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513 P.2d 239 (1973)
Sidney McINTOSH, a minor by her next friend, Robert J. McIntosh and Robert J. McIntosh, Individually, Plaintiffs-Appellants,
v.
George F. ROMERO, Defendant-Appellee.
No. 72-407.
Colorado Court of Appeals, Div. I.
August 8, 1973.
*240 Clarke W. Karr, David M. Bryans, Denver, for plaintiffs-appellants.
Holley, Boatright & Villano, Roger D. Witt, Wheatridge, for defendant-appellee.
Selected for Official Publication.
SILVERSTEIN, Chief Judge.
Plaintiffs seek damages of approximately $17,000 for injuries received in an automobile accident allegedly caused by the negligence of defendant. Defendant moved for dismissal on the ground that plaintiffs are not the real parties in interest. The motion was granted and judgment of dismissal entered. Plaintiffs appeal from that judgment. We reverse.
Defendant, in his verified motion, asserted that plaintiffs had recovered approximately $4,000 from their insurance carrier under an uninsured motorist clause in their insurance policy. He further alleged that the insurance company was the subrogee of plaintiffs and asked the court to take judicial notice of the fact that the company had previously filed suit in the same court against defendant to recover the amount so paid. At the hearing on the motion, the record of the insurer's action against defendant was admitted in evidence by stipulation and showed that the insurer alleged that it became subrogated to these plaintiffs' rights. The record in this court discloses that the prior case had been dismissed, but there is no showing as to why or under what circumstances the dismissal occurred. Plaintiffs contended that the alleged subrogation was partial, extending only to the amount paid plaintiffs, and did not fully compensate them for the injuries sued on in the present action.
The complaint in the present action states a prima facie claim for relief against defendant. The evidence at the hearing revealed a contested issue of fact and, at most, established the existence of a third party who might be a necessary party to this action. Since failure to join a necessary party is not a ground for dismissal of an action, the evidence presented did not justify dismissal of this case. C.R. C.P. 21. Krueger v. Merriman Electric, 29 Colo. App. 492, 488 P.2d 228. Plaintiffs cannot be deprived of their day in court solely on an allegation of a third party, made in an action to which plaintiffs were not parties. Instead of dismissing the complaint, the court should have proceeded in accordance with C.R.C.P. 19, joining the insurance company as a party, or it *241 should have allowed plaintiffs the opportunity to amend their complaint.
Judgment reversed and cause remanded for further proceedings not inconsistent herewith.
COYTE and PIERCE, JJ., concur.
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747 So. 2d 905 (1999)
George T. MOSS and Susan D. Moss
v.
Teddy E. WILLIAMS.
George T. Moss and Susan D. Moss
v.
Jerry Glenn Coaker and Audrey Ellen Coaker.
2980437 and 2980438.
Court of Civil Appeals of Alabama.
October 8, 1999.
*906 Norton W. Brooker, Jr., and William E. Shreve, Jr., of Lyons, Pipes & Cook, P.C., Mobile; and S.J. Laurie, Chatom, for appellants.
Edward P. Turner, Jr., and E. Tatum Turner of Turner, Onderdonk, Kimbrough & Howell, P.A., Chatom, for appellee Teddy E. Williams.
THOMPSON, Judge.
These appeals arise out of a property dispute. Jerry Glenn Coaker and Audrey Ellen Coaker filed a complaint against adjoining landowners George T. Moss and Susan D. Moss, alleging trespass to property, damage to property, and negligent or wanton removal of dirt and timber from the Coakers' property. The Coakers later amended their complaint to allege that the Mosses were in unlawful possession of the disputed property and to seek a judgment declaring them to be the rightful owners of the property.
Teddy Williams, another landowner whose property adjoins the Mosses' property, filed a complaint and an amended complaint against the Mosses that was substantially identical to that filed by the Coakers.
The disputed property is a strip of property that lies at the eastern edge of the Mosses' property and at the western edge of both the Coakers' property and Williams's property.
The Coakers and Williams both filed a motion for a partial summary judgment on their claims alleging unlawful possession of the disputed portions of property and on their claims seeking a declaratory judgment. The trial court granted both motions for partial summary judgment, holding that the Coakers and Williams were the true owners of the disputed portions of property and that the Mosses had unlawfully possessed both portions of property. The trial court purported to certify its partial summary judgments as final pursuant to Rule 54(b), Ala. R. Civ. P. The Mosses filed a post-judgment motion, pursuant to Rule 59, Ala. R. Civ. P., in each of the actions. After those motions were purportedly denied by operation of law, see Rule 59.1, Ala. R. Civ. P., the Mosses appealed in each case.[1]
The Supreme Court of Alabama transferred the appeals to this court, pursuant to § 12-2-7, Ala.Code 1975. This court remanded the actions for the trial court to determine whether a Rule 54(b) certification of its partial summary judgments was appropriate and, if so, to enter an order in compliance with the requirements of Brown v. Whitaker Contracting Corp., 681 So. 2d 226 (Ala.Civ.App.1996). On remand, the trial court entered additional orders in the two actions. In each order, the court noted that the claims alleging trespass, damage to property, and negligent and wanton removal of timber and dirt from the properties were still pending, and that *907 if this court were to reverse its judgments, a trial would not be necessary.
Not every order has the requisite element of finality that can trigger the operation of Rule 54(b), Ala. R. Civ. P. James v. Alabama Coalition for Equity, Inc., 713 So. 2d 937 (Ala.1997). "Rule 54(b) certifications should be made only in exceptional cases and should not be entered routinely." Parrish v. Blazer Financial Services, Inc., 682 So. 2d 1383 (Ala.Civ.App. 1996). This case does not present a set of exceptional facts that would justify a Rule 54(b) certification of the partial summary judgments. The trial court has determined that the Coakers and Williams are the rightful owners of the disputed portions of property and that the Mosses unlawfully possessed the disputed pieces of property. Both the Coakers and Williams have asserted claims for damages against the Mosses for the Mosses' alleged interference with their property rights. The trial court's judgment does not adequately demonstrate a reason that this court should review the partial summary judgments before the adjudication of the remaining claims for damages in the two actions. See Brown v. Whitaker Contracting Corp., supra. The trial court's order states only that this court's review of its judgment on the issue of the ownership of the property would affect the necessity for a trial on the plaintiffs' claims for damages. However, courts do not favor appellate review in a piecemeal fashion. Brown v. Whitaker Contracting Corp, supra.
We conclude that the trial court's Rule 54(b) certifications were erroneous. Thus, the appeals are premature and must be dismissed for want of jurisdiction.
APPEALS DISMISSED.
ROBERTSON, P.J., and YATES, MONROE, and CRAWLEY, JJ., concur.
NOTES
[1] A postjudgment motion pursuant to Rule 59 may be made only in reference to a final judgment. Malone v. Gainey, 726 So. 2d 725, 725, n. 1 (Ala.Civ.App.1999). Because we hold that the partial summary judgments were not final judgments, the Rule 59 motions did not operate to extend the time for appeal.
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24 Cal.Rptr.3d 654 (2005)
126 Cal.App.4th 865
The PEOPLE, Plaintiff and Respondent,
v.
Michael Todd LONG, Defendant and Appellant.
No. C046360.
Court of Appeal, Third District.
February 10, 2005.
Review Denied June 8, 2005.
*655 William I. Parks, under appointment by the Court of Appeal, for Defendant and Appellant.
Bill Lockyer, Attorney General, Robert R. Anderson, Chief Assistant Attorney General, Mary Jo Graves, Senior Assistant Attorney General, Wanda Hill Rouzan, Supervising Deputy Attorney General, for Plaintiff and Respondent.
Certified for Partial Publication.[*]
ROBIE, J.
INTRODUCTION
A jury found defendant Michael Todd Long guilty of inflicting corporal injury on a cohabitant and of committing battery with serious bodily injury on her.
Defendant contends that after he refused to accept the prosecution's original plea offer, the People acted vindictively by amending the complaint to add new charges and increasing the sentence offered. Defendant further asserts both that the court erred and that his counsel rendered ineffective assistance because the court did not instruct the jury that evidence of the character of a witness may be considered in determining witness credibility. Lastly, defendant contends the court erred in refusing to instruct the jury on the People's delay in disclosing evidence. We will affirm.
*656 FACTUAL AND PROCEDURAL BACKGROUND
On December 17, 2002, Amy Clark drove herself to a hospital emergency room.[1] Clark told emergency room physician Donald Snyder that defendant hit her in the face. At the time, Clark and defendant were living together as girlfriend and boyfriend. Doctor Snyder noticed bruising around Clark's left eye. An X-ray showed Clark had a fracture to the bone around that eye. Doctor Snyder diagnosed Clark as a victim of assault.
Marysville Police Officer Matt Minton was dispatched to the hospital to speak with Clark. Clark told Officer Minton that defendant grabbed her hair and punched her in the face during an argument earlier that day.[2] Officer Minton testified that Clark's eye appeared bruised and nearly swollen shut.
The original complaint charged defendant with one count of inflicting corporal injury on Clark.
In August 2003, the deputy district attorney extended defendant a settlement offer of five years' probation and 120 days in a batterer's treatment program in exchange for a guilty plea. Defendant refused the offer. The court set the case for a preliminary examination. The original prosecutor then transferred the case to a new prosecutor for trial preparation.
In September 2003, defendant tried to accept the August settlement offer. The new prosecutor told defendant that offer was no longer available. The prosecutor filed an amended complaint, which added an infliction of great bodily injury enhancement to the charge of inflicting corporal injury on a cohabitant and an additional charge of battery resulting in serious bodily injury. The amended complaint further alleged a prior strike conviction. The prosecutor then extended defendant a new settlement offer of 10 years in prison in exchange for his guilty plea. Defendant did not accept this offer.
At trial, Clark acknowledged that she told Doctor Snyder and Officer Minton that defendant hit her in the face. However, Clark testified that she lied at the hospital and that defendant never hit her that day. Clark said that on December 17, 2002, she argued with defendant because she thought he was sleeping with his ex-wife. Clark testified that she rammed defendant's car with her car and hit her face on the steering wheel in the process. Doctor Snyder, however, testified that Clark's injuries were inconsistent with her striking her face on a steering wheel.
Dr. Baljit Atwal a psychologist who testified for the defense diagnosed Clark as having borderline personality disorder. The doctor said that a person with this disorder is capable of fabricating information during stressful times. Particular to Clark, the doctor testified that in situations where she thinks she is going to be abandoned or the relationship is ending, she is more likely to have impaired capacity to perceive the facts. Dr. Atwal believed Clark most likely exhibited symptoms of her disorder on December 17 because the conditions were such for her to be emotionally distressed.
At the close of testimony, the court discussed CALJIC No. 2.20 with counsel. CALJIC No. 2.20 provides a nonexclusive list of factors the jury may consider in *657 determining the believability of a witness. The prosecutor asked the court to omit an optional sentence in the instruction, which provides that the jury may consider the character of the witness for honesty and truthfulness or their opposites in determining the witness's believability. Defendant argued that evidence of Clark's character was brought in through Dr. Atwal's testimony and that Clark's lack of credibility was important to the defense. The court struck the sentence from the instruction on the basis that this part of the instruction was not intended for the type of testimony the doctor gave. On defendant's request for reconsideration, the court confirmed the ruling.
The jury convicted defendant on both counts. Following the verdict, the court found defendant's prior strike conviction to be true.
The court then heard defendant's motion to strike his prior conviction. As part of the motion, defendant argued the proposed 15-year sentence was cruel and unusual. He claimed the initial plea offer of probation and 120 days in a batterer's treatment program showed the prosecution's position on what this case was worth in terms of sentencing. Defendant contended that the prosecution raised its settlement offer to 10 years because defendant asserted his right to have a preliminary examination. Defendant argued that the prosecutor had all the information about the crime and defendant's history before the first settlement offer. Thus, he argued, the prosecutor acted vindictively when she added more charges and increased the prison term offer.
The prosecutor acknowledged there had been no change in the case information between the first and second settlement offers except for her appointment as the new prosecutor when the case was set for preliminary examination. She argued, however, that the first offer should not have been made. When she reviewed the extent of Clark's injuries and defendant's criminal history, she filed the additional charges and changed the settlement offer.
The court denied defendant's motion to strike the prior conviction. The court agreed the initial probation offer was not appropriate and rejected defendant's argument that the amended complaint was punishment for exercising his right to a hearing.
The court sentenced defendant to the middle term of three years in state prison on the conviction for inflicting corporal injury on a cohabitant, doubled for his prior strike. The court also imposed a four-year consecutive term for the great bodily injury enhancement on that conviction and an additional five-year consecutive term for his prior conviction. The court imposed a middle term of three years, doubled to six, on the battery conviction and stayed that term, for a total term of 15 years.
DISCUSSION[**]
II
The Jury Was Properly Instructed on Witness Credibility
A
The Court Did Not Err in Refusing to Give the Character Instruction for Witness Credibility
Defendant claims prejudicial error because the trial court refused to include within CALJIC No. 2.20 an instruction that the jury could consider "[t]he character of the witness for honesty or truthfulness or their opposites" in judging the *658 believability of a witness.[4] Defendant claimed that Dr. Atwal's testimony about Clark's mental disorder was evidence of her character for untruthfulness. The court struck the sentence stating that the proffered evidence "is not the type of evidence that this instruction is intended for." We agree.
Character evidence is "[e]vidence regarding someone's general personality traits; evidence of a person's moral standing in a community based on reputation or opinion." (Black's Law Dict. (7th ed.1999) p. 576, col. 2.) An expert's opinion regarding a mental disorder, on the other hand, is admitted only to inform the jury of the effect a certain medical condition may have on the witness. (People v. Russel (1968) 69 Cal.2d 187, 196, 70 Cal.Rptr. 210, 443 P.2d 794.) The expert is not allowed to give an opinion on whether a witness is telling the truth because the determination of credibility is not a subject sufficiently beyond common experience that the expert's opinion would assist the trier of fact. (People v. Cole (1956) 47 Cal.2d 99, 103, 301 P.2d 854; Evid.Code, § 801, subd. (a).)
Here, most of Dr. Atwal's testimony abstractly described the symptoms a person with borderline personality disorder might suffer under certain circumstances. Those symptoms included being capable of fabricating information during stressful times. This testimony is merely explanatory and aided the jury in understanding the disorder. (People v. Russel, supra, 69 Cal.2d at p. 196, 70 Cal.Rptr. 210, 443 P.2d 794.) Moreover, being capable of fabricating information is not exclusive to persons with this disorder. This was not evidence of Clark's character.
Dr. Atwal also testified that Clark is likely to have an impaired or faulty capacity to perceive the facts in a situation when she perceives she is going to be abandoned or the relationship is ending. Additionally, it was the doctor's opinion that in the past Clark had experienced a distorted sense of reality such that she may have thought she was telling the truth but was not. The doctor could not say if Clark was exhibiting these symptoms at the hospital; however, he opined that the conditions were correct for her to be emotionally distressed.
This testimony speaks to Clark's capacity and her perception of reality, not her character for untruthfulness. (See People v. Coffman and Marlow (2004) 34 Cal.4th 1, 83, 17 Cal.Rptr.3d 710, 96 P.3d 30 [cautioning that evidence of battered woman syndrome could be considered only for the limited purpose of showing defendant's *659 mental state].) The jury was properly instructed on that issue when the court advised them they should consider the witness's ability to see or hear or otherwise become aware of the matter about which the witness testified.
In sum, Dr. Atwal provided no testimony of Clark's character for untruthfulness. Accordingly, there was no error in omitting the instruction. The omission of an inappropriate instruction does not violate a defendant's rights to due process and to present a defense. (People v. Brown (2003) 31 Cal.4th 518, 563-564, 3 Cal. Rptr.3d 145, 73 P.3d 1137.)
B
Trial Counsel Was Not Ineffective
Defendant further claims his trial counsel was ineffective in failing to request CALJIC No. 2.24 based on Dr. Atwal's testimony. This claim fails.
To prevail on a claim of ineffective assistance of counsel, defendant must establish his attorney's representation fell below professional standards of reasonableness and must affirmatively establish prejudice. (Strickland v. Washington (1984) 466 U.S. 668, 688, 104 S.Ct. 2052, 2064, 80 L.Ed.2d 674, 693; People v. Hart (1999) 20 Cal.4th 546, 623-624, 85 Cal.Rptr.2d 132, 976 P.2d 683.)
CALJIC No. 2.24 provides: "Evidence of the character of a witness for honesty or truthfulness may be considered in determining [his][her] believability." This instruction is nearly identical to the sentence in CALJIC No. 2.20 the trial court omitted as inappropriate. Trial counsel was not incompetent for failing to request an inappropriate instruction. (People v. Ervin (2000) 22 Cal.4th 48, 89-91, 91 Cal.Rptr.2d 623, 990 P.2d 506.)[5]
III[***]
DISPOSITION
The judgment is affirmed.
We concur: DAVIS, Acting P.J., and HULL, J.
NOTES
[*] Under California Rules of Court, rules 976(b) and 976.1, only the Introduction, the Factual and Procedural Background, part II of the Discussion, and the Disposition are certified for publication.
[1] Amy Clark married defendant on March 13, 2003, and became Amy Long. She is referred to in the transcripts as Amy Clark, Amy Long, and Amy Clark Long. For clarity, we will refer to her as Clark.
[2] The audiotape of this conversation will be discussed as part of defendant's last argument.
[**] See footnote *, ante.
[4] CALJIC No. 2.20 provides: "Every person who testifies under oath [or affirmation] is a witness. You are the sole judges of the believability of a witness and the weight to be given the testimony of each witness. [¶] In determining the believability of a witness you may consider anything that has a tendency reasonably to prove or disprove the truthfulness of the testimony of the witness, including but not limited to any of the following: [¶] The extent of the opportunity or ability of the witness to see or hear or otherwise become aware of any matter about which the witness testified; [¶] The ability of the witness to remember or to communicate any matter about which the witness has testified; [¶] The character and quality of that testimony; [¶] The demeanor and manner of the witness while testifying; [¶] The existence or nonexistence of a bias, interest, or other motive; [¶] The existence or nonexistence of any fact testified to by the witness; [¶] The attitude of the witness toward this action or toward the giving of testimony[.][;][¶] [A statement [previously] made by the witness that is [consistent] [or] [inconsistent] with [his][her] testimony][.][;][¶] [The character of the witness for honesty or truthfulness or their opposites][;] [¶] [An admission by the witness of untruthfulness][;][¶] [The witness' prior conviction of a felony][;] [¶] [Past criminal conduct of a witness amounting to a misdemeanor][;] [¶] [Whether the witness is testifying under a grant of immunity]." The court omitted the italicized paragraphs.
[5] Further, the record is clear that counsel vigorously argued for the inclusion of this sentence in CALJIC No. 2.20. The court rejected the argument twice. Counsel is not required to engage in futile arguments before the court. (People v. Osband (1996) 13 Cal.4th 622, 678, 55 Cal.Rptr.2d 26, 919 P.2d 640.)
[***] See footnote *, ante.
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364 F.Supp. 1137 (1973)
OSKEY GASOLINE AND OIL COMPANY INC., a Minnesota corporation, Plaintiff,
v.
OKC REFINING INC., a Delaware corporation, Defendant.
No. 4-73 Civ. 180.
United States District Court, D. Minnesota, Fourth Division.
September 18, 1973.
*1138 *1139 Dorsey, Marquart, Windhorst, West & Halladay, by Peter Dorsey, Minneapolis, Minn., for plaintiff.
Faegre & Benson, by Lawrence C. Brown, Minneapolis, Minn., for defendant.
NEVILLE, District Judge.
This case presents an interesting and novel question as to the meaning and application of Section 2-207 of the Uniform Commercial Code, Minn.Stat. § 336.2-207. It arises because one of the parties to a proposed agreement inserted before signing, over the other party's signature who had tendered it, additional language which was designed to conform the agreement to the parties past practices. The agreement when so altered and signed was returned to the original signator who for some period of time performed thereunder. The issue now raised upon cessation of such performance prior to the termination date is whether the parties have a valid contract.
For the most part the facts are not in dispute. Plaintiff is a wholesale distributor of oil products, including gasoline and fuel oil, operating in a twelve-state Mid-west area from Oklahoma to the Canadian border. It sells principally to so-called independents which in turn, at gas stations and through storage facilities, sell to the public.
Defendant is a refinery in or near Okmulgee, Oklahoma processing crude oil into a number of products but principally gasoline of different grades and heating oil. It has a capacity of 20,000 barrels a day and until January 1, 1973 purchased its crude oil through Phillips Oil Company. In early 1972 plaintiff and defendant commenced doing business, to some extent on a trial basis, whereby plaintiff purchased 300,000 barrels of gasoline from defendant refinery. A barrel normally contains 42 gallons. Ultimately and on or about October 1, 1972 the parties concluded to formalize their arrangement and to enter into a written contract for a somewhat extended period. At this time plaintiff was in debt to defendant for over three hundred thousand dollars. Plaintiff informed defendant that the only way payment could be possible was if defendant agreed to continue to sell plaintiff product so that plaintiff could earn the money to pay the debt. Accordingly, defendant offered to sell plaintiff product for fifteen months if plaintiff paid off its debt, partially by immediate payments, and partially by the signing of a short term note. Plaintiff kept its bargain and as of date of trial all amounts due on this debt had been paid in full.
After fairly lengthy negotiations, two written sale and purchase agreements were perfected. The first, plaintiff's Exhibit 1, provided for the sale and purchase of 15,000 barrels per month of 70% regular and 30% premium gasoline, deliveries to be made on buyer's order into buyer's trailer from an independent pipe line having a number of stations throughout the Mid-west area. The agreement by its terms expires December 31, 1973, provided for taking delivery by plaintiff from Williams Brothers Pipeline System, provided a schedule of prices, and contained a force majeure performance clause excusing defendants performance from a number of broadly worded causes.
The second contract (plaintiff's exhibit 2) is similar except that it relates to 5,000 barrels per month of Distillate (fuel oil) with a different price and provides *1140 for its termination March 1, 1973. The second contract thus by its terms had expired by the time of the commencement of this lawsuit and is no longer of import in this case.
The contract here involved was prepared by defendant's legal staff, signed by defendant's vice president and forwarded with a covering letter (Plaintiff's Exhibit No. 3) to plaintiff together with the promissory note for part of the indebtedness. Plaintiff added to the agreement on the typewriter language to paragraph 3 as shown hereinbelow in the italics so as to make paragraph 3 read as follows:
"3. DELIVERY AND MEASUREMENT
The quantity of motor fuel gasoline loaded into trucks shall be determined by truck loading rack meters, as computed in gross gallons."
Plaintiff also inserted the date in paragraph 2 "commencing October 1, 1972" and its president initialed these changes in the margin and returned the signed copies to defendant. Plaintiff by letter, in returning the altered agreement indicated to defendant that it wanted a revised agreement with the added words included. The court places little emphasis on the fact that plaintiff's president called the added words "changes" at that time. He is not a lawyer and it is clear that any added word is a "change" in the general sense in the contract as it was sent.
Defendant shortly commenced shipments or delivery though in no month from October 1972 to March 1973 did it deliver the agreed upon 15,000 barrels per month. In the more than five months' pre-contract period from February 23, 1972 to August 8, 1972 the volume of gas purchased by plaintiff was 13,334,030 gallons for a total cost of $1,354,428.62. As of March 1, 1973 defendant discontinued deliveries to plaintiff entirely and except for a small amount stipulated to following the institution of this action,[1] plaintiff has received no supplies of gasoline or oil from defendant. Defendant's evidence establishes that as of January 1, 1973 through no fault of its own Philips Petroleum terminated its supply contract for crude oil; that defendant has been making efforts elsewhere to procure crude oil but has been able to procure only enough to produce an average from October 1972 through July 1973 of approximately 75% of its daily capacity. It pleads impossibility in obtaining adequate supplies of crude oil.
It was developed at the trial that there is a difference between gross gallons and net gallons. It is conceded that gas expands with heat; that delivery at the so-called rack on the Williams Bros. Pipeline at 60°F. is considered the norm; that if the temperature is in excess thereof the number of gallons received is reduced in proportion as the temperature increases above 60°, and increased in proportion as the temperature decreases below 60°. So that if delivery is taken at 20°F., for instance more gallonage occupies the same space in a truck or trailer than at 60°F.; and vice versa less gallonage if delivered at 90°F. Commencing October 1, 1972 defendant billed plaintiff on a net gallonage basis and plaintiff remitted on a gross gallonage basis. To March 1973 the difference was pleaded to amount to $5,415.59, though at the trial it developed that the actual difference was approximately $4,500, the balance being a disallowance of a discount claimed for payment within a certain period. On March 9, 1973 defendant claims to have transmitted a letter to plaintiff's president demanding it "fulfill its obligations under the agreement date October 18, 1972", claiming a breach of agreement citing the fact of $5,415.59 as due and "accordingly we hereby notify you that OKC will not sell any additional gasoline or other additional products to [plaintiff] and *1141 cancels any agreement of whatsoever nature and kind it has with [plaintiff]." Plaintiff denies ever having received this letter but plaintiff's president did have telephone conversation with defendant's personnel and shortly remitted the $5,415.59 which check was cashed by defendant and it cleared plaintiff's bank. Plaintiff claims it made it clear that this payment was made "under protest."
Plaintiff takes the position that under Section 2.207 of the Uniform Commercial Code the additional language inserted by plaintiff's president at the time of signing the agreement did not affect the parties contractual relationship and such additional terms became a part of the contract because the offer (tendered by defendant in a signed contract) was not expressly limited to its terms and in any event the additions did not materially alter the contract and no later notification of objection was given by defendant. Plaintiff also relies on the fact under 2.207(3) that the conduct of both parties, namely the shipment of product, evidenced that the parties did have a contract and that defendant so understood.
Defendant originally took the view in its answer that the addition of the words "computed in gross gallons" constituted the document a counteroffer, was not authorized to be inserted over the signature of the defendant, and never having been accepted nor the originals ever returned to plaintiff that no contract exists. At the trial plaintiff took the position that there is and was a contract, the only question being its terms and whether plaintiff breached the same so as to justify a termination by defendant. Prior to the addition of the extra words the meaning of the sentence might seem clear enough to someone ignorant of the oil industry. However, as the testimony indicated, truck loading rack meters on pipe lines measure fuel in both gross and net quantities. And the difference in the standards, as described above, will result in a difference in price and quantity. Thus, prior to plaintiff's addition the agreement contained a latent ambiguity. To someone knowledgeable about the petroleum industry a glance at the above sentence would provoke a question as to which truck loading rack meter was meant to control.
Having concluded that there is an ambiguity in the writing as proferred by defendant this court must look to other evidence to decide what the parties meant. This evidence will aid the court in arriving at the objective intent of the parties, Cut Price Super Markets v. Kingpin Foods, Inc., 256 Minn. 339, 98 N.W.2d 257 (1959). Of course it is the intent of the parties which the court is to discover and enforce. Independent School District No. 877 v. Loberg Plumbing & Heating Co., 266 Minn. 426, 434, 123 N.W.2d 793 (1963).
Objective evidence of intent may be found in prior dealings between the parties. Minn.Stat. § 336.1-205.[2] defines "course of dealing":
(1) A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
Plaintiff and defendant had dealt with each other on a gross gallons basis for some five or six months prior to October 1972. This was the only quantity standard they had ever used in their dealings. Plaintiff claimed it never received product from any supplier any other way. It seems clear that any "common basis of *1142 understanding" must have been on a gross gallonage basis. It is obvious that this was the way plaintiff wanted to receive its product, and defendant was certainly aware of this desire.
Minn.Stat. § 336.1-205(3) defines the effect which a course of dealing between the parties is to be given in interpreting their conduct and expressions:
A course of dealing between the parties . . . give(s) particular meaning to and supplement(s) or qualif(ies) terms of an agreement.
Defendant wrote the October agreement and did not make any specific reference to the fact that it wanted a change in the manner in which the parties had been dealing. Under this circumstance, and because defendant appears to be the party who later wanted to change the nature of the relationship rather than simply extend its duration, it seems to this court that the onus was on defendant to have inserted the term "net gallons" in its proposal or to have objected immediately to the words plaintiff inserted. Otherwise, with the contract not specifying which measurement standard was to be used, the most reasonable expectation is that it would be the method which both parties had previously used. If the gross gallon relationship with plaintiff was as atypical as defendant indicated it was, one would think defendant would be specific if it proposed to change that relationship. Under 1-205(1), (3) this court is of the opinion that the previous relationship of plaintiff and defendant on a gross gallons basis "supplements" and "gives particular meaning" to the written contract.
The conduct of the parties when performing may also be relevant in defining contract terms. National Heater Co., Inc. v. Corrigan Co. Mech. Contractors, Inc., 482 F.2d 87 (8th Cir. 1973). Another section of the UCC, Minn.Stat. § 336.2-208 states:
(1) Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement.
This contract did call for repeated performances by both parties. Defendant was to deliver product frequently, if not daily, and plaintiff was to make repeated payments. Defendant was to bill plaintiff at least monthly. Both parties had knowledge of the other's performance and the opportunity to object to it. Thus it appears that the basis for application of 2-208 is present.
In this case plaintiff performed consistently with a gross gallons contract. First, it added to the proferred agreement words which indicated gross gallon measurement would control. Second, plaintiff sent a letter requesting the contract be redrafted and resigned with these changes. Third, plaintiff consistently paid for the product it received in gross payments although it was billed in net. In terms of 2-208 this "course of performance" by plaintiff and the continuation of deliveries by defendant without objection is both evidence of the way that parties construed the contract and a real objection to the way defendant now would like to construe the contract.
Defendant did not object to plaintiff's course of performance. The only response defendant made to the fact that plaintiff wanted the agreement redrafted, or that plaintiff was paying in gross terms and not net as billed, was in March of 1973. This was five months after the contract commenced. It was after defendant had sold plaintiff over two million gallons of product and after a national shortage of petroleum began to develop and became somewhat alarming. Although 2-208 does not by its terms specifically require a timely objection this condition must be implied *1143 to give 2-208 any consistency. Flood v. M. P. Clark, Inc., 319 F.Supp. 1043 (E. D.Pa.1970); cf. Construction Aggregates Corp. v. Hewitt-Robins, Inc., 404 F.2d 505 (7th Cir. 1969) (dealing with acquiescence over time under 2-207(3). In referring to "opportunity for objection" the section clearly must require a seasonable objection be lodged. Defendant, as it claims to have understood the contract, may well have thought that plaintiff was not paying properly. However this failure in performance was acquiesced in for five months. Defendant never refused to accept the payments proferred by plaintiff. Defendant cannot claim its having billed on a net basis was a proper objection when it was accepting payment on a gross basis without protest and cashing the checks. This court finds that a five month delay in the context of this agreement is simply not a properly timely objection to qualify under 2-208.[3]
There still remains the question of what effect should be given the words plaintiff added to the defendant's offer when he signed it.[4] The parties correctly point out that additional or different terms included in a purported acceptance are governed by U.C.C. § 2-207. That section provides in part:
(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless:
(a) The offer expressly limits acceptance to the terms of the offer;
(b) They materially alter it; or
(c) Notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
* * * * * *
U.C.C. § 2-207(2)[5] indicates that additional terms become part of the contract unless (a) the offer limits acceptance to its terms, (b) the additions materially change the offer, or (c) the offeror notifies the offeree of objection to them. First, although a letter accompanied the submission of the sales and purchase agreement it by no means limited acceptance solely to the terms of the offer. It required the offeree acquiesce in all the terms contained in it, but did not preclude him from adding terms. More importantly since the measurement standard was not explicitly defined in the sale and purchase agreement it would be possible to agree to those terms and not necessarily agree to having a net standard used. Again, it must be emphasized that nowhere did defendant specifically require a net standard. Suffice it to say that defendant did not use language which clearly indicated it was attempting to avail itself of 2-207(2) (a) and limiting any acceptance to the terms of the offer. An example of a term which clearly indicated the offeror was attempting to avail itself of 2-207(2) (a) is found in In Re *1144 Tunis Mfg. Co., 11 U.C.C.Rep. 544 (N. Y.Sup.Ct.App.Div. 1972), where the offers "contained a provision that no change in the [offers] could be effected-except by a writing signed by [the offeror]." 11 U.C.C.Rep. at 544.[6] It is axiomatic that written contracts must be construed against the maker when there is ambiguity. Freyberg v. London & Scottish Assurance Corp., 246 Minn. 417, 75 N.W.2d 203 (1956). Defendant's contract was prepared by counsel and was explicit in many instances. In the context of this case any attempt to limit acceptance to the terms of the offer could have been clearly stated. Thus 2-207(2)(a) should not preclude added words from becoming part of the contract.
If the additional language materially altered the terms of the offer, 2-207(2)(b) precludes the additional terms from becoming part of the contract. Thus the question arises whether the addition of the words "as computed in gross gallons" materially altered the defendant's proposal. Since the court is of the opinion that defendant's proposal is most reasonably read to call for a gross gallon measurement there is no alteration at all. See, American Parts Co., Inc. v. American Arbitration Ass'n, 8 Mich.App. 156, 154 N.W.2d 5 (1967). Even if the defendant's proposal were interpreted to call for a net gallon measurement however it is questionable whether a change to gross gallons would be a material change. There was conflicting evidence at trial concerning the actual price and volume difference. As mentioned above defendant did charge plaintiff, and plaintiff paid under protest some $4,500 (part of $5,415.59) for the price difference between two standards for the fuel actually delivered. Yet during this period defendant supplied plaintiff with over two million gallons of gasoline and over seven hundred thousand gallons of fuel oil. Plaintiff's overall charge was in excess of two hundred thousand dollars. The court is inclined to believe that on these facts the amount of but 2+% of overall volume would probably not be a material change; but it need not reach that issue.
Finally, 2-207(2)(c) prevents additional terms from becoming part of the agreement where the original offeror has notified the offeree of objection to them or notifies the latter within a reasonable time after they are received. As previously recounted there was no evidence at trial which indicated that defendant objected to the terms prior to March of 1973 when defendant billed plaintiff for the difference between gross and net gallons.
Since neither 2-207(2) (a), (b), or (c) preclude the additional words from becoming part of the agreement, they do become part of it. Accordingly, 2-207 does not alter this court's original conclusion.
Defendant has strenuously argued that the court should read 2-207(1) and (2) differently. It asserts that because 2-207(1) encompasses both "additional terms" and terms "different from those offered" and 2-207(2) refers only to "additional terms" that 2-207(2) should not apply in this case. Defendant's distinction between different and additional may or may not be sound, but the conclusion derived therefrom is not. It is reasonable to interpret "different" terms to mean terms that are contradictory to those stated in an offer. In other words, terms that conflict with the offer. UCC 2-207, Official Comment, Para. 6. Additional terms are terms that do not conflict with the offer, but simply add to it. Defendant argues that the notice of objection required in 2-207 (2) (c) need not be made where "different" terms are included in a purported acceptance, and that objection may be inferred in such a case. This interpretation is bolstered by the facts that 2-207(2) *1145 does not refer to "different terms" but only "additional terms", and the Official Comment to Section 2-207, Paragraph 6 appears to concur:
Where clauses on confirming forms sent by both parties conflict each party must be assumed to object to a clause of the other conflicting with one on the confirmation sent by himself. As a result the requirement that there be notice of objection which is found in subsection (2) is satisfied and the conflicting terms do not become a part of the contract.
However, acceptance of defendant's legal theory if it be sound and the court need not pass on it here does not compel acceptance of his position on the facts at bar. In the form sent by defendant to plaintiff there was no term indicating whether defendant wanted a gross or net measurement standard. Thus plaintiff's insertion of "as computed in gross gallons" was an addition. It was not a "different" term contradictory to or in conflict with a present term. Where a term is not mentioned in the offer it would normally be difficult to find contradiction to the offer if the term were mentioned in the acceptance. In the present case plaintiff's additional words are at most "additional terms" and certainly not "different terms" in the contradictory or conflicting sense. The additional terms, if anything, simply clarified the existing agreement.
Accordingly, 2-207 does not change the result reached before: the parties contracted for delivery of product measured on a gross gallons basis. It should be noted in passing that 2-207(3) cannot apply in this case because, by its terms, it only is applicable where "the writings of the parties do not otherwise establish a contract." American Parts Co., Inc. v. American Arbitration Ass'n, 8 Mich.App. 156, 154 N.W.2d 5, (1967). Both parties agree that the Sale and Purchase Agreements did in fact result in a contractual relationship. The dispute is over the nature of that relationship.
This court has decided that a mandatory injunction ordering defendant to fulfill its contract with plaintiff, consistently with the Force Majeure clause in the contract, is an appropriate remedy and separate findings of fact, conclusions of law and order for judgment have been entered.
NOTES
[1] No point has been made of this in the current lawsuit.
[2] The Uniform Commercial Code (UCC) is applicable to this transaction. UCC § 2.105(1) defines the "goods" to which the UCC applies as "all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale." Certainly the motor fuel gasoline and fuel oil covered by the contract in issue fall properly under this definition. The UCC controls this case.
[3] Defendant alludes to the fact that plaintiff paid the amount defendant claimed was delinquent, due to plaintiff's paying on a gross not net basis, when it was demanded in March. The argument is that this is an indication that plaintiff knew it was a net contract. However, this payment was made under protest. Also, unless plaintiff paid, it realized it would get no more product from defendant. Under this type of impending harm it cannot be said plaintiff was indicating any belief in the terms of this contract.
[4] Since the court has found a gross gallons contract was the intent of the parties an argument may be made that the words plaintiff added were not "additional terms" within the contemplation of 2-207. See American Parts Co., Inc. v. American Arbitration Ass'n, 8 Mich.App. 156, 154 N.W.2d 5 (1967).
[5] The subparts of 2-207(2) only apply between merchants. The parties agree here that they are merchants. U.C.C. § 2-104.
[6] But see J. A. Maurer, Inc. v. Singer Co., 7 U.C.C.Rep. 110 (N.Y.Sup.Ct.1970), where even this language was not clear enough to void the offeror's duty to take affirmative action to avoid the impact of any condition contained in the acceptance.
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477 So. 2d 31 (1985)
Wendy M.L. COOPER, As Personal Representative of the Estate of William T. Cooper, Deceased, Appellant,
v.
Angie ALFORD, Appellee.
No. BA-169.
District Court of Appeal of Florida, First District.
October 17, 1985.
George E. Day, Ft. Walton Beach, for appellant.
Siegfried Kessler of Smith, Grimsley, Remington & Kessler, Ft. Walton Beach, for appellee.
THOMPSON, Judge.
This is an appeal from an amended final judgment entered in appellant's favor ordering the disbursement of funds. Appellant contends that the trial court erred in finding that interest commenced to run on the money judgment from the date this court finally determined which party was entitled to recover the liquidated sum. We agree.
The original dispute was a contract action. In an action ex contractu, interest runs from the date a liquidated debt is due. This is so even if there exists an honest dispute as to whether the debt was in fact due. Once it is finally determined the debt was due, the person to whom it was owed is entitled to payment of the principal plus interest from the due date. Parker v. Brinson Construction Co., 78 So. 2d 873 (Fla. 1955).
When a claim is liquidated, as in the instant case, interest is merely another element of pecuniary damages. The purpose in awarding such interest is to compensate a party for deprivation of property. Once damages and liability are established, a party is to be made whole. Argonaut Insurance Co. v. May Plumbing Co., et al., 474 So. 2d 212 (Fla. 1985).
The appellant, however, claims interest only from the date of the original judgment in the lower court. The amended judgment appealed is therefore modified to *32 provide that the appellant is entitled to interest from the date of the original lower court judgment and, as modified, the judgment is affirmed.
MILLS and SMITH, JJ., concur.
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208 S.E.2d 60 (1974)
Joyce B. GUTHRIE
v.
The NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a corporation.
No. 13267.
Supreme Court of Appeals of West Virginia.
July 30, 1974.
*62 DiTrapano, Mitchell, Lawson & Field, Rudolph L. DiTrapano and W. C. Field, Robert G. Perry, Charleston, for appellant.
James P. Robinson, Charleston, for appellee.
*61 SPROUSE, Justice.
This case is before the Court upon appeal by the plaintiff, Joyce B. Guthrie, from the judgment of the Circuit Court of Kanawha County, which affirmed a summary judgment granted by the Common Pleas Court of Kanawha County in favor of the defendant, Northwestern Mutual Life Insurance Company.
This action was instituted in the common pleas court by the plaintiff on May 16, 1970, alleging that the defendant insurance company wrongfully refused to pay her the face value of a $35,000 life insurance policy previously issued upon the life of Mahlon G. Guthrie, the plaintiff's deceased husband. Summary judgment was granted by the trial court upon the theory that the insurance policy had lapsed prior to the death of the insured for nonpayment of premiums.
The life insurance policy was issued by the defendant insurance company on December 1, 1949, and premiums were payable in quarterly installments. The policy provided a grace period of thirty-one days for late premium payments. The insured died on January 11, 1969, and the quarterly premium which was due on December 1, 1968, had not been paid at the time of his death. The policy was void, under its provisions, after the expiration of the grace period.
Although not raised in the pleadings, the plaintiff now contends that the insured was totally and permanently disabled for a period of more than six months prior to his death. The deceased had, some years prior to his death, purchased by payment of a separate premium an additional provision attached to the life insurance policy entitled "Agreement for Waiver of Premiums in Event of Total and Permanent Disability". The agreement provided, in part, that upon notifying the company that the insured had been totally and permanently disabled for a period of six months, the premiums on the policy would be waived during the period of disability. The defendant insurance company was not notified of the deceased's disability prior to his death.
The complaint, in part, alleged that "up until the time of the death of the said Mahlon G. Guthrie, all premiums accrued upon said policy were fully paid", and "[t]hat the said Mahlon G. Guthrie and plaintiff each performed all of the conditions of said insurance on his part."
The defendant's answer denied that the premium due on December 1, 1968, was paid when due or within the grace period. The defendant alleged that the "quarterly premium due under the policy and the provisions of the first paragraph of the agreement for waiver of premiums attached thereto as a part thereof was not paid when due or within the grace period provided * * * ", and that the policy "was out of force at the time of his death under the provisions of paragraphs 8 and 15 and other provisions of said policy."
The deposition of the plaintiff was taken, and she answered interrogatories submitted to her. The plaintiff admitted that no attempt to pay the last quarterly premium was made until after the death of the insured.
The defendant moved for summary judgment on the basis of the pleadings, the deposition and interrogatories, together with a copy of the insurance policy which was introduced by way of an affidavit from an official of the company. The plaintiff, by order of the court, likewise filed a copy of the insurance policy. The trial court *63 granted summary judgment in favor of the defendant.
The appellant alleges the trial court committed error by: (1) Granting summary judgment notwithstanding the existence of material issues of fact relative to the application of the premium waiver provision of the policy; (2) receiving the insurance policy in evidence by an insufficient affidavit; and (3) omitting the plaintiff's note of argument from the record.
The principal question for decision is, of course, whether summary judgment was properly awarded by the trial court. The plaintiff argues that the applicability of the premium waiver provision, and the effect of the plaintiff's failure to notify the company of the insured's disability, created material issues of fact precluding summary judgment. These factual issues, according to the plaintiff's contention, were raised by the complaint and the filing of the insurance policy. If not sufficiently raised, counsel for the plaintiff contends they were brought to the attention of the trial court by the note of argument allegedly submitted in connection with the motion for summary judgment.
The defendant insurance company concedes that the failure to notify the insurance company of the insured's disability in accordance with the policy terms would not, under ordinary circumstances, necessarily preclude the plaintiff from recovery. The insured might have been unable to comply with the notice provision, thus excusing his failure. Generally, this would have been an issue to be resolved upon the trial of the case. Columbian Nat. Life Ins. Co. v. Zammer, 178 Okl. 207, 62 P.2d 63; Swann v. Atlantic Life Ins. Co., 156 Va. 852, 159 S.E. 192; 15 Appleman, Insurance Law and Practice, Section 8316, page 131.
The defendant insurance company, on the other hand, contends that any factual issues raised by the premium waiver provision and the insured's total and permanent disability were not properly before the trial court at the time summary judgment was entered. Implicit in the defendant's argument is the proposition that waiver must be pleaded specifically even under Rule 9(c) of the West Virginia Rules of Civil Procedure. The defendant further contends that summary judgment cannot be defeated by factual assertions in the brief of the opposing party.
Neither waiver of premium nor any facts concerning the disability of the deceased prior to his death were alleged in the complaint; nor could reliance upon waiver by reason of disability be ascertained from the deposition or answers to interrogatories submitted by the plaintiff. The plaintiff, in response to the defendant's motion for a summary judgment, filed no information concerning these allegations. As a matter of fact, the defendant's attorney did not appear at the time the motion was orally argued.
Rule 9(c) of the West Virginia Rules of Civil Procedure provides as follows:
"In pleading the performance or occurrence of conditions precedent, it is sufficient to aver generally that all conditions precedent have been performed or have occurred. A denial of performance or occurrence shall be made specifically and with particularity."
Rule 9(c) constitutes a departure from the common law requirement that performance of each condition precedent be alleged in detail. 5 Wright and Miller, Federal Practice and Procedure, Section 1302, page 428; Lugar and Silverstein, West Virginia Rules 87; 2A Moore, Federal Practice, Section 9.04, page 1943. The burdensomeness of this type pleading, especially in insurance cases, prompted even code pleading states to provide quite universally that a general allegation of performance of conditions is sufficient. 2A Moore, Federal Practice, Section 9.04, pages 1943-44.
However, in 5 Wright and Miller, Federal Practice and Procedure, Section 1303, page 430, it is stated: "Despite its liberality, Rule 9(c) still obliges the pleader to allege *64 compliance with the contract or to state that performance or occurrence of the conditions was waived or excused."
Defendant cites Pearl Assur. Co. v. First Liberty Nat. Bank, 140 F.2d 200 (5th Cir.) and Town of Potsdam v. Aetna Casualty & Surety Co., 218 App.Div. 27, 217 N.Y.S. 641, in support of its contention that this rule stated in Wright and Miller applies to the complaint in this case.
Pearl, Town of Potsdam, and Gipps Brewing Corporation v. Central Manufacturers' Mut. Ins. Co., 147 F.2d 6 (7th Cir.), however, deal with the course of conduct of a party which made inoperable a provision of a contract and excused performance of one of the conditions. Those cases, and the rule cited in 5 Wright and Miller, Federal Practice and Procedure, Section 1303, page 430, obviously relate to the waiver of contractual provisions occasioned purely by the acts of the party and not to a right of waiver accorded by a specific contractual provision. In the instant case, waiver is set out specifically as a condition of the contract.
The plain terms of Rule 9(c) permit such contractual waiver to be pleaded generally as a condition of the contract, and this was the rule in West Virginia prior to the adoption of the Rules of Civil Procedure.
Levy v. Peabody Insurance Company, 10 W.Va. 560, involved an action in assumpsit on a fire insurance policy. The declaration alleged that the plaintiff had performed all the conditions of the policy, and at trial the plaintiff relied on waiver. The Court stated: "* * * But the weight of American authorities are the other way; thus: `If the plaintiff, in his declaration * * * allege that he has, on his part, performed all the conditions of a policy of insurance, and has violated none of its provisions, he must be regarded as meaning such as have not been waived. * * *" Levy v. Peabody Insurance Company, supra at 565.
The rule announced in Levy v. Peabody Insurance Company, supra, was, of course, somewhat modified by the subsequently enacted Code, 1931, 56-4-21, and Code, 1931, 56-4-22. Under those provisions the plaintiff was required, after complaint and answer, to file a statement in writing specifying in general terms the matter on which he intended to rely for waiver. In turn, this Court held one of those Code provisions to have been superseded by the subsequent enactment of the West Virginia Rules of Civil Procedure. Laxton v. National Grange Mutual Insurance Company, 150 W.Va. 598, 148 S.E.2d 725.
It seems clear, then, that the statement in the plaintiff's complaint alleging performance by the plaintiff and deceased of "all the conditions of said insurance on his part * * *", constituted a general allegation of compliance with all conditions of the contract, including the premium waiver condition.
Although this allegation is conclusory, it is sufficient for the purposes of Rule 8(a), which provides: "A pleading which sets forth a claim for relief, whether an original claim, counterclaim, cross-claim, or third-party claim, shall contain (1) a short and plain statement of the claim showing that the pleader is entitled to relief, and (2) a demand for judgment for the relief to which he deems himself entitled. * * *"
Rule 7(a) eliminates the requirement of the mandatory reply to new matter necessary in pleadings at common law. The pleader is protected by the provisions of Rule 8(d) which states: "* * * Averments in a pleading to which no responsive pleading is required or permitted shall be taken as denied or avoided."
The complaint, therefore, adequately provided notice of the claim and, coupled with the answer, interrogatories and deposition, framed the issue of fulfillment of the contract conditions. At trial, the plaintiff, under the guildelines of the complaint, could have introduced evidence of the decedent's permanent disability or any other evidence within the issue thus framed.
*65 Rule 56, R.C.P., however, serves an entirely different function. Its purpose is not to notify nor to frame the issues. Rule 56 is designed to provide a method of promptly and speedily disposing of the controversy if there is no triable issue of fact. Weather-Rite Sportswear Co. v. United States, 298 F.Supp. 508 (U.S.Cust.Ct.); 10 Wright and Miller, Federal Practice and Procedure, Section 2712, page 370. The real purpose of summary judgment is to pierce the allegations of the pleadings to determine whether a genuine issue as to a material fact actually exists. 6 Moore, Federal Practice, Section 56.01[1], page 2014.
The pleading of a conclusion, which may be satisfactory for the purposes of Rule 8(a), is not sufficient to withstand a motion under the summary judgment provisions of R.C.P. 56. It is true, as contended by the appellant, that in some federal jurisdictions prior to the 1963 change in Rule 56 of the Federal Rules of Civil Procedure, factual allegations in a complaint were sufficient to create a material issue of fact and defeat a motion for summary judgment. Reynolds Metals Co. v. Metals Disintegrating Co., 176 F.2d 90 (3rd Cir.); Frederick Hart & Co. v. Recordgraph Corporation, 169 F.2d 580 (3rd Cir.). See Williams v. Minnesota Mining and Manufacturing Co., 14 F.R.D. 1 (D.C.Cal.).
However, the plaintiff did not allege facts in her complaint. The complaint did not allege the premium had not been paid due to the last illness of the decedent; that the decedent had a total and permanent disability for a continuous period of six months; that the decedent could not notify the insurance company of his disability because of the debilitating effect of the illness; or any facts indicating the decedent had a disability prior to his death. The only fact alleged in the complaint was that the quarterly premium had been paidan allegation later admitted on deposition to be untrue. The only allegation of the complaint touching on the matter of premium waiver was the general allegation that all conditions of the policy had been met. Such a conclusion was not sufficient, even under the prior practice in some federal jurisdictions, to defeat a motion for summary judgment when the opposing party presented facts by depositions, interrogatories, affidavits, or otherwise, indicating that there was no dispute as to any material fact.
Moreover, the holdings in Reynolds Metals and Frederick Hart were changed by the 1963 amendment to Rule 56(e) of the Federal Rules of Civil Procedure by the following language: "* * * When a motion for summary judgment is made and supported as provided in this rule, 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. If he does not so respond, summary judgment, if appropriate, shall be entered against him."
Finally, the rule in this State, even prior to the 1963 amendment to Federal Rule 56(e), required the party opposing summary judgment to present some evidence indicating that the facts were in dispute or else suffer a judgment to be entered against him. This Court stated in a 1961 opinion:
"* * * In that situation the circuit court was justified in determining the motions for summary judgment on the undisputed facts disclosed by the record. By decisions of the Federal Courts relating to Rule 56 of the Federal Rules which is practically identical with Rule 56 of the West Virginia Rules of Civil Procedure, it is well settled that to resist a motion for summary judgment the party against whom it is made must present some evidence to indicate that the facts are in dispute when the evidence of the moving party shows no disputed facts, and that the mere contention that the issue is disputable is not sufficient. Berry v. Atlantic Coastline Railroad Company, 4th Circuit, *66 273 F.2d 572; Zoby v. American Fidelity Company, 4th Circuit, 242 F.2d 76." Petros v. Kellas, 146 W.Va. 619, 630, 122 S.E.2d 177, 183.
The rule announced in Petros v. Kellas, supra, continues to govern Rule 56 motions even though the 1963 change in Federal Rule 56(e) has not been adopted in this State.
The appellant contends on the one hand that the insurance policy was improperly in the record because the affidavit of the defendant insurance company officer identifying it was insufficient, and, on the other hand, that the presence of the insurance policy in the record containing the premium waiver provision was sufficient to create a material issue of fact. Since the plaintiff had filed a copy of the insurance policy, the additional copy placed in the record by the defendant in connection with the motion for summary judgment would be, at most, harmless error. Even if this were not so, we could not now consider that alleged error as it was not raised in the trial court or in the circuit court. This Court will not decide nonjurisdictional questions which are not considered and decided in the trial court from which the appeal has been taken. Mahoney v. Walter, W.Va., 205 S.E.2d 692 (decided June 11, 1974); Boury v. Hamm, W.Va., 190 S.E.2d 13; Pettry v. Chesapeake & Ohio Railway Company, 148 W.Va. 143, 135 S.E.2d 729.
It is equally clear that the insurance policy does not, under the Kellas rule, present an issue of fact so as to avoid summary judgment. The contents of the insurance policy are not an answer to the factual admissions in the depositions and interrogatories filed by the defendant. Under the Kellas rule, it would have been necessary for the plaintiff to produce factual information from the record or otherwise, showing either that the premium had been paid or showing justification for nonpayment such as total and permanent disability of the deceased. The policy merely provided the legal opportunity to assert such ultimate facts.
The last and most persuasive contention of the plaintiff is that the factual assertions contained in the note of argument opposing summary judgment (referred to in some detail in the defendant's note of argument) were sufficient to apprise the trial court of the existence of a material issue of fact.
Plaintiff's counsel on appeal states that plaintiff's counsel below submitted a note of argument in opposition to the motion for summary judgment setting forth alleged facts concerning the decedent's prolonged and total disability prior to the time of his death. The defendant denies that plaintiff's note of argument was filed with the court, contending instead that only a copy of it was furnished by the plaintiff's counsel to defense counsel.
The record does not contain plaintiff's note of argument. The defendant's note of argument filed in connection with the motion for summary judgment is contained in the record, however, and defendant stated therein: "* * * [P]laintiff's note of argument * * * [contains] a statement that evidence to be adduced at the trial will show that the insured had a total disabling illness within the meaning of the waiver of premium provisions of the policy." There are, likewise, other references to the waiver issue contained in that brief.
Although the liberal construction required under R.C.P. 9(c) permits a contractual waiver to be pleaded by a general allegation, such pleading cannot be considered as a presentation of controverted fact in an R.C.P. 56 motion for summary judgment. Such an allegation in an insurance claim, together with a copy of the insurance policy in the record and a statement in a party's brief outlining the facts proposed to be proved at trial, might be sufficient to alert the court to a potential issue of fact so that in its discretion the court could have required further submission of facts by the plaintiff as an alternative to granting summary judgment. To *67 require a trial court to inject itself in that manner into Rule 56 proceedings, however, would substantially defeat the purposes of the rule. The overwhelming authority is that a trial court will not be deemed to have abused its discretion in granting a motion for summary judgment even though it is opposed by allegations of material facts contained in an opposition brief. Hartford Accident & Indemnity Company v. Hartley, 275 F.Supp. 610 (D.C.Ga.); United States v. Lot 800, 169 F.Supp. 904 (D.C.D.C.); Allen v. Radio Corporation of America, 47 F.Supp. 244 (D.C.Del.); Lane v. Greyhound Corp., 13 F.R.D. 178 (D.C.Ky.). See Barron and Holtzoff, Federal Practice and Procedure, Section 1236, page 161, wherein it is said: "* * * Summary judgment cannot be granted on the basis of assertions of fact in the brief of the moving party, nor defeated by factual assertions in the brief of the opposing party, but admissions made in the brief of the opposing party may be used in determining that there is no genuine issue as to any material fact. * * *"
Reinforcing this view is the fact that the note of argument prepared by counsel for the plaintiff is not in the record. Aside from counsel's assertion on appeal, there is nothing to indicate that the trial court had it available for its consideration.
The appellant cites its omission from the record as error. The defendant denies that it was ever present in the trial record. If the plaintiff's note of argument was before the trial court, this fact has not been documented on appeal, so we cannot consider its omission from the record as error.
In view of the above, the judgment of the Circuit Court of Kanawha County is affirmed.
Affirmed.
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208 S.E.2d 670 (1974)
285 N.C. 717
In re the ESTATE of Kirby W. LOFTIN, Deceased (72E146).
Sybil Lewis LOFTIN, Petitioner-Appellant (73SP35),
v.
Kirby C. LOFTIN, Executor of the Estate of Kirby W. Loftin, Respondent-Appellee.
No. 36.
Supreme Court of North Carolina.
October 10, 1974.
*673 Donald P. Brock, Trenton, for petitioner appellant.
Jeffress, Hodges, Morris & Rochelle, P. A., by A. H. Jeffress, Kinston, for respondent appellee.
BRANCH, Justice.
We first consider whether contracts with respect to her property and property rights constituted a bar to plaintiff's dissent and application for a year's allowance.
It is well settled in this jurisdiction that a man and woman contemplating marriage may enter into a valid contract with respect to the property and property rights of each after the marriage, and such contracts will be enforced as written. Stewart v. Stewart, 222 N.C. 387, 23 S.E.2d 306; Perkins v. Brinkley, 133 N.C. 86, 45 S.E. 465; Harris v. Russell, 124 N.C. 547, 32 S.E. 958. After marriage the persons may release and quitclaim any rights as they might respectively acquire or may have acquired by marriage in the property of each other. G.S. § 52-10. Such transactions between husband and wife are, however, subject to the provisions of G.S. § 52-6, which provides that "no contract between husband and wife made during their coverture shall be valid to affect or change any part of the real estate of the wife . . . unless such contract . . . is in writing, and is acknowledged before a certifying officer who shall make a private examination of the wife according to the requirements formerly prevailing for conveyance of land."
Antenuptial contracts, when properly executed and acknowledged, are not against public policy and may act as a bar *674 to the wife's right to dissent and to petition for a year's allowance. Turner v. Turner, 242 N.C. 533, 89 S.E.2d 245; Perkins v. Brinkley, supra.
A married woman or widow may directly attack the certificate of her acknowledgment and privy examination respecting the execution of instruments during coverture which affect or change any part of the real estate belonging to her. The general grounds for permissible attack in this instance are (1) fraud, duress or undue influence known of or participated in by the grantee; (2) no appearance before the officer or no examination had; (3) forgery; or (4) mental incapacity or infancy. Eubanks v. Eubanks, 273 N.C. 189, 159 S.E.2d 562; Lee v. Rhodes, 230 N.C. 190, 52 S.E.2d 674.
We note that there is a vast difference between proof of no appearance and the denial of material findings in the certificate. As to the latter, when the certificate is regular in form and complies with G.S. § 52-6, it is conclusive as to all matters which the statute requires the officer to certify except upon a showing of fraud or imposition in the procurement of the acknowledgment. Lee v. Rhodes, supra; Best v. Utley, 189 N.C. 356, 127 S.E. 337.
Thus, unless the certificate is attacked upon one of the above-stated grounds, when petitioner admitted her appearance before the Clerk of Superior Court, his certificate, regular in form, became conclusive and established that she acknowledged the due execution of the instrument and the purposes therein expressed; that she was privately examined separate and apart from her husband touching her voluntary execution of the same; that she signed the same freely and voluntarily without fear or compulsion of her said husband; and that it had been made to appear to the certifying officer's satisfaction, and he found as a fact, that the execution of the instrument by petitioner was not unreasonable or injurious to her.
It is obvious that plaintiff does not rely upon mental incapacity, infancy or forgery as grounds for attack on the contracts. We therefore look to the remaining possible grounds upon which she must rely.
In petitioner's "reply to response for application for year's allowance" in Loftin v. Loftin, it was, in part, alleged:
". . . That at the time of the purported execution of the Antenuptial Contract, the undersigned widow and the deceased had been married for some ten years and misrepresentations were made to the widow at the time said contract was purportedly executed, both as to the assets of the deceased and as to the contents and meaning of said contract. That the execution of said contract was obtained through coercion and was in fact injurious and unfair to the undersigned widow."
We note that no similar allegations were contained in her "reply to answer to dissent to will" in the action of In Re Loftin.
Petitioner's strongest averments as to fraud or duress were to the effect that she did not know and was not advised as to the value of the assets of her husband's estate at the time she executed the instruments; that she signed the duplicate contract at her husband's insistence; and that although she appeared before the Clerk of Superior Court of Lenoir County on both occasions, she denied that she executed the instruments freely and voluntarily or that she was properly examined by the Clerk.
In order to obtain relief from a contract on the ground of fraud, the moving party must show false representation of a past or subsisting material fact, made with fraudulent intent and with knowledge of its falsity, which representation was relied upon when the party executed the instrument. Davis v. Davis, 256 N.C. 468, 124 S.E.2d 130; Barnes v. House, 253 N.C. 444, 117 S.E.2d 265.
Undue influence is a fraudulent influence over the mind and will of another *675 to the extent that the professed action is not freely done but is in truth the act of the one who procures the result. Lee v. Ledbetter, 229 N.C. 330, 49 S.E.2d 634; Greene v. Greene, 217 N.C. 649, 9 S.E.2d 413. Duress is the result of coercion and may be described as the extreme of undue influence and may exist even when the victim is aware of all facts material to his decision. Link v. Link, 278 N.C. 181, 179 S.E.2d 697; 25 Am.Jur.2d, Duress and Undue Influence § 1, page 353.
We agree with the holding of the Court of Appeals that petitioner's allegations of fraud amounted to a mere conclusion not in compliance with G.S. § 1A-1, Rule 9(b), or our former decisions, which require particular statements of the circumstances allegedly constituting fraud or duress. Products Corp. v. Chestnutt, 252 N.C. 269, 113 S.E.2d 587; G.S. § 1A-1, Rule 9(b). Certainly there were no allegations sufficient to allege undue influence or duress.
However, we call attention to the fact that this case differs procedurally from the case of Van Every v. Van Every, 265 N.C. 506, 144 S.E.2d 603, upon which the Court of Appeals partially relied. In Van Every there was a motion for judgment on the pleadings, and the cause was dismissed for failure of the plaintiff to allege facts which, if found to be true, would permit a legitimate inference of fraud. In instant case, there was a motion for summary judgment pursuant to G.S. § 1A-1, Rule 56, which made it incumbent upon the trial judge to consider the pleadings, affidavits, interrogatories, deposition and admissions which were before him. After such consideration, the trial judge correctly dismissed the actions upon finding that no genuine issue of material fact was raised in either proceeding.
We also observe in passing that the Court of Appeals used language which seemed to interpret our decision in Turner v. Turner, 242 N.C. 533, 89 S.E.2d 245, to require that an antenuptial agreement satisfy the provisions of G.S. § 52-6. It appears to us that this Court in Turner, while considering the total circumstances surrounding the execution of the antenuptial agreement, merely observed that the Clerk of Superior Court of Gates County did conduct a privy examination incorporating in his certificate the statement that the agreement was not unreasonable or injurious to the femme contractor.
In our opinion the correct rule is stated by Dr. Robert E. Lee in his North Carolina Family Law, Vol. 2, § 181, page 364, as follows:
"N.C. Gen.Stat. § 52-12 [now renumbered as § 52-6] is not applicable to antenuptial agreements. It is limited in its application to contracts between the husband and wife which affect the real estate of the wife and separation agreements. Antenuptial agreements are not made between a husband and a wife `during their coverture.' A postnuptial agreement between the husband and wife which affects or changes any part of the wife's real estate must, of course, comply with the provisions of N.C. Gen.Stat. § 52-12 [now renumbered as § 52-6]."
We do not deem it necessary to discuss the question of whether petitioner was barred by her acceptance of benefits under the will since we hold that the contracts affecting her real property effectively barred her rights to dower and a year's allowance.
The opinion of the Court of Appeals is
Affirmed.
BOBBITT, C. J., not sitting.
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513 P.2d 1151 (1973)
Michael LANDERS, Appellant,
v.
EAST TEXAS MOTOR FREIGHT LINES, INC., a Texas Corporation, and Timothy Hust, Respondents.
Supreme Court of Oregon, In Banc.
Argued and Submitted July 11, 1973.
Decided September 10, 1973.
Burton J. Fallgren, Portland, argued the cause and filed a brief for appellant.
Jeffrey M. Batchelor, Portland, argued the cause for respondents. With him on the brief were David C. Landis, and Gearin, Landis & Aebi, Portland.
HOLMAN, Justice.
Plaintiff was injured when an automobile he was operating was involved in an accident with a truck owned by defendant East Texas Motor Freight Lines and operated by its agent, Timothy Hust. More than ten days prior to commencing his action, plaintiff gave defendants the following notice:
"Unless you contact me within ten days and make satisfactory arrangements *1152 for the settlement of this claim for personal injury or have your insurance carrier do so in your behalf, I am instructed by Mr. Landers to commence legal proceedings against you and each of you to recover full and just compensation for his injury, together with attorney's fees and court costs pursuant to ORS 20.080."
Plaintiff subsequently brought this action for $875 general damages and $105 special damages. The parties thereafter stipulated for the entry of judgment in favor of plaintiff in the sum of $450. The only issue in the case is whether under such circumstances plaintiff is entitled to attorney fees pursuant to ORS 20.080. The trial judge ruled that plaintiff was not so entitled, and plaintiff appealed.
Plaintiff contends that the notice was sufficient despite the lack of demand for a specific amount of money because it notified defendants that attorney fees would be requested pursuant to the statute and, therefore, necessarily informed defendants that plaintiff's claim would be $1,000 or less. Defendants contend that the demand was insufficient in the absence of a demand for a specific amount because its purpose is to give a defendant an opportunity to settle before action is commenced and the notice does not give the defendants this opportunity in the absence of notification of the amount requested. ORS 20.080 is as follows:
"(1) In any action for damages for an injury or wrong to the person or property, or both, of another where the amount pleaded is $1,000 or less, and the plaintiff prevails in the action, there shall be taxed and allowed to the plaintiff, as a part of the costs of the action, a reasonable amount to be fixed by the court as attorney fees for the prosecution of the action, if the court finds that written demand for the payment of such claim was made on the defendant not less than 10 days before the commencement of the action; provided, that no attorney fees shall be allowed to the plaintiff if the court finds that the defendant tendered to the plaintiff, prior to the commencement of the action, an amount not less than the damages awarded to the plaintiff.
"* * *."
The purpose of the notice is to give the defendant an opportunity to settle the case. Heen v. Kaufman, 258 Or. 6, 8-9, 480 P.2d 701 (1971); Johnson v. White, 249 Or. 461, 464, 439 P.2d 8 (1968). The notification given by plaintiff was sufficient to inform defendants that plaintiff's claim would be $1,000 or less because that is the only circumstance under which plaintiff would be entitled to attorney fees under ORS 20.080 and the notice states that he will request attorney fees under that statute. There was no difference between the notice which plaintiff gave and a notice which demands $1,000, insofar as enabling defendants to make an intelligent offer of settlement. Therefore, the solution of this controversy depends upon whether the statute contemplates that a plaintiff is entitled to attorney fees if the amount of his judgment is less than the amount of his demand. As an illustration, had plaintiff made a demand for $1,000 (the equivalent of his actual demand), would his $450 judgment entitle him to attorney fees under the statute?
It is clear that the statute does not intend to require that plaintiff's judgment be equal to the amount of plaintiff's demand before plaintiff is entitled to attorney fees. The statute requires only that:
1) The amount pleaded be $1,000 or less;
2) The plaintiff prevails in the action;
3) A written demand for "such claim" be made more than ten days prior to the commencement of the action; and
4) Plaintiff's judgment be greater than any offer of settlement made by defendant prior to the commencement of the action.
*1153 "Such claim" refers back to "any action for damages * * * where the amount pleaded is $1,000 or less." The statute does not specifically require that the amount of recovery be the amount pleaded, but only that "the plaintiff prevails in the action" and that the judgment be greater than the defendant's offer of settlement. Had the legislature intended anything more, we believe it would have said so.
The purpose of the statute is to coerce tort-feasors and their insurance companies into settling small, legitimate claims where it is impracticable for the offended party to employ an attorney to prosecute his claim. Heen v. Kaufman, 258 Or. 6, 8, 480 P.2d 701 (1971); Johnson v. White, 249 Or. 461, 462-463, 439 P.2d 8 (1968); Colby v. Larson, 208 Or. 121, 297 P.2d 1073, 299 P.2d 1076 (1956). We believe it was the legislature's intention, whenever a defendant has notice that a claim will be $1,000 or less, to require him to evaluate the case and to make an offer at the risk of having to pay attorney fees if the offer is inadequate. This sort of an interpretation accomplishes the statutory purpose and is in conformance with the statute's literal provisions.
Defendants contend that Heen and Johnson hold that one of the purposes in requiring the written demand is to prevent "inflated demands" in minor cases. Defendants therefore argue that plaintiff should not be allowed to demand more than he gets and still be entitled to attorney fees. We hold it was the intention of the legislature to limit the inflation of small claims by excluding from the purview of the statute demands in excess of $1,000 and that it contemplated plaintiff should recover attorney fees so long as plaintiff's demand was no greater than that amount. As between plaintiff and defendant, it appears the legislature intended to put the risk of failure to evaluate the claims of $1,000 or less accurately upon the defendant. Defendants refer to dictum in Colby[1] which can be inferred to indicate to the contrary. It is obvious that the court did not have the present, specific problem in mind and the dictum is not controlling here.
The judgment of the trial court is reversed and the case is remanded for the allowance of attorney fees to plaintiff.
NOTES
[1] "* * * The plaintiff, under 20.080, is entitled to recover `as a part of the costs of the action, a reasonable amount to be fixed by the court as attorney's fees for the prosecution of the action,' if, as his offer of proof shows, he made a written demand upon the defendant more than ten days before the commencement of the action for $372.59 [the amount of the judgment], * * *." 208 Or. 121 at 125, 297 P.2d at 1075 (Emphasis added).
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513 P.2d 1402 (1973)
Floyd Amos JONES, Appellant,
v.
The STATE of Oklahoma, Appellee.
No. A-18149.
Court of Criminal Appeals of Oklahoma.
September 7, 1973.
Bill Heskett, Pawhuska, for appellant.
Larry Derryberry, Atty. Gen., Fred H. Anderson, Asst. Atty. Gen., for appellee.
*1403 OPINION
BLISS, Presiding Judge:
In the District Court of Osage County, Case No. CRF-70-892, appellant, Floyd Amos Jones, hereinafter referred to as defendant, upon his plea of guilty was convicted for the offense of Second Degree Burglary. His punishment was fixed at seven (7) years imprisonment. Upon that judgment and sentence, defendant filed an application for post-conviction relief in the said District Court. From the District Court's denial of said relief, defendant has perfected a timely appeal to this Court.
In defendant's brief it is submitted defendant was denied due process of law as he was denied effective assistance of counsel at his plea of guilty. In support of this allegation, defendant argues the inventory search of his vehicle, apparently abandoned on a highway and impounded by the Oklahoma Highway Patrol and inventoried, was an unlawful search and seizure of incriminating evidence. Consequently, counsel submits permitting defendant to enter a plea of guilty with such a search present constitutes a plea of guilty entered with ineffective assistance of counsel.
As a general rule, relief upon a final conviction on the ground of ineffective counsel will be granted only when the trial is a farce or mockery of justice, or is shocking to the conscience of the reviewing court, or the purported representation was only perfunctory, in bad faith, a sham, a pretense, or without adequate opportunity for conference and preparation. Ellis v. State, 430 F.2d 1352 (10th Cir.1970), cert. denied 401 U.S. 1010, 91 S.Ct. 1260, 28 L.Ed.2d 546. The farce and mockery standard exists only as a metaphor that the burden *1404 is heavy to show ineffectiveness. Scott v. United States, 138 U.S.App.D.C. 339, 427 F.2d 609 (1970). The burden is clearly upon defendant to show inadequacy. Parks v. State, Okl.Cr., 457 P.2d 818 (1969), a burden which cannot be met by defendant pointing out only possible errors in counsel's judgment or lack of success in the defense. Mitchell v. United States, 104 U.S.App.D.C. 57, 259 F.2d 787 (1958). In the instant case, a full hearing on defendant's motion to suppress was had prior to the entry of his guilty plea. The record sufficiently shows trial counsel preserved his defense in a good faith effort to preserve defendant's statutory and constitutional rights. It is this Court's opinion that in light of the fact, there is no allegation before the court defendant did not enter his plea of guilty for any other reason than because of his guilt, the waiver of his right to challenge the search and seizure culminating from his plea of guilty, Mack v. State, Okl.Cr., 492 P.2d 670 (1971), did not per se deny him of due process of law for the reason of ineffective counsel. The fact the evidence derived from the purportedly unlawful search might have been suppressed on appeal does not sustain the burden of showing ineffective counsel as it considered in its most favorable light constitutes speculation upon a possible error in counsel's judgment in his recommending a plea of guilty to defendant. We therefore find this assignment of error to be without merit.
Defense counsel next submits defendant was denied effective assistance of counsel for the reason court-appointed counsel was compensated by the county, a subdivision of State government. Counsel argues that since court-appointed counsel is appointed by the State and compensated by the State, counsel is an official of the State and the waiver of defendant's constitutional rights, culminating from his plea of guilty, constituted the State waiving his rights for him. We find this assignment to be completely without merit. We find defendant was not deprived of effective counsel resulting from State payment and appointment of counsel and consequently, a waiver of a constitutional right by appointed counsel does not constitute a State waiving a right for the accused.
The District Court's denial of post-conviction relief is hereby affirmed.
BUSSEY, and BRETT, JJ., concur.
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193 Ga. App. 701 (1989)
389 S.E.2d 264
HOOD
v.
THE STATE.
A89A1098.
Court of Appeals of Georgia.
Decided November 28, 1989.
Hyatt Legal Services, Steven Harrell, for appellant.
Ralph T. Bowden, Solicitor, Judith C. Emken, N. Jackson Cotney, Jr., Assistant Solicitors, for appellee.
BEASLEY, Judge.
Hood appeals his conviction for vehicular homicide in the second degree (OCGA § 40-6-393 (b)), for failure to drive in accordance with OCGA § 40-6-48 (1).
The victim's station wagon ran out of gas at the I-85 and I-285 junction. He parked it in a neutral zone, a triangle defined by solid white lines at the point where the entrance ramp from I-285 merged with I-85. He was standing at the left rear of his station wagon, with emergency lights flashing, when Hood, driving a pickup, came off the I-285 ramp attempting to merge onto I-85. He struck the left rear of the station wagon with the right front of his truck, crushing the victim between them. The victim then fell and was run over by a Mustang following Hood. The Mustang did not stop, travelling over 400 feet before the victim's body caused the car to stop.
Hood testified that a van in front of him swerved and revealed the station wagon, which Hood said was partially in the lane, and the victim. Hood said he locked his brakes, then regained control and attempted to go by the station wagon to the left, through the neutral zone. He said he may have clipped the victim but when he last saw him, he was running.
Eason, a former DeKalb police officer and at trial time a private accident reconstruction specialist, gave his opinion that the victim was compressed between the two vehicles and was horizontal when *702 the Mustang ran over him. Photos taken at the scene reveal blood and body tissue on the hood and windshield of the truck and extensive damage to its right front quarter-panel. Shredded clothing from the victim was embedded in the crushed left quarter-panel of the station wagon.
1. Defendant moved for directed verdict at the close of the State's case, based on the failure of the State to show that defendant "caused the death." At the close of all evidence, defendant renewed his motion, contending that he could not be held "responsible for the superseding intervening acts of third parties in the operation of his motor vehicle."
A directed verdict is appropriate only where there is no evidence to support a verdict to the contrary. OCGA § 17-9-1; Conger v. State, 250 Ga. 867, 870 (301 SE2d 878) (1983); Bradley v. State, 180 Ga. App. 386 (349 SE2d 263) (1986).
Because the State did not timely serve defendant with a copy of the medical examiner's report, the doctor was unable to testify from his specific knowledge of the case and instead answered only hypothetical questions, some of which were premised on the photos of the wrecked vehicles. The doctor's opinion was that it was "quite likely that this person within reasonable probability sustained injuries that could have resulted in death." He was unable to say for certain that the injuries definitely did result in death.
This did not, however, mean that the question should be taken from the jury. Causation is a required element of vehicular homicide. It must be shown that the defendant's illegal act, here crossing the neutral zone when it was unsafe to do so, was the cause of death. Davis v. State, 187 Ga. App. 517, 520 (3) (370 SE2d 779) (1988); Collins v. State, 172 Ga. App. 100, 102 (1) (321 SE2d 823) (1984).
The doctor's answers to the hypothetical, the photographs, and Eason's opinion as to how the accident occurred formed a sufficient basis upon which the jury could find, beyond a reasonable doubt, that defendant's act caused the death. OCGA §§ 24-4-5; 16-1-5; Davis, supra at 521. The jury was not compelled by the evidence to accept defendant's theory that the victim was still alive and not dying after he hit him and was killed instead by the Mustang. Denial of the directed verdict was not error. Davis, supra at 522.
Defendant's argument that the fact that the Mustang hit the decedent required the trial court to hold as a matter of law that an intervening superseding criminal act was the proximate cause of the death is not supportable. Proximate cause has been used in vehicular homicide cases for many years. Davis, supra at 521; Johnson v. State, 170 Ga. App. 433, 434 (1) (317 SE2d 213) (1984). The concept of independent intervening causes which will break the chain of causation is one of the yardsticks used to measure proximate cause. Western *703 Stone &c. Corp. v. Jones, 180 Ga. App. 79, 80 (348 SE2d 478) (1986); Brandvain v. Ridgeview Institute, 188 Ga. App. 106, 115 (2 b) (372 SE2d 265) (1988), aff'd 259 Ga. 376 (382 SE2d 597) (1989). In cases of conflicting evidence, this question is one for the jury. Western, supra; Brandvain, supra.
2. Defendant contends that the court erred in allowing Eason to give his opinion concerning the "ultimate issue" in the trial, the cause of death.
Eason was a former police officer who had been trained in accident analysis and reconstruction and had worked numerous accidents both as patrolman and detective. He gave his background, experience and qualifications in this area and was tendered to the court as an expert. The court declined to rule, reserving such until a challenge was made. Thereafter, Eason was asked if he had an "opinion or final conclusion as to what was the cause of the accident." He gave his factual findings concerning the chronology of the accident based on his examination of the scene and vehicles and concluded that defendant crossed the neutral zone, "collided with the stopped [station wagon] and death resulted."
At this point defendant objected, on the basis that, as to the testimony concerning the death, "I don't think that is a conclusion he is qualified to draw." The court overruled that objection.
During cross-examination, Eason was asked if he knew the victim was dead when he was struck by the Mustang. He responded that he had an opinion based on his experience, but that he had no personal knowledge. On redirect, the State asked what that opinion was. Defendant objected that such an opinion would invade the province of the jury and was the ultimate opinion on the issue in the case. This objection was sustained.
Defendant enumerates the allowance of testimony of the ultimate issue and allowing Eason to state a "legal conclusion to the jury over objection."
Eason was not permitted to give his opinion after the second objection, so defendant cannot complain in that regard. The first objection went not to the "ultimate issue" objection now raised, but only to the qualifications of Eason to give an opinion of when death occurred. This is the only issue we address.
The question of whether a witness has established sufficient opportunity for forming a correct opinion or has stated a proper basis for expressing an opinion is for the trial court. Dept. of Transp. v. McLaughlin, 163 Ga. App. 1, 5 (3) (292 SE2d 435) (1982). Eason had worked numerous accidents involving death, was trained in accident reconstruction, and gave factual bases for his conclusions. The court did not err as a matter of law in overruling the stated objection and thereby finding the witness qualified to give his opinion. Doughty v. *704 State, 175 Ga. App. 317, 319 (2) (333 SE2d 402) (1985); see State v. Butler, 256 Ga. 448, 450 (2) (349 SE2d 684) (1986).
Also, the fact of death was not disputed and was proven by an emergency medical technician who found no life signs in the victim at the scene. The medical examiner gave his opinion that it was "reasonably probable" that the impact of a truck going 45 m.p.h. against a human body compressed against a stationary vehicle would cause death. Even if Eason's opinion were an unsupported conclusion, there was other evidence to support it and therefore no harm has been shown. Doughty, supra. As to the doctrine of harmless error in criminal cases, see Johnson v. State, 238 Ga. 59, 60 (230 SE2d 869) (1976).
3. Defendant alleges error in the court's failure to charge, sua sponte, on independent intervening criminal acts.
Defendant filed 37 Requests to Charge, none of which contained this principle. At the conclusion of the charge, the court asked if defendant had objections and two were made, neither of which was the one now raised for the first time. Any such objection has been waived, Allen v. State, 177 Ga. App. 600, 603 (340 SE2d 246) (1986), inasmuch as failure to so charge was not error under OCGA § 5-5-24 (c). Billingsley v. State, 183 Ga. App. 850, 853 (5) (360 SE2d 451) (1987).
Judgment affirmed. Carley, C. J., and McMurray, P. J., concur.
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25 Cal.Rptr.3d 400 (2005)
126 Cal.App.4th 1526
N.V. HEATHORN, INC., Plaintiff and Appellant,
v.
COUNTY OF SAN MATEO, Defendant and Respondent.
No. A105650.
Court of Appeal, First District, Division Two.
February 23, 2005.
*401 Stubbs & Leone and Gregory E. Stubbs, Walnut Creek, for Appellant.
Farella, Braun & Martel and Alan E. Harris, Bridget K. Kaman and Carl E. Switzer, San Francisco, for Respondent.
Certified for Partial Publication.[*]
RUVOLO, J.
I.
INTRODUCTION
In this action, plaintiff N.V. Heathorn, Inc. (Heathorn), an unpaid subcontractor on a public project, sought to hold defendant County of San Mateo (the County) liable after it discovered that the County failed to obtain a payment bond from the bankrupt general contractor as required by Civil Code section 3247. Heathorn appeals from a judgment of dismissal entered after the trial court sustained the County's demurrer without leave to amend. We reverse, finding the injury resulting from a public entity's failure to discharge its statutory duty to obtain a payment bond from the original contractor on a public project qualifies as an "injury" to support a cause of action under the Government Tort Claims Act. (See Gov.Code, § 815.6.)
II.
FACTS AND PROCEDURAL HISTORY
Because this is an appeal from a judgment of dismissal sustaining a demurrer *402 without leave to amend, we accept as true all properly pleaded factual allegations in the complaint other than contentions, deductions, or conclusions of fact or law. (White v. Davis (1975) 13 Cal.3d 757, 765, 120 Cal.Rptr. 94, 533 P.2d 222; Serrano v. Priest (1971) 5 Cal.3d 584, 591, 96 Cal. Rptr. 601, 487 P.2d 1241.)
The operative complaint alleges that on or about January 19, 1999, Heathorn and Nielsen Dillingham Builders, Inc. (NDBI) entered into a written agreement, effective December of 1998, whereby Heathorn would provide labor and materials for a work of improvement known as the San Mateo County Health Center (County Health Center). At the time Heathorn entered into a contract with NDBI, NDBI was under contract with the County for the overall construction of the County Health Center and was "acting in the capacity of a general contractor on a public works project."
Heathorn contends that on July 27, 2001, NDBI breached the above-described contract and owed Heathorn $423,890.11, plus interest, for the work Heathorn performed on the project.[1] On July 31, 2001, Heathorn filed this action against NDBI to recover the amount it claims it was owed. Heathorn then commenced discovery.
In January 2003, NDBI filed for Chapter 11 bankruptcy protection, terminating its contractual obligation to pay Heathorn the unpaid sums due under the contract. In the course of discovery, Heathorn learned that the County had not required NDBI to post a payment bond for the project as required by Civil Code section 3247. Because the County failed to obtain the statutory payment bond from NDBI, which was required as a condition of awarding the contract, Heathorn was deprived of a potential payment source.
Heathorn was allowed to add the County as a defendant and to amend its complaint to allege a new cause of action for breach of the County's mandatory duty to require its general contractor, NDBI, to obtain a payment bond under Civil Code section 3247. On February 20, 2003, Heathorn submitted a claim to the County on account of the damages it sustained by virtue of the unbonded bankruptcy of NDBI. On or about March 25, 2003, the County issued its rejection of Heathorn's claims.
The County interposed a general demurrer based upon two grounds. The first ground was that "Heathorn's inability to collect money due and owing it on a public work of improvement from a statutory payment bond does not give rise to an `injury' under the Government Tort Claims Act." The second ground was that Heathorn's cause of action against the County was time-barred. After giving Heathorn an opportunity to amend its complaint, the trial court sustained the demurrer on the first ground without leave to amend. The court found it unnecessary to address the second ground of the demurrer. After the court entered judgment in favor of the County, Heathorn filed this timely appeal.
III.
DISCUSSION
A. Standard of Review
"In reviewing the sufficiency of the complaint against the ... [County's] demurrer, we must treat the demurrer as admitting all allegations of the complaint as true.... [I]t is settled law that in evaluating the sufficiency of a complaint against *403 a demurrer a court will consider matters that may be judicially noticed.... [¶] `On demurrer, it is not the function of a trial court, or of this court, to speculate on the ability of a plaintiff to support, at trial, allegations well pleaded.' (Meyer v. Graphic Arts International Union (1979) 88 Cal.App.3d 176, 179, [151 Cal.Rptr. 597)] As a reviewing court, we are not bound by the construction of the pleadings by the trial court, but we make our own independent judgment of the sufficiency of the complaint. (Miller v. Bakersfield News-Bulletin, Inc. (1975) 44 Cal.App.3d 899, 901, [119 Cal.Rptr. 92)]" (Parsons v. Tickner (1995) 31 Cal.App.4th 1513, 1521, 37 Cal.Rptr.2d 810; see also Adelman v. Associated Internat. Ins. Co. (2001) 90 Cal.App.4th 352, 359, 108 Cal.Rptr.2d 788.)
Consequently, for purposes of analyzing Heathorn's appeal from the County's successful demurrer, we will accept as true Heathorn's allegations that NDBI was a general contractor, Heathorn was its subcontractor, and that Civil Code section 3247 required NDBI to file a payment bond with the County for the project at issue. Any disputes on these factual allegations are premature, and will have to await further court proceedings.
B. Does the Government Tort Claims Act Authorize a Cause of Action Against A Public Entity for Failure to Secure a Payment Bond?
The parties acknowledge the general rule that all government tort liability in California must be based on statute. (Caldwell v. Montoya (1995) 10 Cal.4th 972, 980, 42 Cal.Rptr.2d 842, 897 P.2d 1320.) Under Government Code section 815.6, "[w]here a public entity is under a mandatory duty imposed by an enactment that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury of that kind proximately caused by its failure to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge the duty." (See generally Haggis v. City of Los Angeles (2000) 22 Cal.4th 490, 498-499, 93 Cal.Rptr.2d 327, 993 P.2d 983.)
The statutory provisions cited in Heathorn's complaint clearly establish a statutory duty upon a public body, such as the County, to secure a payment bond under the circumstances alleged in Heathorn's complaint. Specifically, Civil Code section 3096 defines "payment bond" as "a bond with good and sufficient sureties that is conditioned for the payment in full of the claims of all claimants and that also by its terms is made to inure to the benefit of all claimants so as to give these persons a right of action to recover upon this bond in any suit brought to foreclose the liens provided for in this title or in a separate suit brought on the bond...." Civil Code section 3247 requires a payment bond as a condition of being awarded a contract by a public entity. It provides in relevant part as follows: "(a) Every original contractor to whom is awarded a contract by a public entity, except as provided in subdivision (d) of Section 7103 of the Public Contract Code, involving an expenditure in excess of twenty-five thousand dollars ($25,000) for any public work shall, before entering upon the performance of the work, file a payment bond with and approved by the officer or public entity by whom the contract was awarded." Civil Code section 3251 makes it illegal for a public entity to pay a contractor unless a payment bond is filed.
As we have seen, "[w]hen an enactment establishes a mandatory governmental duty and is designed to protect against the particular kind of injury the plaintiff suffered, [Government Code] section 815.6 provides that the public entity `is liable' for *404 an injury proximately caused by its negligent failure to discharge the duty." (Haggis v. City of Los Angeles, supra, 22 Cal.4th at p. 499, 93 Cal.Rptr.2d 327, 993 P.2d 983.) The allegations in Heathorn's complaint serve as a predicate for liability under Government Code section 815.6. Heathorn's fourth cause of action alleges that the County breached a statutory obligation established by the Labor Code to assure that NDBI secured a payment bond. Heathorn goes on to allege that "[a]s a result of the County's failure to require that NDBI post a payment bond as required by statute, the obligations of NDBI to pay its sub-contractors is not secured by a bond as required by law and plaintiff has been injured because it cannot collect from [NDBI] any of its unpaid contract payments, interest, penalties, attorneys' fees and the like."
The County counters these assertions by arguing that what is lacking in this case is an allegation setting forth an "injury" as defined by the Government Tort Claims Act. As we have seen, section 815.6 imposes liability only "for an injury" caused by the failure of a public entity to discharge its statutory duty. The definition of "injury" for purposes of section 815.6 is set forth in Government Code section 810.8. As explained by the Supreme Court in Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 9 Cal.Rptr.2d 92, 831 P.2d 317 (Aubry): "For purposes of the Tort Claims Act, injury is defined as `death, injury to a person, damage to or loss of property, or any other injury that a person may suffer to his person, reputation, character, feelings or estate, of such nature that it would be actionable if inflicted by a private person.' (Gov.Code, § 810.8, italics added.)" (Id. at p. 968, 9 Cal.Rptr.2d 92, 831 P.2d 317.) The Law Revision Commission comment to Government Code section 810.8's definition of "injury" states, in part: "The purpose of the definition is to make clear that public entities and public employees may be held liable only for injuries to the kind of interests that have been protected by the courts in actions between private persons." (Cal. Law Revision Com. com. 32 West's Ann. Gov.Code (1996 ed.) foll. § 810.8, p. 155, italics added.)
In ruling on demurrer, the trial court held that the County's failure to perform its mandatory duty of requiring NDBI to provide a payment bond and the resulting damage that Heathorn incurred when NDBI declared bankruptcy is the not the type of "injury" that supports a cause of action based on Government Code section 815.6. Specifically, the court held that Heathorn "had not lodged or pleaded a valid government tort claim against [the County] because [Heathorn's] alleged injury claim against [the County] could not be asserted against a private person."
In so ruling, the trial court specifically relied upon Aubry, supra, 2 Cal.4th 962, 9 Cal.Rptr.2d 92, 831 P.2d 317. In Aubry, the Supreme Court considered whether a public hospital district could be held liable under Government Code section 815.6 for not requiring its contractor to pay the prevailing wage required by the Labor Code for public works projects. The court noted that under the Government Tort Claims Act, "`public entities and public employees may be held liable only for injuries to the kind of interests that have been protected by the courts in actions between private persons.'..." (Aubry, supra, at p. 968, 9 Cal.Rptr.2d 92, 831 P.2d 317, quoting Cal. Law Revision Com. com., Deering's Ann. Gov.Code (1982 ed.), § 810.8, p. 125.) Because a claim for prevailing wages is not an injury that could exist absent the public entity's involvement as the awarding body, the court held that Government Code section 815.6 could not support such a claim against the public entity.
*405 The court explained its holding as follows: "Here, the [Division of Labor Standards Enforcement] alleges that as a result of the [public entity's] failure to perform its mandatory duties, the workers were paid less than the prevailing wage while engaged on a public work. This injury is one which by its very nature could not exist in an action between private persons; if the defendant awarding body were not a public entity, there would be no injury. As a result, the injury alleged in this case is not included within the Tort Claims Act's definition of injury. Accordingly, the [public entity] is not subject to liability under Government Code section 815.6 for any failure to carry out its responsibilities under the Labor Code's prevailing wage provisions." (Aubry, supra, 2 Cal.4th at p. 968, 9 Cal. Rptr.2d 92, 831 P.2d 317.)
In mounting the successful argument on demurrer below, the County claimed the rationale underlying Aubry should apply equally to the present case: "If the County were not a public entity but a private person, Heathorn could not maintain a cause of action against the County for the injuries arising from the failure to obtain a payment bond that is only required on public works of improvement, just as two private parties could not sue each other for failure to pay prevailing wages required only on public jobs."
As we have seen, the basic rule of public entity liability is that public entities will be held liable for "injuries to the kind of interests that have been protected by the courts in actions between private persons." (Cal. Law Revision Comm. com., supra, foll. Gov.Code, § 810.8; italics added.) We thus look to the law governing private parties to determine if the injury on which Heathorn's fourth cause of action is based being deprived of compensation against a defaulting general contractor is an injury "to the kind of interests that have been protected by the courts in actions between private persons." (Ibid.)
As Heathorn emphasizes, "the lien rights of those who provide labor and materials is protected through constitutional mandate in both the public and private spheres." Our state Constitution guarantees that "laborers of every class[] shall have a lien upon the property upon which they have bestowed labor or furnished material for the value of such labor done and material furnished; and the Legislature shall provide, by law, for the speedy and efficient enforcement of such liens." (Cal. Const., art. XIV, § 3.) In carrying out this statutory mandate, Civil Code section 3110 provides that "all persons and laborers of every class performing labor upon or bestowing skill or other necessary services on ... a work of improvement shall have a lien upon the property upon which they have bestowed labor ... for the value of such labor done ... whether done ... at the instance of the owner or of any person acting by his authority or under him as contractor or otherwise."
The "mechanic's lien law implements our state's constitutional mandate to protect `laborers of every class' and allow them to recover their entire compensation, regardless of the form the compensation takes. [Citations.]" (Betancourt v. Storke Housing Investors (2003) 31 Cal.4th 1157, 1174, 8 Cal.Rptr.3d 259, 82 P.3d 286.) Our Supreme Court has noted, "`The mechanic's lien is the only creditors' remedy stemming from constitutional command and our courts "have uniformly classified the mechanics' lien laws as remedial legislation, to be liberally construed for the protection of laborers and materialmen." [Citation.]' [Citation.]" (Wm. R. Clarke Corp. v. Safeco Ins. Co. (1997) 15 Cal.4th 882, 889, 64 Cal.Rptr.2d 578, 938 P.2d 372.)
*406 However, "[u]nder the principle of sovereign immunity, mechanics' liens may not be asserted on government projects.... The only remedies available on public works are stop notices (Civ.Code, §§ 3179-3214) and actions on public works payment bonds (Civ.Code, §§ 3247-3252)." (Liton Gen. Engineering Contractor, Inc. v. United Pacific Insurance (1993) 16 Cal. App.4th 577, 584, 20 Cal.Rptr.2d 200; see Civ.Code, § 3109.)
Importantly, "the payment bond is the practical substitute for the mechanic's lien in the public works context when a stop notice is inadequate because insufficient funds remain to be paid by the awarding body." (Department of Industrial Relations v. Fidelity Roof Co. (1997) 60 Cal. App.4th 411, 423, 70 Cal.Rptr.2d 465; Washington Internat. Ins. Co. v. Superior Court (1998) 62 Cal.App.4th 981, 986, 73 Cal.Rptr.2d 282.) "No lien being available to those who perform labor or furnish material on public works [citation], the provisions of the Public Works Act requiring a bond were obviously enacted to create a fund in lieu of the building or work itself against which materialmen and laborers might proceed as an additional and contemporaneous remedy. The bond required is not a voluntary bond but a statutory bond [citations], and affords an additional or cumulative remedy. [Citation.]" (Pneucrete Corp. v. U.S. Fid. & G. Co. (1935) 7 Cal.App.2d 733, 737, 46 P.2d 1000.)
In view of the foregoing considerations, we conclude the court below erred in holding that Aubry controlled Heathorn's claims against the County. As Heathorn persuasively argues, "[s]ince mechanics liens can be enforced to provide payment security in actions between private persons and since the public works payment bond is the equivalent of a mechanics lien, the loss of payment security suffered by Heathorn for lack of a payment bond in this instance is an injury to `the types of interest that are protected in actions between private persons....'" (Quoting Aubry, supra, 2 Cal.4th at p. 970, 9 Cal.Rptr.2d 92, 831 P.2d 317.) Thus, the situation in this case is wholly unlike that in Aubry, where no right to be paid prevailing wages existed in the private sphere.
We also agree with Heathorn that the more pertinent case appears to be Walt Rankin & Associates, Inc. v. City of Murrieta (2000) 84 Cal.App.4th 605, 101 Cal. Rptr.2d 48 (Rankin), because it specifically addresses the statutory provisions germane to this case. In Rankin, the City of Murrieta (City) entered into a general contact with KLM Engineering (KLM) for the construction of a playground park. "As part of the bid solicitation process and the award of the contract, KLM was required under [Civil Code] sections 3247 and 3248 to provide a payment bond to the City." (Id. at p. 610, 101 Cal.Rptr.2d 48.) KLM obtained the bond and the City approved the bond. (Id. at pp. 610-611, 101 Cal. Rptr.2d 48.) After being awarded the contract, KLM subcontracted with Rankin to supply and install the playground equipment at the park. (Id. at p. 611, 101 Cal.Rptr.2d 48.) Rankin completed the project and demanded payment from KLM pursuant to its subcontract in the amount of $100,514. (Ibid.)
KLM failed to make payment, which caused Rankin to initiate a statutory stop notice procedure.[2] (Rankin, supra, *407 84 Cal.App.4th at p. 611, 101 Cal.Rptr.2d 48.) Pursuant to the stop notice, the City withheld remaining funds owed KLM to pay Rankin, which amounted to $63,000. Rankin's demands under the payment bond to obtain the $37,514 balance owed under the subcontract with KLM were unsuccessful. An investigation by Rankin revealed the surety was not licensed in California and was effectively a fraudulent entity.
Unable to collect the balance owed, Rankin sued the City under Government Code section 815.6 for violating its mandatory duty to determine whether the surety providing the payment bond was an admitted surety insurer under the payment bond statutes and the Bond and Undertaking Law. (Rankin, supra, 84 Cal.App.4th at p. 612, 101 Cal.Rptr.2d 48.)
The City and Rankin stipulated to the above facts and presented to the trial court the single issue of whether the City had a duty "to require a surety providing a payment bond to be an admitted surety insurer or to confirm the solvency of the surety." (Rankin, supra, 84 Cal.App.4th at p. 612, 101 Cal.Rptr.2d 48.) The trial court concluded the City did not have such a duty. The Court of Appeal disagreed. According to the Court of Appeal, if the City had "properly determined" the surety was not an admitted surety insurer, it would have rejected the surety. (Id. at p. 628, 101 Cal.Rptr.2d 48.) "[B]ecause the City did not comply with its duty to determine whether [the surety] was an admitted surety insurer, its breach of that duty proximately resulted in Rankin's injuries, i.e., nonpayment of the remainder due under its subcontract with KLM." (Id. at p. 628, 101 Cal.Rptr.2d 48.) The Court of Appeal held that in failing to discharge its mandatory duty, the City was liable under Government Code section 815.6.[3]
The result reached in Rankin has important implications for the instant case. In light of Rankin, to hold in favor of the County in this case would result in the anomalous situation where a public entity that eschewed its statutory duties and failed to secure any payment bond would be better off, in terms of potential liability, than a public entity that discharged its statutory duties and secured the payment bond without investigating the condition of the surety. This result would not only create a discordance in the law but would defeat the obvious purpose of the payment bond statutes of providing a mechanism for securing payment to those furnishing labor or materials on public works projects. For the foregoing reasons, we reverse, finding the injury resulting from a public entity's failure to discharge its statutory duty to obtain a payment bond from the original contractor, on a public work of improvement, qualifies as an "injury" to support a cause of action under Government Code section 815.6.
*408 C. Did Heathorn Fail to File a Timely Claim?[**]
IV.
DISPOSITION
The judgment is reversed. Costs on appeal are awarded to Heathorn.
We concur: KLINE, P.J., and LAMBDEN, J.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of part III.C.
[1] In its original complaint filed on July 31, 2001, Heathorn sought to recover $262,000, the contract amount it alleged it was owed. In its amended complaint, Heathorn inexplicably increased its alleged outstanding contract balance to $423,890.11.
[2] In seeking to distinguish Rankin from the instant case, the County points out that Heathorn "never filed a stop notice or pursued a stop notice enforcement action against the County in an effort to collect its alleged outstanding contract balance from the County." The County claims we should not countenance Heathorn's "diliatory actions in failing to abide by the legal remedy that was available to it to collect its alleged outstanding contract balance." The filing of a stop notice is not a condition precedent to suing the surety on the payment bond. (Civ.Code, § 3250; see Consolidated Elec. Distributors, Inc. v. Kirkham, Chaon & Kirkham, Inc. (1971) 18 Cal.App.3d 54, 61-62, 95 Cal.Rptr. 673.)
[3] In a subsequent case, the court that decided Rankin acknowledged that "[i]n arriving at this conclusion, we did not discuss Aubry but focused on the duty imposed upon the public entity under Civil Code sections 3247 and 3248 and the bonds and undertakings law." (Landeros v. Department of Corrections (2002) 99 Cal.App.4th 271, 275, 120 Cal.Rptr.2d 867, fn. omitted.)
[**] See footnotes *, ante.
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24 Cal.Rptr.3d 210 (2005)
126 Cal.App.4th 478
SIERRA VIEW LOCAL HEALTH CARE DISTRICT, Plaintiff and Respondent,
v.
SIERRA VIEW MEDICAL PLAZA ASSOCIATES, LP, Defendant and Appellant.
No. F043467.
Court of Appeal, Fifth District.
January 6, 2005.
As Modified February 3, 2005.
Review Denied May 11, 2005.
*211 Demetriou, Del Guercio, Springer & Francis, Jeffrey Z.B. Springer and Bradley D. Pierce, Los Angeles, for Defendant and Appellant.
Clifford & Brown, James E. Brown and John R. Szewczyk, Bakersfield, for Plaintiff and Respondent.
OPINION
DAWSON, J.
This is a condemnation proceeding to determine the fair market value of the condemnee's property interest in a medical office building taken in eminent domain by a public hospital district. The district, citing the declarations of four jurors, challenged the verdict on the ground it was based in part on factors the jury should not have considered, and it moved for a new trial accordingly. The trial court granted the motion, and the condemnee has appealed. We will reverse.
FACTS AND PROCEEDINGS
The Sierra View Local Health Care District (the District) is a public entity that owns and operates the Sierra View District Hospital in Porterville.[1] In the mid-1990's, while the present hospital building was under construction, the District solicited bids to develop (i.e., construct and manage) a medical office building of similar design on land the District owned across the street. It subsequently awarded the development contract to a limited partnership that was, or would become, known as Sierra View Medical Plaza Associates, LP (the Partnership).
The office building, completed in May of 1997, is a "two-story concrete tilt-up structure" with a "net rentable area" of some 29,000 square feet. The structure itself was owned by the Partnership, and the underlying land was owned by the District. *212 The District leased the land to the Partnership for a term of 45 years, with an option in the Partnership to renew the lease for an additional 10 years. The Partnership also had an option to purchase the land, beginning on the fifth anniversary of the effective date of the ground lease, and each year thereafter on the anniversary date.
The Partnership, as landlord, leased office space in the building subject to certain covenants, conditions, and restrictions (CC & R's) in favor of the District, including one restricting occupancy to doctors having privileges at Sierra Vista District Hospital. The District could waive this restriction, however, as indeed it did with respect to some if not all of the original tenants.
The District was itself a tenant in the building, leasing two offices totaling about 7,000 square feet for a blood lab and an outpatient surgery center, and another office of 2,500 square feet it subleased to a doctor. In addition, the District was, initially at least, part owner of a newly formed corporation known as the Sierra Health Network (SHN) (known later as the Valley Physicians Alliance) that leased about 5,650 square feet in the building before it, SHN, went out of business. The Partnership thereafter looked to the District for payment of the rent due for the remaining term of the SHN lease, based on what the Partnership claimed was a rent guaranty signed by the District. The District disputed this claim, which would become the subject of a separate lawsuit.
In 2001, the District, in an effort to reduce its expenses, attempted to renegotiate its leases with the Partnership to lower the rent. When the negotiations failed, the District told the Partnership it would not renew its leases when they expired in May of 2004. The District simultaneously undertook a study of its options for acquiring 13,000 square feet of space it projected it would need if the leases were not renewed. One of these options was to condemn the Partnership's interest in the office building. This was the option the District chose to pursue.
The District filed this condemnation action in December of 2001, and received an order of possession effective March 1st of the following year.[2] The sole issue at trial was the amount of compensation due the Partnership for its interest as of the date of valuation on January 7, 2002.
An appraiser retained by the Partnership estimated the Partnership's interest in the building had a fair market value of $4.3 million. The Partnership's managing partner testified to a figure of $4.8 million. The District's appraiser evaluated the interest at $2,825,000. He previously had appraised the interest twice, both times at the request of a local bank providing construction financing. In 1995, he estimated the interest's value at $4.1 million and, in 1996, at $3.9 million. He explained the large discrepancy between his early and later appraisals as stemming from instructions given him by counsel for the District to assume, for purposes of his new appraisal, that the District would not renew its leases to occupy the building when they expired in 2004.
The jury returned a unanimous verdict for $3.9 million. A judgment for this amount was entered in favor of the Partnership on February 26, 2003.
The Partnership moved to set aside the judgment and enter a different one (see *213 Code Civ. Proc., § 663)[3] complying with statutory requirements for the award of interest and costs (§§ 1268.310, 1268.710), and as to form (§ 1235.130).
A few days later, the District filed a motion for new trial (§ 657) on the ground of juror misconduct. It claimed, based on declarations by four jurors, that the jury's verdict represented an amount it had determined the condemned interest was worth to the District in particular, rather than, as it should have, what the interest was worth to a disinterested buyer. The trial court agreed and granted the motion. The court's order stated:
"Admissible evidence of misconduct is submitted and received in the form of ... declarations of four (4) of twelve jurors factually demonstrating that at least four (4), and evidently more jurors, disregarded the court[']s legal instructions, specifically BAJI 11.75 and 11.77, and based their verdict on a calculated value of worth to [the District] of the purpose for which the property interest is being acquired and calculated a fair market value based upon assumed future use, extent of use and discretionary acts in the future by the [District].
"The presumed prejudicial result of the misconduct is uncontroverted by any evidence from the [Partnership]. Further, the manner in which the jurors proceeded can only result in a higher valuation figure that [sic] the jurors would have otherwise determined."
The Partnership filed a timely notice of appeal.
DISCUSSION
The Partnership raises three issues on appeal. It contends the jurors' declarations fail to demonstrate misconduct; that the misconduct, if any, was not prejudicial; and that the declarations were inadmissible under Evidence Code section 1150 to show the jurors' subjective reasoning process.
"In ruling on a request for a new trial based on jury misconduct, the trial court must undertake a three-step inquiry. [Citation.] First, it must determine whether the affidavits supporting the motion are admissible. [Citation.] If the evidence is admissible, the trial court must determine whether the facts establish misconduct. [Citation.] Lastly, assuming misconduct, the trial court must determine whether the misconduct was prejudicial. [Citations.] A trial court has broad discretion in ruling on each of these issues, and its rulings will not be disturbed absent a clear abuse of discretion. [Citations.] [¶] ...
"[J]ury misconduct is not reversible per se. Although jury misconduct does give rise to a presumption of prejudice, the presumption may be rebutted by the prosecution on the basis of the entire record. [Citation.] In deciding whether misconduct was prejudicial, the trial court must determine whether there exists a substantial likelihood that some extrinsic material or information improperly influenced the vote of one or more jurors. This is an objective standard. `... "In effect, the court must examine the extrajudicial material and then judge whether it is inherently likely to have influenced the juror." [Citation.]' [Citation.]" (People v. Dorsey (1995) 34 Cal.App.4th 694, 703-704, 40 Cal.Rptr.2d 384; see also People v. Ault (2004) 33 Cal.4th 1250, 1272, 17 Cal. Rptr.3d 302, 95 P.3d 523; 8 Witkin, Cal. *214 Procedure (4th ed. 1997) Attack on Judgment in Trial Court, § 143, p. 644.)
The Jurors' Declarations
The declarations all said essentially the same thing. Three of the jurors concurred with the declaration of the fourth, the jury foreman, who asserted:
"3. That in arriving at the verdict, the jury openly considered and discussed the use of the subject medical office building for hospital space and for rental space;
"4. That the jury discussed and considered the cost approach in evaluating the hospital's [i.e., the District's] need for 13,000 square feet of space, and that the hospital would alternatively have had to construct a building of this size to meet its space needs;
"5. That the jury considered and discussed the rental value of the remaining 16,000 square feet and evaluated it on the income method utilizing a triple net per square foot value basis considering the hospital's ability to relax the CC & R requirements;
"6. That the ultimate verdict was achieved through open discussions concerning the respective values placed on the 13,000 square feet to be used for hospital purposes and the remaining 16,000 square feet to be used for rental purposes under the hospital's control[.]"[4]
The other three jurors, in addition to confirming the foreman's declaration, each added the following statement of their own:
"3. In reaching our verdict, the jury openly discussed and considered the hospital's use of the building, and placed a higher value on the space to be used by the hospital than the remaining rental space[.]"
Evidence Code Section 1150
Evidence Code section 1150, subdivision (a) provides:
"Upon an inquiry as to the validity of a verdict, any otherwise admissible evidence may be received as to statements made, or conduct, conditions, or events occurring, either within or without the jury room, of such a character as is likely to have influenced the verdict improperly. No evidence is admissible to show the effect of such statement, conduct, condition, or event upon a juror either in influencing him to assent to or dissent from the verdict or concerning the mental processes by which it was determined."
The Partnership maintains the jurors' declarations, insofar as they purported to explain what factors the jury considered in reaching its verdict, were inadmissible under Evidence Code section 1150. (See, e.g., Krouse v. Graham (1977) 19 Cal.3d 59, 81, 137 Cal.Rptr. 863, 562 P.2d 1022 [absent evidence of express agreement by jurors to base verdict on improper factors, or of extensive discussions evidencing an implied agreement, assertion jurors privately considered the factors is inadmissible]; *215 Moore v. Preventive Medicine Medical Group, Inc. (1986) 178 Cal.App.3d 728, 740-741, 223 Cal.Rptr. 859 [same]; Tramell v. McDonnell Douglas Corp. (1984) 163 Cal.App.3d 157, 172-173, 209 Cal.Rptr. 427 [same].)
The District contends, on the other hand, that the Partnership waived this objection by failing to raise it before the trial court. (See Vikco Ins. Services, Inc. v. Ohio Indemnity Co. (1999) 70 Cal.App.4th 55, 66-67, 82 Cal.Rptr.2d 442; 9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 394, p. 444.)
We will not decide this issue because, as will be seen, it is unnecessary for us to do so.
Was There Misconduct?
The Partnership maintains the jury was permitted, if not required, to consider the District's prospective uses of the office building because it was a "market participant," meaning the District was "a tenant of substantial space, the guarantor of additional space, a potential tenant of even further space, and a potential purchaser of all or a portion of the [building]." Thus, the Partnership concludes:
"The juror declarations do not demonstrate a failure to follow the instructions. The declarations merely recite that the jury discussed evidence that was admitted at trial concerning the District's use and occupancy of the [building]. The District does not claim, and it cannot claim, that this evidence was improperly admitted. Since the evidence was proper and the declarations do no more tha[n] indicate that the jury discussed this evidence, the declarations cannot run afoul of the instructions. [¶] ...
"The instructions ... required jurors to consider the highest price that would be paid considering the most profitable use for which the [building] was adaptable and available.... All that the declarations demonstrate is that the jury considered nothing more than the [District's] use and occupancy of the [building] in valuing the [building].
"The jury received testimony and was also instructed concerning valuation of the [building] based on its highest and best use. The testimony demonstrated that the current use, as well as the highest and best use, involved the [District] as a current tenant in the [building]. Additionally, the [District's] need for additional space and the [building's] proximity to the [h]ospital made the [building] the likely site for the District's additional space needs.... The highest and best use and fair market value instructions given to the jury also required it to consider the occupancy of the [building] based on the District's ability and history of relaxing the [CC & R's]. In other words, the statements set forth in the declarations are merely statements of evidence admitted at trial and are consistent with the jury instructions." (Fn.omitted.)
An owner is entitled to "just compensation" for property taken for a public use (U.S. Const., 5th Amend.; Cal. Const., art. I, § 19; § 1263.010), as measured by the fair market value of the property (§ 1263.310). Fair market value is defined as "the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available." (§ 1263.320, subd. (a).) Fair market value refers to the highest and best use for which the property is geographically and *216 economically adaptable. (City of Los Angeles v. Decker (1977) 18 Cal.3d 860, 867, 135 Cal.Rptr. 647, 558 P.2d 545 (Decker).)
Fair market value is to be determined in terms of what the property would be worth to a knowledgeable but disinterested buyer in the general market a generic buyer as opposed to a specific one as if there were no condemnation action. Put another way, "`just compensation' contemplates compensation measured by what the landowner has lost rather than by what the condemner has gained." (Merced Irrigation Dist. v. Woolstenhulme (1971) 4 Cal.3d 478, 494, 93 Cal.Rptr. 833, 483 P.2d 1 (Woolstenhulme).) "`The rule is, that the owner is entitled to the market value of his land, to be determined in view of all the facts which would naturally affect its value in the minds of purchasers generally. ... "Any existing facts which enter into the value of the land in the public and general estimation, and [tend] to influence the minds of sellers and buyers, may be considered." [Citation.]' [Citations.]" (Id. at p. 493, 93 Cal.Rptr. 833, 483 P.2d 1, italics added.)
"The fair market value of the property taken shall not include any increase or decrease in the value of the property that is attributable to any of the following: [¶] (a) The project for which the property is taken. [¶] (b) The eminent domain proceeding in which the property is taken. [¶] (c) Any preliminary actions of the plaintiff relating to the taking of the property." (§ 1263.330.)
"Woolstenhulme clearly states that the value to the condemner cannot be used to calculate the value of the property to the property owner." (People ex rel. Dept. of Water Resources v. Andresen (1987) 193 Cal.App.3d 1144, 1156, 238 Cal.Rptr. 826 (Andresen); 8 Witkin, Summary of Cal. Law (9th ed. 1988) Constitutional Law, § 1015, p. 576.)
These limitations are reflected in the following instructions, based on former BAJI Nos. 11.75 and 11.77, respectively, which were given to the jury in this case.
"You are not permitted to value the property with reference to what it was worth to the [Partnership] for speculation or merely for possible uses, nor what the [Partnership] claims it was worth to [the Partnership], nor what it may be worth to the [District] for the purposes for which it is being acquired." (BAJI No. 11.75, italics added.)
"In determining the fair market value of the property, do not include any change caused by the project; that is, the use which the [District] is to make of the property. [¶] Do not include any change in value because the property is being taken by eminent domain proceedings; that is, any change based on speculation as to what the [District] ultimately may be required to pay in this proceeding. [¶] Do not include any change in value because of any preliminary action of the [District] relating to the taking of the property." (BAJI No. 11.77, italics added.)
We question the utility of at least the italicized portions of these instructions in the present case, where the historical use of the property by the condemner was the same as the proposed use after condemnation. The instructions, we think, were designed for different situations.
Woolstenhulme concerned a precondemnation increase in value attributable to the subject property's proximity to a proposed project. There, an irrigation district proposed to expand and improve an artificial lake it owned in a rural county. News of the proposal caused land in the vicinity of the lake, used then mostly for grazing, including Mrs. Woolstenhulme's land, to increase in value. The project, *217 later finalized, included a portion of Woolstenhulme's property, and the district condemned it. The question then was whether Woolstenhulme was entitled to compensation for the increase in the value of her property which was due to public knowledge that the project would occur.
In arguing she was not entitled to that increase in value, the district relied on the usual rule that, in determining just compensation, one may not consider any increase in the value of property attributable to the project for which it is being taken. The Supreme Court affirmed this rule in situations where it is known or expected the property will be taken. (Woolstenhulme, supra, 4 Cal.3d at pp. 490-491, 93 Cal.Rptr. 833, 483 P.2d 1.) As explained in Andresen, Woolstenhulme rejects valuation based on speculation caused by the knowledge that certain property will be condemned: "[s]imply stated, purchasers of property that is known to be condemned are prevented from inflating the value of the property by conjecturing what the condemner will actually pay for the property."[5] (Andresen, supra, 193 Cal.App.3d at p. 1156, 238 Cal.Rptr. 826.) There is no evidence here that any such speculation was a concern.
Another of the situations addressed by the instructions given also has no relevance here. In East Bay Mun. Utility Dist. v. Kieffer (1929) 99 Cal.App. 240, the landowner complained of error in the trial court's refusal to allow evidence concerning the selling price of water and electricity in connection with valuation of property condemned for use as a reservoir. In rejecting this assertion of error, the appellate court spoke of conjecture and speculation: "[T]he relation between the value of land in a proposed reservoir and the current price of water and electric energy is too remote and conjectural to be of any reliable assistance to the jury in determining the market value of the land taken." (Id. at p. 250, 278 P. 476.) The court could as well have noted that the attempt to use the price of resources available to the public agency because of the project, in order to value the property, would run afoul of the rule against using value to the condemner to establish fair market value. Again, no such situation is involved here.
The Partnership does not argue, however, that there was error in the giving of the noted instructions. The Partnership appeals only from the grant of a new trial. We therefore will assume in the remainder of our analysis that the jury properly was precluded from basing its verdict on the use to which the District would put the property after the condemnation was complete.
We need not, therefore, expend great effort in analyzing the Partnership's reliance on two cases: Decker, supra, 18 Cal.3d 860, 135 Cal.Rptr. 647, 558 P.2d 545, and Andresen, supra, 193 Cal.App.3d 1144, 238 Cal.Rptr. 826. Both of those cases addressed the question whether the condemning agencies' prospective use of the property could be used to show the property's highest and best use in the hands of the landowner or a generic buyer.
Decker and Andresen, like Woolstenhulme, are useful in the present case only *218 in that they clarify the general rule by identifying situations in which it does not apply. The condemner's proposed use of property may be indicative of the property's value to the owner or a generic buyer on the assumption the owner could put it to the same use (Decker, Andresen), but its value to the condemner for that use is not a permissible measure of just compensation (Woolstenhulme). (See 4 Nichols, Eminent Domain (rev.3d ed.2004) § 12.03, pp. 12-90 to 12-93.) This, however, is not a highest and best use case; there is no question here that the highest and best use of the building is for medical offices. Thus, the fact the District would use it for that purpose is irrelevant.
Stripped of all these distractions, this case is simple. The jury was instructed: "You are not permitted to value the property with reference to ... what it may be worth to the [District] for the purposes for which it is being acquired [i.e., for a medical office building]." (BAJI No. 11.75.)
This instruction did not require, however, that the jury disregard the District's historical use of the building. More particularly, the jury was not required to accept as true the District's assertion it would allow its lease to lapse in May of 2004, or the suggestion it would no longer waive the occupancy limitations in the CC & R's. Someone in the market for a medical office building in Porterville, in estimating what this one was worth, might reasonably have assumed the District would not move out because it would not have been in the District's interest to do so. Indeed, this appears to us to be what the jury believed as well.
The gist of the jurors' declarations was that the jury, in determining the fair market value of the building, assigned a higher value to the space occupied by the District than it did to the rest of the space in the building.
"[T]he jury discussed and considered the cost approach in evaluating the [District's] need for 13,000 square feet of space, and that the [District] would alternatively have had to construct a building of this size to meet its space needs; [¶][T]he jury considered and discussed the rental value of the remaining 16,000 square feet and evaluated it on the income method ... considering the [District's] ability to relax the CC & R requirements; [¶][T]he ultimate verdict was achieved through open discussions concerning the respective values placed on the 13,000 square feet to be used for [the District's] purposes and the remaining 16,000 square feet to be used for rental purposes under the [District's] control...."
"... In reaching our verdict, the jury openly discussed and considered the [District's] use of the building, and placed a higher value on the space to be used by the [District] than the remaining rental space...."
Thus, the jury evidently assumed that, had the condemnation not occurred, the District would have continued to occupy the building and would have continued to grant exceptions to the CC & R's with respect to the other tenants, just as it had done in the past. This, as we have said, was a permissible assumption. It was also a reasonable one under the circumstances. The jury could have surmised the District would renew its lease, and even lease additional space, when faced with the more expensive alternative of having to find or construct comparable space somewhere else. And, in fact, the District was paying a higher rent for its space in the building than the other tenants: about $2 a square foot, as compared to about $1.50. This was the reason for the meeting in April of 2001 at which the District said it would not renew its lease when it expired three years *219 later unless the Partnership agreed to extend the lease for 10 years and reduce the rent to $1.25 a square foot (or to sell to the District all or part of the building).
The meeting took place between Kelly Morgan, the District's chief executive officer, and Randall Strada, the Partnership's managing partner. Strada, who refused the offer, testified he thought at the time Morgan was bluffing.
"Q. [District's counsel] So this would be more than three years before the lease was set to expire, he [Morgan] threatened you [Strada] that in three years I am going to move out?
"A. [Strada] Yes.
"Q. And what did he have to do in order to move out in three years, as far as his lease was concerned?
"A. Well, nothing with his lease. He would just use his lease for three years, and prior to moving out, of course, he would have to find suitable replacement space, build it out suitable for a hospital, move all at least anticipate moving all the equipment and everything ... he had a whole lot of stuff in that building. I told you earlier I didn't think he was going to do it. I thought he was bluffing. On the other hand, it wasn't his money. He could do that if he wanted to.
"Q. You thought he was bluffing?
"A. I took him seriously, but my instinct[s] were he wasn't going to leave that building, and he hasn't. [Strada gave this testimony on February 19, 2003.]
"Q. You thought he was bluffing when he made the threat?
"A. That entered my mind. I didn't think he was going to move out, but I had to take it seriously, yes. [¶] ...
"Q. Three years down the road when the lease runs out, the hospital has done everything that it's contracted to do under the lease, it has no more lease obligations at the end of three years, and it finds other space. What is the threat in that to you?
"A. I didn't it is not as easy for a hospital to move out of that building as it would be for a real estate office to pick up a desk and get new phone service. Their own study says they are going to spend millions of dollars to do other things if they don't stay in this building. I didn't know what exactly it would cost them, but I knew it would cost them a lot.
"Q. Why did you think that was a threat to you as opposed to a stupid statement on his part?
"A. Maybe I thought it was both.
"Q. Well, why was it a threat?
"A. Well, maybe it is a definition of the word threat if your biggest tenant tells you if you don't do what I want, I'm going to move out. That seems like a threat to me."
We understand the jurors' declarations to say only that they too thought Morgan was bluffing. This was their prerogative. It follows there was no violation of the instructions given, and that the trial court erred in granting the District's new trial motion.
DISPOSITION
The order granting the District's motion for new trial is reversed. The matter is remanded to the trial court with directions to enter an order denying the motion. The Partnership is awarded its costs on appeal.
WE CONCUR: CORNELL, Acting P.J., and GOMES, J.
NOTES
[1] Porterville is in Tulare County. The matter was tried in Kern County because, as the court explained to the jury, it was a neutral forum.
[2] The action as originally filed also named LaSalle National Bank, the holder of a $2.8 million mortgage on the building, as a defendant. The bank was dismissed from the case shortly before trial, after it and the District reached a settlement as to the value of the bank's interest in the building.
[3] Unless noted otherwise, all future statutory citations will refer to the Code of Civil Procedure.
[4] The "income method" is one of three commonly accepted approaches used in condemnation proceedings to determine the fair market value of property. It reflects the capitalized value of the net rental income the property is expected to generate. (State of Cal. ex rel. State Pub. Wks. Bd. v. Stevenson (1970) 5 Cal.App.3d 60, 63, 84 Cal.Rptr. 742.) The two other approaches look to the current cost of reproducing the property, less depreciation, and to recent sales of comparable properties. (Ibid.; see also Evid.Code, §§ 810-823.)
A "triple net lease" is one that passes on to the tenant all the maintenance and operating costs incurred for the leased property. (Pate v. Channel Lumber Co. (1997) 51 Cal.App.4th 1447, 1450, 59 Cal.Rptr.2d 919.)
[5] Woolstenhulme distinguished the situation where property near a project is not at first expected to be taken: "[U]nder our just compensation clause, an owner of the condemned property should be compensated for the increase in value which his land has experienced in anticipation of the benefits of a proposed improvement, so long as it is not reasonably probable that the specific piece of property being evaluated is to be taken for the improvement." (Woolstenhulme, supra, 4 Cal.3d at p. 487, 93 Cal.Rptr. 833, 483 P.2d 1.)
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720 A.2d 134 (1998)
Marlon L. MYERS, Sr. An Individual and Nelda Myers, His Wife, Appellant,
v.
TRIAD CONTROLS, INC.
v.
E.W. BLISS, CO., Appellee. (Three Cases.)
Superior Court of Pennsylvania.
Argued May 18, 1998.
Filed September 21, 1998.
Reargument Denied November 24, 1998.
Thomas A. Berret, Pittsburgh, for Marlon L. & Nelda Myers.
Edward J. McGinn, Philadelphia, for Triad Controls, Inc.
Louis Anstandig, Pittsburgh, for E.W. Bliss Co.
Before DEL SOLE and JOYCE, MONTEMURO[*], JJ.
DEL SOLE, Judge:
This appeal challenges the trial grant of summary judgment and dismissal of Appellants, Mr. and Mrs. Myers', complaint with prejudice. The complaint set forth claims in negligence, strict liability and breach of warranty and sought recovery for damages suffered when Mr. Myers injured his left hand while working as a punch press operator. We reverse.
The parties agree on the facts. Mr. Myers was employed as a punch press operator for a manufacturer of children's playground equipment. His employer purchased a punch press from Appellee, E.W. Bliss Company. Some time later the employer installed a safety system on the press, which it purchased from Appellee, Triad Controls Inc. The system, Triad Superlight V is referred to as a "light curtain." It is comprised of two pylon panels installed on opposite sides of an opening on the press which transmit an infrared light barrier across the opening. The light curtain stops the press from operating when the infrared beams are broken by the intrusion of an object into the area. A control panel with a red and green light is located on the right pylon. The red light illuminates when the press stops because an object has broken the circuit. The green light remains lit otherwise, but it is not an indicator that the light curtain is functional.
One day prior to the accident Myers was operating the press when he was instructed to replace a die in the press with a larger one. When the press would not operate with *135 the larger die because it interfered with the light curtain, Myers called someone from maintenance, who intentionally disconnected the light curtain by shorting out the contacts between the light curtain and the punch press. This action made the light curtain inoperable, but the green light on the control panel remained lit. Myers completed his shift and left a note for the second shift operator to inform him that the curtain was not working. When Myers returned to work the next day he found the large die had been replaced with the original die. The light curtain was not reconnected however, and Myers was injured when he reached into the point of operation to dislodge a piece. Myers testified that he believed the safety device was operating because the green light on the curtain was lit at the time of the accident.
In considering Appellees' claims for summary judgment[1] the trial court found that Appellants were not able to establish a prima facie case of product defect because the light curtain was made unsafe by the changes ordered by Myers' employer. Because it was undisputed that the light curtain was working as intended prior to these changes and because it was not foreseeable that an employer would short circuit the electrical circuit, the trial court dismissed Appellants' claims.
On an appeal from a grant of summary judgment, a reviewing court must examine the record in a light most favorable to the nonmoving party, accepting as true all well-pleaded facts and giving that party benefit of all reasonable inferences which can be drawn from those facts. Hoffman v. Brandywine Hospital, 443 Pa.Super. 245, 661 A.2d 397 (1995). The Superior Court will reverse a grant of summary judgment only when the trial court has committed an error of law or abused its discretion. Butterfield v. Giuntoli, 448 Pa.Super. 1, 670 A.2d 646 (1995).
When presented with a claim involving strict liability we most recently reiterated:
The concept of strict liability allows a plaintiff to recover where a product in a defective condition unreasonably dangerous to the consumer or user causes harm to the plaintiff. In a design defect case, the question is whether the product should have been designed more safely. Pennsylvania law requires that a plaintiff prove two elements in a products liability action: (1) that the product was defective; and (2) that the defect was a substantial factor in causing the injury.
Charlton v. Toyota Industrial Equipment, 714 A.2d 1043, 1046 (Pa.Super.1998) (citations omitted).
In this case the trial court found that Appellants were unable to establish that the product was defective. The court focused on the fact that the light curtain was intentionally made inoperable by the maintenance staff. It correctly noted that under Pennsylvania law a manufacturer is entitled to summary judgment when a seller's safe product is made unsafe by subsequent changes. And, where a substantial change has been made to the product by another, the question becomes whether the manufacturer could have reasonably expected or foreseen such an alteration. Trial court opinion at 3, citing Davis v. Berwind, 547 Pa. 260, 690 A.2d 186 (1997). The trial court found that a substantial change was made to this product and this action could not have been foreseen by the manufacturer.
In Davis v. Berwind, supra, an employee at a meat company injured her hand while using a blender which was sold with an interlocking safety device and a visible warning label reading "DANGER, KEEP FINGERS OUT OF DOOR OPENINGS." The employer removed the safety device from the blender in an effort to increase production. The employee was injured after she shut off power to a blender and reached her hand inside while the blades were still rotating. The plaintiff claimed that the manufacturer was liable for failing to warn users of the propensity of the blades to rotate after power had been turned off. The court ruled that the removal of the safety device constituted a substantial change in the condition of the product as sold, which was not foreseeable and which relieved the manufacturer of liability. *136 It further held the warning gave clear instructions to keep fingers out of the door opening and that it addressed the danger and was sufficient to caution the operator.
The trial court's reliance on Davis was misplaced. Admittedly the two cases appear similar because each involves the removal of a safety device from a product which would otherwise operate to prevent injury. However in Davis there was a clear warning posted, and there was no claim of any defect in the guard itself. In this case it is the absence of a warning and the creation of a false sense of security in the design of the safety curtain which Appellants claim are the defects in the product.
Appellants contend that the light curtain employed a green light/red light indicator system which remained lit even when the guard was not operational. They argue that because there was no visible means for a user to determine if the safety feature was working and no warning that it may not be operating to stop the press if a foreign item is inserted into the light curtain field, the safety device was defective. Thus, Appellants maintain that the trial court wrongly focused on the wiring change made by the employer when their defective design claim concerns a particular feature on the product not involved with the wiring change.
Appellants argue their position is supported by the affidavit of Richard M. Jacobs, a professional engineer. The engineer found the green and red indicator light system was defectively designed because it fed false information to a user concerning whether the safety system was operational. He found that a signal should have been included in the design to inform the operator that the safety feature was working, rather than simply indicating that the system was receiving power. He opined: "because the equipment design is such that the indicator system merely indicates that the power to the safety guard is on, as was the case in this instance, it fails in its purpose and confuses the user as to its safety." Affidavit of Richard M. Jacobs at 5. Mr. Jacobs also indicated that an alternative design, whereby a system would show whether the light curtain is on and working, would be feasible and readily available.
Based upon the facts of this case and the opinion of Appellants' expert, we conclude an award of summary judgment was inappropriate in this matter and the case should proceed before a jury. A guard provides a worker with a sense of safety and security. Where, absent any warnings, a guard system can be disabled and yet continue to emit a green light, and where no viable method is included for a user to determine if it is performing its safety function, the jury should be free to consider whether it has been defectively designed.
In Burch v. Sears, Roebuck & Co., 320 Pa.Super. 444, 467 A.2d 615 (1983) the manufacturer and seller of a lawn mower argued that substantial changes were made to the mower, thus relieving them of liability. This court rejected that contention under the circumstances of the case and stated:
Here, however, appellee asserts not an unexplained malfunction but a specific design defect the lack of a dead man's switch as a safeguard against inadvertent restarting. None of the changes argued by appellants affected that design.
Id. 467 A.2d at 620.
Similarly in this case, Appellants allege a specific defect in the design of the safety device. Although rewiring caused the safety device to become inoperable, the fact that a user was unable to tell it became inoperable and was led to believe it was still operational by the glowing green light, forms the basis for Appellants' products liability claim. Because Appellants make such a specific design defect claim, it is unnecessary on these facts to determine whether the employer's act of rewiring was foreseeable.
Accordingly the trial court grant of summary judgment in favor of both Triad Controls, Inc. and E.W. Bliss Company, dismissing Appellants' complaint, is reversed.[2] Case *137 remanded for further proceedings. Jurisdiction relinquished.
NOTES
[*] Retired Justice assigned to the Superior Court.
[1] The trial court entered two separate orders on the same date, granting motions for summary judgment in favor of Triad Controls Inc. and E.W. Bliss Company.
[2] Triad Controls, Inc. has filed a separate appeal asking that in the event this court does not affirm the order of summary judgment entered in its favor, then the trial court's order entering summary judgment in favor of additional defendant E.W. Bliss Company should also be reversed. We agree that Triad Controls, Inc.'s claims of contribution and indemnity must also be reconsidered in view of our disposition of this matter.
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364 F.Supp. 714 (1973)
Calvin CLARK, Petitioner,
v.
UNITED STATES of America, Respondent.
Civ. A. No. 72-1036.
United States District Court, W. D. Pennsylvania.
October 11, 1973.
*715 John M. Kish, Kish & Kish, Pittsburgh, Pa., for petitioner.
James A. Villanova, Asst. U. S. Atty., Pittsburgh, Pa., for the U. S.
OPINION AND ORDER
MARSH, Chief Judge.
On May 27, 1968, petitioner, Calvin Clark, was charged with violating the narcotic laws, 21 U.S.C. § 174 and 26 U. S.C. § 4704(a), and was found guilty by a jury. His motion for a new trial was denied[1] and his conviction was affirmed on appeal.[2]
On November 2, 1970, petitioner filed a "Motion For Order to Show Cause Why Judgment of Conviction Should Not be Vacated" asserting therein that the prosecutor suppressed evidence helpful to the defense, and that Williams, a police officer, knowingly testified falsely at the trial. The moving papers and affidavit attached thereto state that this motion was made pursuant to Rule 33, Fed.R.Crim.P., rather than 28 U.S.C. § 2255. After a full evidentiary hearing, this motion was denied.[3] The denial of this motion was affirmed on appeal.[4]
*716 On December 4, 1972, petitioner submitted a pro se "Motion Under Rule 33 F.R.Crim.P. and 28 U.S.C. § 2255 to Vacate Sentence and for a New Trial and/or in the Alternative an Appropriate Reduction of Sentence" asserting numerous conclusory allegations. Insofar as this motion was based on Rule 33 and Rule 35, it was untimely. With respect to § 2255, petitioner was ordered to supplement the conclusory allegations with specific sworn facts. Petitioner complied by filing an affidavit. The government was ordered to show cause why an evidentiary hearing should not be granted, but failed to show any reason. Counsel was appointed for petitioner and another evidentiary hearing was held. We think the motion should be denied.
The direct and circumstantial evidence submitted by the government at trial established that about 9:00 p. m. on March 15, 1967, two police officers cruising on Dahlem Street in a patrol car, with a red blinker light on top, first observed a man they identified as the petitioner walking on Railroad Street, a deserted area of the city frequented by litterers. When first observed, the petitioner was carrying a brown paper bag. Deciding to "check him out", the officers proceeded to a place where they turned the car around, drove back, and turned into Railroad Street where they had seen the petitioner. They accosted the petitioner who was running toward the car, but by then he had discarded the bag. It is a reasonable inference that petitioner discarded the bag because he had observed the patrol car in the vicinity. He told the police that the discarded bag had contained a sandwich he had purchased for his wife at the nearby Eat 'n Park restaurant and he had thrown it away. The petitioner and the police searched for the bag but failed to find it. After "patting down" the petitioner the police decided not to arrest him for littering and after a conversation all parties left the area.
Since the ground was covered with recent snow, the police reasoned that petitioner had misled them and the bag could be found. Accordingly, they returned to the area about 10 minutes later, proceeded to trace petitioner's tracks in the snow and found the bag. In the bag were 347 glassine packets of heroin. Three of the packets bore the petitioner's fingerprints.
At the trial the police officers, William J. Seifer and John R. Williams, positively identified the petitioner as the man with the bag whom they accosted on March 15th and "patted down", and with whom they searched for the bag and conversed. On cross-examination, it was brought out that Officer Williams examined photographs at the "F.B.I. Photo Lab" and identified the picture of petitioner,[5] and both officers were shown one picture by Inspector McDaniels which they identified as petitioner and were subsequently told by the Inspector that the man in the picture was Calvin Clark.[6]
The petitioner was represented at the trial by two attorneys, both experienced as defense advocates and one was a former Assistant United States Attorney. At no time did the defense object to the admissibility of the in-court identification. No motion to suppress was made. No request was made for a Simmons hearing,[7] and no motion was made to strike the in-court identification. The motion for a new trial did not attack the in-court identification and it does not appear that any identification error was assigned on appeal. Cf. Pettett *717 v. United States, 434 F.2d 105, 110 (6th Cir. 1970).
As a matter of trial tactics, the defense, on cross-examination, brought out the pre-trial photographic identification hoping to detract from the weight the jury might otherwise accord the in-court identification. Cf. Clemons v. United States, 133 U.S.App.D.C. 27, 408 F.2d 1230 (1968). Accordingly, the jury was instructed that if they found that the two policemen identified the petitioner from photographs shown to them and not from observing the petitioner at the scene, their identification testimony should be disregarded.[8]
At the evidentiary hearing, over six years after the event, each police officer testified that Inspector McDaniels had shown them several photographs separately and each picked one of them as being the man they observed at the scene and were then told his name wa Calvin Clark.[9] Moreover, it was brought out by petitioner that when the matter was under investigation, the prosecutor had been told by the narcotic agent assigned to the case, William H. Mattingly, that both officers had identified the petitioner from photographs shown to them at F.B.I. headquarters in Pittsburgh.[10] Also, each officer again positively identified petitioner and testified that his in-court identification was from what he observed of petitioner at the scene.[11]
I find as a fact that the incourt identification of petitioner at trial and at the evidentiary hearing was from an independent source. I further find from the totality of circumstances that the out-of-court identification by each police officer of petitioner's photograph was not so unnecessarily suggestive and conducive to irreparable mistaken identification that it denied petitioner due process of law. Simmons v. United States, 390 U.S. 377, 88 S.Ct. 967, 19 L. Ed.2d 1247 (1968); Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967).
There was no substantial likelihood of misidentification. The police had need for utilization of photographic identification, and the photographic identification was reliable because these policemen, trained to observe and devoid of emotional factors, unlike some victims of a crime, had viewed the suspected litterer for a substantial period under light from the nearby Eat 'n Park restaurant, the headlights of their car, the snow reflection as they searched for the bag, and the dome light inside their car as the subject conversed with them through the car window. Cf. Neil v. Biggers, 409 U.S. 188, 197, 93 S.Ct. 375, 34 L. Ed.2d 401 (1972).
Where a petitioner at trial and on appeal failed to challenge the validity of the identification evidence at least one Court of Appeals has held that he was foreclosed to present the due process question years later by a post-conviction motion for relief under § 2255, 28 U.S.C. Pettett v. United States, supra, 434 F.2d p. 110.
We think that after six years the burden was on the petitioner to show that the photographic identification violated his right to due process. United States ex rel. Darcy v. Handy, 351 U.S. 454, 462, 76 S.Ct. 965, 100 L. Ed. 1331 (1956). In this respect, he has failed.
False Testimony
Petitioner contends that (1) both officers testified falsely at trial that there was no vehicular traffic in the area during the time in question; (2) Officer Williams testified falsely at trial that petitioner flagged down the police officers in the patrol car; and (3) both officers testified falsely at trial that petitioner stuck his head in the window of the patrol car.
*718 The first contention was not a false statement in the context of the testimony.
The second and third contentions were not false statements of material facts. In his brief, petitioner states that "the Petitioner is not attempting to show perjury or prosecutorial misconduct", but that the conviction was tainted by the cumulative effect of this false testimony. We disagree with this conclusion.
With respect to the first contention, the officers testified that during the time the petitioner was in their presence and after they returned to the area about 10 minutes later and conducted a search for the bag, they observed no vehicular or pedestrian traffic in the vicinity of Dahlem and Railroad Streets. At the subsequent hearings, the officers testified that after they had conducted the search and found the bag and as they were proceeding on Dahlem Street, they observed a car pulling off and going down Hamilton Avenue. Obviously, there was no falsehood or even inconsistency in the testimony of the officers given at trial and that given in the subsequent hearings. At trial they responded to questions addressed solely to vehicular traffic in the vicinity of Dahlem and Railroad Streets before they found the bag which petitioner had discarded. At trial they were not questioned about vehicular traffic after they found the bag and while they were leaving. At trial they were not questioned about vehicular traffic on Hamilton Street. Moreover, Hamilton Street is not in the area where the action took place. The officers' testimony was truthfully given at trial and the presence of a car on Hamilton Street, brought out at the subsequent hearings, is at best newly discovered evidence which cannot be considered in a motion for § 2255 relief. Cf. Shaver v. Ellis, 255 F.2d 509 (5th Cir. 1958). At trial the officers were not questioned about vehicular traffic on Hamilton Street at any time during or after the events which took place in the littered area.
With respect to the second contention, at trial both officers testified that they stopped the petitioner in the littered area on Railroad Street. Officer Williams changed this version after being confronted with his grand jury testimony in which he stated that petitioner had hailed the police to stop. Thus the jury was aware of the inconsistent testimony of Officer Williams concerning a very immaterial fact. Moreover, this subject matter was previously considered and disposed of by this court and the Court of Appeals.[12]
The third contention that both officers testified falsely when they agreed that petitioner stuck his head inside the window of their car is likewise an immaterial matter (Trial Tr., pp. 31, 71).[13] At the evidentiary hearing the officers explained that petitioner did not have his whole head inside the car, but that his entire face was visible in the opening at the side window. The material point which was established was that this was one of several instances during the confrontation, and perhaps the best, when the officers had a good look at petitioner's facial features while they were illuminated by the dome light inside their car as they conversed with petitioner. The variance in the testimony at trial and at the evidentiary hearing if any, is more of a problem of semantics than one of substance and did not affect the fundamental fairness of the trial.
The important issue was whether the petitioner's facial features were illuminated by the dome light and not whether petitioner's head was inside or outside *719 the car. Moreover, this was only one of the opportunities the officers had to observe the petitioner at the scene in order to establish that their in-court identification had sources independent of pre-trial photographic identification.
With respect to the last two contentions of false testimony, we paraphrase what was stated by the Court of Appeals in United States v. Clark, 454 F.2d 1056 (3d Cir. 1972) at page 1058: At worst what we have here is incorrect testimony given erringly but not wilfully upon matters not material to the guilt of the petitioner. In our opinion, this did not render the trial fundamentally unfair and did not deny petitioner due process.
An appropriate order will be entered.
We take this opportunity to record our appreciation to John M. Kish, Esq. for the diligent services he rendered at our request on behalf of the petitioner at the hearing and in preparing his two briefs.
NOTES
[1] United States v. Clark, 294 F.Supp. 1108 (W.D.Pa.1968).
[2] United States v. Clark, 425 F.2d 827 (3d Cir. 1970), cert. denied 400 U.S. 820, 91 S. Ct. 38, 27 L.Ed.2d 48 (1970).
[3] Opinion and Order, unpublished, filed May 18, 1971, at Criminal No. 67-111.
[4] United States v. Clark, 454 F.2d 1056 (3d Cir. 1972).
[5] Trial Tr., pp. 195-197.
[6] Trial Tr., pp. 39-42, 194-195.
[7] Simmons v. United States, 390 U.S. 377, 88 S.Ct. 967, 19 L.Ed.2d 1247 (1968). A Simmons hearing is conducted prior to an incourt identification to determine, first, whether the pretrial identification has been violative of due process, and, second, if a violation is found, whether there is an independent source for the in-court identification. See: United States v. Hurt, 476 F.2d 1164, 1167 (D.C.Cir. 1973).
[8] Trial Tr., pp. 644-646.
[9] Transcript of hearing of April 4, 1973, pp. 45-53, 75-82.
[10] Id., pp. 10-12.
[11] Id., pp. 66-68, 81, 87-89.
[12] Unpublished opinion of this court filed May 18, 1971, at Criminal No. 67-111, pp. 6-7, and United States v. Clark, 454 F.2d 1056 (3d Cir. 1972).
[13] That petitioner "stuck his head inside the cruiser" was a colloquial characterization of petitioner's action originated by the prosecutor which was not challenged by the defense either at the time it was made or on cross-examination.
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720 A.2d 291 (1998)
351 Md. 667
Ade Yemi SCOTT
v.
STATE of Maryland.
No. 110, Sept. Term, 1997.
Court of Appeals of Maryland.
November 16, 1998.
Julia Doyle Bernhardt, Asst. Public Defender (Stephen E. Harris, Public Defender; George E. Burns, Jr., Asst. Public Defender, on brief), Baltimore, for Petitioner.
Celia Anderson Davis, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., on brief), Baltimore, for Respondent.
Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, RAKER, WILNER and CATHELL, JJ.
BELL, Chief Judge.
The sole issue presented by this case is whether, when what is possessed is "50 grams or more of cocaine base, commonly known as `crack,' " § 286(f)(1)(iii), the sentence prescribed by Maryland Code (1957, 1996 Repl.Vol.) Article 27, § 286(b)(1),[1] for possession with intent to distribute cocaine as proscribed in Article 27, § 286(a)(1),[2] may be enhanced, by both § 286(f)(3) and § 293. Concluding that it could, the Circuit Court for Kent County enhanced the petitioner's sentence pursuant to both statutes, and the Court of Special Appeals agreed. We shall reverse.
I
The petitioner, Ade Yemi Scott, was convicted by a jury of, inter alia, possession of 79.8 grams of crack cocaine with the intent to distribute. The State, having timely filed the requisite notices, in accordance with Maryland Rule 4-245,[3] proved the qualifying convictions, *292 and asked the court to sentence the petitioner pursuant to both § 293 and § 286(f)(3). The court sentenced the petitioner for the possession with intent to distribute count, as follows:
"In... Madame Clerk, let it be the judgment of this Court, in 4698, Count 1, and that is possession of cocaine in sufficient quantity to indicate an intent to distribute, specifically 50 grams or more, in violation of Article 27 Section 286(a)(1) and (f), it is the judgment of this Court, as a penalty for that offense, the Defendant is committed to the Division of Corrections for a period of 28 years, and that is effective March 19, 1996. He is to be given credit for time he has already served pre-trial and pre-sentence."
In summarizing all of the sentences imposed on the petitioner, the court said:
"That's an effective sentence of 28, 28 and 1, of 57 years as I calculate it. And this sentence is imposed ... the sentence in Count 1 of 4698 is imposed under Article 27 Section 286(f), which means a minimum mandatory 5 years. All other provisions are imposed under Article 27 Section 293."
Both the docket entry for possession of cocaine with intent to distribute and the Commitment Record signed by the court refer to § 286(f) as the section pursuant to which that sentence was imposed. The petitioner noted an appeal to the Court of Special Appeals.
In that court, one of the petitioner's contentions was that the sentence the trial court imposed for the possession with intent to distribute count was illegal. Pointing to the trial court's sentencing remarks as well as the docket entries and the Commitment Record, he argued, as he does here:
"[T]he trial court specifically and unequivocally sentenced [him] under count one, possession of cocaine with intent to distribute in the amount of fifty grams or more, pursuant to § 286(f) and under all other eligible provisions pursuant to § 293. As the maximum sentence under § 286(f) is twenty years imprisonment, and the court imposed a twenty-eight-year sentence, eight years of the sentence imposed on count one is illegal."
The intermediate appellate court affirmed the judgment of the trial court in an unreported opinion. Rejecting the petitioner's argument, the court held that the trial court sentenced the petitioner pursuant to both § 293 and § 286(f), and, that its doing so was proper. Aware of our holding in Gardner v. State, 344 Md. 642, 645, 689 A.2d 610, 611 (1997), that a sentence on a single count of an indictment or information may not be enhanced pursuant to both § 286(c) and § 293, the intermediate appellate court distinguished the case on the basis that "[s]ection 286(c), unlike section 286(f), is a subsequent offender provision." Thus, the Court of Special Appeals interpreted Gardner as prohibiting only "enhancing the sentence on a single count twice under two subsequent offender provisions."
The petitioner filed a Petition for Writ of Certiorari, which we granted. Scott v. State, 348 Md. 334, 703 A.2d 1265 (1998). For the reasons that follow, we reverse the judgment of the intermediate appellate court.
II.
(a)
The petitioner makes two arguments in this Court. First, as he did in the Court of Special Appeals, he maintains that the trial court enhanced his sentence for possession with intent to distribute pursuant to § 286(f) only, that the language used by the court clearly and unambiguously demonstrates this, and, thus, eight years of the twenty-eight-year sentence imposed is illegal. The petitioner argues that the Court of Special Appeals ignored the clear language of the *293 trial court, and instead viewed the prosecutor's request that both § 286(f) and § 293 be applied in sentencing as dispositive proof that the trial judge did utilize both provisions.
The petitioner argues alternatively that the sentence is illegal under our decision in Gardner. He reasons that a substantial basis for the Gardner decision was the fact that the "drug kingpin" section, § 286(g), explicitly referenced, and thus contemplated, enhancement of a sentence imposed thereunder pursuant to § 293, while § 286(c) did not. Therefore, as § 286(f), like the other subsections of § 286, does not contain that reference, he continues, it is clear in this case, as in Gardner, that the Legislature did not intend that a sentence enhanced pursuant to one of those subsections also be enhanced pursuant to § 293. Contrary to the opinion of the Court of Special Appeals, therefore, the petitioner submits that the primary basis for the Court's holding in Gardner was not that both subsections in that case were subsequent offender statutes, but rather that one of them lacked specific reference to § 293.
(b)
In response to the petitioner's arguments, the State contends, as the intermediate appellate court found, that the enhancement of the petitioner's sentence pursuant to both § 286(f) and § 293 was appropriate. First, the State rejects the argument that the trial judge did not apply both sentencing provisions. On the contrary, it asserts that it is clear the trial court did so, when, in addition to referencing § 286(f) specifically, it indicated in the course of the sentencing proceeding, precisely how it enhanced the sentence, by imposing a 28 year sentence, rather than one of 20 years, the maximum allowed for a violation of § 286(a)(1). See § 286(b)(1). Section 293, the State points out, provides that the maximum penalty for possession of cocaine with intent to distribute is doubled when the offense is a second or subsequent one. Thus, in the instant case, instead of a maximum of 20 years, the petitioner faced a maximum of 40 years as a result of his prior convictions. The State also notes that the Maryland Sentencing Guidelines range, computed on the basis of the sentence being enhanced pursuant to § 293, was from 14 to 28 years.
The State further maintains that the petitioner's sentence was properly enhanced pursuant to both sentencing provisions. Unlike the petitioner, it believes that Gardner is distinguishable from the present case. In Gardner, the State insists, both § 286(c) and § 293 were triggered by the petitioner's prior convictions. By contrast, citing Wadlow v. State, 335 Md. 122, 132, 642 A.2d 213, 218 (1994), the State continues, § 286(f) requires that the prosecutor specifically charge and prove, as an additional element of the crime, that the defendant distributed or possessed the quantity of illegal drugs specified in the statute. Thus, the State contends, because § 293(a) applies at sentencing and is triggered by prior convictions, it is not in conflict with § 286(f); the statutes simply operate in different ways. Moreover, the State rejects the petitioner's argument that, in the absence of a reference in § 286(f) to § 293, as in the case of § 286(g), that section may not be applied in combination with § 293 to enhance a single count of an indictment or information. It maintains that "without the specific reference to Section 293 in Section 286(g), the 40-year maximum provided in Section 286(g) might have been construed to obviate Section 293."
III.
The issue before the court is one of statutory construction: we must determine whether the Legislature intended that sentences enhanced pursuant to § 286(f) also be enhanced pursuant to § 293.[4] Although we have not had occasion to address this precise issue, we have quite recently addressed a similar one in Gardner, supra. In that case, the Court framed the issue as "whether a *294 sentence on a single count of an indictment or information may be enhanced pursuant to both ... Article 27, § 286(c)[[5]] and § 293." 344 Md. at 644, 689 A.2d at 611. The Court held that it could not, reasoning:
"Because both statutes are being applied to a single count, they must be construed together and in context." Whack, 338 Md. at 673, 659 A.2d at 1350 (citing State v. Thompson, 332 Md. 1, 7, 629 A.2d 731, 734 (1993)) ("when we are called upon to interpret two statutes that involve the same subject matter, have a common purpose, and form part of the same system, we read them in pari materia and construe them harmoniously."); Gargliano v. State, 334 Md. 428, 436, 639 A.2d 675, 679 (1994); Jones v. State, 311 Md. 398, 405, 535 A.2d 471, 474 (1988); State v. Loscomb, 291 Md. 424, 432, 435 A.2d 764, 768 (1981). "Full effect is given to each statute to the extent possible, and we will not add or delete words to obtain a meaning not otherwise evident from the statutory language." Accord, Geico [GEICO] v. Insurance Comm'r, 332 Md. 124, 132, 630 A.2d 713, 717 (1993). Moreover, § 286(c) is but a subsection of § 286, section (g) of which also addresses sentence enhancements. Because it is imperative that statutory language be interpreted in its full context, it follows that § 286(c) must "be read in conjunction with the other subsections of § 286 so that we may give effect to the whole statute and harmonize all of its provisions." Gargliano v. State, 334 Md. 428, 436, 639 A.2d 675, 678-79 (1994) (citing Williams v. State, 329 Md. 1, 15-16, 616 A.2d 1275, 1282 (1992) for the proposition that a court must discern "legislative intent from the entire statutory scheme, as opposed to scrutinizing parts of a statute in isolation." (emphasis added)). Consequently, §§ 286(c) and 293(a) must be construed together with § 286(g).
"When that is done, it is clear that their application in the single count context is not at all clear. This is especially the case when § 286(g) is considered. Subsection (g)(2)(i) prescribes both the maximum sentence for a drug kingpin committing the acts proscribed40 years imprisonment without paroleand a mandatory minimum sentence20 years imprisonment without paroleto be imposed and not suspended. Subsection (g)(5) expressly authorizes the enhancement of that sentence pursuant to § 293(a). If the state were correct that the enhancement statutes are clear both in their language and application, inclusion of that provision would have been unnecessary.
"Nor does enlightenment flow from their legislative histories. As the petitioner points out, there is absolutely nothing, in the history of these statutes that even suggests that the Legislature intended a stacking of enhanced penalties. Section 293(a) was enacted in 1970 and has existed, without change, since that time. See Laws of Maryland 1970, ch. 403. The two-time loser provision of § 286(c) was enacted 12 years later, see Laws of Maryland 1982, ch. 770, and except for relettering, see Laws of Maryland 1988, ch. 439, has not been changed. As we have seen, only § 286(g) provides any basis for discerning the intent of the General Assembly on the issue here presented.
"It is apparent that §§ 286(c) and 293(a) are highly penal statutes, and, as we have seen, their application to enhance a sentence *295 on a single count is ambiguous. An ambiguous penal statute is subject to the "rule of lenity," which requires that such statutes be strictly construed against the State and in favor of the defendant.
* * * *
"Finally, when the Legislature has both wanted to increase the maximum penalty and to impose a mandatory minimum sentence for a second or subsequent offense, it has done so unequivocally, in clear and unambiguous terms...."
Id. at 649-52, 689 A.2d at 613-15 (some citations and statutory references omitted). This reasoning is equally applicable to the issue sub judice.
The language of § 286(f), like that of § 293, Gardner, 344 Md. at 648, 689 A.2d at 613, viewed in isolation, is quite clear. And, as in Gardner, both statutes enhance a defendant's sentence in different ways. Section 286(f), like § 286(c), prescribes a mandatory minimum sentence, which may not be suspended, but the former applies to a defendant convicted of possessing more than fifty grams of crack cocaine, rather than to one who is a subsequent offender. On the other hand, "[s]ection 293 enhances the permissible maximum sentence by permitting the imposition of twice the otherwise allowable sentence for those who are subsequent offenders." Whack v. State, 338 Md. 665, 683, 659 A.2d 1347, 1355. When § 286(f) is read in conjunction with the other subsections of § 286, including subsection (g), and with § 293(a), to which subsection (g) explicitly refers, it is clear that its application, and that of § 293(a), to the same count, as in the case of §§ 286(c) and 293(a), see Gardner, 344 Md. at 649-50, 689 A.2d at 613-14, is ambiguous and not at all clear. Moreover, the legislative history of § 286(f), rather than clearing up the ambiguity, actually confirms it.
Subsection (f) was added to § 286, along with subsection (g), in 1989, when the Legislature enacted "The Drug Kingpin Act." See 1989 Md. Laws, ch. 287. Although enacted simultaneously, only in § 286(g) did the legislature specifically authorize the enhancement of the prescribed sentence pursuant to § 293(a). As we pointed out in Gardner, inclusion of such a provision in § 286(g)(5) would not have been necessary if "the enhancement statutes [were] clear both in their language and application." Id. at 650, 689 A.2d at 614. It follows, therefore, that § 286(f) is more, not less, ambiguous in this context than was § 286(c).
The Court of Special Appeals interpreted the Gardner decision as prohibiting the enhancement of a sentence on a single count twice under two subsequent offender statutes or provisions, arguing, by way of contrast, that "[t]he court here enhanced [the petitioner's] sentence as a subsequent offender only after the State proved that [the petitioner] possessed more than fifty grams of [crack] cocaine with the intent to distribute it." The State agrees, but stresses that the proof was required to be, and was, presented at trial. We are not persuaded. As the petitioner points out, the primary basis for this Court's holding in Gardner was not that § 286(c) was a subsequent offender statute, but rather the absence of a specific reference in that provision to § 293. Indeed, although, in this case, we address a different subsection of § 286, the question to be answered is the same, namely whether the Legislature intended that sentences already enhanced pursuant to a subsection other than subsection (g), be further enhanced by § 293. The answer in this case, as in Gardner, is simply not clear; considering, the applicable statutes in context leaves a doubt as to whether both were intended to be applied to a single count of an indictment or information simultaneously.
Section 286(f), like § 286(c), is a highly penal statute, whose application in conjunction with § 293(a), another highly penal statute, see Gardner, 344 Md. at 651, 689 A.2d at 614, is ambiguous. Consequently, the "rule of lenity" applies. Applying the rule of lenity and being cognizant of the Gardner reasoning, it follows that only an enhanced sentence pursuant to § 286(g)(5) may be further enhanced pursuant to § 293(a). Accordingly, the same disposition is required in this case as was reached in Gardner, vacation of the judgment and remand for re-sentencing.
JUDGMENT OF THE COURT OF SPECIAL APPEALS REVERSED. CASE REMANDED *296 TO THE COURT OF SPECIAL APPEALS WITH DIRECTIONS TO VACATE THE SENTENCE AND REMAND THE CASE TO THE CIRCUIT COURT FOR KENT COUNTY FOR RESENTENCING CONSISTENT WITH THIS OPINION. COSTS IN THIS COURT AND IN THE COURT OF SPECIAL APPEALS TO BE PAID BY KENT COUNTY.
Dissenting opinion by RAKER, J., in which RODOWSKY and WILNER, JJ., join.
RAKER, Judge, dissenting:
The majority holds that, based on the rule of lenity, § 286(f) and § 293 of Maryland Code (1957, 1996 Repl.Vol., 1997 Supp.), Article 27,[1] may not be applied to enhance simultaneously the same count of a criminal sentence. Maj. op. at 295. Such an interpretation contradicts the plain meaning of the statutory provisions at issue. In addition, the result reached by the majority offends settled principles of statutory construction. Accordingly, I dissent.
Our focus properly turns to the plain language of § 286(f) and § 293. In pertinent part, the language of the base enhancement provision of § 293 states:
§ 293. Second or subsequent offenses.
(a) More severe sentence.Any person convicted of any offense under this subheading is, if the offense is a second or subsequent offense, punishable by a term of imprisonment twice that otherwise authorized....
The "HealthControlled Dangerous Substances" subheading encompasses §§ 276-313, inclusive. Thus, the scope of § 293 unambiguously extends to § 286(f).
Subsection 286(f)(1) provides that if a person commits certain offenses involving specified quantities of controlled dangerous substances, that person will be subject to the penalties provided in subsection 286(f)(3)(i). Subsection 286(f)(3)(i) provides in pertinent part:
A person convicted of violating paragraph (1) of this subsection is guilty of a felony and shall be sentenced as otherwise provided for in this section, except that it is mandatory upon the court to impose no less than 5 years' imprisonment, and neither that term of imprisonment nor any part of it may be suspended.
Nothing in the plain language of § 286(f) indicates that § 293 is inapplicable to a sentence imposed under that subsection. Simply stated, because § 286(f) is codified under the same subheading as § 293, the General Assembly has clearly demonstrated that the latter statutory provision may enhance a criminal sentence imposed under § 286(f).
Scott correctly observes that § 286(f) is an integral component of § 286, and that all statutory components of § 286 must be construed in harmony with one another. See Gargliano v. State, 334 Md. 428, 436, 639 A.2d 675, 678-79 (1994). Scott also accurately notes that § 293 is an enhancement provision based on prior criminal history, and that § 286 already contains three enhancement provisions based on prior criminal history: § 286(c), the "two-time loser" enhancement provision, § 286(d), the "three-time loser" enhancement provision, and § 286(e), the "four-time loser" enhancement provision. Hence, Scott argues, the framework of § 286 manifests the legislative intent that a sentence imposed under § 286 may be enhanced only by subsection (c), (d), or (e), if such an enhancement is based upon prior criminal history.
Scott's contention does not withstand scrutiny when examined in light of the evolution of § 286. When § 286 originally was enacted in 1970, that section contained only two subsections, § 286(a) and § 286(b). As this Court observed in Lewis v. State, 348 Md. 648, 654, 705 A.2d 1128, 1131 (1998):
Subsection (a) of § 286 codifies the offense of possession of a controlled dangerous substance with the intent to distribute that substance, and § 286(b) provides the garden variety penalty for violating § 286(a).
These two subsections and § 293 were enacted during the same legislative session. 1970 *297 Maryland Laws ch. 403, at 896-97, 900. Consequently, when § 293 took effect on July 1, 1970, it unambiguously applied to a sentence imposed under § 286(a).
Current subsection (c) of § 286, the first sentencing enhancement provision of § 286 based upon prior criminal history, was not enacted until 1982. 1982 Maryland Laws ch. 470, at 3046-48.[2] Scott argues that § 293 may not enhance a sentence imposed under either § 286(a) or § 286(f); rather, any enhancement based on prior criminal history may be made only under subsection (c), (d), or (e) of § 286.
Under Scott's interpretation, from 1970 until 1982, § 293 could validly enhance a sentence imposed under § 286(a). Under that same interpretation, after 1982, § 293 could no longer be used to enhance a sentence imposed under § 286(a). Such a result was not expressly contemplated by the plain language of the amendments to § 286 in 1982, and there is no indication in the legislative history of those amendments which demonstrates any intent to preclude the application of § 293 to a sentence imposed under § 286(a). It is a fundamental canon of statutory construction that repeal by implication is not favored. State v. Harris, 327 Md. 32, 39, 607 A.2d 552, 555 (1992). The majority's reasoning in this case flatly contradicts this principle.
Scott argues that this Court's decision in Gardner v. State, 344 Md. 642, 689 A.2d 610 (1997), controls the outcome in this case. Rather than reach a fair, logical result in light of the Gardner holding, the majority's opinion in this case contorts Gardner and reaches an unsound result. In Gardner, the Court held that § 286(c) and § 293 could not be imposed simultaneously to enhance a single criminal count. Id. at 644-45, 689 A.2d at 611. The majority in Gardner relied in part on the fact that another subsection of § 286, subsection (g)(5), contained specific language authorizing the application of § 293 to the offense contained in that subsection.[3] The Court stated:
Subsection [286](g)(5) expressly authorizes the enhancement of that sentence pursuant to § 293(a). If the [S]tate were correct that the enhancement statutes are clear both in their language and application, inclusion of that provision would have been unnecessary.
Id. at 650, 689 A.2d at 614. According to Gardner, the express reference to § 293 in § 286(g) led to the inference that by not referring to § 293 in § 286(c), the General Assembly did not intend the doubling provisions of § 293 to apply to § 286(c).
If the reasoning in Gardner were extended to its logical end, the result would be contrary to the Legislature's intent. As noted, the majority in Gardner reasoned that the favorable reference in § 286(g) to § 293 necessarily implied that the Legislature did not intend for § 293 to enhance a sentence simultaneously with § 286(c). If extended logically, it would follow from this premise that the reference in § 286(g) to § 293 necessarily excluded § 293 from simultaneously enhancing any sentence imposed under any other subsection of § 286. Indeed, Scott makes that argument before this Court. It is significant to note, however, that nothing in the plain language or legislative history of § 286 or § 293 reflects the intent to exclude all of § 286, save subsection (g), from the enhancing provisions of § 293.
