these matters should be dealt with in a separate issue and not submitted to the jury as items to be considered in connection with a mutual account arising out of farming and business operations. See Haywood v. Hutchins, 65 N.C. 574.
Considering defendant's counterclaim as a matter of set-off, the question then becomes: Is there any genuine issue with respect to plaintiffs' claim that defendant is indebted under an open, mutual running account in the sum of $64,210.52? In our opinion, the trial judge correctly determined that there is not.
We think the trial judge also correctly determined that there is no genuine issue with respect to defendant's obligation under the note alleged as plaintiffs' second claim in the principal action, or with respect to plaintiffs' right to foreclose on the notes and deeds of trust as alleged in the foreclosure case, subject to the conditions outlined in the judgment. An abundance of evidence was offered by plaintiffs that Hurdle, joined by his wife in some instances, executed the notes and deeds of trust in question, that the instruments were executed under seal and for consideration, and that they have not been satisfied. Hurdle does not deny in his answers that he and his wife executed the notes in question. He states specifically in his answer with respect to all of the notes and deeds of trust that "[i]t is not denied that this answering defendant and India Marie Hurdle signed certain papers from time to time for the late P. P. Gregory but this answering defendant denies that consideration was received for the said signatures and this answering defendant avers that the amounts set forth in the alleged papers are incorrect and defendant denies being indebted in any manner under any of the papers that are alleged to have been signed by this answering defendant and India Marie Hurdle."
Defendant contends that the court erred in failing to find that his general denial, in response to a request that he admit certain particulars regarding the notes and deeds of trust, raises a question as to whether he actually executed the instruments.
We think that under the circumstances, this general denial was entitled to no more weight than if it had been contained in defendant's answer in response to allegations in the complaint. "When a motion for summary judgment is made and supported . . ., an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." G.S. § 1A-1, Rule 56(e). As stated in the case of Bruce Construction Corp. v. United States, 242 F.2d 873, 875 (5th Cir. 1957), "when a movant makes out a convincing showing that genuine issues of fact are lacking, we require that the adversary adequately demonstrate by receivable facts that a real, not formal, controversy exists, *877 and, of course, he does not do that by mere denial or holding back evidence."
As previously noted Hurdle did not deny in his answer or affidavit that he executed the instruments in question. Neither Hurdle nor his counsel suggested in any way that evidence could be produced which would tend to dispute the overwhelming showing of plaintiffs that Hurdle executed the instruments. In this connection it is significant that before entering summary judgment Judge Godwin inquired of Hurdle's counsel as to what evidence Hurdle was prepared to offer "in support of his denial of the execution of said notes, the balance owing thereon and the right of foreclosure under said deeds of trust." When counsel stated they were unable to respond as to what Hurdle might say if he were to testify, the hearing was recessed until the next day and Hurdle's counsel were requested to ascertain in the interim, and frankly advise the court, what evidence Hurdle would be prepared to offer at trial in support of his contentions with respect to the notes and deeds of trust, including the names of witnesses and the substance of their testimony in that regard. Counsel were also advised that they should take whatever time they needed to make these determinations and that their tardiness on convening of court the next morning would be excused.
In spite of the opportunity given, defendant's counsel were unable to advise the court as to any evidence which might place in issue any material fact with respect to the questions then being considered. In the case of Kessing v. National Mortgage Corp., 278 N.C. 523, 535, 180 S.E.2d 823, 831, the court noted the following:
"Defendant, on inquiry by the trial court as to whether any responsive countervailing evidence could be presented, failed to present such. Under these circumstances, defendant's mere allegations were not sufficient and summary judgment was appropriately entered dismissing the first counterclaim. G.S. § 1A-1, Rule 56(e). . . ."
Summary judgment procedure is designed to permit penetration in advance of trial of unfounded claims or defenses and to allow summary disposition when this is effectively done. 2 McIntosh, N.C. Practice and Procedure 2d, § 1660.5, p. 72 (Phillips' Supp.1970). It has been effectively shown here that Hurdle's only possible defense, with respect to any of the issues on which summary judgment has been granted, is by way of a possible setoff. He may still establish this defense by proving at trial the validity of any items in his counterclaim which have not been adjudged barred by the statute of limitations. Consequently, Hurdle has not been denied the opportunity of a trial with respect to the only possible valid defense he has.
Affirmed.
PARKER and VAUGHN, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261547/ | 239 P.3d 283 (2010)
237 Or. App. 271
In the Matter of C.A.S., a Youth.