Moreover, logic dictates that the preclusive effect of indiscriminately applying the canon expressio unius est exclusio alterius would extend beyond merely § 286. By its express terms, § 293 applies to the entire controlled dangerous substances subheading. The fair extension of the argument Scott makes in this case is that by including a reference to § 293 in § 286(g), the drug kingpin subsection, the General Assembly intended to exclude § 293 from simultaneously enhancing any other statutory provision in the entire controlled dangerous substance subheading. For instance, in this case, Scott's conviction for importing cocaine into the State of Maryland *298 in violation of § 286A(a)(2) could not be enhanced by § 293. Such an interpretation effectively engrafts § 293 as a separate paragraph under § 286(g), without any indication of such an intent expressed in the plain language, legislative history, or other surrounding circumstances of either provision. To avoid this unwarranted result, this Court should interpret Gardner to stand for the following proposition: When based upon the same underlying factual predicate (i.e., prior criminal history), to infer an intent that multiple sentencing enhancement provisions in the same statutory scheme will be applied simultaneously to a single count, the statutory language must expressly reflect that intent. Such a principle is consistent with the holding of Gardner and makes sense.
In this case, § 286(f) enhances a sentence based upon the quantity and type of controlled substance involved, while § 293 enhances a sentence based upon prior criminal history. The underlying factual predicate for these enhancement provisions is distinct. See Wadlow v. State, 335 Md. 122, 128-29, 642 A.2d 213, 216 (1994) ("In Maryland, ... we have generally drawn a distinction between sentence enhancement provisions that depend upon prior conduct of the offender and those that depend upon the circumstances of the offense.").
Gardner was based on the premise that the General Assembly might have implicitly intended for only one sentencing enhancement provision to apply when multiple enhancement provisions were based upon the same underlying factual predicate, and accordingly, the rule of lenity applied. Gardner, 344 Md. at 651-53, 689 A.2d at 614-15. Whereas here, multiple enhancement provisions are based upon different factual predicates, no such danger reasonably exists, absent legislative intent to the contrary.
The Court of Special Appeals held that the trial court did not err in sentencing Scott to twenty-eight years under § 286(f) and § 293. In distinguishing Gardner from the instant case, that court reasoned:
Section 286(c), unlike section 286(f), is a subsequent offender provision. In Gardner, the trial court enhanced defendant's sentence twice: once by the subsequent offender provision of section 286(c), and once by the subsequent offender provision of section 293. In the instant case, however, in order to invoke the mandatory minimum term under section 286(f), the State had to specifically charge and prove that the crime involved a certain quantity of the drugs as set forth in section 286(f). Once the State had proven the amount as an element of the crime, the court could apply the sentencing provisions requiring the five year mandatory minimum. Section 286(c), in contrast, is purely a subsequent offender provision invoked after trial during the sentencing phase, as is section 293. What the Court of Appeals found illegal in Gardner, namely enhancing the sentence on a single count twice under two subsequent offender provisions, did not occur in the instant case. The court here enhanced appellant's sentence as a subsequent offender only after the State proved that appellant possessed more than fifty grams of cocaine with the intent to distribute it.
(Internal citation omitted). The Court of Special Appeals was correct. We should affirm the judgment.
Whatever one may think of the wisdom of mandatory sentencing, I believe the policy decision is one for the General Assembly, and not for this Court. We should not create an ambiguity where none exists in order to apply the rule of lenity. Accordingly, I dissent.
Judge RODOWSKY and Judge WILNER have authorized me to state that they join in the views expressed herein.
NOTES
[1] That section provides:
"(b) Any person who violates any of the provisions of subsection (a) of this section with respect to:
"(1) A substance classified in Schedules I or II which is a narcotic drug is guilty of a felony and is subject to imprisonment for not more than 20 years, or a fine of not more than $25,000, or both"
Unless otherwise indicated, all future statutory references will be to Maryland Code (1957, 1996 Repl.Vol.) Article 27.
[2] "(a) Except as authorized by this subheading, it is unlawful for any person:
"(1) To manufacture, distribute, or dispense, or to possess a controlled dangerous substance in sufficient quantity to reasonably indicate under all circumstances an intent to manufacture, distribute, or dispense, a controlled dangerous substance;"
[3] Maryland Rule 4-245, in pertinent part, provides:
"(b) Required Notice of Additional Penalties. When the law permits but does not mandate additional penalties because of a specified previous conviction, the court shall not sentence the defendant as a subsequent offender unless the State's Attorney serves notice of the alleged prior conviction on the defendant or counsel before the acceptance of a plea of guilty or nolo contendere or at least 15 days before trial in circuit court or five days before trial in District Court, whichever is earlier.
"(c) Required Notice of Mandatory Penalties. When the law prescribes a mandatory sentence because of a specified previous conviction, the State's Attorney shall serve a notice of the alleged prior conviction on the defendant or counsel at least 15 days before sentencing in circuit court or five days before sentencing in District Court. If the State's Attorney fails to give timely notice, the court shall postpone sentencing at least 15 days unless the defendant waives the notice requirement."
[4] That section, in part, provides:
"(a) More severe sentence.Any person convicted of any offense under this subheading is, if the offense is a second or subsequent offense, punishable by a term of imprisonment twice that otherwise authorized, by twice the fine otherwise authorized, or by both."
[5] That section, in pertinent part, provides:
"(c)(1) A person who is convicted under subsection (b)(1) or subsection (b)(2) of this section, or of conspiracy to violate subsection (b)(1) or (b)(2) of this section shall be sentenced to imprisonment for not less than 10 years if the person previously has been convicted:
"(i) Under subsection (b)(1) or subsection (b)(2) of this section;
"(ii) Of conspiracy to violate subsection (b)(1) or subsection (b)(2) of this section; or
"(iii) Of an offense under the laws of another state, the District of Columbia, or the United States that would be a violation of subsection (b)(1) or subsection (b)(2) of this section if committed in this State.
"(2) The prison sentence of a person sentenced under subsection (b)(1) or subsection (b)(2) of this section, or of conspiracy to violate subsection (b)(1) or subsection (b)(2) of this section or any combination of these offenses, as a second offender may not be suspended to less than 10 years, and the person may be paroled during that period only in accordance with Article 31B, § 11 of the Code."
[1] Unless otherwise specified, all statutory references herein shall be to Maryland Code (1957, 1996 Repl.Vol., 1997 Supp.), Article 27.
[2] Subsection 286(f) was enacted by Chapter 287 of the Acts of 1989 as a part of the "Drug Kingpin Act." See 1989 Maryland Laws ch. 287, at 2415-16.
[3] Subsection 286(g)(5) reads in relevant part:
Nothing contained in this subsection prohibits the court from imposing an enhanced penalty under § 293 of this article.
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720 A.2d 1193 (1998)
124 Md. App. 23
Edith GARRETT
v.
STATE of Maryland.
No. 121, Sept. Term, 1998.
Court of Special Appeals of Maryland.
December 1, 1998.
Mark E. Herman, Baltimore, for Appellant.
Michael A. Fry, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., on the brief), Baltimore, for Appellee.
Argued before SALMON and ADKINS, JJ., and PAUL E. ALPERT, Judge (retired), Specially Assigned.
PAUL E. ALPERT, Judge (retired), Specially Assigned.
Appellant, Edith Garrett, sued appellees, the Mayor and City Council of Baltimore and the State of Maryland, in the District Court of Maryland for Baltimore City for negligence. Appellees requested a jury trial, and the case was transferred to the Circuit Court for Baltimore City. Ms. Garrett subsequently filed another complaint in the circuit court, as she was required to do by Rule 2-326(c); nevertheless, that complaint was filed roughly three weeks after the deadline set by the rule. Because of Ms. Garrett's tardiness in filing her circuit court complaint, the State moved to strike her complaint pursuant to Rule 2-322(e). That motion was granted, and this appeal followed.
ISSUES
Ms. Garrett raises three issues, which we reorder and rephrase:
*1194 I. Whether the circuit court erred when it granted the State's motion to strike.
II. Whether the State, as the party filing the motion to strike, bore the burden of proof on the issue of prejudice resulting from Ms. Garrett's tardy complaint.
III. Whether the circuit court erred when it dismissed Ms. Garrett's complaint.
THE PROCEEDINGS
Ms. Garrett's District Court complaint, filed on May 30, 1997, contained allegations that several sheriff's deputies knocked her down while pursuing a suspect in the Clarence Mitchell Courthouse in Baltimore; the complaint also asked for $20,000 in damages. Both the State and the Mayor and City Council of Baltimore subsequently filed motions for a jury trial, and the case was removed to the Circuit Court for Baltimore City.
On July 17, 1997, the clerk of the circuit court mailed a notice of removal to all parties in the case. Thus, under Rule 2-326(c), Ms. Garrett had 30 daysuntil August 16, 1997 to file another complaint in the circuit court. Ms. Garrett failed to do so until September 8, 1997.
On September 17, the State filed a motion to strike pursuant to Rule 2-322(e). Ms. Garrett filed a response in which she argued that: 1) the State had the burden, in its motion, to establish prejudice from the delayed filing; 2) the State had failed to meet its burden; and 3) the State had not been prejudiced by the tardiness of the circuit court complaint. The State, in turn, filed a response which asserted that: 1) Ms. Garrett had the burden of establishing that the State had not been prejudiced by the delayed filing; and 2) the State had, in fact, been prejudiced by Ms. Garrett's tardiness. On October 27, 1997, the circuit court granted the motion to strike without holding a hearing or issuing an opinion.
DISCUSSION
I. Grant of Motion to Strike
Ms. Garrett's suit in District Court was one over which both the District Court and the Circuit Court have concurrent jurisdiction. See Md.Code Ann. § 4-402(d) (1997 Supp.) of the Courts and Judicial Proceedings Article. Accordingly, when the case was transferred to the circuit court, Ms. Garrett was required, pursuant to Rule 2-326(c), to refile her complaint in the circuit court. Rule 2-326(c) provides:
(c) Action not within exclusive original jurisdiction of the District Court. When the action transferred is one over which the District Court does not have exclusive original jurisdiction, a complaint complying with Rules 2-303 through 2-305 shall be filed within 30 days after the date the clerk sends the notice required by section (a) of this Rule. The complaint shall be served pursuant to Rule 1-321. The defendant shall file an answer or other response within 30 days after service of the complaint. The action shall thereafter proceed as if originally filed in the circuit court.
Ms. Garrett failed to file her circuit court complaint within 30 days of the date the clerk mailed a notice of the transfer. Thus, the State, pursuant to Patapsco Associates Limited Partnership v. Gurany, 80 Md.App. 200, 560 A.2d 611 (1989), moved to strike Ms. Garrett's complaint. In Patapsco, this Court held that when a plaintiff fails to file timely a complaint pursuant to Rule 2-326(c), the complaint is subject to a Rule 2-322(e) motion to strike. 80 Md.App. at 203-04, 560 A.2d 611. We also held that such a motion should be granted only if the delay prejudices the defendant. Id. at 204, 560 A.2d 611.[1]
In the proceedings below, the parties' arguments revolved around two separate issues: 1) whether the State had the burden of establishing prejudice from Ms. Garrett's late filing; and 2) whether the State suffered any prejudice from Ms. Garrett's tardiness. When it granted the motion to strike, the *1195 circuit court failed to specify which of these two grounds formed the basis for its decision; and in this appeal, the parties spend most of their time arguing over the first issue whether the State had the burden of establishing prejudice. We, however, believe that the case must be reversed on either ground. The record shows fairly clearly that the State did not suffer any prejudice from the delay; and, for that reason, the motion should not have been granted.
That the State did not suffer any prejudice from the delayed filing is demonstrated most clearly through adherence to the requirements of the Maryland Tort Claims Act, which governed this suit. Under Md.Code Ann. § 12-106(b) (1995 Repl.) of the State Government Article, Ms. Garrett was required to notify the State of her claim within one year after her injury; and there is no dispute that Ms. Garrett did, in fact, notify the State of her claim within the specified time limit. Thus, the State clearly had early notice of, and an ample opportunity to investigate, Ms. Garrett's claim; and for this reason, the State's ability to investigate Ms. Garrett's claim was not hampered by her tardy complaint.
The only other possible prejudice caused by the late filing was the alleged inability of the State to file a third-party complaint against Leonard Thomas, the person whom the sheriff's deputies were chasing when Ms. Garrett was knocked down. According to the State, Ms. Garrett's tardiness prevented it from filing its claim against Mr. Thomas. As Ms. Garrett notes in her brief, however, there has been no indication that Mr. Thomas could have been served during the period of her delay; and in the absence of such a showing, any assertion of prejudice must fail.
In sum, the State did not suffer any tangible detriment from Ms. Garrett's three-week delay. Because of the lack of prejudice, the motion to strike should not have been granted.
II. Burden of Proof
In determining who has the burden of proof in a motion to strike filed under Rule 2-322(e), it is useful first to review some general principles governing the allocation of burdens of proof. As an initial matter, we note that the allocation of a burden of proof is a question that is determined by considerations of the circumstances of a particular case. See Plummer v. Waskey, 34 Md.App. 470, 368 A.2d 478 (1977) (In regard to civil proceedings, burden of ultimate persuasion as well as burden of producing evidence may be allocated to either party on any particular issue as the emerging common law deems appropriate and fair). That said, the general practice is to allocate the burden of proof to the party asserting the affirmative of an issue, or seeking to change the status quo. See Operations Research, Inc. v. Davidson & Talbird, Inc., 241 Md. 550, 217 A.2d 375 (1966) (Burden of proof rests on party who has affirmative of issue; although in some circumstances duty of going forward with evidence may shift to other side, burden of proof remains); Singewald v. Singewald, 165 Md. 136, 166 A. 441 (1933) (One asserting affirmative has the burden of proof); Noffsinger v. Noffsinger, 95 Md.App. 265, 620 A.2d 415, cert. denied, 331 Md. 197, 627 A.2d 539 (1993) (Burden of proving a fact is generally on the party bearing the affirmative of an issue); Daniels v. Superintendent, Clifton T. Perkins State Hospital, 34 Md.App. 173, 366 A.2d 1064 (1976) (In most cases, party who has burden of pleading a fact or who has affirmative of an issue will have burden of producing evidence of the fact and of persuading jury of its existence); Chesapeake & Potomac Telephone Company of Maryland v. Hicks, 25 Md.App. 503, 337 A.2d 744 (1975) (Burden of proof is generally on party asserting the affirmative of the issue, as determined by the pleadings and the nature of the case). The other major consideration is whether particular facts are more readily available to one party or another; if so, the burden of proving those facts is sometimes placed on the party with that special knowledge or availability. See Lake v. Callis, 202 Md. 581, 97 A.2d 316 (1953) (Burden of proving a fact is on party who presumably has peculiar means of knowledge enabling him to prove its falsity).
These considerations weigh strongly in favor of placing the burden of proof on the issue of prejudice on the party advancing the *1196 motion to strike. Indeed, that party is asserting the affirmative of the issue; and that party would also appear the one who could more easily demonstrate that prejudice has occurred.
Added to these considerations is the fact that we are dealing here with a motion to strike under Rule 2-322(e). Although Rule 2-322(e) itself does not indicate which of the two partiesthe one making the motion or the one opposing the motionhas the burden of proof, other rules do allocate the burden of proof for specified motions to strike. For example, Rule 2-331(d) allows a party no more than 30 days after its answer is due to file a counterclaim. If a counterclaim is filed more than 30 days after the date a party's answer is due, "any other party may object to the late filing by motion to strike filed within 15 days of service of the counterclaim or cross-claim." Id. Further, the rule directs that "[t]he court shall grant the motion to strike unless there is a showing that the delay does not prejudice other parties to the action." Id. (emphasis added). As this Court recognized in Mattvidi Associates Limited Partnership v. NationsBank of Virginia, 100 Md.App. 71, 639 A.2d 228 (1994), this language clearly places the burden of proof on the non-moving party. The State argues that Mattvidi places the burden of proof on the non-moving party in all situations which a motion to strike has been filed. In light of the fact that the case specifically involved an application of Rule 2-331(d), the State's assertion is clearly wrong; and, as noted below, the fact that Rule 2-331(d) places the burden of proof on the non-moving party in situations specified by the rule strengthens the notion that in other situations involving a motion to strike, the moving party may have the burden of proof. Id. at 80, 639 A.2d 228. A nearly identical provision in Rule 2-332(e) governs late-filed third-party claims.[2]
In light of the general principles governing allocations of burdens of proof, and in light of the fact that the Court of Appeals placed the burden of proof on the non-moving party only in specific motions to strike, we hold that in a situation like the one presented herewhere a motion to strike has been filed in response to a tardily-filed complaint under Rule 2-326(c)the moving party has the burden of proving that it has been prejudiced by the tardiness.
III. Dismissal With Prejudice
In light of the foregoing discussion, we need not address Ms. Garrett's third issue.
JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY REVERSED. CASE REMANDED TO THAT COURT FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION.
APPELLEE TO PAY THE COSTS.
NOTES
[1] Rule 2-326(c) fails to provide a remedy for a plaintiff's tardy filing of a complaint. Our holding in Patapsco addressed this problem.
[2] The fact that the Court of Appeals specifically placed the burden of proof on the non-moving party in these specific situations arguably indicates that the Court intended that, in other situations, the party making the motion to strike may have the burden of proof. Had the Court intended otherwise, the language in Rules 2-331(d) and 2-332(e) specifically placing the burden of proof on the non-moving party may have been unnecessary.
Rule 2-332(e) provides:
(e) Time for filing. If a party files a third-party claim more than 30 days after the time for filing that party's answer, any other party may file, within 15 days of service of the third-party claim, a motion to strike it or to sever it for separate trial. When such a motion is filed, the time for responding to the third-party claim is extended without special order to 15 days after entry of the court's order on the motion. The court shall grant the motion unless there is a showing that the late filing of the third-party claim does not prejudice other parties to the action.
(emphasis added).
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25 Cal.Rptr.3d 82 (2005)
126 Cal.App.4th 1330
Eric C. HSU et al., Plaintiffs and Appellants,
v.
SEMICONDUCTOR SYSTEMS, INC. et al., Defendants and Appellants.
Nos. A097708, A097974, A098305.
Court of Appeal, First District, Division Four.
February 17, 2005.
Rehearing Denied March 17, 2005.
*83 Gray Cary Ware & Freidenrich, Richard I. Yankwich, East Palo Alto, Stanley J. Panikowski, Barry D. Roe, San Diego, Andrew P. Valentine, East Palo Alto, Kathryn E. Karcher, San Diego, Counsel for Plaintiffs and Appellants.
Folger Levin & Kahn LLP, Michael A. Kahn, Roger B. Mead, Michael F. Kelleher, San Francisco, Andrew J. Davis, West Covina, Counsel for Defendants and Appellants.
Certified for Partial Publication.[*]
SEPULVEDA, J.
Employee shareholders of a closely-held corporation transferred ownership of the shares of a former employee to themselves just before a merger that significantly increased the value of the corporate shares. The acquiring shareholders claimed they "purchased" the shares pursuant to an employee shareholder agreement entitling them to acquisition at book value. A jury found that any right to purchase shares at book value pursuant to the agreement was either held by the corporation alone, not the shareholders, or had elapsed before the alleged right was exercised.
The jury awarded the former employee $2.4 million in compensatory damages upon concluding that no contractual right to purchase the shares had existed, and that the transfer of shares occurred with *84 nondisclosure of the pending merger. The jury returned a verdict finding breach of contract, intentional interference with prospective economic advantage, conversion, and violations of the California Corporations Code. Additionally, a bench trial following the jury's verdict determined that the corporation's management breached their fiduciary duty by withholding information from the former employee, who had remained a corporate shareholder. In addition to the compensatory damages award, the court awarded the former employee over $2 million in costs and attorney fees.
This appeal followed, along with a cross-appeal by the prevailing former employee who challenges an adverse summary adjudication of his punitive damages claim and seeks remand for trial on punitive damages alone. We reject most of the contentions on both the appeal and cross-appeal, and affirm the judgment except for modifications in the cost award and one statutory claim.
I.
FACTS
A. Corporate Formation.
Defendant Semiconductor Systems, Inc. (SSI) built and sold equipment used in manufacturing computer semiconductor chips. SSI was formed in 1990 as an employee-owned, closely-held corporation. Plaintiff Eric C. Hsu was a founder, officer, director, and the largest shareholder of SSI, eventually holding 20 percent ownership.[1] Defendants Michael L. Parodi, Jr., Gerald E. Masterson, and Douglas K. Amis were also founders, officers, directors, and major shareholders (collectively, management defendants).[2] Hsu was SSI's vice-president of sales and marketing; Parodi was initially vice-president of engineering and succeeded to the post of president and chairman of the board of directors; Masterson was vice-president of finance, chief financial officer (CFO), and secretary to the board; and Amis was vice president of human resources.
SSI was formed through a management buyout of an existing corporation. Management borrowed the purchase money and, in conjunction with that loan, Hsu pledged his SSI stock as security for repayment and delivered his share certificate to the lender. The security pledge agreement was also accompanied by a blank form assignment of all SSI shares Hsu might acquire, to be used by the lender if SSI defaulted on its loan. The pledge agreement provided that it would terminate upon repayment of the loan, and promised that the share certificate and stock assignment would then be returned to Hsu. The loan was repaid in less than two years, and the lender delivered the share certificates and stock assignments to SSI. However, SSI did not forward those share certificates to Hsu or the other shareholders, but retained them.
B. Employee Stock Purchase and Shareholder Agreement.
Meanwhile, each of the shareholders had signed an "Employee Stock Purchase and Shareholder Agreement" (Agreement) upon formation of SSI that restricted *85 disposition of shares.[3] A shareholder could not sell his or her shares without first giving SSI an opportunity to purchase the shares itself or, failing such an election, giving the other shareholders an opportunity to purchase the shares. There is also a purchase right if the employee-shareholder leaves the company, although whether that right inures to the benefit of SSI alone, or to shareholders as well, is a point of contention. It is clear, however, that any right to purchase shares of a departing employee is a right, not an obligation. If the purchase right under the Agreement is not exercised, the departing employee may keep the shares.
The right to purchase is also strictly limited in time and commences upon "the cessation of [the share] Purchaser's employment." The corporation's right to purchase a departing employee's shares must be exercised within 60 days of cessation of employment or within 45 days after the corporation's receipt of the departing shareholder's written notice of cessation of employment, whichever is later. Assuming the shareholders have a right to purchase a departing employee's shares if the corporation does not opt to purchase, then the corporation has seven days after termination of its option to buy to notify the shareholders of the availability of the shares and the shareholders have seven days from their receipt of notice to elect a purchase. Shares purchased from a departing employee are bought at book value (the employee-shareholder's portion of undistributed corporate profits).
C. Hsu's departure from SSI.
Hsu left SSI in the summer of 1995. The exact date of Hsu's cessation of employment, which triggered the time-restricted right to buy Hsu's shares, is disputed. Defendants maintain that Hsu's cessation of employment coincided with his August 24, 1995 notice of resignation. Plaintiff Hsu maintains that his cessation of employment occurred when he left the company on July 28, 1995 for a so-called "leave of absence" that was, in reality, a termination.
At trial, Hsu testified that he was offered an executive position at KLA Instruments Corporation (KLA) in Taiwan, and advised Parodi and Amis, SSI's president and vice-president of human resources, of his decision to accept the position over lunch on June 29, 1995. Hsu told the SSI executives that he would like to take a leave of absence, rather than to resign immediately, to blunt the impact of his departure for the company's benefit. Hsu also wanted leisure time with his family before relocating to Taiwan. However, Hsu testified at trial that he clearly told the SSI executives that he would not return to SSI after his leave of absence. Amis's journal entry for June 29, 1995 is corroborative, though more equivocal than Hsu's testimony. Amis wrote that Hsu informed SSI that Hsu "wants to take a L.O.A. and probably will not return to the company." Parodi conceded at trial that SSI management's expectation was that Hsu "would not return from the leave of absence."
The testimony of Hsu and Parodi is consistent in establishing that Parodi asked Hsu not to announce his leave of absence until after an important industry conference in mid-July 1995. Hsu agreed to limit his announcement to a few people, and told only CFO Masterson, certain SSI sales personnel, and a couple of customer *86 contacts before the July 1995 conference. One of those SSI sales personnel, defendant Fey, corroborated the fact that Hsu announced to some members of the SSI sales staff before the July 1995 conference that Hsu was "leaving the company." Fey understood that Hsu "would not be returning as an employee."
Hsu testified that he made a general announcement to his sales and marketing department on July 13, 1995, the last day of the industry conference, that he was taking a leave of absence, at the completion of which he would not return to SSI but would instead work at KLA. Hsu completed a form request for leave of absence covering the period from July 28, 1995 to September 30, 1995, using dates Hsu said SSI's Amis told him to use. Hsu testified that he told SSI's human resources department, when completing the form, that he was taking a month's leave of absence and then would start work at KLA. Hsu's salary and medical insurance were terminated at the start of his leave of absence.
Hsu physically left SSI on Friday, July 28, 1995. Hsu testified that he packed and removed his personal belongings and returned his security badge. Hsu had planned to start work at KLA in September, after time off from work, but instead started at KLA on the following Monday, July 31, 1995. Hsu initially worked for KLA in the San Francisco Bay Area, and then split time between California and Taiwan.
The journal entries of SSI management following Hsu's physical departure indicate that management understood that Eric Hsu was not returning. Amis, the vice-president of human resources, may have begun efforts to replace Hsu as vice-president of sales and marketing. Amis's journal entry on his task list for August 17, 1995 states: "Search of VP sales." On that same day, CFO Masterson's task list includes the notation: "Get Eric off Records."
On August 24, 1995, Hsu faxed notice of resignation to SSI's management, Parodi, Masterson, and Amis. Hsu wrote: "This memo is to inform you regarding my resignation, from the position of Vice President of Sales and Marketing at Semiconductor Systems Inc. start this date." Hsu testified that he sent the letter because he had told SSI that he was taking a month's leave of absence beginning July 28, 1995, and was writing about a month later "to have closure." SSI replied to Hsu on August 24, 1995, accepting his resignation "effective this date."
D. Failed negotiations to purchase Hsu's SSI corporate shares.
When Hsu provided his notice of resignation on August 24, 1995, he also wrote to SSI management saying that he wanted to sell his SSI stock back to the company and requesting corporate financial documents to assess any purchase proposal. Hsu was not aware of any purchase rights under the Agreement. Hsu testified that SSI had previously purchased shares of departing employee-shareholders at what Hsu believed were freely negotiated prices. Hsu intended to keep his shares if he and SSI could not agree on a price.
SSI initially expressed no interest in purchasing Hsu's stock, and told him he should keep his shares. However, SSI agreed to get back to Hsu with a proposal, and did so on September 28, 1995. SSI's proposal did not invoke the Agreement, and offered a price below the Agreement's formula book value. SSI represented the book value of Hsu's shares at $1.86 million, and offered a maximum of $750,000 based on a liquidation value. As of this time, SSI had not made any mention of the Agreement, or its provisions for purchasing *87 a departing employee-shareholder's stock.
In October 1995, Hsu told SSI's CFO Masterson that Hsu could not accept the proposal without supporting financial documentation as to the value of the shares, which Masterson agreed to provide. Hsu also told Masterson that Hsu intended to seek outside advice on valuing his shares. Shortly after Hsu's conversation with Masterson, SSI increased its offer to $1.8 million on October 27, 1995. In SSI's written offer, Masterson said he calculated the figure under the Agreement's "purchase price formula," but the amount would have to be paid over four years and payment was subject to approval by SSI's bank. This was SSI's first mention of the Agreement since Hsu's departure from the company.
Hsu and Masterson both testified that SSI was not attempting to invoke its rights under the Agreement at this time and that the parties were continuing their negotiations outside the Agreement. In fact, Masterson conceded at trial that any right that SSI had to purchase Hsu's shares under the Agreement had lapsed. SSI's right under the Agreement to buy Hsu's shares expired by October 23, 1995, at the latest, even assuming that Hsu ceased employment upon his written resignation on August 24, 1995, and not the earlier date of the designated leave of absence. Hsu did not accept SSI's October 27, 1995 offer, and continued to insist on reviewing the company's financial documents.
E. SSI negotiates a merger with another company.
Meanwhile, SSI was exploring various financing alternatives to sustain growth. In late September 1995, FSI International, Inc. (FSI), expressed interest in the possibility of a financial transaction with SSI. On October 10, 1995, SSI hired an investment banking firm to evaluate its financing alternatives. FSI executives toured SSI facilities, and SSI and FSI signed a non-disclosure agreement for sharing corporate information, on November 1, 1995. SSI management (Parodi, Masterson, and Amis) toured FSI facilities on November 16 and 17, 1995, as discussions continued. The possibility of a merger was under consideration by November 1995. Draft merger agreements were circulated between SSI and FSI beginning in mid-December 1995, and SSI approved the merger on February 4, 1996. The merger agreement was signed February 5, 1996, and the transaction closed in April 1996. SSI shareholders realized a multimillion dollar profit.
F. SSI shareholders acquire Hsu's shares.
Parodi, Masterson, and Amis of SSI did not disclose to Hsu their discussions with FSI leading to the merger. In late October 1995, after FSI expressed an interest in discussing financial arrangements with SSI, SSI took a different approach in dealing with Hsu. Previously, SSI had proposed purchasing Hsu's shares outside the Agreement, at negotiated terms.
SSI now tried for a shareholder purchase under the Agreement. On October 30, 1995, SSI notified its shareholders (except Hsu) that limitations imposed by the company's bank could restrict SSI from purchasing Hsu's shares, and offered the shareholders an opportunity to buy Hsu's shares at book value. Parodi and Masterson informed the shareholders that SSI was investigating financial partnerships, and that investment representatives valued the company higher than its book value. In fact, written materials provided to the shareholders went so far as to say that the market value of Hsu's shares "far exceeds" the book value, and that a merger or other *88 event "leading to at least partial liquidity" could occur in the next 12 months.
The shareholders were asked to make their purchase elections by November 3, 1995. The shareholders returned elections to purchase Hsu's shares dated between October 30 and November 3, 1995. Assuming the shareholders had a right to purchase a departing employee's shares (a disputed point), elections through November 3, 1995 would be timely only if Hsu ceased employment upon his written resignation on August 24, 1995, and not the earlier date of the designated leave of absence.
Masterson of SSI wrote to Hsu on November 3, 1995, stating that the shareholders were exercising their purported right under the Agreement to purchase Hsu's shares at book value, which Masterson said was $1.8 million the same price offered by Masterson in his October 27, 1995 letter. Masterson asked Hsu to specify his payment instructions, and indicated a desire to close the transaction by November 20, 1995. Hsu telephoned Masterson on November 14, 1995, and again the next day, and advised Masterson that Hsu was still awaiting financial documentation supporting Masterson's proposal. Masterson did not mention his recent invocation of the Agreement, and Hsu believed discussions were still open as to the sale of his shares. Masterson and Hsu agreed to discuss the matter further by telephone on November 21, 1995. Instead of a telephone call continuing discussions, Masterson sent a letter to Hsu on November 21, 1995, stating that SSI shareholders were exercising their right to purchase Hsu's shares under the Agreement, and enclosing an SSI company check for $1,803,847. The letter was delivered on the same day that SSI delivered a "term sheet" to FSI proposing a merger valued at $57 million.
Hsu did not believe that there was any difference between SSI's October 27, 1995 offer and the shareholders' November 1995 stated elections to buy. Hsu thought he was still negotiating with the company through Masterson. Before receiving SSI's latest letter and check, Hsu replied to SSI on November 22, 1995, that he was agreeable to SSI's October 1995 proposal to use book value in valuing the stock but said he wanted an audit to ascertain that value. Upon receiving SSI's check, Hsu immediately objected that no agreement had been reached to sell his shares. Hsu said that Masterson's letter and check were "invalid." Hsu did not cash the check.
After tendering the check to Hsu, SSI transferred ownership of Hsu's shares to the remaining shareholders over Hsu's prior objection without his knowledge. Under the Agreement, any transfer between shareholders was supposed to be accomplished by the departing employee's voluntary acceptance of the formula purchase price and delivery of his or her share certificates. Rather than obtaining Hsu's endorsement of his stock certificate as required by the Agreement, SSI used a blank form stock assignment signed by Hsu in a previous, unrelated transaction. As noted earlier, Hsu had pledged his SSI stock as security for repayment of a loan at the time of SSI's corporate formation. The security pledge agreement was accompanied by a blank form assignment of all SSI shares Hsu might acquire, to be used by the lender if SSI defaulted on its loan. The pledge agreement terminated years earlier upon repayment of the loan, and the stock assignment should have been returned to Hsu but was retained by SSI. It was that stock assignment document, executed by Hsu for the distinct purpose of securing a loan, that SSI used to transfer ownership of Hsu's shares to the remaining shareholders.
*89 SSI never told Hsu that it had transferred ownership of his shares to the other shareholders. On December 21, 1995, SSI wrote to Hsu agreeing to an audit and consideration of a price adjustment of its $1.8 million book value calculation, but without indicating that the shares had already been transferred. Hsu told SSI that he would not accept their proffered check for the purchase of his shares until the audit was complete. The audit was being arranged when, in February 1996, SSI publicly announced a merger with FSI. Hsu testified at trial that no agreement to sell his shares had ever been reached.
II.
TRIAL PROCEEDINGS
Hsu sued SSI and the individual defendant shareholders in October 1996 for breach of contract, breach of fiduciary duty, violation of the California Corporations Code, and related claims. On cross-motions for summary adjudication on multiple issues in November 1998, the court found that defendants' reliance upon the advice of counsel negated plaintiff Hsu's punitive damages claim.
Jury trial commenced in September 2000. In October 2000, the jury returned a verdict in plaintiff Hsu's favor on all submitted claims: breach of contract, intentional interference with prospective economic advantage, conversion, and Corporations Code violations. The jury found that defendant SSI breached the Agreement either because the individual shareholder defendants had no right to purchase Hsu's shares or because the shareholders' right to purchase had expired before the elections to buy were submitted. The jury also found that the management defendants (Parodi, Masterson, and Amis) intentionally interfered with Hsu's prospective economic advantage, and that all defendants wrongfully converted Hsu's shares. Finally, the jury found SSI and the management defendants liable for buying stock through means of negligent misrepresentation in violation of Corporations Code section 25401, among other Corporations Code violations by SSI and certain management defendants. The jury assessed damages for the contract and torts claims at $2.418 million, plus an additional sum later struck by the trial court for intentional interference with prospective economic advantage. The damages award appears founded upon the testimony of plaintiff Hsu's damages expert that the merger value of Hsu's shares was $4.218 million and he received only $1.8 million, for a difference of $2.418 million.[4]
In January 2001, the court held a bench trial on Hsu's equitable claims. After a tentative statement of decision and objections, the court issued its final statement of decision in November 2001. The court concluded that the management defendants (Parodi, Masterson, and Amis) breached fiduciary duties owed Hsu as a shareholder.
The court found that Hsu ceased employment with SSI on July 28, 1995, the date he started his purported leave of absence, but remained a shareholder until November 22, 1995, when SSI unilaterally transferred ownership of Hsu's shares. The court found that any right vested in the shareholders to buy Hsu's shares lapsed before the elections to buy were made. The management defendants' transfer of Hsu's shares in violation of the Agreement, and their failure to disclose *90 material information to Hsu, breached fiduciary duties owed Hsu as a shareholder.
In January 2002, posttrial motions for a new trial or judgment notwithstanding the verdict were denied, with the exception of an adjustment to the damages awarded for intentional interference with prospective economic advantage noted earlier. An amended and final judgment was entered on March 8, 2002. In addition to the $2.418 million compensatory damages award, the court also awarded Hsu over $1 million in prejudgment interest and approximately $2.3 million in costs and attorney fees. The parties timely appealed.
III.
DISCUSSION
A.-D.[**]
E. Costs.
The trial court awarded plaintiff Hsu $136,824.98 in costs. The award includes $69,466.08 for expert witness fees and general photocopying expenses, which defendants contend are not recoverable as costs. Defendants are correct. These two categories of expenses are "not allowable as costs, except when expressly authorized by law." (Code Civ. Proc., § 1033.5, subd. (b)(1) & (3).)
Plaintiff argues that the expenses are expressly authorized by law because contractual fee and cost provisions are enforceable, and the parties' Agreement states that the prevailing party shall recover "all fees, costs and expenses." (Civ.Code, § 1717, subd. (a).) Plaintiff argues that the broadly worded contractual cost provision expands the scope of recoverable costs beyond those costs permitted by statute. Some courts have rejected this argument outright, holding that the Legislature's intention that Civil Code section 1717 be uniformly applied precludes litigants from adopting a definition of costs different from the statutory definition. (E.g., Fairchild v. Park (2001) 90 Cal.App.4th 919, 928-930, 109 Cal.Rptr.2d 442.) Other courts have held that litigants may contractually define costs different from the statutory definition, although contractual costs provisions are presumed to adopt the statutory definition absent evidence to the contrary. (E.g., Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464, 491-492, 54 Cal.Rptr.2d 888 (Arntz).) As stated in Arntz, "an undefined general contractual provision entitling the prevailing party to `reasonable attorney's fees and costs' must be interpreted in light of Code of Civil Procedure section 1033.5's limited definition of costs." (Id. at p. 491, 54 Cal.Rptr.2d 888.) Nevertheless, "[w]hile it is reasonable to interpret a general contractual cost provision by reference to an established statutory definition of costs, we do not discern any legislative intent to prevent sophisticated parties from freely choosing a broader standard authorizing recovery of reasonable litigation charges and expenses." (Id. at p. 492, 54 Cal.Rptr.2d 888; see Davis v. KGO-T.V., Inc. (1998) 17 Cal.4th 436, 446-447, fn. 5, 71 Cal.Rptr.2d 452, 950 P.2d 567 [the effect of a contractual agreement for shifting litigation costs turns on the intentions of the parties].)
Plaintiff urges us to follow Arntz, and to construe the Agreement here as providing a standard of "costs" broader than the statutory definition. But the costs award is insupportable even if we were to do as plaintiff urges. Recovery of costs provided by contract must be specially pleaded and proven at trial, and not *91 awarded posttrial as was done here. (Arntz, supra, at p. 491, 54 Cal.Rptr.2d 888; First Nationwide Bank v. Mountain Cascade, Inc. (2000) 77 Cal.App.4th 871, 878-879, 92 Cal.Rptr.2d 145.) "[T]he proper interpretation of a contractual agreement for shifting litigation costs is a question of fact that `turns upon the intentions of the contracting parties.'" (First Nationwide Bank, supra, at p. 879, 92 Cal.Rptr.2d 145.) Accordingly, "the issue must be submitted to the trier of fact for resolution pursuant to a prejudgment evidentiary proceeding, not a summary postjudgment motion." (Ibid.)
Nor may the disputed costs be awarded to plaintiff as an element of attorney fees under the rationale that the expenses were disbursed by the attorneys in the course of litigation. We disavow this court's previous adoption of that view as an unwarranted conflation of fees and costs. (Bussey v. Affleck (1990) 225 Cal.App.3d 1162, 1167, 275 Cal.Rptr. 646.) As persuasively argued by our colleagues in the Third Appellate District in disagreeing with Bussey: "In the absence of some specific provision of law otherwise, attorney fees and the expenses of litigation, whether termed costs, disbursements, outlays, or something else, are mutually exclusive, that is, attorney fees do not include such costs and costs do not include attorney fees." (Ripley v. Pappadopoulos (1994) 23 Cal.App.4th 1616, 1626, 28 Cal.Rptr.2d 878.) We join other divisions of this district in following Ripley on this point. (First Nationwide Bank v. Mountain Cascade, Inc., supra, 77 Cal.App.4th at p. 878, 92 Cal.Rptr.2d 145; Robert L. Cloud & Associates, Inc. v. Mikesell (1999) 69 Cal.App.4th 1141, 1154, 82 Cal.Rptr.2d 143.)
Defendants also argue that $1,530.91 spent by plaintiff to expedite preparation of deposition transcripts is not recoverable as an item of costs. Standard transcription fees for "necessary" depositions are recoverable, but the extra cost for expediting transcripts may be allowed only in the exercise of the trial court's discretion. (Code Civ. Proc., § 1033.5, subds. (a)(3), (c)(4).) Plaintiff maintains that the trial court either found the extra deposition fees to be necessary or exercised its discretion in allowing recovery of these extra fees. Plaintiff notes that the court commented, at the hearing on costs: "I am not satisfied that [the expedited transcripts] are merely convenient." However, the court also said that the requested expedited deposition costs are "not allowed under the code section," and proceeded to award the costs under the parties' contract which, in the court's view, provided a more expansive definition of costs. The court erred in awarding costs not authorized by statute. We will therefore modify the judgment to strike the recovery of expert witness fees, general photocopying costs, and expedited deposition transcript fees, thus reducing the costs award by $70,996.99.
F. Cross-Appeal: Punitive Damages.[***]
IV.
DISPOSITION
The judgment is modified to strike the finding that defendant SSI violated Corporations Code section 25401 and to reduce the costs award to $65,827.99. As modified, the judgment is affirmed. The parties shall bear their own costs and attorney fees incurred on the appeal and cross-appeal.
We concur: KAY, P.J., and RIVERA, J.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of parts III. A., B., C., D., and F.
[1] Hsu's wife, Angie L. Hsu, consented to the stock purchase and is also a plaintiff. For convenience, Mr. Hsu alone is referred to as plaintiff because Ms. Hsu played no active role in the events at issue.
[2] SSI corporate shares were also held, in lesser amounts, by defendants Qui Van Nguyen, Michael E. Van De Ven, John Stephens, Louie C. Fredriksz, Richard T. Benventano, Steve G. Cruickshank, Richard K. Fey, Ronald L. Lindquist, and Melville H. Madden (collectively, nonmanagement defendants).
[3] The Agreement contains different provisions for vested and unvested shares, but vested shares alone are at issue here.
[4] The parties stipulated that Hsu eventually cashed SSI's tendered and refused $1.8 million check, without waiving his objections.
[**] See footnote *, ante.
[***] See footnote *, ante.
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23 Cal.Rptr.3d 920 (2005)
126 Cal.App.4th 726
David B. SCHACHTER, Plaintiff and Appellant,
v.
CITIGROUP, INC. et al., Defendants and Respondents.
No. B168847.
Court of Appeal, Second District, Division 7.
February 8, 2005.
Review Denied June 9, 2005.[*]
*921 Law Offices of Ashley D. Posner, Ashley D. Posner and Barbara Brudno, Los Angeles, for Plaintiff and Appellant.
Skadden, Arps, Slate, Meagher & Flom, Raoul D. Kennedy, David Pattiz, Douglas B. Adler, Los Angeles, and Seth M. Schwartz, Walnut Creek, for Defendant and Respondent.
ZELON, J.
In this class action, a stockbroker challenges his former employer's stock purchase plan, which used tax-deferred compensation to purchase restricted company stock for participating employees. If the employee resigned before the stock's vesting period, both the unvested shares and the deferred compensation applied toward their purchase were forfeited. Plaintiff contends the forfeiture provision violates the requirement to pay wages upon resignation (Lab.Code, 201-202), and constitutes conversion and unfair business practices (Bus. & Prof.Code, 17200, et seq.).
Early in the litigation, the trial court denied defendants' motion for summary judgment. Four years later, with no newly discovered facts, new circumstances, or any change in the law, defendants renewed their motion before a new trial judge. The court granted the motion under its inherent power to reconsider its own rulings sua sponte. We find the second motion was barred by Code of Civil Procedure section[1] 437c, subdivision (f)(2) ( 437c(f)(2)), *922 which requires a party moving for a second summary judgment motion to establish "newly discovered facts or circumstances or a change of law supporting the issues reasserted in the summary judgment motion." We conclude the trial court thus improperly reconsidered defendant's renewed summary judgment and reverse.
FACTUAL AND PROCEDURAL BACKGROUND
A. FACTS
The following facts are undisputed. Plaintiff and appellant David B. Schachter was formerly employed as a financial consultant by defendant and respondent Salomon Smith Barney, Inc. (SSB), a subsidiary of defendant and respondent Citigroup, Inc. (formerly Travelers Group, Inc.) (collectively defendants).
SSB offered its financial consultants the opportunity to participate in the Capital Accumulation Plan (the Plan), whereby employees made annual elections to apply 5 to 25 percent of their deferred compensation at six- or 12-month intervals for the purchase of restricted shares of Citicorp stock, which were discounted at a rate of 25 percent. The restricted shares vested after two or more years of employment. However, if the employee voluntarily terminated employment or was involuntarily terminated for cause during that two-year period, both the unvested shares of restricted stock and the deferred compensation applied toward their purchase were forfeited, and the employee would retain only restricted shares that had vested.[2] Schachter elected to participate in the Plan in 1995 for 12 months and in 1996 for six months. In March 1996, he voluntarily terminated his employment with SSB. As a result, Schachter forfeited both the unvested shares of restricted stock and the deferred compensation applied toward their purchase.
B. PROCEDURE
On May 22, 1998, on behalf of himself and all others similarly situated, Schachter filed his initial complaint alleging: (1) violation of Labor Code section 200 et seq.; (2) violation of Labor Code section 400 et seq.; (3) conversion; and (4) violation of the unfair business practices act (Bus. & Prof.Code, 17200 et seq.).
Schachter amended his complaint three times. His third amended complaint, filed February 27, 2002, retained three of the four original causes of action with minor modifications: (1) violation of Labor Code sections 201-202; (2) conversion; and (3) violation of the unfair business practices act (Bus. & Prof.Code, 17200 et seq.).
On March 29, 2002, Defendants cross-complained for recoupment and rescission.
1. Defendants' First Motion for Summary Judgment
On October 16, 1998, defendants moved for summary judgment or, in the alternative, summary adjudication. On July 13, *923 1999, Judge Aurelio Munoz issued the following tentative order:
"The motions are both denied.[[3]] The nature of the policy in this case is such that it is either all good or all bad. Unfortunately, the deduction and subsequent loss of the employee[']s contribution, should the employee leave the employment before the passage of two years, means that the employee is for-feiting part of his pay. Ware [v.] Merrill, Lynch, Pierce, Fenner & Smith, [Inc.] (1972) 24 [Cal.App.]3d 35, 44. Were this a bonus plan where the bonus was not earned until a certain date or condition was met, then there would be no problem because the bonus is not earned until the passage of a certain period of time. See Lucian [v.] All States Trucking [Co.] (1981) 116 [Cal. App.]3d 972. Here, however, the employee is paid the wages and then gives the money back to the employer subject to forfeiture should he or she leave before the passage of two years. This amounts to a rebate to the employer in violation of Labor Code [section] 224 since the employee is getting nothing back in return. See also Phillips [v.] General Moving Specialists (1998) 63 [Cal.App.]4th 563, 572[,] fn.3."
Court and counsel discussed at length the facts and law pursuant to defendants' motion for summary judgment, essentially the same issues that were later renewed in defendants' subsequent motion.
Following the hearing, the court ordered the parties to prepare a final order, but the parties failed to agree on mutually acceptable language despite the passage of 15 months. In October 2000, Judge Munoz adopted the tentative ruling as the court's final order.
2. Defendants' Second Motion for Summary Judgment
On November 8, 2002, defendants renewed their motion for summary judgment, raising essentially the same issues as the first motion. This time, defendants relied on a nonprecedential trial court decision by Judge Carolyn B. Kuhl in Blum v. Prudential Securities, Inc. (Super. Ct., Central Dist., L.A. County, 2002, No. BC250046), which granted summary judgment for another employer on its tax deferred stock purchase plan that had a similar forfeiture provision. Defendants asked the court to reconsider its prior ruling sua sponte in light of Blum.
At the April 18, 2003 hearing on the motion, newly assigned Judge Victoria Chaney announced: "The tentative is to deny, and the reason is that, well, basically, this had been apparently decided by Judge Munoz before I got the case. [Â] It isn't a true motion to reconsiderÔÇöI'm following the rules of [section] 1008 of the Code of Civil Procedure. Judge Kuhl's opinion, although interesting, is not precedent, it's not binding on me, and it has no effect in this case. And it doesn't really matter whether I agree or disagree with Judge Munoz, the reality is, he made a ruling and we're all going to be living with it."
However, Judge Chaney deferred issuing a final ruling on the motion until both parties submitted briefing concerning the propriety of a limited trial on a discrete issue. In the same hearing, Judge Chaney requested Schachter's counsel "to agree to let [the court] reconsider the [section 437c] motion that we have here now, reconsider it anew...." Schachter's counsel objected to reconsideration of the summary judgment motion on the grounds it was barred by section 437c(f)(2) and triable issues of *924 material fact precluded summary judgment.
At the May 19, 2003 case management/status conference, defendants once more asked Judge Chaney to reconsider Judge Munoz's order denying their first motion for summary judgment. The following colloquy took place:
"THE COURT: ... If I reconsidered that, where does that get us? And let's say I granted your motion.
"MR. KENNEDY [defense counsel]: I think that would terminate the case, Your Honor.
"THE COURT: The whole case?
"MR. KENNEDY: Yes, Your Honor."
The court permitted the parties to argue defendants' motion and took the matter under submission.
On June 17, 2003, the court granted summary judgment for defendants under its inherent power to reconsider its own rulings sua sponte. Finding no triable issues of material fact, Judge Chaney held all three causes of action in Schachter's third amended complaint failed as a matter of law. Schachter timely appealed from the judgment.
DISCUSSION
A. STANDARD OF REVIEW
The appeal presents two sets of questions: 1) whether consideration of defendant's renewed summary judgment motion was appropriate in light of section 437c(f)(2); and 2) if so, whether the court erred in granting it because of procedural or legal errors, or disputed issues of material fact. On the section 437c(f)(2) question, we apply the abuse of discretion standard of review. (Pender v. Radin (1994) 23 Cal.App.4th 1807, 1812, 29 Cal.Rptr.2d 36.) On the grant of summary judgment, the appropriate standard of review is de novo. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855, 107 Cal.Rptr.2d 841, 24 P.3d 493.)
B. DEFENDANTS WERE BARRED FROM RENEWING THEIR SUMMARY JUDGMENT BECAUSE THEY FAILED TO COMPLY WITH SECTION 437c(f)(2)
1. Section 437c(f)(2) Limits a Party's Ability to Renew a Motion for Summary Judgment
Schachter contends the renewal of defendants' motion for summary judgment contravenes section 437c(f)(2).
Section 437c(f)(2) provides: "a party may not move for summary judgment based on issues asserted in a prior motion for summary adjudication and denied by the court, unless that party establishes to the satisfaction of the court, newly discovered facts or circumstances or a change of law supporting the issues reasserted in the summary judgment motion."
In Bagley v. TRW, Inc. (1999) 73 Cal. App.4th 1092, 86 Cal.Rptr.2d 909 (Bagley), the trial court had earlier denied the defendant's motion for summary judgment, summarily adjudicated 27 of the issues in favor of the defendant, and denied the remaining 103 requests for summary adjudication. Later, relying on the same facts and the same law, the defendant made a second motion for summary judgment or, in the alternative, summary adjudication of each of the plaintiff's seven causes of action. The second motion was heard by a different judge, who granted summary judgment. On appeal, Division One of this District reversed and remanded. The Bagley court held a second summary judgment motion is barred where it offers "no `newly discovered facts or circumstances,'" does not suggest that "`a change of law'" had occurred, and does not request the judge to "make a finding" concerning these statutory requirements. (Id. at pp. 1093, 1096, 86 Cal.Rptr.2d 909.)
As to court's inherent authority to reconsider its prior orders, the Bagley court *925 explained: "In light of the specific language of subdivision (f)(2) of section 437c, we summarily reject TRW's suggestion that a trial court always has the `inherent' authority to reconsider its own rulings. Leaving to one side the fact that this is a case in which one judge was asked to reconsider another judge's ruling [citation], a court does not have the inherent power to act in a manner that is prohibited by statute." (Bagley, supra, 73 Cal. App.4th at p. 1097, fn. 5, 86 Cal.Rptr.2d 909.)[4]
2. Section 1008 Permits a Trial Court to Sua Sponte Reconsider a Prior Order under Specified Conditions
Relying on section 1008 case authority, defendants contend that the trial court has the inherent power to sua sponte reconsider its interim orders, including summary judgment and summary adjudication, even if the elements of section 437c(f)(2) are not satisfied.
Section 1008, the general statute governing motions for reconsideration, allows the trial court to reconsider and modify, amend, or revoke its prior order when the moving party shows a different state of facts exists, or when the court determines that there has been a change of law that warrants reconsideration on its own motion.[5] Like section 437c(f)(2), "[s]ection 1008 is designed to conserve the court's resources by constraining litigants who would attempt to bring the same motion over and over." (Darling, Hall & Rae v. *926 Kritt (1999) 75 Cal.App.4th 1148, 1157, 89 Cal.Rptr.2d 676 (Darling, Hall & Rae).)
The prevailing authority has found the jurisdictional limitation of section 1008, subdivision (e), to be an impermissible interference with the core functions of the judiciary. (Scott Co. v. United States Fidelity & Guaranty Ins. Co. (2003) 107 Cal.App.4th 197, 207, 132 Cal.Rptr.2d 89; see also Remsen v. Lavacot (2001) 87 Cal. App.4th 421, 426-427, 104 Cal.Rptr.2d 612 [order granting interest to beneficiaries of trust properly modified]; Kollander Construction, Inc. v. Superior Court (2002) 98 Cal.App.4th 304, 311-314, 119 Cal.Rptr.2d 614 [agreeing with Remsen but finding satisfaction of section 1008 requirements in any event]; accord Blake v. Ecker (2001) 93 Cal.App.4th 728, 739, fn. 10, 113 Cal. Rptr.2d 422 [inherent power to reconsider exists even after end of 10-day period to bring motion]; Wozniak v. Lucutz (2002) 102 Cal.App.4th 1031, 1042, 126 Cal.Rptr.2d 310 [irrelevant whether the court acts sua sponte or pursuant to a party's motion].) These courts hold that a trial court has the inherent power under the California Constitution to reconsider an interim ruling, a power that is "neither confined by nor dependent on statute." (Kollander Construction, Inc. v. Superior Court, supra, 98 Cal.App.4th at p. 311, 119 Cal.Rptr.2d 614; accord Scott Co. v. United States Fidelity & Guaranty Ins. Co., supra, 107 Cal.App.4th at p. 207, 132 Cal. Rptr.2d 89 [jurisdictional limitation of section 1008, subdivision (e) constitutes an impermissible interference with the core functions of the judiciary].)
This District has supported the view that a court has the jurisdiction to reconsider its earlier decisions. It has, in appropriate cases, focused on the delineation between sua sponte action by the court and actions by the parties that fall under an express legislative determination. (See Darling, Hall & Rae, supra, 75 Cal. App.4th 1148, 89 Cal.Rptr.2d 676 [this court held section 1008 does not govern the trial court's ability, on its own motion, to reevaluate its own interim rulings]; Case v. Lazben Financial Co. (2002) 99 Cal.App.4th 172, 121 Cal.Rptr.2d 405 [Division Three of this District held section 1008 restricts only litigants' motions, not court's sua sponte reconsideration of its own orders]; Bernstein v. Consolidated American Ins. Co. (1995) 37 Cal.App.4th 763, 774, 43 Cal.Rptr.2d 817, disapproved on another ground in Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 841, 88 Cal.Rptr.2d 366, 982 P.2d 229, fn. 13 [Division One of this District held that, upon request for clarification, correction of prior ruling denying summary adjudication permissible on court's own motion]; Kerns v. CSE Ins. Group (2003) 106 Cal.App.4th 368, 130 Cal.Rptr.2d 754 [Division Three of this District held section 1008 was jurisdictional and controlling only when a party has renewed a motion or requested reconsideration, not when the trial court reconsiders its ruling sua sponte]; Abassi v. Welke (2004) 118 Cal.App.4th 1353, 14 Cal. Rptr.3d 336 [Division Three of this District *927 held the trial court may sua sponte invite a second summary judgment motion following its denial of a previous summary judgment motion notwithstanding section 1008].)
Indeed, in Darling, Hall and Rae, we found the line of cases holding section 1008 jurisdictional to be inapplicable, because subdivision (a) of section 1008 applies only to applications made to the court by parties, not only by its very terms, but also because the intent of the Legislature was "to conserve the court's resources by constraining litigants who would attempt to bring the same motion over and over." (Darling, Hall & Rae, supra, 75 Cal. App.4th at p. 1157, 89 Cal.Rptr.2d 676.) There, the trial court, after denying the plaintiffs' motions for summary judgment, reconsidered the motions sua sponte and granted summary judgment for plaintiffs. (Id. at p. 1156, 89 Cal.Rptr.2d 676.) Upholding the court's ability to reevaluate its own interim rulings sua sponte, we explained that the statute does not restrict reconsiderations, because "these same judicial resources would be wasted if the court could not, on its own motion, review and change its interim rulings." (Id. at p. 1157, 89 Cal.Rptr.2d 676.) The only requirement is that the trial court exercise due consideration before modifying, amending, or revoking its prior orders. The trial court did so in Darling, Hall & Rae by reviewing the papers and carefully reflecting on its prior rulings. (Ibid.)
Similarly, in Abassi v. Welke (2004) 118 Cal.App.4th 1353, 1358, 14 Cal.Rptr.3d 336, the trial court denied the defendant's first motion for summary judgment but granted his second motion for summary judgment. There, two years after the defendant's first motion for summary judgment had been denied, and after many of the issues had been resolved, a status conference was held. During this conference, the parties discussed the most efficient manner to proceed. The trial court expressly invited the defendant to file a second summary judgment motion because it wanted to reassess its prior ruling. The parties had an opportunity to brief the issue, and a hearing was held. (Id. at p. 1360, 14 Cal.Rptr.3d 336.) Thus, due consideration was given and Division Three of this District affirmed the hearing of this invited motion. (Id. at p. 1360-1361, 14 Cal.Rptr.3d 336.) However, because the motion was based entirely on section 1008, the Abassi court did not address the distinction between an invited and uninvited motion or the prohibition against the parties under section 437c (f)(2). (Abassi at p. 1360, fn. 7, 14 Cal. Rptr.3d 336.)
3. The Court's Inherent Authority to Reconsider Its Prior Orders Does Not Excuse a Party From Satisfying the Requirements of Section 437c(f)(2) in Renewing a Summary Judgment Motion
"In matters of statutory construction, we may not ignore restrictions the Legislature has inserted. ( 1858.)" (Woods v. Young (1991) 53 Cal.3d 315, 326, 279 Cal.Rptr. 613, 807 P.2d 455.) "A specific provision relating to a particular subject will govern a general provision, even though the general provision standing alone would be broad enough to include the subject to which the specific provision relates." (People v. Tanner, (1979) 24 Cal.3d 514, 521, 156 Cal.Rptr. 450, 596 P.2d 328.) Section 437c(f)(2) prohibits "a party" from moving for summary judgment based on issues asserted in a prior motion for summary adjudication and denied by the court, unless that party establishes to the satisfaction of the court, newly discovered facts or circumstances or a change of law supporting the issues reasserted. Section 1008, in contrast, attempted to directly limit "the court's jurisdiction" *928 with regard to general applications for reconsideration of its orders and renewals of previous motions. ( 1008, subd. (e).) Therefore, section 437c(f)(2), not the provisions of section 1008, governs where the motion is for summary judgment.
The Bagley court explained that "[q]uite clearly, this case must be decided by the specific requirements of the summary judgment statute, not the general provisions of the reconsideration statute. [Citation.] This is particularly true where, as here, the prohibition against repeated summary judgment motions was added to make the summary judgment process more efficient and to reduce the opportunities for abuses of the procedure (Sen. Rules Com., Off. of Sen. Floor Analyses, rev. of Sen. Bill No. 2594 (Aug. 23, 1990)) which the addition of subdivision (f)(2) accomplished by overruling the cases that had held that an order denying a motion for summary judgment did not preclude a renewal of the same motion at any time before trial. [Citations.]" (Bagley, supra, 73 Cal.App.4th at p. 1096, fn. 3, 86 Cal. Rptr.2d 909.)
Here, nearly four years after Judge Munoz denied defendants' summary judgment motion, defendants renewed their motion "based on issues asserted in a prior motion for summary adjudication and denied by the court" with no "newly discovered facts or circumstances or a change of law supporting the issues reasserted." ( 437c(f)(2).) Like the Bagley court, we have also evaluated the evidence submitted with defendants' first and second motions, and found that while they are "cosmetically repackaged," the motions are essentially "identical." (Bagley, supra, 73 Cal.App.4th at p. 1096, 86 Cal. Rptr.2d 909.) As in Bagley, the causes of action were nearly identical between the original and operative third amended complaints. That Schachter had filed a third amended complaint and reorganized four causes of action into three does not create "new circumstances" within the meaning of section 437c(f)(2). The only new California authority defendants cited was a nonpublished superior court case: Blum v. Prudential Securities, Inc. (Super. Ct., Central Dist., L.A. County, 2002, No. BC250046). However, as defendants concede, "a written trial court ruling has no precedential value." (Santa Ana Hospital Medical Center v. Belshe (1997) 56 Cal. App.4th 819, 831, 65 Cal.Rptr.2d 754.) Thus, there was no "change of law" under the meaning of section 437c(f)(2). The court recognized this; upon granting the renewed motion, Judge Chaney did not make the findings necessary to permit the renewed motion.
We continue to believe that, as a general matter, "`[T]he court's inherent power to correct its own rulings is based on the California Constitution and cannot be impaired by statute.' [Citation.] Moreover it is irrelevant whether the court acts sua sponte or pursuant to a party's motion: "`We find this to be a distinction without a difference. Whether the trial judge has an unprovoked flash of understanding in the middle of the night or is prompted to rethink an issue by the stimulus of a motion is "constitutionally immaterial" to the limitation on the power of the Legislature to regulate the judiciary.' [Citation.] In either case, the ability of the trial court to correct what it perceives to be an incorrect interim ruling can only further the policy of conserving judicial resources." (Wozniak v. Lucutz (2002) 102 Cal.App.4th 1031, 1042, 126 Cal. Rptr.2d 310.)
However, the Legislature enacted a specific limitation on the parties out of a concern for abuse of the summary adjudication process, and the burden such motions can impose on a party's resources. *929 The Legislature did not, however, attempt to limit the court's sua sponte authority. Thus, for example, were a party to suggest that the court reconsider a motion, the court would have every right to do so, even if that required the party to bring a new motion. In that circumstance, the responding party would not bear the burden of preparing opposition unless the court indicated an interest in reconsideration.
That did not happen here. Unlike Abassi v. Welke, the defendants did not file their renewed motion based on a request from the court, but instead used their motion to request the court to act "sua sponte." The only briefing the court requested related to discrete issues concerning the propriety of a limited trial. Nonetheless, the court later permitted argument on defendants' identical motion for summary judgment at a case management/status conference.
The defendants, as parties to the case, were expressly bound by the requirements of section 437c (f)(2). Their motion, however, violated that provision because it failed to establish newly discovered facts or circumstances or a change of law. They are, therefore, barred from renewing their summary judgment motion. Accordingly, the trial court erred in considering defendants' second motion for summary judgment.[6]
DISPOSITION
The trial court's judgment is reversed. Plaintiff is awarded his costs on appeal.
We concur: PERLUSS, P.J., and WOODS, J.
NOTES
[*] Kennard, J., dissented.
[1] All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
[2] The purpose of the Plan was "to attract, retain and motivate officers and other key employees." Thus, the forfeiture provision did not apply equally to employees who terminated their employment due to death, disability, involuntary termination without cause, or retirement. Termination of employment under those other conditions resulted in immediate vesting, full or partial cash payment without interest on the annual compensation that had been applied toward the forfeited restricted stock, or issuance of restricted stock upon completion of the vesting period.
[3] Judge Munoz's use of the plural, "motions," was in reference to defendants' motion for summary judgment or, in the alternative, summary adjudication.
[4] The question of whether section 437c(f)(2) expressly deprives a trial court of jurisdiction to hear a second summary judgment motion that does not comply with its requirements is currently before the Supreme Court. (See Le Francois v. Goel (2004) 119 Cal.App.4th 425, 433, 14 Cal.Rptr.3d 321, review granted Sept. 15, 2004, S126630, 18 Cal.Rptr.3d 869, 97 P.3d 811.) Le Francois presents the following issue: "Does a trial court have the inherent power to rule on a second motion for summary judgment or, in the alternative, for summary adjudication, even though the second motion did not meet the requirements of Code of Civil Procedure section 1008, subdivision (a), relating to applications for reconsideration, or the requirements of Code of Civil Procedure section 437c, subdivision (f)(2), relating to motions for summary judgment following an unsuccessful motion for summary judgment."
[5] Section 1008 provides: "(a) When an application for an order has been made to a judge, or to a court, and refused in whole or in part, or granted, or granted conditionally, or on terms, any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order. The party making the application shall state by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown. [Â] (b) A party who originally made an application for an order which was refused in whole or part, or granted conditionally or on terms, may make a subsequent application for the same order upon new or different facts, circumstances, or law, in which case it shall be shown by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown. For a failure to comply with this subdivision, any order made on a subsequent application may be revoked or set aside on ex parte motion. [Â] (c) If a court at any time determines that there has been a change of law that warrants it to reconsider a prior order it entered, it may do so on its own motion and enter a different order. [Â] (d) A violation of this section may be punished as a contempt and with sanctions as allowed by Section 128.7. In addition, an order made contrary to this section may be revoked by the judge or commissioner who made it, or vacated by a judge of the court in which the action or proceeding is pending. [Â] (e) This section specifies the court's jurisdiction with regard to applications for reconsideration of its orders and renewals of previous motions, and applies to all applications to reconsider any order of a judge or court, or for the renewal of a previous motion, whether the order deciding the previous matter or motion is interim or final. No application to reconsider any order or for the renewal of a previous motion may be considered by any judge or court unless made according to this section. [Â] (f) For the purposes of this section, an alleged new or different law shall not include a later enacted statute without a retroactive application. [Â] (g) This section applies to all applications for interim orders."
[6] Because we determined defendant's renewed summary judgment motion was not appropriate in light of section 437c(f)(2), we need not reach the merits of the motion.
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720 A.2d 607 (1998)
156 N.J. 466
Mark SPERLING, Claimant-Appellant,
v.
BOARD OF REVIEW, Respondent-Respondent.
Supreme Court of New Jersey.
Argued September 28, 1998.
Decided December 11, 1998.
Antranig Aslanian, Jr., Fort Lee, for claimant-appellant (Aslanian & Khorozian, attorneys; Mark Sperling, pro se on the brief).
Andrea R. Grundfest, Deputy Attorney General, for respondent-respondent (Peter Verniero, Attorney General of New Jersey, attorney; Joseph L. Yannotti, Assistant Attorney General, of counsel).
PER CURIAM.
The judgment is affirmed, substantially for the reasons expressed in Judge Baime's opinion of the Appellate Division, reported at 301 N.J.Super. 1, 693 A.2d 901 (1997).
STEIN, J., concurring.
The Court affirms the judgment below on the basis of the Appellate Division's majority opinion. 301 N.J.Super. 1, 693 A.2d 901 (1997). I join in the Court's disposition but write briefly to identify a collateral issue, raised at oral argument, that the Court's disposition does not purport to resolve.
Petitioner sustained personal injuries under circumstances in which his right to compensation under the Workers' Compensation Act, N.J.S.A. 34:15-1 to -128, was "in a twilight zone, with liability under the compensation law doubtful and dependent on the outcome of contested proceedings." Janovsky v. American Motorists Ins. Co., 11 N.J. 1, 5, 93 A.2d 1 (1952). In such circumstances, petitioner would have been entitled to receive temporary disability benefits pending *608 resolution of his workers' compensation claim. See N.J.S.A. 43:21-30; Janovsky, supra, 11 N.J. at 5, 93 A.2d 1.
Petitioner testified that he applied to the Division of Temporary Disability Insurance (Division) for disability benefits, but the Division had no record of his claim and so informed him. Subsequently, he settled his compensation claim pursuant to N.J.S.A. 34:15-20 for $1500, of which $500 was allocated to counsel fees. Thereafter, he reapplied to the Division for temporary disability benefits, but the Division determined that he was ineligible because he had received a workers' compensation award for the same disability. A divided panel of the Appellate Division affirmed the Division's denial of benefits, holding that the receipt of benefits under the Workers' Compensation Act and the Temporary Disability Benefits Law, N.J.S.A. 43:21-25 to -56, for the same injury is impermissible.
Before us, petitioner's counsel argued for reversal on the theory that if petitioner had in fact received temporary disability benefits from May 1993, when he allegedly applied, until October 1994 when his workers' compensation claim was settled for a nominal sum, the Division's right of subrogation would be limited to the amount of the compensation award. In that circumstance, because petitioner's temporary disability benefits would substantially exceed the compensation award, petitioner would receive benefits under both statutes for the same injury. Accordingly, petitioner argued that an award subsequent to the compensation settlement of temporary disability benefits for the same period in which petitioner would have been eligible to receive them prior to the settlement would not contravene the legislative plan. Petitioner emphasized that where the compensation settlement is nominal, reflecting the weakness of the compensation claim, a requirement that the worker fully reimburse the Division for temporary disability benefits substantially in excess of the compensation settlement would be self-defeating, because workers would be reluctant to agree to settle compensation claims if the settlement would generate a liability in excess of the amount received.
The Attorney General, representing the Board of Review, disagreed, contending that the statute required full reimbursement of temporary disability benefits by a worker who settles a compensation claim irrespective of the disparity between the benefits paid and the amount of the workers' compensation settlement. Subsequent to oral argument the Attorney General informed the Court that the Division has issued an Administrative Instruction directing that claimants be permitted to retain temporary disability benefits paid prior to a Section 20 settlement of a workers' compensation claim, to the extent such benefits exceed the settlement. The Attorney General has advised the Division to withdraw that portion of the Administrative Instruction, believing it to be contrary to law.
Because petitioner had not received temporary disability benefits prior to settling his workers' compensation claim, my view of the Court's disposition is that it does not resolve the question whether a worker whose workers' compensation settlement is less than the amount of temporary disability benefits received prior to the settlement nevertheless is obligated to reimburse the Division in full. Without expressing any final view on that issue, I note that there appears to be a substantial basis for the view that the Division's right of recovery would be limited to the amount of the compensation settlement. See N.J.S.A. 43:21-30 ("In the event that workmen's compensation benefits ... are subsequently awarded for weeks with respect to which the claimant has received disability benefits ..., the State fund ... shall be entitled to be subrogated to such claimant's rights in such award to the extent of the amount of disability payments made hereunder.") (emphasis added). See also Statement to A. 216 (L. 1967, c. 306) ("There is ample provision under this section ... for subrogation and repayment from a subsequent workmen's compensation award to preclude double benefits.").
Based on my understanding of the limited scope of the Court's affirmance, I concur in the Court's disposition of this appeal.
*609 O'HERN, J., concurring in part and dissenting in part.
I concur with Justice Stein's understanding of the limited breadth of the Court's judgment. Ante at 469, 720 A.2d at 608.
I
One who suffers an injury between work and everyday affairs may seek temporary disability benefits while recovering from the injury under either the Workers' Compensation Act, N.J.S.A. 34:15-1 to -128 (comp), or the Temporary Disability Benefits Law, N.J.S.A. 43:21-25 to -56 (benefits law). If a workers' compensation carrier denies coverage on the basis that the injury is not work related, a claimant may commence an action immediately to receive benefits under the benefits law. The Department of Labor's appeal tribunal in this case quoted Janovsky v. American Motorists Insurance Co., 11 N.J. 1, 5, 93 A.2d 1 (1952), in which the Court explained:
If ... the occurrence is in a twilight zone, with liability under the compensation law doubtful and dependent on the outcome of contested proceedings ..., immediate payment to help tide the worker over during his inability to work should be permissible and, indeed, readily available, under the benefits law, with full reimbursement from any award subsequently rendered in the compensation proceeding.
[(citation omitted).]
Let us assume that such a "twilight zone" dispute continues for six months or more in the Workers' Compensation court, during which time the worker has recovered temporary disability benefits. Assume, further, that in a contested proceeding the Workers' Compensation court decided that the worker was entitled to only one month of temporary disability benefits on account of a work-related injury, and that any other disability was attributable to other causes that were not work related. In that setting, N.J.S.A. 43:21-30 provides that the benefits plan would be entitled "to such claimant's rights in such award." Because the "claimant's rights" in workers' comp were less than the temporary disability award, the benefits plan would simply recover to the extent of the comp award, but not recover in full from the worker all the disability benefits received. The Court does not disagree with that interpretation of N.J.S.A. 43:21-30.
II
My disagreement with the Court concerns its conclusion that because of the timing of events in this case, the result should be different. It is most unusual for this Court to dismiss a meritorious claim on the basis of the sequence of claims. Heretofore, we have molded the procedures governing management of two parallel benefit programs to the requirements of fairness and justice with the overarching goal that there should be no double recovery. See Riccio v. Prudential Property & Cas. Ins. Co., 108 N.J. 493, 504, 531 A.2d 717 (1987) (discussing pursuit of tort claims in court and insurance claims in arbitration and observing that the essential purpose of the relevant laws is "to make the victim whole, but not provide a windfall or to allow a double recovery"); see also Parks v. Colonial Penn Ins. Co., 98 N.J. 42, 49-51, 484 A.2d 4 (1984) (molding procedures for management of automobile-reparation claims in two forums, judicial and arbitral). Each forum must respect the rights of the claimant in the other forum. See Hetherington v. Briarwood Coachlight, 253 N.J.Super. 484, 489-90, 602 A.2d 292 (App.Div.1992) (holding workers' compensation judge was without authority to force PIP carrier to accept settlement of its own right to be reimbursed for disability benefits claimed for automobile accident injury).
In its disposition, the Court makes no reference to the fairness of the procedures. No one could have foreseen that the settlement of a patently unmeritorious workers' compensation claim would translate into a settlement of the meritorious temporary disability claim. This is an example of a "trap for the unsuspecting," a school of jurisprudence so recently condemned by Justice Stein in his dissent in Oliver v. Ambrose, 152 N.J. 383, 407, 705 A.2d 742 (1998) (quoting Cafferata v. Peyser, 251 N.J.Super. 256, 263, 597 A.2d 1101 (App. Div.1991)).
*610 A.
The language of neither governing statute supports the position taken by the Court. N.J.S.A. 34:15-20 states that when parties have consented to a comp settlement, the settlement
shall have the force and effect of a dismissal of the claim petition and shall be final and conclusive ... and shall be a complete surrender of any right to compensation or other benefits arising out of such claim under the statute. Any payments made under this section shall be recognized as payments of workers' compensation benefits for insurance rating purposes only.
The Court converts that adjudication of "dismissal" into an adjudication that the disabled person's only benefits are in workers' comp, a paradox to say the least. After settlement, N.J.S.A. 43:21-30 simply entitles the benefits plan to reimbursement for the "claimant's rights" in the award. It does not disqualify one for having sought benefits that proved to be unavailable. Because there was no determination that the injury was work related (in fact, there was an adjudication of "dismissal"), this disabled claimant is entitled to disability benefits attributable to his non-work-related injury.
A close analogy is to the judicial administration of parallel claims for automobile accident reparations under tort and underinsured motorist (UIM) regimes. In that setting we have ruled that subject to Longworth notice[1] being given, the UIM benefits provider is bound by judicial disposition of the tort claim. Zirger v. General Accident Ins. Co., 144 N.J. 327, 342, 676 A.2d 1065 (1996). Although the procedures here lack the formality of Longworth notice, the Division was aware that a comp claim was pending. If the Court finds the procedures for notice lacking, we should explain, as we did in Rutgers Casualty Insurance Co. v. Vassas, 139 N.J. 163, 171-74, 652 A.2d 162 (1995), how the procedures may be improved. The Division seems to insist that the injured party engage in an exercise in
futility. The Division would require full pursuit of the comp claim before it will pay disability benefits. This reasoning is flawed for two reasons. First, this requirement is inconsistent with Janovsky, which advocates payment of temporary disability payments to a worker while a comp claim is pending. Janovsky, supra, 11 N.J. at 5, 93 A.2d 1. Second, the Division's position fails to recognize that an injury or illness may not be clearly work related. For the Division there is only night or day, not twilight.
Finally, the Court fails to explain what point there is in forcing one such as Sperling to try his case to an unsuccessful conclusion. He was on a purely personal errand when the accident occurred. We generally try to avoid "unnecessary court events." State v. Shaw, 131 N.J. 1, 13, 618 A.2d 294 (1993).
B.
To read the transcripts of the hearings at which the injured worker first represented himself is to experience the same futile "Kafkaesque journey" as does a citizen who encounters an unreasoning bureaucracy. Rosen v. New Jersey Div. of Dev'l Disabilities, 256 N.J.Super. 629, 631, 607 A.2d 1030 (App. Div.1992). The Division misunderstands the legislative provisions. At the first hearing, the Division representative interpreted N.J.S.A. 43:21-30 to mean that no temporary disability benefits may be paid if the injured party receives any other disability or sickness benefits. It is quite obvious to even the most casual reader of its title that N.J.S.A. 43:21-30 intends to avoid double recovery, not full recovery. Although no specific offset provision exists, the purpose of the law demonstrates that recovery for temporary disability and workers' comp is not mutually exclusive. The title to N.J.S.A. 43:21-30 is "Nonduplication of benefits," not "Election of benefits."
The historical notes to N.J.S.A. 43:21-25 recite that the benefits law is designed "to provide for the payment of disability benefits to certain persons with respect to accident *611 and sickness not compensable under the [comp] law." The purpose of the act includes "fill[ing] the gap in existing provisions for protection against the loss of earnings caused by involuntary unemployment, by extending such protection to meet the hazard of earnings loss due to inability to work caused by nonoccupational sickness or accident." N.J.S.A. 43:21-26.
When a Division representative was asked to explain at the second hearing why Sperling's disability claim was denied, he responded as follows:
A. We issued our denial because the State has no legal basis to pay the claimant since there is no claim petition for us to file a lien against.
Q. Okay, just a minute. And that's why you made the determination that you made?
A. That is correct.
A. We must go by what we had on the claim form originally.
It does not matter to the Division what the settlement represents once a claimant has indicated that there might be a "twilight zone" claim. Paradoxically, the Division acknowledged that if the worker had tried his case and received no award, he would have received the benefits. "Under those circumstances, we would have paid him without a lien since it would not be considered [w]orkers' [c]ompensation." Better, the Division reasons, that it should receive nothing, than to receive a partial reimbursement for that part of the disability that is work related.
In addition to misinterpreting the statute, the Division has also misinterpreted this Court's decision in Janovsky, supra. The appeal tribunal believes that The Court in Janovsky "clearly states that `any award' from [worker's] [c]ompensation negates payment of State disability." Nothing could be further from the truth. In Janovsky, the Court simply explained "the overriding legislative plan and its practical operation." Janovsky, supra, 11 N.J. at 5, 93 A.2d 1. The Court's reference to "any award" simply signifies that when the benefits are paid to a worker there should be "full reimbursement [to the plan] from any award subsequently rendered in the compensation proceeding." Ibid. (emphasis added). That is not a disqualification from benefits. N.J.S.A. 41:21-30 prohibits duplication of benefits but does not mandate that receipt of workers' comp and temporary disability benefits is mutually exclusive.
Prudential Insurance Co. v. New Jersey Division of Employment Security, 75 N.J.Super. 430, 431, 183 A.2d 440 (1962), does not dictate a contrary result. In that case an award was erroneously made under the Title 43 benefits plan for a period of temporary disability during which a comp award was paid for an increase in permanent disability. The two plans were "mutually exclusive," id. at 435, 183 A.2d 440, only in the sense that one is not entitled to Title 43 disability benefits for periods of disability for which Title 34 comp awards are payable. That, however, is not the case here.
This Court once said that "justice is the polestar of our system" and that "our procedures must ever be moulded and applied with that in mind." New Jersey Highway Auth. v. Renner, 18 N.J. 485, 495, 114 A.2d 555 (1955). Like the Division, the Court appears to be indifferent to whether justice is done or whether the procedures are fair. Instead, the Court accepts the unfounded reasoning of the Division that the Division cannot pay benefits unless "there is [a] claim petition for us to file a lien again[st]."
When Sperling entered into the $1500 settlement under N.J.S.A. 34:15-20, he gave up forever his rights in comp to reopen his case for two years if his condition worsened. It is unfair to assume that Sperling intended to waive between $6000 and $8000 in temporary disability benefits in favor of the $1500 settlement. Sperling explained that his counsel in the proceedings was misinformed about the status of his case. Sperling stated that his attorney "was under the impression that [he] had already received [temporary] disability payments for the time that [he] was out of work." As noted by Judge Shebell in his dissent, the $1500 "represents only a nuisance settlement for a non-work-related accident with the claimant receiving only $1000 after counsel fees." 301 N.J.Super. 1, 6, 693 A.2d 901 (1997). Judge Shebell correctly *612 characterizes the spirit and letter of N.J.S.A. 43:21-30 in stating, "[i]f the claimant proves his disability and entitlement to benefits for a period that is longer than the compensation he received would cover, he is then entitled to [temporary disability benefits] for the additional period not covered by [comp]." Ibid.
At oral argument, counsel for the Board of Review candidly acknowledged that the procedures in each forum should be improved. She said, "There does need to be, whether from this Court or from an administrative source, such as on the form of the [comp] order itself, some kind of declaration" that a worker who makes any settlement of a comp claim not only is disqualified from temporary disability benefits under Title 43, but also must reimburse the disability benefits fund even though the disability may be non-work-related. The Division's counsel favored a requirement that the worker receive a clear explanation to that effect. Such, she said, is an "excellent idea" and one that should be "endorsed by the Court." At least that procedural improvement would eliminate a "trap for the unsuspecting" worker.
STEIN, J., concurring in the result.
For affirmanceChief Justice PORITZ, and Justices HANDLER, POLLOCK, GARIBALDI, STEIN and COLEMAN6.
Concurring in part, dissenting in part Justice O'HERN1.
NOTES
[1] Under Longworth v. Van Houten, 223 N.J.Super. 174, 194, 538 A.2d 414 (App.Div.1988), upon receiving an acceptable settlement offer from the tortfeasor, the insured must notify the carrier. The carrier may promptly (presumptively within 30 days) offer its insured the amount in exchange for the insured assigning the claim against the tortfeasor to the carrier. Ibid.
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23 Cal.Rptr.3d 909 (2005)
126 Cal.App.4th 575
The PEOPLE, Plaintiff and Respondent,
v.
Elisio VALDEZ, Defendant and Appellant.
The People, Plaintiff and Respondent,
v.
Johnnie Ray Peraza, Defendant and Appellant.
Nos. C036614, C037039.
Court of Appeal, Third District.
February 4, 2005.
Review Denied May 11, 2005.[**]
*910 Charles M. Bonneau, under appointment by the Court of Appeal, for Defendant and Appellant Elisio Valdez.
Cliff Gardner, under appointment by the Court of Appeal, for Defendant and Appellant Johnnie Ray Peraza.
Bill Lockyer, Attorney General, Robert R. Anderson, Chief Assistant Attorney General, Jo Graves, Senior Assistant Attorney General, Stephen G. Herndon and David Andrew Eldridge, Deputy Attorneys General, for Plaintiff and Respondent.
Certified for Partial Publication.[*]
SCOTLAND, P.J.
Defendants Elisio Valdez and Johnnie Ray Peraza were convicted of various crimes, including the murders of Andrea Mestas and her fetus, the premeditated attempted murder of Ronny Giminez, and the false imprisonment and aggravated assault of Nancy Davis. The crimes were committed at separate times and in separate places. The prosecutor theorized that defendants went to Mestas's apartment intending to kill her boyfriend on orders from the Nuestra Familia, a prison gang. The prosecutor also presented evidence that the Nuestra Familia considered Mestas to be a "rat" and a "snitch." As to the motive for the Giminez shootings and the crimes against Davis, who was defendant Peraza's girlfriend, evidence indicated that Peraza was upset because Davis had been seeing Giminez, the father of three of her children.
Defendant Valdez was sentenced to multiple life sentences, plus a determinate term of 11 years and 8 months in prison. *911 Defendant Peraza received multiple life sentences, plus a determinate term of 14 years in prison. On appeal, they raise numerous claims of error.
In the published part of this opinion, we reject defendants' claim that (1) California's murder statute does not apply to the killing of a fetus that, even absent criminal intervention, would not have survived until birth due to a fatal physical or medical condition, and thus (2) the trial court erred in excluding evidence that Mestas's fetus suffered from such a condition. As we will explain, just as the murder statute protects human beings who are suffering from fatal conditions and have little time to live, it protects fetuses with fatal conditions.
In the unpublished parts of our opinion, we conclude that other contentions also lack merit. However, we shall correct sentencing errors.
FACTS AND PROCEDURAL BACKGROUND[***]
DISCUSSION
I
Andrea Mestas was shot in the chest at very close range. A bullet perforated her heart and killed her. During the autopsy, Dr. Sally Fitterer determined that Mestas was 16 to 17 weeks pregnant with a male fetus, which perished as a result of Mestas's death.
In challenging their convictions for murdering a fetus, defendants contend the trial court erred by excluding evidence that, if there were no shooting, Mestas's fetus would not have survived past the second trimester because of a fatal medical condition.
This contention is based on the following evidence that defendant Valdez sought to introduce at trial. Microscopic examination of the placenta revealed areas of "focal necrosis or cell death." Placental autopsy slides were sent to a pathologist, who found considerable chronic inflammation of the implantation sitewhere the placenta attaches to the uterine wallas well as acute inflammation of the membranes surrounding the fetus. The pathologist and Dr. Fitterer opined that the infection made it unlikely the fetus would have survived to term in utero. According to Dr. Fitterer, problems would have developed in the second trimester.
Defense counsel claimed that the Legislature had made a policy decision to protect fetal life because it is "potential life," which necessarily anticipates a live birth. Therefore, counsel argued, if medical evidence showed the fetus would not have survived to term, even absent defendants' criminal intervention, it was not potential life for purposes of a murder charge.
The court ruled that evidence of the medical condition of the fetus was irrelevant and inadmissible because viability is not an element of fetal homicide. (People v. Davis (1994) 7 Cal.4th 797, 814-815, 30 Cal.Rptr.2d 50, 872 P.2d 591; Pen.Code, § 187, subd. (a), further section references are to the Penal Code unless otherwise specified.)
On appeal, defendants contend the trial court erred because fetal viability is not the same thing as "survivability," which defendant Valdez defines as meaning the fetus likely would have completed gestation and been born absent the criminal intervention of a third party. Relying on Roe v. Wade (1973) 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147 and subsequent abortion rights decisions, Valdez reiterates the position he took in the trial court that (1) *912 the Legislature's purpose in protecting fetal life is the protection of "potential human life," and thus (2) if a fetus has no chance of developing until birth, it is not potential life and murder of such a fetus does not fall within the proscription of section 187, subdivision (a).
Valdez even goes so far as to claim that, "if interpreted to apply to the killing of a fetus which is mortally diseased, [the murder statute] violates the cruel and unusual punishment provisions of the state and federal constitutions."
It follows, defendants argue, the court erred in excluding evidence that, even absent defendants' criminal intervention, Mestas's fetus would not have survived until birth.
For reasons that follow, the contentions lack merit, and the proffered evidence was properly excluded.
A
After the California Supreme Court held that the former prohibition against the unlawful killing of a human being did not encompass the murder of a fetus (Keeler v. Superior Court (1970) 2 Cal.3d 619, 87 Cal.Rptr. 481, 470 P.2d 617), the Legislature amended section 187, subdivision (a), to include the unlawful killing of a fetus. (Stats.1970, ch. 1311, § 1, p. 2440.) The amended statute reads: "Murder is the unlawful killing of a human being, or a fetus, with malice aforethought." (§ 187, subd. (a).) It applies except when the death of the fetus resulted from a lawful abortion. (§ 187, subd. (b).)
The Legislature did not define "fetus" to be the equivalent of "human being," and it did not similarly amend section 192, which defines manslaughter as "the unlawful killing of a human being without malice." Consequently, a fetus is not a human being within the meaning of the murder statute. (People v. Dennis (1998) 17 Cal.4th 468, 505, 71 Cal.Rptr.2d 680, 950 P.2d 1035.) It is an unborn human offspring in the postembryonic period after major structures have been outlined, which typically occurs seven or eight weeks after fertilization. (People v. Davis, supra, 7 Cal.4th at pp. 810, 814-815, 30 Cal.Rptr.2d 50, 872 P.2d 591.)[1]
Although a fetus is not a human being within the meaning of the murder statute, the Legislature made the policy decision that fetal life is entitled to the same protection as human life, except where the mother's paramount privacy interests are at stake. (People v. Dennis, supra, 17 Cal.4th at p. 511, 71 Cal.Rptr.2d 680, 950 P.2d 1035; People v. Davis, supra, 7 Cal.4th at pp. 803, 809-810, 30 Cal. Rptr.2d 50, 872 P.2d 591.)
In making this policy decision, the Legislature was aware that it could have limited the term "fetus" to "viable fetus," but it did not do so. (People v. Davis, supra, 7 Cal.4th at p. 803, 30 Cal.Rptr.2d 50, 872 P.2d 591.) Likewise, the Legislature did not require that, to be covered by the murder statute, the fetus must not be suffering from a fatal condition that would prevent it from developing until birth. Under the plain language of section 187, subdivision (a), fetuses with terminal conditions are nonetheless fetuses protected from an unlawful killing.
*913 Defendants' reliance on Roe v. Wade, supra, 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147 and its progeny is misplaced because the legal principles in those decisions are inapplicable to a statute that criminalizes the unlawful killing of a fetus without the mother's consent. (People v. Davis, supra, 7 Cal.4th at p. 807, 30 Cal. Rptr.2d 50, 872 P.2d 591.) Moreover, defendants point to nothing in those decisions to support a conclusion that the state's legitimate "interest in protecting fetal life or potential life" (Planned Parenthood v. Casey (1992) 505 U.S. 833, 876, 112 S.Ct. 2791, 2820, 120 L.Ed.2d 674, 714; italics added) does not extend to fetuses with fatal conditions.
Despite statistical evidence disclosing that many fetuses spontaneously miscarry in the early stages of pregnancy (Comment, Severe Penalties for the Destruction of `Potential Life'Cruel and Unusual Punishment? (1995) 29 U.S.F. L.Rev. 463, 493-494), the Legislature did not limit the application of section 187, subdivision (a), to fetuses at stages of development that make them statistically more likely to survive until birth.
Instead, as we have noted, the Legislature made the policy decision to protect fetal life in the same manner that it protects human life, except where the mother's paramount privacy interests are at stake. Section 187, subdivision (a), protects human beings who are suffering from fatal conditions and have little time to live. "Murder is never more than the shortening of life; if a defendant's culpable act has significantly decreased the span of a human life, the law will not hear him say that his victim would thereafter have died in any event." (People v. Phillips (1966) 64 Cal.2d 574, 579, 51 Cal.Rptr. 225, 414 P.2d 353, disapproved on another point in People v. Flood (1998) 18 Cal.4th 470, 490, fn. 12, 76 Cal.Rptr.2d 180, 957 P.2d 869; People v. Moan (1884) 65 Cal. 532, 537, 4 P. 545.) It follows that the statute likewise must be construed to protect fetuses suffering from fatal conditions.
B
We reject defendants' claim that murder of a "non-survivable" fetus "is a much less serious offense" than murder of a human being and, thus, construing the murder statute to apply to such a fetus would violate constitutional prohibitions against cruel and unusual punishment.
Although not "cruel or unusual" in its method, a punishment may violate California's Constitution if "it is so disproportionate to the crime for which it is inflicted that it shocks the conscience and offends fundamental notions of human dignity." (In re Lynch (1972) 8 Cal.3d 410, 424, 105 Cal.Rptr. 217, 503 P.2d 921, fn. omitted.) Factors relevant to the assessment of such a claim include (1) the nature of the offense and the offender, (2) whether more serious crimes are punished in this state less severely than the offense in question, and (3) whether the same offense is punished more severely in this state than in other jurisdictions. (Id. at pp. 425-427, 105 Cal.Rptr. 217, 503 P.2d 921.) Defendants focus on the second and third factors.[2]
As to the second factor, their argument is terse. They simply state: "In California, feticide has the same punishment as *914 murder. But killing of a non-survivable feticide [sic] is not a comparable offense to murder: it is a much less serious offense, because the non-survivable fetus is not a potential human life."
This comparison to the penalty for murder of a human being in California is flawed because defendants underestimate the severity of the murder of a "non-survivable" fetus. As we have pointed out, the state has a legitimate interest in the protection of fetal life. (Planned Parenthood v. Casey, supra, 505 U.S. at p. 876, 112 S.Ct. at p. 2820, 120 L.Ed.2d at p. 714.) "The fact that the victim murdered is an unborn child does not render defendant less culpable, or the crime less severe, in light of the Legislature's determination that ... fetuses receive the same protection under the murder statute as persons." (People v. Bunyard (1988) 45 Cal.3d 1189, 1240, 249 Cal.Rptr. 71, 756 P.2d 795.)
Receiving the same protection under the murder statute means that, just as the state may penalize an act that unlawfully shortens the existence of a terminally-ill human being, it may penalize an act that unlawfully shortens the existence of a fetus which later would have perished before birth due to natural causes. (People v. Phillips, supra, 64 Cal.2d at p. 579, 51 Cal.Rptr. 225, 414 P.2d 353; People v. Moan, supra, 65 Cal. at p. 537, 4 P. 545.)
Regarding the third factor, defendants' comparison of the punishment for feticide in California to punishments for feticide in other jurisdictions fails to provide any meaningful analysis of those other laws or to demonstrate that they would not apply under the facts of this case. They simply assert "California is unique in imposing murder penalties to the killing of a non-survivable fetus" and, thus, it is excessively harsh to permit a conviction for murdering such a fetus.
This assertion is undermined by our state Supreme Court's observation in People v. Davis, supra, 7 Cal.4th 797, 30 Cal. Rptr.2d 50, 872 P.2d 591, that murder statutes in Arizona, Illinois, Louisiana, Minnesota, North Dakota, and Utah, criminalizing the nonconsensual killing of an "unborn child" do not require the unborn to have reached a particular stage of development. (Id. at p. 808, 30 Cal.Rptr.2d 50, 872 P.2d 591.) Therefore, California is not as unique as defendants claim.
Moreover, the fact that "California's punishment scheme is among the most extreme does not compel the conclusion that it is unconstitutionally cruel or unusual. This state constitutional consideration does not require California to march in lockstep with other states in fashioning a penal code." (People v. Martinez (1999) 71 Cal.App.4th 1502, 1516, 84 Cal.Rptr.2d 638.) "[T]he needs and concerns of a particular state may induce it to treat certain crimes ... more severely than any other state.... [¶] Whether a particular punishment is disproportionate to the offense is a question of degree. The choice of fitting and proper penalty is not an exact science but a legislative skill involving an appraisal of the evils to be corrected, the weighing of practical alternatives, consideration of relevant policy factors, and responsiveness to the public will.... Thus, the judiciary should not interfere in the process unless a statute prescribes a penalty "`out of all proportion to the offense."' [Citation.]" (People v. Cooper (1996) 43 Cal.App.4th 815, 827, 51 Cal.Rptr.2d 106; see also Harmelin v. Michigan (1991) 501 U.S. 957, 985-986, 993-994, 111 S.Ct. 2680, 2696-2697, 115 L.Ed.2d 836, 858-859, 864 (plur. opn. of Scalia, J.); id. at p. 1004, 111 S.Ct. at 2707, 115 L.Ed.2d at p. 871 (conc. opn. of Kennedy, J.) [the Eighth Amendment forbids *915 only extreme sentences that are grossly disproportionate to the crime].)
As we have noted, our state's Legislature made a policy decision to protect fetal life in the same manner as the life of a human being, except where the mother's paramount privacy interests are at stake. In light of the state's legitimate interest in protecting fetal life, we cannot say that it is grossly disproportionate, or that it shocks the conscience or offends fundamental notions of human dignity, to punish as murder the unlawful killing of a fetus which, due to a physical or medical condition, may not otherwise survive until birth. In other words, construing California's murder statute to apply to the killing of "a non-survivable fetus" does not violate the cruel and/or unusual punishment clauses of the state and federal Constitutions.
C
In any event, defendants did not offer any evidence showing there was no possibility that medical intervention could have prevented the fetus from perishing as a result of the inflammation. Hence, they failed to establish the factual predicate for their legal claim.
II-XIV[]
DISPOSITION
The judgments imposed on September 18, 2000, are modified as follows: (1) the section 186.22, subdivision (b)(1) sentence enhancements on the murders and attempted murder convictions (counts I, II, and IV) are stricken and 15-year minimum parole eligibility terms are imposed instead (§ 186.22, subd. (b)(5)); (2) the stay of the section 12022.53, subdivision (d) enhancement on the fetal murder conviction (count II) is vacated; and (3) the award of 123 days of presentence conduct credits is stricken. As modified, the judgments are affirmed.
The trial court is directed to amend the abstract of judgments to reflect these modifications, and to forward certified copies of the amended abstracts to the Department of Corrections.
We concur: DAVIS and RAYE, JJ.
NOTES
[*] Pursuant to California Rules of Court, rule 976.1, this opinion is certified for publication with the exception of the Facts and Procedural Background and parts II through XIV.
[**] Kennard, J., dissented.
[***] See footnote *, ante.
[1] Because the Legislature did not define "fetus" to be the equivalent of "human being," and did not similarly amend section 192, which defines manslaughter as "the unlawful killing of a human being without malice," there is no crime of manslaughter of a fetus. (People v. Brown (1995) 35 Cal.App.4th 1585, 1592-1594, 42 Cal.Rptr.2d 155; accord, People v. Dennis, supra, 17 Cal.4th at pp. 505-506, 71 Cal.Rptr.2d 680, 950 P.2d 1035.)
[2] In passing, defendants assert they did not know Mestas was pregnant when Valdez shot her and, in doing so, murdered her fetus; thus, their "punishment [for feticide] also fails the first prong of the Lynch test," i.e., an assessment of the nature of the offense and the offender. (In re Lynch, supra, 8 Cal.3d at p. 425, 105 Cal.Rptr. 217, 503 P.2d 921.) We address this as-applied factor in part II, post.
[] See footnote *, ante.
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30 Mich. App. 284 (1971)
186 N.W.2d 94
PEOPLE
v.
EUGENE JOHNSON
Docket No. 9167.
Michigan Court of Appeals.
Decided January 29, 1971.
Leave to appeal denied May 7, 1971.
Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, Robert F. Leonard, Prosecuting Attorney, and Donald A. Kuebler, Chief Assistant Prosecuting Attorney, for the people.
Leonard B. Shulman, for defendant on appeal.
*285 Before: QUINN, P.J., and BRONSON and O'HARA,[*] JJ.
Leave to appeal denied May 7, 1971. 384 Mich. 838.
PER CURIAM.
January 31, 1969, a jury found defendant guilty of robbery armed[1] and he was sentenced therefor. His appeal questions the admission in evidence of a knife found in defendant's automobile following a search without a warrant. Defendant also asserts reversible error because the trial court denied his motion to strike the testimony of a witness on the basis of the latter's mental retardation.
September 17, 1968, a robbery at knife point occurred in Flint. The robber, armed with a knife, was seen entering an automobile which left the scene. From the description given of this automobile, the police located it parked in front of defendant's apartment building. The police arrested defendant in his apartment without a warrant and while one officer searched defendant, another searched his automobile, also without a warrant to do so. The knife in question was located by this search. Defendant made a pretrial motion to suppress which the trial court denied on the basis of Const 1963, art 1, § 11, and that the search was reasonable.
In view of People v. Pennington (1970), 383 Mich. 611, the first ground relied on by the trial court for denying the motion to suppress was error. However, on authority of People v. Danny Williams (1969), 16 Mich. App. 557, People v. Johnnie Mae Jones (1968), 12 Mich. App. 369, and People v. Tisi (1970), 384 Mich. 214, the trial court's finding that the search was reasonable is affirmed.
*286 In addition, the automobile was evidence of defendant's guilt and was an instrumentality of the crime. The search was reasonable under People v. Cook (1970), 24 Mich. App. 401.
With respect to the testimony that defendant moved to strike, the trial court heard this testimony in the absence of the jury before admitting it. The record supports defendant in his position that the witness is mentally retarded, but it will not support a finding by this Court that the trial court abused its discretion in admitting this testimony and leaving the weight and credibility thereof to the jury. Mead v. Harris (1894), 101 Mich. 585.
Affirmed.
NOTES
[*] Former Supreme Court Justice, sitting on the Court of Appeals by assignment pursuant to Const 1963, art 6, § 23 as amended in 1968.
[1] MCLA § 750.529 (Stat Ann 1970 Cum Supp § 28.797).
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513 P.2d 417 (1973)
30 Utah 2d 47
CORPORATION NINE, a Utah corporation, Plaintiff and Appellant,
v.
Ray L. TAYLOR and Neva W. Taylor, his wife, Defendants and Respondents.
Ray L. TAYLOR and Neva W. Taylor, his wife, Plaintiffs and Respondents,
v.
CORPORATION NINE, a Utah corporation, Defendant and Appellant.
No. 12983.
Supreme Court of Utah.
August 17, 1973.
*418 Victor G. Sagers, Midvale, for plaintiff-appellant.
Lawrence L. Summerhays, of Strong & Hanni, Salt Lake City, for defendants-respondents.
CROCKETT, Justice:
This controversy arises out of a real estate contract wherein Ray L. Taylor and his wife Neva, as sellers, undertook to sell 50 acres of unimproved land in the southeast part of Salt Lake County to plaintiff, Corporation Nine, Inc., buyer. After certain of the payments had been made, and some tracts of the land had been conveyed seriatim, as the contract provided, dispute arose. Corporation Nine brought action seeking specific performance and damages, alleging wrongful refusal by the sellers Taylors to accept tender of payments and convey further tracts of the land. Taylors brought their own separate action against Corporation Nine alleging that it had defaulted. They asked to have the contract terminated, and that they be released from any obligation to convey the rest of the land.
The actions were consolidated and tried to the court. It found the issues in favor of the Taylors: that plaintiff Corporation Nine had defaulted, and that its rights under the contract were terminated; and awarded the Taylors $6,099.87 for past due interest, and $1,000 attorney's fees. Corporation Nine appeals. The Taylors urge affirmance of the judgment, except they claim entitlement to a greater amount of attorney's fees.
The contract by which Corporation Nine (in this decision regarded as plaintiff) agreed to buy and the Taylors (herein regarded as defendants) agreed to sell the 50 acres above mentioned was executed January 24, 1968. Mr. John New, general manager, and an owner in Corporation Nine, handled the transactions for it. The contract stated the purchase price as $240,000: $20,000 down and $25,000 March 1, 1969, and a similar amount on March 1 of each year thereafter, plus interest at four percent on unpaid balances. Concurrent with its execution the sellers (Taylors) were to convey six acres, and on receiving the payment on March 1 of each year were to convey an additional five acres. The sellers *419 retained possession, and all incidents and duties pertaining to ownership, including paying taxes thereon, until the payment was received and the land conveyed. The contracts also stated that Corporation Nine had no privilege of prepayment without prior written consent of the sellers.
It is the position of Corporation Nine that because the main contract was not followed literally, but was departed from by modification by the parties, it was not bound to keep its strict terms. In the first transaction, February 1, 1968, Corporation Nine paid the $20,000 down payment and received its six acres. It also requested and received an extra .567 acre and executed a promissory note for $12,835 to the Taylors payable in three years. (This note was finally paid off in June of 1971.) This side transaction was explained by the Taylors thus: that the actual agreed purchase price was $250,000 and the Taylors wanted $30,000 down; but that Mr. New explained that Corporation Nine did not have $30,000, but if the contract price were shown to be only $240,000, it could obtain a $20,000 loan from the bank; and that it would give a promissory note secured by a mortgage for the other $10,000 of the down payment, plus the $2,835 for the.567 acre, which would account for the $12,835 promissory note. On the question of the purchase price, the trial court found in favor of Corporation Nine that the purchase price was $240,000. That finding stands as correct, particularly in view of the parol evidence rule.[1]
The following year, in February 1969, Corporation Nine again asked the Taylors for more land than the five acres provided for in the contract. This was because, in variance of their plan of building cluster type housing, they planned to house the 1969 Utah Home Show. The Taylors agreed to convey more land, at a value of $5,000 per acre for the additional acreage. Three separate parcels were conveyed at that time: 8.618 acres; 4.45 acres; and 1.18 acres. Corporation Nine made the following payments: $30,900 on February 17, 1969; $22,500 on October 9, 1969; and $18,090 on January 7, 1970. Some difficulty appears in these figures because the payments made do not correspond exactly to the values of those individual parcels. The payment of $30,900 paid for the largest tract included payment of $5,900 for the separate 1.18 acre tract, and also for the defendant's five-acre obligation to purchase that year. This leaves 3.618 acres to be taken care of by the $18,090 payment.
It is of considerable significance that with respect to the other tract, the 4.45 acres, the parties prepared and signed a letter of instructions to the Security Title Company. It stated that when the payment for that tract (the $22,250) was made, it would be applied to the next annual installment under the contract. That amount was paid in October 1969, and was applied to the 1970 installment. The Taylors did not demand that the remaining $2,750 owed be paid by Corporation Nine to complete their performance for that year.
In February 1970 Taylors sent a statement of account, including interest for the previous year on the balance of the contract, to be due March 1, 1970. Upon the request of Mr. New, Taylors extended the due date several times, and after some tentative considerations concerning forfeiture, payment was finally made in November 1970. The next year, on February 25, 1971, Taylors sent notice of payments to be due March 1, 1971, $25,000 principal, plus $5,837 interest. On March 24, 1971, Corporation Nine sent a check for $9,197, which it asserted covered the interest and principal due, and demanded a conveyance of .752 of an acre. It asserted that this would complete the amount of land it had agreed to take up to that time and the payment therefore. The Taylors refused to *420 accept that proposition and on March 31, 1971 sent Corporation Nine notice of default and their intent to terminate the contract unless it was remedied within five days. The parties stood pat on their respective positions, and these lawsuits resulted.
The foregoing tender and refusal is the heart of the controversy in this case. Corporation Nine contends that all of the three parcels conveyed in 1969, and the payments therefore, should be credited in advance on their performance of their annual obligations on the contract; whereas plaintiffs Taylors contend to the contrary, and particularly that the 1.18 acres and the amount of $5,900 paid therefore was not part of the main contract; but that it was an entirely separate transaction. It is undisputed that this small tract is not within the 50 acres described in the contract, but is in other land belonging to the Taylors. Upon disputed evidence, the trial court found this issue in favor of the Taylors: that the 1.18 acres was a separate transaction, and that the $5,900 paid therefore was not to be credited on the main contract. But it did credit all other payments made by Corporation Nine against the total of the main contract.
In regard to prepayment, the provision of the contract was: that the buyer has no privilege of prepayment other than consistent with the terms of this agreement, unless prior written consent first had and obtained from the sellers." The court interpreted this clause as not allowing payments made under side agreements to take the place of the next succeeding annual installments, unless by written consent.[2] It is important to reflect that this procedure was followed in the letter of instructions concerning the payment of $22,250 in October 1969 for the 4.45 acres. But there was no such written consent to so apply the $5,900 for the 1.18 acres, nor to so apply the $18,090 for 3.618 acres. In view of the trial court's finding, contrary to Corporation Nine's contentions, it is clear that its tender of $9,197 in March of 1971 was several thousand dollars short of its obligation on the contract to that date.
Corporation Nine cites authorities to support its argument that by course of conduct the Taylors had lead it into believing that modifications of the agreement would be taken as performance of the main contract and that they were thus estopped to change their position and strictly enforce its terms.[3] In looking at the principle of estoppel as applicable to the evidence here these observations are pertinent. The determination of such an issue is not dependent on the asserted subjective content of the mind of the person claiming he was misled. The test to be applied is an objective one as to what a reasonable and prudent person in the circumstances might conclude; and the burden of proof and of persuasion as to the issue of estoppel is upon him who asserts it (Corporation Nine).
The refusal of the trial court to so find is indulged with the usual presumptions of verity; and this court on review will not overturn his determination and compel such a finding unless the evidence clearly preponderates to the contrary. In our survey of this case in the light of the foregoing it is our opinion that there is no sufficient basis to compel a finding that by their conduct the Taylors should be deemed to have relinquished their rights to insist upon compliance with the terms of the contract.
Corporation Nine makes the contention that its failure to make the payment *421 of $25,000 principal, plus interest, on March 1, 1971, and its tender of $9,197 in lieu thereof, did not justify a "forfeiture" and termination of the contract. It cites cases for the principle that forfeitures are not favored.[4] We agree that in the situation of the usual real estate contract, and perhaps even in this one, the five day notice to perform might be unreasonable and arbitrary if a more reasonable and longer time would have been of any benefit to the buyer. However, Corporation Nine made no such indication, nor does it now so appear. Inasmuch as it simply stood upon the position that it had tendered full performance, we do not see that any more time would have done any good. Moreover, this was not a forfeiture of the character dealt with in the usual uniform real estate contract cases referred to, where the seller can declare a forfeiture of the amounts paid in, be restored to his entire property, and the buyer be deprived thereof. In this instance the "forfeiture" is palliated to the extent that the contract is in a sense a series of divisible contracts, and the buyer has received the parcels it has paid for. Such losses and disadvantages as have been suffered are due to its own failure to perform the contract as agreed.
Corporation Nine also makes an averment that it suffered damages by making expenditures on installation or services of water, gas, sewer and other improvements. These brief comments suffice: The trial court made no finding in its favor in this respect and there is no evidence to compel such a finding, whatever expenditure may have been made was in full awareness of the contingencies to be met before defendants would come into ownership of the land, and it cannot complain that its plan was not completed, inasmuch as this was due to its own failure.[5]
On the basis of what has been said above, we are not persuaded that we should reverse the findings and conclusions of the trial court that the termination of the contract was justified.
Corporation Nine also essays that it is entitled to damages against the Taylors because they had committed a breach of the contract by entering into an agreement with a Mr. Jerry Young to sell part of the land to him. Two points support the trial court in rejecting this claim. First, the law does not require the vendor to have clear and marketable title at all times during the performance of his contract, and is not ordinarily so obliged until the time comes for him to perform. The buyer should not be heard to complain unless it appears that it will be impossible or at least highly unlikely that the seller will be able to perform his contract when he is called upon to do so,[6] which we do not see as the situation here. Complementing this is the fact that the buyer himself should not be heard to complain when it is his own default which is preventing fulfillment of the contract.
We now reverse our course to consider the contention of the defendants Taylors. They urge that, inasmuch as the contract provided for an award of reasonable attorney's fees for its enforcement, the trial court should have awarded more than the $1,000. In this regard we are in agreement with the contention of the plaintiff Corporation Nine because its position is simply to oppose any change in the findings or judgment in that regard. Although the parties had ample opportunity to prove their respective cases and the items of damages claimed, there is nothing in the *422 evidence which would justify any such change in the award of attorney's fees.[7]
Affirmed. Costs to defendants Taylors (Respondents).
CALLISTER, C.J., and HENRIOD, ELLETT and TUCKETT, JJ., concur.
NOTES
[1] See Bullfrog Marina, Inc. v. Lentz, 28 Utah 2d 261, 501 P.2d 266, 270 (1972); Youngren v. John W. Lloyd Construction Co., 22 Utah 2d 207, 450 P.2d 985, 987 (1969); Garrett v. Ellison, 93 Utah 184, 72 P.2d 449, 451-452 (1937).
[2] The evidence is that the Taylors desired this to assure them a steady annual income.
[3] Farmers & Merchants Bank v. Universal C.I.T. Corp., 4 Utah 2d 155, 289 P.2d 1045, 1048 (1955), citing J.T. Fargason Co. v. Furst, 287 F. 306, 310 (8th Cir. (1923). As to other statements of the estoppel principle see Grover v. Garn, 23 Utah 2d 441, 464 P.2d 598 (1970); Migliaccio v. Davis, 120 Utah 1, 232 P.2d 195 (1951).
[4] Jensen v. Nielsen, 26 Utah 2d 96, 485 P.2d 673 (1971); Perkins v. Spencer, 121 Utah 468, 243 P.2d 446 (1952); Malmberg v. Baugh, 62 Utah 331, 218 P. 975 (1923).
[5] One who spends money for the improvement of land which he does not own and is fully aware of the true character of his title should not be heard to complain. Migliaccio v. Davis, footnote 3 above.
[6] See Marlowe Investment Corporation v. Radmall, 26 Utah 2d 124, 485 P.2d 1402, 1404 (1971); Woodward v. Allen, 1 Utah 2d 220, 265 P.2d 398 (1953).
[7] See F.M.A. Fin. Corp. v. Build, Inc., 17 Utah 2d 80, 404 P.2d 670 (1965).
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30 Mich. App. 34 (1971)
186 N.W.2d 61
PEOPLE
v.
THOMAS SMITH
PEOPLE
v.
WATROS
Docket No. 8686.
Michigan Court of Appeals.
Decided January 22, 1971.
Leave to appeal granted August 12, 1971.
Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, James K. Miller, Prosecuting Attorney, and Donald A. Johnston, III, Chief Appellate Attorney, for the people.
Fred D. Falkinburg, for defendants on appeal.
Before: FITZGERALD, P.J., and QUINN and McINTYRE,[*] JJ.
Leave to appeal granted August 12, 1971. 385 Mich. 778.
QUINN, J.
Defendants were charged with and tried for the statutory rape[1] of defendant Watros' 15-year-old daughter Jacqueline. They were found guilty by a jury; they were sentenced and they appeal.
Defendant Watros and her children, including Jacqueline, were living with defendant Smith in a house rented by him. Defendants decided that *36 Jacqueline should marry defendant Smith and there is testimony indicating that Smith and Jacqueline became engaged, although she testified that she did not wish to marry Smith.
Jacqueline testified that on March 8, 1968, the defendants came to her bedroom where she was in bed. That her mother told Jacqueline to have sexual intercourse with Smith and that the act of sexual intercourse was accomplished in the presence of the mother. Although defendants agree that there were plans for Jacqueline to marry Smith, they deny that Smith had sexual intercourse with Jacqueline. Other facts pertinent to the appeal will be stated in the discussion of the issues raised on appeal.
Over objection, Jacqueline was permitted to testify to subsequent acts of sexual intercourse with Smith. On the theory that this testimony was relevant to Smith's intent, the testimony was admitted under MCLA § 768.27 (Stat Ann 1954 Rev § 28.1050). At the time he ruled that this testimony was admissible, the trial judge said he would instruct on it, and he did. In essence, the court instructed the jury to disregard the testimony of subsequent acts of sexual intercourse, except for the limited purpose of showing the relations between the parties and Smith's opportunity to have sexual relations with Jacqueline on the occasion charged.
Defendants contend that the admission of this testimony was reversible error. We do not agree. The testimony was relevant to "opportunity and disposition of the parties". People v. Askar (1967), 8 Mich. App. 95. Once relevancy of the testimony is established, it is discretionary with the trial judge to admit or reject it. In exercising that discretion, he must weigh the probative value of the testimony as opposed to its prejudicial effect on defendants. People v. Shaw (1968), 9 Mich App *37 558. The trial judge did not abuse his discretion in this instance.
Defendant Smith claims it was reversible error to admit in evidence a statement he gave to the police because he was not advised that interrogation would cease at his request. He contends that such a warning is required by Miranda v. Arizona (1966), 384 U.S. 436 (86 S. Ct. 1602, 16 L. Ed. 2d 694, 10 ALR3d 974). This contention is incorrect. If a defendant under interrogation requests that the interrogation cease, it must cease, but he does not have to be forewarned of that fact. People v. Tubbs (1970), 22 Mich. App. 549. There is no indication on this record that defendant Smith requested cessation of interrogation.
Defendants assert reversible error occurred from prejudicial remarks of the prosecuting attorney in closing argument. No objection was made to these remarks at trial, nor did defendants request an instruction on these remarks. This error is not preserved for appeal unless a showing of miscarriage of justice is made. People v. Panknin (1966), 4 Mich. App. 19. There is no showing of miscarriage of justice.
Defendants contend that they were denied due process of law because they were not arrested until August 21, 1968, for an offense allegedly occurring March 8, 1968. In support of this contention, they cite People v. Hernandez (1968), 15 Mich. App. 141. The majority opinion in Hernandez did hold that delay in arrest could violate due process rights. Only one judge of this Court signed that opinion and we have not found a single case which relied on Hernandez as precedent for the error here asserted. In People v. Noble (1969), 18 Mich. App. 300, three judges of this Court declined to follow Hernandez and held "there is no constitutional right *38 to be arrested". Hoffa v. United States (1966), 385 U.S. 293 (87 S. Ct. 408, 17 L. Ed. 2d 374).
At sentencing, defendants' appointed counsel was not present but an attorney from that counsel's firm was present. Relying on People v. Theodorou (1968), 10 Mich. App. 409, defendants claim reversible error. In Theodorou, there was no representation at sentencing. The case before us is controlled by People v. Edwards (1969), 18 Mich. App. 526, and no error is shown.
Affirmed.
All concurred.
NOTES
[*] Circuit judge, sitting on the Court of Appeals by assignment.
[1] MCLA § 750.520 (Stat Ann 1954 Rev § 28.788).
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186 N.W.2d 161 (1971)
STATE of Iowa, Appellee,
v.
Ronald Dean BONER, Appellant.
No. 54304.
Supreme Court of Iowa.
April 9, 1971.
*162 Porter, Heithoff, Pratt & Reilly, Council Bluffs, for appellant.
Richard C. Turner, Atty. Gen., Max A. Gors, Asst. Atty. Gen., George J. Knoke, County Atty., Lyle A. Rodenburg, Asst. County Atty., Council Bluffs, for appellee.
REES, Justice.
Defendant was charged by grand jury indictment with the crime of manslaughter. *163 He was tried to a jury and convicted and sentenced, and now brings this appeal asserting the trial court erred in overruling a motion to suppress evidence of a blood test and overruling objections to the admissibility of the evidence of the test at trial. He also complains of the giving of two instructions. We reverse and remand.
On August 7, 1969 defendant had been a member of a wedding party in Council Bluffs and following the ceremony had attended a reception for the bride and groom at a local club. He admittedly consumed one mixed drink containing whiskey and six cans or bottles of beer. Later in the evening he was involved in an automobile accident in Council Bluffs in which two girls, occupants of the car defendant was operating, were killed and in which same accident defendant sustained serious injuries. The defendant was taken to a hospital and a physician was called by the arresting officers to take a sample of blood from the defendant. The physician was not in attendance upon the defendant to administer first aid or other professional services. No request in writing from the arresting officers or anyone else in authority was made to the physician to withdraw the blood sample. Prior to withdrawing the sample, the physician attempted to communicate with the defendant, identified himself, told the defendant that he was there for the purpose of withdrawing a sample of blood and requested permission to withdraw the same. Defendant made no reply to the request and the physician testified upon the trial that in his opinion defendant was not unconscious but that the physician did not believe he was capable of responding or consenting to or refusing to submit to withdrawal of blood. The blood was then withdrawn from the defendant by the physician by the use of a disposable plastic syringe and a fresh needle, the blood was placed in a specimen bottle and the syringe and needle were disposed of. Only one specimen was withdrawn. The specimen was then examined by a pharmacologist, who found it to contain nineteen-hundredths of one percent, or 190 milligrams percent of alcohol.
I. Section 321B.4, Code, 1966, provides, "Only a licensed physician, or a medical technologist or registered nurse designated by a licensed physician as his representative, acting at the written request of a peace officer may withdraw such body substances for the purpose of determining the alcoholic content of the person's blood." (Italics supplied). The failure of the peace officer to direct a written request to the physician to withdraw the blood specimen from defendant is urged as a grounds for reversal as rendering evidence of the blood test inadmissible.
Section 321B.5, Code 1966 provides, "Any person who is dead, unconscious or who is otherwise in a condition rendering him incapable of consent or refusal shall be deemed not to have withdrawn the consent provided by section 321B.3, and the test may be given; provided that a licensed physician shall certify in advance of such test that such person is dead, unconscious or otherwise in a condition rendering him incapable of consent or refusal. In such case such condition shall obviate the requirements of arrest and advice pursuant to Section 321B.6."
The above excerpted portions of the statute are incorporated in the so-called "implied consent law" of our statute. Defendant contends that a failure of literal compliance with the foregoing statutes renders the evidence of the chemical test inadmissible and that the motion to suppress the evidence of the test should have been sustained and that objections to it made during the course of the trial should likewise have been sustained. We are disposed to agree. That the defendant at the time the blood sample was withdrawn from him was incapable of either refusing or consenting seems to be established without question. That no certificate of the physician who *164 withdrew the blood specimen in advance of the test was provided seems to us to be also satisfactorily shown. No request in writing to the physician to administer the test by the arresting officer or any other peace officer in authority was made.
We are not unmindful of the pronouncements of this court in State v. Charlson, 261 Iowa 497, 154 N.W.2d 829, cited by the State, in which this court held substantial compliance with the procedural provisions of our implied consent law is sufficient. However we note the test involved in the Charlson case was taken at the request of the defendant and with his consent. The request of a defendant or his consent to the taking of a specimen of his blood or other bodily substance, would reasonably obviate the necessity for literal compliance with the provisions of the implied consent law above set out.
The defendant further complains the fact only one sample of the defendant's blood was withdrawn, destroyed one of the rights of the defendant guaranteed him by Section 321B.4, Code, which provides inter alia, "Such person may have an independent chemical test or tests administered in addition to any administered at the direction of a peace officer. The failure or inability of the person to obtain an independent chemical test or tests shall not preclude the admission in evidence of the results of the test or tests taken at the direction of the peace officer. Upon the request of the person who is tested, the results of the test or tests taken at the direction of the peace officer shall be made available to him." The pharmacologist who analyzed the blood sample testified that there is a possibility of error in making the test and that he destroyed the blood sample in this case, and that it would be impossible to make another test. The defendant in effect contends that since by the action in disposing of the sample, a comparison test is not possible and that he therefore has been deprived of any effective means of cross-examination of the very thing which is the basis of the testimony relative to the chemical test of his blood, and accordingly contends that the testimony should have been suppressed and denied admission.
The defendant does not contend that the sample was disposed of with any intent to suppress the evidence or to deprive him of an opportunity to make a comparison analysis. If the sample had been in existence and a demand was made and the demand then refused, there would appear to be merit to the defendant's position, although we are not disposed to express opinion on this question at this time. A provision of the statute last above set out which afforded the defendant the right to have an independent chemical test or tests administered in addition to that test administered by the physician albeit as we have herein concluded the test was administered without compliance with the statutes afforded the defendant adequate protection in this area. See City of Columbus v. Glascock, 117 Ohio App. 63, 189 N.E.2d 889, 891.
The State contends the certificate required by section 321B.5, Code 1966 does not require the certificate of the doctor to be in writing prior to the withdrawal of bodily substances from any person who is dead, unconscious or otherwise in a condition rendering him incapable of consent or refusal to the test. With this position on the part of the State, we cannot agree. The word "certify" has a generally accepted meaning; it means to testify in writing; to make known or establish as a fact. Black's Law Dictionary, Revised 4th Ed., p. 287; Smith v. Smith, Ind. App., 110 N.E. 1013, 1014. Or, it means to vouch for a thing in writing. State ex inf. Carnahan ex rel. Webb v. Jones, 266 Mo. 191, 181 S.W. 50, 52; Sawyer v. Lorenzen & Weise, 149 Iowa 87, 92, 127 N.W. 1091, 1093. The term "to certify * * * means to testify to a thing in writing; and in the absence of statutory provision declaring the particular form of certification any form which affirms the fact in writing is sufficient." *165 (italics supplied). State ex rel. Scotten v. Brill, 58 Minn. 152, 59 N.W. 989, 990; Kipp v. Dawson, 59 Minn. 82, 60 N.W. 845, 846; State v. Schwin, 65 Wisc. 207, 26 N.W. 568, 570. And see State ex rel. Beckstedt v. Eyrich, 120 Ohio App. 338, 195 N.E.2d 371, 376, where the court said, "The court has searched through most standard legal works dealing with the terms `certify', `certified' and `certification', and at no point in the law is there any indication that such an act can take place without being endorsed in one way or another upon a document or other paper-writing."
Based upon the failure of the peace officer to comply with the provisions of section 321B.4 and of the physician to comply with section 321B.5, Code, 1966, we feel evidence of the test should have been suppressed and the motion to accomplish the suppression of the same in advance of trial should have been sustained, and we accordingly reverse the trial court.
II. In Division II of his brief and argument, defendant alleges the court erred in the giving of Instruction No. 8 on the effect of blood alcohol tests, and in instructing the jury, "If you find from the evidence before you beyond a reasonable doubt that at the time and place in question the alcoholic content of the defendant's blood was not less than ten-one-hundredths of one percentum by weight, then you would be warranted in concluding that he was under the influence of alcoholic beverage which would prevent his safe operation of a motor vehicle; unless you find from a consideration of all of the evidence that he was not under the influence of an alcoholic beverage, or that his consumption of an alcoholic beverage does not prevent his safe operation of his vehicle."
Particular complaint of the instruction is to the effect that the use of the phrase "would be warranted in concluding that he was under the influence of alcoholic beverage" was improper and that the court should have instructed the jury it would be permitted to presume the fact of defendant's intoxication or that the evidence before it could be interpreted by the jury as raising a presumption of his intoxication. The defendant insists that the word "warranty" is different in meaning from the word "presumed", and that in view of the fact that the words "presumptive evidence" is set forth in the statute, which is set out infra, such wording should have been employed in the instruction.
Sub-section 5 of Chapter 205 of the Acts of the Sixty-third General Assembly, which was amendatory to Section 321.281 of the Code, 1966, provides, "For the purposes of this section, evidence that there was, at the time, more than ten hundredths of one percentum by weight of alcohol in his blood shall be admitted as presumptive evidence that the defendant was under the influence of an alcoholic beverage." Section 321.281 is the section which proscribes the operation while intoxicated or drugged of a motor vehicle upon the public highway.
We are unable to perceive merit in the defendant's exceptions to Instruction #8. The instruction was well balanced, informed the jury that if it found from the evidence beyond a reasonable doubt that the alcoholic content of defendant's blood was not less then ten-one-hundredths of one percentum of alcohol by weight, that then the jury would be warranted in concluding that the defendant was under the influence of an alcoholic beverage, which would prevent his safe operation of a motor vehicle, and the jury was then instructed that unless it so found from a consideration of the evidence, that he was not so under the influence of an alcoholic beverage or that his consumption of an alcoholic beverage did not prevent his safe operation of his motor vehicle they would not be warranted in so concluding. We have paraphrased the instruction, but this is its obvious thrust.
*166 A presumption is a substitute for evidence, but is not itself evidence, being rather an aid to legal reasoning applied to particular subjects. Van Ausdall v. Van Ausdall, 48 R.I. 106, 135 A. 850, 851. "What are commonly known as `presumptions of fact' are really not presumptions at all, but inferences." Stenberg v. Buckley, 245 Iowa 622, 626-627, 61 N.W.2d 452, 454. "* * * a `presumption of fact', in the loose sense, is merely an improper term for the rational potency, or probative value, of the evidentiary fact * * *." State v. Jiles, 258 Iowa 1324, 142 N.W.2d 451, 457. The principal objection of the defendant to the instruction is to the employment of the word "warrant". The use of this word did not, in our judgment, serve to mislead the jury. The court had available to it the choice of several terms such as "permitted", "justified", "warranted", etc., and elected to use the phraseology employed. In State v. Rish, 104 S.C. 250, 88 S.E. 531, 534, the court said, "While the word `justified' is most commonly used in that connection by judges and text-writers, yet we find `warranted' frequently used by them in the same sense and the lexicographers define them as practically synonymous." The use of the word "warranted" did not in any sense prejudice the defendant here.
Instruction #8 as submitted served to correctly inform the jury on the effect of a chemical test for blood alcohol.
III. In Division III of his brief and argument, defendant asserts that Instruction #6 submitted by the trial court to the jury was erroneous for that in the first sub-part of the instruction, the court informed the jury "in order for you to convict the defendant of the crime of manslaughter as charged in the indictment, the plaintiff must prove by the evidence before you beyond a reasonable doubt * * * first: that the defendant in the operation of his motor vehicle at the time and place in question was negligent or acting unlawfully in one or more of the ways charged in the indictment." (italics supplied)
The State contends that objections or exceptions to Instruction #6 were not properly preserved for review, and we incline to agree. No exception was taken to Instruction #6 by the defendant, and although defendant submitted certain requested instructions to the court, he failed to object to the court's refusal to submit the same. The asserted error therefore was not preserved for consideration by us on this appeal, as is required by Rule 196, Rules of Civil Procedure. State v. Gilmore (Iowa, 1970), 181 N.W.2d 145; State v. Schmidt, 259 Iowa 972, 979-980, 145 N.W.2d 631, 635-636; State v. Carstens (Iowa), 182 N.W.2d 119, 121.
In view of our reversal here and the remand which will doubtless result in a retrial, we feel impelled to comment on the substance of the third division of defendant's brief and argument.
In Instruction #6 the jury was informed that before convicting the defendant it must find from the evidence beyond a reasonable doubt that the defendant at the time and place in question was negligent or acting unlawfully in one or more of the ways charged in the indictment. We feel the use of the disjunctive "or" in this part of the instruction, following the word "negligent" is improper, as a finding of mere negligence, as the term is commonly used would not permit the jury to convict. Negligence is generally understood to be a want or lack of due care under the existent circumstances, and what might be considered actionable negligence in the law of torts, unaccompanied by a wanton and reckless disregard or indifference to the safety of others will not constitute the basis for a conviction of the crime of manslaughter. State v. McLaughlin, 250 Iowa 435, 440-441, 94 N.W.2d 303, 306; State v. Kellison, 233 Iowa 1274, 1276, 11 N.W.2d 371, 372-373; 7 Am.Jur.2d, *167 Automobiles, § 283, p. 831; State v. Richardson, 216 Iowa 809, 812, 249 N.W. 211, 212; State v. Graff, 228 Iowa 159, 175, 290 N.W. 97, 104; State v. Thomlinson, 209 Iowa 555, 557, 228 N.W. 80, 81; 61A C.J.S. Motor Vehicles § 659(1), p. 471.
The State urges Instruction #6, when read in its entirety, covers everything defendant complains of, and we concede the remainder of the instruction apparently embraces a correct statement of the law. We are however disposed to the view the use of the word "negligent", standing alone and unamplified or unqualified and followed by a disjunctive or coordinating conjunctive "or", could reasonably have misled or misdirected the jury in a very significant essential of the case, and we would reverse on this point.
The case is therefore reversed and remanded.
Reversed and remanded.
All Justices concur.
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186 N.W.2d 498 (1971)
186 Neb. 735
BLUE FLAME GAS ASSOCIATION, a nonprofit corporation, Appellant,
v.
McCOOK PUBLIC POWER DISTRICT, a public corporation et al., Appellees.
No. 37723.
Supreme Court of Nebraska.
April 23, 1971.
*499 James D. Conway, E. J. Jackson, Hastings, Wade Stevens, McCook, for appellant.
Lyons, Wood & Carroll, McCook, for appellees.
Heard before WHITE, C. J., and CARTER, SPENCER, BOSLAUGH, SMITH, McCOWN and NEWTON, JJ.
McCOWN, Justice.
This is an action by plaintiff, Blue Flame Gas Association for an injunction against the defendant, McCook Public Power District, to enjoin alleged violations of the Unfair Sales Act of Nebraska. A temporary injunction against the defendant was modified and thereafter a demurrer by the defendant was sustained.
The evidence and testimony at the hearing on the temporary injunction is included in the bill of exceptions and is part of the record here. The plaintiff is a nonprofit Nebraska corporation whose members engage in the sale of natural gas and liquefied petroleum gas at wholesale and retail in various parts of Nebraska. The defendant is a public corporation and political subdivision of the State of Nebraska engaged in the purchase, transmission, and sale of electrical energy at retail to customers in its service area comprised of portions of Gosper, Frontier, Hayes, Hitchcock, Lincoln, and Red Willow Counties, Nebraska. It serves rural customers almost exclusively.
The defendant purchased its wholesale power from the Nebraska Public Power System. The contract contained a demand provision, sometimes referred to as a penalty ratchet clause. This provision required the defendant in each month of the year to pay for at least 70 percent of the amount of electric energy used in its peak demand month, which was August. In the winter months particularly, the defendant was required to pay for wholesale energy for which it did not have a retail demand.
In the late spring of 1969, the defendant by advertisements offered to install a complete electric heating system in any home in its service area free upon the agreement of the customer to heat his home electrically for 5 calendar years. The equipment became the property of the customer after he had used it for the required 5 years, but if he failed to fulfill the agreement, the district had the right to remove the equipment. The defendant's objective was to stimulate the use of electricity in the winter months when the wholesale power contract required it to pay for electricity even though it was not needed or used by retail customers. The offer was open to customers until July 1, 1969.
In the spring and summer of 1969, the defendant had 1,467 domestic customers in its service area. Prior to the offer, 57 of these customers had used electric heating. One hundred fifteen customers signed contracts during the time the offer was open. By late August 1969, 23 of the new installations had been completed and 7 were partially *500 completed. The balance had not been started. The average cost of material on those completed was $450.75 and the average labor cost was $191.98. There was no evidence as to the amount of electricity ordinarily required for domestic heating nor as to the quantity of electricity purchased by defendant but previously unsold during the winter months.
The petition alleged that defendant's actions were intended to divert trade from other heating fuels and were contrary to the Unfair Sales Act. Ss. 59-1201 to 59-1206, R.R.S.1943. Irreparable damage was alleged. The district court initially granted a temporary injunction and after a hearing it was dissolved except as to future advertising. Thereafter the court sustained the defendant's demurrer. The basis was unconstitutionality of subsections (5) and (6) of section 59-1202, R.R.S.1943, of the act. Those provisions were held to be nonseverable and the act was therefore declared unconstitutional.
The Unfair Sales Act, broadly speaking, provides that any advertising, offer to sell, or sale of any merchandise at less than cost as defined in the act with the intent or effect of inducing the purchase of other merchandise or of unfairly diverting trade from a competitor, is unfair competition and contrary to public policy. The act is civil in nature with the right to recover damages extended to persons damaged by a violation, including trade associations. Ss. 59-1201 to 59-1206, R.R.S.1943.
Section 59-1202, R.R.S.1943, contains the critical definitions of terms. Subsection (5) of that section reads: "The term cost to the retailer as defined in subsection (1) hereof, means bona fide costs; and purchases made by retailers at prices which cannot be justified by prevailing market conditions within this state shall not be used in determining cost to the retailer." Subsection (6), in essentially identical words, applies to wholesalers.
The district court held that those particular provisions were so vague, general, and indefinite as to be incapable of practical application and therefore arbitrary and unreasonable. The plaintiff relies on the fact that the Unfair Sales Act was held to be constitutional by this court in Hill v. Kusy, 150 Neb. 653, 35 N.W.2d 594 (1949). In that case, however, the particular provisions under attack here were not challenged nor were they considered by the court. A holding by this court that an act of the Legislature is constitutional or unconstitutional determines its validity only on the questions considered and determined by the court. Silence by the court does not have the effect of validating a section of the act not brought in issue and not determined by the court. Stanton v. Mattson, 175 Neb. 767, 123 N.W.2d 844.
The specific provisions challenged here have been considered by several courts. So far as we can determine, wherever the constitutionality has been challenged on the ground of vagueness, generality, and indefiniteness, it has on each occasion been held void. See, Avella v. Almac's Inc., 100 R.I. 95, 211 A.2d 665 (1965); McIntire v. Borofsky, 95 N.H. 174, 59 A.2d 471; Daniel Loughran Co., Inc. v. Lord Baltimore Candy & Tobacco Co., Inc., 178 Md. 38, 12 A.2d 201; State v. Walgreen Drug Co., 57 Ariz. 308, 113 P.2d 650; State v. Consumers Warehouse Market, Inc., 183 Kan. 502, 329 P.2d 638.
The challenged provisions set no standards for determining prices which are "justified by prevailing market conditions within this state." Such prices are not ordinarily susceptible of consistent, accurate determination. It is equally possible that prevailing marketing conditions may be greatly different in different localities of the state. A retailer should not be required to speculate or guess as to which price he may use in determining "costs." We therefore hold that the provisions of subsections (5) and (6) of section 59-1202, R.R.S.1943, are so indefinite and uncertain as to be arbitrary and unreasonable and are, therefore, unconstitutional and invalid.
*501 The effect of that invalidity on the entire act remains to be determined. The Nebraska Unfair Sales Act contains no severability clause. In most of the states in which this particular provision has been declared unconstitutional, there was a severability clause. In those states, the courts held that the invalid provision was, therefore, separable and did not affect the remainder of the act.
In Maryland, however, there was no severability clause and the court's comment is appropriate here. The court said: "It is apparent that this provision, relating to the method of computing cost, is a vital part of the foundation of the legislative structure; and therefore, without regard to the other provisions, if it be held unconstitutional by reason of the uncertainty of its application, and its potential inequities, the other sections die with it. Such clauses sometimes cause more mischief than they were intended to avoid." Daniel Loughran Co., Inc. v. Lord Baltimore Candy & Tobacco Co., Inc., supra.
In recent years, efforts to regulate or control prices have been subjected to increasing scrutiny by courts and lawmakers as well as by the purchasing public. Without indicating any views as to the legal advisability of such legislation, we hold, as did the district court, that subsections (5) and (6) of section 59-1202, R.R.S.1943, are an essential part of the method of computing cost set out in the Unfair Sales Act and that act is therefore unconstitutional.
The remaining contention of the plaintiff is that the actions of the defendant involved the giving of credit of the State of Nebraska in violation of the Constitution. This contention is untenable on the facts before us.
The action of the district court was correct and the judgment is affirmed.
Affirmed.
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11TH COURT OF APPEALS
EASTLAND, TEXAS
JUDGMENT
Billy George Kemp, * From the 106th District
Court of Dawson County,
Trial Court No. 10-07-18413.
No. 11-11-00292-CV * October 31, 2013
Sharon Anne Kemp, * Memorandum Opinion by McCall, J.
(Panel consists of: Wright, C.J.,
McCall, J., and Willson, J.)
This court has inspected the record in this cause and concludes that there is
error in the judgment below. Therefore, in accordance with our opinion, we modify
Section (2) on page ten of the decree to read as follows:
(2) An award and judgment in favor of Petitioner Wife for
reimbursement to her separate property estate, against Respondent
Husband in the amount of $3,964, bearing interest at the rate of 5% per
annum from and after June 8, 2011, all due and payable on or before
August 15, 2011.
We modify the decree to delete Section (3) on page ten in its entirety.
We also modify the decree to delete the words “and prior years” in the first
paragraph under the heading “Federal Income Tax” on page eleven of the decree.
As modified, we affirm the trial court’s final decree of divorce. The costs
incurred by reason of this appeal are taxed eighty percent against Billy George
Kemp and twenty percent against Sharon Anne Kemp.
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364 F.Supp. 1394 (1973)
The FIRESTONE TIRE & RUBBER COMPANY
v.
UNITED STATES.
C.D. 4474, Court Nos. 72-5-01060 and 72-9-01969.
United States Customs Court.
October 11, 1973.
*1395 Kirkland, Ellis & Rowe, Washington, D. C. (Perry S. Patterson, Washington, D. C., of counsel), for plaintiff.
Irving Jaffe, Acting Asst. Atty. Gen. (Frank J. Desiderio, Dept. of Justice, Civil Div., Customs Section, New York City, trial attorney), for defendant.
ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
NEWMAN, Judge:
In these consolidated civil actions, the parties agree that there is no genuine issue as to any material fact, and they have filed cross-motions for summary judgment pursuant to rule 8.2.
The imported merchandise consists of so-called top and bottom domes for premix sode syrup containers manufactured in the United States by a division of Firestone, and then shipped to Uniroyal, Ltd. in Montreal, Canada (Uniroyal). At Uniroyal, by the application of a rubber coating, a shock resistant quality was imparted to the domes. Thereafter, they were returned to Firestone in the United States for completion of manufacture.
Plaintiff claims that upon importation of the domes from Canada the provisions of item 806.30 of the Tariff Schedules of the United States (TSUS) were applicable. Item 806.30 reads as follows:
806.30 Any article of metal (except precious
metal) manufactured in the United
States or subjected to a process
of manufacture in the United
States, if exported for further
processing, and if the exported
article as processed outside the
United States, or the article
which results from the processing
outside the United States, is returned
to the United States for
further processing. . A duty upon the
value of such
processing outside
the United
States * * *
Plaintiff asserts that the domes were subjected to "further processing" outside the United States within the meaning of item 806.30 by virtue of the rubber coating operation at Uniroyal. Thus, insists plaintiff, the entries should have been liquidated upon merely the value of the processing outside the United States, in accordance with item 806.30, rather than upon the full appraised value of the imported articles, as liquidated by the Government.
Defendant contends that the domes were not subjected to "further processing" in Canada within the purview of item 806.30, TSUS; and that consequently, the imported articles were properly assessed with duty by the district director in accordance with their full appraised value.
The sole issue to be determined on these cross-motions is whether plaintiff's domes were subjected to "further processing" outside the United States within the meaning of item 806.30, TSUS.[1]
*1396 For the reasons stated hereinafter, I have concluded that the rubber coating operation at Uniroyal in Canada meets the requirement of "further processing" under item 806.30, TSUS; and that item 806.30 was applicable in the liquidation of the entries covered by these civil actions. Accordingly, plaintiff's motion for summary judgment is granted; defendant's cross-motion is denied.
As provided in rule 8.2(f), plaintiff has submitted a supporting affidavit executed by an official at Uniroyal which describes the rubber coating operation.[2] The pertinent portion of that affidavit states:
The manufacturing process done in Canada to the stainless steel top and bottom domes for premix syrup containers of Firestone identified in paragraphs 2 and 10 of its Complaint commenced with the domes being subjected to an acid pickling process designed to alter chemically the exterior surface of the domes. Once the surface was chemically altered, two different coats of special adhesive were then applied to the domes. A measured amount of special rubber formulation in the form of a cylindrical slug was then placed with the dome in a mold within a steam heated press. The mold was closed and, under heat and pressure, the rubber and the adhesive were vulcanized in the stainless steel domes.
With this background in mind, we reach the specific legal issue involved in these actions: whether or not the words "further processing" in item 806.30 encompass the rubber coating operation at Uniroyal, as described supra.
Paragraph 1615(g)(2), Tariff Act of 1930, as amended, the predecessor provision to item 806.30, contained the phrase "further processing" which was construed recently by our appellate court in Intelex Systems, Inc. v. United States, 59 CCPA 138, C.A.D. 1055, 460 F.2d 1083 (1972). That case involved copper wire and insulating paper manufactured in the United States and exported to Spain where certain operations were performed resulting in lead-covered telephone cable. Such telephone cable was then imported into the United States on cable rolls and supplied to a contractor who was installing communications equipment. The sole issue was whether the telephone cable was "returned to the United States for further processing" (emphasis added) within the meaning of paragraph 1615(g)(2)(B). The appellate court determined that the cable was a completed article when it was returned to the United States, and that the operations performed on the cable at the installation site by the installing contractor did not constitute "further processing" within the purview of paragraph 1615(g)(2)(B).
Respecting the construction of the words "further processing", the appellate court stated (59 CCPA at page ___, 460 F.2d at page 1085):
We have considered the numerous cases cited by the importer and the Government which have interpreted the words "process" or "processing." While those interpretations are helpful in a general sense, we are not really concerned with the meaning of "processing" in a vacuum, in the abstract, or in other contexts unrelated to those at bar. Rather, its meaning must be controlled by the particular context in which it is used here and the legislative intent. Fleming v. Hawkeye Pearl Button Co., 113 F.2d 52, 57 (8th Cir. 1940). When we look to the context of ¶ 1615(g)(2), we do not think that Congress had in mind that any and all kinds of "processing" taking place upon return of an article to the United States would suffice to bring the article within the purview of that paragraph. Instead, we believe that the words "further processing" related to the kind of processing to which the article had been subjected *1397 before namely, "a process of manufacture," as expressed in ¶ 1615 (g)(2)(A). We continue of the view that Congress used "the expression `subjected to a process of manufacture' as synonymous with `processing'", Burstrom v. United States, 44 CCPA 27, CAD 631 (1956), and that the "further processing" referred to in P 1615(g)(2) is a further manufacturing process.
Although the sole issue decided in Intelex was whether the telephone cable was "returned to the United States for further processing",[3] in my view the above quoted construction by the appellate court is equally applicable to the words "further processing" as applied to the operations performed outside the United States. Therefore, the domes must have been subjected to a process of manufacture in Canada to come within the ambit of item 806.30, TSUS.
Plaintiff argues that, as shown by an affidavit, "the domes were subjected to a number of integrated manufacturing processes in Canada", viz., the rubber coating operation. I agree. It is defendant's position, however, that to come within the purview of item 806.30, TSUS, some process of manufacture comparable to machining, grinding, drilling, tapping, threading, punching, or forming must be performed on the metal itself. Defendant urges that these enumerated operations were the types of "further processing" contemplated by Congress in item 806.30, and that the rubber coating operation performed by Uniroyal in Canada was not comparable to any of the above enumerated operations.
Defendant's position is without merit. Significantly, no legislative history or other judicially recognized authority is cited by defendant which supports its highly restrictive interpretation. Moreover, if Congress had intended the meaning advocated by defendant, surely such intent would have been plainly indicated. Therefore, the provision was intended, I think, to be more comprehensive than defendant's interpretation and certainly includes the manufacturing operation performed by Uniroyal in this case.
Defendant also cites the following cases for the well established principle in customs law that the mere cleansing of an article, or "getting it by itself", is not a manufacturing process. Passaic Worsted Co. et al. v. United States, 17 CCPA 459, T.D. 43916 (1930) (cleaning of wool); Woolart Mills, Inc. v. United States, 58 Cust.Ct. 450, C.D. 3018, 269 F.Supp. 381 (1967) (silk cleaning); George Beurhaus Co. et al. v. United States, 32 Cust.Ct. 269, C.D. 1612 (1954) (removal of pumpkin seed kernels from their pods).
The foregoing decisions are inapposite here. Even granting that the acid pickling process at Uniroyal was "in the nature of a cleansing operation", as asserted by defendant,[4] the additional processes of applying a special adhesive and coat of rubber also must be considered in determining whether the domes were subjected to "further processing".
In summary, I find that there is no genuine issue of fact to be tried in this case, and that as a matter of law the articles in issue were further processed outside the United States within the purview of item 806.30, TSUS, as claimed by plaintiff. Accordingly, it is hereby
Ordered that the plaintiff's motion for summary judgment be and the same hereby is granted; and it is further
*1398 Ordered that defendant's cross-motion for summary judgment be and the same hereby is denied; and it is further
Ordered that the district director reliquidate the entries covered by these civil actions, and in so doing assess the appropriate rate of duty upon the value of the processing outside the United States, in accordance with item 806.30, TSUS.
NOTES
[1] Hence, there is no dispute between the parties that the domes were metal articles manufactured in the United States, or that they were returned to the United States for processing, as also required by item 806.30, TSUS. Moreover, affidavits submitted by plaintiff establish those facts.
[2] The expression "rubber coating operation" where used in this opinion refers to all of the processes performed by Uniroyal, as described in the supporting affidavit.
[3] As pointed out in footnote 1, defendant does not dispute that the domes were returned to the United States for processing, as required by item 806.30, TSUS.
[4] An affidavit submitted by plaintiff (quoted in part ante) indicates that the acid pickling process was "designed to alter chemically the exterior surface of the domes". The Government submitted no controverting affidavit. Consequently, there is no basis in fact for considering the acid pickling process used at Uniroyal to be merely a cleansing operation, as urged by defendant.
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554 Pa. 157 (1998)
720 A.2d 757
John P. GOLASCHEVSKY, Appellant,
v.
COMMONWEALTH of Pennsylvania, DEPARTMENT OF ENVIRONMENTAL PROTECTION, Appellee.
Supreme Court of Pennsylvania.
Argued October 22, 1997.
Decided November 24, 1998.
*158 Patrick M. McHugh, Philadelphia, for John P. Golaschevsky.
Patrick H. Blair, Beth Liss Shuman, Harrisburg, for D.E.P.
*159 Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO and NEWMAN, JJ.
OPINION OF THE COURT
NEWMAN, Justice.
John P. Golaschevsky (Appellant) appeals from an Order of the Commonwealth Court granting a Motion for Summary Judgment filed by the Commonwealth of Pennsylvania, Department of Environmental Resources (DER) in Appellant's original action against DER pursuant to the Pennsylvania Whistleblower Law, Act of 1986, P.L. 1559, No. 169, as amended, 43 P.S. § 1421 et seq. (Whistleblower Law). We granted allocatur to decide whether alleged copyright violations by DER employees constitute "wrongdoing" within the meaning of the Whistleblower Law, and whether Appellant has adequately established a causal connection between his report of such conduct and DER's termination of his employment.
FACTUAL AND PROCEDURAL BACKGROUND
Appellant began his employment with DER on September 7, 1993 as a probationary employee. He was classified as a Computer Systems Analyst I and assigned to work in DER's District Mining Operations (DMO) office in Harrisburg. Pursuant to a Job Description dated November 1, 1993, which Appellant signed, his duties included: assisting in the development of computer program applications; ensuring adherence to departmental standards for hardware, software, development, security and operations; conducting initial problem diagnoses and coordinating with vendors for hardware repairs; attending Systems Coordinator meetings; performing various training functions; and designing and installing LAN's (local area networks).
On December 20, 1993, Appellant met with his supervisor Paul Linnan (Linnan), DER's Director of District Mining Operations, and informed Linnan that he suspected other DMO employees were using certain computer software in violation of federal copyright laws. Linnan encouraged Appellant *160 to make a detailed report regarding the alleged copyright violations.
Approximately three weeks later, on January 7, 1994, Appellant met with Linnan and Lynda Ronemus (Ronemus), another supervisor, to receive an interim performance evaluation. The evaluation report noted that Appellant's performance was lacking in a number of ways, including failure to achieve established goals. Linnan and Ronemus discussed Appellant's performance problems with him, particularly his failure to complete certain assignments. The following week, Appellant's supervisors gave him a list of projects to complete during the first quarter of the year. With the assistance of Appellant's union representative, Appellant and his supervisors established and agreed to a schedule for completion of the assigned work.
On April 15, 1994, Linnan and Ronemus gave Appellant a second performance evaluation. Appellant's overall performance was rated "unsatisfactory", and the report noted performance problems virtually identical to those noted in the first evaluation report, e.g., failure to complete assignments on time. By letter dated April 25, 1994, DER terminated Appellant's employment, effective April 26, 1994, for failure to meet the minimum performance standards for his position.
Following his termination, Appellant filed a Complaint against DER in the Commonwealth Court,[1] alleging that he was terminated in violation of the Whistleblower Law. Specifically, Appellant claimed that he was the victim of an improper retaliatory termination because of his reporting alleged copyright violations by DER employees.
After the parties took discovery, DER filed a Motion for Summary Judgment, arguing that Appellant had failed to state a cause of action pursuant to the Whistleblower Law. The Commonwealth Court agreed and granted summary judgment in favor of DER. Appellant now appeals to this Court, arguing that the Commonwealth Court erred in holding that *161 he failed to establish a prima facie case of retaliatory discharge pursuant to the Whistleblower Law.
DISCUSSION
This appeal involves two separate issues. The first is whether the conduct that Appellant reported to his supervisors alleged violations of federal copyright laws comes within the Whistleblower Law's definition of "wrongdoing". The second is whether Appellant established the requisite causal connection between his report of copyright violations and the subsequent termination of his employment. We discuss each in turn.
Issue One: Definition of "Wrongdoing"
Section 3 of the Whistleblower Law, 43 P.S. § 1423(a), provides as follows:
(a) Persons not to be discharged No employer may discharge, threaten or otherwise discriminate or retaliate against an employee regarding the employee's compensation, terms, conditions, location or privileges of employment because the employee or a person acting on behalf of the employee makes a good faith report or is about to report, verbally or in writing, to the employer or appropriate authority an instance of wrongdoing or waste.
Pursuant to the definitional section of the Whistleblower Law, 43 P.S. § 1422, the statute applies to "public bodies", including Commonwealth agencies like DER.
43 P.S. § 1422 also defines "wrongdoing" as:
A violation which is not of a merely technical or minimal nature of a Federal or State statute or regulation, of a political subdivision ordinance or regulation or of a code of conduct or ethics designed to protect the interest of the public or the employer.
This definition was at issue in Gray v. Hafer, 168 Pa.Cmwlth. 613, 651 A.2d 221 (Pa.Cmwlth.1994), affirmed per curiam, 542 Pa. 607, 669 A.2d 335 (1995), in which an employee of the Department of the Auditor General reported to his superiors *162 instances of allegedly improper conduct perpetrated by employees of another governmental unit. In that context, the Commonwealth Court interpreted the statutory definition of "wrongdoing" as follows:
"In determining whether "wrongdoing" is established by reporting violations not only of crimes of the employer but of third parties, we must look to the definition of "wrongdoing." Within the definition of "wrongdoing", there is a requirement that the violation of the law or regulation be one that is designed to protect the interest of the public or employer. While the definition uses the phrase "to protect the interest of the public", and that could be interpreted to apply to any statute or ordinance as used in the context of retaliation taken by an employer because of an employee's work performance, that requirement means that a statute or regulation is of the type that the employer is charged to enforce for the good of the public or is one dealing with the internal administration of the governmental employer in question."
Gray, 651 A.2d at 224. In so limiting the definition of "wrongdoing", Gray was principally concerned with preventing employees from invoking the Whistleblower Law in cases where there could be no rational relation between the alleged illegal activity and the employer's conduct.
However, Gray's limitation of the definition of "wrongdoing" plainly does not apply where, as here, the employee alleges that there has been illegal activity within his own agency. Under these circumstances, pursuant to the plain language of 43 P.S. § 1422, "wrongdoing" includes not only violations of statutes or regulations that are "of the type that the employer is charged to enforce," but violations of any federal or state statute or regulation, other than violations that are "of a merely technical or minimal nature."[2] Although here there is some question whether the alleged copyright *163 violations Appellant reported to his supervisors would come within the "technical or minimal" exception, we need not reach that issue, because Appellant clearly has not met his burden of demonstrating a causal connection between his report and the subsequent termination of his employment.
Issue Two: Causal Connection
While Gray's analysis of the definition of "wrongdoing" is inapplicable to the present case, its discussion of the causal connection issue is germane. Gray correctly held that, to make out a prima facie case of retaliatory termination pursuant to the Whistleblower Law, a plaintiff must "show by concrete facts or surrounding circumstances that the report [of wrongdoing or waste] led to [the plaintiff's] dismissal, such as that there was specific direction or information received not to file the report or [that] there would be adverse consequences because the report was filed." Gray, 651 A.2d at 225.
Here, Appellant does not present sufficient evidence to establish a causal connection between his report and his termination. He does not allege that his supervisors threatened to fire him or to impose any other adverse consequences because of his report, nor does he establish any other "concrete facts" to connect the report with the dismissal. Instead, in attempting to show a causal connection, Appellant relies solely on vague and inconclusive circumstantial evidence.
For example, Appellant alleges that, prior to his December 20, 1993 meeting with Linnan regarding the alleged copyright violations, his supervisors had not indicated any dissatisfaction with his work. Appellant claims that his report of alleged wrongdoing touched off a series of retaliatory actions, including negative performance evaluations, lack of cooperation from fellow employees and supervisors, withholding of information regarding computer software, and, ultimately, termination of Appellant's employment. However, this "evidence" constitutes nothing more than Appellant's perception of how others treated him after he made the December 20, 1993 report a *164 perception that is obviously colored by Appellant's interest in proving that he is a victim of retaliatory discharge.
Viewing the evidence objectively, Appellant's termination apparently was the result of his unsatisfactory work performance, and had nothing to do with his report of alleged copyright violations. Indeed, rather than punishing him for making an oral report of alleged wrongdoing, Appellant's supervisors encouraged him to follow up on the matter and produce a written report, though he apparently never did so.
Appellant offers no concrete evidence tending to show a causal connection between his report of alleged copyright violations and his subsequent termination, and, therefore, he cannot establish a prima facie case of retaliatory discharge pursuant to the Whistleblower Law. Accordingly, we AFFIRM the Commonwealth Court's grant of summary judgment in favor of DER.
NIGRO, J., files a concurring opinion.
ZAPPALA, J., concurs in the result.
NIGRO, Justice, concurring.
I concur in the result reached by the majority. I agree that Appellant produced insufficient evidence of retaliation to survive summary judgment in his action under the Whistleblower Law. However, I write separately to clarify that absent direct evidence of retaliation, circumstantial evidence may be used to prove a violation of the statute.
While there is little authority addressing the burdens of proof under the Whistleblower Law, 43 Pa.C.S. §§ 1421-1428, the Commonwealth Court has stated that the statute envisions a shifting burden of proof. Watson v. City of Philadelphia, 162 Pa. Commw. 340, 347, 638 A.2d 489, 492 (1994). An employee is obligated to show that he reported wrongdoing before being subjected to adverse action. Watson, 162 Pa. Commw. at 347, 638 A.2d at 492. See also 43 Pa.C.S. § 1424(b).[1] The burden then shifts to the employer to establish *165 that there was a legitimate reason for the adverse action. Watson, 162 Pa. Commw. at 347, 638 A.2d at 492. See also 43 Pa.C.S. § 1424(c).[2] Once the employer offers such evidence, the burden shifts back to the employee to show that this reason was merely pretextual. Watson, 162 Pa. Commw. at 347, 638 A.2d at 492. The burden shifting under the Whistleblower Law is similar to that found in cases involving claims of unlawful discrimination brought under the Pennsylvania Human Relations Act, 43 P.S. §§ 951-963 (PHRA). Id. See also Allegheny Housing Rehabilitation Corp. v. Pennsylvania Human Relations Comm'n, 516 Pa. 124, 532 A.2d 315 (1987)(discussing shifting burdens of proof under the PHRA for discrimination claims).[3]
The Whistleblower Law does not explicitly require an employee to establish a causal connection between his report of wrongdoing and the alleged reprisal as part of his prima facie case. See 43 Pa.C.S. § 1424(b)(stating that an employee must show that before the alleged reprisal, he reported or was about to report wrongdoing). The Commonwealth Court has stated, however, that to make out a cause of action under the Whistleblower Law, an employee must make more than a general statement that a report was filed and he was subsequently fired. As recognized by the majority, in Gray v. Hafer, 168 Pa. Commw. 613, 620, 651 A.2d 221, 225 (1994), the Commonwealth Court stated that an employee must show that *166 the report led to his dismissal.[4]See also Robert Wholey Co., Inc. v. Pennsylvania Human Relations Comm'n, 146 Pa. Commw. 702, 706, 606 A.2d 982, 983 (1992)(prima facie case of retaliation under the PHRA requires showing of a causal connection); Krouse v. American Sterilizer Co., 126 F.3d 494, 500 (3rd Cir.1997)(prima facie case of retaliation under Title VII requires showing of a causal connection).
Appellant correctly states that establishing a prima facie case in this context is not intended to be onerous. See Allegheny Housing Rehabilitation Corp. v. Pennsylvania Human Relations Comm'n, 516 Pa. at 130, 532 A.2d at 319. To establish a causal connection, an employee must show by concrete facts or surrounding circumstances that the report led to his dismissal. Gray, 168 Pa. Commw. at 620, 651 A.2d at 225. The court's examples of such facts or circumstances in Gray were evidence of a specific direction not to file the report or a statement that there would be adverse consequences because the report was filed. Id. In Title VII cases discussing the causal connection requirement, the Third Circuit has required evidence of intervening antagonism or retaliatory animus to survive summary judgment. See Krouse, 126 F.3d at 504; Woodson v. Scott Paper Co., 109 F.3d 913, 920-21 (3rd Cir.1997).
Appellant concedes that he has no direct evidence that his employer retaliated against him for reporting that he suspected illegal pirating of software in the office. Instead, he maintains that there is sufficient circumstantial evidence to support his claim and thus summary judgment is not warranted. Summary judgment may be granted where the material facts are not in dispute and the movant is entitled to judgment as a matter of law. Pa. R. Civ. P. 1035. In reviewing a *167 motion for summary judgment, the evidence must be viewed in the light most favorable to the non-moving party. Borden, Inc. v. Advent Ink Co., 701 A.2d 255, 258 (Pa.Super.1997).
Viewing the record before this Court in the light most favorable to Appellant, it establishes the following. Between September 7, 1993, when Appellant began working for the Department of Environmental Resources, and December 20, 1993, when Appellant reported to his boss that he suspected illegal activity, Appellant had no difficulty with anyone at the Department. Appellant's 2/13/96 deposition at 9. On December 20, 1993, Appellant's boss, Paul Linnan, reacted angrily to the report of his suspicions of illegal activity. Appellant testified:
"And Paul got real angry, said that's not what we hired you for. . . . He didn't even want to know the details of the pirating thing. Of course, I only said I suspected it. But he brushed it off. He didn't really want to hear about it."
Appellant's 2/27/96 deposition at 51-53. Appellant testified that the more he talked about it, the more agitated Linnan became and when Linnan abruptly ended the meeting, Appellant believed he had offended him. Id. at 54-55.
On January 13, 1994, Appellant met with Paul Linnan and his supervisor, Lynda Ronemus, for an interim performance evaluation. His overall rating was "Needs improvement." See 1/13/94 Employe Performance Review. Appellant expressed that he disagreed with the evaluation. See id. This was Appellant's first indication that there was dissatisfaction with his work. Appellant's 2/13/96 deposition at 26; see also Appellant's 2/27/96 deposition at 93, 224.
On the same day, Appellant was given three priority projects with deadlines. One project involved taking an inventory of computer equipment. Appellant testified that his co-workers did not cooperate with him and hampered his ability to complete the project. See Appellant's 2/13/97 deposition at 165; Appellant's 2/27/96 deposition at 112, 216. Appellant maintained that the lack of cooperation he received at work was a change from how he was treated before January 13. *168 Appellant's 2/27/96 deposition at 194; Appellant's 4/22/96 deposition at 44-45. Appellant stated that after January 13, Linnan and Ronemus interfered with his ability to do his job. Appellant's 2/27/96 deposition at 111-12. He testified:
All of a sudden I started to be taking on this project, that project. I got less and less cooperation from the PC coordinators. A lot of things changed after January 13th that made it very difficult for me to do my job.
Id. at 112. Appellant sought help from Ronemus to get his co-workers to cooperate but she did not intervene. Id. at 113.
While Appellant received extensions of time to finish his assignments through the intervention of his union representative, he did not complete them. See id. at 131-33. Appellant's second performance evaluation was on April 18, 1994. Linnan rated Appellant "Unsatisfactory." See 4/15/94 Employe Performance Review. Appellant was suspended and ultimately terminated effective April 26, 1994.
Considering this evidence in its entirety, I conclude that it is insufficient to allow a jury to reasonably find that Appellant's employer engaged in antagonistic behavior against Appellant after his report of illegal activity, that led to his unsatisfactory performance evaluation and termination of employment. While in another case the circumstances may permit a jury to infer that a report of wrongdoing led to an employee's dismissal, such a factual scenario is not present here. Thus, I would affirm the decision of the lower court.
NOTES
[1] Pursuant to Section 4 of the Whistleblower Law, 43 P.S. § 1424(a), a civil action alleging a violation of the Whistleblower Law may be brought in any court of competent jurisdiction.
[2] For example, had Appellant reported to his supervisors that fellow employees were dealing drugs out of the office, such conduct would constitute "wrongdoing", regardless of the fact that DER is not charged with enforcing the drug laws.
[1] Section 1424(b) states:
Necessary showing of evidence. An employee alleging a violation of this act must show by a preponderance of the evidence that, prior to the alleged reprisal, the employee or a person acting on behalf of the employee had reported or was about to report in good faith, verbally or in writing, an instance of wrongdoing or waste to the employer or an appropriate remedy.
[2] Section 1424(c) states:
Defense. It shall be a defense to an action under this section if the defendant proves by a preponderance of the evidence that the action by the employer occurred for separate and legitimate reasons, which are not merely pretextual.
[3] In Allegheny, 516 Pa. at 129-31, 532 A.2d at 318-19, the Court applied a burden shifting analysis similar to that employed in Title VII discrimination cases.