State of Oregon, Petitioner-Respondent,
v.
C.A.S., Appellant.
605672; Petition Number 08JV0440; A142189.
Court of Appeals of Oregon.
Argued and Submitted August 18, 2010.
Decided September 15, 2010.
Christa Obold-Eshleman argued the cause for appellant. With her on the brief was Juvenile Rights Project.
Michael R. Washington, Senior Assistant Attorney General, argued the cause for respondent. With him on the brief were John R. Kroger, Attorney General, and Jerome Lidz, Solicitor General.
Before SCHUMAN, Presiding Judge, and WOLLHEIM, Judge, and ROSENBLUM, Judge.
PER CURIAM.
Youth drove a car without the owner's permission and then crashed itacts that, if committed by an adult, would be crimes. A juvenile court referee ordered that youth pay restitution to the car's owner in the amount of $250.00, her insurance deductible for the cost of repairing the car. The referee also *284 ordered that youth pay $4,315.26 to AFNI Insurance Services (AFNI), the victim's insurance carrier, for repair costs it paid. Youth sought review of that order by a juvenile court judge, arguing that the insurance company was not a "victim" for purposes of the juvenile delinquency restitution statute, ORS 419C.450. The juvenile court agreed with youth in that regard, but rather than eliminate the award of $4,315.26, it made the amount payable to the car's owner instead of AFNI. Youth now appeals that judgment, again arguing that an insurance company is not a "victim" for purposes of ORS 419C.450.
The problem with youth's argument is that the juvenile court did not award restitution to AFNI. Indeed, the court agreed with youth's contention that the "victim" was the owner of the damaged car, and the judgment makes restitution payable to the car's owner and not AFNI. Thus, the issue that youth frames on appealthe meaning of the word "victim" in ORS 419C.450has no direct bearing on the ultimate correctness of the restitution award.
The juvenile delinquency restitution statute contemplates an award of restitution in the "specific amount that equals the full amount of the victim's injury, loss or damage." CRS 419C.450(1)(a)(A). Given the nature of the judgment in this case, the real question is what constitutes the "full amount of the victim's injury, loss or damage" in light of the fact that an insurance company paid for repairs to the victim's car. That statutory construction question, however, has not been briefed or argued on appeal, and we decline to address it.[1]See State v. Montez, 309 Or. 564, 604, 789 P.2d 1352 (1990) (refusing to consider an argument that was not adequately developed on appeal).
Affirmed.
NOTES
[1] Read in isolation, youth's assignment of errorthat the court "erred by entering a juvenile judgment ordering the youth to pay $4565.26 to the victim, when the victim had only $250 in out-of-pocket costs, and the rest was paid by her insurance company"appears to frame the correct issue. Youth's argument in support of that assignment, however, is directed exclusively to the question whether an insurance company is a "victim" for purposes of ORS 419C.450. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261564/ | 428 A.2d 1140 (1981)
In re LUNDE CONSTRUCTION COMPANY.
No. 99-79.
Supreme Court of Vermont.
February 27, 1981.
Joseph C. Palmisano, Barre, for appellant.
M. Jerome Diamond, Atty. Gen., Benson D. Scotch and Meredith Wright, Asst. Attys. Gen., and Richard H. Cowart, Sp. Asst. Atty. Gen., Montpelier, for Environmental Board.
Before BARNEY, C. J., and DALEY, LARROW, BILLINGS and HILL, JJ.
BARNEY, Chief Justice.
Lunde Construction Company sought an Act 250 permit for a real estate development in Barre Town. Barre City, a separate municipal corporation, sought party status under 10 V.S.A. § 6084(b) and 6085(c), and under Environmental Board Rule 12(C), to protect its interests at the hearing before the District Environmental Commission, but was turned down. The request was also denied by the Environmental Board. The City is appealing, claiming (i) that it was entitled to receive individual notice of the application under 10 V.S.A. § 6084(b) and thus party status under 10 V.S.A. § 6085(c), and (ii) that the District Environmental Commission and the Environmental Board abused their discretion in denying the City's request for party status under Environmental Board Rule 12(C).
The application of Lunde indicates that the development will use municipal water and sewer service. Barre Town, the site of the proposed development, has no water or *1141 sewage system of its own. Instead, it receives those services from its neighbor, Barre City, under contract. That contract limits the amount of sewer and water service the Town may get from the City. The City wants to present data on the state of its water and sewer systems, as well as to give evidence as to the effect of the proposed development on its water and sewer operations.