[4] Gray was before the court on preliminary objections. The court stated that the employee alleged in his complaint that he filed a report with his employer indicating that a third party had violated the law and that his employer was guilty of wrongdoing because he was then terminated. Id. The court found such allegations insufficient to state a claim under the statute and granted the employee leave to amend his complaint. Id. This Court affirmed the Commonwealth Court's order. 542 Pa. 607, 669 A.2d 335.
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720 A.2d 434 (1998)
316 N.J. Super. 401
AVR REALTY CO., c/o Rose, Plaintiff-Respondent,
v.
CRANFORD TOWNSHIP, Defendant-Appellant.
Superior Court of New Jersey, Appellate Division.
Argued October 27, 1998.
Decided December 1, 1998.
*435 Robert F. Renaud, Cranford, for defendant-appellant (Palumbo & Renaud, attorneys; Mr. Renaud, on the brief).
William J. Sitar, West Orange, for plaintiff-respondent (Mandelbaum & Mandelbaum, attorneys; Mr. Sitar, on the brief).
Before Judges BROCHIN and KLEINER.
The opinion of the court was delivered by KLEINER, J.A.D.
Defendant Cranford Township appeals from an adverse ruling of the Tax Court relating to Cranford's assessment of plaintiff AVR Realty Co.'s property for 1995. We conclude that the Tax Court failed to properly construe a prior decision of this court, AVR Realty Co. v. Cranford Tp., 294 N.J.Super. 294, 683 A.2d 235 (App.Div.1996), certif. denied, 148 N.J. 460, 690 A.2d 608 (1997) ("AVR I"), in which we invalidated Cranford's assessment of plaintiff's property for the tax years 1992 and 1993. AVR I fully analyzed the proper assessment procedure when the assessment for a forthcoming year implicates the Freeze Act, N.J.S.A. 54:51A-8. Contrary to the Tax Court decision, our review of the record reflects that Cranford's assessor followed the statutory procedure of N.J.S.A. 54:51A-8 in his assessment of plaintiff's property in 1994, and that his taxing procedure comports with our prior analysis in AVR I. We therefore reverse the Tax Court decision and remand to implement our decision in this appeal.
I
Although the factual history of this dispute is fully reviewed in AVR I, we will reiterate some salient facts. In 1992, plaintiff's seven-acre property included a brick mixed-use complex comprising office space, a restaurant facility and a motel structure with 180 guest rooms. In October 1992, plaintiff was granted a building permit to construct a one-story building and to convert the motel into a senior citizens' assisted living facility. The new building was designed for use as administrative offices, a reception area, a dining area, and a lounge for use by the residents of the senior citizens' facility. Plaintiff's building permit application estimated the cost of construction as $1,102,325.
On November 4, 1993, plaintiff received a certificate of occupancy and immediately began renting the units to senior citizens. The converted motel was fully occupied by 1994.
In October 1992, at the time the construction began, plaintiff's property was assessed for the tax year commencing January 1, 1993, at $14,884,100. Upon receiving the 1993 assessment, plaintiff appealed its tax assessment. After a trial on June 2, 1995, the Tax Court entered judgment reducing the 1993 assessment to $11,170,000.
In October 1995, plaintiff filed a motion in the Tax Court seeking to have the Freeze Act, N.J.S.A. 54:51A-8, applied to the tax assessment for 1994. Defendant opposed plaintiff's motion contending that plaintiff's new construction and the modifications to its pre-existing building had increased the value of plaintiff's property. The Tax Court concluded that defendant's failure to file a formal complaint alleging a change in the value of plaintiff's property was a jurisdictional defect; thus, plaintiff's motion was granted. Defendant appealed the Tax Court decision. In AVR I, we affirmed the decision of the Tax Court; however, in our decision we concluded that defendant was not required to *436 file a complaint alleging a change of value. Rather, defendant was not entitled to the higher assessment because it could not demonstrate that plaintiff's property had increased in value as plaintiff had not received its certificate of occupancy until November 4, 1993, after the October 1, 1993 deadline for increasing the assessment for the 1994 tax year. Id. at 301-02, 683 A.2d 235.
On October 24, 1996, plaintiff filed a motion to apply the Freeze Act to the assessment of plaintiff's property for the 1995 tax year. Defendant contended that, although it was precluded from raising the assessment on plaintiff's property for the 1994 tax year pursuant to AVR I, it was permitted to raise plaintiff's assessment for the 1995 tax year. The Tax Court concluded that defendant had failed to follow the statutory procedure and disallowed the increased assessment. As noted, we disagree and reverse.
II
The Freeze Act, N.J.S.A. 54:51A-8, provides:
Where a final judgment has been rendered by the tax court involving real property, the judgment shall be conclusive and binding upon the municipal assessor and the taxing district, parties to the proceeding, for the assessment year and for the 2 assessment years succeeding the assessment year covered by the final judgment, except as to changes in the value of the property occurring after the assessment date. Where those changes are alleged, the complaint shall specifically set forth the nature of the changes relied upon as the basis for the appeal. However, the conclusive and binding effect of the judgment shall terminate with the tax year immediately preceding the year in which a program for complete revaluation of all real property within the district has been put into effect.
The purpose of the Freeze Act is to prevent "the repeated yearly increases in the assessed value of property, not related to or justified by any changes increasing its market value and resulting in harassment of the taxpayer, subjecting him to the trouble and expense of annual appeals to the county tax board." Newark v. Fischer, 8 N.J. 191, 200, 84 A.2d 547 (1951).
Applying N.J.S.A. 54:51A-8 to the facts presented, the Tax Court judgment dated June 2, 1995, reducing plaintiff's 1993 assessment[1] to $11,170,000, protected plaintiff from any increased assessment for 1994 and 1995. However, N.J.S.A. 54:51A-8 does provide an exception to the freeze. A taxpayer may not apply the Freeze Act "to changes in the value of the property occurring after the assessment date. Where those changes are alleged, the complaint shall specifically set forth the nature of the changes relied upon as the basis for the appeal." Ibid.
As we noted in AVR I, "the techniques available to a taxing district for asserting a change-of-value claim depends on the timing of the entry of the Freeze Act judgment." 294 N.J.Super. at 299, 683 A.2d 235. Recognizing that an assessor must evaluate a property annually in October preceding the tax year, we noted:
[I]f the judgment for the base year has been entered prior to the assessment date for the Freeze-Act years, the assessor is no longer at liberty to make an independent assessment of value as of that date. Because the Freeze Act is self-executing, the assessor is obliged simply to conform the assessment for the freeze years to the judgment. Should the assessor believe that there has been a change of value as of the assessment date, the Freeze Act expressly requires the taxing district to file a complaint seeking relief from the base year assessment.
[Ibid. (citations omitted).]
The procedure changes, however, when the assessment is made before the entry of final judgment for the base year, as was the situation both in AVR I and in the present appeal:
Obviously, even though the assessor may know that the prior year's assessment has been challenged by the taxpayer, the assessor cannot know what the outcome of the challenge will be and what, if any, will be the base and the freeze years. Thus, *437 until final judgment is entered there is no constraint upon the assessor's exercise of the statutory obligation to assess annually according to true value on the assessment date, and there is neither reason nor opportunity, prior to the fact, to require the assessor to file a complaint in order to increase the prior year's assessment. If a final judgment is entered in the taxpayer's favor after that date, it is then the taxpayer's burden to seek the benefit of the Freeze Act by a motion filed in the original cause. R. 8:7(d). And if the assessor is of the view that a change of value has occurred between the base year assessment date and the freeze year assessment date, the taxpayer's motion can be defended against by the assertion of and, ultimately, by proof of that change.
[Id. at 299-300, 683 A.2d 235 (citations omitted).]
Here, the Tax Court judgment was entered on June 2, 1995. Obviously the date of judgment post dates the assessment date of October 1, 1993, for the tax year commencing January 1, 1994, and also post dates the assessment date of October 1, 1994 for the tax year commencing January 1, 1995. As noted in AVR I, if the Tax Court judgment is entered after the October 1 assessment date, the municipality may allege a change in value in their opposition to the motion to freeze. Id. at 299-300, 683 A.2d 235.
In order to defeat the application for the freeze and be entitled to a plenary hearing, the municipality must allege: (1) the change in value results from an internal or external change; (2) the change materialized after the assessing date of the base year; and (3) the change substantially and meaningfully increased the value of the property. Union Min. & Alloys Corp., 11 N.J.Tax 280, 283 (Tax 1990) (citing Cumberland Arms v. Burlington Tp., 10 N.J.Tax 255 (Tax 1988)). "Examples of changes internal to the property are physical refurbishment of the building or additions thereto such as added wings or added floors, which changes are easily ascertainable." Cumberland Arms, 10 N.J. Tax at 263. In AVR I, we indicated the change in use and additions to a property "may effect a substantial and meaningful change in value." 294 N.J.Super. at 301, 683 A.2d 235.
Defendant, in support of its opposition to plaintiff's motion to freeze the 1995 assessment, filed the certification of John Duryee, the Cranford Tax Assessor. In his certification, Duryee averred that the value of plaintiff's property changed between the assessing date for the 1993 tax year, October 1, 1992, and the assessing date for the 1995 tax year, October 1, 1994. He stated:
12. In my opinion, the value of the property as of October 1, 1994, was substantially and meaningfully changed and increased from what it had been on October 1, 1992. There are a number of changes in my opinion. First, there was the construction of the new building. Clearly, there was an increase in value occasioned by that construction. The building was constructed voluntarily by plaintiff after applying for and receiving approvals from the municipality.
13. The second reason for the change in value was the change of the hotel/motel portion of the premises to a completely different use, that of senior citizens' assisted living apartments and other facilities.... As can be seen from the lease, the new use was completely different from the former motel use. Formerly, motel rooms were rented on a daily or weekly basis. At "Senior Quarters", apartments were rented to tenants on an annual basis. Tenants were provided with [meals, personal care, housekeeping, utilities, and recreation].
The assessor also certified that on October 1, 1992, the net operating income was $761,960; on October 1, 1994, the net operating income was $1,102,000. He concluded, "[T]he property has significantly increased in value over that period of time."
The assessor's certification is a prima facie demonstration of a change in value and should have entitled defendant to a plenary hearing to determine whether a change in value was sufficient to deflect the freeze sought by plaintiff.
Here, the Tax Court judge did not focus upon N.J.S.A. 54:51A-8, but relied upon an analysis of the Added Assessment Law, *438 N.J.S.A. 54:4-63.1 to -63.11, and the Omitted Assessment Law, N.J.S.A. 54:4-63.12 to -63.40. The judge concluded that the assessor's failure to utilize either statute precluded his filing responsive pleadings in opposition to plaintiff's motion to invoke the Freeze Act to the 1995 assessment. We need not determine whether the judge's interpretation of either the Added Assessment Law or the Omitted Assessment Law was correct. Suffice it to say, N.J.S.A. 54:51A-8, as interpreted in AVR I, provides an assessor with a two-fold mechanism to challenge the Freeze Act: the assessor may file a complaint, or the assessor may file a responsive pleading to a complaint filed by a taxpayer seeking to invoke the Freeze Act. AVR I, 294 N.J.Super. at 299-300, 683 A.2d 235 (citing Union Min. & Alloys Corp. v. Kearny, 11 N.J.Tax at 283 (1990) (finding municipality was not required to file a Freeze Act complaint because the base year judgment was entered after the assessing dates for both freeze years)). We specifically noted:
[I]f the assessor is of the view that a change in value has occurred between the base year assessment date and the freeze year assessment date, the taxpayer's motion can be defended against by the assertion of and, ultimately, by proof of that change.
[AVR I, 294 N.J.Super. at 299-300, 683 A.2d 235 (emphasis added).]
Since N.J.S.A. 54:51A-8, as interpreted in AVR I, permitted the assessor to challenge the taxpayer's Freeze Act motion, we conclude the narrow view of the Tax Court deprived defendant of an opportunity to prove at a plenary hearing the change in the value of plaintiff's property occurring after the assessment date of October 1,1994.
Reversed and remanded for further proceeding. We do not retain jurisdiction.
NOTES
[1] 1993 became the "base year" in the assessment analysis.
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777 F.Supp. 1133 (1991)
UNITED STATES of America, Plaintiff,
v.
INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, AFL-CIO, et al., Defendants.
In re APPLICATION XLV OF the INDEPENDENT ADMINISTRATOR.
No. 88 CIV. 4486 (DNE).
United States District Court, S.D. New York.
October 24, 1991.
*1134 Charles M. Carberry, Investigations Officers of Intern. Broth. of Teamsters.
Otto G. Obermaier, U.S. Atty., S.D.N.Y. (Edward T. Ferguson, III, Asst. U.S. Atty., of counsel), for U.S.
Climaco, Climaco, Seminatore, Lefkowitz & Garofoli Co., L.P.A., Cleveland, Ohio, (John R. Climaco, Paul S. Lefkowitz, of counsel), Wendell Shepherd & Roy Barnes, P.C., New York City, for Carmen E. Parise.
OPINION AND ORDER
EDELSTEIN, District Judge:
This opinion emanates from the voluntary settlement in the action commenced by *1135 the plaintiffs United States of America (the "Government") against the defendants International Brotherhood of Teamsters (the "IBT") and the IBT's General Executive Board (the "GEB") embodied in the voluntary consent order entered March 14, 1989 (the "Consent Decree"). The Consent Decree provided for three Court-appointed officials, the Independent Administrator to oversee the remedial provisions, the Investigations Officer to bring charges against corrupt IBT members, and the Election Officer to oversee the electoral process leading up to and including the 1991 election for International Officers (collectively, the "Court Officers"). The goal of the Consent Decree is to rid the IBT of the hideous influence of organized crime through the election and prosecution provisions.
Application XLV presents for this Court's review the opinion of the Independent Administrator finding that the Investigations Officer proved two charges filed against IBT member Carmen E. Parise, who is the Secretary-Treasurer of IBT Local Union 473 in Cleveland, Ohio and President of Joint Council 41, also in Cleveland.
I. BACKGROUND
Both charges filed by the Investigation Officer allege that Parise violated Article II, Section 2(a) and Article XIX, Section 6(b) of the IBT Constitution by conducting himself in a manner to bring reproach upon the Union. Article II, § 2(a) of the IBT Constitution is the IBT membership oath and provides in relevant part that every IBT member shall "conduct himself or herself in a manner so as not to bring reproach upon the Union." Article XIX, Section 6(b) of the IBT Constitution provides that IBT members may be disciplined for violating this oath. The first charge alleges that Parise, the Secretary Treasurer of Local 473, went to the place of employment of Jerry Jones, a Local 473 member, where he violently threatened Jones with physical harm and economic ruin. The second charge alleges that Parise refused to answer questions under oath regarding possible corrupt and dishonest activities in Local 473.
Prior to Parise's disciplinary hearing, the Investigations Officer and Parise submitted to the Independent Administrator for approval an agreement to resolve the charges, calling for a three month suspension. The agreement was submitted as Application XVIII for this Court's approval. This Court rejected the agreement in light of the severity of the charges.
After a disciplinary hearing on the charges, the Independent Administrator found that Investigations Officer had sustained his burden and demonstrated "just cause"[1] that the two charges had been proved. As a penalty for Charge One, the Independent Administrator imposed a suspension of twenty-four months on Parise from the IBT and its affiliates. However, the Independent Administrator credited Parise with the three month suspension already served in compliance with his agreement with the Elections Officer. As a result, the Independent Administrator ordered that Parise remove himself from the IBT and all of his IBT-affiliated union positions, including membership in the IBT, for a period of twenty-one months. (Ind.Admin. Dec. at 15). The Independent Administrator imposed a concurrent twenty-four month suspension on Parise for the second charge, also crediting Parise with three months served with respect to this charge. Thus, the Independent Administrator suspended Parise for an additional period of twenty-one months to run concurrently with the suspension imposed on Charge One. (Id. at 16). In addition, the Independent Administrator directed that Parise ensure that no retaliatory action be taken against Local 473 members Jerry Jones and/or Ron Milano, and that Parise disqualify himself from Union proceedings involving them.
Further, the Independent Administrator directed that Local 473, Joint Council 41 and any other IBT-affiliated entity not contribute to the following funds and benefit programs during his twenty-one month suspension: *1136 (1) the Local 473 Health and Welfare Fund; (2) the Local 473 Pension Fund; (3) the Joint Council 41 Severance Plan; and (4) the use of a Union-owned automobile. The Independent Administrator also directed that Local 473 be reimbursed by Parise for the funds expended by the Local in his defense of these charges.
Parise appeals to this Court the decision of the Independent Administrator. This Court finds that the decision of the Independent Administrator is fully supported by the evidence, and that Parise's arguments are completely without merit. Accordingly, the decision of the Independent Administrator is affirmed in all respects.
II. DISCUSSION
It is well settled that the findings of the Independent Administrator "are entitled to great deference." United States v. Int'l Brotherhood of Teamsters, 905 F.2d 610, 616 (2d Cir.1990), aff'g March 13, 1990 Opinion & Order, 743 F.Supp. 155 (S.D.N.Y.1990). This Court will overturn findings when it determines that they are, on the basis of all the evidence, "arbitrary or capricious." United States v. Int'l Brotherhood of Teamsters, supra, 905 F.2d at 622; October 16, 1991 Memorandum & Order, 777 F.Supp. 1130, 1132 (S.D.N.Y.1991); October 11, 1991 Memorandum & Order, 777 F.Supp. 1127, 1128-___ (S.D.N.Y.1991); October 9, 1991 Memorandum & Order, 777 F.Supp. 1123, 1125 (S.D.N.Y.1991); August 14, 1991 Memorandum & Order, slip opinion, at 4, 1991 WL 191084 (S.D.N.Y.1991); July 31, 1991 Memorandum & Order, slip opinion at 3-4, 1991 WL 150226 (S.D.N.Y.1991); July 18, 1991 Memorandum & Order, slip opinion, at 3-4, 1991 WL 136030 (S.D.N.Y.1991); July 16, 1991 Opinion & Order, slip opinion, at 3-4, 1991 WL 136029 (S.D.N.Y.1991); June 6, 1991 Opinion & Order, 775 F.Supp. 90, 93 (S.D.N.Y.1991); May 13, 1991 Memorandum & Order, 764 F.Supp. 817, 820-21 (S.D.N.Y.1991); May 9, 1991 Memorandum & Order, 764 F.Supp. 797, 800 (S.D.N.Y.1991); May 6, 1991 Opinion & Order, 764 F.Supp. 787, 789 (S.D.N.Y.1991); December 27, 1990 Opinion & Order, 754 F.Supp. 333, 337 (S.D.N.Y.1990); September 18, 1990 Opinion & Order, 745 F.Supp. 189, 191-92 (S.D.N.Y.1990); August 27, 1990 Opinion & Order, 745 F.Supp. 908, 911 (S.D.N.Y.1990); March 13, 1990 Opinion & Order, supra, 743 F.Supp. at 159-60, aff'd, 905 F.2d at 622; January 17, 1990 Opinion & Order, 728 F.Supp. 1032, 1045-57, aff'd, 907 F.2d 277 (2d Cir.1990); November 2, 1989 Memorandum & Order, 725 F.Supp. 162, 169 (S.D.N.Y.1989). Parise challenges the Independent Administrators findings on both charges.
A. Charge One
As to Charge One, the Independent Administrator found that the evidence conclusively proved that on September 4, 1987, Parise went to Jerry Jones' place of employment and violently threatened him. (Ind.Admin.Dec. at 5). Parise's threats to Jones were captured on an audio tape of the September 4, 1987 encounter. Parise's threats included statements such as the following:
The day after the Pressman's election, you'll be sorry the day you were born, you mother fucker.... Every time you turn around, I'll have somebody give you a fucking beating. You understand me? [Investigations Officer Ex. 5A at 1-2]
* * * * * *
When I get through with you, you won't be fit to be garbage man. Let me tell you something else. When I get through with you, you won't get a fucking job any place Teamsters are at. Do you understand? [Id. at 8]
* * * * * *
Like I told you, you better hope this fucking election don't come for three years, because I'm telling you, the day after it you're through. Do you understand?.... Every time you open that fucking mouth, somebody's going to bust it for me. That's the way it's going to be around here. The day after that fucking election.... The only reason I didn't do it now is I ain't going to give those clowns an issue and make you a fucking big man. But the day after, win, lose or *1137 draw, you're fucked and I want you to know it. You understand? [Id. at 12-13]
At his disciplinary hearing, Parise admitted that he threatened to have Jones physically beaten, and that he threatened to use his position as a union official to have Jones fired. (Tr. at 105, 106).[2] Further, subsequent to his disciplinary hearing, Parise plead guilty to a criminal charge arising out of the September 4, 1987 incident. Specifically, Parise plead guilty to violent deprivation of a union members rights in violation of 29 U.S.C. § 530 in the United States District Court for the Northern District of Ohio.
Because Parise entered a guilty plea to the criminal charge arising from the September 4, 1987 incident, he is collaterally estopped from contesting the facts underlying the disciplinary charge arising from the same incident. See United States v. Int'l Brotherhood of Teamsters, 905 F.2d 610, 623 (2d Cir.1990), aff'g, 745 F.Supp. at 911; June 6, 1991 Opinion & Order, 775 F.Supp. at 94-95 (S.D.N.Y.1991). Nonetheless, Parise raises several challenges to Charge One.
Parise argues that the Independent Administrator incorrectly rejected his affirmative defense under Article XIX, § 3(d) of the IBT Constitution. Section 3(d) provides that an IBT elected official may not be disciplined for "activities or actions ... known generally by the membership" when that official was last elected to his IBT post. In order to invoke this affirmative defense, an IBT official has the burden of demonstrating that the relevant membership had "conclusive knowledge" that he was "actually guilty of the conduct charged" when he was elected. June 6, 1991 Opinion and Order, 775 F.Supp. at 96-97 (S.D.N.Y.1991); May 10, 1991 Opinion and Order, slip opinion, at 9-10 (S.D.N.Y.1991); March 13, 1990 Opinion & Order, 743 F.Supp. 155, 166 (S.D.N.Y.), aff'd, 905 F.2d 610 (2d Cir.1990).
Parise denied his guilt up until the day of his disciplinary hearing. Parise indicated, in an open letter published by Parise's attorneys in the Local 473 newsletter in the Summer of 1990, that he would "defend [himself] against the charges filed by Carberry." (Inv.Off.Ex. 13 at p. 5). It is now well settled that charged IBT officials who deny their conduct to the membership cannot invoke the § 3(d) defense. June 6, 1991 Opinion and Order, 775 F.Supp. at 96-97 (S.D.N.Y.1991); May 10, 1991 Opinion and Order, slip opinion, at 9-10 (S.D.N.Y.1991); March 13, 1990 Opinion & Order, 743 F.Supp. at 166 (S.D.N.Y.), aff'd, 905 F.2d 610 (2d Cir.1990). Based on Parise's denial of the charge up until the disciplinary hearing and a review of the evidence presented by Parise, the Independent Administrator found that Parise failed to establish a § 3(d) defense. Given Parise's denial, this finding was inescapable. Parise's argument to the contrary is wholly without merit.
Parise next challenges the Independent Administrator's imposition of a twenty-four month suspension on this charge because of the agreement he entered into with the Investigations Officer calling for a three month suspension. That agreement was approved by the Independent Administrator, but was rejected by this Court. Paragraph 12(A) of the Consent Decree specifically provides that "[a]ny decision of the Independent Administrator shall be ... subject to the Court's review as provided herein." Further, the agreement between Parise and the Investigations Officer specifically provided for its submission to the District Court so that it may "be entered as an order." (December 18, 1990 Agreement at p. 4, ¶ 7). Given the clear language of the Consent Decree and the agreement itself, Parise's argument is without merit. After hearing Parise testify at his disciplinary hearing, and in imposing a twenty-four month suspension, the Independent Administrator stated, "had there been no tape, Parise would have carried out his threats to `blackball' Jones and have him physically injured. Parise did not strike me as a man who made idle threats." (Ind.Admin.Dec. at 14). In addition, in imposing *1138 the twenty-four month suspension, the Independent Administrator had before him Parise's guilty plea, entered after the disciplinary hearing, to a criminal charge arising out of the September 4, 1987 incident. Accordingly, the imposition of a twenty-four month suspension was neither arbitrary or capricious.
Finally, Parise argues that his actions were not "corrupt," and that his suspension is therefore inappropriate because the misdemeanor to which he pleaded guilty is not an offense for which he can be barred from union office under 29 U.S.C. § 504. Parise does not cite any authority for this argument. Indeed, the caselaw directly contradicts Parise's assertion. United Union of Roofers, Inc. v. Meese, 823 F.2d 652, 655-659 (1st Cir.1987); see Illario v. Frawley, 426 F.Supp. 1132 (D.N.J.1977). Accordingly, Parise's argument is frivolous.
B. Charge Two
As to Charge Two, the Independent Administrator found that the Investigations Officer established that Parise violated Article II, Section 2(a) and Article XIX, Section 6(b) of the IBT Constitution and the AFL-CIO Code of Ethical Practices by taking the Fifth Amendment and refusing to answer certain questions during his July 2, 1990 deposition. IBT members may be disciplined for bringing reproach upon the IBT by taking the Fifth Amendment and refusing to testify. August 27, 1990 Opinion & Order, 745 F.Supp. 908, 917 (S.D.N.Y.1990). The Independent Administrator found, and a review of the deposition transcript reveals, that Parise refused to answer questions "not only in connection with his pending criminal prosecution, but in connection with many other legitimate areas of inquiry which were not the subject of the then pending indictment." (Ind.Admin.Dec. at 10).
Parise argues that the Independent Administrator's finding on Charge Two violates the Fifth Amendment. This argument is premised on the contention that the actions of the Independent Administrator in disciplinary proceedings, such as this case, constitute "state action." The Court of Appeals and this Court have conclusively established that the Independent Administrator's conduct in disciplinary proceedings does not constitute state action. United States v. IBT, 941 F.2d 1292, 1295-97 (2d Cir.1991); October 9, 1991 Memorandum & Order, 777 F.Supp. at 1126 (S.D.N.Y.1991). Because the Independent Administrator's decision to discipline Parise was not state action, his Fifth Amendment claim must fail.
Parise argues that he can not be disciplined for violating the AFL-CIO Code of Ethical Practices, which states that it is the policy of the AFL-CIO that if a union officer "decides to invoke the Fifth Amendment for his personal protection and to avoid scrutiny ... he has no right to continue to hold office in his union." The fundamental flaw with Parise's argument is that he was not disciplined for violating the AFL-CIO Code of Legal Practices, but was disciplined for violating Article II, Section 2(a) and Article XIX, Section 6(b) of the IBT Constitution by conducting himself in a manner bringing reproach upon the Union. The Independent Administrator specifically considered the AFL-CIO Code within the parameters of the IBT Constitution, and found the Code to be probative in the context of considering whether Parise violated his oath of office. (Ind.Admin.Dec. at 12). The Second Circuit and this Court have long ago settled the power of the Investigations Officer to bring and the Independent Administrator to decide such a charge. United States v. Int'l Brotherhood of Teamsters, 905 F.2d 610 (2d Cir.1990), aff'g, March 13, 1990 Opinion & Order, 743 F.Supp. 155 (S.D.N.Y.1990). Accordingly, Parise's argument is frivolous.
In sum, there was overwhelming evidence to support both charges against Parise, and an ample basis to impose a concurrent suspension of twenty-four months. The Independent Administrator's decision is neither arbitrary nor capricious. Accordingly, the decision of the Independent Administrator is affirmed in all respects.
*1139 III. CONCLUSION
IT IS HEREBY ORDERED that Parise's objections to the Independent Administrator's decision are denied.
IT IS FURTHER ORDERED that the decision of the Independent Administrator is affirmed in all respects.
IT IS HEREBY ORDERED that the stay of penalties imposed on Parise by the Independent Administrator is dissolved, effective immediately.
SO ORDERED.
NOTES
[1] Paragraph F.12(C) of the Consent Decree mandates that the Independent Administrator must decide disciplinary hearings using a "just cause" standard.
[2] "Tr." refers to the hearing transcript before the Independent Administrator.
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777 F.Supp. 20 (1991)
The TIMKEN COMPANY, Plaintiff,
v.
UNITED STATES, Defendant,
and
Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A.; NSK Ltd. and NSK Corporation, Defendants-Intervenors.
No. 90-06-00313.
United States Court of International Trade.
October 25, 1991.
*21 Stewart and Stewart (Eugene L. Stewart, Terence P. Stewart and James R. Cannon, Jr.), for plaintiff.
Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice (Velta A. Melnbrencis), Joan L. Mackenzie, Attorney-Advisor, Office of Chief Counsel for Import Admin., U.S. Dept. of Commerce, of counsel, for defendant.
Powell, Goldstein, Frazer & Murphy (Peter O. Suchman, Richard M. Belanger, Susan P. Strommer, Eric G. Stockel and Robert Torresen, Jr.), for defendants-intervenors Koyo Seiko Co., Ltd. and Koyo Corp. of U.S.A.
Donohue and Donohue (Joseph F. Donohue, Jr., James A. Geraghty and Kathleen C. Inguaggiato), for defendants-intervenors NSK Ltd. and NSK Corp.
OPINION
TSOUCALAS, Judge:
Plaintiff, The Timken Company ("Timken"), brought this action to challenge the final results of an administrative review conducted by the Department of Commerce, International Trade Administration ("Commerce" or "ITA"), of an outstanding affirmative dumping finding dating back to 1976. Tapered Roller Bearings Four Inches or Less in Outside Diameter from Japan; Final Results of Antidumping Duty Administrative Review, 55 Fed.Reg. 22,369 (June 1, 1990). The matter is presently before the Court to determine whether Commerce erred in concluding that importers are not liable for interest on any duties to be assessed on the entries subject to the 1976 finding. The Court heard oral argument on September 11, 1991.
Background
In 1974, the United States Treasury Department ("Treasury"), the agency then responsible for the administration of the antidumping laws, conducted a sales at less than fair value ("LTFV") investigation of 0-4 inch tapered roller bearings ("TRBs") and TRB components from Japan. The investigation resulted in a determination of affirmative dumping for, among other importers, Koyo Seiko Co., Ltd., Koyo Corporation of U.S.A. (collectively "KOYO") and Nippon Seiko K.K., NSK Corporation (collectively "NSK")[1], defendants-intervenors herein. Tapered Roller Bearings From Japan AntiDumping; Determination of Sales at Less Than Fair Value, 39 Fed. Reg. 32,337 (Sept. 3, 1974). Treasury immediately halted appraisement proceedings for all subject entries pending an injury determination by the United States International Trade Commission ("ITC"). The ITC subsequently determined that an industry in the United States was likely to suffer material injury by reason of the LTFV sales and, Treasury issued a "dumping finding" on August 18, 1976. T.D. 76-227. However, for reasons that are somewhat obscure, Treasury never calculated estimated dumping margins. Defendant's Opposition to Plaintiff's Motion for Partial Judgment Upon the Administrative Record at 6. Consequently, importers were not required to make actual cash deposits, "although some of them may have posted bonds pursuant to Customs regulations." Id.
On January 2, 1980, the administration of antidumping laws was transferred from Treasury to the Department of Commerce by virtue of the Trade Agreements Act of 1979 ("the 1979 Act"). Besides transferring the responsibility for enforcement of the dumping laws the 1979 Act provided for the annual review of all unliquidated entries subject to outstanding dumping findings. Accordingly, Commerce commenced *22 conducting annual administrative reviews of all unliquidated TRB entries subject to T.D. 76-227. These reviews were discontinued in 1984, however, when section 751 of the Tariff Act of 1930, codified at 19 U.S.C. § 1675 (1982 & 1984 Supp.), was amended to provide that administrative reviews be conducted upon request only.
As prescribed by the revised 19 U.S.C. § 1675(a), Timken requested a review of all unliquidated entries of 0-4 inch TRBS imported by KOYO and NSK dating back to 1974. Pursuant to Timken's request, Commerce reinitiated the reviews of all entries subject to T.D. 76-227 and issued the final results of its review on June 1, 1990. Finally, some fourteen years after the issue of the original dumping finding, Commerce established dumping margins for the importers: 18.81-35.89% for KOYO and 4.99-23.43% for NSK. 55 Fed.Reg. at 22,382. However, since the review results are being challenged in this court by both the importers and Timken, liquidation has been enjoined pending a final disposition.
Timken filed the instant action challenging certain aspects of Commerce's review results. Among the aspects with which Timken takes issue is Commerce's position regarding the importers' liability for interest on dumping duties to be assessed on their entries dating back to the original withholding of appraisement. Commerce maintains that there is no statutory authority for the imposition of interest in this case because the pertinent interest provision applies only where cash deposits are involved. Since, here, the merchandise was entered upon bonds, interest cannot be imposed pursuant to 19 U.S.C. § 1677g.
Nevertheless, plaintiff argues, on a variety of theories, that Commerce is statutorily required to collect interest from the importers on the dumping duties to be assessed on merchandise encompassed by this review, despite the fact that the duties have not yet been assessed nor their payment required. Commerce's failure to direct Customs to collect interest in this instance, Timken maintains, would amount to an interest-free loan to the importers, thereby compounding the injury to the domestic industry.
Discussion
Jurisdiction
Since defendants-intervenors have challenged the Court's jurisdiction over the issue of interest, it is well to address this matter at the outset. KOYO and NSK maintain the interest issue is not appertain to the underlying dumping determination, but rather is a protestable matter of duty assessment and collection by Customs, and as such is not properly before the Court at this time. Defendants-intervenors cite our appellate court's decision in Nichimen America, Inc. v. United States, 938 F.2d 1286 (Fed.Cir.1991) in support of this contention.
In a case such as this, any discussion of jurisdictional propriety requires an analysis of the statutory scheme for judicial review pursuant to the Antidumping Act of 1921, as well as, the 1979 Act. Under the Antidumping Act of 1921, after Treasury issued a dumping finding, Customs was charged with the determination, assessment and eventual collection of the dumping duties assessed. An interested party could challenge any aspect of these procedures by filing a protest with Customs. 19 U.S.C. § 1514(a)(1976). If the protest was denied, a legal action seeking judicial review of the denial could be commenced in the Customs Court pursuant to 28 U.S.C. § 2632 (1976).
The 1979 Act changed the statutory scheme of antidumping duty law. Title X of the Act, however, specifically provided that outstanding dumping findings issued pursuant to the Antidumping Act of 1921 would remain in effect, subject to review under section 751 of the Tariff Act of 1930.
Section 751 states in pertinent part:
(a) Periodic review of amount of duty
(1) In general
At least once during each 12-month period beginning on the anniversary of the date of publication of a countervailing duty order under this subtitle or under section 1303 of this title, an antidumping duty order under this subtitle or a finding under the Antidumping *23 Act, 1921, or a notice of the suspension of an investigation, the administering authority, if a request for such a review has been received and after publication of notice of such review in the Federal Register, shall
(A) review and determine the amount of any net subsidy,
(B) review, and determine (in accordance with paragraph (2)), the amount of any antidumping duty, and
....
and shall publish the results of such review, together with notice of any duty to be assessed, estimated duty to be deposited, or investigation to be resumed in the Federal Register.
(2) Determination of antidumping duties
For the purpose of paragraph (1)(B), the administering authority shall determine
(A) the foreign market value and United States price of each entry of merchandise subject to the antidumping duty order and included within that determination, and
(B) the amount, if any, by which the foreign market value of each such entry exceeds the United States price of the entry.
The administering authority, without revealing confidential information, shall publish notice of the results of the determination of antidumping duties in the Federal Register, and that determination shall be the basis for the assessment of antidumping duties on entries of the merchandise included within the determination and for deposits of estimated duties.
In the event that an interested party disagreed with Commerce's determination issued pursuant to a section 751 review, the final results could be challenged in this court. 19 U.S.C. § 1516a(a)(2) (1988). Any actions undertaken by Customs in the course of implementing Commerce's challengeable determination, however, were made final and conclusive on all parties unless the underlying determination was challenged under section 1516a. 19 U.S.C. § 1514(b) (1988).
At first glance, it seems rudimentary that since a section 751 review of the outstanding finding was effected, and the parties objected to the results embodied in the determination, 19 U.S.C. § 1516a confers jurisdiction upon this court to resolve any challenge stemming from the determination. Defendants-intervenors, however, insist that Nichimen requires a different result. The Court is not persuaded by this argument.
The issue before the court in Nichimen was whether a section 751 review determination could give rise to judicial review of a broad range of issues. The court found several claims directly related and jurisdictionally grounded upon the determination, while other claims were found to be too far removed from the determination to be considered ancillary. The claims which were rejected: (1) the propriety of a settlement agreement entered into by the government, and (2) Customs' failure to comply with its own procedures in the appraisement and liquidation of merchandise, were found to be fully outside the scope of Commerce's authority.
Additionally, the court in Nichimen noted on numerous occasions that the rejected claims fell squarely within the listing of matters protestable to Customs under 19 U.S.C. § 1514(a). By way of contrast, Customs' actions in dispatching Commerce's mandate not to collect interest could not be protested under 19 U.S.C. § 1514(a). Indeed, Customs failure to collect interest from the importers would constitute just the type of act made final and conclusive under 19 U.S.C. § 1514(b). Therefore, unless plaintiff challenges Commerce's underlying determination not to require interest, it will be left without any means to challenge that decision. The Court cannot envision this result to be intended by our appellate court.
Moreover, the Nichimen court acknowledged that certain ancillary issues not expressly specified in the statute could and should properly be considered and determined in connection with a 751 review. 938 *24 F.2d at 1292. The applicability of 19 U.S.C. § 1677g to the entries encompassed by T.D. 76-227 is precisely this type of ancillary question which can and, indeed, must be determined at this juncture. Unlike the ministerial function of duty collection, the determination of whether section 1677g applies is solely within Commerce's discretion. Therefore, the decision not to recommend the imposition of interest necessarily constitutes a component of Commerce's final determination reviewable by this court pursuant to 19 U.S.C. § 1516a.
Thus, our appellate court's decision in Nichimen acknowledging that, pursuant to a section 751 review, jurisdiction exists for the adjudication of supplementary issues within the discretion of the administering agency, supports this Court's conclusion herein.
Interest issue
Having determined the jurisdictional propriety of this action, a reminder of this court's powers to review agency action is in order. The court shall affirm a determination or finding that is supported by substantial evidence and is otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B) (1988). "Under this standard, Commerce is granted considerable deference in its interpretation of its statutory authority." Tehnoimportexport v. United States, 15 CIT ___, ___, 766 F.Supp. 1169, 1173 (1991) (citations omitted). Since plaintiff here challenges Commerce's interpretation of its statutory mandate, it bears the burden of establishing that the agency's construction is clearly erroneous and contrary to expressed legislative intent.
The provision allowing interest on the variances between antidumping duties actually collected and the duties owed is a relatively recent development. Under the Antidumping Act of 1921, Treasury had no statutory authority to impose interest on underpayment of duties, nor did it pay interest on overpayments.
The substantial lag between the issuance of dumping orders and the actual collection of dumping duties, however, concerned Congress. In 1978, in hearings before the Subcommittee on Trade of the Committee on Ways and Means, Committee Chairman Vanik raised the issue of duty collection and introduced the matter of interest. Mr. Vanik noted, while discussing the deferred assessment and payment of antidumping duties with Mr. Mundheim, General Counsel of Treasury:
Mr. Vanik ... And the second question that I would raise: What about the matter of interest? ... What about our right to impose some interest on this?
....
So you know we are losing every day there is a delay in collection. Are you doing anything about interest? Shouldn't there be something done about interest?
Mr. Mundheim. Your statement is certainly correct, and it's correct from the point of the time that the goods enter, that duties ought to be assessed and collected with respect to them; if they are not, somebody has interest-free use of the money, and that is not normally a desirable situation.
I think one of the difficulties, Mr. Chairman, is that the statute does not authorize either the collection of interest in connection with duties[interruption by Mr. Vanik] assessed, or if duties have been previously paid and overpaid and refunded, we don't pay any interest on that refund. The statute simply doesn't provide for that.
Assessment and Collection of Duties Under the Antidumping Act of 1921: Hearing Before the Subcommittee on Trade of the Committee on Ways and Means, 95th Cong., 2nd Sess. 42-43 (1978) (emphasis added).
Chairman Vanik repeatedly expressed his concern over Commerce's procedure of interest-free deferred duty collection and suggested a change in legislation to correct the situation:
Mr. Vanik. And it would seem to me that there ought to beI don't know that we should have to spell out in every statute that "Interest must be collected."
*25 I think if there is a claim made, the claim should include an interest charge from the date it was assessed and determined to be due.
....
I think this upfront procedure suggested by Mr. Mundheim [referring to the proposed requirement to collect estimated cash deposits at entry] is a good suggestion. I think we will look at that, and I certainly urge my colleagues to put that into the statute along with the interest assessment.
Id. at 59-60 (emphasis added).
Congress considered these hearings and sought to enact legislation in the 1979 Act that would deal effectively with the concerns expressed therein. Specifically, it acknowledged that
[u]nder current practice, if the security posted to cover the estimated liability for special dumping duties is different from the actual duty imposed, the difference is refunded or collected, as the case may be, without interest.
S.Rep. No. 249, 96th Cong., 1st Sess. 76-77, reprinted in 1979 U.S.Code Cong. & Admin.News 381, 463 (emphasis added). In order to accelerate duty collection, the proposed legislation would require the imposition of interest whenever there existed a difference between the estimated duties deposited and the duties actually assessed. Id.
The 1979 Act introduced both the provision requiring actual cash deposits of estimated dumping duties pending liquidation (codified at 19 U.S.C. § 1673e(a)(3) (1988)), as well as a corresponding provision requiring the imposition of interest whenever the estimated duties on deposit differed from the actual duties due. 19 U.S.C. § 1677g(a) (1982). The latter section, upon which plaintiff bases its primary argument, provides:
(a) General rule
Interest shall be payable on overpayments and underpayments of amounts deposited on merchandise entered, or withdrawn from warehouse, for consumption on and after the date on which notice of an affirmative determination by the Commission under section 1671d(b) or 1673d(b) of this title with respect to such merchandise is published.
(Emphasis added).
Against the legislative backdrop mentioned infra, Commerce interpreted this provision and, in relation to this case, has concluded that:
Section 778 of the Tariff Act provides that interest is payable on underpayments of amounts deposited on merchandise entered, or withdrawn from warehouse, for consumption on and after the date of a finding under the Antidumping Act of 1921. We have concluded that the words "amounts deposited" refer only to cash deposits of estimated antidumping duties upon entry and not to other kinds of security such as a bond, because the Tariff Act repeatedly links the word "deposit" to "cash" (see, e.g., sections 733(d)(2), 734(f)(2)(A)(iii), and 735(c)(3)(B) of the Tariff Act). Thus, since a bond is not cash, it does not constitute an "amount deposited."
The Trade Agreements Act of 1979 ("the 1979 Act") contained no provision for the immediate conversion of existing antidumping findings from bonds to cash. Section 106(a) of the 1979 Act merely provided that outstanding antidumping findings would remain in effect and would be subject to review under section 751 of the Tariff Act. Section 751(a)(2) provides that the administrative review "shall be the basis for ... deposits of estimated duties." Thus, the legal basis for requiring cash deposits under the 1979 Act is a review under section 751 of the Tariff Act or an order pursuant to section 736 of the Tariff Act. The Department is without power to require the imposition of a cash deposit until the completion of an administrative review. In any event, since interest is only collectible on cash deposits, interest would accrue only from the time that Customs required deposit of cash. Consequently, interest would not be retroactive to the time of entry under bond.
55 Fed.Reg. at 22,370 (emphasis added).
As plaintiff correctly notes, the latitude allowed Commerce in the interpretation of *26 this and all other statutory provisions is necessarily circumscribed by Congress' expressed intent in enacting the provision. Congress' concern with the expedited assessment and collection of antidumping duties is equally incontrovertible. Indeed, it was precisely this concern that served as impetus for the legislation requiring actual cash deposits rather than bonds to satisfy estimated duty requirements, as well as, the interest provision. The legislative history of these provisions, however, supports Commerce's conclusion that the provision requiring cash deposits of estimated duties and the interest provision were intended to operate simultaneously.
In fact, Congress acknowledged that the existing practice of accepting security to secure future payment of dumping duties did not provide a scheme for the imposition of interest. The change in legislation, therefore, was intended to require actual deposits of estimated duties at entry and then impose interest on any overpayments or underpayments created by the eventual assessment of actual dumping duties owed. S.Rep. No. 249, 96th Cong., 1st Sess. 77, reprinted in 1979 U.S.Code Cong. & Admin.News 381, 463. It is reasonable to conclude, then, that these sections were developed and enacted simultaneously further implies that Congress intended them to function concurrently.
Finally, this court has examined the applicability of section 1677g on only two occasions since its enactment: Hide-Away Creations, Ltd. v. United States, 8 CIT 286, 598 F.Supp. 395 (1984), and Canadian Fur Trappers Corp. v. United States, 12 CIT 612, 691 F.Supp. 364 (1988), aff'd, 884 F.2d 563 (Fed.Cir.1989). Although in both instances the court sanctioned the imposition of interest, neither court contemplated the relationship between actual cash deposits and the imposition of interest.
Plaintiff, however, finds these cases to be virtually indistinguishable from the case at bar because there, as in the instant action, the underlying duty order predated the enactment of the interest statute. Timken maintains, therefore, that the court's rationale in those cases dictate a disposition in its favor herein.
Indeed, both Hide-Away Creations and Canadian Fur Trappers sanctioned the imposition of interest pursuant to 19 U.S.C. § 1677g. It is also true, as plaintiff notes, that the underlying orders involved in these cases were in effect before the interest provision was enacted. However, plaintiff fails to note the significant differences that exist between those cases and the action at bar.
In Hide-Away Creations, the court maintained that the importers could be entitled to interest on their cash deposits of estimated countervailing duties because, in actions arising under 19 U.S.C. § 1303,[2] the requirement of an ITC determination in order to invoke the interest provision could be disregarded. 8 CIT at 291-92, 598 F.Supp. at 399. At no point did the court attempt to ascertain whether section 1677g equates "amounts deposited" with bonds or other forms of security other than cash. Quite the contrary, the court's conclusion that "interest must be allowed, but only in connection with cash deposits of estimated countervailing duties," further implies that it is the existence of cash deposits which triggers the application of the interest provision. 8 CIT at 291, 598 F.Supp. at 398 (emphasis added).
Similarly, the court in Canadian Fur Trappers, found that Commerce properly interpreted 19 U.S.C. § 1677g to require the imposition of interest on the underpayment of countervailing duties. Again in this case, the issue involved the applicability of section 1677g to actions arising under 19 U.S.C. § 1303. As in Hide-Away Creations, the court's countless references to "deposits" where cash deposits were actually collected, imply that the applicability of the interest provision was deemed predicated on the existence of such deposits.
Significantly, both Hide-Away Creations and Canadian Fur Trappers involved *27 actual cash deposits of estimated countervailing duties which, upon a § 751 review, were found to be deficient. Equally important, both of the cited cases involved countervailing duty orders for which an estimated duty rate was established at the time the Treasury order was issued. In stark contrast, the case herein does not involve a deficiency in estimated duty deposits, but rather it relates to the use of a bond to secure future payment of any dumping duties later found to be due.
Additionally, it is of considerable factual significance that this case involves a dumping finding instead of a countervailing duty order. Unlike the pre-1980 countervailing duty orders issued by Treasury which established a preliminary duty rate at which countervailing duties could be deposited at time of entry, this action is underlied by a dumping finding which did not establish an estimated duty rate, so there was no way in which to estimate the importer's liability to require payment.
Hence, the caselaw cited by plaintiff as being dispositive of this issue is actually inapposite. Plaintiff fails to note the crucial element in this case, i.e., that while section 1677g contemplates the existence of cash deposits, no actual deposits were made herein. Moreover, to argue that the language of the statute does not differentiate between cash and other forms of security ignores the legislative intent that estimated duties be satisfied with cash rather than bonds.
Plaintiff's alternative arguments: that interest should be imposed pursuant to 19 U.S.C. § 580 (1988), or in equity, are equally without merit. Section 580 is inapplicable here because this action was not commenced by the Government to recover upon a bond that has come due. Compare United States v. American Motorists Ins. Co., 10 CIT 19, 1986 WL 8339 (1986); United States v. Federal Ins. Co., 857 F.2d 1457 (Fed.Cir.1988). Moreover, since Commerce has not yet asked for payment from the importers, the bonds have not come due.
Finally, as for plaintiff's other argument, this court's powers in equity are intended to enable it to give full effect to the requirements of justice. This tenet should not be misinterpreted to condone the circumvention of fundamental legal methods in order to achieve desired results.
Conclusion
The Court, having visited the alternative theories urged by plaintiff, can find no basis in statute, legislative history, or caselaw to support plaintiff's position. Thus, bearing in mind the considerable deference afforded Commerce's interpretation of the statutes it administers, the Court adheres to the agency's construction of its statutory mandate. Accordingly, Commerce's decision not to impose interest in this case is hereby affirmed.
NOTES
[1] During the pendency of this action, the Court granted a motion filed by defendant-intervenor Nippon Seiko, K.K. and NSK Corporation, seeking a name change in the case caption. Defendant-intervenor's new name of record is NSK Ltd. and NSK Corporation.
[2] The issue in Hide-Away Creations concerned the applicability of procedures introduced by Title VII of the Trade Agreements Act of 1979 (including the interest provision), to countervailing duty actions arising under § 1303.
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720 A.2d 178 (1998)
Francis E. WEAVER, Petitioner,
v.
DEPARTMENT OF CORRECTIONS, Respondent.
Commonwealth Court of Pennsylvania.
Submitted on Briefs September 18, 1998.
Decided November 2, 1998.
*179 Francis E. Weaver, petitioner, pro se.
Mark E. Guzzi, Camp Hill, for respondent.
Before FRIEDMAN and KELLEY, JJ., and JIULIANTE, Senior Judge.
JIULIANTE, Senior Judge.
Before this Court in its original jurisdiction are the preliminary objections in the nature of a demurrer filed on behalf of the Department of Corrections (DOC) in opposition to Francis E. Weaver's petition for review "in the nature of mandamus and/or prohibition." In his mandamus action, Weaver requests that this Court invalidate DOC's inmate medical service co-pay regulations promulgated under the authority of the Prison Medical Services Act (Medical Services Act).[1] Weaver further requests that this Court invalidate the Medical Services Act and the regulations promulgated thereunder because they are ex post facto laws and, therefore, unconstitutional. For the reasons set forth below, we grant DOC's preliminary objections and dismiss Weaver's petition.
Weaver, a pro se litigant, is an inmate currently incarcerated at the State Correctional Institution at Retreat (SCI-Retreat). On May 3, 1998, Weaver filed his mandamus action alleging not only that DOC did not properly promulgate regulations to implement the Medical Services Act, but also that said Act, and the regulations promulgated thereunder, are ex post facto laws.
Specifically, Weaver alleges: (1) that DOC may not enforce the inmate medical service co-pay regulations because their publication in the October 4, 1997 Pennsylvania Bulletin was not sufficient notice to inmates in correctional facilities and, as a result, the inmates did not have an opportunity to comment on or object to the regulations, and that this also constitutes a violation of what is commonly known as the Right to Know Act;[2] (2) that DOC did not publish the final form of the regulations in the Pennsylvania Bulletin in violation of the requirements of the Regulatory Review Act[3] and the Commonwealth Documents Law;[4] and (3) that the Medical Services Act and the regulations promulgated thereunder are ex post facto laws and, therefore, unconstitutional.
DOC timely filed preliminary objections in the nature of a demurrer alleging that Weaver has failed to state a claim for which relief can be granted. Specifically, DOC maintains *180 that it had provided proper notice of rulemaking concerning the regulations, that the regulations were published in final form and that the Medical Services Act and the regulations promulgated thereunder are to be applied prospectively and, therefore, are not ex post facto laws.
"Initially we note that when ruling on preliminary objections, this Court considers as true all well-pleaded facts which are material and relevant." Giffin v. Chronister, 151 Pa.Cmwlth. 286, 616 A.2d 1070, 1072 (Pa.Cmwlth.1992). "Specifically, a preliminary objection in the nature of a demurrer is deemed to admit all well-pleaded facts and all inferences reasonably deduced therefrom." Id. "In determining whether to sustain a demurrer the court need not accept as true conclusions of law, unwarranted inferences from the facts, argumentative allegations, or expressions of opinion." Id.
I.
Weaver's first two arguments are that DOC failed to comply with applicable rulemaking requirements in that DOC failed to provide him with an opportunity to comment on and/or object to the proposed inmate medical service co-pay regulations, and that DOC did not publish these regulations in final form as required by the Commonwealth Documents Law and the Regulatory Review Act.[5] To the contrary, DOC argues that Weaver's lawsuit is premature and that it did publish the regulations in final form and satisfied the requirements of both the Commonwealth Documents Law and the Regulatory Review Act.
Section 201 of the Commonwealth Documents Law, 45 P.S. § 1201, requires that an agency must give "public notice of its intention to promulgate, amend or repeal any administrative regulation." Section 201 further requires that the notice include: 1) the text of the proposed regulation, 2) a statement of the statutory authority under which it is promulgated, 3) a brief explanation of the proposed regulation, and 4) a request for written comments by any interested person concerning the proposed regulation or change therein.
Likewise, Section 5 of the Regulatory Review Act, 71 P.S. § 745.5, requires that the agency submit "a proposed regulation to the Legislative Reference Bureau for publication of notice of proposed rulemaking in the Pennsylvania Bulletin as required by the Commonwealth Documents Law...."
In the instant case, it appears that DOC has sufficiently complied with these requirements. In the October 4, 1997 issue of the Pennsylvania Bulletin, DOC published a notice of proposed rulemaking stating that it was promulgating regulations under the authority of the Medical Services Act to establish and impose inmate co-pay fees as found in said Act[6]. Specifically, the notice stated:
*181 The Department of Corrections (Department) acting under the authority conferred by the Prison Medical Services Act (act) (61 P.S. §§ 1011-1017)... gives public notice of its intention to adopt amendments to Chapter 93 (relating to State correctional institutions and facilities).
The proposed amendment will enable the Department to impose fees on inmates in State correctional institutions and facilities for the provision of certain medical services. The proposed amendment will also require inmates who are covered by medical insurance to pay for the medical services through that insurance as far as the medical insurance may allow....
. . . .
The proposed amendment shall be effective upon closure of the public comment period, the regulatory review process and subsequent publication as final rulemaking in the Pennsylvania Bulletin.
Public Comment Period/Contact Person
Written comments concerning the Department's proposed amendment of § 93.12 shall be submitted to Kathleen Zwierzyna, Director, Bureau of Health Care Services, Pennsylvania Department of Corrections, 2520 Lisburn Road, P.O. Box 598, Camp Hill, PA XXXXX-XXXX. Written comments must be received within 30 days of the publication of this notice of proposed rulemaking in the Pennsylvania Bulletin.
(Pennsylvania Bulletin, Vol. 27, No. 40, pp. 5095, 5096; DOC's Brief, Ex. A). Clearly, the notice also stated that all interested persons could submit written comments to DOC within 30 days.
Nevertheless, Weaver asserts that this notice was invalid because, inter alia, no public hearings were held, the regulation was not published in all major newspapers of the Commonwealth, the matter was not given proper review by DOC's Chief Counsel or the Attorney General, the inmates were not given a proper opportunity to respond, and a complete financial impact statement was not filed. In particular, Weaver contends that DOC should have provided inmates with notice of the proposed rulemaking. DOC, to the contrary, contends that it met its notice obligations under the Commonwealth Documents Law and Regulatory Review Act and has no obligation under any statute or case law to provide inmates in state correctional institutions with any type of notice other than what is contained in the Pennsylvania Bulletin.
We agree. DOC sufficiently complied with the requirements of the Commonwealth Documents Law and Regulatory Review Act by publishing its notice of proposed rulemaking regarding the inmate medical service co-pay regulations in the October 4, 1997 issue of the Pennsylvania Bulletin.
Regarding the other requirements mentioned by Weaver, we note that his mandamus petition was filed before DOC published the final form of the inmate co-pay regulations in the May 30, 1998 issue of the Pennsylvania Bulletin. Pursuant to 45 Pa.C.S. § 905, that publication created a rebuttable presumption that the regulations were duly issued, approved as to legality by the Department of Justice, and that all applicable requirements for the promulgation of the regulations had been met. Insofar as Weaver's petition was filed prematurely before the regulations were published in final form, Weaver has failed to allege any facts in his petition to rebut the presumption in 45 Pa.C.S. § 905 that the inmate medical service co-pay regulations were properly promulgated.
We also reject Weaver's contention that DOC violated the Right to Know Act by not giving inmates adequate time to respond to the proposed co-pay regulations. The Right to Know Act is irrelevant because it does not govern the promulgation of regulations. Rather, the Right to Know Act requires only that DOC make its public records open for examination, copying or inspection. 65 P.S. §§ 66.2 and 66.3. Weaver makes no allegation that DOC failed to make their public records open for examination, copying or inspection. Consequently, Weaver states no cause of action under the Right to Know Act.
In view of the foregoing, we conclude that DOC properly promulgated its inmate medical service co-pay regulations and that Weaver *182 has failed to allege any facts in his petition that would entitle him to a ruling that DOC's inmate co-pay regulations are invalid or not in compliance with the Commonwealth Documents Law and the Regulatory Review Act.[7]
II.
Weaver also contends that the Medical Services Act and the regulations promulgated thereunder are ex post facto laws and, therefore, violate Article I, § 10 of the United States Constitution.[8] "The ex post facto prohibition forbids the Congress and the States to enact any law `which imposes a punishment for an act which was not punishable at the time it was committed; or imposes additional punishment to that then prescribed.'" Weaver v. Graham, 450 U.S. 24, 28, 101 S.Ct. 960, 67 L.Ed.2d 17 (1981) (quoting Cummings v. Missouri, 4 Wall. 277, 325-326, 18 L.Ed. 356 (1866)); see also Stewart v. Pennsylvania Board of Probation and Parole, 714 A.2d 502 (Pa.Cmwlth.1998) (ex post facto clause permits individuals to go about their business without being afraid of being punished for an act that was not prohibited by law at the time it was committed).
Moreover, the ex post facto clause "has been interpreted to pertain exclusively to penal statutes." Kansas v. Hendricks, 521 U.S. 346, ___, 117 S.Ct. 2072, 2086, 138 L.Ed.2d 501 (1997) (emphasis added). Specifically, the clause "is aimed at laws that `retroactively alter the definition of crimes or increase the punishment for criminal acts.'" California Department of Corrections v. Morales, 514 U.S. 499, 504, 115 S.Ct. 1597, 131 L.Ed.2d 588 (1995) (citing Collins v. Youngblood, 497 U.S. 37, 43, 110 S.Ct. 2715, 111 L.Ed.2d 30 (1990)).
In Weaver v. Graham, the Supreme Court recognized that two essential elements must be present in order for a criminal or penal law to be ex post facto: "it must be retrospective, that is, it must apply to events occurring before its enactment, and it must disadvantage the offender affected by it." 450 U.S. at 29, 101 S.Ct. 960 (emphasis added). In the case at bar, neither the Medical Services Act nor the regulations promulgated thereunder are penal in nature. They do not criminalize any type of conduct that was legal before their enactment nor do they deprive a criminal defendant of any defense that was available to him at the time of his alleged crime. Rather, under the Act and regulations, fees are imposed upon inmates for certain non-emergency medical services in order to reduce government costs in providing those services.
Even assuming arguendo that the Medical Services Act and regulations could be considered penal in nature, they did not become enforceable until published and apply only prospectively, not retrospectively. As such, we reject Weaver's contention that either the Medical Services Act or the regulations promulgated thereunder by DOC violate the ex post facto prohibition in U.S. Const. Art. I, § 10. Morales; Weaver v. Graham.
In summary, we conclude that DOC properly promulgated its regulations under the Medical Services Act in accordance with the requirements of the Commonwealth Documents Law and the Regulatory Review Act. Furthermore, neither the Medical Services Act nor the regulations promulgated thereunder are ex post fact laws. Hence, Weaver is not entitled to a ruling that either the Medical Services Act or the regulations promulgated thereunder are invalid or unenforceable. We therefore grant DOC's preliminary objections in the nature of a demurrer and dismiss Weaver's mandamus action.[9]
*183 ORDER
AND NOW, this 2nd day of November, 1998, Respondent Department of Corrections' preliminary objections are granted and Petitioner Francis E. Weaver's petition in the nature of mandamus and/or prohibition is hereby dismissed.
NOTES
[1] Act of May 16, 1996, P.L. 220, 61 P.S. §§ 1001-1017.
[2] Act of June 21, 1957, P.L. 390, as amended, 65 P.S. §§ 66.1-66.4.
[3] Act of June 25, 1982, P.L. 633, as amended, 71 P.S. §§ 745.1-745.14.
[4] Act of July 31, 1968, P.L. 769, as amended, 45 P.S. §§ 1102-1602.
[5] We note that there is a distinction between an agency's regulations, which must be established through proper rulemaking procedures, as opposed to an agency's general statement of policy, which does not. "An agency may establish binding policy through rulemaking procedures by which it promulgates substantive rules.... A properly adopted substantive rule establishes a standard of conduct which has the force of law...." Pennsylvania Human Relations Commission v. Norristown Area Sch. Dist., 473 Pa. 334, 349-350, 374 A.2d 671, 679 (1977) (citing Pacific Gas & Elec. Co. v. Federal Power Comm'n, 506 F.2d 33, 38 (D.C.Cir.1974)). "A general statement of policy is the outcome of neither a rulemaking nor an adjudication; it is neither a rule nor a precedent...." Id. In the instant case, DOC's inmate medical service co-pay regulations are substantive rules and must be promulgated by means of the rulemaking process.
[6] Under the inmate medical service co-pay regulations, DOC would charge an inmate a $2.00 fee for: a) non-emergency medical service provided at the inmate's request; b) medical service, including emergency service, provided to the inmate as a result of self-inflicted injury or illness; c) initial prescriptions, with the exceptions of immunizations, vaccinations, prenatal care and psychotropic medications; d) medical service provided to an inmate as a result of his or her assaultive conduct; e) medical service provided to an inmate as a result of participation in sports; and f) medical service provided to determine whether inmate can participate in sports. The regulations also require that an inmate who has private health insurance shall pay for his or her own medical needs and that an inmate who injures another inmate by assaultive conduct must pay a fee of (2/3) two-thirds of the injured inmates' medical services. These fees will be deducted from the inmates' personal prison account.
[7] We note that Weaver further contends that in addition to the proposed regulations, he was also improperly denied an opportunity to comment on DOC's Policy Bulletin DC-ADM 820 (Policy Bulletin) and that, therefore, it should also be ruled invalid. This allegation also fails to state a cause of action under any law. The Policy Bulletin is not an agency regulation. Rather, it is an internal directive to DOC employees.
[8] In Stewart v. Pennsylvania Board of Probation and Parole, 714 A.2d 502, 509 (Pa.Cmwlth.1998), this Court noted that the ex post facto clause applies to acts of the legislature and not to an agency's general policies. However, we believe the ex post facto clause does apply to an agency's substantive regulations, which as noted by the Court in Norristown Area Sch. Dist., have the force of law.
[9] "Mandamus is an extraordinary writ. It will only be granted to compel performance of a ministerial duty where the plaintiff establishes a clear legal right to relief and a corresponding duty to act by the defendant. Mandamus is not proper to establish legal rights, but is only appropriately used to enforce those rights which have already been established." Wassell v. Pennsylvania Board of Probation and Parole, 658 A.2d 466, 468 (Pa.Cmwlth.1995) (citations omitted). In the case sub judice, Weaver has failed to demonstrate any clear right to legal relief.
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720 A.2d 298 (1998)
351 Md. 683
Andrea Lynn DIETZ
v.
William Albert DIETZ.
No. 6, Sept. Term, 1998.
Court of Appeals of Maryland.
November 16, 1998.
*299 Frances C. Gambo, Timonium, for petitioner.
Thomas L. Hennessey, Towson, for respondent.
Susan Carol Elgin, Marguerite Angelari, Bruce A. Kaufman Center for Family Law, Towson, brief of Amicus Curiae Bruce A. Kaufman Center for Family Law.
Argued before BELL, C.J., ELDRIDGE, RODOWSKY, CHASANOW, RAKER and WILNER[*], JJ., and ROBERT L. KARWACKI, Judge, (retired), Specially Assigned.
RODOWSKY, Judge.
In this divorce action the Court of Special Appeals dismissed an appeal seeking an increase in a monetary award because the appellant had accepted payments under the award as rendered. Dietz v. Dietz, 117 Md. App. 724, 701 A.2d 1144 (1997). We shall reverse and remand for the reasons set forth below.
The issue before us is limited, so that the facts may be briefly stated. Nothing in our recital of facts is intended to indicate any view on the merits of the issues to be decided on remand.
The respondent, William Albert Dietz (Mr. Dietz), his father, Fred Dietz, Sr., and one of his brothers, Fred Dietz, Jr., have been lifelong farmers, principally dairy farming.[1] Prior to 1979 they leased farmland or farmed for shares. The combined acreage on which their farming operations were conducted totaled approximately 700 acres.
*300 On January 8, 1977, the petitioner, Andrea Lynn Dietz (Mrs. Dietz), and Mr. Dietz were married. Two children were born of the marriage.
In February 1979 the fee simple title to 289 acres of farmland, known as the Lang Valley Farm (the Farm), was conveyed to Mr. Dietz, his father, and his brother. The purchase price of the Farm was $400,000, of which $100,000 was paid at the time of closing, and the three Dietzes, jointly and severally, secured the balance of the purchase price by executing a take-back purchase money mortgage. The parties to this action lived together in the house on the Farm until 1990.
In 1984, when Fred Dietz, Sr. retired, Mr. Dietz and Fred Dietz, Jr. formed Dietz Brothers, a partnership (the Partnership) in which each brother had a fifty percent interest. The assets of the Partnership were livestock, crops, and equipment.
Marital difficulties between Mr. and Mrs. Dietz led to trial separations and to a final separation in September 1992. Mrs. Dietz filed for divorce in the Circuit Court for Baltimore County in October 1992.
A number of evidentiary hearings were held. Both parties produced experts to value Mr. Dietz's interest in the Partnership. The parties stipulated that the value of the Farm was $1,200,000 as of the date of separation, but there was a dispute as to what portion, if any, of Mr. Dietz's interest in the Farm was marital property.
In February 1996 the circuit court rendered an oral opinion, determining that the Partnership was marital property and that the value of Mr. Dietz's interest in the Partnership was $602,380. Based thereon, a monetary award of 40.7% or $245,169, rounded to $245,000, was granted to Mrs. Dietz. The court, however, denied any monetary award to Mrs. Dietz on her claim that Mr. Dietz's interest in the Farm was marital property. Final judgment was entered April 1, 1996.
The court ordered Mr. Dietz to pay $20,000 within thirty days of the entry of judgment, with the $225,000 balance of the monetary award to be paid in monthly installments of $1,250 over a fifteen-year period.
By check dated April 23, 1996, Mr. Dietz paid Mrs. Dietz the installment of $20,000. Mrs. Dietz deposited the check on or about April 26, 1996. Her appeal to the Court of Special Appeals was noted on May 1, 1996. When the first of the regular monthly installments of $1,250, due May 1, 1996, was not timely paid, Mrs. Dietz petitioned to have Mr. Dietz found in contempt. After the circuit court issued a show cause order and scheduled a hearing, Mr. Dietz paid the May installment, and the hearing was canceled. Insofar as the record in this case reflects, Mr. Dietz subsequently has paid, and Mrs. Dietz has accepted, each monthly installment.
In her brief to the Court of Special Appeals, Mrs. Dietz made two contentions: first, that the trial court erred in rejecting her claim that the monetary award should include an amount based on finding Mr. Dietz's interest in the Farm to be marital property; and, second, that it was inequitable for the monetary award to be paid over a fifteen-year period. Mr. Dietz moved to dismiss the appeal, arguing that Mrs. Dietz voluntarily had accepted the benefits of the judgment. Mr. Dietz did not cross-appeal. Mrs. Dietz's right to have a monetary award based on the Partnership, the total amount of that award, and the rate at which that award is to be paid, are not questioned by Mr. Dietz on this appeal.
The Court of Special Appeals dismissed the appeal. That court began its analysis by stating categorically what it called "the general waiver rule," which it described as follows:
"It is a well established rule in Maryland that if a party, knowing the facts, voluntarily accepts the benefits accruing to him or her under a judgment, order, or decree, such acceptance operates as a waiver of any errors in the judgment, order, or decree and estops that party from maintaining an appeal therefrom."
Dietz, 117 Md.App. at 730, 701 A.2d at 1147. The court then reviewed the Maryland cases and noted that there were a number of "exceptions," e.g., " `benefits ... unrelated to, or *301 independent of, the unfavorable portion of the decree,' " id. at 733, 701 A.2d at 1148 (quoting Dubin v. Mobile Land Corp., 250 Md. 349, 353, 243 A.2d 585, 587 (1968), as quoted in Rispoli v. Jackson, 51 Md.App. 606, 611, 445 A.2d 349, 351 (1982)); awards in workers' compensation cases, Dietz, 117 Md. App. at 733-34, 701 A.2d at 1148-49; and attempts to obtain an increase in alimony while accepting the payments ordered by the court, id. at 734-35, 701 A.2d at 1149 (citing Lewis v. Lewis, 219 Md. 313, 149 A.2d 403 (1959)). The Court of Special Appeals concluded that the reason for the "exception" from the "general waiver rule" in Lewis was "because the benefits accruing to the appellant under [the] trial court's award of alimony `provide necessary support until the final adjudication of the case.' " Dietz, 117 Md. App. at 739, 701 A.2d at 1151 (quoting from Lewis, 219 Md. at 317, 149 A.2d at 403) (emphasis added by Court of Special Appeals). Reasoning that a monetary award is not a form of support, and because Mrs. Dietz was seeking an increase in the monetary award, the Court of Special Appeals concluded that the Lewis "exception" did not apply, and the court dismissed the appeal.
We granted Mrs. Dietz's petition for certiorari which is limited to whether her appeal was properly dismissed. The Bruce A. Kaufman Center for Family Law filed an amicus curiae brief in support of Mrs. Dietz's position.
I
Our analysis begins with the principle that a party who is aggrieved by a final judgment may perfect an appeal to obtain review of the judgment. Looking at the same concept from a different perspective in Baer v. Robbins, 117 Md. 213, 83 A. 341 (1912), we said that "[w]hile it is the general rule that an appeal cannot be taken from a judgment by a party in whose favor it was rendered, yet an exception to this rule is recognized in cases where the judgment `is for less than the amount or short of the right claimed.' " Id. at 225, 83 A. at 343 (citation omitted).
The Court of Special Appeals used "general waiver rule" to refer to a limitation on the right to appeal that part of a judgment of which a party is aggrieved. Dietz, 117 Md.App. at 730, 701 A.2d at 1147. A waiver ordinarily is the voluntary relinquishment of a known right or such conduct as warrants an inference of the relinquishment of such right, and may result from an express agreement or be inferred from circumstances. Government Employees Ins. Co. v. Group Hospitalization Med. Serv., Inc., 322 Md. 645, 650, 589 A.2d 464, 466 (1991) (citing Food Fair Stores, Inc. v. Blumberg, 234 Md. 521, 531, 200 A.2d 166, 172 (1964)).
This Court's explanations of the limitation on the right to appeal have not been entirely uniform. For example, earlier cases have spoken of waiver, see Farmers' Bank v. Thomas, 37 Md. 246, 258 (1873), describing Lanahan v. Latrobe, 7 Md. 268 (1854);[2] election of remedies, see Lanahan, 7 Md. at 272-73;[3] and splitting of a decree. Silverberg v. Silverberg, 148 Md. 682, 130 A. 325 (1925).[4]
Our most recent cases have repeated the description of the limitation on the right to appeal that is found in Rocks v. Brosius, 241 Md. 612, 630, 217 A.2d 531, 541 (1966), namely, "[t]he right to appeal may be lost by acquiescence in, or recognition of, the validity of the decision below from which the appeal is taken or by otherwise taking a position *302 which is inconsistent with the right of appeal." See Osztreicher v. Juanteguy, 338 Md. 528, 534, 659 A.2d 1278, 1281 (1995); Franzen v. Dubinok, 290 Md. 65, 68, 427 A.2d 1002, 1004 (1981). We shall call the limitation "the acquiescence rule."
In Rocks, it was unnecessary to apply the acquiescence rule, but the two later decisions illustrate applications of it. Osztreicher involved a judgment entered against the plaintiff after the plaintiff's attorney declined to produce evidence. The trial court had precluded a witness for the plaintiff from testifying, a ruling with which plaintiff's counsel disagreed. Although a second witness was available to give substantially the same evidence that would have been given by the precluded witness, that would have sufficed to avoid a judgment on motion for the defendant, and that was not barred by the ruling complained of, plaintiff's counsel voluntarily left the record in a posture that required judgment for the defendant, thereby clearly acquiescing in that judgment. In Franzen we said that the payment of a judgment by a judgment debtor would not normally be treated as acquiescence in the judgment because the coercive aspects of the judgment usually render the payment involuntary. Franzen, 290 Md. at 71-72, 427 A.2d at 1005.
The clearest example of acquiescence in a judgment is found in the remittitur cases. There the trial court rules that it will grant a new trial unless the plaintiff consents to a specified reduction in the verdict. If the reduction is accepted it results in a judgment for the plaintiff in the lesser amount. In these cases the plaintiff chooses to have the verdict and judgment reduced rather than retry the case. Because of this acquiescence, an appeal from the judgment by the plaintiff ordinarily must be dismissed. See Kneas v. Hecht Co., 257 Md. 121, 262 A.2d 518 (1970); State use of Shipley v. Walker, 230 Md. 133, 186 A.2d 472 (1962); Turner v. Washington Suburban Sanitary Comm'n, 221 Md. 494, 158 A.2d 125 (1960). Dismissal in the remittitur cases of an appeal is very similar to the dismissal of an appeal under the rule that no appeal lies from a consent judgment. See, e.g., Mercantile Trust Co. of Baltimore v. Schloss, 165 Md. 18, 24, 166 A. 599, 601-02 (1933).
A frequently cited acquiescence case is Bowers v. Soper, 148 Md. 695, 130 A. 330 (1925). It arose out of the sale of realty by trustees in a partition proceeding. In an earlier appeal, Shirk v. Soper, 144 Md. 269, 124 A. 911 (1923), Shirk, a part owner of the property, had obtained a reversal, based on inadequacy of price, of the order ratifying the sale, but in that decision this Court stated that, because there had been no appeal bond filed, the reversal would not affect any rights which the purchaser may have acquired in the property. On remand, Shirk requested the trustees to distribute the "money `as audited,' and ... the trustees accordingly disbursed the funds." Bowers, 148 Md. at 697, 130 A. at 331. Shirk then sought to appeal from the denial of his exceptions to the audit that "were based in part upon the theory that the distribution of the funds would preclude any action by the trustees in derogation of the sale which they had reported and which the court below had approved." Id. at 699, 130 A. at 331. Thus, not only had Shirk "waived his right of appeal," id. at 698, 130 A. at 331, or acquiesced in the judgment, but the reliance of the trustee on Shirk's request in making distribution prevented Shirk "[u]pon the plainest principles of estoppel ... from successfully disputing a disposition of funds ... made with his consent." Id. at 697, 130 A. at 331.
Requiring special attention are certain early decisions of this Court, dealing with equity's administration of a fund generated by the judicial sale of property, because they can be read as presenting perhaps the strictest applications of the acquiescence rule in our reports. In these cases a creditor who claims a lien on assets of the estate challenges the court's dealing with the assets as if there were no lien, but the creditor also files a claim for a distributive share. See Gottschalk v. Smith, 74 Md. 560, 22 A. 401 (1891); Horsey v. Chew, 65 Md. 555, 5 A. 466 (1886); Farmers' Bank v. Thomas, 37 Md. 246 (1873). In these cases the creditor is in effect saying, "I am entitled to have my lien fully enforced out of the assets subject to the lien, but if I do not prevail on that argument, *303 then I am still a general creditor and entitled to participate in the distribution." This Court, however, concluded that the creditors lost their rights to challenge the courts' rulings on their particular liens by filing claims for a distributive share. See Horsey, 65 Md. at 557, 5 A. at 467. Thus, the rationale of these cases appears to be out of harmony with modern practice which recognizes claims in the alternative. See Maryland Rule 2-303(c). More recently we have cautioned that the acquiescence rule "is a severe one, which it is now generally held should not be extended." Petillo v. Stein, 184 Md. 644, 652, 42 A.2d 675, 678 (1945). See also Lewis, 219 Md. at 317, 149 A.2d at 405. Consequently, it is sufficient for present purposes to state that the Gottschalk, Horsey, and Farmers' Bank cases should be limited to their facts.
The acquiescence rule was applied where an appellant sought to reverse an order while previously or concurrently relying on the order as being correct. Stewart v. McCaddin, 107 Md. 314, 68 A. 571 (1908) (mortgagee's appeal to overturn injunction of foreclosure dismissed where mortgagee was relying on an exclusion of later defaults from the injunction in order to justify a second foreclosure).
In another class of cases in which appeals have been dismissed, the trial court has exercised its discretion in fashioning relief to combine, so as to be interdependent or non-severable, the feature complained of by the appellant, and the feature acceptable to the appellant. For example, where the feuding husband and son of a disabled woman each sought appointment as her guardian, the court appointed both, as co-guardians, and each qualified under the order by posting bond. Their appeals, each seeking to have the other removed as co-guardian, were dismissed. Kicherer v. Kicherer, 285 Md. 114, 400 A.2d 1097 (1979). See also Suburban Dev. Corp. v. Perryman, 281 Md. 168, 377 A.2d 1164 (1977) (where order setting aside foreclosure of right of redemption from tax sale was conditioned on original owner's paying tax sale purchaser's expenses, which were paid to and accepted by purchaser, purchaser could not appeal vacating of the foreclosure); Dubin v. Mobile Land Corp., 250 Md. 349, 243 A.2d 585 (1968) (injunction of mortgage foreclosuresame).
In the instant matter Mrs. Dietz did not expressly give up her claim for a monetary award derived from her husband's interest in the Farm. Nor did the circuit court reject her claim as the result of, or because it was interrelated with, the grant of a monetary award derived from the Partnership. Rather, our decisions in the workers' compensation, spousal support, and condemnation contexts are the most analogous to the instant matter.
In the earliest of the workers' compensation cases involving a claimed acquiescence, the claimant had been awarded fifty percent permanent partial disability by the Commission, based on loss of use of a leg. Bethlehem Steel Co. v. Mayo, 168 Md. 410, 177 A. 910 (1935). The claimant accepted payments at that level of compensation, but appealed to the circuit court seeking an increase to one hundred percent permanent partial disability, a contention with which the jury agreed. Id. at 413, 177 A. at 911. Rejecting the employer's motion to dismiss because of acquiescence, we said that "that rule does not apply where the right to the benefit received is conceded by the opposite party, or where the appellant would be entitled thereto in any event." Id. We said that "[t]he whole issue in the case was not whether [the claimant] had lost less than fifty percent. of the use of that leg, but whether he had lost more than fifty percent. of the use thereof." Id. at 414, 177 A. at 911. We held that "the general rule that one cannot take the benefits under a judgment ... and at the same time attack its validity, does not apply where the right to the benefits actually received is conceded by the opposite party...." Id. at 414-15, 177 A. at 911. Reinforcing that conclusion, we said that "[a]ny other conclusion would be wholly inconsistent with the legislative intent as declared in the [Workers' Compensation Act]." Id. at 415, 177 A. at 911.
Subsequent workers' compensation cases have not treated Mayo`s holding as peculiar to, or based only upon, the public policy underlying that statute. Petillo v. Stein, 184 Md. 644, 42 A.2d 675 (1945), reversed a dismissal of a claimant's appeal where the circuit *304 court had applied the acquiescence rule. The claimant had been awarded compensation of 212 weeks for a permanent partial disability, had obtained an order converting the award into a lump sum, and sought a permanent total disability rating on appeal to the circuit court. The employer also appealed to the circuit court, initially seeking a reduction in the disability finding, but, after the lump sum had been paid, the employer sought dismissal of the claimant's appeal. Reiterating the language from Mayo, quoted above, this Court reinstated the claimant's appeal. We said that the acquiescence doctrine "should only be applied to actions taken by the same litigant which are necessarily inconsistent," but that the claimant's entitlement "to the commutation of the award made is not inconsistent with his claim on appeal that he is entitled to more." Petillo, 184 Md. at 652, 42 A.2d at 678. Rejecting the employer's argument that conversion to a lump sum award prevented the employer from obtaining any practical benefit from its appeal, this Court further held that the remedy of dismissal sought by the employer was unrelated to its damages. Id. at 649, 42 A.2d at 677.
Mayo was again applied in Smith v. Revere Copper & Brass, 196 Md. 160, 76 A.2d 147 (1950), where Mayo was described as holding that the acquiescence rule "does not apply where the right to the benefit received is conceded by the opposite party, or where he would be entitled thereto in any event." Revere Copper, 196 Md. at 166, 76 A.2d at 149. The claimant, Smith, had been awarded forty weeks of compensation for disfigurement, and on appeal to the circuit court sought to obtain additional compensation for partial loss of use of the arm. The circuit court dismissed, but was reversed. We held that "in the absence of appeal by employer, claimant's right to the award for disfigurement is not disputed. Acceptance of that award, therefore, did not bar claimant's appeal as to loss of use of the arm...." Id.
In its opinion in the instant matter the Court of Special Appeals relied heavily on Lewis v. Lewis, 219 Md. 313, 149 A.2d 403 (1959). See Dietz, 117 Md.App. at 734-35, 739, 701 A.2d at 1149, 1151. In Lewis, the wife accepted alimony while appeals were pending. The husband appealed, contending that the alimony award was too high, the wife cross-appealed, contending the alimony award should be increased, and the husband moved to dismiss the wife's appeal under the acquiescence rule. Initially, we rejected the reasoning that earlier had been applied in Silverberg v. Silverberg, 148 Md. 682, 689, 130 A. 325, 328 (1925), where an appeal similar to that of the wife in Lewis had been dismissed on the theory that a party may not split a decree. Lewis, 219 Md. at 316, 149 A.2d at 404. We then recognized that the workers' compensation cases had held that the acquiescence rule "would not apply where the right to the benefit received was not contested by appeal of the opposite party." Id. at 317, 149 A.2d at 405. In Lewis, however, the husband, by his appeal, had contested the alimony award.
After repeating Petillo`s statement that the acquiescence doctrine "is a severe one and should not be extended," we made the following holding:
"[I]f applicable at all in a divorce case, the bar cannot be raised where the benefits accruing to the wife, by reason of the award, provide necessary support until the final adjudication of the case."
Lewis, 219 Md. at 317, 149 A.2d at 405.
The holding in Lewis should not be read to mean that the acquiescence rule applies in divorce cases unless the order under which benefits have been taken and which has been appealed is an order for support, as the Court of Special Appeals seems to have done. Dietz, 117 Md.App. at 739, 701 A.2d at 1151. Lewis presents a very limited holding circumscribing application of the acquiescence rule in support cases where the support awarded is challenged on appeal, but Lewis does nothing to undermine the proposition that the acquiescence rule does not apply where there is no cross-appeal and the appellant seeks only an increase in an undisputed minimum.
Shapiro v. Maryland-Nat'l Capital Park & Planning Comm'n, 235 Md. 420, 201 A.2d 804 (1964), a condemnation case, makes plain that the holdings in the workers' compensation cases are not limited to that field of law.
*305 In Shapiro, a property owner accepted payment of the amount awarded by the jury for the taking, declared that the acceptance was without prejudice to appeal, and appealed, raising only the claimed inadequacy of the jury's award. Id. at 424-25, 201 A.2d at 805. This Court denied the condemnor's motion to dismiss the appeal because the " `right to the benefit received is conceded by the opposite party.' " Id. at 424, 201 A.2d at 805 (quoting Mayo, 168 Md. at 413, 177 A. at 911).
Courts in other jurisdictions have declined to dismiss in cases very similar to the case at bar. In re Marriage of Abild, 243 N.W.2d 541 (Iowa 1976), involved an appellant's claim that a division of marital property was inequitable. The appellee sought dismissal because the appellant accepted $200 monthly payments under the decree while the appeal was pending. Id. at 542. There was no cross-appeal. Denying dismissal, the court reasoned as follows:
"When an appellant accepts only that which the appellee concedes, or is bound to concede, to be due him under the judgment or decree, he is not barred from prosecution of an appeal which involves only his right to a further recovery. Acceptance of part of the award in such circumstances is not inconsistent with the appellant's claim that the award should have been larger. This principle is applicable when an appellant in a [case involving marital property,] where there is no cross-appeal[,] accepts part of an award of cash ... while claiming entitlement to a larger award on appeal."
Id. at 543. See also Bailey v. Bailey, 345 So.2d 304, 306 (Ala.Civ.App.1977) (denying dismissal where the appellee did not cross-appeal and the appellant sought an increase in a marital property award); Cohen v. Cohen, 102 Cal.App.2d 624, 228 P.2d 54, 55 (1951) (same); Boyce v. Boyce, 541 A.2d 614, 620 n. 13 (D.C.1988) (same); Cunningham v. Cunningham, 60 Nev. 191, 105 P.2d 398, 400 (1940) (same); Simon v. Simon, 148 N.J.Super. 40, 371 A.2d 818, 819-20 (N.J.Super.Ct.App.Div.1977) (no inconsistency between judgment and appeal), cert. denied, 75 N.J. 12, 379 A.2d 243 (1977); Sanford v. Sanford, 295 N.W.2d 139, 142 (N.D.1980) (only increase sought, no cross-appeal); Bohl v. Bohl, 72 S.D. 257, 32 N.W.2d 690, 692 (1948) (same); In re Marriage of Hadley, 88 Wash.2d 649, 565 P.2d 790, 792 (1977) (same); Anderson v. Anderson, 72 Wis.2d 631, 242 N.W.2d 165, 169 (1976) (same).
In the instant matter Mr. Dietz does not contest the monetary award that was made. There is nothing inconsistent between Mrs. Dietz's acceptance of the monetary award that was made because of Mr. Dietz's Partnership interest and her request for an increase in the monetary award because of Mr. Dietz's interest in different property. Under these circumstances there has been no acquiescence in the judgment, and it is immaterial that a monetary award is not alimony.
II
The same result flows if, as Mrs. Dietz urges, the Court of Special Appeals concludes that it was error for the trial court to spread payment of the monetary award derived from the Partnership over a period as long as fifteen years. If Mrs. Dietz is successful in this aspect of her appeal, the case would be remanded to the trial court for shortening the payment schedule. In that event, Mrs. Dietz's monthly installments could only increase. Her acceptance of the lesser amount in the past installments, therefore, was not inconsistent with her claim that she is entitled to more money in each installment.
Accordingly, we reverse and remand for the Court of Special Appeals to consider on the merits the issues raised by Mrs. Dietz's appeal.
JUDGMENT OF THE COURT OF SPECIAL APPEALS REVERSED. CASE REMANDED TO THAT COURT FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION. COSTS IN THIS COURT TO BE PAID BY THE RESPONDENT, WILLIAM ALBERT DIETZ.
NOTES
[*] Wilner, J., participated in the hearing of this case; however, he did not participate in the conference, decision, and adoption of this opinion.
[1] Although the captions on the pleadings and papers filed in the Circuit Court for Baltimore County name the respondent simply as William Albert Dietz, his name was converted to William Albert Dietz, Jr. on the briefs in the Court of Special Appeals. We shall revert to the name used in the circuit court.
[2] Farmers' Bank describes Lanahan as holding "that a creditor who participates in a proceeding in equity for the distribution of the proceeds of property sold under a deed of trust, so far makes himself a party as to waive his right afterward to object to the validity of the deed." Farmers' Bank, 37 Md. at 258.
[3] At the referenced portion of the opinion in Lanahan, this Court stated that the appellant
"may certainly be required to elect how he will proceed: for he cannot insist upon the efficacy of his liens at law, in opposition to the deed as fraudulent, and in equity, claim to participate in the funds, without the concession that they are rightfully there for distribution among the creditors of the grantor."
Id. at 272-73.
[4] Silverberg said that an appeal designed to obtain an increase in counsel fees awarded in a divorce case involved "the twofold error of at once splitting the decree and attempting both to accept and reject its terms." Id. at 689, 130 A. at 328.
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280 Pa. Superior Ct. 243 (1980)
421 A.2d 703
Agnes D. NOWOSIELSKI and Edward E. Nowosielski, her husband, Appellants,
v.
Genevieve A. KRYZOSIAK.
Superior Court of Pennsylvania.
Argued November 15, 1979.
Filed August 29, 1980.
Reargument Denied October 31, 1980.
Petition for Allowance of Appeal Denied February 27, 1981.
*244 H. Fred Mercer, Pittsburgh, for appellants.
John A. Robb, Jr., Pittsburgh, for appellee.
Before SPAETH, HOFFMAN and VAN der VOORT, JJ.
HOFFMAN, Judge:
Appellants contend that the lower court should have barred appellee's medical witness from testifying at trial because appellee failed to include a copy of the witness' *245 medical report in her pretrial statement, as required by a local rule of court. We disagree and, accordingly, affirm the judgment of the lower court.
Appellants-plaintiffs brought this action in trespass to recover for personal injuries which plaintiff Agnes Nowosielski allegedly sustained in an automobile collision with appellee-defendant. Throughout these proceedings defendant has admitted her negligence in the incident, but has contended that her negligence did not cause the injuries for which plaintiffs seek to recover. At trial defendant called as a witness Dr. Thomas C. Long, a physician who had examined Mrs. Nowosielski on three separate occasions within five weeks following the accident. Dr. Long's testimony strongly suggested that Mrs. Nowosielski's injuries could not have occurred in the automobile collision involving defendant. The jury returned a verdict in favor of the defendant, and the lower court subsequently denied plaintiffs' motion for a new trial. This appeal followed.
Rule 212 VI. C. 1. c. of the Rules of Civil Procedure of the Allegheny County Court of Common Pleas provides that before trial the defendant "[s]hall serve upon all other parties a written statement containing . . . medical reports of any . . . doctor who treated, examined, or was consulted in connection with the injuries complained of and who may be called as a witness." Rule 212 VI. E. of the Allegheny County Rules of Civil Procedure provides that "[w]itnesses. . . whose reports have not been furnished under . . . [Rule 212] VI. C. 1. c. . . . will not, under any circumstances whatsoever, be permitted to testify at the subsequent trial of the case." In the present case defendant failed to include in her pre-trial statement a copy of the notes which Dr. Long had taken during each of Agnes Nowosielski's office visits.[1] Accordingly, contend plaintiffs, the lower court committed reversible error in allowing Dr. Long to testify at trial.
*246 "To preclude . . . testimony is a drastic sanction, and if it is not necessary under the facts of the case, an abuse of discretion may be found." Gill v. McGraw Electric Co., 264 Pa.Super. 368, 383, 399 A.2d 1095, 1102 (1979). Thus, notwithstanding the clear language of Rule 212 VI. E. barring "under any circumstances whatsoever" the testimony of witnesses whose reports have not been furnished as required, we must determine whether such a sanction would have been appropriate under the facts of this case.
In Gill v. McGraw Electric Co., supra, this Court was called upon to decide whether the appellee's violation of a pretrial order requiring disclosure of the names and opinions of expert witnesses constituted grounds for the exclusion of the witnesses' testimony. We noted the following basic considerations which should be taken into account in such situations:
"(1) the prejudice or surprise in fact of the party against whom the excluded witnesses would have testified, (2) the ability of that party to cure the prejudice, (3) the extent to which waiver of the rule against calling unlisted witnesses would disrupt the orderly and efficient trial of the case or of other cases in the court and (4) bad faith of [sic] willfulness in failing to comply with the court's order."
Id., 264 Pa.Super. at 382, 399 A.2d at 1102 (quoting Meyers v. Pennypack Woods Home Ownership Association, 559 F.2d 894, 904-05 (3d Cir. 1977)). Applying these considerations to the facts of Gill, we held that the appellee's expert witnesses should not have been permitted to testify. Essential to our decision was the extent to which the appellee's actions had prejudiced the appellants. Our review of the record revealed "[n]othing [to] suggest[] any ability on appellants' part to discover before trial either the identity of the witnesses or the substance of their opinions." Id., 264 Pa.Super. at 382, 399 A.2d at 1102. We noted further that
appellee's conduct-both its violation of the pre-trial conference order and its failure to give counsel a copy of the laboratory report-was prejudicial to appellants, for it put appellants in the position of being unable to offer effective *247 rebuttal-or any rebuttal-of appellee's experts. Appellee's conduct was especially prejudicial to appellants in view of the fact that appellants had offered only a videotape deposition of their expert. It is hardly surprising that the jury rejected the opinion expressed on videotape, given the contrary opinion expressed by two experts who testified in person, and who were unrebutted.
Id., 264 Pa.Super. at 383, 399 A.2d at 1103.
Courts have deemed proper the exclusion of testimony in other cases involving extreme prejudice and surprise to litigants. See, e.g., Nissley v. Pennsylvania Railroad Co., 435 Pa. 503, 259 A.2d 451 (1969) (where plaintiff refused to answer interrogatory relating to expert witness it was error to permit witness to testify); Moore v. H.P. Foley Co., 235 Pa.Super. 310, 340 A.2d 519 (1975) (same). But see Saks v. Jeanes Hospital, 268 Pa.Super. 578, 408 A.2d 1153 (1979) (although appellee failed to include witness' name in answer to interrogatory, court did not abuse discretion in permitting witness to testify where appellee's failure was not willful, appellants were informed before trial that witness would be called, and trial judge offered appellants continuance to investigate witness' qualifications.
Our review of the present case reveals that defendant's failure to include in her pre-trial statement a copy of Dr. Long's report was of minimal prejudice to plaintiffs. Dr. Long had served as Mrs. Nowosielski's own physician; accordingly, plaintiffs, unlike the appellants in Gill v. McGraw Electric Co., supra, were well aware that he was a prospective witness. Moreover, defendant clearly indicated in her pre-trial statement that she might call Dr. Long as a witness at trial.[2] Additionally, nothing in the record suggests that plaintiffs were unable to discover the substance of Dr. Long's opinions, as was the case in Gill, supra. Plaintiffs *248 and defendant apparently had equal access to the records of the clinic where Dr. Long had examined Mrs. Nowosielski. Finally, the record shows that defendant provided plaintiffs with a copy of Dr. Long's notes at the trial. If plaintiffs needed extra time to study these notes, they could have sought a continuance for that purpose. They chose not to do so. Viewing all these facts together, we conclude that defendant's violation of Rule 212 VI. C. 1. c. does not warrant imposition of the "drastic sanction" of excluding Dr. Long's testimony. Gill, supra, 264 Pa.Super. at 382, 399 A.2d at 1102. Accordingly, we affirm the judgment of the lower court.
Judgment affirmed.
SPAETH, J., files a dissenting opinion.
SPAETH, Judge, dissenting:
In Gill v. McGraw Electric Co., 264 Pa.Super. 368, 399 A.2d 1094 (1979), this court was confronted with a case involving a violation of a pre-trial conference order entered pursuant to Pa.R.Civ.P., No. 212. That rule did not provide any specific mandatory sanction for violation of an order; the sanction to be imposed was within the discretion of the trial judge. Accordingly, in Gill, this court discussed some of the factors that a trial judge should consider before exercising his discretion to impose the drastic sanction of excluding a witness from testifying. And see Saks v. Jeanes Hospital, 268 Pa.Super. 578, 408 A.2d 1153 (1979) (as case arose before effective date of Rule 4019(i), sanction was discretionary).
In the present case, however, the Allegheny County Local Rule specifically provides that "[w]itnesses . . . whose reports have not been furnished . . . will not, under any circumstances whatsoever, be permitted to testify at the subsequent trial of the case." Thus, the sanction of excluding the witness's testimony was not discretionary, as in Gill, but mandatory, required in all cases and "under any circumstances whatsoever." Gill, therefore, is inapposite, and by relying on it, the majority has rewritten the local rule and transformed a mandatory sanction into a discretionary one.
*249 In my opinion we should not rewrite the rule but should require the lower court to apply it as the lower court has written it. Since here the lower court failed to apply its own rule, its judgment should be reversed and appellants granted a new trial.
NOTES
[1] Throughout these proceedings the parties have treated these notes as constituting Dr. Long's medical report, as we now do for purposes of this appeal.
[2] Defendant's pre-trial statement indicated that defendant might call as witnesses "[a]ny or all persons named as medical . . . witnesses in any pleadings filed in this case, including depositions, interrogatories etc." Plaintiffs have named Dr. Long as one of the physicians who had rendered service to them in connection with the accident underlying this case.
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24 Cal.Rptr.3d 751 (2005)
126 Cal.App.4th 1131
TRAVELERS CASUALTY AND SURETY COMPANY, et al., Petitioners,
v.
The SUPERIOR COURT of Los Angeles County, Respondent;
Plaintiffs and Defendants in the Clergy Cases I, Real Parties in Interest.
No. B176030.
Court of Appeal, Second District, Division Eight.
February 15, 2005.
Review Denied June 15, 2005.
*753 Drinker Biddle & Reath, Ronald T. Labriola and Alan J. Lazarus, Los Angeles, for Petitioner Travelers Casualty and Surety Company.
Harris & Green, Gary L. Green, Los Angeles; Horvitz & Levy and Peter Abrahams, Encino, for Petitioner Industrial Underwriters Insurance Co.
Burnham & Brown and Gary R. Selvin, Oakland, for Petitioner Centennial Insurance Co.
Selman Breitman, Jeffrey C. Segal and Richard David Bremer, Los Angeles, for Petitioner Associated International Insurance Co.
Musick, Peeler & Garret and Susan J. Field, Los Angeles, for Petitioner Stonewall Insurance Company.
Arnold & Porter, John Quinn, James F. Speyer and John Lombardo, Los Angeles; McDermott, Will & Emery and Margaret Warner, Los Angeles, for Petitioner Allianz Global Risks US Insurance Co.
Cortner McNaboe Colliau & Elenius, Elizabeth A. Klippi and Michael T. Colliau, Los Angeles; Grippo & Elden and Laura K. McNally, Chicago, IL, for Petitioner CNA Insurance Co.
No appearance for Respondent.
Kiesel Boucher & Larson, Raymond P. Boucher, Patrick DeBlase, and Anthony M. DeMarco, Beverly Hills, for Real Parties in Interest Plaintiffs in Clergy Cases I.
Latham & Watkins, G. Andrew Lundberg, Los Angeles; Tobin & Tobin, Paul E. Gaspari, San Francisco; Callahan, McCune & Willis, Peter M. Callahan and Thomas M. Rutherford, Jr., San Francisco, for Real Party in Interest Roman Catholic Diocese of Orange.
*752 RUBIN, J.
The Roman Catholic Diocese of Orange (the Church) has been sued by numerous persons claiming they were the victims of childhood sexual abuse by various priests. Petitioners are the Church's liability insurers. They seek to vacate a written order by a settlement judge purporting to: (1) determine the good faith settlement value of the cases; (2) preclude the insurers from declaring a forfeiture of *754 coverage should the Church settle without their consent; and (3) provide evidence of the insurers' bad faith for future use. As set forth below, we grant the petition because the settlement judge exceeded his authority by making factual findings and otherwise preparing a coercive order in violation of the fundamental principles governing mediation proceedings.[1]
FACTS AND PROCEDURAL HISTORY
The Church is the principal defendant in an action brought by approximately 90 persons (plaintiffs) for alleged childhood sexual abuse by certain priests. Those cases known collectively as Clergy Cases I were coordinated within the Los Angeles County Superior Court with claims against dioceses in other parts of the state. In July 2003, Judge Peter D. Lichtman was appointed by stipulated order as the settlement judge. In addition to the parties, the Church's several liability insurers were included in a series of ongoing settlement discussions.[2] Although the Church's two primary insurers were providing a defense for the Church, they did so with a reservation of rights, leaving the insurers the option of withdrawing their defense and denying coverage of the plaintiffs' claims. The Church's five excess insurers also took part in the settlement discussions subject to a reservation of rights.
On April 30, 2004, Judge Lichtman issued an order for the parties and the insurers to participate in a "Valuation Hearing," after which the court would "render findings reflecting its determination of (i) the verdict potential for the sexual abuses cases if they were to proceed [to a jury trial], and (ii) the reasonable settlement value of such cases." According to the April 30 order, those findings were "intended to constitute an independent adjudication of liability and damages, based on an actual trial as that standard has been construed in California, and may be used by the parties or judicial officials in subsequent proceedings only to the extent lawfully permissible and for whatever legal relevance they may have." Judge Lichtman felt this method was authorized by his inherent powers to fashion new procedures and was warranted by the parties' inability to reach a settlement. Judge Lichtman attributed the failure to settle to the parties' widely divergent views of the value of the cases if they were to go to jury trial.
Judge Lichtman stated in his April 30 order that he had been guided by the case law developed under Insurance Code section 11580, subdivision (b)(2), which provides that an injured plaintiff who obtains a judgment against an insured defendant may then sue the insurer to recover the amount of that judgment. Citing to National Union Fire Ins. Co. v. Lynette C. (1994) 27 Cal.App.4th 1434, 33 Cal.Rptr.2d 496 (National Union Fire Ins.), Judge Lichtman said that the "actual trial" requirement of the statute was satisfied by an independent adjudication of facts based on an evidentiary showing, during a process that does not create the potential for *755 abuse, fraud, or collusion.[3] In order to satisfy this standard, Judge Lichtman ordered the parties to submit briefs and present live testimony and other evidence relating to the value of these and other sexual abuse cases during a two-day hearing. Judge Lichtman's "ultimate goal" was to "determine and advise the parties, based on an independent adjudicatory proceeding, [of] (i) the nature and extent of the injuries suffered by the various claimants, (ii), the probability that the [Church's] liability will be established, and (iii) the potential for damages by verdict or settlement, resulting from any liability."
Petitioners objected to this proceeding, contending that Judge Lichtman had no authority to make any factual findings or determinations. When he overruled those objections, petitioners asked this court to vacate the April 30 order. On May 21, 2004, we issued a notice of intention to grant a peremptory writ in the first instance, stating that Judge Lichtman had no authority to adjudicate any aspect of the case, conduct an actual trial, or render any binding findings. We warned that Judge Lichtman's April 20 order would be vacated unless he agreed to delete certain specified portions of his order, including any mention of adjudication, trials, and findings.[4]
By minute order dated May 24, 2004, Judge Lichtman said he would make the required changes to his order. The judge issued a modified order that same day, which deleted the language we found to be improper. As part of the modified order, Judge Lichtman said it had never been his intent to adjudicate or make findings establishing liability or damages. He still intended, however, to conduct the valuation proceedings and "provide the parties and the insurers with its determination(s) as to reasonable settlement and verdict values, based upon a showing of facts that do not create the potential for fraud, abuse or collusion."
The insurers objected that the modified order of May 24 still included provisions for Judge Lichtman to provide "adjudicated benchmarks" for the value of the sexual abuse claims, make findings reflecting his determinations of the verdict potential and settlement value of the cases, and allowed use of his determinations in subsequent proceedings as permitted by law. In response, we issued another order on May 24, 2004, suggesting that Judge Lichtman delete the references to "adjudicated benchmarks" and "findings reflecting." Judge Lichtman promptly did so. Petitioners objected again, contending that those two deletions were inadequate because Judge Lichtman's modified order still retained language concerning his intention to make determinations about the trial and settlement value of the cases, along with his intention to make his ultimate valuation order available for use in *756 later proceedings, as permitted by law. Because Judge Lichtman modified the April 30 order that had been the subject of the petition, we dismissed petitioners' further objections as moot. We indicated in a footnote, however, that the deletions made by Judge Lichtman appeared to address the concerns initially raised in our May 21 order.
The valuation hearing took place on May 24-25, 2004. Counsel for the Church and plaintiffs introduced the testimony of several lawyers involved in other childhood sex abuse cases concerning the value of those claims, a video presentation of several of the plaintiffs describing their damages, and other evidence. Although counsel for the insurers attended the hearing and were invited to participate, they did not introduce any evidence and did not examine any of the parties' witnesses. On June 8, 2004, Judge Lichtman issued a lengthy written order (the Valuation Order) which set forth his determination of the reasonable settlement value of the Clergy Cases I claims.[5] A substantial portion of the Valuation Order is devoted to Judge Lichtman's belief that the insurers had stymied all attempts at settling the cases through their threat of coverage forfeiture should the Church settle in an amount that had not been properly adjudicated. As part of this, Judge Lichtman described various actions or inactions by the insurers which he contended had derailed the parties' settlement efforts. In a separate section, he addressed the effect his order would have on the insurers in any further proceedings. According to Judge Lichtman, the valuation procedure he used satisfied the actual trial requirement of Hamilton, supra, 27 Cal.4th at pages 725-726, 117 Cal.Rptr.2d 318, 41 P.3d 128.[6] He therefore intended the parties "to have limited use of this Court's order for the purpose of precluding the insuring carriers from announcing or declaring coverage forfeiture and for the parties['] support of arguments alleging bad faith. This Court intends to make this order (save and except its settlement valuations) available to the parties for subsequent open court hearings 60 days from today's date unless precluded by a reviewing court." (Original boldface.)
The insurers have petitioned this court once again, contending, as they did before, that Judge Lichtman's order exceeded his powers as a settlement judge and violated the confidentiality provisions governing reports of mediation proceedings. In response, we stayed Judge Lichtman's Valuation Order pending the outcome of this writ procedure.
DISCUSSION
1. Provisions Establishing Limits on Fact-Finding Powers and Coercive Conduct by a Mediator
The nature of mediation proceedings and the limits on the use of information derived from such proceedings are set forth in Evidence Code sections 1115 through 1128.[7] Under section 1115, sub-division *757 (a), mediation is defined as "a process in which a neutral person ... facilitate[s] communication between the disputants to assist them in reaching a mutually acceptable agreement." Although mediation takes many forms and has been defined in many ways, it is essentially a process where a neutral third party who has no authoritative decisionmaking power intervenes in a dispute to help the disputants voluntarily reach their own mutually acceptable agreement. (Saeta v. Superior Court (2004) 117 Cal.App.4th 261, 269, 11 Cal.Rptr.3d 610 (Saeta) [employee sued for wrongful termination and sought to compel deposition testimony of a retired judge who had taken part in a company sponsored three-person review panel; judge's claim that mediation confidentiality provisions applied and precluded his testimony was rejected because the review panel did not conduct a mediation designed to help the parties voluntarily and independently resolve their dispute but instead heard evidence and made and transmitted recommendations].)
Mediation generally falls into two categories. The first is traditional or classic mediation, where attorneys are not present, the mediator meets directly with the parties to facilitate negotiations, and the mediator is passive, expressing neither judgment nor opinion on the merits. The second is the type of mediation conducted as part of voluntary settlement conferences. In that form, lawyers are present and the mediator takes a more active role, often expressing an opinion on the merits but without authority to reach a decision. (Saeta, supra, 117 Cal.App.4th at pp. 269-270, 11 Cal.Rptr.3d 610.)[8] Critical to either process is the concept of self-determination, leaving the parties in control of resolving their own dispute. Self-determination commits the parties to their settlement terms because they have made decisions by themselves instead of having a resolution imposed on them by a third party. (Saeta, at p. 270, 11 Cal.Rptr.3d 610, quoting Kentra, Hear No Evil, See No Evil, Speak No Evil: The Intolerable Conflict for Attorney-Mediators Between the Duty to Maintain Mediation Confidentiality and the Duty to Report Fellow Attorney Misconduct (1997) BYU L. Rev. 715, 718.) "The function of the mediator, therefore, is to facilitate the parties to voluntarily reach their own agreement. *758 [Citations.]" (Saeta, supra, at p. 270, 11 Cal.Rptr.3d 610.)
The California Rules of Court provide guidelines that address the issues of voluntariness and coercion in the conduct of mediation proceedings.[9] Although these rules are not directly applicable to mediations conducted by sitting judges (rule 1620.1(d)), judges are "nevertheless encouraged to be familiar with and observe these rules when mediating, particularly the rules concerning subjects not covered by the Code of Judicial Ethics such as voluntary participation and self-determination." (Advisory Com. com., 23 pt. 2 West's Ann. Court Rules (2004 supp.) foll. rule 1620.1, p. 400.) A mediator must conduct the mediation in a manner that supports the principles of voluntary participation and self-determination by the parties. To that end, a mediator must, among other things, respect the right of each participant to decide the extent of his or her participation in the mediation, including the right to withdraw from the mediation at any time, and must refrain from coercing any party to join or continue participation in a mediation. (Rule 1620.3(a)-(c).) A "participant" is "any individual, entity, or group, other than the mediator taking part in a mediation, including but not limited to attorneys for the parties." (Rule 1620.2(c).) "[E]xamples of conduct that violate the principles of voluntary participation and self-determination include ... providing an opinion or evaluation of the dispute in a coercive manner or over the objection of the parties, ... and threatening to make a report to the court about a party's conduct at the mediation." (Advisory Com. com., 23 pt. 2 West's Ann. Court Rules (2004 supp.) foll. rule 1620.2, pp. 400-401.)
The Evidence Code's mediation provisions are also concerned with these issues. Even though there are no specific limitations on the format of a mediation, the process must still be conducted by a "neutral" person in order to facilitate communication between the parties and assist them in reaching a mutually acceptable agreement. (§ 1115; Saeta, supra, 117 Cal. App.4th at pp. 269, 271, 11 Cal.Rptr.3d 610.) "[A] mediator should not have the authority to resolve or decide the mediated dispute, and should not have any function for the adjudicating tribunal with regard to the dispute, except as a non-decisionmaking neutral." (Law. Rev. Com. com., 29B, pt. 3, West's Ann. Evid.Code (2004 supp.) foll. § 1121, p. 154.) Instead, as the Law Revision Commission made clear, "the focus is on preventing coercion." (Ibid.)[10]
2. The Valuation Order Violated the Rules Prohibiting Fact-Finding and Other Coercive Conduct by a Mediator
In order to understand the intended effect of the Valuation Order and why it violated the prohibitions against fact-finding and coercive conduct, it is first necessary to understand some of the legal rules governing the relationship between insurer and insured. Insurance Code section 11580 provides an injured plaintiff with the right to bring a direct action against a defendant's insurer which does not defend its insurer once the plaintiff *759 obtains a judgment against the defendant. An element of such a claim is a previous independent adjudication of facts based on an evidentiary showing during a proceeding that did not have the potential for abuse, fraud, or collusion. If such a proceeding did not occur, then the insurer cannot be liable in an action brought against it by the plaintiff. (National Union Fire Ins., supra, 27 Cal.App.4th at pp. 1444, 1447-1449, 33 Cal.Rptr.2d 496.) A related, but analytically distinct, situation occurs when an insurer refuses to accept a reasonable settlement offer made within the policy limits of the insured. Such conduct breaches the implied covenant of good faith and fair dealing, with the insurer liable for all damages which proximately result, including a judgment in excess of the policy limits. (Hamilton, supra, 27 Cal.4th at pp. 725-726, 117 Cal.Rptr.2d 318, 41 P.3d 128.) However, when the insurer is defending its insured, and the insured settles with a plaintiff without the insurer's consent or participation, and the settlement contains a covenant by the plaintiff not to execute in exchange for an assignment of the insured's policy rights against the insurer, the insurer has no obligation to pay. In essence, coverage is forfeited. Even though the insured defendant and the plaintiff entered a stipulated judgment and obtained a finding that their settlement was in good faith under Code of Civil Procedure section 877.6, absent a trial, there was no reliable litigated determination that the insured had suffered any damages at all. (Id. at pp. 725-727, 730, 732-734, 117 Cal.Rptr.2d 318, 41 P.3d 128.)
Judge Lichtman believed that the insurers had effectively thwarted any settlement because the Church feared that reaching a settlement without the insurers' participation and without a proper adjudication under Hamilton would put the Church at risk of forfeiting its coverage. To preclude the insurers from declaring such a forfeiture, he ordered that his determination as to the reasonable settlement value of the cases qualified as the adjudication required by Hamilton.[11] Additionally, because he believed the insurers were acting improperly, he directed that his written order could be used as evidence of the insurers' bad faith in any future proceedings. As set forth below, we believe Judge Lichtman exceeded his authority and our previous orders that he make no findings regarding the settlement value of the Clergy Cases I.[12] Additionally, he anticipatorily adjudicated certain legal *760 issues that were not properly before him. The net effect was to render the mediation process coercive, at least as to the insurers.
By ordering that his settlement valuation constituted an actual trial for purposes of precluding a declaration of coverage forfeiture by the insurers, Judge Lichtman purported to make binding factual determinations. He also ruled that the Valuation Order could be used as evidentiary fodder for any future bad faith claim by the Church against the insurers. Finally, the order stated that it would become available to the parties for use in open court within 60 days, unless barred by this court. The net effect of these provisions was twofold: First, they purported to cut off the insurers' right to declare a coverage forfeiture in the event of an unauthorized settlement; second they dangled over the insurers' heads the threat of a bad faith action that was already fortified with the weight of a judge's findings. This left the insurers backed into a corner where the easiest way out would be to withdraw their reservation of rights and pay money to settle the cases. In short, the Valuation Order's factual findings and future use provisions were coercive. (Law. Rev. Com. com., 29B, pt. 3, West's Ann. Evid.Code (2004 supp.) foll. § 1121, p. 154 [mediator has no authority to resolve dispute and has no function except that of a non-decisionmaking neutral]; rule 1620.3(a)-(c) [mediator must respect each participant's right to decide the extent of its participation and must refrain form coercion]; Advisory Com. com., 23 pt. 2 West's Ann. Court Rules (2004 supp.) foll. rule 1620.2, pp. 400-401 [warning against coercive opinions or evaluations or threatening to make a report to the court about a party's mediation conduct].) As a result, the court abandoned its designated role as a neutral facilitator without decisionmaking authority.[13]
Judge Lichtman contended that the Valuation Order was justified pursuant to the public policy of encouraging mediated settlements. The Valuation Order said that because the insurers effectively failed to participate in the mediation and otherwise acted improperly, a contrary ruling would shift the state's public policy from favoring settlements to favoring trials "when insuring carriers decide that it is in their best interests not to settle." Similar reasoning was rejected by the Supreme Court in Foxgate, supra, 26 Cal.4th 1, 108 Cal.Rptr.2d 642, 25 P.3d 1117. At issue there was whether the mediator could report to the court concerning the defendant's bad faith failure to participate meaningfully in a mediation session. The plaintiffs, who sought sanctions for that conduct, argued that an exception to the mediation confidentiality provisions was needed in order to prevent conduct that frustrated the policy of encouraging mediation. *761 Relying on the Legislature's clearly expressed intent to promote frank and informal discussions by guaranteeing confidentiality, the Supreme Court held that the clear language of the statutes precluded such an exception. (Foxgate, supra, at pp. 14, 17-18, 108 Cal.Rptr.2d 642, 25 P.3d 1117.) If the mediation confidentiality rules still apply even where a mediation participant frustrates a mediated settlement by arguably sanctionable conduct, then, by parity of reasoning, the principles favoring voluntary participation over coercion should apply to an insurer whose supposedly limited and recalcitrant participation makes it unlikely that its insured will be able to settle. Preventing or punishing such conduct is not the job of a mediator. Instead, it is best left resolved by insurer and insured through an action for bad faith.[14]
Plaintiffs oppose the insurers' petition on three grounds: (1) the "actual trial" standards employed by the court in valuing the cases did not result in binding determinations; (2) the judge's inherent authority to control the proceedings permitted him to act as he did (Code Civ. Proc., § 128); and (3) the stipulated order appointing Judge Lichtman expressly granted him broad powers to conduct the mediation through any settlement techniques he deemed appropriate. None of these contentions are well taken.
We first reject plaintiffs' contention that the order was not intended to and did not result in purported binding factual determinations. Although plaintiffs correctly note that the Valuation Order did not expressly make findings concerning either the Church's ultimate liability or plaintiffs' damages, the order specifically provides that Judge Lichtman's settlement valuations were the result of an actual trial that would preclude the declaration of a coverage forfeiture under Hamilton. The purpose of the actual trial requirement in Hamilton was to provide a reliable judicial determination that an insured defendant who settles with a plaintiff without the consent of the insurer in fact suffered damages as a result of that settlement. Absent that determination, in a case where the insurer was providing a defense and therefore might have prevailed at trial, there is no proof that the insured actually suffered any loss from the insurer's breach of contract. (Hamilton, supra, 27 Cal.4th at pp. 725-727, 730, 732-734, 117 Cal.Rptr.2d 318, 41 P.3d 128.) If, as the Valuation Order states, Judge Lichtman was trying to satisfy Hamilton, it follows that he purported to find that the Church would lose if the matter went to trial.
We next consider whether Judge Lichtman's order was proper under his inherent authority to control the processes of his court. (Code Civ. Proc., § 128.) It was not. Whatever inherent authority Judge Lichtman possessed could not be exercised in a manner that was inconsistent with or which contravened a statute. (Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 967, 67 Cal.Rptr.2d 16, 941 P.2d 1203.) The same is true of the stipulated order appointing him as settlement judge. Despite the broad grant of authority to use different settlement or mediation techniques, nothing in the order can or should be read to allow Judge Lichtman to exceed the neutral, non-factfinding role of a mediator.[15] (People v. National Auto-mobile *762 & Casualty Ins. Co. (2002) 98 Cal.App.4th 277, 290, 119 Cal.Rptr.2d 746 [where a statute requires a certain procedure or imposes certain limitations, an act beyond those limits is in excess of jurisdiction].)
The Church has opposed the petition on only one ground: because it declines to waive the mediation confidentiality privileges and allow disclosure of the Valuation Order at this time, it is premature to reach a decision as to whether the Valuation Order should be vacated or barred from some future use. We reject the Church's contention insofar as vacating the order is concerned. As discussed above, the order is coercive. Keeping it confidential for the time being does nothing to remedy that and is not grounds for leaving in place an unlawful order. As set forth below, however, the Church's position makes it unnecessary for us to reach the issues concerning the disclosure or future use of the Valuation Order.
3. Mediation Confidentiality and Non-Disclosure Rules
Evidence of admissions or anything else said in connection with the mediation process is not admissible or subject to discovery, and disclosure of that evidence "shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding ...." (§ 1119, subd. (a).) The same limitations apply to any writings prepared pursuant to or in connection with a mediation proceeding. (§ 1119, subd. (b).) All communications, negotiations, or settlement discussions by and between participants in the course of a mediation shall remain confidential. (§ 1119, subd. (c).) "Neither a mediator nor anyone else may submit to a court or other adjudicative body, and a court or other adjudicative body may not consider, any report, assessment, evaluation, recommendation, or finding of any kind by the mediator concerning a mediation conducted by the mediator, other than a report that is mandated by court rule or other law and that states only whether an agreement was reached, unless all parties to the mediation expressly agree otherwise...." (§ 1121.) These protections continue to apply even after a mediation ends. (§ 1126.) Any reference to a mediation during "any subsequent trial" is ground for a new trial. (§ 1128.)[16]
Petitioners contend that the Valuation Order violated the mediation confidentiality statutes. Plaintiffs contend that section 1119 does not apply because, as Judge Lichtman stated in the Valuation Order, the insurers took no part in the Valuation Hearing and made no communications that could be protected. Plaintiffs contend that section 1121 does not apply because that statute's use of the phrase "parties to the mediation" limits its reach to the actual litigating parties. We need not reach these issues, however, because of *763 the one ground upon which the Church has opposed the petition: based on its refusal to waive the mediation confidentiality privileges and allow disclosure of the Valuation Order at this time, it is premature to reach a decision as to whether the Valuation Order should be disclosed or barred from some unknown future use.[17] We agree. Because the Church will not allow the Valuation Order to be disclosed at this time, it must remain confidential and may not be used without the Church's consent.[18]
4. The Proper Remedy Is to Vacate the Valuation Order
As mentioned before, we do not believe Judge Lichtman erred by providing the parties and the insurers with his evaluation of the plaintiffs' prospects for victory or the reasonable settlement value of their cases. To the extent the Valuation Order includes such information, it was proper. Judge Lichtman should not have characterized his settlement valuations as findings, however. Neither should he have purported to make findings concerning the actual trial requirements of Hamilton nor otherwise taken a position concerning whether the insurers' conduct was in bad faith. We therefore grant the petition, vacate the Valuation Order, and direct that it remain sealed.[19] Because we are opposed to the destruction of court records, and in order to ensure that a true and accurate copy of the Valuation Order be maintained, we decline to expunge that order as the insurers request.
DISPOSITION
For the reasons set forth above, let a peremptory writ of mandate issue directing *764 the trial court to vacate and seal the Valuation Order. Petitioners to recover their appellate costs.
We concur: COOPER, P.J., and FLIER, J.
NOTES
[1] This court is aware of recently published news reports that these cases have settled. The parties have not contacted us regarding any such settlement and the insurers have not asked that we dismiss the petition or take any other action as a result of the parties' presumed settlement.
[2] The Church's primary liability insurers are Travelers Casualty and Surety Co. and Centennial Insurance Co. Five other companies acted as the Church's excess insurers: Industrial Underwriters Insurance Co., Associated International Insurance Co., CNA Insurance Co., Stonewall Insurance Co., and Allianz Global Risks U.S. Insurance Co. We will refer to these seven companies collectively as either "the insurers" or "petitioners."
[3] We discuss the "actual trial" requirement in greater detail, post. In general, the rule demands proof of an insured defendant's liability to a third party plaintiff through some form of independent fact-finding determination as a prerequisite to holding the defendant's insurance liable to either the insured or the third party for benefits under the policy. A variation of the rule was applied in Hamilton v. Maryland Casualty Co. (2002) 27 Cal.4th 718, 725-726, 117 Cal.Rptr.2d 318, 41 P.3d 128 (Hamilton), where the court held that an insurance company defending its insured cannot be held liable on the policy where the insured settles without the insurer's participation or consent and without the benefit of an actual trial to determine its, and thus the insurer's, ultimate liability.
[4] The portion of the April 30 order that we specified for deletion ran from page 4, line 14 through page 7, line 15, and consisted of the discussion concerning the standards and procedures applicable to an "actual trial" for purposes of Insurance Code section 11580.
[5] As set forth in our later discussion, Judge Lichtman's order was and remains subject to the statutory rules of confidentiality for a mediator's reports. We therefore refrain from describing the specifics of Valuation Order. Instead, we describe the contents of that order in only the most general terms, and only as needed to give our discussion and ruling context. Accordingly, we will say nothing more about the valuation itself other than the fact that one was made.
[6] See footnote 3, ante.
[7] All further undesignated section references are to the Evidence Code. These provisions, which deal primarily with confidentiality restrictions and limitations on the later use and admissibility of information derived from mediation proceedings, are discussed in more detail, post.
[8] The mediation conducted here appears to fall into this second category. The stipulated order by which Judge Lichtman was appointed stated that the matter had been transferred to him for settlement purposes only, set forth the various powers he was being granted, and acknowledged that he could communicate with the trial court "about the mediation process," as well as make reports on the "status and progress of the mediation." Judge Lichtman consistently applied the mediation confidentiality privileges throughout the process, and specifically invoked them in his May 24, 2004, order setting the Valuation Hearing. As part of that order, he stated that it was his intention to achieve a "mediated settlement." The parties have never contended that the Valuation Hearing was something other than a mediation, even though that mediation took place as part of a voluntary settlement process. On this record, we treat the Valuation Order as the result of a mediation proceeding that was governed by the rules applicable to mediations. We expressly decline to consider or clarify any differences that might exist between a mediation and voluntary settlement conference. (Foxgate Homeowners' Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1, 12, 108 Cal.Rptr.2d 642, 25 P.3d 1117, fn. 8 (Foxgate).) Therefore, our decision should not be construed as holding that all voluntary settlement conferences are mediations which are subject to the rules concerning the conduct of mediation proceedings. Instead, we apply the various mediation rules to the Valuation Order only because that order was the result of a mediation.
[9] All further rule references are to the California Rules of Court.
[10] The mediation confidentiality provisions found at sections 1115 through 1128 were proposed by the Law Revision Commission (Rojas v. Superior Court (2004) 33 Cal.4th 407, 418, 15 Cal.Rptr.3d 643, 93 P.3d 260), and we therefore give substantial weight to the commission's own understanding of that legislation. (Estate of Joseph (1998) 17 Cal.4th 203, 216, 70 Cal.Rptr.2d 619, 949 P.2d 472.)
[11] We express no opinion on the correctness of Judge Lichtman's analysis concerning the interpretation or applicability of National Union Fire Ins. or Hamilton to the insurers' conduct. We simply note their holdings in order to give context to the Valuation Order.
[12] In our May 25, 2004, order, we dismissed petitioners' continuing objections that Judge Lichtman's modified order retained language concerning his intent to make settlement value determinations and to make his ultimate order available for use in later proceedings. In response to those objections, we said that Judge Lichtman's deletions of certain portions of his modified order addressed petitioners' concerns. Plaintiffs contend that this language somehow implicitly endorsed the disputed portions of the Valuation Order now before us. That comment was made in a footnote to an order in which we declined to reach petitioners' further objections because the original order setting the valuation hearing had been modified, making the petition moot. Our footnoted aside was therefore no more than dictum. Regardless, by ordering Judge Lichtman to delete certain language relating to the making of findings, as well as the portions of his order discussing the actual trial requirement under Insurance Code section 11580, we believe it was reasonably clear that any such findings were not allowed. Further, the parties never raised, and we therefore never decided, whether Judge Lichtman could order the later use in open court of his conclusions regarding the insurers' alleged bad faith.
[13] Equally, if not more troubling, is the fact that the Valuation Order identifies by name some of the plaintiffs and the priests who allegedly abused them and provides a factual summary of the plaintiffs' allegations. Although the Valuation Order states that the "settlement valuations" were not to be made available for use in open court, the facts concerning the named priests and their alleged victims come in another section of the report. At a minimum, it is unclear whether those portions of the report were included within the scope of the Valuation Order.
However, we have no problem with Judge Lichtman's creative use of a mini-trial evidentiary proceeding to help him evaluate the worth of the cases. Nor do we see anything wrong with him sharing his frank assessment with the parties and the insurers. Indeed, given the reported settlement (see fn. 1, ante), it seems fairly clear that the procedure adopted by Judge Lichtman and the assessment of the cases that he conveyed to counsel were instrumental in producing their resolution.
[14] We express no opinion as to the propriety of the insurers' alleged misconduct during the mediation and settlement process. We simply note that if, as Judge Lichtman apparently believes, they have acted in bad faith toward their insured, then they run the risk of liability for such conduct.
[15] The stipulated order appointing Judge Lichtman as settlement and mediation judge stated that he could review the probable evidence, offer evaluations of the strength of the evidence, the applicable law, the amount of damages, and "take any other steps or apply any other settlement techniques he finds appropriate, including but not limited to order the appearance and presence of any party representative necessary to consummate a settlement." We believe this authorized Judge Lichtman to conduct the evidentiary hearing and provide the parties with his evaluation of the merits of the case and its proper settlement value. It did not, however, allow him to exceed the statutory limits on his role as a neutral mediator.
[16] Neither the parties, the insurers, nor Judge Lichtman dispute that their settlement discussions and the evaluation hearing were generally subject to these mediation confidentiality rules. In fact, Judge Lichtman consistently reminded the parties that those provisions applied to the proceedings. According to plaintiffs and Judge Lichtman, however, the circumstances of this case justify an exception to those provisions.
[17] Because we grant the petition on this basis, we need not decide any issues relating to possible future uses of the Valuation Order or whether the Church, the plaintiffs, or the insurers might be able to consent to the use of the Valuation Order in the future.
[18] Should the Church ever consent to the disclosure or use of the Valuation Order, however, the issue will become ripe for adjudication at that time.
Even though we need not reach the issue, we believe that the plaintiffs' interpretation of section 1121 is wrong. While section 1121 states that no report by the mediator may be filed unless "all parties to the mediation" agree, that provision cannot be read narrowly to include only parties to an action, and exclude participating insurers. When interpreting this provision, we must give it a reasonable and commonsense reading that is consistent with the Legislature's apparent approach and which will not lead to an absurd result. As part of this task, we must read section 1121 together with the rest of the mediation confidentiality statutes and harmonize them. (Kotler v. Alma Lodge (1998) 63 Cal.App.4th 1381, 1391, 1394, 74 Cal.Rptr.2d 721.) These provisions were intended to apply to participants, not just parties, including insurance company representatives. (See § 1119, subd. (c) [privilege applies to communications "by and between participants in the course of a mediation" (italics added)]; § 1122, subd. (a)(1) [writings made during course of mediation are admissible if "[a]ll persons who conduct or otherwise participate in the mediation expressly agree..."]; Law Rev. Com. com., 29B, pt. 3 West's Ann. Evid.Code (2005 supp.) foll. § 1122, p. 188 [general rule allows disclosure of mediation documents "only upon agreement of all participants, including not only parties but also ... nonparties attending the mediation ([including] an insurance representative...)"]; accord, rule 1620.2(c) [a "participant" is "any individual, entity, or group, other than the mediator taking part in a mediation, including but not limited to attorneys for the parties."].) In light of the Legislature's apparent purpose of extending some aspects of mediation confidentiality to participants such as the insurers, not just the parties to an action, we construe the phrase "parties to the mediation" as used in section 1121 to include such participants.
[19] We also direct that copies of the Valuation Order in our own records remain sealed as well.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2259412/
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720 A.2d 773 (1998)
51 PARK PROPERTIES, Appellee,
v.
Joanne E. MESSINA and Bruce J. Zehms, a/k/a M. Bruce Zehms, Appellants.
51 PARK PROPERTIES, Appellant,
v.
Joanne E. MESSINA and Bruce J. Zehms, a/k/a M. Bruce Zehms, Appellees.
Superior Court of Pennsylvania.
Argued May 18, 1998.
Filed October 28, 1998.
*774 James Esper, Mononogahela, for Messina and Zehms.
Joseph P. Covelli, Pittsburgh, for 51 Park Properties.
Before DEL SOLE, JOYCE and MONTEMURO[*], JJ.
DEL SOLE, Judge:
This action was initiated by 51 Park Properties (Landlord) against Joanne E. Messina and Bruce M. Zehms, a/k/a M. Bruce Zehms (Tenants) seeking eviction/ejection and money *775 damages for nonpayment of rent and violation of mobile home park rules. Tenants filed a counterclaim against Landlord alleging damages for breach of a verbal contract to prepare a mobile home site. A jury trial was held before a Special Master. At the conclusion of Tenant's case, a directed verdict on the issue of ejectment was entered in favor of Landlord. The jury returned a verdict in favor of Landlord on damages awarding $4,197 in back rent.
Tenants filed a motion for post-trial relief. Following briefing and oral argument, an order was entered upholding the directed verdict on ejectment, but granting a new trial on damages on the basis of one error of law: the admission of testimony from Tenants' former landlord regarding their prior landlord/tenant litigation. Thereafter, Tenants filed a motion for reconsideration on the ejectment issue, based on amendments to the Pennsylvania Landlord/Tenant Act, claiming the amendment gave mobile home park residents a perpetual lease. The judge, holding that the amendments to the Act could not be applied retroactively, denied that motion. Both parties filed timely appeals. We affirm.
First, Tenants claim that the trial court erred in directing a verdict in favor of Landlord on the issue of ejectment. Initially, they argue the existence of an oral lease was an issue of fact, which should have gone to the jury. In this Commonwealth, a directed verdict may be granted only where the facts are clear and there is no room for doubt. Forgang v. Universal Gym Co., 423 Pa.Super. 416, 621 A.2d 601 (Pa.Super.1993). In deciding whether to grant a motion for a directed verdict, the trial court must consider the facts in the light most favorable to the nonmoving party and must accept as true all evidence which supports that party's contention and reject all adverse testimony. Brown v. Philadelphia Asbestos Corp., 433 Pa.Super. 131, 639 A.2d 1245 (Pa.Super.1994).
A review of the evidence at trial fails to establish the existence of any type of lease between the parties, either written or oral. Tenant Zehms' own testimony indicates that Tenants had an oral agreement to enter into a lease at a future date and Tenants were under no obligation to sign the lease as presented to them by Landlord. More interestingly, Tenant Zehms testified that Tenants felt that they had the option to find another place to live if they did not like the contents of Landlord's lease. N.T. 10/25-27/95 at 333-335. As the court explained in granting the directed verdict:
... at best, what [Tenants] have proved [sic] through the testimony of Mr. Zehms who testified in answer to the Court's questions that the agreement was for him and his wife to execute a written lease, but that the written lease was not tendered.
He also indicated that in answer to the Court's questions, that he would not have simply signed whatever lease was provided or whatever written lease was provided to him by the [Landlord]. There would be further negotiations, and he also stated that he would not have signed just any old lease.
So at best what [Tenants] has [sic] proved is an oral agreement to enter into a lease, not an oral lease.
N.T. 10/25-27/95 at 539-540.
Consequently, Tenants' argument that an oral lease existed fails and we find the trial court properly granted the motion for a directed verdict.
In addition, Tenants argue that the trial court erred in denying a new trial on ejectment after refusing to compel certain witnesses to attend and testify. Prior to trial, Tenants served Notices to Attend on Landlord partners, Larry Saliterman and Robert Larson, both of Minnesota. Landlord filed a Motion for Protective Order for both partners which was denied. However, neither partner appeared at trial as the court excused them from testifying the day before they were to arrive. Tenants claim that the testimony of the partners was necessary to establish the existence of an oral year-to-year lease with automatic renewal, which agreement was allegedly entered into after Tenants negotiated with one of Landlord's representatives.
We are mindful that competent relevant evidence having probative value is generally admissible and this court on appeal *776 will accord a large measure of discretion to the trial court regarding its admission or exclusion. See Engle v. West Penn Power Co., 409 Pa.Super. 462, 598 A.2d 290 (Pa.Super.1991). The trial transcript indicates the partners had airline reservations to attend the trial but, the day before the flight, the court determined that the partners' testimony was irrelevant. N.T. 10/25-27/95 at 330-331. The court explained Tenants only pled they had an agreement with Landlord's representative, not a subsequent agreement with the partners, and Tenant Zehms testified accordingly. N.T. 10/25-27/95 at 305-306, 450-451. Therefore, in light of these facts the testimony of the partners would have been irrelevant and the court did not abuse its discretion in refusing to compel the appearance of the two witnesses.
In addition, Tenants claim the trial court erred in refusing to apply retroactively the 1996 amendments to the Landlord/Tenant Act in order to vacate the directed verdict. In 1996, after Tenants' trial, and in response to Pennsylvania caselaw, the Pennsylvania Legislature passed amendments to 68 P.S. § 250.501 which essentially serve to preclude the ejectment of a mobile home park tenant at the end of a lease. In refusing to apply the amendments retroactively, the trial court properly concluded that under the laws of statutory construction, new provisions are construed as effective only from the date the amendment became effective. 1 Pa.C.S.A. § 1953. Moreover, Tenants cite no authority in support of applying the amendment retroactively.[1] Therefore, a new trial on this basis is not appropriate.
Next, Landlord challenges whether the trial court properly granted a new trial on damages. The decision to order a new trial is one that lies within the discretion of the trial court. On appeal, our scope of review is limited to those reasons upon which the trial court relied: we consider whether any of the trial court's reasons for granting a new trial have merit and if so, defer to that decision. Nogowski v. Alemo-Hammad, 456 Pa.Super. 750, 691 A.2d 950 (Pa.Super.1997).
The new trial was granted after Judge Stassburger determined the Special Master committed reversible error by permitting Tenants' prior landlord to testify concerning previous landlord/tenant litigation. The testimony was initially admitted to show Tenant Zehms' credibility. However, a review of the transcript proves that Landlord continually questioned the previous landlord regarding: Tenants' failure to pay rent, the subsequent eviction attempt, the filing of a legal action against Tenants, Tenants' filing of a counterclaim, the securing of a court order for eviction, Tenants' eventual vacating of the property, and the landlord's receipt of a monetary judgment against Tenants. N.T. 10/25-27/95 at 220-228. We agree with Judge Strassburger that the testimony of Tenant's prior landlord went beyond that necessary to determine Tenant's credibility and a new trial on damages is necessary.
In addition to the above issue upon which a new trial on damages was granted, Tenants raise four issues they claim are also the basis for a new trial on damages but were not addressed by the trial court.[2] However, these issues are beyond our scope of review, as the trial court did not rely upon them in granting the new trial as to damages. Id. The trial court opinion specifically states: "A new trial was granted because the Special Master committed reversible error by permitting Mr. Zehms' prior landlord, Charles Bennett, to testify about their prior landlord/tenant *777 litigation." Trial Court Opinion, 12/20/96 at 6-7. In light of our decision affirming the trial court award of a new trial as to damages, we find no reason to discuss other grounds cited by Tenants in support of relief, which they have already been afforded. Thus, we conclude these issues are moot.
Orders affirmed.
NOTES
[*] Retired Justice assigned to the Superior Court.
[1] Even if this amendment were applied retroactively, it would be to no avail for Tenants. As Tenants' brief admits, the amendment specifically deals with the issue of ejectment at the termination of a lease. Tenants' brief at 11. Here, Tenants failed to prove, as a matter of law, the existence of a valid lease, either written or oral. Consequently, the amended statute would not apply.
[2] The four additional issues presented in Tenants' brief are: (a) whether a new trial on damages should be granted because of Landlord's failure to bring suit in the name of the partners; (b) whether a new trial on damages should be granted because of Landlord's collection of rent in absence of a writing; (c) whether a new trial on damages should be granted because of time constraints placed on the trial; and (d) whether a new trial on damages should be granted because Tenants claimed inability to respond to Landlord's second amended complaint.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2259413/
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777 F.Supp. 330 (1991)
IMPERIAL CHEMICAL INDUSTRIES, PLC, Plaintiff,
v.
DANBURY PHARMACAL, INC., Defendant.
Civ. A. Nos. 89-575-CMW, 90-736-CMW.
United States District Court, D. Delaware.
November 4, 1991.
*331 *332 Douglas E. Whitney, Donald F. Parsons, Jr., and Jack B. Blumenfeld of Morris, Nichols, Arsht & Tunnell, Wilmington, Del. (Donald J. Bird, Stephen L. Sulzer, Lynn E. Eccleston, and Mark G. Paulson of Cushman, Darby & Cushman, Washington, D.C., of counsel), for plaintiff.
Jeffrey M. Weiner, Wilmington, Del. (Alfred B. Engelberg, Greenwich, Conn., of counsel), for defendant.
OPINION
CALEB M. WRIGHT, Senior District Judge.
The plaintiff-patentee Imperial Chemical Industries, PLC ("ICI"), is a British corporation having its corporate offices and principal place of business in Imperial Chemical House, Millbank, London, England. Consolidated Pretrial Order ("P.T. Order") filed March 6, 1991 at p. III-1. The defendant Danbury Pharmacal, Inc., ("Danbury"), is a corporation organized and existing under the laws of the State of Delaware having its principal place of business at Stoneleigh Avenue, Carmel, New York. Id. ICI has charged Danbury with infringement of ICI's U.S. Patent No. 3,934,032, ("the '032 patent") and Danbury has asserted the invalidity of this patent as an affirmative defense in Civil Action Nos. 89-575 and 90-736.[1] P.T. Order at p. I-1. The subject '032 patent was issued to ICI on January 20, 1976 with two claims directed to a method for the treatment of hypertension in a warm-blooded animal by the administration of a particular alkanolamine derivative.[2] The preferred compound covered by the '032 patent is generically known as "atenolol". P.T. Order at p. I-3.
On June 30, 1989, Danbury filed two abbreviated new drug applications ("ANDAs") Nos. 73-352 and 73-353. The two ANDAs which are the subject of Civil Action No. 89-575, seek authorization from the U.S. Food and Drug Administration ("FDA") to sell a generic version of the drug atenolol in 50 mg and 100 mg tablets, respectively, after the expiration date of the '032 patent. P.T. Order at p. I-2. Atenolol is marketed for the treatment of hypertension by ICI under the trademark TENORMIN. P.T. Order at p. I-3. On September 5, 1989, Danbury amended ANDAs Nos. 73-352 and 73-353 and simultaneously submitted a patent certification which alleged, pursuant to 21 U.S.C. § 355(j)(2)(A)(vii) (1988), that the '032 patent and ICI's U.S. Patent No. 3,836,671 ("the '671 patent")[3] were invalid. Further, *333 Danbury sought approval to market atenolol immediately, without regard to the expiration date of the '032 and '671 patents. P.T. Order at p. I-2.
On November 5, 1990, Danbury filed an ANDA (number unspecified) which is the subject of Civil Action No. 90-736, seeking authorization from the FDA to sell a generic version of the drug atenolol/chlorthalidone. P.T. Order at p. I-2. Atenolol in combination with chlorthalidone is marketed for the treatment of hypertension by ICI under the trademark TENORETIC. P.T. Order at p. I-3. Concurrent with the filing of this ANDA, Danbury submitted a patent certification which alleged, pursuant to 21 U.S.C. § 355(j)(2)(A)(vii) (1988), that the '032 patent was invalid, and that Danbury sought approval to market the combined drug atenolol/chlorthalidone commencing September 17, 1991 (after the expiration of the '671 patent) without regard to the expiration date of the '032 patent. P.T. Order at pp. I-2, 3.
Danbury's submission of the ANDAs and the patent certification challenging the validity of the '032 patent, constitutes infringement of the '032 patent under 35 U.S.C. § 271(e)(2)(A) (1988). Danbury has admitted infringement with respect to both atenolol per se and atenolol/chlorthalidone combinations, and raised the affirmative defense of invalidity. FDA approval of Danbury's ANDAs could have been effective immediately (assuming the ANDAs are otherwise in compliance with FDA requirements) except that ICI brought suit within forty-five days of its receipt of the patent certification notices.[4] P.T. Order at pp. I-3, 4. Since ICI filed suit within the forty-five day period,[5] the FDA may not permit Danbury to market its generic drug for a period of thirty months from the date of the receipt of the patent certification notices[6] unless both claims of the '032 patent are finally adjudicated to be invalid before the respective thirty month periods expire.[7] P.T. Order at p. I-4.
This Court has jurisdiction under the United States Patent Laws, Title 35, and under 28 U.S.C. §§ 1331, 1338(a). In addition, this action is authorized under the Food and Drug Law, Title 21, and specifically 21 U.S.C. § 355(j)(4)(B) (1988). Venue is found under 28 U.S.C. § 1400(b) since the defendant Danbury is a Delaware corporation.[8] P.T. Order at p. II-1.
The Court held an eight day bench trial from April 1 through April 5 and April 8 through April 10, 1991. Since Danbury has admitted infringement of the '032 patent and has not engaged in any commercial activity relating to the '032 patent the sole issues for determination at trial were the validity and enforceability of claim 2 of the '032 patent. After trial, the parties submitted proposed findings of fact and conclusions of law. The Court has considered the parties' post-trial submissions along with the testimony and documentary evidence presented at trial. After this review the Court renders this Opinion containing its Findings of Fact and Conclusions of Law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.
Danbury seeks a declaration that claim 2 of the '032 patent is invalid and grounds its attack on validity upon 35 U.S.C. § 103 (1988) ("section 103")[9] and 35 U.S.C. § 112 *334 (1988) ("section 112")[10]. The basis of Danbury's § 103 defense of obviousness is that "given the scope and content of the prior art, the nature of the differences between atenolol and the prior art and level of skill in the art, a medicinal chemist of ordinary skill in the art in February, 1969 would reasonably have expected that atenolol because of its R-ABC structure and the close similarity of its R group to known R groups would also be a beta-blocker and, therefore, be useful as an antihypertensive agent." Defendant Danbury's Proposed Findings of Fact and Conclusions of Law ("DFC") at p. 32, ¶ 50.
The basis for Danbury's § 112 defense is "the patent specification's alleged failure to disclose adequately to one of ordinary skill in the art `how to use' the invention without undo experimentation." DFC at p. 71, ¶ 86. It is Danbury's position that "the '032 patent in suit does not disclose, and would not teach, a person of ordinary skill in the art how to use atenolol to treat hypertension in the manner ultimately approved by the FDA[11] [and that] extensive experimentation with atenolol over a period of many years was required by those skilled in the art before they ultimately learned of the possibility of using atenolol to treat hypertension at a dose as low as 100 mg. taken once-a-day." DFC at p. 28, ¶ 44.
ICI counters that "[i]n light of the significant structural differences between atenolol and the prior art, the lack of any teachings in the prior art which would have suggested the modifications required to make atenolol, atenolol's unexpected, qualitatively different combination of pharmacological properties, and its advantages over the prior art in the treatment of hypertension, and the other objective evidence of nonobviousness (i.e., the invention's outstanding commercial success, the pharmaceutical industry's acquiescence in the '032 patent's validity, and Danbury's copying of atenolol), the invention of claim 2 of the '032 patent would not have been obvious to one of ordinary skill in the art when the invention was made on February 21, 1969." Plaintiff ICI's Findings of Fact and Conclusions of Law ("PFC") at pp. 238-39, ¶ 97.
ICI argues in opposition to Danbury's § 112 defense, that "the disclosure of the '032 patent specification would have enabled one skilled in the art, without undue experimentation, to practice the invention of claim 2 and to obtain atenolol's benefits of beta1-selectivity, lack of ISA, and hydrophilicity." PFC at p. 243, ¶ 107.
In the first part of this Opinion, "Findings of Fact", the following areas will be discussed: (a) The Patent In Suit; (b) The Scope and Content of the Prior Art;[12] (c) The Differences Between the Prior Art and the Claimed Invention; (d) The Development of the Patent in Suit; (e) The Level of Skill in the Art; (f) The Teachings of the '032 Patent; (g) Superior or Unexpected Results; (h) The Commercial Records of TENORMIN and TENORETIC. In the second part of this Opinion, "Conclusions *335 of Law", the Court will address and state its conclusions of law in reference to the parties' legal theories and the pertinent case law regarding the following issues: (a) Burden of Proof; (b) Obviousness: 35 U.S.C. § 103; and (c) Adequate Disclosure: 35 U.S.C. § 112.
I. FINDINGS OF FACT
A. The Patent in Suit
The validity of claim 2 of U.S. Patent No. 3,934,032, entitled "Alkanolamine Derivatives for Treating Hypertension" is at issue in this case. This patent was issued to ICI on January 20, 1976 on application Serial No. 461,262 naming Arthur Michael Barrett, John Carter, Roy Hull, David James LeCount, and Christopher John Squire as inventors. Application Serial No. 461,262 was filed on April 15, 1974 as a division of Serial No. 233,781 filed March 10, 1972 (which is now U.S. Patent No. 3,836,671). Application Serial No. 233,781 was, in turn, a continuation-in-part of Application Serial No. 199,011 filed November 15, 1971 (now abandoned) and Application Serial No. 9451 filed February 6, 1970, which issued as U.S. Patent No. 3,633,607. P.T. Order at p. III-1.
Three separate patents were issued to ICI as a result of restriction requirements by the United States Patent and Trademark Office ("PTO") and double patenting is not an issue in this action. These patents are the expired '607 patent which claims, inter alia, atenolol, per se, as a chemical compound, the '671 patent which expired on September 17, 1991, and claims inter alia, pharmaceutical compositions containing atenolol as the active ingredient and the use of atenolol to treat angina pectoris and the '032 patent. P.T. Order at pp. III-1, 2.
The '032 patent contains two claims which read as follows:
1. A method for the treatment of hypertension in a warm-blooded animal in need of such treatment which comprises administering orally, parenterally or by inhalation to said animal an effective amount of at least one alkanolamine derivative selected from the group consisting of a compound of the formula:
wherein R1 is isopropyl or t-butyl, R2 is carbamoyl or alkylcarbamoyl of up to 4 carbon atoms, A is alkylene of 1 to 5 carbon atoms or alkenylene of 2 to 5 carbon atoms and R3 is hydrogen, halogen or alkyl, alkenyl, or alkoxy each of up to 4 carbon atoms: and a non-toxic, pharmaceutically acceptable acid-addition salt thereof.
2. The method of claim 1 wherein the alkanolamine derivative is 1-p-carbamoyl-methylphenoxy-3-isopropyl amino-2-propanol or a non-toxic, pharmaceutically acceptable acid-addition salt thereof.
Claim 2, the only claim at issue in this case, is directed to, and specifically covers the use of atenolol to treat hypertension. P.T. Order at p. III-2.
B. The Scope and Content of the Prior Art
1. Background Facts
The body's autonomic nervous system prepares it to deal with physical exertion and various stressful and emotional conditions. The autonomic nervous system works through two different systems; the parasympathetic system and the sympathetic system. The relevant focus for this discussion is on the sympathetic nervous system. When this system is activated by impulses it releases certain neurohormones which trigger the release of two neurochemicals, adrenaline and noradrenaline,[13]*336 collectively referred to as catecholamines. Adrenaline is released into the bloodstream and noradrenaline is released at the nerve endings. Thadani, Tr. at p. 21; P.T. Order at p. III-3.
These catecholamines act at structures called receptors which lie on the cell surface of almost all organs and systems in the body. There are two kinds of receptors which are designated as alpha-receptors and beta-receptors. Our focus for purposes of this case is on the beta-receptors.[14] The interaction between the catecholamines and the receptors produce a response in the associated cells and organ to facilitate the body's reaction to physical and emotional stress. Thadani, Tr. at pp. 21-23.
When the beta-receptors are stimulated by the catecholamines, they produce a response in the heart in that they increase the force and rate of contraction of the heart which increases the blood flow from the heart (cardiac output). In addition, stimulation of the beta-receptors causes dilation of the arteries to the heart and the peripheral arteries so more blood can be accommodated in these vessels and dilation of the bronchial passages so that the flow of air to and from the lungs is enhanced and thus the flow of blood to critical organs and muscles is facilitated. Thadani, Tr. at pp. 21-23; P.T. Order at p. III-3.
2. The Function and Use of Beta-Blockers
Claim 2 of the '032 patent claims a method of use of the compound atenolol in the treatment of hypertension. Atenolol is a beta-blocker. P.T. Order at p. III-3. At trial, Danbury's expert witness on the clinical uses of beta-blockers, Dr. Thadani,[15] described the function of a beta-blocker. He explained that beta-blocker drugs are synthetic chemicals which have a similar structure to the naturally occurring catecholamines and can, therefore, occupy a receptor site and block the catecholamine's reaction with the receptor site.[16] By blocking the catecholamines from interacting with the receptor site, the beta-blockers decrease heart stimulation because the stimulating effects of the catecholamines which normally would increase the force and rate of contraction on the heart are reduced. This reduction in the force and rate of the heart's contraction then lowers *337 the oxygen demands of the working heart. Thadani, Tr. at pp. 25, 26.
This blockade by a beta-blocker is competitive in that total or complete beta-blockade is never achievable since the inhibitory effect of the beta-blocker or beta-antagonist can always be overcome by increasing the concentration of the endogenous catecholamine or agonist. Nevertheless, the level of the body's response to the endogenous catecholamines is lessened by the presence of a beta-blocker. This lessened response is desirable under certain circumstances. P.T. Order at p. III-3-4.
When a person is exercising or experiencing a stressful situation the heart muscle will be stimulated by the release of adrenaline and noradrenaline, as described previously, and it will pump harder in order to accommodate the increased demands for blood flow and oxygen by the muscles. Under normal circumstances this response by the heart is tolerable but in certain situations such a response can be detrimental. For example, in a patient with angina pectoris the coronary arteries which supply blood to the heart muscle are narrowed with fatty deposits or cholesterol accumulation. When the patient exercises the heart is being stimulated and is trying to contract faster but the blood flow cannot increase because the arteries are narrowed and the patient experiences chest pain. A beta-blocker can be used in a patient with angina pectoris to decrease the stimulation of the heart thereby reducing the force and rate of contraction of the heart and lowering the oxygen demands of the heart. Thadani, Tr. at pp. 25, 26.
In addition, beta-blocker drugs are useful for the treatment of hypertension. Hypertension is a condition of increased blood pressure.[17] At trial Dr. Thadani testified that beta-blockers lower blood pressure in about sixty percent of hypertensive patients but that the manner in which they accomplish this, even at present, is not known. Thadani, Tr. at p. 28.
Dr. Thadani testified at trial that the functions and uses of beta-blockers, outlined above, were all known prior to February of 1969.[18] Thadani, Tr. at p. 29. Dr. Thadani supported this statement by referring to several prior art articles that he had read and was familiar with and by indicating as to each article any reference it had to a description of the general function and uses of beta-blockers. As to the uses of beta-blockers he specifically identified those articles which mentioned the use of beta-blockers for the treatment of hypertension.
Dr. Thadani discussed DX 504 at trial which is a 1966 article by Doctors Epstein and Braunwald entitled "Beta-Adrenergic Receptor Blocking Drugs: Mechanisms of Action and Clinical Applications" published in the New England Journal of Medicine. The first part of this article describes how beta-blockers function and their effect on various parameters such as heart rate. On page 1179 of this article appears a discussion of the use of beta-adrenergic receptor drugs (beta-blockers) for the treatment of hypertension. In this discussion of hypertension the article makes reference to a 1964 article by Dr. Brian Prichard entitled "Hypotensive Action of Pronethalol" published in the British Medical Journal. Dr. Thadani also referred to this article which is PX 26. Thadani, Tr. at pp. 29-31, 33.
In this article (PX 26), the hypertensive action of a beta-blocker known by the name of "pronethalol" was described. Dr. Prichard found that this beta-blocker drug lowered *338 the blood pressure in patients with hypertension. Further work on pronethalol was discontinued when experiments in mice showed that it produced carcinogenic effects. However, on page 1228 of PX 26, Dr. Prichard does state that "when a noncarcinogenic beta-receptor-blocking drug is produced it would be worth trying in the treatment of hypertension." Thadani, Tr. at pp. 33-34.
The Epstein and Braunwald article (DX 504 referred to previously) at p. 1179 states that Prichard's observations contained in his 1964 article (PX 26) were extended to another beta-blocker, "propranolol" which was found to be effective as a blood-pressure-lowering agent. Dr. Thadani also referred to Dr. Prichard's work with propranolol at trial, in discussing PX 314 a 1969 article co-authored by Dr. Prichard and Dr. Gillam entitled "Treatment of Hypertension with Propranolol" published in the British Medical Journal. Dr. Thadani stated that this article's authors found that propranolol, a beta-blocker, was effective in the treatment of hypertension. Thadani, Tr. at 35-37.
Dr. Thadani also referred to DX 505 at trial, a 1969 article by Dollery entitled "Clinical Pharmacology of Beta-receptorblocking Drugs". This article discusses and describes the clinical pharmacology, properties, function and uses of beta-blocking drugs. The fifth section of the article which deals with the clinical use of beta-blocking drugs, describes the value of these drugs in the treatment of hypertension as giving rise to controversy (at page 785) and indicates that further work will need to be done in order to define the position of beta-blocking drugs in such treatment (at page 787). The article does, however, offer a thorough review of the studies concerned with the blood pressure lowering effect of beta-blocking drugs, and many of the cited studies show successful results. Dr. Thadani characterized this article as describing what he and other physicians were aware of at this time, in 1969, as to beta-blocker drugs. Thadani, Tr. at pp. 31-33.
The Court finds that it was known prior to February of 1969 not only how beta-blockers functioned but that they could be used to lower blood pressure.
3. The Development of Beta-Blockers
In 1948 Dr. R.P. Ahlquist published a paper describing the effect of sympathetic amines (two endogenous catecholamines, adrenaline and noradrenaline, and four synthetic analogues, one of which was isoprenaline) in producing responses in a variety of different animal tissues. The chemical structures of adrenaline, noradrenaline and isoprenaline are as follows:
*339 All three compounds have a benzene ring on which hydroxyl (-OH) groups are substituted at the 3- and 4- positions, and an ethanolamine side-chain at the 1-position. The only difference in structure between these three compounds is the amino group of ethanolamine side-chain. P.T. Order at p. III-6-7.
Upon finding that there were two distinct rankings of relative potency of these sympathetic amines for producing responses depending on the organs tested, Dr. Ahlquist concluded that there were two distinct types of adrenoceptors in the body which could be affected by this class of compound. He referred to these as alpha and beta adrenoceptors. Dr. Ahlquist found that beta-receptors were associated with most of the inhibitory functions such as dilation of the vascular system and inhibition of the bronchial muscles and one excitatory function that of myocardium or heart muscle stimulation. Isoprenaline was found to stimulate these beta-receptors the most, followed by adrenaline and then noradrenaline which stimulated the beta-receptors the least. P.T. Order at p. III-7-8.
In 1958, a report was published by Eli Lilly showing that certain adrenoceptors in animals could be blocked by a chemical compound known as dichloroisoprenaline (DCI). The structure of DCI is as follows:
As in adrenaline, noradrenaline and isoprenaline, DCI has a benzene ring with an ethanolamine side-chain at the 1-position. Unlike the other three compounds, DCI is substituted at the 3- and 4- positions with chlorine (Cl) instead of hydroxyl groups. However, DCI has the same amino group of the ethanolamine side-chain as isoprenaline, a hydrogen and an isopropyl group. P.T. Order at p. III-8.
With the discovery of DCI, the classification scheme of alpha and beta, adopted by Dr. Ahlquist for adrenoceptors, became more widely accepted and was extended to certain drugs which were classified as either alpha or beta according to the type of receptor for which they had the greatest affinity. Thus, DCI was described as a "beta-adrenergic blocking drug" in 1961 and was the first beta-blocker discovered. P.T. Order at p. III-8.
In 1958, Dr. J.W. Black, who had been working on drug treatments for angina pectoris[19] suggested an alternative approach to the treatment of angina pectoris. He suggested reducing the stimulation of the heart so that the heart would need less oxygen. Aware that stress, either emotional or exercise-induced, played a role in bringing about an angina attack and that the release of noradrenaline (from the nerve endings adjacent to the heart muscles) and adrenaline (into the bloodstream from the adrenal gland) acted to stimulate the heart by stimulating the beta-receptors, Dr. Black suggested that by blocking the beta-receptors in the heart muscle the *340 harmful effects of this stimulation could be overcome. P.T. Order at pp. III-9-10.
DCI as a beta-blocker with the ability to block beta-receptors from stimulation by adrenaline and noradrenaline had the potential of being the type of drug that could be used to treat angina pectoris in the alternative way suggested by Dr. Black. However, DCI was found to be a very potent beta-agonist in that it had a strong stimulating effect on the same beta-receptors that it blocked such that it was considered an unsuitable drug for use in the treatment of angina. This led Dr. Black and his colleagues at ICI in 1958 to begin searching for a beta-blocker free from the stimulating effect possessed by DCI. P.T. Order at p. III-10.
In 1960, Drs. Black and Stephenson of ICI discovered, pronethalol, the first clinically useful beta-blocker. The chemical structure of pronethalol is as follows:
A comparison of the structural formulae of pronethalol, DCI, isoprenaline, adrenaline and noradrenaline reveals that each possesses an ethanolamine side chain and that the differences among these compounds include differing amino group substituents of the ethanolamine side chain (hydrogen, methyl and isopropyl), differing ring systems (benzene and double or naphthyl ring structures) and differing substituents on their respective ring structures when comparing DCI and pronethalol with each other and with the sympathetic amines, adrenaline, noradrenaline and isoprenaline. It is these differences that account for the significantly different behavior and clinical utility of these drugs. P.T. Order at p. III-10-11.
Pronethalol was fully developed through pre-clinical testing and clinical trials which showed it to be a successful beta-blocking drug in the treatment of angina pectoris by improving these patients exercise tolerance, though a fairly high dose was needed. These results seemed to support Dr. Black's hypothesis of an alternative treatment approach for angina. P.T. Order at p. III-11.
As discussed previously in reference to Px 26, Dr. Prichard found that pronethalol also had blood pressure lowering capabilities. The use of pronethalol, however, was associated with various side-effects, mostly of central nervous system ("CNS") origin, which seemed unrelated to its beta-blocking effect. Its use was further complicated by its carcinogenic potential in humans such that in 1965 it was withdrawn from human use. P.T. Order at p. III-11-12.
In 1962 propranolol, another beta-blocker drug, was discovered. This compound proved to be not only successful in clinical use, but safe. The structural formula of propranolol is as follows:
*341 Propranolol has a naphthyl ring structure like pronethalol but unlike pronethalol, between the ring and the ethanolamine group (-CH(OH)-CH2-NH-CH(CH3)2), propranolol has an oxymethylene group -(OCH2) to form an "oxypropanolamine" group. This oxypropanolamine group was found to give rise to compounds 10-20 times as potent as the corresponding ethanolamine analogues. Propranolol was fully developed through preclinical testing and clinical trials and, in 1965, ICI commenced selling propranolol and it became important in the treatment of hypertension and angina. P.T. Order at p. III-12.
The history as to the development of beta-blockers further supports the Court's finding that it was known prior to February, 1969 that beta-blocker drugs functioned to block beta-receptors from the stimulating effects of adrenaline and noradrenaline and that these drugs could be used successfully to treat hypertension.
4. The Structural and Pharmacological Properties of Beta-Blockers
Atenolol is a novel compound. P.T. Order at p. III-17. Atenolol is a beta-blocker. P.T. Order at p. III-3. ICI contends that the use of atenolol, acknowledged to be a novel compound and a beta-blocker, in the treatment of hypertension is not obvious in view of the prior art. ICI supports this position primarily by focusing on the structural differences between atenolol and the prior art beta-blockers. ICI claims that the prior art would not have suggested the modifications necessary to make atenolol and that the combination of pharmacological properties possessed by atenolol are unexpected and qualitatively different. Based on the findings discussed in the following sections "a" through "e" of this Opinion, the Court is convinced that ICI's reliance on structural differences is without merit.
a. The Common Molecular Structure of Beta-Blockers
The prior art includes numerous patents and publications which discuss the structural features of beta-blocker compounds. The basic molecular structure of these compounds can be represented as follows:
made up of the following chemical groups or moieties:
"A" represents an aryl (an aromatic ring structure) which, as material to this discussion, may be either a benzene ring (a pheynl group) or a naphthalene ring (a naphthyl group), or a heterocyclic group such an indole ring, as in pindolol;
"B" represents oxymethylene group (-OCH2-) which may, but need not, be present for beta blocking activity;
"C" represents an ethanolamine group (-CH(OH)-CH2-NH-), wherein the amine (NH-) may, but need not, be attached to an isopropyl group (-CH(CH3)2), as shown;
*342 "R" represents one or more substituents which may be attached to the aryl group at one or more positions which are labeled on the benzene ring the 2- and 6- positions are also termed "ortho", the 3- and 5- positions "meta", and the 4- position "para";
"BC" collectively represents an oxypropanolamine group (-OCH2-CH(OH)-CH2-NH-CH(CH-3)2), wherein, as shown, the amine is optionally attached to an isopropyl group, but may alternatively be attached to a t-butyl group;
"AC" collectively (without "B") would represent an arylethanolamine; and
"ABC" collectively represents an aryloxypropanolamine.
P.T. Order at p. III; ¶ 8. This molecular structure is shown on Px 871.
The following are among the specific beta-blocker structures which are prior art with respect to atenolol.[20]
At trial Dr. Loev, an expert in medicinal chemistry for Danbury,[21] was asked to explain the relationship, if any, between the compounds shown on exhibits Px 872 *343 through PX 874 and the general structure shown on PX 871. Dr. Loev testified that the structure on PX 871 shows a generic structure for beta-blocker compounds and that the letters which are used above the different parts of the structure, "R" and "A" and "B" and "C" are a shorthand to represent different parts of the molecule. He further explained that the structures on PX 872, PX 873 and PX 874, all fit within the general structure shown on PX 871. In reference to Claim 2 of the '032 Patent Dr. Loev stated that atenolol fits within the R-ABC generic structure shown on PX 871. Loev, Tr. at pp. 287-96.
At trial Dr. Loev reviewed several prior art publications which discuss the general structure of the class of compounds known as beta-blockers.[22] In summary he stated that the publications discuss what PX 871 illustrates about structure of the betablocker compounds and that many of the publications even use the same R-ABC shorthand to identify the structure. Dr. Loev testified that "[i]n general [these prior art publications] say that for a substance to be a beta-blocker it will have a structure corresponding to R-ABC, in some cases using those [specific] identifiers, otherwise showing the structure identical to what is [in PX 871] and saying that this is the general structure." Loev, Tr. at p. 297.