The City has brought this appeal under 3 V.S.A. § 815. We have held that one denied party status by the Environmental Board has standing to appeal the decision to this Court under that statute. In re Preseault, 130 Vt. 343, 347, 292 A.2d 832, 834-35 (1972).
The litigants agree that Barre City is not entitled to party status as of right under 10 V.S.A. § 6084(a). Section 6084(a) gives party status to the municipality in which the proposed development is to be located, and to adjacent municipalities if the development is on a boundary. In this case Barre City does not come within either provision.
The statute also provides for discretionary power in the District Commission, or the Board, to decide which additional municipalities should receive notice, if any. 10 V.S.A. § 6084(b). Section 6084(b) provides:
The district commission shall forward notice and a copy of the application to the board and any state agency directly affected, and any other municipality or state agency, or person the district commission deems appropriate. Notice shall also be published in a local newspaper generally circulating in the area where the land is located not more than 7 days after receipt of the application.
The City, in essence, contends that it was an abuse of discretion for the District Commission to refuse to send the City notice, conferring party status on the City. The Board, when the issue was brought before it, sustained the District Commission's ruling on the grounds that expert testimony presented through the regional planning commission or state agencies would sufficiently protect the interests of the City.
In the law, discretionary rulings are always subject to the limitations that such discretion not be withheld or abused. Abuse is defined as the purported exercise of discretion on grounds or for reasons clearly untenable, or to an extent clearly unreasonable. John v. Fernandez, 124 Vt. 346, 348-49, 205 A.2d 552, 555 (1964). In determining the application of these limits, the statutory objectives are of first consideration. Since the use of the discretionary power is limited by those statutory objectives, a review of the exercise of discretionary power must reach the question of whether they were sufficiently taken into account.
The effects of a proposed development on water and sewer services are a principal concern of environmental proceedings such as this one, and are among the exact criteria that the District Commission must examine under 10 V.S.A. § 6086(a), which provides in relevant part:
Before granting a permit, the board or district commission shall find that the subdivision or development:
(1) Will not result in undue water or air pollution....
(2) Does have sufficient water available for the reasonably foreseeable needs of the subdivision or development.
(3) Will not cause an unreasonable burden on an existing water supply, if one is to be utilized.
....
(7) Will not place an unreasonable burden on the ability of the local governments to provide municipal or governmental services.
These are the exact concerns which Barre City seeks to raise. It provides these critical water and sewer connections which, in the usual case, would be encompassed within the interests of the municipality in which the development is to be located. Barre City has an interest in the effect on its supply of water and the adequacy of its sewage system.
*1142 But, as already noted, Barre Town obtains its water and sewage by contracting with Barre City. The finite limits of the contracts are all the protection Barre City needs. It is no concern of the City how the Town distributes its limited water and sewer rights among its customers. The District Commission did not abuse its discretion in failing to notify Barre City individually about the permit application.
Turning to the claim under Environmental Board Rule 12(C), it should be noted that Barre City's request for party status under the Rule was fully four months late. Rule 12(C) requires application for party status on or before the first day of the hearing. At the time of the petition considerable progress had been made in the hearings, and the entrance, at this time, of a new party would likely require reopening of hearings as to all criteria already addressed. No compelling reasoning justifying any sort of waiver of the time limitation appears, and, furthermore, the delay itself is further reason favoring the refusal to exercise the discretion to make Barre City a party.
Lack of party status does not rule out the presentation of any evidence Barre City may want to bring forth. Its agents may be called as witnesses by any of the parties, some of whom are also represented by the attorney for the City, and have been since the first day of the hearings. No interests of the City are threatened by the refusal of party status under Rule 12(C), but great delay and additional expense to the applicant and others will result if the board were to rule otherwise.
In a late memorandum the Environmental Board has sought to raise the issue of its own standing before this Court. The State also attempted to file a concededly late amicus curiae brief. Lunde Company objected, both as to timeliness of the brief and to the lack of opportunity to develop the standing issue before it was raised here. Without depreciating the importance of the question of the standing of an administrative body to appear in defense of its actions that are being reviewed, it is quite apparent that the issue is not one central to the questions in this case, and that it has not had timely presentation. For these reasons that issue is not passed upon and the amicus curiae brief has not been considered in this case.
The ruling of the Environmental Board denying party status to Barre City in this proceeding is affirmed, and the cause remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261587/ | 428 A.2d 1064 (1981)
STATE
v.