In addition to examining the prior art publications Dr. Loev examined and discussed several prior art patents in reference to the common structure of betablocker compounds.[23] Based on his review of the prior art patents Dr. Loev estimated that thousands of different beta-blocker compounds having the R-ABC structure are disclosed. He further stated that these compounds differ very little from one another and that they all conform to the R-ABC structure. Dr. Loev proceeded to go through each of the prior art patents he examined, indicating for the Court where each patent disclosed a beta-blocker having the R-ABC structure. Loev, Tr. at pp. 312-344. The Court will not reiterate Dr. Loev's remarks as to each patent since it was made evident to the Court at trial that these prior art patents do refer to a common structure, possessed by the beta-blocker compounds, though not always represented by the R-ABC shorthand.[24]
*344 b. The Necessary Molecular Structure of Beta-Blockers
The common generic structure, often times represented by the shorthand R-ABC, associated with the beta-blocker compounds in the prior art is also necessary in that it enables the compound to act as a beta-blocker. Several prior art publications were introduced at trial which analyzed the structure-activity relationship of beta-blockers and defined the necessary structural elements for this class of compounds.
Dr. Loev testified at trial, in reference to DX 536, a 1967 publication by Ariens entitled "The Structure Activity Relationships of Beta Adrenergic Drugs and Beta Adrenergic Blocking Drugs", that the very close structural relationship between the endogenous catecholamines, adrenaline and noradrenaline, and the compounds identified as beta-blockers, both of which fit the R-ABC structure, explains why the beta-blocker compounds are able to fit the beta-receptor site so well. Dr. Loev next summarized what DX 538, a 1966 publication by Brandstrom, et al. entitled "Synthesis of some B-adrenergic blocking agents", disclosed with respect to the relationship between structure and activity in beta-blockers. He stated that the authors indicated a standard hypothesis in drug-receptor research was that one part of the molecule is responsible for combining with the receptor, the attachment part, while another part is responsible for producing the stimulation effect.
At trial, Dr. Loev focused on the drug-receptor reaction that occurs with a beta-blocker drug. He explained that the beta-blocker compound comes to the receptor site (the beta-receptor) and combines with the site. Specifically, the oxypropanolamine side chain portion of the beta-blocker compound reacts with the beta-receptor site and acts to attach the compound to the site. The other part of the beta-blocker compound, the "RA" portion, sticks out and physically blocks the site thus preventing the endogenous substances from getting into that site to react and cause beta-stimulation.[25] Loev, Tr. at pp. 298-305.
*345 The Court finds that a compound must possess the requisite molecular structure to be capable of acting as a beta-blocker and that the generic structure denoted by the shorthand R-ABC was both the common and necessary molecular structure possessed by the beta-blocker compounds known in the prior art. Specifically, a prerequisite for beta-blocking activity was an ethanolamine "C" group connected to an aromatic ring "A" preferably linked by an oxymethylene (OCH2-) bridge "B". The oxymethylene bridge "B" was not necessary for beta-blocking activity but, when present, was found to give rise to compounds 10 to 20 times as potent. P.T. Order at pp. III-5, 12. The ethanolamine side chain was believed to be responsible for a beta-blocker's affinity to the beta-receptor site while the "R-A" portion physically blocked the endogenous substances from reacting with the receptor site.
c. Variation in the "R-ABC" Structure
The way in which the prior art beta-blocker compounds (see the structures illustrated in section I.B.4.a.) differ is in their respective "R" group substituents or their aromatic ring structures, the "A" group. At trial Dr. Loev presented four exhibits (590A-D) which he had prepared to illustrate the diversity of R group substituents that had been used and reported in beta-blocker compounds prior to 1969. Dr. Loev used prior art publications and patents (referenced on each exhibit for each structure appearing on the exhibit) in preparing these exhibits.
DX 590A focuses on aryl ring variations and shows the variety of different ring systems that have been used which fit the R-ABC beta-blocker structure. DX 590B illustrates R group variations which are all attached to the ring by a methylene group (CH2) or methylene bridge. All of these fit the R-ABC beta-blocker structure. DX 590C illustrates a variety of structures containing the "R" group substituent of an amide functional group, an amide. Each of these compounds shown on DX 590C has either front to back or back to front the (CONH) or (CONH2) groupings. All of these are amides. DX 590D illustrates miscellaneous "R" group variations, little groups, big groups, reactive and nonreactive groups, which do not fit into any particular category and further shows the wide diversity of "R" groups which appear in beta-blocker compounds. Loev, Tr. at pp. 345-49.
These exhibits, prepared by Dr. Loev from the prior art patents and publications, show that wide variations in the "R" group substituent can be tolerated while retaining beta-blocking activity. This level of modification in the "R" group is possible since the "BC" portion of the beta-blocker structure was generally believed to be responsible for the affinity or binding of the beta-blocker compound to the receptor site while the "R" or "RA" portion of the structure resulted in various pharmacological profiles. Loev, Tr. at pp. 297-375.
Dr. Loev testified that it would be a reasonable expectation of a person of ordinary skill in the art that compounds possessing
*346 the R-ABC beta-blocker structure would have not only a reasonable likelihood, but a very high likelihood of possessing beta-blocking activity. Further, it was Dr. Loev's testimony, based on his readings, that the pharmacological implication flowing from this property would be antihypertensive activity. Loev, Tr. at pp. 354-56. The Court agrees and finds that there would be a high expectation that a compound of the R-ABC beta-blocker structure would possess beta-blocking activity and thus blood pressure lowering capabilities.
d. Secondary Pharmacological Properties of Beta-Blockers
In the prior art publications which analyzed the structure-activity relationships of beta-blockers it was generally believed that the ethanolamine side chain, the "C" group, preferably linked by an oxymethylene (OCH2-) bridge "B" to the aromatic ring "A", was responsible for establishing the affinity or binding between the beta-receptor and the beta-blocker compound. The "R" or "R-A" substituent, which in the endogenous catecholamines causes stimulation by reacting with the receptor site and in the beta-blocker compounds physically blocks the site, was believed to be responsible for the presence or absence of certain secondary pharmacological properties. P.T. Order at p. III-17; DX 529, DX 505, DX 535, DX 536, DX 538, DX 539; Loev, Tr. at pp. 298-306.
The ancillary pharmacological properties associated with the beta-blocker compounds, in addition to their beta-adrenergic receptor blocking activity, include cardioselectivity, intrinsic sympathomimetic activity ("ISA") and membrane stabilizing activity ("MSA"). By 1967 it was a generally accepted practice to classify the beta-blockers by the ancillary pharmacological properties which they possessed. P.T. Order at pp. III-13-15.
Cardioselectivity refers to the preference or selectivity certain beta-blockers demonstrate for the beta-receptors predominantly located in the cardiac muscle, called beta1-receptors, as opposed to those beta-receptors, referred to as beta2-receptors, predominantly located in the muscles of the peripheral vascular or bronchial systems.[26] Thus, the beta-blocking effects on the muscles in the peripheral vascular or bronchial system are significantly reduced with a cardioselective beta-blocker.[27] Beta-blockers which are cardioselective are referred to as being beta1-selective. ISA, also known as partial agonist activity or PAA, refers to the fact that some beta-blockers provide some degree of stimulation to the beta-receptor while simultaneously blocking that receptor from stimulation by the endogenous catecholamines. P.T. Order at pp. III-13-15.
Variations in the "R" or "RA" portion of the R-ABC beta-blocker generic structure could be expected to produce a compound possessing beta-blocking activity and some combination of the secondary pharmacological properties associated with the beta-blocker compounds as described above. The only structural difference between the cardioselective prior art beta-blocker, practolol, and the non-selective prior art beta-blockers such as alprenolol and oxprenolol is the nature of the "R" group substituent. In addition, the only structural difference between the prior art beta-blocker propranolol which lacks ISA and the prior art beta-blockers oxprenolol and alprenolol which possess ISA is the nature of the aromatic ring "A" and the "R" group substituent. P.T. Order at p. III-17.
e. Beta-Blockers as a Class of Compounds
It is the Court's finding that the beta-blocker compounds define a class of compounds and that atenolol's inclusion in this class is appropriate. The prior art patents *347 and publications along with the expert testimony given at trial, all discussed in the proceeding sections I.B.4.a. through d., support the Court's characterization of the beta-blocker compounds as a class. All three chemical experts, Dr. Rees, Dr. Hirschmann and Dr. Loev, and the co-inventor on the '032 Patent, Dr. LeCount, appear to recognize that there was an established class of chemical compounds known as aryloxypropanolamines and that this class was known to possess beta-blocking activity in conjunction with other common characteristics. Loev, Tr. at pp. 286-311; LeCount, Tr. at pp. 484-86; Rees, Tr. at pp. 684-85; Hirschmann, Tr. at pp. 872-73.
The prior art teaches the way in which this class of compounds functions and the uses for this class of compounds.[28] In addition, it is apparent to the Court that the prior art teaches that there were certain common and necessary structural elements which the prior art beta-blockers possessed that enabled this class of compounds to perform the function of a beta-receptor blockade.[29] The review of the prior art further reveals that as long as the necessary structure was maintained, wide variations of the non-requisite structural elements of this class of compounds could be tolerated.[30] These variations would not result in a loss of beta-blocking activity but only in a variety of secondary pharmacological properties exhibited by the class of compounds of beta-blockers.[31]
Atenolol is a novel compound and admittedly does possess structural differences from the prior art beta-blockers, but it is still a beta-blocker and a member of this class of compounds. Atenolol retains the generic structure common and necessary to the class' function. Atenolol's structural variation appears only in the non-requisite portions of the molecule which results in its combination of secondary pharmacological properties.[32]
C. Differences Between the Prior Art and the Claimed Invention
Atenolol possesses the common and necessary R-ABC structure of the class of beta-blocker compounds known to possess beta-blocking activity. Atenolol is a novel compound. It differs from the prior art compounds by the structure of its "R" group only or by the structure of its "A" group in addition to its "R" group. Through the testimony of Dr. Loev it was seen that a wide variation in the structure of the "R" group can be tolerated with a retention of beta-blocking activity such that there is an expectation that almost any "R" group would result in a beta-blocker. P.T. order at pp. III-15, ¶ 26 and III-17, ¶ 30; Loev, Tr. at pp. 297-375. This expectation of beta-blocking activity is further enhanced if the modifications in the "R" group substituent are minor such as where an "R" group structure close to that of a prior art "R" group is retained.[33] Such is *348 the case when atenolol is compared to the prior art beta-blocker practolol. At trial Dr. Loev demonstrated by using three dimensional scale models, the very similar size and shape of these two compounds. Loev Tr. at pp. 272-82, 375-85.
Atenolol and practolol are structural isomers in that they each have the same number of carbon, hydrogen, nitrogen and oxygen atoms. They each have the identical aryloxypropanolamine structure, the common and necessary "ABC" structure of the class of beta-blockers. They differ in structure in their respective "R" group substituents at the para position on the aryl ring. The "R" group of each is an acetamide (CH3-CO-NH2-) but in the case of atenolol this group is linked to the aryl ring, the "A" group, through a methyl (CH3) group and in the case of practolol, the acetamide is linked to the aryl group through an amino (NH) group. Dr. Loev explained that if one were seeking a cardioselective beta-blocker the fact that practolol possessed an amide (NH-CO) functional group as its "R" group and it was cardioselective, the expectation would be that retention of such an amide group would result in a cardioselective beta-blocker and, if one were asked to get a beta-blocker, you could "stick almost anything [in the R group position.]" Loev, Tr. pp. 397-98. P.T. Order at p. III-18, ¶ 31; Loev, Tr. at pp. 297-375; Rees, Tr. at p. 636; DX 596; DX 600.
The expectation of beta-blocking activity is also enhanced if modification to the "R" group is in accord with the guidelines developed for "isosteric" and "bioisosteric" replacements.[34] These established replacements are published into tables. Such a table appears on page 75 of DX 545[35] as table 8-I. According to this table a known isosteric replacement is the substitution of CH2 for NH or NH2 for CH3. Such exchanges would result in atenolol from practolol. As Dr. Loev testified, these tables have limits since it is recognized that there is no guarantee that a particular molecular modification will produce a desired result. However, it is reasonable, in the case of a beta-blocker compound, where the prior art discloses such compounds as possessing "R" groups which vary greatly in steric and electronic configurations, that an "R" group selection which results in a compound that is isosteric or isomeric with known beta-blockers having established activity, that the likelihood of beta-blocking activity is greater than if the "R" group is selected at random. Loev, Tr. at pp. 273-77, 374-378.
*349 The Court is aware that the prior art patents do not actually disclose the specific molecular modifications required to synthesize atenolol from any prior art beta-blocker, including practolol (which is considered to be the closest prior art by ICI). (PFC at p. 55). The Court can't agree, however, with ICI's position that the general prior art gave no guidance to persons of ordinary skill in the art seeking to make a new beta-blocker. Loev, Tr. at 411; PFC at p. 59. The Court finds that the physical and chemical relationships between atenolol and the prior art beta-blockers (i.e. the common and necessary R-ABC structure and an "R" group substituent structurally related to known beta-blockers with activity[36]), would enhance the expectation, in 1969, that atenolol would be an active beta-blocker and, thus, a member of the recognized class of beta-blocker compounds disclosed in the prior art as having antihypertensive utility. Loev Tr. at pp. 272-82, 375-85.
D. The Development of the Patent in Suit
1. ICI's Research Interests and Goals
In 1968, ICI's cardiovascular team's research included research into beta-blockers. When Dr. LeCount, a co-inventor of the '032 patent, joined the Pharmaceutical Division of ICI this research involved exploration of the chemistry of compounds related to the prior art beta-blocker, practolol. Practolol is a cardioselective beta-blocker which has ISA. The interest at ICI, and one of Dr. LeCount's goals, was to find a beta-blocker that was cardioselective, like practolol, but which lacked the ISA of practolol. At this time, however, it was not clear whether the presence or absence of ISA was desirable. Thus one of the objectives in making a cardioselective beta-blocker without ISA was to permit clinical evaluation of the effectiveness of this combination of properties. LeCount, Tr. at pp. 476-484, 489, 497, 499-504. No beta-blocker existed in the prior art which had cardioselectivity but lacked ISA to serve as a reference. P.T. Order at p. III-15.
In reference to the upper left hand drawing on PX 892, Dr. LeCount explained that the changes to the practolol compound being explored at ICI included those positions marked as follows: 1) "R", which indicates the terminal amino group on the oxypropanolamine side chain; 2) "R1", which indicates the terminal portion of the practolol side chain; and 3) "R2", which indicates other substituents at various positions on the aryl ring. He also explained that the (-NHCOR1) group (of the practolol compound) was being kept constant in an effort to retain its overall properties while attempting to enhance its level of activity. Research was also being done to explore changes in the prior art beta-blocker propranolol, in which the double ring structure was held constant while variations were made to other parts of the molecule. LeCount, Tr. at pp. 497, 499-503.
Throughout his testimony Dr. LeCount referred to the "practolol series" when discussing the research involved in making the above modifications to the practolol compound, and to the "propranolol series" in reference to the modifications being made to the propranolol compound. He concluded from the prior work in modifying practolol and propranolol that the desired "series" of improved beta-blocker would not be found in either the propranolol series or the practolol series, but that it would be necessary to devise a new series having the most desirable properties of each. Affidavit *350 of David James LeCount (DX 503) at p. 34, ¶ 42.
The Court does not agree with Dr. LeCount's characterization of the prior art compounds as belonging to different series. The Court has found that they are all part of the class of compounds of beta-blockers for which the prior art defines a generic structure and the permissible modifications that can be made to this structure without a loss of beta-blocking activity. In fact, Dr. LeCount was aware of the teachings of the prior art relating to beta-blocker structures and recognized that because his objective was to make a beta-blocker the R-ABC structure would have to be retained since it was a prerequisite to obtaining a compound which possessed beta-blocking activity. Also based on his knowledge of the prior art, Dr. LeCount believed that the R group was the only part of the molecule that could potentially make a difference with respect to cardioselectivity since he knew that the only structural difference between the cardioselective prior art beta-blocker, practolol, and the non-selective prior art beta-blockers, alprenolol and oxprenolol, was the nature and location of the "R" group substituent on the "A" ring. These are the very portions of the structures of practolol and propranolol that the ICI work, discussed above, centered on. LeCount, Tr. at pp. 482, 486-90.
In the Court's view, Dr. LeCount's description of the ICI research team's goal as a departure from the "practolol series" with the objective of finding a new series, is misleading. This characterization creates the impression that in embarking on the synthesis of a new beta-blocker with the desired combination of properties, that the prior art with respect to the chemical structure of beta-blockers created no expectation that a new compound, with the R-ABC structure and an "R" group close to that of prior art "R" groups, would be a beta-blocker. The Court is convinced that this was not the case.[37] In fact, to the contrary, ICI's focus in synthesizing a new beta-blocker was on modifications of the "R" group of practolol. This is hardly a major departure from what is disclosed in the prior art to warrant classifying the resulting compound as a member of a "new series". Dr. LeCount described the rationale which led to the synthesis of atenolol as follows:
"Clearly, it is a simple matter to synthesize a molecule that looks like a beta-adrenoceptor blocking agent, and not too difficult to synthesize one that is active.... The only difference between the selective practolol and its nonselective relatives was the presence of the acetylamino group in practolol; therefore it was toward this group that our attention turned."
LeCount, Tr. at pp. 482, 488-89; DX 532 at p. 126.
2. The Synthesis of Atenolol By ICI A Chance Discovery
It is contended by ICI that the compound that became atenolol was not the target of the synthesis intended by Dr. LeCount and Dr. Hull.[38] It is asserted that the biological activity of atenolol was purely a chance discovery.[39] LeCount, Tr. at pp. 515-517; *351 Rees, Tr. at pp. 613-14, PX 82. Further, it is asserted that making the structure of atenolol would have been inconsistent with Dr. LeCount's goal, because if he was trying to disclose acidity on the carbon adjacent to the aromatic ring, it would not have been sensible to have amide hydrogens present nearby, as is the case in the structure of atenolol. This is because amide hydrogens are inherently more acidic, since they are hydrogens on nitrogen as opposed to hydrogens on carbon. Rees, Tr. at p. 614.
The Court does not see the significance to be given to ICI's assertion that atenolol was a chance discovery. Atenolol fits the R-ABC structure of the class of beta-blocker compounds. The net result of the synthesis of atenolol was a compound in which there is a modification of the "R" portion of the generic R-ABC structure of prior art beta-blockers. In fact, if the "R" group of practolol is turned around, the resulting compound is atenolol.[40] As discussed previously, the prior art publications and patents and the opinion of Dr. Loev based on these prior art items, shows that there was a recognized class of beta-blocker compounds having a generic R-ABC structure in which a diverse array of "R" groups could be put into the R-ABC structure and beta-blocking activity still retained. It was also disclosed in the prior art (and discussed previously), that compounds of this class were useful antihypertensive agents. Therefore, a determination as to whether atenolol resulted from an unintended synthesis route or was simply the rearrangement of the "R" group of an existing prior art beta-blocker is not a necessary finding this Court must make in deciding this case.
E. The Level of Skill in the Art
Atenolol possesses an aryloxypropanolamine group, the "ABC" structural component of the generic beta-blocker structural formula. The "AC" portion is required for beta-blocking activity and the "B" portion, the oxymethylene bridge, is desirable as it is attributable to additional potency. Atenolol differs from the prior art beta-blockers in the structure of its "R" group and/or in the modification of the "A" group. Structural differences in the nature of the aromatic ring "A" and the "R" group substituent distinguish a cardioselective prior art beta-blocker from a non-selective one, specifically cardioselective practolol and nonselective *352 alprenolol and oxprenolol and a prior art beta-blocker lacking ISA from a beta-blocker possessing ISA, specifically ISA lacking propranolol and ISA possessing oxprenolol and alprenolol. P.T. Order at p. III-17, ¶ 28, ¶ 29. Therefore, it was apparent that variations in the nature of the "A" portion and the "R" portion of the beta-blocker basic molecular structure, R-ABC, could result in beta-blockers with varying pharmacological profiles. P.T. Order at p. III-5, ¶ 8; p. III-17, ¶ 29. Therefore, the level of ordinary skill in the art in this case involves the research and development of beta-blockers for use in the treatment of hypertension as of February, 1969, since the claimed invention is a method for the use of a novel beta-blocker compound, atenolol, for treating hypertension. P.T. Order at p. IV-4, ¶ 14; p. III-3 at ¶ 7; p. III-17 ¶ 30.
1. A Medicinal Chemist
ICI was interested in developing a beta-blocker with varying pharmacological properties from the prior art beta-blockers when atenolol was discovered. ICI sought to develop a beta-blocker which was cardioselective like practolol but, unlike practolol, lacked ISA. LeCount, Tr. at pp. 478-84. Therefore, a determination of how to modify the "R" and "A" portions of the R-ABC structure of existing beta-blockers was required in order to produce a beta-blocker compound with the desired properties. The Court finds that the art involved in such a determination and thus of the invention in the '032 patent is that of medicinal chemistry and that the person of ordinary skill in the art would be a medicinal chemist. Loev, Tr. at pp. 350-52; Hirschmann, Tr. at p. 839.
The person of ordinary skill in the art would be an individual with a PhD degree in organic chemistry, with an emphasis in medicinal chemistry (i.e. the application of organic chemistry to the development of pharmaceutical products), who would have some experience with the development of beta-blockers, and would be thoroughly familiar with the prior art which discusses the structure-activity relationships of the existing beta-blockers and have knowledge of the methodologies of drug development (i.e. lead following, isosterism, and bioisosterism, discussed in the following section of this Opinion). Loev, Tr. at pp. 282-85; Hirschmann Tr. at pp. 726-28.
ICI has asserted that the level of ordinary skill in the art involved in the research and development of beta-blockers for use in the treatment of hypertension as of February, 1969, would be that possessed by a hypothetical person or team having a PhD in organic chemistry and advanced degrees in pharmacology and medicine. P.T. Order at IV-4, ¶ 14. The Court does not agree that either a team or an individual possessing the above advanced degrees, in addition to a PhD degree in organic chemistry, is necessary. The educational degree of necessity for developing a new beta-blocker compound for hypertension, would be in organic chemistry as applied to pharmaceutical product development (medicinal chemistry) since the alteration of a requisite and common chemical structure is involved in achieving this invention. Guidance from other individuals with degrees in pharmacology and medicine could be accessible and useful to this medicinal chemist for obtaining information from a clinician's point of view as to optimal properties. The medicinal chemist himself, however, would not need to possess this additional training in order to pursue the necessary development work.[41]
Dr. LeCount, a co-inventor of the '032 patent, is himself an individual with a PhD degree in organic chemistry who fits the other criteria the Court has assigned to the level of ordinary skill in the art in this case. *353 Dr. LeCount's reliance on input from biologists and physicians is the type of guidance foreseen by the Court and does not alter the characterization of the level of ordinary skill in the art as previously described. Hirschmann, Tr. at pp. 726-729; LeCount, Tr. at pp. 451, 453-54, 466, 469, 493-500.
2. Methodology Employed in Drug Research
Prior to 1969 two strategies were known with respect to drug development. These two strategies were referred to as "lead-seeking" and "lead-following". The lead-seeking strategy is employed when a researcher's area of interest is new and no useful compounds for treatment have previously been found. Thus, there exists no class of compounds or specific compounds which are effective and the aim under this strategy is to find a prototype compound, a first compound, which is effective. Once a compound is found it must be screened to determine if it possesses the desired activity. If it is active, which many times the compounds are not, it is then subjected to in-depth evaluation to determine if it has problems with side effects, toxicity, potency etc.[42] Loev, Tr. at pp. 261-62; DX 597.
The other strategy called lead-following, is a later step after the lead-seeking stage. This strategy involves taking a prototype or lead compound which has been found and following it and modifying it in an attempt to get rid of certain deficiencies it may have and improve it. In doing this, one makes other compounds related to this lead compound, such as analogs and homologs. Any of these related compounds will have to be screened initially for activity. Even though a lead compound or prototype which possesses activity is being followed, it does not necessarily mean that the related compound will also be an active compound. However, there is a reasonable likelihood that active compounds will be produced since a lead compound which possesses activity is being followed. Once this strategy produces an active molecule, further modifications will most likely be necessary because this compound will still have certain deficiencies or not meet the researcher's criteria for one reason or another. Continual modifications, with subsequent screenings for activity, will occur until a compound is produced which is determined to be suitable for marketing or the search following this lead compound is abandoned. Loev, Tr. at pp. 262-64; DX 597.
Prior to 1969, the lead-following strategy was the more common strategy in the development of drugs. Loev, Tr. at p. 264. A 1960 textbook entitled "Chemobiodynamics and Drug Design" (DX 550) by F.W. Schueler, PhD, states at page 405 that "[t]he most widely used mode of approach today in the design of new drugs devolves upon the use of some drug of known structure as a model or prototype from which congeners,[43] or homologues[44] and analogues[45] are designed." In explaining why this approach is so widely used Dr. Schueler states:
This mode of approach while offering a wide scope to creativity also has certain outstanding practical advantages. Thus the fact that one is designing from a known biologically active prototype is reassuring *354 to the designer (and his financial supporters) in that drug activity of the desired type is known to be possessed by at least one structure. Also, since it has seldom if ever been found (at least upon prolonged investigation) that any biologic response is triggered solely by one molecular species, the designer can with a high degree of expectation utilize the method of variation, [lead-following][46] to formulate additional products that may be as valuable as the prototype, or even superior pharmacologically to it in some regards.
F.W. Schueler, PhD, Chemobiodynamics and Drug Design, (1960) at p. 405.
There were general rules prior to and as of February, 1969, that were used in the lead-following strategy. Loev, Tr. at p. 270. One approach is that of "isosteric replacement". "This requires substitution of one atom or group of atoms in the parent compound for another, with a similar electronic and steric configuration." (DX 545 at p. 72)[47] Dr. Loev described this approach as involving the replacement of one group that you believe to be important by another group of the same physical size. Loev, Tr. at p. 275.
Another approach is the "bioisosteric approach". Dr. Loev described this approach as involving known replacements of certain atoms or chemical portions of a molecule with other atoms such that there is high likelihood of retaining similar biological activity. Loev, Tr. at pp. 275-76. At trial, Dr. Loev referred to Table 8-I of biosteric groups in DX 545, on page 75, which indicates in each column the groups that can be used to replace another group in the same column with a reasonable likelihood of getting activity. Loev, Tr. at p. 276. There were other prior art references produced at trial which discuss the approaches of isosterism and bioisosterism and give tables similar to the one in DX 545. Loev, Tr. at pp. 277-282; DX 546; DX 549; DX 551.
The Court finds that the "lead-following" strategy along with its concepts of isosterism and bioisosterism was the basic technique employed in the pharmaceutical industry when searching for new compounds or products with improved properties prior to the discovery of atenolol. Dr. Loev and Professors Rees and Hirschmann agree that this stategy would have been used by a person of ordinary skill in the art who was looking for a new cardioselective beta-blocker. Each of these chemical experts also acknowledges that the compound practolol, a prior art cardioselective beta-blocker, would have been used as a lead compound in employing the lead-following strategy in search of a new cardioselective beta-blocker since it possessed the desirable property of cardioselectivity. Loev, Tr. at p. 384; Rees, Tr. at pp. 663-68; Hirschmann, Tr. at pp. 720, 819.
F. The Teachings of the '032 Patent
1. Claim of Use for Hypertension
ICI filed the initial patent application for the patent in suit, in February, 1969, which claimed the use of atenolol to treat hypertension in warm-blooded animals.[48] Dr. LeCount agreed that as of February 1969, when this initial patent application was filed, resulting in the patent in suit,[49] that neither he nor anyone else at ICI had conducted a single test in man or animal which demonstrated that atenolol was able to lower blood pressure. The only tests which had been conducted with atenolol as of *355 February, 1969, were experiments designed to illustrate its beta-blocking activity and the ancillary properties of ISA, cardioselectivity and MSA. None of these tests measured the ability of atenolol to lower blood pressure. LeCount, Tr. at pp. 449-450; PX 1.
The '032 patent states that atenolol along with the other compounds claimed in the patent can be used in man for the treatment of hypertension. It further states the dose ranges for such treatment. The '032 patent (PX 3) at column 5, line 54, describes the disease states and dose ranges with respect to atenolol and the compounds of Claim 1. Since ICI, admittedly had done no testing on atenolol for its use in lowering blood pressure, it was Dr. LeCount's belief that the above doses were based on what was known about the clinical use of the prior art beta-blockers, propranolol and pronethalol, which were known to be useful in the treatment of hypertension. Thus, the hypertensive use claim for atenolol would appear to be based on a reasonable expectation that as a beta-blocker it would have the same capability to lower blood pressure as the prior art beta-blockers. At trial, Dr. LeCount was quite reluctant to respond to questions concerning such an expectation. He claimed that the dosage and use aspects of the patent were not his part of the invention nor his responsibility and thus, he did not know from where this information was obtained. LeCount, Tr. at pp. 450-57.
As a co-inventor of this patent and a chemist thoroughly familiar with the invention and the prior art, the Court believes Dr. LeCount's position is unrealistic. The Court is of the opinion that Dr. LeCount would be able to agree that an expectation as to the use of atenolol for hypertension existed. The abstract of the now expired U.S. Patent 3,633,607, which claims the chemical compound known as atenolol states that "[t]his invention relates to new alkanolamine derivatives which possess beta adrenergic blocking activity and which are therefore, useful in the treatment or prophylaxis of the heart diseases, for example angina pectoris and cardiac arrhythmias and in the treatment of hypertension and phaeochromocytoma in man." PX 1. (emphasis added). When confronted with this statement Dr. LeCount did ultimately agree that because the compounds in the patent, which specifically include atenolol, were beta-blockers his feeling was that they would be useful in the treatment of hypertension. LeCount, Tr. at pp. 458-59.
2. Dose Ranges
The patent in suit (PX 3, at column 5, line 54) contains a statement with respect to the recommended dose of atenolol in the treatment of hypertension which states:
"When the alkanolamine derivatives of the invention are to be used in man, for example for the treatment of heart diseases such as angina pectoris and cardiac arrythmias, or for the treatment of hypertension or phaeochromocytoma, it is expected that they would be given at a total oral dose of between 25 mg and 1,200 mg daily, preferably between 200 mg and 600 mg daily, at doses spaced at 6-8 hourly intervals, or at an intravenous dose of between 1 mg and 40 mg, preferably between 5 mg and 25 mg. Preferred oral dosage forms are tablets or capsules containing between 25 and 200 mg and preferably 100 mg of active ingredient."
The FDA approved dosage for atenolol in the treatment of hypertension in DX 530, which is the FDA approved label for TENORMIN (atenolol), states that "[t]he initial dose of TENORMIN is 50 mg given as one tablet a day either alone or added to diuretic therapy. The full effect of this dose will usually be seen within one to two weeks. If an optimal response is not achieved, the dosage should be increased to TENORMIN 100 mg given as one tablet a day. Increasing the dosage beyond 100 mg a day is unlikely to produce any further benefit."
The doses recommended in the '032 patent are much higher than those doses which have been approved by the FDA. It was Danbury's expert's opinion that there is nothing in the entire patent, PX 3, that suggests or relates to selecting the doses for cardioselectivity in the manner approved by the FDA. The dosing information *356 contained in the patent (preferred dose 200 to 600 mg./day) is much higher than the approved dose. There is also nothing in the '032 patent that suggests using atenolol once a day in the treatment of hypertension. Actually what the patent discloses conflicts with the idea of using atenolol once a day in the treatment of hypertension since the patent says it should be given every 6 to 8 hours which would be three to four times a day. Thadani, Tr. at pp. 141-45. It is Danbury's position that the '032 patent does not contain an adequate disclosure to enable persons skilled in the art to use the invention and select a dose for atenolol in the treatment of hypertension that is cardioselective.
After review of the documentary evidence produced by Danbury in support of this position and evidence offered by ICI in support of the contrary position, the Court must agree with Danbury's position. As discussed below the documentary evidence relied upon by ICI's expert witness, Dr. Cruickshank,[50] to support his opinions, is in many cases irrelevant and some cases contrary to his opinion testimony.
ICI's position is that atenolol has been demonstrated to be significantly cardioselective and effective in the treatment of hypertension throughout the entire dose range of 25 mg to 1,200 mg daily as claimed in the '032 patent and that this range includes the FDA approved dose range of 50 to 100 mg/day which is now generally used and acknowledged by Danbury to be cardioselective. Dr. Cruickshank testified at trial that in his opinion atenolol would be effective in the treatment of hypertension at a total daily dose of 25 milligrams in some patients. Cruickshank, Tr. at p. 1071. The Court believes the operative word is "some" in reference to patients. The study, PX 234, relied on by Dr. Cruickshank as confirmation of this opinion is, in the Court's view, of very little relevancy and support to Dr. Cruickshank's statement.[51]
Dr. Cruickshank also testified at trial that, in his opinion, atenolol is effective in its treatment of hypertension at doses up to 1200 milligrams per day. Cruickshank, Tr. at p. 1072. To confirm his opinion Dr. Cruickshank relied on a report by his colleague, Dr. Zacharias, PX 140, entitled "Atenolol in Hypertension: A Study of Long-Term Therapy", published in 1977. This study appears to the Court to offer little support to Dr. Cruickshank's opinion for two reasons. First, the report states that with only a few patients were doses larger than 1000 mg/day used. Second, the study ultimately found that increasing the dose of atenolol beyond 100-200 mg/day does not usually add to the efficacy of the treatment and due to the antihypertensive dose curve of atenolol, the result is a smaller range of effective dosage as compared with propranolol. As a matter of fact, the ultimate finding of this report would tend to support the idea that the high dose range disclosed in the '032 patent reflects the thinking at that time, the dose-response of atenolol being similar to propranolol. *357 As such, increasing the dose of atenolol would lead to the conclusion that its antihypertensive effect would increase since this was known to be true with propranolol.
Several studies presented at trial confirm this idea and discuss the finding made as to atenolol which ultimately resulted in its generally used dose range of 50-100 mg/day given in a single dose. A study, entitled "Atenolol in Hypertension: a double-blind comparison of the response to three different doses", PX 141, authored by Zacharias, Hayes and Cruickshank and published in 1977 states that "[w]hen we first began to investigate the antihypertensive properties of atenolol, we assumed that there would be a dose-response relationship similar to that seen with propranolol. Accordingly, we started at a low dose and built it up fairly quickly ... However, there were indications both from our own studies and from others ... that the anti-hypertensive dose-response curve of atenolol reaches a plateau much sooner than we had expected...." (PX 141 at p. 114). The investigators were able to reduce the dose of atenolol in the majority of their high dose patients without a compromise in the control of their blood pressure. Thus, they set out to test the hypothesis that small doses of atenolol are as effective as large ones. The conclusion reached was that for the majority of patients "doses of atenolol in excess of 100 mg/day confer no additional benefit in terms of antihypertensive action." (PX 141 at p. 115).[52]
A study published in 1977 by Dr. Harry of ICI not only established the possibility of a lower dose and once-a-day dosing but revealed the discovery which made such a dosing regimen possible and effective. Dr. Harry found that even though the half life of beta-blockers is too brief to give good blood levels after 24 hours, the duration of their hypotensive action is not equally brief. It was discovered that the plasma half-life[53] of a beta-blocker was exceeded by the pharmacological half-life[54] of a beta-blocker. (PX 153; PX 208). In other words, the blood pressure lowering effect of a beta-blocker persisted for a long time after the concentration of a beta-blocker in the bloodstream had disappeared.
It is evident to the Court that the disclosure of the '032 patent does not teach a person of ordinary skill in the art how to select a cardioselective dose for the treatment of hypertension. The evidence presented in this case shows that it was not until 1976, after atenolol had been in clinical use for four years and after much experimentation had been done with it, that it was learned that atenolol could be used to treat hypertension with a once-a-day dose as low as 100 mg.[55]
At trial, however, Dr. Cruickshank testified that the patent in suit would teach him how to select a dose of atenolol that would be beta-1 selective. He stated that the patent teaches him that atenolol has beta-1 selective properties, that he should start with a dosage which is low and slowly build up the dosage in order to obtain the optimal *358 anti-hypertensive therapy and stop if an adverse reaction, such as bronchial asthma, occurred. He also stated that the patent taught him that as a beta-1 selective agent there would be no interference with the beta2 receptors except at higher doses selectivity would tend to be lost and the beta-2 receptors would be occupied to a degree. Cruickshank, Tr. at pp. 1081-84.
Dr. Cruickshank testified that the disclosure is for one skilled in the art to find the selective dose for atenolol through the use of dose titration which, in his opinion, was a known practice prior to February, 1969. Cruickshank, Tr. at pp. 1073-1078. Further, through the use of an isoprenaline test[56] and a FEV1 test[57], both of which Dr. Cruickshank testified were known tests prior to 1969, a selective dose for atenolol could be determined since these tests could determine the degree of beta2-blockade and, thus, the degree of beta1-selectivity. Cruickshank, Tr. at pp. 1083-1086. The Court finds, however, that reliance on the use of a dose titration procedure in conjunction with the isoprenaline test and the FEV1 test, does not attribute to the '032 patent's specification the teaching of how to select a cardioselective dose. The contrary evidence presented at trial shows that up until 1976 the misconception existed that increasing the dose of atenolol would increase its antihypertensive effect. Therefore, one skilled in the art, as of February 21, 1969, would not have been taught by the '032 patent specification how to select a dose for atenolol in the treatment of hypertension that is cardioselective.[58]
Finally, ICI asserts that both hydrophilicity[59] and the absence of ISA are inherent properties of atenolol which are not dose dependent, and that the '032 patent adequately teaches a person skilled in the art how to obtain the benefits that result from such properties in the treatment of hypertension. Thadani, Tr. at pp. 195-97; Cruickshank, Tr. at p. 1081. However, there is no indication in the patent as to the hydrophilicity of atenolol. Thadani, Tr. at p. 156.
It is stated in the '032 patent that atenolol lacks ISA. In the book chapter coauthored by Dr. Thadani, entitled "Beta-Blocking Agents", which appears in the book "Drugs for the Heart" by Professor Lionel H. Opie, published in 1984, (DX 524), there is a preference expressed that the ideal beta-blocker would contain ISA. Dr. Thadani explained that there are studies in the literature that indicate that ISA can be beneficial for those patients with compromised heart function or very low heart rates especially elderly patients. In these patients it is not desirable to reduce the heart rate and, as such, it does not do any harm to have some stimulation from the *359 beta-blocker drug.[60] Thadani, Tr. at p. 70.
G. Superior or Unexpected Results of the '032 Patent
It is undisputed that no beta-blocker was known prior to atenolol that was both cardioselective and lacked ISA. P.T. Order at III-15; Thadani, Tr. at p. 41; Cruickshank, Tr. at p. 1040. Atenolol is also a hydrophilic drug. Thadani, Tr. at p. 155. ICI's position is that certain unexpected benefits in the treatment of hypertension result from this unique combination of properties. ICI asserts that because of atenolol's combination of beta1-selectivity and lack of ISA, atenolol is, overall, capable of providing a greater decrease in blood pressure than prior art beta-blockers. ICI further asserts that the small additional decrease in blood pressure that is achieved with atenolol, may significantly reduce the risk of future stroke and heart attack. ICI also claims that atenolol's unique combination of cardioselectivity and lack of ISA, together with its hydrophilic nature results in fewer and less serious side effects overall than prior art beta-blockers. A review of the references and the testimony put forth by ICI in support of each of these assertions, however, does not convince the Court of their veracity.
1. Increased Reduction in Blood Pressure
In opposition to the claim by ICI that atenolol provides greater blood pressure lowering capability than prior art beta-blockers, Danbury's expert Dr. Thadani expressed the opinion that in view of his own research and the work of others, all beta-blockers reduce blood pressure to the same degree irrespective of the presence or absence of secondary pharmacological properties such as cardioselectivity and/or ISA. The Court will have to agree with Danbury that the references cited in support of Dr. Thadani's opinion do indicate that the ancillary pharmacological properties, specifically cardioselectivity and/or ISA, of the beta-adrenoreceptor drugs are of little relevance to the anti-hypertensive activity of these drugs[61] and that such activity of the various drugs is approximately equal.[62] The Court finds the opinion of Dr. Thadani to be sufficiently supported by credible evidence.
The evidence presented by ICI to show that atenolol offers a significant advantage in the treatment of hypertension by offering a greater blood pressure lowering capability, *360 was not convincing in the Court's view. Specifically, ICI claims that atenolol lowers diastolic blood pressure to a greater extent than the prior art beta-blockers by an overall difference of about 4 mmHg. ICI's evidence in support of this assertion consists of testimony by its expert witness, Dr. Cruickshank, in reference to the beta-blocker textbook (PX 208) that he co-authored and an overview he compiled (PX 818) and testimony by its expert witness, Dr. Sleight, also in reference to Dr. Cruickshank's overview.
There are problems with this evidence. Some of the testimony given by Dr. Cruickshank is inconsistent with the views expressed in his textbook.[63] Dr. Cruickshank testified that he and his co-author arrived at the conclusion that the difference between atenolol and nonselective drugs in lowering blood pressure was in the area of about 4 mmHg. The textbook (PX 208), however, indicates that some researchers and studies show that beta-blockade is the same for all beta-blockers, while other researchers and studies suggest that the fall in blood pressure is greater and more impressive with a selective beta-blocker, such as atenolol. Thus, the actual conclusion reached was that "[t]he studies showing a greater fall in diastolic blood pressure with beta1-selective drugs show a difference of about 4 mmHg...." Cruickshank, Tr. at pp. 1209-10; PX 208 at p. 74. There is no indication that this conclusion was arrived at as to propranolol.
There were other instances where Dr. Cruickshank's testimony at trial was inconsistent with the views expressed in his 1987 textbook. Dr. Cruickshank agreed that his position as to the differences between acebutolol and atenolol had changed since his 1987 textbook. Cruickshank, Tr. at pp. 1210-1212. Dr. Cruickshank explained that these changes in position were due to a new database. The Court is not convinced of this reasoning since at trial Dr. Cruickshank admitted that a majority of the studies available to him today which compare atenolol versus propranolol, for example, were available to him in 1987. Also, the additional studies included in the overview which discuss atenolol and acebutolol would not justify Dr. Cruickshank's change in position as to acebutolol. A careful review of the studies comparing acebutolol and atenolol not only undermines Dr. Cruickshank's reasoning for his change in position regarding acebutolol but also demonstrates to the Court the unreliable and perhaps biased manner in which the studies were interpreted and compiled for purposes of the overview. The Court's apprehensions as to the reliability and veracity of the overview is hereafter set forth.
PX 413 is a chart which shows how eight studies comparing atenolol with acebutolol were interpreted by Dr. Cruickshank. A review of these eight studies through the testimony of Dr. Cruickshank showed the following: 1) no difference between acebutolol and atenolol was found; 2) acebutolol was superior; 3) the study itself was invalid; 4) the study was not concerned with blood pressure lowering efficacy; 5) the comments as to the significance of the data by the investigators were ignored; and 6) the manner in which the data was interpreted by Dr. Cruickshank is questionable.[64] Cruickshank, Tr. at pp. 1208-09, *361 1227-54; PX 244, 137, 281, 282, 283, 284, 285, 286, 413.
Dr. Cruickshank created an overview (PX 818) which depicts data points from all the studies and exhibits PX 819-824 which serve as overviews of each individual beta-blocker compared, to support the position that atenolol lowers supine diastolic blood pressure to a greater extent than the prior art beta-blockers by an overall difference of about 4 mmHg. Dr. Cruickshank testified that in his opinion the overview established such a finding. Eighty studies, which compared atenolol with other beta-blockers, were found through ICI records, the Medline Source and the studies quoted in the beta-blocker book (PX 208). The studies were compiled into an overview representing a comparison between atenolol and other beta-blockers. Cruickshank, Tr. at pp. 1006-1009.
The Court finds that there exists problems as to the validity and reliability of this overview. This overview included all studies found which made a comparison between atenolol and other beta-blockers. This is a flaw in the Court's view and impacts on the validity of the overview because studies which are different in design, dose regimens and patient bases are being compared. Dr. Cruickshank acknowledged that by including all of the studies, high-quality studies and studies of lesser quality would be involved. Also this meant that studies which measured different blood pressures were included and left undifferentiated.[65] Cruickshank, Tr. at pp. 1007-1009.
ICI attempted, through Dr. Cruickshank and Professor Sleight (its expert witnesses in the field of cardiovascular medicine), to highlight the significance of the apparent difference seen for atenolol in the graphical depiction of PX 818 and to dispel the idea that random error was the cause for such differences. Also it was through these witnesses that ICI attempted to defend the scientific integrity of the overview and establish its lack of bias. Both Dr. Cruickshank and Professor Sleight testified in terms of what is statistically appropriate to do or not do and what is statistically significant or insignificant. The Court finds that neither of these witnesses is qualified to discuss the statistical significance of the results obtained or the validity of methods used in compiling this overview. Cruickshank, Tr. at pp. 1023-27, 1187-91, 1222, 1326-28; Sleight, Tr. at pp. 1347-49, 1355-56, 1394-1400, 1420. This type of testimony was properly within the domain of a statistical expert.[66]
*362 Danbury criticizes the overview for its disregard of the differences in design of the underlying studies and the patient populations studied, which ranged from non-hypertensives to severe hypertensives, and any conclusions reached by the authors of the study in regard to the true significance of the results obtained.[67] The Court believes that these are legitimate criticisms and further undermine the credibility of ICI's claim regarding the 4 mmHg diastolic blood pressure superiority of atenolol.
ICI sought to prove at trial that atenolol, due to its combination of cardioselectivty and lack of ISA, gives it a blood pressure lowering capability which is about 4 mmHg more than the prior art beta-blockers which are non-selective with or without ISA or selective with ISA and that this capability provides significant benefits in the reduction of strokes, coronary heart disease and death. The evidence, however, does not support this 4 mmHg claim of superiority in the treatment of hypertension with atenolol and, thus, the evidence presented at trial as to any alleged benefits derivative of this claim need not be discussed.[68]
2. Increased Reduction in Heart Rate
In further reliance on the combination of properties possessed by atenolol ICI asserts that these properties have clinical significance in atenolol's ability to lower blood pressure through its effect on cardiac output and vascular resistance. Cruickshank Tr. at pp. 960, 998. Dr. Cruickshank explained that, in his opinion, the current belief is that beta-blockers lower blood pressure predominantly by a combination of reductions in cardiac output and vascular resistance.[69] Blood pressure is a product of cardiac output and vascular resistance such that a decrease in either one alone or in combination will result in a decrease in blood pressure. Cruickshank Tr. at pp. 897, 941-943.[70]
According to Dr. Cruickshank different combinations of beta1-selectivity and ISA result in different effects on cardiac output and vascular resistance. He based this opinion on the following explanations: 1) If *363 the beta1-receptors, which predominate in the heart and increase heart rate when stimulated, are blocked by a beta-blocker drug, heart rate will decrease, thereby decreasing cardiac output and blood pressure; 2) If the beta-blocker drug also blocks the beta2-receptors, found predominantly in the bronchi and vessels of the peripheral vascular system, the dilation of these vessels via natural beta2-stimulation is blocked, resulting in constriction of the vessels and an increase in peripheral resistance; 3) If the beta1-receptors are blocked by a beta-blocker having ISA, the heart rate will not be reduced as much as a drug without ISA, because of the partial stimulation from the ISA, resulting in a lesser reduction in cardiac output and blood pressure; and 4) If the beta2-receptors are also blocked, there will also be some stimulation from the ISA which will cause some dilation of the vessels as compared to a drug without ISA. P.t. Order at p. III-15, ¶ 25; Cruickshank Tr. at pp. 899-903, 934-942, 960, 998, 1032; PX 407; PX 911; PX 912; PX 913.
At trial ICI presented Exhibit PX 407 which graphically summarizes the resultant effects from the various combinations of selectivity and ISA as discussed by Dr. Cruickshank. This exhibit represented the theoretical predictions of various combinations of these two properties on the lowering of blood pressure. Exhibit PX 813, a chart taken from PX 163 at p. 2120 a book chapter done by Man in't Veld entitled "Effects of Antihypertensive Drugs on Cardio-vascular Hemodynamics", was presented at trial to show that the actual effects of various beta-blockers on cardiac output, heart rate, vascular resistance, and blood pressure were consistent with the predictions in PX 407.
In the Court's view this literature review by Man in't Veld simply confirms that many drugs have been developed for the treatment of hypertension and that the primary aim of such drugs is to reduce blood pressure though the mechanism of action for achieving this goal is different. Also, that among the beta-blocker drugs, specifically, the differences in ancillary pharmacological properties may effect the hemodynamic changes which cause a reduction in blood pressure. In the Court's view this study does not support any conclusion as to a reduction in heart rate and superior efficacy in the lowering blood pressure.[71] Dr. Thadani testified that there is no correlation between reduction or control of blood pressure and the changes in heart rate with different beta-blockers. He further testified that there is no relationship as far as blood pressure control is concerned and ISA or the heart rate and that in hypertension or high blood pressure control, the relevance of heart rate control does not make a difference. Thadani, Tr. at pp. 122-23.
As explained previously by Dr. Cruickshank, blood pressure can be lowered independently of heart rate (i.e. by lowering peripheral resistance). This is in fact the mechanism of blood pressure reduction for many antihypertensive agents such as diuretics and beta-blockers which possess relatively high amounts of ISA such as pindolol. Thadani Tr. at pp. 122-23, Dr. Cruickshank Tr. at pp. 1168-71, 1177-79. Furthermore, the superior blood pressure lowering effectiveness claimed by ICI for atenolol due to its lack of ISA and thus its effect on heart rate is undermined by the fact that this would also be true as to those prior art drugs lacking ISA such as propranolol. The Court does not find that atenolol's lack of ISA and associated effect on heart rate gives it superiority in the treatment of hypertension. Dr. Cruickshank also testified that he finds nothing in the claims of the '032 Patent (PX 3) which says anything about reducing heart rate.
3. Central Nervous System Side Effects
ICI alleges that atenolol's combination of pharmacological properties provides a benefit over the prior art beta-blockers in the treatment of hypertension because, overall, atenolol is associated with lesser side effects and adverse reactions and, thus, provides *364 generally a better quality of life. The side effects associated with beta-blockers can relate directly to their pharmacological properties such as beta1-selectivity, ISA, and hydrophilicity or lipophilicity. However, the side effects can also be unrelated to these properties. Cruickshank Tr. at pp. 1041-47.
It is ICI's position that, in general, the central nervous system ("CNS") side effects are related to the lipophilicity or hydrophilicity of a beta-blocker drug and that because atenolol is a highly hydrophilic drug it will not easily cross the blood brain barrier. Therefore, its concentration level in the brain tissue will be lower in comparison to a highly lipophilic drug such as propranolol, which appears in very high concentrations in the brain and has been associated with a higher level of adverse CNS reactions including sleeplessness, dreams, nightmares, and hallucinations. Cruickshank Tr. at pp. 974-76, 1041-42.
An article entitled "B-Adrenoceptor Blockers and the Blood-Brain Barrier" (PX 130) compared the three lipophilic beta-blockers, propranolol, oxprenolol, and metoprolol to atenolol and found that the three lipophilic drugs appeared in the brain tissue at concentrations 10-20 times greater than that of hydrophilic atenolol. This article concluded, however, that "[t]he low concentration of atenolol in brain tissue is possibly responsible for the low incidence of central nervous system-related side effects in patients on this agent compared to lipophilic B-adrenoceptor blockers." PX 130 at p. 549. (emphasis added).
PX 145, a 1990 article by McAinsh and Cruickshank, entitled "Beta-Blockers and Central Nervous System Side Effects," states that it appeared that the occurrence of CNS side effects during the clinical usage of beta-blockers, was related to the relative lipophilicity of a particular drug since a lower incidence of such side effects occurred with atenolol, the most hydrophilic drug investigated. However, in this article the degree of lipophilicity was not deemed to be the only factor responsible for such effects since pindolol is associated with a higher incidence of CNS side effects in comparison to the drug metoprolol, a beta-blocker having a similar degree of lipophilicity as pindolol. PX 145 at pp. 187-188. Danbury cited exhibit DX 527 which is the official "Summary Basis of Approval for TENORMIN" issued by the FDA at the time that it approved the drug known as atenolol which states that "[t]here is evidence that atenolol does not enter the brain, but no evidence at all to indicate that its adverse effects differ from the other beta-blockers because of this." DX 527 at p. 74.
The evidence presented at trial, in the Court's view, shows only that any reduction in CNS side effects with atenolol, in comparison to prior art beta-blockers, is a matter of degree. Other prior art beta-blockers, which are also less lipophilic in comparison to the highly lipophilic beta-blocker propranolol also exhibit less CNS side effects.[72]
ICI further asserts that atenolol provides additional benefits of reduced side effects and adverse reactions due to its pharmacological properties of beta1-selectivity and ISA. Under the headings "Adverse Reactions" and "Potential Adverse Effects" on DX 530, the FDA Approved Label for Atenolol from the Physicians Desk Reference, the same side effects such as fatigue, CNS side effects, dreams, and hallucinations, are listed for atenolol as for any other beta-blocker.[73] Cruickshank, Tr. at pp. 1118-1119. Further, a 1980 report by Dr. Zacharias entitled "Comparison of the Side Effects of Different Beta Blockers in the Treatment of Hypertension," found that in a comparison of some of the "commoner" tolerable side effects of propranolol and atenolol, most importantly cold extremities[74]*365 and fatigue, that there was no significant difference between the two drugs. This report also stated that "there is no startling difference among any of the beta-blockers in this respect." Cruickshank, Tr. at pp. 1124-30; PX 144.
Table 3 of this report indicates that the dose limiting side effects of atenolol[75] tend to increase with an increasing dose. Dr. Cruickshank agreed that any side effects will increase with the dosage of any of the beta-blocker drugs, including atenolol. Further, he would expect the side effects that would be produced if one followed the preferred dose range of the '032 Patent to be higher than if one followed the dose range established by the FDA for atenolol. Cruickshank, Tr. at pp. 1125-1129; PX 144.
PX 145, (referred to above) states that:
The side-effects common to all beta-blockers arise from beta1-blockade such as fatigue and cold peripheries. These side effects may be manifest with hydrophilic agents that are either beta1-selective (e.g. atenolol) or nonselective (e.g. sotalol), and with lipophilic agents which are either beta1-selective (e.g. metoprolol) or nonselective (e.g. propranolol).
PX 145 at pp. 163-64. (emphasis added). Dr. Cruickshank agreed that in reference to any side effect differences between acebutolol and atenolol that whatever benefits are derived from beta1-selectivity, both atenolol and acebutolol will exhibit them. Cruickshank, Tr. at pp. 1120-23. However, beta-blocker drugs, even beta1-selective beta-blockers, are not generally given to asthmatic patients. DX 519; DX 530.
In reference to ISA, Dr. Cruickshank agreed that some studies show that when it comes to the side effect known as cold extremities, beta-blockers with ISA have a positive effect on reducing this side effect. Cruickshank, Tr. at p. 1129. Drugs with partial agonist activity might have an advantage or are at least are preferable with respect to other side effects such as bradycardia (too low a heart rate). Thadani, Tr. at pp. 50-51, 70-77; DX 519; DX 524.
The Court finds that there was sufficient credible evidence produced at trial to support the finding that all beta-blockers produce the same types of side effects and that any differences exhibited between the various beta-blocker drugs are a matter of degree. Some of the studies cited by ICI may indicate that atenolol has less of a particular effect as compared to certain other beta-blocker drugs in some patients, but in the Court's view, the evidence was not sufficient to find that atenolol possesses an unexpected degree of superiority as compared to the prior art beta-blockers with respect to side effects.
H. TENORMIN'S and TENORETIC'S Commercial Records
Robert C. Black, Corporate Vice President with ICI Americas and Vice president of Sales and Marketing for ICI Pharmaceuticals Group,[76] testified concerning the commercial records of TENORMIN[77] and TENORETIC.[78] Mr. Black's responsibilities *366 as to these products were essentially the same. His responsibilities included overseeing the promotional activities and marketing campaigns as to these products and the implementation of these through the sales force. Mr. Black is familiar with the general marketplace as to beta-blockers and beta-blocker/diuretic combination drug classes and is aware of the characteristics and claims of competing products in these classes of drugs. Mr. Black characterized the market for these products as extremely competitive and very noisy.[79] Black, Tr. at pp. 1434-37, 1478-81.
Mr. Black testified that in evaluating the sales and overall performances of TENORMIN and TENORETIC one should examine the entire life cycle of each product in comparison to the beta-blocker category of anti-hypertensive products (in the case of TENORMIN) and the category of beta-blocker/diuretic combinations (for TENORETIC). It was Mr. Black's opinion that if the entire life cycle of a pharmaceutical product is not examined a very misleading view results because pharmaceutical products have relatively long commercial lives. Thus, in the case of TENORMIN, evaluation should begin in 1981, when it entered the market place, and continue today. In the case of TENORETIC one should begin with its launch date of August, 1982 and continue over its entire life cycle up until today. Black, Tr. at pp. 1442, 1480, 1482, 1483.
It was also Mr. Black's opinion that because each of these products does compete in the anti-hypertensive marketplace, you could conceivably compare them to all of the anti-hypertensive products, regardless of category. However, because that market is so heterogenous, it is better to compare them against the above categories of products (i.e. beta-blockers and beta-blocker/diuretic combinations), in which they really compete. Black, Tr. at pp. 1442-43. The Court agrees with these opinions of Mr. Black as he has sufficient knowledge and experience concerning the appropriate way to conduct such evaluations.
The Court, however, does not agree with ICI and find that dollar sales data and data as to market share generated from dollar sales is anymore probative or reliable than prescription data and market share data associated with it. Each of these data should be analyzed in assessing a product's performance. Mr. Black testified that both are used and that prescription data is important but that sometimes prescription data can be misleading such that dollar sales numbers are relied upon more heavily. There was insufficient evidence to convince the Court that a preference as to one type of data should exist. Black, Tr. at p. 1444.
With the protocol for evaluating a products performance outlined, the Court will discuss the data presented first as to TENORMIN and then as to TENORETIC. Exhibits 701 and 702 are bar graphs which indicate the share of dollar sales of beta-blockers approved for hypertension for the years 1981 through 1989.[80] The only difference between the exhibits is that 701 has all of the propranolol-containing products combined into one graph and 702 has segregated Inderal and Inderal LA (a slow release form) from the generic propranolols. These graphs show an upward progression in market share for TENORMIN from one and one half percent in 1981, when TENORMIN was launched, to thirty-five point one percent in 1989. As of 1989 TENORMIN had become the leading beta-blocker in terms of market share based on dollar shares. Mr. Black testified that this pattern was indicative of a very successful *367 product. Black, Tr. at pp. 1450, 1451, 1453-56.
In 1981, when atenolol was launched, there were three beta-blockers already launched in the marketplace and approved for the treatment of hypertension. They were Inderal[81], Corgard[82] and Lopressor,[83] with Inderal being the market leader at this time.
Mr. Black, in testifying as to exhibits 701 and 702, stated that the propranolol products showed a "steep decline" and that TENORMIN overtook the propranolol-containing products in 1987 in terms of market share.[84] As to Lopressor and Corgard Mr. Black characterized their performances as being "flat" over this period of time. Black, Tr. at pp. 1436, 1453, 1508-09.
Exhibits 703 and 704 are graphs in the same format as 701 and 702 except they indicate share of prescriptions for beta-blockers approved for treating hypertension. This data shows an upward slope for TENORMIN and, again, flat performance for Corgard and a gradual decrease for Lopressor. This data also showed that the propranolol-containing products did have a slightly higher market share based on total prescriptions in 1989 than did TENORMIN. Black, Tr. at pp. 1461-65.
Exhibit 706[85] is a bar graph showing the share of dollar sales of beta-blocker/diuretic combinations approved for treating hypertension from 1981 through 1989. This graph shows an increase for TENORETIC in overall market share from nine point nine percent, in 1984, to fifty-five point one percent in 1989. Mr. Black testified that by its fourth year of marketing, TENORETIC was dominating the class of beta-blocker/diuretic combination products and its dramatic increase in market share within a relatively short period of time represents a strong performance and a significant accomplishment. Black, Tr. at pp. 1485, 1489, 1491, 1497.
The evidence put forth by ICI as to the reasons for TENORMIN'S and TENORETIC'S commercial success consisted of the testimony of Mr. Black. The Court finds that Mr. Black's views as to why physicians prescribe any one beta-blocker in favor of another does not carry much weight. His personal experience of working in the field with sales representatives and hearing physicians discuss their experiences with different products is not sufficient to support a finding that it is the properties associated with the products, TENORMIN and TENORETIC, which cause physicians to prescribe these products. Throughout his testimony on the subject of why these products have experienced commercial success, Mr. Black referred to market research studies, but admitted that no such studies have been done with any regularity and that it is an ad hoc process. No such studies were presented by ICI. It is not clear from this record whether once a day dosing, a feature not claimed in the '032 patent, may be the reason for TENORMIN'S success. Black, Tr. at pp. 1497-99, 1543-48; DX 594.
II. CONCLUSIONS OF LAW
A. Burden of Proof
35 U.S.C. § 282[86] creates the presumption that claim 2 of the '032 Patent is *368 valid and imposes the burden of proving invalidity by clear and convincing evidence on the attacker, Danbury. Rohm and Haas Co. v. Mobil Oil Corp., 718 F.Supp. 274, 312-313 (D.Del.1989), aff'd, 895 F.2d 1421 (Fed.Cir.1990); American Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1360 (Fed.Cir.), cert. denied, 469 U.S. 821, 105 S.Ct. 95, 83 L.Ed.2d 41 (1984). The presumption of validity is never weakened, ACS Hospital Systems, Inc. v. Montefiore Hospital, 732 F.2d 1572, 1574-75 (Fed.Cir.1984), and the burden of proving invalidity never shifts from the party asserting invalidity. American Hoist & Derrick Co., 725 F.2d at 1359-60. Though the burden of proof is not reduced and the presumption of validity remains the same, meeting this burden may be facilitated when the challenger relies on pertinent prior art not considered by the PTO. Uniroyal, Inc. v. Rudkin-Wiley Corp., 837 F.2d 1044, 1050 (Fed.Cir.), cert. denied, 488 U.S. 825, 109 S.Ct. 75, 102 L.Ed.2d 51 (1988); Kaufman Co. v. Lantech, Inc., 807 F.2d 970, 973 (Fed.Cir.1986). Likewise, sustaining this burden of proof may be more difficult when the prior art evidence relied upon by the challenger is the same as that considered by the examiner. Hughes Aircraft Co. v. United States, 717 F.2d 1351, 1359 (Fed.Cir.1983). However, "[t]here is no legal authority for the view that the court must first determine that prior art in an evaluation of obviousness is more pertinent than the prior art considered by the PTO."[87]Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560, 1571-72 (Fed. Cir.), cert. denied, 488 U.S. 892, 109 S.Ct. 228, 102 L.Ed.2d 218 (1988). "Any relevant evidence, whether more or less pertinent, can be considered in an analysis of obviousness." Id. at 1572 n. 6.
Once the challenger has established a legally sufficient prima facie case of invalidity then the patentee may present evidence to rebut invalidity. All of the evidence of invalidity and any evidence rebutting invalidity is examined by the Court in determining whether the patent is invalid by clear and convincing evidence. Rohm and Haas Co., 718 F.Supp. at 313. The Court has evaluated the evidence presented in this case by applying these principles.
B. Obviousness: 35 U.S.C. § 103
Obviousness is a question of law. Panduit Corp. v. Dennison Manufacturing Co., 810 F.2d 1561, 1567-68 (Fed.Cir.), cert. denied, 481 U.S. 1052, 107 S.Ct. 2187, 95 L.Ed.2d 843 (1987). The basis of Danbury's attack on the validity of claim 2 of the '032 Patent is 35 U.S.C. § 103 which provides that a patent may not be obtained for an invention "if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103 (1988).
In making a determination of obviousness the Court's analysis must include the following factual inquiries as discussed in Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 693-94, 15 L.Ed.2d 545 (1966):
(i) the scope and content of the prior art;
(ii) the differences between the prior art and the claims at issue;
(iii) the level of ordinary skill in the pertinent art;
*369 (iv) secondary considerations such as commercial success, long felt but unsolved needs, failure of others, etc.
Uniroyal Inc., 837 F.2d at 1050. The Court was mindful of these factors when making its findings of fact.
1. The Scope and Content of the Prior Art
The Court's thorough discussion of the prior art appears supra, at Part I.B.1-3. An examination of the prior art in this case shows that as of February, 1969, there was an established class of chemical compounds referred to as the aryloxypropanolamines. This class was known to possess beta-blocking activity. The members of this class of compounds all possessed the common and necessary "R-ABC" structure of which the "BC" side chain was responsible for the affinity of the compound to the receptor site. The differences exhibited among members of this class are contained in the R or R-A portion of the necessary structure. It is these variations that are responsible for secondary pharmacological properties of a compound, such as cardioselectivity and ISA.[88]
The documentary evidence and testimony at trial also showed that this class of compounds was associated with anti-hypertensive utility. The Court agrees with the defendant that the prior art would have created an expectation in one of ordinary skill in the art that the compound atenolol, as a member of this class, could be used to treat hypertension. The argument by the Plaintiff that such an expectation would not exist because the value of using beta-blockers to treat hypertension was in "controversy" is not persuasive. PFC at p. 67.[89] There may have been papers which did not show dramatic results in the reduction of blood pressure with the use of a beta-blocker but this does not alter the fact that the prior art patents and literature would create the expectation that a beta-blocker compound, such as atenolol, would have anti-hypertensive utility.
Further, the prior art references must be considered in their entirety as recognized by both the Defendant and the Plaintiff. PFC at p. 203, ¶ 23; DFC at p. 76, ¶ 88. Parts of a reference can't be discounted because they may be unfavorable to a certain position. Both the utility statements in the prior art patents as well as the clinical evidence in the prior art scientific literature must be examined in determining whether an anti-hypertensive utility was disclosed for beta-blocker compounds. The Court rejects the idea that the prior art patents' disclosures as to activity and utility should be given little weight in assessing any expectation as to utility that the prior art may contain. Hirschmann, Tr. at pp. 772-77, 826-27, 850-73. Finally, whether persons of ordinary skill in the art in February, 1969 would have had the ability to predict beforehand whether a new beta-blocker compound would have sufficient potency for anti-hypertension usefulness is not reflective of whether one of ordinary skill in the art would have a reasonable expectation that such a compound would be useful in the treatment of hypertension. PFC at pp. 69-70, at ¶ 117; Hirschmann, Tr. at pp. 775-78, 821-22. Potency relates to the level of activity of the compound in terms of the amount of a compound needed to get a desired effect. LeCount, Tr. at p. 464.
2. The Differences Between the Prior Art and the Claims at Issue
The prior art in this case defines a class of beta-blocker compounds and contains much information as to this class of compounds. The prior art suggests that this class of beta-blocker compounds has usefulness in the treatment of hypertension. In terms of structure-activity relationships associated with the class, the prior art suggests *370 not only the requisite structure necessary for beta-blocking activity but the portions of this structure which can tolerate modification without a resultant loss of beta-blocking activity. Further, the prior art indicates that quite diverse modifications can be tolerated in the modifiable portions without a loss of either beta-blocking activity or usefulness in the treatment of hypertension.
Viewed against this background the differences between the "R" groups of atenolol and practolol would not seem significant. Each compound possesses the requisite R-ABC structure and their respective "R" groups are isomeric. The Court concludes that the prior art, taken as a whole, creates a reasonable expectation that atenolol would be a beta-blocker and, thus, be useful in the treatment of hypertension. Only a "reasonable expectation" that such activity would result is necessary, not "absolute predictability." Rohm and Haas Co., 718 F.Supp. at 303. See also In re O'Farrell, 853 F.2d 894, 903-04 (Fed.Cir. 1988); In re Longi, 759 F.2d 887, 897 (Fed. Cir.1985).
Though "[s]tructural similarity, alone, may be sufficient to give rise to an expectation that compounds similar in structure will have similar properties," In re Merck & Co., 800 F.2d 1091, 1096 (Fed.Cir.1986) (emphasis added), this Court, like the Board in Merck, is not basing its conclusion of obviousness on structural similarity alone. As discussed previously in this Opinion, the teachings in the prior art gave directions as to which portions of the R-ABC structure could tolerate modification and the scope of such modifications. In addition, the prior art teachings included the teachings of techniques, such as bioisosteric replacement to implement such modifications.
In Merck, the additional teaching of the prior art that the precise structural difference between amitriptyline and imipramine involved a known bioisosteric replacement provided a sufficient basis for the expectation of the beneficial result. Id., at 1097.[90] The difference between the "R" group of practolol and that of atenolol involves, as was testified to by Dr. Loev, a known bioisosteric replacement. This, along with structural similarity, leads to a "reasonable expectation" that the desired activity will result.
a. In Re Kuehl
The case of In re Kuehl, 475 F.2d 658 (C.C.P.A.1973), resembles the present case in that it involves the use of a novel compound, specifically a novel zeolite, identified by the symbol ZK-22. The claims are directed to a hydrocarbon conversion process which involves the "use" of ZK-22 as a catalyst to crack hydrocarbons. The Court finds the reasoning of this case to be particularly instructive as to the proper resolution of the present case.
In Kuehl, the only prior art of record, the Frilette Patent, disclosed a class of crystalline zeolites useful as catalysts for cracking hydrocarbons. This class was described as "crystalline metal aluminosilicates" known as molecular sieves, which have catalytic capabilities due to their structure. Molecular sieves of the "A" series are taught by Frilette to be members of the class of zeolites which are useful as catalysts for cracking hydrocarbons.
The CCPA, on appeal, reversed the Patent Office Board of Appeals' affirmance of the examiner's rejection of the claims for obviousness. The Court found that:
ZK-22 is not so similar to the zeolites of the "A" series identified by Frilette as to render the use of ZK-22 to crack hydrocarbons, albeit in the manner used by Frilette, obvious to one of ordinary skill in the art. ZK-22 is not a homologue, isomer, or chemical analogue of series "A" zeolites. Nor do Frilette's teachings of zeolites broadly define a class, the knowledge of which would render ZK-22 or its use as a catalyst obvious. Furthermore, the differences therebetween appear significant.
Kuehl, 475 F.2d at 663 (emphasis in original). The Court in Kuehl made the determination *371 as to "[t]he obviousness of the process of cracking hydrocarbons with ZK-22 as a catalyst ... without reference to knowledge of ZK-22 and its properties." Id. at 665.
This Court has also made the determination as to the obviousness of using atenolol to treat hypertension without reference to knowledge of atenolol and its properties. In the present case, however, there exists a significant structural similarity and a vast amount of information in the prior art concerning this structure, which was lacking in Kuehl. Unlike Kuehl, the prior art teachings of beta-blockers, in the present case, define a class, the knowledge of which this Court finds renders atenolol's use for the treatment of hypertension obvious. The Court did not find that the prior art was such as to warrant characterizing the various prior art beta-blockers as members of different "series", as was done by some of ICI's expert witnesses.
Atenolol is not significantly different from the prior art members of the class. As is the case with the other compounds in this class, atenolol is distinguishable because it has a different "R" substituent and/or "A" group. Furthermore, atenolol is an isomer of the prior art beta-blocker practolol.
b. Unexpected Properties
Any unexpected or superior properties and results of the claimed invention not shared by the prior art, are relevant in evaluating obviousness. In re Dillon, 919 F.2d 688, 692-93 (Fed.Cir.1990) (in banc), cert. denied sub nom. Dillon v. Manbeck, ___ U.S. ___, 111 S.Ct. 1682, 114 L.Ed.2d 77 (1991); In re Chupp, 816 F.2d 643 (Fed. Cir.1987). Danbury has the burden of establishing by clear and convincing evidence, the claimed invention's lack of such results. American Hospital Supply Corp. v. Travenol Laboratories, Inc., 745 F.2d 1, 8 (Fed.Cir.1984). The Court finds that Danbury presented sufficient evidence to meet this burden.
The evidence presented does not support ICI's claim that atenolol produces unexpected results, such as increased reductions in blood pressure and heart rate and a lower incidence of CNS side effects, when used to treat hypertension. The evidence merely indicates that, as to these claims, the difference between atenolol as compared to other beta-blockers are either nonexistent or represent a slight difference in degree. See supra Part I.G.1.-3.
3. The Level of Ordinary Skill in the Pertinent Art
The Federal Circuit has provided the Court with the following list of factors to assist it in its determination of the level of ordinary skill in the art. The factors that may be considered are:
(i) the educational level of the inventor;
(ii) the type of problems encountered in the art;
(iii) the prior art solutions to those problems;
(iv) the rapidity with which innovations are made;
(v) the sophistication of the technology; and
(vi) the educational level of the active workers in the field.
Environmental Designs, Ltd. v. Union Oil Co., 713 F.2d 693, 696 (Fed.Cir.1983), cert. denied, 464 U.S. 1043, 104 S.Ct. 709, 79 L.Ed.2d 173 (1984). The Federal Circuit has given the courts further guidance as to this determination by explaining that "[n]ot all [of the factors listed above] may be present in every case, and one or more of these or other factors may predominate in a particular case." Id. at 696-97. Assessing the ordinary level of skill in the art is necessary to "adhere to the statute, i.e., to hold that an invention would or would not have been obvious as a whole, when it was made, to a person of `ordinary skill in the art' not to the judge, or to a layman, or to those skilled in remote arts, or to geniuses in the art at hand." Id. at 697; See also, Custom Accessories, Inc. v. Jeffrey-Allan Industries, Inc., 807 F.2d 955, 962 (Fed.Cir. 1986).
Applying the factors to the present case, the Court finds that a person of ordinary skill in the art would be an individual with a PhD degree in organic chemistry, with an emphasis in medicinal chemistry and experience *372 with the techniques of drug development in general and specific experience with the development of beta-blockers. This definition seems to reasonably characterize the theoretical ordinary level of skill in the art based on the factors of Environmental Designs.
4. Secondary Factors
Commercial success, long felt but unsolved needs, and failure of others are examples of secondary considerations a court may consider in its determination of the question of obviousness to "give light to the circumstances surrounding the origin of the subject matter sought to be patented." Graham, 383 U.S. at 17-18, 86 S.Ct. at 694.[91] Such objective evidence of secondary considerations must be considered by the court before a conclusion on obviousness/nonobviousness is reached. Panduit Corp., 810 F.2d at 1570; Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1380 (Fed.Cir.1986), cert. denied, 480 U.S. 947, 107 S.Ct. 1606, 94 L.Ed.2d 792 (1987); Ashland Oil, Inc. v. Delta Resins & Refractories, Inc., 776 F.2d 281, 306 (Fed.Cir.1985), cert. denied, 475 U.S. 1017, 106 S.Ct. 1201, 89 L.Ed.2d 315 (1986). However, evidence as to these factors does not control the conclusion as to obviousness. Newell Companies v. Kenney Manufacturing Co., 864 F.2d 757, 769 (Fed.Cir.1988), cert. denied, 493 U.S. 814, 110 S.Ct. 62, 107 L.Ed.2d 30 (1989). Objective evidence of nonobviousness is assigned weight based upon the nature of the evidence and its relationship to the merits of the claimed invention. See, e.g., Demaco Corp., 851 F.2d at 1392-94; Ashland Oil, Inc., 776 F.2d at 306; Simmons Fastener Corp. v. Illinois Tool Works, Inc., 739 F.2d 1573, 1575 (Fed.Cir.1984), cert. denied, 471 U.S. 1065, 105 S.Ct. 2138, 85 L.Ed.2d 496 (1985). If the evidence of secondary considerations is to be given substantial weight by the court in its determination of the obviousness issue it must be established that a nexus exists between the merits of the claimed invention and such evidence. See Demaco Corp., 851 F.2d at 1392; Ashland Oil, Inc., 776 F.2d at 305; Stratoflex Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538-39 (Fed.Cir.1983). Mindful of these principles the Court has considered ICI's objective evidence as to the following: 1) atenolol's unexpected advantages over the prior art beta-blockers in the treatment of hypertension (See supra Part II.B.2. for the Court's conclusion as to this evidence); 2) commercial success of TENORMIN and TENORETIC; 3) the pharmaceutical industry's acquiescence in the validity of the '032 Patent; and 4) the alleged deliberate copying of atenolol by Danbury.
ICI seeks to rely upon commercial success as objective evidence of nonobviousness. "A prima facie case of nexus is generally made out when the patentee shows both that there is commercial success, and that the thing (product or method) that is commercially successful is the invention disclosed and claimed in the patent." Demaco Corp., 851 F.2d at 1392. ICI contends that it has shown commercial success and the requisite nexus between this commercial success and the method of use claimed in the '032 patent through evidence as to its products, TENORMIN and TENORETIC.
Through the testimony of Robert C. Black, Corporate Vice President with ICI Americas and Vice President of Sales and Marketing for ICI Pharmaceuticals Group, ICI established that both TENORMIN and TENORETIC occupy a substantial share of the United States market for beta-blockers and beta-blocker/diuretic combinations approved for use in treating hypertension. It was shown that each of these products has experienced substantial sales in this market and that each is associated with a steady increase both as to sales and market share. The Court would note, however, that as to some of Mr. Black's interpretations of the data, there were instances where the significance *373 of the data was exaggerated and other instances, in reference to other beta-blockers where all of the relevant circumstances (i.e. the availability of low cost generics) were not taken into consideration. Nevertheless, the Court finds that ICI has presented sufficient evidence to show that TENORMIN and TENORETIC are commercially successful. The record, however, does not establish that there is a sufficient relationship between the commercial success of these products and the method of use claimed in the '032 patent.[92]
The evidence presented by ICI in support of its claims that Danbury deliberately copied TENORMIN and TENORETIC and that the pharmaceutical industry has acquiesced in the validity of the '032 Patent was very limited. The evidence was insufficient to prove these claims or to establish that there was a nexus between these claims and the merits of the method of use claimed in the '032 Patent.
5. Conclusion as to Obviousness
In light of the explicit teachings of the prior art as to the functional, structural, and utility aspects of the beta-blocker class of compounds, the structural similarities between atenolol and the prior art, the suggestions in the prior art as to techniques to make the modifications necessary to obtain atenolol, atenolol's lack of unexpected properties and advantages over the prior art beta-blockers in the treatment of hypertension, and the lack of a nexus between the commercial success of TENORMIN and TENORETIC and the merits of the claimed invention, the invention in claim 2 of the '032 Patent would have been obvious to one of ordinary skill in the art when the invention was made on February 21, 1969.
C. Section 112
Danbury's second attack on the validity of claim 2 of the '032 Patent is based on 35 U.S.C. § 112 which provides in pertinent part:
The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.
35 U.S.C. § 112 (1988). Danbury alleges that the specification of the patent in suit fails to include an adequate disclosure of how to use the invention without undue experimentation and thus is invalid under 35 U.S.C. § 112. DFC at pp. 71-72.
As set forth in Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1384 (Fed.Cir.1986), cert. denied, 480 U.S. 947, 107 S.Ct. 1606, 94 L.Ed.2d 792 (1987), enablement is a legal determination of whether a patent, as of the filing date of a patent application, enables one skilled in the art to make and use the claimed invention. However, a patent "need not teach ... what is well known in the art." Id. Some experimentation is permissible "although the amount of experimentation needed must not be unduly extensive." Id. A determination as to whether undue experimentation is necessary in order to teach those skilled in the art to make and use the invention "is not a single, simple factual determination, but rather is a conclusion reached by weighing many factual considerations." In Re Wands, 858 F.2d 731, 737 (Fed.Cir.1988). "The test is not merely quantitative, since a considerable amount of experimentation is permissible, if it is merely routine, or if the specification in question provides a reasonable amount of guidance with respect to the direction in which the experimentation should proceed...." Ex parte Jackson, 217 USPQ 804, 807 (Bd.App.1982).
*374 Guided by these principles the Court reviewed the evidence presented to decide whether the amount of experimentation required to enable one skilled in the art to select an effective dose of atenolol and obtain anti-hypertensive effectiveness, was excessive as Danbury asserts or a matter of the exercise of routine skill. DFC at p. 72. Based on the Court's thorough discussion and findings as to the teachings of the '032 Patent, it is the Court's conclusion that the requisite experimentation in this case was excessive.
ICI's own actions prior to the issuance of the patent in suit and subsequent to its issuance support such a conclusion. No testing as to atenolol's blood pressure lowering capability was conducted prior to the filing of the patent application by ICI yet the patent contains a dosage range of "between 25 mg and 1,200 mg daily, preferably between 200 mg and 600 mg daily at doses spaced at 6-8 hourly intervals...."[93] This dose range is a broad disclosure, from 1 to 48 times, and is very high in comparison to the dose range of 50 mg to 100 mg approved by the FDA. The Court was not persuaded by the evidence presented by ICI that atenolol is effective in the treatment of hypertension throughout the entire range contained in the patent. Nor did the Court find ICI's contention that one skilled in the art seeking to determine an effective dose in February of 1969 could have selected a dose anywhere within the range recited in the '032 patent and been able to obtain hypertensive effectiveness persuasive.
This high dose was apparently the result of reliance on the belief during the initial clinical evaluations of atenolol between 1972 and 1976 that it possessed a dose response similar to that of propranolol. The existence of the belief, that high doses of atenolol were needed to achieve the goal blood pressure, contradicts Dr. Cruickshank's testimony that an effective dose could be determined by the use of the technique of "dose titration".[94] Cruickshank, Tr. at pp. 1098-1116. The belief that the dose response of atenolol would be the same as that of propranolol influenced the clinical study of atenolol up until 1976 in respect to higher dose amounts and frequency of administration in patients.[95] It was not until several years of dose studies had been conducted with atenolol that a much lower dose of 100 mg, given once daily, was determined to be the effective dose for achieving the benefit of cardioselectivity. This determination was based on the discovery that the plasma half life of a beta-blocker, such as atenolol, was exceeded by its pharmacological half life such that the blood pressure lowering effect persisted for a long time after the concentration of a beta-blocker in the bloodstream disappeared. Cruickshank, Tr. at pp. 1098-116; Thadani, Tr. at pp. 141-49; PX 153.
This discovery, responsible for the effective dose regiment of atenolol, represents the result of substantial experimentation such that the requirement of an adequate disclosure of 35 U.S.C. § 112 has not been satisfied. The reasonable amount of guidance which may make a considerable amount of experimentation permissible is not present in this case. See In Re Wands, 858 F.2d at 737. On the contrary, the patent disclosure would not offer guidance but misdirect one attempting to determine an effective dose. In terms of both quantity of dose and frequency of administration, the patent states the dose range being used for propranolol as of the filing date of the patent in suit. Cruickshank, Tr. at pp. 1111-1116; PX 3; PX 142; DX 530. The disclosure of the '032 patent specification would not have enabled one skilled in the art, without undue experimentation, to practice the invention of claim 2.
*375 III. Conclusion
For the foregoing reasons, the Court concludes claim 2 of the '032 patent is invalid under 35 U.S.C. §§ 103 and 112.
NOTES
[1] Civil Action Nos. 89-575 and 90-736 were consolidated for all purposes by stipulation of the parties and Order of this Court issued February 19, 1991.
[2] The '032 patent contains only two claims. Claim 2 is directed to and specifically covers the use of atenolol to treat hypertension. ICI's assertion that claim 1 of the '032 patent was infringed was withdrawn during the trial, leaving only claim 2 of the '032 patent at issue in this case. Trial Transcript ("Tr.") at pp. 955-56.
[3] The '671 patent which expired on September 17, 1991, claimed inter alia, pharmaceutical compositions containing atenolol as the active ingredient and the use of atenolol to treat angina pectoris. P.T. Order at p. III-1, ¶ 3. By letter to the FDA dated January 4, 1991, Danbury withdrew its challenge to the validity of the '671 patent, and by Stipulation and Order signed January 17, 1991, the '671 patent was formally withdrawn from this Action. Claim 2 of the '032 patent is thus the only patent claim in issue in Civil Action No. 89-575. P.T. Order at p. I-3. See supra note 2.
[4] 21 U.S.C. § 355(j)(4)(B)(iii) (1988).
[5] ICI brought Civil Action No. 89-575 for patent infringement on October 19, 1989. Civil Action No. 90-736 for patent infringement was brought by ICI on December 21, 1990. P.T. Order at p. I-2.
[6] From September 7, 1989 with respect to atenolol per se, and from November 9, 1990 with respect to the combined drug atenolol/chlorthalidone. P.T. Order at p. I-4.
[7] 21 U.S.C. § 355(j)(4)(B)(iii) (1988).
[8] Jurisdiction and venue are admitted by both parties to this Action.
[9] 35 U.S.C. § 103 (1988) provides as follows:
A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the difference between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.
Subject matter developed by another person, which qualifies as prior art only under subsection (f) or (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the invention was made, owned by the same person or subject to an obligation of assignment to the same person.
[10] 35 U.S.C. § 112 (1988) provides, in pertinent part, as follows:
The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.
[11] The FDA approved dosage for atenolol in the treatment of hypertension is 50 or 100 mg. given as one tablet a day. DFC at p. 27, ¶ 42; Defendant's Exhibit ("DX") 530.
[12] This section includes subsections which discuss the function, use, development, structure and pharmacological properties of beta-blockers.
[13] Adrenaline and noradrenaline are natural or endogenous catecholamines (also called sympathetic amines). P.T. Order at p. III-3. In England these two endogenous catecholamines are referred to as epinephrine and norepinephrine. Loev, Tr. at p. 299.
[14] The beta-receptors are located on the heart muscle, in the blood vessels and in the bronchial muscles. Thadani, Tr. at p. 22.
[15] At present Dr. Thadani is a Professor of Medicine at the University of Oklahoma, and Vice Chief of the Section of Cardiology where he is involved with patient care, the supervision of students, residents and cardiology fellows and research in the evaluation of cardiovascular drugs. From 1969 until 1975 Dr. Thadani's research was primarily concerned with the evaluation of beta-blocker drugs in patients with angina pectoris and hypertension. In 1975, Dr. Thadani continued some work on beta-blocker drugs but the major emphasis of his research was on the evaluation of drugs called nitrates, which are vasodilators used widely in the management of patients with angina pectoris. For the last four years Dr. Thadani has been evaluating calcium channel blockers which are agents used to treat both angina pectoris and hypertension and various other disorders. Thadani, Tr. at pp. 8, 12-13.
In evaluating various cardiovascular agents Dr. Thadani would write protocols for studies of these drugs in human patients and would administer these drugs to patients in double blind studies and examine the effect of treatment with these drugs in the patients by a comparison to the results with a placebo. Dr. Thadani is the author of a publication entitled "Beta-Blockers and Hypertension" which is a review article on the use of beta-blockers and hypertension up to the year of publication in 1983 in the American Journal of Cardiology. This article reviewed all of the relevant published literature on studies of beta-blockers and hypertension. Dr. Thadani is also the co-author of a chapter entitled "Beta-blocking Agents" appearing in DX 524 which is the 1984 edition of Professor Opie's book, Drugs for the Heart, and a chapter of the same title appearing in DX 525, a 1987 second expanded edition of Professor Opie's book. Thadani, Tr. at pp. 12-14, 15-18.
[16] Stimulants or agonists (such as adrenaline) and beta-blockers or beta-antagonists (such as atenolol), compete for occupancy of the receptors. Therefore, the higher the concentration of agonist in the blood stream, as during times of stress and exertion, the greater the proportion of beta-receptors that will be stimulated by the agonist, rather than blocked by the antagonist. However, the relative level of stimulation achievable by the agonists is lessened by the presence of the beta-blocker. P.T. Order at p. III-4.
[17] A person with a blood pressure which falls outside of the blood pressure range representing the blood pressures of ninety percent of the population, which can be considered the normal range, is said to have high blood pressure or hypertension. What is considered to be normal blood pressure will vary with different age groups. An individual's blood pressure can vary from day to day and even within the same day, depending on the existing circumstances when the reading is taken. The individual's emotional state and whether he has smoked a cigarette or had a cup of coffee prior to the reading can vary one's blood pressure. The reading can also vary depending on the investigator or physician taking the reading. Dr. Thadani Tr. at pp. 26, 27.
[18] The '032 Patent claims priority for the filing of a foreign application. An application was filed in the United Kingdom on February 21, 1969. Plaintiff's Exhibit ("PX") 6.
[19] A condition associated with a deficiency in the supply of oxygen to the muscles of the heart. Treatment at this time was primarily aimed at increasing the supply of oxygen to the muscles of the heart by using coronary vasodilator drugs. Vasodilator drugs cause dilation of the blood vessels supplying blood and hence oxygen to the muscles of the heart. P.T. Order at pp. III-9-10.
[20] At trial Mr. Engelberg, the attorney representing Danbury in this action noted, for the record, that all of the compounds appearing on PX 872, PX 873 and PX 874, with the exception of the compound known as bupranolol which appears on the top of PX 874, are identified in the agreed statement of facts in the pretrial order as compounds which were known in the prior art. Loev, Tr. at p. 286.
[21] Dr. Loev's present occupation is that of a consultant to the chemical and pharmaceutical industries and various universities. Dr. Loev was employed with Smith, Kline and French (now Smith, Kline and Beckman) from 1958 until 1975. During the years from 1958 until February 1969, Dr. Loev was involved in drug development primarily in the cardiovascular and the central nervous system areas.
In the area of cardiovascular drug development Dr. Loev's focus was on different mechanisms for lowering blood pressure. He was personally involved in the design and synthesis of the compounds which were to be tested. Specifically, Dr. Loev worked with beta-blockers doing structure activity studies to determine the effect that variations in the chemical structure of a compound would have on its biological properties.
For the next six years at Smith, Kline and then at Revlon (starting in 1975), although at the management level, Dr. Loev continued to maintain extensive involvement in the design and development of cardiovascular drugs. He participated in the development of a beta-blocker drug while at Revlon called celebralol, sold under the name Selectrol, which is awaiting FDA approval for sale in the United States. Loev, Tr. at pp. 246-55; DX 501.
[22] Dr. Loev looked at DX 536 which is a 1967 publication by Ariens, from the Annals of the New York Academy of Science entitled "The Structure-Activity Relationships of Beta Adrenergic Drugs and Beta Adrenergic Blocking Drugs". Dr. Loev stated that this article indicates that the endogenous (naturally occurring) catecholamines and the beta-blocker compounds have essentially the same structure. Dr. Loev explained that isoproterenol was used experimentally for convenience but that it is identical in substance to the endogenous compounds, adrenaline and noradrenaline. Dr. Loev characterized the structural relationship between the endogenous catecholamines and the beta-blocker compounds as being very close. It was his opinion that this structural similarity was the reason why the beta-blockers were made and why they fit the receptor site so well. Table 2 on page 609 depicts a variety of beta adrenergic blocking drugs and isoproterenol as representative of the endogenous catecholamines. In reference to this table, Dr. Loev indicated that even "grossly looking at [these structures] they all have the [R-ABC] general structure indicated on PX 871." Loev, Tr. at pp. 297-300.
[23] Dr. Loev examined prior art patents disclosing beta-blockers which are identified by the following exhibit numbers. DX 554 DX 560, DX 562-570, DX 574-577, DX 581, and DX 586. Loev, Tr. at pp. 312-343.
[24] In addition to Dr. Loev's testimony concerning the common structure possessed by the known prior art beta-blockers, there was testimony to this same effect from Dr. LeCount, Professor Rees and Professor Hirschmann, all of which were called as witnesses by ICI.
Dr. David James LeCount was called as a fact witness by ICI. He has been employed by ICI Pharmaceuticals as a research chemist since 1964. He is identified as an inventor on the '032 patent. When shown PX 871, which shows the basic molecular structure of the beta-blocker compounds, Dr. LeCount agreed that the generic structure shown on PX 871 was the structure for the beta-blockers known to him prior to the time he commenced the work leading to atenolol. He further agreed that he was aware that all of the known prior art betablockers possessed the R-ABC structure shown on PX 871 and that for those that did not it was the "B" part of the structure, the oxymethylene (OCH2) group, which was lacking. He was aware, however, that this group may, but need not, be present for beta-blocking activity. He also agreed that the prior art beta-blocker compounds listed on exhibits PX 872-874 (except for bupranolol which is not a prior art beta-blocker) were all known to him before he began his work on atenolol. LeCount, Tr. at pp. 484-86.
Professor Charles W. Rees was called as an expert witness in organic chemistry by ICI. At present he is a Hoffman Professor of Organic Chemistry at the Imperial College of Science, Technology and Medicine at the University of London and has occupied this position for twelve years. Professor Rees has also been consulting actively since 1965 in the areas of medicinal chemistry, photographic chemistry, and agrochemistry for various companies. At trial Professor Rees agreed that based on his review of the prior art, the majority of the known beta-blockers fit within the R-ABC structure shown on PX 871. Rees, Tr. at pp. 536-41, 684-85; PX 71.
Professor Ralph F. Hirschmann was called as an expert witness in medicinal chemistry by ICI. He is currently a Research Professor of Chemistry at the University of Pennsylvania and holds a concurrent appointment at the Medical University of South Carolina in Charleston, as a University Professor of Bioorganic Chemistry. At trial he agreed that if one took into account the definitions on PX 871, the R-ABC structure is the appropriate generic structure established in the prior art before February 1969 as a structure common to all known beta-blockers. Professor Hirschmann also agreed that if he gave one of his chemistry students, in February 1969, the assignment of reviewing the literature and providing him with a generic definition of compounds coming within the class known as beta-blockers, the student would have handed him PX 871. Hirschmann, Tr. at pp. 713-14, 872-73; PX 72.
[25] This description concerning the functions of the different parts of the molecule are described in DX 538. Loev, Tr. at pp. 302-3. Dr. Loev also referred to the following figure, which appears as Figure 1 at the top of page 17D in DX 529, a 1982-1983 article from the American Journal of Cardiology, as illustrative of his testimony about the relationship between the various parts of a molecule and the ability to bind to a receptor and block or stimulate that receptor.
Dr. Loev explained that the top portion of the figure shows the conceptualization of the endogenous substances, using the molecule isoprenaline as a mimic of the natural substances, reacting with the receptor site by illustrating binding with the right-hand portion of the molecule and a reaction with the left-hand portion. He explained that the lower part of this figure shows the structure of "propranolol" a beta-blocker compound, binding on the right hand side, the "ABC" portion, and thus attaching the molecule to the receptor site while the left-hand portion of the molecule, the "RA" portion, is blocking the receptor site. Loev, Tr. at pp. 303-5.
[26] There are also beta1-receptors located in the peripheral vascular or bronchial systems, although in fewer number than the beta2-receptors. Likewise, there are beta2-receptors located in the cardiac muscle but in fewer number than the beta1-receptors. P.T. Order at p. III-15, note 3.
[27] Cardioselective beta-blockers are "selective" rather than "specific" for the beta1-receptor, and at high enough doses they will tend to block not only the beta1-receptors, but also the beta2-receptors. P.T. Order at p. III-15, note 3.
[28] See discussion supra parts I.B.1. and 2.
[29] See discussion supra parts I.B.4.a. and b.
[30] See discussion supra part I.B.4.c.
[31] See discussion supra part I.B.4.d.
[32] There was no beta-blocker known prior to atenolol which was cardioselective but lacked ISA. Propranolol was not cardioselective and had no ISA. Alprenolol, oxprenolol, and pindolol were non-cardioselective but possessed ISA. Practolol and acebutolol were cardioselective and possessed ISA. P.T. Order at p. III-15.
[33] ICI sought to show that such an expectation did not exist through the testimony of its expert witness Dr. Rees. ICI's expert witness, Dr. Charles Rees, discussed the steric properties of a compound, those properties that are spatial and relate to a compound's shape and size and the electronic properties of a compound, those that are determined by the nature and character of the electrons in a compound and their movement within the compound. He then discussed how these properties define the physical and chemical properties of a compound which in turn define its biological properties.
It was his opinion that the steric and electronic properties of a particular beta-blocker have a significant impact on the its actual functioning. Rees, Tr. at pp. 546-47. In support of this opinion Dr. Rees engaged in a lengthy discussion of the basics of organic chemistry underlying these concepts. He presented an illustrated talk which included the alkanes, alkenes, cycloalkanes and aromatic rings with references to their respective reactivity, the various functional groups and their association with the chemical reactivity and planarity of a structure, the concept of the inductive effect (an unequal sharing of electrons in a single bond, see PX 866) and the conjugative effect (an actual flow of electrons from one part of the compound to another). Rees Tr. at pp. 585-606.
Dr. Rees' testimony did establish that the electronic and steric properties of the substituent parts of the various beta-blockers under consideration in this case are indeed different, but he never commented as to the significance of these differences on biological activity or the expectation that a compound would be beta-blocker. In his review of the prior art Dr. Rees focused on the similarities and differences in chemical structure and did not attempt to assess the relationship between chemical changes and biological properties in the prior art. All Dr. Rees would say is that in his opinion any change in the structure of a chemical compound will result in an unpredictable change in the biological properties though he could not comment on the expectation of biological activity associated with such a change in structure. Rees Tr. at pp. 687-89.
Dr. Rees, however, did agree that every steric or electronic difference will not necessarily result in a biological difference. Rees Tr. at p. 691. He further agreed that it is evident from the prior art that the "R" group can tolerate a very wide range of functions and still get some beta-blocking activity even though the "R" groups of the prior art compounds exhibit steric and electronic differences. Rees Tr. at p. 697. In particular, Dr. Rees agreed that many of these prior art "R" groups exhibit large steric and electronic differences, larger in many cases than the differences between practolol and atenolol. Rees Tr. at 693-94.
[34] These concepts are discussed and defined infra part I.E.2. of this Opinion which discusses the methodology employed in drug research. Generally these concepts involve substituting one atom, or group of atoms, in a compound which possesses the desired properties, a "lead compound", with atoms of a similar steric or electronic configuration in hopes that the desired properties will be retained. Loev, Tr. at pp. 272-82, 375-85.
[35] DX 545 is a textbook published in 1960, entitled "Medicinal Chemistry" by Alfred Burger, a Professor of Chemistry at the University of Virginia.
[36] Dr. Loev explained that he would have expected a structure such as atenolol to have beta-blocking activity for the following three reasons. First, due to the fact that almost any "R" group put in the "ABC" structure leads to a compound with activity, there would be a high likelihood that any new substituent in the "R" group position would also result in a compound having activity. Second, as is shown on DX 590C there is a whole diverse group of compounds with the amide structure of atenolol and all of these are beta-blockers such that another compound which was created that contained an amide group would also have such activity. The third reason given by Dr. Loev is the indication from DX 590B that almost anything can be put on the CH2 group, a methylene group of which atenolol possesses, with a retention of activity. Loev, Tr. at pp. 374-76.
[37] ICI's chemical experts also sought to create the impression that the knowledge of the prior art with respect to the chemical structure of beta-blockers was insufficient to create any general expectation that modification of the "R" group of the R-ABC structure would produce a useful beta-blocker.
[38] Dr. Hull was the head of the chemistry section at ICI in which Dr. LeCount worked.
[39] Dr. Rees explained by reference to the drawings on exhibit PX 902, the hypothesis Drs. Hull and LeCount had concerning the synthesis of a new cardioselective beta-blocker. Dr. Rees explained that their hypothesis centered on the hydrogen attached to the nitrogen in the acetamido of practolol with the thought that this might be the structural feature related to the selectivity of practolol's biological action. Rees, Tr. at pp. 607-08.
This hydrogen is acidic and gains its acidity from the adjacent carbonyl group. Since the nitrogen has free electrons which it likes sharing with other parts of the molecule, and oxygen likes collecting electrons, there is a flow of electrons from the nitrogen toward the oxygen, giving the hydrogen a partial positive charge, and the oxygen a partial negative charge. LeCount, Tr. at pp. 507-11; Rees, Tr. at pp. 608-09; PX 894; PX 893. In efforts to maintain this acidic hydrogen which formed the basis of Dr. LeCount's hypothesis, it was proposed that the amide nitrogen be replaced by a carbon. However, since carbon is not as willing as nitrogen to give up its electrons, it was further proposed to place two electron withdrawing groups on the carbon such that there would be a flow of electrons away from the hydrogen. Thus a small positive charge would be conferred on the hydrogen atom and a negative charge would be shared between the two oxygen atoms. LeCount, Tr. at pp. 512-14; Rees, Tr. at pp. 608-09; PX 894; PX 869. In addition, the aromatic ring adjacent to the carbon would provide additional inducement to the hydrogen to ionize thus, giving it a partial positive charge. Rees, Tr. at p. 609; Px 869.
In carrying out this proposal an unintended reaction occurred during the chemical conversion aimed at assembling the oxypropanolamine side chain which required that a protecting group be inserted in efforts to mask the ester group of the molecule from the unwanted reaction with isopropylamine. LeCount, Tr. at pp. 515-16; Rees, Tr. at pp. 612-13; PX 902. It was Dr. LeCount's intention to then carry out the chemical conversion to form the oxypropanolamine side chain and then remove the protecting group. LeCount, Tr. at pp. 515-16; Rees, Tr. at pp. 613-14; PX 895. However, when the intermediate compound which existed prior to the removal of the protecting group and the conversion back to the originally intended ester, was tested, it was found to be an active compound. Further, it was cardioselective and lacked ISA. This intermediate compound later became known as atenolol. LeCount, Tr. at pp. 515-17; PX 895.
[40] When Dr. LeCount was asked whether he ever considered simply turning the "R" group of practolol around, as an obvious route to atenolol, as suggested by Danbury, he answered no. LeCount, Tr. at p. 520. The Court does not dispute that this route may not have been considered and does not make a finding as to whether it was considered or not.
[41] PX 307, a 1970 book by Burger, entitled "Medicinal Chemistry" at page 307 states that "close collaboration among chemists, biologists and clinicians is most conducive to making novel drug discoveries." This statement indicates to the Court that collaboration of individuals possessing the advanced degrees urged by ICI may occur and be most desirable. However, it is not essential that the level of ordinary skill in the art for our purposes be characterized as a "team" possessing these degrees. There are smaller institutions of research than ICI that may not have the resources to devote such a team to this type of work and would still be able to achieve the desired results.
[42] Dr. Loev testified at trial concerning the topic of drug development strategies and, specifically, the knowledge as to this topic prior to 1969. Dr. Loev lectured on this topic throughout the sixties and continued to do so afterwards at various universities and throughout the world. To assist him in his testimony on this subject Dr. Loev referred to DX 597, a document he had prepared in conjunction with one of his previous lectures, which illustrates the general approach used by Dr. Loev and other experts in the field to arrive at a desired compound or modify a compound in hopes of improving its profile. Loev, Tr. at pp. 259-61.
[43] In footnote one, on page 405 of this textbook, congeners are defined as substances literally generated or synthesized by essentially the same synthetic chemical reactions and the same procedures.
[44] Footnote one on page 405 of this textbook states that "[c]ongeners as defined are, strictly speaking usually essentially the same as homologues; i.e., both represent sets of entities arising in essentially the same way."
[45] Footnote one at page 405 of this textbook describes analogues as substances that are analogous in some respect to the prototype agent in chemical structure.
[46] Dr. Loev testified that what Dr. Schueler calls the "method of variation" he called "lead-following" and that each of these terms describes the same approach to drug development. Loev, Tr. at pp. 264-65.
[47] DX 545 at page 72. This is an excerpt from the second chapter of a textbook entitled "Medicinal Chemistry," Second Edition, edited by Alfred Berger, Professor of Chemistry, University of Virginia, dated 1960. Dr. Loev described Professor Berger as the father of medicinal chemistry since he had been in the field so long and was the first to systematize and organize the field.
[48] PX 1, the now expired U.S. Patent 3,363,607, claims the chemical compound known as atenolol.
[49] The '032 patent is derived from a continuation-in-part patent application which was filed in November, 1971.
[50] Dr. Cruickshank was called as an expert witness in cardiology by ICI. Presently, he conducts his medical practice at Wythenshawe Hospital and is a Senior House Officer at the National Heart Hospital in London. He also is a cardiovascular consultant which included full time employment with ICI in this capacity from January 1, 1974 until June of 1990 mainly in the area of the development of beta-blockers which included a particular association with atenolol. While employed by ICI he in conjunction with Dr. Brian Prichard wrote a book entitled "Beta-blockers in Clinical Practice" (PX 208). He currently receives a pension and consulting fees from ICI.
[51] PX 234 is a study by Hansson et al., entitled "Long-Term Trial of Atenolol in Hypertension" published in December of 1977. As the title indicates, and the context of the paper confirms, the purpose of this study was to evaluate long-term effects, mainly side effects, of atenolol when given to patients for up to four years. The study was not aimed at evaluating the effectiveness of a 25 mg/day dose of atenolol in the treatment of hypertension. Furthermore the average daily dose was 174 mg. Admittedly the range of doses given for this average daily dose was 12.5 to 600 mg/day but there is no indication on any of the tables of data what patients were given what doses. Each table simply states the average daily dose which, in fact, was never lower than 152 mg. The presentation of data in this study was not aimed at producing nor segregating data as to the effectiveness of a daily dose of 25 mg/day in the treatment of hypertension.
[52] PX 150, another study in which Zacharias was involved, entitled "Comparison of propranolol and atenolol in hypertension", published in 1977, confirms the prior belief that the dose response curves of the two drugs, propranolol and atenolol, were the same. However, it became known to the investigators, as a result of this study, that atenolol differs greatly from propranolol both in its metabolism and in its dose response curve. The authors admit that when they started to look at atenolol on a long term basis they naturally adopted the same principle of dose titration (a method where one starts drug therapy with a very low dose of an agent and slowly builds up the dose until the goal blood pressure is achieved or until some adverse reaction occurs. (Cruickshank, Tr. at pp. 1073-74)) as they had used with propranolol and it soon became apparent to them that atenolol was quite different from propranolol and that its effective dose range was much narrower. PX 150 at p. 113.
[53] The plasma half-life relates to the disappearance of the drug from the blood. Cruickshank, Tr. at p. 1078.
[54] The pharmacological half-life is a biological measure and relates to the activity of the drug at tissue level. Cruickshank, Tr. at p. 1079.
[55] PX 208, a book co-authored by Dr. Cruickshank, confirms that the first published study indicating that a beta-blocker could be given once daily was in 1976. PX 208 at p. 378.
[56] The Isoprenaline test is a measure of beta-2 blockade. When isoprenaline is given, the beta-2 stimulation causes an increase in blood flow and a decrease in peripheral resistance which would not be affected by a low dose of atenolol. Cruickshank, Tr. at pp. 1084-85; PX 263.
[57] The FEV1 test also measures the relative degree of beta-2 blockade. It involves the measurement of forced expiratory volume in one second. Cruickshank, Tr. at p. 1085; PX 504. If there has been a significant degree of blockade of the beta-2 receptors in the bronchi the FEV1 would decrease. Thadani, Tr. at p. 221.
[58] Dr. Hirschmann also testified at trial that persons skilled in the art as of February 21, 1969 would have known from the patent disclosure itself that the most beta1-selective doses would be at the lower end of the disclosed dose range. He, as did Dr. Cruickshank, interpreted the disclosure of the '032 patent to teach that selectivity is not absolute and that it relates to dose. Also, in order to maximize selectivity, a person of ordinary skill in the art would want to use the lowest dose that was effective as an antihypertensive. Hirschmann, Tr. at pp. 823-26. It appears that Dr. Hirschmann, like Dr. Cruickshank, believes that the use of dose titration would allow a cardioselective dose to be selected. This, however, still does not take into account the prevailing contrary view at this time that increasing atenolol's dose would increase its effectiveness.
[59] Hydrophilicity means that the drug is soluble in water. If a drug is hydrophilic it will enter the brain in a lesser concentration and thus the central nervous system as compared to a drug which is soluble in lipids or lipophilic. A lipophilic drug will cross the blood brain barrier into the central nervous system much more easily such that more side effects may be seen with such a drug. Thadani, Tr. at pp. 155-56.
[60] Also in the second edition of "Drugs for the Heart" published in 1987, a preference for ISA is expressed. It states that atenolol goes a long way to fulfill the requirements of the ideal beta-blocker but cites the lack of ISA as a disadvantage. Dr. Thadani testified that these statements are based on a review of different articles which were published up to the point of publication or just prior to publication. Thadani, Tr. at pp. 70-72; DX 525.
[61] DX 510 at p. 258; DX 512 at pp. 572s-73s; DX 513 at p. 543a; DX 515 at p. 9; DX 516 at pp. 417-20; DX 519 at p. 261; DX 522 at p. 120; DX 523 at pp. 718-19; DX 524 at p. 11; DX 525 at p. 8.
[62] ICI would have the Court discredit the references cited by Danbury because some of the studies which include clinical data on relative anti-hypertensive effectiveness do not include atenolol and the remainder of the references are simply general observations unsubstantiated by clinical evidence. In the studies in DX 513 and DX 515, cited by Dr. Thadani, the beta-blocker drug metoprolol was included which is cardioselective and lacks ISA like atenolol. Thadani, Tr. at p. 58. The Court will note that Dr. Cruickshank in assembling his overview PX 410, did not find it unreasonable to use as a surrogate for practolol the beta-blocker drug epanolol which, as he described, is "virtually identical in its pharmacological properties to practolol." Cruickshank, Tr. at p. 1014.
Dr. Thadani made reference to DX 522 which is his 1983 article entitled "Beta Blockers in Hypertension". He stated that in reaching the conclusion that all beta-blockers are equally effective, all of the public studies which are based on references were considered and reviewed. Thadani, Tr. at p. 63. Dr. Thadani also based his opinion on DX 523 which is an excerpt from the Fifth Edition, 1983, of a publication entitled "AMA Drug Evaluations". Dr. Thadani testified that this is unbiased information which is critically reviewed. Thadani, Tr. at p. 65.
ICI is also critical of PX 154 and DX 528 introduced at trial by Danbury in support of the view that ISA does not reduce the effectiveness of a beta-blocker in the treatment of hypertension. The Court is not convinced that the references presented by Danbury are of so little relevance and credibility as to be ignored. In reviewing the references cited by Danbury the Court notes that they all contain numerous references to other studies and publications.
[63] The Court notes that at many times during Dr. Cruickshank's testimony it was difficult to ascertain his meaning, particularly during cross examination, as he became quite adversarial and reluctant to answer questions with either an affirmative or negative response.
[64] The first study on PX 413 is the Tsukiyama study (PX 244) which found that there was no difference between acebutolol and atenolol. The second study, the Wilcox study (PX 137), the investigator concluded, and Dr. Cruickshank agreed, that the comparison with acebutolol was unfair since acebutolol was probably under-dosed. However, Dr. Cruickshank included this study in the overview anyway.
The third study, the Neutel study (PX 281), found that acebutolol was superior to atenolol. The fourth study, the De Backer study (PX 282), favored acebutolol. As to this particular study Dr. Cruickshank testified that the data had to be pulled off of graphs with the assumption that the figures were drawn to scale since there was no data elsewhere in the article relating to blood pressure. This study was not aimed at comparing hypertensive effects but was comparing the efficacy tolerance and effect on serum lipids of acebutolol.
The fifth study, the Sau study (PX 283), Dr. Cruickshank acknowledged is an abstract and not an article. Dr. Cruickshank agreed that many times abstracts are not accepted for publication after a peer review. Dr. Cruickshank also agreed that this study was an open study in which one drug was always given last and that the results from this study should be stricken as this was a poor study and he believed there was an unfair advantage to the last drug given.
The sixth study, the Turner study (PX 284) concluded that the two drugs were equally effective. Dr. Cruickshank, however, believing in his methodology of treatment as to the studies in the overview credited atenolol with a 3.8 difference because of the fact that one or two patients had a better than average response to atenolol.
In testifying about the seventh study, the Costa study (PX 285), Dr. Cruickshank acknowledged that studies which dosed once a day were lumped together with studies in which the dosing was three to four times a day and that the numbers in a study were just put into the overview without any regard for the comments of the investigators as to the statistical significance of the data generated.
The last study, the Lewis study (PX 286), was aimed at examining psychological side effects and not comparing blood pressure lowering efficacy. The Court found it necessary to thoroughly discuss each of these studies and the associated testimony of Dr. Cruickshank in order to illustrate with just one example, that of acebutolol, the inherent unreliability of the Cruickshank overview due to its methods of data interpretation and inclusion and its disregard for the opinions of the investigators actually involved in the studies.
[65] Since the majority of the studies measured supine or lying diastolic blood pressure this was the preferred reading and when available was the measurement taken. If a study did not record supine blood pressure then a reading for sitting blood pressure was next preferred and, finally, if all that was available was a standing diastolic blood pressure that was used. Cruickshank, Tr. at p. 1008.
[66] The Court does not agree with ICI that Professor Sleight's testimony with respect to Dr. Cruickshank's overview analysis is within his expertise. Dr. Sleight's involvement with large clinical trials, and experience in the interpretation of studies and overviews in his cardiology research and his involvement with statisticians as part of his work in cardiology does not, in the view of the Court, qualify him to discuss the statistical aspects of the overview. A statistical expert would be the appropriate expert for such a discussion. Therefore, corroboration by Professor Sleight as to the validity and significance of Dr. Cruickshank's overview is unpersuasive. Sleight, Tr. at pp. 1342-56. Furthermore, Dr. Sleight testified that he did not study any of the underlying reports of the overview and that he was relying totally on what Dr. Cruickshank told him as to these studies and the data generated. This further supports the Court's conclusion that Professor Sleight was in no position to state whether the underlying studies were scientifically valid or if the overview was valid. Sleight, Tr. at pp. 1342-56, 1394.
[67] In response to the criticism by Danbury that the studies underlying the overview were not randomized so that atenolol or the comparator drug was always administered following the other, thus favoring the last-administered drug, Dr. Cruickshank recalculated the data, removing all non-randomized studies that might favor atenolol, where atenolol was given last. The mean difference in diastolic blood pressure was recalculated and found to be 3.7 mmHg favoring atenolol which Dr. Cruickshank still characterized as a significant advantage for atenolol. Thadani, Tr. at pp. 83-86; Cruickshank, Tr. at pp. 1027-29.
[68] The Court will not address the evidence presented by ICI in support of its assertion that small reductions in blood pressure lowering provide significant benefits in reduced stroke and myocardial infarction since the Court has determined that the evidence does not support the claim that the diastolic blood pressure lowering capability of atenolol shows an overall benefit of 4 mmHg (revised to 3.7 mmHg) as compared with prior art beta-blockers.
ICI presented evidence through the testimony of Dr. Sleight, summarized on exhibit PX 817, concerning the MacMahon, Collins and Linbald studies (PX 104; PX 125; PX 287). These are studies which investigated the effect of blood pressure on the incidence of stroke and/or myocardial infarction and/or coronary heart disease.
[69] See also exhibit PX 163 at pp. 2117-18 under the heading "The Pressure-Flow-Resistance Diagram."
[70] Dr. Thadani testified at trial that the method by which beta-blockers lower blood pressure is still not known today and that neither the pharmacological properties of ISA or beta1selectivity have any clinical significance in the ability of a beta-blocker to lower blood pressure. Thadani Tr. at pp. 28, 55.
[71] The Court believes that Dr. Cruickshank was not able to cite any study that indicates the heart rate has anything to do with lowering blood pressure. Cruickshank, Tr. at pp. 1176-78.
[72] Dr. Cruickshank testified that since the prior art beta-blocker acebutolol is "modestly" hydrophilic its central nervous side effects would be similar to those of atenolol. Cruickshank Tr. at pp. 1119-1120.
[73] Dr. Cruickshank agreed that all beta-blockers exhibit certain side effects that are a result of the function of beta-blockade by beta-blockers. Cruickshank, Tr. at pp. 1131, 1134; PX 145.
[74] The side effect referred to as "cold extremities" means cold fingers and toes. Cruickshank, Tr. at p. 1129.
[75] This is a side effect which limits the dose that you would want to give to a patient yet is not so severe at a lower dose that you need to withdraw the patient from the drug. Cruickshank, Tr. at p. 1127.
[76] ICI Americas Inc. ("ICI Americas") is plaintiff ICI's corporate operating subsidiary doing business in the United States. ICI Pharmaceuticals Group is a business unit of ICI Americas which is engaged in the research, development, manufacturing, marketing and sale of pharmaceutical products in the United States. ICI PLC is the corporate entity located in London, England and is the owner of the '032 patent. Black, Tr. at pp. 1426-30.
[77] TENORMIN, ICI's brand name for the beta-blocker atenolol, is cardioselective, hydrophilic, lacks ISA and is given in tablet form, once daily for the treatment of hypertension. TENORMIN was approved by the FDA for treating hypertension in August 1981. ICI Americas introduced Tenormin in the United States market for treating hypertension in September of 1981 to a limited physician audience. In October of 1981 a full launch of the product was commenced. Black, Tr., at pp. 1436, 1440, 1441.
[78] TENORETIC is the combination of the beta-blocker TENORMIN with the diuretic chlorthalidone. TENORETIC was approved by the FDA for the treatment of hypertension in June of 1984 and was launched by ICI in August of 1984. Black, Tr., at pp. 1479-80.
[79] The term "noisy" was used by Mr. Black to describe the market in the sense that there is a lot of promotional activity in the hypertensive marketplace and particularly with the competitive beta-blockers. Black, Tr. at p. 1437.
[80] The data on these graphs originated from a large external pharmaceutical audit service which is called IMS Americas which offers data on many aspects of the pharmaceutical industry. It was Mr. Black's opinion that the industry regards this type of data as being extremely reliable. This is the primary source from which ICI Americas obtains its market information for use in evaluating its products' performances. ICI Americas has used such data extensively in evaluating TENORMIN. 1444-1451.
[81] Inderal is the brand name for the beta-blocker propranolol. Black, Tr., at p. 1438.
[82] Corgard is the brand name for the beta-blocker natolol. Black, Tr. at p. 1439.
[83] Lopressor is the brand name for the beta-blocker metoprolol. Black, Tr. at p. 1438.
[84] The Court will note, however, that this description as to the performance of the propranolol products may be somewhat exaggerated and distorted by the fact that lower cost generic sales are combined with higher-price Inderal sales. The Inderal patent expired in 1985. Black, Tr. at pp. 1507-09.
[85] The data as to TENORETIC also originated from IMS data. ICI Americas uses this data to assess TENORETIC'S commercial success. Black, Tr. at p. 1484.
[86] 35 U.S.C. § 282 provides, in pertinent part, as follows:
A patent shall be presumed valid. Each claim of a patent (whether in independent, dependent, or multiple dependent form) shall be presumed valid independently of the validity of other claims; dependent or multiple dependent claims shall be presumed valid even though dependent upon an invalid claim. The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.
35 U.S.C. § 282 (1988).
[87] ICI asserts that Danbury has failed to present any prior art more pertinent than that already considered by the Patent Office in allowing the claims of the '032 Patent and, thus, the presumption of validity is of special significance and it is more difficult for Danbury, as the party asserting invalidity, to carry its burden of proof. PFC at p. 195. The Court is aware that while it must "give `appropriate consideration and weight' to the PTO's decision, its decision is not controlling nor binding on the court [and that] the courts can and do decide differently from the PTO examiner" based on the evidence presented to a court at trial. Badalamenti v. Dunham's Inc., 680 F.Supp. 256, 260 (E.D.Mich.1988), aff'd without opinion, 862 F.2d 322 (Fed.Cir.1988), cert. denied, 490 U.S. 1047, 109 S.Ct. 1955, 104 L.Ed.2d 425 (1989).
[88] All three chemical experts, Dr. Rees, Dr. Hirschmann and Dr. Loev confirmed that such a characterization of these compounds as a class existed and that the class was associated with a common structure and activity. Dr. LeCount also testified about this. Loev, Tr. at pp. 286-311; LeCount, Tr. at pp. 484-86; Rees, Tr. at pp. 684-85; Hirschmann, Tr. at pp. 872-73.
[89] ICI points to passages at pages 780 and 785 in DX 505, an article by Dollery et al. entitled "Clinical Pharmacology of Beta-receptor-blocking Drugs" published in 1969.
[90] The instructiveness of Merck is not diminished by the fact that it involved an alleged new use for a known compound and this case involves an alleged new use for a novel compound.
[91] Citing Graham the Federal Circuit explained that the rationale for considering evidence of "secondary considerations" is to provide the Court with objective evidence of how the patented invention is viewed in the marketplace, by those interested in the invention. Demaco Corp. v. F. Von Langsdorff Licensing Ltd., 851 F.2d 1387, 1391 (Fed.Cir.), cert. denied, 488 U.S. 956, 109 S.Ct. 395, 102 L.Ed.2d 383 (1988).
[92] Assuming ICI had established a prima facie case of nexus, the Court's conclusion that the invention claimed would have been obvious, would not have been altered. "[E]vidence rising out of the so-called `secondary considerations' must always when present be considered en route to a determination of obviousness." Stratoflex, Inc., 713 F.2d at 1539. Although this evidence "must be considered, [it does] not control the obviousness conclusion." Newell Companies, Inc., 864 F.2d at 768.
[93] PX 3, at column 5, line 54.
[94] Using the same principle of dose titration as was used with propranolol, Dr. Zacharias in the early seventies would quickly increase the daily doses of atenolol up to the thousand milligram range in an effort to get even better blood pressure lowering results since this approach had previously been successful with propranolol. Cruickshank, Tr. at pp. 1072-73, 1109-1111; PX 150 at p. 113.
[95] Cruickshank, Tr. at pp. 1098-1116; PX 152; PX 141; PX 208 at p. 378; PX 153; PX 3; PX 142; DX 530.
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24 Cal.Rptr.3d 474 (2005)
126 Cal.App.4th 993
Eldon Ray BLUMHORST, Plaintiff and Appellant,
v.
JEWISH FAMILY SERVICES OF LOS ANGELES et al., Defendants and Respondents.
No. B170904.
Court of Appeal, Second District, Division Five.
February 14, 2005.
Review Denied April 27, 2005.
*476 Law Office of Marc E. Angelucci and Marc E. Angelucci for Plaintiff and Appellant.
O'Melveny & Myers, Gordon E. Krischer, Adam J. Karr, Jeffrey E. Raskin, Los Angeles; California Women's Law Center, Vicky Barker, Manhattan Beach, Nancy Solomon, Woburn, MA and Marci Fukuroda for Defendants and Respondents Jewish Family Services of Los Angeles, House of Ruth, Su Casa Family Crisis and Support Center, Domestic Violence Center of the Santa Clarita Valley, Rainbow Services, Ltd., Peace and Joy Care Center, Southern California Alcohol and Drug Program, Inc., Haven Hills, Inc., and Young Women's Christian Association of Glendale, California.
Morris Polich & Purdy, Beth Kahn, Richard H. Nakamura, Jr., Los Angeles, and Maureen M. Home for Defendant and Respondent Haven House, Inc.
DLA Piper Rudnick Gray Cary U.S., and Justin S. Suhr, Los Angeles, for Battered Women's Justice Project as Amicus Curiae on behalf of Defendants and Respondents.
Helene E. Swanson and Jaime M. Gher, San Francisco, for The California Commission on the Status of Women as Amicus Curiae on behalf of Defendants and Respondents.
Nancy K.D. Lemon and Amy Keating for California Alliance Against Domestic Violence as Amicus Curiae on behalf of Defendants and Respondents.
*475 KRIEGLER, J.[*]
In this civil rights action, plaintiff and appellant Eldon Ray Blumhorst appeals from a judgment of dismissal, following the sustaining of a demurrer without leave to amend and the granting of judgment on the pleadings, in favor of defendants and respondents Jewish Family Services of Los Angeles, House of Ruth, Inc., Su Casa Family Crisis and Support Center, Domestic Violence Center of the Santa Clarita Valley, Rainbow Services, Ltd., Peace and Joy Care Center, Haven Hills, Inc., Southern California Alcohol and Drug Program, Inc., Young Women's Christian Association of Glendale, California, and Haven House, Inc. (collectively, shelters).[1] Because Blumhorst lacked standing to bring the action, individually or as a civil rights "tester,"[2] we affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Allegations of the Complaint
On March 12, 2003, Blumhorst filed a complaint for an injunction against shelters for violation of Government Code section 11135.[3] Blumhorst alleged each shelter *477 operated a domestic violence shelter and received financial assistance from the State of California. Between December 9 and December 16, 2002, Blumhorst called shelters' hotline and stated "he needed shelter from domestic violence perpetrated against him." "[Shelters] refused to provide [Blumhorst] with shelter because he is a man. It is [shelters'] policy to refuse ... shelter to men." He requested an injunction "permanently enjoining the denial of full and equal access to each [shelter's] benefits, programs and activities on the basis of sex."
Demurrer to the Complaint
Shelters each filed a demurrer to the complaint on the ground that the complaint failed to state a cause of action for violation of Government Code section 11135,[4] because shelters were lawful programs benefiting women which, pursuant to section 11139,[5] were exempt from the prohibitions of section 11135. Haven House, Inc. further contended, inter alia, that the complaint failed to state a cause of action because Blumhorst lacked standing, in that Blumhorst did not allege he was a victim of domestic violence in need of shelter who was discriminated against. He alleged only that he had made a setup call. Blumhorst filed opposition to the demurrers, contending he had standing as a civil rights tester and, accordingly, did not need to have a bona fide need for emergency shelter as a battered person. He further contended that section 11139 was unconstitutional. The trial court sustained the demurrer to each cause of action with leave to amend, stating, inter alia, the allegations concerning standing were deficient.
Allegations of the First Amended Complaint
On August 12, 2003, Blumhorst filed a first amended complaint for injunction against shelters, County of Los Angeles, and state defendants.[6] He alleged that male victims of domestic violence have been denied access to domestic violence shelters for years on the basis of their sex. There were many male victims of domestic violence. Blumhorst "is ... a battered husband. Today he walks with a limp ... from one of his ex-wife's assaults in which she hurled a piece of furniture at him. When [Blumhorst] was assaulted by his partner, he sought help from social service organizations but found little or no help because he was a male. Consequently, [Blumhorst] realized the injustice that males often face as domestic violence victims and he joined the National Coalition of Free Men's ... Los Angeles Chapter (`NCFM-LA')." "NCFM-LA ... decided to test state-funded domestic violence shelters to document whether they discriminate by sex. [Blumhorst] agreed to do the testing. Between December 9 and December 14, 2002, [Blumhorst] called state-funded domestic violence shelters who are defendants in this case. He stated that he was a domestic violence victim and that he needed shelter to escape his violent partner. Each defendant denied him shelter because he was a male, not due to capacity or other *478 reasons." In a separate cause of action against each shelter, Blumhorst alleged shelters operated a domestic violence shelter and received financial assistance from the State of California. Between December 9 and December 16, 2002, Blumhorst called each shelter and stated "he needed shelter from domestic violence perpetrated against him." He was refused shelter because he was a man. It was each shelter's policy to refuse shelter to men. He requested an injunction permanently enjoining the denial of full and equal access to each shelter's programs on the basis of sex.
Demurrer to the First Amended Complaint
Shelters each filed a demurrer to the first amended complaint on the ground, inter alia, the complaint failed to state a cause of action in that they were exempt from section 11135 pursuant to section 11139. Blumhorst filed opposition to the demurrers.
The trial court sustained the demurrers to the first amended complaint without leave to amend, on the ground that, shelters were exempt from section 11135 under section 11139, and section 11139 was not unconstitutional. A judgment of dismissal was filed in favor of shelters on all causes of action and this timely appeal followed.
DISCUSSION
Standard of Review
"In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. `We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.' [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal. Rptr. 718, 703 P.2d 58.) "To meet [the] burden of showing abuse of discretion, the plaintiff must show how the complaint can be amended to state a cause of action. [Citation.] However, such a showing need not be made in the trial court so long as it is made to the reviewing court." (William S. Hart Union High School Dist. v. Regional Planning Com. (1991) 226 Cal. App.3d 1612, 1621, 277 Cal.Rptr. 645.) "[W]e may affirm a trial court judgment on any basis presented by the record whether or not relied upon by the trial court." (Day v. Alta Bates Medical Center (2002) 98 Cal.App.4th 243, 252 & fn. 1, 119 Cal.Rptr.2d 606.)
Standing
Haven House, Inc. contends Blumhorst lacks standing to sue for a violation of section 11135. Blumhorst responds that he has standing for three reasons. First, Blumhorst argues the text and history of sections 11135 and 11139 indicate that broad standing was intended. In support of this assertion, Blumhorst relies on Kyles v. J.K. Guardian Sec. Services, Inc. (7th Cir.2000) 222 F.3d 289, 292. Second, Blumhorst contends he was "actually injured" in that he previously needed shelter *479 but none was available to men, and in any event, as a civil rights tester, he was sufficiently injured to establish standing. Blumhorst relies on Koire v. Metro Car Wash (1985) 40 Cal.3d 24, 219 Cal.Rptr. 133, 707 P.2d 195 to support this contention. Third, Blumhorst argues standing rules are relaxed for public interest purposes.
A litigant's standing to sue is a threshold issue to be resolved before the matter can be reached on the merits. (Hernandez v. Atlantic Finance Co. (1980) 105 Cal.App.3d 65, 71, 164 Cal.Rptr. 279.) "If we were to conclude that plaintiff did not have standing to maintain the action, not having been personally damaged by the defendants' conduct, then there would be no need to address the merits of her cause. Equally wasteful of judicial resources would be a resolution on the merits without reaching the standing issue." (Ibid.) We will not address the merits of litigation when the plaintiff lacks standing, because "`California courts have no power ... to render advisory opinions or give declaratory relief.'" (Municipal Court v. Superior Court (Gonzalez) (1993) 5 Cal.4th 1126, 1132, 22 Cal.Rptr.2d 504, 857 P.2d 325.) Standing "`goes to the existence of a cause of action.' [Citation.]" (5 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 862, p. 320.)
Lack of standing may be raised at any time in the proceeding, including at trial or in an appeal. (Associated Builders & Contractors, Inc. v. San Francisco Airports Com. (1999) 21 Cal.4th 352, 361, 87 Cal.Rptr.2d 654, 981 P.2d 499 [associational standing to seek writ of mandate under Code Civ. Proc., § 1086]; Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 438, 439, 261 Cal.Rptr. 574, 777 P.2d 610 [citizen standing to seek writ of mandate to compel public agency to perform its public duty]; 5 Witkin, Cal. Procedure, supra, Pleading, § 862, p. 320.) We may decide a standing issue even if the trial court did not rule on the issue. (Hernandez v. Atlantic Finance Co., supra, 105 Cal.App.3d at p. 71, 164 Cal.Rptr. 279; 5 Witkin, Cal. Procedure, supra, Pleading, § 862, p. 320.)
"Standing requirements will vary from statute to statute based upon the intent of the Legislature and the purpose for which the particular statute was enacted." (Midpeninsula Citizens for Fair Housing v. Westwood Investors (1990) 221 Cal.App.3d 1377, 1385, 1387, 1389-1390, 1393, 271 Cal.Rptr. 99 [in a suit under a now modified unfair competition statute, injury was not required, because the then-existing version of the statute expressly gave standing to "the general public" to sue for relief].)
Code of Civil Procedure section 367 provides: "Every action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute." (Accord, 5 Witkin, Cal. Procedure, supra, Pleading, § 862, p. 320.) "The issue of whether a party has standing focuses on the plaintiff, not the issues he or she seeks to have determined." (Torres v. City of Yorba Linda (1993) 13 Cal. App.4th 1035, 1040, 17 Cal.Rptr.2d 400.) "A person who invokes the judicial process lacks standing if he, or those whom he properly represents, `does not have a real interest in the ultimate adjudication because [he] has neither suffered nor is about to suffer any injury of sufficient magnitude reasonably to assure that all of the relevant facts and issues will be adequately presented.' [Citation.]" (Schmier v. Supreme Court (2000) 78 Cal.App.4th 703, 707, 93 Cal.Rptr.2d 580; see also Common Cause v. Board of Supervisors, supra, 49 Cal.3d at pp. 439-440, 261 Cal. Rptr. 574, 777 P.2d 610["[t]he purpose of a *480 standing requirement is to ensure that the courts will decide only actual controversies between parties with a sufficient interest in the subject matter of the dispute to press their case with vigor"]; Residents of Beverly Glen, Inc. v. City of Los Angeles (1973) 34 Cal.App.3d 117, 129, 109 Cal. Rptr. 724 [associational standing to sue on behalf of members who were injured by defendant].) "California decisions ... generally require a plaintiff to have a personal interest in the litigation's outcome." (Torres v. City of Yorba Linda, supra, 13 Cal.App.4th at p. 1046, 17 Cal.Rptr.2d 400.) "[T]he purported `public interest' litigation exception [to the personal interest requirement] ... is usually applied in cases where an association sues on behalf of its members." (Ibid.)
1. Standing Under Section 11139
We turn first to Blumhorst's contention that the text and history of sections 11135 and 11139 indicate broad standing was intended. We find no support for this position in the language or history of the statutes, nor in the reasoning of Kyles v. J.K. Guardian Sec. Services, Inc., supra, 222 F.3d 289, upon which Blumhorst relies.
"`In interpreting a statute, we apply the usual rules of statutory construction. "We begin with the fundamental rule that our primary task is to determine the lawmakers' intent. [Citation.] ... To determine intent. `"The court turns first to the words themselves for the answer."' [Citations.] `If the language is clear and unambiguous there is no need for construction, nor is it necessary to resort to indicia of the intent of the Legislature (in the case of a statute)....'" [Citation.] We give the language of the statute its "usual, ordinary import and accord significance, if possible, to every word, phrase and sentence in pursuance of the legislative purpose. A construction making some words surplusage is to be avoided. The words of the statute must be construed in context, keeping in mind the statutory purpose.... Both the legislative history of the statute and the wider historical circumstances of its enactment may be considered in ascertaining the legislative intent."' [Citation.]" (Shewry v. Arnold (2004) 125 Cal.App.4th 186, 193, 22 Cal. Rptr.3d 488.)
In its original form, section 11135 et seq. was intended to shift the burden of proving unlawful discrimination from the person being discriminated against to the state agency administering the program. (Arriaga v. Loma Linda University (1992) 10 Cal.App.4th 1556, 1562-1565, 13 Cal. Rptr.2d 619.) Arriaga held that section 11135 did not create a private right of action. (10 Cal.App.4th at pp. 1562-1565, 13 Cal.Rptr.3d 619.)
Arriaga was effectively overruled by the Legislature in 1999 and 2001 by the addition of the fourth paragraph to section 11139, which did create a private right of action. The fourth paragraph was added to clarify the legislative intent that "a victim of unlawful discrimination" could enforce the prohibition against discrimination in section 11135 through an action for equitable relief without pursuing administrative remedies first. (Assem. Com. on Judiciary, Analysis of Assem. Bill No. 677 (2001-2002 Reg. Sess.) as introduced Feb. 22, 2001; Assem. Com. on Judiciary, Analysis of Assem. Bill No. 1670 (1999-2000 Reg. Sess.).)
While the Legislature did create a private cause of action for civil rights discrimination by the amendments to section 11139, it did not in relax traditional standing requirements. There is nothing in the plain language of sections 11135 and 11139, as amended, or in the legislative history, to warrant deviation from the rule that standing requires a plaintiff to allege that he or she was personally damaged.
*481 Blumhorst's reliance on Kyles v. J.K. Guardian Sec. Services, Inc., supra, 222 F.3d 289 to support his interpretation is misplaced. Kyles did not involve an interpretation of section 11135. Kyles held that employment testers had standing to sue for employment discrimination under title VII of the Civil Rights Act of 1964, 42 United States Code section 2000e, but not under section 1 of the Civil Rights Act of 1866, 42 United States Code section 1981. "[T]he two statutes are different in important respects. Title VII takes aim at a wide range of racially discriminatory practices which, among other things, either `deprive or tend to deprive any individual of employment opportunities....' 42 U.S.C. § 2002e-2(a)(2).... It also bestows on any person `aggrieved' by a violation of the statute the right to initiate a charge, § 2000e-5(b), signaling that Congress meant to extend standing to the outer boundaries laid down by Article III of the Constitution.... Section 1981, by contrast, does not proscribe any practice that might tend to interfere with one's ability to enter and enforce a contract; it protects the right to enter into and preserve a contractual relationship, period. Moreover, there is nothing in section 1981's language suggesting that Congress meant to stretch standing to the limits of Article III." (Kyles v. J.K. Guardian Sec. Services, Inc., supra, 222 F.3d at pp. 302-303.) While Kyles demonstrates that standing requirements may be relaxed by statute, there is nothing in section 11135 or section 11139 to support a finding that the Legislature intended to broaden the concept of standing to a party who did not suffer injury.
2. Actual Injury and Tester Standing
Blumhorst argues he had standing because he alleged an actual injury, and in any event, he had standing as a tester who was denied shelter on the basis shelter was unavailable to men. Neither argument has merit.
Blumhorst's argument that he alleged a sufficient actual injury to support a finding of standing is without merit. Blumhorst alleged he is a battered husband who walks with a limp, as a result of one of his ex-wife's assaults in which she hurled a piece of furniture at him. He further alleged that when he was assaulted by his partner, he sought help from social service organizations but found little or no help because he was a male. Later, Blumhorst realized the injustice that males often face as domestic violence victims, and he joined the Los Angeles Chapter of the National Coalition of Free Men, an organization that decided to test state-funded domestic violence shelters to document whether they discriminate by sex. Blumhorst alleged that he agreed to act as a tester, and between December 9 and December 14, 2002, he called state-funded domestic violence shelters who are defendants in this case. Blumhorst alleged that he stated that he was a domestic violence victim and needed shelter to escape his violent partner, but was denied because he was a male.
Blumhorst's pleadings allege he had suffered domestic violence in the past, not at the time he made the test calls to shelters. He does not allege that when he suffered domestic violence, he asked shelters for shelter and was denied. Thus, he does not allege he was a victim of shelters' alleged unlawful discriminatory practices. Accordingly, Blumhorst lacks standing, in that he was not personally aggrieved.
We also reject Blumhorst's argument that he has standing as a tester. As indicated above, sections 11135 and 11139 do not provide for standing by a party who is not personally injured. The right to sue for a violation of section 11135 exists in *482 injured victims of unlawful discrimination. The statute does not give standing to a plaintiff who was not injured by a defendant's alleged discriminatory practices.
Blumhorst's argument that Koire v. Metro Car Wash, supra, 40 Cal.3d 24, 219 Cal.Rptr. 133, 707 P.2d 195, supports the concept of standing for a tester is mistaken. There was no issue of standing in Koire, and no discussion of the concept is contained in the opinion. The plaintiff in Koire was personally the victim of discrimination, so the court had no occasion to discuss standing in general or standing as a tester. The law is well settled that cases are not authority for propositions not considered. (People v. Myers (1987) 43 Cal.3d 250, 265, fn. 5, 233 Cal.Rptr. 264, 729 P.2d 698.)
Further, for standing to seek the prospective relief of an injunction, a plaintiff must show a likelihood he will be harmed in the future if the injunction is not granted. (Coral Construction, Inc. v. City & County of San Francisco (2004) 116 Cal.App.4th 6, 17, 24, 10 Cal.Rptr.3d 65 [contractor who sought to enjoin a local affirmative action ordinance concerning bidding on public contracts, who had bid in the past and was able and willing to bid in the future, satisfied the likelihood of future harm requirement for standing to sue for injunctive relief].) Blumhorst makes no allegation of a likelihood of future harm in the first amended complaint.
3. Relaxed Standing Rules for Public Interests
Blumhorst's final argument on standing is that the rules are relaxed in matters involving the public interest. (See Residents of Beverly Glen, Inc. v. City of Los Angeles, supra, 34 Cal.App.3d at pp. 121-127, 109 Cal.Rptr. 724.) We reject application of the concept that cases involving public interests broaden the standing rules for purposes of the instant case. Section 11139, as discussed above, contains no suggestion of an intent to broaden the standing rule. Further, the Legislature identified the public interest in the following language in section 11139: "This article shall not be interpreted in a manner that would frustrate its purpose. [¶] This article shall not be interpreted in a manner that would adversely affect lawful programs which benefit the disabled, the aged, minorities, and women." Adoption of a relaxed rule of standing, applied to Blumhorst's first amended complaint, would frustrate the purpose of section 11139, in that the section specifically prohibits an interpretation that would adversely affect a lawful program benefiting women. Finally, "the purported `public interest' litigation exception [to the personal interest requirement] ... is usually applied in cases where an association sues on behalf of its members." (Torres v. City of Yorba Linda, supra, 13 Cal.App.4th at p. 1046, 17 Cal.Rptr.2d 400.) Blumhorst sued as an individual, not on behalf of an organization of victims of unlawful discrimination. In view of all of these considerations, it would be error to apply a relaxed standing rule on the theory Blumhorst's complaint fell under the relaxed rules of public interest litigation.
DISPOSITION
The judgment is affirmed.[7] Costs on appeal are awarded to respondents.
We concur: TURNER, P.J., and ARMSTRONG, J.
NOTES
[*] Judge of the Superior Court for the Los Angeles Judicial District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
[1] Where appropriate, Haven House, Inc. will be referred to as a separate party in this opinion.
[2] A tester in the context of this case is one who falsely poses as a victim of domestic violence in need of shelter in order to gather evidence of discrimination. (Cf. Kyles v. J.K. Guardian Sec. Services, Inc. (7th Cir.2000) 222 F.3d 289, 292, fn. 1 [employment discrimination tester].)
[3] Government Code section 11135 provides, in pertinent part: "(a) No person in the State of California shall, on the basis of race, national origin, ethnic group identification, religion, age, sex, color, or disability, be unlawfully denied full and equal access to the benefits of, or be unlawfully subjected to discrimination under, any program or activity that is conducted, operated, or administered by the state or by any state agency, is funded directly by the state, or receives any financial assistance from the state."
[4] Hereinafter, all statutory references will be to the Government Code, unless specified otherwise.
[5] Section 11139 provides, in pertinent part: "This article shall not be interpreted in a manner that would adversely affect lawful programs which benefit the disabled, the aged, minorities, and women."
[6] The county and state defendants are not parties to this appeal.
[7] Since we affirm the judgment on the ground of lack of standing, we do not address the other contentions raised by Blumhorst.
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720 A.2d 1058 (1998)
Robert D. HARMAN and Dorothy E. Harman, on Behalf of Christopher HARMAN, a minor, and In Their Own Right, Appellants,
v.
Bishnu C. BORAH, M.D. and Children's Hospital of Philadelphia and Judy Bernbaum, M.D., and Jeanne Parks, M.D., Appellees.
Superior Court of Pennsylvania.
Argued July 14, 1998.
Filed October 6, 1998.
Reargument Denied December 15, 1998.
*1059 Derek R. Layser, Philadelphia, or appellants.
Allan H. Starr, Philadelphia, for Children's Hosp. and Parks, appellees.
Paul E. Peel, Plymouth Meeting, for Bernbaum, appellee.
Sheila A. Haren, Philadelphia, for Borah, appellee.
Before KELLY and JOYCE, JJ., and CERCONE, President Judge Emeritus.
JOYCE, Judge.
Appellants, Robert D. Harman, Dorothy Harman, and their minor son, Christopher, appeal from the judgment entered on March 3, 1997. For the following reasons, we vacate the judgment entered in favor of CHOP, *1060 Dr. Parks and Dr. Bernbaum and remand for further proceedings consistent with this Opinion. The trial court's order granting summary judgment in favor if Dr. Borah is affirmed. The pertinent facts are as follows.
On January 10, 1986, Mrs. Harman took her then eighteen-month-old son Christopher to the office of Dr. Bishnu C. Borah, to obtain an MMR (measles, mumps and rubella) vaccination. On January 16, 1986, Christopher developed a fever and was again taken to Dr. Borah, who diagnosed left otitis media[1] and prescribed Amoxicillin. On January 19, 1986, Appellants took Christopher to the Lower Bucks Hospital emergency room, where he was admitted and diagnosed with left otitis media and encephalitis.[2] Dr. Borah supervised and managed Christopher's care at Lower Bucks Hospital. On January 19, 1986, Christopher was transferred to Children's Hospital of Philadelphia (CHOP), where he was treated for encephalitis by Dr. Jeanne Parks and Dr. Judy Bernbaum. He remained hospitalized until February 12, 1986.
As a result of the encephalitis, Christopher suffered permanent neurological damage, which produced cognitive and physical impairment. On January 11, 1988, Appellants instituted suit against Merck, Sharp and Dohme Research Laboratories, the manufacturer of the MMR vaccine, and related entities, as well as various employees of Merck, (hereinafter Merck) and Dr. Borah. The complaint alleged that the MMR inoculation caused the encephalitis and subsequent disabilities. Appellants further alleged that the vaccine was in a defective condition when supplied to Dr. Borah and that Merck was liable on theories of, inter alia, breach of warranty, strict liability and negligence. Appellants also alleged that Dr. Borah was negligent in administering the vaccine, that Dr. Borah failed to warn of the dangers of the MMR vaccination and that he failed to timely diagnose and treat the encephalitis.
On October 14, 1988, Appellants filed an amended complaint that named CHOP, Dr. Parks, and Dr. Bernbaum, as additional defendants. Appellants alleged, inter alia, that CHOP, Dr. Bernbaum, and Dr. Parks were negligent in failing to diagnose and treat Christopher's encephalitis properly with corticosteriods and failing to diagnose his encephalitis as a reaction to the MMR inoculation. Additionally, Appellants alleged that Dr. Parks, an intern at the time Christopher was hospitalized, was negligent in failing to obtain assistance from the consulting pediatrician, Dr. Bernbaum, who did not see Christopher until the morning after his admission to CHOP.
Appellants subsequently petitioned the court to dismiss the complaint without prejudice, which would enable Appellants to file a petition with the United States Court of Federal Claims pursuant to the National Vaccine Injury Compensation Program (Vaccine Act). 42 U.S.C.A. §§ 300aa-300aa-26.[3] The trial court granted Appellants' request on August 24, 1990. Appellants filed a petition under the Vaccine Act and obtained favorable judgments on January 11, 1993 and April 20, 1993. On May 10, 1994, Appellants praeciped to have the complaint reinstated. The case proceeded against Appellees, Dr. Borah, CHOP, Dr. Parks and Dr. Bernbaum.[4]
Prior to trial, Dr. Borah moved for summary judgment, claiming that Appellants' acceptance of the judgment entered by the United States Court of Federal Claims barred any further civil action against Dr. Borah as he was the administrator of the vaccine under the Vaccine Act. The trial court granted Dr. Borah's motion for summary judgment. Trial against the remaining defendants took place in April, 1996. The jury returned a verdict in favor of Appellees. Appellants filed post-trial motions which the *1061 trial court denied on November 25, 1996.[5] This timely appeal followed.
Appellant presents the following claims for our review: (1) whether the trial court erred in granting Dr. Borah's motion for summary judgment; (2) whether the trial court abused its discretion in refusing to grant a new trial when the court requested to speak off the record with a defense expert; (3) whether the trial court erred in denying Appellant's motion to disqualify a defense expert, Dr. Warren Grover; and (4) whether the trial court erred in permitting Dr. Peter Berman to offer opinion testimony.
Appellants first challenge the trial court's order granting Dr. Borah's motion for summary judgment.[6]
In reviewing a grant of summary judgment, an appellate court may disturb the order of the trial court only where there has been an error of law or a manifest abuse of discretion. Nevertheless, the scope of review is plenary and the appellate court shall apply the same standard for judgment as the trial court.... The record is to be viewed in the light most favorable to the nonmoving party, and all doubts as to the presence of a genuine issue of material fact must be resolved against the moving party.
Albright v. Abington Memorial Hospital, 548 Pa. 268, 279-280, 696 A.2d 1159, 1165 (1997) (citations omitted). "Summary judgment may be granted only in cases where the right is clear and free from doubt." Cappelli v. York Operating Co., Inc., 711 A.2d 481, 483 (Pa.Super.1998) (en banc). A nonmoving party must adduce sufficient evidence on an issue essential to his case and on which he bears the burden of proof such that a jury could return a verdict in his favor. Ertel v. Patriot-News Company, 544 Pa. 93, 101, 674 A.2d 1038, 1042(1996) cert. denied, ___ U.S. ____, 117 S.Ct. 512, 136 L.Ed.2d 401 (1996). "Failure to adduce this evidence establishes that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Id. See also Pa.R.C.P. 1035.2(2) (adverse party to a motion for summary judgment must show the existence of facts essential to the cause of action). We will evaluate Appellants' arguments with these principles in mind.
In determining whether any claims against Dr. Borah are barred by The National Childhood Vaccine Injury Act, we must examine various sections of the Act itself. "Statutory interpretation begins with the language of the statute itself." Pennsylvania Dept. of Public Welfare v. Davenport, 495 U.S. 552, 557, 110 S.Ct. 2126, 2130, 109 L.Ed.2d 588 (1990). The Vaccine Act provides for compensation to persons injured as a result of a vaccine, but prohibits recovery if an injured person has a pending civil action. However, the Act recognizes the situation where, as here, a civil action was filed before the effective date of the Act:
A plaintiff who on the effective date of this subpart has pending a civil action for damages for a vaccine related injury or death may, at any time within 2 years after the effective date of this subpart or before judgment, whichever occurs first, petition to have such action dismissed without prejudice or costs and file a petition under *1062 subsection (b) of this section for such injury or death.
42 U.S.C.A. § 300aa-11(a)(5)(A).[7]
The Vaccine Act further provides that before an injured person files a civil action, he or she must file a petition with the United States Court of Federal Claims:
No person may bring a civil action for damages in an amount greater than $1,000 or in an unspecified amount against a vaccine administrator or manufacturer in a State or Federal court for damages arising from a vaccine-related injury or death associated with the administration of a vaccine after the effective date of this subpart, and no such court may award damages in an amount greater than $1,000 in a civil action for damages for such a vaccine-related injury or death, unless a petition has been filed, in accordance with section 300aa-16 of this title, for compensation under the Program for such injury or death and
(i)(I) the United States Court of Federal Claims has issued a judgment under section 300aa-12 of this title on such petition, and
(II) such person elects under section 300aa-21(a) of this title to file such an action, or
(III) such person elects to withdraw such petition under section 300aa-21(b) of this title or such petition is considered withdrawn under such section.
Id. at 300aa-11(a)(2)(A).
Section 300aa-21 provides the petitioner with a choice of remedies once a petition has been filed. The Vaccine Act also states that if a person elects to accept the judgment awarded by the United States Court of Federal Claims, that person may not bring or maintain a civil action for damages against a vaccine administrator or manufacturer for the vaccine-related injury or death for which the judgment was entered. 42 U.S.C.A. § 300aa-21(a).
After judgment has been entered by the United States Court of Federal Claims or, if an appeal is taken under section 300aa-12(f) of this title, after the appellate court's mandate is issued, the petitioner who filed the petition under section 300aa-11 of this title shall file with the clerk of the United States Court of Federal Claims
(1) if the judgment awarded compensation, an election in writing to receive the compensation or to file a civil action for damages for such injury or death, or
(2) if the judgment did not award compensation, an election in writing to accept the judgment or to file a civil action for damages for such injury or death.
... If a person elects to receive compensation under a judgment of the court in an action for a vaccine-related injury or death associated with the administration of a vaccine before the effective date of this part, or is deemed to have accepted the judgment of the court in such an action, such person may not bring or maintain a civil action for damages against a vaccine administrator or manufacturer for the vaccine-related injury or death for which the judgment was entered.
Id. at § 300aa-21(a).
It is evident from the plain language of the statute, that once a petitioner has elected to accept the award from the United States Federal Claims Court that the petitioner is barred from filing a civil action against an administrator of the vaccine for an injury resulting from the administration of a vaccine. See e.g., Gilbert v. Secretary of the Department of Health and Human Services, 51 F.3d 254, 257 (Fed.Cir.1995) (holding that a failure to timely reject a judgment awarded by the Court of Federal Claims precluded plaintiff from filing a civil action); and Flowers v. Secretary of the Department of Health and Human Services, 49 F.3d 1558, 1560 (Fed.Cir.1995) (petitioner's pending civil action in Ohio state court precluded her from filing a Vaccine Act petition). But see Schumaker v. Secretary of Dept. of Health and *1063 Human Services, 2 F.3d 1128, 1136 (Fed.Cir. 1993) (holding that a civil action, as defined by the Vaccine Act, does not include civil actions against non-manufacturers and non-administrators of the vaccine).
The National Childhood Vaccine Injury Act represents an effort to provide compensation to those harmed by childhood vaccines outside the framework of traditional tort law. Congress passed the law after hearing testimony 1) describing the critical need for vaccines to protect children from disease, 2) pointing out that vaccines inevitably harm a very small number of the many millions of people who are vaccinated, and 3) expressing dissatisfaction with traditional tort law as a way of compensating those few victims. Injured persons (potential tort plaintiffs) complained about the tort law system's uncertain recoveries, the high cost of litigation, and delays in obtaining compensation. They argued that government had, for all practical purposes, made vaccination obligatory, and thus it had a responsibility to ensure that those injured by vaccines were compensated. Vaccine manufacturers (potential tort defendants) complained about litigation expenses and occasional large recoveries, which caused insurance premiums and vaccine prices to rise, and which ultimately threatened the stability of the vaccine supply.
Schafer v. American Cyanamid Co., 20 F.3d 1, 2 (1st. Cir.1994). Clearly, the complicated structure of the Vaccine Act was designed to afford injured persons an option of either accepting an award from the United States Federal Claims Court or pursuing traditional tort remedies in federal district court or state court.
However, Appellants assert that an administrator's subsequent negligent acts in treating an adverse reaction to inoculation are severable from the act of administering the vaccine thereby constituting a viable civil action regardless of Appellant's acceptance of the award under the Vaccine Act. Our research has revealed no Pennsylvania case law addressing the viability of a civil action after an acceptance of an award under the Vaccine Act. The decisions of the federal district courts and courts of appeal, including those of the Third Circuit Court of Appeals while persuasive are not binding on Pennsylvania courts, even when a federal question is involved. Martin v. Hale Products, Inc., 699 A.2d 1283, 1287 (Pa.Super.1997). We nonetheless find the federal authorities instructive.
In Amendola v. Secretary of the Dept. of Health and Human Services, 989 F.2d 1180 (Fed.Cir.1993), the court considered whether the negligent act of administering the vaccine was covered under the Vaccine Act and, hence, whether plaintiffs were barred from bringing a civil action against the doctor who administered the vaccine. The Amendola court held that the negligent administration of a vaccine that causes injury constitutes a vaccine-related injury and is covered under the Act. Id. at 1186. In reaching this result, the court distinguished between an injury resulting from the vaccine's effects and an injury which occurs irrespective of the effects of the vaccine, such as contamination or the doctor dropping the infant while administering the vaccine. Id. See also 42 U.S.C.A. § 300aa-33(5) (defining vaccine-related injury or death as a result of one of the vaccines set forth in the Vaccine Injury Table, except the term does not include an illness, injury, condition, or death associated with an adulterant or contaminant intentionally added to such a vaccine.).
In interpreting the plain meaning of the statute, and considering the above authorities, we find that Appellants' action against Dr. Borah is barred by the acceptance of the judgment awarded by the United States Federal Claims Court. 42 U.S.C.A. § 300aa-21. As in Amendola, supra, the injuries sustained by Christopher were vaccine-related. Furthermore, Appellants stipulated that all of Christopher's injuries were vaccine-related. Stipulation, filed 11/18/92, at 2. Appellant's expert, Dr. Poser, signed an affidavit stating that the MMR vaccine administered to Christopher Harman was the cause of the post-vaccinal encephalitis. Affidavit, dated August 12, 1990. This affidavit was filed with Appellants' petition with the United States Claims Court. The United States Federal Claims Court awarded Appellants *1064 funds (not to exceed $795,540) sufficient to purchase annuities which would provide compensation for Christopher's unreimbursed medical expenses for life. Id. The award also provided compensation for pain and suffering, and impaired earning capacity. Id.
We recognize that under traditional tort remedies, the question of whether a physician's failure to diagnose or treat an existing condition has increased the risk of harm is a jury determination. Poleri v. Salkind, M.D., 453 Pa.Super. 159, 683 A.2d 649, 654 (Pa.Super.1996). "Our courts have recognized that in some instances the causal connection between the care provided by a physician and the resulting injury is not amenable to proof to a reasonable degree of medical certainty." Id. Appellants' expert opined that Dr. Borah's subsequent failure to diagnose and treat Christopher's reaction contributed to his injuries. Plaintiff's Complaint, Exhibit A. It is thus Appellants' position that Christopher's injuries from the encephalitis would not have been as severe if corticosteriods were administered during this reaction.
While we agree that the apportioning of the amount of harm caused by the reaction to the vaccine itself and the amount of harm caused by the alleged negligent treatment of this reaction is a determination left for a jury, the acceptance of the award by the United States Claims Court bars further recovery from Dr. Borah in this instance. By electing to receive the federal award, Appellants acknowledged that Christopher's injuries were vaccine-related. "Congress' overriding purpose was to provide an alternative to traditional tort litigation as a means of compensating persons who were injured by vaccines." Schumacher v. Secretary of Dept. of Health and Human Services, 2 F.3d 1128, 1133 (Fed.Cir.1993). Appellants were compensated by the award for Dr. Borah's acts or omissions which under the facts of this case produced vaccine-related injuries. We find that Congress intended this alternative remedy, if accepted by the injured party, to be the sole remedy available against vaccine manufacturers and administrators. Id. Permitting Appellants to recover in state court after accepting the United States Claims Court award would constitute a double recovery from the vaccine administrator and defeat the intent of the Vaccine Act. Id. "[Appellants] are entitled to one satisfaction for the harm which they have sustained." Capone v. Donovan, 332 Pa.Super. 185, 480 A.2d 1249, 1252 (Pa.Super.1984). We caution, however, that if Dr. Borah's acts or omissions were construed as negligent conduct which produced non-vaccine related injuries, the Vaccine Act would not prohibit a subsequent civil action against Dr. Borah. See e.g., Amendola, supra. This is not the case here. Accordingly, we affirm the trial court's order granting Dr. Borah's motion for summary judgment.
We next address Appellants' claim that the trial court committed reversible error when the judge conducted an off the record discussion with one of the defense experts. This discussion was held in the presence of the jury. The trial judge found that his cautionary instruction the following day was sufficient to remedy any appearance of impartiality. Trial Court Opinion, 2/27/98, at 25.
The facts of this case are similar to Fudala v. Leedom, 270 Pa.Super. 322, 411 A.2d 548 (Pa.Super.1979). In Fudala, the trial court engaged in a private discussion with a medical witness off the record but in the presence of the jury. Id. at 549. On appeal, we held that "conversations between the bench and the witness stand should only occur in those rare situations when such intervention is demanded by the interests of justice." Id. at 550. Even though the conversation was held out of the hearing of the jury, this Court concluded that the jury may well have misconstrued the court's conversation to the doctor as a judicial "imprimatur" on his credibility. Id. Moreover, our Supreme Court has held that a curative instruction is insufficient to rectify the appearance of impartiality in this instance. McKown v. Demmler Properties, 419 Pa. 475, 214 A.2d 626 (1965). We are therefore constrained to remand for a new trial as the trial judge's conduct may well have swayed the jury to give more *1065 weight to the defense.[8]
Summary judgment in favor if Dr. Borah affirmed. Judgment in favor of CHOP, Dr. Parks and Dr. Bernbaum vacated. Remanded for further proceedings. Jurisdiction relinquished.
NOTES
[1] Otitis media is defined as an inflammation of the middle ear. Stedman's Medical Dictionary, 1112 (25th ed.1990).
[2] Encephalitis is defined as inflammation of the brain. Id. at 506.
[3] The provisions of the Act bar recovery under the program if there is a pending civil action regarding a vaccine-related injury. See 42 U.S.C.A. § 300aa-11.
[4] Merck and its related entities were thereafter removed from the complaint as defendants.
[5] This order was made final by entry of judgment on March 3, 1997, after the notice of appeal had been filed. However, we will treat this appeal as lying from entry of judgment. See Pa.R.A.P. 905(a) (notice of appeal filed after the announcement of a determination but before the entry of an appealable order shall be treated as filed after such entry and on the day thereof). See also Snyder Heating Company, Inc. v. Pennsylvania Manufacturers' Association Insurance Company, 715 A.2d 483, 484 (Pa.Super.1998) (en banc). (holding that an appeal lies from entry of final judgment).
[6] Appellee Dr. Borah asserts that Appellants have waived their right to appeal the trial court's order granting Dr. Borah's motion for summary judgment because they included this claim in their motion for post-trial relief. See note Pa. R.C.P. 227.1 (a motion for post-trial relief may not be filed to orders disposing of, inter alia, motions for summary judgment). The order granting Dr. Borah's motion for summary judgment was not appealable until final judgment was entered disposing all claims of all parties. Pa.R.A.P. 341. Appellants properly included their claim against Dr. Borah in a 1925(b) statement as directed by the trial court. We find despite the Appellants' original procedural error, Appellants have properly preserved this claim for our review.
[7] The effective date of the Compensation Program is October 1, 1988, but the Act was amended in 1989. Pub.L. No. 101-239, Title VI § 6601(c)(1)-(7), 103 Stat. 2285, 2286 (1989). Because Appellants' petition was filed after the December 1989 amendments, the amendments apply to Appellants' petition.
[8] Because we are remanding for a new trial, we need not address Appellants' remaining claims.
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777 F.Supp. 990 (1991)
Paul BACHMAN, Plaintiff,
v.
BOARD OF TRUSTEES OF the UNIVERSITY OF the DISTRICT OF COLUMBIA, Defendant.
Civ. A. No. 86-74 SSH.
United States District Court, District of Columbia.
November 8, 1991.
Gary T. Brown, James McConville, Washington, D.C., for plaintiff.
Domenique Kirchner, Asst. Corp. Counsel, Washington, D.C., for defendant.
OPINION
STANLEY S. HARRIS, District Judge.
Plaintiff, Paul Bachman, brought suit against the Board of Trustees of the University of the District of Columbia (UDC) under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., alleging *991 racial discrimination in UDC's failure to promote him to the rank of Full Professor.
A two-week bench trial was conducted in September 1988. The parties submitted post-trial briefs in late spring 1989. The Court regrets the delay in resolving this case, caused in part by the difficulties posed by this matter as well as by the exigencies of an ever-burgeoning criminal calendar.[1]
On August 29, 1988, this Court granted in part and denied in part defendant's motion for summary judgment. The motion was granted with respect to denial of promotion for academic years 1984-85, 1986-87, and 1987-88. The motion was denied with respect to academic year 1985-86, and defendant's failure to promote Bachman for that year alone was the subject of trial.[2] Notwithstanding the Court's ruling on the motion for summary judgment, which was based in large measure on plaintiff's failure to set forth issues of material fact in opposing the motion, the Court allowed plaintiff to introduce some evidence relevant to UDC's alleged history of discrimination and to flaws in the procedures used for making promotion decisions in other years.[3]
Findings of Fact
Paul Bachman, a white male, was hired as an Assistant Professor by Federal City College (FCC) in 1971.[4] Bachman holds a Bachelor of Science degree from Wilkes College, a Master of Business Administration from the University of Scranton, and a Master of Arts from St. Francis College. In 1978, Bachman received a Doctorate of Business Administration (DBA) from The George Washington University. (This, in academic parlance, constitutes the "terminal degree" for Bachman's area of specialization.) Throughout his tenure at FCC and UDC, Bachman has been employed by the College of Public Management. Bachman was a faculty member of the Department of Management.[5] In 1979, he was promoted to the rank of Associate Professor.
Overview of the Promotion Process
The District of Columbia Faculty Association represents the faculty members within the bargaining unit of faculty at UDC. The collective bargaining agreement between UDC and the Association is embodied in the Master Agreement, which sets forth procedures and minimum eligibility standards for promotion. For promotion to Full Professor, applicants must have three years of service at the next lower rank, Associate Professor; must have a terminal degree, defined as a doctorate; and must have an evaluation rating of "`good' or better for the last academic year."
Under the Master Agreement, each department has the responsibility of forming its own Committee on Promotions. That committee "recommend[s], in order of priority, the department's candidates for promotion." The departmental committee's recommendation is forwarded to the Collegewide Committee on Promotions, which "review[s] the recommendations of the various department committees and ... recommend[s], *992 in order of priority, the College's candidates for promotion." Master Agreement, Section XII. Disagreements with the recommendations of either the departmental or collegewide committees are brought before the Faculty Review Committee, whose grievance review appears to be procedural rather than substantive.
Each academic year, a certain number of promotion slots are allocated to each college. The Vice-President for Academic Affairs and the President match the number of available slots to the priority rankings of each college's candidates.[6] That is, if a particular college has only one slot allocated to it, then only the top-ranked candidate will be promoted. If three slots are available, then the top three candidates will be promoted.
Supplementing, but not superseding, the minimum eligibility requirements of the Master Agreement are the UDC Faculty and Administrative Personnel Policies, which provide the most generalized of promotion criteria: education, teaching ability, scholarship and professional growth, service to the University, length of service, and service to the community.