Carol A. ROHELIA et al.
No. 80-71-C.A.
Supreme Court of Rhode Island.
April 22, 1981.
Dennis J. Roberts, II, Atty. Gen., Kathryn A. Panciera, Sp. Asst. Atty. Gen., for plaintiff.
John F. Cicilline, Charles J. Rogers, Jr., Providence, for defendants.
OPINION
KELLEHER, Justice.
On July 23, 1975, the grand jury for Providence and Bristol Counties returned a three-count indictment charging the defendants, Carol A. Rohelia (Rohelia), Rudolph Sciarra (Sciarra), and Romeo Gabriele (Gabriele), with a variety of offenses, all of which related to a successful escape from the Adult Correctional Institutions (ACI) by several inmates in late September 1972. The first count charged all three defendants with conspiracy, the second count charged Sciarra and Gabriele with aiding and abetting the escapees, while the third count charged Rohelia with harboring the escapees. The indictment came to trial before a Superior Court jury in June 1979. The jury acquitted Rohelia of the conspiracy charge but reported it was hopelessly deadlocked in regard to the other two counts.[1]
On February 15, 1980, the trial justice, at the instance of the Attorney General, acting pursuant to the terms of G.L. 1956 (1969 Reenactment) § 9-24-27, certified to us the following question:
"Whether the decision of the Supreme Court of Rhode Island in State v. Jenison and Cory, R.I., 405 A.2d 3 (1979), holding that the total and arbitrary exclusion of the university and college academic community *1065 from the grand jury selection process is an impermissible violation of the due process right of the criminal defendant to be indicted by an impartial grand jury drawn from a fair cross section of the community, is to be retroactively applied to indictments returned prior to the date of that decision and whether the defendants in the above listed case forever waived any defects in the indictment for purposes of retrial by proceeding to trial on June 5, 1979, which trial ended in a hung jury on June 13, 1979, without having raised the issue."
In State v. Jenison, R.I., 405 A.2d 3 (1979), we held that the entire exclusion by the jury commissioner of presidents, professors, students, and tutors of recognized universities and colleges from grand-jury service deprived a defendant of his due-process right to be indicted by an impartial grand jury drawn from a fair cross section of the community. The Jenison holding was based upon Taylor v. Louisiana, 419 U.S. 522, 95 S.Ct. 692, 42 L.Ed.2d 690 (1975), where the Supreme Court held that a systematic exclusion of a cognizable class of people from a petit jury was constitutionally impermissible.
Subsequent to the certification by the trial justice, we ruled in State v. O'Coin, R.I., 417 A.2d 310 (1980), that the rule of Jenison would apply to all cases of defendants who were indicted by grand juries impaneled after the date of Taylor v. Louisiana, to wit, January 21, 1975, and whose convictions had not become final by July 11, 1980, the publication date of O'Coin. However, in O'Coin we also recognized that a defendant cannot have the best of both worlds when we ruled that he or she may not both receive the benefit of a retroactive application of the Jenison rule and also be excused for failure to raise the issue prior to trial.
A defendant may receive the benefit of the retroactive application of Jenison because the state was put on notice by Taylor v. Louisiana that its impaneling process was improper. Logic and fairness dictate that if the state was put on notice of this impropriety, then the defendants were also put on notice. Consequently, in O'Coin we said that a defendant, in order to take advantage of the retroactive issue, had to raise the question prior to trial by way of Rule 12(b) of the Superior Court Rules of Criminal Procedure. Rule 12(b) provides in its pertinent part:
"(2) [D]efenses and objections based on defects in the institution of the prosecution or in the indictment, information, or complaint * * * may be raised only by motion before trial. * * * Failure to present any such defense or objection * * constitutes a waiver thereof, but the court for cause shown may grant relief from the waiver.
"(3) The motion shall be made no later than twenty-one (21) days after the plea is entered, * * * but in any event the court may permit the motion to be made within a reasonable time after the plea is entered * * *."
According to O'Coin, if a defendant who comes within the time frame of Jenison has challenged the composition of the grand jury prior to trial and within twenty-one days of his or her plea, then he or she is entitled as a matter of right to a dismissal of the indictment. If the motion is made prior to trial but more than twenty-one days after the plea, the grant of the motion is a matter that rests within the discretion of the trial justice. In O'Coin, we stated that the reason for the requirement of a pretrial challenge to the jury's composition was the necessity for the defect to be cured before the court, the witnesses, and the litigants had gone through the burden and expense of a trial.