In practice, at least within Bachman's college and department, decisions as to what weight to accord each of the criteria listed above were made after the candidates for promotion for a given year were known. Judith Ramey, a witness on behalf of UDC, testified that as a member of the Departmental Promotion Committee, the procedure was to (1) identify the candidates, (2) review the materials they submitted, (3) establish the criteria to be used for ranking purposes, and (4) vote. For example, for academic year 1985-86, candidates applied for promotion in December 1984. In January 1985 the Departmental Committee adopted the following criteria and weights to be used for evaluating candidates.
Maximum Points Available
Teaching 35
Scholarship 35
University Service 15
Community Service 15
___
100
Those weights differ from the ones used in preceding academic years. Indeed, the relative weight for each area generally changed from year to year.[7]
Two points become immediately obvious. First, the candidates did not know from year to year how they were to be evaluated in terms of the weighting of criteria due to the inconsistencies. Thus, they could not focus their applications in any meaningful way nor would they necessarily benefit from trying to improve their standing in a particular area. Second, and more important to this matter, the process was ripe for manipulation. The relative strength or weakness of a candidate in a certain area could be overcome by giving that category greater or lesser weight.
*993 One other procedural aspect is worthy of mention. The members of the Departmental Committee were drawn from all those faculty members in the department not seeking promotion for that academic year. Thus, candidates for promotion to Full Professor were evaluated by Assistant and Associate Professors, as well as by Full Professors.
Dr. George LaNoue, an expert on behalf of plaintiff, testified that there could not be a worse system.[8] First, comparisons were not abstractly objective, but rather were made on a year-to-year basis. Accordingly, a candidate's chances for promotion varied depending upon who the other candidates were in a given year. Second, candidates from different ranks were all thrown in the same pool. That is, someone seeking promotion to the rank of Associate Professor did not "compete" solely against other candidates for promotion to that rank. To evaluate their relative merit, different criteria geared to particular promotion ranks should have been used. The UDC process in effect obliged the committees to compare apples and oranges. Finally, the fact that the weighting system changed every year, after the candidates were known, was an invitation to skew the process.
In another anomaly, a candidate's ranking by his or her Departmental Committee was of great importance when it came time to be ranked by the Collegewide Committee, according to Dean William Crump, its head. If a professor was ranked first by his department even if that ranking occurred solely by virtue of that person's being the only candidate it could work in favor of the candidate.[9]
From the testimony presented, it also appears that very short shrift was given to the relative merits of candidates' academic achievements. Despite testimony from some faculty members to the contrary, which testimony was not credible, the process of evaluating accomplishments was primarily one of tallying. The number of "items" submitted by a candidate as support for achievement in any category was important; the quality was not. For example, Antonia Nowell, who testified for UDC, was a member of the departmental Committee on Promotions during several years, including academic year 1985-86. She could not recall any discussion of the merits or quality of any of the supporting materials proffered by any candidate. Similarly, Judith Ramey stated that if a candidate had written a book, for example, "we would just look to see if they wrote it." The material was "too voluminous" to do more than "itemiz[e]" or "skim" it. Although she testified that the committee was "not rushed" and could take its time in evaluating materials, when asked whether it would take up to two hours to review all of the supporting materials she stated that she did not think it took that long.
In addition to these apparent flaws in the basic procedures governing promotions, there was ample testimony that the invitation to manipulate was heeded. For example, Emmanuel Chatman, a member of the College Promotions Committee in 1983-84 and 1984-85, testified that Dean Crump, who chaired the Collegewide Committee, would always indicate his general attitude toward each applicant.[10] He further testified that Dean Crump disfavored promoting plaintiff. In 1984-85, the same year in which the Collegewide Committee requested the Departmental Committee to provide a basis for its rankings (see supra note 7), Chatman testified that Crump would indicate whom he supported, would know the applicants' backgrounds, and thereafter would establish the criteria. It was Chatman's belief that Dean Crump had a strong *994 preference for blacks, particularly black women. Chatman noted that the person preferred by Dean Crump in 1983-84 was "strong on research." In 1984-85, however, Crump's leading candidate, Beverly Farrall, a black woman, was weak on research. Chatman also testified that Crump "kept track" of what were supposed to be officially secret ballots through the use of different colored pens and paper, which he distributed.
Dean Crump chaired the Collegewide Committee in 1985-86, the year at issue. Promotion Process in Academic Year 1985-86
For academic year 1985-86, Dr. Carlyle Hughes, Chair (white), Dr. John Attaway (black), Dr. Beverly Farrall (black), Dr. Antonia Nowell (black), Dr. Lois Poag-Rhodes (black), Dr. Yearn Choi (Korean), and Judith Ramey (black) comprised the Departmental Promotions Committee. Three members of the department applied for promotion: plaintiff, Dr. A. Vincent Ashe (black), and Steven Stryker (white).
On January 23, 1985, the Departmental Committee met to review and "evaluate" the materials submitted by plaintiff. Each member filled in a secret ballot. The next day, Ashe's and Stryker's materials were reviewed. Each of those applications was missing some backup material, and Ashe and Stryker were allowed to provide additional information to the committee.[11] On February 5, 1985, the Committee met again to review and "evaluate" Ashe's materials.[12] Each member completed a secret ballot with respect to Dr. Ashe. At the same meeting, the Committee voted unanimously that Stryker did not meet the eligibility requirements and his candidacy was not accorded further review.
As noted previously, the criteria and weights for 1985-86 were: teaching, 35 points; scholarship, 35 points; University service, 15 points; and community service, 15 points. According to the Department's records regarding the submissions, plaintiff submitted documentation about his development of several chapters in a managerial economics text, the writing of five vocational pamphlets, the presentation of several workshops, and the development of instructional materials for three courses. In terms of University service, plaintiff had served on four committees and had updated student records in his department. With respect to community service, plaintiff had evaluated proposals submitted to the Small Business Administration. Dr. Ashe had presented papers, completed research in the UDC self-study program, had taken some courses, and had attended about a dozen conferences and workshops. Dr. Ashe had 11 activities listed under community service and another 11 items listed under University service.
With respect to both candidates, the review and evaluation of materials appeared to have been one of tallying, rather than of subjective review of the relative merit of a given activity or piece of scholarship. The secret ballots were totalled and averaged for each candidate.[13] Plaintiff's average score was 82.71; Dr. Ashe's average was 86.51. Accordingly, although both candidates were recommended for promotion, the Committee ranked Dr. Ashe first. From the testimony presented by members of the Committee, and from the ballots themselves, it is obvious that Dr. Ashe's superior ranking was based on his community and University service.[14]
On February 13, 1985, plaintiff wrote to Dean Crump, objecting to having been ranked second to Dr. Ashe. Plaintiff stated that he was more qualified than Dr. Ashe and that Dr. Ashe had been allowed to supplement his application while plaintiff had been denied that opportunity for academic *995 year 1984-85.[15] Crump responded that the departmental ranking "may, or may not, be significant."
On March 22, 1985, the Collegewide Committee met to consider the applicants for promotion.[16] In addition to Ashe and plaintiff, the candidates were Dr. Sandra Yates (black), Dr. Emmanuel Chatman (black), and Dr. Connie Ross (black). Ashe, Yates, and plaintiff sought promotion to Full Professor. Chatman and Ross sought promotion to Associate Professor. Two promotion slots were available.
At that meeting, the Committee decided to use the same criteria and weights it had used the previous year: department evaluation, 15; scholarship, 25; professional growth, 25; University service, 15; college and department service, 15; community service, 5; teaching, 10. Each department chair summarized the applications of his or her candidates. The underlying materials had been available for review earlier, although Melanie Brown testified that the Committee looked primarily at the number of accomplishments listed in each category. Dean Crump testified that his committee compared Associate Professors with Associate Professors and that they were judged more stringently than Assistant Professors seeking promotion. Nevertheless, there were no distinctions made between the two types of candidates in terms of separate rankings.
After the ballots were completed and scored, Dr. Yates was ranked first, Dr. Chatman second, plaintiff third, Ashe fourth, and Ross fifth. On March 27, 1985, Dean Crump officially recommended that the two promotion slots be awarded to Yates and Chatman, based on their rankings.
On March 28, having been informed of the results by Brown, plaintiff requested the Faculty Review Committee to review the Collegewide Committee's recommendation. The Faculty Review Committee concluded that it could not establish any procedural violations.
In July 1985, plaintiff received his contract notice for the upcoming academic year, which kept him at the rank of Associate Professor. Plaintiff then appealed to the University President, who denied his appeal on December 4, 1985.[17] On December 20, 1985, plaintiff filed charges with the Equal Employment Opportunity Commission (EEOC).
Conclusions of Law
In McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), the Supreme Court established a framework allocating the burdens of proof in Title VII cases. First, the plaintiff must establish a prima facie case. For promotion cases, including ones involving white plaintiffs, the prima facie case required by McDonnell Douglas is a showing that (1) the plaintiff "belongs to a protected group," (2) the plaintiff "was qualified for and applied for" the promotion, (3) the plaintiff "was considered for and denied the promotion," and (4) "other employees of similar qualifications who were not members of the protected group were indeed promoted at the time the plaintiff's request for promotion was denied." Daye v. Harris, 655 F.2d 258, 262 n. 11 (D.C.Cir. *996 1981) (quoting Bundy v. Jackson, 641 F.2d 934, 951 (D.C.Cir.1981)).[18] The Court finds that the plaintiff clearly established a prima facie case.
Once a plaintiff meets this burden, the defendant must then set forth "some legitimate, nondiscriminatory reason for the employee's rejection." McDonnell Douglas, 411 U.S. at 804, 93 S.Ct. at 1825. Although the defendant does not bear the burden of establishing the nondiscriminatory reasons by a preponderance of the evidence, the defendant's evidence must be sufficient "to allow the trier of fact rationally to conclude that the employment decision ha[s] not been motivated by discriminatory animus." Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 257, 101 S.Ct. 1089, 1096, 67 L.Ed.2d 207 (1981). Here, defendant offers its selection process as a legitimate, nondiscriminatory method of promotion under which, in the year in question, another candidate was found more qualified. While under other circumstances the Court might rationally conclude that such a system guarded against decisions based on racial animus, it is unable to do so in light of the evidence presented by plaintiff in response to defendant's claims.
Despite the defendant's burden of production, the ultimate burden of persuasion remains on the plaintiff. See Burdine, 450 U.S. at 256, 101 S.Ct. at 1095. Plaintiff does not, however, have to provide direct evidence of discrimination to prevail. See Postal Serv. Bd. of Governors v. Aikens, 460 U.S. 711 at 717, 103 S.Ct. 1478 at 1483, 75 L.Ed.2d 403. Plaintiff's ultimate burden may be met by either convincing the Court by a preponderance of the evidence that the refusal to promote "was motivated by a discriminatory reason" or by showing "`that the employer's proffered explanation is unworthy of credence.'" Postal Serv. Bd. of Governors v. Aikens, 460 U.S. 711, 717-18, 103 S.Ct. 1478, 1483 (1983) (Blackmun, J., concurring) (quoting Burdine, 450 U.S. at 256, 101 S.Ct. at 1095). Here, the Court believes that the defendant's explanation is unworthy of credence and is merely pretextual.
This decision, however, has not been an easy one. As the Supreme Court has recognized, decisions in discrimination cases are difficult and, in the end, the district court has to decide which party's explanation it believes. See Cooper v. Federal Reserve Bank of Richmond, 467 U.S. 867, 875, 104 S.Ct. 2794, 2799, 81 L.Ed.2d 718 (1984) (quoting Aikens, 460 U.S. at 716, 103 S.Ct. at 1482). Although on its face the promotion process has the potential to be a nondiscriminatory, evenhanded comparison of prospective candidates, in practice it was hardly so. The sum total of the evidence given credence and the facts found by the Court including, but not limited to, that the weight given the criteria changed annually; that quantity rather than quality determined a candidate's score; that a candidate's scholarly work was generally not studied, if even read, during the process; that the weight given was not decided until after the identity of the candidates was known; that the Dean in charge of the Collegewide Committee expressed personal opinions about the subjects and disfavored promoting plaintiff, had a preference for black women candidates, and manipulated the secret ballots so that he knew for whom members of the committee had voted all lead the Court to conclude that defendant's explanation is merely a pretext for a decision based at least partially on racial bias.[19] Supporting this conclusion is *997 the Court's belief that plaintiff was the more qualified candidate.[20] While not sufficient for liability on its own, this finding is probative of pretext. See Burdine, 450 U.S. at 259, 101 S.Ct. at 1096-97.
Therefore, the Court finds that plaintiff was discriminated against on the basis of race in violation of § 703(a)(1) of Title VII.[21]See 42 U.S.C. § 2000e-2(a)(1). Accordingly, the Court orders the defendant to pay plaintiff backpay of $11,787.53 and to add $1,768.13 to plaintiff's retirement fund.[22]
NOTES
[1] The Court does not believe that this delay has caused undue hardship, however, given that the objective sought by plaintiff when this suit was initiated promotion to the rank of Professor was achieved prior to trial. Indeed, it is the Court's view that this case proceeded to trial in large measure based on the availability of attorney's fees should plaintiff prevail, rather than on the need to seek a judicial resolution of the underlying controversy.
[2] Plaintiff's motion for reconsideration of the summary judgment rulings, made on the eve of trial, was denied.
[3] Based on that evidence, it is likely that but for the summary judgment rulings, the Court could have found that plaintiff should have been promoted in academic year 1984-85, the year in which Beverly Farrall was promoted while plaintiff was not.
[4] FCC was one of three predecessor institutions to UDC, which was created by the merger of FCC, Washington Technical Institute, and D.C. Teacher's College in 1977.
[5] Nine departments comprise the College of Business and Public Management: accounting, business economics and finance, business education and office administration, management, marketing logistics and public contracts, computer information and systems sciences, secretarial science, management technology, and accounting technology.
[6] There is no review of an individual candidate's merits by either the Vice-President for Academic Affairs or the President.
[7] In academic year 1984-85, for example, teaching was allocated 15 points, scholarship was allocated 30, and the category lumped together in the text as University service was allocated 30. It should be noted, moreover, that these point totals were created after the candidates had already been ranked and their materials had been forwarded to the Collegewide Committee. The Collegewide Committee had requested the Departmental Committee to provide some basis for its rankings. Upon doing so, the rankings changed and plaintiff was dropped from being ranked second to being ranked third. Although the Departmental Committee had originally recommended promoting plaintiff, it changed that recommendation after creating its post-hoc rationalization at the behest of the Collegewide Committee. Although the Court is not making a determination of whether plaintiff was discriminated against for academic year 1984-85, that year is instructive in showing how the process is subject to manipulation.
The criteria were weighted differently yet again for academic year 1986-87.
[8] Dr. LaNoue's academic area is the law and politics of education. He was accepted as an expert in the following areas: characteristics of academic careers, academic personnel management, discrimination in higher education, the application of civil rights law to higher education faculty, the application of social science theory and methodology to civil rights issues, the effect of the litigation process on civil rights plaintiffs, and the reputation of higher education institutions.
[9] In 1984-85, for example, Professors Truelove and Ross were the only promotion candidates from their respective departments and each was highly ranked by the Collegewide Committee.
[10] Chatman is black, as is Dean Crump.
[11] This same courtesy had been refused plaintiff the year before when questions had been raised about some of his supporting materials.
[12] Although the Committee had also met on January 31, 1985, it conducted no business because there was not a quorum present.
[13] There was conflicting testimony as to whether the ballots were averaged on January 23 for plaintiff or on February 5 for both candidates.
[14] It should be kept in mind that the relative weights were not decided upon until after the candidates were known.
[15] Part of Bachman's argument was that he had two Master's Degrees and that his terminal degree was in Management, his area of expertise. One of the curious aspects of faculty hiring and promotion at UDC, based on testimony from numerous witnesses, was the range of degrees (in terms of kind and area of specialization) found to be acceptable. Although a terminal degree is required for promotion to both Associate and Full Professor, UDC's definitions of terminal degrees is not limited to doctorates. Dean Crump, moreover, testified that the relative merit or value of doctoral degrees received scant attention in promotion decisions. Whether the degree came from a non-accredited program such as NOVA (the case with Dr. Farrall in 1984) or from a more prestigious institution did not matter: this seemed to be part of the "tallying" mentality.
[16] The Collegewide Committee members for that year were: Dean Crump, Chair (black), Melanie Brown, Secretary (black), Richard Clark (black), Carlyle Hughes (white), Peter Martin (white), Earl Wortham (black), Patrick Hughes (black), and Kantilal Jain (Indian).
[17] Claude A. Ford was then Acting President for UDC.
[18] The Court finds that the facts in this case, similar to those in Daye, "support the suspicion that the defendant is that unusual employer who discriminates against [whites]" and are sufficient to establish that plaintiff is entitled to use the McDonnell Douglas criteria to establish a prima facie case. See Parker v. B & O Railroad, 652 F.2d 1012, 1017-18 (D.C.Cir.1981) (citing Daye v. Harris). The Court finds it unnecessary to deal in detail with the legally analytical anomaly that on the UDC faculty, part of an educational institution, and in the District of Columbia, a geographic and political entity, blacks constitute a "majority" and whites are a "minority."
[19] In the face of such overwhelming evidence that defendant's "process" was manipulated, the Court is unwilling to find that such an arbitrary, unfair system insulates the defendant from Title VII.
[20] The Court is mindful that it is not well-qualified to judge the relative merits of UDC's faculty members; the fact that those charged with that task failed to carry it out in a meaningful way is, however, obvious.
[21] Plaintiff also argues that he was retaliated against in violation of § 704(a) of the Civil Rights Act of 1964. See 42 U.S.C. § 2000e-3. The Court, however, finds that plaintiff has failed to establish a prima facie case under this section for the promotion year involved here. Plaintiff's first grievance alleging race discrimination was not filed until December 20, 1985, after the promotion process for that year had been completed.
[22] See Affidavit of Ms. W. Sue Reddick, at 3.
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553 Pa. 569 (1998)
720 A.2d 121
COMMONWEALTH of Pennsylvania, Appellee,
v.
Mumia ABU-JAMAL, a/k/a Wesley Cook, Appellant.
Supreme Court of Pennsylvania.
October 29, 1998.
*571 Leonard I. Weinglass, David Rudovsky, Philadelphia, Daniel R. Williams, New York City, Stephen W. Hawkins, Philadelphia, Rachel H. Wolkenstein, for M. Abu-Jamal.
Catherine Marshall, Philadelphia, Robert A. Graci, Harrisburg, for Com.
Before FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, NEWMAN and SAYLOR, JJ.
*572 OPINION IN SUPPORT OF DENIAL OF APPELLANT'S MOTION FOR RECUSAL
CASTILLE, Justice.
On August 5, 1996, appellant filed an Application for Recusal requesting that I recuse myself from participating in the consideration or decision of his appeal pending in this Court stating the following concerns (1) I served as an Assistant District Attorney and as the District Attorney of Philadelphia County during certain periods when this matter was being tried or appealed; (2) As a former prosecutor, I allegedly have a "vested interest" in protecting my former colleagues such that I would be unable to judge appellant's claims of prosecutorial misconduct fairly; and (3) during my election campaign for the Supreme Court, I was endorsed by the Fraternal Order of Police ("FOP").
Under the existing practice of this Court, recusal has always been a matter of individual discretion or conscience and only the jurist being asked to recuse himself or herself may properly respond to such a request. Commonwealth v. O'Shea, 523 Pa. 384, 407, 567 A.2d 1023, 1034 (1989), cert. denied, 498 U.S. 881, 111 S.Ct. 225, 112 L.Ed.2d 180 (1990); In re Crawford's Estate, 307 Pa. 102, 108-09, 160 A. 585, 587 (1931). For the reasons set forth below, in an exercise of my discretion, appellant's application for recusal is denied.
1. Employment by the District Attorney's Office
Appellant first argues that I should recuse myself because I was employed by the Philadelphia District Attorney's Office throughout the period of his conviction and direct appeal. By way of background, appellant was tried and convicted of the first degree murder of Philadelphia Police Officer Daniel Faulkner in 1982.[1] Although I was employed *573 as an Assistant District Attorney in 1982, I did not personally prosecute or otherwise participate in appellant's trial or his direct appeal. I resigned from my position as an Assistant District Attorney shortly after appellant filed his notice of appeal from his sentence of death and did not return to the Philadelphia District Attorney's Office until I was sworn in as District Attorney in January of 1986. At that time, appellant's direct appeal was still pending before the Supreme Court and was argued on January 19, 1988. The Supreme Court affirmed the judgment of sentence on March 6, 1989. Commonwealth v. Abu-Jamal, 521 Pa. 188, 555 A.2d 846 (1989), reh'g denied, 524 Pa. 106, 569 A.2d 915 (1990), cert. denied, 498 U.S. 881, 111 S.Ct. 215, 112 L.Ed.2d 175 (1990), reh'g denied, 498 U.S. 993, 111 S.Ct. 541, 112 L.Ed.2d 551 (1990).
Appellant argues that my employment with the District Attorney's Office as an Assistant District Attorney at the time his trial proceeded in 1982 and as the elected District Attorney during part of the period of time that his direct appeal was pending between 1986 and 1989 per se warrants my recusal. With respect to my employment as an Assistant District Attorney, I find that there is no basis for my recusal based upon such employment, since I personally neither contributed to, nor participated in, the prosecution of appellant's case. Since I was not involved in any manner in the prosecution of appellant as an Assistant District Attorney, I was not privy to any special information that could possibly hamper my ability to fairly and impartially decide this appeal.
Second, appellant argues that my position as the elected District Attorney of Philadelphia while appellant's direct appeal was pending automatically warrants my recusal. However, as I have stated in other matters raising a similar issue,[2] during my tenure as District Attorney from January of 1986 through February of 1991, the Philadelphia District Attorney's office (consisting of approximately 225 attorneys and a total of *574 475 staff employees) each year disposed of over 65,000 criminal matters and several thousand appeals in both the Superior and Supreme Courts of Pennsylvania, as well as in the federal courts. Given the enormous volume of criminal cases processed in Philadelphia County, it is virtually impossible for any duly-elected District Attorney administering such a caseload to be personally familiar with the details of each and every criminal case and appellate proceeding prosecuted by the over 225 Assistant District Attorneys, Chiefs, or Deputy District Attorneys employed in that office. Indeed, with respect to appellant's matter, despite my position as District Attorney while his appeal was pending, I did not participate personally in the Office's appellate response to his appeal or otherwise gain knowledge of information exclusively within the control of the District Attorney's Office by virtue of my position. The mere placing of my name on the Commonwealth's brief as a formal administrative requirement fails to demonstrate that I was, per se, personally and directly involved with the prosecution or appeal of appellant's case such that a claim for recusal would be colorable.
I have not prejudged appellant's matter nor would I prejudge it simply because I served as District Attorney of Philadelphia and had a general responsibility for all matters that fell within my official capacity, this being but one of the hundreds of thousands. Given the absence of personal involvement with appellant's matter while I served both as an Assistant District Attorney and as the District Attorney, and upon review of the relevant case law, recusal is not warranted in this matter.
In Laird v. Tatum, 409 U.S. 824, 93 S.Ct. 7, 34 L.Ed.2d 50 (1972), then-Justice William Rehnquist was asked to disqualify himself in a matter that appeared before the United States Supreme Court based upon the fact that, as an Assistant Attorney General in the Department of Justice, he had publicly commented on the subject matter then pending before the Supreme Court (namely, the authority of the executive branch to gather information under the Constitution and federal statutes), and also because he had previously testified as an *575 expert witness on behalf of the United States Justice Department in United States Senate hearings inquiring into the very same subject. The respondents in Laird claimed that Justice Rehnquist's impartiality was "clearly questionable" because of his expert testimony in the Senate hearings, because of his intimate knowledge of the subject matter underlying the allegations before the Court, and because of his public statements about issues related to the pending matter prior to his appointment to the Court. Laird, supra, 409 U.S. at 825, 93 S.Ct. 7.
Rejecting respondents' arguments, Justice Rehnquist held that even though he held a high-level supervisory position in the Department of Justice while Laird was being investigated and prosecuted within the Department of Justice, his disqualification was not warranted since he personally did not have any advisory role in any matters involving Laird v. Tatum, had never signed a pleading or brief regarding the case, and had never personally participated in the trial or appeal of the matter on behalf of the Government. In support of his position that recusal was not warranted, Justice Rehnquist cited Schneiderman v. United States, 320 U.S. 118, 63 S.Ct. 1333, 87 L.Ed. 1796, reh'g denied, 320 U.S. 807, 64 S.Ct. 24, 88 L.Ed. 488 (1943), a matter in which former United States Supreme Court Justice Murphy did not disqualify himself even though the matter then before the Court had been prosecuted by the Department of Justice while Justice Murphy was the Attorney General of the United States.
Similarly, in Commonwealth v. Darush, 501 Pa. 15, 459 A.2d 727 (1983), this Court held that recusal was not required of a trial judge even though the trial judge, formerly serving as the District Attorney of the county, had personally prosecuted the appellant on charges unrelated to the matter presently before him, had taken a statement of a primary witness in the case before him concerning the appellant's charges while he was District Attorney, and had been the District Attorney when the offenses in question were committed by the appellant. The appellant argued that the trial judge should have recused himself because of his previous prosecutorial role and *576 prior contact with the appellant. This Court, however, rejected the appellant's argument:
[W]e have never held and are unwilling to adopt a per se rule that a judge who had participated in the prosecution of a defendant may never preside as judge in future unrelated cases involving that defendant. Absent some showing of prejudgment or bias we will not assume a trial court would not be able to provide a defendant a fair trial based solely on prior prosecutorial participation.
Commonwealth v. Darush, 459 A.2d at 731.[3]Accord Commonwealth v. Edmiston, 535 Pa. 210, 229-30, 634 A.2d 1078, 1088 (1993); In re Crawford's Estate, 307 Pa. at 109, 160 A. at 587.
Here, unlike the trial judge in Darush, I had no personal connection with appellant's matter. Thus, as in Darush, since there is no indication that I had any personal connection with appellant's matter while I was an Assistant District Attorney or as the District Attorney of Philadelphia County, recusal is not warranted. Moreover, recusal is further unwarranted where, as here, there has been no allegation or showing of any specific prejudgment or bias against appellant. Commonwealth v. Darush, 459 A.2d at 731. As this *577 Court stated in Reilly v. Southeastern Pennsylvania Transp. Authority, 507 Pa. 204, 489 A.2d 1291 (1985)
It is incumbent upon the proponent of a disqualification motion to allege facts tending to show bias, interest or other disqualifying events, and it is the duty of the judge to decide whether he feels he can hear and dispose of the case fairly and without prejudice because we recognize that our judges are honorable, fair and competent.
Reilly, 507 Pa. at 221-22, 489 A.2d at 1300 (emphasis added). As discussed below in more detail, appellant has failed to allege facts that would demonstrate bias, interest or other disqualifying events. Hence, this argument fails to compel my recusal. See Commentary to Canon 3 of the Code of Judicial Conduct.[4]
*578 As District Attorney of Philadelphia, I took an oath to uphold the Constitution of the United States and of this Commonwealth. I took a similar oath at the beginning of my tenure on this Court. I do not now take, and never have taken, such oath lightly. "Laws not enforced cease to be laws, and rights not defended may wither away." Thomas E. Moriarty, American educator, Laurence J. Peter, Peter's Quotations (1977).
Appellant next claims that because of my prior experience as a prosecutor, I have a "vested interest in defending" my former colleagues and that this "interest" would prevent me from fairly determining appellant's allegations of prosecutorial misconduct by attorneys in the Philadelphia District Attorney's Office. Appellant attempts to support this claim with references to entirely unrelated matters. Specifically, appellant claims that my public support of a particular Assistant District Attorney in the wake of certain judicial rulings in an unrelated case somehow affects my ability to judge the behavior of other prosecutors who handled this case. Such a claim cannot rationally be addressed because there is simply no logical connection between my public comments regarding a particular prosecuting attorney in a completely different matter, who had no connection with this case, and my determination of this matter.
I would further note that appellant's argument that this supposed "vested interest" would prevent me from rendering rulings favorable to a defendant with respect to claims of prosecutorial misconduct in the Philadelphia District Attorney's Office is belied by the Majority Opinion I authored in *579 Commonwealth v. LaCava, 542 Pa. 160, 666 A.2d 221 (1995). In LaCava, which appellant does not acknowledge in his Application for Recusal, the Court determined that an Assistant District Attorney in the Philadelphia District Attorney's Office had engaged in misconduct in the death penalty phase of a case involving the murder of a Philadelphia police officer such that a reversal of the death penalty was warranted. Despite appellant's argument to the contrary in the instant matter, my rulings, whether adverse to or favorable to an appellant, or whether they involve my former office or any other prosecuting agency, are based solely upon the law. If the law warrants relief in appellant's pending matter, then the law shall govern.
Appellant's final argument in support of his request that I recuse myself is that recusal is necessitated because I was endorsed by Lodge 5 of the Fraternal Order of Police several years ago during the electoral process. This argument similarly fails to convince me that a recusal is warranted.
At the outset, I note that the very same FOP which endorsed me during earlier electoral processes also endorsed Mr. Chief Justice John P. Flaherty, Mr. Justice Ralph Cappy, Mr. Justice Russell M. Nigro, and Madame Justice Sandra Schultz Newman. If the FOP's endorsement constituted a basis for recusal, practically the entire court would be required to decline participation in this appeal. Appellant's stated conviction that the FOP's endorsement of my candidacy warrants my recusal is belied by appellant's failure to seek the recusal of any other Justice due to an FOP endorsement in their respective elections to this Court. The FOP is not a party to this matter (just as it was not party to the LaCava matter) and appellant's argument that my recusal is warranted because of its endorsement of me in particular is not compelling.
Furthermore, appellant ignores the fact that, while I was District Attorney, despite having received endorsement from the FOP during my electoral campaign for the position of District Attorney, my office either initiated or assisted in *580 extensive investigations and proceedings against other members of the FOP.[5] Hence, appellant's position that my endorsement by the FOP would prevent me from looking at this matter with judicial impartiality is, once again, belied by the actual record, which amply demonstrates that endorsements do not, and have never, impaired my ability to apply the law fairly to the circumstances at hand regardless of the persons involved.
There are a total of seven Justices who at present sit upon this Court, the highest appellate court in this Commonwealth. In addressing the special concerns that arise when a Justice has been asked to recuse or disqualify himself or herself from matters pending before the highest court, Justice Rehnquist remarked in his Memorandum:
[T]here is no way of substituting Justices on [the highest] Court as one judge may be substituted for another in the district courts. There is no higher court of appeal that may review an equally divided decision of this Court and thereby establish the law for our jurisdiction.
*581 Laird v. Tatum, 409 U.S. at 837, 93 S.Ct. 7. These concerns are equally applicable to the Supreme Court of Pennsylvania. Indeed, in Goodheart v. Casey, 523 Pa. 188, 565 A.2d 757 (1989), former Chief Justice Nix specifically addressed these same concerns as they applied to a request that a Pennsylvania Supreme Court Justice recuse himself:
Unlike a trial court where one judge presides, courts en banc, panels or en banc intermediate appellate courts, the Supreme Court is constituted so as to provide its full complement of seven members to consider all of the matters that come before it. Its responsibility to interpret and develop the law of the Commonwealth mandates that its full membership be available and participate in all matters that come before the Court. A state as diverse in cultures, interests and ethnic stock as this Commonwealth increases the importance of assuring that the questions before this Court receive the reflective judgment enriched by the varied perspectives of its members that participate in reaching that judgment. The expression of concurring and dissenting views assures a more complete exposition of the reasons underpinning the judgment and aids in evaluating the wisdom of the majority position. Quite frequently the dissenting view today becomes the majority view of the future. Thus, this Court was structured so that, except for good cause, the full complement of the Court should participate in the judgments of this Court. Failure to recuse, standing alone, is not a basis for collateral attack upon a jurist.
Goodheart, 523 Pa. at 201, 565 A.2d at 763-64 (emphasis added).
Because this Court sits as a full court, as does the Supreme Court of the United States, were I to recuse myself, this Court would lack its present full complement of seven justices. Similarly, if I were to recuse myself on all matters pending or initiated while I was District Attorney, potentially over 300,000 criminal cases would be subject to this Court's review without the benefit of a full Court.
Pursuant to my sworn duties, I respectfully decline appellant's invitation to recuse myself and I will participate in the *582 decision and consideration of appellant's matter without bias or prejudgment. For the foregoing reasons, appellant's request is denied.
ORDER
AND NOW, this 29th day of October, 1998, it is hereby ordered that Appellant's Motion requesting my recusal in the matter is DENIED.
NOTES
[1] The Honorable Edward Rendell, the current Mayor of Philadelphia, was the duly-elected District Attorney who approved the Commonwealth's pursuit of the death penalty against appellant. He also served as the District Attorney at the time appellant was tried and convicted by a jury in the Philadelphia Court of Common Pleas.
[2] See, e.g., Commonwealth v. Jones, 541 Pa. 351, 663 A.2d 142 (1995); Commonwealth v. Cull, No. 32 E.D. Appeal Dkt.1993 (Pa., filed February 9, 1994); Commonwealth v. Goodie, 536 Pa. 38, 637 A.2d 621 (Pa., 1994).
[3] It should be noted that even though the matter was remanded for a new trial in Darush, it was solely on the grounds that the appellant averred that while running for election for judge, the judge allegedly made statements about the appellant which could conceivably evidence personal bias against the appellant and for which the judge had no recollection of such statements. Here, there is no evidence that I made personal statements to the public suggesting a personal bias towards appellant and I do not recall having ever made any such statements. Appellant's speculation that I must have made comments on this case because of its high profile nature is insufficient to require that I step down from performing my sworn duties as a Justice of this Court. Unlike the intensity attendant to a high publicity trial or hearing, the appellate process is substantially more subdued. The witnesses have testified, the evidence has been ruled upon, and the orders entered. Appellate decisions are made from cold records and prior rulings. The stimuli of live witnesses and media coverage of a public trial or hearing, which may have prompted my predecessor and successor to comment publicly on appellant's case, no longer existed once the appellate process began, which may explain why appellant is unable to point to any public comments by me regarding this matter.
[4] The Commentary to Canon 3, which the American Bar Association included out of recognition that an attorney's association with a governmental agency warrants special considerations, provides: "A lawyer in a governmental agency does not necessarily have an association with other lawyers employed by that agency within the meaning of this subsection ...".
Professor E. Wayne Thode, the reporter for the A.B.A. Committee who testified before the Senate Judiciary Committee during the 93d Congress in connection with the Code of Judicial Conduct, explained the purpose behind the Commentary to Canon 3(C)(1)(b) as follows:
The commentary clarifies the status of the judge who was formerly a lawyer in a governmental agency. An agency, for example, the Justice Department, is not fully equated with a private law firm, in that a former agency lawyer is not considered to have been associated with all other lawyers in the agency.
Muench v. Israel, 524 F.Supp. 1115, 1117 (E.D.Wis.1981). (emphasis added).
In applying the Commentary to Cannon 3, the Honorable Robert W. Warren in Muench v. Israel declined to recuse himself even though he had served as the Attorney General of Wisconsin during the time the appellant appealed his criminal conviction to the Wisconsin Supreme Court. The state, as the respondent, was formally represented by then Attorney General Warren. Nevertheless, Judge Warren did not recuse himself from hearing the petitioner's federal petition for a Writ of Habeas Corpus since he had not personally participated in the previous state appellate process other than in his official, formal capacity. Taking guidance from the United States Supreme Court, the court noted that:
[H]istory is replete with examples of United States Supreme Court Justices who had previously served in the Justice Department and later declined recusal in cases which had been handled by the Department during their tenure as government attorneys but with which their connections were purely formal. Thus . . . the standard for recusal followed by most Supreme Court justices who had previously served as United States Attorney General was whether their prior involvement in a case involved something more than a mere pro forma relationship.
Muench v. Israel, 524 F.Supp. at 1118 (footnote omitted). See also In re Searches Conducted on March 5, 1980, 497 F.Supp. 1283, 1290 (E.D.Wis.1980) (recusal not required even though judge formerly served as the Attorney General of Wisconsin during the investigation and prosecution of petitioners and had been sued by one of the petitioners in an unrelated matter).
[5] Specifically, while I was District Attorney, investigations and legal proceedings were either commenced or pursued against members of the Philadelphia Police Department's narcotics units known as One Squad, Two Squad and Five Squad, among other persons. See, e.g., Commonwealth v. Cassidy, 423 Pa.Super. 1, 620 A.2d 9 (1993) (One Squad); Commonwealth v. Trudell, et al., 371 Pa.Super. 353, 538 A.2d 53 (1988) (four officers prosecuted for bribery and criminal conspiracy).
Appellant's contention that the Philadelphia District Attorney's Office, under my administration, disregarded alleged police corruption in the 39th Police District is also unfounded. The District Attorney's Office Special Investigations Unit explored all allegations of police misconduct directed at the 39th District and, based in part upon investigations initiated while I was District Attorney, the widespread corruption was ultimately made public.
Appellant apparently assumes that, because an investigation is not publicly discussed, no investigation is or was underway. Investigations into police corruption, or any other matter of a sensitive nature, must be handled confidentially and carefully to ensure that the collection of credible evidence is not endangered and that the position ultimately taken is well-grounded. As with any matter falling under the province of the District Attorney's Office, only if the District Attorney's Office is confident that it has collected sufficient credible evidence to support a prosecution, or dismissal, should it proceed against or on behalf of a party.
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720 A.2d 659 (1998)
316 N.J. Super. 517
ARISTA MARKETING ASSOCIATES, INC. and Philip J. Curcura, Plaintiffs-Respondents,
v.
The PEER GROUP, INC. and Barry Fry, Defendants-Appellants.
The PEER GROUP, INC. and Barry J. Fry, Plaintiffs-Appellants,
v.
ARISTA MARKETING ASSOCIATES, INC. and Philip J. Curcura, Defendants-Respondents, and
Kenneth Arlein, Stephen Knox, and American Arbitration *660 Association, Defendants.[1]
Superior Court of New Jersey, Appellate Division.
Argued November 12, 1998.
Decided December 9, 1998.
Ambrose Richardson, for appellants (Richardson, Mahon, Casey & Rooney, of the New York Bar, pro hac vice, New York City, attorneys; Rabner, Allcorn, Baumgart & Ben-Asher, Montclair, co-counsel; Mr. Richardson and David Owen, Montclair, on the brief).
Robert E. Rochford, Hackensack, for respondents (Wine, Banta, Rizzi, Hetherington & Basralian, attorneys; Mr. Rochford and Brian J. Neff, on the brief).
Before Judges WALLACE, NEWMAN and FALL.
The opinion of the court was delivered by *661 FALL, J.S.C. (temporarily assigned).
In these separate commercial arbitration appeals, consolidated for opinion purposes, we examine the court's authority for the pre-arbitration removal of a party-appointed arbitrator, designated pursuant to the tripartite arbitration procedures set forth in the corporate dissolution agreement of the parties. We also consider whether the pre-arbitration disqualification of a party-appointed arbitrator based on "evident partiality" requires appointment of an entirely new arbitration panel. In the first action, the motion judge removed a party-appointed arbitrator, pre-arbitration, based on a finding of "evident partiality." In the second action, under the terms of the arbitration clause in the parties' agreement, the motion judge determined the pre-arbitration disqualification of a party-appointed arbitrator based on "evident partiality" was not cause for disqualification of the remaining arbitrators, and de novo commencement of the arbitrator appointment process. We affirm both decisions.
I.
The facts and procedural history are complex and require significant discussion. Philip J. Curcura and Barry J. Fry were each 50% owners of both Arista Marketing Associates, Inc. (Old Arista) and Oakwood Consulting, Inc. (Oakwood). These corporations were engaged in the business of providing promotional and marketing services to the health care industry.
Curcura and Fry began to have disagreements concerning the operation of these businesses in 1993. After considerable negotiations, in November 1994, Curcura and Fry entered into a number of agreements designed to terminate their joint ownership. Under the terms of a Workout Agreement dated November 24, 1994, Fry transferred his 50% interest in Oakwood to Curcura, who changed Oakwood's name to Arista Marketing Associates, Inc. (New Arista); and Curcura transferred his 50% interest in Old Arista to Fry, who changed Old Arista's name to The Peer Group, Inc. (Peer). Fry agreed to pay Curcura $250,000 for Curcura's interest in Old Arista (now Peer), and Curcura agreed to pay Fry $1,000 for Fry's interest in Oakwood (now New Arista).
In further consideration for these ownership transfers, Fry and Curcura agreed to a division of clients; equipment ownership; assumption of lease obligations; various non-solicitation covenants; indemnification provisions; and various other matters relating to these ownership transfers. In addition to the foregoing, Article 7.1 of the Workout Agreement, titled "Arbitration" provides:
Except with respect to any proceeding brought under ARTICLE SIX hereof, any controversy, claim, or dispute between the parties, directly or indirectly, concerning this Agreement or the breach hereof, or the subject matter hereof, including questions concerning the scope and applicability of this arbitration clause, shall be finally settled by arbitration in Union County, New Jersey pursuant to the rules then applying of the American Arbitration Association. The arbitrators shall consist of one representative selected by Fry, one representative selected by Curcura and one representative selected by the first two arbitrators. The parties agree to expedite the arbitration proceeding in every way, so that the arbitration proceeding shall be commenced within thirty (30) days after request therefore is made, and shall continue thereafter, without interruption, and that the decision of the arbitrators shall be handed down within thirty (30) days after the hearings in the arbitration proceedings are closed. The arbitrators shall have the right and authority to assess the cost of the arbitration proceedings and to determine how their decision or determination as to each issue or matter in dispute may be implemented or enforced. The decision in writing of any two of the arbitrators shall be binding and conclusive on all of the parties to this Agreement. Should either Curcura or Fry fail to appoint an arbitrator as required by this ARTICLE SEVEN within thirty (30) days after receiving written notice from the other party to do so, the arbitrator appointed by the other party shall act for all of the parties and his decision in writing shall be binding and conclusive on all of the *662 parties to this Workout Agreement. Any decision or award of the arbitrators shall be final and conclusive on the parties to this Agreement; judgment upon such decision or award may be entered in any competent Federal or state court located in the United States of America; and the application may be made to such court for confirmation of such decision or award for any order of enforcement and for any other legal remedies that may be necessary to effectuate such decision or award.
This arbitration clause is applicable to all disputes arising between Fry and Curcura under the Workout Agreement, except to proceedings brought under Article Six, relating to any alleged violations of the non-solicitation covenants. The parties also entered into a Consulting Agreement on November 29, 1994, whereby New Arista agreed to provide specified consulting services to Peer for compensation set forth therein.
After the ownership transfers, Fry contended Curcura wrongfully appropriated assets valued at several hundred thousand dollars and that Curcura failed to pay his share of continuing expenses. Fry then set-off the amounts of these alleged misappropriations and non-payments from amounts Fry owed Curcura under the Workout Agreement and Consulting Agreement. Curcura denied Fry's allegations and objected to the set-offs. Unable to resolve these disputes, Curcura invoked the arbitration clause to resolve the controversies, filing a demand for arbitration on February 29, 1996. The amounts at issue exceed $1 million.
Pursuant to the arbitration procedures set forth in Article 7.1 of the Workout Agreement, on March 15, 1996 Fry selected Todd Sahner, an attorney, as his designated arbitrator. On April 3, 1996 Curcura selected Stephen Knox, an attorney, as his designated arbitrator. Sahner and Knox then selected Kenneth Arlein, an accountant, as the neutral arbitrator.
Todd Sahner is an attorney with the firm of Hannoch Weisman. After his appointment, and pursuant to rules of the American Arbitration Association (AAA), Sahner disclosed that he and his firm were previously retained by Fry to commence a corporate dissolution proceeding of Old Arista against Curcura in the event the negotiations between Fry and Curcura to transfer and allocate their respective ownership interests in those corporations failed. While the negotiations leading to, and performance of, the Workout Agreement and Consulting Agreement were performed by other attorneys in his firm, Sahner did spend eight hours meeting with Fry and reviewing and editing pleadings and preparing a certification for use in a proposed corporate dissolution action. The November 28, 1994 agreements reached by Fry and Curcura eliminated any need for the corporate dissolution action. Sahner's firm continued to represent Fry until December 1994.
On May 23, 1996 the AAA forwarded Curcura the notice of appointment completed by Sahner, wherein Sahner disclosed the prior representation. Curcura objected to Sahner's participation in the arbitration proceeding through the June 3, 1996 letter of his attorney to the AAA. Through counsel, each party advanced their positions on the objection to Sahner to the AAA. The AAA responded to this objection, by its letter dated June 27, 1996, providing, in relevant part:
Please be advised that inasmuch as Mr. Sahner is not designated as the "neutral" Arbitrator in this matter, the Association cannot assert a determination pursuant to Section 19 of the Commercial Arbitration Rules of the American Arbitration Association.
The AAA then scheduled the initial arbitration hearings for November 18, 1996. Curcura's objection to Sahner serving as an arbitrator was raised again at the November 18, 1996 arbitration hearing. Curcura contended the arbitrators had jurisdiction to decide the disqualification issue. The arbitrators determined they had no authority to rule on Sahner's status and denied Curcura's request to adjourn the arbitration proceedings, after Fry stipulated he would not allege any prejudice or contend the court had no jurisdiction to consider the disqualification issue solely based on the fact the arbitration hearings had commenced. The arbitration hearing proceeded, and continued through November 20, 1996.
*663 On November 21, 1996, Curcura and New Arista filed a verified complaint with the Chancery Division seeking disqualification of Sahner from the arbitration proceedings on the basis of "evident partiality," relying on N.J.S.A. 2A:24-8(b) and Barcon Associates v. Tri-County Asphalt Corp., 160 N.J.Super. 559, 390 A.2d 684 (Law Div.1978), aff'd, 172 N.J.Super. 186, 411 A.2d 709 (App.Div. 1980), aff'd, 86 N.J. 179, 430 A.2d 214 (1981). An order was entered by Judge Kentz on November 21, 1996, directing Fry and Peer to show cause on January 22, 1997 why the relief in the complaint should not be granted. The order restrained the parties from continuing the arbitration hearing, pending further order.
The January 22, 1997 return date was carried to January 29, 1997. Judge Kentz continued the temporary restraints, converting them into a preliminary injunction, ultimately executing an order to that effect on May 27, 1997. The matter was transferred to Judge Boyle, who conducted a case management conference on June 26, 1997, ordered limited discovery, and set the matter down for a hearing. Both parties moved for summary judgment.
After hearing oral argument on September 12, 1997, Judge Boyle ruled Sahner was disqualified, finding his prior representation of Fry in the corporate dispute with Curcura constituted "evident partiality" under Barcon. On September 15, 1997, Judge Boyle read into the record an opinion detailing his findings and reasons for that ruling. Further, he directed the arbitration to proceed expeditiously in accordance with the arbitration clause in Article 7.1 and the Commercial Arbitration Rules of the AAA. Fry and Peer filed this appeal on October 20, 1997, and on November 10, 1997, Judge Boyle denied their application for a stay of the arbitration proceedings pending appeal. We denied the application for a stay on January 16, 1998.
Through counsel's letter to the AAA dated October 24, 1997, Fry and Peer selected James T. Kelly as their party-appointed arbitrator, under protest. Fry and Peer also objected to Knox and Arlein continuing as arbitrators, contending that since Kelly was not part of the original arbitration proceeding, the arbitrator selection process in Article 7.1 of the Workout Agreement should start from the beginning; that Curcura should select a new party-arbitrator, and then Kelly and that arbitrator should select a new neutral arbitrator; and that the arbitration hearings should start anew. The AAA considered the position of both parties and, by letter dated December 24, 1997 ruled, in relevant part:
After careful consideration of the Parties' contentions, the Association hereby rules as follows:
Mr. Kenneth Arlein is hereby reaffirmed as the neutral Arbitrator in this matter. The Parties are requested to return the Calendar Forms enclosed with the letter from the undersigned dated December 10, 1997 by no later than December 31, 1997 so that a preliminary hearing and/or telephone conference may be scheduled.
On February 11, 1998 Fry and Peer presented a verified complaint for filing and order to show cause for consideration, naming Curcura, New Arista, Arlein, Knox and the AAA as defendants, seeking an order restraining the arbitration; disqualifying Knox and Arlein on the basis of "evident partiality"; and requiring the arbitrator appointment process proceed de novo under Article 7.1 of the Workout Agreement. The complaint and order to show cause were considered at a hearing conducted by Judge Boyle on February 18, 1998. Fry and Peer contended that arbitration must commence de novo in the event of the death or involuntary withdrawal of an arbitrator before a decision is rendered. They alleged continuation of Knox and Arlein prejudices them, as Kelly did not participate in the selection of Arlein, as contemplated in the arbitration clause. Fry and Peer further contended the ability of Knox and Arlein to be impartial was tainted by their participation in the aborted arbitration hearings.
Judge Boyle rejected the complaint presented by Fry and Peer by order dated February 18, 1998, essentially dismissing it. The judge first considered application of the entire controversy doctrine to bar this second action. He found in the first action, that Fry and Peer could have, and in fact did, anticipate *664 the reappointment or continuation of Knox and Arlein as arbitrators. He determined the continuation of Knox and Arlein was part of the same controversy litigated and decided in the first action. The judge felt it appropriate to apply the claim preclusion bar of R. 4:30A to the second action.
However, Judge Boyle also addressed the merits of the proposed complaint. He noted under Article 7.1 of the Workout Agreement, the parties agreed that any questions concerning the scope and applicability of the arbitration clause itself shall be determined by arbitration pursuant to the rules of the AAA. He noted the AAA confirmed continuation of Arlein as the neutral arbitrator and determined the decision of the AAA was binding on the parties. The judge also noted that Sahner, although subsequently disqualified, did participate in the appointment of Arlein, concluding Fry and Peer received the benefit of participation in the selection of the neutral arbitrator in accordance with the arbitration clause. Further, the judge noted Fry and Peer failed to demonstrate how continuation of Arlein and Knox as arbitrators violated the "evident partiality" standard under Barcon and N.J.S.A. 2A:24-8(b). Fry and Peer filed a second notice of appeal on April 3, 1998, appealing Judge Boyle's February 18, 1998 decision.
On the appeal from the order disqualifying the party-appointed arbitrator, Todd Sahner, Fry and Peer present the following arguments for consideration:
POINT I
THE NEW JERSEY ARBITRATION STATUTE DOES NOT AUTHORIZE THE PRE-ARBITRATION REMOVAL OF A PARTY-APPOINTED, NON-NEUTRAL ARBITRATOR.
POINT II
THE CONTRACTUAL RIGHT TO ONE'S CHOICE OF ARBITRATOR OUTWEIGHS THE RIGHT, IF ANY, OF THE OPPOSING PARTY TO APPEARANCES.
POINT III
BY AVOIDING A PRELIMINARY CONFERENCE, AND WAITING UNTIL THE BEGINNING OF HEARINGS, PLAINTIFF WAIVED ANY RIGHT TO PRE-ARBITRATION CHALLENGES.
POINT IV
A DE MINIMIS PRIOR BUSINESS INVOLVEMENT IS NOT "EVIDENT PARTIALITY."
On the appeal from the order rejecting the complaint seeking disqualification of the neutral arbitrator, Kenneth Arlein, and the party-appointed arbitrator, Stephen Knox, Fry and Peer present the following arguments:
POINT I
THE LAW AND THE ARBITRATION AGREEMENT REQUIRE THE ARBITRATION TO COMMENCE DE NOVO.
POINT II
THIS ACTION IS NOT BARRED BY THE ENTIRE CONTROVERSY DOCTRINE.
II.
The primary contention in the first appeal of Fry and Peer is that the New Jersey Arbitration and Award statute, N.J.S.A. 2A:24-1 to -11, does not authorize the pre-arbitration removal of a party-appointed, non-neutral arbitrator. We disagree. Our Supreme Court approved the judicial disqualification of an arbitrator found to have "evident partiality" under N.J.S.A. 2A:24-8(b), whenever discovered. Barcon, 86 N.J. at 188-89, 430 A.2d 214. Barcon similarly involved a tri-partite arbitration contract clause. After the arbitration was completed, it was discovered that the arbitrator designated by Barcon Associates had ongoing business dealings with Barcon. While the trial judge found no proof Barcon's designated arbitrator acted in a biased or partisan manner during the arbitration proceedings, the trial judge vacated the arbitration award, explaining:
In short, the objective circumstances were such that reasonable men would perceive a relatively high risk of biased and partisan decision making on the part of arbitrator Spatz. The appearances inherent in this situation fatally compromised the independence and impartiality required of arbitrator Spatz. I conclude that there was "evident *665 partiality" of an arbitrator in this case within the meaning of N.J.S.A. 2A:24-8b.
[Barcon, 160 N.J.Super. at 571, 390 A.2d 684.]
In affirming, the Supreme Court concluded the "existence of an undisclosed, substantial business relationship between a party-designated arbitrator in tri-partite arbitration and the party designating that arbitrator" throughout the arbitration proceeding "constitutes `evident partiality' under N.J.S.A. 2A:24-8(b)." Barcon, 86 N.J. at 182-83, 191, 430 A.2d 214. The Court went on to state:
In addition, we establish prospectively the requirement that every arbitrator, whether party-designated or `neutral,' disclose to the parties, prior to the commencement of arbitration proceedings, any relationship or transaction that he has had with the parties or their representatives. This disclosure should also include any other fact which would suggest to a reasonable person that the arbitrator is interested in the outcome of the arbitration or which might reasonably support an inference of partiality.
[Barcon, 86 N.J. at 183, 430 A.2d 214 (emphasis added).]
The Supreme Court explained it had decided to "adopt" such a "pre-arbitration disclosure requirement" because it had several advantages. Id. at 192-93, 430 A.2d 214. For example, it would "reduce the likelihood of potentially wasteful post-arbitration challenges." Id. at 193, 430 A.2d 214. Also, pre-arbitration disclosure would accomplish this:
Disclosure will leave to the parties themselves the initial decision as to whether to object to an arbitrator designated by the other side and, if necessary, to seek judicial determination of whether that arbitrator appears to be too partial to be permitted to participate in the arbitration.
[Id. at 194, 430 A.2d 214.]
Even though the dissent in Barcon opposed the majority's establishment of this pre-arbitration disclosure requirement, the dissent acknowledged the "majority's pre-arbitration disclosure requirement now confers upon parties the pre-hearing right to object to the other party's selection of a representative arbitrator." Id. at 213, 430 A.2d 214 (Clifford, J., dissenting). Given the "long-standing, successful commercial practice... of tripartite commercial arbitration," the dissent perceived no need for such a "judicially-imposed requirement that the party-designated arbitrators disclose such prior dealings or relationships as would demonstrate the specific degree of their possible bias." Id. at 200, 215, 430 A.2d 214.
Appellants' reliance on Allwood Plumbing & Heating Co., Inc. v. Local Union 274, 199 N.J.Super. 517, 489 A.2d 1243 (App.Div. 1985), to support their assertion the trial court lacked jurisdiction to consider disqualification of a party-appointed arbitrator prior to completion of the arbitration is misplaced. In Allwood Plumbing, we determined plaintiff was not entitled to pre-arbitration relief under the particular facts before us. Under the arbitration clause in Allwood Plumbing, any arbitration was to take place before a panel made up equally of union members and members of the Mechanical Contractors Association of New Jersey. Plaintiff, Allwood Plumbing & Heating Co., Inc., was not a member of that Association. When the unions invoked the arbitration clause, Allwood sought a restraining order to block the arbitration, based on the composition of the arbitration panel. Allwood Plumbing, 199 N.J.Super. at 519-20, 489 A.2d 1243. We reversed the trial court's grant of the restraining order, and remanded for entry of an order dismissing Allwood's complaint, explaining:
Allwood argues that the case of Barcon Associates v. Tri-County Asphalt, 86 N.J. 179 [430 A.2d 214] (1981), holds that a party may seek a pre-arbitration "judicial determination of whether [the] arbitrator appears to be too partial to be permitted to participate in the arbitration." 86 N.J. at 194 [430 A.2d 214]. While that commercial case seems to suggest the existence of such a remedy, we do not conceive of this case as one within the contemplation of its holding. Barcon requires disclosure of possible conflicts of interest on the part of an arbitrator prior to the commencement of the proceeding. If this disclosure reveals a connection between an arbitrator *666 and one of the parties such that the arbitrator will appear to be "too partial" to that party, the opponent may seek his removal. Barcon does not suggest that a party is entitled to challenge an arbitrator or panel specifically identified and agreed to in the contract. That is what is involved here. For eight successive years and knowing full well the constituency of the arbitration panel, Allwood voluntarily bound itself to the arbitration provision of the local agreement, promising to substitute that private forum for litigation. There is no suggestion here that Allwood recently discovered some formerly undisclosed fact about the proposed arbitrators indicating bias or partiality. All that is involved is Allwood's present resistance to the very provisions of the contract whereby it agreed to arbitrate. Nothing in Barcon supports the view that a party such as Allwood is entitled to pre-arbitration relief from the precise terms of its agreement.
[Allwood Plumbing, 199 N.J.Super. at 523-24, 489 A.2d 1243 (emphasis added).]
Contrary to appellants' contention, in Allwood Plumbing we expressly recognized the authority conferred by Barcon to consider the pre-arbitration removal of an arbitrator if disclosure reveals the existence of "evident partiality." In Allwood Plumbing, plaintiff entered into a contract that identified the arbitrator panel, and there was no post-contract discovery of formerly undisclosed facts indicating "evident partiality."
Appellants' argument that one party's contractual right to appoint an arbitrator of that party's choice outweighs the other party's right to seek rejection of any arbitrator sufficiently exhibiting the "appearance of partiality" was rejected in Barcon, where the Court stated:
Although arbitration originates in the contract of the parties and is a process which may operate without any court involvement, we reject the notion, repeatedly asserted by the dissent, that the parties' contract should prevail over all other considerations. In particular, we give priority to the need to maintain the integrity of arbitration and public faith in the process .... [I]t is our strongly held view that honest, fair and impartial arbitration is as important as the finality of arbitration. Because of the confidentiality in which arbitrators conduct their deliberations, the goal of ensuring that they will adhere to high standards will best be attained by requiring them to avoid not only actual partiality but also the appearance of partiality.
[Barcon, 86 N.J. at 189, 430 A.2d 214 (citations omitted).]
We are bound by the majority opinion in Barcon and reject appellants' arguments that pre-arbitration removal of a party-appointed, non-neutral arbitrator is prohibited where "evident partiality" is demonstrated.
III.
Fry and Peer also contend that Curcura and New Arista waived any right to pre-arbitration challenges because they waited nearly five months after their first objection to Sahner's appointment in June 1996, before seeking relief from the court in November 1996.
On June 27, 1996, the AAA notified both sides it could not make a determination regarding the objection to Sahner's participation in the arbitration "inasmuch as Mr. Sahner is not designated as the `neutral' Arbitrator in this matter." At the beginning of the initial arbitration hearing on November 18, 1996, Curcura and New Arista sought to obtain the arbitrators' ruling on Sahner's status. However, the arbitrators ruled they did not have the authority to consider disqualification of Sahner, and therefore did not address the substantive issue of whether he should be disqualified due to an appearance of "evident partiality." On November 21, 1996, Curcura and New Arista filed their Chancery Division complaint.
In Barcon, the Supreme Court emphasized that arbitrators "must make full disclosure prior to the commencement of proceedings," and ruled that, "should an arbitrator make full disclosure and the other party fail to object at that time, that party will be held to have waived any right later to object to the designation of the arbitrator on the *667 grounds so revealed." Barcon, 86 N.J. at 195, 430 A.2d 214. The Court explained, under the "rule of waiver we have adopted for these arbitration proceedings," a "timely objection" was one advanced before the "panel has rendered an unfavorable decision":
Courts can only rule on the apparent partiality of an arbitrator if one of the parties objects and brings the matter before the courts. It would be inequitable and wasteful to allow a party to withhold its objections until after the panel has rendered an unfavorable decision. While we do not condone arbitration awards made by a panel whose members are not impartial, we see a greater evil in permitting parties that are aware of grounds for objection to put the other party and the panel through the time and expense of arbitration proceedings before challenging the proceedings.
[Barcon, 86 N.J. at 197, 430 A.2d 214.]
Here, Curcura and New Arista timely objected to Sahner's continuation as an arbitrator once disclosure of his past representation of Fry took place. When the AAA ruled it did not have the authority to consider removal of Sahner, they raised the issue again, before the arbitrators, at the very beginning of the arbitration hearings. When the arbitrators determined they lacked the authority to consider the issue, Curcura and New Arista promptly sought relief from the court. Waiting to first raise the issue in front of the arbitrators, before seeking court intervention, is not unreasonable, and certainly does not constitute a waiver of their right to seek relief from the court.
IV.
Fry and Peer argue that Sahner's de minimis prior business involvement with Fry does not constitute "evident partiality." Sahner, an attorney, was retained to commence corporate dissolution litigation against Curcura and Old Arista in the event the separation negotiations failed. Sahner personally spent eight hours over an eighteen-day period in November 1994 meeting with Fry and preparing pleadings, Fry's certification, and a proposed restraining order against Curcura. Sahner's law firm, Hannoch Weisman, performed additional legal services for Fry in connection with the corporate dissolution negotiations. When Curcura and Fry reached the agreements of November 28, 1994, the need for this litigation was eliminated.
Judge Boyle concluded Sahner's role in drawing pleadings on behalf of Fry for use against Curcura and Old Arista met the "evident partiality" standard, particularly in view of the adversarial nature of the representation. We agree. As the Supreme Court noted in Barcon, the Law Division judge in Barcon correctly concluded that "the line" being drawn here was "between the acceptable predisposition of attitude permitted in the case of a party-designated arbitrator and impermissible bias or partisanship (or the appearance thereof)," because "the law simply cannot allow any judicially enforceable arbitration proceeding to be anything other than an impartial proceeding which has appropriate appearances of impartiality." Barcon, 160 N.J.Super. at 570-71, 390 A.2d 684. See Gauntt Const. Co. v. Delaware River & Bay Auth., 241 N.J.Super. 422, 431, 575 A.2d 70 (Law Div.1989), rev'd on other grounds, 241 N.J.Super. 310, 575 A.2d 13 (App.Div. 1990).
The Supreme Court required all arbitrators "to avoid not only actual partiality but also the appearance of partiality," and authorized the contracting parties "to object to an arbitrator designated by the other side and, if necessary, to seek judicial determination of whether that arbitrator appears to be too partial to be permitted to participate in the arbitration." Barcon, 86 N.J. at 189, 194, 430 A.2d 214. The standard adopted by the Supreme Court in Barcon was "the appearance of partiality." We noted the standard in Allwood Plumbing:
Barcon requires disclosure of possible conflicts of interest on the part of an arbitrator prior to the commencement of the proceeding. If this disclosure reveals a connection between an arbitrator and one of the parties such that the arbitrator will appear to be "too partial" to that party, the opponent may seek his removal.
[Allwood Plumbing, 199 N.J.Super. at 523, 489 A.2d 1243.]
*668 The mere fact that a party-designated arbitrator discloses a prior relationship with the party will not necessarily disqualify the arbitrator. Barcon, 86 N.J. at 194, 430 A.2d 214. See International Bhd. of Teamsters v. Bergen-Hudson Roofing Supply Co., 159 N.J.Super. 313, 316, 387 A.2d 1246 (Ch. Div.1978) (The fact that an arbitrator had been a party's attorney is not sufficient cause for disqualification of an arbitrator for that reason per se.). On the other hand, the Supreme Court observed that "arbitration should be conducted by arbitrators, not by the parties themselves or their legal advocates." Barcon, 86 N.J. at 199, 430 A.2d 214 (emphasis added).
Here, Sahner had not only once been Fry's attorney, but had also drafted the complaint intended to be used against Curcura involving the same general matter now the subject of the parties' arbitration dispute. We find this constitutes a direct conflict to his role as an arbitrator, and clearly constitutes "evident partiality."
V.
Fry and Peer contend that once Judge Boyle disqualified Sahner as a party-appointed arbitrator, the parties were required to begin the arbitrator appointment process set forth in Article 7.1 anew, with Kelly, their newly appointed party-designated arbitrator, participating in the selection of a new neutral arbitrator.
In the September 15, 1997 order disqualifying Sahner from serving, the judge:
ORDERED that defendants shall proceed expeditiously with the currently pending arbitration in accordance with the arbitration clause contained in the contract between the parties, the Commercial Arbitration Rules of the American Arbitration Association and applicable law.
Fry and Peer interpreted that to mean the arbitrator-selection process would begin anew under Article 7.1 of the Workout Agreement. They so concluded in light of comments by Judge Kentz at the January 29, 1997 hearing concerning the effect on the arbitration if Sahner were ultimately disqualified:
THE COURT: ... I've got a question here as to whether or not this arbitrator is alleged to have some conflict of interest should he be removed and replaced. It seems to me that if that happened you'd have to start de novo with your arbitration proceeding.
MR. ROCHFORD; Yes, we would, Judge.
Judge Boyle considered the de novo argument at the February 18, 1998 hearing on whether Fry and Peer would be permitted to institute suit seeking Arlein's disqualification, stating:
You believe, in the sense that perhaps Judge Kentz used the term, although it wasn't defined, that de novo meant everybody's replaced and you start all over, that isn't always the way the term is used. Then, I suppose, I can't look into the mind of Judge Kentz, but de novo does not necessarily mean that you replace the fact-finders. It merely means that the fact-finders have to start all over again.
Now if it's, as Mr. Rochford pointed out, if it says de novo on the record, that merely means that you read the record and make a new decision. Here, of course, nothing was mentioned about de novo on the record, so that's not really germane to our discussion this morning. De novo means let's start all over again.
Curcura and New Arista contend the suit by Fry and Peer was properly barred by the entire controversy doctrine. We disagree. The September 15, 1997 order disqualifying Sahner and directing the arbitration proceed in accordance with the parties' agreement could arguably be interpreted to mean that new arbitrators would be appointed under Article 7.1 of the Workout Agreement. Certainly, it is equally tenable to conclude the opposite. Fry and Peer simply sought enforcement of their interpretation of the effect of Judge Boyle's decision. It would be inequitable to apply the claim-preclusion bar of the entire controversy doctrine in R. 4:30A under these circumstances. See Oliver v. Ambrose, 152 N.J. 383, 395-96, 705 A.2d 742 (1998).
After discussing application of the entire controversy doctrine as a bar to the second *669 suit, Judge Boyle considered the issues raised in the complaint, on the merits. We concur with the judge's conclusion that Fry and Peer procedurally received all they were entitled to under the arbitration clause. Article 7.1 provides, inter alia, that "any controversy, claim or dispute between the parties... including questions concerning the scope and applicability of this arbitration clause, shall be finally settled by arbitration in Union County, New Jersey, pursuant to the rules then applying of the American Arbitration Association." The parties contractually agreed to be bound by procedural determinations made by the AAA. When Fry and Peer contended that Arlein should be disqualified, and that the arbitrator selection process should begin anew, they placed that issue before the AAA. Curcura and New Arista responded. After careful consideration of each position, the AAA ruled on December 24, 1997 that Arlein was reaffirmed as the neutral arbitrator, and directed the arbitration to proceed. While the AAA has no rules dealing with the potential disqualification of a party-appointed arbitrator, as stated in its June 27, 1996 letter concerning Sahner, it is empowered by its rules to deal with the potential disqualification of a neutral arbitrator. The issue of whether Arlein would continue as the neutral arbitrator was resolved by the AAA in accordance with its rules. Nothing has been advanced demonstrating that determination was arbitrary or unreasonable. See Van Syoc v. Walter, 259 N.J.Super. 337, 339-40, 613 A.2d 490 (App. Div.1992), certif. denied 133 N.J. 430, 627 A.2d 1136 (1993).
The parties made a decision in their agreement that the AAA rules would apply. The AAA applied its rules, and determined Arlein should not be disqualified. Fry and Peer are contractually bound by that decision. This is distinguishable from the June 27, 1996 determination by the AAA concerning disqualification of the party-appointed arbitrator, Todd Sahner. There, the AAA declined to decide that issue because it had no rules dealing with disqualification of party-appointed arbitrators.
We recognize that the goals of maintaining the integrity of arbitration and public faith in the process overrides even the parties' agreement. Barcon, 86 N.J. at 189, 430 A.2d 214. When discussing the action taken by the AAA, Judge Boyle considered that issue, stating:
In its brief, Peer fails to indicate why this decision is not binding, as the parties' contract seemingly calls for disputes and the scope of the arbitration clause to be decided by AAA; therefore, this issue may not be properly before this Court. At the same time, the Court is cognizant of the Barcon case, supra, 86 N.J. at 189, 430 A.2d 214, where the Court noted, the parties' contract should not necessarily prevail over all other considerations, as the Court states that priority should be given to the "integrity of arbitration" and "public faith in the process."
We believe that the Barcon case obviously is a direction for this Court, but at the same time in its consideration, believe that the integrity of the arbitration and the public faith in the process can be met by requiring the hearing to start all over again; that is, de novo. So that Mr. Kelly is there right out of the starting gate, and the fact that, unless the parties agree otherwise, Mr. Curcura will have to testify live all over again.
Furthermore, regarding a probability of success on the merits, Peer has not demonstrated specifically how the appointment of Messrs. Arlein and Knox violates the "evident partiality" standard set forth in N.J.S.A. 2A:24-8(b) and discussed in Barcon, supra, 86 N.J. at 182, 430 A.2d 214, which applies to party-designated arbitrators and neutral arbitrators as well.
We are in accord with this reasoning. Our review of the record reveals nothing that would support the disqualification of the neutral arbitrator, Arlein, or the party-appointed arbitrator, Knox, and the consequent re-appointment of an entirely new panel of arbitrators. The fact Arlein and Knox participated in the prior aborted arbitration proceeding does not alone meet the "evident partiality" standard set forth in Barcon. Additionally, when Curcura and New Arista initiated their action to remove Sahner, the parties agreed the arbitration would proceed, *670 without prejudice, pending court determination.
In the absence of any substantive challenge to Arlein or Knox based on allegations of "evident partiality," procedural issues are for determination in the arbitration forum, in accordance with the agreement of the parties, free from judicial interference. See Kalman Floor Co., Inc. v. Jos. L. Muscarelle, Inc., 196 N.J.Super. 16, 31, 481 A.2d 553 (App.Div.1984), aff'd o.b., 98 N.J. 266, 486 A.2d 334 (1985). Fry and Peer obtained the benefit of that portion of their agreement providing for participation in selection of the neutral arbitrator when Sahner and Knox selected Arlein. We are at this point because of Sahner's "evident partiality." It would be wholly inappropriate and unnecessary to now disqualify Arlein, Knox, or both, essentially because of Sahner's "evident partiality." Under these circumstances, the rationale for convening a new panel on death of one arbitrator in tripartite arbitration proceedings, contained in Mitchell v. Alfred Hofmann, Inc., 48 N.J.Super. 396, 406-07, 137 A.2d 569 (App.Div.), certif. denied 26 N.J. 303, 139 A.2d 589 (1958), Marine Products Export Corp. v. M.T. Globe Galaxy, 977 F.2d 66, 67 (2d Cir.1992), and Cia De Navegacion Omsil, S.A. v. Hugo Neu Corp., 359 F.Supp. 898, 899 (S.D.N.Y.1973) is inapplicable. The death of an arbitrator, where no one is at fault, is different from circumstances where the actions of one party causes the pre-arbitration disqualification of its designated arbitrator.
In Mitchell, each party appointed an arbitrator and then those two selected a third arbitrator. The three appointed arbitrators conducted hearings in 1946. The hearings were adjourned, without date. A party-appointed arbitrator died in 1955 and the neutral arbitrator died in 1957. When one of the parties wanted to resume the arbitration in 1957, the other party objected, contending arbitration was no longer the appropriate method for resolving their dispute, contending the multi-year delay constituted laches and waiver, barring a demand for arbitration. We rejected these contentions, found no prejudice, and enforced the parties' agreement to resolve their contract disputes through arbitration. We ruled that death of an arbitrator before the close of the hearings has the effect of terminating the authority of the arbitrators to render an award and directed the controversies be resubmitted to arbitration before a new arbitration panel. Mitchell, 48 N.J.Super. at 406-07, 137 A.2d 569. Obviously, the only alternative was to appoint a new panel under such unusual circumstances.
The real issue in Mitchell was whether arbitration should proceed in view of the 11-year hiatus. Here, in contrast, a party-appointed arbitrator was disqualified, pre-arbitration, due to "evident partiality." The arbitration hearings were commenced, without prejudice, after the disqualification issue was joined through institution of court proceedings. These circumstances provide no basis for overruling the decision of the motion judge enforcing the AAA determination.
V.
In summary, the pre-arbitration removal of the party-appointed arbitrator based on a finding of "evident partiality" was correct. Under the broadly-worded arbitration clause presented, the parties agreed the rules of the AAA would apply. The ruling by the AAA that the court-disqualification of party-appointed arbitrator, Todd Sahner, on the basis of "evident partiality" did not require disqualification of the neutral arbitrator, Kenneth Arlein, was properly enforced by the motion judge. Further, appellants present no basis for disqualification of the remaining arbitrators, Kenneth Arlein and Stephen Knox. The motion judge correctly directed the arbitration to proceed.
Affirmed.
NOTES
[1] The notice of appeal filed by Peer and Fry states they are not appealing as to these defendants.
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389 S.E.2d 30 (1990)
326 N.C. 348
STATE of North Carolina
v.
Mildred Watkins VANDIVER.
No. 101PA89.
Supreme Court of North Carolina.
March 1, 1990.
*31 Lacy H. Thornburg, Atty. Gen., by Charles M. Hensey, Sp. Deputy Atty. Gen., Raleigh, for State.
Malcolm Ray Hunter, Jr., Appellate Defender by Staples Hughes, Asst. Appellate Defender, Raleigh, for defendant.
FRYE, Justice.
This case raises questions concerning the role of the sentencing judge as it relates to the finding of a non-statutory aggravating factor at a resentencing hearing. Defendant was charged in a proper bill of indictment with second degree murder. She was convicted of second degree murder and sentenced to life imprisonment, a sentence in excess of the presumptive term. On appeal, defendant's conviction was upheld by this Court, but the Court remanded for a new sentencing hearing because a non-statutory aggravating factor that defendant's testimony was perjured was erroneously used. State v. Vandiver, 321 N.C. 570, 364 S.E.2d 373 (1988). At the resentencing hearing, the trial court found the non-statutory aggravating factor of premeditation and deliberation, found two mitigating factors, and sentenced defendant to thirty years imprisonment, a sentence also in excess of the presumptive term.
On appeal to the Court of Appeals, defendant contended: 1) the evidence was insufficient as a matter of law to support the sentencing court's finding that the crime was committed with premeditation and deliberation; and 2) the State should be estopped from asserting premeditation and deliberation as an aggravating factor in sentencing on a conviction of second degree murder based on an indictment alleging only second degree murder. The Court of Appeals rejected defendant's second contention but nevertheless concluded that the disputed factor in aggravationpremeditation and deliberationwas not supported *32 by a preponderance of the evidence. Concluding that "fundamental fairness and due process considerations require that this defendant not be required to again meet the risk of other findings in aggravation," the Court of Appeals remanded the case for resentencing "for imposition of a sentence not to exceed the presumptive sentence." State v. Vandiver, 92 N.C.App. 695, 701, 376 S.E.2d 17, 20 (1989). The State and defendant filed petitions for discretionary review of the Court of Appeals' decision. This Court allowed both petitions on 5 May 1989.
The State's petition for discretionary review presents two questions:
1. May the appellate court substitute its discretion or judgment for the judgment of the sentencing judge in determining the existence of aggravating factors?
2. May the appellate court ex mero motu prohibit the resentencing court from conducting a resentencing hearing de novo ?
Defendant's petition for discretionary review presents the question of whether a sentencing judge is barred from using premeditation and deliberation as an aggravating factor in sentencing upon a verdict of second degree murder based on an indictment alleging only second degree murder.
We first consider the question raised by defendant's petition. We begin with this Court's decision in State v. Melton, 307 N.C. 370, 298 S.E.2d 673 (1983). Although the indictment in Melton would have supported a conviction of murder in the first degree as well as murder in the second degree, the State agreed not to try defendant for murder in the first degree in exchange for defendant's plea to guilty of murder in the second degree. Id. at 372-73, 298 S.E.2d at 676. At the sentencing hearing, the judge found one aggravating factor, that "the killing occurred after defendant premeditated and deliberated the killing." Id. at 372, 298 S.E.2d at 675. On appeal defendant argued that "fundamental fairness requires that facts underlying charges which have been dismissed pursuant to a plea bargain cannot be used during sentencing for the admitted charge." Id. at 376, 298 S.E.2d at 678. Noting that the mere fact that a guilty plea has been accepted pursuant to a plea bargain does not preclude a sentencing court from reviewing all of the circumstances surrounding the admitted offense in determining the presence of aggravating or mitigating factors, this Court held that "[a]s long as they are not elements essential to the establishment of the offense to which the defendant pled guilty, all circumstances which are transactionally related to the admitted offense and which are reasonably related to the purposes of sentencing must be considered during sentencing." Id. at 378, 298 S.E.2d at 679 (citations omitted). The Court went on to hold that although the State agreed not to prosecute defendant for murder in the first degree, the fact that he premeditated and deliberated the killing was transactionally related to the second degree murder conviction and was therefore properly considered by the jury during sentencing. Id.
Our decision in Melton was followed by this Court in State v. Brewer, 321 N.C. 284, 362 S.E.2d 261 (1987). In Brewer, defendant was charged with murder in the first degree and entered a plea of guilty to murder in the second degree. Upon being sentenced to life imprisonment, defendant appealed to this Court assigning as error the trial judge's finding of premeditation and deliberation as a non-statutory aggravating factor. We held that the fact that defendant premeditated and deliberated the killing was transactionally related to the second degree murder conviction and was therefore properly considered by the sentencing judge. Id. at 286, 362 S.E.2d at 262. Both Melton and Brewer hold that a determination by the preponderance of the evidence that defendant premeditated and deliberated the killing is reasonably related to the purposes of sentencing. Melton, 307 N.C. at 378, 298 S.E.2d at 679; Brewer, 321 N.C. at 286, 362 S.E.2d at 262. Therefore, a sentencing judge is not precluded from finding premeditation and deliberation as an aggravating factor even though the *33 State has accepted a defendant's plea of guilty to second degree murder.
In both Melton and Brewer, we noted that a plea of guilty to second degree murder is fundamentally different from a conviction of second degree murder when the defendant has been tried on a charge of first degree murder. Id.
In State v. Marley, 321 N.C. 415, 364 S.E.2d 133 (1988), the defendant was tried before a jury on a charge of murder in the first degree and convicted of murder in the second degree. On appeal to this Court, defendant contended that the sentencing judge was precluded by considerations of due process from finding as an aggravating factor that defendant acted with premeditation and deliberation. This Court agreed, reasoning as follows:
To allow the trial court to use at sentencing an essential element of a greater offense as an aggravating factor, when the presumption of innocence was not, at trial, overcome as to this element, is fundamentally inconsistent with the presumption of innocence itself.
We conclude that due process and fundamental fairness precluded the trial court from aggravating defendant's second degree murder sentence with the single elementpremeditation and deliberation which, in this case, distinguished first degree murder after the jury had acquitted defendant of first degree murder.
Id. at 425, 364 S.E.2d at 139.
In the instant case, defendant contends that whether premeditation and deliberation may be used as an aggravating factor in sentencing a defendant charged with second degree murder and convicted of second degree murder is controlled by Marley. She contends that since it is unfair to find an aggravating factor of premeditation and deliberation when the jury has acquitted the defendant of first degree murder based on premeditation and deliberation then it is equally unfair to find that same aggravating factor when the defendant is originally indicted and charged only with second degree murder. We conclude that an initial charge and subsequent conviction of murder in the second degree is controlled by Melton and Brewer rather than Marley.
In Marley, the jury found defendant not guilty of first degree murder based on premeditation and deliberation. The sentencing judge was then precluded from using that element to enhance defendant's sentence because the conviction of the lesser included offense of second degree murder acquitted defendant of the greater offense of first degree murder. Id. 321 N.C. at 424, 364 S.E.2d at 138. However, unlike Marley, in the instant case there is no jury determination as to whether the murder was committed with premeditation and deliberation.
The instant case is more like Melton and Brewer where the prosecutors accepted pleas of guilty to second degree murder although the indictments permitted prosecution for first degree murder based on premeditation and deliberation. In both cases we held that acceptance of the plea of guilty to the lesser included offense of second degree murder did not prevent the sentencing judge from finding premeditation and deliberation as a non-statutory aggravating factor and using that factor as a basis for a sentence greater than the presumptive term. Brewer, 321 N.C. at 286, 362 S.E.2d at 262.
We hold that where a defendant is convicted on an indictment charging only second degree murder, a determination by the preponderance of the evidence that defendant premeditated and deliberated the killing is reasonably related to the purposes of sentencing. Therefore, a sentencing judge is not barred from using premeditation and deliberation as an aggravating factor in such a case.
We next consider questions raised by the State's petition. The State contends essentially that the Court of Appeals substituted its judgment for that of the sentencing judge in determining whether aggravating factors existed so as to permit a sentence in excess of the presumptive term. Defendant was before the sentencing judge for resentencing pursuant to the remand from this Court. This Court had awarded a new sentencing hearing because *34 the initial sentencing judge incorrectly found as a non-statuatory aggravating factor that defendant perjured herself at trial, and used that factor as a basis for sentencing defendant to life imprisonment, a sentence in excess of the presumptive term for second degree murder. At the resentencing hearing the judge found the non-statutory aggravating factor of premeditation and deliberation and upon a determination that this aggravating factor outweighed the mitigating factors sentenced defendant to thirty years imprisonment, a sentence also in excess of the presumptive term. The Court of Appeals concluded that it was unlikely that in fifteen minutes the sentencing judge was able to give the pertinent portions of the entire trial transcript adequate review so as to allow him to find premeditation and deliberation by a preponderance of the evidence. Vandiver, 92 N.C.App. at 700, 376 S.E.2d at 20. The court reached this conclusion after reviewing the preponderance of the evidence standard which gives to the trial judge "wide latitude in arriving at the truth as to the existence of aggravating and mitigating [factors]...." Id. (quoting State v. Ahearn, 307 N.C. 584, 300 S.E.2d 689 (1983)). "This standard," the court said, "must be applied even more stringently where the sentencing judge is not the trial judge, and more particularly to such a subjective element as premeditation and deliberation." Vandiver, 92 N.C.App. at 700, 376 S.E.2d at 20.
The specific question before the Court of Appeals was whether the disputed factor in aggravationpremeditation and deliberationwas supported by a preponderance of the evidence. The assistant District Attorney announced that the evidence at the resentencing hearing "would be by way of directing the court's attention to the trial transcript and portions there, testimony given under oath by certain witnesses and arguments. We will have no formal presentation." The State then presented the trial transcript to the court, calling the court's attention to specific pages "to support our argument for aggravating factors, the first one being premeditation and deliberation." Id. at 698, 376 S.E.2d at 19. Defense counsel objected to this procedure, essentially contending that the sentencing judge could not find an aggravating factor by a preponderance of the evidence by reading portions of the trial transcript. The resentencing hearing continued with the defendant presenting such evidence as he desired to rebut the aggravating factors and support mitigating factors. The judge then announced that he would take about fifteen minutes to "review the case decision, as well as the State v. Brewer ... before making findings." Id. at 699, 376 S.E.2d at 19-20. Following the fifteen minute recess, the trial judge made the following pertinent remarks:
COURT: [T]aking into consideration the evidence presented both by the State and the Defendant and the argument of counsel, the Court finds ... by a preponderance of the evidence that the crime was committed with premeditation and with deliberation....
Id. at 699, 376 S.E.2d at 20.
We are unable to say that the judge's finding of the aggravating factor of premeditation and deliberation was not supported by the preponderance of the evidence. We first note that the judge appeared to be familiar with the transcript. For example, when the prosecutor referred to the testimony of a specific witness, the sentencing judge supplied the name of that witness. Secondly, while the record only supports a fifteen minute recess to review the case law and make findings, it is apparent that the judge had devoted a substantial amount of time to the case prior to the fifteen minute recess. Finally, the only testifying eyewitness to the murder, other than defendant, testified that defendant came out of her apartment armed with a knife and stabbed the victim who was standing with his hands in his pockets, after defendant's boyfriend urged her to "[g]o ahead and do it if you're going to." Defendant testified that she did not kill the victim, that her boyfriend was the perpetrator. The question for the sentencing judge was one of credibility. In making this determination, the judge was aided by the jury's finding that defendant murdered the *35 victim, a finding of at least some credibility on the part of the eyewitness to the crime. This same witness gave testimony detailing circumstances leading up to the actual stabbing tending to show that defendant in fact premeditated and deliberated the killing. This evidence was sufficient to support the sentencing judge's finding by a preponderance of the evidence that the crime was committed with premeditation and deliberation. The Court of Appeals erred in finding to the contrary. See generally State v. Ahearn, 307 N.C. 584, 300 S.E.2d 689.
The State's second question concerns whether the Court of Appeals could prohibit the judge at the sentencing hearing from making other findings in aggravation. Although that question does not have to be reached since there will not be another resentencing hearing in this case, we note that ordinarily a resentencing hearing is a de novo proceeding at which the trial judge may find aggravating and mitigating factors without regard to the findings made at the prior sentencing hearing. State v. Jones, 314 N.C. 644, 336 S.E.2d 385 (1985).
In summary, we agree with the Court of Appeals that the State is not estopped from asserting premeditation and deliberation as an aggravating factor in this case. We reject the Court of Appeals' conclusion that the disputed factor in aggravationpremeditation and deliberationis not supported by a preponderance of the evidence. The decision of the Court of Appeals remanding this case for resentencing is reversed and the judgment of the trial court is reinstated.
REVERSED.
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132 Ga. App. 628 (1974)
208 S.E.2d 634
BLALOCK
v.
STAVER.
49595.
Court of Appeals of Georgia.
Submitted September 5, 1974.
Decided September 20, 1974.
E. T. Hendon, Jr., for appellant.
*631 Jones, Cork, Miller & Benton, Wallace Miller, Jr., Harold E. Martin, for appellee.
EBERHARDT, Presiding Judge.
In this action for personal injury arising from a rearend *629 collision (defendant's vehicle striking plaintiff's from rear), the jury returned a verdict for the defendant. Appealing from the judgment entered thereon, plaintiff assigns as error the trial court's denial of her motion for new trial. Plaintiff contends solely that the preponderance of the evidence against the defendant was so great as to suggest jury bias or gross misapprehension and as to shock the understanding and moral sense, Brown v. Nutter, 125 Ga. App. 449 (2) (188 SE2d 133), and that she was therefore entitled to a new trial. Held:
If there is any evidence to support the verdict of the jury, this court will not disturb the verdict. "This ground in the motion for new trial is addressed to the discretion of the trial judge, upon whom is imposed the duty of being satisfied with a verdict before he approves it." Hargett v. State, 24 Ga. App. 357 (100 S.E. 765); Bell Bros. v. Aiken, 1 Ga. App. 36 (57 S.E. 1001). See also Car-Perk Services, Inc. v. Carr, 219 Ga. 322 (132 SE2d 780); Middleton v. Waters, 205 Ga. 847 (5) (55 SE2d 359). "After a jury verdict has been returned the evidence is construed in its light most favorable to the prevailing party, for every presumption and inference is in favor of the verdict." Brown v. Nutter, 125 Ga. App. 449 (1), supra; Brown v. Wingard, 122 Ga. App. 544 (177 SE2d. 797).
The evidence of record construed in this light is sufficient to warrant a jury conclusion that plaintiff was negligent in the operation of her vehicle in that she was traveling at night at a high rate of speed (between 55 and 70 miles per hour); that she slowed suddenly to make a right hand turn onto an intersecting road; that she did not signal her intention of doing so sufficiently in advance to warn defendant, who was following her; and that her vehicle upon braking skidded to the right then to the left causing it to be astraddle the centerline at the time of impact.
"All drivers of vehicles using the highways are held to the exercise of due care. A leading vehicle has no absolute legal opposition superior to that of one following. Each driver must exercise ordinary care in the situation in which he finds himself. The driver of the leading vehicle must exercise ordinary care not to stop, slow up, *630 nor swerve from his course without adequate warning to following vehicles of his intention so to do. The driver of the following vehicle, in his turn, must exercise ordinary care to avoid collision with vehicles, both those in front and those behind him." Cardell v. Tennessee Electric Power Co., 79 F2d 934, 936 (5th Cir. 1935). "The mere fact that one vehicle is struck in its rear, while another is not struck, is not in and of itself sufficient to fix liability on the driver of either vehicle." Davenport v. Robinson, 109 Ga. App. 753, 755 (137 SE2d 380); Hay v. Carter, 94 Ga. App. 382, 384 (94 SE2d 755). "All the facts and circumstances are to be taken into consideration in making a determination as to where the liability lies." Brown v. Nutter, 125 Ga. App. 449, 450, supra; Harper v. Plunkett, 122 Ga. App. 63 (176 SE2d 187).
The trial judge covered these principles in his charge to the jury as well as the law of comparative negligence, to which plaintiff did not object, and which was appropriate under the evidence. See Holland v. Watson, 118 Ga. App. 468 (2) (164 SE2d 343); Flanigan v. Reville, 107 Ga. App. 382 (130 SE2d 258).
That the negligence of the plaintiff under those circumstances (as leading vehicle in a rear-end collision) presents a question for the jury is found in Roesler v. Etheridge, 125 Ga. App. 358 (187 SE2d 572); Sears, Roebuck & Co. v. Kinzler, 118 Ga. App. 682 (164 SE2d 872); O'Neil v. Moore, 118 Ga. App. 424 (3) (164 SE2d 328); Pfeifer v. Yellow Cab Co. of Atlanta, 88 Ga. App. 221 (76 SE2d 225).
The jury was authorized under the law and the evidence to find for the defendant, even though the defendant may have been negligent also. We find evidence in the record to support the verdict and no abuse of discretion in the trial court's denial of plaintiff's motion for new trial.
Judgment affirmed. Deen and Stolz, JJ., concur.
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232 Ga. 779 (1974)
208 S.E.2d 801
OLLEY VALLEY ESTATES, INC. et al.
v.
FUSSELL et al.
28916.
Supreme Court of Georgia.
Argued June 11, 1974.
Decided September 4, 1974.
Rehearing Denied September 24, 1974.
Edwards, Awtrey & Parker, A. Sidney Parker, Green, Force & Alderman, William O. Green, Jr., for appellants.
Neely, Freeman & Hawkins, Paul M. Hawkins, *786 William G. Tabb, III, John L. Coney, for appellees.
HALL, Justice.
This is an appeal by the developer from a decision *780 of the Superior Court of Douglas County which ruled, following an interlocutory hearing, that the vote of the Commissioners of Roads and Revenues of Douglas County to re-zone certain property was null and void, and that all parties were enjoined from developing the property under the re-zoned classification.
The background of the litigation is, briefly, that Olley Valley Estates, Inc. (hereinafter, "Olley Valley") had petitioned to re-zone its property to allow the development of a mobile home subdivision and that the commissioners by a two-to-one vote granted the requested re-zoning though opposition was advanced at the hearing by appellees. Following the vote for re-zoning, appellees brought the superior court action against Olley Valley, the county, and the commissioners individually, seeking the injunction on grounds, among others, that the vote of Commissioner Joseph T. Smith, whose affirmative vote was determinative in allowing the re-zoning, had been influenced by personal considerations and that Commissioner Smith should be held disqualified.
It is critical to our action on this appeal that the superior court terminated the hearing and issued its decision after hearing extensive evidence on the alleged disqualification from appellees, but without hearing evidence from Olley Valley and the other appellants. Appellees acquiesce in the contention that due process therefore requires a rehearing to allow appellants to make their showing, and we will remand for that purpose. However, we are urged by appellants not to remand without determining certain of the contested points of law which will arise again on a new hearing. Accordingly, we will in this opinion decide three questions of law central to this dispute, namely, what is the standard under which a zoning commissioner may be determined to be disqualified from voting on a particular matter (Olley Valley enumerations 1 (g), 4, 5, 6 and 7; County enumerations XVI and XVII); should the injunction suit be dismissed against the county commissioners in their individual capacities (3, II, III and IV); and is the evidence at the injunction hearing limited to that admitted at the initial hearing on the re-zoning *781 request (10).
1. Turning to the first question, the parties hotly contest here whether a board of commissioners hearing a re-zoning application performs a function correctly described as quasi-judicial or quasi-legislative. The argument runs that, if the function is quasi-judicial a commissioner may be disqualified for a conflict of interest; but if the function is quasi-legislative the decision of the commissioners will stand unless it is clearly arbitrary and unreasonable, and the courts should not inquire into the motivation of the commissioners. Appellees further argue that if zoning, with its comprehensive community planning, is properly regarded as a legislative function, nonetheless re-zoning must be regarded as quasi-judicial because it requires an adjudicative determination. The superior court ruled with appellees. We find that the function in question, if it must be labeled, is quasi-legislative; but that like most labels this one does not answer the real question which is, in this case, what disqualifies the commissioner in a zoning matter?
A review of all the Georgia cases cited by the parties on this point makes clear that the Georgia view is that commissioners in voting on either a zoning or re-zoning proposal are functioning in a legislative capacity. E.g., Cota v. Northside Hospital Assn., 221 Ga. 110, 112 (143 SE2d 167); Vulcan Materials Co. v. Griffith, 215 Ga. 811, 816 (114 SE2d 29); Humthlett v. Reeves, 212 Ga. 8 (90 SE2d 14); Toomey v. Norwood Realty Co., 211 Ga. 814, 817 (89 SE2d 265); Morgan v. Thomas, 207 Ga. 660, 664 (63 SE2d 659); Barr v. City Council of Augusta, 206 Ga. 756 (4) (58 SE2d 825); Story v. City of Macon, 205 Ga. 590, 594 (54 SE2d 396). This is also, incidentally, the view of the Fifth Circuit which recently, in South Gwinnett Venture v. Pruitt, 491 F2d 5 (5th Cir. 1974), wrote with two dissents and one special concurrence that zoning was quasi-legislative and that there was no difference between the functions of zoning and re-zoning. The en banc opinion reversed the decision of the three-judge panel of the Fifth Circuit, which had found zoning legislative and re-zoning judicial. 482 F2d 389 (5th Cir. 1973). The Fifth Circuit also wrote that it would not apply *782 its own earlier case of Hornsby v. Allen, 326 F2d 605 (5th Cir. 1964) to zoning cases. 491 F2d, p. 7, n. 1. Hornsby had stated that "A governmental agency entrusted with the licensing power... functions as a legislature when it prescribes standards, but the same agency acts as a judicial body when it makes a determination that a specific applicant has or has not satisfied them." 326 F2d, p. 608. Building on the suggestion in Hornsby, our Court of Appeals in Rogers v. Mayor &c. Atlanta, 110 Ga. App. 114 (137 SE2d 668) wrote that the grant or withholding of a special use permit under a zoning ordinance was a judicial function. The Fifth Circuit has now disclaimed the reading that Rogers gave Hornsby, undercutting Rogers to that extent. However, Rogers may have continued viability because of the same fact that makes it irrelevant to this appeal: the special use permit considered in Rogers is basically different from an act of re-zoning, and many respectable authorities suggest that the former is properly regarded as a quasi-judicial act even though the latter is not.[1]
In any event, labeling a zoning or re-zoning function "quasi-legislative" will not terminate the inquiry into a commissioner's disqualification if he has a financial interest in the subject on which he is voting. This was the clear implication of the analogous cases of Story v. City of Macon, 205 Ga. 590 (54 SE2d 396) and Crawford v. Brewster, 225 Ga. 404 (169 SE2d 317) both of which concerned city councilmen subject to the conflict of interest provisions of Code § 69-204. The reasoning which underlies this conclusion that self-interested voting is improper despite its legislative character is set forth in 8 McQuillin, Municipal Corporations § 25.57 (1965): "Furthermore, zoning ordinances and regulations should be designed to promote the general welfare and other *783 objectives specified in the statutes, rather than to benefit individual property owners or to relieve them from the harshness of the general regulation as applied to their property. Thus, a zoning measure may be invalid by reason of the fact that a member of the council which enacted the zoning ordinance or amendment, or a member of the zoning commission which recommended its enactment had an interest, direct or indirect, in the affected property, although in some cases the interest of a municipal legislator has not been regarded as material on the issue of the validity of the zoning measure. In any case, a remote or speculative interest will not warrant abrogation of the municipal action in which the officer participated."
The usual test has been stated as follows: "Fraud or bad faith with respect either to context or manner of arriving at a decision in an administrative zoning matter, is sufficient ground for judicial reversal thereof. But the motives of a zoning board are not, except with respect to fraud or bad faith, open to inquiry on judicial review." 8A McQuillin, Municipal Corporations § 25.313 (1965). Several analogous and helpful cases are discussed in the treatise, Rathkopf, The Law of Zoning and Planning, Ch. 22, § 3 (1972 Supp. for use in 1974) which concludes that "It would seem that the general rule against inquiring into the motives of the legislative body gives way as a matter of public policy where there is an allegation or appearance of corruption or fraud." In short, the unimportance to this point of the distinction between quasi-judicial and quasi-legislative labels has been recognized (see Note, Disqualification of Councilman for Personal Interest, 57 Mich. L. Rev. 423, 425 (1959)), and it has been suggested that "Although the courts have generally refrained from stating that the rule of nonreview of motives in legislative action should be abandoned, such a result has in effect been reached by various techniques which include invalidating legislative action where `fraud' is involved, or classifying an action as quasi-judicial when in other circumstances it has been treated as legislative. Conceding that the difficulty of inquiring into the motives of municipal legislators may lead courts to follow the general rule of nonreview, it *784 would appear that in zoning actions policy arguments urge that the general rule not be applied, and that action involving self-interested votes be invalidated." Id. pp. 425-426.
Given this background, that inquiry into the possible disqualification of Commissioner Smith may proceed despite the quasi-legislative nature of the voting, we conclude that it is of no importance that the superior court applied the wrong label and termed the voting quasi-judicial. However, the questions of whether there actually was self-interested voting here and whether that degree of self-interest was disqualifying, may be answered by the superior court only by examination of the facts and circumstances presented by the whole record made upon rehearing when appellants have been given the opportunity to present their evidence. The question the superior court must answer is whether, under all the evidence, Commissioner Smith had a direct or indirect financial interest in the outcome of the zoning vote an interest which was not shared by the public generally, and which was more than remote or speculative. See, Crawford v. Brewster, 225 Ga. 404 (1) (169 SE2d 317); Story v. City of Macon, 205 Ga. 590, 594 (54 SE2d 396); South Georgia Power Co. v. Baumann, 169 Ga. 649, 656 (151 S.E. 513). We further note here, in response to appellants' contention, that it is not necessarily fatal to an attempt to show disqualification, that the allegedly disqualifying act or interest did not take place or appear at the very moment the vote was cast, if it appears that the act or interest infected the vote. See Fleming v. City of Tocoma, 81 Wash. 2d 292 (502 P2d 327).
2. The second question we must address is whether appellees, having failed to raise at the zoning hearing the question of Commissioner Smith's disqualification, are therefore precluded from raising the question de novo in the superior court. The answer inheres in what we have written above: where self-interested voting has been alleged, the usual rule of only limited review of zoning decisions is abrogated, and judicial inquiry into all the pertinent surrounding circumstances is proper, and this is true whether or not the question of the commissioner's *785 possible bias was raised at the zoning hearing. We do not have here an appeal from an administrative decision and an associated requirement for the exhaustion of administrative remedies, as in, for example, Dept. of Public Safety v. Foreman, 130 Ga. App. 71 (202 SE2d 196), cited by appellants; instead we have a plenary suit in equity brought to enjoin the development of the property on grounds that the re-zoning decision was null and void. The evidence adduced at the zoning hearing does not restrict that before the superior court on the question of disqualification. See also Code Ann. §§ 69-1211.1, 6-501; 8A McQuillin, Municipal Corporations §§ 25.334-25.336 (1965).
3. The third question, whether the superior court erred in refusing to dismiss the suit against the commissioners individually, we answer in the negative. Though suits by and against a county are properly brought in the name of the county, Code Ann. §§ 2-7801, 23-1501, an injunction may be sought in a court of equity in an action which is brought against the governing officials of the county. McGinnis v. McKinnon, 165 Ga. 713 (141 S.E. 910); Dancer v. Shingler, 147 Ga. 82 (92 S.E. 935). "A suit of the character above mentioned differs from suits to obtain legal or equitable relief for or against counties. In suits of that character the county is the proper party." McGinnis v. McKinnon, 165 Ga. 713 (1a).
4. The remaining enumerations of error may become moot upon re-trial and therefore will not be decided.
This appeal is remanded to the Superior Court of Douglas County for rehearing and decision in accordance with the foregoing opinion.
Case remanded with direction. All the Justices concur.
INGRAM, Justice, concurring.
I concur in the judgment requiring a rehearing in the trial court and agree that an independent determination can be made by a court of equity whether or not a particular zoning (or re-zoning) decision of a county governing authority is illegal and void. See, Hopping v. Cobb County Fair Assn., 222 Ga. 704 (152 SE2d 356). However, I would add that the courts have no right to invade the province of the other departments of the government to review the merits of decisions made by the executive and legislative branches in the proper exercise of their constitutional powers. The Constitution of Georgia places the exclusive zoning power of a county in the governing authority and only the county governing authority can zone or re-zone property. Humthlett v. Reeves, 212 Ga. 8 (90 SE2d 14). Any judicial review of the exercise of this constitutionally delegated power must be limited to questions which reach the level of constitutional protections. It is the conflict between the competing constitutional powers of the county governing authority and the constitutional rights of the citizen that justify interference by the judiciary to achieve a constitutional balance. This objective is illustrated by prior decisions of this court. For example, there must be a notice and an opportunity for interested parties to be heard before a decision is made by the governing authority and there must be a meaningful hearing. Pendley v. Lake Harbin Civic Assn., 230 Ga. 631 (198 SE2d 503). The action taken by the governing authority must not be arbitrary or unreasonable. E.g., see Tuggle v. Manning, 224 Ga. 29 (159 SE2d 703). But, if there is any evidence to sustain the action taken by the governing authority, the courts have no right to overturn that action. Again, the reason is that the power of the governing authority to make a zoning decision is rooted in the Constitution and it ought not to be interfered with when exercised consistently with constitutional safeguards. See, Hunt v. McCollum, 214 Ga. 809 (108 SE2d 275).
We have seen that a meaningful hearing is *787 mandated by constitutional due process requirements of fundamental fairness. This would also mean that a member of a county governing authority should not act on a zoning or re-zoning question in which he, or any member of his immediate family, has a financial interest not shared by the public generally. But, beyond the duty of the court to pass upon such questions of self interest, which infect due process fairness, there is a vast area of legislative motivations in which the courts have no right or expertise to explore under our constitutional scheme. Therefore, I do not believe the court properly can explore into the background of zoning decisions and effectively second-guess the judgment of city or county governing authorities. Any tendency toward a broader judicial review of zoning decisions is contrary to Hunt v. McCollum, supra, and I believe tends to erode the zoning power expressly delegated to county and city governing authorities in our state by the Georgia Constitution.
NOTES
[1] "Boards of zoning adjustment and review generally are deemed to be quasi-judicial bodies having quasi-judicial powers, functions and duties, essentially fact-finding and discretionary in character." 8A McQuillin, Municipal Corporations, § 25.230 (1965).
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Appeal is from conviction for possessing intoxicating liquor for the purpose of sale, the punishment being one year in the penitentiary.
We find in the record what purports to be a statement of facts. It is signed by the attorneys but is not approved by the trial judge. It cannot be considered. (For authorities see Vernon's 1925 Ann. C. C. P., Art. 760, note 24.)
A requested special charge was refused and exception reserved. The propriety, or otherwise, of the requested instruction depends on the evidence developed on the trial, and not being authorized to consider the facts before us we are not in a position to review the action of the court in the premises.
The only bill of exception found in the record complains at the court's refusal to instruct a verdict of not guilty, the reasons stated being that the state had failed to produce any incriminating evidence against appellant, and that such evidence as had been introduced was obtained by virtue of an illegal and defective search warrant. Various reasons are stated why the search warrant was claimed to be defective, but the warrant is not incorporated in the bill, and none of the matters upon which the claimed defects are based is certified by the judge as in fact existing but are only the grounds of objection. The authorities holding such a bill defective are numerous. (Many are collated in Vernon's 1925 Ann. C. C. P., Art. 667, note 23.) Neither is there incorporated in the bill of evidence claimed to be insufficient and having no statement of facts before us which we are authorized to consider we cannot appraise such complaint.
The record now before us demands an affirmance and it is so ordered.
Affirmed. *Page 395
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18 Cal.Rptr.3d 152 (2004)
121 Cal.App.4th 1179
Maria MARTINEZ, Plaintiff and Appellant,
v.
CHIPPEWA ENTERPRISES, INC., Defendant and Respondent.
No. B166231.
Court of Appeal, Second District, Division Eight.
August 26, 2004.
*153 Cheryl Podbielski, Beverly Hills, for Plaintiff and Appellant.
Horvitz & Levy, David M. Axelrad, Karen M. Bray, Kim L. Nguyen, Encino; Law Offices of Zurawski & Chase and Kathleen L. Casey for Defendant and Respondent.
COOPER, P.J.
In this slip-and-fall case, the trial court granted summary judgment to defendant Chippewa Enterprises, Inc., at whose real property plaintiff Maria Martinez slipped on wet pavement, on grounds defendant had not owed plaintiff any duty of care with respect to the open and obvious condition of water on the ground. This ruling did not accord with the relevant law, nor was it justified by the facts presented, which were insufficient to determine the nonexistence of duty. Accordingly, the judgment will be reversed.
FACTS
Plaintiff filed a single-count negligence/premises liability complaint, alleging that defendant, the owner or lessor of premises known as 9650 Flair Drive in El Monte, had negligently owned, maintained, and operated the property, so that on February 9, 2001, it was in a dangerous condition, "when plaintiff slipped and fell from water improperly placed on the premises." Plaintiff also alleged that defendant had failed to warn her of the dangerous condition, of which it should reasonably have been aware.
The evidence offered on defendant's motion for summary judgment showed the following material facts, including certain conflicts. According to declarations by plaintiff and her brother, about 7:30 a.m. on February 9, 2001, plaintiff drove her brother to an appointment at the Immigration and Naturalization Service (INS) office situated in defendant's building on Flair Drive. Plaintiff parked on Flair, a block and a half from the building, and she and her brother crossed that street and walked toward the premises. They saw no water on the sidewalk until they reached the building. Nor did they see any cars tracking water into the parking lot through a driveway across the sidewalk. As plaintiff crossed this driveway, with her brother in front of her, "it was wet and I slipped and fell." Plaintiff's shoulder was dislocated, and her back hurt badly. She remained on the ground until an ambulance arrived. Plaintiff's brother declared that the water on the ground "covered dark marks that appeared to be oil marks." He also stated that plaintiff had fallen at a point in the driveway just beyond its apron, which coincided with the sidewalk.
Plaintiff also presented a declaration by Adam Webb, a security guard employed by an independent contractor providing security services to the INS, who had been assigned to defendant's building since 1999. Webb stated he had been informed by an INS officer at 7:40 a.m. on February 9, 2001, that a woman was hurt at the driveway. He went there and found plaintiff on the ground in the driveway. After she stated her back hurt, Webb called 911, and an ambulance responded (along with a *154 fire truck and paramedics), and took plaintiff to Greater El Monte Hospital.[1]
Webb also declared that, on many occasions both before and after the accident, he had seen water in the building's driveway. He stated that it came from sprinklers on the premises, and flowed down the driveway onto Flair Drive. He had often seen the sprinklers running when he arrived at work, his arrival times being between 4:00 a.m. and sometime before 8:00 a.m., and he had had to step around the water to avoid getting spots on his shoes. Webb had not seen vehicles that entered the driveway track in the amount of water shown in a photo of the area where he had found plaintiff, apparently taken the day of the accident. Webb also stated that he knew of another instance during his employment when someone had slipped and fallen in the same general area as plaintiff.
Webb's declaration contrasted with that of David Tellez, offered by defendant in support of its motion. Tellez, a day porter and maintenance supervisor for the building, employed by defendant and responsible for day-to-day operations, stated that the sprinklers were on a timer set for 8:00 p.m., and that defendant did not "water the premises during the daytime." The last such watering before plaintiff's accident had occurred at 8:00 p.m. the day before.
Moreover, Tellez stated, while taking photographs of the scene on the day of the accident, he had observed water on the sidewalk and in the gutter. He added, "It was obvious that the water on which plaintiff slipped was tracked in by vehicles entering the driveway from the street." It did not come from defendant's premises, nor was it caused by any condition on them. Tellez concluded, "[Defendant] does not own, control or maintain the sidewalk adjacent to the premises and did not create the condition on which plaintiff fell."[2] Tellez's photographs, attached to his declaration, showed water covering (a) the slanted apron of the driveway, along the sidewalk; (b) the beginning of the flat driveway, beyond the sidewalk, where plaintiff's brother claimed she had slipped and fallen; and (c) a substantial portion of the outdoor driveway itself. Beyond the driveway, additional water extended in the gutter, narrowing and becoming more shallow away from the driveway.
Defendant also offered excerpts of plaintiff's deposition, in which she stated she had seen the wetness of the driveway before she walked on it, and in which she had marked a photograph to show the "approximate" area where she believed she fell. That location was toward the top of the driveway apron, which traversed the sidewalk. In her subsequent declaration, plaintiff reaffirmed that this was an approximation, because she had not taken note of the exact location after she fell.
Defendant's motion for summary judgment asserted, first, that defendant was not under an actionable duty to maintain the sidewalk unless defendant created the dangerous condition, which, based on Tellez's testimony, was not the case. Second, defendant had no duty to warn plaintiff of the allegedly dangerous condition (the wetness), because it was open and obvious.
*155 At the hearing, the court recognized that there was a triable issue regarding the source of the water and defendant's responsibility for it. Nevertheless, the court indicated that the open and obvious presence of the water entitled defendant to summary judgment. The court subsequently granted the motion on this basis. Its minute order stated, in part, "Regardless of the source of the water, or whether plaintiff slipped on the sidewalk or driveway, . . . [¶] [w]ithout more, the existence of water on concrete or asphalt located outdoors is an open and obvious condition."
DISCUSSION
We review the grant of summary judgment de novo. (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476, 110 Cal. Rptr.2d 370, 28 P.3d 116; Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767, 107 Cal.Rptr.2d 617, 23 P.3d 1143 (Saelzler.) In brief, to obtain summary judgment, defendant had to show either that one or more elements of plaintiff's claim could not be established, or that there existed a complete affirmative defense to it. (Code Civ. Proc., § 437c, subds. (a), (o)(1), (2), (p)(2).) Defendant could do this by advancing evidence that either negatived the claim or element, showed that plaintiff had insufficient evidence to establish it, or established the complete defense. (Id., subd.(p)(2).) Defendant bore the burden of persuading the court to this effect. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850, 107 Cal.Rptr.2d 841, 24 P.3d 493.) In determining whether this burden was met, we view the evidence in the light most favorable to plaintiff, as the nonmoving party, liberally construing her evidence while strictly scrutinizing defendant's. (Id. at p. 856, 107 Cal.Rptr.2d 841, 24 P.3d 493; Saelzler, supra, 25 Cal.4th at p. 768, 107 Cal.Rptr.2d 617, 23 P.3d 1143.)
Although grounded in an accurate factual premise, the trial court's decision was legally incorrect. The court first ruled that the allegedly dangerous condition plaintiff encounteredthe water and wetness at the area (sidewalk or driveway) where she fellwas "open and obvious." That much was correct: defendant's photographs prima facie established the obviousness of the wet condition (at least to sighted persons), and plaintiffwho admitted having seen the wetness before stepping on itdid not dispute this. However, that the hazard was open and obvious did not relieve defendant of all possible duty, or breach of duty, with respect to it. In the trial court and again here, defendant argued only that the obvious appearance of the wet pavement excused defendant from a duty to warn of it. That was most likely so. But the obviousness of a condition does not necessarily excuse the potential duty of a landowner, not simply to warn of the condition but to rectify it. The modern and controlling law on this subject is that "although the obviousness of a danger may obviate the duty to warn of its existence, if it is foreseeable that the danger may cause injury despite the fact that it is obvious (e.g., when necessity requires persons to encounter it), there may be a duty to remedy the danger, and the breach of that duty may in turn form the basis for liability. . . ." (Osborn v. Mission Ready Mix (1990) 224 Cal.App.3d 104, 122, 273 Cal.Rptr. 457; see id. at p. 121, 273 Cal. Rptr. 457; Beauchamp v. Los Gatos Golf Course (1969) 273 Cal.App.2d 20, 33, 77 Cal.Rptr. 914.)
The court's analysis therefore was incomplete, and led to a premature conclusion of no duty and therefore no liability. The palpable appearance of the wetness may itself have provided a warning of the slippery condition, excusing defendant from having to do so. But it may yet have *156 been predictable that despite that constructive warning, the wet pavement would still attract pedestrian use. For example, the pavement appears to have provided a principal if not sole access way from the street to defendant's building, which housed a government office serving the public. In these circumstanceswhich the evidence did not negative, but supported defendant may have been charged with a duty of relieving the dangerous condition. Whether such a duty existed depends upon a number of as yet unresolved factors, such as the foreseeability of harm, defendant's advance knowledge vel non of the dangerous condition, and the burden of discharging the duty. (See Rowland v. Christian (1968) 69 Cal.2d 108, 113, 70 Cal.Rptr. 97, 443 P.2d 561.) The facts presented on the motion for summary judgment, some of them in direct conflict (e.g., the source of the water), did not permit resolution of this question of duty in defendant's favor.
Defendant urges otherwise. Postulating arguendo that the source of the wetness was the building's sprinklers, defendant argues that certain of the factors identified as relevant to duty in Rowland v. Christian, supra, 69 Cal.2d at pages 112-113, 70 Cal.Rptr. 97, 443 P.2d 561, should militate dispositively against "imposing a duty of due care under the facts of this case. . . ." But most of defendant's argument is not tied to the facts of this case (which themselves have scarcely been developed). For example, defendant adduces the straw man that if a duty to prevent or remedy existed in this case, "every homeowner, business owner, and landowner would be subject to liability any time they ran their sprinklers and failed to dry the pavement in front of their premises," or they would be subject to expense and inconvenience "every time they ran their sprinklers." But a holding that defendant's general duty of due care (Civ.Code, § 1714) extended to assuring that the pavement adjacent to its driveway remained free of dangerous wetness would not entail a legislative rule of the type and sweep that defendant here hypothesizes.
Likewise, defendant's argument that there is no evidence either that it acted recklessly, or that it could foresee plaintiff's accident, overlooks that on this motion for summary judgment, it was defendant's burden to provide facts justifying a favorable decision on an element of plaintiff's cause of action. The only facts defendant presented bearing on foreseeability were a series of photographs of the distinctly wet if not puddled end and apron of the driveway. Once again, the facts before the trial court and this court did not warrant a conclusion that defendant neither possessed nor breached a duty of care in this connection. (Cf. Lopez v. Superior Court (1996) 45 Cal.App.4th 705, 716-717, 52 Cal.Rptr.2d 821.)
Defendant also suggests that it would have been appropriate, as a practical matter and as a factor in allocating duty, for plaintiff to have stepped around the wet area (presumably into the gutter), or to have walked more carefully when she encountered the wetness. Depending upon the ultimate evidence, how plaintiff navigated the area may pose an issue of comparative negligence. (See, e.g., Beauchamp v. Los Gatos Golf Course, supra, 273 Cal.App.2d at pp. 35-36, 77 Cal.Rptr. 914.) But that does not now warrant relieving defendant of all the legal burden of the situation.
Defendant does not reassert the contention that it could not be responsible for the condition of the sidewalk, assuming that plaintiff fell there. Not only was the evidence as to the location of plaintiff's accident conflicting and unresolved, defendant recognized at the outset that it might be responsible for a condition of the sidewalk *157 that it caused. (See Kopfinger v. Grand Central Pub. Market (1964) 60 Cal.2d 852, 857-860, 37 Cal.Rptr. 65, 389 P.2d 529.)
DISPOSITION
The judgment is reversed. Plaintiff shall recover costs.
We concur: RUBIN and BOLAND, JJ.
NOTES
[1] On the same day, Webb prepared an incident report. Attached to his declaration, it recited the same facts as just summarized.
[2] Plaintiff objected to these statements, and others, as conclusions, but the trial court never expressly ruled on either party's evidentiary objections. (See Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 670, fn. 1, 25 Cal.Rptr.2d 137, 863 P.2d 207.)
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17 Cal.Rptr.3d 524 (2004)
121 Cal.App.4th 927
The PEOPLE, Plaintiff and Respondent,
v.
Luis Miguel RUBIO, Defendant and Appellant.
No. F043941.
Court of Appeal, Fifth District.
August 18, 2004.
Rehearing Denied September 8, 2004.
Review Denied November 10, 2004.[**]
*525 John Doyle, under appointment by the Court of Appeal, for Defendant and Appellant.
Bill Lockyer, Attorney General, Robert R. Anderson, Chief Assistant Attorney General, Mary Jo Graves, Assistant Attorney General, Charles A. French and Laura Wetzel Simpton, Deputy Attorneys General, for Plaintiff and Respondent.
Certified for Partial Publication.[*]
OPINION
CORNELL, J.
Luis Miguel Rubio was convicted of one count of perjury (Pen.Code, § 118)[1] and sentenced to the midterm sentence of three years. He argues on appeal that the trial court improperly instructed the jury and abused its discretion when it refused to sentence him to probation.
We agree with Rubio's argument that the 2003 version of CALJIC No. 7.20 incorrectly defines materiality. This instruction correctly informs the jury that a false statement must be material before the defendant can be found guilty of perjury. The instruction then defines a false material statement as one that "could influence the outcome of the proceedings in which it is uttered." We think the correct definition of a false material statement is one that "could probably have influenced the outcome" of the proceeding in which it is uttered. (People v. Pierce (1967) 66 Cal.2d 53, 61, 56 Cal.Rptr. 817, 423 P.2d 969.)
We conclude, however, the error was harmless beyond a reasonable doubt. We also reject Rubio's contention that the trial court abused its discretion in denying him probation and affirm the judgment.
FACTUAL AND PROCEDURAL SUMMARY
Juan Nava was prosecuted for various gang-related crimes. Rubio was called as a defense witness during Nava's trial, apparently in an attempt to establish an alibi for Nava. During his testimony, Rubio denied he had any tattoos.
Rubio has a tattoo consisting of three dots on the web of his left hand. He testified the three dots signify "my crazy life" or "mi vida loca." Expert witness Probation Officer Leonard Bakker testified the tattoo could represent "mi vida loca," but it also was a symbol of the East Side Dukes criminal street gang. Based on the tattoo and other information, Bakker concluded that Rubio was a member or associate of the East Side Dukes.
Rubio was charged with one count of perjury. (§ 118.) The information also alleged the crime was committed for the benefit of a criminal street gang. (§ 186.22, subd. (b)(1).) The jury found Rubio guilty of perjury but found the gang enhancement not true. The trial court denied probation and sentenced Rubio to the midterm sentence of three years.
DISCUSSION
I. CALJIC No. 7.20
CALJIC No. 7.20 defines the elements of perjury. The trial court instructed the jury with a modified version of CALJIC No. 7.20 (7th ed.2003),[2] which *526 informed the jury that a defendant is guilty of perjury if he or she makes a false material statement while under oath. A statement was defined as material "if it could influence the outcome of the proceedings in which it is uttered."
We begin with the evolution of CALJIC No. 7.20. Prior to 1995, the question of whether the alleged false statement was material was an issue of law determined by the court. (See, e.g., People v. Pierce, supra, 66 Cal.2d at p. 61, 56 Cal.Rptr. 817, 423 P.2d 969.) A long line of cases stated that a false statement was material if it "could probably have influenced the outcome of the proceedings, and the actual belief or opinion of the judge in the original proceeding is not controlling. [Citations.]" (Ibid.; see also People v. Feinberg (1997) 51 Cal.App.4th 1566, 1575, 60 Cal.Rptr.2d 323; People v. Jimenez (1992) 11 Cal.App.4th 1611, 1622, 15 Cal.Rptr.2d 268; People v. McRae (1967) 256 Cal. App.2d 95, 106, 63 Cal.Rptr. 854; People v. Davidson (1964) 227 Cal.App.2d 331, 335, 38 Cal.Rptr. 660; People v. Grider (1962) 200 Cal.App.2d 41, 45, 19 Cal.Rptr. 41; People v. Di Giacomo (1961) 193 Cal. App.2d 688, 699-700, 14 Cal.Rptr. 574; People v. Barry (1957) 153 Cal.App.2d 193, 209, 314 P.2d 531.)
Because the issue of materiality was considered a question of law for the court, CALJIC No. 7.20 concluded, "If you find that the defendant made [one or more of] the statement[s] as charged, such statement[s][was][a] [were] material matter[s] within the definition of perjury just read to you." (CALJIC No. 7.20 (5th ed.1988).)
In People v. Kobrin (1995) 11 Cal.4th 416, 45 Cal.Rptr.2d 895, 903 P.2d 1027, the Supreme Court, consistent with United States v. Gaudin (1995) 515 U.S. 506, 115 S.Ct. 2310, 132 L.Ed.2d 444, Sullivan v. Louisiana (1993) 508 U.S. 275, 113 S.Ct. 2078, 124 L.Ed.2d 182, and In re Winship (1970) 397 U.S. 358, 90 S.Ct. 1068, 25 L.Ed.2d 368, held that materiality was an issue that must be decided by the jury because it was an element of the crime of perjury. In dicta, the Supreme Court also stated the test of materiality as "whether the statement or testimony `might have been used to affect [the proceeding in or for which it was made].' [Citations.]" (Kobrin, at p. 420, 45 Cal.Rptr.2d 895, 903 P.2d 1027.) The Supreme Court cited section 123 and Pierce as authorities for this definition. Section 123 addresses the situation where the witness claims he or she did not know the false statement was material. Kobrin quoted a portion of the last sentence of section 123. This sentence *527 reads in full: "It is sufficient that it was material, and might have been used to affect such proceeding."[3] As stated above, Pierce formulated the test of materiality as whether it "could probably have influenced the outcome of the proceedings, and the actual belief or opinion of the judge in the original proceeding is not controlling. [Citations.]" (People v. Pierce, supra, 66 Cal.2d at p. 61, 56 Cal. Rptr. 817, 423 P.2d 969.)
CALJIC No. 7.20 was revised to inform the jury that it must decide whether the false statement was material and defined materiality for the jury. Consistent with Pierce, CALJIC No. 7.20 stated, "A false statement is material if [it could probably have influenced the outcome of the proceeding in which it was uttered. Whether it actually had that effect is irrelevant.]" (CALJIC No. 7.20 (6th ed.1996).)
Materiality was defined in this manner until the seventh edition of CALJIC was published in 2003. In this edition, the instruction stated, "A false statement is material if [it could influence the outcome of the proceedings in which it is uttered. Whether it actually had that effect is irrelevant.]" (CALJIC No. 7.20 (7th ed.2003).) The Use Note does not explain why the word "probably" was omitted. Only the first paragraph of the Use Note addresses the issue of materiality, and it is identical to the first paragraph of the 1996 Use Note. Both versions cite Pierce as authority for the definition of materiality. As noted above, Pierce defined materiality consistent with the 1996 version of CALJIC No. 7.20. Our research has not located any authority for the change in the instruction.
The cases cited by the People do not approve the version of the instruction that is before us. Kobrin was preceded by People v. Hedgecock (1990) 51 Cal.3d 395, 405, 272 Cal.Rptr. 803, 795 P.2d 1260. One issue in Hedgecock was how materiality should be defined when determining whether false statements in a public filing required by the Political Reform Act of 1974 were perjurous. (Gov.Code, § 81000 et seq.) The Supreme Court acknowledged that the definitions used in the context of a judicial proceeding were of no assistance. (People v. Hedgecock, supra, 51 Cal.3d at p. 405, 272 Cal.Rptr. 803, 795 P.2d 1260.) In dicta, the Supreme Court cited Pierce in defining a material statement as a false statement that "could have `influenced the outcome of the proceedings.'" (Hedgecock, at p. 405, 272 Cal. Rptr. 803, 795 P.2d 1260.)
People v. Gamble (1970) 8 Cal.App.3d 142, 146, 87 Cal.Rptr. 333, stated the issue of materiality depended on whether the statement had a tendency to influence the trial. People v. Poe (1968) 265 Cal.App.2d 385, 391, 71 Cal.Rptr. 161, quoted Witkin in stating the same formulation. People v. Sagehorn (1956) 140 Cal.App.2d 138, 148, 294 P.2d 1062, and People v. Darcy (1943) 59 Cal.App.2d 342, 349, 139 P.2d 118, disapproved on other grounds in Murgia v. Municipal Court (1975) 15 Cal.3d 286, 301, 124 Cal.Rptr. 204, 540 P.2d 44, both found the perjurous statements material using the "could influence" formulation of materiality. Since Gamble, Poe, Sagehorn, and Darcy all preceded Kobrin, none of the cases address the proper language to define "material" in a jury instruction.
This lack of consistency among the cases provides little guidance. We think, however, the proper definition of "material" is *528 found in Pierce and the early version of CALJIC No. 7.20.
Section 118, subdivision (a) defines perjury as willfully stating under oath "any material matter which he or she knows to be false." The relevant definition of "material" is "important, essential, or pertinent (to the matter under discussion)." (Webster's New World Dict. (3d college ed.1988, p. 834.)) To state that a false statement is material if it could influence the outcome of the proceeding is simply too broad. Anything could influence the outcome of a proceeding. A jury easily could understand this definition of materiality to mean that a false statement is material if it could possibly influence the outcome of the proceeding. Virtually any false statement could possibly influence the outcome of the proceeding. As CALJIC No. 2.90 informs the jury, everything in human affairs is open to some possible doubt. This definition seems to us to render the element of materiality virtually moot.
An instruction that informs the jury that a false statement is material if it could probably influence the outcome of the proceeding is much more consistent with the definition of "material" and the cases we have reviewed. This instruction conveys the requirement that the false statement must be important to the matter under discussion. It also conveys to the jury that false statements on matters not pertinent to the proceeding do not constitute perjury.
We do not think that Kobrin requires a different result. As authority for its statement that "materiality" means "whether the statement or testimony `might have been used to affect [the proceeding in or for which it was made],'" the Supreme Court cited Pierce and section 123. In our view, neither Pierce nor section 123 supports such a broad definition of materiality. Pierce defines materiality as a false statement that could probably influence the outcome of the proceeding. Section 123 states a false statement must be "material, and might have been used to affect" the proceeding. (Italics added.) The use of the conjunction "and" in section 123 denotes dual requirements: (1) The false statement must be material, and (2) the false statement must have been used in a fashion that might have affected the proceeding. We do not believe the sentence should be read as providing a definition for "material".
The United States Court of Appeal, Ninth Circuit, recently reached the same conclusion in Chein v. Shumsky (9th Cir. 2004) 373 F.3d 978. Chein was convicted of perjury after a jury trial. Consistent with Pierce and the pre-2003 version of CALJIC No. 7.20, the jury was instructed that a statement is material if it could probably have influenced the outcome of the proceeding. In deciding the correct standard to be applied in its review, the appellate court addressed the above identified statement in Kobrin. "It does not appear that this dicta in Kobrin, derived from California Penal Code § 123, purported to overrule earlier formulations of the materiality standard. The issue of the applicable standard (as opposed to the proper decisionmaker) was not before the court, and Kobrin cites approvingly to Pierce, at the very spot where the `could probably have influenced the outcome of the proceedings' standard is stated." (Chein, at pp. 984-985, fn. omitted.)
Since we conclude that the jury instruction for materiality was incorrect, the issue becomes whether reversal is required. Rubio argues the instruction resulted in a "structural error" that requires reversal per se.
"The United States Supreme Court has classified constitutional errors into two groups; structural errors, which are *529 subject to automatic reversal, and trial errors: subject to a harmless error analysis. (See, e.g., Neder v. United States (1999) 527 U.S. 1 [119 S.Ct. 1827, 144 L.Ed.2d 35], and Arizona v. Fulminante (1991) 499 U.S. 279 [111 S.Ct. 1246, 113 L.Ed.2d 302], (opn. of Rehnquist, C. J., for the court as to pt. II).)
"Structural errors comprise a very limited class of cases and occur where there is a defect affecting the framework within which the trial proceeds rather than simply an error in the trial process itself. (Neder v. United States, supra, 527 U.S. at pp. 8-9, 119 S.Ct. 1827.) Structural errors have been found where there was a complete denial of counsel (Gideon v. Wainwright (1963) 372 U.S. 335 [83 S.Ct. 792, 9 L.Ed.2d 799]), where the trial judge was biased (Tumey v. Ohio (1927) 273 U.S. 510 [47 S.Ct. 437, 71 L.Ed. 749]), where there was racial discrimination in the selection of the grand jury (Vasquez v. Hillery (1986) 474 U.S. 254 [106 S.Ct. 617, 88 L.Ed.2d 598]), where there was a denial of self-representation (McKaskle v. Wiggins (1984) 465 U.S. 168 [104 S.Ct. 944, 79 L.Ed.2d 122]), where there was a denial of a public trial (Waller v. Georgia (1984) 467 U.S. 39 [104 S.Ct. 2210, 81 L.Ed.2d 31]), and where the reasonable doubt instruction was defective (Sullivan v. Louisiana [, supra,] 508 U.S. 275 [113 S.Ct. 2078, 124 L.Ed.2d 182]).
"Most constitutional errors are subject to harmless error analysis because they do not necessarily render a criminal trial fundamentally unfair or an unreliable vehicle for determining guilt or innocence. (Neder v. United States, supra, 527 U.S. at pp. 8-9 [119 S.Ct. 1827].) Harmless error analysis has been utilized by the Supreme Court where improper instructions have been given on an element of an offense (Yates v. Evatt (1991) 500 U.S. 391 [111 S.Ct. 1884, 114 L.Ed.2d 432] [mandatory rebuttable presumption], overruled on other grounds in Estelle v. McGuire [(1991)] 502 U.S. [62,] 72, fn. 4 [112 S.Ct. 475, 116 L.Ed.2d 385]; Carella v. California (1989) 491 U.S. 263 [109 S.Ct. 2419, 105 L.Ed.2d 218] [mandatory conclusive presumption]; Pope v. Illinois (1987) 481 U.S. 497 [107 S.Ct. 1918, 95 L.Ed.2d 439] [misstatement of element]; Rose v. Clark (1986) 478 U.S. 570 [106 S.Ct. 3101, 92 L.Ed.2d 460] [mandatory rebuttable presumption], overruled on other grounds in Brecht v. Abrahamson (1993) 507 U.S. 619, 637 [113 S.Ct. 1710, 123 L.Ed.2d 353]) and where elements of an offense have been omitted. (Johnson v. United States (1997) 520 U.S. 461 [117 S.Ct. 1544, 137 L.Ed.2d 718]; California v. Roy (1996) 519 U.S. 2 [117 S.Ct. 337, 136 L.Ed.2d 266].) Neder involved a failure to instruct the jury on an element of the offense, specifically the requirement that a misstatement on a tax form in a tax fraud case must be material. The Supreme Court concluded that the error was subject to harmless error analysis. (Neder v. United States, supra, 527 U.S. at pp. 7-8 [119 S.Ct. 1827].)" (People v. Magee (2003) 107 Cal.App.4th 188, 193-194, 131 Cal. Rptr.2d 834.)
In Magee, we held that a failure to instruct the jury on an element of the charged offense was subject to harmless error analysis under Chapman v. California (1967) 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705. (People v. Magee, supra, 107 Cal.App.4th at p. 194, 131 Cal.Rptr.2d 834.) We see no logical reason to apply a different standard to this case. We may affirm, therefore, only if it appears beyond a reasonable doubt that the incorrect definition of "material" in CALJIC No. 7.20 did not contribute to the verdict. (Neder *530 v. United States, supra, 527 U.S. at p. 15, 119 S.Ct. 1827.)
The People argue that the failure to disclose the tattoo was material because the tattoo signified gang membership and would therefore disclose to a jury Rubio's potential for bias in an effort to aid a fellow gang member. The People suggest that because the prior trial was gang related, Rubio was motivated by his gang ties to fabricate an alibi for Nava.
Rubio's counsel did not address materiality in his closing argument. Instead, he focused on intent, arguing that Rubio made an innocent mistake in answering the question and therefore lacked the requisite intent to testify falsely under oath.
False testimony that affects the credibility of a witness is material and will support a perjury conviction. (See, e.g., People v. Macken (1939) 32 Cal.App.2d 31, 39-40, 89 P.2d 173.) Rubio essentially conceded the fact of materiality by focusing on another element of perjurywhether he had the specific intent to testify falsely. We can see no possibility, under these facts, that the erroneous instruction contributed to the verdict. Therefore, the error in instruction does not require reversal of the judgment.
II. Probation[***]
DISPOSITION
The judgment is affirmed.
WE CONCUR: VARTABEDIAN, Acting P.J., and DAWSON, J.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of part II.
[**] Kennard, J., dissented.
[1] All further statutory references are to the Penal Code unless otherwise indicated.
[2] The instruction as read to the jury stated in full: "Every person who, having taken an oath to testify truly before any competent tribunal, willfully and contrary to the oath, states as true any material matter which he or she knows to be false, is guilty of the crime of perjury in violation of Penal Code section 118.[¶] A false statement is material if it could influence the outcome of the proceedings in which it is uttered. Whether it actually had that effect is irrelevant. [¶] It is alleged the defendant made the following false statement: [¶] That he did not have any tattoos on his person. [¶] In order to prove this crime, each of the following elements must be proved: [¶] 1. A person knowingly took an oath to testify truly before a competent tribunal, and willfully stated as true, matter which was false; [¶] 2. The testimony, was given in circumstances in which an oath may by law be administered, and was delivered to another person with the specific intent that it be uttered or published as true; [¶] 3. The person knew the statement was false; [¶] 4. The false statement was material; and [¶] 5. The person had the specific intent to testify falsely under oath. [¶] The falsity of defendant's statement may be established by direct or circumstantial evidence. However, the defendant may not be convicted of perjury where the only proof of the falsity of the statement is the testimony of one witness which contradicts defendant's statement. [¶] Perjury requires that the statement be made willfully by a person who knows that the statement is being made under oath and who knows or believes that the statement is false. A statement made under an actual mistake and in a belief that it is true is not perjury even though the statement is false. [¶] The word `willfully' simply means a purpose or willingness to commit the act or make the omission referred to."
[3] Section 123 states in full: "It is no defense to a prosecution for perjury that the accused did not know the materiality of the false statement made by him; or that it did not, in fact, affect the proceeding in or for which it was made. It is sufficient that it was material, and might have been used to affect such proceeding."
[***] See footnote *, ante.
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777 F.Supp. 962 (1991)
UNITED STATES of America, Plaintiff,
v.
NEMAN BROTHERS & ASSOCIATES, and Yoel Neman, Defendants.
No. 89-07-00444.
United States Court of International Trade.
November 8, 1991.
Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, (Anthony H. Anikeeff), (Carla Anderson Johnson, Asst. Regional Counsel, U.S. Customs Service, of counsel), Washington, D.C., for plaintiff.
Yoel Neman, pro se, for defendants.[1]
MEMORANDUM OPINION AND ORDER
MUSGRAVE, Judge.
I. Introduction
This case comes before the Court on Defendants' motion for summary judgment. Defendants ("Neman Brothers" or "Neman") claim that the case should be time barred by 19 U.S.C. § 1621 because they never received acknowledgement of their proposed waiver of the statute. In *963 the alternative, defendants argue that the government's claim should be barred because the case was filed one year and one day after the proposed waiver period.
The government claims that the waiver was executed and returned, and copies of the waiver and a transmittal letter to defendants are attached to its memorandum in opposition. Plaintiff argues that a one year waiver includes the anniversary date of the waiver.
Defendants' motion is denied because significant questions of fact remain, and this matter is inappropriate for summary judgment.
II. Facts
The government seeks to recover penalties from Neman Brothers for allegedly fraudulent entry of fabrics falsely declared as the product of Japan, between August 1, 1983 and July 27, 1984. The alleged fraud was first discovered on May 1, 1984.
During the investigation, defendants apparently agreed in October, 1987 to waive for one year the statute of limitations that was due to expire on August 1, 1988. On October 9, 1987, Neman Brothers sent Customs a letter waiving the § 1621 time limit for "one (1) year commencing August 1, 1988." Plaintiff's Exhibit 3. This letter was prepared by Neman Brothers' counsel at the time and signed by its president. In it, Mr. Leon Neman states that the waiver is "made knowingly and voluntarily be Neman Brothers & Associates in order that Neman Brothers & Associates might obtain the benefits of the orderly continuation and conclusion of an administrative proceeding currently being conducted by the U.S. Customs Service...." Plaintiff's Exhibit 3.
Although defendants and Mr. Fertman claim to attach a copy of the waiver to its motion, none was submitted to the Court. The government has produced a copy of the waiver countersigned on May 20, 1988 by John Elkins, Acting Director of the Regulatory Procedures and Penalties Division of the Customs Service, along with a letter dated May 25, 1988 transmitting the waiver back to Neman's attorney. Although Neman Brothers' attorney admits that his address is the same as that on Elkins letter, he states that he never received it. Declaration of Leonard M. Fertman, at 2.
This action was filed on August 1, 1989.
III. Summary Judgment
On a motion for summary judgment, there may be no genuine issues of material fact in dispute, as the Court cannot try issues of fact. Carter Footwear v. United States, 10 C.I.T. 618 (1986); Wright, Law of Federal Courts § 99 at 664 (4th ed. 1983) (court may only determine whether there are issues to be tried). Summary judgment may be inappropriate where the parties agree on the basic facts, but disagree about the factual inferences to be drawn from those facts; if reasonable minds differ on the inferences arising from undisputed facts, then the court should deny summary judgment. Warrior Tombigbee Transportation Co. v. M/V Nan Fung, 695 F.2d 1294, 1296-97 (11th Cir. 1983); Mitsui Foods, Inc. v. United States, 12 C.I.T. 276, 278, 688 F.Supp. 605, 606 (1988), aff'd, 7 Fed.Cir. (T) 36, 867 F.2d 1401 (1989). In addition, the party against whom the motion is made is entitled to all the favorable inferences that may be reasonably drawn from the evidence, and if when so reasonably viewed reasonable minds might reach different conclusions, the motion should be denied. Caylor v. Virden, 217 F.2d 739 (8th Cir.1955).
On the facts before the Court, there remains a significant question of whether the waiver was executed and returned to defendants. The Court must draw all inferences in the government's favor and give the government's affidavits the weight they are due. If the government's statements are true, then defendants did receive the executed waiver and defendants' motion for summary judgment must be denied.
IV. One Year Waiver
Defendants argue that even if the waiver was accepted by the government, it was only for one year from August 1, 1988. The government filed this action on August *964 1, 1989. According to defendants, July 31, 1989 was the last day the statute of limitations was waived.
The government argues that statutes of limitation are construed to include the anniversary date of the accrual of the cause of action. Lawson v. Conyers Chrysler, Plymouth & Dodge Trucks, 600 F.2d 465 (5th Cir.1979); Krajci v. Provident Consumer Discount Co., 525 F.Supp. 145 (E.D.Pa.1981) (complaint filed on anniversary date is timely); Fed.R.Civ.P. 6(a).[2] The rule has been analogized to statute of limitation waivers. United States v. Ressler, 576 F.2d 650 (5th Cir.1978). Defendants did not cite any precedent to support the proposition that the one year waiver does not include the anniversary date. Because Rule 6(a) of this Court is analogous to Fed.R. 6(a), and other precedent holds that the time computation method used in Fed.R. 6(a) applies to waivers, then the "anniversary" method will be used in this case. The waiver period included August 1, 1989, and the government's suit is timely.
Whether the government's cause of action accrued on the discovery of the alleged fraud (May 4, 1984), or on the first date that the alleged fraud took place (August 1, 1983) also remains to be decided. The government points out that the earliest date that the § 1621 statute of limitations would have run was August 1, 1988, for negligent or grossly negligent violations. Assuming that the waiver was accepted by the government and returned to defendants, the waiver would have been effective until August 1, 1989, the date suit was filed. Therefore, none of the government's causes of action are jeopardized by the statute of limitations.
V. Conclusion
After examining the evidence and law presented to support the motion for summary judgment, this Court believes that the factual issue of whether the waiver was ever signed by Customs and returned to defendants remains to be decided. For this reason, defendant's motion for summary judgment is DENIED.
SO ORDERED.
NOTES
[1] Defendants were represented by counsel until May 23, 1991.
[2] CIT Rule 6(a) provides:
In computing any period of time prescribed or allowed by these rules, by order of court, or by any applicable statute, the day of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included, unless it is a Saturday, Sunday, or legal holiday, or when the act to be done is the filing of a paper in court, a day on which weather or the conditions have made the office of the clerk inaccessible, in which event the period runs until the end of the next day which is not one of the aforementioned days....
U.S.C.I.T.Rule 6(a) (1991) (footnote omitted).
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17 Cal.Rptr.3d 674 (2004)
121 Cal.App.4th 823
Helga CARTER, Plaintiff and Respondent,
v.
CALIFORNIA DEPARTMENT OF VETERANS AFFAIRS, Defendant and Appellant.
No. E030908.
Court of Appeal, Fourth District, Division Two.
August 17, 2004.
Review Granted December 1, 2004.
*676 Joseph Maguire, John H. McCardle, Hayward, and Patricia M. Keegan for Defendant and Appellant.
Terry K. Davis, Napa, for Plaintiff and Respondent.
Graves & King, Patrick L. Graves, Harvey W. Wimer III, Riverside, and Dennis J. Mahoney, San Bernardino, for Diversified Paratransit, Inc. and California Manufacturers & Tech. Ass'n.; Jones Day for the Los Angeles Unified School District; Law Office of David J. Duchrow and David J. Duchrow, for California Employment Lawyers Association, as Amicus Curiae on behalf of Plaintiff and Respondent.
*675 OPINION
WARD, J.
Plaintiff and respondent Helga Carter worked as a nurse in a veterans residence facility administered by defendant and appellant, the Department of Veterans Affairs (the employer). Plaintiff sued the employer, alleging it was liable for sexual harassment on a hostile environment theory. The alleged hostile environment was created, not by a coemployee, but by one of the patient residents of the facility. The trial court held that an employer may be liable under the California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.) for the harassing *677 conduct of clients or customers, and gave judgment for plaintiff.
The employer appealed. The first time the matter was before us, we reversed the judgment, concluding, based upon our construction of the relevant provisions, that the FEHA did not impose liability upon an employer for sexual harassment perpetrated by a client or customer of the employer. The California Supreme Court granted review of that decision. Afterward, the Legislature amended Government Code section 12940, subdivision (j)(1), expressly providing that an employer may be responsible for sexual harassment by nonemployees. The amendment was purportedly intended to clarify the ambiguities in the statute, and expressly to alter the result in this case. The Supreme Court has remanded the matter for reconsideration under the amendments to the FEHA; we now address the appeal in that light.
FACTS AND PROCEDURAL HISTORY
The employer, an agency of the State of California, owns and operates certain "Veterans' Homes," to care for "aged and disabled" veterans. The Veterans' Homes provide varying levels of care, from independent living to skilled nursing care. Plaintiff, a registered nurse, was hired in 1996 and assigned to work in the ambulatory care clinic, which provides outpatient services to the veterans occupying independent living facilities.
Elbert Scott Brown, a veteran, was a tenant resident of the independent living facilities of the Veterans' Home where plaintiff worked. Brown received a penile implant in 1996. Plaintiff performed some nursing care for Brown relative to his penile implant. After receiving the implant, Brown began making suggestive remarks to plaintiff, such as, "You've got nice breasts," or "You've got a nice ass."
Quilting was one of Brown's hobbies. At a social event in approximately October of 1996, Brown offered to give quilting lessons to some of the staff members. For about two months thereafter, plaintiff made frequent visits to Brown's room, ostensibly for quilting lessons. Plaintiff testified that she would receive instruction from Brown; then, at home, she would work on the quilt on her sewing machine. The next day, she would show Brown her progress and receive instruction on the next step. It took plaintiff about two months to complete a quilt for her daughter.
After plaintiff finished her quilting project with Brown, she stopped spending so much time with him. Plaintiff started learning how to play pool with another resident, Ray Bishop. Bishop resided in the same building as Brown. Plaintiff would occasionally have coffee with Bishop.
Residents of the Veterans' Home were generally veterans over the age of 62, or suffering from some disability which prevented them from earning a living. To provide a social outlet for the residents, the Veterans' Home had an "adopt-a-resident" program at the holidays under which staff or employees might invite a resident to share Thanksgiving or Christmas dinner in the employee's home. As part of the "adopt-a-resident" program, plaintiff invited Brown to her home for Thanksgiving dinner. Brown seemed particularly lonely. Brown was alienated from his family; his family members did not visit him at the Veterans' Home. For some time, Brown had been advertising for a companion in "senior singles" magazines.
In addition, after plaintiff had completed the quilt, she on one occasion invited Brown to dinner to thank him for his help.
At first, plaintiff regarded Brown's remarks and attitude toward her as inappropriate *678 but harmless. Plaintiff hoped, for example, after Brown had visited her home, that he would realize that plaintiff had a husband and family, and that he would stop his inappropriate conduct.
Instead, sometime after the holidays, Brown's behavior became worse. According to plaintiff, Brown became "very attached" to her. Plaintiff explained that Brown told her that he was "having no luck" with his personal advertisements, but "he didn't really need to, he felt at that point because, after all, he had me." Brown told plaintiff that he wanted to sleep with her. Plaintiff tried to laugh it off; she told Brown she was happily married. Brown threatened that, if plaintiff refused, he would ruin her reputation by telling everyone that he had slept with her. Plaintiff was "shocked at his persistence"; Brown said she "might as well sleep with him either way," because he would ruin her reputation whether she did so or not. Plaintiff still refused; she told Brown to "[p]ut a sign on the freeway. . . . I don't care. It will never happen." Plaintiff later overheard Brown telling others in the clinic that plaintiff was sleeping with him.
At some point, plaintiff complained to her supervisor about Brown. Brown did not desist, however. Plaintiff testified that Brown "continued harassing me in the clinic. He was chasing me in the hall with his scooter. He was there first thing in the morning when I unlocked the clinic. He came to the clinic many times a day for no reason. He was everywhere." Plaintiff testified that Brown several times tried to ram her with his scooter. He would call and leave derogatory and sexually explicit messages on her home telephone recorder.
After plaintiff complained, the employer undertook to counsel Brown to leave plaintiff alone. Plaintiff was issued a walkie-talkie she could use to call security if Brown caused problems at the clinic. Plaintiff testified, however, that Brown's conduct did not change.
Plaintiff twice went on stress leave. After the expiration of her second leave, plaintiff did not return to work. Brown was still residing in the Veterans' Home, and, according to plaintiff, "nothing had changed." Consequently, she was afraid to return to work.
Plaintiff believed that something could have been done under the Veterans' Home code of conduct to move Brown to another facility, though she was not herself familiar with the procedures necessary to remove a resident from the home. While plaintiff was on disability leave, she filed an initial complaint with the Department of Fair Employment and Housing (DFEH), and was issued a right-to-sue letter. She did not pursue that complaint, however, because plaintiff's supervisor had told her that, as a state employee, plaintiff could not sue the employer, a state agency. Plaintiff's superiors also told her that if she pursued legal action, she would be fired. Plaintiff later discovered that she was not legally prohibited from pursuing a sexual harassment complaint against the state. She filed an amended complaint with the DFEH. After receiving a right-to-sue letter, she initiated the instant action.
At trial, the employer's defense strategy was largely to suggest that plaintiff may in fact have had some kind of relationship with Brown, and that Brown became jealous when plaintiff began spending time with Bishop.
In discovery responses, however, the employer admitted that plaintiff had complained of sexual harassment, and that she had called security several times to the clinic regarding disturbances caused by Brown.
The administrator of the Veterans' Home, Thomas Langley, also acknowledged *679 that residents were subject to a code of conduct which prohibited all sorts of disruptive behavior, including sexual harassment. Among other sanctions, a resident may be evicted for misconduct.
Langley was newly assigned to the Veterans' Home during the time that plaintiff experienced difficulties with Brown. Langley testified that, shortly after he began his assignment, plaintiff had complained to him about Brown. Langley advised plaintiff to have no contact with Brown and that, if Brown came to the clinic, plaintiff should leave the area. Brown would be seen by another nurse. Langley called Brown in "to find out his side of the story." Brown maintained that "this was not his fault," and that he believed there was common affection between plaintiff and himself. Langley directed Brown to "cease and [de]sist" from any further contact with plaintiff; "regardless of the circumstances, he was not to speak to or about [plaintiff]." Langley also told Brown that "he was never to go to the clinic without being accompanied except for emergency care," on pain of possible dismissal from the Veterans' Home.
In addition, Langley referred the matter to the staff social worker for treatment of Brown's behavior. The social worker, William Rigole, attempted intervention through individual counseling. Brown told Rigole that he and plaintiff had had an intimate relationship, and that he felt "jilted" when plaintiff stopped talking to him.
Evidence at trial showed that the employer's sole basis for believing that plaintiff had had a sexual relationship with Brown was Brown's statements. In fact, although the only sexual encounter Brown had claimed to have had with plaintiff was one tryst at a motel, the motel had no record of Brown's or plaintiff's occupancy at the motel.
Rigole determined that Brown's conduct toward plaintiff was inappropriate and instituted a "therapeutic contract" with him. Brown continued to be upset and jealous, however; he was preoccupied with plaintiff's supposed relationship with Bishop, and remained "somewhat sexually fixated."
The staff member responsible for the residential building where Brown lived also described Brown's personality characteristics. The residents of the independent living facilities normally were assigned two to a room. Brown, however, never had a roommate for very long. He would complain that his roommate snored, or he would leave the light on, disturbing the roommate's sleep. The roommates always wanted to be moved from Brown's room. On the surface, Brown was friendly enough, but "he didn't mingle amongst the other individuals only because he felt like he was more of an upper class level, and he was residing with lower class residents there." Brown was "a proud, boastful man." The staff member also testified that Brown was angry and jealous over the perceived attention plaintiff was giving to Bishop, rather than spending time with Brown.
Plaintiff's complaint alleged causes of action for sexual harassment, failure to maintain a workplace free from sexual harassment, retaliation, and intentional infliction of emotional distress. The trial court granted the employer's motion for summary adjudication as to the retaliation and intentional infliction of emotional distress claims; the court also dismissed plaintiff's claim for punitive damages.
At trial upon the remaining causes of action, the employer moved for a directed verdict on the basis that the FEHA does not impose liability on employers for third party (i.e., nonemployee) harassment, and that the employer had discretionary immunity *680 under Government Code section 820.2. The court denied the motion for directed verdict.
On a special verdict, the jury found that plaintiff was subjected to hostile environment harassment, the employer knew or should have known of the harassment, and the employer failed to take immediate and appropriate steps to correct the situation. Accordingly, the jury awarded plaintiff $34,788 in economic damages and $150,000 in noneconomic damages. The court entered judgment on the verdict.
The court denied the employer's motion for judgment notwithstanding the verdict (JNOV). The court granted plaintiff's motion for attorney fees. The employer appealed.
The primary focus of the first appeal was whether an employer may be held liable under the FEHA for the conduct of a client or customer. The employer argued that the statute imposed no such liability. The employer further contended that it was immune from liability, as a governmental agency, for its discretionary decisions. It exercised its discretion in attempting to address the problem of the alleged harassment by Brown, a client of the Veterans' Home. The employer argued, in addition, that the evidence was insufficient to support the judgment, because there was inadequate proof Brown harassed plaintiff on account of her sex, rather than because of a personal animus arising from a "failed relationship."
The employer repeated essentially the same points in its arguments that the trial court had erred in instructing the jury and in preparing the special verdict form. Thus, the employer argued, the court had erred in instructing the jury that the employer could be liable for nonemployee harassment, in allowing the jury to review the employer's exercise of discretion, for which it was immune, and in refusing the employer's instruction on a "failed relationship" defense. The employer also argued the court should have given instructions apportioning fault between itself and Brown. The employer urged that the special verdict form was inadequate in the same respects as the instructions. Finally, the employer contended that the trial court had abused its discretion in awarding attorney fees to plaintiff.
We had concluded on our initial review that the FEHA did not impose employer liability for nonemployee harassment. We found the issue dispositive, and reversed the judgment on that ground. We therefore did not address the remaining issues: immunity, sufficiency of the evidence, defenses, apportionment, or attorney fees.
The California Supreme Court granted review of our initial decision.[1] In the meantime, the Legislature amended the relevant provisions of the FEHA, however, to provide for employer liability for sexual harassment by nonemployees. The California Supreme Court then dismissed its review, and remanded the matter to us for reconsideration.[2] The Salazar court has published its revised opinion in Salazar v. Diversified Paratransit, Inc. (2004) 117 Cal.App.4th 318, 11 Cal.Rptr.3d 630 (Salazar II), holding the employer's conduct in that case was subject to the statute as *681 amended. In light of Salazar II and the statutory amendment, we now reexamine the issues raised on appeal.
ANALYSIS
I. The FEHA Does Not Generally Impose Employer Liability for Client or Customer Misconduct
A. Standard of Review
The coverage issue whether an employer liable for prohibited harassment committed by nonemployees, such as clients or customers is one of statutory construction. Statutory construction presents a question of law which we review de novo.[3]
B. Rules of Statutory Construction
The court's "role in construing a statute is to ascertain the Legislature's intent so as to effectuate the purpose of the law. [Citation.] In determining intent, we look first to the words of the statute, giving the language its usual, ordinary meaning. If there is no ambiguity in the language, we presume the Legislature meant what it said, and the plain meaning of the statute governs. [Citation.]"[4] "Furthermore, we consider portions of a statute in the context of the entire statute and the statutory scheme of which it is a part, giving significance to every word, phrase, sentence, and part of an act in pursuance of the legislative purpose."[5] "[A] construction making some words surplusage is to be avoided."[6]
Application of these rules is sometimes difficult, however. For example, other rules of construction teach that the "`language of a statute should not be given a literal meaning if doing so would result in absurd consequences which the Legislature did not intend.'"[7] Thus, "`[t]he intent prevails over the letter, and the letter will, if possible, be so read as to conform to the spirit of the act.'"[8]
Our foremost task remains ascertainment of the legislative intent, including consideration of "the entire scheme of law of which it is part so that the whole may be harmonized and retain effectiveness."[9] We must always give due regard to "the object to be achieved and the evil to be prevented by the legislation."[10]
C. The Competing Theories on the First Appeal
Plaintiff and the employer each urged that the purpose of the FEHA was "clear," but each initially based this reliance upon different sources within the FEHA.
Before the 2003 amendment, plaintiff based her contention upon the expression of intent in the preamble of the FEHA. The uncodified preamble states: "The Legislature finds and declares that it is the existing policy of the State of California to *682 prohibit harassment and discrimination in employment on the basis of any protected classification. Such conduct whether intentional or unintentional is a violation of the civil rights of California citizenry and has been shown to decrease productivity in the workforce. It is the existing policy of the State of California, as declared by the Legislature, that procedures be established by which allegations of prohibited harassment and discrimination may be filed, timely and efficiently investigated, and fairly adjudicated, and that agencies and employers be required to establish affirmative programs which include prompt and remedial internal procedures and monitoring so that their worksites will be maintained free from prohibited harassment by their agents, administrators, and supervisors as well as by their nonsupervisors and clientele. To further this intent, the Legislature enacts this act."[11]
Plaintiff argued that the words of legislative purpose were clear on the face of the enactment, in the form of the uncodified preamble. Plaintiff correctly asserted that an uncodified preamble is fully part of the statutory law of this state; it is simply uncodified.[12] Under the preamble's statement of purpose, therefore, when Government Code section 12940 (hereafter, section 12940) subdivision (j)(1) (before the 2003 amendment; hereafter referred to as former section 12940(j)(1)) provided, in part, that it is an unlawful employment practice "[f]or an employer, labor organization, employment agency, apprenticeship training program or any training program leading to employment, or any other person [italics added], because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, or sexual orientation, to harass an employee," it should mean literally what it says: that harassment of an "employee," on the basis of any proscribed animus, by an employer, "or any other person," presumably including a client or customer is unlawful under the statute.
The employer emphasized other, codified, portions of the FEHA, however, which suggested that employers are not liable for harassment perpetrated by "clientele" or customers, or other nonemployees. That is, the employer placed reliance on the second sentence of former section 12940(j)(1), which specifically stated: "Harassment of an employee, an applicant, or a person providing services pursuant to a contract by an employee other than an agent or supervisor shall be unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action." (Italics added.) Thus, under the employer's reading of former section 12940(j)(1), an employer/entity may be held liable for unlawful harassment of an employee, if and only if the harassment is committed by an employee, other than an agent or supervisor, and only if the employer/entity knew about the harassment but failed to take corrective action. The second sentence does not appear to impose liability for harassment, in any of its prohibited forms, on an employer/entity for failing to take corrective action, as to any harasser except another (nonsupervisory) employee.
Our opinion on the first appeal dealt solely with which of these two proffered interpretations of former section 12490(j)(1) better comported with the language and purposes of the FEHA.
*683 D. Section 12940 Does Not Make Employers Liable Generally for Harassment Committed by Nonemployees
Former section 12940(j)(1) stated:
"It shall be an unlawful employment practice, unless based upon a bona fide occupational qualification, . . . [¶] . . . [¶]
"(j)(1) For an employer, labor organization, employment agency, apprenticeship training program or any training program leading to employment, or any other person, because of race, religious creed, color, national origin, ancestry, sex, age, or sexual orientation, to harass an employee, an applicant, or a person providing services pursuant to a contract. Harassment of an employee, an applicant, or a person providing services pursuant to a contract by an employee other than an agent or supervisor shall be unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action. An entity shall take all reasonable steps to prevent harassment from occurring. Loss of tangible job benefits shall not be necessary in order to establish harassment."
Subdivision (k) of section 12940 (hereafter, section 12940(k)) states that it shall be an unlawful employment practice "[f]or an employer, labor organization, employment agency, apprenticeship training program, or any training program leading to employment, to fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring."
Plaintiff argued that the first and third sentences of section 12940(j)(1) are not qualified by limitation to specific persons. Under this view, it would be an unlawful employment practice for anyone, i.e., an "employer," or "any other person," to harass an employee on the basis any of the prohibited classifications. The words "any other person" must be taken to include nonemployees, such as customers and clientele. The duty of an "entity" to take "all reasonable steps to prevent harassment," in former section 12940(j)(1) and section 12940(k), would likewise not be limited, at least on the face of these provisions, to the prevention of harassment by any particular person. Thus, plaintiff argued, when the first and third sentences of former section 12940(j)(1) are read together, they impose liability on an employer for failing to prevent harassment by customers and clientele.
Upon deeper analysis, however, we concluded that plaintiff's construction failed to account for the complete context: i.e., all the sentences in former section 12940(j)(1).
The first sentence of former section 12940(j)(1) stated that liability for harassment might be imposed upon an employer, upon any similar entity, "or [upon] any other person," for unlawful acts of harassment committed by such entity or person directly upon an employee. To the extent the first sentence of former section 12940(j)(1) may be read to make it unlawful for a client or customer as "any other person" to harass an employee, it is the client or customer alone who bears the responsibility for such acts. Thus, even if the first sentence of section 12940(j)(1) were to be read to "cover" acts of harassment by "any other person," as plaintiff had argued, it simply did not address employer liability for the acts of another.
Otherwise, the first sentence of former section 12940(j)(1) would have to be read to impose liability on the employer not only for harassment committed by "any other person," but also for harassment committed by any of the other listed entities, such as a labor organization, an employment agency, an apprenticeship training program, and any training program *684 leading to employment. Parallel construction of the references leads inevitably to this conclusion. The conclusion is, however, obviously absurd, and therefore untenable.
Former section 12940(j)(1) was patently intended to impose separate liability on each of the named entities for its own wrongs, not for the wrongs of any or all of the others. Just as an employer should be liable for harassing an employee, applicant, or contracted service provider, so a labor organization should be separately liable for harassing an employee, applicant, or contracted service provider; an employment agency should be separately liable for harassing an employee, applicant or contracted service provider; an apprenticeship program should be liable for harassing an employee, applicant or contracted service provider; etc. Likewise, the reference in the first sentence of former section 12940(j)(1) must mean that "any other person" who commits acts of harassment is separately liable for his or her own unlawful acts committed upon an employee, applicant, or contracted service provider. The first sentence of former section 12940(j)(1) cannot reasonably be read to impose broad employer liability for the acts of all the other mentioned entities, leaving all such others to escape their own liability for harassment; thus, it simply does not address employer liability, other than for its own acts.
The second sentence of former section 12940(j)(1), by contrast, does explicitly address the liability of an employer or one of the other named entities for the acts of others. That is, an employer, labor organization, employment agency, apprenticeship program, and so on, may be liable for unlawful harassment perpetrated by another, but only on account of "an employee" presumably of an employer, or of a labor organization, or of an apprenticeship program, etc. "other than an agent or supervisor,"[13] and, even then, only if two other requirements are met: The employer/entity, or its agents or supervisors, must be on notice of the harassing conduct, and the employer/entity must have failed to respond with corrective action.[14]
In this context, we determined that the third sentence of former section 12940(j)(1) could properly refer only to the second sentence. An employer or other covered entity would be required under the third sentence of former section 12940(j)(1) to "take all reasonable steps to prevent harassment from occurring," but this duty would apply only when the employer/entity could otherwise be liable for harassment. An employer/entity would be liable for harassment committed "by another," only under the second sentence of former section 12940(j)(1), when the harassment was committed by an employee other than an agent or supervisor, and only with notice and failure to act.
The third sentence of former section 12940(j)(1), could not have been read as plaintiff argued i.e., to single out employers as being required to "take steps" to prevent harassment by anyone, including labor organizations, employment agencies, *685 apprenticeship programs, and individuals, including customers and clientele because the second sentence of former section 12940(j)(1) would not then have limited liability so strictly for acts committed by others.
That is, we held, the second sentence of former section 12940(j)(1) set the conditions for employer/entity liability for acts of harassment committed by another. It imposed such liability only for a coemployee, and only if the employer/entity had both (1) had notice of the coemployee's acts of harassment, and (2) had failed to take corrective action.
The first sentence of former section 12940(j)(1) could not be read to imply broad liability for, and impose an equally far-reaching duty solely on employers to prevent harassment by, all manner of nonemployee third parties, including labor organizations, employment agencies, apprenticeship programs, as well as customers and clientele. If it had so provided, the second sentence of former section 12940(j)(1) would either have to be considered redundant, or it would have expressly included customers and clientele within its ambit. We must reject an interpretation which renders a provision mere surplusage,[15] and no express provision for liability for the acts of customers or clientele was included in the second sentence of former section 12940(j)(1). The duty to "take all reasonable steps to prevent harassment," then, logically could refer only to harassment committed by coemployees, other than supervisors or agents. It did not refer to harassment committed by a client or customer of an employer/entity.
Our reading of the legislative history of former section 12940(j)(1) also confirmed our interpretation. We examined language that had been rejected, changed, or retained in the enacted version of the statute to glean the meaning of former section 12940(j)(1).[16]
The legislative history of 1984 amendments to former section 12940 showed that the Legislature had rejected a proposed amendment which expressly would have made an employer or other entity liable for harassment by clients or customers. This legislative history still supports the conclusion that employers and other named entities are generally not liable for harassment committed by clients and customers.
As originally enacted, the provision which became (part of) former section 12940(j)(1) stated: "Harassment of an employee or applicant by an employee other than an agent or supervisor shall be unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action."[17] (Italics added.)
In 1984, an amendment was proposed, as follows: "Harassment of an employee or applicant by an employee any person other than an agent or supervisor shall be unlawful if the entity, or its agents or *686 supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action."[18] Such an amendment to the portion of former section 12940(j)(1) imposing liability on an employer/entity for the acts of others would necessarily have included clients and customers, but only, as before, if that employer/entity had had notice of the harassment and had failed to act.