Here, in the case at bar, the indictment comes well within the time frames of Jenison; and Sciarra and Rohelia, by motions filed in 1980, more than twenty-one days after the not-guilty pleas, have challenged the composition of the grand jury. Thus, the rationale of O'Coin will not be disserved here because, due to the jury's impasse, this controversy remains, for all practical purposes, *1066 at the pretrial stage.[2] Although Rohelia and Sciarra have not waived the Jenison issue, their entitlement to a dismissal of the indictment is a question to be resolved by the exercise of the trial justice's sound judicial discretion.
The papers in the case with our decision certified thereon are to be returned to the Superior Court for further proceedings.
SHEA, J., did not participate.
NOTES
[1] Subsequent to the mistrial, Romeo Gabriele died. His death is noted on the record.
[2] State v. Jenison, R.I., 405 A.2d 3 (1979), does not apply to those cases in which a retrial is granted on appeal for reasons other than the composition of the grand jury. When a conviction has been obtained against a defendant who has not raised the Jenison issue prior to trial, the issue may not be raised thereafter. The conviction renders the jury challenge moot. Id. 405 A.2d at 8 n. 5. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2261588/ | 109 Cal.Rptr.2d 919 (2001)
91 Cal.App.4th 423
In re MARCUS A., a Person Coming Under the Juvenile Court Law.
The People, Plaintiff and Respondent,
v.
Marcus A., Defendant and Appellant.
No. E027896.
Court of Appeal, Fourth District, Division Two.
August 8, 2001.
Marta I. Stanton, under appointment by the Court of Appeal, for Defendant and Appellant.
Bill Lockyer, Attorney General, David P. Druliner, Chief Assistant Attorney General, Gary W. Schons, Senior Assistant Attorney General, Pamela A. Ratner, Supervising Deputy Attorney General, and Susan E. Miller, Deputy Attorney General, for Plaintiff and Respondent.
OPINION
RAMIREZ, P.J.
The defendant, Marcus A, appeals from an order committing him to the California Youth Authority (CYA) after a contested dispositional hearing, arguing that the proceedings were improperly initiated pursuant to Welfare and Institutions Code section 777.[1] The People concede that prejudicial error occurred. We agree and reverse.
FACTS AND PROCEDURAL HISTORY
Marcus A. became involved with the juvenile courts at age 13, when, in December 1997, the San Bernardino County District Attorney filed a petition alleging that he was a person coming under the provisions of section 602 because he had committed *920 the crime of grand theft in violation of Penal Code section 487, subdivision (a). An amended petition was later filed, alleging two additional counts: petty theft in violation of Penal Code section 488, and giving false information to a police officer in violation of Penal Code section 148.9, subdivision (a).
On June 23, 1998, Marcus A. voluntarily admitted the grand theft count. On the motion of the district attorney the remaining two counts were dismissed. Marcus A. was found to come under the provisions of section 602 and was retained in juvenile hall. At a dispositional hearing on July 8, 1998, Marcus A. was declared a ward of the court, placed on probation and released to the custody of his aunt with specified terms and conditions of probation.
Some six weeks later a supplemental petition for more restrictive placement was filed under section 777, subdivision (a)(2), alleging that Marcus A. had violated terms of his probation by removing an electronic monitoring device, running away from home, and testing positive for marijuana. Then, on September 1, 1998, a subsequent juvenile wardship petition was filed, alleging that Marcus A. had committed the crime of second degree robbery in violation of Penal Code section 211, and had received stolen property in violation of Penal Code section 496. Marcus A. voluntarily admitted violating Penal Code section 496 and the trial court dismissed the robbery count and the allegations that he violated terms of his probation. At the dispositional hearing the court ordered Marcus A. continued in juvenile hall pending his placement in a foster care facility. As of October 15, 1998, he was placed in Joy House.
In August 1999, Marcus A. graduated from the program at Joy House. However, he had no relatives willing and able to care for him as his aunt had passed away during his placement. Therefore a supplemental petition for a more restrictive placement was filed recommending that he be maintained in juvenile hall pending a lower level placement. On September 2, 1999, the August 1999 supplemental petition was dismissed, Marcus A. was placed in the home of another aunt and was continued a ward of the court.
A short time later, the district attorney filed an additional subsequent juvenile wardship petition charging Marcus A. with assault by means likely to produce great bodily injury in violation of Penal Code section 245, subdivision (a)(1). Marcus A. eventually admitted the charge and was maintained in juvenile hall pending placement at La Hacienda on December 20, 1999.
On June 19, 2000, Marcus A.'s probation officer filed a notice to initiate a proceeding to revoke probation pursuant to section 777. Marcus A. was accused of non-compliance with the terms of probation because he allegedly violated La Hacienda's dress code and was found in possession of a cigarette.
At a jurisdictional hearing on July 12, 2000, the court heard testimony that Marcus A. was repeatedly advised of the terms and conditions of his placement at La Hacienda, including obeying the rules and obeying the placement staff. A staff member of La Hacienda testified that he told Marcus A. that he was in violation of the dress code for wearing layered clothing, and Marcus A. refused to comply. However, the staff member later admitted that there was no written prohibition in the rules against wearing layered clothing. The court thus found not true the allegation that Marcus A. had violated La Hacienda's dress code and disobeyed placement staff. However, based upon the testimony of another staff member *921 who found three and one-half cigarettes in Marcus A.'s pocket, the court found true the allegation that he had been in possession of cigarettes. The testimony was admitted over the objection of Marcus A.'s attorney, who asserted that possession of cigarettes was a separate crime and could not be raised at the hearing under section 777. At a contested dispositional hearing on July 25, 2000, the trial court committed Marcus A. to the CYA for a maximum period of five years. This appeal followed.
DISCUSSION
Marcus A. contends that the trial court erred when it committed him to the CYA after finding that he had violated the terms of his probation in a hearing instituted under section 777. The People concede that the trial court did err and we agree.
Section 777 provides for the removal of a minor ward of the court or probationer to a more restrictive placement than that previously ordered based upon additional misconduct by the minor. Prior to the passage of Proposition 21, section 777 outlined two categories of misconduct, that which amounted to a crime and that which did not. (See Historical & Statutory Notes, 73A West's Ann. Welf. & Inst.Code (2001 supp.) foll. § 777, p. 64.)
However, the provision was dramatically changed by the passage of Proposition 21, which became effective on March 8, 2000. (In re Melvin J. (2000) 81 Cal. App.4th 742, 757, 96 Cal.Rptr.2d 917.) From that date, the statute has applied only to those violations of probation that do not amount to a crime. (§ 777, subd. (a)(2).)
Marcus A. was charged with two offenses allegedly amounting to a violation of his probation. Both of those offenses occurred after the effective date of the amended statute. The dress code/failure to comply with a reasonable staff order offense did not amount to a crime, and was therefore properly raised in the hearing below. However, the trial court found that allegation was not true. Therefore, it did not form a basis for the challenged order.
The other offense, possession of cigarettes, was the only ground for the order herein. However, since he was under the age of 18, Marcus A.'s possession of cigarettes was a criminal offense. (Pen.Code, § 308, subd. (b).) Because this alleged probation violation occurred after the amended statute's effective date and amounted to a criminal offense, it should not have been pursued in proceedings initiated under the amended version of section 777.
The error was prejudicial and therefore the order must be reversed. Under former section 777, due process required that the additional misconduct be proved beyond a reasonable doubt. (In re Arthur N. (1976) 16 Cal.3d 226, 235-241, 127 Cal.Rptr. 641, 545 P.2d 1345.) Currently, section 777, subdivision (c) requires proof only by a preponderance of the evidence. Here, the record reflects that the trial court found true the allegation that Marcus A. was in possession of cigarettes in violation of the rules at La Hacienda only by a preponderance of the evidence.
The amended statute also permits the use of hearsay, which was not acceptable under the prior version, and eliminates the necessity of a finding that the prior disposition was ineffective in rehabilitating the minor (the trial court did make that finding here). (See In re Jorge Q. (1997) 54 Cal.App.4th 223, 231-232, 62 Cal.Rptr.2d 535, & In re Antonio A. (1990) 225 Cal. App.3d 700, 703-706, 275 Cal.Rptr. 482, interpreting the pre-Proposition 21 law; § 777, subd. (c).) Further, as Marcus A. points out, under the facts and circumstances *922 of this case, it is possible that the prosecutor may have, in a proper exercise of discretion, declined to pursue a criminal prosecution of this offense.
DISPOSITION
The July 25, 2000, order committing Marcus A. to the CYA is reversed.
McKINSTER J., and GAUT J., concur.
NOTES
[1] Further statutory references will be to the Welfare and Institutions Code unless otherwise noted | 01-03-2023 | 10-30-2013 |
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