The bill proposing this amendment was itself amended, however, to delete the language which would have imposed liability on an employer for harassment by "any person." The change restored the language imposing liability only for nonsupervisory employees: "Harassment of an employee or applicant by any person an employee other than an agent or supervisor shall be unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action."[19] The deletion of "by any person" and replacement with "by an employee," shows that the Legislature had the opportunity to adopt expanded employer liability, but elected not to do so. The Legislature's purposeful deletion of language which appeared in an earlier proposed version of a statute constitutes strong evidence that the final statute as enacted should not be construed to include the omitted provision.[20] It is beyond the proper role of a court to add language which the Legislature has expressly rejected. Accordingly, we concluded that former section 12940(j)(1) did not, at least up to the 2003 amendment, require employers or other entities to assume liability for any acts of harassment perpetrated by customers and clientele.
Plaintiff had relied in the earlier appeal on certain federal cases to show that employers could be held liable for third-party harassment under federal anti-discrimination law.[21] We noted, however, that the particular provisions of the federal law which impose employer liability for customer harassment had no counterpart in the California law (FEHA). The specific provisions of what eventually became former section 12940(j)(1) were patterned on equally specific provisions of Equal Employment Opportunity Commission (EEOC) regulations, contained in 29 Code of Federal Regulations (CFR) part 1604.11, (hereafter, 29 CFR 1604.11) as it existed in 1982, when the FEHA was initially adopted.[22] Regulation 29 CFR 1604.11(e) provided: "(e) An employer may also be responsible for the acts of non-employees, with respect to sexual harassment of employees in the workplace, where the employer (or its agents or supervisory employees) knows or should have known of the conduct and fails to take immediate and appropriate corrective action. In reviewing these cases the Commission will consider the extent of the employer's control *687 and any other legal responsibility which the employer may have with respect to the conduct of such non-employees." Any provision like this was conspicuously absent from the formulation of the FEHA, as expressed in former section 12940(j)(1). We concluded that the omission of any provision in the FEHA which mirrored 29 CFR 1604.11(e), when all the surrounding provisions had been incorporated into the FEHA, represented a deliberate intent not to include liability for third-party harassment in section 12940. We noted that, "[w]hile as a general rule the courts have looked to federal decisions under Title VII for assistance in interpreting [the] FEHA `where appropriate' [citations], it is not appropriate to follow federal decisions where the distinct language of [the] FEHA evidences a legislative intent different from that of Congress. [Citation.]"[23] Consequently, we rejected plaintiff's reliance on her proffered federal cases.
Consistent with the above-outlined analysis of former section 12940(j)(1), we held that the FEHA did not impose a duty on the employer here to protect an employee such as plaintiff from harassment by a nonemployee.
On August 13, 2003, the California Supreme Court granted review of this case; on November 19, 2003, that court transferred the case to us once again, with directions to vacate our former decision and to reconsider the matter in light of the enactment of chapter 671 of the Statutes of 2003. We now turn to the specifics of that provision.
II. The FEHA Amendment Does Not Apply to This Case
A. The Amendment
By Statutes of 2003, chapter 671, section 1, page 4072, the Legislature amended former section 12940, subdivision (j)(1). As we have described, former section 12940, subdivision (j)(1) had provided in relevant part that it is an unlawful employment practice, "For an employer, labor organization, employment agency, apprenticeship training program or any training program leading to employment, or any other person, because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, or sexual orientation, to harass an employee. . . . Harassment of an employee . . . by an employee, other than an agent or supervisor, shall be unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action." The amendment added a provision, between the second and third sentences of former section 12940(j)(1), to the effect that, "An employer may also be responsible for the acts of nonemployees, with respect to sexual harassment of employees, . . . in the workplace, where the employer, or its agents or supervisors, knows or should have known of the conduct and fails to take immediate and appropriate corrective action. In reviewing cases involving the acts of nonemployees, the extent of the employer's control and any other legal responsibility which the employer may have with respect to the conduct of those nonemployees shall be considered."[24]
The Legislature has further declared that, "[i]t is the intent of the Legislature in enacting this act to construe and clarify the meaning and effect of existing law and to reject the interpretation given to the law in Salazar v. Diversified Paratransit, Inc. (2002) 103 Cal.App.4th 131, 126 Cal. *688 Rptr.2d 475."[25]
B. Standard of Review and Principles of Construction
De novo review applies to issues of statutory interpretation, including the retroactivity of a statute. "`"[T]he construction of statutes and the ascertainment of legislative intent are purely questions of law. . . ." [Citation.]' [Citation.]"[26]
The normal rule is that a statutory enactment is applied prospectively only.[27] "[T]he presumption that legislation operates prospectively rather than retroactively is rooted in constitutional principles. . . ."[28] Thus, "statutes do not operate retrospectively unless the Legislature plainly intended them to do so. [Citations.]"[29] More specifically, the Legislature must expressly provide that it is to be retrospective; otherwise, "a statute will not be applied retroactively unless it is very clear from extrinsic sources that the Legislature . . . must have intended a retroactive application."[30] Under this "`general prospectivity principle,' . . . a statute's retroactivity is, in the first instance, a policy determination for the Legislature and one to which courts defer absent `some constitutional objection' to retroactivity."[31]
A statute is said to operate retrospectively if it substantially changes the legal consequences of past events.[32] However, "[w]hen a statute `merely clarifies, rather than changes, existing law, . . .'"[33] it is deemed not to operate retrospectively, even if applied to cases pending at the time of its enactment. This is because, in theory, "`the true meaning of the statute remains the same.'"[34] A legislative declaration concerning "the prior import of its statutes [is] entitled to due consideration, and we cannot disregard [it]."[35] Nonetheless, "a legislative declaration of an existing statute's meaning is neither binding nor conclusive in construing the statute. Ultimately, the interpretation of a statute is an exercise of the judicial power the Constitution assigns to *689 the courts. [Citations.]"[36]
C. The Legislature Did Not Expressly Declare the Amendment Was to Be Retroactive
As noted, statutes operate prospectively only, unless the Legislature declares otherwise. As is plain on the face of the amending statute, the Legislature did not expressly declare that the amendment was to apply retrospectively.
D. The Amendment Effected a Change in the Law
The Legislature did expressly declare that it intended "`in enacting this act to construe and clarify the meaning and effect of existing law and to reject the interpretation given to the law in Salazar v. Diversified Paratransit, Inc. (2002) 103 Cal.App.4th 131, 126 Cal.Rptr.2d 475.'"[37]
Despite the Legislature's declaration of intent, however, we cannot conclude that the amendment was simply a clarification of existing law. To reiterate, the added sentences to section 12940 provide: "An employer may also be responsible for the acts of nonemployees, with respect to sexual harassment of employees, applicants, or persons providing services pursuant to a contract in the workplace, where the employer, or its agents or supervisors, knows or should have known of the conduct and fails to take immediate and appropriate corrective action. In reviewing cases involving the acts of nonemployees, the extent of the employer's control and any other legal responsibility which the employer may have with respect to the conduct of those nonemployees shall be considered."
The amendment differs from the other provisions of section 12940(j)(1) in two significant ways. First, unlike the provisions of former 12940(j)(1) which we have reviewed extensively, above, the amendment does not impose liability for harassment upon any "entity" other than an employer. In other words, unlike the other sentences in former section 12940(j)(1), the amendment does nothing to impose responsibility on, e.g., a labor organization, employment agency, or apprenticeship program, for harassment by a nonemployee. The amendment specifically singles out employers for this liability.
Second, former section 12940(j)(1) provided liability for harassment based upon any animus forbidden by the FEHA: i.e., race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age or sexual orientation. The amendment not only singles out employers for nonemployee liability, but also provides that such liability may be imposed solely for sexual harassment.
If plaintiff's proffered interpretation of former 12940(j)(1) had been correct, and that provision had always contemplated liability for harassment by nonemployees, then such liability would have been provided under existing law for labor organizations, employment agencies and apprenticeship programs, as well as for employers, and liability would be imposed for such nonemployee harassment on any of the bases prohibited by the FEHA. The "clarifying" enactment would not restrict liability to employers and would not impose liability solely for nonemployee sexual harassment. Patently, therefore, "the true meaning of the statute" has not "remain[ed] the same," and the amendment is not merely declaratory *690 of existing law, but has effected a substantial change in the law.
This conclusion is also supported by the legislative history of the amendment itself. In this respect, we agree with the dissent in Salazar II,[38] as decided upon remand: "The legislative history also shows that in Assem. Bill 76 the Legislature deliberately rejected a broad prohibition against harassment of whatever kind. Instead the Legislature enacted a version of Assem. Bill 76 which limited an employer's potential liability to sexual harassment of employees by nonemployees. [¶] As initially proposed, Assem. Bill 76 prohibited all harassment of employees by any person. Early versions of Assem. Bill 76 referred to employer responsibility for acts `with respect to harassment of employees' and to `[h]arassment of an employee . . . by any person.'[39] On June 19, 2003, the Senate deleted the prohibition against harassment `by any person' and added a sentence stating that `[a]n employer may be responsible for the acts of nonemployees, with respect to harassment of employees. . . .'[40] On August 28, 2002, the Senate limited the prohibitions against harassment to `sexual harassment.' [Fn. omitted.] . . . [¶] The June 19 and August 28, 2003 amendments thus materially changed the initial version of Assem. Bill 76 by narrowing employers' statutory liability from broad `harassment by any person' to `acts of nonemployees, with respect to sexual harassment of employees.' The existence of these starkly different substantive amendments precludes any conclusion that Assem. Bill 76 clarified and construed existing law."[41]
The amendment thus effected a significant change in the substantive law and did not merely clarify existing law.
We fully recognize that the Salazar II majority has decided that the amendment merely clarifies existing law. (117 Cal. App.4th 318, 328, 11 Cal.Rptr.3d 630.) The majority there did not fully analyze the language and context of the amendment, however. In our view, the pre-amendment version of section 12940, subdivision (j) is not merely ambiguous on the question of employer liability for client harassment of employees. The amendment evinces, in our view, an intent to change the law, inasmuch as the prior statutory language did not, upon thorough analysis, bear an interpretation that would impose such liability. The peculiar restrictions of the amendment, which limit liability to instances of sexual harassment committed by clients, renders the assertion that section 12940, subdivision (j) "always" imposed such a liability, patently untenable.
E. The Legislature Has Nevertheless "Very Clearly" Expressed an Intent to Apply the Amendment Retroactively
Had the amendment to section 12940(j)(1) simply "clarified" existing law, its application to this case would not be considered retrospective, because its substance would have "always been the law." We have determined that the amendment was not a mere clarification, but a substantive change in the law. Our inquiry is not *691 ended by this determination, however; the possibility still exists that the Legislature has intended the amendment to apply retroactively, notwithstanding the change in the law. Thus, "even if the court does not accept the Legislature's assurance that an unmistakable change in the law is merely a `clarification,' the declaration of intent may still effectively reflect the Legislature's purpose to achieve a retrospective change."[42]
The circumstances of the enactment here indicate a plain intent that, even if the amendment cannot be deemed declaratory of existing law, the Legislature nonetheless meant it to apply retroactively to this case; the amendment specifically states that its purpose is to alter the result in Salazar I, a parallel case. The statement itself that the amendment clarifies or declares existing law, "`obvious[ly] . . . is indicative of a legislative intent that the amendment apply to all existing causes of action from the date of its enactment. . . .' [Citations.]"[43] Another circumstance which makes plain this intent is that the amendment was made promptly in response to Salazar I and this case, both of which were granted review on the same issue by the California Supreme Court. Our initial construction of former section 12940(j)(1) was analogous to that in Salazar I, which the Legislature expressly intended to contravene by its amendment.
F. Application of the Amendment Is Constitutionally Prohibited
"When a legislative body clearly intends a statute or ordinance to operate retroactively, that intent must be enforced unless retroactivity is barred by constitutional constraints."[44] "Of course, a statute cannot be retroactively applied to the detriment of due process. [Citation.] . . . [A] retroactive statute generally offends due process by impairing a contract or a vested property right with insufficient justification."[45]
We find that applying the amendment retroactively is constitutionally objectionable. Constitutional considerations of due process require that citizens be fairly apprised of laws affecting their conduct. Here, the import of the amendment is to impose substantial new obligations on employers, and to impose such liability, without clear notice, for conduct which was already completed in the past.
Not only does the amendment impose new and significant liabilities for already-completed acts, it also does so in a way which is unfair both to employers and their employees. The amendment provides that an employer must anticipate and protect its employees from workplace harassment by nonemployees, but only as to sexual harassment. Employees who are harassed by nonemployees because of any other animus generally forbidden under the FEHA, such as race, ethnicity, national origin, age, and so forth, have no protection under the amendment. On the other hand, the amendment holds employers liable for nonemployee sexual harassment, but does not impose the same obligation on other entities *692 covered by the FEHA, such as labor organizations, employment agencies, or apprenticeship programs.
To prevent fundamental unfairness of all these kinds imposition of substantial new liabilities without due notice, unequal treatment of employees, and unequal treatment of employers we conclude the amendment cannot constitutionally be applied retroactively to this case. If it is applicable at all, its effect must be prospective only.
III. The Remaining Issues Need Not Be Decided
We have determined that the FEHA more particularly, section 12940(j)(1) as amended cannot be applied here to impose liability on the employer for the harassing conduct of Brown, its client/customer. Thus, we need not reach the additional questions of, e.g., governmental immunity, alleged instructional error, the form of the special verdict, and so on. Similarly, we need no longer be concerned with the trial court's supposed failure to consider the "failed relationship" defense, or to instruct on apportionment of fault, for purposes of assessing noneconomic damages, between the employer and Brown.
Finally, inasmuch as we must reverse the judgment, plaintiff is not the prevailing party, and the award of attorney fees must also be reversed.
DISPOSITION
As directed by the California Supreme Court, we have reconsidered the matter in light of the enactment of Statutes of 2003, chapter 671, section 1, page 4072. Upon such reconsideration, we conclude that the amendment was neither expressly retroactive nor, despite the Legislature's declaration to the contrary, merely declaratory of existing law. We further conclude that, although the Legislature did nevertheless clearly express an intent to apply the amendment retroactively, it is "constitutionally objectionable" to do so. Accordingly, we again reverse both the judgment and the award of attorney fees in plaintiff's favor.
Defendant shall recover costs on appeal.
We concur: RAMIREZ, P.J., and KING, J.
NOTES
[1] On January 22, 2003, the California Supreme Court had already granted review (130 Cal.Rptr.2d 656, 63 P.3d 215) in another case, Salazar v. Diversified Paratransit, Inc. (2002) 103 Cal.App.4th 131, 126 Cal.Rptr.2d 475 (hereafter, Salazar I), presenting the same issue. On August 13, 2003, the California Supreme Court granted plaintiff's petition for review in this case. (3 Cal.Rptr.3d 622, 74 P.3d 725.)
[2] Order of the California Supreme Court (Nov. 19, 2003) (7 Cal.Rptr.3d 315, 80 P.3d 201).
[3] Haas v. Meisner (2002) 103 Cal.App.4th 580, 586, 126 Cal.Rptr.2d 843.
[4] Hunt v. Superior Court (1999) 21 Cal.4th 984, 1000, 90 Cal.Rptr.2d 236, 987 P.2d 705.
[5] Curle v. Superior Court (2001) 24 Cal.4th 1057, 1063, 103 Cal.Rptr.2d 751, 16 P.3d 166.
[6] Watkins v. Real Estate Commissioner (1960) 182 Cal.App.2d 397, 400, 6 Cal.Rptr. 191.
[7] Younger v. Superior Court (1978) 21 Cal.3d 102, 113, 145 Cal.Rptr. 674, 577 P.2d 1014.
[8] People v. Pieters (1991) 52 Cal.3d 894, 899, 276 Cal.Rptr. 918, 802 P.2d 420.
[9] Clean Air Constituency v. California State Air Resources Bd. (1974) 11 Cal.3d 801, 814, 114 Cal.Rptr. 577, 523 P.2d 617.
[10] Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1159, 278 Cal.Rptr. 614, 805 P.2d 873.
[11] Statutes of 1984, chapter 1754, section 1, pages 6403-6404, italics added.
[12] See County of Los Angeles v. Payne (1937) 8 Cal.2d 563, 574, 66 P.2d 658.
[13] Other provisions of the FEHA impose strict liability on the employer for the unlawful discriminatory acts of its supervisors and agents, without the qualifications expressed in the second sentence of section 12940(j)(1), for harassment by employees "other than an agent or supervisor."
[14] The second sentence of former section 12940(j)(1) provided: "Harassment of an employee, an applicant, or a person providing services pursuant to a contract by an employee, other than an agent or supervisor, shall be unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action." (Italics added.)
[15] In re J.W. (2002) 29 Cal.4th 200, 210, 126 Cal.Rptr.2d 897, 57 P.3d 363; Reno v. Baird (1998) 18 Cal.4th 640, 658, 76 Cal.Rptr.2d 499, 957 P.2d 1333.
[16] State Farm Mut. Auto. Ins. Co. v. Haight (1988) 205 Cal.App.3d 223, 236, 252 Cal.Rptr. 162 "successive drafts" of a pending bill "are helpful in interpreting a statute if it is conceded that the meaning is unclear." In this connection, as before, we grant the employer's motion to take judicial notice of legislative history documents concerning section 12940. Likewise, we again deny both the employer's request to take judicial notice of Brown's deposition testimony, and plaintiff's November 25, 2002 request for judicial notice.
[17] Statutes of 1982, chapter 1193, section 2, page 4260.
[18] Senate Bill No.2012 (1983-1984 Reg. Sess.)
[19] Italics (for proposed new language) and strikethrough type (for proposed deletion) in original.
[20] Central Delta Water Agency v. State Water Resources Control Bd. (1993) 17 Cal.App.4th 621, 634, 21 Cal.Rptr.2d 453.
[21] See, e.g., Coates v. Sundor Brands, Inc. (11th Cir. 1999) 164 F.3d 1361, 1366; Lockard v. Pizza Hut, Inc. (10th Cir.1998) 162 F.3d 1062, 1075; Rodriguez-Hernandez v. Miranda-Velez (1st Cir.1998) 132 F.3d 848, 854; Crist v. Focus Homes, Inc. (8th Cir.1997) 122 F.3d 1107, 1110; Folkerson v. Circus Circus Enterprises, Inc. (9th Cir.1997) 107 F.3d 754, 756.
[22] EEOC regulations: 29 Code of Federal Regulations, section 1604.11, effective November 10, 1980.
Enactment of the FEHA: Statutes of 1982, chapter 1193, section 2, pages 4258-4260.
[23] Page v. Superior Court (1995) 31 Cal.App.4th 1206, 1215-1216, 37 Cal.Rptr.2d 529.
[24] Statutes of 2003, chapter 671, section 1, page 4072.
[25] Statutes 2003, chapter 671, section 2, page 4073 (West's Cal. Session Laws 2003-2004).
[26] Murray v. Oceanside Unified School Dist. (2000) 79 Cal.App.4th 1338, 1348, 95 Cal. Rptr.2d 28.
[27] Newman v. Emerson Radio Corp. (1989) 48 Cal.3d 973, 978-979, 258 Cal.Rptr. 592, 772 P.2d 1059.
[28] Myers v. Philip Morris Companies, Inc. (2002) 28 Cal.4th 828, 841, 123 Cal.Rptr.2d 40, 50 P.3d 751.
[29] Western Security Bank v. Superior Court (1997) 15 Cal.4th 232, 243, 62 Cal.Rptr.2d 243, 933 P.2d 507.
[30] Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1209, 246 Cal.Rptr. 629, 753 P.2d 585, italics added.
[31] Myers v. Philip Morris Companies, Inc., supra, 28 Cal.4th 828, 841, 123 Cal.Rptr.2d 40, 50 P.3d 751.
[32] Western Security Bank v. Superior Court, supra, 15 Cal.4th 232, 243, 62 Cal.Rptr.2d 243, 933 P.2d 507.
[33] Colmenares v. Braemar Country Club, Inc. (2003) 29 Cal.4th 1019, 1024, footnote 2, 130 Cal.Rptr.2d 662, 63 P.3d 220, citing Western Security Bank v. Superior Court, supra, 15 Cal.4th 232, 243, 62 Cal.Rptr.2d 243, 933 P.2d 507.
[34] Colmenares v. Braemar Country Club, Inc., supra, 29 Cal.4th 1019, 1024, footnote 2, 130 Cal.Rptr.2d 662, 63 P.3d 220, again citing Western Security Bank v. Superior Court, supra, 15 Cal.4th 232, 243, 62 Cal.Rptr.2d 243, 933 P.2d 507.
[35] Western Security Bank v. Superior Court, supra, 15 Cal.4th 232, 244, 62 Cal.Rptr.2d 243, 933 P.2d 507.
[36] Western Security Bank v. Superior Court, supra, 15 Cal.4th 232, 244, 62 Cal.Rptr.2d 243, 933 P.2d 507.
[37] Statutes 2003, chapter 671, section 2, page 4073, (West's Cal. Sessions Laws 2003-2004).
[38] Salazar v. Diversified Paratransit, Inc., supra, 117 Cal.App.4th 318, 334-335, 11 Cal.Rptr.3d 630 (Dis. opn. of Kitching, J.) (Salazar II).
[39] "See Assem. Bill No. 76, introduced December 23, 2002, and amendments dated February 26, 2003, February 27, 2003, and March 11, 2003."
[40] "Amendment of June 19, 2003, to section 1 of Assem. Bill No. 76, amending Government Code section 12940, subdivision (j)(1)."
[41] Salazar II, supra, 117 Cal.App.4th 318, 334-335, 11 Cal.Rptr.3d 630.
[42] Western Security Bank v. Superior Court, supra, 15 Cal.4th 232, 244, 62 Cal.Rptr.2d 243, 933 P.2d 507.
[43] Western Security Bank v. Superior Court, supra, 15 Cal.4th 232, 244-245, 62 Cal. Rptr.2d 243, 933 P.2d 507.
[44] Plotkin v. Sajahtera, Inc. (2003) 106 Cal. App.4th 953, 961-962, 131 Cal.Rptr.2d 303, citing Western Security Bank v. Superior Court, supra, 15 Cal.4th 232, 243-244, 62 Cal.Rptr.2d 243, 933 P.2d 507.
[45] Bank of America v. Angel View Crippled Children's Foundation (1999) 72 Cal.App.4th 451, 458-459, 85 Cal.Rptr.2d 117.
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280 Pa. Superior Ct. 454 (1980)
421 A.2d 810
Fate FAULKS and Tonyelayo Faulks
v.
PAPO BAR, INC., Appellant.
Superior Court of Pennsylvania.
Argued December 3, 1979.
Filed August 22, 1980.
Richard S. March, Philadelphia, for appellant.
*455 Milton S. Lazaroff, Philadelphia, for appellees.
Before HESTER, MONTGOMERY and CIRILLO, JJ.[*]
PER CURIAM:
Presently before the court is appellant's, Papo Bar, Inc., appeal from the order of the lower court dated December 6, 1978 and docketed December 8, 1978, wherein the lower court vacated the prior order dismissing the instant case and reinstated same.
The procedural history may be briefly summarized as follows: Appellees' action was dismissed with prejudice by the prothonotary on September 23, 1977 pursuant to Star Rule 350 of the Rules of Civil Procedure of the Court of Common Pleas of Philadelphia County (now designated Philadelphia Rule 130), which provides:
Rule 130. Disposition of Inactive Cases
(1) Whenever in any civil action a Certificate of Readiness has not been filed and no proceedings have been docketed in the Prothonotary's Office for a period of two (2) successive years, the action shall be dismissed with prejudice, for failure to prosecute under the provisions of this rule, and the docket so marked, provided that no less than sixty (60) days' notice be given by publication once in The Legal Intelligencer.
(2) Whenever in any civil action a Praecipe or an Order for trial or a Certificate of Readiness has been filed, but thereafter no further action or any disposition has been noted on the docket in the Prothonotary's Office for a period of three (3) successive years, the action shall be dismissed, with prejudice, for failure to prosecute under the provisions of this rule, and the docket so marked; provided that no less than six (6) months advance notice thereof be given by publication once in The Legal Intelligencer.
*456 (3) Dismissal under (1) or (2) is subject to the right of any party to reinstate the action by written application for good cause shown after such dismissal within three (3) months of the date of dismissal.
Star Rule [*]350, adopted February 15, 1973; Star Rule # 1047A, adopted September 23, 1971, amended November 16, 1972.
In July of 1978, appellees' petition to reinstate the case was denied by the court. In November of 1978, appellees' petition for reconsideration was again denied but with leave to appellees to file an amended petition for reconsideration. Appellees filed an amended petition, the prayer of which was subsequently granted by order dated December 6, 1978 wherein the lower court vacated its prior order and reinstated the case. It is from this order that appellant has filed the instant appeal.
The lower court acknowledged our holding in International Telephone and Telegraph Corporation v. Philadelphia Electric Company, 250 Pa.Super. 378, 382, 378 A.2d 986, 988 (1977) wherein we stated:
Reinstatement of a cause of action is authorized under Philadelphia Rule 1047A and its replacement rule 350(3) "for good cause shown". Repeated decisions of this Court and the Supreme Court of Pennsylvania have established that "good cause shown" requires satisfactory proof of three positions, stated in Boyles v. Sullivan, 230 Pa.Super. 453, 455, 326 A.2d 440, 442 (1974) to be as follows:
"The criteria for opening a judgment of non pros are: (1) the petition must be timely filed; (2) the reason for the default reasonably explained or excused; and, (3) the facts constituting grounds for the cause of action be alleged."
To the same effect: Goldstein v. Graduate Hospital of University of Pennsylvania, 441 Pa. 179, 272 A.2d 472 (1971); Thorn v. Clearfield Borough, 420 Pa. 584, 586, 218 A.2d 298, 299 (1966); Dupree v. Lee, 241 Pa.Super. 259, 262, 361 A.2d 331, 333 (1976); Johnson v. Mulhall, 230 Pa.Super. 183, 185, 326 A.2d 439, 440 (1974); Matyas *457 v. Albert Einstein Medical Center, 225 Pa.Super. 230, 233, 310 A.2d 301, 302 (1973).
but then ordered the case reinstated for the reason that no notice of the September 23, 1977 dismissal was given in accordance with Pa.R.C.P. 236. Rule 236 provides:
Rule 236. Notice by Prothonotary of Entry of Order, Decree or Judgment
(a) The prothonotary shall immediately give written notice by ordinary mail of the entry of any order, decree or judgment:
(1) When a judgment by confession is entered, to the defendant at the address stated in the certificate of residence filed with the prothonotary in support of the confession of judgment. The Plaintiff shall provide the prothonotary with the required notice and documents for mailing and a properly stamped and addressed envelope; and
(2) In all other cases, to each party who had appeared in the action or to the party's attorney of record.
(b) The prothonotary shall note in the docket the giving of the notice and, when a judgment by confession is entered, the mailing of the required notice and documents.
(c) Failure to give the notice or to mail the required document or both, shall not affect the lien of the judgment.
Adopted October 4, 1973, effective December 1, 1973; amended March 10, 1977, effective 30 days after March 26, 1977.
The lower court thus concluded that Star Rule 350's silence as to any notice requirement is in contravention to Pa.R.C.P. 236, and since the courts of common pleas may adopt local rules for the conduct of their business "which shall not be inconsistent with or in conflict with said general rules prescribed by the Supreme Court of Pennsylvania, Act of June 21, 1937, P.L. 1982, No. 392, § 2 as amended, 17 P.S. § 62",[1] Star Rule 350 as applied, is "null and void."
*458 After declaring Star Rule 350 as applied in Philadelphia before October 20, 1978[2] to be null and void, the lower court concluded that it need not reach the question of whether the three (3) requirements, acknowledged to be the law by the lower court as clearly set forth in ITT v. Phila. Electric Company (infra), need be satisfied. The lower court thus vacated its earlier order and reinstated the case.
We are of the opinion that the lower court erred in concluding that it need not consider all three elemental criteria which constitute the three-pronged test above stated before reinstating the case. Surely a conflict in application between Star Rule 350 and Pa.R.C.P. 236 impacts only upon the first of the three, well-settled and defined criteria. Therefore, we believe that the lower court acted improvidently when it reinstated the case without a full inquiry into the second and third elements which constitute "good cause shown," to-wit, the reason for docket inactivity for two successive years and the meritoriousness of the underlying cause of action.
We are familiar with our court's holding in John Corcoran and Francis Barr v. Louis Fiorentino, 277 Pa.Super. 256, 419 A.2d 759 (1980). We find no inconsistency between the instant case and Fiorentino (supra). We do feel, however, that the remaining factual elements which constitute "good cause shown" as above stated must be first resolved at the lower court level.
For the foregoing reasons, we remand for additional proceedings consistent herewith.
Order remanded.
NOTES
[*] Judge VINCENT A. CIRILLO, of the Court of Common Pleas of Montgomery County, Pennsylvania, is sitting by designation.
[1] Coffey v. Faix, 426 Pa. 421, 423, 233 A.2d 229 (1967).
[2] On October 20, 1978, the Philadelphia County Common Pleas Court Administrator ordered that notice be given pursuant to Pa.R.C.P. 236 of any Star Rule 350 (now Philadelphia Rule 130) dismissals.
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777 F.Supp. 901 (1991)
UNITED STATES of America, Plaintiff,
v.
Bernard D. REICHER, Defendant.
Cr. No. 90-229 JP.
United States District Court, D. New Mexico.
November 5, 1991.
*902 J. Oliver Lee, Jr., Dallas, Tex., William L. Lutz, Asst. U.S. Atty., Albuquerque, N.M., Duncan S. Currie, Dept. of Justice, for plaintiff.
Teresa E. Storch, Albuquerque, N.M., for defendant.
MEMORANDUM OPINION AND ORDER OF DISMISSAL
PARKER, District Judge.
The subject of this Opinion is defendant's motion, filed September 26, 1991, for judgment of acquittal following discharge of the jury, pursuant to Federal Rule of Criminal Procedure 29(c). A trial in this case was held on September 16, 17, 19, 20 and 23, 1991. The jury returned its verdict on September 24, 1991, convicting on one count and acquitting on two counts of a three-count indictment.[1] Defendant moves this court to set aside the jury's guilty verdict on Count I, which charged the defendant with conspiring to rig bids in unreasonable restraint of trade in violation of the Sherman Antitrust Act, 15 U.S.C. § 1 (1982). Having thoroughly considered the pleadings, facts and law, and being otherwise fully advised in the matter, I conclude that defendant's motion should be granted.
Count I of the indictment charged defendant Reicher with conspiring to rig bids for a contract with Los Alamos National Laboratory: specifically, beginning in 1985 and continuing through 1986, Reicher and accomplices participated in a conspiracy to rig quotations for the award of a contract to supply the Laboratory with a temporary structure known as the Optical Channel Assembly ("OCA"), which would provide a controlled environment for laser testing. The OCA facility, as designed, was to be double-walled and constructed of metal-clad urethane panels.
At trial, the evidence showed that the defendant did in fact conspire to submit a sham bid. On June 7, 1985 the Laboratory sent out an OCA bid package to prospective bidders, whose names the Laboratory had compiled and which included the defendant's company, B.D. Reicher & Son, Inc. of Scottsdale, Arizona. Because the bidding process was competitive, the Laboratory required the submission of at least two bids by the deadline of June 28, 1985. As the bid deadline approached, however, defendant learned of the possibility that his would be the only bid. Although Laboratory contracting procedures permitted single-source, non-competitive contracting, defendant testified that Laboratory personnel had informed him that budgetary limitations would not allow adequate time to reconstitute the contracting process in that manner; it was Reicher's understanding that, if the Laboratory could not award the contract through the competitive process, the funds then budgeted for the OCA project would no longer be available for that purpose at that time. Consequently, Reicher persuaded James Giolas, president of Giolas Sales Company of Salt Lake City, Utah, to submit another bid.
Like Reicher's company, Giolas Sales Co. appeared on the Laboratory's list of potential bidders, but, it is clear from the evidence that Giolas' company was not capable of performing the contract if awarded. Giolas Sales Co. simply did not have the means of satisfying the narrow specifications of the project, as both Giolas and Reicher knew at the time. In addition, New Mexico was not part of the business area within which Giolas Sales Co. operated. Nonetheless, at Reicher's insistence and based on Reicher's assurance that the bid would be awarded to B.D. Reicher & Son, Inc. and not to Giolas Sales Co., Giolas signed a blank bid proposal and, on June *903 25, 1985, forwarded it by overnight express conveyance to Reicher's office in Scottsdale. Reicher, or his employee Jerry Budner under Reicher's instructions, filled out the blank, but signed, Giolas bid proposal and, on June 28, 1985, submitted both the Reicher and the Giolas bids to the Laboratory. Having received two bids, Reicher's for $832,917.00 and Giolas' for $852,615.00, the amount inserted by employee Budner as Reicher instructed, the Laboratory awarded the contract to Reicher.
Section one of the Sherman Act makes illegal contracts, combinations, or conspiracies "in restraint of trade." 15 U.S.C. § 1. See United States v. Sargent Elec. Co., 785 F.2d 1123, 1126 (3rd Cir. 1986), cert. denied, 479 U.S. 819, 107 S.Ct. 82, 93 L.Ed.2d 36 (1986). Specifically, a "conspiracy to submit collusive, non-competitive, rigged bids is a per se violation of the statute." United States v. Brighton Bldg. & Maintenance Co., 598 F.2d 1101, 1106 (7th Cir.1979), cert. denied, 444 U.S. 840, 100 S.Ct. 79, 62 L.Ed.2d 52 (1979). Although the Act nowhere contains language that a conspiracy to rig bids, to be actionable, requires an agreement between or among competitors, "[i]t is as if the Sherman Act read: `An agreement among competitors to rig bids is illegal.'" Id. Consistent with this reading, the Tenth Circuit has adopted the following definition of Sherman Act bid rigging:
`Any agreement between competitors pursuant to which contract offers are to be submitted or withheld from a third party constitutes bid rigging per se violative of 15 U.S.C. section 1.'
United States v. Mobile Materials, Inc., 881 F.2d 866, 869 (10th Cir.1989), cert. denied, 493 U.S. 1043, 110 S.Ct. 837, 107 L.Ed.2d 833 (1990) (quoting United States v. Portsmouth Paving Corp., 694 F.2d 312, 325 (4th Cir.1982)) (emphasis added). See also United States v. W.F. Brinkley & Son Constr. Co., 783 F.2d 1157, 1160 (4th Cir.1986); United States v. Koppers Co, Inc., 652 F.2d 290, 294 (2nd Cir.1981), cert. denied, 454 U.S. 1083, 102 S.Ct. 639, 70 L.Ed.2d 617 (1981); United States v. Beachner Constr. Co., 555 F.Supp. 1273, 1276 (D.Kan.1983), aff'd, 729 F.2d 1278 (10th Cir.1984); United States v. Seville Indus. Machinery Corp., 696 F.Supp. 986, 989 (D.N.J.1988). Cf. United States v. Suntar Roofing, Inc., 897 F.2d 469, 472-74 (10th Cir.1990) (market allocation conspiracy requires an agreement between competitors); TV Communications Network, Inc. v. ESPN, Inc., 767 F.Supp. 1062, 1075 (D.Colo.1991) (an agreement between entities that are not competitors does not violate section one of the Sherman Act).
The issue for decision then is whether Reicher and Giolas were "competitors," as comprehended and required by the statute and its interpreting case law. To that end, the government advances two arguments in support of the jury verdict on Count I. First, the government contends that Giolas was a "potential" competitor. Horizontal restraints between or among potential competitors, though perhaps not as pernicious, are no less violative of section one of the Sherman Act than agreements made by actual competitors. See Transource International, Inc. v. Trinity Industries, Inc., 725 F.2d 274, 279-80 (5th Cir.1984). See also Otter Tail Power Co. v. United States, 410 U.S. 366, 377, 93 S.Ct. 1022, 1029, 35 L.Ed.2d 359 (1973) (use of monopoly power to exclude potential entrants to marketplace is a violation of section two of the Act). The section one crime at issue here, "[t]he crime of conspiracy to rig bids[,] ... is essentially an agreement among actual or potential competitors which restrains competition in or effecting interstate trade or commerce." Beachner Constr., 555 F.Supp. at 1277. See Sargent, 785 F.2d at 1127; United States v. Ashland-Warren, Inc., 537 F.Supp. 433, 445 (M.D.Tenn.1982). Conversely, no violation occurs where the parties to an agreement not to compete do not include at least two actual or potential competitors. United States v. MMR Corp. (LA), 907 F.2d 489, 498 (5th Cir.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 1388, 113 L.Ed.2d 445 (1991).
The evidence at trial established that Reicher and Giolas, either individually or through their respective companies, *904 were not potential or actual competitors. By this, I mean that neither was a competitor in the relevant market. Although a charge of per se violation of the Sherman Act proscribes inquiry into competitive effects, "it does not excuse identification of the relevant markets." Sargent, 785 F.2d at 1127. "An agreement among persons who are not actual or potential competitors in a relevant market is for Sherman Act purposes brutum fulmen." Id. See United States v. Glenn Berry Manufacturers, Inc., 1991 WL 98851 (E.D.Pa., June 4, 1991). In this instance, the relevant market was a narrow one, limited to contracting to supply the Laboratory with the OCA facility.[2] As such, the unassailed evidence showed that in no way could Giolas or Giolas Sales Co. be plausibly characterized as a potential or actual competitor of or as a "competitive threat" to Reicher. United States v. Metropolitan Enterprises, Inc., 728 F.2d 444, 449 (10th Cir.1984); MMR Corp., 907 F.2d at 497-98. See Otter Tail, 410 U.S at 377, 93 S.Ct. at 1029. Not only was Giolas not a potential competitor, whose competitive threat could have been coopted by a bid rigging scheme, he was, in fact, a solicited outsider, capable of aiding and abetting but incapable of full membership. Giolas was strongly encouraged by Reicher to become involved in a process that he otherwise would not have entered, a process in which Giolas' potential to compete on his own was a nullity.
Second, the government asserts that Giolas was a "putative" competitor. By this argument, the government puts its finger on what may have been the most reprehensible aspect of Reicher's conduct. The thrust of this argument does not go to whether Giolas was in fact a competitor, but instead is directed to whether the Laboratory's contracting officials believed it so, when they went forward with the bidding process and when they evaluated the reasonableness of the two bid amounts. The government relies heavily on language from United States v. Finis P. Ernest, Inc., 509 F.2d 1256 (7th Cir.1975), cert. denied, 423 U.S. 874 & 893, 96 S.Ct. 142 & 191, 46 L.Ed.2d 105 & 124 (1975).[3] In Ernest the defendant submitted a bid to the City of East St. Louis for a proposed sanitary sewer project. The city rejected the bid because no other bids were made and because the bid amount substantially exceeded the city engineer's estimate for the cost of the job. The city then put the job up for re-bidding, receiving only two bids, one from Ernest and one from another company, Modern Construction. Ernest was awarded the contract. Subsequently, both companies were indicted and convicted under section one of the Sherman Act for conspiracy to bid rig. On appeal to the Seventh Circuit, however, the issue was not whether the two firms were competitors but "[w]hether the evidence was sufficient to prove a conspiracy between the defendants to rig bids." Id. at 1258. After reviewing the evidence that the two bids had been prepared collusively, the panel commented: "There was other evidence that the Modern bid was not a serious one and was submitted so that there would be an appearance of competitive bidding." Id. at 1262.[4] The court went on to cite further *905 evidence supporting the position that Modern's bid was a sham, concluding that the evidence was sufficient to prove a conspiracy.
Without a doubt the submission of complementary bids in order to deceive, by creating an appearance of competition or by justifying an otherwise excessive bid, is objectionable, but, in the absence of a bid-rigging agreement between or among competitors, such conduct is not a violation of section one of the Sherman Act. Creating an appearance of competition is not by itself enough. In the antitrust context, courts have often used the term "putative competitors" to describe conspirators to an anticompetitive scheme. The government, however, misconstrues the meaning of "putative competitors," by arguing that such a usage implies that bidders only have to appear, from the subjective standpoint of the victim, to be competitors in order for a conspiracy between or among them to be actionable. Such a subjective belief, however, is not enough, if even necessary, because the bidders must in fact be competitors, actual or potential.
As used by the courts, the term "putative competitor" commonly connotes one of two meanings, neither of which supports the government's position. The more prevalent use is merely a descriptive statement of fact: if would-be competitors have joined in an anticompetitive conspiracy, they are, in that instance, not actually in competition, but are supposed or apparent competitors.[5]See Arnold Pontiac-GMC, Inc. v. Budd Baer, Inc., 826 F.2d 1335, 1339 (3rd Cir.1987); Fishman v. Estate of Wirtz, 807 F.2d 520, 573 (7th Cir.1986) (Easterbrook, J., dissenting in part); United States v. David E. Thompson, Inc., 621 F.2d 1147, 1149 (1st Cir.1980); Ashland-Warren, 537 F.Supp at 438-45. As formulated by the case law, the phrase "putative competitor" connotes a specialized type of conspirator. And, underlying the positive description is the normative notion that the commercial actors in question should be competitors in substance not simply in form. An actor foils competition by "`engag[ing] in a conspiracy with those who should have been [the actor's] competitors.'" Id. at 444 (quoting United States v. Consolidated Packaging Corp., 575 F.2d 117, 125 (7th Cir.1978)). The second usage of "putative competitors" conveys once more the notion of "potential competitors" and could just as easily read that way. See Standard Oil Co. v. United States, 337 U.S. 293, 318, 69 S.Ct. 1051, 1066, 93 L.Ed. 1371 (1949); United States v. Columbia Steel Co., 334 U.S. 495, 535, 68 S.Ct. 1107, 1127, 92 L.Ed. 1533 (1948); United States v. Western Elec. Co., 673 F.Supp. 525, 579 (D.D.C.1987), modified, 900 F.2d 283 (D.C.Cir.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 283, 112 L.Ed.2d 238 (1990). Accordingly, while Giolas may have been an apparent competitor, he was not a putative competitor.
Finally, in the alternative to arguing that Giolas was a competitor, the government asserts that he and Reicher formed an actionable conspiracy to rig bids, notwithstanding Giolas' status as a non-competitor. The government cites the principle that "a person `may be guilty of conspiring although incapable of committing the objective offense.'" United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224 n. 59, 60 S.Ct. 811, 845 n. 59, 84 L.Ed. 1129 (1940) (quoting United States v. Rabinowich, 238 U.S. 78, 86, 35 S.Ct. 682, 684, 59 L.Ed. 1211 (1915)). In particular, a non-competitor can violate section one of the Sherman Act by participating in a bid-rigging scheme. See Metropolitan Enterprises, 728 F.2d at 449-50; MMR Corp., 907 F.2d at 498. The government's argument, however, founders because it is impossible to join a conspiracy that does not exist. To be actionable under section one of the Sherman Act, a conspiracy must include more than one competitor. In this instance, Giolas was *906 incapable of forming a violative conspiracy with Reicher because Reicher was the only competitor agreeing to the scheme. Likewise, Giolas was incapable of joining a conspiracy, for Reicher, acting either individually or through his company, could not form such a conspiracy on his own. See Id.
By the evidence adduced at trial, the government failed to show that Reicher violated the Sherman Act's per se rule against bid rigging. More broadly, the government failed to show that the tenor of the Act was in some way compromised.[6]Per se rules are appropriate "for conduct which is manifestly anticompetitive and should be `invoked when surrounding circumstances make the likelihood of anticompetitive conduct so great as to render unjustified further examination of the challenged conduct.'" Palmer v. BRG of Georgia, Inc., 874 F.2d 1417, 1432 n. 13 (11th Cir.1989), modified, 893 F.2d 293 (11th Cir.1990), rev'd on other grounds, ___ U.S. ___, 111 S.Ct. 401, 112 L.Ed.2d 349 (1990) (quoting National Collegiate Athletic Ass'n v. Board of Regents of University of Oklahoma, 468 U.S. 85, 103-04, 104 S.Ct. 2948, 2961, 82 L.Ed.2d 70 (1984)). Looking behind the per se rule against bid rigging to the economic rationale that underlies the rule, the basis for condemning Reicher's conduct does not sound in anti-trust law. The government simply did not show that Reicher's conduct was either anticompetitive or an unreasonable restraint of trade. No rival was impeded from bidding[7] and no rival entered into an agreement not to compete. While clearly reprehensible, Reicher's acts did not constitute the pernicious conduct comprehended and targeted by the Act.
IT IS THEREFORE ORDERED that:
1. Defendant Bernard D. Reicher's motion, filed September 26, 1991, for judgment of acquittal following discharge of the jury, pursuant to Federal Rule of Criminal Procedure 29(c), is granted;
2. The jury's guilty verdict on Count I, finding defendant guilty of conspiring to rig bids in unreasonable restraint of trade in violation of the Sherman Antitrust Act, 15 U.S.C § 1 (1982), is hereby set aside; and,
3. The indictment is dismissed in its entirety with prejudice.
NOTES
[1] The jury found defendant not guilty of conspiracy to defraud the government in violation of 18 U.S.C. § 371 (Count II) and of mail fraud in violation of 18 U.S.C. § 1341 (Count III).
[2] However, even if defined in broader terms, the relevant market could not reasonably include the business activity of Giolas Sales. Inclusion of that company in the relevant marketplace would require specifying some "whens" and "wheres" that the evidence simply did not specify or support. Sargent, 785 F.2d at 1127. In terms of some bigger picture, there was no evidence that this was a traditional tit-for-tat agreement in which one party refrained from competing in order later or elsewhere to benefit from the reciprocal conduct by the other. Giolas reluctantly went along with the scheme in order to preserve the legitimate business relationship that he and Reicher had already, but fairly recently, established. Giolas testified that he feared that his refusal to submit another bid, as Reicher was pressuring him to do, would jeopardize his business arrangement with Reicher to supply refrigeration equipment in Utah.
[3] According to the government, the Seventh Circuit's holding in Ernest was "that evidence that a bid had been submitted in order to create the appearance of competitive bidding was sufficient to support conviction for bid rigging." Government's Response, filed October 9, 1991, 4. The government is wrong, and its reliance on Ernest is misplaced.
[4] The creation by the defendants of such an appearance, however, was not the basis for liability, but instead was evidence in support of a finding of conspiracy. Whether the two firms were competitors was not an issue before the appellate court.
[5] Under this connotation, a commercial actor, to be a putative competitor, must simultaneously be both an apparent and potential rival. Both the subjective and objective aspects are necessary.
[6] The Act targets specific conduct "in restraint of trade." In interpreting this language, I note that to the extent that the Act's intent is unclear, the rule of lenity operates in a defendant's favor "in resolving doubt about expression of legislative will defining crimes...." United States v. Villano, 816 F.2d 1448, 1455 (10th Cir.1987). See also United States v. Dashney, 937 F.2d 532, 537-39 (10th Cir.1991); United States v. Brzoticky, 588 F.2d 773, 777 (10th Cir.1978). While I find that the Act is not ambiguous as to Reicher's conduct and, in that respect, does not encompass it, any finding of ambiguity would conscript the rule in defendant's favor.
[7] I do observe, although the government has not addressed this issue and I am not considering it as a ground for my holding, that as to any argument that Reicher's conduct might have prevented the Laboratory from re-bidding the contract, using then-available funding, or somehow frustrated the institution of another bidding process at a later time, using subsequent funding, the evidence did not support such an assertion, either as to intent or outcome.
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17 Cal.Rptr.3d 135 (2004)
121 Cal.App.4th 445
Jerry FELGENHAUER et al., Plaintiffs, Cross-defendants and Appellants,
v.
Jennifer SONI et al., Defendants, Cross-complainants and Appellants.
Court of Appeal, Second District, Division Six.
August 5, 2004.
Christian E. Iversen, Paso Robles, for Plaintiffs, Cross-defendants and Appellants.
James L. Hudgens, Cappello & Noel, A. Barry Cappello, Santa Barbara, Pine & Pine and Norman Pine for Defendants, Cross-complainants and Appellants.
Certified for Partial Publication.[*]
*136 GILBERT, P.J.
Here we hold that to establish a claim of right to a prescriptive easement, the claimant need not believe he or she is legally entitled to use of the easement.
Jerry and Kim Felgenhauer brought this action to quiet title to prescriptive easements over neighboring property owned by Ken and Jennifer Soni. [[/]][***]
A jury made special findings that established a prescriptive easement for deliveries. [[/]][***]
We affirm.
FACTS
In November of 1971, the Felgenhauers purchased a parcel of property consisting of the front portion of two contiguous lots *137 on Spring Street in Paso Robles. The parcel is improved with a restaurant that faces Spring Street. The back portion of the lots is a parking lot that was owned by a bank. The parking lot is between a public alley and the back of the Felgenhauers' restaurant.
[[/]][]
From the time the Felgenhauers opened their restaurant in 1974, deliveries were made through the alley by crossing over the parking lot to the restaurant's back door. The Felgenhauers never asked permission of the bank to have deliveries made over its parking lot. The Felgenhauers operated the restaurant until the spring of 1978. Thereafter, until 1982, the Felgenhauers leased their property to various businesses.
The Felgenhauers reopened their restaurant in June of 1982. Deliveries resumed over the bank's parking lot to the restaurant's back door. In November of 1984, the Felgenhauers sold their restaurant business, but not the real property, to James and Ann Enloe. The Enloes leased the property from the Felgenhauers. Deliveries continued over the bank's parking lot.
James Enloe testified he did not believe he had the right to use the bank's property and never claimed the right. Enloe said that during his tenancy, he saw the bank manager in the parking lot. The manager told him the bank planned to construct a fence to define the boundary between the bank's property and the Felgenhauers' property. Enloe asked the manager to put in a gate so that he could continue to receive deliveries and have access to a trash dumpster. The manager agreed. Enloe "guess[ed]" the fence and gate were constructed about three years into his term. He said, "[Three years] could be right, but it's a guess." In argument to the jury, the Sonis' counsel said the fence and gate were constructed in January of 1988.
The Enloes sold the restaurant to Brett Butterfield in 1993. Butterfield sold it to William DaCossee in March of 1998. DaCossee was still operating the restaurant at the time of trial. During all this time, deliveries continued across the bank's parking lot.
The Sonis purchased the bank property, including the parking lot in dispute in 1998. In 1999, the Sonis told the Felgenhauers' tenant, DaCossee, that they were planning to cut off access to the restaurant from their parking lot.
The jury found the prescriptive period was from June of 1982 to January of 1988.
[[/]][]
DISCUSSION
I
[[/]][]
The Sonis contend there is no substantial evidence to support a prescriptive easement for deliveries across their property. They claim the uncontroverted evidence is that the use of their property was not under "a claim of right."
Whether the elements of a prescriptive easement have been established is a question of fact, which we review under the substantial evidence rule. (See O'Banion v. Borba (1948) 32 Cal.2d 145, 149-150, 195 P.2d 10.) "In viewing the evidence, we look only to the evidence supporting the prevailing party. [Citation.] We discard evidence unfavorable to the prevailing party as not having sufficient verity to be accepted by the trier of fact. [Citation.] *138 Where the trial court or jury has drawn reasonable inferences from the evidence, we have no power to draw different inferences, even though different inferences may also be reasonable. [Citation.] The trier of fact is not required to believe even uncontradicted testimony. [Citation.]" (Rodney F. v. Karen M. (1998) 61 Cal.App.4th 233, 241, 71 Cal.Rptr.2d 399.)
At common law, a prescriptive easement was based on the fiction that a person who openly and continuously used the land of another without the owner's consent, had a lost grant. (See Warsaw v. Chicago Metallic Ceilings, Inc. (1984) 35 Cal.3d 564, 575, 199 Cal.Rptr. 773, 676 P.2d 584.) California courts have rejected the fiction of the lost grant. Instead, the courts have adopted language from adverse possession in stating the elements of a prescriptive easement. The two are like twins, but not identical. (Taormino v. Denny (1970) 1 Cal.3d 679, 686, 83 Cal.Rptr. 359, 463 P.2d 711 [elements necessary to establish prescriptive easement are the same as those required to establish adverse possession, with exception of the payment of taxes].) Those elements are open and notorious use that is hostile and adverse, continuous and uninterrupted for the five-year statutory period under a claim of right. (Ibid.) Unfortunately, the language used to state the elements of a prescriptive easement or adverse possession invites misinterpretation. This is a case in point.
The Sonis argue the uncontroverted evidence is that the use of their property was not under a claim of right. They rely on the testimony of James Enloe that he never claimed he had a right to use the bank property for any purpose.
Claim of right does not require a belief or claim that the use is legally justified. (Lord v. Sanchez (1955) 136 Cal.App.2d 704, 707, 289 P.2d 41.) It simply means that the property was used without permission of the owner of the land. (Ibid.) As the American Law of Property states in the context of adverse possession: "In most of the cases asserting [the requirement of a claim of right], it means no more than that possession must be hostile, which in turn means only that the owner has not expressly consented to it by lease or license or has not been led into acquiescing in it by the denial of adverse claim on the part of the possessor." (3 Casner, American Law of Property (1952) Title by Adverse Possession, § 5.4, p. 776.) One text proposes that because the phrase "`claim of right'" has caused so much trouble by suggesting the need for an intent or state of mind, it would be better if the phrase and the notions it has spawned were forgotten. (Cunningham et al., The Law of Property (Law. ed. 1984) Adverse Possession, § 11.7, p. 762.) Enloe testified that he had no discussion with the bank about deliveries being made over its property. The jury could reasonably conclude the Enloes used the bank's property without its permission. Thus they used it under a claim of right.
The Sonis attempt to make much of the fence the bank constructed between the properties and Enloe's request to put in a gate. But Enloe was uncertain when the fence and gate were constructed. The Sonis' attorney argued it was constructed in January of 1988. The jury could reasonably conclude that by then the prescriptive easement had been established.
The Sonis argue the gate shows the use of their property was not hostile. They cite Myran v. Smith (1931) 117 Cal.App. 355, 362, 4 P.2d 219, for the proposition that to effect a prescriptive easement the adverse user "`"... must unfurl his flag on the land, and keep it flying, so that the owner may see, if he will, that an enemy *139 has invaded his domains, and planted the standard of conquest."'"
But Myran made the statement in the context of what is necessary to create a prescriptive easement. Here, as we have said, the jury could reasonably conclude the prescriptive easement was established prior to the erection of the fence and gate. The Sonis cite no authority for the proposition that even after the easement is created, the user must keep the flag of hostility flying. To the contrary, once the easement is created, the use continues as a matter of legal right, and it is irrelevant whether the owner of the servient estate purports to grant permission for its continuance.
[[/]][]
The judgment is affirmed. The parties are to bear their own costs.
We concur: YEGAN and COFFEE, JJ.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for partial publication. The portions of this opinion to be deleted from publication are identified as those portions between double brackets, e.g., [[/]].
[***] See footnote *, ante.
[] See footnote *, ante.
[] See footnote *, ante.
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18 Cal.Rptr.3d 1 (2004)
121 Cal.App.4th 1017
ACE AMERICAN INSURANCE COMPANY, Plaintiff, Cross-Defendant and Respondent,
v.
Jessica WALKER, a Minor, etc., et al., Defendants, Cross-complainants and Appellants.
No. C044420.
Court of Appeal, Third District.
July 27, 2004.
*2 Larry Lockshin and Janet Manrique, Sacramento, for Defendants, Cross-complainants and Appellants.
Hinshaw & Culbertson, Robert J. Romero and Paul E. Vallone, San Francisco, for Plaintiff, Cross-defendant and Respondent.
BLEASE, Acting P.J.
Defendants and cross-complainants Kimberly Taylor, as guardian ad litem for Jessica Walker, a minor, appeal from a judgment entered after the trial court granted plaintiff Ace American Insurance Company's (ACE) summary judgment motion and sustained ACE's demurrer to defendants' *3 cross-complaint without leave to amend.
ACE brought this declaratory relief action to determine coverage issues relating to a commercial general liability insurance policy issued to its insured. Walker was injured in an accident while she was a passenger in an a car owned by ACE's insured. We shall conclude the trial court correctly determined there was no possibility of coverage under the policy.
FACTUAL AND PROCEDURAL BACKGROUND
Walker sustained serious injuries in a car accident that occurred while she was a passenger in a car driven by Kai Sheng Hou (Kai). The title to the automobile in which the collision occurred was held by Kai's father, Hsin Jen Hou (Hsin). Hsin, who lived in Southern California, had purchased the car for his son's use. Kai lived in the Sacramento area, and the accident occurred when Kai was in Sacramento.
Walker sued Hsin, Kai, the Buta Buddhism Research Center (BBRC), and Hou's Institution. BBRC is a religious corporation formed by Hsin. Hou's Institution was a name under which Hsin obtained liability insurance for his business for the conduct of Buddhism studies. ACE insured Hou's Institution under a CIGNA property and casualty commercial general liability policy. Walker's complaint asserted causes of action for negligence and negligent entrustment.
Walker's claim was tendered to Hsin's automobile insurer, Farmers Insurance Group (Farmers). Farmers agreed to provide a defense for Hsin and BBRC. Hsin and BBRC also tendered the claim to ACE. On June 22, 2001, ACE indicated to Hsin's counsel that it was still investigating coverage, but that its "preliminary coverage evaluation entitles the insureds to a defense in the Walker lawsuit, subject to the conditions of the Policy and applicable law." Nevertheless, ACE never retained defense counsel for Hsin and BBRC. It eventually paid Farmers $25,000 for attorney fees.
The Farmers policy limit was $25,000. The ACE policy limit was $1 million.
On October 22, 2001, ACE filed a complaint for declaratory relief against Hsin, BBRC and Hou's Institution. The complaint sought a judicial declaration that ACE had no duty to defend or indemnify from the claims asserted in the Walker action. On October 30, 2001, ACE filed a first amended complaint adding Walker as a defendant.
On June 3, 2002, the parties in the Walker action attended a settlement conference and agreed to settle Walker's claims. They signed a written agreement on June 17, 2002. Under the terms of the settlement, the Walker defendants agreed to stipulate to liability and to allow a trier of fact to determine the amount of damages. The Walker defendants agreed to pay the Farmers policy limit of $25,000 and to assign any claims and causes of action they might have against ACE or their agents or brokers to Walker. In return, Walker agreed not to execute the judgment against the Walker defendants.
On July 16, 2002, Walker requested a 60-day stay of ACE's declaratory relief action. Walker requested the stay because the court had not yet approved the settlement agreement wherein the Walker defendants assigned their claims against ACE to her. Walker represented there was "outstanding discovery from ACE to HOU which pertain to critical issues. . . ." On August 12, 2002, the trial court granted the stay request and the case was stayed until September 15, 2002, 60 days from the request.
*4 Meanwhile, on August 1, 2002, ACE filed a summary judgment motion in its declaratory relief action. The hearing on the motion was scheduled for September 5, 2002. Walker moved to continue the hearing because of the stay, because the settlement was still pending court approval, and because she needed time to conduct discovery. Walker requested the hearing be continued to January 2003. The trial court granted a continuance to October 17, 2002.
On October 9, 2002, Walker filed a cross-complaint in the ACE action. In her capacity as assignee of the Walker defendants' claims she alleged causes of action for breach of the duty to defend, negligence, misrepresentation, breach of contract, and breach of the covenant of good faith and fair dealing. She alleged ACE knew Hsin was seeking coverage that would protect him and BBRC from claims arising from theories of negligence and the alter ego doctrine and told Hsin and BBRC such coverage would be provided, yet failed to provide such coverage. ACE demurred to the cross-complaint.
When Walker filed her opposition papers to the summary judgment motion, she again requested a continuance to allow her time to conduct discovery. Walker stated the court had approved the settlement in the Walker action on September 6, 2002, but that she needed 120 days to conduct discovery. Walker argued she needed time to "conduct discovery regarding the allegations set forth in ACE's complaint and in her cross-complaint." Walker claimed she needed to talk to representatives of BBRC and the insurance agent who sold the ACE policy to find out what was said with regard to who would be the named insured on the policy. Walker needed this information to support her claim that the policy inadvertently listed "Hou's Institution" instead of BBRC as the named insured. Walker also claimed she needed to depose the insurance agent to support her claim of negligence and misrepresentation in failing to deliver the agreed upon coverage.
On November 13, 2002, the trial court issued its written ruling on ACE's summary judgment motion. It denied Walker's request for a continuance and granted ACE's motion for summary judgment.
As to the request for continuance, the court stated that Walker proposed conducting discovery into an alleged error in naming Hou as the insured instead of BBRC and into the representations made concerning the nature and scope of the policy. The court stated that the dispositive issue in the summary judgment motion was whether the claim made by Walker was within the terms of the policy, and that the items she proposed for discovery would not lead to facts essential to her opposition on that issue.
As to the summary judgment motion, the trial court found the policy's express exclusion for any claim for "bodily injury or property damage arising from the ownership, maintenance, use or entrustment to others of any auto owned or operated by or rented or loaned to any insured[ ]" to be dispositive of the issue of coverage.
On December 19, 2002, the trial court ruled on ACE's demurrer to Walker's cross-complaint. The trial court sustained the demurrer to the causes of action for breach of the duty to defend, breach of contract, and breach of the covenant of good faith and fair dealing without leave to amend. The court found its earlier ruling on the summary judgment motion which found no possibility of coverage dispositive of these issues.
The trial court sustained the demurrer to the negligence and misrepresentation causes of action with leave to amend. The *5 court ruled the complaint did not allege that auto coverage was requested and not provided and did not sufficiently allege a misrepresentation.
On January 28, 2003, Walker filed a first amended cross-complaint for damages containing a single cause of action for breach of the duty to defend. ACE again demurred on the ground it could not be liable for breaching a duty to defend where the court had already ruled there was no actual or potential coverage under the policy. ACE further argued there could be no resulting damages from failure to defend because the Walker defendants were fully defended by another insurer. The trial court sustained the demurrer without leave to amend. A judgment of dismissal followed.
DISCUSSION
I
Continuance
Walker claims the trial court erred in refusing to continue the hearing on Ace's motion for summary judgment to allow her sufficient time to conduct discovery. Walker argued below she had grounds for a continuance based on Code of Civil Procedure section 437c, subdivision (h), which states in pertinent part:
"If it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication or both that facts essential to justify opposition may exist but cannot, for reasons stated, then be presented, the court shall deny the motion, or order a continuance to permit affidavits to be obtained or discovery to be had or may make any other order as may be just."
In Bahl v. Bank of America (2001) 89 Cal.App.4th 389, 107 Cal.Rptr.2d 270, the court stated a continuance is "virtually mandated" where there has been a good faith showing one is needed to obtain evidence essential to justify the opposition to the motion. (Id. at p. 395, 107 Cal.Rptr.2d 270.)
"The nonmoving party seeking a continuance `MUST SHOW: (1) the facts to be obtained are essential to opposing the motion; (2) there is reason to believe such facts may exist; and (3) the reasons why additional time is needed to obtain these facts. [Citations.]' [Citation.]." (Frazee v. Seely (2002) 95 Cal.App.4th 627, 633, 115 Cal.Rptr.2d 780.) The trial court need not grant a continuance where the proposed discovery is focused on matters beyond the scope of the dispositive issues framed by the pleadings. (Allyson v. Department of Transportation (1997) 53 Cal.App.4th 1304, 1321, 62 Cal.Rptr.2d 490.) The decision whether to grant a continuance is within the discretion of the trial court. (Frazee v. Seely, supra, 95 Cal.App.4th at p. 633, 115 Cal.Rptr.2d 780.)
The ACE policy stated that the named insured under the policy was Hou's Institution, and that Hou's Institution was an individual, presumably Hsin. The location of the insured was listed as 4111 Nogales Street, West Covina, California. The policy stated that if the insured were an individual, coverage was for the individual, but only with respect to the conduct of a business of which he or she was the sole owner. The policy also excluded coverage for bodily injury "arising out of the ownership, maintenance, use or entrustment to others of any . . . `auto' . . . owned or operated by or rented or loaned to any Insured."
ACE's complaint alleged, inter alia, that their policy provided no coverage for the car accident because the claim did not arise from the conduct of a business of which Hsin was the owner and because the policy excluded coverage for bodily injury *6 arising out of the entrustment of an automobile.
ACE's summary judgment motion argued it was undisputed that the car accident was not in any way related to the conduct of a business owned by Hsin. ACE also argued the automobile exclusion was unambiguous, and precluded coverage for the car accident since it was undisputed Hsin owned the vehicle in question and entrusted it to Kai. ACE's summary judgment motion was directed to its complaint seeking a declaration regarding coverage, and not to the issues of negligence and breach of various duties to its insured raised by Walker's cross-complaint.
The evidence Walker asserted in support of her request for a continuance, on the other hand, was directed toward her cross-complaint. Her attorney filed a declaration in support of the request stating:
"I believe in good faith that there is evidence which will raise several issues of material fact. First, ACE agreed to defend the Hou defendants in the Walker action, but breached its duty to do so . . . . Second, CIGNA's insurance policy should have identified Buta Buddhism Research Center as an insured. The only reason Hou's Institution was listed was because the escrow company that was closing the real estate deal for purchase of the premises at 4111 Nogales Street, West Covina, California inadvertently listed `Hou's Institution' instead of Buta Buddhism Research Center. I need time to meet with the trustees of Buta Buddhism Research Center and the Buddhist nun who spoke with OIS Agency's representative, David Ku, to discuss what was said between them in regard to who was going to be the named insureds on the insurance policy. I need to depose the escrow company's person most knowledgeable regarding the insurance policy. I will also conduct discovery to establish that Ku held himself out as an expert in insurance matters and represented to the Buddhist nun that there would be insurance coverage for the legal contentions made in the Walker action. Ku's failure to deliver the agreed upon insurance coverage will constitute actionable negligence. I will seek to obtain evidence establishing that ACE and the other defendants in the cross-complaint misrepresented the nature, extent and scope of the coverage being offered and provided; that there was a request or inquiry by the insureds for particular type or extent of coverage; and that ACE and the other defendants in the cross-complaint action assumed an additional duty by their express agreement or by holding themselves out as having expertise in the given field of insurance being sought by the insured."
None of the discovery Walker sought was related to the issue of coverage, which was the material issue framed by the complaint and addressed by the motion for summary judgment.
Walker argues on appeal that the terms of the policy set forth exceptions to the auto exclusion, and the allegations in ACE's complaint were neutral as to whether the exceptions to the exclusion applied. This was not one of the grounds Walker argued to the trial court in support of her request for a continuance. Furthermore, only one of the exceptions to the auto exclusion pertained to an automobile. That exception was for parking an auto on or next to the business premises owned or rented by the insured, and only if the auto was not owned, rented or loaned to the insured. There was no dispute that this exception did not apply to the facts underlying the case.
The discovery for which Walker sought a continuance was not essential to her opposition to the motion. Accordingly, the trial court did not abuse its discretion *7 when it denied Walker's request for a continuance.
II
Duty to Defend
Walker argues the trial court erred in concluding ACE had no duty to defend. She claims the ACE policy contained an exception to the auto exclusion, but the allegations in her complaint against the Walker defendants was neutral as to whether any of these exceptions to the exclusion would apply.
An insurer has a duty to defend if there is any potential the damages sought by a third party are covered by the policy. (Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 295, 24 Cal.Rptr.2d 467, 861 P.2d 1153.) The existence of a duty turns on the facts known to the insurer at the inception of the third party lawsuit. (Ibid.) Facts extrinsic to the complaint may give rise to a duty to defend if they reveal a possibility the claim may be covered under the policy. (Ibid.)
Walker appears to be arguing ACE cannot use evidence extrinsic to the underlying complaint to defeat the duty to defend. However, just as the insured is entitled to rely both on the allegations of the underlying complaint and extrinsic facts to reveal a possibility of coverage, an insurer may rely on extrinsic evidence to show there is no possibility of coverage. (Montrose, supra, 6 Cal.4th at pp. 298-299, 24 Cal.Rptr.2d 467, 861 P.2d 1153; Wausau Underwriters Ins. Co. v. Unigard Security Ins. Co. (1998) 68 Cal.App.4th 1030, 1036, 80 Cal.Rptr.2d 688; Atlantic Mutual Ins. Co. v. J. Lamb, Inc. (2002) 100 Cal.App.4th 1017, 1034, 123 Cal.Rptr.2d 256.)
Walker claims the court erred in finding no duty to defend because the ACE policy contained some exceptions to the auto exclusion and the complaint in the Walker action was "neutral" as to whether those exceptions applied. However evidence extrinsic to the complaint in the Walker action showed there was no possibility of coverage. The only exception to the auto exclusion applicable to automobiles was for "[p]arking an `auto' on, or on the ways next to, premises you own or rent, provided the `auto' is not owned by or rented or loaned to you or the insured. . . ."[1] The traffic collision report prepared by the investigating officer for the accident indicated the accident was caused when an Acura Integra owned by Hsin and operated by Kai sped down a Sacramento area street at speeds in excess of 65 miles per hour, lost control, and slammed into the center divider. The incident did not fall within the exception to the exclusion because the auto was not being parked at the time of the accident, it was not on premises owned by the insured, and the auto was owned by the insured.
The trial court did not err in concluding ACE proved there was no possibility of coverage, and therefore no duty to defend.
III
Demurrer
Walker claims the trial court erred in sustaining ACE's demurrer to her *8 cross-complaint. She claims the order granting summary judgment was not res judicata because it was not a final judgment. She claims the summary judgment order did not contain sufficient findings to preclude a cause of action based on breach of ACE's duty to defend.
The trial court granted ACE's motion for summary judgment on its complaint for a judicial declaration that ACE had no duty to defend or indemnify Hsin, Hou's Institution, or BBRC in the Walker action. This having been determined, Walker's cross-complaint for breach of the duty to defend could not stand. Whether or not the court's prior determination was res judicata, the question of duty had been answered in the negative, and there could be no breach of a non-existent duty.
Walker apparently attacks the order granting summary judgment on the ground it did not make a specific finding there was no potential for coverage, therefore no duty to defend.
Code of Civil Procedure section 437c, subdivision (g) states in pertinent part:
"Upon the grant of a motion for summary judgment, on the ground that there is no triable issue of material fact, the court shall, by written or oral order, specify the reasons for its determination. The order shall specifically refer to the evidence proffered in support of, and if applicable in opposition to, the motion which indicates that no triable issue exists."
Nevertheless, on appeal we review the validity of the ruling rather than the reasons for the ruling, and failure to provide a sufficient statement of reasons is not automatically a ground for reversal. (Santa Barbara Pistachio Ranch v. Chowchilla Water Dist. (2001) 88 Cal.App.4th 439, 448-449, 105 Cal.Rptr.2d 856.) Where our independent review establishes the validity of the judgment, any error is harmless. (Ibid.) We concluded in the prior section that the trial court's determination there was no possibility of coverage was correct. Our conclusion is now the law of the case such that if there were error, it would be harmless and reversal and remand on this issue would be pointless.[2]
*9 DISPOSITION
The judgment is affirmed.
We concur: RAYE and MORRISON, JJ.
NOTES
[1] Another exception was for the operation of certain designated equipment, defined as "(2) Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and (3) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment." Walker presented no evidence the Acura Integra Kai was driving fit this description, or that there was any reason for ACE to believe it did. She cannot "manufacture a dispute on summary judgment, ipse dixit, by refusing to concede the truth of a fact without adducing some evidentiary support for [her] position." (Montrose Chem. Corp., supra, 6 Cal.4th at p. 301, 24 Cal.Rptr.2d 467, 861 P.2d 1153.)
[2] At oral argument Walker asserted for the first time that ACE had a duty to defend because it did not immediately deny the tender of defense or seek a court determination of its duties. The argument is that even if there was no potential for coverage under the policy, the insurer initially agreed to defend subject to a reservation of rights and was thereafter estopped from claiming there was no duty to defend. We need not consider an argument not mentioned in the briefs and raised for the first time at oral argument. (Sunset Drive Corp. v. City of Redlands (1999) 73 Cal.App.4th 215, 226, 86 Cal.Rptr.2d 209.)
In any event, we fail to understand the merit of this argument. The elements of estoppel are: "(1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct be acted upon, or must so act that the other party has a right to believe that it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) the other party must rely on the conduct to her injury." (Moore v. State Board of Control (2003) 112 Cal.App.4th 371, 384, 5 Cal.Rptr.3d 116.) Walker claimed at oral argument that Hsin and BBRC's act of reliance was agreeing to settle and allowing a judgment to be entered against them. To establish a claim of estoppel Hsin and BBRC would have to show they believed ACE was going to provide them a defense, and in reliance on that belief, they agreed to settle the case.
This claim suffers two flaws. First, Hsin and BBRC agreed to settle the case on May 30, 2002. ACE filed its declaratory relief action claiming it had no duty to defend or indemnify on October 22, 2001. Hsin and BBRC were on notice that ACE disputed its duty to defend. Second, we fail to understand the logic of Hsin and BBRC agreeing to settle because they believed ACE would defend them. In fact, Walker claims in her opening brief that Hou and BBRC agreed to settle because ACE refused to provide a defense. To establish estoppel, Walker must show Hou and BBRC believed ACE's representation that it would provide a defense, that they settled the case based upon that belief, and that they suffered damage as a result. The facts simply do not bear out such a scenario.
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232 Ga. 638 (1974)
208 S.E.2d 460
GEARHART
v.
ETHERIDGE et al.
28925.
Supreme Court of Georgia.
Argued June 11, 1974.
Decided September 3, 1974.
Claude E. Hambrick, for appellant.
Sutherland, Asbill & Brennan, James P. Groton, Charles T. Lester, Jr., for appellees.
JORDAN, Justice.
The parties hereto entered into a joint business venture in which many complicated monetary *639 transactions took place over an extended period of time. The venture was not successful and upon the death of Etheridge his executors filed an action in Fulton Superior Court seeking an accounting and a recovery of certain monies claimed to be due. After an extensive hearing the trial judge, sitting as the trior of facts, rendered judgment in favor of the plaintiff. Gearhart appealed to the Court of Appeals which affirmed the trial court. For a complete statement of the facts and issues involved in that appeal, see Gearhart v. Etheridge, 131 Ga. App. 285 (205 SE2d 456). We granted certiorari for the sole purpose of clarifying certain language in the opinion of the Court of Appeals dealing with the privilege that exists between a certified public accountant and his client as provided for in Code Ann. § 84-216. Held:
Code Ann. § 84-216 provides that "Any communications to any practicing certified public accountant ... shall be treated as confidential and not disclosed nor divulged by said accountant in any proceedings of any nature whatsoever. This rule shall not exclude the accountant as a witness to any facts which may transpire in connection with his employment." (Emphasis supplied.)
Among Gearhart's enumerations of error was that "the trial court erred in allowing the witness, Thomas J. Smith, a certified public accountant for the defendant, to testify about communications between the witness and the defendant, and in overruling the defendant's objection to such testimony." In affirming the trial court's ruling allowing the certified public accountant to testify the Court of Appeals stated that "The language of Code Ann. § 84-216 refers to communications `in anticipation of or pending employment, not his work thereafter.'"
We conclude that this is an erroneous interpretation of this statute for it lends itself to the conclusion that the accountant-client privilege is operative only prior to actual employment and evaporates when the questioning extends to the accountant's "work thereafter." Such interpretation would effectively thwart the privilege. The purpose of the accountant-client privilege is to insure an atmosphere wherein the client will transmit all relevant *640 information to his accountant without fear of any future disclosure in subsequent litigation. Without an atmosphere of confidentiality the client might withhold facts he considers unfavorable to this situation thus rendering the accountant powerless to adequately perform the services he renders.
We conclude, in interpreting the statute, that the emphasized portion of Code Ann. § 84-216 merely provides for the cases where the accountant and his client become embroiled in a controversy between themselves as in an action for compensation or damages. In this situation it becomes necessary for the accountant to testify in order to preserve his right to compensation and/or a clear and unclouded reputation.
However, under the facts of this case it was not error for the trial judge to hold that the privilege did not exist between the accountant and Gearhart. The accountant was supervising a joint account and every entry into the books of account affected both Gearhart and Etheridge. There was no intent to keep the transactions of one secret from the other. In cases where an accountant is jointly employed a doctrine of limited confidentiality has been applied. All communications between the joint clients and the accountant are privileged as to all outside parties, but the privilege does not exist between the principals involved. See Garner v. Wolfinbarger, 430 F2d 1093, 1103 and cits. Although we can find no Georgia cases delineating this principle as it affects the accountant-client privilege the principle has been applied with regard to the privilege that exists between an attorney and his client. See Walker v. Mason, 75 Ga. App. 229 (43 SE2d 116); Stone v. Minter, 111 Ga. 45 (36 S.E. 321, 50 LRA 356); Whiddon v. Hall, 155 Ga. 570(118 SE 347); Fowler v. Sheridan, 157 Ga. 271 (121 S.E. 308). Professor Thomas Green treated the question in his treatise on the Georgia Law of Evidence as follows: "If two or more persons jointly consult an attorney for the purpose of having him prepare a deed or contract for them, the communications which either makes to the attorney are not privileged in the event of any subsequent litigation between the parties. In such situations it is considered that the attorney does not have an attorney-client *641 relationship with either of the joint parties." Green, Georgia Law of Evidence, § 185 (1957). See also McCormick, Handbook of the Law of Evidence, § 91 and 8 Wigmore on Evidence, § 2312.
Due to the similarity of our statutory privileges for the clients of attorneys and accountants (for the statute involving the attorney-client privilege see Code § 38-419) we feel the analogy drawn between the two is sound and we hereby approve same.
Judgment affirmed. All the Justices concur.
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259 Ga. 861 (1990)
389 S.E.2d 223
WILEY
v.
LUKE et al.
S89A0469.
Supreme Court of Georgia.
Decided March 7, 1990.
Perry, Moore & Studstill, Mitchell O. Moore, for appellant.
Thomas & McClain, Tom W. Thomas, Allen & Kelley, Roy Benton *864 Allen, Jr., for appellees.
BELL, Justice.
The appellant, Pat Wiley, appeals from a jury verdict finding in favor of the appellees on Wiley's adverse-possession claim. Wiley contends that the trial court erred in excluding testimony regarding statements by a predecessor in title to appellee Sechler;[1] in failing to give certain jury charges; and in refusing to grant her a continuance. We reverse.
1. In her first enumeration of error Wiley contends that the trial court erred in excluding testimony from several witnesses that a Mr. Robinson, one of Sechler's predecessors in title,[2] told the witnesses *862 that he had given the property in question (consisting of two borrow pits) to the Wileys. These witnesses would have testified that Robinson said that he gave the pits to the Wileys because he had allowed the Department of Transportation to dig the borrow pits and the digging of them had caused damage to the Wileys' property. The appellees objected to such testimony on the ground the testimony would constitute hearsay, and the court sustained the objection.
Wiley now contends that the court should have admitted the witnesses' testimonies, based on OCGA §§ 24-3-2, 24-3-7 (a), 24-3-8, and 24-3-32. We agree that the witnesses' testimonies were admissible under § 24-3-8.
a. Initially, we must address the appellees' argument that Wiley, in response to the appellees' hearsay objection, made no offer of proof regarding what the witnesses' testimony would have been. The appellees argue that the trial court therefore could not determine whether the testimonies would have come within any exception to the hearsay rule, and that Wiley, accordingly, is not entitled to have this court review the exclusion of the testimony in question. Cambron v. Canal Ins. Co., 246 Ga. 147, 152 (10) (269 SE2d 426) (1980).
We disagree. The appellees filed a motion in limine to prohibit Wiley from having witnesses testify "that the land in question was given to her . . . by R. H. Robinson based on an oral statement." Moreover, at the hearing on the motion in limine, the appellees stated that they wanted to prohibit Wiley or any of her witnesses from stating that Robinson had told them that he had given the land to Wiley. Wiley responded that Robinson had stated that he had given the land in question to Wiley as a result of damage done to Wiley's land when he had allowed the Department of Transportation to dig borrow pits on the land.
The trial court denied the motion in limine, but at trial, in response to the appellees' hearsay objections, the court did exclude the witnesses' testimonies. Moreover, at trial, when the court and the parties were discussing the appellees' hearsay objections, it was clear that the subject of the objections was the statements allegedly made by Robinson.
Under the foregoing circumstances, we conclude that Wiley made a sufficient offer of proof. Cambron, supra, 246 Ga. at 152.
b. We now turn to the question whether the statements were admissible. OCGA § 24-3-8 provides that "[d]eclarations . . . made by a person since deceased against his interest . . . shall be admissible in evidence." As Robinson was the titleholder of the property until October 1965, statements made by Robinson before that time, to the effect that he had given the land to Wiley, would have been in disparagement of his title and thus against his interest. See Freeman v. Saxton, 240 Ga. 309, 311 (1) (240 SE2d 708) (1977). Moreover, statements *863 to the same effect made after October 1965 would have been against Robinson's pecuniary interest, in that he conveyed the property by warranty deed containing a covenant of title. Finally, these statements were against Robinson's interest to the extent he admitted that by allowing the DOT to dig the borrow pits he had damaged Wiley's property.
The appellees argue that the statements were properly excluded because the statements were actually in Robinson's interest, in that "the purpose of the alleged declarations was to settle a damage claim [with Wiley]." Even assuming that Robinson's declarations were to some extent self-serving, we conclude that, on balance, the declarations were more against his interest than in his interest, and were therefore admissible. See Agnor's Georgia Evidence (2nd ed.), § 11-18; Massee-Felton Lumber Co. v. Sirmans, 122 Ga. 297, 299-300 (2) (50 S.E. 92) (1905).
For the foregoing reasons, we conclude that the trial court erred in excluding the testimony in question. Moreover, as this testimony would have assisted Wiley in establishing a claim of right to the property, which is an element of an adverse-possession action, § 44-5-161 (a) (4), we conclude that the error was harmful. The judgment must therefore be reversed on this ground.
2. We have examined Wiley's second through fifth enumerations of error and conclude that they have no merit, as the trial court's charge as a whole correctly stated the law of adverse possession. Moreover, Wiley's sixth enumeration of error, concerning the failure to grant her a continuance, is moot because of our holding in Division 1.
Judgment reversed. All the Justices concur, except Hunt, J., who concurs specially. HUNT, Justice, concurring specially.
I write separately only to state that the balancing test referred to in Division 1 (b) of the opinion should be conducted not by us but by the trial court. We should not conclude that the evidence is admissible. We should leave that to the trial court, on retrial, when the competing evidence is properly before it. The trial court's decision in that regard may then, if necessary, be subject to our review under an appropriate standard.
NOTES
[1] Appellee Sechler holds record title to the property in question. Appellee Luke leases the property from Sechler.
[2] In 1965 Robinson deeded a tract of land, including the property in question, to W. J. Laughlin. Laughlin conveyed the land to Sechler.
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232 Ga. 654 (1974)
208 S.E.2d 474
CARTER
v.
THE STATE.
28787.
Supreme Court of Georgia.
Argued April 9, 1974.
Decided September 4, 1974.
*655 Walker, Clarke, McConnell & Richardson, Robert M. Richardson, for appellant.
R. Joneal Lee, District Attorney, Arthur K. Bolton, Attorney General, G. Stephen Parker, Deputy Assistant Attorney General, for appellee.
GRICE, Chief Justice.
Raymond C. Carter, Jr., appeals from his convictions and sentences in the Superior Court of Houston County for the murder of Dennis McInvale, for which he received a sentence of life imprisonment, and the aggravated assault of John Scott Zellner, for which he was sentenced to seven years imprisonment, and the overruling of his motion for new trial.
1. Enumerations of error 1 and 2 relate to the general grounds of the motion for new trial and whether the evidence was sufficient to support the verdict.
We conclude that it was.
The evidence adduced upon the trial established that on March 10, 1973, appellant picked up two teenaged boys, Dennis McInvale and John Scott Zellner, who were hitchhiking home from a skating rink in Warner Robins, Georgia; that shortly thereafter he pulled out a pistol and fatally shot McInvale, who was sitting on the front seat; that he then shot Zellner, the back seat passenger, *656 several times, wounding him; that he drove several miles out of town and dumped the body of McInvale down an embankment; and that he then drove back toward Warner Robins, stopped by the side of the road and dragged Zellner out where he left him on the shoulder of the road.
Zellner swore that neither he nor McInvale made any threatening gestures toward the appellant before he began shooting; that after the shooting appellant stopped the car several times and at the third stop he checked his pulse and stabbed him and hit him in the head.
Police officers testified that aided by Zellner's description of appellant's car they arrived at his apartment a few hours after the incident and arrested him; and that he assisted them in locating McInvale's body.
Appellant stated that he carried a pistol for his own protection, having been the victim of an armed robbery; that he shot McInvale when he "came sliding across the seat" because he thought he was going to be robbed "or something to that effect"; that Zellner appeared to be coming over the seat and was grabbing with his hands so he "turned and shot him and then I'd say the shot didn't appear to slow him down too much, so I just started beating him back with the gun"; that he did not beat or stab Zellner thereafter; and that he was in a daze after the shootings and could not explain why he disposed of the bodies as he did. Several character witnesses testified in his behalf.
Appellant was examined by a psychiatrist on May 4, 1973, and was determined to be of sound mind at the time of the alleged crimes and mentally able to conduct his defense of the charges.
Whether appellant's fears were reasonable and his actions justifiable was for the jury to determine. Resolution of any conflicts in testimony was properly within its province. Geter v. State, 219 Ga. 125, 133 (132 SE2d 30).
2. Appellant's third enumeration contends that the trial court erred in overruling certain requests to charge and in its summation of the law contained within the charge.
*657 (a) A charge on mistake of fact as set forth in Code Ann. § 26-705 (Ga. L. 1968, pp. 1249, 1270; 1969, pp. 857, 859) was requested by appellant and omitted from the summary of law given by the court. When the omission was noted, upon request of appellant's attorney, the judge brought the jury back and gave the requested charge. The jury was instructed that it was inadvertently omitted and should be considered along with the rest of the charge.
Appellant contends that this method of charging the jury on mistake of fact was ineffective and constituted an expression of opinion by the court that this law was not applicable. However, the emphasis thus put upon the charge as given could also have led the jury to believe that the court considered this portion of its charge to be especially important. Moreover, the appellant did not complain at that time to the giving of the charge in this manner.
(b) Appellant's arguments in regard to the trial court's refusal to give requested charges on involuntary manslaughter, accident and heat of passion cannot be sustained. Since the evidence at the trial did not raise these issues there was no error in refusing to give these charges.
Accordingly, this enumeration is without merit.
3. Appellant also complains that a kitchen knife found in his apartment, photographs of Dennis McInvale's body and other items of physical evidence were erroneously admitted at the trial.
(a) It is contended that since John Scott Zellner did not testify that he was stabbed by a knife, the kitchen knife was introduced solely for the purpose of influencing or leading the jury to believe that it was in fact used in the commission of the assault.
We do not agree.
The knife was taken from appellant's apartment by a police officer along with several other bloody items and identified as having been found there immediately after the crime. Appellant denied using it on Zellner but laboratory analysis showed the presence of human blood on it. In our view it was properly admitted into evidence and the conflicting testimony concerning its use was for the jury to consider.
*658 (b) The photographs of Dennis McInvale's body were identified by the person who took them. They were relevant and material and not objected to as inflammatory by the appellant. Clearly, their admission was proper to show the nature and extent of the victim's wounds. Sirmans v. State, 229 Ga. 743 (1) (194 SE2d 476).
(c) The contentions that the introduction of various automobile parts and the appellant's shoes were cumulative and offered no new evidence are likewise not valid. These items were also blood stained and reinforced the state's position that the quantity of evidence was indicative of the appellant's guilt.
We find no merit in this enumeration.
4. Appellant next asserts that the trial court's refusal to exclude statements made by him to the investigating officers during the pre-trial investigation was erroneous.
We do not agree.
Two hearings were held out of the presence of the jury to determine whether these statements by appellant were knowingly and voluntarily made. Not only the police officers involved in the interrogation but the appellant himself testified that he agreed to cooperate and throughout the entire investigation he assisted the sheriff and all the police officers voluntarily and willingly. Furthermore, after he responded affirmatively to the police officers when asked if they could talk to him, he was told that he was being arrested and was advised of his Miranda rights.
The argument that these admissions were inadmissible because of certain promises that things would "go easier on him" is likewise not maintainable.
The appellant testified that the officers told him "that they had found one boy and he appeared to be in fairly good shape and at that point the charges against me were merely aggravated assault and if I would help in finding the other boy, and they could find him alive, that it would go easier on me; it wouldn't be a murder charge if he were found alive." (Emphasis supplied.)
Clearly this amounted to a recounting of the facts and a request for assistance, rather than a promise of lighter punishment which was the situation in the cases *659 relied upon by the appellant. It is obvious that he could not be prosecuted for McInvale's murder if the boy were found alive.
In our view, the evidence here was insufficient to show that the appellant's statements were induced by the arresting officers through hope or fear. Code § 38-411. Thus, having determined in the Jackson v. Denno hearings that these statements were admissible, the trial court did not err in permitting this evidence to be presented to the jury. Walker v. State, 226 Ga. 292 (3) (174 SE2d 440); Ladd v. State, 228 Ga. 113 (2) (184 SE2d 158); Johnson v. Caldwell, 228 Ga. 776 (2) (187 SE2d 844); Callahan v. State, 229 Ga. 737 (4) (194 SE2d 431).
5. Appellant's sixth enumeration, which urges that the trial court erred in overruling his two motions for directed verdict, is likewise without merit.
The first motion, made at the conclusion of the state's evidence, contended that the state had not carried its burden of proof in establishing the element of the offenses charged. The second motion was made at the conclusion of the presentation of appellant's case upon the ground that he had established that he acted in reasonable fear for his safety in shooting the victims.
Although the evidence was in some instances conflicting, it was clearly ample to establish the shooting through the eyewitness testimony of the surviving victim and statements made by the appellant. Whether or not the appellant acted in reasonable fear for his safety and was justified in shooting the victim were issues for the jury's determination.
Denial of both motions for directed verdict was proper.
6. The failure to furnish appellant an inventory of the items taken from his apartment does not establish that an unlawful search and seizure took place or that this evidence was inadmissible. Such failure is a ministerial act and does not affect the validity of the search. Guest v. State, 230 Ga. 569 (1 d) (198 SE2d 158).
Since the appellant has failed to show that reversible error was committed for any reason assigned, the judgment of the trial court is affirmed.
Judgment affirmed. All the Justices concur.
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497 P.2d 1062 (1972)
BOARD OF REGENTS FOR the OKLAHOMA AGRICULTURAL AND MECHANICAL COLLEGES Acting For and on Behalf of the MURRAY STATE COLLEGE OF AGRICULTURE AND APPLIED SCIENCE, Appellant,
v.
OKLAHOMA STATE REGENTS FOR HIGHER EDUCATION et al., Appellees.
No. 45459.
Supreme Court of Oklahoma.
May 23, 1972.
E. Moses Frye, Ray Lee Wall, Stillwater, for appellant.
Larry Derryberry, Atty. Gen., Larry L. French, Asst. Atty. Gen., for appellees.
*1064 IRWIN, Justice.
This proceeding was commenced by the Board of Regents for the Oklahoma Agricultural and Mechanical Colleges, acting for and on behalf of Murray State College of Agriculture and Applied Science, seeking a judicial determination that Senate Bill No. 214 is unconstitutional. The trial court determined it to be constitutional and appellant (plaintiff) challenges that determination in this appeal.
Senate Bill No. 214 (1971 Session Laws, Chapter 128, pgs. 391-392, and codified as 70 Ohio St. 1971, §§ 3407.1 and 3407.2) generally provides that the Oklahoma State Regents for Higher Education shall make a study to determine the feasibility of changing the functions of Murray State College of Agriculture and Applied Science to give predominate emphasis to technical education; that if the State Regents determine that the change should be made, they shall issue a proclamation declaring the change in the functions of the college and specifying the effective date; that thereafter the official name of the college shall be Murray State College of Technology; and there shall be created a Board of Regents of Murray State College of Technology and all governing control of the property, assets and obligations of the present Murray State College shall be transferred to the Board of Regents of the Murray State College of Technology. The enactment then made provisions for the Board of Regents of Murray State College of Technology and the appointment, tenure and duties of the members of the Board.
Pursuant to the above enactment, the Oklahoma State Regents for Higher Education conducted a feasibility study and thereafter approved a Statement of Functions for Murray State College. This statement contained seven functions for the college and one of these stated functions (Number 2) was "to provide an educational program which gives predominant emphasis to technical and occupational education." In a footnote on the Statement of Functions this language was used:
"The term `predominant' as used in functional statement Number 2 above is interpreted to mean that educational programs of a technical nature be given great emphasis or prominent emphasis in planning the educational program to meet the needs of the people in the area served by the college. The function of technical education is implemented through technical education programs which cut across the several fields of education *1065 including business, nursing and other health related education, agriculture, engineering and industrial education, computer science, and other such programs with a mathematical or scientific undergirding. * * *."
On October 27, 1971, the Oklahoma State Regents for Higher Education issued its Proclamation. In this Proclamation the Regents found that the results of the study indicate that the functions of the College should be changed as suggested in Senate Bill 214, and resolved that the functions of the College be changed to provide for a predominant emphasis in technical education, effective November 1, 1971.
The governing control of the property, assets and obligations of Murray State College of Agricultural and Applied Science has been under the Board of Regents of Oklahoma Agricultural and Mechanical Colleges. By virtue of the State Regents' determination and proclamation, and Senate Bill 214, the official name of the College is to be changed; another Board of Regents is to be created for the College; it becomes the duty of the Governor, by and with the consent of the Senate, to appoint seven members to the Board; and all property, assets and obligations of the College are to be transferred to the new Board.
It should be pointed out that the record discloses that the functions for Murray State College, as approved by the Oklahoma State Regents, were for all practical purposes in effect on November 1, 1971. In other words, this cause was presented on the theory that the Statement of Functions for Murray State College had been implemented and in force and effect on November 1, 1971, when the Oklahoma State Regents' Proclamation became effective.
We will first consider plaintiff's contention that Senate Bill 214 contravenes Article VI, § 31a, of the Constitution which creates a "Board of Regents for the Oklahoma Agricultural and Mechanical College and all Agricultural and Mechanical Schools and Colleges maintained in whole or in part by the State."
Plaintiff argues that the above Constitutional provision requires that Murray State College be governed by it; that the College has always been and continues to be an Agricultural and Mechanical College within the meaning of the Constitution, notwithstanding Senate Bill 214; and that the Legislature does not have the Constitutional authority to create a new governing board for the College.
Section 31a, supra, was adopted at a special election on July 11, 1944, after the Legislature in March 1943, passed Senate Joint Resolution No. 9, (1943 Session Laws, page 340) proposing an amendment to Article VI, § 31, of the Constitution. Under § 31, as adopted in 1907, the State Board of Agriculture was "the Board of Regents of all State Agricultural and Mechanical Colleges." This section was amended in 1913, the amendment changing only the membership of the State Board of Agriculture.
At the time of the adoption of § 31, in 1907, two Universities or Colleges in Oklahoma, had the word "Agricultural" included in their names, i.e., the Oklahoma Agricultural and Mechanical College (now Oklahoma State University) and the Colored Agricultural and Normal University (now Langston University). The Oklahoma Agricultural and Mechanical College was placed under the governing control of the Agricultural and Mechanical College Board of Regents being the State Board of Agriculture, (see Revised Laws of 1910, § 7971); and the Colored Agricultural and Normal University was placed under its own Board of Regents (Revised Laws of 1910, § 8019). The Colored Agricultural and Normal University (name changed to Langston University in 1941; 70 Ohio St. 1941, § 1451a), was not placed under the governing control of the State Board of Agriculture until 1943. See 1943 Session Laws, page 211. Langston University was placed under the Board of Regents of Agricultural *1066 and Mechanical Colleges in 1945. See 70 Ohio St. 1951, § 1451b. It therefore appears that since Langston University was named the Colored Agricultural and Normal University until 1941, the Legislature did not construe the word "Agricultural" in its name, as necessarily meaning that it was in fact an Agricultural and Mechanical College within the meaning of § 31. Had it been an Agricultural and Mechanical College within the meaning of § 31, it would seem that § 31 of the Constitution would have required it to be governed by the State Board of Agriculture.
Murray State College was first established as a "district agricultural school of secondary grade", pursuant to Senate Bill No. 109, enacted by the Legislature in 1908. See 1907-08 Session Laws, page 18, § 14, 1910 Revised Session Laws, § 7879. That enactment provided for the establishment "in each of the Supreme Court Judicial Districts a district agricultural school of secondary grade * * *." Another section of that enactment (§ 7671 of the 1910 Revised Session Laws) also provided for the establishment in each of the state normal schools a department to be known as the department of agriculture and industrial education. It would appear that the establishment of an agricultural department in a school or college did not necessarily mean that such school was an agricultural and mechanical school and required to be under the control of the State Board of Agriculture as prescribed by § 31, supra, of the Constitution.
Murray State College was under the control of the State Board of Agriculture at the time § 31 was amended by the adoption of § 31a, supra, in 1944. It was established by Legislative authority; it is not a land grant college; and its control and management are not burdened by any obligations flowing from the 1906 Enabling Act of Congress.
Under the terms of § 31, supra, the State Board of Agriculture was the Board of Regents "of the State Agricultural and Mechanical Colleges." The 1944 amendment of § 31, (§ 31a), created a Board of Regents for one specifically named College (The Oklahoma Agricultural and Mechanical College) and for a "class" of schools and colleges (all Agricultural and Mechanical Schools and Colleges). We find no material difference in the language used in the 1907 proviso and the 1944 proviso. Unlike the language employed in § 8 and § 12 of the 1906 Enabling Act of Congress, which reserved and granted to the State of Oklahoma certain lands for the use and benefit of "* * * the normal schools now established or hereafter to be established * * *", neither § 31, as adopted in 1907, nor the amendment (§ 31a) employed such descriptive language.
There is also a material distinction between § 31a, supra, where only one college is specifically named and other colleges are included by being within a "class", and Article XIII-B, of the Constitution, which places the management and control of six State Colleges (all being specifically named) under the Board of Regents of Oklahoma Colleges, and no other Colleges are included by being within a "class". For clarification, § 1, of Article XIII-B, creates a Board of Regents of Oklahoma Colleges, and § 2 provides that the Board "shall hereafter have the supervision, management and control of the following State Colleges: Central State College at Edmond; East Central State College at Ada; Southwestern Institute of Technology at Weatherford; Southeastern State College at Durant; Northwestern State College Alva; and the Northeastern State College at Tahlequah, * * *." At one time all of the above State Colleges were designated as "Normal Schools". See Chap. 34, Art. 36, O.S. 1931, §§ 7281-7303.
There is no language in § 31a, expressing an intent that all Agricultural and Mechanical Colleges which were under the management and control of the State Board of Agriculture when § 31a was adopted, shall be under and must continue to be under the management and control of the Board of Regents for the Oklahoma *1067 Agricultural and Mechanical Colleges. The only Colleges or Schools that would be in that category would be "The Oklahoma Agricultural and Mechanical College and all Agricultural and Mechanical Schools and Colleges." We agree with plaintiff that the Legislature may not constitutionally remove the management and control of a School or College that comes within the meaning of § 31a, from the Board of Regents named therein and place its management and control in another Board. However, if the intent of § 31a, was to "freeze-in" such Schools and Colleges to be under the Board of Regents created therein, although such Schools and Colleges at some future date may not fall within the meaning of an Agricultural and Mechanical School or College, language would have been employed expressing such an intent. Absent such language, we hold that when a School or College ceases to be an Agricultural and Mechanical School or College within the meaning of § 31a, supra, that said section does not require that such School or College be under the management and control of the Board of Regents for the Agricultural and Mechanical Colleges.
The Legislature has the constitutional power and authority to create a new governing Board for Murray State College if it ceases to be an Agricultural and Mechanical College. This is so for the reason that Article V, § 36, of the Constitution provides that the authority of the Legislature shall extend to all rightful subjects of legislation; there is no constitutional provision vesting such power and authority in another department, board or commission; and there is no constitutional prohibition prohibiting the Legislature from exercising such power and authority. See Tate v. Logan, Okl., 362 P.2d 670, wherein we said that we do not look to the Constitution to determine whether the Legislature is authorized to do an act but rather to see if it is prohibited.
The next issue to be considered is whether or not Murray State College, when its functions were changed to give predominant emphasis to technical education, is an Agricultural and Mechanical College within the meaning of § 31a. The trial court in its journal entry of judgment dated December 30, 1971, found from the evidence submitted, that during this year's fall term there were 126 full time equivalent students studying agriculture at Murray State College out of an enrollment of 869 students and the agricultural courses constituted 5.1% of the total credit hours at the college; that the resolution adopted by the Oklahoma State Regents for Higher Education provided that the predominant emphasis of the College be changed to technical education; and that henceforth, the predominant function of the college will be that of a technical school as opposed to an agricultural and mechanical school.
Plaintiff argues that the trial court erred in its finding that the predominant functions of Murray State College is that of a technical school as opposed to an agricultural and mechanical school; and that such a finding declares in effect that if an institution is not predominantly agricultural and mechanical it is not an agricultural and mechanical institution. Plaintiff also argues that § 31a, requires that so long as any part of an institution is agricultural and mechanical it must be governed by the Board of Regents for the Oklahoma Agricultural and Mechanical Colleges, and that the function change of Murray State College to give predominant emphasis to technical education does not eliminate any agricultural and mechanical functions, but in fact increases the agricultural and mechanical functions of the institution.
Dr. Clyde R. Kindell, President of Murray State College, testified that there were no plans to eliminate any agricultural and mechanical art subjects or agricultural and mechanical functions at the College, but that a request had been submitted to the State Regents to increase the agricultural and mechanical programs. Dr. Kindell was of the opinion that Murray State College *1068 would continue to be an Agricultural and Mechanical College although the functions of the College had been changed. In response to a question if the College would be predominantly agricultural and mechanical, he stated: "It depends on the definition of predominant. As it is, there had been the enrollment, the largest percent of enrollment in any one department is agriculture. If you think in terms of predominant as being fifty-one percent or more, no, fifty-one percent or more of the enrollees are not" and "as far as departmental-wise in relation to all other departments, agriculture is predominant, if we think in terms of agriculture compared to other courses." The Court ask the following question: "Do you have an opinion if you do implement with curriculum, as the new functions would appear, do you have any basis for determining in your mind what would then be predominant?" Dr. Kindell answered: "No Sir".
Dr. E.T. Dunlap, Chancellor of the Oklahoma State Regents for Higher Education, testified that the institutions now governed by the Board of Regents of A & M Colleges vary in their functions and programs and that institutional names and institutional functions are two different things. Dr. Dunlap pointed out that although Northeastern Oklahoma A & M College has an A & M name, that institution is predominantly a comprehensive junior college in its operation, and its functions are junior college education with programs of study being in various and sundry fields of junior college education. Dr. Dunlap testified that an A & M function, as such, is a misnomer and the name applies in the designation of an institution, but what an institution does in its functions and in its programs or courses of study is the thing to look to in determining what kind of education it carries on.
Dr. Dunlap further testified that Murray State College does not have an agricultural and mechanical function; and that "it teaches some courses of study in the field of agriculture and in the field of mechanical arts, yes. That is not a function though", and "we teach agriculture at many colleges, nearly every college in Oklahoma."
By virtue of Article XIII-A, § 2, of the Constitution, to be discussed later, the Oklahoma State Regents for Higher Education has the Constitutional power and duty to prescribe standards of education and to determine the functions and courses of study at Murray State College; and it has determined that the functions of the College be changed to provide predominant emphasis to technical education. Although agricultural and mechanical courses will continue to be offered, the trial court's determination that henceforth the predominant function of Murray State College will be that of a technical school as opposed to an Agricultural and Mechanical school is supported by the evidence.
This conclusion brings us to one of the crucial issues presented in these proceedings and that is: When an institution offers courses in agriculture and other allied courses of study, but its courses of study and functions give predominant emphasis to technical education, which cuts across the several fields of education, is such institution an Agricultural and Mechanical College within the meaning of § 31a, supra?
Our Constitution is not helpful in resolving the above issue for the simple reason it does not prescribe an operational definition of what constitutes an Agricultural and Mechanical College. However, implicit in the enactment of Senate Bill 214, is a legislative construction and determination that if the functions of an institution give predominant emphasis to technical education, that such institution would not constitute an Agricultural and Mechanical College within the meaning of § 31a, supra. This is so for the reason there is a presumption that any Legislative enactment is constitutional and that the Legislature would not enact an unconstitutional law. See Schmitt v. Hunt, Okl., 359 P.2d 198. Also, in the Schmitt case we said that in *1069 the consideration of any act of the Legislature it must be borne in mind that such an act should be held to be constitutional unless its unconstitutionality is shown beyond a reasonable doubt.
In State ex rel. Kerr v. Grand River Dam Authority, 195 Okl. 8, 154 P.2d 946, we said that Legislatures, like courts, must function within constitutional limitations and it is presumed that it acts with a conscious regard thereof, and a legislative construction of the Constitution is deemed highly persuasive by the courts.
In its Statement of Functions for Murray State College, the Oklahoma State Regents said the College was "to provide an educational program which gives predominant emphasis to technical and occupational education." The technical educational programs, which carry out these functions, cut across several fields of education, including business, nursing, agriculture, engineering and industrial education. As stated by the Oklahoma State Regents in its Statement of Functions for Murray State College, this stepped-up emphasis on technical education is responsive to the needs of the people in the area served by Murray State College.
We hold that when an institution offers courses of study in agriculture and other allied courses of study, but its courses of study and functions give predominant emphasis to technical education, which cuts across the several fields of education, such institution is not an Agricultural and Mechanical College within the meaning of Article VI, § 31a, of the Constitution.
Plaintiff contends that Senate Bill 214, is an unconstitutional delegation of legislative authority to the Oklahoma State Regents for Higher Education. Plaintiff argues that the Legislature has delegated to the Regents the power to (1) designate or define what constitutes an Agricultural and Mechanical College, (2) make the "law" by their determination that a change should be made, rather than to apply facts to the law, or determine facts upon which the law is operative, (3) determine that an agricultural and mechanical college ceases to be an agricultural and mechanical college when technology functions are added, and (4) leaves to the Regents the authority to remove an institution from the management and control of an existing constitutional governing board (i.e., the Board of Regents for Oklahoma Agricultural and Mechanical Colleges) and to create a new governing board.
Prior to the adoption of § 31a, supra, in 1944, the people of Oklahoma recognized that a change in economics, social values, educational requirements or needs in a particular area, might dictate a necessity for a change in the standards of higher education and the functions and courses of study in some or all State institutions of higher learning. In March 1941, Article XIII-A, of the Constitution was adopted. Section 1 of that Article provides that all institutions of higher education supported in whole or in part by direct legislative appropriations shall be integral parts of a unified system to be known as "The Oklahoma State System of Higher Education." Section 2, established the Oklahoma State Regents for Higher Education which is a co-ordinating board of control for all State institutions that are a part of the Oklahoma State system of Higher Education. This section expressly provides that the State Regents shall prescribe standards of education applicable to each institution, and it shall determine the functions and courses of study in each of the institutions to conform to the standards prescribed. Section 3 provides that appropriations by the Legislature for all such institutions shall be made in consolidated form without reference to any particular institution and the State Regents shall allocate to each institution according to its needs and functions.
The Oklahoma State Regents for Higher Education changed the functions of Murray State College to provide for a predominant emphasis in technical education which they were constitutionally authorized to do. The State Regents had this constitutional power and authority with or without *1070 the benefit of Senate Bill 214. Although the State Regents may have acted pursuant to Senate Bill 214, their authority to act springs from the Constitution.
Plaintiff's contention that Senate Bill 214 constitutes an unlawful delegation of Legislative authority to the State Regents presents an issue similar to an issue in Schmitt v. Hunt, Okl., 359 P.2d 198, wherein it was contended that the 1959 Merit System Law (74 O.S.Supp. 1959, Chap. 27) was unconstitutional. In upholding the constitutionality of that Act we held that it did not become effective or operative until such time as the Executive Order was actually issued to any particular department or agency of government and we said that a Legislative enactment may ordinarily provide that it will take effect on the happening of some future event.
Under Senate Bill 214, the provisions therein which changed the name of the College; created a new Board of Regents; and transferred control of the property, assets and obligations of the College, did not become effective or operative until the functions of Murray State College were changed by the State Regents. The State Regents' action in changing the functions of Murray State College and placing in effect those changes in functions, were the events that made effective and operative the remaining portion of Senate Bill 214.
Senate Bill 214 did not authorize the State Regents to designate or define what would constitute an Agricultural and Mechanical College nor did it delegate to the State Regents the power to change the governing control of Murray State College. The State Regents' action in changing the functions of the college to give predominant emphasis to technical education was not in conflict with their constitutional powers and duties. The Legislature determined that the management and control of Murray State College would be changed in the event the functions of the College were changed by the State Regents. We hold that Senate Bill 214 is not an unlawful delegation of Legislative authority to the State Regents.
Plaintiff contends that the Oklahoma State Regents for Higher Education did not satisfy the requirements of 70 Ohio St. 1971, § 3208, before it changed the functions of Murray State College to give predominant emphasis to technical education.
Section 3208, supra, relates to the functions and courses of study at institutions and hearings before changes may be made. It provides that the "State Regents shall afford any and all institutions affected a full public hearing, after such notice as may be prescribed by the State Regents, before ordering any change, and shall allow sufficient time before final action is taken for the said institution or institutions to prepare and present it or their arguments and briefs in support of or in opposition to any such proposed change." Whether the Legislature could constitutionally establish a procedure for the State Regents to carry out their constitutional duties is not herein considered.
The trial court in its journal entry of judgment found: "Although there is conflict in the evidence as to the notice given to Murray State College pursuant to Title 70 Ohio St. 3208, the Court finds that it was insufficient under this statute as the hearing which was originally scheduled for the 27th day of October, 1971, was actually heard on the 26th and that insufficient time was given to the institution's president to permit him to be present at the hearing. However, there was a meeting before the Board of Regents on the 8th day of November, 1971, to reconsider the change of the functions and courses of study at Murray State College at which time President Kindell of the college was present together with other interested parties and the Court finds that this hearing did satisfy the requirements as to notice prescribed by the statute last referred to, and the State Regents for Higher Education, in effect, ratified their Resolution No. 731, by refusing to change or rescind it."
*1071 There is nothing in the record indicating that the State Regents intentionally failed to give reasonable notice of the hearing originally scheduled for October 27, 1971, or that all interested parties, including Dr. Kindell, President of Murray State College, did not attend meetings of which they had reasonable notice. It appears from the record that there may have been a misunderstanding of the scheduled meetings.
We agree with the trial court that the actions of the State Regents changing the functions of Murray State College should not be vacated because the State Regents did not strictly comply with the requirements of § 3208, supra. In our opinion, the hearings and notices thereof, in the State Regents' final determination that the functions of Murray State College should be changed, sufficiently satisfies the requirements of § 3208, supra.
Plaintiff contends that Senate Bill 214 contravenes Article V, § 59 of the Oklahoma Constitution which provides that "Laws of a general nature shall have a uniform operation throughout the State, and where a general law can be made applicable, no special law shall be enacted."
Plaintiff argues that Murray State College is one of eight Agricultural and Mechanical Colleges in Oklahoma; that Senate Bill 214 is applicable to only Murray State College; that if a feasibility study were necessary, general legislation should have been enacted directing a feasibility study in regard to changing the functions of all institutions in the same class as Murray State College.
As previously stated, the sole authority for determining the functions and courses of study of each of the institutions in the Oklahoma State System of Higher Education is vested in the Oklahoma State Regents for Higher Education by Art. XIII-A, § 2, of the Constitution. Senate Bill 214 neither attempts to enlarge nor diminish the State Regent's Constitutional powers of determining the functions and courses of study of each of the institutions. The State Regents had the Constitutional authority to conduct a feasibility study and to change the functions and courses of study at Murray State College or any other institution with or without Legislative enactment or approval. We hold that Senate Bill 214 does not contravene Article V, § 59, of the Oklahoma Constitution.
Judgment affirmed.
BERRY, C.J., DAVISON, V.C.J., and WILLIAMS, JACKSON, HODGES, LAVENDER and McINERNEY, JJ., concur.
BARNES, J., dissents.
BARNES, Justice (dissenting):
I cannot concur in the Majority Opinion. As I read the Oklahoma Constitution, the voters of Oklahoma have historically withheld from the Legislature the power to vest control of this State's Agricultural and Mechanical Colleges in any body other than one designated by the Constitution itself. And this started with the adoption of that Constitution in 1907.
In territorial days, when the school now named "Oklahoma State University" (hereinafter referred to as "A & M") was established in Payne County, it was governed by a statutory board of regents known as the "Agricultural and Mechanical College Board of Regents", usually referred to herein as the "A & M Board" (see Stats. of Okla., 1893, § 142, referred to in the Historical note to R.L. 1910, § 7971, cited in the Majority Opinion). The adoption of the Oklahoma Constitution changed this. It made clear the intention of Oklahoma electors that A & M thenceforth was to be governed by a constitutional Board, which, at the time this Court's opinion in Trapp v. Cook Const. Co., 24 Okl. 850, 105 P. 667, was promulgated in 1909, was the State Board of Agriculture. There, this Court held that Art. 6, § 31, of the Constitution vested in this State's Board of Agriculture, as the Board of Regents of all State Agricultural and Mechanical Colleges, the same power, jurisdiction, and authority over A *1072 & M that was possessed by the previous territorial board of regents. The Court referred to the fact that this power consisted of doing all things necessary to make the college effective as an educational institution, and held that, by reason thereof, a portion of a certain statute, insofar as it purported to confer duties, encompassed in such power, on the state board of public affairs, exceeded the Legislature's authority and was unconstitutional.
Murray State College of Agriculture and Applied Science (hereinafter referred to as "Murray") was established under the name of "Murray School of Agriculture", as a "district agricultural school", under the 1908 Legislature's Senate Bill No. 109 (S.L. 1907-1908, ch. 3, Art. III, pp. 13-20, both incl.), which placed it under the ultimate control of the State Board of Agriculture. That control was emphatically continued into the period after it became a college. See S.L. 1923-4, ch. 69, pp. 85-86.
The Majority Opinion seems to recognize that in 1944, when the voters amended Art. 6, § 31, of the Oklahoma Constitution and transferred the governing control of the board of regents (which we upheld against attempted legislative encroachment in Trapp, supra) from the State Board of Agriculture to the A & M Board, by adopting § 31a, Murray was one of the agricultural and mechanical schools and colleges encompassed in said amendment's wording:
"There is hereby created a Board of Regents for . .. all Agricultural and Mechanical Schools and Colleges maintained in whole or in part by the State." (Emphasis added)
The position of an institutional Board of Regents, designated as such by the Constitution, is unique. While the members of the A & M Board are, of course, not elected directly by the people as were the members of the Board involved in Christie v. Board of Regents of University of Michigan, 364 Mich. 202, 111 N.W.2d 30, that fact is not a decisive consideration in evaluating its power as a constitutional board, as evidenced by Trapp, supra. More important in making such a board independent of legislative direction and control are the facts referred to in Sterling v. Regents of University, 110 Mich. 369, 68 N.W. 253, 34 L.R.A. 150. To paraphrase the Michigan Court's language, these facts are: (1) The Board and the Legislature derive their power from the same supreme authority, the Constitution; (2) direct power conferred upon one necessarily excludes its existence in the other, in the absence of language showing a contrary intent; (3) the Board is not mentioned in the portions of the Constitution referring to powers and duties of the Legislature; nor, in the portions of the Constitution relating to the Board, is there any language which can be construed as conferring on the Legislature governing control of Agricultural and Mechanical Colleges maintained in whole or in part by the State. As to the A & M Board and the Oklahoma Legislature, I think it must be concluded, as did the Michigan Court with regard to the University Board and Legislature of that State:
"They are separate and distinct constitutional bodies, with the powers of the Regents defined. By no rule of construction can it be held that either can encroach upon or exercise the powers conferred upon the other."
I have no quarrel with the rule set out in Tate v. Logan, Okl., 362 P.2d 670, referred to in the Majority, but that rule is not applicable here because the constitutional provision expressly includes "all State Agricultural and Mechanical Schools and Colleges ..." Thus, this constitutional mandate prohibits legislation of contrary effect quite as effectively as if the prohibition was written into it in precise and affirmative terms. More pertinent to the matter is the well-established rules this Court recognized and followed in Grim v. Cordell, 197 Okl. 144, 169 P.2d 567, and Thomas v. Reid, 142 Okl. 38, 285 P. 92, and the Nebraska Court announced in State ex rel. Crounse v. Bartley (1894), 40 Neb. 298, 58 N.W. 966, and State ex rel. Bottcher v. Bartling, 149 Neb. 491, 31 N. *1073 W.2d 422. In Grim, we held that legislative authority may be limited by restrictions that are implied (as well as expressed) in the Constitution. See also Flaska v. State, 51 N.M. 13, 24, 25, 177 P.2d 174, 181, and 16 Am.Jur.2d, "Constitutional Law", § 230, and the cases cited under footnote 20, page 480, of said Volume. To paraphrase what was said in State ex rel. University of Minnesota v. Chase, 175 Minn. 259, 220 N.W. 951:
The whole power to govern the Agricultural and Mechanical Colleges was put in that Board by the people. So no part of it can be put elsewhere but by the people themselves.
With the Legislature's policy this Court has nothing to do. But recognizing the mandate of the Oklahoma Constitution, we must give it effect when litigation before us furnishes the occasion and imposes the duty of deciding which of two conflicting enactments we must enforce, the paramount rule of the Constitution, or the subordinate law of the Legislature. The Constitution of this State has declared, in effect, that the management of these colleges, until the people themselves say otherwise, shall be in a relatively small, slowly changing board. The purpose of our Constitution remains clear. It was to put the management of these state educational institutions (directly quoting)
"... beyond the dangers of vacillating policy, ill-informed or careless meddling and partisan ambition that would be possible in the case of management by either Legislature or executive, chosen at frequent intervals and for functions and because of qualities and activities vastly different from those which qualify for the management of an institution of higher education. * * * Constitutional limitations are not to be ignored because no harm has come from past infractions or because a proposed violation has a commendable purpose. `The tendency to sacrifice established principles of constitutional government in order to secure centralized control and high efficiency in administration may easily be carried so far as to endanger the very foundations upon which our system of government rests.' (Citation) It is in such fashion that the friends of free government may sap its foundations by measures they intend for its benefit."
The Majority Opinion does not directly deny that when Oklahoma's electorate, by adoption of § 31a as an amendment of § 31, made the A & M Board the board of regents for Murray (and other Agricultural and Mechanical Schools) that Board was vested with the same control over Murray that this Court had held in Trapp, supra, was given to the State Board of Agriculture over the A & M College in Payne County by § 31, i.e., the power to "do all things necessary to make the college effective as an educational institution" (105 P. 668). But the Majority Opinion seems to hold that this power of governing control (which the courts have upheld against legislative encroachment) has been lost by the A & M Board, on the theory that Murray has ceased to be an Agricultural and Mechanical College, simply upon the basis of the criteria formulated in Senate Bill 214, i.e., by changing its function so as to give "predominant emphasis" to technical education. The Majority Opinion upholds the Thirty-third Legislature's right to formulate this criteria as a "legislative construction and determination" of the question of when Murray ceases to become an Agricultural and Mechanical College. Rather paradoxically that opinion also holds that the Oklahoma State Regents for Higher Education (hereinafter referred to as "State Regents") has the constitutional power to change Murray's functions to provide for predominant emphasis in technical education without benefit of Senate Bill 214. I think the Majority Opinion has erred in both of these conclusions because they are based upon power it attributes to the Thirty-third Legislature and to the State Regents power which neither possesses. If either of these bodies has such power, it has to be of recent *1074 acquisition, because as late as 1965 (approximately twenty-one years after the adoption of § 31a in 1944 and twenty-four years after creation of the State Regents by the adoption of Art. XIII-A in 1941) the Thirtieth Legislature affirmed the A & M Board's governing control over Murray in stronger and more specific language than was used in the Territorial Act (Wilson's Rev. & Ann.St., Okl. 1903, § 6408, referred to in Trapp, supra), by its enactment of our Higher Education Code. In the last two paragraphs of § 412 of that Code (S.L. 1965, p. 709; 70 Ohio St. 1971, § 3412) that Legislature said:
"The enumeration herein of certain powers and immunities of the Board of Regents for the Oklahoma Agricultural and Mechanical Colleges shall not be construed as in derogation or as a limitation of other powers and immunities properly belonging to said Board by virtue of any provisions of the Constitution of Oklahoma or of any provision of law. Said Board, is hereby, expressly granted every power necessary or convenient to make institutions under its jurisdiction effective for the purposes for which they were created and are maintained and operated.
"Nothing in this section shall be construed as in derogation of the constitutional powers and responsibilities of said Board of Regents for the Oklahoma Agricultural and Mechanical Colleges, acting as the Board of Regents for Cameron State Agricultural College, Connors State Agricultural College, Eastern Oklahoma Agricultural and Mechanical College, Murray State Agricultural College, Northeastern Oklahoma Agricultural and Mechanical College, Panhandle Agricultural and Mechanical College, and Langston University." (Emphasis added)
If the Thirty-third Legislature may not assume power it does not possess (State Board of Agriculture v. State Adm. Board [Mich.], 226 Mich. 417, 197 N.W. 160; in accord, Trapp, supra) to encroach upon the A & M Board's historic governing control of Murray, and a change in that control can only be effected by an amendment of the Constitution, let us examine Art. XIII-A to see if this constitutional amendment effected such a change. Section 2 of that amendment gives the State Regents the following specific powers (among others not material here) over the institutions of higher education comprising the "Oklahoma State System of Higher Education":
"(1) it shall prescribe standards of higher education applicable to each institution;
"(2) it shall determine the functions and courses of study in each of the institutions to conform to the standards prescribed; * * *" (Emphasis added)
It will be noted that the only authority concerning functions of the various institutions included in this State's Higher Education System, which "(2)", above, gives the State Regents is the power to "determine the functions and courses of study in each ... to conform to the standards of higher education" said Regents "shall prescribe" under "(1)", above. Is this the equivalent of authority to change the functions of an A & M College controlled, under mandate of the Constitution, by the A & M Board to such an extent that, by the issuance of a proclamation, the State Regents can declare it to be a different kind of college, and, by so doing, enable its removal from the control of its constitutional Board? I think the plain wording of Art. XIII-A shows that it does not contemplate such a vesting of power in the State Regents, as a "coordinating board." In this connection, it will be noted that Art. XIII-A nowhere in its terms purports to repeal Art. VI, § 31, nor does it purport to abolish or supersede the various statutory boards of regents of other "integral parts" of the "unified system." And no legislation enacted under the purported authority of Art. XIII-A has undertaken to do so. We know as a matter of history that since this amendment's adoption more than thirty years ago, all these governing *1075 boards have continued to exist and function. Some of them, since, have attained the status of constitutional boards. Obviously, it was not intended to do away with them and to substitute the State Regents as the governing board for all of the institutions. The framers and adopters of Constitutions, equally with the Legislature, are presumed not to have done a vain thing. Moral Ins. Co. v. Cooksey, Okl., 285 P.2d 223. Yet how vain it would be, and what a stupendous waste of time, energy and talent, to maintain a collection of individual boards for the several institutions of higher learning, if these boards must run on every occasion to the State Regents for advance approval of their decisions, or take the risk of having these decisions set aside if the State Regents disapprove. Analysis of Art. XIII-A, § 2, reveals that this amendment's intention is to give the State Regents a much more restricted competence. Its direction to these Regents is not to set up programs of instruction, courses of study, or curricula. It is to prescribe "standards of higher education applicable to each institution." This plainly implies that the State Regents' grant of authority extends only to determining general measurements of excellence rather than to prescribing functions or dictating programs. This is a far cry from changing the function of an institution (from "the purposes for which they were created", Tit. 70, § 3412, supra), based upon "predominant emphasis", which has nothing to do with determining functions and courses of study to conform to applicable standards of higher education. Preventing an institution of higher learning from embarking upon programs it has neither the resources nor the faculty to sustain on a level of excellence is quite different from abolishing a major function allotted to an institution as the basic purpose for which it was founded and which has continued as one of its major activities through the years.
My interpretation of Art. XIII-A is strengthened by considering it in relation to this Amendment's Section 4, which authorizes private and denominational institutions of higher learning to become "coordinated with the State System of Higher Education under regulations set forth by" the State Regents. Obviously, such institutions would not desire to become coordinated with the System if this meant changing their basic functions against the will of their own governing boards. Any such meaning would preclude all hope that such institutions would accede to coordinating with the State System. Once again, we must assume that the framers of Art. XIII-A did not intend to write into it a vain or futile provision.
Lastly, I think the matter of "predominant emphasis" is of questionable importance and relevancy. It has never been the policy or practice in this State's agricultural and mechanical colleges to abjure teaching in other fields. The territorial statutes established a "normal school", but the University of Oklahoma was to have a "normal department", Okla.Stats. 1890, §§ 6788, 6792. The Territorial Agricultural College was not confined to purely agricultural and mechanical studies. See Okla.Stats. 1890, § 241:
"The design of the institution is to afford practical instruction in agriculture and the natural sciences connected therewith, and also the sciences which bear directly upon all industrial arts and pursuits. The course of instruction shall embrace the English language and literature, mathematics, civil engineering, agricultural chemistry, animal and vegetable anatomy and physiology, the veterinary art, entomology, geology and such other natural sciences as may be prescribed; political, rural, and household economy, horticulture, moral philosophy, history, bookkeeping and especially the application of science and the mechanic arts to practical agriculture in the field."
I do not think that Murray College would cease to be an agricultural and mechanical college merely because it might set up major courses of study in English or Political Science. And I do not think that a nose *1076 count of its students pursuing such majors would determine whether it ceased to be an agricultural and mechanical college. Certainly, the Oklahoma State University of today has not forfeited its standing as an institution devoted to agricultural and mechanical education because it offers advanced training and graduate degrees in other fields. In short, I do not believe that diversification or a shift in emphasis has any effect upon the classification of an institution for the purpose of constitutional assignment to a particular Board, so long as there is a substantial activity in the classification. We are not called upon to determine the effect of a complete abandonment of all agricultural and mechanical education at Murray. The record does not show that this has happened there.
In accord with the foregoing, I would hold Senate Bill 214, supra, unconstitutional, and reverse the judgment of the trial court. I therefore respectfully dissent.
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194 Ga. App. 72 (1989)
389 S.E.2d 560
PENDER
v.
WITCHER.
A89A1091.
Court of Appeals of Georgia.
Decided December 5, 1989.
Rehearing Denied December 20, 1989.
Davis, Sissel & Williams, Warren P. Davis, for appellant.
Chambers, Mabry, McClelland & Brooks, Genevieve L. Frazier, for appellee.
CARLEY, Chief Judge.
Appellant-plaintiff filed this action, seeking to recover for the personal injuries he allegedly sustained as the proximate result of appellee-defendant's negligence. The case was tried before a jury and verdict in favor of appellant was returned. Appellant's motion for new trial was denied and he appeals.
1. Appellant enumerates as error the denial of his motion for new trial on the ground that the damages awarded by the jury were inadequate. A review of the evidence shows that this enumeration of error is without merit. See generally Wright v. Satilla Rural Elec. Co-op., 179 Ga. App. 230, 232 (2) (345 SE2d 892) (1986).
2. The trial court denied appellant the opportunity to use, for impeachment purposes, appellee's first offender record for possession of cocaine. This ruling is enumerated as error.
The law provides that an adverse witness may be impeached by several different methods. One such method is to disprove the facts to which he has testified at trial. See OCGA § 24-9-82. Another method is to prove that he made prior contradictory statements relevant to his trial testimony and to the case. See OCGA § 24-9-83. It was only these two methods of impeachment which were discussed and applied in Hightower v. General Motors Corp., 255 Ga. 349, 352 (338 SE2d 426) (1986): "To insure that in seeking the truth, the jury is not misled by false or deceiving testimony, we hold that a guilty plea as to which a plaintiff in a civil case has been granted first offender treatment is admissible in evidence to disprove and contradict such party's testimony given in a civil case." However, neither of these two methods is relevant to the impeachment issue presented in the instant case. Accordingly, the Supreme Court's holding in Hightower has no bearing whatsoever on this appeal.
*73 The relevant inquiry in the instant civil case is whether the adverse witness' first offender record is admissible, for impeachment purposes, as evidence of a conviction of a felony or a crime of moral turpitude. Proof that an adverse witness has been convicted of a felony or a crime of moral turpitude is yet another method of impeachment which, entirely unlike the two methods discussed by the Supreme Court in Hightower, is in no way dependent upon a consideration of his trial testimony. "In Georgia, a witness in a civil case may always be impeached by proof of a conviction for a felony or other crime involving moral turpitude. [Cit.]" Giles v. Jones, 169 Ga. App. 882 (315 SE2d 440) (1984). Regardless of the specifics of an adverse witness' trial testimony, he is nevertheless subject to impeachment simply because his conviction of a felony or a crime of moral turpitude reflects upon his general lack of credibility. "The fact that a witness has been convicted of a felony or a crime involving moral turpitude is admissible for the purpose of discrediting his evidence. [Cit.] . . . Evidence which discredits a witness on the ground of infamy tends to impeach him." Ford v. State, 92 Ga. 459 (17 S.E. 667) (1893).
A majority of this court has previously held that it is permissible to impeach an adverse witness in a civil case by providing his first offender record for commission of a felony or a crime of moral turpitude. See Hightower v. Gen. Motors Corp., 175 Ga. App. 112, 113 (1) (332 SE2d 336) (1985), aff'd on other grounds 255 Ga. 349, supra. See also Salomon v. Earp, 190 Ga. App. 405, 407 (379 SE2d 217) (1989); Hardman v. Hardman, 185 Ga. App. 519, 520 (4) (364 SE2d 645) (1988). Possession of cocaine is a felony. Accordingly, unless and until this court's decision in Hightower and the cases which follow that decision are overruled, they must be followed in the instant case and the judgment herein reversed for the erroneous failure of the trial court to allow appellant to impeach the adverse witness by proof of his first offender record for the felony of possession of cocaine.
Whidby v. Columbine Carrier, 182 Ga. App. 638 (356 SE2d 709) (1987) is not viable authority for the proposition that no reversible error occurred in this case. In Whidby, this court, relying upon the Supreme Court's decision in Hightower, held: "The defendant's [first offender] criminal record did not tend to `disprove and contradict [the defendant's] testimony' in this civil case as to a specific material fact testified to by defendant. [Cits.] It tended at best only to impeach the character and credibility of the defendant generally, in this civil suit instigated by another; the fact that defendant had committed theft in the past had no logical bearing on the specific issue of negligence in driving the truck." (Emphasis in original.) Whidby v. Columbine Carrier, supra at 640 (3). It is clear, however, that the Whidby decision is premised upon an erroneous construction of the Supreme Court's decision in Hightower, supra. As previously noted, *74 the Supreme Court's decision in that case related solely to the issue of impeachment pursuant to OCGA §§ 24-9-82 and 24-9-83, and not to the issue of impeachment by proof of conviction of a felony or a crime of moral turpitude. With specific regard to the issue of impeachment by proof of conviction of a felony or crime of moral turpitude, it is the decision of this court in Hightower that is controlling. Thus, regardless of the irrelevancy of an adverse witness' prior first offender record to his trial testimony or to any factual issue in a civil case, that record is admissible as impeaching evidence if it shows his commission of a felony or a crime of moral turpitude. Such evidence is admissible to impeach the witness for the very reason that it does, in fact, reflect upon his general lack of credibility. See generally Ford v. State, supra. Accordingly, the witness in Whidby was subject to impeachment by virtue of his first offender theft record and this court erred insofar as it held that he was not. See Hightower v. Gen. Motors Corp., supra at 175 Ga. App. 113 (1). It follows that Whidby v. Columbine Carrier, supra, is clearly not authority for affirming the judgment in this case. The decision in Whidby is erroneous and is hereby overruled.
As previously noted, the judgment in this case can be affirmed only if the whole court decision in Hightower v. Gen. Motors Corp., 175 Ga. App. 112, supra, and the decisions which follow it are overruled. A majority of this court, as presently constituted, adheres to the holdings in those decisions. Accordingly, the judgment in this case must be reversed for the erroneous failure of the trial court to allow appellant to use appellee's possession of cocaine first offender record for impeachment purposes.
3. An enumeration of error predicated upon the argument of appellee's counsel and upon a jury instruction given by the trial court presents nothing for review. The record shows that appellant made no objection to either the contested argument or the challenged instruction.
4. Appellant's contention that he was erroneously denied the opportunity to testify as to his diminished capacity to work and labor is refuted by the record which contains his testimony in that regard.
Judgment reversed. Deen, P. J., McMurray, P. J., Banke, P. J., Birdsong and Sognier, JJ., concur. Pope, Benham and Beasley, JJ., concur specially.
BENHAM, Judge, concurring specially.
I concur fully with the majority and write only with respect to Division 2 of the opinion. As the majority points out, the judgment in this case can only be affirmed if the decision in Hightower v. Gen. Motors, 175 Ga. App. 112 (1) (332 SE2d 336) (1985) is overruled. I dissented in Hightower because I believed then, as I do now, that it *75 extended the Supreme Court's decision in Favors v. State, 234 Ga. 80 (3) (214 SE2d 645) (1975), which allowed the defendant in a criminal case to impeach the State's witness with evidence of a first offender conviction, far beyond what that case intended. The case at bar presents an opportunity for the Supreme Court to decide the issue which they found unnecessary to review in Hightower v. Gen. Motors Corp., 255 Ga. 349 (338 SE2d 426) (1986): whether evidence of a first offender conviction may be used to impeach a witness in a civil case as evidence of a conviction of a felony or crime involving moral turpitude.
I am authorized to state that Judge Pope joins in this opinion.
BEASLEY, Judge, concurring specially.
I concur fully and only add, with regard to Division 2, what may explain why the logical rationale in Whidby v. Columbine Carrier, 182 Ga. App. 638 (356 SE2d 709) (1987), is in error.
Defendant, as a witness, was subject to impeachment just as any other witness other than an accused in a criminal case. Harris v. State, 173 Ga. App. 787, 788 (2) (328 SE2d 370) (1985). One of the common law methods of impeachment is conviction of a crime of moral turpitude or a felony, the roots of which rule are synopsized in Lewis v. State, 243 Ga. 443 (254 SE2d 830) (1979). The evidentiary rule is a relaxation of the former common law tradition of barring certain convicts from testifying altogether. The reason for this former rule of witness incompetency was the view that "insensibility to the obligation of an oath . . . [followed] conviction of an offense which rendered one infamous." Shaw v. State, 102 Ga. 660, 670 (29 S.E. 477) (1897). It was infamy which precluded such a witness from testifying altogether, as the law conclusively presumed the witness not to be credible. Now such a witness is permitted to testify, but the effect of the witness' crime-producing infamy on the issue of his or her credibility is deemed relevant and is left to the jury to accept or reject.
Not all convictions would be admissible for this purpose, as demonstrated by the analysis in Lewis, supra, and the distinction is not drawn upon whether the crime is malum in se or malum prohibitum. The Supreme Court applied two tests without expressly holding that satisfaction of only one would be sufficient, although that is indicated. It held that the sale of cocaine (OCGA § 16-13-30 (b)) meets both tests.
In this case, the crime is possession of cocaine. It, too, meets both tests. First, it draws felony punishment. OCGA § 16-13-30 (a) and (c). Second, it is "contrary to justice, honesty, modesty, good morals or man's duty to man." Lewis, supra at 446. Since possession of cocaine necessarily means that the possessor obtained the drug or received it from someone, and that he or she did so prompted by the desire to *76 have it for some reason (such as to use or sell or give to another), it follows that the possessor is an integral and obviously essential link in the chain of drug trafficking, a scourge of mankind. The possessor, a contributor to such activity, violates "man's natural duty to man." Lewis, supra at 447. It is thus "a crime falsi," the concise term used in Georgia R. v. Homer, 73 Ga. 251, 258 (5) (1884), which according to Black's Law Dictionary, 4th ed., "involves the element of falsehood, and includes everything which has a tendency to injuriously affect the administration of justice by the introduction of falsehood and fraud."
The evidence was relevant and, considering its case-recognized potential effect in the credibility equation, exclusion from the jury's ken was harmful error.
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891 N.E.2d 52 (2008)
SUMERACKI
v.
HITZ.
Supreme Court of Indiana.
June 26, 2008.
Transfer denied. All Justices concur, except Dickson and Boehm, JJ., who vote to grant transfer.
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17 Cal.Rptr.3d 321 (2004)
121 Cal.App.4th 566
ARLENA M., Petitioner,
v.
The SUPERIOR COURT of the County of San Bernardino, Respondent;
San Bernardino County Department of Children's Services, Real Party in Interest.
No. E035193.
Court of Appeal, Fourth District, Division Two.
April 23, 2004.
Maria G. Niciforos, for Petitioner.
No appearance for Respondent.
Ronald D. Reitz, County Counsel, and Phebe W. Chu, Deputy County Counsel, for Real Party in Interest.
OPINION
McKINSTER, Acting P.J.
Petitioner Arlena M. (Mother) seeks review of an order setting a hearing under *322 Welfare and Institutions Code section 366.26 with respect to her children Alicia F. and Destiny M.[1] We deny the petition.
Because Mother's argument is wholly procedural, no detailed recitation of the facts is necessary. The minors were taken into protective custody on May 14, 2003, when two-year-old Destiny was found unattended in the parking lot of the motel where the family was staying; Mother and Father were "passed out" in the motel room with the infant Alicia. The trial court found that the minors were dependent children (§ 300, subds. (b) and (g)) on June 10, 2003, with reunification services ordered for both parents.
Mother did not make progress on her plan, and at the six-month review hearing (§ 366.21) on January 21, 2004, the trial court terminated reunification services and directed that a permanency planning hearing be set.[2]
The sole contention raised in this petition is that the trial court committed fatal error when it failed to advise her at the jurisdictional/dispositional hearing that if she failed to participate regularly in any court-ordered treatment programs, the court could terminate reunification services after six months.
DISCUSSION
Section 361.5, subdivision (a)(3) provides that when a child is under three years of age at the time of removal, "the court shall inform the parent or guardian that the failure of the parent or guardian to participate regularly in any court-ordered treatment programs or to cooperate or avail himself or herself of services provided as part of the child welfare services case plan may result in a termination of efforts to reunify the family after six months." The question raised here is whether the failure of the trial court to comply with this requirement automatically requires the re-institution of services to the parent who was not so advised.[3]
First, we note that although the minute order reflects that the parents were warned in the required terms, the reporter's transcript does not include such an advisement. In such a case, the reporter's transcript generally prevails as the official record of proceedings (see In re Josue G. (2003) 106 Cal.App.4th 725, 731, fn. 4, 131 Cal.Rptr.2d 92), and real party does not contend otherwise.
However, real party points out that the warning was contained in the "Waiver of Rights" signed by Mother and accepted by the court. (Mother also initialed the box containing the warning, and, in fact, the provision was circled.) At the hearing, Mother was asked by the court whether she had initialed and signed the form "to indicate that you'd read understood [sic] all the matters contained on the form?" She responded "Yes, sir," and also confirmed that she had had sufficient time to discuss the matter with her attorney.
The waiver of rights form which Mother signed also included a waiver of, inter alia, her rights to a hearing, to confront and *323 cross-examine witnesses, to testify, and to employ the power of the court to compel the attendance of witnesses. It was therefore the dependency-court equivalent of the "Tahl waiver" form commonly used in the criminal courts.[4] In criminal law, it is well established that a defendant may make a valid waiver of constitutional rights by executing such a form even if the trial court itself does not go over them orally; rather, it is sufficient if the court verifies that the defendant has read and understood the form, and has signed it willingly. (In re Ibarra (1983) 34 Cal.3d 277, 285-286, 193 Cal.Rptr. 538, 666 P.2d 980.) The same has been held true of a written waiver of statutory rights. (People v. Ramirez (1999) 71 Cal.App.4th 519, 522, 83 Cal. Rptr.2d 882.)
In our case, section 361.5, subdivision (a)(3) does require the court to provide the specified information to the parent. However, the same was true in People v. Ramirez, supra, 71 Cal.App.4th 519, 83 Cal. Rptr.2d 882, which dealt with the requirement of Penal Code section 1016.5 concerning advisement of noncitizen defendants concerning the potential immigration and deportation effects of a criminal conviction. As the court found in that case, the "legislative purpose" is fully served if the required advice is provided in a written document which the party may read and consider at his or her own pace.[5]
If a written communication of one's constitutional rightsverified and confirmed by the trial courtis sufficient to support a valid waiver of those rights and, as a result, a plea of guilty to criminal charges, we see no reason why a similar communication should not be effective in the dependency court. We therefore hold that the warning mandated by section 361.5, subdivision (a)(3) may be provided in writing, as long as the record indicates that the parent represented in court that the advice had been read and understood.[6]
We also agree with respondent that, if there were error here, it was harmless, and properly reviewed under that standard. Unlike Penal Code section 1016.5, subdivision (b), for example, which specifically provides that a defendant who does not receive the required advice may, upon request, withdraw his plea of guilty, section 361.5, subdivision (a)(3) contains no express consequence for a failure to follow its directions. It is true that, in cases not involving a statutory time limit, the fact that a statute does not specify a consequence for the failure to meet a requirement does not necessarily mean that there is none. (See People v. Tindall (2000) 24 Cal.4th 767, 775, 102 Cal.Rptr.2d 533, 14 P.3d 207.) It is also true that, given the constitutional dimensions of many dependency court proceedings, there is some tendency to find procedural errors reversible per se. Thus, in Judith P. v. Superior Court (2002) 102 Cal.App.4th 535, 547-551, 126 Cal.Rptr.2d 14 (Judith P.), the court found that the failure to give a parent a copy of the social worker's review report at least the statutory 10 days before the review hearing (see § 366.21, subd. (c)) was reversible per se. However, the distinctions between the breach in that case, and the lapse here, are instructive.
*324 In Judith P., the court found that the requirement for advance notice of the contents of the social worker's report was an essential element of due process in the entire context of dependency proceedings. Furthermore, by giving the parent a fair opportunity to rebut or contest negative information, the requirement "`reduce[s] the risk of erroneous fact finding . . . and to thereby preserve the parent-child relationship whenever possible. . . .'" (Judith P., supra, 102 Cal.App.4th at p. 550, 126 Cal.Rptr.2d 14.)
The advice requirement of section 361.5, subdivision (a)(3), by contrast, has nothing to do with due process. We concede that its purpose is apparently to instill in a parent a sense of urgency and of the seriousness of the matter. To that extent it certainly promotes the goal of family preservation or reunification. However, realistically, the requirement can only operate on a parent who would otherwise ignore or neglect the reunification plan and its requirements. The efficacy of the warning assumes that such a parent, who otherwise would ignore his or her child and responsibilities, may be stimulated by the reference to a six-month limit and therefore work diligently towards reunification from the beginning.
While the warning may have this salutary effect in a few cases, the negative effect of making its omission automatically reversible could be widespread and substantial. Dependency courts are already awash in requirements for what must be put on the record; indeed, the Legislature has established a rigorous framework of required findings, following upon required considerations which probably exceeds, in its minutiae and micro-management, the infamously detailed criminal sentencing rules. It is far from unusual that something slips by and is omitted. (E.g., In re Kristin W. (1990) 222 Cal.App.3d 234, 253, 271 Cal.Rptr. 629.) If such omissions are routinely given the effect of invalidating rulingsespecially rulings related to permanency planningthe result would be an undesirable protraction of proceedings.
Militating against this approach is the fact that, in addition to family preservation and reunification where possible, the primary goal of the dependency statutes is to obtain stability and permanency for children who will not return to their natural parents. The clear legislative intent is that "minors who are adoptable will no longer have to wait months and often years for the opportunity to be placed with an appropriate family on a permanent basis." (Cynthia D. v. Superior Court (1993) 5 Cal.4th 242, 247, 19 Cal.Rptr.2d 698, 851 P.2d 1307.) It is also often stressed that "[t]he reality is that childhood is brief; it does not wait while a parent rehabilitates himself or herself. The nurturing required must be given by someone, at the time the child needs it, not when the parent is ready to give it." (In re Debra M. (1987) 189 Cal.App.3d 1032, 1038, 234 Cal. Rptr. 739.)
One might paraphrase the maxim and say that "A family delayed is a family denied." Hence, in our view, courts should be (and are) cautious in determining which errors and omissions require that proceedings be returned to the trial court for further attempts at a reunification which the record suggests will never occur.[7]
*325 As we have noted, any "error" here was not of constitutional dimensions. We therefore conclude that even if the advice required by section 361.5, subdivision (a)(3) could not properly be conveyed indirectly as it was in this case, the "error" would not require reversal unless the parent could show prejudice. None appears here. The record indicates that Mother was aware of the six-month limitation, and there is no evidence that if Mother had been directly advised of the possible consequences of her inaction, she would have promptly and consistently participated in her plan.[8]
The petition for writ of mandate is denied.
We concur: HOLLENHORST and GAUT, JJ.
NOTES
[1] All subsequent statutory references are to the Welfare and Institutions Code.
[2] The minors are placed with their maternal great-grandparents, who wish to adopt them.
[3] Real party suggests that the doctrine of waiver should be applied, because Mother did not raise the issue at the time. It is true that a point may properly be deemed waived if not raised at a time when any error could have been corrected. (See generally 9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 394, pp. 444-446.) However, we decline to apply the doctrine of waiver here, where the statute is clearly concerned that the advice should be given and presumes the party's ignorance of the information to be communicated.
[4] In re Tahl (1969) 1 Cal.3d 122, 81 Cal.Rptr. 577, 460 P.2d 449.
[5] Arguably such a method is more effective than expecting a party to take in and understand a litany of rights and consequences rattled off by a busy trial judge.
[6] Again by analogy to the criminal context, such a representation may not be lightly recanted. (See People v. Fratianno (1970) 6 Cal.App.3d 211, 220, 85 Cal.Rptr. 755.) In this case, petitioner does not assert that she did not, in fact, read or sign the waiver form.
[7] When the omission is a finding, the courts have frequently relied on the theory of implied findings to avoid the consequence of reinstituting "reunification" many months or even years after an apparently "permanent" order. (E.g., In re Andrea G. (1990) 221 Cal.App.3d 547, 554-555, 270 Cal.Rptr. 534.) Obviously one cannot "imply" that something was said which in fact was not said, so such an approach would not be available here.
[8] One of Mother's deficiencies during the reunification period was her failure to visit the minors on anything approaching a regular basis. A concerned but lackadaisical parent might conceivably need a stern warning to push him or her into therapy, drug rehabilitation, or parenting classes, but it is difficult to imagine that any encouragement or threat could overcome essential indifference.
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16 Cal.Rptr.3d 503 (2004)
121 Cal.App.4th 1
COUNTY OF LOS ANGELES, Plaintiff and Respondent,
v.
GRANITE STATE INSURANCE COMPANY, Defendant and Appellant.
No. B165315.
Court of Appeal, Second District, Division One.
June 30, 2004.
*504 Nunez & Bernstein and E. Alan Nunez, Fresno, for Defendant and Appellant.
Lloyd W. Pellman, County Counsel, Gary N. Miller, Assistant County Counsel, and Lauren M. Black, Deputy County Counsel, for Plaintiff and Respondent.
ORTEGA, J.
The trial court forfeited bail and entered summary judgment on the forfeiture. The court denied the surety's (Granite State Insurance Company) motion to set aside the summary judgment and exonerate the bond. We conclude notice of the forfeiture was defective, entitling Granite State to exoneration of the bond.
Criminal defendant Danny Bellrio was released on a $30,000 bond posted by Granite State through its agent Millennium Bail Bonds. Bellrio was ordered to appear for a pretrial hearing on February 13, 2001. When he failed to appear, the trial court forfeited the bail and issued a bench warrant with $10,000 bail. The following constitutes the totality of the February 13 hearing: "The Court: On Bellrio, we are going to issue a bench warrant for Mr. Bellrio. The underlying offense is 11352. I will put $25,000 what was the previous bail? [¶] Ms. Villanueva: Bail was previously 30,000. He has no other record. With the probation recommendation, I don't know whether the Court would consider low bail. [¶] The Court: I will at this time. $10,000. [¶] The Clerk: Bail forfeited? [¶] The Court: Bail forfeited, and 10,000 on the warrant."
Notwithstanding the above, the clerk prepared a minute order declaring that the court had found "good cause not to forfeit bail" and had ordered the warrant held to March 6, 2001.
On March 6, Bellrio again failed to appear. The trial court noted that it had "held a bench warrant till today." It again issued a bench warrant (this time $25,000 bail) and "forfeited" bail.
On March 9, 2001, the trial court issued a notice of bail forfeiture, specifically noting the forfeiture date as March 6, 2001, and making no mention of the February 13 hearing.
Penal Code section 1305, subdivision (b), provides, in part, that "[t]he surety or depositor shall be released of all obligations under the bond if any of the following conditions apply: [¶] (1) The clerk fails to mail the notice of forfeiture in accordance with this section within 30 days after the entry of the forfeiture."
The question becomes whether the trial court forfeited bail on February 13 and, if so, whether the March 9 notice (sent within 30 days of February 13) fulfilled the statutory requirement. We conclude the court unequivocally forfeited bail on February 13 (in spite of the contradictory minute *505 order). We also conclude that the March 9 notice, which specifically limited itself to the March 6 "forfeiture," failed to adequately advise the surety of the February 13 forfeiture.
"`The law traditionally disfavors forfeitures and this disfavor extends to forfeiture of bail. [Citations.] Thus, Penal Code sections ... dealing with forfeiture of bail bonds must be strictly construed in favor of the surety to avoid the harsh results of a forfeiture.' [¶] The standard of review, therefore, compels us to protect the surety, and more importantly the individual citizens who pledge to the surety their property on behalf of persons seeking release from custody, in order to obtain the corporate bond." (County of Los Angeles v. Surety Ins. Co. (1984) 162 Cal.App.3d 58, 62, 208 Cal.Rptr. 263.)
The March 9 notice provided as follows: "Please take notice that the surety bond posted by you for the below named defendant has been ordered forfeited by the court in Dept. 116 for the failure to appear on 03/06/01." (Italics added.) We will not stretch this notice to somehow encompass the February 13 forfeiture. The March 9 notice limited itself to March 6 and thereby excluded February 13. We also decline to let the clerk overrule the judge by issuing a minute order that bears no resemblance to what took place during the hearing.
The bottom line is that on March 6, there was no bail to forfeit. The court had ordered the bail forfeited on February 13. The surety was entitled to notice of that forfeiture within 30 days. Not having received such notice, the surety was entitled to relief. Even if the trial court somehow had the authority to forfeit the bail twice, "the surety and bail agent are entitled to separate notice under the statute every time a forfeiture is declared." (People v. American Contractors Indemnity Co. (2001) 91 Cal.App.4th 799, 808, 110 Cal. Rptr.2d 799.)
DISPOSITION
The judgment is reversed. The matter is remanded to the trial court for entry of an order exonerating the bond. Granite State Insurance Company is entitled to its costs on appeal.
We concur: SPENCER, P.J. and VOGEL, J.
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16 Cal.Rptr.3d 710 (2004)
121 Cal.App.4th 74
SOUTH BEVERLY WILSHIRE JEWELRY & LOAN et al., Petitioners,
v.
The SUPERIOR COURT of Los Angeles County, Respondent.
Emanuel Gordon, Real Party in Interest.
No. B172846.
Court of Appeal of Second District, Division Three.
July 29, 2004.
Review Denied October 13, 2004.[*]
Thelen Reid & Priest LLP, Curtis A. Cole, James H. Turken and Nicole M. Duckett, Los Angeles, for Petitioners.
No appearance by Respondent.
Lavely & Singer Professional Corporation, William J. Briggs, II and Michael D. Holtz, Los Angeles, for Real Party in Interest.
Robert S. Gerstein, Santa Monica; Huron Maki & Johnson LLP, Henry I. Bushkin and Craig Wu, Los Angeles, for Bobby Freedman as Amicus Curiae on behalf of Petitioner.
Law Offices of Dennis Holahan and Dennis Holahan, Los Angeles, for Diamond Dealers Club, Inc., as Amicus Curiae on behalf of Real Party in Interest.
CROSKEY, J.
In this case (1) a person voluntarily relinquished possession of his property under a consignment, (2) such property was then wrongfully transferred by the consignee to the possession of a third party who took it for value and without notice, and (3) the consignor could have perfected a security interest in the property but did *711 not. Under those circumstances, the applicable rule is set out in Civil Code section 3543, which states that "[w]here one of two innocent persons must suffer by the act of a third, he, by whose negligence it happened, must be the sufferer."
This case has its origins in written consignments of diamonds, other gems, and jewelry (the goods), by the plaintiff, Emanuel Gordon dba Manny Gordon Trading (plaintiff), to one of the defendants, Richard Maslan & Co., for the purpose of said defendant's inspection and prospective sale of such goods. Also named as a defendant in this case is the individual Richard Maslan (Maslan), whom the complaint alleges is the sole shareholder, director and officer of Richard Maslan & Co. (Maslan Company).
The written consignments specifically state that a sale of the goods by Maslan Company could only be effected, and title would only pass, if and when plaintiff agreed to such sale and rendered a bill of sale. They further state that the goods were delivered to Maslan Company with the understanding that it would have no power or right to pledge the goods. Nevertheless, Maslan did in fact pledge over $6 million worth of the goods to the other defendants in this case, as security for repayment of over two million dollars in loans from them.[1]
After plaintiff discovered that Maslan had pledged the goods as collateral for loans, and after Maslan Company then refused or was unable to return the pledged goods to plaintiff or pay plaintiff for their value, plaintiff filed this action. Plaintiff alleged causes of action for breach of contract and fraud against Maslan and Maslan Company, and for conversion and recovery of goods against them and the lending defendants.
Criminal charges were brought against the individual Maslan, he was found guilty of grand theft by embezzlement, and this court affirmed his conviction on appeal. The trial court relied on the affirmed conviction to grant plaintiff's motion for summary adjudication of issues. It is that ruling that prompted two of the lending defendants, Top Dollar Financial and South Beverly Wilshire Jewelry & Loan (petitioners), to file a petition for a writ of mandate asking that we direct the trial court to vacate its order granting summary adjudication.
The right of petitioners to writ relief turns on the question whether the common law rule that a thief cannot pass title to stolen property has application in a case where the thief lawfully gained possession of the property by a voluntary transfer from the owner. The trial court concluded such rule is applicable even in voluntary transfer circumstances, applied the rule to this case, and on that basis, granted summary adjudication to plaintiff on his causes of action for conversion and recovery of personal property. We conclude that this was error.
Here, plaintiff and petitioners are both innocent victims of Maslan's embezzlement. However, plaintiff consigned the goods to Maslan Company without availing himself of the protection of provisions in the California Uniform Commercial Code ("CUCC") that were in effect at the time he transferred possession of the goods. Those provisions would have given plaintiff priority over third party creditors of his consignee who later came into possession of the goods for value and without notice. Thus, under the directive in Civil Code *712 section 3543, as between plaintiff and such third party creditors, plaintiff would be the "sufferer." As discussed infra, plaintiff can only escape that role if he can establish that his consignee was generally known by his (i.e., the consignee's) creditors to be substantially engaged in the sale of goods belonging to others.
Plaintiff argues that the Civil Code section 3543 maxim of jurisprudence has no application here because the pertinent provisions of the CUCC, which plaintiff failed to utilize, address the priority, or lack thereof, of persons who are creditors of a consignee and here, Maslan Company is the consignee whereas it was Maslan in his individual capacity that pawned the subject goods. Thus, plaintiff's argument goes, the lending defendants are the creditors of Maslan, not Maslan Company, and therefore whether plaintiff utilized the Commercial Code provisions or not is irrelevant. This argument, however, simply raises an issue to be addressed by the parties upon return of this case to the trial court. The complaint alleges that Maslan Company is a corporation and that Maslan is its sole shareholder, director and officer. Whether Maslan is the alter ego of Maslan Company such that he was effectively the consignee in his dealings with plaintiff and petitioners, or whether some other reason exists for him to be deemed the effective consignee, are questions for the trial court to resolve upon remand.
BACKGROUND OF THE CASE
Evidence presented at Maslan's criminal trial showed that he was a jeweler who conducted business in the County of Los Angeles, and that plaintiff operated a wholesale jewelry business in New York City. Between 1992 and 1999, plaintiff consigned various pieces of his inventory to Maslan Company for possible sale. Each item was consigned pursuant to a written contract (a consignment memorandum), which plaintiff routinely used in his business. That memorandum specified that Maslan Company was the consignee. As noted above, this written memorandum provided that a sale of the goods could only be effected, and title would only pass, if and when plaintiff agreed to such sale and rendered a bill of sale (an exception was made if the sale price was greater than that specified in the consignment memorandum), and further provided that the goods were delivered to Maslan Company with the understanding that it would have no power or right to pledge the goods. Pawning of consigned jewelry is not customary within the jewelry business, and plaintiff never permitted his goods to be pawned by a consignee.
By September 1999, plaintiff's records showed that Maslan Company had possession of approximately 75 items consigned from plaintiff, which were worth around $7 million wholesale. Plaintiff made a surprise visit to Maslan Company's place of business. When he asked Maslan to produce those goods, Maslan only presented about 13 items. Maslan admitted to plaintiff that he had pawned many of plaintiff's pieces. When the missing goods were not returned to plaintiff within 24 hours, plaintiff went to the police.
At the time of Maslan's criminal trial in June 2002, plaintiff's pawned items still had not been returned to him and there was evidence that Maslan was not able to redeem any of those goods. In July 2002, Maslan was convicted on multiple counts of grand theft by embezzlement, and we affirmed that conviction in October 2003.
In prosecuting the instant case, plaintiff filed successive motions for summary adjudication on the causes of action against petitioners, and ultimately the court granted the motion. Petitioners then filed this writ of mandate proceeding, contending *713 the trial court's adjudication order should be reversed because plaintiff's failure to secure his interest in his consigned goods, pursuant to the CUCC, required a finding under Civil Code section 3543 that as the negligent innocent person, plaintiff must suffer the loss of title to the goods and that title rests in petitioners.
DISCUSSION
1. Standard of Review
Code of Civil Procedure section 437c, subdivision (f)(1), states that a trial court may grant a motion for summary adjudication only when such motion "completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty." We conduct a de novo review of this matter to determine whether there is a triable issue of material fact associated with the causes of action against petitioners or whether plaintiff is entitled to summary adjudication as a matter of law. (Lunardi v. Great-West Life Assurance Co. (1995) 37 Cal.App.4th 807, 819, 44 Cal.Rptr.2d 56.)
2. Reconciling the Common Law Rule That a Thief Cannot Pass Title to Stolen Property, With Civil Code Section 3543 and the Protective Provisions of the CUCC
Under plaintiff's view of this case, since Maslan's guilt on the charge of theft by embezzlement has already been finally adjudicated, we must apply the common law rule that a thief cannot pass title to stolen property, and we must conclude that petitioners never gained title to the goods that Maslan pawned with them and therefore they are liable to plaintiff for the return of such goods or payment of their value. However, while Maslan's conviction decided the question as to whether he committed theft, that conviction is only the beginning of our analysis in this case, not the end. We must address the precise issue presented by petitionerswhether such common law rule should be applied to those situations where a person voluntarily relinquishes possession of his personal property to another via consignment, with instructions that the property may not be pledged, but fails to utilize provisions of law that would protect his interest in such property if that other person disregards the instructions and pledges the property to a third person who takes it without notice.
We hold that a person who voluntarily relinquishes possession of his property to another in a consignment, and who has the ability to protect his title by means of a CUCC filing but does not do so, will not be entitled to the benefit of the common law rule that a thief cannot pass title to stolen property where an innocent third party has taken possession of the property from the consignee for value and without notice. This would be so even when the consignment was made with the directive that the consigned goods not be pledged.
Here, plaintiff could have protected his title to goods he consigned to Maslan Company by utilizing provisions of the CUCC that were in effect at the time of his consignments. He failed to avail himself of such protection.[2] Had plaintiff filed a *714 CUCC financing statement, then for purposes of Maslan's creditors, such as petitioners, title to the goods would have stayed with plaintiff and as between him and those creditors, he would be entitled to possession of the goods. Because of his failure to file the financing statement, and unless he can establish that Maslan was known generally by his (Maslan's) creditors to be substantially engaged in selling goods that belong to others, the effect of the former CUCC provisions is that title to the pledged goods passed to Maslan Company, and when Maslan failed to redeem such pledged goods, title passed to the lending defendants, including petitioners. The applicable CUCC provisions did not make an exception for circumstances where third parties take for value and without notice in cases involving theft.
Moreover, it is effectively the directive of Civil Code section 3543 that as between the common law rule upon which plaintiff relies and the former, but applicable to this case, CUCC legislation, the latter is more equitably applied. As noted above, section 3543 provides that "[w]here one of two innocent persons must suffer by the act of a third, he, by whose negligence it happened, must be the sufferer."[3]
"The concept of Civil Code section 3543 is basically an estoppel theory, addressing comparative fault between two innocent victims. It is based upon misplaced confidence by one victim resulting in victimization of the other: `Misplaced confidence has been held to be negligence within section 3543 and has resulted in the estoppel of a true owner from asserting title against an innocent party. [Citations.]' [Citation.] `[S]ection 3543 ... "has been applied to bona fide purchasers for value from those who have been clothed with the indicia of ownership. It has been held that although the true owner is guilty of no more than misplaced confidence, such misplaced *715 confidence is negligence within the meaning of section 3543. [Citations.]"' [Citation.]" (Wurzl v. Holloway (1996) 46 Cal.App.4th 1740, 1752, 54 Cal.Rptr.2d 512.) Here, plaintiff's negligent misplaced confidence consists of his so trusting Maslan Company to not pledge the consigned goods that he failed to file a financing statement.
Whether it was customary for persons in plaintiff's line of business to avail themselves of the secured transactions provisions in the CUCC is not an issue. The fact that some or even many diamond and jewelry consignors may transact business without such protection is of no consequence when innocent third persons are involved. Had plaintiff made a CUCC filing, he would have given petitioners constructive notice of his continuing interest in the subject goods and assured his continuing title to those goods.
It was equitable considerations that prevailed in Carter v. Rowley (1922) 59 Cal.App. 486, 211 P. 267, a case in which the owner of a car entrusted it to a used car dealer with the instruction that the dealer would bring the prospective purchaser and the owner together before a sale was made. The dealer sold the car without abiding by that instruction and then failed to give the sale money to the plaintiff. Plaintiff sued the buyer of his car to recover possession of the vehicle. The Carter court found that while the buyer knew that plaintiff's used car dealer agent was not the owner of the car, the buyer reasonably believed the agent had authority to sell the car. Finding that plaintiff had clothed the agent with apparent or ostensible authority to sell the car, the court affirmed the judgment in favor of the defendant buyer. In doing so, the court stated: "As between two innocent persons, one of whom must suffer, the loss should fall on the principal who has armed the agent with apparent authority and thus has enabled him to obtain the advantage of the person with whom he trades, rather than on the purchaser, where the agent acts within the apparent scope of his authority and there is nothing in the transaction to put the purchaser on notice that the agent is exceeding his authority. [Citation.] The nature and extent of this exception to the general rule that a purchaser gets no title if his vendor has none, or if the vendor has no authority from the owner, are very clearly stated ... in Saltus v. Everett, 20 Wend. (N.Y.) [267] 278, 32 Am. Dec. [541] 547 [where] the learned author of that opinion says: `After a careful examination of all the English cases, and those of this state, that have been cited or referred to, I come to this general conclusion, that the title of property in things movable can pass from the owner only by his own consent and voluntary act, or by operation of law; but that the honest purchaser who buys for a valuable consideration in the course of trade, without notice of any adverse claim, or any circumstances which might lead a prudent man to suspect such adverse claim, will be protected in his title against the original owner in those cases, and in those only, where such owner has by his own direct, voluntary act conferred upon the person from whom the bona fide vendee derives title, the apparent right of property, as owner, or of disposal as an agent.'" (Id. at pp. 489-490, 211 P. 267.) Former subdivisions (3)(b) and (c) of section 2326 were in harmony with this analysis, as are the provisions of Civil Code section 3543.
In contrast are the cases upon which plaintiff reliescases where the owner of property or his agent parted with possession involuntarily. In Suburban Motors, Inc. v. State Farm Mut. Auto. Ins. Co. (1990) 218 Cal.App.3d 1354, 268 Cal.Rptr. 16, a car was stolen from its owner and then successively purchased by persons *716 who were unaware that the vehicle had been stolen. The court ruled title belonged to the insurer of the lawful owner who had transferred title to the insurer after being paid for the loss of the car.
Likewise, A. Benjamini, Inc. v. Dickson (Tex.App.1999) 2 S.W.3d 611, which is heavily relied upon by plaintiff, affords him no support. That case involved William Dickson, a consignor, his consignee Houston Gems & Appraising (HGA), and Kenneth Rosenbaum, an employee of HGA. Rosenbaum, who had unfettered access to the contents of the consignee's safe, took gems belonging to Dickson from that safe and sold them to a third party, Jonathan's Fine Jewelers, who in turn sold them to another person, A. Benjamini, Inc. The reviewing court acknowledged the rule that "where the real owner, by some act or conduct vests the possession and right to personal property apparently in the seller, he thereby estops himself from setting up a claim to the property as against the purchaser for value without notice. [Citation.]" (Id. at p. 613.) "Therefore," said the court, "the question on appeal is whether Dickson's act of consigning the diamonds to HGA clothed Rosenbaum with an indicia of ownership, such that Dickson is estopped from claiming superior right to the diamonds against Benjamini and Jonathan's, good faith purchasers." (Ibid.) The appellate record in that case demonstrated that Rosenbaum had business cards that were imprinted with his and HGA's names, and he had conducted transactions with Jonathan's Fine Jewelers in the past by stating he was acting on behalf of HGA and presenting his business card. When he presented the stolen gems to Jonathan's, he was accompanied by a woman whom he represented to be the true owner of the gems. Rosenbaum and the woman represented to Jonathan's that she had inherited the gems and wished to sell them. He did not state he was acting on behalf of HGA, although Jonathan's mistakenly made the assumption that he was. Jonathan's did not verify with HGA that Rosenbaum had authority to broker the gems, nor did it ask the woman for testamentary letters showing ownership. Moreover, Jonathan's issued checks to Rosenbaum as an individual for the gems. Further, there was no evidence that Dickson vested Rosenbaum with possession of the gems for the purpose of selling them. Based on this state of the record, the court concluded Dickson was not estopped from claiming a superior right to the diamonds over Jonathan's and Benjamini. (Id. at pp. 613-614.)
Plaintiff asserts the instant case is essentially identical to A. Benjamini. He contends Maslan stole consigned goods from Maslan Company, and he argues that the reasoning of A. Benjamini compels the conclusion that Maslan was without actual or ostensible authority to deal with goods consigned to Maslan Company and therefore, petitioners have no valid claim to the goods. However, there are at least two problems with this argument. First, Maslan was convicted of stealing goods from plaintiff, not from Maslan Company. Second, plaintiff's argument ignores the substantial factual distinctions between this case and A. Benjamini. In A. Benjamini, the consignee's employee had an established business relationship with the initial buyer of the stolen gems such that when the employee acted in a manner that was different from his past transactions with the buyer (the employee did not present the consignee's business card, he did not state he was acting on behalf of the consignee, and he had the payment checks issued to himself), the buyer was no longer entitled to presume (as he mistakenly did) that the employee was acting on behalf of the consignee when he sold the gems. Thus, the buyer could not reasonably claim *717 that he believed the employee had authority from his employer to sell the gems. And since the consignor of the gems had never voluntarily conferred upon the consignee's employee the apparent right to possess the gems as an owner or an agent with authority to sell them, the court rightfully declared the consignor was entitled to have them returned to him. Here, there is no evidence of an established business relationship between petitioners and Maslan, much less one where petitioners mistakenly and unreasonably presumed that Maslan was acting as an agent on behalf of Maslan Company when he pledged goods with petitioners. Moreover, upon remand of this case, the court may accept plaintiffs' argument that Maslan and Maslan Company are effectively, if not legally, identical, such that when plaintiff consigned goods to Maslan Company, he intentionally conferred upon Maslan himself the right to possess the gems as a consignee.
Nor does Jewelry Co. v. Provident Loan Assn. (1935) 6 Cal.App.2d 506, 45 P.2d 271 provide any support for plaintiff. There, the evidence was that the plaintiff wholesale jeweler transferred jewelry to one Ernest Kaplan for inspection only. The contract stated in part: "The goods ... are sent to you for examination and remain our property. Sale takes effect only from date of our approval of your selection and until then the goods are to be held subject to our order, or returned to us on demand." After receiving the goods, Kaplan pledged it for a loan from defendant. The reviewing court held that under those circumstances, title to the goods remained in the plaintiff. Quoting from an earlier case, the court said: "`So long as the possession of the goods is not accompanied with some indicia of ownership, or of right to sell, the possessor has no more power to divest the owner of his title or to affect it than a mere thief.'" (Id. at p. 513, 45 P.2d 271, italics omitted.) The court referenced and quoted from now-repealed Civil Code section 2991: "`One who has allowed another to assume the apparent ownership of property for the purpose of making any transfer of it, cannot set up his own title, to defeat a pledge of the property, made by the other, to a pledgee who received the property in good faith, in the ordinary course of business, and for value.'" (Jewelry Co., at pp. 509, 45 P.2d 271 et seq.)
DISPOSITION
The petition for writ of mandate is granted and a peremptory writ shall issue directing the trial court to vacate its order of January 5, 2004, and enter a new and different order denying plaintiff's motion for summary adjudication and to conduct further proceedings consistent with the views expressed herein. Petitioners shall recover their costs incurred in these writ proceedings.
We Concur; KLEIN, P.J., and KITCHING, J.
NOTES
[*] Chin, J., dissented.
[1] The other defendants in the case are Top Dollar Financial, South Beverly Wilshire Jewelry & Loan aka Ben Jewelry, Keshmiri's, Jan Bronson, and Bobby Freedman (collectively, the lending defendants).
[2] At the time of plaintiff's consignments to Maslan Company, now-repealed CUCC section 9114, a part of the provisions on secured transactions, gave priority to a consignor over secured parties who were or became creditors of the consignee and who would have a perfected security interest in the consigned goods if the goods were the property of the consignee.
Under the provisions in former subdivisions (3)(b) and (c) of section 2326, consigned goods were deemed to be delivered under a "sale or return" arrangement insofar as the creditors of the consignee were concerned, unless the consignor either filed a CUCC financing statement, or could establish that the consignee was "generally known by his creditors to be substantially engaged in selling the goods of others," and these provisions were applicable even if there was an agreement that title would remain in the consignor, or an agreement that used the words "on consignment" or "on memorandum." In a "sale or return" arrangement, title to the goods delivered for sale passes to the person receiving them, and he may revest title in the person sending the goods rather than pay for them. Until revested, the goods belong to the person receiving them and may be reached by his creditors.
Current provisions respecting the rights of creditors of a consignee while consigned goods are in the consignee's possession provide that except when a perfected security interest held by the consignor would have priority over the rights of a creditor of the consignee, "the consignee is deemed to have rights and title to the goods identical to those the consignor had or had power to transfer." (CUCC, § 9319; see the Uniform Commercial Code Comment 23B pt.2 West's Ann. Cal. U. Com. Code (2002) foll. § 9319, p. 364; Assem. Com. Com., 23B pt. 2 West's Ann. Cal. U. Com. Code, supra, foll. § 9109, com. 6, p. 119.) While not relevant to our decision, it appears that this revised statutory language would not alter the result we reach in this matter.
[3] Technically petitioner Top Dollar Financial is not an innocent victim of theft because the jury in the criminal case against Maslan acquitted him on the counts that were based on his pawning of plaintiff's goods to Top Dollar Financial. Since there was no thievery associated with those pawnings, for that reason alone, Top Dollar Financial's claimed right to plaintiff's goods cannot be found to come within the common law rule that a thief cannot pass title to stolen goods. Instead, plaintiff is left to argue, on remand of this case, that pawning the goods to Top Dollar Financial was a breach of the agreement Maslan Company had with him.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2259521/
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16 Cal.Rptr.3d 920 (2004)
121 Cal.App.4th 533
In re KASAUNDRA D., a Person Coming Under the Juvenile Court Law.
The People, Plaintiff and Respondent,
v.
Kasaundra D., Defendant and Appellant.
No. B169043.
Court of Appeal, Second District, Division Four.
August 10, 2004.
Cheryl Barnes Johnson, under appointment by the Court of Appeal, for Defendant and Appellant.
Bill Lockyer, Attorney General, Robert R. Anderson, Chief Assistant Attorney General, Pamela C. Hamanaka, Senior Assistant Attorney General, Victoria B. Wilson and Jennifer A. Jadovitz, Deputy Attorneys General, for Plaintiff and Respondent.
Certified for Partial Publication.[*]
CURRY, J.
Appellant Kasaundra D. contends that in a situation where two or more Welfare and Institutions Code[1] section 602 juvenile petitions *921 charging a minor with criminal misconduct are filed under the same superior court case number, an order terminating jurisdiction issued by the judicial officer presiding over proceedings on two petitions requires proceedings on the other petition to cease. For the reasons discussed, we agree.
FACTUAL AND PROCEDURAL BACKGROUND[2]
The Three Petitions
Appellant, born July 1982, was brought before the juvenile court on three separate petitions, one filed May 16, 1997 (Petition 1); one filed June 20, 1997 (Petition 2); and one filed September 10, 1999 (Petition 3).
Petition 1 alleged that appellant had committed two counts of second degree robbery in violation of Penal Code section 211 and personally used a knife (Pen.Code, § 12022, subd. (b)(1)). According to the probation officer's report, the crime involved an attempt to take bags of Halloween candy from two trick-or-treaters by physical force and display of a knife tucked in appellant's waistband. The petition was amended in June 1997 to allege misdemeanor grand theft (Pen.Code, § 487, subd. (c)), through personal use of a knife. Appellant admitted the allegations of the petition, as amended.
Petition 2 alleged that appellant committed battery (Pen.Code, §§ 242/243, subd. (a)) and vandalism (Pen.Code, § 594, subd. (a)(2)) against her aunt and her aunt's home. On July 23, 1997, both counts in the petition were sustained.
On August 12, 1997, the juvenile court aggregated the sentences on Petitions 1 and 2, and ordered appellant to participate in the Camp Community Placement Program for one year and four months. On January 26, 1998, appellant was furloughed from camp. On July 6, 1998, the court ordered the camp furlough release terminated on the ground there was no available relative with whom appellant could reside or who could supervise her. Appellant was ordered "suitably placed," and the probation officer was to evaluate the parents' home for placement. On July 19, 1999, appellant was placed in her parents' home. On October 18, 1999, appellant's mother informed the court that appellant refused to come home and was living with her grandmother. The court in Department 261 issued a warrant for her arrest (the October warrant).
A month earlier, on September 10, 1999, Petition 3 had been filed, charging appellant with attempted robbery (Pen.Code, §§ 664/211) and assault with a deadly weapon (again a knife) by means likely to produce great bodily injury (Pen.Code, § 245, subd. (a)(1)). A warrant was issued for her arrest on that date by Department 264 (the September warrant).
Order Terminating Jurisdiction
Apparently, little was done to enforce either warrant in the ensuing years. Appellant's case came up for regular review in Department 261, and by orders dated January 14, 2000, and January 12, 2001, the court ordered the October warrant to remain in full force and effect. The orders were in harmony with contemporaneous probation officer reports that pointed to the existence of Petition 3 and the September *922 warrant to support the recommendation that the court retain jurisdiction for purposes of further proceedings on the October warrant and Petitions 1 and 2.
On January 11, 2002,[3] however, the probation officer noted that appellant had remained in the community unsupervised for two years without being rearrested, and that her date of birth meant that she was 19 years old and outside the jurisdiction of the juvenile court. Based on those facts, the report recommended that the October warrant be recalled and juvenile court jurisdiction terminated. Having reviewed and signed the report, by order dated January 11, 2002, the court in Department 261 recalled the October warrant, and checked the boxes on the form order entitled "Jurisdiction Terminated" and "No outstanding Warrants found in review of case file." The superior court case file was thereupon stamped "Jurisdiction Terminated."
Similar review procedures took place in Department 264 with respect to the September warrant. On September 8, 2000, and September 7, 2001, the court ordered that warrant to remain in full force and effect. Then, on September 6, 2002, the probation officer recommended recalling the September warrant and terminating jurisdiction for the same reasons set forth in the January 11, 2002, report: appellant's age and the fact she had been in the community for two years without being rearrested. The probation officer's recommendation was rejected in Department 264. By order dated September 6, 2002, the court ordered the September warrant to remain in full force and effect.
Nunc Pro Tunc Order and Motion to Dismiss
Appellant was located and arrested in April 2003, and brought to court to face charges on Petition 3. In an order dated April 25, 2003, the court in Department 264 issued an order recalling the September warrant, and stating: "The minute order dated 1-11-02 in Dept. 261 is ordered amended nunc pro tunc by deleting: ['](X) Jurisdiction Terminated.[']"
Petition 3 was set for adjudication on May 14, 2003. At that hearing, the court granted a continuance so that the defense could prepare a motion to dismiss for lack of jurisdiction. At the hearing that followed, the court explained: "the way the system is set up, we have one court file for all of the minor's cases, ... every new petition that is filed ... comes under one court number" and that the court in Department 261 "should have more closely considered what it was doing." The court expressed the belief that Department 261 terminated its own jurisdiction only "since [this] case was not before them, even though they knew about it." The court further expressed the view that the court in Department 261 acted "in excess of jurisdiction" and that its termination of jurisdiction meant nothing "in terms of an unanswered, unresponded to petition." The court gave defense counsel an opportunity to file a written brief. After briefing, the motion was formally denied, the court once again expressing the belief that "the order made in the other court has no [e]ffect on this case whatsoever."
Petition 3 Adjudication
At the adjudication, the following evidence was presented: Prosecution witness Phil Williams testified that on April 30, 1999, he received a late night call from appellant to bring her food. Williams had *923 met appellant approximately two months previously and spoke with her frequently. He was then age 36 and appellant was 16, although she had told Williams she was 18. When he arrived at appellant's house with food, another girl was there. Appellant asked for money. Williams refused, and she threw his wallet into the bedroom. When Williams went to retrieve it, appellant and the other girl followed him. The two girls closed the door and placed heavy dressers in front of it. They threw bottles and other items at Williams. Appellant asked Williams to strip. She picked up a 12-inch knife and poked him with it on his neck, back, and arms. He was not injured. Williams pushed the dressers away and got out of the room. Appellant followed, and inflicted minor damage on Williams's car.
Appellant, testifying on her own behalf, stated that she had known Williams for about two or three months prior to the incident. He called her every day. He often gave her money or presents. He would occasionally try to hug or kiss her. Appellant testified that on the night in question it was Williams who pushed a dresser in front of the door when they were alone in her bedroom, and tried to engage her in sexual activity. Specifically, Williams indicated an interest in being penetrated by a candle appellant had carved into a phallic object. Appellant attempted to comply, but was unsuccessful. Williams grabbed at her, and she threw an object at him and ran away.
The court placed more credence on Williams's version of events. Based on that testimony, the court concluded that there had been an assault with a deadly weapon, but dismissed the attempted robbery charge. Appellant was committed to the California Youth Authority for four years.
DISCUSSION
Appellant contends that the January 11, 2002, order lawfully terminated juvenile court jurisdiction over her and precluded the 2003 adjudication of Petition 3. Appellant further contends that the court erred in issuing the nunc pro tunc order of April 25, 2003, which purported to correct the January 11, 2002, order by eliminating the words "Jurisdiction Terminated."
I[**]
II
We now turn to the question of whether the court in Department 264 could properly ignore the order terminating jurisdiction in Department 261 as having "no [e]ffect on [Petition 3] whatsoever."
Despite recent laws geared toward shifting minors who commit violent crimes to adult court (see, e.g., Gang Violence and Juvenile Crime Prevention Act of 1998 (§ 707, subd., (d)); § 602, subd. (b)), it is important to keep in mind that the primary goal behind maintaining separate courts and procedures for adults and minors is to ensure that juvenile offenders who have not yet become hardened criminals receive treatment and rehabilitation. "The juvenile court system and the adult criminal courts serve fundamentally different goals. The punishment for serious crimes tried in the criminal courts is imprisonment, and `the purpose of imprisonment for crime is punishment.' (Pen. Code, § 1170, subd. (a)(1).) ... [¶] In contrast, the juvenile court system seeks not only to protect the public safety, but also the youthful offender.... [E]ven for the most serious offenders-those who will be committed to the California Youth Authority `community restoration, victim *924 restoration, and offender training and treatment shall be substituted for retributive punishment and shall be directed toward the correction and rehabilitation of young persons who have committed public offenses.'" (Manduley v. Superior Court (2002) 27 Cal.4th 537, 593, 117 Cal.Rptr.2d 168, 41 P.3d 3, Kennard, J., dissenting; see § 203 ["An order adjudging a minor to be a ward of the juvenile court shall not be deemed a conviction of a crime for any purpose, nor shall a proceeding in the juvenile court be deemed a criminal proceeding"].)
The difference in how juvenile and adult offenders are treated is reflected in the basic jurisdictional statute, which states that a person who violates a state or federal law or local ordinance while under the age of 18 "is within the jurisdiction of the juvenile court," and may be adjudged "a ward of the court." (§ 602, subd. (a).) A juvenile court's responsibility toward a "ward" has been compared to a Probate Code guardianship. (See, e.g., In re Dargo (1948) 86 Cal.App.2d 114, 117, 194 P.2d 34 ["A proceeding ... to have a minor declared a ward of the juvenile court is not a `criminal' proceeding. It is not a proceeding in which a minor is `charged with' or `convicted of' a public offense. It is a proceeding `more in the character of a guardianship whereby the minor is relieved of the stigma of a criminal conviction by placing him upon probation with individuals or in institutions having the facilities to give him corrective care, supervision and training'"]; In re Magnuson (1952) 110 Cal.App.2d 73, 75, 242 P.2d 362 ["[Juvenile] proceedings are for the benefit and protection of the minor when such protection is needed by the occurrence of causes for wardship, as set forth in the pertinent code sections. The result of a declaration of wardship, far from being a conviction of crime, is more in the nature of a guardianship such as is provided for in the Probate Code"].)
The governing statutes compare a juvenile court's responsibility to that of a parent: "When the minor is removed from his or her own family, it is the purpose of this chapter to secure for the minor custody, care, and discipline as nearly as possible equivalent to that which should have been given by his or her parents.... [¶] . . . Minors under the jurisdiction of the juvenile court as a consequence of delinquent conduct shall, in conformity with the interests of public safety and protection, receive care, treatment, and guidance that is consistent with their best interest, that holds them accountable for their behavior, and that is appropriate for their circumstances." (§ 202, subds. (a), (b); see In re Magnuson, supra, 110 Cal.App.2d at p. 75, 242 P.2d 362 ["The control exercised by the court and by the persons or agencies in whose immediate custody the ward may be placed is akin to the former parental control for which it is a substitute"].)
There can be no question that the goals of treatment and rehabilitation are better served if the minor's case history is dealt with as a whole, with each new offense committed by the minor used as a basis for reevaluation of the prior disposition. Not surprisingly, therefore, it has long been the practice to file successive juvenile petitions under a single case number. (See, e.g., Moore v. Superior Court (1913) 22 Cal.App. 156, 159, 133 P. 990.) Two modern courts have said that the use of a single case number for consecutive petitions has only "clerical" or "record keeping" significance. (In re Arthur S. (1991) 228 Cal.App.3d 814, 819, 279 Cal.Rptr. 69; In re Maurice H. (1980) 107 Cal.App.3d 305, 315, 166 Cal.Rptr. 213.) We do not see it that way. Filing multiple petitions against a juvenile under a single case number has important practical considerations. *925 It allows the court to keep track of the minor's progress (or lack thereof), to determine whether ordered rehabilitative programs are succeeding or failing and whether new ones should be tried, and to aggregate offenses in order to extend the maximum term of confinement for a new offense where the minor appears to be sliding toward incorrigibility. (See In re Michael B. (1980) 28 Cal.3d 548, 554, 169 Cal.Rptr. 723, 620 P.2d 173; In re Ernest R. (1998) 65 Cal.App.4th 443, 449, 76 Cal.Rptr.2d 453.)
It is also a basic precept of juvenile law that rulings issued with respect to one petition can have profound impact on other petitions. In In re Dennis J. (1977) 72 Cal.App.3d 755, 140 Cal.Rptr. 463 (Dennis J.) three section 602 petitions were filed against the minor in 1975 for relatively minor crimes. The petitions were sustained, but before the juvenile court could make dispositional orders, a new section 602 petition was filed charging him with rape, burglary, and robbery. A hearing was held on the latter petition, and the minor was found to be unfit for handling by the juvenile court. He pled guilty and was sentenced in adult court. Thereafter, the juvenile court disposed of the three earlier petitions by committing him to the Youth Authority. The issue on appeal was whether the juvenile court could continue to exercise jurisdiction over the minor after the finding of unfitness. The court concluded that "[s]ince ... the juvenile court, in the exercise of its discretion, determined that [the minor] was not a proper subject for any of its programs, including Youth Authority commitment, and since that determination was made in the light of his entire background, it was error for it to retain jurisdiction over matters which were part of that background in attempting to augment the actions of the adult court. [¶] ... When the juvenile court determines that wardship is no longer necessary it should terminate its jurisdiction." (Dennis J. at p. 762, 140 Cal.Rptr. 463.)
Similar reasoning was utilized in a different factual situation in In re Shanea J. (1984) 150 Cal.App.3d 831, 198 Cal.Rptr. 228, where three juvenile petitions were filed against a single minor in October 1981, June 1982, and August 1982. In November 1981, a fitness hearing was held in conjunction with the first petition, and the minor was found to be unfit. The second petition was adjudicated and sustained in juvenile court in 1982. A few days later, the minor was found to be unfit for purposes of the third petition. Contrasting Dennis J., where "the determination of unfitness was made on the last of three petitions filed against the minor," the appellate court expressed the belief that "where the first determination of unfitness was made seven months before this petition was even filed, the lack of jurisdiction over [the minor] should have been even more obvious to the juvenile court." (Shanea, supra, at p. 838, 198 Cal.Rptr. 228.)
The holding in Dennis J. was superseded by statute as discussed in In re Ivan T. (1999) 76 Cal.App.4th 624, 630-632, 90 Cal.Rptr.2d 588 (Ivan T.). Section 707.01, added in 1994, provides in relevant part: "If a minor is found an unfit subject to be dealt with under the juvenile court law pursuant to Section 707, then ... [t]he jurisdiction of the juvenile court with respect to any previous adjudication resulting in the minor being made a ward of the juvenile court that did not result in the minor's commitment to the Youth Authority shall not terminate, unless a hearing is held ... and the jurisdiction of the juvenile court over the minor is terminated." (§ 707.01, subd. (a)(1), italics added.) The court applied the statute to a situation very similar to that in Dennis J., holding *926 that the juvenile court properly retained jurisdiction over pending matters after the minor was found not to be fit for purposes of a new crime and an adult criminal court found him guilty of robbery and burglary.
Ivan T. and section 707 do not apply in the present case. Both deal with the impact of a judicial determination of unfitness in a later filed petition on a previously adjudicated petition. The Legislature carved out an exception for that situation so that the juvenile court could continue to exercise jurisdiction over juvenile petitions adjudicated prior to the time the minor became fit only for adult court. There is nothing inherently inconsistent in concluding that a minor should be tried in adult court for offenses committed when he is older, but retaining juvenile jurisdiction for purposes of earlier acts.
In the present case, however, as in In re Shanea J., supra, 150 Cal.App.3d 831, 198 Cal.Rptr. 228, the finding that juvenile court jurisdiction should be terminated occurred with respect to the earlier filed petition. The court in department 261 reviewed all of the facts and circumstances, and, knowing that Petition 3 had been filed but never adjudicated, based its decision on (1) the fact that appellant had not been arrested since the incident described in Petition 3 occurred in September 1999, more than two years prior to the date of its order; and (2) the fact that appellant had turned 19. To allow a second judicial officer to look at the same facts and reach an opposite conclusion concerning jurisdiction and then proceed to disposition on the ground that the first judicial officer "should have more closely considered what it was doing" would undermine the integrity of final judicial rulings. (See In re Alberto, supra, 102 Cal.App.4th 421, 428, 125 Cal.Rptr.2d 526 ["[B]ecause a superior court is but one tribunal, an order `"`"made in one department during the progress of a cause can neither be ignored nor overlooked in another department"'"'"].) If respondent was unhappy with the ruling terminating jurisdiction in Department 261, it should have followed orderly procedures for appellate review rather than seek a different ruling in Department 264. The January 11, 2002, order terminating jurisdiction precluded further action on a petition filed prior to its date.
DISPOSITION
The orders issued by the court on April 25, 2003, June 2, 2003, and June 3, 2003, are reversed.
We concur: EPSTEIN, Acting P.J., and HASTINGS, J.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of part 1 of the Discussion.
[1] Unless otherwise specified, all statutory references are to the Welfare and Institutions Code.
[2] For reasons that are not clear, the clerk's transcript prepared for this appeal does not contain all of the superior court file. Appellant attempted to augment with selected orders and reports, but we found it necessary to call up the entire superior court file in order to fully understand the relevant background.
[3] The report's date is actually written as "1-11-01" but the signature at the bottom indicates it was prepared and filed in 2002.
[**] See footnote *, ante.
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777 F.Supp. 759 (1991)
Tarra Lynne COONCE, et al., Plaintiffs,
v.
AETNA LIFE INSURANCE CO., et al., Defendants.
No. 90-0487-CV-W-1.
United States District Court, W.D. Missouri, W.D.
November 6, 1991.
*760 *761 Timothy Brownlee, Crew, Smart, Whitehead & Waits, Kansas City, Mo., for plaintiffs.
John W. Cowden, Peter F. Travis, and Brian E. Howard, Baker & Sterchi, Kansas City, Mo., for defendant Aetna.
Mark D. Herbert, Sullins, Johnston, Rohrbach & Magers, Houston, Tex., for defendant San Marcos Treatment.
ORDER
WHIPPLE, District Judge.
Five motions are pending before this court. They are intervenor plaintiff San Marcos Treatment Center's Motion for Partial Summary Judgment, filed May 31, 1991; defendants' Motion for Partial Summary Judgment on the Claims of Plaintiff Tarra Lynne Coonce, filed June 14, 1991; defendants' Motion for Summary Judgment *762 on Intervenor San Marcos Treatment Center's Complaint in Intervention, filed June 14, 1991; intervenor plaintiff San Marcos Treatment Center's Motion for Leave to File First Amended Complaint in Intervention, filed September 4, 1991; and plaintiff Tarra Lynne Coonce's Motion for Leave to File First Amended Complaint, filed October 21, 1991.
For the reasons set forth below, San Marcos Treatment Center's motion for partial summary judgment will be denied, defendants' motion for partial summary judgment on plaintiff Coonce will be granted, defendants' motion for summary judgment on San Marcos Treatment Center will be granted in part and denied in part, San Marcos Treatment Center's motion to file its First Amended Complaint will be granted in part and denied in part, and plaintiff Tarra Lynne Coonce's motion to file her First Amended Complaint will be denied.
I. BACKGROUND
This action arises under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiff Tarra Lynne Coonce ("Tarra") challenges the decision of defendants Trustees of Sickness and Accident Fund Local 235 GCIU ("Trustees") and Aetna Life Insurance Co. ("Aetna"), denying a claim for medical benefits under a group health insurance plan.
Since 1978, Tarra has been employed by TransAmerica Color Systems, Inc. As a benefit of her employment, Tarra is insured as a participant under a group health care plan. Tarra's minor daughter, Tina Marie Coonce ("Tina"), is also an insured participant under the plan. The plan is administered by the Trustees. The Trustees are responsible for making initial determinations regarding what level of benefits a participant is entitled to under the plan. Aetna is an agent of the Trustees with respect to the plan. Aetna is responsible for making final determinations regarding what level of benefits a participant is entitled to, as well as processing and paying claims submitted thereunder. The insurance plan is subject to the requirements of ERISA.
Prior to 1985, Tarra's daughter Tina began receiving psychiatric treatment on an out-patient basis. She subsequently received in-patient treatment. Prior to June of 1986, plan participants were reimbursed in full for in-patient treatment of "mental and nervous disorders" up to a lifetime cap of $1 million. In June of 1986, the Trustees amended the plan benefits, reducing reimbursement for in-patient mental health care to eighty percent. Notice of the change was provided to plan participants. Tarra received notice of the change in coverage sometime during 1986. Dep. of Tarra Lynne Coonce at 25. In July of 1989, the Trustees again amended the benefits for mental health coverage by reducing the lifetime cap from $1 million to $80,000.00. Additionally, the Trustees put a limit on the number of days a plan participant could be confined for mental health care on an annual basis. Before the amendment, there was no limit on the number of days per confinement. The only limitation was that the confinement had to be approved (pre-certified) by Aetna prior to admission. After July 1, 1989, plan participants were limited to thirty days in-patient treatment in any one calendar year. Pre-certification remained a requirement.
In the spring of 1989, Tina was receiving in-patient care at a facility located in Kansas City, Missouri. In May of that year, Tarra sought to transfer Tina to plaintiff San Marcos Treatment Center ("San Marcos"),[1] a facility located in San Marcos, Texas. Between the months of May and July of 1989, in a series of telephone conversations participated in by representatives of San Marcos, Aetna, and the Trustees (union), the parties sought to determine what level of coverage Tina would be entitled to in light of the scheduled changes in *763 plan benefits.[2] Specifically, the parties sought to determine whether the reduction in the lifetime cap and the limit on the number of days per confinement would apply to Tina, given that she would be receiving treatment for an ongoing condition. Dep. of Barbara Manzullo at 283; Dep. of Beth Cathcart at 73-74.
Sometime during the month of June, Aetna representative Barbara Manzullo ("Manzullo") advised San Marcos representative Beth Cathcart ("Cathcart") that Aetna would pre-certify a two-week stay at San Marcos. Dep. of Manzullo at 135. However, a question remained as to whether there would be a limitation on the number of days Tina could be confined for treatment.[3] On July 18, 1989, Cathcart was advised by Manzullo that Tina's confinement would be conditioned solely on obtaining the necessary pre-certification and that no day limit would be imposed. Pre-certification would be contingent upon a finding of "medical necessity." Dep. of Cathcart at 82; Dep. of Manzullo at 261-62.
On the same day Cathcart received this information from Manzullo, she completed a San Marcos Benefit Certification form to confirm all the oral representations which had been made to her regarding Tina's insurance coverage. Where the form asked for information regarding the time limit on coverage, Cathcart typed "per certification." Where the form asked for information regarding the dollar limit on coverage, Cathcart typed "one million."[4] Cathcart sent the form by certified mail to the union. Dep. of Cathcart at 86-87. She sent the form to the union's office because she had been advised that bills and verification of insurance matters should be routed to that office. Id. The union received the benefits verification form; it did not forward a copy of the form to Aetna. Id. The form was not returned to San Marcos.
On July 24, 1989, Tina was admitted to San Marcos for treatment. On the same day of her admission, Tarra assigned her interest in insurance benefits to San Marcos. The assignment form, which was provided by San Marcos, stated:
Acceptance of third party Insurance Carrier benefits by The San Marcos Treatment Center for partial or full payment of the hospital charges incurred by patients of The San Marcos Treatment Center is contingent upon the assignment of benefits to the hospital by the policy owner/holder.
Assignment means that benefits which are available under the policy will be paid directly to The San Marcos Treatment Center.
....
I hereby assign, transfer and set over to The San Marcos Treatment Center, as its interest may appear under my insurance policy, out of any such benefits that I may be due.
After Tina completed her two-week stay at San Marcos, Aetna refused to certify any additional days of confinement. Despite Aetna's decision not to approve any additional days, Tina remained at San Marcos until her release in November of 1990.
This suit was filed on May 25, 1990, following exhaustion of the internal appeals process. In her six-count petition, Tarra raises the following claims: 1) Count *764 I: claim for civil enforcement under 29 U.S.C. § 1132(a)(1)(B); 2) Count II: claim for breach of fiduciary duty by the Trustees for their decision in June of 1986 to reduce the level of reimbursement from 100% to 80% for in-patient care after it had "accrued, vested and attached"; 3) Count III: claim for vexatious refusal to pay under Mo.Rev.Stat. § 375.420; 4) Count IV: claim for breach of contract; 5) Count V: claim for breach of contract arising from certain oral representations made by Aetna to San Marcos regarding what coverage Tina had under the plan; and 6) Count VI: claim for breach of fiduciary duty by Aetna for refusing to reimburse, on a 100% basis, claims for in-patient care submitted after June 1986.
In September of 1990, San Marcos sought leave of court to intervene as a party in the present action. The court granted San Marcos leave to intervene on December 11, 1990. In its six-count petition, San Marcos raises the following claims: 1) Count I: various claims under the Texas Deceptive Trade Practices-Consumer Protection Act and Insurance Code (statutory claims for misrepresentation); 2) Count II: claim for breach of contract; 3) Count III: claim for breach of the duty of good faith and fair dealing; 4) Count IV: claim for negligent misrepresentation; 5) Count V: claim for equitable estoppel; and 6) Count VI: claim for civil enforcement under 29 U.S.C. § 1132(a)(1)(B).
II. DISCUSSION
A. Standard of Review
A movant is entitled to summary judgment under Rule 56(c) of the Federal Rules of Civil Procedure "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."
The moving party bears the burden of proof. Aetna Life Ins. Co. v. Great Nat'l Corp., 818 F.2d 19, 20 (8th Cir.1987). When considering a motion for summary judgment, the court must scrutinize the evidence in the light most favorable to the non-moving party, according the non-moving party the benefit of every factual inference and resolving all doubts as to the facts or existence of any material fact against the moving party. United States v. Conservation Chemical Co., 619 F.Supp. 162, 179-80 (W.D.Mo.1985). If the moving party meets this requirement, the burden shifts to the non-moving party who must set forth specific facts showing that there is a genuine issue for trial to defeat a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202, 212 (1986).
B. Defendants' Motion for Partial Summary Judgment Against Plaintiff Coonce
In their motion, defendants seeks entry of summary judgment on all counts except Count I of plaintiff's Complaint. The court separately shall address the arguments raised on each of the challenged counts.
(1) Count II (Breach of fiduciary duty)
Defendants argue that they are entitled to summary judgment on Count II of plaintiff's Complaint because the cause of action is barred by ERISA's three-year statute of limitations for breach of fiduciary duty claims. 29 U.S.C. § 1113(2). The court finds that defendants are entitled to summary judgment on Count II without reaching defendants' argument that the claim is time barred. Rather, the court finds that defendants are entitled to summary judgment on Count II because plaintiff fails to state a claim upon which relief may be granted.
Plaintiff bases her claim for breach on the theory that she acquired a "vested, accrued" interest in receiving a certain level of benefits under the plan in this instance, 100% reimbursement for in-patient mental health care. The court, however, is hard pressed to find any support for the theory that an employee has vested rights in benefits provided under a group health insurance plan. ERISA recognizes two forms of employee benefit plans: pension benefit plans and welfare benefit plans. A *765 group health insurance plan is a welfare benefit plan. See 29 U.S.C. § 1002(1)(A). ERISA imposes stiff requirements regarding the vesting, participation, and funding of pension benefit plans. See 29 U.S.C. §§ 1051-1060, 1081-1085. To the contrary, the statute expressly preempts welfare benefit plans from these requirements. See 29 U.S.C. § 1051(1). Consequently, courts have concluded that welfare benefit plan participants acquire no vested rights in those benefits. Reichelt v. Emhart Corp., 921 F.2d 425, 430 (2d Cir.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 2854, 115 L.Ed.2d 1022 (1991); Alday v. Container Corp. of America, 906 F.2d 660, 663 (11th Cir.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 675, 112 L.Ed.2d 668 (1991); Howe v. Varity Corp., 896 F.2d 1107, 1109 (8th Cir.1990); Musto v. American Gen. Corp., 861 F.2d 897, 901 & n. 2 (6th Cir.1988), cert. denied, 490 U.S. 1020, 109 S.Ct. 1745, 104 L.Ed.2d 182 (1989); Sutton v. Weirton Steel Div. of Nat'l Steel Corp., 724 F.2d 406, 410 (4th Cir.1983), cert. denied, 467 U.S. 1205, 104 S.Ct. 2387, 81 L.Ed.2d 345 (1984). That being so, the only issue before a court is whether the plan administrator retained the right to amend or terminate the plan. Howe, 896 F.2d at 1109; see also McGann v. H & H Music Co., 742 F.Supp. 392 (S.D.Tex.1990).
In the present matter, the Trustees retained the right to change or discontinue the plan in its entirety. While plaintiff attempts to argue that there is a genuine issue of fact with respect to the sufficiency of the notice (detailing the June 1986 change in benefits), the court declines to address this argument for two reasons: plaintiff does not raise this argument in her Complaint, and plaintiff's claim would be time barred under 29 U.S.C. § 1113(2). Therefore, summary judgment shall be entered for defendants on Count II.
(2) Count III (Vexatious refusal to pay)
Defendants argue they are entitled to summary judgment on Count III as a matter of law for two reasons: 1) ERISA expressly preempts claims arising under state law, 29 U.S.C. § 1144(a); and 2) the Eighth Circuit has determined that Missouri's vexatious refusal to pay statute, Mo.Rev.Stat. § 375.420, is not saved from preemption under § 1144(b)(2)(A) as being a law "which regulates insurance." In re Life Ins. Co. of North America, 857 F.2d 1190, 1194 (8th Cir.1988). The court of appeals' decision in In re Life Ins. is dispositive of this matter. Therefore, summary judgment shall be entered for defendants on Count III as a matter of law.
(3) Count IV (Breach of contract)
Defendants argue that they are entitled to summary judgment on Count IV because it is likewise preempted by 29 U.S.C. § 1144(a). Plaintiff, in response, argues that her breach of contract claim "is grounded in ERISA and its progeny and is not preempted by ERISA." Plaintiff provides no support or guidance for this statement. Therefore, the court shall enter summary judgment for defendants on Count IV of plaintiff's Complaint.
(4) Count V (Breach of contract)
Defendants argue that they are entitled to summary judgment on Count V on several grounds: 1) the claim is preempted by 29 U.S.C. § 1144(a); 2) plaintiff is not the real party in interest because she assigned her right to benefits under the plan to San Marcos; and 3) plaintiff is not the real party in interest as a third party beneficiary of an alleged oral contract.
While acknowledging that the assignment affects that portion of benefits "which may be due and owing to San Marcos," plaintiff contends that she is a real party in interest to the extent she remains liable for payment. Additionally, plaintiff argues that there is an issue of material fact regarding the validity of the assignment. Plaintiff did not obtain the required consent of Aetna prior to executing the assignment in favor of San Marcos.
Based on the plain language of the assignment, it is clear that plaintiff absolutely and unconditionally assigned her interest in benefits due and owing to San Marcos. The only injury plaintiff alleges under Count V arises from the very interest she assigned to San Marcos on July 24, *766 1989. Plaintiff's liability for twenty percent of Tina's in-patient care is not implicated in the claim raised under Count V. Therefore, this court concludes that defendants are entitled to summary judgment on the grounds that plaintiff is not the real party interest, having assigned her interest in benefits to San Marcos.[5]
(5) Count VI (Breach of fiduciary duty)
Defendant, relying on the same argument they raised with respect to Count II, contend they are entitled to summary judgment because the claim is time barred. 29 U.S.C. § 1113(2). The court shall enter summary judgment for defendants on Count VI for the same reasons it stated summary judgment should be granted on Count II.
(6) Count I (§ 1132(a)(1)(B) action)
Although defendants have not requested that summary judgment be entered on their behalf under Count I, the court, in light of its rationale for granting summary judgment on Counts II and V, sua sponte shall enter summary judgment on Count I for defendants. Therefore, defendants' motion seeking partial summary judgment shall be granted as a motion for summary judgment.
C. Cross Motions for Summary Judgment
San Marcos and defendants Trustees and Aetna have filed cross motions for summary judgment against each other. San Marcos, in its motion for partial summary judgment, requests that the court grant summary judgment on all of the affirmative defenses defendants raise that are premised on "ERISA preemption."[6] San Marcos relies on Texas and Fifth Circuit case law for its support. Defendants, in their motion for summary judgment, request that the court grant summary judgment on San Marcos' six-count petition on the grounds that ERISA preempts Counts I, II, III, IV, and V, and that San Marcos lacks standing under Count VI. Alternatively, defendants argue that Counts I and IV should be barred because San Marcos did not detrimentally rely on the alleged representations. Because of the overlapping nature of the issues raised, the court shall consider the merits of the two motions jointly.
(1) Counts I and IV
(Texas state law claims and negligent misrepresentation)
In Count I of its complaint, San Marcos raises claims under the Texas Insurance Code and Deceptive Trade Practices-Consumer Protection Act (codification of common law action for misrepresentation).[7] The claims arise from alleged representations defendants made to San Marcos regarding the level of coverage Tina was entitled to after July 1, 1989. San Marcos raises an analogous common law claim for negligent misrepresentation in Count IV of its Complaint. Defendants argue they are entitled to summary judgment on Counts I and IV because ERISA preempts claims arising under state law. 29 U.S.C. § 1144(a).[8] Alternatively, defendants argue *767 that Counts I and IV should fail because San Marcos did not rely to its detriment upon any representations defendants made.
San Marcos responds that summary judgment is not appropriate because the Fifth Circuit determined in Memorial Hospital System v. Northbrook Life Insurance, Co., 904 F.2d 236 (5th Cir.1990), that claims arising under article 21.21 of the Texas Insurance Code are not preempted because they do not "relate to" an ERISA plan. San Marcos urges the court that the laws of Texas, as well as Texas and Fifth Circuit case law, should govern the question of whether its statutory and common law claims for misrepresentation are preempted by ERISA. San Marcos is correct in stating that its claims for misrepresentation arise under Texas law. See Restatement (Second) of Conflicts of Law § 148(2) cmt. j. However, San Marcos is incorrect in stating that this court is obliged to follow Fifth Circuit precedent when considering a matter arising under federal law. Rather, this court is obliged to follow Eighth Circuit precedent when considering a matter arising under federal law. Zuniga v. United Can Co., 812 F.2d 443, 450 (9th Cir.1987).
The Eighth Circuit, albeit briefly, has looked at the force and effect of ERISA's preemption clause. Baxter By & Through Baxter v. Lynn, 886 F.2d 182 (8th Cir.1989); Anderson v. John Morrell & Co., 830 F.2d 872 (8th Cir.1987). In Baxter, the court of appeals stated at the outset that the United States Supreme Court, starting with its decision in Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983), has "affirmed the broad preemptive scope of ERISA." Baxter, 886 F.2d at 184-85; see also Anderson, 830 F.2d at 875. The court of appeals then went on to say that whether a claim is preempted involves a determination of whether the state (or common) law "relates to" an employee benefit plan.
Such a relationship exists when the state law in question "has a connection with or reference to" an employee benefit plan. This phrase is not to be limited to those state laws which deal specifically with ERISA plans or with subject matters covered by ERISA plans. Thus, any provision of state law which conflicts with a proper provision of an ERISA plan must give way to the latter.
Baxter, 886 F.2d at 185 (citations omitted). See also Ingersoll-Rand Co. v. McClendon, 498 U.S. ___, ___, 111 S.Ct. 478, 483, 112 L.Ed.2d 474, 485 (1990) (Court held that a Texas state law, which created a cause of action for an employee discharged by an employer seeking to avoid payment of employee benefits, is preempted because the existence of the plan is a "critical factor in establishing liability.... [T]his cause of action relates not merely to pension benefits, but to the essence of the pension plan itself." (emphasis in original)).
The court of appeals' decision in Anderson further illuminates the Eighth Circuit's construction of § 1144(a). In Anderson, the plaintiff filed suit for breach of contract, contending that his employer failed to comply with the company's oral "policy" that nonunion salaried employees would always receive fringe benefits as good as or better than those provided to unionized employees. Anderson, 830 F.2d at 873-74. The plaintiff, arguing against the view that his breach of contract claim was preempted, stated that his cause of action was not one to recover benefits under the plan but "an action to establish his contract right to have other benefits added to the plan." Id. at 875. The court, however, disagreed. "We think [plaintiff's] distinction cannot stand, and conclude that principles of common law governing a claimed contract right to have the plan modified clearly `relates to' the plan and that state law in that area is preempted." Id. (emphasis added).
This court finds Anderson dispositive of the question now being considered. Like *768 Anderson, the oral representations modify the terms of the group health insurance plan. This is not a case where the health care provider simply called the plan administer to verify that a prospective patient had coverage, as was the case in Memorial Hospital. Rather, this case involves a series of discussions that took place for the express purpose of determining whether Tina would continue to receive benefits based on pre-July 1989 limits. Taken in their entirety, the representations defendants are alleged to have made would have modified the plan by allowing Tina to receive benefits which were no longer available to plan participants after July 1, 1989.
This result is consistent with the Fifth Circuit's analysis of § 1144(a) in Memorial Hospital. Therein, the court acknowledged that ERISA preempts state law claims that have the "effect of orally modifying the express terms of an ERISA plan." Memorial Hospital, 904 F.2d at 245 (emphasis added). The court concluded that plaintiff, a health care provider, was not barred from bringing an action under article 21.21 of the Texas Insurance Code based in part[9] on the following rationale:
If a patient is not covered under an insurance policy, despite the insurance company's assurances to the contrary, a provider's subsequent civil recovery against the insurer in no way expands the rights of the patient to receive benefits under the terms of the health care plan.... A provider's state law action under these circumstances would not arise due to the patient's coverage under an ERISA plan, but precisely because there is no ERISA plan coverage.
Id. at 246 (emphasis added). In Memorial Hospital, the plan participant was without coverage because she sought treatment for an excluded pre-existing condition. See also Hospice of Metro Denver, Inc. v. Group Health Ins. of Oklahoma, Inc., 944 F.2d 752 (10th Cir.1991) (relying on Memorial Hospital for the proposition that a common law claim for promissory estoppel does not "relate to" a plan because it does not seek to enforce or modify the terms of a plan where there is no available coverage in the first instance).
Therefore, the court must conclude that San Marcos' statutory and common law claims for misrepresentation are preempted by § 1144(a) because they "relate to" an ERISA plan. San Marcos' remaining claims under Count I also are preempted, pursuant to the Fifth Circuit's decision in Ramirez v. Inter-Continental Hotels, 890 F.2d 760, 762-63 (5th Cir.1989). Summary judgment shall be granted in favor of defendants on Counts I and IV of San Marcos' Complaint.
(2) Counts II and III
(Breach of contract, breach of duty of good faith and fair dealing)
Defendants argue they are entitled to summary judgment on Counts II and III because they involve claims for improperly processing a claim for benefits. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987); see also Ramirez, 890 F.2d at 762-63. Pilot Life is dispositive of this matter. Therefore, summary judgment shall be entered on behalf *769 of defendants on Counts II and III of San Marcos' Complaint.
(3) Count V (Equitable estoppel)
Defendants argue that they are also entitled to summary judgment on Count IV because a claim for equitable estoppel "relates to" the plan and, therefore, is preempted. The courts have split on the question of whether a claim for equitable or promissory estoppel may be raised under ERISA. A majority of the courts have dealt with this question by examining whether a federal common law claim for estoppel should be fashioned. See, e.g., Armistead v. Vernitron Corp., 944 F.2d 1287 (6th Cir.1991); Black v. TIC Inv. Corp., 900 F.2d 112, 114-115 (7th Cir.1990); Degan v. Ford Motor Co., 869 F.2d 889, 895 (5th Cir.1989); Nachwalter v. Christie, 805 F.2d 956, 959-61 (11th Cir.1986); Holland v. Burlington Industries, Inc., 772 F.2d 1140, 1147 n. 5 (4th Cir.1985), affirmed without opinion, 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 559 (1986); Landro v. Glendenning Motorways, Inc., 625 F.2d 1344, 1351 (8th Cir.1980); see contra Hospice of Metro Denver, Inc. v. Group Health Ins. of Oklahoma, 944 F.2d 752 (10th Cir.1991) (recognizing a state law claim for promissory estoppel on behalf of a health care provider); Duerr v. Delco Products, 911 F.2d 732 (6th Cir.1990) (unpublished opinion) (recognizing a state law claim for promissory estoppel on behalf of an individual who was not a participant under the ERISA plan). While this court acknowledges that San Marcos has not characterized its claim for equitable estoppel as one arising under federal common law, the court shall determine sua sponte whether the facts in this case warrant recognition of a federal common law claim for equitable estoppel.
On two occasions the Court of Appeals for the Eighth Circuit has lent its support to the proposition that Congress intended the courts to create a body of federal common law to enforce ERISA's provisions. Anderson, 830 F.2d at 877; Landro, 625 F.2d at 1351. In Landro, the first case to address this matter, the court of appeals explained its support for the creation of a body of federal common law:
The legislative history of the Act demonstrates that in order to fill the gaps left by ERISA's express provisions, Congress "intended that a body of Federal substantive law will be developed by the courts to deal with issues involving rights and obligations under private welfare and pension plans," 120 Cong.Rec. 29942 (1974) (remarks of Senator Javits), in much the same way as the federal courts have long fashioned federal common law under section 301 of the Labor Management Relations Act of 1974. We might, therefore, seek to discern and apply "federal" principles in the decision of this case.
Id. at 1351 (citations omitted). The Eighth Circuit later restated this view in Anderson.
Notwithstanding its remarks, the Eighth Circuit has yet to fashion a remedy for estoppel under federal common law in ERISA cases. In Landro, the court of appeals determined that the acts giving rise to the plaintiff's claim for promissory estoppel occurred prior to the enactment of ERISA. Therefore, the case was resolved under state law. Id. at 1352. In Anderson, the court of appeals refused to recognize a federal common law right of action to enforce the terms of an alleged oral contract, because it did not believe the employer intended to be bound by its so-called company "policy":
The gist of Anderson's claim is that the employer's oral statement to individual employees of its "policy" became a contract to maintain and improve the plan.... Doubtless it is consistent with the intent of Congress for an employer to undertake such an obligation if it elects to do so. We conclude, however, that to accomplish that result, there must be a specific, if not written, expression of the employer's intent to be bound. Such expression is lacking in the Company's statement of its "policy" in this case.
Anderson, 830 F.2d at 877 (emphasis added). Although the Eighth Circuit to date *770 has not seen fit to recognize a federal common law right of action in ERISA cases, these decisions suggest that the court would be willing to fashion a federal common law action for equitable estoppel under certain circumstances. This court suggests that the Eighth Circuit would be willing to recognize a claim for estoppel where an employer (or plan administrator) has expressed a "specific" intent to be bound by either an oral or written modification of the plan.
Other federal courts of appeal have explored at length the appropriateness of expanding ERISA's express remedies. The Court of Appeals for the Eleventh Circuit, in Nachwalter v. Christie, 805 F.2d 956 (11th Cir.1986), was one of the first circuits to address this issue at length. In Nachwalter, the court was asked to employ the doctrine of estoppel to enforce an oral agreement that had the effect of modifying the written terms of an employee pension plan. The court of appeals declined to do so. In support of its decision, the court of appeals articulated three reasons for refusing to adopt the federal common law doctrine of estoppel in ERISA cases: 1) ERISA requires that employee benefit plans are "established and maintained pursuant to a written instrument," 29 U.S.C. § 1102(a)(1); 2) ERISA further requires that an employee benefit plan "provide a procedure for amending such plan, and for identifying the persons who have authority to amend the plan," 29 U.S.C. § 1102(b)(3); and 3) ERISA's purpose of protecting employee benefit plan interests would be undermined because employees "would be unable to rely on these plans if their expected retirement benefits could be radically affected by funds dispersed to other employees pursuant to oral agreements." Id. at 960.
The Eleventh Circuit has reaffirmed its decision in Nachwalter on several occasions. See, e.g., National Companies Health Benefit Plan v. St. Joseph's Hosp. of Atlanta, Inc., 929 F.2d 1558 (11th Cir. 1991); Alday v. Container Corp. of America, 906 F.2d 660 (11th Cir.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 675, 112 L.Ed.2d 668 (1991); Kane v. Aetna Life Ins., 893 F.2d 1283 (11th Cir.), cert. denied, ___ U.S. ___, 111 S.Ct. 232, 112 L.Ed.2d 192 (1990). Nevertheless, in Kane, the court of appeals agreed to recognize a claim for equitable estoppel under federal common law to enforce oral interpretations of an employee benefit plan. Id. at 1285. Kane involved an action to enforce an oral interpretation of an ambiguous clause in the plaintiff's group health insurance plan. The court of appeals explained that the holding in Kane was consistent with Nachwalter: "[T]he use of the law of equitable estoppel to enforce oral interpretations of employee benefit plans will not affect the ability of employees and beneficiaries to rely on the written terms of such plans." Id. at 1286.
The majority of courts which have followed Nachwalter have relied on the writing requirement and the concern for actuarial soundness in pension plans (the third reason indicated by the Nachwalter court). See, e.g., Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1163-64 (3d Cir.1990) (reliance on writing requirement); Degan v. Ford Motor Co., 869 F.2d 889 (5th Cir. 1989) (reliance on both writing requirement and actuarial soundness); Straub v. Western Union Tel. Co., 851 F.2d 1262, 1265-66 (10th Cir.1988) (writing requirement); Cleary v. Graphic Communications Int'l Union Supplemental Retirement & Disability Fund, 841 F.2d 444, 447-448 (1st Cir.1988) (actuarial soundness).
Two circuits, however, have refused to apply Nachwalter's reasoning when the case involves benefits under a welfare benefit plan. The Seventh Circuit in Black v. TIC Investment Corp., 900 F.2d 112 (7th Cir.1990) (holding limited to claims for benefits under unfunded single-employer welfare benefit plans), and the Sixth Circuit in Armistead v. Vernitron Corp., 944 F.2d 1287 (6th Cir.1991) (relying on Black), held that federal common law estoppel principles are applicable to claims for benefits under employer welfare plans because concerns about actuarial soundness are absent. In the case of a welfare plan (ie., health insurance policy), the Sixth Circuit explained:
*771 Typically the employer pays policy premiums out of its own assets, perhaps with a contribution from the employee. The actuarial soundness of a fund, which might be depleted if strict vesting and accrual requirements were not observed, is not an issue where a plan of this description is involved. We conclude therefore that in such a case, the purpose of Congress in enacting 29 U.S.C. § 1102(a) [the writing requirement] would not be frustrated by recourse to estoppel principles, which are generally applicable to all legal actions.
Id. at 1300. See also, Black, 900 F.2d at 115 ("In cases such as these where there is no danger that others associated with the Plan can be hurt, there is no good reason to breach the general rule that misrepresentations can give rise to an estoppel.").
Like the plans at issue in Black and Armistead, the present case involves a claim for benefits under an employee welfare plan. The alleged oral representations San Marcos seeks to enforce would modify the terms of the written plan. However, the nature of these oral statements differ in kind from the type of representations often involved in these cases. This is not an instance where someone misrepresented that an employee had coverage when he did not or assured an employee that certain welfare benefits would never be amended or terminated, contrary to the express terms of the plan. Here, the issue is whether Tina was entitled to maintain pre-July 1989 benefits on the grounds that the mental disorder she was receiving treatment for pre-existed the change in benefits. In some respects, this case is akin to Kane in that the oral representations San Marcos seeks to enforce appear to have been made pursuant to an interpretation of the plan's provisions.[10]
Based on this court's analysis of Eighth Circuit case law, the court finds that the present circumstances warrant finding a federal common law claim for equitable estoppel. The oral representations made were neither flippant nor gratuitous in character. They were made by persons with the apparent authority to make such representations. Furthermore, the statements were made over a period of several months and during the course of several telephone conversations. Based on these circumstances, the court believes that there is sufficient evidence to suggest that defendants expressed a "specific" intent to be bound by these oral representations. Thus, the fact that defendants did not draft a formal written amendment to the plan should not be grounds for denying San Marcos' claim for equitable estoppel. Congress inserted the writing requirement in ERISA "in order that every employee may, on examining the plan documents, determine exactly what his rights and obligations are under the plan." H.R.Conf. Rep. No. 1280, 93d Cong., 2d Sess. 297 (1974), reprinted in 1974 U.S.Code Cong. & Admin.News, 4639, 5038, 5077-78. When a written plan fails to adequately inform a participant of his rights due to an omission or an ambiguity blind application of this rule will only serve to defeat the very purpose it was meant to further.
Having established that San Marcos may proceed with its claim for equitable estoppel under federal common law, the court must qualify its finding. Because Aetna did not agree at the outset to reimburse, carte blanche, the treatment San Marcos sought to provide Tina, San Marcos has incurred no injury under a theory of detrimental reliance. Before San Marcos can raise its claim for estoppel, it must first establish that Aetna erred in denying further benefits under the plan.[11] Once it has been established that benefits were improperly denied, questions as to *772 what level of benefits Tina was entitled shall be ripe for the court's consideration along with San Marcos' claim for equitable estoppel.[12]
(4) Count VI (§ 1132(a)(1)(B) action)
Finally, defendants argue that they are entitled to summary judgment on Count VI because San Marcos does not have standing to bring an enforcement action under § 1132(a)(1)(B). As noted earlier, Tarra executed an assignment of benefits to San Marcos. Although Tarra failed to obtain the required consent prior to executing the assignment, defendants, by their own actions, have waived the right to contest the validity of the assignment. Not only did Aetna make direct payment of benefits to San Marcos, it permitted San Marcos to participate in the administrative appeals process. Defendants do not dispute these statements, nor do they offer any argument in the way of rebuttal. Accordingly, the court finds that the assignment of benefits is valid and shall permit San Marcos to proceed with its § 1132(a)(1)(B) action. Defendants request for summary judgment on Count VI is denied.
(5) Request to Strike Affirmative Defenses
Although San Marcos moves to strike defendants' affirmative defenses, its motion for partial summary judgment deals entirely with its contention that statutory and common law claims for misrepresentation are not preempted by § 1144(a). Since San Marcos fails to explain why it is entitled to summary judgment on the remaining defenses, the court shall deny San Marcos' request for summary judgment.
D. San Marcos' Motion to Amend
San Marcos seeks leave to file its First Amended Complaint to amend its damages (actual and attorney's fees), to "clarify and more precisely plead its allegations," and to add additional claims under ERISA and Missouri law.[13] In support of its motion, San Marcos argues that because much of the discovery in this case took place after the deadline for amending pleadings (March 29, 1991), it did not have the information it now seeks to incorporate in its petition. Defendants object to San Marcos' request to amend as untimely and inappropriate.
On May 30, 1991, this court denied San Marcos' first request to amend its Complaint to add additional parties. This request was denied because the court did not find that "extraordinary circumstances" were present to warrant such relief. Although not mentioned in its original order, another reason why the court denied San Marcos' motion was because it believed that San Marcos wished to engage in a "fishing" expedition.
As San Marcos aptly points out, Rule 15(a) of the Federal Rules of Civil Procedure directs a court to permit a party to amend its pleading "when justice so requires." The court sympathizes with the difficult position San Marcos was placed as a result of its late entry in this suit. Thus, to the extent that San Marcos seeks to supplement its petition so as to "clarify" its allegations, the court shall permit San Marcos *773 to do so. Additionally, San Marcos shall be permitted to amend its actual (economic) damages and the stated sums for reasonable attorney's fees. The court agrees with San Marcos that defendants will not be prejudiced by these amendments. The court, however, will not permit San Marcos to allege new claims under ERISA and Missouri law. It is this court's belief that San Marcos had sufficient information at the outset of this proceeding to assert the claims it now seeks to add. Accordingly, the court shall direct San Marcos to revise its proposed First Amended Complaint so that it conforms with all of the rulings the court has made in this order.
E. Tarra Lynne Coonce's Motion to Amend
Tarra seeks to amend her Complaint to clarify the factual allegations contained in the causes of action and to add additional claims under ERISA and Missouri law.[14] Defendants object to plaintiff's motion as being untimely.
Pursuant to defendants' motion for partial summary judgment, this court entered summary judgment in its entirety on behalf of defendants and against Tarra. See supra discussion at B.(1)-(6). Were the court to grant Tarra's motion namely, her request to add additional claims arising under ERISA and Missouri law Tarra would be reinstated as a party in this action. The court, however, does not believe that the circumstances warrant such a finding. As the court noted in its disposition of San Marcos' motion to amend, the claims Tarra seeks to add involve matters that were known to her at the time she filed this action. There is no excusable reason why Tarra did not include these claims in her original petition or before the deadline passed for amending pleadings. The court does not believe that Rule 15(a) should be used to cure careless omissions in drafting particularly when the request to amend occurs shortly before trial. Consequently, the court shall deny Tarra's motion to amend in its entirety.
III. CONCLUSION
In consideration of the above, it is hereby
ORDERED that defendants' Motion for Partial Summary Judgment on the Claims of Plaintiff Tarra Lynne Coonce is granted. Judgment shall be entered for defendants and against plaintiff Tarra Lynne Coonce on Counts I, II, III, IV, V, and VI. Defendants' motion discharges plaintiff Coonce as a party in this case. Plaintiff San Marcos Treatment Center is the surviving plaintiff in this case. It is further
ORDERED that plaintiff San Marcos' Motion for Partial Summary Judgment is denied. It is further
ORDERED that defendants Motion for Summary Judgment on Intervenor San Marcos is granted in part and denied in part. The court grants summary judgment on behalf of defendants and against plaintiff San Marcos on Counts I, II, III, and IV. The court denies summary judgment on Counts V and VI. It is further
ORDERED that plaintiff San Marcos' Motion for Leave to File First Amended Complaint in Intervention is granted in part and denied in part. San Marcos shall be permitted to supplement its surviving allegations and amend its prayer for actual damages and attorney's fees. San Marcos is directed to revise its First Amended Complaint so that it conforms with the rulings set forth herein. The court further directs San Marcos to resubmit its amended petition for filing within fifteen (15) days from the date of this order. It is further
ORDERED that plaintiff Tarra Lynne Coonce's Motion for Leave to File First Amended Complaint is denied.
NOTES
[1] Plaintiff San Marcos initially entered this suit as an intervenor party. During the pendency of these motions, San Marcos sought leave to realign itself as a party plaintiff. The court granted San Marcos leave to realign itself as a party plaintiff. See Order of September 17, 1991.
[2] Tarra also participated in some of these discussions.
[3] The confusion as to the number of days was complicated by the fact that Cathcart had been incorrectly advised at the outset that the current benefit level of coverage (pre-July 1, 1989) included a 365-day per confinement limit.
[4] In addition to setting forth what benefits were available to a prospective patient, the form included a place for the recipient to indicate whether there were any discrepancies in the coverage limits as stated therein. It provided:
We require written verification of benefits and advisement of any exclusions and limitations other than those indicated above. It is hereby agreed that the subject patient's complete confinement at the San Marcos Treatment Center will be paid according to the benefits stated above. Please complete and sign the certification below, return at your earliest convenience. IF THIS DOCUMENT IS NOT RETURNED TO US WITHIN 20 CALENDAR DAYS OF THE DATE SHOWN ABOVE, WE WILL RESUME THAT ALL INFORMATION CONTAINED HEREIN IS CORRECT.
(Emphasis and bold type included in original text).
[5] The court finds plaintiff's argument regarding the validity of the assignment moot. By their own actions, defendants have verified plaintiff's assignment. See infra discussion under C.(4).
[6] The affirmative defenses challenged: 1) attorney's fees are barred (29 U.S.C. § 1132); 2) action is barred by ERISA's statute of limitations (29 U.S.C. § 1113); 3) claims are barred by the business judgment doctrine; 4) claims are preempted (29 U.S.C. § 1144(a)); 5) claims are barred by lack of specific intent to violate ERISA; 6) claims are barred because San Marcos has failed to exhaust all available administrative remedies; and 7) claims are barred because defendants did not act arbitrarily and capriciously.
[7] Tex.Ins.Code Ann. art. 21.21 §§ 4(1), 16; Tex. Bus. & Com.Code Ann. §§ 17.46(b)(2), (5), (7), (12). San Marcos also asserts claims under Texas State Board of Insurance Official Order No. 41454, Rule 059.21.26.003(15) (refusal to pay claim); Official Order No. 41060, Rule 059.50.01.003(a), (b); Official Order No. 18663, and Rule 059.50.01.004 (misrepresentation of policy terms and deceptive claims practices).
[8] Section 1144(a) provides:
Except as provided in subsection (b) of this section [savings clause], the provisions of this subchapter ... shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan
....
(Emphasis added). State law is broadly defined under the statute. It includes "all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." 29 U.S.C. § 1144(c)(1).
[9] The Fifth Circuit also rested its decision on the fact that plaintiff had no standing to bring an action for civil enforcement under § 1132(a)(1)(B). Although the Fifth Circuit earlier held in Hermann Hospital v. MEBA Medical & Benefits Plan, 845 F.2d 1286 (5th Cir.1988), that a health care provider's state law claims (breach of fiduciary duty, negligence, equitable estoppel, breach of contract, and fraud) were preempted by ERISA, it suggested that MEBA Medical was factually distinguishable from the present case and that the Supreme Court's decision in Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988), released after MEBA Medical, "places a different light on state law actions brought by non-ERISA entities against an ERISA plan or fiduciary." Memorial Hospital, 904 F.2d at 250 n. 20. To date, the Supreme Court has not been asked to decide what remedies are available to a health care provider who has been given incorrect information regarding insurance coverage. With all due respect to the Fifth Circuit, this court suggests that the court of appeals' reliance on Mackey is misplaced. This court shall not consider whether parties who do not have standing to sue under § 1132 should be entitled to remedies that would be preempted under § 1144(a).
[10] Because the court has not seen the actual insurance contract, it can only speculate as to why defendants had reason to question whether the plan's new level of benefits applied to Tina's pre-existing condition. The court has reviewed the insurance booklet that was in effect at the time. The insurance booklet does not provide any information addressing this matter.
[11] The parties have not yet advised the court as to what standard of review "arbitrary and capricious" or "de novo" they believe the court should apply in relation to San Marcos' civil enforcement action.
[12] Whether the elements of a claim for equitable estoppel are present is a question of fact. Twin City Fire Ins. v. Philadelphia Life Ins. Co., 795 F.2d 1417, 1431 (9th Cir.1986); Apponi v. Sunshine Biscuits, Inc., 809 F.2d 1210, 1217 (6th Cir.), cert. denied, 484 U.S. 820, 108 S.Ct. 77, 98 L.Ed.2d 40 (1987). Because the parties disagree as to whether the elements of equitable estoppel are present, this matter will be submitted to a jury. The court, however, will decide whether the doctrine should apply in this case. The elements of equitable estoppel, as recognized by federal common law, include: 1) misstatement of a material fact; 2) party to be estopped was aware of the true facts; 3) party intended that the misstatements be acted on or had reason to believe that the recipient of the information would rely on it; 4) the recipient of the information did not know, nor should have known, the true facts; and 5) the recipient of the information reasonably and detrimentally relied on the misstatements. National Companies Health Benefit Plan, 929 F.2d at 1572.
[13] San Marcos wishes to add claims pursuant 29 U.S.C. § 1140 (discrimination against a plan participant or beneficiary for exercising rights under an employee benefit plan) and Mo.Rev. Stat. § 376.381 (required mental health benefits under state law).
[14] Tarra seeks to add claims pursuant to 29 U.S.C. §§ 1140, 1132(c)(1) (administrator's refusal to supply requested information to a plan participant), and Mo.Rev.Stat. § 376.381.
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https://www.courtlistener.com/api/rest/v3/opinions/2259543/
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18 Cal.Rptr.3d 127 (2004)
121 Cal.App.4th 1133
Henry C. YUEN et al., Petitioners,
v.
The SUPERIOR COURT of Los Angeles County, Respondent.
Gemstar-TV Guide International, Inc. et al., Real Parties in Interest.
No. B172662.
Court of Appeal, Second District, Division Five.
August 25, 2004.
As Modified August 31, 2004.
Review Denied December 1, 2004.[*]
Arkin Kaplan, Stanley S. Arkin, Michelle A. Rice, New York, NY; Augustini & Wheeler, David Wheeler, Los Angeles, and Frederick A. Haist, Santa Monica, for Petitioners.
No appearance for Respondent.
Hogan & Hartson, Richard L. Stone, Anthony Basich, Neil R. O'Hanlon and Gary L. Urwin, Los Angeles, for Real Parties in Interest.
ARMSTRONG, J.
In Green Tree Financial Corp. v. Bazzle (2003) 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414, the Supreme Court has held that in arbitration proceedings governed by the Federal Arbitration Act (FAA) (9 *128 U.S.C. § 1 et seq.), where an arbitration agreement is silent on the issue of whether class-wide relief is available, an arbitrator, not a court, should resolve the class arbitration issue. In this case, which is also governed by the FAA, we hold that the arbitrator should likewise decide whether the parties' arbitration agreement permits consolidation of two arbitration proceedings.
FACTS AND PROCEDURAL HISTORY
Petitioner Henry Yuen is the founder and former president of Gemstar. Petitioner Elsie Ma Leung is Gemstar's former chief financial officer. Yuen developed the "VCR+" system that allows a viewer to videotape television programs using a five-digit code. TV Guide International acquired Gemstar, now known as "Gemstar-TV Guide International."[1] Upon the sale of Gemstar to TV Guide, Yuen and Leung became Gemstar employees. As part of the acquisition, Yuen and Leung each signed five written agreements, collectively referred to as the "Restructuring Agreements." Each agreement provided that the parties would submit any dispute involving the agreements to binding arbitration under the rules of the American Arbitration Association (AAA). The arbitration was to be held in the State of New York, but California law would apply.[2]
Restructuring Agreements signed by Yuen and Leung provided that they could be terminated for cause. Gemstar terminated both Yuen and Leung's employment on April 18, 2003, based on, among other things, alleged financial irregularities revealed in an accounting report.
On May 30, 2003, Yuen and Leung initiated separate AAA arbitration proceedings in New York. Their arbitration demands are substantially identical. On June 9, 2003, the AAA provided petitioners' counsel lists of potential arbitrators. Each list contained different names. On July 8, 2003, petitioners' counsel submitted petitioners' arbitrator selection list. Again, the list was different for each petitioner. On that same date, Gemstar filed a consolidated answer and counterclaim.
On July 31, 2003, the AAA submitted to counsel a three-member panel of arbitrators for each proceeding. There was a short delay in the Yuen proceeding after Yuen objected to the appointment of one of the arbitrators. The Leung panel was appointed on August 13, 2003 and a replacement arbitrator was selected for the Yuen panel on September 19, 2003.
Gemstar raised the matter of consolidation during conferences with the arbitrators in September 2003. The panels advised counsel that absent the parties' agreement or a court order, the AAA did not have jurisdiction to consolidate the proceedings. The AAA case manager confirmed the AAA's position in a letter to counsel dated October 22, 2003.
In early October 2003, both sides commenced discovery in the Leung proceeding. Additional matters, including Leung's motions to dismiss Gemstar's counter *129 claims and to advance attorney's fees, were submitted to the arbitration panel.
Yuen and Leung would not agree to consolidate the arbitrations. On November 3, 2003, Gemstar filed before respondent court a motion to consolidate the arbitrations pursuant to Code of Civil Procedure section 1281.3. That section provides that a court may order consolidation of separate arbitration proceedings where: "(1) Separate arbitration agreements or proceedings exist between the same parties; or one party is a party to a separate arbitration agreement or proceeding with a third party; and (2) The disputes arise from the same transactions or series of related transactions; and (3) There is common issue or issues or law or fact creating the possibility of conflicting rulings by more than one arbitrator or panel of arbitrators."
Respondent court granted the motion to consolidate in an order filed November 24, 2003. The court found it would be appropriate to consolidate the two arbitration proceedings because the facts alleged in the demands for arbitration were virtually identical, many of the same witnesses would testify in both proceedings, and counsel were the same in both proceedings. The court found that "[s]eparate arbitrations would be costly, involve duplicative witnesses and might result in conflicting rulings by the respective AAA arbitration panels." The court found that the only remaining issue to be determined was whether Code of Civil Procedure section 1281.3 applied. Neither party had cited or discussed Green Tree, and respondent court did not refer to Green Tree in its order granting the motion to consolidate. Instead, the court based its analysis on California case law and earlier Supreme Court cases, particularly Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University (1989) 489 U.S. 468, 109 S.Ct. 1248, 103 L.Ed.2d 488 (Volt), in which the court held that the FAA did not preclude a California court from applying California procedural statutes governing arbitration.
Petitioners challenged respondent court's order in a petition for writ of mandate filed January 26, 2004.[3]
DISCUSSION
Congress enacted the FAA "`to overrule the judiciary's long-standing refusal to enforce agreements to arbitrate, . . .'" (Volt, supra, 489 U.S. at p. 478, 109 S.Ct. 1248.) The FAA's passage "`was motivated, first and foremost, by a congressional desire to enforce agreements into which parties had entered.'" (Ibid., citing Dean Witter Reynolds Inc. v. Byrd (1985) 470 U.S. 213, 220, 105 S.Ct. 1238, 1242, 84 L.Ed.2d 158.)
Beyond ensuring that courts would enforce arbitration agreements covered by the FAA, Congress made "no federal policy favoring arbitration under a certain set of procedural rules. . . ." (Volt, supra, 489 U.S. at p. 469, 109 S.Ct. 1248.) Prior to the Supreme Court's decision in Green Tree, California courts applied California statutes governing arbitration procedures to arbitrations covered by the FAA. (Garcia v. DIRECTV, Inc. (2004) 115 Cal.App.4th 297, 298, 9 Cal.Rptr.3d 190; Blue Cross of California v. Superior Court (1998) 67 Cal.App.4th 42, 60, 78 Cal.Rptr.2d 779.)
Green Tree, a commercial lender, was the defendant in two class actions (Bazzle and Lackey) filed by disgruntled customers. The plaintiffs' loan agreements included a clause providing for arbitration of *130 all contract-related disputes, but was silent on the issue of whether a class-wide arbitration was permissible. Green Tree moved to compel arbitration in both cases. The arbitrator who arbitrated both cases certified class arbitrations and ultimately ruled in favor of the plaintiffs in both cases.
Among Green Tree's arguments on appeal was that the matters should not have proceeded as class arbitrations because the contract prohibited them. The South Carolina Supreme Court held that because the arbitration clauses were silent on the issue, state law applied. Interpreting South Carolina law, the court interpreted the agreements as permitting class arbitration. The Supreme Court granted certiorari to determine whether that ruling conflicted with the FAA.
The Supreme Court held that the issue of whether the parties' contract permitted class arbitration was a matter of state law contract interpretation that the arbitrator, not the court, should resolve. Although a court should decide "certain gateway matters, such as whether the parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy," issues that do not involve either "the validity of the arbitration clause nor its applicability to the underlying dispute between the parties" are for the arbitrator, not the court, to resolve.
". . . [T]he question is not whether the parties wanted a judge or arbitrator to decide whether they agreed to arbitrate a matter. [Citation.] Rather, the relevant question here is what kind of arbitration proceeding the parties agreed to. That question does not concern a state statute or judicial procedures. [Citation.] It concerns contract interpretation and arbitration procedures. Arbitrators are well situated to answer that question. Given these considerations, along with the arbitration contracts' sweeping language concerning the scope of the questions submitted to arbitration, this matter of contract interpretation should be for the arbitrator, not the courts, to decide. [Citation.]" (Green Tree, supra, 123 S.Ct. at p. 2407, 123 S.Ct. 2402.)
Thus, under the line drawn by the Supreme Court in Green Tree, the court decides whether the matter should be referred to arbitration, but "once a matter has been referred to arbitration, the court's involvement is strictly limited until the arbitration is completed." (Finley v. Saturn of Roseville (2004) 117 Cal.App.4th 1253, 1259, 12 Cal.Rptr.3d 561.)
The contracts in this case contain a California choice-of-law provision with an equally broad arbitration clause stating that "all disputes" relating to the contract shall be submitted to arbitration. Green Tree mandates that consolidation is such an issue.
Although it declined to resolve the consolidation issue at the time Gemstar informally requested consolidation, the AAA, in direct response to Green Tree, has recognized the impact of that case by adopting Supplementary Rules for Class Arbitration. Pursuant to these supplementary rules, effective October 8, 2003, the AAA has agreed to administer demands for class arbitration where "(1) the underlying agreement specifies that disputes arising out of the parties' agreement shall be resolved by arbitration in accordance with any of the Association's rules, and (2) the agreement is silent with respect to class claims, consolidation or joinder of claims." (AAA, Rules, Supplementary Rules for Class Arbitration, .) Although these rules are specific to class arbitrations, and a request *131 for consolidation may involve somewhat different considerations, the rules nonetheless provide an administrative mechanism by which the AAA may consider the consolidation issue raised here.
DISPOSITION
The petition for writ of mandate is granted. A peremptory writ shall issue directing respondent court to vacate its order of November 24, 2003, granting defendant's motion to consolidate separate arbitrations, and enter a new and different order denying the motion without prejudice to submitting the matter to the AAA. The parties are to bear their own costs.
I concur: GRIGNON, Acting P.J.
MOSK, J., Concurring.
Introduction
This case involves a trial court order pursuant to Code of Civil Procedure section 1281.3 compelling consolidation of two arbitrations involving different claimants with identical employment agreements with the same defendant. The majority hold that a California trial court may not, under a state statute and over the objection of one of the parties, compel consolidation of two arbitrations that involve interstate commerce, and that the issue of consolidation should be left to the arbitrator.[1] The majority state that the case is governed by the Federal Arbitration Act, 9 U.S.C. section 1, et al. (FAA), and rely upon Green Tree Financial Corp. v. Bazzle (2003) 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414 (Green Tree), a case that dealt with a class arbitration rather than consolidation pursuant to a state statute.
I come to the same conclusion as the majority and explain why I do so. Interpreting the choice-of-law clauses in the agreements, I determine that the parties did not intend to incorporate state arbitration law, and that is why the FAA applies. In the past, a majority of federal courts have held that the FAA did not authorize the consolidation of arbitrations absent the agreement of the parties. In Green Tree, supra, 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414, a plurality of the United States Supreme Court held that the arbitrator should determine whether an arbitration agreement subject to the FAA permitted or precluded class arbitration. The reasoning of Green Tree should result in the arbitrator or arbitrators agreements in this case permit consolidation and whether the arbitrations should be consolidated.
Agreements
The agreements provide that any "dispute, controversy, claim or disagreement shall be resolved pursuant to confidential binding arbitration in New York, New York by a panel of three neutral arbitrators. The arbitration shall be conducted in accordance with the Commercial Rules of the American Arbitration Association then in effect." The agreements also state, "This Agreement, the legal relations between the parties and any action, whether contractual or non-contractual, instituted by any party with respect to matters arising under or growing out of or in connection with or in respect of this Agreement, the relationship of the parties or the subject matter hereof shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and performed in such State and without regard to conflicts of law doctrines."
*132 Applicable Laws
Code of Civil Procedure section 1281.3 specifically authorizes the trial court to consolidate arbitrations under circumstances that existed in this case. Any written agreement to arbitrate in a contract involving interstate commerce is subject to the FAA. The parties to such an agreement may, however, "make applicable state rules governing the conduct of arbitration," as long as state law is not preempted by the FAA. (Volt Information Sciences, Inc. v. Board of Trustees (1989) 489 U.S. 468, 476, 109 S.Ct. 1248, 103 L.Ed.2d 488.) The transactions here are in interstate commerce. Consequently, unless the parties agreed to apply state arbitration law that was not preempted, the FAA would apply.
Federal Decisions Before Green Tree
A majority of federal appeal court decisions before Green Tree, supra, 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414, held that consolidation of arbitrations governed by the FAA may not be compelled absent the parties' express consent. (See 2 Oehmke, Commercial Arbitration (3d ed.2004) § 61:7, pp. 61-12 to 61-14 (Oehmke); 1 Domke on Commercial Arbitration (3d ed.2003) § 32:2, pp. XX-X-XX-X; 21 Williston on Contracts (4th ed.2001) § 57.88, p. 506; Jeydel, Consolidation, Joinder and Class Actions: What Arbitrators and Courts May and May Not Do (2003) 57-JAN Disp. Resol. J. 24; Shamoon & TenCate, Absence of Consent Trumps Arbitral Economy: Consolidation of Arbitrations Under U.S. Law (2001) 12 Am. Rev. Int'l Arb. 335, 336; Annot., Consolidation by Federal Courts of Arbitration Proceedings Brought Under Federal Arbitration Act (9 U.S.C.A. § 4) (1991) 104 A.L.R. Fed. 251.) Courts have suggested when interstate commerce is involved, federal law does not preempt applicable state laws that permit compelling consolidation of arbitration proceedings. (See New England Energy, Inc. v. Keystone Shipping Co. (1st Cir.1988) 855 F.2d 1; Blue Cross of California v. Superior Court (1998) 67 Cal.App.4th 42, 78 Cal.Rptr.2d 779 [no preemption of state law allowing class arbitrations].)
One authority has noted that "[t]he driving force behind the majority of federal circuits that deny consolidation (absent an explicit agreement of all parties) is the lack of an underlying contract among all parties to arbitrate in a single proceeding. The law of contract is the cornerstone of arbitration. For example, an agreement by parties A and B to arbitrate a dispute does not mean, ipso facto, that parties A and B have also agreed to arbitrate in the same room at the same time before the same arbitrators some previously unimagined issues of law and fact with parties X and Y. [¶] Beyond arbitration's traditional carrots of relative speed and greater economy, privacy is the other leg in this troika of features. Parties A and B may not want their business affairs laundered in public (e.g., trade secrets, processes, procedures, methods, etc.) because forcing consolidated arbitrations may compromise business secrecy and confidentiality. [¶] Contractual silence on the issue of consolidation should not be construed as consent to consolidation. Parties' legitimate expectations about arbitration and all of its nuances should be valued, even absent an express prohibition on consolidation in an arbitration agreement. Parties have successfully opposed consolidation by proving it would undermine their stated expectations, especially regarding the arbitrator selection procedures." (Oehmke, supra, § 61:1, at p. 61-3.)
Matters To Be Decided By Court Or Arbitrator
A shift in the law could have been anticipated as a result of the United States *133 Supreme Court decision in Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 123 S.Ct. 588, 154 L.Ed.2d 491 (Howsam). In that case, the court held that the application of a National Association of Securities Dealers (NASD) rule imposing a time limit on submission of disputes for arbitration was a matter for the arbitrator rather than the court. (Id. at p. 81, 123 S.Ct. 588.) In reaching this conclusion, the court distinguished between a narrow category of "questions of arbitrability" that are to be resolved by the courts unless the parties have clearly agreed otherwise, and a broader category of other procedural issues that are presumptively reserved for the arbitrator's resolution. (Id. at pp. 83-84, 123 S.Ct. 588.) The narrow category includes disputes about "whether the parties are bound by a given arbitration clause" and "whether an arbitration clause in a concededly binding contract applies to a particular type of controversy." (Id. at p. 84, 123 S.Ct. 588.) The broader category, by contrast, includes "`procedural' questions which grow out of the dispute and bear on its final disposition" and disputes about such defenses to arbitrability as waiver, estoppel, laches, and time limits. (Id. at pp. 84-85, 123 S.Ct. 588.) The court concluded that the NASD rule on time limits fell into this second, broader category of issues to be determined by an arbitrator. (Id. at pp. 85-86, 123 S.Ct. 588.)
After Howsam, supra, 537 U.S. 79, 123 S.Ct. 588, 154 L.Ed.2d 491, the court in Shaw's Supermarkets, Inc. v. United Food and Commercial Workers Union, Local 791 (1st Cir.2003) 321 F.3d 251, was faced with a United States District Court order requiring plaintiff to arbitrate grievances that had arisen under three separate collective bargaining agreements and to submit the issue of consolidation of the arbitrations to the arbitrators. Plaintiff contended on appeal that consolidation is an issue of substantive arbitrability and not a question of procedure, and that therefore the court rather than the arbitrator should decide the issue. The Court of Appeals disagreed, saying, "The issue before us is who should make the determination as to whether to consolidate the three grievances into a single arbitration: the arbitrator or a federal court. Since each of the three grievances is itself concededly arbitrable, we think the answer is clear. Under Howsam v. Dean Witter Reynolds, Inc., supra, 537 U.S. 79, 123 S.Ct. 588, 154 L.Ed.2d 491, this is a procedural matter for the arbitrator." (Shaw's Supermarkets, Inc. v. United Food and Commercial Workers Union, Local 791, supra, 321 F.3d at p. 254.)
Green Tree
In Green Tree, supra, 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414, the United States Supreme Court dealt with class arbitration and not specifically with consolidation. In that case there was a state court decision ordering class arbitration under state law when the arbitration agreement was silent as to the subject of class arbitration. After concluding that the agreement did not expressly forbid class arbitration, a plurality of the court held that "[u]nder the terms of the parties' contracts, the questionwhether the agreement forbids class arbitrationis for the arbitrator to decide." (Green Tree, supra, at p. 451, 123 S.Ct. 2402.) The plurality said that whether the parties' agreement allowed consolidation was a question of contract interpretation that should be for the arbitrator, not the court, to decide. They referred to Howsam, supra, 537 U.S. 79, 123 S.Ct. 588, 154 L.Ed.2d 491, "finding for roughly similar reasons that the arbitrator should determine a certain procedural `gateway matter.'" *134 (Green Tree, supra, at p. 453, 123 S.Ct. 2402.)
Justice Stevens, whose concurrence in the judgment in Green Tree, supra, 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414, provided the fifth vote, would have allowed the state court decision allowing the class arbitration to stand, but concurred because "[a]rguably the interpretation of the parties' agreement should have been made in the first instance by the arbitrator, rather than the court," and "because Justice BREYER's opinion [the plurality opinion] expresses a view of the case close to my own. . . ." (Id. at p. 455, 123 S.Ct. 2402 (conc. opn. of Stevens, J.).) Thus, it appears that Justice Stevens agreed with the plurality that arbitrators should initially interpret the parties' agreement.
The plurality in Green Tree, supra, 539 U.S. at p. 452, 123 S.Ct. 2402, said that the parties generally expect that a court will decide certain issues related to whether there is a valid and enforceable agreement to arbitrate. The plurality added, however, that "the relevant question here is what kind of arbitration proceeding the parties agreed to. That question does not concern a state statute or judicial procedure. [Citation.] It concerns contract interpretation and arbitration procedures." (Green Tree, supra, 539 U.S. at pp. 452-453, 123 S.Ct. 2402.) In concluding that the arbitrator should determine whether or not the parties' arbitration agreement precluded class arbitration, the plurality in Green Tree, supra, 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414, relied on the parties' express agreement to arbitrate all disputes related to the contract. Even though, the plurality in Green Tree held that the arbitrator decides whether the agreement forbids a class action, they determined, at least initially, that the arbitration agreement in that case did not clearly forbid class arbitration.
Authorities following Green Tree, supra, 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414 seem to treat consolidation as comparable to class arbitration and therefore subject to Green Tree. (Pedcor Management Company, Inc. v. Nations Personnel of Texas, Inc. (5th Cir.2003) 343 F.3d 355, 362 (Pedcor); Birmingham News Company v. Horn (Ala.2004) 901 So.2d 27, 2004 WL 1293993.) A consolidation involves more than one pending arbitration proceeding. This creates problems in how to merge existing panels or panels to be selected in accordance with different agreements. But a class proceeding may involve many who are subject to arbitration clauses. Both consolidation and class arbitration are essentially procedural "gateway" matters (Howsam, supra, 537 U.S. at pp. 83-84, 123 S.Ct. 588; Green Tree, supra, at p. 453, 123 S.Ct. 2402) that do not involve issues of arbitrability. Thus, for purposes of determining whether or not consolidation is permissible under the FAA, Green Tree's reasoning is applicable.
It appears that the plurality opinion in Green Tree, supra, 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414 is not limited to agreements governed solely by the FAA, but there is some question as to whether or not arbitration agreements involving interstate commerce but governed exclusively by state arbitration law would be covered by the holding of the opinion. (See Pedcor, supra, 343 F.3d at pp. 360, 362, fn. 30; see also Garcia v. DIRECTV, Inc.(2004) 115 Cal.App.4th 297, 298, 303, fn. 2, 9 Cal.Rptr.3d 190.) Because, as I discuss, the choice-of-law clauses in the parties' agreements do not reflect the intention to be bound by state law governing arbitrations, neither that question nor any issue of preemption need be addressed.
Intention Of The Parties
In determining whether the applicable choice-of-law clauses manifest an intention *135 to be governed by California procedural rules applicable to arbitrations, courts employ the usual rules of contract interpretation. (See Mount Diablo Medical Center v. Health Net of California, Inc. (2002) 101 Cal.App.4th 711, 722, 124 Cal.Rptr.2d 607.) In Mastrobuono v. Shearson Lehman Hutton, Inc. (1995) 514 U.S. 52, 58-59, 115 S.Ct. 1212, 131 L.Ed.2d 76 (Mastrobuono), the United States Supreme Court dealt with a clause that specified that the agreement "shall be governed by the laws of the State of New York." The court rejected the argument that this provision incorporated a state arbitration rule that precluded arbitrators, but not courts, from awarding punitive damages. The court concluded that state law contract principles suggested that the parties did not intend to incorporate this New York rule and that the choice-of-law provision did not include "special rules limiting the authority of arbitrators." (Id. at p. 63, fn. 9, p. 64, 115 S.Ct. 1212).[2]
In Mount Diablo Medical Center v. Health Net of California, Inc., supra, 101 Cal.App.4th 711, 124 Cal.Rptr.2d 607, the court interpreted a choice-of-law clause to incorporate California arbitration law. In that case, the choice-of-law clause was "broad, unqualified and all encompassing." (Id. at p. 722, 124 Cal.Rptr.2d 607.) It provided that "`[t]he validity, construction, interpretation and enforcement of this Agreement' shall be governed by California law." (Ibid.) The court said, "The explicit reference to enforcement reasonably includes such matters as whether proceedings to enforce the agreement shall occur in court or before an arbitrator. Chapter 2 (in which § 1281.2 appears) of title 9 of part III of the California Code of Civil Procedure is captioned `Enforcement of Arbitration Agreements.' An interpretation of the choice-of-law provision to exclude reference to this chapter would be strained at best." (Ibid.) The court distinguished Mastrobuono, supra, 514 U.S. 52, 115 S.Ct. 1212, 131 L.Ed.2d 76, by noting that the choice-of-law clause there "provided only that it `"shall be governed by the laws of the State of New York."'" (Id. at p. 723, 115 S.Ct. 1212; see also Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 962, 64 Cal.Rptr.2d 843, 938 P.2d 903 [choice-of-law clause incorporated California Code of Civil Procedure sections applicable to arbitrations]; Note, "An Unnecessary Choice of Law: Volt, Mastrobuono, and Federal Arbitration Act Preemption" (2002) 115 Harv. L.Rev. 2250 [discusses application of choice-of-law clauses in cases subject to the FAA].)
In the instant case, the choice-of-law clauses do not refer to enforcement. Real parties in interest argue that the phrase, "[t]his Agreement, the legal relations between the parties and any action" (italics added) evidences an intent to incorporate California procedural law. Yet, the phrase "laws of the state of California applicable to contracts made and performed in such State and without regard to conflicts of law doctrines" modifies the entire clause and suggests that the clauses refer only to California substantive law.
The parties provided that the arbitration was to take place in New York. It seems unlikely that the parties intended to provide for the application of California procedural law in an arbitration taking place in New York. Also relevant is the fact that the agreements applicable in this case replaced *136 agreements that contained the following clauses: "Any controversy or claim arising out of or relating to this Agreement, its enforcement or interpretation, or because of an alleged breach, default, or misrepresentation in connection with any of its provisions, shall be submitted to arbitration, to be held in Los Angeles County, California in accordance with California Code of Civil Procedure Sections 1282-1284.2." The change in the choice-of-law clauses in the new agreements, especially the omission of the references to Code of Civil Procedure sections 1282-1284.2, and the addition of the references to the Commercial Rules of the American Arbitration Association, suggest that the parties did not intend to incorporate California's procedural law for arbitration.
Thus, the most reasonable interpretation of the choice-of-law clauses is that the parties did not intend to be bound by California procedural law applicable to arbitration. Therefore, the FAA applies, rather than Code of Civil Procedure section 1281.3.
Conclusion
I concur in the conclusion of the majority. I note, however, that the "Commercial Rules of the American Arbitration Association then in effect"the mechanism provided by the parties in their agreementsdo not cover consolidation. The arbitrator or arbitrators must determine whether he, she or they have the authority to and should consolidate the proceedings.
NOTES
[*] Kennard, J., dissented.
[1] For ease of reference, we refer to real parties in interest collectively as "Gemstar."
[2] The choice-of-law provision included in each agreement states: "This Agreement, the legal relations between the parties and any action, whether contractual or non-contractual, instituted by any party with respect to matters arising under or growing out of or in connection with or in respect of this Agreement, the relationship of the parties or the subject matter hereof shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and performed in such State and without regard to conflicts of law doctrines."
[3] Petitioners also filed a notice of appeal of respondent court's order. We dismissed the appeal on May 5, 2004.
[1] I assume the majority's reference to "submitting the matter to the AAA" (maj. opn., ante, at p. 1139, 18 Cal.Rptr.3d at p. 131) means to the American Arbitration Association arbitrator or arbitrators and not to the American Arbitration Association administrator.
[2] Volt Information Sciences, Inc. v. Board of Trustees, supra, 489 U.S. 468, 109 S.Ct. 1248, 103 L.Ed.2d 488, "does not stand for the proposition a general choice-of-law provision evidences in all cases an express intent to incorporate a state's arbitration rules into an arbitration agreement." (Blue Cross of California v. Superior Court (1998) 67 Cal.App.4th 42, 62-63, fn. 8, 78 Cal.Rptr.2d 779.)
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288 Md. 216 (1980)
421 A.2d 69
ALFRED DONNELL HUGHES
v.
STATE OF MARYLAND
[No. 122, September Term, 1979.]
Court of Appeals of Maryland.
Decided August 12, 1980.
*217 The cause was argued before MURPHY, C.J., and SMITH, DIGGES, ELDRIDGE, COLE, DAVIDSON and RODOWSKY, JJ.
Nancy Louise Cook, Assistant Public Defender, with whom was Alan H. Murrell, Public Defender, on the brief, for appellant.
Ray E. Stokes, Assistant Attorney General, with whom was Stephen H. Sachs, Attorney General, on the brief, for appellee.
SMITH, J., delivered the opinion of the Court. MURPHY, C.J., and RODOWSKY, J., dissent. MURPHY, C.J., filed a dissenting opinion at page 230 infra, in which RODOWSKY, J., concurs.
We are concerned in this case with the interplay between Maryland Rule 724 stating, with exceptions not here applicable, "[t]he defendant shall be present at every stage of the trial" and Rule 746 b providing that once a trial date in a criminal case has been set any change of date must be "[u]pon motion of a party made in writing or in open court and for extraordinary cause shown [to the satisfaction of] the county administrative judge or a judge designated by him...." In this case appellant Alfred Donnell Hughes was not permitted to appear with counsel at a hearing before the administrative judge to determine whether or not a continuance should be granted. We assume, arguendo, that the hearing was not a "stage of the trial" within the purview of Rule 724. However, because we are of the view that under the facts and circumstances of this case fundamental fairness required that Hughes be present at this particular hearing, we shall reverse the judgment of the Court of Special Appeals in Hughes v. State, 43 Md. App. 698, 407 A.2d 330 (1979).
The facts are relatively simple. Hughes was tried in the *218 Criminal Court of Baltimore on numerous charges. The indictments were returned on April 13, 1978. The appearance of an assistant public defender was entered on his behalf on May 22, 1978. At that time Hughes entered a plea of not guilty and executed the form prescribed by Rule 735 on which he elected a jury trial. A number of weeks prior to September 13, 1978, trial was scheduled for that date. On the morning of September 13 the assigned attorney for Hughes advised the court that on that morning he had been approached by a private attorney; that the private attorney indicated that he had been contacted by the family of the defendant; that the family said they desired to employ that private attorney and were in a financial condition to do so; and that assigned counsel had spoken that morning to Hughes' mother who confirmed the fact that she had indeed talked to the private attorney and had finally been able to marshal her resources so as to be able to retain that private attorney. Counsel said Hughes had been advised of these developments and indicated that he wished to be represented by the private attorney who was the choice of his family. Accordingly, a motion for a continuance was made. The trial judge asked if this was the first time assigned counsel had known about the matter. He replied in the affirmative, stating that the private attorney apparently had just been so advised and that this private attorney was "obviously in no position to represent Mr. Hughes [that day] on these very serious charges." Counsel indicated that the private attorney had certain conflicts of schedule, but as soon as he possibly could he would represent Hughes.
Maryland Rule 746 a as it then existed stated:[1]
a. General Provision.
Within 30 days after the earlier of the appearance of counsel or the first appearance of the defendant before the court pursuant to Rule 723 (Appearance *219 Provision for or Waiver of Counsel), a trial date shall be set which shall be not later than 120 days after the appearance or waiver of counsel or after the appearance of defendant before the court pursuant to Rule 723 (Appearance Provision for or Waiver of Counsel).
b. Change of Trial Date.
Upon motion of a party made in writing or in open court and for extraordinary cause shown, the county administrative judge or a judge designated by him may grant a change of trial date.
Pursuant to that rule the trial judge stated that he had no authority to grant or deny a postponement and suggested to counsel that they see the administrative judge immediately. Whereupon counsel for Hughes said to the court:
MR. LIBOWITZ: Your Honor, on the record, since before my client is taken away, I think, as far as my client is concerned, postponement request is certainly a critical stage in the proceedings against him. It has been indicated, the family has indicated that at this time they are financially able to secure private counsel of their own choice and desirous of same. I would ask that my client be in a position to be present during any postponement request before the administrative judge.
The trial judge indicated he would "leave that up to the jail guard." Thereafter counsel returned to the courtroom and reported relative to the hearing before the administrative judge on the issue of postponement. The assistant State's attorney said:
Your Honor, Judge Karwacki denied the postponement. Mr. Libowitz and Mr. Carey and myself met with him about fifteen, twenty minutes ago. The situation was made known to him. He denied both postponement requests by both Defendants and ordered that the case proceed to trial today. He also denied a motion made by Mr. *220 Carey, Mr. Libowitz to have the Defendants present at the hearing of the request and on the postponement issue.
(Mr. Carey was at that time an assistant public defender who was representing Hughes' codefendant.) Counsel for Hughes added:
I would indicate, Your Honor, that the reasons for the postponement were as indicated to the Court on the record, the Court here.
The case proceeded to trial before a jury. Hughes was found guilty of two counts of assault with intent to murder, two counts of use of a handgun in the commission of a crime of violence, robbery with a deadly weapon, kidnapping, and unlawfully carrying or transporting a handgun. It is the contention of Hughes that the hearing before the administrative judge was a stage of the trial within the meaning of Rule 724 and thus that the defendant was entitled to be present.[2]
The Court of Special Appeals affirmed because of the absence of a record of that which transpired before the *221 administrative judge. It pointed out that in Langrall, Muir & Nopp'r v. Gladding, 282 Md. 397, 401, 384 A.2d 737 (1978), we had said, "[I]t is the responsibility of the aggrieved party, the party claiming abuse, to preserve his objection for review." However, by way of what was termed "dicta," Judge Lowe said for that court, "[I]t would seem that an extraordinary cause hearing may be considered of such importance especially with regard to the underlying purpose that it would at the very least be sufficiently critical to require appellant's presence under Maryland Rule 724 a." He went on to note for the court:
We are apprised that the Supreme Bench of Baltimore City has adopted the post-Hicks administrative policy of requiring all defendants to be present at all requests for scheduling change under Md. Rule 746. While this cumbersome procedure, which obviously causes security and other problems, is questionable, that court has taken Hicks as a warning flag, and chosen not to jeopardize future proceedings with technical oversights. [Id. 43 Md. App. at 711 (emphasis in original).]
(The reference is to State v. Hicks, 285 Md. 310, 403 A.2d 356 (1979).) It would appear in the light of the procedure reported by the Court of Special Appeals relative to cases in Baltimore City that the problem presented in this case would not arise there today.
In this instance we believe the request by counsel to the trial judge, which we have previously quoted, and the report back of the proceedings before the administrative judge provide sufficient record of the request on behalf of Hughes and the denial of that request for appellate review.
Maryland has long recognized the common law right to be present at trial and to be confronted by one's accusers. For instance, in Johns v. State, 55 Md. 350 (1881), the Court rejected a defendant's contention that the admission of a Comptroller's certificate showing the amount in which defendant had defaulted as a state tax collector violated his *222 right of confrontation. In so doing Judge Alvey articulated the gist of the right for the Court:
It is only where the prosecution is to be maintained by the testimony of living witnesses that they are required to be produced in court, confronted with the accused, and deliver their testimony under the sanction of an oath, and be subject to cross-examination. In other words, no witness shall give his testimony in secret, or out of the presence of the accused; and no party shall be put upon his trial upon mere hearsay evidence; but the witness shall be produced, and be subject to all the tests that the law has devised for the full disclosure of the truth. [Id. at 360.]
In Dutton v. State, 123 Md. 373, 91 A. 417 (1914), the Court based its observation that "[u]nder no circumstances should a trial be so conducted as to have the appearance of a Star Chamber proceeding" on Maryland Declaration of Rights, Art. 21. Chief Judge Boyd there explained for the Court the purpose of the provision:
It is quite possible that one on trial may be able to make valuable suggestions to his attorney during the examination of witnesses, particularly the prosecuting witness in a case of this kind, as it matters not how well an attorney may have prepared for the trial of a case, it is impossible for him to anticipate all that may be said, or to know all the details a witness on the opposite side will testify to. It might be that in the course of her examination in the presence of the accused the prosecuting witness would discover that she had made a mistake in the identity of the party committing the crime. [Id. at 389.]
More recently, but prior to the adoption of Maryland Rule 775, the predecessor to our present rule, in Midgett v. State, *223 216 Md. 26, 139 A.2d 209 (1958), Judge Horney discussed for the Court the right of the defendant to be present:
In this State there is no doubt that an accused in a criminal prosecution for a felony has the absolute right to be present at every stage of his trial from the time the jury is impaneled until it reaches a verdict or is discharged, and there can be no valid trial or judgment unless he has been afforded that right. The constitutional guarantee includes the right of the accused to be present (i) when the jury is charged or instructed on the facts, the law or the form of the verdict, before it has begun its deliberations or afterwards upon its request or by direction of the court; (ii) when the court is repeating a charge or instruction previously given in whole or in part; (iii) when the court communicates with the jury in answer to questions propounded by the jury, or (iv) when there shall be any communication whatsoever between the court and the jury: unless the record affirmatively shows that such communications were not prejudicial or had no tendency to influence the verdict of the jury. Furthermore, the right to be present is personal to the accused and cannot be waived by his counsel. Duffy v. State, 151 Md. 456, 135 A. 189 (1926); La Guardia v. State, 190 Md. 450, 58 A.2d 913 (1948); Constitution of Maryland, Declaration of Rights, Art. 5. [Id. at 36-37 (emphasis in original).]
In Bunch v. State, 281 Md. 680, 381 A.2d 1142 (1978), citing a number of our prior cases, Judge Eldridge said for the Court:
The right of a criminal defendant to be present at every stage of his trial is, as we have said many times, a common law right preserved by Art. 5 of the Maryland Declaration of Rights.... [(Citing cases.)] The right, in some measure at least, is also protected by the Fourteenth Amendment to the United States Constitution. Faretta v. California, *224 422 U.S. 806, 819 n. 15, 95 S.Ct. 2525, 45 L.Ed.2d 562 (1975); Illinois v. Allen, 397 U.S. 337, 338, 90 S.Ct. 1057, 25 L.Ed.2d 353 (1970). Cf. Snyder v. Massachusetts, 291 U.S. 97, 54 S.Ct. 330, 78 L.Ed. 674 (1934). Finally, the right is guaranteed by Maryland Rule 724, which provides in pertinent part that "the defendant shall be present at every stage of the trial, including the impaneling of the jury. .. ." [Id. at 683-84.]
In that case an accused was denied the right to be present at a bench conference during which the trial judge and counsel considered a note from one of the jurors stating that the juror was biased. The judge overruled the prosecution's motion to excuse the juror and the motion of the defense for a mistrial, holding that the juror should remain. We reversed, concluding that the accused was denied his right to be present at every stage of trial.
The extent of the right of a defendant to be present as guaranteed by the Fourteenth Amendment is expressed by Mr. Justice Cardozo for the Court in Snyder v. Massachusetts, 291 U.S. 97, 105-06, 54 S.Ct. 330, 78 L.Ed. 674 (1934), that is "whenever his presence has a relation, reasonably substantial, to the fulness of his opportunity to defend against the charge."
Ordinarily, the right to be present does not attach until the process of impaneling the jury begins. For instance, in Veney v. Warden, 259 Md. 437, 271 A.2d 133 (1970), we held that a pre-trial conference regarding procedures to be followed at trial, including permitting separation of the jury, was not a stage of trial. In State v. Collins, 265 Md. 70, 288 A.2d 163 (1972), the accused was convicted upon the basis of deposition testimony taken when he was not present. We reversed, holding that to be a stage of trial. In Goldstein v. State, 220 Md. 39, 150 A.2d 900 (1959), we held that when a judge gave jurors a "Handbook for Jurors" prior to the time at which they were impaneled as a jury that this was not a stage of trial at which the accused had the right to be present. The right to be present at the impaneling of the jury, however, is provided for in the rule. In Haley v. State, *225 40 Md. App. 349, 392 A.2d 551, cert. denied, 284 Md. 744 (1978), the Court of Special Appeals held examination of prospective jurors on voir dire at a bench conference was a stage of the trial within the meaning of the rule since "[i]t is an integral and substantial part of the process of impaneling the jury and, therefore, of the trial itself." Id. at 354. See also Sewell v. State, 34 Md. App. 691, 368 A.2d 1111, cert. denied, 280 Md. 734 (1977) (Conference concerning State's motion in limine requesting that the identity of an informant not be disclosed at trial was held to be exclusively a question of law and not a "stage of trial."); Samson v. State, 27 Md. App. 326, 341 A.2d 817 (1975) (A discussion and a decision made in chambers relative to the defendant's motion for a change of venue was a "purely legal matter[]" and not a "stage of trial."); Redman v. State, 26 Md. App. 241, 337 A.2d 441 (1975) (A pre-trial hearing on a motion to suppress physical evidence and to suppress an in court identification was held to be a "stage of trial."); and State v. Tumminello, 16 Md. App. 421, 298 A.2d 202 (1972) (A conference in chambers relative to the admissibility of a conversation transcribed after its interception by a wiretap was held to be a legal argument on the admissibility of evidence and not a part of the trial.).
There are circumstances in which the trial, once it has begun, may be said to be "suspended" so that the court may attend to administrative or "housekeeping" duties in connection with the trial. As Judge Eldridge pointed out for the Court in Bunch:
[N]ot everything that happens in a criminal case after the jury is impaneled is deemed a "stage of the trial" at which the defendant has a right to be present. For example, in Brown v. State, 272 Md. 450 [, 325 A.2d 557 (1974)], we held that proceedings in the judge's chambers during a recess in the trial, at which the court and counsel agreed upon a procedure for the introduction of certain photographic evidence, was not a stage of the trial requiring the defendant's presence. And in Martin v. State, 228 Md. [311] at 316-317 [, 179 A.2d 865 *226 (1962)], this Court held that argument in chambers on a motion for a directed verdict was not a "step of the defendant's criminal proceedings which requires his presence." See, in addition, Brown v. State, 225 Md. [349] at 351-354 [, 170 A.2d 300 (1961), cert. denied, 372 U.S. 960 (1963)] (proceedings in chambers when requests for instructions were offered). [Id. 281 Md. at 684-85.]
See also, for example, Brown v. State, 236 Md. 505, 204 A.2d 532 (1964) (Two jurors went separately to the chambers of the trial judge at the conclusion of one day of trial. Each indicated a desire to submit a question for answer. He instructed the jurors to wait until the resumption of the trial the following morning pointing out that they could then put the questions in writing and hand them to the bailiff at which time the trial judge would call counsel to the bench. The audience was thus summarily terminated by the trial judge, with no attempt to answer the questions which they posed and with no other discussion of the case. These actions were held "under the circumstances [to be] prudent and not prejudicial to the appellant"); Tisdale v. State, 41 Md. App. 149, 396 A.2d 289 (1979) (When court adjourned for the evening the State and the defense had completed their respective cases-in-chief and the State had indicated a desire to call one rebuttal witness. The next morning the trial judge announced that he had been informed that a juror had called to report that her child was sick and that she would not be present in court. After this he made a telephone call in the presence of counsel to determine firsthand whether or not the juror would be able to resume her duties with dispatch. The Court of Special Appeals held this "was entirely collateral to any matter pertaining to appellant's guilt or innocence, or to the fairness of his trial," hence, he had no right to be present.); and State v. Tumminello, supra, (A bench conference regarding the scope of cross-examination of a certain witness was held to be a legal argument only and not a part of the trial.).
As might be expected, most of the cases concerning the absence of the defendant between the time the jury retires *227 and the rendition of verdict involve communications between the judge and the jury. For instance, in State v. Saul, 258 Md. 100, 265 A.2d 178 (1970), we affirmed a reversal of a conviction by the Court of Special Appeals. It held that the delivery of a note from the jury to the judge was merely a communication and that its reception by the judge, the conference with counsel, and the agreement to give a copy of a requested statute to the jury did not amount to a part of the trial, but that the giving of a copy of the statute "was either a reinstruction or a repetition of a charge or instruction" at which the defendant had the right to be present. Id. at 108. In Saul Judge McWilliams quoted for the Court from the "able and comprehensive opinion" of Judge Orth for the Court of Special Appeals in Young v. State, 5 Md. App. 383, 247 A.2d 751 (1968), where he interpreted Midgett for that court:
"(1) it is reversible error for the court to charge or instruct the jury trying the case, on the facts, the law or the form of the verdict at any time during the involuntary absence of the defendant [but see Maryland Rule 775], even though the charge or instruction is a repetition of a charge or instruction previously given in whole or in part, prejudice being conclusively presumed; and
(2) it is reversible error for the court to communicate in any other manner with the jury trying the case, during the involuntary absence of the defendant unless the record affirmatively shows that such communication was not prejudicial or had no tendency to influence the verdict of the jury." Id. at 390-91. [Id. 258 Md. at 106.]
In Bunch, as previously stated, we concluded that a bench conference held in response to a juror's note indicating that he considered himself biased was a stage of the trial since it involved in a sense impaneling of the jury and thus the defendant was entitled to be present.
Here trial had not begun. No evidence was adduced as in State v. Collins, supra, 265 Md. 70. However, if we assume arguendo that the proceeding here was not a stage of the *228 trial, this would not dispose of the matter. As Chief Judge Murphy so cogently expressed it for the Court in State v. Hicks, 285 Md. 310, 319, 403 A.2d 356 (1979), "Determining what constitutes `extraordinary cause' under Rule 746 [justifying a continuance] is, of course, dependent upon the facts and circumstances of each case." In Snyder, 291 U.S. at 106, Mr. Justice Cardozo said for the Court, "Again, defense may be made easier if the accused is permitted to be present at the examination of jurors or the summing up of counsel, for it will be in his power, if present, to give advice or suggestion or even to supersede his lawyers altogether and conduct the trial himself." That statement is no less applicable to this type of proceeding, particularly where it involved a determination as to whether a case might be continued in order that a defendant might have counsel of his choice. In the circumstances of this case the presence of the accused would not, in the words of Mr. Justice Cardozo, "be useless, or the benefit but a shadow." Id. at 106-07. In passing upon this motion and in determining whether "extraordinary cause" was shown, the administrative judge might well have wanted to know the bases for Hughes' expressed dissatisfaction with his designated attorney; whether an agreement as to fee had been reached between the defendant's family and the attorney allegedly hired by them; whether this fee had been paid; if not, whether the attorney had indicated his willingness to try the case prior to payment; if not, the arrangements made as to the time of payment; whether there had been ongoing negotiations between counsel and the defendant's family over a period of time or whether this was a strictly last minute hiring on the eve or morn of trial; and, in an effort to avoid inconvenience to the State, whether there could be a stipulation as to the testimony of certain witnesses. This last inquiry certainly would have required consultation by counsel with the defendant. In this instance all of the relevant information was not necessarily in the possession of the assigned attorney who was to be replaced if the defendant's request for postponement prevailed. The defendant himself might not have had all of the information which the administrative judge might have desired, but the odds are that he had more *229 than did his assigned attorney. Moreover, there may be some validity in Judge Lowe's observation for the Court of Special Appeals, "That an attorney being discharged would be adequate counsel to advocate his own dismissal out of client's presence and to ask for a postponement to allow his successor to prepare, is reasonably incongruous." Id. 43 Md. App. at 703. We conclude that under the facts and circumstances here a fair and just hearing was thwarted by the absence of the defendant.
We emphasize that we do not decide in this case that extraordinary cause for postponement was shown. We are not to be understood as even implying that a request for postponement on the morning of trial by reason of a last minute employment of private counsel constitutes extraordinary cause. Obviously, each case must stand on its own facts. Had the defendant been present at the hearing before the administrative judge, we might or might not have concluded as we did under similar, but not completely analogous, circumstances, in Mathias v. State, 284 Md. 22, 394 A.2d 292 (1978), that the administrative judge did not abuse his discretion. As we said in Mathias, citing a number of cases, "[S]ince discretionary rulings by trial judges carry a presumption of validity, the burden of establishing an abuse of discretion in a particular case lies with the appellant." Id. at 28. We here decide only that under the circumstances of this case fairness dictated the defendant's right to be present when the administrative judge made his determination as to whether or not any extraordinary cause was shown which would justify a continuance. Our holding goes no further.
Judgment of the Court of Special Appeals reversed and case remanded to that court for passage of an order reversing the judgment of the Criminal Court of Baltimore and remanding the case for trial; the Mayor and City Council of Baltimore to pay the costs.
*230 Murphy, C.J., dissenting:
The Court today holds that the Fourteenth Amendment's "fundamental fairness" formulation bestows upon an accused in a criminal case a constitutional right to be present when, under Maryland Rule 746 b, the Administrative Judge determines whether to grant the defendant's motion for a postponement of his scheduled trial date to permit him to retain other counsel. The Court purports to limit its holding to the particular facts of this case, concluding that because a "fair and just hearing [on the motion for postponement] was thwarted by the absence of the defendant," his conviction must be reversed and a new trial granted. There is, however, no requirement for a hearing under Rule 746 b, much less a hearing at which the accused has a constitutional right to be present. I therefore disagree with the majority that the accused enjoys a constitutional right, either to a hearing on his motion for postponement or to be present when a determination of his motion is made. I am simply unable to glean from the majority opinion the precise reach of its application to the thousands of postponement motions made annually in the trial courts of this State a concern certain to be shared by the trial judges of this State. I therefore dissent and briefly give my reasons.
We said in Bunch v. State, 281 Md. 680, 381 A.2d 1142 (1978), that in some measure at least a criminal defendant has a Fourteenth Amendment right, recognized in Snyder v. Massachusetts, 291 U.S. 97, 54 S.Ct. 330, 78 L.Ed. 674 (1934), to be present at every stage of his trial. The constitutional right announced in Snyder, as recently restated by the Supreme Court in Faretta v. California, 422 U.S. 806, 95 S.Ct. 2525, 45 L.Ed.2d 562 (1975), is that "an accused has a right to be present at all stages of the trial where his absence might frustrate the fairness of the proceedings." 422 U.S. at 819 (n. 15). That a determination by a court of a pretrial postponement motion is not a "stage of the trial" within the contemplation of what is now Maryland Rule 724 a would seem to be self-evident. Indeed, the reasoning of the numerous cases of this Court cited in the *231 majority opinion clearly so indicate, pointing out that the rule is simply declaratory of the common law principle that an accused has a right to be present at all material stages of his trial.[1] A number of jurisdictions have specifically held that determination of the merits of a pretrial motion for a continuance is not a stage of the trial at which the accused has a right to be present. See, e.g., State v. Scott, 283 So.2d 250 (La. 1973); Parrish v. Commonwealth, 472 S.W.2d 69 (Ky. 1971); State v. Holmes, 428 S.W.2d 571 (Mo. 1968); People v. Woods, 27 Ill.2d 393, 189 N.E.2d 293 (1963); Hogan v. State, 275 P. 355 (Okla. 1929).
The majority, selectively extracting language from Snyder v. Massachusetts, supra, concludes without regard to whether a ruling on a pretrial postponement motion constitutes a stage of the trial under the common law rule, or under Rule 724 a that the accused has a Fourteenth Amendment right to be present "whenever his presence has a relation, reasonably substantial, to the fullness of his opportunity to defend against the charge." On that premise the majority reasons that because the merits of Hughes' postponement motion depended upon the particular facts and circumstances of his case, he was in a position to give advice and make suggestions to his counsel. To deny Hughes the right to be present in such an instance, according to the majority, would deny him due process of law because, in the words of Snyder, his presence would not be "useless, or the benefit but a shadow."
This interpretation of the breadth of the Snyder case, as applied to pretrial motions for continuance, is, I think, completely unwarranted and will wreak havoc with the orderly and certain scheduling of criminal cases for trial. In Brown v. State, 272 Md. 450, 325 A.2d 557 (1974), Judge O'Donnell, speaking for a unanimous Court, exhaustively reviewed the cases involving the accused's right to be present at every stage of his trial. We there recognized that *232 under the federal constitution, substantive testimony concerning the guilt or innocence of the defendant cannot be submitted during his involuntary absence and in violation of his constitutional right to be confronted by witnesses. We emphasized that the accused's right of presence was "at every material stage in the trial" (emphasis in original), 272 Md. at 458, and we discussed at length the constitutional aspects of the right, as articulated in Snyder. We observed that Snyder involved a Massachusetts statute authorizing the jury to view the scene of the crime. Snyder was on trial for murder and at the opening of his trial the prosecution made a motion that the jury be allowed to view the crime scene. Snyder asked that he be permitted to accompany the jury to the scene of the crime; his motion was denied. At the crime scene, the prosecution and Snyder's counsel were permitted to point out to the jury particular features of the view, i.e., the distances between points and the lighting conditions. The Court held in Snyder that denial of the defendant's request to accompany the jury to the scene of the murder was not a violation of his Fourteenth Amendment due process right because he could not have been of any assistance to his counsel had he been present. It was in this context, as we observed in Brown, that the Supreme Court stated: "So far as the Fourteenth Amendment is concerned, the presence of a defendant is a condition of due process to the extent that a fair and just hearing would be thwarted by his absence, and to that extent only." 291 U.S. at 107-08. It was in this light that the Court said:
"We assume in aid of the petitioner that in a prosecution for a felony the defendant has the privilege under the Fourteenth Amendment to be present in his own person whenever his presence has a relation, reasonably substantial, to the fullness of his opportunity to defend against the charge. Thus, the privilege to confront one's accusers and cross-examine them face to face is assured to a defendant by the Sixth Amendment.... Again, defense may be made easier if the accused is permitted to be present at *233 the examination of jurors or the summing up of counsel, for it will be in his power, if present, to give advice or suggestion or even to supersede his lawyers altogether and conduct the trial himself....
"... Nowhere in the decisions of this court is there a dictum, and still less a ruling, that the Fourteenth Amendment assures the privilege of presence when presence would be useless, or the benefit but a shadow." 291 U.S. at 105-07.
In Brown, we quoted with approval from People ex rel. Lupo v. Fay, 13 N.Y.2d 253, 196 N.E.2d 56, 246 N.Y.S.2d 399 (1963), cert. denied, 376 U.S. 958 (1964), in which the New York Court of Appeals said (13 N.Y.2d at 256-57) that due process under Snyder "mandates the presence of a defendant at his felony trial to the extent only that his presence is necessary for a fair and just hearing of his cause and he must be deemed to have the absolute right to hear everything the jury hears ... so that his may be the opportunity to confront his accusers and advise with his counsel." By way of placing the language in Snyder in proper perspective, we referred in Brown to the following passage from Snyder.
"A fertile source of perversion in constitutional theory is the tyranny of labels. Out of the vague precepts of the Fourteenth Amendment a court frames a rule which is general in form, though it has been wrought under the pressure of particular situations. Forthwith another situation is placed under the rule because it is fitted to the words, though related faintly, if at all, to the reasons that brought the rule into existence. A defendant in a criminal case must be present at a trial when evidence is offered, for the opportunity must be his to advise with his counsel [Citations omitted], and cross-examine his accusers. [Citations omitted.] Let the words `evidence' and `trial' be extended but a little, and the privilege will apply to stages of the cause at which the function of counsel is mechanical *234 or formal and at which a scene and not a witness is to deliver up its message. In such circumstances the solution of the problem is not to be found in dictionary definitions of evidence or trials. It is not to be found in judgments of the courts that at other times or in other circumstances the presence of a defendant is a postulate of justice. There can be no sound solution without an answer to the question whether in the particular conditions exhibited by the record the enforced absence of the defendant is so flagrantly unjust that the Constitution of the United States steps in to forbid it." 291 U.S. at 114-15.
The Court in Snyder was plainly focusing on the trial of the case and on the defendant's ability to assist his counsel in substantive matters relating to his guilt or innocence.[2] To apply the general language of Snyder to routine matters preliminary to trial, like a last-minute motion for a continuance to obtain new counsel, is, in my opinion, a sweepingly broad misreading of that case. The Court pointed out in Brown that matters unrelated to the issue of the accused's guilt, which do not involve his right of confrontation or cross-examination or bear a reasonable substantial relationship to the opportunity to defend his innocence, do not implicate his due process right to be present at every stage of the trial. The Court observed in Brown that by necessity conferences are held between the court and counsel "for the purpose of discussing scheduling" and "other collateral matters of procedure," at which the accused has no right to be present since such conferences "have not been held to be a part of the trial." 272 Md. at 479. Indeed, the Court said in Brown:
"To require that all such conferences be conducted in open court, or that the defendant be present in chambers, or at a bench conference, on each occasion would create administrative burdens, diminish *235 the decorum of the proceedings, and in many instances involve security risks none of which can be balanced by any gain from the defendant's presence." 272 Md. at 479-80.
As heretofore indicated, there is neither a right to a hearing on a postponement motion under Rule 746 b, or under the state or federal constitutions. Nor is there anything in the facts of this case which would warrant the Court's holding that Hughes, had he been present, could have materially assisted his counsel when the Administrative Judge was determining the merits of the continuance motion.
The record discloses only that on the morning of the trial, which had been set many weeks previously, a private lawyer approached Hughes' Public Defender counsel and advised him that Hughes' family wanted to engage his services and was financially able to do so. The Public Defender contacted Hughes' mother who confirmed the fact that she had spoken to the private attorney and was financially able to retain him to represent her son. The Public Defender then conferred with Hughes who indicated his concurrence with the family's decision to retain the private counsel. There is nothing to indicate that Hughes believed his Public Defender counsel to be incompetent or otherwise unprepared to try the case. In these circumstances, to afford Hughes a constitutional right to be present when the Administrative Judge decided his motion for a postponement is just plain wrong, unsupported by Snyder, or any other case, which has come to my attention.
I, of course, do not disparage the importance of having counsel of one's choice, but that right must be timely exercised. A guilty accused may effectively avoid punishment if he is permitted to maneuver, carte blanche, for postponements or delay. Today's decision gives him a new tool to that end, to the great detriment of the administration of justice in this State. Because the Court's decision is premised on a constitutional right, trial courts will be reluctant to limit the rule announced today to requests for *236 postponements made on the day of trial by an accused for the ostensible purpose of obtaining new counsel, and reluctant to act on the basis of a waiver by counsel of the possible right of presence of the accused. Until the limits and procedures of the rule announced today are refined by future decisions, the result will be to cast yet another burden on the operation of the criminal justice system.
Accordingly, I would affirm the convictions in this case. Judge Rodowsky has authorized me to state that he concurs with the views expressed herein.
NOTES
[1] On November 16, 1979, subsequent to our decision in State v. Hicks, 285 Md. 310, 403 A.2d 356 (1979), we amended this rule, effective immediately, to change the required trial date to not later than 180 days.
On July 3, 1980, we amended Rule 746 b so that for a change of trial date good cause rather than extraordinary cause must be shown. This was in accord with recently enacted legislation.
[2] Rule 724 states:
a. When Presence Required.
The defendant shall be present at every stage of the trial, including the impaneling of the jury and the return of the verdict, and at the imposition of sentence, except as provided by these Rules.
b. When Presence Not Required.
A defendant need not be present:
1. At a conference or argument on a question of law;
2. When a nolle prosequi or stet is entered pursuant to Rule 782 (Nolle Prosequi and Stet).
3. At a reduction of sentence pursuant to Rule 773 (Sentence Review) or Rule 774 (Sentence Revisory Power of Court);
4. At any stage of the proceedings if the defendant is a corporation.
c. When Presence Waived.
A defendant initially at trial waives his right to be present when:
1. He voluntarily absents himself after the trial has commenced, whether or not he has been informed by the court of his right to remain during trial; or
2. He engages in conduct to justify his being excluded from the courtroom.
[1] The historical reasons underlying the development of the common law right of presence of the accused at his trial are well chronicled in United States v. Gregorio, 497 F.2d 1253 (4th Cir.1974), cert. denied, 419 U.S. 1024.
[2] Pretrial evidentiary hearings on motions to suppress clearly fall within Snyder's coverage. In such instances, the issue is whether evidence pertaining to the defendant's guilt will be used against him at trial.
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720 A.2d 619 (1998)
316 N.J. Super. 437
FOUNDATION FOR FAIR CONTRACTING, LTD., and Miguel Mattei, Plaintiffs-Appellants,
v.
NEW JERSEY STATE DEPARTMENT OF LABORWAGE AND HOUR COMPLIANCE DIVISION; City of Trenton; Lutheran Senior Services, Inc.; Circle F Urban Renewal Limited Partnership; and Costanza Contracting Company, Inc., Defendants-Respondents.
Superior Court of New Jersey, Appellate Division.
Argued October 7, 1998.
Decided December 2, 1998.
Deborah L. Mains, Camden, for plaintiff-appellant, (Tomar, Simonoff, Adourian, O'Brien, Kaplan, Jacoby, and Graziano, Haddonfield, attorneys, Ms. Mains and Mark E. Belland, Haddonfield, on the brief).
Donald Palombi, Assistant Chief Deputy Attorney, for defendant-respondent New Jersey Department of Labor (Peter Verniero, Attorney General of New Jersey, attorney; Mary C. Jacobson, Assistant Attorney General, of counsel, Lewis A. Scheindlin, Deputy Attorney General, on the brief).
Bruce Meller, River Edge, for defendant-respondent Costanza Contracting Company, Inc. (Peckar and Abramson, attorneys, Mr. Meller and Gary P. Rothman, on the brief).
Ellen O'Connell, Princeton, for defendants-respondents Lutheran Senior Services, *620 Inc. and Circle F Urban Renewal Limited Partnership (Smith, Stratton, Wise, Heher & Brennan, attorneys, Ms. O'Connell and Christopher P. Morrison, on the brief).
Lyle P. Hough, Jr., Assistant City Attorney, for defendant-respondent City of Trenton (Rocky L. Peterson, City Attorney, attorneys, Mr. Hough, on the brief).
Before Judges STERN, BRAITHWAITE and WECKER.
The opinion of the court was delivered by WECKER, J.A.D.
Plaintiffs Foundation for Fair Contracting, Ltd. (FFC) and Miguel Mattei appeal from a summary judgment dismissing their complaint against defendants New Jersey State Department of Labor (DOL), City of Trenton, Lutheran Senior Services, Inc., Circle F Urban Renewal Limited Partnership, and Costanza Contracting Company, Inc. Plaintiffs' complaint sought a declaration that the Prevailing Wage Act, N.J.S.A. 34:11-56.25 et seq. (the Act), applies to a construction contract between defendants Circle F and Costanza for construction of a senior citizens housing project funded in part by a grant from the State and to be operated under an agreement between the City and Circle F, in which Lutheran Senior Services is a general partner.
In their motions for summary judgment and/or to dismiss the complaint, the several defendants challenged plaintiffs' standing to maintain this action; the jurisdiction of the Law Division to entertain the action; and the applicability of the Act to this construction contract. The Law Division Judge erred in concluding that he had jurisdiction to hear the matter. He also concluded that neither plaintiff had standing to bring this action, but that if either plaintiff did have standing, the Act did not apply. Because we agree that the Act does not apply to this construction contract, we affirm. In light of our disposition on the merits, we need not address the standing issues raised by defendants, and will only briefly address the jurisdictional issue raised by the DOL.
The background facts are not in dispute. The City of Trenton received a grant of over $1.3 million from the Department of Community Affairs under the Neighborhood Preservation Program, N.J.S.A. 52:27D-320,[1] part of the Fair Housing Act, N.J.S.A. 52:27D-301 et seq., enacted in 1985. The grant was to finance the conversion of the Circle F factory building in Trenton into seventy affordable housing units for senior citizens with low to moderate incomes. The grant agreement between the Department of Community Affairs and the City provides for the City to comply with all "applicable" laws, expressly including but not limited to several federal and state financial audit requirements, as well as affirmative action and non-discrimination laws. The grant agreement does not specifically mention the Prevailing Wage Act.
Lutheran Senior Services, Inc., as general partner, along with several limited partners, formed Circle F Urban Renewal Limited Partnership[2] as an "urban renewal entity" pursuant to the Long Term Tax Exemption Law, N.J.S.A. 40A:20-1 et seq. That law, enacted in 1991, consolidated
the various statutes under which municipalities may agree with private entities for the private entities to undertake redevelopment projects in return for tax exemptions.
....
This bill is part of a package of bills that provides a new partnership between the public and private sectors to redevelop and rehabilitate New Jersey's urban centers, older suburbs, and other communities that are in need of redevelopment. The bills encourage the maximum participation of the private sector in the redevelopment of the State's distressed communities.
*621 [Senate County and Municipal Govt. Comm. Statement to Senate No. 291, L.1991, c. 431.]
The legislation's express purpose is in large part "to encourage private capital and participation by private enterprise" in the construction, renovation and rehabilitation of low and moderate income housing. N.J.S.A. 40A:20-2, citing the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et seq., and expressing the intention that these two acts be construed together.
The City entered into a developer's agreement with Circle F for the construction of the project, with Circle F undertaking to "develop, market, and rent" to senior citizens at substantially less than market rates, ranging from $275 per month for an efficiency apartment to $450 for certain two-bedroom apartments. Circle F contracted with Costanza to perform as the general contractor on the Circle F project.
FFC holds itself out as a nonprofit corporation whose stated "sole and exclusive purpose is to monitor public works projects for compliance with the New Jersey Prevailing Wage Act ... and other relevant state and federal statutes, thereby protecting the workers employed on such projects and the taxpayers whose money is used to finance such projects." Mattei describes himself as a "citizen" and "taxpayer" of the State of New Jersey, who resides in Trenton. FFC sent an investigator to the Circle F project to inquire into Costanza's compliance with the Act. Although FFC's investigator apparently was unable to determine whether Costanza was paying the workers employed on the Circle F project the prevailing wage under the Act, it is undisputed that Costanza has not paid all of its employees on this project in accordance with the Act. Costanza maintains that the project "was let as a non-Prevailing Wage Act project."
FFC's investigator then contacted the DOL "regarding defendant Costanza's obligation to pay prevailing wages to its employees working on the project." Michael McCarthy, Chief of Enforcement for the DOL's Wage and Hour Compliance Division, responded by letter, stating that the DOL had been advised by the Attorney General's office that the Prevailing Wage Act did not apply in the absence of an agreement between a public body and a contractor, and the Act therefore did not apply to the Circle F Project. The Attorney General's letter opinion cited a prior letter opinion to the DOL in 1990 to the same effect, stating that the Act did not apply to situations where developers received public funds and then entered into separate contracts with developers, notwithstanding the fact that public funds were used to pay for the work. The City of Trenton also had been advised by DOL that the Act did not apply to the project. Counsel to FFC wrote to McCarthy asking the DOL to reconsider its position, and McCarthy declined to do so "absent a declaratory judgment from a court of competent jurisdiction...."
The Prevailing Wage Act provides in pertinent part:
Every contract in excess of the prevailing wage contract threshold amount for any public work to which any public body is a party or for public work to be done on property or premises leased or to be leased by a public body shall contain a provision stating the prevailing wage rate which can be paid (as shall be designated by the commissioner) to the workers employed in the performance of the contract and the contract shall contain a stipulation that such workers shall be paid not less than such prevailing wage rate.
[N.J.S.A. 34:11-56.27 (emphasis added).]
The "prevailing wage contract threshold" was at all relevant times $9,500. N.J.S.A. 34:11-56.26(11)(a). There is no dispute that the construction contract exceeds this threshold.
"Public work" is defined under the Act, in relevant part, as:
... construction, reconstruction, demolition, alteration, or repair work, or maintenance work, including painting and decorating, done under contract and paid for in whole or in part out of the funds of a public body, except work performed under a rehabilitation program.
*622 [N.J.S.A. 34:11-56.26(5) (emphasis added).]
"Public body" is defined in relevant part as:
the State of New Jersey, any of its political subdivisions, any authority created by the Legislature of the State of New Jersey and any instrumentality or agency of the State of New Jersey or of any of its political subdivisions.
[N.J.S.A. 34:11-56.26(4) (emphasis added).]
Plaintiffs rely on language in the Developer's Agreement between Trenton and Circle F, requiring Circle F to "comply with all applicable State, Federal and local laws, rules and regulations, whether because the Developer received the Balanced Housing Funds or otherwise, including but not limited to, any affirmative action and/or prevailing wage laws." We do not find that language determinative. First, it requires compliance with "applicable" laws; if the Act is not otherwise applicable, this provision does not make it so. Second, the express reference to "any ... prevailing wage laws," without citing the Act and stating it to be applicable, suggests only that the drafters required Circle F to comply with any applicable federal or state prevailing wage law. See, e.g., 40 U.S.C.A. § 276A et seq. (the Davis-Bacon Act).[3]
The issue presented is whether the agreement between Circle F and Costanza, to which neither the City of Trenton nor the State is literally a party, should nevertheless be construed as a "contract ... for ... public work to which any public body is a party" and therefore subject to the Act.
As the Supreme Court stated in Richard's Auto City, Inc. v. Director, Div. of Taxation, 140 N.J. 523, 531, 659 A.2d 1360 (1995):
In the enterprise of statutory construction, the first step is the examination of the provisions of the legislative enactment to ascertain whether they are expressed in plain language that, in accordance with ordinary meaning, clearly and unambiguously yields only one interpretation.
If we were to hold that the Costanza contract with Circle F is subject to the Act, our
decision would render meaningless that portion of N.J.S.A. 34:11-56.27 that modifies the phrase "[e]very contract ... for any public work" with the phrase of limitation "to which any public body is a party." Had the Legislature intended that every contract for construction of public work be subject to the Prevailing Wage Act, irrespective of the identity of the parties to the contract, there would have been no reason to include in the statute the phrase "to which any public body is a party ...." Our Supreme Court has clearly stated that "[a] construction that will render any part of a statute inoperative, superfluous, or meaningless, is to be avoided." State v. Reynolds, 124 N.J. 559, 564, 592 A.2d 194 (1991). See also Paper Mill Playhouse v. Millburn Tp., 95 N.J. 503, 521, 472 A.2d 517 (1984); Central Constrn. Co. v. Horn, 179 N.J.Super. 95, 101-02, 430 A.2d 939 (App.Div.1981) ("The Legislature is presumed not to employ meaningless language or to intend useless legislation.")
Any suggestion that this phrase of limitation"to which any public body is a party" is superfluous is belied by the consistent repetition of a similar adjective phrase throughout the Act. For example, N.J.S.A. 34:11-56.28 provides:
The public body or lessor awarding any contract for public work or otherwise undertaking any public work shall ascertain from the commissioner the prevailing wage rate in the locality in which the public work is to be performed for each craft or trade needed to perform the contract....
[emphasis added.]
Similarly, N.J.S.A. 34:11-56.29 provides
Every contractor and subcontractor shall
keep an accurate record ... of wages paid.... The record shall be open at all reasonable hours to the inspection of the public body awarding the contract ....
[emphasis added.]
N.J.S.A. 34:11-56.38 provides:
The public body awarding any contract for public work, or otherwise undertaking any public work, or entering into a lease or agreement to lease pursuant to which public *623 work is to be done, shall first ascertain from the commissioner the list of names of contractors or subcontractors who have failed to pay prevailing wages ....
[Emphasis added.]
Each of these sections describes "the public body" by the phrase "awarding [a] contract." Obviously, a public body cannot "award" a contract to which it is not a party.
We recognize a certain ambiguity in the Act's reference to "the public body [ ] awarding any contract for public work or otherwise undertaking any public work ..." See N.J.S.A. 34:11-56.28 (requiring a public body to ascertain the prevailing wage and so specify in covered contracts). See also N.J.S.A. 34:11-56.38 (requiring a public body to ascertain the identities of violators and prohibiting for three years an award of any contract for public work to a contractor who has violated the Act). The "otherwise undertaking" language of these sections, examined separately, is subject to the inference that some other involvement of a public body, neither as a party to the contract nor as a lessor of the subject property, could bring the contract within the Act's coverage. The legislative history does not enlighten us with respect to the phrase "otherwise undertaking." However, because "awarding" a contract implies a contract for which bids have been received, and not every contract for public work by a public body is subject to bidding, see, e.g., N.J.S.A. 40A:11-5, we suspect that the "otherwise undertaking" language was intended to cover such non-bid contracts.
We have previously recognized that the Prevailing Wage Act is remedial legislation entitled to liberal construction to effectuate the
public policy of this State to establish a prevailing wage level for workmen engaged in public works in order to safeguard their efficiency and general well being and to protect them as well as their employers from the effects of serious and unfair competition resulting from wage levels detrimental to efficiency and well-being.
[N.J.S.A. 34:11-56.25.]
See Horn v. Serritella Brothers, Inc., 190 N.J.Super. 280, 463 A.2d 366 (App.Div.1983); see also Central Construction, 179 N.J.Super. at 104, 430 A.2d 939. Recognizing that purpose, however, does not permit us, much less require us, to ignore the plain language of the statute itself.
The Attorney General's advice to the DOL, in response to plaintiffs' request for action against Circle F and Costanza, was to cite its 1990 opinion responding to an inquiry from the Chief of the Public Contracts Section concerning the applicability of the Act to three specific projects, each involving "a grant by a public agency to a private entity to assist in the construction of housing" and a construction contract between the private entity and the contractor. One of the three projects specifically involved a contract between the City of Camden and a private developer, financed by a combination of private moneys and a Department of Community Affairs grant, much like the case before us.
In 1990 Attorney General cited the literal language of the statute, then applicable to "[e]very contract in excess of $2,000 for any public work to which any public body is a party ...." and advised:
The foregoing statutory provision clearly states that the prevailing wage must be paid only where there is a public work contract to which a public body is a party. In the situations presented here, no public body is a party to the construction contracts in question. Instead, the construction contracts are between a private entity and a general contractor. Thus, the plain language of the Prevailing Wage Act indicates that the statute does not apply to the contracts in question.
The fact that the source of the funds for the contracts is a grant from a public body is immaterial. Where the Legislature has intended that the prevailing wage be paid on projects financed by a public body that is not a party to the resulting project, it has stated such intention explicitly. For example, N.J.S.A. 55:14K-42 expressly states that a housing sponsor granted a loan from the Housing Finance Agency, or any contractor engaged by such housing sponsor, shall pay workmen on *624 any qualified project not less than the prevailing wage rate. Similarly, the Legislature has specifically provided that where a construction contract is undertaken with the financial assistance of the Economic Development Authority, the workers must receive the prevailing wage rate. N.J.S.A. 34:1B-5.1. Thus, the Legislature has recognized that the Prevailing Wage Act does not cover contracts made between private parties for which financing has been provided by a public agency. In the absence of a clear statutory statement that prevailing wages must be paid in such a situation, there is no basis for ignoring the limitation of N.J.S.A. 34:11-56.27 to contracts to which a public body is a party.
We agree with the Attorney General's interpretation, which the DOL as well as the Law Division Judge followed.
We have also considered whether the chain of contracts, that is, the grant agreement between the Department of Community Affairs and the City, the developer's agreement between the City and Circle F, and Circle F's contract with Costanza, makes the construction contract one to which a public body is a party. In other words, should the combined contracts constitute one contract for purposes of applying the Prevailing Wage Act?
There is some facial appeal to the concept that these agreements should be viewed as a whole, and Trenton considered a "party" to the Costanza contract for purposes of the Act. The Long Term Tax Exemption Law, specifically at N.J.S.A. 40A:20-4, provides in pertinent part that "the undertaking of a project by an urban renewal entity pursuant to [a redevelopment] plan ... shall be deemed a delegation of the powers of the municipality to undertake the project...." The delegation does not, however, turn the developer into a public body. After careful consideration, we conclude that these contracts are not to be treated as one under current law.
If the Legislature had intended the Prevailing Wage Act, originally enacted in 1963, to apply to all public works projects without exception, it could have expressed that intention in the subsequently enacted statutes that apply to this project: the Fair Housing Act, N.J.S.A. 52:27D-301 et seq.; the Neighborhood Housing Services Grant Fund Act, N.J.S.A. 52:27D-366 et seq.; the Long Term Tax Exemption Law, N.J.S.A. 40A:20-1 et seq.; and the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1, et seq. Indeed, the Legislature apparently recognized that the Prevailing Wage Act did not by its own terms apply where the public bodybe it the state or a municipality conveys funds by grant or loan to an independent entity, which then contracts for construction or other services. Hence the provisions in the Housing and Mortgage Finance Act, N.J.S.A. 55:14K-42,[4] and the Economic Development Act, N.J.S.A. 34:1b-5.1.[5] We conclude that the Legislature did not intend the Act to cover contracts such as that between Urban F and Costanza, where the public entity is a conduit for state grant moneys to subsidize the creation of low cost housing, and where higher construction costs *625 would reduce the number of housing units created with that subsidy.
Moreover, the Prevailing Wage Act was amended by L.1990, c. 27, with respect to its scope, to "provide[] for the payment of prevailing wages for work performed on ... property ... leased or to be leased by a public body whether or not the work is paid for from public funds." See Sen. Labor, Industry and Professions Committee Statement, Assy No. 2895, L.1990, c.27. That amendment reflects the Legislature's reexamination and extension of the scope of the Act's coverage by adding to its definition of covered contracts, contracts "for public work to be done on property or premises leased or to be leased by a public body ...." N.J.S.A. 34:11-56.27.[6]
That amendment demonstrates the Legislature's recognition that the Act as previously written would not apply to a contract for public work to which the public body is not a party. It also contributes to our conclusion that the Legislature intends only what the Act's literal language prescribes. That is, only contracts to which a public body is a party, or for public work leased by a public body, are subject to the Act, absent express legislation placing specific contracts within the Act's coverage. E.g., N.J.S.A. 55:14K-42; N.J.S.A. 34:1B-5.1. "The Legislature is assumed to be thoroughly familiar with its own enactments...." Monaghan v. Holy Trinity Church, 275 N.J.Super. 594, 602, 646 A.2d 1130 (App.Div.1994). See also Thomas v. Teaneck Bd. of Educ., 184 N.J.Super. 443, 446 A.2d 547 (App.Div.1982), rejecting the public employees' claim that their work on public work projects entitled them to the prevailing wage under the Act, and holding the Act applicable only to "contracts with contractors." Id. at 446, 446 A.2d 547.
While a policy argument can be made in favor of broad application of the Act to all contracts for public works, this court is not the place for such an argument. The Legislature has apparently concluded that the goals expressed in the Fair Housing Act and the Long Term Tax Exemption Law, that is, to provide incentives to bring private developers into partnership with government to create affordable housing in communities around the state; to improve conditions in certain run-down urban areas; and to maintain strict cost controls over such projects, take precedence over the goals of the Prevailing Wage Act. We cannot interfere with that choice.
Plaintiffs also contend that summary judgment was premature because plaintiffs were entitled to discovery, including "whether defendants Lutheran and Circle F Partnership are indeed legitimate entities ... [and] the relationship, if any, between defendant Costanza and defendants Lutheran and Circle F Partnership." That contention is without merit, as the issue before us is solely one of statutory construction. See R. 2:11-3(e)(1)(E).
With respect to our jurisdiction or that of the Law Division, the DOL contends that its May 6, 1996, response to FFC constitutes a final action of an administrative agency. Because plaintiffs filed a complaint for declaratory judgment in the Law Division eight months after the Department's decision, instead of filing an appeal with this court within the forty-five days permitted by R. 2:4-1 (or the additional thirty days available pursuant to R. 2:4-4), the DOL urges us to affirm the Law Division's dismissal, but solely for lack of jurisdiction, without addressing plaintiffs' standing or the merits of the complaint.
When FFC requested enforcement of the Act on this project, the DOL responded by letter of April 4, 1996, relating the Attorney General's advice "that construction projects being funded in whole or in part with public funds but involve [sic] no contract with any public body do not require payment of wages under the New Jersey Prevailing Wage Act." The writer suggested that FFC "explore statutory or regulatory changes that may eliminate this confusion on future publicly funded projects of this nature." The DOL then effectively invited FFC to bring a declaratory judgment action when it responded to FFC's request for reconsideration on May 6, 1996, stating that "[a]bsent a declaratory *626 judgment from a court of competent jurisdiction we have no plans to reconsider our administrative policy at this time."
We conclude that DOL's responses to FFC constituted expressions of its "administrative policy" and not a final determination. Compare In re Unclaimed Property Office, 309 N.J.Super. 272, 275 (App.Div.), certif. granted, 156 N.J. 381 (1998). FFC's challenge to quasi-legislative action therefore was not subject to the time limits applicable to a final decision pursuant to R. 2:4-1(b). See Pressler, Current N.J. Court Rules, comment 2 to R. 2:4-1 (1999).
An appeal from administrative agency action is exclusively cognizable in the Appellate Division. See R. 2:2-3(a)(2). Nevertheless, the Law Division Judge had the power to transfer the matter to the Appellate Division and we will regard that done nunc pro tunc. See R. 1:13-4.
We are satisfied that the substantive issue raised by this appeal is one of public importance that is likely to arise again. We therefore conclude that under all the circumstances, the issue warranted our consideration on the merits.
We affirm the dismissal of plaintiffs' complaint.
NOTES
[1] The Fair Housing Act was the Legislature's response to the Supreme Court's decisions in Southern Burlington County NAACP v. Mt. Laurel, 67 N.J. 151, 336 A.2d 713 (1975), and 92 N.J. 158, 456 A.2d 390 (1983), holding that growing municipalities have a constitutional obligation to provide a fair share of the regional demand for low and moderate income housing.
[2] Circle F and Lutheran Senior Services are referred to collectively as "Circle F."
[3] There is no contention that the federal law applies here.
[4] N.J.S.A. 55:14K-42 provides:
Each qualified housing sponsor granted a loan from the [Housing and Mortgage Finance Agency], or any builder, contractor or subcontractor engaged by the qualified housing sponsor for the construction or rehabilitation of any housing project, shall pay the workmen employed in the performance of any contract for such construction or rehabilitation not less than the prevailing wage rate.
In Newark Laborers Pension-Welfare Funds v. Comm'l Union Ins. Co. of N.Y., 126 N.J.Super. 1, 312 A.2d 649 (App.Div.1973), we held that the Prevailing Wage Act applied to workers on a housing project in Newark, financed in part by loans from the New Jersey Housing Finance Agency. We cited N.J.S.A. 55:14J-37, now repealed and replaced by N.J.S.A. 55:14K-42, expressly requiring the prevailing wage to be paid on any project financed by the Housing and Mortgage Finance Agency.
[5] N.J.S.A. 34:1B-5.1 provides:
The New Jersey Economic Development Authority shall adopt rules and regulations requiring that not less than the prevailing wage rate be paid to workers employed in the performance of construction contracts undertaken in connection with Authority financial assistance. The prevailing wage rate shall be the rate determined by the Commissioner of Labor and Industry pursuant to the provisions of P.L.1963, c. 150 (C. 34:11-56.25 et seq.
[6] The Act's coverage was also modified by replacing for most purposes the absolute $2,000 contract amount with "the prevailing wage contract threshold amount," to be adjusted every five years. L.1995, c. 259. See N.J.S.A. 34:11-56.26 (11)(a); 34:11-56.27.
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720 A.2d 220 (1998)
HAZLETON AREA SCHOOL DISTRICT, Appellant,
v.
ZONING HEARING BOARD OF HAZLE TOWNSHIP.
Commonwealth Court of Pennsylvania.
Argued September 17, 1998.
Decided November 9, 1998.
*221 Edward P. McNelis, Hazelton, for appellant.
Charles R. Pedri, Hazelton, for appellee.
Before FRIEDMAN and FLAHERTY, JJ., and McCLOSKEY, Senior Judge.
FRIEDMAN, Judge.
The Hazleton Area School District (HASD) appeals from an order of the Court of Common Pleas of Luzerne County (trial court) which affirmed the decision of the Hazle Township (Township) Zoning Hearing Board (ZHB) denying HASD's application to expand a previously approved special exception and thereby permit HASD to use an athletic field located at the Hazleton Area Senior High School for non-school-related ballgames. We affirm.
HASD is a second class school district with its principal office located in the Township. On February 2, 1990, the ZHB approved HASD's application for a special exception to construct the Hazelton Area Senior High School in an area zoned R-1 residential. Subsequently, HASD applied for a building permit to construct athletic fields for the school, including a hardball field, a softball field and six tennis courts, adjacent to the high school building. Following hearings on the matter, the ZHB granted HASD's application with attached conditions.[1]
On April 4, 1994, HASD submitted an amended application for use and improvements of the athletic fields, seeking to add two dugouts, two water fountains, a scoreboard and a backstop to the hardball field. In an April 25, 1994 decision, the ZHB granted the amended application but indicated that the hardball field could be used only for school baseball practice and interscholastic competition.[2] On April 10, 1996, HASD submitted an application to the ZHB requesting a change in the ZHB's April 25, 1994 decision; HASD sought to expand the use of the hardball field to include non-school-related ballgames.[3] Following a hearing at which both supporters and challengers of HASD's application provided testimony, the ZHB rendered an oral decision on June 3, 1996, denying HASD's request. A written decision denying HASD's application was filed June 25, 1996.
HASD appealed the denial to the trial court[4] arguing, inter alia, that when the ZHB restricted HASD's use of the athletic field in its April 1994 decision, and then sustained that restriction in its June 1996 decision, the ZHB impermissibly preempted and interfered with the authority specifically granted HASD under the Public School Code of 1949 (School Code)[5] to locate and erect *222 school facilities and to implement its educational and community related purposes. Further, HASD argued that the ZHB decision was a mere recommendation and, thus, was not binding upon HASD. The trial court disagreed with HASD's contentions and affirmed the ZHB's decision. HASD now appeals to this court.[6]
HASD first argues that the trial court erred in affirming the ZHB's decision because the restrictions that the ZHB placed on the use of the hardball field, i.e., allowing only school baseball practice and interscholastic competition, clearly obstructed HASD's performance of its statutory duties under the School Code. In fact, HASD contends that those restrictions render the facility virtually useless by preventing HASD from performing both its school-related and non-school-related functions. We disagree.
Initially, we point out that in making this argument, HASD appears to challenge the ZHB's restriction on the use of the hardball field not merely as a denial of HASD's ability to allow non-school-related ballgames on the field, but also as an interference with HASD's duties to perform school-related activities on the field. In the latter context, HASD asserts that the ZHB's restrictions impermissibly prevent HASD from utilizing the athletic field for educational purposes such as school band practice, field hockey practice or instructional space. (See HASD's brief at 17.) In support of this assertion, HASD relies on section 511 of the School Code, 24 P.S. § 5-511, in which the General Assembly reserves for local boards of school directors specific powers to determine and enforce reasonable rules and regulations regarding the control and supervision of athletics related to school programs.[7] However, we need not consider whether HASD has a valid argument in this respect because this is not the issue that is now before us. HASD's application to the ZHB sought permission to use the hardball field for non-school-related ballgames. Because it is that application which the ZHB considered and denied, we must limit our review to a determination of whether denial of that application was proper.
In support of its position, HASD also relies on sections 701 and 702 of the School Code, 24 P.S. §§ 7-701 and 7-702,[8] as reserving *223 specific powers and discretion to school districts to locate school buildings and the playgrounds associated with those buildings. HASD notes that, after considering the relationship between the grant of these specific powers in the School Code and the general power of municipalities to enact land use regulations, our supreme court has held that a municipality may not, through land use regulations or zoning ordinances, limit a school district's power to choose the location of a school. See Pemberton Appeal, 434 Pa. 249, 252 A.2d 597 (1969); School District of Philadelphia v. Zoning Board of Adjustment, 417 Pa. 277, 207 A.2d 864 (1965).[9] Relying on Pemberton Appeal and School District of Philadelphia, HASD contends that sections 701 and 702 of the School Code preempt any authority the ZHB may have under the local zoning ordinance.
Again, however, it appears that HASD has misconstrued the issue before us. Because, here, the ZHB already has approved the location and construction of the high school and its accompanying athletic fields, the issue now is not whether the ZHB has the power to regulate HASD's location of public school buildings but, rather, whether the School Code provides HASD with specific power to use the school property for non-school-related activities that would preempt the Township's conflicting land use regulations or zoning ordinances.[10]
HASD relies on section 775 of the School Code as providing it with just such power, specifically, the authority to lease any of its athletic fields to any reputable organization that HASD deems proper. Section 775 of the School Code provides:
The board of school directors of any district may permit the use of its school grounds and buildings for social, recreation, and other proper purposes, under such rules and regulations as the board may adopt. The board shall make such arrangements with any city, borough, or township authorities for the improvement, care, protection, and maintenance of school buildings and grounds for school, park, play, or other recreation purposes, as it may see proper. Any board of school directors may make such arrangements as it may see proper with any officials or *224 individuals for the temporary use of school property for schools, playgrounds, social, recreation, or other proper educational purposes, primaries and elections, and may permit the use of any school building for holding official meetings of the governing authorities of corporate or politic, governmental or quasi-governmental bodies, created by authority of any act of Assembly. The use thereof shall not interfere with school programs and shall be subject to reasonable rules and regulations adopted by the board of school directors.
The board of school directors of any school district shall have power and authority to lease any part of their respective school building, equipment and premises, or any vacant building, for any educational purpose. Such leases shall be subject to the terms and regulations which may be adopted by the board of school directors, and except in districts of the first class, shall be further subject to the approval of the Department of Public Instruction.
Funds raised by individuals, groups, associations, or corporations, through the permissive use of school grounds or buildings, now or hereafter authorized by law, shall be the property of the individuals, groups, associations, or corporations, and not the property of the school district, subject, however, to such arrangements as the board may, at its discretion, lawfully make.
The board of public education or the board of school directors of any school district shall have the power and authority to lease any of their respective school buildings or athletic fields to any reputable organization or group of persons for charitable purposes, subject to such charges as the board may consider proper to reimburse it for any costs resulting from the leasing of such school buildings or athletic fields. At the time of such leasing, any such board may require a bond, in an amount that it may deem proper, with responsible sureties or securities, and a statement of the charitable purposes for which such lease is requested.
24 P.S. § 7-775 (emphasis added).
Based on this language, HASD asserts that the ZHB's action limiting HASD's use of the subject grounds to baseball practice and interscholastic competition precludes HASD from exercising its state-mandated authority under section 775 of the School Code to enter into agreements for the utilization of the hardball field, and, thus, the ZHB's limitation is unenforceable. Further, relying on the Statutory Construction Act of 1972, 1 Pa.C.S. §§ 1501-1991, HASD argues that the special powers granted to school directors through the School Code supersede any conflicting general power of the Township to enforce its land use regulations or zoning ordinances and, thus, render those municipal regulations and ordinances void with respect to HASD.[11]
In response, the Township first contends that HASD has waived this argument because it failed to raise the statutory provisions of section 775 of the School Code before the trial court and, instead, presents this argument for the first time to this court. Moreover, the Township maintains that, even if section 775 were applicable, that section, by its terms, clearly requires zoning approval.
*225 Even assuming that HASD has not waived this issue, we would agree that the statutory authority granted school districts pursuant to section 775 of the School Code is not the type intended by the State to preempt municipal zoning regulations. The General Assembly delegated specific exclusive powers to school districts as a means of fulfilling the constitutional mandate to provide a thorough and efficient system of public education for the Commonwealth. Because purely non-school-related activities are involved in HASD's application, requiring HASD to comply with the ZHB's limitations in this case would not adversely affect HASD's ability to carry out its vested responsibilities.[12] In this respect, we can derive guidance from Skepton v. Borough of Northampton, 87 Pa.Cmwlth. 24, 486 A.2d 1022 (Pa.Cmwlth.1985). In that case, a school district and contractor sought a declaratory judgment to determine whether the School Code preempted local regulations of a school construction project. We affirmed the trial court decision that local regulations were not preempted, stating:
A local ordinance is... superceded to the extent it contradicts or is inconsistent with a statute that is not explicitly pre-emptive. Municipalities, however, pursuant to their subordinate police power, may promulgate supplemental or additional regulations that are reasonable and do not offend the spirit of state regulatory provisions.... The School Code contains no explicit pre-emption language.... By implication the Department regulations permit local regulation of school building construction that is supplemental to, or consistent with, state standards.
Id. at 1024 (citations omitted). Because the School Code has no specific preemptive mandate allowing the use of school property for non-school-related activities, such unrestricted use of school property by HASD would frustrate the Township's zoning scheme designed to promote and protect the health, safety and welfare of Township residents. Therefore, HASD must abide by the ZHB's limitations to use the hardball field for school-related activities only. See County of Venango v. Borough of Sugarcreek Zoning Hearing Board, 534 Pa. 1, 626 A.2d 489 (1993).
HASD also contends that section 305 of the Pennsylvania Municipalities Planning Code (MPC), Act of July 31, 1968, P.L. 805, as amended, 53 P.S. § 10305, stands for the proposition that the ZHB's restrictions on the use of the hardball field are merely recommendations, and, thus, the ZHB's attempt to make them mandatory is contrary to law. Section 305 of the MPC provides:
Following the adoption of a comprehensive plan or any part thereof by any municipality or county governing body, pursuant to the procedures in section 302, any proposed action of the governing body of any public school district located within the municipality or county relating to the location, demolition, removal, sale or lease of any school district structure or land shall be submitted to the municipal and county planning agencies for their recommendations at least 45 days prior to the execution of such proposed action by the governing body of the school district.
53 P.S. § 10305 (footnote omitted). Based on this language, HASD contends that a school district need only submit proposed actions to a municipality to get a recommendation, but that the school district remains free to accept that recommendation or to reject it.
On the other hand, the Township and the ZHB contend that HASD's reliance on section 305 of the MPC for the proposition *226 that ZHB restrictions are merely recommendations is misplaced. Although acknowledging that this section of the MPC requires a school district to submit proposed actions to municipal and county planning agencies for recommendations which are purely advisory, the Township and the ZHB maintain that section 305 of the MPC is inapplicable to zoning hearing boards of municipalities. We must agree with this reasoning because to conclude otherwise would make it impossible to require a school district to ever comply with any local land use regulation or zoning ordinance. We do not believe that the legislature intended such a result. Further, the fact that our courts, under particular circumstances, have required school districts to yield to local zoning regulations in carrying out their plans indicates that HASD's contention is incorrect.
Accordingly, for the foregoing reasons, we affirm.
ORDER
AND NOW, this 9th day of November, 1998, the order of the Court of Common Pleas of Luzerne County, dated December 15, 1997, is hereby affirmed.
NOTES
[1] The conditions placed upon the ZHB's grant of variances included: (1) no exterior lighting; (2) planting of trees to screen a neighboring property; (3) no concession stands; (4) no lavatory/restroom facilities; (5) no dugouts; (6) no scoreboards; and (7) no football practice. (R.R. at 5a.)
[2] Specifically, paragraph 5 of the ZHB's April 25, 1994 decision stated, "Upon approved completion of the aforementioned structures and dimensions, it is understood that the hardball field can then be utilized for practice and interscholastic competition." (R.R. at 7a.) Although paragraph 5 does not specifically exclude other uses of the facility, both parties seem to agree that the language in this paragraph restricts use of the hardball field solely to school practice and competition.
[3] The Hazelton Area American Legion Baseball League, which was open to boys between 15 and 19 years of age, contacted HASD requesting to use the hardball field for its practice sessions and league games when the high school was not using the facility.
[4] The ZHB granted the Township's motion to intervene in this matter on July 29, 1996. (R.R. at 22a-23a.)
[5] Act of March 10, 1949, P.L. 30, as amended, 24 P.S. §§ 1-101-27-2702.
[6] There is a question raised as to our scope of review here. This court's scope of review in zoning cases depends upon whether additional evidence is taken by the trial court. Where the trial court does not take additional evidence, we review the ZHB's decision to determine whether the ZHB committed an error of law or an abuse of discretion. De Cray v. Zoning Hearing Board of Upper Saucon Township, 143 Pa.Cmwlth. 469, 599 A.2d 286 (Pa.Cmwlth.1991). However, where the trial court does take additional evidence, it must decide the case de novo, making its own factual findings. Id. We must then determine whether the trial court committed an error of law or an abuse of discretion. Id. Thus, if the trial court receives, and does not reject, additional factual evidence relevant to the issue on the merits of the zoning appeal, the trial court must set forth appropriate findings of fact to allow us to properly review the trial court's decision. Id.
Here, HASD notes that the trial court conducted a hearing on November 24, 1997, at which it heard argument by and between counsel for the respective parties, (R.R. at 216a-34a), and, in addition, the trial court accepted "evidence" consisting of minutes from the ZHB meeting of April 25, 1994 and a set of stipulations submitted by the Hazelton Area School Board, which essentially set forth the findings and conclusions of the prior ZHB decision. (R.R. at 217a, 233a). HASD contends that the trial court should have conducted de novo review, and this court must review the trial court's decision rather than the decision of the ZHB. We disagree. The record here indicates that the trial court did not receive any additional relevant factual evidence; therefore, the trial court acted properly in reviewing the ZHB decision, and we must do likewise.
[7] That section provides, in relevant part:
(a) The board of school directors in every school district shall prescribe, adopt, and enforce such reasonable rules and regulations as it may deem proper, regarding (1) the management, supervision, control, or prohibition of exercises, athletics, or games of any kind, . . . and other activities related to the school program....
...
(c) The board of school directors may (1) permit the use of school property, real or personal, for the purpose of conducting any activity related to the school program, or by any school or class organization, club, society, or group....
24 P.S. § 5-511 (emphasis added).
[8] These sections provide in relevant part:
The board of school directors of each district shall provide the necessary grounds and suitable school buildings to accommodate all the children ... in said district, who attend school....
24 P.S. § 7-701.
The location and amount of any real estate required by any school district for school purposes shall be determined by the board of school directors of such district.... No new school building shall be erected without a proper playground being provided therefor.
24 P.S. § 7-702 (emphasis added).
[9] Similarly, in School District of Pittsburgh v. City of Pittsburgh, 23 Pa.Cmwlth. 405, 352 A.2d 223 (Pa.Cmwlth.1976), this court recognized that the General Assembly, in an effort to fulfill its constitutional mandate to provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth, (Article III, section 14 of the Pennsylvania Constitution), delegates various powers and duties to school districts within the Commonwealth including, inter alia: (1) the exclusive power to establish and maintain schools and to provide the grounds and buildings necessary for administering the public education system; and (2) the sole power and discretion to determine the location and size of real estate necessary to carry out this power.
[10] Although our courts have recognized that a municipality's land use regulations must yield to a school district's power to locate a school facility anywhere within the school district and, further, that a municipality may not interfere with any matter pertaining to school facilities which has been preempted by the State, we note that school districts must still have their plans approved by the municipality and that they do not always have a clear legal right to such approval. As we stated in School District of Pittsburgh:
It is quite proper for municipal officials to be concerned about their citizens' welfare and the effect of schools upon the orderly development of neighborhoods. They should be given notice of the school district's plans for the construction and alteration of school facilities. It is, of course, possible that some construction or land use by a school district will not be for educational purposes or otherwise preempted by the State. It would be improper, therefore, to permit school districts to proceed with construction or development without some formal notice to the municipality. It is for these reasons that one of the holdings in this case is that the school districts must make applications, together with all the necessary documentation, for permits as required of all other developers in the municipality.
Id. 352 A.2d at 229, (emphasis added); see also Council Rock School District v. Wrightstown Township Zoning Hearing Board, 709 A.2d 453 (Pa.Cmwlth.1998); School District of Philadelphia.
[11] Section 1933 of the Statutory Construction Act of 1972, 1 Pa.C.S. § 1933, replaces section 63 of the Act of May 28, 1937, P.L. 1019, formerly 46 P.S. § 563, repealed by the Act of Dec. 6, 1972, P.L. 1339. Like the former section, section 1933 provides that where a general provision in a law conflicts with a special provision in the same or another law, the two should be construed to give effect to both. However, if the conflict is irreconcilable, the special provision will prevail as an exception to the general provision, unless it is manifestly apparent that the legislature intended the general provision to prevail.
In Pemberton Appeal, the court relied upon former 46 P.S. § 563 to support its holding that section 702 of the School Code precludes a municipality from limiting, by zoning ordinances, the statutory grant of discretion to school directors to choose the location of school grounds. In order to apply this same reasoning here, HASD would have us equate the authority of school directors to lease school buildings to nonschool-related organizations, as set forth in section 775 of the School Code, with the specific power provided school directors in section 702 of the School Code to determine the location and amount of real estate required for a school, even investing the school district with the power to acquire such land by condemnation. We are unpersuaded that sections 702 and 775 of the School Code are comparable.
[12] Indeed, in School District of Philadelphia, the court determined that, in constructing a new school building, the school district had to comply with the City of Philadelphia's (City) zoning regulation concerning off-street parking. The court reasoned that the prohibition imposed on the City against the exercise of powers contrary to, or in limitation of, other acts of the General Assembly regarding the regulation of public schools applies only to substantive matters of state-wide concern. The court then concluded that the requirement of off-street parking facilities was not among the areas of state-wide interest that the legislature intended to protect from local interference when it denied cities the power to regulate public schools. Similarly, we do not believe that the legislature's interest in giving school districts control over school buildings and grounds extends to the use of those facilities for non-school-related activities.
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18 Cal.Rptr.3d 435 (2004)
121 Cal.App.4th 1303
SOUTHERN CALIFORNIA EDISON COMPANY, Petitioner,
v.
PUBLIC UTILITIES COMMISSION, Respondent;
Center for Energy Efficiency and Renewable Technologies, Real Party in Interest.
No. B171050.
Court of Appeal, Second District, Division One.
August 31, 2004.
As Modified on Denial of Rehearing September 27, 2004.
Review Denied January 19, 2005.[*]
*436 Stephen E. Pickett, Michael D. Mackness and Erin K. Moore, Rosemead, for Petitioner.
Randolph L. Wu, Mary F. McKenzie and Karen Paull, San Francisco, for Respondent.
Sara Steck Myers, San Francisco; Ellison, Schneider & Harris, Christopher T. Ellison, Jeffery D. Harris and Lynn M. Haug, Sacramento, for Real Party in Interest.
MALLANO, J.
To accommodate the connection of newly created sources of electrical energy to a transmission facility that is part of the national grid, it is often necessary to up-grade the grid at the point of interconnection. Federal law, as set forth in a recent order of the Federal Energy Regulatory Commission (FERC), states that the generator of the energy is initially responsible for the costs of the upgrade but further provides that the owner of the transmission facility, typically a public utility such as petitioner Southern California Edison (SCE), may elect to pay those costs. (In either case, the costs are later reimbursed through energy sales.) California Public Utilities Code section 399.25, as interpreted by respondent California Public Utilities Commission (PUC), permits a requirement that the public utility pay the up-front costs. The issue in this case is whether PUC's interpretation has been preempted by federal law. We conclude that it has. Accordingly, on a petition for a writ of review filed by SCE, we annul certain PUC decisions to the extent they purport to interpret Public Utilities Code section 399.25 to permit a requirement that transmission owners pay the up-front costs of network upgrades.
BACKGROUND
The California Energy Security and Reliability Act of 2000 (Assem. Bill No. 970 *437 (1999-2000 Reg. Sess.)), contains a legislative declaration that "[i]n recent years there has been significant growth in the demand for electricity in the state due to factors such as growth in population and economic activities that rely on electrical generation," and that "[a]s a result, California faces potentially serious electricity shortages over the next two years, which necessitates immediate action by the state." (Stats. 2000, ch. 329, § 2(a), (c).) On November 2, 2000, PUC filed Investigation No. 00-11-001, 2000 WL 33115425, instituting investigation into implementation of Assembly Bill No. 970.
In 2002, California Senate Bills Nos. 1038 and 1078 (2001-2002 Reg. Sess.), both addressing the state's need for generation of renewable electrical energy (such as wind, solar, and geothermal energy), were signed into law. (Stats. 2002, chs. 515, 516.) This legislation, which included Public Utilities Code section 399.25, called upon the state to increase its electrical generation from renewable sources by at least 1 percent a year until those sources comprise 20 percent of the energy procured by public utilities such as SCE. In early 2003, as part of Investigation No. 00-11-001, 2000 WL 33115425, PUC requested "Comments on Procedural Coordination of Renewables Procurement, Transmission Planning and Statutory Interpretation of Pub. Util.Code, § 399.25."[1] ((Feb. 25, 2003) [as of Aug. 17, 2004].)
On July 10, 2003, PUC issued Decision No. 03-07-033, captioned Interim Opinion on Procedures to Implement Public Utilities Code Section 399.25 (hereafter Interim Opinion), 2003 WL 21705299 [2000 Cal. PUC Lexis 1128]. Among the many topics covered, the Interim Opinion discussed the financing of upgrades to the grid network. The Interim Opinion provides in part:
"By way of definition, we refer to transmission facilities needed to bring power from the plant to the first point of interconnection with the existing transmission grid as `gen-ties.' We refer to facilities needed to upgrade the existing transmission grid to ensure reliable electric service and full delivery of a generator's output *438 with the added generation as `network' or `system' upgrades. Under current FERC policy, new generators absorb gen-tie costs as part of the cost of producing power. With respect to network upgrade costs, current FERC policy requires a new generator to fund network upgrades for which the new generator is the `but for' causation. However, the transmission owner (e.g., the [public utilities]) must credit back those costs, with interest, in monthly payments amortized over a number of years beginning when the new generation is available to the grid. Thus, the renewable developer knows that it currently must finance the needed transmission network upgrades, but will receive that money back with interest once it comes on-line.
"The language of § 399.25 does not modify the developer's cost responsibility for either gen-ties or network upgrades. The former continues to be funded by the new generator and the latter by ratepayers, under current FERC policies. The difference is that § 399.25(b) provides the possibility of `rolled-in ratemaking' for network upgrade costs, which we define to mean that the developer would not have to fund network upgrades upfront and await recovery of those costs over time. Instead, ratepayers would fund those costseither in transmission rates (authorized by FERC) or in retail rates authorized by this Commission. More specifically, the utilities would finance these transmission projects as part of rate base, with the associated costs recovered in rates. Under this scenario, ratepayers assume the financial risk of the generation projects actually coming on line." (Interim Opn., supra, 2003 WL 21705299, p. *5, fns. omitted [2000 Cal. PUC Lexis 1128, pp. *15-*17].)
The Interim Opinion also addresses the responses of SCE and Pacific Gas & Electric (PG & E) to PUC's previous request for comments. In these comments, SCE and PG & E argued that federal preemption precludes an interpretation of Public Utilities Code section 399.25 that requires the utilities to pay up-front for the costs of network upgrades. The Interim Opinion states: "PG & E and SCE are simply incorrect . . . . In this regard, we note that nowhere in their comments do either PG & E or SCE cite to a specific federal law or FERC rule that articulates this FERC policy as a legally binding requirement. Nor could they do so if they tried, because the FERC policy in question, which requires the developers of new generation to front transmission system network upgrade costs and to recover these costs in credits after the new upgrade is available to the grid, is precisely thata policy; it is neither a law nor a rule. [¶] The various FERC decisions cited in PG & E's comments reflect various instances in which that policy was implemented.[[2]] However, the implementation by a federal agency such as FERC of a particular policy preference in various individual cases does not amount to the establishment of federal `law' that supports the application of the doctrine of federal preemption, and the states must be presumed to be able to *439 implement their own alternative policy preferences in such matters unless federal law expressly or impliedly mandates otherwise." (Interim Opn., supra, 2003 WL 21705299, pp. *12-*13 [2000 Cal. PUCLexis 1128, pp. *38-*39].)
SCE filed an application for rehearing. On October 2, 2003, the application was denied in Cal. P.U.C. Decision No. 03-10-020, captioned "Order Denying Rehearing of Decision 03-07-033" (hereafter Order Denying Rehearing), 2003 WL 22336120 [2000 Cal. PUCLexis 1145]. The Order Denying Rehearing notes that 10 days after issuance of the Interim Opinion, FERC issued an order applicable to large power generators, captioned "Standardization of Generator Interconnection Agreements and Procedures" (hereafter Standard Interconnection Agreement Order) (104 FERC ¶ 61,103, 2003 WL 21725988 [2003 FERCLexis 1551]). (Order Denying Rehg., supra, 2003 WL 22336120, p. *1 [2000 Cal. PUCLexis, p. *4].) The Order Denying Rehearing continues:
"FERC indisputably has jurisdiction over interconnection agreements ([16] U.S.C. § 824i), and the Standard [Interconnection] Agreement Order that FERC issued on July 24, 2003 is, as [SCE] correctly points out, a Final Rule (effective October 20, 2003) that will require public utility transmission providers to use a Standard Interconnection Agreement. However, as [certain parties] point out, the Standard [Interconnection] Agreement Order does not require that the developer of new generation advance the up-front costs of transmission upgrades. [Citation.] FERC expressly allows the Transmission Provider `to elect to fund the network upgrades itself, with no advance payment by the Interconnection Customer, and thus no need for subsequent [reimbursement] credits.'[[3]] (Standard [Interconnection] Agreement Order, ¶ 720.) Section 11.3 of the Standard Large Generator Interconnection Agreement, attached to the Order, provides that `unless the Transmission Provider or Transmission Owner elects to fund the capital for the Network Upgrades, they shall be solely funded by the Interconnection Customer.'[[4]] As the Standard [Interconnection] Agreement Order expressly allows the up-front costs to be paid by the Transmission Provider, such an arrangement clearly does not conflict with any of the policy goals discussed in the order. Moreover, this provision does not represent a change in FERC policy; it merely preserves an option that has been available under existing policy. [Citation.]
"The preemption question, therefore, is properly narrowed to whether a federal *440 statute, FERC policy, or FERC rule precludes a state commission from requiring a utility to provide the up-front funding for `but-for' transmission upgrades, subject to FERC approval of the interconnection agreement. [SCE] has cited no statute, no provision of the Standard [Interconnection] Agreement Order, or any other authority, that expressly precludes a state commission from doing this. The Standard [Interconnection] Agreement Order is silent on this question, and as [a generator of renewable energy that previously submitted comments] correctly points out, the courts are reluctant to infer preemption from silence, especially in the context of a federal statutory scheme that does not entirely supplant state regulation. [Citation.]" (Order Denying Rehg., supra, 2003 WL 22336120, pp. *2-*3, fn. omitted [2000 Cal. PUCLexis 1145, pp. *5-*8].)
The Order Denying Rehearing continues by noting that "[u]nder the Federal Power Act, the states retain regulatory authority over transmission siting and integrated resource planning, among other things" (Order Denying Rehg., 2003 WL 22336120, p. *3 [2000 Cal. PUCLexis 1145, p. *8]), and that "[w]ith respect to wholesale rates for electric power, FERC has recognized that FERC's jurisdiction over wholesale rates does not preclude state regulators from determining `whether a purchaser has prudently chosen from among available supply options'" (ibid., 2003 WL 22336120 [2000 Cal. PUCLexis 1145, p. *9]). Thus, concludes PUC: "In light of the role state regulators continue to play with respect to transmission upgrades as well as retail rates under the Federal Power Act, we are not persuaded that FERC's silence on this point should be construed as an expression of Congressional intent to preempt state commissions from directing a utility to provide the up-front costs of necessary network upgrades, subject to FERC approval of the interconnection agreement, and to seek recovery of those costs in transmission rates." (Order Denying Rehg., 2003 WL 22336120, p. *3 [2000 Cal. PUCLexis 1145, p. *10].)
Following the Order Denying Rehearing, SCE petitioned this court for a writ of review. The petition was opposed by PUC, as well as by real party in interest Center for Energy Efficiency and Renewable Technologies (CEERT). SCE filed a reply, addressing both opposition briefs. We issued a writ of review and set the matter for oral argument.
DISCUSSION
"A federal statute or regulation may preempt state law in three situations, commonly referred to as (1) express preemption, (2) field preemption, and (3) conflict preemption. `"First, Congress can define explicitly the extent to which its enactments pre-empt state law." [Citations.] "Second, in the absence of explicit statutory language, state law is pre-empted where it regulates conduct in a field that Congress intended the Federal Government to occupy exclusively." [Citations.] "Finally, state law is pre-empted to the extent that it actually conflicts with federal law." [Citations.]' [Citations.]" (Olszewski v. Scripps Health (2003) 30 Cal.4th 798, 814-815, 135 Cal.Rptr.2d 1, 69 P.3d 927.) "Federal regulations have no less pre-emptive effect than federal statutes." (Id. quoting Fidelity Federal Sav. & Loan Assn. v. de la Cuesta (1982) 458 U.S. 141, 153, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664.
SCE's argument is limited to field preemption. As conceded by PUC in the Order Denying Rehearing, "FERC indisputably has jurisdiction over interconnection agreements . . . ." (Order Denying *441 Rehg., supra, 2003 WL 22336120, p. *2 [2000 Cal. PUC Lexis 1145, p. *5].) Thus, the issue we address is the preemptive effect of this jurisdiction.
As a preliminary matter, we disagree with PUC's assertion that the matter is not ripe for review. This is not a situation, as in PG & E Corp. v. Public Utilities Com. (2004) 118 Cal.App.4th 1174, 13 Cal.Rptr.3d 630, where the "admittedly vague" subject matter of a PUC interim opinion had been given "an almost equally ambiguous interpretation." (Id. at p. 1217, 13 Cal.Rptr.3d 630.) The Interim Opinion and the Order Denying Rehearing at issue here are unambiguous in asserting PUC control over financing of the up-front costs of interconnection upgrades. And as noted by SCE, negotiations on developing new sources of renewable energy for connection to the grid are being inhibited by the uncertainty over this issue. (See Pacific Legal Foundation v. California Coastal Com. (1982) 33 Cal.3d 158, 171, 188 Cal.Rptr. 104, 655 P.2d 306, quoting Abbott Laboratories v. Gardner (1967) 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 [determination of ripeness requires the court "`to evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration'" (italics omitted)].)
Turning to the substantive issue, we note that SCE transmits electricity through the grid, and "any electricity that enters the grid immediately becomes a part of a vast pool of energy that is constantly moving in interstate commerce." (New York v. FERC (2002) 535 U.S. 1, 7, 122 S.Ct. 1012, 1018, 152 L.Ed.2d 47.) Federal statutory jurisdiction over transmission of electrical energy emanates from the Federal Power Act (16 U.S.C. § 791a et seq.), which "declare[s] that the business of transmitting and selling electric energy for ultimate distribution to the public is affected with a public interest." (16 U.S.C. § 824(a).) "Federal regulation of matters relating to generation . . . and . . . transmission of electric energy in interstate commerce and the sale of such energy at wholesale in interstate commerce is necessary in the public interest, such Federal regulation, however, to extend only to those matters which are not subject to regulation by the States." (16 U.S.C. § 824(a).) The Federal Power Act generally applies to "the transmission of electric energy in interstate commerce and to the sale of electric energy at wholesale in interstate commerce . . . [and] over all facilities for such transmission or sale of electrical energy." (16 U.S.C. § 824(b)(1).) It gives FERC "jurisdiction over all facilities for such transmission or sale of electric energy . . . ." (16 U.S.C. § 824(b)(1).) The jurisdiction includes the authority to order interconnection to the grid and to specify the terms of the interconnection. (16 U.S.C. §§ 824i, 824k.)
While this matter was pending before PUC, FERC issued the Standard Interconnection Agreement Order. Its background section states that FERC "to date has addressed interconnection issues on a case-by-case basis. Although a number of Transmission Providers have filed interconnection procedures as part of their [open access transmission tariffs], many industry participants remain dissatisfied with existing interconnection policy and procedures. With the increasing number of interconnection related disputes, it has become apparent that the case-by-case approach is an inadequate and inefficient means to address interconnection issues. [¶] . . . Interconnection plays a crucial role in bringing much-needed generation into the market to meet the growing needs of electricity customers. . . . [FERC] concludes that there is a pressing need for a single set of procedures for jurisdictional *442 Transmission Providers and a single, uniformly applicable interconnection agreement for Large Generators."[5] (Standard Interconnection Agreement Order, supra, 104 FERC ¶ 61,103, pts. I.A.10.-I.A.11., fns. omitted, 2003 WL 21725988, p. *2 [2003 FERC Lexis 1551, pp. *9-*10].)
Given this vast amount of federal statutory and regulatory authority, SCE relies on the following rule: "In the absence of express pre-emptive language, Congress' intent to pre-empt all state law in a particular area may be inferred where the scheme of federal regulation is sufficiently comprehensive to make reasonable the inference that Congress `left no room' for supplementary state regulation. [Citation.] Pre-emption of a whole field also will be inferred where the field is one in which `the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.' [Citations.]" (Hillsborough County v. Automated Medical Labs. (1985) 471 U.S. 707, 713, 105 S.Ct. 2371, 2375, 85 L.Ed.2d 714.)
PUC argues that the federal statutory and regulatory scheme regarding interconnection is not so pervasive as to preempt the field of interconnection agreements and thereby nullify PUC's interpretation of Public Utility Code section 399.25. PUC first relies on the general rule disfavoring implied preemption. As observed in Consumer Justice Center v. Olympian Labs, Inc. (2002) 99 Cal.App.4th 1056, 1059, 121 Cal.Rptr.2d 749, because "Congress knows how to write a preemption clause if it wanted to," analysis of a pre-emption issue should start with a "presumption against preemption." But this presumption is characteristically applied where the field is one that the states have traditionally occupied and regulated. (See, e.g., Olszewski v. Scripps Health, supra, 30 Cal.4th at p. 815, 135 Cal.Rptr.2d 1, 69 P.3d 927 [public health and the costs of medical care].) The presumption "is not triggered when the state regulates in an area where there has been a history of significant federal presence. [Citation.]" (LaPlante v. Wellcraft Marine Corp. (2001) 94 Cal.App.4th 282, 290, 114 Cal.Rptr.2d 196.) Inasmuch as the field of interconnection agreements has a history of significant federal presence, the presumption against preemption is not applicable here.
PUC further notes that federal policy, as reflected in FERC decisions handed down before the Standard Interconnection Agreement Order was promulgated and in the Standard Interconnection Agreement Order itself, permits utilities that provide transmission facilities to pay the upfront costs of network upgrades. Consequently, PUC urges, federal policy is not in conflict with PUC's interpretation of Public Utilities Code section 399.25, which permits the PUC to require that the transmission-provider utilities to pay these costs. But as stated, SCE has limited its challenge in this case to the existence of field preemption, thereby rendering irrelevant the question of whether an actual conflict exists between state and federal law.
As acknowledged by SCE, the Federal Power Act specifies that certain aspects of the transmission of electrical energy are *443 within state jurisdiction. For example, federal regulation does not "deprive a State or State commission of its lawful authority now exercised over the exportation of hydroelectric energy which is transmitted across a State line," nor is there federal jurisdiction "over facilities used for the generation of electric energy or over facilities used in local distribution or only for the transmission of electric energy in intrastate commerce, or over facilities for the transmission of electric energy consumed wholly by the transmitter." (16 U.S.C. § 824(b)(1).) In addition, certain "qualifying small power production facilities" (16 U.S.C. § 796(17)(C)) and "qualifying cogeneration facilities" (16 U.S.C. § 796(18)(B)) are designated to be within the jurisdiction of state regulatory authorities. (See 16 U.S.C. § 824a-3(a), (f).) And as SCE observes was stated with respect to wholesale energy sales in F.P.C. v. Southern Cal. Edison Co. (1964) 376 U.S. 205, 215-216, 84 S.Ct. 644, 651, 11 L.Ed.2d 638, "Congress meant to draw a bright line easily ascertained, between state and federal jurisdiction . . ., making FPC[6] jurisdiction plenary and extending it to all wholesale sales in interstate commerce except those which Congress has made explicitly subject to regulation by the States."
PUC does not rely on any of the areas of state jurisdiction that are specified in the Federal Power Act. Rather, PUC argues there is no field preemption because Congress left room for supplementary state regulation. In so doing, PUC relies primarily on the following language in New York v. FERC, supra, 535 U.S. at page 24, 122 S.Ct. 1012: "FERC has recognized that the States retain significant control over local matters even when retail transmissions are unbundled. See, e.g., Order No. 888, at 31,782, n. 543 (`Among other things, Congress left to the States authority to regulate generation and transmission siting'); id., at 31,782, n. 544 (`This Final Rule will not affect or encroach upon state authority in such traditional areas as the authority over local service issues, including reliability of local service; administration of integrated resource planning and utility buy-side and demand-side decisions, including [demand-side management]; authority over utility generation and resource portfolios; and authority to impose nonbypassable distribution or retail stranded cost charges')."
But notably absent from PUC's Interim Opinion, Order Denying Rehearing, and briefing to this court is an explanation either of the process of "siting" or of the "traditional areas" to which New York v. FERC, supra, 535 U.S. at page 24, 122 S.Ct. 1012, makes reference. None of these areas of state control appears to us to affect interconnection agreements as set forth in the Standard Interconnection Agreement Order, and PUC has failed to explicate why they might do so.
Real party in interest CEERT, which has elected to file an answer to SCE's writ petition, approaches the matter somewhat differently than PUC. CEERT concedes that the field of interconnection agreements has been federally preempted, but asserts that what is relevant here is pricing policy with respect to recovery of interconnection costs, not interconnection itself. In this regard, CEERT argues that "it is common in utility regulation to find that utility options created under federal regulation are in turn curtailed as a result of the state's exercise of its regulatory authority." But, as with PUC's reliance on "siting" and other "traditional areas," CEERT does not explain or provide examples of a proper state exercise of regulatory authority curtailing federal regulation *444 with respect to interconnection cost. Accordingly, its argument is of no assistance to the resolution of this matter.
We have reviewed PUC's Interim Opinion and Order Denying Rehearing to determine whether PUC exceeded its powers or jurisdiction. (Pub.Util.Code, § 1757, subd. (a)(1).) The Interim Opinion and Order Denying Rehearing interpret Public Utilities Code section 399.25 to permit a requirement that utilities pay up-front costs of system upgrades necessary to connect new sources of renewable energy to the grid. Because this interpretation is preempted by federal law, the portions of the decisions in which it appears must be annulled.
DISPOSITION
California Public Utilities Commission Decisions Nos. 03-07-033 and 03-10-020 are annulled to the extent they purport to interpret Public Utilities Code section 399.25 to permit a requirement that utilities pay up-front costs of system upgrades required to connect new sources of renewable energy to the grid.
We concur: ORTEGA, Acting P.J., and VOGEL, J.
NOTES
[*] Chin, J., did not participate therein.
[1] Public Utilities Code section 399.25 provides: "(a) Notwithstanding any other provision in Sections 1001 to 1013, inclusive, an application of an electrical corporation for a certificate authorizing the construction of new transmission facilities shall be deemed to be necessary to the provision of electric service for purposes of any determination made under Section 1003 if the commission finds that the new facility is necessary to facilitate achievement of the renewable power goals established in Article 16 (commencing with Section 399.11).
"(b) With respect to a transmission facility described in subdivision (a), the commission shall take all feasible actions to ensure that the transmission rates established by the Federal Energy Regulatory Commission are fully reflected in any retail rates established by the commission. These actions shall include, but are not limited to:
"(1) Making findings, where supported by an evidentiary record, that those transmission facilities provide benefit to the transmission network and are necessary to facilitate the achievement of the renewables portfolio standard established in Article 16 (commencing with Section 399.11).
"(2) Directing the utility to which the generator will be interconnected, where the direction is not preempted by federal law, to seek the recovery through general transmission rates of the costs associated with the transmission facilities.
"(3) Asserting the positions described in paragraphs (1) and (2) to the Federal Energy Regulatory Commission in appropriate proceedings.
"(4) Allowing recovery in retail rates of any increase in transmission costs incurred by an electrical corporation resulting from the construction of the transmission facilities that are not approved for recovery in transmission rates by the Federal Energy Regulatory Commission after the commission determines that the costs were prudently incurred in accordance with subdivision (a) of Section 454."
[2] One of the cited decisions was American Electric Power Service Corporation (July 26, 2001) 96 FERC 61,136 (Order Accepting Unexecuted Generator Interconnection Agreement), 2001 WL 845782 [2001 FERC Lexis 1831]. There, FERC explained that "the main thrust of [a prior opinion involving the same parties] was to require the [generator] to pay initially for the cost of system upgrades made necessary by the interconnection of its facilities" and that a finding to that effect was "consistent with our policy, articulated [in prior cases] that the [generator] should pay for the costs of system upgrades necessary for the interconnection of generation facilities, subject to later crediting." (96 FERC 61,136 at 61,567, italics added, fn. omitted, 2001 WL 845782, p.*3 [2001 FERC Lexis 1831, pp. **8-**9].)
[3] The Standard Interconnection Agreement Order "refer[s] to both the Transmission Provider [(in California, the Independent Service Operator)] and the Transmission Owner [(the utility)] generically as the Transmission Provider." (104 FERC ¶ 61,103, pt. 2.75, 2003 WL 21725988, p. *14 [2003 FERC Lexis 1551, p. *50].) The "Interconnection Customer" is the owner of the generating facility. (Standard Interconnection Agreement Order, 104 FERC ¶ 61,103, pt. I.3., fn. 3, 2003 WL 21725988, p. *1 [2003 FERC Lexis 1551, p. *4].)
[4] Section 11.3 provides in full: "Network Upgrades and Distribution Upgrades. Transmission Provider or Transmission Owner shall design, procure, construct, install, and own the Network Upgrades and Distribution Upgrades described in Appendix A [(Flow Chart of the Large Generating Facility Interconnection Process)], Interconnection Facilities, Network Upgrades and Distribution Upgrades. The Interconnection Customer shall be responsible for all costs related to Distribution Upgrades. Unless the Transmission Provider or Transmission Owner elects to fund the capital for the Network Upgrades, they shall be solely funded by the Interconnection Customer." (104 FERC ¶ 61,103, appen. C, p. 56, italics added, 2003 WL 21725988, p. *170 [2003 FERC Lexis 1551, p. *10].)
[5] A separate set of procedures is being established for "Small Generators," defined as generators having a capacity of no larger than 20 megawatts. (Standard Interconnection Agreement Order, supra, 104 FERC ¶ 61,103, fn. 10, 2003 WL 21725988, p. *2 [2003 FERC Lexis 1551, p. *10].) Although PUC notes in its order denying rehearing and its brief in this court that some generators of renewable energy in California may fall into this category, PUC does not argue that the distinction between large and small generators is pertinent to analysis of the preemption issue in this case.
[6] FPC is the Federal Power Commission, which was created by the Federal Power Act and is the predecessor to FERC. (See 16 U.S.C. § 792.)
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2259437/
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720 A.2d 183 (1998)
Robert STARR, M.D., Petitioner,
v.
STATE BOARD OF MEDICINE, Respondent.
Commonwealth Court of Pennsylvania.
Argued September 15, 1998.
Decided November 4, 1998.
*184 Charles I. Artz, Harrisburg, for petitioner.
Gerald S. Smith, Harrisburg, for respondent.
Before McGINLEY and SMITH, JJ., and JIULIANTE, Senior Judge.
JIULIANTE, Senior Judge.
Robert T. Starr, M.D. (Starr), petitions for review from the October 27, 1997 decision of the State Board of Medicine (Board) ordering that his license to practice medicine in Pennsylvania be revoked, effective immediately. For the reasons that follow, we affirm.
Starr received his medical license from the West Virginia University Medical School in 1989. (Finding of Fact "F.F." No. 3). He completed his residency program in psychiatry at St. Francis Health Systems hospitals in Pittsburgh and New Castle, Pennsylvania. (Id.) Starr received his license to practice medicine in Pennsylvania on August 12, 1991, and is board-certified in psychiatry and neurology (F.F.Nos. 1, 3). From August 1991 to June 1995, Starr was employed as a consulting psychiatrist at the Lawrence County Human Service Center (LCHSC) in New Castle. (F.F.No. 5).[1] Additionally, since July 1, 1993, Starr was on the staff of St. Francis Hospital in New Castle. (F.F. No. 4).
On December 19, 1996, the Commonwealth Bureau of Professional and Occupational Affairs (Bureau) filed an Order to Show Cause with the Board charging that Starr violated Sections 41(8) and (9) of the Medical Practice Act (the Act),[2] by engaging in immoral, unethical, and unprofessional conduct. (Certified Record "C.R." at 1a-14a).[3] Specifically, *185 the Bureau charged that Starr engaged in romantic and sexual relations with his psychiatric patients. Starr filed an answer to the allegations (C.R. Vol. I at 15a-26a, 27a-32a) and formal hearings were conducted before the Board hearing examiner on March 20 and 21, 1997.
The hearing examiner issued his adjudication and order on April 27, 1997, finding that Starr violated Sections 41(8) and (9) of the Act. Accordingly, the hearing examiner ordered that Starr's license to practice medicine be revoked.
Starr appealed, and on October 21, 1997, the Board revoked Starr's license.[4] This appeal followed.
Starr raises three issues for our review: (1) whether the application of a per se rule that is not authorized by the Act, the Board's regulations, or case law violates what is commonly called the Commonwealth Documents Law;[5] (2) whether Starr engaged in consensual sexual relations with former patients only after the physician-patient relationships ended; and (3) whether the Board's action violated the Equal Rights Amendment of the Pennsylvania Constitution or alternatively, was excessively harsh. Our scope of review is limited to determining whether constitutional rights were violated, whether an error of law was committed, or whether the necessary findings of fact are supported by substantial evidence. Section 704 of the Administrative Agency Law, 2 Pa.C.S. § 704; Firman v. Department of State, State Board of Medicine, 697 A.2d 291 (Pa.Cmwlth.1997), petition for allowance of appeal denied, 550 Pa. 722, 706 A.2d 1215 (1998).
The Board based its decision to revoke Starr's license on the following facts: In the fall of 1994, S.E.[6] became one of Starr's patients at LCHSC. (F.F. No. 17). Her first appointment with Starr was around Thanksgiving of that year and her appointments were scheduled at two-week intervals. (F.F.Nos. 19, 20). Starr treated S.E. for depression, and generally asked about her personal life, including the fact that she was a recovering alcoholic. (F.F.Nos. 21, 22). During S.E.'s sessions, Starr began discussing his personal life with her, and sometime before Christmas 1994, he asked to see her socially. (F.F.Nos. 23, 24). Thereafter, Starr telephoned S.E. at her home and asked her to meet him at a local restaurant. (F.F. No. 25). After their meeting, Starr began visiting S.E. at her home, usually after 11:00 p.m., and sometimes spent the night there. (F.F. No. 26). During these visits, S.E. and Starr would engage in sexual intercourse. (F.F. No. 27). This relationship continued for approximately six-months to a year. (F.F. No. 29).
After the sexual aspect of their relationship began, S.E. informed Starr that another counselor had informed her that it was unethical for Starr to engage in relations with her. (F.F. No. 30). Although Starr replied that he would refer her to another physician, he never did. (Id.). During their sexual relationship, Starr continued to write prescriptions for S.E. for anti-depressant medication. (F.F. No. 32).
T.T. is a divorced mother of two, and she first met Starr when he treated her in his private practice. (F.F.Nos. 33, 34). T.T. also treated with Starr for depression, given the fact that she was experiencing difficulties at work and that her husband had left the marital residence. (F.F.Nos. 35, 36). At the time of her first visit, T.T. was on medical leave from her position with the United States Post Office, and Starr wrote orders allowing her to continue on medical leave. (F.F.Nos. 37, 38). In October of 1994, Starr telephoned T.T. at her home and proceeded to flirt with her, indicating that he had checked into a motel room that had a waterbed. (F.F. No. 39). During the first office visit in November 1994, Starr asked T.T. if *186 she would accompany him on a trip to Boston. (F.F. No. 40). Starr continued to call T.T., and eventually T.T. briefly visited Starr at his apartment. (F.F.Nos. 41, 42).
T.T. then visited Starr again at his apartment in December 1994, at which time she inquired whether it was proper for a physician to date a patient. (F.F. No. 44). Starr replied that it was allowable so long as he was not sleeping with the patient, and then he made a joke that T.T.'s file had disappeared. (Id.). Also at this time, Starr told T.T. that he loved her and that he wanted to marry her. (F.F. No. 45). The two then engaged in sexual intercourse, oral sex, and kissing. (F.F. No. 47). In early December, Starr referred T.T. to another physician; however, he told her not to inform the physician why she was changing doctors. (F.F. No. 46). Starr and T.T. continued to have a sexual relationship until November of 1995, and were even engaged for a brief time in October of 1995. (F.F. No. 48).
Starr testified on his own behalf, admitting that he engaged in sexual relations with both S.E. and T.T. However, he testified that both women pursued him and that he only engaged in consensual sexual relations with them after he terminated the physician-patient relationship. He stated that the last office visit he had with S.E. was on December 14, 1994, nearly a month before they engaged in sexual intercourse. With respect to T.T., he admitted that theirs was a tumultuous relationship, and stated that T.T.'s testimony was that of a vindictive woman scorned by the break-up of their engagement.[7]
Sections 41(8) and (9) of the Act state that the Board shall have the authority to impose disciplinary or corrective measures on a board-regulated practitioner for
(8) Being guilty of immoral or unprofessional conduct. Unprofessional conduct shall include departure from or failing to conform to an ethical or quality standard of the profession. In proceedings based on this paragraph, actual injury to a patient need not be established.
(i) The ethical standards of a profession are those ethical tenets which are embraced by the professional community in this Commonwealth.
(ii) A practitioner departs from, or fails to conform to, a quality standard of the profession when the practitioner provides a medical service at a level beneath the accepted standard of care. The board may promulgate regulations which define the accepted standard of care. In the event the board has not promulgated an applicable regulation, the accepted standard of care for a practitioner is that which would be normally exercised by the average professional of the same kind in this Commonwealth under the circumstances, including locality and whether the practitioner is or purports to be a specialist in the area. (9) Acting in such manner as to present an immediate and clear danger to public health or safety.
63 P.S. § 422.41 (8) and (9).
I.
In his first argument on appeal, Starr maintains that the Board erroneously applied a per se rule requiring the revocation of a professional license for sexual misconduct which violates the Commonwealth Documents Law. We disagree.
Section 201 of the Law provides that an agency shall give public notice of its intention to promulgate, amend or repeal any administrative regulation.[8] The Law further provides that the agency, if required, shall hold public hearings on the matter and review and consider any written comments[9] and that the adopted regulations be approved by the Department of Justice before they are deposited with the Legislative Reference Bureau.[10]
In support of his position that a directive had been issued by the Board, Starr submitted a memorandum (memo) appearing on *187 Department of State letterhead, a newspaper article, and a letter written by Bureau Commissioner Dorothy Childress. (C.R. Vol. II at 493a-496a).[11] Starr maintains that these documents established a directive that provides for the revocation of a practitioner's license should he or she engage in sexual relations with a patient.
The memo resulted from a joint session of various health boards convened April 25-26, 1996 to address, among other concerns, professional sexual misconduct. The first portion of the memo summarized the joint session and included general information regarding its purpose, participants, and goals. Part two of the memo, under the heading of "Findings," stated that
[a]ny policy based on reliable scientific evidence must, at a minimum, reflect the following criteria:
Sexual behavior occurring during the course of any doctor-patient or therapist-patient relationship is never justified and represents a breach of the professional's fiduciary duty to the patient. Such behavior should result in revocation. Consent should not be recognized as a defense.
Post-treatment sexual relations between a mental health professional and a former patient are deemed to be potentially harmful in perpetuity. Once again, consent cannot be raised as a defense.
Post-treatment sexual relations between a non-psychotherapist health care professional and a former patient may be permissible under limited circumstances.
Evidence of a patient's sexual history should always be inadmissible since consent is never an issue; the responsibility to avoid sexual intimacy cannot be shifted from the professional to the patient.
Rehabilitation of sexually exploitative health care professionals is never likely to occur; informed consent to safe treatment should involve full disclosure of any past sexual misconduct.
(C.R. Vol. II at 493a). The memo appeared on Department of State letterhead and did not indicate its author. (Id.).
The newspaper article, appearing in the April 27, 1996 issue of the Harrisburg Patriot-News, informed the public that the joint session was held and provided statistics relating to professional misconduct cases. (C.R. Vol. II at 494a). The article does not attribute any information contained therein to Commissioner Childress.
Finally, Starr introduced a June 3, 1996 letter written by Commissioner Childress addressed to physicians generally. The letter summarized the purpose of the joint session, identified its goals, and cited to statistics regarding the rise in the number of sexual misconduct investigations since 1990. Specifically, Starr cites to that sentence in the Commissioner's letter that stated "[w]e also feel that the information exchanged will assist in our efforts to continue aggressive prosecution and better define standards of conduct." (C.R. Vol. II at 495a).
Starr argues that these documents constitute a directive, or substantive rule, issued by Commissioner Childress rather than a policy statement issued by the Board. We disagree.
In Pennsylvania Human Relations Commission v. Norristown Area School District, 473 Pa. 334, 374 A.2d 671 (1977), our Supreme Court favorably cited to the District of Columbia Court of Appeals' decision in Pacific Gas & Elec. Co. v. Federal Power Commission, 506 F.2d 33 (D.C.Cir.1974). In Norristown, our Supreme Court adopted the District Court's distinction between a substantive rule that must be promulgated through rule-making procedures and statements of policy that require no such proceedings.
An administrative agency has available two methods for formulating policy that will *188 have the force of law. An agency may establish binding policy through rulemaking procedures by which it promulgates substantive rules, or through adjudications which constitute binding precedents. A general statement of policy is the outcome of neither a rulemaking nor an adjudication; it is neither a rule nor a precedent but is merely an announcement to the public of the policy which the agency hopes to implement in future rulemakings or adjudications. A general statement of policy, like a press release, presages an upcoming rulemaking or announces the course which the agency intends to follow in future adjudications.
. . . .
The critical distinction between a substantive rule and a general statement of policy is the different practical effect that these two types of pronouncements have in subsequent administrative proceedings. . . . A properly adopted substantive rule establishes a standard of conduct which has the force of law.... The underlying policy embodied in the rule is not generally subject to challenge before the agency.
A general statement of policy, on the other hand, does not establish a `binding norm'.... A policy statement announces the agency's tentative intentions for the future. When the agency applies the policy in a particular situation, it must be prepared to support the policy just as if the policy statement had never been issued.
Norristown Area School District, 473 Pa. at 349, 374 A.2d at 679 (quoting Pacific Gas & Elec. Co. v. Federal Power Commission, 506 F.2d 33, 38 (D.C.Cir.1974)).
In the present case, the documents submitted by Starr fail to convince us that the Board issued a directive, or substantive rule, addressing professional sexual misconduct in violation of the Law. First, the Board's October 21, 1997 order revoking Starr's license does not mention, quote, or reference the memo or Commissioner Childress' June 3, 1996 letter. Indeed, the Board's decision is based solely on its interpretation of "unprofessional conduct" under Section 41(8) of the Act. (C.R. Vol. II at 511a, 516a-518a).
Second, the unsigned memo and Commissioner Childress' June 3, 1996 letter cannot be described as "Board actions resulting in a substantive rule." While we recognize that evidentiary rules are relaxed in administrative proceedings, we must also recognize that Starr failed to lay any foundation indicating that the Board authored, approved of, or implemented the suggestions contained within the documents. Starr failed to establish that the challenged pronouncements left the Board unable to exercise its discretion to follow or not follow the suggested policy in any individual case.
And third, a fair reading of both documents clearly establishes that they are summaries of the April 25-26, 1996 joint session. The language of both the memo and the letter indicates that the suggestions contained therein are policies that should be formally adopted at some future point in time. Again, the memo states "[a]ny policy based on scientific evidence must, at a minimum, reflect the following criteria" and Commissioner Childress' letter closes with the following remarks: "Beginning next month, members of our staff will begin meeting with affected health boards for the purpose of working towards the adoption of an appropriate professional licensure policy in cases involving sexual misconduct by health practitioners." (C.R. Vol. II at 493a, 496a)(emphasis added). These statements recognize that there is no policy in place.
Accordingly, we conclude that the documents presented do not establish that the Board issued a directive, or substantive rule, in violation of the Commonwealth Documents Law.
II.
Next, Starr maintains that neither the Act nor any appellate case law prohibits consensual sexual relationships with former patients. The underlying basis of his argument is that since the physician-patient relationships ended prior to the commencement of any sexual relationships with S.E. and T.T, *189 the Board should not have revoked his license.
a. Sexual intercourse with former patients
Starr cites this Court to Catena v. State Board of Medical Education and Licensure, 49 Pa.Cmwlth. 542, 411 A.2d 869 (1980) and Pennsylvania State Board of Medical Education and Licensure v. Ferry, 172 Pa.Super. 372, 94 A.2d 121 (1953) for the proposition that the unprofessional conduct must occur during the physician-patient relationship in order to be subject to discipline.[12] While instructive, these cases do not further Starr's position.
In Catena, petitioner's license to practice medicine was suspended for six months for two separate allegations of misconduct, one of them being Medicare fraud. Petitioner argued that his conviction for Medicare fraud did not constitute violations of Sections 15(a)(2) and (8) of the Act, relating to misleading, deceptive, untrue and fraudulent representation and unprofessional conduct, respectively.[13]
In addressing whether Medicare fraud was "unprofessional conduct" under Section 15(a)(8), we noted that that section seemed to be limited to conduct occurring during the course of the physician-patient relationship. In Catena, we relied heavily on the definition of "unprofessional conduct" appearing in Section 15(a)(8) of the Act.[14] Our holding, however, was limited to incidents of Medicare fraud. We specifically declined to identify what "unprofessional conduct" would be in all cases.
In State Board of Medical Education and Licensure v. Ferry, Cornelius Ferry appealed the Board's revocation of his medical license. The Board concluded that Ferry aided and abetted an unlicensed individual in the practice of medicine and, therefore, revoked his license.
At the time that Ferry's license was revoked, the Act provided that the Board could revoke a physician's license if it found that the physician had engaged in "grossly unethical conduct."[15] However, as here, the Legislature did not define "grossly unethical conduct." In Ferry, the Superior Court likened the term to "unprofessional conduct." The Court went on to define "unprofessional conduct" to include "those breaches of trust, confidence and reliance, necessarily attendant upon the intimate relationship of physician and patient, which amount to gross abuses of the standards of professional conduct generally recognized as essential to the proper practice of medicine and surgery." Ferry, 94 A.2d at 124.
Starr maintains that he terminated the physician-patient relationships with S.E. and T.T. before engaging in sexual relations with them. Again, neither the Act nor the Board's regulations instruct a physician as to how to terminate the physician-patient relationship.
In reference to the psychologist-patient relationship, we stated that
the therapist must take certain steps before terminating a therapeutic relationship with a patient. At the very least, he must have a discussion with the patient about whatever additional assistance is necessary *190 and about appropriate providers of the needed services.
Giddings v. State Board of Psychology, 669 A.2d 431, 433-434 (Pa.Cmwlth.1995).
In the present matter, S.E. testified that she questioned Starr regarding their personal relationship, that he told her that he would refer her to another physician, and that he did not follow through on his word. (F.F. No. 30). S.E. further testified that Starr prescribed anti-depressant medication for her during the course of their sexual relationship. (F.F. No. 32).
T.T. likewise testified that she questioned Starr about physicians and patients engaging in personal relationships. According to T.T., Starr responded by making a joke about her file disappearing. (F.F.No. 44). Starr eventually referred T.T. to another physician and then the sexual aspect of their relationship began. (F.F. No. 46, 47).
While it is true that T.T. and Starr did not engage in sexual relations until after T.T. was referred to another physician, Starr fails to acknowledge that the foundations of his relationships with S.E. and T.T. began during the course of their physician-patient relationships. During these sessions, Starr revealed personal information, showed affection toward the complainants, and made suggestions to them indicating his desire to see them socially. Within a month of undertaking S.E. and T.T. as clients, Starr began telephoning them at their homes and discussing his personal interest in them. Additionally, although T.T. did not engage in sexual intercourse with Starr while he was her physician, the two engaged in other types of physical contact, such as kissing. Undoubtedly, all this occurred during the physician-patient relationship.
Starr attempts to draw a bright line that would condone his conduct. However, it is abundantly clear that these relationships began during the course of the physician-patient relationships and resulted only from those relationships. It is also clear that Starr attempted to terminate the relationships so that he could pursue S.E. and T.T. socially. The complainants were in a delicate state of mind, which as a physician Starr should have respected. Starr should have known that they could be easily persuaded and he should have adhered to his responsibility to help them overcome their problems without engaging them in personal relationships. Thus, we agree with the Board's rejection of Starr's argument that he engaged in consensual sexual relationships only with former patients and therefore, did not violate the Act.
The Act provides that a practitioner may be disciplined for "immoral or unprofessional conduct." Section 41(8) of the Act, 63 P.S. § 422.41 (8). Although the Act and the Board's regulations do not delineate conduct that is unprofessional, the Act does provide that unprofessional conduct includes the departure from or the failure to conform to an ethical or quality standard of the profession. Id. In addition, the Act further provides that where the Board has not promulgated an applicable regulation, the practitioner is held to the standard of care normally exercised in this Commonwealth. Id. An administrative agency's interpretation of a statute for which it has enforcement responsibility is entitled to substantial deference, Borough of Pottstown v. Pennsylvania Municipal Retirement Board, 551 Pa. 605, 712 A.2d 741 (1998), and thus, we conclude that the Board is entitled to deference in its determination of what constitutes "unprofessional conduct."
b. The burden of proof
Next, Starr maintains that the Board applied the wrong burden of proof. The hearing examiner applied the preponderance of the evidence standard.[16] (C.R. Vol. II at 469a). However, Starr cites to State Board of Medical Education and Licensure v. Grumbles, 22 Pa.Cmwlth. 74, 347 A.2d 782 (1975) for the proposition that the correct burden of proof is the clear and satisfactory *191 test. Starr's reliance on Grumbles is misplaced.
In Grumbles, this Court set aside the Board's order on the grounds that the adjudication was "not supported by substantial evidence much less the clear and satisfactory evidence necessary to support charges of unprofessional conduct." Id. 347 A.2d at 785. Grumbles cited to In re Shigon, 462 Pa. 1, 329 A.2d 235 (1974) for the burden of proof. In re Shigon involved allegations that several members of the Philadelphia bar had illegally solicited lawsuits. In addressing whether the evidence supported a finding of unprofessional conduct, the Supreme Court stated that the "misconduct must be shown by a preponderance of the evidence, which `should be clear and satisfactory,' but may include logical inferences as well as direct proof." Id. at 17, 329 A.2d at 243 (citing Krehel Appeal, 419 Pa. 86, 89, 213 A.2d 375, 377 (1965)). Thus, tracing the origin of the phrase "clear and satisfactory," it is evident that the phrase was used to modify "preponderance of the evidence" and is not, itself, the correct burden of proof.
c. Starr's right to due process
Next, Starr maintains that the Board violated his right to due process when it refused to compel the prosecution to turn over its investigative file. The Board denied Starr's request to view and copy the prosecution's file, citing what is commonly called the Right to Know Law.[17]
The essential elements of due process are notice and opportunity to be heard and to defend oneself in an orderly proceeding adapted to the nature of the case before a tribunal having jurisdiction over the matter. Soja v. Pennsylvania State Police, 500 Pa. 188, 193, 455 A.2d 613, 615 (1982). Due process also requires an opportunity to confront and cross-examine adverse witnesses. Id. These requirements are fully applicable to adjudicative hearings involving substantial property rights before administrative tribunals. Lewis v. School District of Philadelphia, 690 A.2d 814, 816-817 (Pa.Cmwlth.1997).
Starr argues that this case should be controlled by the Superior Court's decision in Commonwealth v. Kauffman, 413 Pa.Super. 527, 605 A.2d 1243 (1992), wherein the Court held that the Right to Know Law did not apply to discovery proceedings under the Pennsylvania Rules of Civil Procedure.
In Kauffman, Gary Kauffman was found guilty of indecent assault and corruption of a minor. Thereafter, the victim's parents initiated a civil lawsuit against Kauffman and others. As part of the civil proceedings, the trial court entered an order directing the District Attorney to provide, in camera, its files pertaining to Kauffman so that the court could supervise discovery in the civil action.
On appeal to the Superior Court, the District Attorney argued that discovery of the information contained in its file was barred by the Right to Know Law. The Kauffman Court rejected the District Attorney's argument, basing its decision, in part, on the fact that the Legislature, by excluding certain documents from public inspection, did not intend to bar the use of such information in judicial proceedings. Accordingly, the Superior Court held that the Right to Know Law does not bar a party in a civil action from discovering relevant information from the files of a government agency. Kauffman, 605 A.2d at 1243.
However, this case is factually distinguishable. In Kauffman, the victim's parents brought a separate legal action against Kauffman for damages after Kauffman's criminal conviction. Here, the only action pending was the Board's disciplinary proceedings.
We find that this case is governed by our decision in Pastore v. Insurance Department, 125 Pa.Cmwlth. 611, 558 A.2d 909 (1989). In Pastore, the Insurance Department (Department) conducted an investigation of Anthony Pastore for various allegations of violations of the Insurance Department Act of 1921[18] and *192 the Unfair Insurance Practices Act.[19] Pastore's counsel filed a motion for discovery, alleging that he asked the Department to view the entire contents of its file, including the results of any investigations and any other pertinent information in regard to the charges against Pastore. The presiding officer granted that portion of the request that sought witness statements and denied as overly broad that portion of the motion that sought the contents of the entire file.
In Pastore, we determined that the contents of the Department's file were indeed public records as defined under the Right to Know Law. Section 1 of the Right to Know Law defines "public record" as
[a]ny account, voucher or contract dealing with the receipt or disbursement of funds by an agency or its acquisition, use or disposal of services or of supplies, materials, equipment or other property and any minute, order or decision by an agency fixing the personal property rights, privileges, immunities, duties or obligations of any person or group of persons: Provided, That the term "public records" shall not mean any report, communication or other paper, the publication of which would disclose the institution, progress or result of an investigation undertaken by an agency in the performance of its official duties,...; it shall not include any record, document, material, exhibit, pleading, report, memorandum or other paper, access to or the publication of which is prohibited, restricted or forbidden by statute law or order or decree of court, or which would operate to the prejudice or impairment of a person's reputation or personal security....
65 P.S. § 66.1.
Also in Pastore, we determined that the Department's investigative file, because it formed the basis for the Department's action in commencing the violation proceedings, would be included in the definition of public record subject to examination if no exception applied. We then went on to conclude that the investigation file fit squarely within the exception that excluded from the definition of public records "any report, communication or other paper, the publication of which would disclose the institution, progress or result of an investigation undertaken by an agency in the performance of its official duties...." Pastore, 558 A.2d at 913-914. Accordingly, we affirmed the Department's order that denied Pastore's motion for discovery.
The facts of this case are nearly on point with those of Pastore. Therefore, we conclude that the Board properly denied Starr's request to view and copy its investigative file and that Starr's right to due process was not violated.
III.
Next, Starr maintains that the Board's revocation of his license violates the Equal Rights Amendment of the Pennsylvania Constitution. Starr argues that he was punished on the basis of his gender for engaging in consensual sexual relations with adults and that he is unconstitutionally prohibited from treating male patients. This argument is simply without merit.
Article I, Section 28 of the Pennsylvania Constitution provides that
[e]quality of rights under the law shall not be denied or abridged in the Commonwealth of Pennsylvania because of the sex of the individual.
Pa. Const. art. I, § 28.
There is absolutely no evidence in the record to suggest that Starr was discriminated against on account of his gender. The Act is gender-neutral and subjects both male and female practitioners to discipline. Furthermore, even assuming that we accepted Starr's argument that the joint session memo and Commissioner Childress' June 3, 1996 letter were Board directives, the record fails to establish that the pronouncements contained therein are only applicable to male practitioners.
Starr also argues that the revocation of his license is unconstitutional because it prohibits him from treating male patients, rather than only female patients. However, the Act was enacted to protect citizens of the Commonwealth *193 against incompetent practitioners. See Preamble to the Act n. 10.[20] Starr's practice of engaging in sexual relations with his patients evidences his lack of concern and professionalism. It also evidences his willingness to set aside the best interest of his patients for his own personal gain. His failure to uphold the ethical standards of his profession makes him a danger to all patients, irrespective of their gender.
Alternatively, Starr argues that the revocation of his license was excessively harsh because the complainants consented to the relationships.[21] In Hendrickson v. State Board of Medicine, 108 Pa.Cmwlth. 124, 529 A.2d 78 (1987), we recognized that we could modify a Board's order if the penalty was unduly harsh. In making that judgment, we are limited to determining whether the penalty imposed is reasonable in light of the violation. Id. We cannot substitute our judgment for that of the Board if the penalty imposed was reasonable. Id.
The Board found that Starr violated Sections 41(8) and (9) of the Act by engaging in sexual relations with his patients. This is a serious breach of ethical standards and the punishment should reflect that. The Board's order acknowledges that we must take responsibility for our actions and face their consequences. We therefore conclude that the Board's order was reasonable in light of the violations committed.
Accordingly, based upon the foregoing, we affirm the Board's order.
ORDER
AND NOW, this 4th day of November, 1998, it is hereby ordered that the October 27, 1997 order of the State Board of Medicine is affirmed.
NOTES
[1] The Board's finding states that Starr was employed at LCHSC until June of 1996; however, Starr testified that his employment with LCHSC terminated in June of 1995. We view this as a typographical error.
[2] Act of December 20, 1985, P.L. 457, as amended, 63 P.S. § 422.41 (8) and (9).
[3] On October 31, 1996, the Board notified Starr that it suspended his license retroactive to October 22, 1996.
[4] The hearing examiner based his findings of fact and conclusions of law on the testimony of three complaining witnesses. However, when the Board examined the record, it found that the record only supported the findings of fact with regard to two of the three complaining witnesses. The Board did not appeal this determination.
[5] Act of July 31, 1968, P.L. 769, as amended, 45 P.S. §§ 1102-1602.
[6] The initials of the complaining witnesses were used to protect their privacy.
[7] Starr additionally presented the testimony of several co-workers and friends who testified that they witnessed T.T. harass Starr at work and socially.
[8] Section 201 of the Law, 45 P.S. § 1201.
[9] Section 202 of the Law, 45 P.S. § 1202.
[10] Section 205 of the Law, 45 P.S. § 1205.
[11] These documents were first attached to a motion to remove Commissioner Childress and any other members of the Board that might have prejudged the matter. Starr uses them throughout his brief to substantiate his claim that the Board and/or Commissioner Childress issued a directive requiring that any individual that engages in sexual relations with patients shall have his/her license revoked.
[12] Starr also cites to Schireson v. Shafer, 354 Pa. 458, 47 A.2d 665 (1946) for the proposition that "unethical conduct" as used in the statute must be limited to the physician-patient relationship. However, our reading of that case does not support Starr's interpretation. The main issue in Schireson was whether the Board could revoke Schireson's medical license on the basis of fraud when the statute allowing the Board to revoke licenses did not become effective until after his license was issued. Schireson did not address unethical conduct as it applied to the physician-patient relationship.
[13] This definition is now found in Section 41 of the Act. The Act was first enacted as the Act of June 3, 1911, P.L. 639. Under that Act, Section 12 delineated the conduct that was subject to disciplinary or corrective measures. The Act of July 20, 1974, P.L. 551, renumbered Section 12 to 15, and this Section was in effect at the time that the Board revoked Catena's medical license. The Act of 1974 was repealed by the Act of December 20, 1985, P.L. 457, the current version of the Act.
[14] The language of Section 15(a)(8) did not change with the 1985 amendments to the Act.
[15] Section 12 of the Act of June 3, 1911, P.L. 639, repealed by the Act of July 20, 1974, P.L. 551. Substantially similar language now appears in Section 41 of the Act, 63 P.S. § 422.41.
[16] The hearing examiner cited our decision in Lyness v. State Board of Medicine, 127 Pa.Cmwlth. 225, 561 A.2d 362 (1989), rev'd on other grounds, 529 Pa. 535, 605 A.2d 1204 (1992). Our decision in Lyness, however, did not state that the proper burden of proof was the preponderance of the evidence. Rather, it merely stated that those cases cited by Lyness did not establish that the Board must prove its case beyond a reasonable doubt.
[17] Act of June 21, 1957, P.L. 390, as amended, 65 P.S. §§ 66.1-66.4. The Right to Know Law provides that every public record of an agency shall be open for examination and inspection by any citizen of the Commonwealth. Section 2 of the Right to Know Law, 65 P.S. § 66.2.
[18] Act of May 17, 1921, P.L. 789, as amended, 40 P.S. §§ 1-297.4.
[19] Act of July 22, 1974, P.L. 589, as amended, 40 P.S. §§ 1171.1-1171.15.
[20] Note 10 was contained in the Preamble to the Act of June 3, 1911, P.L. 636, which was repealed by the Act of July 20, 1974, P.L. 551, which was repealed by the Act of Dec. 20, 1985, P.L. 457, the current version of the Act.
[21] We note that Section 43(a) of the Act provides that any individual whose license has been revoked may apply for reinstatement after a period of at least five years. 63 P.S. § 422.43(a).
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777 F.Supp. 92 (1991)
CONTINENTAL BANK, NATIONAL ASSOCIATION, As Bond Fund Trustee Under the General Bond Resolution adopted August 26, 1976 of the Massachusetts Municipal Wholesale Electric Company, Plaintiff,
v.
VILLAGE OF LUDLOW, Village of Hardwick, Village of Morrisville, Village of Lyndonville, Village of Stowe, Village of Swanton, Village of North-field, Vermont Electric Cooperative, Inc., and Washington Electric Cooperative, Inc., Defendants.
CONTINENTAL BANK, NATIONAL ASSOCIATION, As Bond Fund Trustee Under the General Bond Resolution Adopted August 26, 1976, of the Massachusetts Municipal Wholesale Electric Company, Plaintiff,
v.
James E. BAKER, Charles Coughlin, Horst Huehmer, Thomas R. Josie, William Kennedy, Michael Madore, Mark Magyar, Wayne Marquis, Neil E. Murray, Bruce Patten, William Rugg, Harold Smith, Joseph Spadea, John Does I-III, Town of Danvers, Danvers Municipal Electric Division, Georgetown Municipal Light Department, Hingham Municipal Lighting Plant, Town of Holden, Holden Municipal Light Department, Hudson Municipal Light Department, Paxton Municipal Light Department, Peabody Municipal Light Plant, Shrewsbury's Electric Light Plant, Sterling Municipal Light Department, West Boylston Municipal Light Plant, and the Massachusetts Municipal Wholesale Electric Company, Defendants.
Civ. A. Nos. 90-12535-Y, 90-12941-Y.
United States District Court, D. Massachusetts.
October 31, 1991.
*93 *94 Arnold P. Messing, Kevin J. Lesinski, Gaston & Snow, Boston, Mass., Howard J. Roin, Mayer, Brown & Platt, Chicago, Ill., for plaintiff Continental Bank Nat. Ass'n.
M. Frederick Pritzker, M. Robert Dushman, Thomas W. Evans, Brown, Rudnick, Freed & Gesmer, Boston, Mass., Edward V. Schwiebert, Carolyn Browne Anderson, Abell, Kenlan, Schwiebert & Hall, Rutland, Vt., for defendants Village of Ludlow, Village of Morrisville, Village of Lydonville and Village of Northfield.
Donald S. Bronstein, Jeffrey M. Bernstein, Bernstein & Bronstein, Boston, Mass., Edward B. French, Law Office of D.P. Stackpole, Stowe, Vt., for defendant Village of Stowe.
Donald S. Bronstein, Jeffrey M. Bernstein, Bernstein & Bronstein, Boston, Mass., Michael L. Burak, Jon T. Anderson, Brian J. Sullivan, Burak & Anderson, Burlington, Vt., for defendant Vermont Elec. Co-op., Inc.
Donald S. Bronstein, Jeffrey M. Bernstein, Bernstein & Bronstein, Boston, Mass., M. Jerome Diamond, Diamond & Associates, Montpelier, Vt., for defendant Washington Elec.
Earle C. Cooley, Cooley, Manion, Moore & Jones, Boston, Mass., for defendants Joseph Spadea, Harold Smith, William Rugg, Bruce Patten, Neil E. Murray, Wayne Marquis, Mark Magyar, Michael Madore, William Kennedy, Thomas R. Josie and Horst Huehmer.
Paul Kenny, Danvers, Mass., for defendants Danvers Mun. Elec. Div. and Town of Danvers.
John O. Mirick, Mirick, O'Connell, DeMallie & Lougee, Worcester, Mass., for defendants Georgetown Mun. Light Dept., Holden Mun. Light Dept., Hingham Mun. Lighting Plant, Shrewsbury's Elec. Light Plant, Sterling Mun. Light Dept. and West Boylston Mun. Light Plant.
Earle C. Cooley, Harry L. Manion, III, Roy Patrick Giarrusso, Cooley, Manion, Moore & Jones, Boston, Mass., for defendants Hudson Mun. Light Dept. and Peabody Mun. Light Dept.
Nicholas J. Scobbo, Gerald J. Caruso, Ferriter, Scobbo, Sikora, Caruso, Rodophele, Boston, Mass., for defendant The Massachusetts Mun. Wholesale Elec. Co.
Martin O'Connell, Morisi & O'Connell, Springfield, Mass., for third-party defendants Daniel Golubek and Westfield Elec. Light Dept.
Brian T. Cuffe, Shafner, Keating & Cuffe, Lynn, Mass., for third-party defendant Frederick Nembergut.
Harold J. Keohane, Craig A. MacDonnell, Keohane, Detore & Keegan, Boston, Mass., for third-party defendant Caroline Stouffer.
George A. Berman, Posternak, Blankstein & Lund, Boston, Mass., for third-party defendants Ferriter, Scobbo, Sikora, Caruso & Rodophele, P.C. and Begley, Ferriter, Lavelle & Welch, P.C.
Mark Alan Beauregard, Resnic, Beauregard, Waite & Driscoll, Holyoke, Mass., for third-party defendant South Hadley Elec. Light Dept.
Jeffrey M. Bernstein, Stacey L. Cushner, Bernstein & Bronstein, Boston, Mass., for third-party defendant Village of Stowe, Village of Stowe Water and Light Dept.
MEMORANDUM AND ORDER
YOUNG, District Judge.
I. Factual Background.
A. Continental Bank v. Village of Ludlow, Civil Action No. 90-12535-Y
Continental Bank National Association ("Continental"), the plaintiff in this first diversity action, seeks a declaratory judgment, as bond fund trustee of the Massachusetts Municipal Wholesale Electric Company ("the Agency"), that several Vermont *95 Villages, ("Villages"), breached Power Sales Agreements ("Agreements") executed with the Agency.[1]
A history and factual background are necessary for a full appreciation of the issues. The Agency, organized under Chapter 775 of the Massachusetts Acts of 1975[2] as a political subdivision of the Commonwealth, is a joint planning agency, designed to provide bulk power supply for its members, usually municipal electric systems and utilities. The Agency "fine tunes" interest in a power facility by offering members a share in the facility or "project capability." Each of these Vermont Villages bought shares of "project capability" in the Seabrook, New Hampshire nuclear generating plant ["Seabrook"] and executed Agreements with the Agency to that end. In the Agreements, the Villages agreed to make revenue payments come "hell-or-high-water," viz. regardless of whether or not the project was completed.[3] The Agreements also provided that Massachusetts law would apply in any legal dispute. Agreement ¶ 19 at 23.
The Agreements authorized the Agency to, inter alia, finance, plan, and engineer the construction of Seabrook and to issue and sell revenue bonds to achieve that objective. Agreement ¶ 3(a) at 9. Consequently, the Agency executed a General Bond Resolution ("Bond Resolution"), with Continental authorizing the issuance of revenue bonds to finance construction of Seabrook. Bondholders were to be re-paid through revenues from the member utilities. A bond fund was established into which member's payments were deposited to cover the monthly principal and interest obligations of the Agency. As bond fund trustee, Continental was empowered to file suit or proceedings in its own name or on behalf of the bondholders, regardless of whether or not a default occurred. Bond Resolution § 8.4 at 76-78. The Bond Resolution also designated Massachusetts law as applicable to disputes. Bond Resolution § 13.8 at 110.
In 1979, twenty Massachusetts municipal light departments and ten non-Massachusetts utilities ("Participants"), including the eight Vermont Villages, signed separate but identical Seabrook Power Sales Agreements contracting with the Agency for the first right to purchase a share of any electricity generated by the project in exchange for an unconditional obligation to pay a pro rata share of the Agency's costs related to the acquisition, construction, and financing of the Agency's approximately 6% ownership of Seabrook. Between 1981 and 1987, the Agency subsequently issued approximately $517 million in bonds pursuant to its Bond Resolution.
By then, with the Seabrook nuclear power facility mired in political controversy, seemingly endless regulatory proceedings, and enormous cost overruns, the Vermont Department of Public Service ("the Department"), aware that Villages had independently contracted for power with the Agency, brought an action in the Vermont Superior Court sitting in and for Washington County, Vermont, seeking declaratory relief that the Agreements were invalid and therefore not binding on the Villages. The lower court was not persuaded, granting summary judgment to the defendant Agency and six Villages.[4] The Vermont Supreme Court, however, agreed with the Department on appeal and declared the *96 Agreements void ab initio.[5]Vermont Dept. of Public Service v. Massachusetts Municipal Wholesale Elec. Co., 151 Vt. 73, 558 A.2d 215 (1988), cert. denied, 493 U.S. 872, 110 S.Ct. 202, 107 L.Ed.2d 155 (1989).
In the Vermont decision, Chief Justice Allen noted that Vermont law empowered the Villages to collectively purchase "capacity and energy." Id. 151 Vt. at 78, 558 A.2d 215. The Agreements at issue thereand here, however, do not involve a purchase of electricity but of "project capability," and require payments even if the project fails and no electricity is generated. Id. The Villages could only buy electricity, not potential electricity. Id. at 78-81, 558 A.2d 215. Moreover, the take-or-pay provisions obligated the Villages, in the court's opinion, to give financial priority to payments to the Agency, restricting their ability to make spending decisions. Id. at 86, 558 A.2d 215. The Agreements thus constituted an impermissible intrusion upon the province of the municipal legislatures to determine the expenditure of revenues for long-term power supply.[6] The Villages, though empowered to purchase electricity, could not restrict or delegate their spending power. Id. at 85-86, 558 A.2d 215. The same held true for the quasi-public Vermont cooperatives. Id. at 88-89, 558 A.2d 215. The court held the Agreements void ab initio.
The Villages here move to dismiss based on three grounds: (1) that since Continental was not a party to the Agreements it lacks standing to sue; (2) that Continental, as bond fund trustee, stands in the shoes of the Agency and, based on the prior disposition in the Supreme Court of Vermont, is collaterally estopped from maintaining this action; and (3) that principles of res judicata prevent a second disposition of these issues. In the alternative, the Villages seek to transfer the matter to the District of Vermont, where a related action is pending.[7]
B. Continental Bank v. BakerCivil Action No. 90-12941-Y
Continental brings this second action under the federal securities laws and the Court's diversity jurisdiction as Bond Fund Trustee ("Trustee") under the Bond Resolution, on behalf of the bondholders who it alleges were misled as to the value of the Bonds by the Massachusetts Participants and the officials who signed the Agreements ("Individuals") since they attempted to escape their obligations after the issuance of the Bonds.
In this action as well, the background facts are largely undisputed. In March, 1989, after the Vermont Supreme Court declared the Seabrook Agreements void ab initio as to the eight Vermont Villages for lack of proper authority, Vermont Dept. of Public Service v. Massachusetts Municipal Wholesale Elec. Co., 151 Vt. 73, 558 A.2d 215 (1988), cert. denied, 493 U.S. 872, 110 S.Ct. 202, 107 L.Ed.2d 155 (1989), the Agency invoked the step-up provisions of the remaining Agreements which allow it, in case of default by a Participant, to bill the remaining utilities for a pro rata share of the resulting shortfall in revenues. Shortly thereafter, a number of the Massachusetts Participants filed suits in the Massachusetts Supreme Judicial Court for Suffolk County ("the Single Justice Session") against the Agency, claiming that their Seabrook Agreements were no longer valid in light of the Vermont Supreme Court decision, and that the Vermont Participants' non-payment was not a default which would cause the step-up provisions to apply.[8] The Agency and Continental *97 likewise filed suit in the Single Justice Session seeking declaratory relief to enforce the Agreements.[9] On August 22, 1991, the full bench of the Massachusetts Supreme Judicial Court declared in the action which had consolidated those suits just mentioned that the Agreements were valid and that the step-up provisions properly invoked. Massachusetts Municipal Wholesale Elec. Co. v. Town of Danvers, 411 Mass. 39, 61-62, 577 N.E.2d 283 (1991). Meanwhile, Continental, professing to be outraged that the Massachusetts Participants and Individuals would balk at performing their duties under the step-up provisions, brought this second action as Trustee on behalf of the bondholders. Continental now alleges misrepresentation by the defendant Participants and Individuals in violation of the federal securities laws (Count I); deceit, fraud, and misrepresentation (Count II); and negligence (Count III).
The Defendants move to dismiss all the claims in this second action.
II. Motions to Dismiss (both cases).
This Court must take the material allegations of each complaint as true and view the facts in a light most favorable to Continental. Kilmartin v. Wainwright & Co., 580 F.Supp. 604, 605 (D.Mass.1984). If it is beyond doubt that Continental can prove no set of facts in support of its claims for relief, this Court is empowered to dismiss the flawed action. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). Where the defense of res judicata is raised, the Court may dismiss if it is satisfied that, in a prior action between the parties or those in privity with them, the issues which were there raised or which could have been raised have been resolved by a prior judgment. See McDonald v. City of West Branch, 466 U.S. 284, 287 n. 5, 104 S.Ct. 1799, 1801 n. 5, 80 L.Ed.2d 302 (1984); Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 414, 66 L.Ed.2d 308 (1980) (denying federal access to a claimant under 42 U.S.C. § 1983 who could have advanced that claim in state courts, and noting that "a final judgment on the merits of an action precludes the parties or their privies from again litigating issues that were or could have been raided in that action"). See also Bergeron v. Estate of Loeb, 777 F.2d 792, 795 (1st Cir.1985) (sustaining dismissal of plaintiff's previously litigated claims against the estate because "res judicata would preclude review here even if we believed the [state court's] decision was unconstitutional on its face").
III. Standing (both cases).
All the defendants strike at the power source, challenging Continental's standing to sue.
A. Contractual Considerations
The defendants first contend that Continental has no standing to sue on behalf of the bondholders under the Bond Resolution itself. Their attempts to distinguish In re Washington Public Power Supply System ("WPPSS") Securities Litigation, 623 F.Supp. 1466 (W.D.Wash. 1985), are, however, unpersuasive. The Bond Resolution provides, inter alia, that
The Bond Fund Trustee may without the happening of an Event of Default ... take such steps and institute such suits, actions or proceedings in its own name, or as trustee or in the name of [the Agency], or in the name of the Bondholders, all as the Bond Fund Trustee may deem appropriate, for the protection and enforcement of the rights of the holders of bonds and the coupons appurtenant thereto, to collect any amount due and owing from [the Agency] or by injunction, mandamus or other appropriate proceeding in law or in equity to obtain other appropriate relief.
*98 Bond Resolution § 8.4 at 78.
A comparison of these provisions with the language of the WPPSS Bond Resolution which was found in the WPPSS case to give broad power to Chemical Bank as Trustee to bring federal securities and state tort claims reveals that there is no material difference between them.[10] This Court thus comes to the similar conclusion that Continental is broadly empowered as Trustee under the Bond Resolution to bring the claims now before the Court and consequently has proper standing as the legitimate contractual representative of the affected Bondholders.
B. Constitutional Considerations
While Continental thus properly stands in the shoes of the bondholders and can sue on their behalf, it is argued that neither Continental nor the bondholders were parties to the executed Agreements and therefore cannot pursue judicial remedies. Continental naturally does not claim any personal right under the Agreements themselves, but rather claims to be an intended beneficiary and, as Trustee, exercises its right to sue as expressed in the Bond Resolution executed between itself and the Agency.
Standing, together with the related concept of mootness, is the first hurdle of justiciability and among the most important. See L. Brilmayer, The Jurisprudence of Article III: Perspectives on the "Case or Controversy" Requirement, 93 Harv.L.Rev. 297 (1979). Article III empowers this Court to decide only "cases and controversies," and a party invoking the judicial power must show actual or threatened personal injury-in-fact resulting from the conduct of the defendant that can be redressed through a disposition of the issues. Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 471-72, 102 S.Ct. 752, 757-58, 70 L.Ed.2d 700 (1982). Advisory opinions are not the province of the Court, and constitutional standing requirements assure that concrete issues are before the court, rather than lofty and amorphous claims. Id. at 472, 102 S.Ct. at 758. Only those parties likely to be affected by the outcome of the case are entitled to sue. Id. at 473, 102 S.Ct. at 759; see also Ozonoff v. Berzak, 744 F.2d 224, 227 (1st Cir.1984); National Association for the Advancement of Colored People, Boston Chapter v. Harris, 607 F.2d 514, 518 (1st Cir.1979); Conservation Law Foundation of New England, Inc. v. Reilly, 743 F.Supp. 933, 936-38 (D.Mass.1990), appeal pending.
IV. AnalysisContinental Bank v. Village of Ludlow, Civil Action Nol 90-12535-Y.
A. Standing
This Court recognizes that Continental has an interest in whether the Villages have an obligation to pay monies under the Agreements. The risk that bondholders Continental represents may not be reimbursed is increased if the Villages are not required to pay revenues into the bond fund as permitted by the decision of the Vermont Supreme Court in the Vermont Dept. of Public Service case. Virtually nothing other than an actual default could qualify as a more personal stake in the outcome of the case than the potential of losses resulting from the Villages failure to pay. It also follows that, if Continental were to receive the relief it requests, its injury would subside. Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 81, 98 S.Ct. 2620, 2634, 57 L.Ed.2d 595 (1978). Having proved a personal stake in the outcome, a potential injury-in-fact *99 that is fairly traceable to the conduct of the defendants, and redressability, Continental passes the standing test.
B. Choice of Law
Federal common law governs issues of constitutional standing. State law is implicated, however, where the parties dispute issues related to Continental's personal stake in the outcome, more particularly Continental's status as an intended beneficiary of the Agreements and its lack of privity with the Villages. Sitting in diversity, this Court must apply Massachusetts choice-of-law principles. Klaxon Co. v. Stentor Electric Mfg. Co., Inc., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941); Computer Systems of America, Inc. v. International Bus. Machines Corp., 795 F.2d 1086, 1091 (1st Cir.1986).
Massachusetts follows a "functional choice-of-law approach [to contract cases] that responds to the interests of the parties, the States involved, and the interstate system as a whole." Bushkin Associates, Inc. v. Raytheon Co., 393 Mass. 622, 631, 473 N.E.2d 662 (1985). Consequently, the law of the state with "the strongest interest in the resolution of the particular issue presented," applies to the substantive issues. Schulhof v. Northeast Cellulose, Inc., 545 F.Supp. 1200, 1203 (D.Mass.1982), quoting Pevoski v. Pevoski, 371 Mass. 358, 360, 358 N.E.2d 416 (1976). Where, as here, the parties have selected Massachusetts as the forum, their choice will be upheld so long as the result is not contrary to public policy. Steranko v. Inforex, Inc., 5 Mass.App.Ct. 253, 260, 362 N.E.2d 222, 228 (1977) (citation omitted). Forum selection clauses, akin to those present in both the Bond Resolution and the Agreements[11] are not controlling, but are given due deference, together with the other factors that determine a state's interest. However, "the designated State [must have] some substantial relation to the contract," Steranko, supra, 5 Mass.App.Ct. at 260, 362 N.E.2d at 228.
The Massachusetts Supreme Judicial Court provides instructions on how to determine a state's interest by weighing several factors: (1) the place of contracting; (2) the place of negotiation of the contract; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the domicil, residence, nationality, place of incorporation, and place of business of the parties. Bushkin, supra, 393 Mass. at 632, 473 N.E.2d 662, quoting Restatement (Second) of Conflict of Laws (1971), § 188(2). The test is qualitative rather than quantitative, i.e. the contacts cannot simply be added together but must be weighed, considering also: (1) the needs of the interstate and international systems; (2) the relevant policies of the forum; (3) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue; (4) the protection of justified expectations; (5) the basic policies underlying the particular field of law; (6) certainty, predictability and uniformity of result; and (7) ease in the determination and application of the law to be applied. Bushkin, supra, 393 Mass. at 632, 473 N.E.2d 662. Having balanced all of the factors, the Supreme Judicial Court reasoned that a court should choose "that law `which would carry out and validate the transaction in accordance with [the] intention [of the parties].'" Id. at 636, 473 N.E.2d 662, quoting Boston Safe Deposit & Trust Co. v. Paris, 15 Mass.App.Ct. 686, 691, 447 N.E.2d 1268, 1270 (1983).
Application of these well established choice-of-law principles reveals that the Commonwealth indeed has a substantial interest in enforcement of these Agreements against the defendants, otherwise the step-up provisions will transfer a heavier burden to ratepayers of the many Massachusetts towns and utilities which invested in Seabrook. However, Vermont's interest is still more compelling as it implicates core concerns of state sovereignty viz. the state of Vermont's power to control the functioning of its own municipalities.[12] The law of *100 Vermont, therefore, must apply to this litigation between Continental and these Vermont Villages.[13]
C. The rights of third party beneficiaries under Vermont law
Continental asserts that its interest in the litigation is as an intended beneficiary of the Agreements. It asserts this interest in the litigation to emphasize its separate identity from the Agency, a party to the earlier Vermont litigation.
The Restatement (Second) of Contracts § 302 (1979) entitles a litigant to the rights of an intended third party beneficiary where:
recognition of a right of performance in the beneficiary is appropriate to effectuate the intention of the parties, and either (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.
The intent of the parties, at the time of contracting, must be to confer a benefit or satisfy a debt to another. Pike Ind. Inc. v. Middlebury Associates, 140 Vt. 67, 70-71, 436 A.2d 725, 727 (1981); Morrisville Lumber Co. Inc. v. Okcuoglu, 148 Vt. 180, 184, 531 A.2d 887, 890 (1987); Falzarano v. United States, 607 F.2d 506, 511 (1st Cir. 1979) (interpreting the National Housing Act, 12 U.S.C. 17151). Continental would not qualify as an intended beneficiary on that basis since, as matter of law, the Agreements were not designed directly to benefit Continental and the bondholders, but were created to promote completion of Seabrook. Review of the Agreements makes it clear that neither the Agency nor the Villages had either Continental or the bondholders particularly in mindindeed, the Bond Resolution appears merely to be the result of a particular financing strategy. Admittedly, the parties must have known that bondholders and a bond fund trustee might be employed, but this is legally insufficient to establish Continental as an intended third-party beneficiary.
D. Res Judicata
Ruling that Continental is not an intended third party beneficiary is fatal to its claim. Although it has standing and rights to sue under the Bond Resolution, still it needs some relationship to the Agreementssome duty, promise, or conduct owed to it as to which it can here seek a remedy. Absent third party beneficiary status, it can find such rights only in the shoes of the Agency and, after the decision of the Vermont Supreme Court, those shoes are filled with feet of clay. In short, Continental comes into this lawsuit in privity with the Agency from which all its rights derive. Pursuant to 28 U.S.C. § 1738,[14] it is the duty of this Court to give the same full faith and credit to the Vermont disposition as would be accorded by the Vermont courts. Ohland v. City of Montpelier, 467 F.Supp. 324, 336 (D.Vt. 1979). See Prizio v. City of Revere, 629 F.Supp. 538, 539 (D.Mass.1986), citing Kremer v. Chemical Construction Corp., 456 U.S. 461, 466, 102 S.Ct. 1883, 1889, 72 L.Ed.2d 262 (1982) and Parsons Steel, Inc. v. First Alabama Bank, 474 U.S. 518, 522, 106 S.Ct. 768, 771, 88 L.Ed.2d 877 (1986). In Vermont, the principles of res judicata apply when there has been a final adjudication between parties. Alpstetten Association, *101 Inc. v. Kelly, 137 Vt. 508, 513-14, 408 A.2d 644, 646 (1979); Ohland, supra, 467 F.Supp. at 335, n. 13. A "substantial identity" must exist between the parties in the first and second actions, placing the two in privity. Davis v. Saab-Scania of America, Inc., 133 Vt. 317, 320, 339 A.2d 456, 458 (1975). Here the Bond Resolution itself, executed by Continental with the Agency, provides that substantial identity. Since Continental was in privity with the Agency, there are sufficient grounds to invoke res judicata under Vermont law. Continental simply cannot deny the binding effect of a disposition by the Vermont Supreme Court, interpreting its own law, that these Villages were unable to enter into these Agreements. Consistent with this Court's duty under 28 U.S.C. § 1738, the Vermont disposition, voiding the Agreements, must be given full faith and credit against Continental, extinguishing any cause of action based on the Agreements.
E. Conclusion
Continental has constitutional standing to sue but is estopped by the prior Vermont disposition because it stands in privity with the Agency. Pursuant to the principles of res judicata as applied in the state of Vermont, the motion by the Villages to dismiss must be and hereby is, GRANTED.
V. AnalysisContinental Bank v. Baker, Civil Action 90-12941-Y.
A. Mootness
In the second case, each of Continental's three theories of liability[15] seeks damages for the difference between the price the bondholders paid for the bonds and the price they would have paid if the Massachusetts Participants had divulged their alleged understanding that the step-up provisions were unenforceable and that the Agreements were voidable. In Massachusetts Mun. Wholesale Elec. Co. v. Town of Danvers, 411 Mass. 39, 577 N.E.2d 283 (1991), however, the Massachusetts Supreme Judicial Court declared that "the [Seabrook Agreements] executed by the defendants are valid and that the step-up provisions therein have been properly invoked." Id. at 62, 577 N.E.2d 283. Since the Massachusetts participants are now bound by court order to honor their agreements in full, nothing remains for this Court to redress in the action before it.[16] Any opinion or judgment by this Court would be gratuitous in the wake of the decision of the Massachusetts Supreme Judicial Court which resolved the case before it in the Agency's and therefore Continental's favor.[17] This action is now moot. The bondholders presumably have exactly what they paid for originally.
B. Statute of limitations and period of repose (federal securities claims)
Even were this second action not moot, the federal securities claims (Count I) would, in any event, have to be dismissed as untimely.
The proper statute of limitations to be applied to a claim under § 10(b) of the *102 Securities Exchange Act is the analogous one-and-three-year limitations and repose structure provided for other causes of action under the Securities Act of 1933 and the Securities Exchange Act of 1934, Lampf, Pleva, Lipkind, Prupis & Petrigrow v. Gilbertson, ___ U.S. ___, 111 S.Ct. 2773, 2780-82, 115 L.Ed.2d 321 (1991). "Litigation instituted pursuant to § 10(b) and Rule 10b-5 therefore must be commenced within one year after the discovery of the facts constituting the violation and within three years after such violation." Lampf, 111 S.Ct. at 2782.
Continental Bank filed its Complaint on December 5, 1990, and a First Amended Complaint on December 12, 1990. It follows that any alleged § 10(b) violations which were discovered previous to the one year prescriptive period beginning on December 6, 1989, or which occurred before December 6, 1987, are time-barred.[18] Continental alleges that misrepresentations in the 1984, 1985, and 1987 Official Statements as well as in the original Agreements misled Seabrook bond purchasers as to the true value of the Bonds. The last time the Agency issued an Official Statement and Seabrook Bonds was in July, 1987. Continental's contention that the three-year period of repose begins anew at every purchase (and repurchase) of the Bonds defeats the purpose of the period's absolute outer limit. Id.; see Anixter v. Home-Stake Production Co., 939 F.2d 1420, 1435-36 (10th Cir.1991). This Court determines that the repose period begins when the last alleged misrepresentation was made by any of the Participants. In this case, that period began prior to December 6, 1987, inasmuch as the Bonds and the accompanying Official Statement were issued in July, 1987. Greenberg v. Boettcher & Co., 755 F.Supp. 776, 785 (N.D.Ill. 1991) (calculating a period of repose in § 10[b] action from issuance of bonds and accompanying official statement). See Beard v. J.I. Case Co., 823 F.2d 1095, 1097 n. 1 (7th Cir.1987) (period of repose bars suit a fixed number of years after an act by the defendant). Continental's securities claims are thus time-barred under Lampf.
Although Continental argues that the Lampf rule should not be applied retroactively to this case because it relied on the old state-borrowing rule, the Supreme Court in Lampf allied the new rule to the parties before it without qualification, and over a vigorous dissent from Justice O'Connor. Id. 111 S.Ct. at 2785-88 (O'Connor, J. dissenting); see Barr v. McGraw-Hill, 770 F.Supp. 855 (S.D.N.Y. July 16, 1991) (no "possibility that the majority in Lampf intended to leave the door open for prospective application of the new rule in special circumstances"); see also Anixter v. Home-Stake, 939 F.2d 1420, 1435-36; Baggett v. Edward D. Jones & Co., No. 90-1054-C, 1991 WL 126602, 1991 U.S.Dist. LEXIS 9118 (D.Kan. June 27, 1991); Bank of Denver v. Southeastern Capital Group, Inc., 770 F.Supp. 595, 596-97 (D.Colo.1991). Continental's contention that James B. Beam Distilling Co. v. Georgia, ___ U.S. ___, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991), stands for the proposition that this Court has equitable discretion to temper the harsh effects of Lampf does not withstand scrutiny. See Boudreau v. Deliotte, Haskins & Sells, 942 F.2d 497, 497 (8th Cir.1991) (Lampf and James Beam compel application of Lampf rule retroactively). The Supreme Court in James Beam explicitly stated that "principles of equality and stare decisis prevail [] over any claim based on a Chevron Oil [Co. v. Huson, 404 *103 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971)] analysis," so that "it is an error to refuse to apply a rule of federal law retroactively after the case announcing the rule has already done so." Id. 111 S.Ct. at 2446.
Once retroactive application is chosen for any assertedly new rule, it is chosen for all others who might seek its prospective application. The applicability of rules of law are not to be switched on and off according to individual hardship....
Id. at 2447-48.
Consequently, the Lampf three-year period of repose precludes Continental's § 10(b) claims.
In addition, Continental's § 17(a) claims cannot survive because there is no private right of action under that section. Although the Supreme Court and the First Circuit have declined to consider whether an implied right of action exists under § 17(a), a majority of courts in the circuits and in this district have refused to find such a private right of action. Norman v. Brown, Todd & Heyburn, 693 F.Supp. 1259, 1262 (D.Mass.1988) (Skinner, J.) (citing authorities). This Court likewise refuses to do so.
Without a predicate securities violation, the § 20(a) claims for controlling person liability also fail. Accordingly, the federal securities claims in Count I must be dismissed.
C. Conclusion
Accordingly, the Joint Motion to Dismiss is ALLOWED.
NOTES
[1] The five-count complaint alleges: (1) the right to a declaratory judgment that the Agreements are valid; (2) breach of contract; (3) promissory and equitable estoppel; (4) waiver and laches; and (5) unjust enrichment.
[2] Chapter 775 of the Massachusetts Acts of 1975 is entitled, "An Act Making The Massachusetts Municipal Wholesale Electric Company A Public Corporation And Defining Its Powers and Duties," reprinted in Mass.Gen.L. ch. 164 app. at § 1 et seq. (West 1976). See also Official Statement of Massachusetts Municipal Wholesale Electric Company, at 1.
[3] These "hell-or-high-water" or "take-or-pay" provisions are customary in the utility field. See Agreement ¶ 5(d) at 12.
[4] The Village of Stowe and Vermont Electric Cooperative joined with the plaintiff, leaving the remaining six Villages, Washington Electric Cooperative and the Agency as defendants.
[5] Latin for "From the beginning; from the first act; from the inception." Black's Law Dictionary, West Publishing (1979).
[6] The Agreements also impermissibly delegated the legislature's spending power since the Villages had no input into decisions to incur debt but were obligated to pay "come-hell-or-high-water." Id. at 85, 558 A.2d 215.
[7] Washington Elec. Cooperative, Inc. v. Mass. Municipal Wholesale Elec. Co., No. 89-94 (D.Vt.) (Action for the return of monies paid to the Agency under the Agreements voided by the Supreme Court of Vermont).
[8] Hudson Light and Power Department and Peabody Municipal Light Plant v. Massachusetts Municipal Wholesale Elec. Co., SJC C.A. No. 89-225; Shrewsbury Electric Light Plant v. Massachusetts Municipal Wholesale Elec. Co., SJC C.A. No. 2192B; Hingham Municipal Lighting Plant v. Massachusetts Municipal Wholesale Elec. Co., SJC C.A. No. 89-2193C; Sterling Light Department v. Massachusetts Municipal Wholesale Elec. Co., SJC C.A. No. 89-2253C; Holden Municipal Light Department v. Massachusetts Municipal Wholesale Elec. Co., SJC C.A. No. 89-2361A.
[9] Massachusetts Municipal Wholesale Elec. Co. and Continental Bank v. Danvers, et al., C.A. No. 90-0511 (filed April 24, 1989).
[10] Section 11.4 of the WPPSS Bond Resolution provides, in relevant part, that the Bond Fund Trustee,
as attorney in fact for the holders of all the Bonds ... shall be entitled and empowered to proceed forthwith to institute such suits, actions and proceedings at law or in equity for the collection of all sums due in connection with the Bonds and to protect and enforce its rights and the rights of the holders of the Bonds under the Resolution ... in the enforcement of any other legal or equitable right as the Bond Fund Trustee, being advised by counsel, shall deem most effectual to enforce any of its rights or the rights of the holders of the Bonds....
In re WPPSS Securities Litigation, 623 F.Supp. at 1483.
[11] Agreement ¶ 19 at 23; Bond Resolution § 13.8 at 110.
[12] For a comparable analysis by this Court also resulting in a choice of law at odds with the applicable forum selection clause, see Greenwood Trust Co. v. Massachusetts, 776 F.Supp. 21, 39-42 (D.Mass.1991).
[13] While resolution of the choice-of-law issue is necessary for an analytically accurate record, nothing much turns on it as the issues which implicate state lawthe rights of third-party beneficiaries and privityare identical in Vermont and Massachusetts, both states subscribing to the principles of the Restatement (Second) of Contracts. See Morrisville Lumber Co. Inc. v. Okcuoglu, 148 Vt. 180, 531 A.2d 887, 890 (1987); Pike Industries Inc. v. Middlebury Associates, 140 Vt. 67, 436 A.2d 725, 727-28 (1981); Plymouth Housing Authority v. Town of Plymouth, 401 Mass. 503, 505, 517 N.E.2d 470 (1988); Choate, Hall & Stewart, v. SCA Services, Inc., 378 Mass. 535, 542-48, 392 N.E.2d 1045 (1979).
[14] Section 1738 provides (in pertinent part):
"Such ... judicial proceedings ... shall have the same full faith and credit in every court with the United States and its Territories and Possessions as they have by law or usage in the courts of such State ... from which they are taken."
[15] Under the first theory (alleged violation of federal securities law), the Court has federal question jurisdiction. Under the two common law theories (fraud and negligence) the Court exercises not pendant but diversity jurisdiction by virtue of the diversity of citizenship between the named Plaintiff, Continental, as Trustee, a citizen of Illinois (and real party to the controversy for purposes of diversity jurisdiction; see Bullard v. City of Cisco, 290 U.S. 179, 190, 54 S.Ct. 177, 181, 78 L.Ed. 254 [1933]), and the Massachusetts participants Massachusetts municipalities, municipal electric departments, and residents.
[16] The Massachusetts participants have been paying the step-up charges since the inception of the Massachusetts state court litigation pursuant to a preliminary injunction.
[17] The Court also notes, without expressing any opinion thereon, that the Massachusetts Torts Claim Act, Mass.Gen.L. ch. 258, § 1 et seq., may severely limit Continental's ability to sue the Participants for the alleged intentional acts of their employees (Count I) on the one hand, and the Individuals for their alleged negligent acts as employees of a public employer (Count III) on the other. See, e.g., Lane v. Commonwealth, 401 Mass. 549, 551, 517 N.E.2d 1281 (1988) (denying cause of action for conversion against state agency and noting, "normally a public employer cannot be held liable for intentional torts"); Carapellucci v. Town of Winchester, 707 F.Supp. 611, 622 (D.Mass.1989) (recognizing qualified immunity for town officials as necessary "to protect their freedom and discretion in performing their jobs").
[18] Continental's Complaint rests entirely upon the discovery, through previous Massachusetts state court litigation, that the defendants were asserting that the Power Sales Agreements were void, and in the alternative, that the step-up provisions were not enforceable. Those assertions are said to contravene representations in the Official Statements, the Participants' Certificates, and the Power Sales Agreements that each of the Participants would honor its contractual obligations and make step-up payments if any of the Agreements were not honored for any reason. Since the Massachusetts state court litigation was initiated by the defendants and the Agency in the spring of 1989, Continental knew or should have known of the defendants' contrary assertions which form the basis of its § 10(b) claims before the prescriptive one year period. The Court, however does not rule on this basis because the record is insufficient as to the exact dates and form of all Participants defendants' assertions before December 6, 1989.
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777 F.Supp. 58 (1991)
Mary C. RABOYA, Plaintiff,
v.
SHRYBMAN & ASSOCIATES, et al., Defendants.
Civ. A. No. 91-1829 (CRR).
United States District Court, District of Columbia.
November 14, 1991.
*59 Iris McCollum Green of Green & Foushee, Washington, D.C., for plaintiff.
Shirlie Norris Lake, Jeffrey J. Hines, Joel H. Oleinik of Eccleston & Wolf, Baltimore, Md., for defendants.
ORDER
CHARLES R. RICHEY, District Judge.
Plaintiff has brought this action alleging libel per se, libel, negligence, invasion of privacy and intentional infliction of emotional distress based upon the Defendants' publication of a letter reporting Plaintiff's alleged neglect of her sixteen-year-old pregnant daughter to the D.C. Department of Human Services. Defendants come before this Court on a Motion to Dismiss Count One of Plaintiff's Amended Complaint which consists of the libel per se claim.[1] Upon further consideration of the Defendants' Motion, the Plaintiff's response thereto, the record herein and applicable law, the Court grants the Defendants' Motion and dismisses Count One of the Plaintiff's Complaint.
Any written or printed statement which falsely charges another with the commission of a crime is libelous per se. See 53 C.J.S. Libel and Slander § 38. In the District of Columbia, in order to be actionable as libel per se, the contents of a defamatory publication must
"`impute ... the commission of some criminal offense for which [the Plaintiff] may be indicted and punished, if the charge involves moral turpitude and is such as will injuriously affect [the Plaintiff's] social standing', or, ... the question is whether, from the language attributed to defendant, there is something from which commission of a crime can be inferred."
Farnum v. Colbert, 293 A.2d 279, 281 (D.C.1972), quoting Harmon v. Liss, 116 A.2d 693, 695 (D.C.1955) (citations omitted).
Plaintiff in this case has been "accused of child neglect", or more specifically, of "failing to provide for her sixteen-year-old pregnant daughter." See Plaintiff's Amended Complaint at 2-3, ¶ 9; Plaintiff's Opposition to Motion to Dismiss Count One at 2. In the District of Columbia, child neglect constitutes a civil statutory infraction, governed by D.C.Code § 16-2301 et seq. (1981). Child neglect is not a criminal offense in the District of Columbia, and libel per se requires the false imputation of a crime. Farnum v. Colbert, supra. Both Plaintiff and Defendants concede this point. See Plaintiff's Opposition to Motion to Dismiss Count One at 1; Defendants' Memorandum of Law in Support of Motion to Dismiss Count One at 2. The issue, therefore, is whether the Defendants' accusation of child neglect can, nevertheless, constitute libel per se.
Plaintiff argues that the "actions of the Defendants in imputing the statutory infraction of child neglect to Plaintiff is analogous to imputation of a crime...." Plaintiff's Amended Complaint at 4, ¶ 14. In support of her argument, Plaintiff emphasizes the various penalties that accompany a violation of child neglect. For instance, the allegation of neglect can lead to the issuance of a summons and petition to appear before a judge. In addition, if a person is found to have violated the child neglect statute, he or she may risk having the child temporarily taken out of his or her custody, and may be subject to orders of the court system and the Department of Human Services. See Plaintiff's Opposition to Motion to Dismiss Count One at 3. Plaintiff concludes that these penalties can be analogized to punishment, and that "moral turpitude can certainly be inferred from an accusation of child neglect." Plaintiff's Opposition to Motion to Dismiss *60 Count One at 3. Accordingly, Plaintiff claims that an accusation of child neglect is analogous to an accusation of a crime, and therefore should be treated as libel per se. Id.
Defendants refute Plaintiff's argument, stressing that an imputation of a crime is necessary for a libel per se action. Defendants also contend that "under the District of Columbia Code, a parent's duty under criminal law to adequately provide for a child extends only to the age of fourteen (14) years." Because Plaintiff's daughter was sixteen (16) years old at the time in question, there can be no imputation of a crime. See Defendants' Memorandum of Law in Support of Motion to Dismiss Count One at 2.
After reviewing the pleadings in this case and the relevant caselaw in the District of Columbia pertaining to libel per se, the Court finds that the accusation by Defendants concerning Plaintiff's alleged neglect of her daughter does not impute the commission of a crime by the Plaintiff. First and foremost, the Court takes notice that there are two statutes in the District of Columbia addressing the treatment of children. D.C.Code § 16-2301 et seq., sets forth the statutory infraction of child neglect. D.C.Code § 22-901, on the other hand, sets forth the criminal offense for cruelty to children. While similar types of conduct trigger the application of each statute, the proceedings that follow the violation of each statute "is profoundly different in purpose and character." In re S.K. and V.L., 564 A.2d 1382, 1388 (D.C.1989). A civil proceeding based on neglect is remedial in nature and focuses on the child and his or her best interest. See In re S.K. and V.L., supra; In re S.G., 581 A.2d 771 (D.C.1990). A criminal proceeding based on cruelty or abuse, however, is "primarily concerned with the allegedly abusive parent." In re S.G., 581 A.2d at 775. Because a separate criminal statute does exist relating to the abuse of children, and because Plaintiff admits that she was accused solely of the statutory offense of child neglect, see Plaintiff's Amended Complaint at 4, ¶ 14, the Court cannot find that the Defendants' accusation of neglect is sufficiently analogous to an accusation that Plaintiff committed a criminal offense.
Similarly, Plaintiff's argument that the penalties resulting from a child neglect charge are analogous to the punishment afforded to criminal violators does not convince this Court to treat her action as a libel per se. In fact, the neglect statute does not provide for indictment or criminal punishment such as fines or imprisonment. Farnum v. Colbert, supra, requires that such punishment measures be at issue. Furthermore, because the statutory scheme for child neglect involves at most a temporary suspension of parental rights, due process only requires that a finding of neglect be based on a preponderance of evidence. See In the Matter of N.H., 569 A.2d 1179 (D.C.1990) (rejecting claim that the Constitution requires the clear and convincing evidence standard in neglect cases). Criminal proceedings, on the other hand, require proof of guilt beyond a reasonable doubt. It follows that the statutory infraction of child neglect cannot accurately be described as analogous to a crime.
There are distinct differences between an action in libel and an action in libel per se. A defamatory publication need only be injurious to the reputation of another to constitute libel, while libel per se requires an actual imputation of a criminal offense. See Smith v. District of Columbia, 399 A.2d 213 (D.C.1979); 53 C.J.S. Libel and Slander §§ 2 and 38. In addition, the necessary allegations of general and specific damages differs in each action. See Curtis Publishing Co. v. Vaughan, 278 F.2d 23 (D.C.Cir.1960); 53 C.J.S. Libel and Slander §§ 145-147. It is precisely because the law draws distinctions between libel and libel per se actions that the Court should not liberally permit a Plaintiff to assert a libel per se claim.
Therefore, it is, by this Court, on this 14th day of November, 1991,
ORDERED that Defendants' Motion to Dismiss Count One of Plaintiff's Complaint shall be, and hereby is, GRANTED insofar as it alleges a claim of libel per se, and the *61 Court shall treat the remainder of Count One as a claim sounding in tort as a pure libel action.
NOTES
[1] Defendants have requested a hearing on their Motion to Dismiss Count 1 of the Complaint. Such a hearing is unnecessary, however, as the issues may be resolved on the papers.
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364 F.Supp. 504 (1973)
Stanley C. BURGER, and Earl Aquila Garrettson, Jr., Plaintiffs,
v.
Thomas L. JUDGE, as Governor of the State of Montana, et al., Defendants.
Civ. No. 2284.
United States District Court, D. Montana, Helena Division.
July 11, 1973.
Judgment Affirmed December 3, 1973.
*505 Morrow, Nash & Sedivy, Bozeman, Mont., for plaintiffs.
Robert L. Woodahl, Atty. Gen., Lawrence D. Huss and John P. Connor, Jr., Deputy Attys. Gen., Jerome T. Loendorf, Special Asst. Atty. Gen., Helena, Mont. and Marshall Murray, Special Asst. Atty. Gen., Kalispell, Mont., for defendants.
Before BROWNING, Circuit Judge, and MURRAY and JAMESON, District Judges.
Judgment Affirmed December 3, 1973. See 94 S.Ct. 563.
OPINION
PER CURIAM:
Plaintiffs seek a declaratory judgment "that the proposed Constitution *506 for the State of Montana was declared adopted in violation of the Fourteenth Amendment to the Constitution of the United States, Article IV, Section 4 of the Constitution of the United States, and the Voting Rights Act of 1965 (42 U.S.C. Section 1973) and is, therefore, void." The case was submitted to a three-judge court on an agreed statement of facts, answers to interrogatories, depositions and exhibits.
At a special election on June 6, 1972 the electors of Montana voted on four propositions submitted by a Constitutional Convention held pursuant to (1) the authority of Section 8 of Article XIX of the Montana Constitution;[1] (2) the vote of the electors of Montana at the general election on November 3, 1970; and (3) the Enabling Act of the Legislative Assembly of the State of Montana, Chapter 296, Session Laws of 1971, as amended by Chapter 1, Laws of First Extraordinary Session, 1971.[2]
The constitutional election ballot reads:
INSTRUCTIONS TO VOTERS: PLACE AN "X" IN THE BOXES WHICH EXPRESS YOUR PREFERENCES. THE FULL TEXT OF THE PROPOSED CONSTITUTION AND THE SEPARATE PROPOSITIONS IS AVAILABLE FOR INSPECTION AT YOUR POLLING PLACE. IF THE PROPOSED CONSTITUTION FAILS TO RECEIVE A MAJORITY OF THE VOTES CAST, ALTERNATE ISSUES ALSO FAIL.
OFFICIAL BALLOT
PROPOSED CONSTITUTION
PLEASE VOTE ON ALL FOUR ISSUES
1.
(Vote for One)
FOR the proposed Constitution.
AGAINST the proposed Constitution.
------------------------------------------
| The proposed Constitution will include |
| a bicameral (2 houses) legislature |
| unless a majority of those voting in |
| this election vote for a unicameral (1 |
| house) legislature in Issue 2. |
------------------------------------------
2.
(Vote for One)
2A. FOR a unicameral (1 house)
legislature.
2B. FOR a bicameral (2 houses)
legislature.
----------------------------------------------
3.
(Vote for One)
3A. FOR allowing the people or the
legislature to authorize gambling.
3B. AGAINST allowing the people
or the legislature to authorize
gambling.
-----------------------------------------
4.
(Vote for One)
4A. FOR the death penalty.
4B. AGAINST the death penalty.
-----------------------------------------
*507 237,600 electors voted at the special election on June 6, 1972. Of this number 116,415 voted for the proposed constitution (Proposition 1) and 113,883 voted against it. A total of 7,302 persons voted neither for nor against the proposed constitution, but voted on one or more of the other propositions.[3] Thereupon the Governor of Montana proclaimed that the proposed constitution had been approved and adopted.
Original proceedings were instituted in the Supreme Court of Montana by William F. Cashmore and Stanley C. Burger (one of the plaintiffs in this action), relators, against the Governor of Montana "seeking a declaratory judgment that the proposed 1972 Montana Constitution was not ratified and adopted because it was not `approved by a majority of the electors voting at the election' as required by Article XIX, Section 8 of the present Montana Constitution." State ex rel. Cashmore v. Anderson, Mont., 500 P.2d 921, 924. The Supreme Court of Montana in its opinion on August 18, 1972, held, inter alia:
"Accordingly, we hold that `approval by a majority of the electors voting at the election' as used in Article XIX, Section 8, of the Montana Constitution means approval by a majority of the total number of electors casting valid ballots on the question of approval or rejection of the proposed 1972 Montana Constitution. We hold that it does not refer to or include those electors who failed to express an opinion by a vote on that issue. The Secretary of State's certificate shows 116,415 votes in favor of the proposed constitution and 113,883 votes against the proposed constitution and no one contends these figures are incorrect. As these figures carry a presumption of correctness by statute, section 93-1301-7(15), R.C.M.1947, and as there is nothing to indicate otherwise, we hold that the proposed 1972 Montana Constitution was approved by the required majority and the Governor's proclamation thereof was correct." Id. at 929.[4]
A Petition for a Writ of Certiorari to the Supreme Court of the United States filed by Burger was denied without comment by an order entered February 20, 1973. This action followed.
Defendants contend, inter alia,[5] that this action does not present a justiciable controversy and that in any event it is not a proper case for a three-judge court under 28 U.S.C. § 2281.[6]
*508 Most nearly in point is Kohler v. Tugwell, 292 F.Supp. 978 (E.D.La.1968), aff'd, 393 U.S. 531, 89 S.Ct. 879, 21 L. Ed.2d 755 (1969), where plaintiff sought an injunction prohibiting any action under a state constitutional amendment on the ground that the designation of the amendment as it appeared on the ballot misled voters. Relying upon the holding in Reynolds v. Sims[7] that "the Constitution of the United States protects the right of all qualified citizens to vote, in state as well as in federal elections", the court concluded that the question of whether the ballot was so misleading as to deprive the electors of their constitutional right to vote was a justiciable controversy. The three judges agreed that the Due Process Clause[8] was applicable, and two of the three judges were of the opinion that the issue was also justiciable under the Guaranty Clause.[9] The question of whether the controversy was properly before a three-judge court was not raised, and the court held that the electors had not been misled or deprived of any constitutional right by the manner in which the amendment was submitted.
In Watermeier v. Louisiana Stadium, 308 F.Supp. 273 (E.D.La.1969), aff'd, 398 U.S. 955, 90 S.Ct. 2172, 26 L.Ed.2d 539 (1970), it was expressly held that an action involving "an attack upon the constitutionality of the application, execution and operation of a state constitutional amendment" was properly before a three-judge court.
We conclude that this case is properly before a three-judge court.[10] In the event we should be mistaken, Judge Jameson, to whom the case was assigned and who requested the designation of the three-judge court, has individually arrived at the same conclusion with respect to the merits of the controversy.[11]
We turn now to the merits of the controversy. The parties have stipulated that the "terms `approval of the majority of the electors voting at the election', `electors' and `electors voting at the election' have been defined by the Montana Supreme Court in State ex rel. Cashmore v. Anderson, supra," and are "res judicata for the purposes of this cause of action". Plaintiffs rely upon the Montana court's interpretation "to prove that the representations made by Montana officials prior to the election, and on the Ballot, as to what effect an elector's voting decision would have, were actually wrong." They argue that 7,302 electors were "misled by the change of rules, after the election was over," were "disenfranchised by the misleading and erroneous information," and "that the Federal Constitution and law will protect them from such action."
In support of their contention that the 7,302 electors were misled, plaintiffs rely upon (1) the official ballot, quoted *509 supra; (2) an official publication mailed to all voters; (3) a newspaper supplement, 197,500 copies of which were distributed by the 13 leading newspapers in the state; (4) an analysis prepared by the Montana Constitutional Convention Commission in 1971; (5) debate in the Constitutional Convention; and (6) Section 17(9) of Ch. 296, 1971 Session Laws, quoted supra in Note 2.
The plaintiff Burger voted against the proposed constitution. The plaintiff Garrettson was one of the 7,302 electors who did not vote on the constitution. (Proposition One). He testified in his deposition that he voted for a bicameral legislature, gambling, and the death penalty, and that he understood that if the proposed constitution failed "the alternate issues also fail." He failed to vote on the proposed constitution for two reasons: first, because he did not know enough "about the issues involved",[12] and second, because he felt that if he did not vote, "it was a vote against it." He had read the ballot and the newspaper supplement. Garrettson's wife voted as he did. There was no further testimony with respect to any other electors.
With respect to the official ballot, plaintiffs rely upon the recitals that, "If the proposed constitution fails to receive a majority of the votes cast, alternate issues also fail," and "The proposed constitution will include a bicameral (2 houses) legislature unless a majority of those voting in this election vote for a unicameral (one house) legislature in Issue 2." The reference to the "majority of those voting in this election" simply follows the language of the then existing constitution providing that no revision, alteration or amendment shall take effect unless approved by "a majority of the electors voting at the election". It is obvious that if the proposed constitution failed to pass, the alternate issues would also fail. The ballot contains and underscores the statement "PLEASE VOTE ON ALL FOUR ISSUES."
The "OFFICIAL PUBLICATION OF THE 1972 CONVENTION", which was mailed to all voters, as required by Chapter 296, 1971 Session Laws of Montana, as amended, contains a sample ballot, the official text of the proposed constitution with explanation, and the following explanation of the ballot:
"THIS BALLOT HAS FOUR SECTIONS. IN THE FIRST SECTION THE VOTER WILL HAVE THE OPPORTUNITY TO VOTE `FOR' OR `AGAINST' THE PROPOSED 1972 CONSTITUTION.
"THEREAFTER FOLLOW THREE SEPARATELY SUBMITTED CONSTITUTIONAL PROPOSITIONS. THE VOTER MAY SELECT EITHER ALTERNATIVE ON PROPOSITION NO. 2. THE VOTER MAY VOTE FOR OR AGAINST EACH OF THE THIRD AND FOURTH PROPOSITIONS.
"THE THREE ALTERNATE ISSUES DO NOT AFFECT THE PRESENT CONSTITUTION. IF ADOPTED BY A MAJORITY OF THOSE VOTING AT THE ELECTION THEY WILL BECOME EFFECTIVE ONLY IF THE PROPOSED CONSTITUTION IS ADOPTED.
"THE VOTER SHOULD VOTE ON ALL FOUR QUESTIONS REGARDLESS OF WHETHER HE VOTES FOR OR AGAINST THE PROPOSED CONSTITUTION."
Both the ballot and the official publication mailed to all voters follow the language *510 of the existing constitution and do not purport to construe or interpret its meaning. Both urge a vote on all four issues.
Plaintiffs next rely upon two statements in the newspaper supplement.[13] Under the heading "Frequently Asked Questions", the following appears:
"Why can't we vote on more separate issues? Why can't we vote on the proposal article by article?
"The convention had to strike a medium between a manageable and understandable ballot and a ballot so long it would be confusing. An article by article ballot would have contained at least 14 separate items and would have necessitated a most complicated adoption schedule. There is also a special consideration peculiar to the Montana situation. Article XIX, Section 8 of the 1889 Constitution requires that any item the convention submits to the people can be adopted only by a majority of the electors voting at the election. We know that as they go down the ballot voters fail to vote in increasing numbers on each subsequent item. Consequently, the likelihood of a proposition failing for the lack of a majority of those voting in the election increases with the addition of each item on the ballot."
The newspaper supplement contained a sample ballot, and on the same page an explanation of the ballot reading:
"Montana's citizens will vote on the Constitutional Convention's proposals on June 6. Because of wording in both the 1889 Constitution and the Convention Enabling Act, this will be a special election held at the same time as the primary elections. * * *
"It is essential that the voter understand several important points about this ballot. If you vote for the proposed Constitution, you will be voting for a constitution with a bicameral (2 houses) legislature. However, if a majority of those voting in the election vote for a unicameral house in item No. 2 on the ballot, the unicameral article will automatically be substituted for the bicameral article in the new Constitution.
"If the proposed Constitution fails, your vote on the other measures the make-up of the legislature, gambling, and the death penalty will not count because they automatically fail if the proposed Constitution is rejected. Second, your vote on these three questions will not count unless each is decided by a majority of those voting in the election. If you fail to vote on any item, you will aid in its defeat.
"If the proposed Constitution carries and the issue of gambling is not decided because neither those for nor those opposed get a majority of those voting in the election, then the same restrictions against gambling in Section 9, Article III of the proposed Constitution will be retained. Similarly, if the issue of capital punishment is not decided because neither those for nor those against get a majority of those voting in the election, then the situation will be as it is now: the new Constitution would leave the future of the death penalty in the hands of the legislature where it presently lies."
Richard B. Roeder, the author of the supplement, testified that in describing the formula to be used in determining whether the various propositions would *511 be adopted, he was trying to reflect what he "interpreted to be the dominant opinion" expressed by the Convention's lawyer delegates. Excerpts from the debate in the Convention confirm this interpretation.
Finally, plaintiffs refer to an "Analysis of Convention Enabling Act Proposed by the Montana Constitutional Revision Commission", which contains the following:
"The majority for ratification: (`a majority of the electors voting at the election') necessitates the holding of a `special election' on the same day as the general election, instead of making the ratification part of the general election. Since twenty-five (25) percent of the electors who vote in general elections do not vote on constitutional questions, if the proposals of the convention were placed on the general election ballot they would almost certainly not receive the vote of a majority of the electors voting at the election."
There is no suggestion that any publication or statement, either official or unofficial, was intended to misrepresent any facts or deceive or mislead the voters. The official ballot and publication followed the language of the existing constitution. The other statements at most contained an erroneous interpretation of an ambiguous provision in the Montana Constitution an interpretation deemed correct by two of the five justices of the Montana Supreme Court.
In no document was there any advice or suggestion that the electors should not vote on the proposed constitution. On the contrary, the unofficial as well as the official publications urged a vote on all four issues. Additionally the newspaper supplement and other unofficial statements cautioned the electors that if they did not vote on the constitution (or any of the other issues) they would aid in its defeat. While this interpretation of the language in the existing constitution was subsequently held erroneous, it was made in good faith and was not an unreasonable interpretation when it was made. In any event, it is clear that all electors who were in fact opposed to the proposed constitution could have expressed their disapproval by voting against it.
This is not a case where any electors were deprived of a right to vote[14] or where there was any debasement or dilution in their votes.[15] Nor is it a case where the voters were misled with respect to the content or meaning of any of the issues submitted to them.[16] The 7,302 electors clearly had a right and opportunity to vote on the proposed constitution and in fact were urged to do so.[17]
*512 If, under these circumstances, any electors were in fact misled, they were simply mistaken as to the effect of their abstention from voting and not deprived of any right or opportunity to vote in violation of Article IV, Section 4 of the Constitution of the United States, the Fourteenth Amendment to the Constitution, or the Voting Rights Act of 1965 (42 U.S.C. § 1973).
The motion to dismiss accordingly has been granted.
NOTES
[1] Section 8 of Article XIX provides in pertinent part:
"The legislative assembly may at any time, by a vote of two-thirds of the members elected to each house, submit to the electors of the state the question whether there shall be a convention to revise, alter, or amend this constitution; and if a majority of those voting on the question shall declare in favor of such convention, the legislative assembly shall at its next session provide for the calling thereof. * * * Said convention shall meet within three months after such election and prepare such revisions, alterations or amendments to the constitution as may be deemed necessary, which shall be submitted to the electors for their ratification or rejection at an election appointed by the convention for that purpose, not less than two nor more than six months after the adjournment thereof; and unless so submitted and approved by a majority of the electors voting at the election, no such revision, alteration or amendment shall take effect." (Emphasis added)
[2] Section 17(9) of Chapter 296 provides in pertinent part:
"If a majority of the electors voting at the special election shall vote for the proposals of the convention the governor shall by his proclamation declare the proposals to have been adopted by the people of Montana."
[3] The election returns were canvassed by the state canvassing board and the results certified by the Secretary of State as follows:
"FOR the proposed Constitution. 116,415
AGAINST the proposed Constitution. 113,883
2A. FOR a unicameral (1 house)
legislature. 95,259
2B. FOR a bicameral (2 houses)
legislature. 122,425
3A. FOR allowing the people or
the legislature to authorize
gambling. 139,382
3B. AGAINST allowing the people
or the legislature to
authorize gambling. 88,743
4A. FOR the death penalty. 147,023
4B. AGAINST the death penalty. 77,733
Total number of electors voting. 237,600"
Defendants question the accuracy of the 7,302 figure, contending that the 237,600 total includes void ballots. It is stipulated, however, that unofficial recanvasses conducted by plaintiffs in 19 counties show that in those counties 3,476 more electors cast ballots than voted on Proposition 1. The addition of this figure to the 113,883 electors voting against Proposition 1 equals 117,359, which is in excess of the 116,415 voting in favor of Proposition 1.
[4] Two of the five justices dissented, and "would hold that the * * * language `a majority of the electors voting at the election', means just what it says", 500 P.2d at 930, and that "the natural significance" of this language "is that to determine whether the proposed constitution was adopted, you count the total number of electors voting at the election, and one half plus one must have voted for the measure or it fails." Id. at 933.
[5] Since we are dismissing the action on the merits, it is unnecessary to consider other questions raised by the defendants.
[6] 28 U.S.C. § 2281 provides that an injunction restraining the enforcement of a State statute "shall not be granted by any district court or judge thereof upon the ground of the unconstitutionality of such statute unless the application therefor is heard and determined by a district court of three judges under section 2284 * * *."
[7] 377 U.S. 533, 554, 84 S.Ct. 1362, 1377, 12 L.Ed.2d 506 (1964).
[8] U.S.Const. Amend. XIV, § 1.
[9] Section 4 of Article IV of the United States Constitution provides that, "The United States shall guarantee to every State in this Union a Republican Form of Government * * *."
[10] Moreover, we are satisfied that a substantial claim of unconstitutionality is raised by plaintiffs' complaint. As the Supreme Court said in Ex parte Poresky, 290 U.S. 30, 32, 54 S.Ct. 3, 4, 78 L.Ed. 152, "The existence of a substantial question of constitutionality must be determined by the allegations of the bill of complaint." The claims "are constitutionally insubstantial only if the prior decisions inescapably render the claims frivolous; previous decisions which merely render claims of doubtful or questionable merit do not render them insubstantial for the purpose of 28 U.S.C. § 2281." Goosby v. Osser, 409 U.S. 512, 518, 93 S.Ct. 854, 35 L.Ed.2d 36 (1973).
[11] See Law Students Civil Rights Research Council, Inc. v. Wadmond, 299 F.Supp. 117, 129 (S.D.N.Y.1969).
[12] Garrettson testified in part:
"A. In my own mind, I decided that not knowing enough about the issue involved, I would just not vote, or mark the ballot, whichever way you wish to call it.
* * * * *
"A. I am taking a presumption that if people read the ballot as I read it, plus the instructions, as I read it, that it takes a majority of the voters voting at the election to win any particular issue, then I would presume very strongly that they abstained from voting, as I did for any number of reasons. My reason was lack of knowledge of the two. And I felt that if I did not vote, it was a vote against it."
[13] The so-called newspaper supplement was prepared by Dr. Richard B. Roeder, a member of the faculty of Montana State University and also a member of the Constitutional Convention. The material was checked for "accuracy, style, and objectivity" by three other members of the Convention. It was partially financed by Community Services Program, Title I of the Higher Education Act of 1965, with the state providing office expense and state employees furnishing services; and supplementary funding was provided by Concerned Citizens for Constitutional Improvement (a private group of Montana citizens). While widely distributed, it was not mailed to all voters and was not an official publication.
[14] The cases upon which plaintiffs rely are inapposite. In Harper v. Virginia State Board Elections, 383 U.S. 663, 86 S.Ct. 1079, 16 L.Ed.2d 169 (1966), the Court held that a state's conditioning the right to vote on the payment of a fee or tax violated the Equal Protection Clause of the Fourteenth Amendment. In Carrington v. Rash, 380 U. S. 89, 85 S.Ct. 775, 13 L.Ed.2d 675 (1965), it was held that a state cannot deny the ballot to a bona fide resident merely because he is a member of the Armed Forces. In Kramer v. Union Free School District No. 15, 395 U.S. 621, 89 S.Ct. 1886, 23 L.Ed.2d 583 (1969), the Court held unconstitutional a law limiting the right to vote in school district elections to property owners or parents of children enrolled in the local public schools. In all of these cases the electors in question were deprived of the right to vote.
[15] As the Supreme Court held in Reynolds v. Sims, supra, "the right of suffrage can be denied by a debasement or dilution of the weight of a citizen's vote just as effectively as by wholly prohibiting the free exercise of the franchise." 377 U.S. at 555, 84 S.Ct. at 1377.
[16] We agree with the statement in Kohler v. Tugwell, supra, that "the state may not mislead its voters to the extent that they do not know what they are voting for or against." 292 F.Supp. at 982. That is not the case here. The electors were clearly advised what they were voting for or against.
[17] Except for plaintiff Garrettson and his wife, there is no evidence regarding the reasons the 7,302 electors failed to vote on the proposed constitution. As Garrettson suggested in his deposition, they may have failed to vote "for any number of reasons".
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491 Pa. 320 (1980)
421 A.2d 157
Eugene K. ALBRIGHT and Reba Albright, Appellants,
v.
COMMONWEALTH of Pennsylvania ex rel. Clark Lincoln FETTERS and Theodore Leroy Fetters, Appellees.
Supreme Court of Pennsylvania.
Argued May 22, 1980.
Decided September 22, 1980.
*321 *322 Jack M. Hartman, Harrisburg, for appellants.
Robert E. Campbell, Gettysburg, for appellees.
Before EAGEN, C.J., and O'BRIEN, ROBERTS, NIX, LARSEN, FLAHERTY and KAUFFMAN, JJ.
OPINION
NIX, Justice.
This is an appeal from an order of the Superior Court reversing a custody award entered in favor of the maternal grandparents by the hearing court. The Superior Court ruled that custody should be awarded to the natural father and remanded the cause to the trial court to set appropriate visitation rights for the grandparents. The grandparents sought review which was granted by this Court and for the reasons that follow, we now reverse the order of the Superior Court, 266 Pa.Super. 583, 405 A.2d 1260, and reinstate the hearing court's order.
This appeals involves a dispute over the custody of two minor children, Clark Lincoln Fetters and Theodore Leroy Fetters. Clark Fetters was born September 10, 1963, to Kenneth and Suzanna Fetters. Kenneth is the appellee herein. When Clark was four years of age, his parents separated and his father took him to live with his maternal grandparents, Eugene K. and Reba Albright, appellants herein. Shortly thereafter, the parents reconciled and on June 8, 1968, Theodore Leroy was born. The marital relationship terminated after Theodore's birth and their father entrusted the children to the care of their maternal grandparents, where they remained for the next four years. Theodore resided with his grandparents from birth.
In 1972, the mother was given permanent custody of the boys with visiting privileges awarded to the father. In the interim, the mother remarried and a third son, Andrew, *323 resulted from that union. That marriage also terminated by divorce. From 1972 until the summer of 1978, the three boys lived together with their mother on weekdays during the winter. The grandparents kept the children every summer and three out of every four weekends during the remaining months. One weekend each month, Clark and Theodore stayed with their father who also had remarried.
In the beginning of the summer of 1978, the mother left the three boys with their grandparents for their usual summer visit. On June 28, 1978, the mother died. The children have remained with their grandparents since the death of the mother. On July 12, 1978, the father sought custody of his two sons in the Court of Common Pleas of Adams County. As previously stated, that court, after hearing, awarded custody to the maternal grandparents. The Superior Court reversed that order and directed that custody be awarded to the father.
The resolution of the questions presented in this appeal is dependent upon a determination of the proper standard to be applied in such cases. Both the hearing court and the Superior Court asserted that they were proceeding in accordance with the principle that where the custody dispute is between a parent and a third party, the parent has a prima facie right to custody, which will be forfeited only if convincing reasons appear that the child's best interest will be served by an award to the third party. The different results reached by these two tribunals, ostensibly using the same standard, evidences the need for further reiteration of that standard. The precise question raised is what is the full effect of the result of the parent's prima facie right to custody.
At the outset, it must be emphasized that the cardinal concern in all custody cases is the best interest and permanent welfare of the child. Commonwealth ex rel. Bendrick v. White, 403 Pa. 55, 169 A.2d 69 (1961); Cochran Appeal, 394 Pa. 162, 145 A.2d 857 (1958); Commonwealth ex rel. Graham v. Graham, 367 Pa. 553, 80 A.2d 829 (1951); Commonwealth ex rel. Rogers v. Daven, 298 Pa. 416, 148 A. 524 (1929); In re Custody of Neal, 260 Pa.Super. 151, 393 A.2d *324 1057 (1978); In re Leskovich, 253 Pa.Super. 349, 385 A.2d 373 (1978); Smith v. Smith, 246 Pa.Super. 607, 371 A.2d 998 (1977); Scott v. Scott, 240 Pa.Super. 65, 368 A.2d 288 (1976); Brown v. Brown, 206 Pa.Super. 439, 213 A.2d 395 (1965); Hixon's Appeal, 145 Pa.Super. 33, 20 A.2d 925 (1941). We have traditionally embraced the view that the scope of review to be applied by appellate courts in custody cases is very broad. Commonwealth ex rel. Holschuh v. Holland-Moritz, 448 Pa. 437, 292 A.2d 380 (1972); Commonwealth ex rel. Bendrick v. White, supra; Ciammaichella Appeal, 369 Pa. 278, 85 A.2d 406 (1952); Commonwealth ex rel. Children's Aid Society, Guardian v. Gard, 362 Pa. 85, 66 A.2d 300 (1949); In re Custody of Neal, supra; Smith v. Smith, supra; Commonwealth ex rel. Ulmer v. Ulmer, 231 Pa.Super. 144, 331 A.2d 665 (1974); Johnson v. Pinder, 217 Pa.Super. 180, 269 A.2d 511 (1970); Commonwealth ex rel. Gifford v. Miller, 213 Pa.Super. 269, 248 A.2d 63 (1968); Commonwealth ex rel. Williams v. Price, 167 Pa.Super. 57, 74 A.2d 668 (1950); Commonwealth ex rel. Lewis v. Tracy, 155 Pa.Super. 257, 38 A.2d 405 (1944). Nonetheless, a broad scope of review should not be construed as providing the reviewing tribunal with a license to nullify the factfinding functions of the court of the first instance. Commonwealth ex rel. Bendrick v. White, supra; Commonwealth ex rel. Harry v. Eastridge, 374 Pa. 172, 97 A.2d 350 (1953); Commonwealth ex rel. Bowser v. Bowser, 224 Pa.Super. 1, 302 A.2d 450 (1973); Clair Appeal, 219 Pa.Super. 436, 281 A.2d 726 (1971); Commonwealth ex rel. Doberstein v. Doberstein, 201 Pa.Super. 102, 192 A.2d 154 (1963); Commonwealth ex rel. Urbani v. Bates, 186 Pa.Super. 77, 140 A.2d 638 (1958); Commonwealth ex rel. Knouse v. Knouse, 146 Pa.Super. 396, 22 A.2d 618 (1941); Commonwealth ex rel. Bentley v. Bentley, 108 Pa.Super. 132, 165 A. 44 (1933); Commonwealth ex rel. Witte v. Witte, 80 Pa.Super. 397 (1923).
Prior case law has variously attempted to articulate the burden to be placed upon the third party in a dispute over custody with a parent. Some cases have expressed the standard in terms of a parent possessing a "primary right to the custody of the child." Commonwealth ex rel. Bradley v. *325 Bradley, 188 Pa.Super. 108, 146 A.2d 147 (1958); Commonwealth ex rel. Galloway v. Galloway, 188 Pa.Super. 313, 146 A.2d 383 (1958); Commonwealth ex rel. Kraus v. Kraus, 185 Pa.Super. 167, 138 A.2d 225 (1958); Commonwealth ex rel. Shroad v. Smith, 180 Pa.Super. 445, 119 A.2d 620 (1956). This formulation has been appropriately criticized because the expression "primary right" connotes a type of property interest possessed by the parent in the child. See In re Custody of Hernandez, 249 Pa.Super. 274, 376 A.2d 648 (1977). As we recently noted in Ellerbe v. Hooks, 490 Pa. 363, 369, 416 A.2d 512, 514 (1980):
". . ., deference to the parental relationship is not an archaic adherence to any property rights theory of the family."
Whatever weight that is to be given in the decision based upon the parent-child relationship can only be justified upon the ground that parenthood "has traditionally served and continues to serve as our society's fundamental criterion for allocating control over and responsibility for our children. . . ." Ellerbe v. Hooks, 490 Pa. at 369, 416 A.2d at 514.
Most recently this Court has had occasion to adopt the standard set forth by the Superior Court in In re Hernandez, supra; Ellerbe v. Hooks, supra. In holding that parents have a "prima facie right to custody," we explained that standard as providing for:
". . . simply instruct the hearing judge that the non-parent bears the burden of production and the burden of persuasion and that the non-parent's burden is heavy." Ellerbe v. Hooks, 490 Pa. p. 368, 416 A.2d p. 514.[1]
However, we made it clear that there was no intention in adopting this formulation to suggest that parenthood alone *326 would necessarily defeat the claim of custody of a non-parent. "Clearly these principles do not preclude an award of custody to the non-parent." Ellerbe v. Hooks, 490 Pa. 368, 416 A.2d 514. A contrary view would ignore clear legislative intention otherwise. For instance, the legislature has set forth standards where the state may remove a child from the custody of a parent, Juvenile Act, P.L. 586, 42 Pa.C.S. § 6301 et seq. (1978); Child Protective Services Law, P.L. 438, 11 P.S. § 2201 et seq. (1975), and even permits the termination of the parental relationship under defined circumstances, Act of July 24, 1970, P.L. 620, No. 208, Art. I, § 101, 1 P.S. § 101 et seq. (1971).
Thus the Hernandez standard, adopted by this Court in Ellerbe, was in tended to emphasize the importance of the maintenance of the parental relationship, yet at the same time permit the hearing court to award custody to the third party where the best interests of the child will be clearly served by such a decision. This point is best demonstrated by the fact that this Court in Ellerbe, after embracing the Hernandez standard, applied it and sustained the decision of the hearing court awarding custody to the maternal grandmother. Ellerbe v. Hooks, supra.[2]
In this case, the hearing court after conceding that the father had entered into an apparently stable second *327 marriage and could provide a good home, nevertheless concluded that the maternal grandparents had presented sufficiently compelling reasons to justify the award of custody to them. Those factors which were deemed to be persuasive were that the children had been exposed to chaotic conditions throughout their lives as a result of the marital difficulties between the parents and that the home of the grandparents had proven to be the single stabilizing factor in their lives.[3] In Ellerbe, we held that the removal of a child from a secure and familiar environment was the type of factor that could justify the award of the child to a grandparent over the claim of a parent. Ellerbe v. Hooks, supra. The adverse effect upon the development of youngsters caused by the disruption of an established stable relationship has been well recognized in this area of the law. Gunter v. Gunter, 240 Pa.Super. 382, 399, 361 A.2d 307, 316 (1976).
In addition to the problem of separation trauma, the court also was troubled by the fact that granting custody of the two sons to their father would prevent the siblings from being raised together.[4] It has always been a strong policy in our law that in the absence of compelling reasons to the contrary, siblings should be raised together whenever possible. Tomlinson v. Tomlinson, 248 Pa.Super. 196, 374 A.2d 1386 (1977); Commonwealth ex rel. Steuer v. Steuer, 244 Pa.Super. 302, 368 A.2d 732 (1976); In re Custody of *328 Myers, 242 Pa.Super. 225, 363 A.2d 1242 (1976); Commonwealth ex rel. Bowser v. Bowser, 224 Pa.Super. 1, 302 A.2d 450 (1973); Commonwealth ex rel. Sissel v. Sciulli, 216 Pa.Super. 429, 268 A.2d 165 (1970); Commonwealth ex rel. Martino v. Blough, 201 Pa.Super. 346, 191 A.2d 918 (1963); Commonwealth ex rel. Johnson v. Johnson, 195 Pa.Super. 262, 171 A.2d 627 (1961); Commonwealth ex rel. Reese v. Mellors, 152 Pa.Super. 596, 33 A.2d 516 (1943). This principle is in no way diluted by the fact that the third child in this case is a half brother. The benefits to be derived from the three minors being raised in the same household provided a further factor that could properly be weighed against the parent's claim for custody. Thus, in view of these countervailing factors, we cannot agree with the Superior Court's conclusion that the hearing court misapplied the standard in awarding custody to the grandparents.
Finally, a reference to an implicit misperception in the Superior Court's reasoning is required. That court framed the issue in terms of the absence of any evidence "that the father has forfeited his prima facie right to custody of his sons, . . ." 266 Pa.Super. 583, 586, 405 A.2d 1260, 1262. Such a formulation tends to focus the inquiry on the respective rights of the contesting parties whereas the real issue is the best interest of the children involved. Restated, the standard in this area is not to be construed as precluding a custody award to a non-parent, absent a demonstration of the parent's dereliction. We again emphasize that the standard seeks only to stress the importance of parenthood as a factor in determining the best interests of the child. However, other factors which have significant impact on the well being of the child can justify a finding in favor of the non-parent, even though the parent has not been shown to have been unfit.
Accordingly, the order of the Superior Court is reversed and the order of the Court of Common Pleas awarding custody to the maternal grandparents is reinstated.
*329 FLAHERTY, J., joins the opinion and filed a separate concurring opinion.
LARSEN, J., concurred in the result.
FLAHERTY, Justice, concurring.
I join, and make reference to the Concurring Opinion which I authored in Ellerbe v. Hooks, 490 Pa. 363, 416 A.2d 512 (1980). It is safe to say that the law of this Commonwealth has now advanced to the point where we truly have an unbeclouded standard in custody cases which serves, ". . . the child's interests, including physical, emotional, intellectual, moral and spiritual well being." (Emphasis supplied.)
NOTES
[1] The Hernandez Court also took issue with those decisions that formulated the standard in terms of a presumption in favor of a parent. Commonwealth ex rel. Bendrick v. White, 403 Pa. 55, 169 A.2d 69 (1961); Auman v. Eash, 228 Pa.Super. 242, 323 A.2d 94 (1974); Commonwealth ex rel. Bifford v. Miller, 213 Pa.Super. 269, 248 A.2d 63 (1968); Commonwealth ex rel. Galloway v. Galloway, 188 Pa.Super. 313, 146 A.2d 383 (1958). This objection is probably nothing more than a semantic quibble. "Prima facie" is in reality nothing more than a procedural device which assigns the burden of proceeding with the evidence. A fact presumed to be true unless disproved by some evidence to the contrary. Mineo v. Eureka Sec. F. & M. Ins. Co., 182 Pa.Super. 75, 125 A.2d 612 (1956); Beckman v. Brownback, 341 Pa. 565, 20 A.2d 200 (1941); Johnson v. State, 258 Ind. 648, 283 N.E.2d 532 (1972); Dal. Int'l. Trading Co. v. The Milton J. Foreman, 171 F.Supp. 794, (E.D.N.Y. 1959); Detig v. Kelley, 17 Ill.App.2d 496, 150 N.E.2d 845 (1958); Herbert v. Whims, 68 Ohio App. 39, 38 N.E.2d 596 (1941); Black's Law Dictionary 1353 (Rev. 4th ed. 1968). The real questions are the quality and quantity of evidence required to overturn the presumption. It is doubtful whether either term, i.e., "presumption" or "prima facie" is particularly helpful in this regard.
[2] Similar to the procedural posture of this case the Superior Court in Ellerbe had reversed the hearing court's award of custody to the maternal grandmother and directed that custody be given to the father.
[3] The significance of this factor in this case was highlighted by the testimony of the older child who expressed great concern at the prospect of his brother and he being uprooted again.
[4] The three children can benefit greatly from a joint upbringing. Clark Fetters, the oldest of the three children, who was fourteen years old at the time of the hearing, expressed serious concern for what would happen to his youngest brother if he became separated from his older brothers.
Clark also expressed a well-articulated preference to remain with his grandparents. The preference of the child is one factor to be considered in awarding custody. The weight to be accorded such preference varies according to age, intelligence and maturity of the child. Commonwealth ex rel. Bankert v. Children's Services, 224 Pa.Super. 556, 307 A.2d 411 (1973). Clark Fetters, the trial judge noted was "a reasonable and intelligent young man and the Court was impressed with his views."
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426 S.E.2d 834 (1993)
Carlee D. CHASTAIN, Respondent,
v.
OWENS CAROLINA, INC., Appellant.
No. 1939.
Court of Appeals of South Carolina.
Heard September 16, 1992.
Decided February 1, 1993.
Ronald W. McKinney, Greer, for appellant.
Hal J. Warlick, Easley, for respondent.
BELL, Judge:
This is a statutory action by an employee seeking lost wages and reinstatement in a job from which he was discharged in retaliation for filing a claim under the Workers' Compensation Law. The action was tried to a jury on the issue of whether the discharge was retaliatory. The jury found for the employee. With the consent of the parties, the court reserved to itself determination of the amount of lost wages the employee should recover. From a judgment awarding $52,930.00 in lost wages, the employer appeals. We affirm in part and reverse in part and remand.
*835 Carlee D. Chastain, the employee, brought this action against Owens Carolina, Inc., his employer, pursuant to S.C.Code Ann. § 41-1-80 (Supp.1992), which authorizes an employee who has been discharged for instituting a workers' compensation proceeding to bring an action against his employer for lost wages suffered as a result of the retaliatory discharge. The circuit court found Owens had employed Chastain for about eight years before his wrongful discharge on April 9, 1989. At the time of his discharge, Chastain was a stocker and truck driver for the company. He worked sixty hours a week, for which Owens paid him $620.00 plus a "bonus" of $50.00, for a total weekly wage of $670.00. Although the "bonus" could be deducted from his pay if errors were reported in his work for the week, there were only a few weeks out of his entire time at Owens that he did not receive it. Accordingly, the court found he would have regularly received the weekly "bonus" had he not been discharged. After his discharge, Chastain was unemployed for nine weeks until he found another job as a truck driver earning $280.00 for a forty hour work week. He worked at this job until the time of trial.
I.
Owens first argues the circuit court should have reduced the lost wages award by the amount Chastain earned from his alternative employment during the period of wrongful discharge, because he was under a duty to avoid damages that reasonably could be avoided. See Tri-Continental Leasing Corp. v. Stevens, Stevens & Thomas, P.A., 287 S.C. 338, 338 S.E.2d 343 (Ct.App.1985).
The applicable rule of law has been clearly stated by the Supreme Court in Smalls v. Springs Industries, Inc., 300 S.C. 481, 388 S.E.2d 808 (1990):
The doctrine of avoidable consequences operates in wrongful discharge actions, as in others, to permit a wrongfully discharged employee to recover only damages for losses which, in the exercise of due diligence, he could not avoid. The employee's so-called duty to mitigate his damages permits the employee to recover the amount of his losses caused by the employer's breach reduced by the amount the employee obtains, or through reasonable diligence could have obtained, from other suitable employment. [Citations omitted.]
Accordingly, the circuit court erred when it failed to reduce the award of lost wages by the amount Chastain obtained from his other employment during the period of wrongful discharge.
II.
Owens next contends the circuit court should have reduced the lost wages award by $200.00 a week, because Chastain obtained alternative employment for only forty hours a week instead of the sixty hours he worked at the job from which he was wrongfully discharged. The evidence shows Owens originally hired Chastain as a salaried employee for a forty hour work week. He also worked a second job as a projectionist at a movie theater for twenty hours a week. Owens and Chastain later agreed that he would quit the movie theater job and work for the company sixty hours a week at increased pay of $620.00 a week, a raise of $200.00 a week. On this basis, Owens now argues Chastain failed to mitigate his damages by taking on a second job paying $200.00 a week after they wrongfully discharged him. This argument is without merit.
Although the law requires an injured party to do those things a prudent person would do to avoid damages that are reasonably avoidable, it does not require him to exert himself unreasonably or to incur substantial expense to avoid damages. Tri-Continental Leasing Corp. v. Stevens, Stevens & Thomas, P.A., supra. Moreover, the party who claims damages should have been minimized has the burden of proving they could reasonably have been avoided or reduced. Id.
Owens makes the naked assertion that Chastain would have reduced his lost wages by $200.00 a week if he had worked sixty hours a week at one or more jobs *836 after they discharged him. However, they adduced no evidence that such work was reasonably available or that it would have paid $200.00 a week. Whether an employee has fully mitigated his damages is a question of fact to be determined from the circumstances of each case. See Smalls v. Springs Industries, Inc., supra; Mixson v. Rossiter, 223 S.C. 47, 74 S.E.2d 46 (1953). On this record, we conclude Chastain made a reasonable effort to avoid damages by actually obtaining full time employment as a truck driver with another employer. In the circumstances, the law required no more of him.
III.
Owens also argues the circuit court should have reduced the award of lost wages by $50.00 a week attributable to the employee "bonus" program, because the "bonus" was not an assured part of Chastain's regular earnings. The court found to the contrary that Chastain had in fact received the weekly "bonus" almost without fail in the many years he had worked for Owens. Thus, the Court concluded he would in fact have continued to receive the "bonus" had he not been discharged. Owens offered no evidence to contradict this inference. The court's finding of fact on this point is amply supported by the evidence and the reasonable inferences to be drawn therefrom. Accordingly, there is no ground for reversal on this issue. See Metze v. Meetze, 231 S.C. 154, 97 S.E.2d 514 (1957) (findings of fact supported by preponderance of evidence will not be reversed on appeal).
IV.
Finally, Owens asserts the circuit court should have reduced the lost wages award by the amount of state and federal taxes it would have been required to withhold from his earnings had he not been discharged. They base this argument on the proposition that, as a matter of law, a judgment awarding lost wages is not subject to income taxation. We reject this argument as based on an erroneous statement of law. See United States v. Burke, ___ U.S. ___, 112 S.Ct. 1867, 119 L.Ed.2d 34 (1992) (back pay awards not excludable from gross income for tax purposes). In addition, Owens offered no proof of the dollar amount that would have been withheld from Chastain's pay if he had not been wrongfully discharged. Furthermore, the method Owens used for computing the claimed reduction in damages was flawed, because it failed to take into account the amount of withholding deducted from Chastain's gross pay at his alternative job during the period of wrongful discharge.
For the reasons given, we reverse the award of lost wages and remand for a reduction of the award by the amount of wages Chastain earned at his alternate employment during the period of wrongful discharge. The judgment is affirmed in all other respects.
AFFIRMED IN PART, REVERSED IN PART AND REMANDED.
SHAW and CURETON, JJ., concur.
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280 Pa. Superior Ct. 359 (1980)
421 A.2d 762
COMMONWEALTH of Pennsylvania ex rel. Patricia Owens CASWELL
v.
William D. CASWELL, Appellant.
Superior Court of Pennsylvania.
Argued June 13, 1979.
Filed September 26, 1980.
*360 *361 Angus R. Love, Norristown, for appellant.
J. Keath Fetter, West Chester, for Commonwealth, appellee.
*362 Before SPAETH, STRANAHAN and SUGERMAN, JJ.[*]
SUGERMAN, Judge:
Appellant ("Father") appeals an order of the lower court dismissing his petition to reduce a support order. The facts necessary to our disposition are simply stated.
Father and Appellee ("Mother"), divorced in May, 1977, are the parents of two daughters, 14 and 15 years of age at the date of the hearings below. On October 4, 1977, an existing order for the support of the two girls was modified by agreement, and Father was directed to pay the sum of $100 per week as support. At or about the time of the entry of the modified order, Father, 39 years of age, was reputedly earning approximately $1500 monthly as a salesman, but in March, 1978 he lost such employment.
Two months thereafter, on May 23, 1978, Mother filed a petition to increase the support order, and on June 20, 1978, Father filed an answer and a cross-petition to reduce the order. The petitions were consolidated and heard by Judge HONEYMAN of the court below on July 18, 1978.
At the hearing, Father testified that he was yet unemployed, although utilizing the services of several employment agencies and a number of friends in an effort to obtain employment. Father also testified that he owned no assets other than a small balance in one checking and one savings account, an automobile, and an interest in some household furnishings. Father further testified that he had no income from any source. Mother testified that since the date of the modified order, her earnings had increased by the sum of $15 weekly.
At the conclusion of the hearing, Judge HONEYMAN found that the increase in Mother's earnings offset such slight additional income as she might have required for the support of the children, and on that basis he dismissed Mother's petition to increase.
*363 Judge HONEYMAN also found Father's earning capacity had not diminished since the entry of the agreed order, and that there had been no substantial change in circumstances, notwithstanding Father's then lack of income. Accordingly, he dismissed Father's petition to reduce the support order.
Father did not appeal from Judge HONEYMAN's order but on August 25, 1978, some 5 weeks subsequent to Judge HONEYMAN's order filed a second petition to reduce the support order. The petition was heard by Judge BROWN of the lower court on October 3, 1978.
At the hearing, Father testified that he was receiving public assistance in the sum of $173 monthly, having become eligible on August 5, 1978. Father also testified that since the date of Judge HONEYMAN's order he had been living by the use of his credit cards, and had thus incurred substantial debt. Father also testified that several physical problems had "flared up" since the entry of Judge HONEYMAN's order, causing him to incur medical and dental expenses. Father testified that the total debt incurred since the date of the hearing before Judge HONEYMAN was in the approximate sum of $3000.
At the conclusion of the hearing, Judge BROWN found no change in Father's circumstances subsequent to the date of Judge HONEYMAN's order, and on that basis, dismissed Father's petition to reduce.
In its opinion filed pursuant to Pa.R.A.P. 1925(a), the lower court reiterated its finding in the following language:
"On both July 18, and October 3, the defendant was unemployed, had no source of income, and had no savings. Since August 5, 1978, he has received $173 per month in public assistance. The defendant has suffered from colitis and back problems for a number of years. However, neither of these ailments impair his ability to work in his chosen field-advertising and sales. There was no suggestion at the hearing that the needs of the children have diminished. Since the facts presented to this Court are identical to those existing on July 18, we find no reason to disturb the order." Appellant's Brief at 13.
*364 On appeal, Father advances two arguments: (1) the lower court committed error in permitting Judge BROWN to hear Father's second petition to reduce, rather than assigning the matter to Judge HONEYMAN who heard Father's first petition, and (2) the lower abused its discretion in failing to find a change in Father's circumstances during the period between the first and second hearings.
I.
Father first contends on appeal that the lower court erred in permitting Judge BROWN to hear his second petition to reduce, rather than assigning the matter to Judge HONEYMAN, who heard his first petition.
Father is correct, and we must once again note that the practice of granting a rehearing before a judge other than the one who heard the case in the first instance is not in the best interest of the parties. Brake v. Brake, 271 Pa.Super. 314, 316 n.2, 413 A.2d 422, 423 n.2 (1979); Commonwealth ex rel. Schulberg v. Hirsch, 236 Pa.Super. 179, 344 A.2d 530 (1975); Bell v. Bell, 228 Pa.Super. 280, 323 A.2d 267 (1974).
When the original judge is available, he or she should be the one to whom all questions of modification are directed, as it is such judge who is most familiar with the case and most qualified to determine whether a modification is warranted under the circumstances. Commonwealth ex rel. Schulberg v. Hirsch, supra 236 Pa.Super at 182, 344 A.2d at 531; Commonwealth ex rel. D'Alfonso v. D'Alfonso, 181 Pa.Super. 71, 121 A.2d 900 (1956).
Although we remain firmly committed to this principle and do not condone its violation, the question of whether the failure to be guided by the principle constitutes reversible error is quite a different matter. In the case before us, we find that it does not.
We have thoroughly reviewed the transcripts of the hearings held before Judges HONEYMAN and BROWN, and find that Father virtually repeated his earlier testimony at *365 the hearing before Judge BROWN. Judge BROWN was thus able to evaluate Father's circumstances at the time of the first hearing and was therefore in a position to determine whether those circumstances had changed at the date of the second hearing. Father has neither argued nor shown prejudice and we find none.
II.
It will be recalled that Father also contends that Judge BROWN abused his discretion in failing to find a change of circumstances and in dismissing his second petition to reduce.
When reviewing a proceeding of this nature, our scope of review is limited, and we will not interfere with the determination of the court below unless there has been a clear abuse of discretion.[1]Commonwealth ex rel. ReDavid v. ReDavid, 251 Pa.Super. 103, 380 A.2d 398 (1977); Bell v. Bell, 228 Pa.Super. 280, 323 A.2d 267 (1974), both quoted with approval in Brake v. Brake, supra, 271 Pa.Super. at 316, 413 A.2d at 423; Commonwealth ex rel. Hartranft v. Hartranft, 267 Pa.Super. 572, 407 A.2d 389 (1979). A finding of abuse is not lightly made but only upon a showing of clear and convincing evidence. Commonwealth ex rel. Hartranft v. Hartranft, supra, 267 Pa.Super. at 574, 407 A.2d at 390; Commonwealth ex rel. McQuiddy v. McQuiddy, 238 Pa.Super. 390, 358 A.2d 102 (1976).
A court may increase or decrease an order for support if the financial conditions of the parties change, or where other proper reasons are assigned. Cyphert v. Aber, 272 Pa.Super. 112, 114, 414 A.2d 695, 696 (1979), quoting Commonwealth ex rel. Kaplan v. Kaplan, 219 Pa.Super. 163, 185, 280 A.2d 456, 457 (1971); Commonwealth ex rel. Delbaugh *366 v. Delbaugh, 258 Pa.Super. 127, 130, 392 A.2d 717, 718 (1978). The party seeking to modify a support order, however, bears the burden of demonstrating such a change of circumstances as will justify a modification. Commonwealth ex rel. Haertsch v. Haertsch, 267 Pa.Super. 283, 284, 406 A.2d 805, 806 (1979); Commonwealth ex rel. Burns v. Burns, 251 Pa.Super. 393, 400, 380 A.2d 837, 840 (1977). We also have held that only "material and substantial changes in circumstances", as proven by competent evidence will warrant modification of a support order. Commonwealth ex rel. Delbaugh v. Delbaugh, supra 258 Pa.Super. at 130, 392 A.2d at 718; Commonwealth ex rel. Hall v. Hall, 243 Pa.Super. 162, 165, 364 A.2d 500, 502 (1976); Commonwealth ex rel. Schmitz v. Schmitz, 237 Pa.Super. 519, 521, 352 A.2d 103, 104 (1975), and that a modification may only be based upon facts appearing in the record which show such permanent change in circumstances as to require such modification. Brake v. Brake, supra, 271 Pa.Super. at 316, 413 A.2d at 423; Bell v. Bell, supra 228 Pa.Super. at 283, 323 A.2d at 269.
Applying these principles to the facts before us, with out narrow scope of review in mind, we are not convinced that Judge BROWN abused his discretion in finding that Father's circumstances between the date of the first hearing, July 18, 1978, and the second hearing, October 3, 1978, had so materially and substantially changed as to warrant modification of the order.
At the date of the first hearing before Judge HONEYMAN, Father was unemployed, owned virtually no assets, had no income, and had selectively sought employment without success. At the date of the second hearing, some two and one-half months later, Father's circumstances were the same, except that he was then receiving public assistance.
Father places great emphasis upon the fact that he was unemployed at the date of the first hearing, and remained so at the time of the second hearing. Under such circumstance, Father argues, requiring him to pay the sum of $100 weekly as support, constitutes a punishment and *367 renders the order confiscatory in the extreme.[2] See e.g. Commonwealth ex rel. Goichman v. Goichman, 226 Pa.Super. 311, 316 A.2d 653 (1973). The most cursory review of the record made at the hearing held upon Father's first petition before Judge HONEYMAN clearly reveals that this issue was fully litigated at the first hearing and ultimately resolved against Father by Judge HONEYMAN. Father, as earlier noted, did not appeal Judge HONEYMAN's order but chose instead to file a second petition endeavoring to raise the same issue. We have repeatedly held that under such circumstances further consideration of the issue in the absence of a change of circumstances is foreclosed under the doctrine of res judicata. See Commonwealth ex rel. Grow v. Grow, 268 Pa.Super. 290, 407 A.2d 1361 (1979); Commonwealth ex rel. Palchinski v. Palchinski, 253 Pa.Super. 171, 384 A.2d 1285 (1978); Commonwealth ex rel. De Medio v. De Medio, 210 Pa.Super. 520, 233 A.2d 609 (1967). Judge BROWN was therefore properly concerned with the single question of whether Father's circumstances since the date of Judge HONEYMAN's order had changed. The record of the hearing before Judge BROWN reveals that Father failed to meet his burden of demonstrating a change in those circumstances.[3] As there is more than sufficient evidence to sustain *368 the order of the lower court, we will not disturb it on appeal. Brake v. Brake, supra; Commonwealth ex rel. Delbaugh v. Delbaugh, supra.
Affirmed.
SPAETH, J., files a concurring statement.
SPAETH, Judge, concurring:
At first the result in this case appears harsh: an unemployed father, in debt and receiving only $173 a month on welfare, is ordered to continue paying $100 a week in child support. However, I believe Judge SUGERMAN has accurately stated both our standard of appellate review and the substantive law, and has reached the correct result. I write separately only to highlight very briefly the portions of the record that lead me to agree with Judge SUGERMAN.
Critical to me are Judge HONEYMAN's findings that appellant's earning capacity had not decreased and that appellant had not been sufficiently diligent in looking for work. When appellant failed to appeal Judge HONEYMAN's order of July 18, 1978, these findings became res judicata. When appellant was before Judge BROWN, therefore, it was his burden to show that in the five weeks between July 18 and the filing of his second petition, his situation had materially changed. The transcript makes clear that Judge BROWN believed that any difficulties appellant might be facing in the labor market were no *369 different from those he had faced in July, and that principles of res judicata therefore precluded a finding that appellant's earning capacity had decreased. Without a finding of decreased earning capacity, the increased debt incurred by appellant between July and October was not by itself a material change in circumstances. Likewise, as long as appellant's earning capacity was unimpaired, he was not entitled to either a temporary reduction in the support order or relief from accumulated arrearages.
NOTES
[*] President Judge JOHN Q. STRANAHAN, of the Court of Common Pleas of Mercer County, Pennsylvania, and Judge LEONARD SUGERMAN, of the Court of Common Pleas of Chester County, Pennsylvania, are sitting by designation.
[1] In Commonwealth ex rel. Levy v. Levy, 240 Pa.Super. 168, 361 A.2d 781 (1976) we defined an abuse of discretion as ". . . not merely an error of judgment, but if in reaching a conclusion the law is overridden or misapplied, or the judgment exercised is manifestly unreasonable, or the result of partiality, prejudice, bias or ill-will, as shown by the evidence or the record, discretion is abused."
[2] The issue is discussed at length in Commonwealth ex rel. Burns v. Burns, supra. And see Costello v. Le Noir, 462 Pa. 36, 337 A.2d 866 (1975); Judge HONEYMAN's comments from the bench as he announced his order dismissing Father's first petition indicated that he did not find Father's testimony concerning Father's efforts to obtain employment credible. Accordingly, Judge HONEYMAN based his order upon Father's earning capacity. See, e.g., Commonwealth ex rel. Burns v. Burns, supra; Commonwealth ex rel. Burns v. Burns, 232 Pa.Super. 295, 331 A.2d 768 (1974); Hecht v. Hecht, 189 Pa.Super. 276, 150 A.2d 139 (1959).
[3] Although Father's counsel at the outset of the hearing before Judge BROWN asserted that the matter at issue was Father's petition to reduce the support order, during the hearing, counsel retreated substantially from that position and in final argument stated to the court:
". . . And all we ask for this court to do is to temporarily suspend or lower this order to a reasonable sum so that the arrearages won't be so bad, that when he finally does get a job he will be facing an unsurmountable burden of paying back the arrearages and keeping the order going at the same time." R.25a
It is apparent to us that Father's counsel was in effect requesting relief from an accumulation of arrearages during Father's period of unemployment, rather than a permanent reduction of the support order. We have said in the past that the legislature has vested the courts with broad powers over orders for support. Commonwealth ex rel. Silverman v. Silverman, 180 Pa.Super. 94, 117 A.2d 801 (1956). Thus, a court may in appropriate circumstances grant the relief requested by Father's counsel in the form of a temporary order reducing the periodic sums payable, an order suspending temporarily the payment of any sums, or an order remitting arrearages. 42 Pa.C.S. § 6710. And see Commonwealth ex rel. Lyle v. Lyle, 248 Pa.Super. 458, 375 A.2d 187 (1977) and Commonwealth ex rel. Crane v. Rosenberg, 212 Pa.Super. 144, 239 A.2d 810 (1965).
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491 Pa. 329 (1980)
421 A.2d 161
COMMONWEALTH of Pennsylvania, Appellee,
v.
James WEBB, Appellant.
Supreme Court of Pennsylvania.
Argued April 18, 1980.
Decided September 22, 1980.
*330 *331 *332 Daniel M. Preminger, Philadelphia, for appellant.
Robert B. Lawler, Chief, Appeals Division, Michelle Goldfarb, Asst. Dist. Attys., Philadelphia, for appellee.
Before EAGEN, C.J., and O'BRIEN, ROBERTS, NIX, LARSEN, FLAHERTY and KAUFFMAN, JJ.
OPINION
EAGEN, Chief Justice.
In a non-jury trial, James Webb was found guilty of murder of the first degree, arson, aggravated assault, simple assault, and risking a catastrophe. Post-verdict motions were denied, and Webb was sentenced to life imprisonment on the murder conviction; not less than ten nor more than twenty years imprisonment, concurrently, on the arson conviction; not less than two and one-half nor more than five years imprisonment, concurrently, on the simple and aggravated assault convictions. Webb then filed these appeals.[1]
The first assignment of error is the trial court's denial of a pre-trial motion to suppress the evidence of statements made by Webb to investigating police officers while he was in the hospital. It is argued these statements were involuntary and should not have been admitted as evidence because Webb's physical and mental condition at the pertinent time precluded a free and voluntary choice. Our scope of review is limited to determining whether the factual findings of the suppression court are supported by the record and whether the legal conclusions drawn therefrom are in error. Commonwealth *333 v. Hall, 475 Pa. 482, 380 A.2d 1238 (1977). The suppression court found the following facts in reference to the challenged evidence.
Webb was admitted to the hospital at 12:30 a.m. on December 16, 1976 in fair condition but suffering from second degree burns to the face, ears, and hands. The attending physician prescribed percodan, a painkiller which does not reduce an individual's sensorium,[2] to reduce Webb's discomfort. Webb was advised, if the pain persisted or increased, he could have a sedative; but he made no such request. The attending physician spoke with Webb several times on December 16, and 17, 1976 and concluded Webb's sensorium was clear and well-oriented. A detective, at 10:35 a.m. on December 17, 1976, requested and received permission from the attending physician to speak with Webb. The detective advised Webb he was to be questioned about the arson death of Clarence Keyes which occurred on December 15, 1976. The detective read the Miranda[3] warnings, and, after Webb indicated he understood the warnings and was willing to answer questions, he was questioned by the detective until about 10:53 a.m. Although in discomfort, Webb appeared lucid, alert and cooperative, and not under the influence of narcotic medication. Webb was considerably improved on December 18, 1976, and his sensorium remained clear and well-oriented. Another detective interviewed Webb in the hospital on December 18, 1976 from about 9 a.m. to 9:35 a.m. after obtaining permission from the supervising nurse. Webb was again advised he was going to be questioned about the arson murder, was warned of his rights, and again indicated he understood. Webb answered some questions but then invoked his constitutional privilege to remain silent, and the interview ended. We find ample support for the foregoing findings of fact in the record.
*334 Turning now to the suppression court's conclusions of law, we must determine, considering the totality of the circumstances surrounding Webb's questioning, whether his statements were a result of factors which overwhelmed his ability to exercise a reasoned choice. Commonwealth v. Hunt, 263 Pa.Super. 504, 398 A.2d 690 (1979).
The suppression court concluded the Commonwealth proved by a preponderance of the evidence that, on December 16 and 17, 1976, Webb's physical condition did not interfere with his ability to exercise an unfettered will. This conclusion is fully supported by the following facts. On both December 17 and 18, 1976, Webb was informed of his constitutional rights and indicated he understood those rights before submitting to the detectives' questioning. The drugs used in his treatment did not affect his ability to think clearly. His pain was apparently tolerable since he was offered a sedative but declined it. Finally, numerous conversations with the attending physician led that physician to conclude his sensorium was not impaired. Moreover, Webb exercised his right to remain silent during the second period of questioning. Given these facts, we are not persuaded the suppression court erred in concluding Webb's hospital statements were voluntary.[4] Cf. Commonwealth v. Perry, 475 Pa. 1, 379 A.2d 545 (1977) (plurality opinion concluding hospital confessions should be scrutinized closely).
Next, Webb claims his trial counsel was ineffective in three different instances.[5] Initially, Webb argues his trial counsel was ineffective for failing to file a motion to suppress evidence concerning clothing seized from the possession of his brother. This argument fails because a review of the record demonstrates a motion to suppress the evidence *335 of this clothing was in fact made and denied. During the direct examination of Nathan Webb, appellant's brother, the Commonwealth sought to introduce into evidence the clothing worn by Webb when he was burned on December 15, 1976. At that time, Webb's counsel objected to its introduction, and the trial judge, in the interest of justice, entertained a motion to suppress. See Commonwealth v. Cooke, 260 Pa.Super. 528, 394 A.2d 1271 (1978); Pa.R.Crim.P. 323(b). The testimony already introduced at trial provided the facts and circumstances surrounding the seizure, and the court considered this testimony and allowed argument on the motion. During argument, additional evidence was presented by the Commonwealth, and the defendant was afforded the opportunity to present evidence. After hearing the evidence and argument, the court denied the motion. Furthermore, the propriety of the order denying suppression was also raised by trial counsel in post-verdict motions and considered by the court on its merits. Therefore, trial counsel cannot be found to have been ineffective for not seeking suppression since he did so. Since present counsel has not raised the merits of the court's ruling denying the suppression, we need not consider it.[6]
Webb's next contention of ineffectiveness stems from trial counsel's failure to object to the Commonwealth's impeachment and cross-examination of its own witness without first pleading surprise. An examination of the underlying facts demonstrates this claim to be meritless.
The witness whose examination is in question is Webb's brother. Prior to trial, he had given a statement in which he said that Webb had admitted setting the fire. The Commonwealth called him as a witness and asked whether Webb had made any statements concerning the origin of the fire. He replied no, but Webb had indicated he was at the scene at the time of the fire. At that point, the prosecutor began asking whether the witness had given a different *336 statement to the police investigators; he admitted he had and finally testified that his brother, the accused, had told him he set the fire.
Webb argues that, since the Commonwealth had not pleaded surprise, trial counsel should have objected to this impeachment and was thus ineffective for not doing so. It is well-established that counsel cannot be ineffective for failing to make baseless or fruitless objections. Commonwealth v. Wilson, 482 Pa. 350, 393 A.2d 1141 (1978); Commonwealth v. Gray, 473 Pa. 424, 374 A.2d 1285 (1977). Under the circumstances, it is obvious that, if an objection had been made, the Commonwealth would merely have entered a plea of surprise and then been allowed to conduct the examination in the manner it did. Hence, an objection would have been a futile gesture. See Commonwealth v. Duffy, 238 Pa.Super. 161, 353 A.2d 50 (1975); Commonwealth v. Settles, 442 Pa. 159, 275 A.2d 61 (1971); Commonwealth v. Gurreri, 197 Pa.Super. 329, 178 A.2d 808 (1962); Commonwealth v. Bartell, 184 Pa.Super. 528, 136 A.2d 166 (1957); Commonwealth v. Joseph, 182 Pa.Super. 617, 128 A.2d 121 (1956). Thus, trial counsel cannot be deemed ineffective in this instance either.
Webb contends trial counsel was ineffective for failing to call as witnesses at the pretrial suppression hearing the hospital records custodian and his two brothers.
In determining the effectiveness of counsel, it is presumed counsel acted diligently and reasonably on his or her client's behalf, and this presumption can be overcome only if no reasonable basis exists for the action taken or omitted. Com. ex rel. Washington v. Maroney, 427 Pa. 599, 235 A.2d 349 (1967). The issue here thus becomes whether an available course not chosen would have offered a potential for success substantially greater than that which was done. Com. ex rel. Washington v. Maroney, supra, 427 Pa. at 605 n.8, 235 A.2d at 353 n.8.
Webb claims the hospital records custodian would have testified that in addition to percodan, which the attending *337 physician testified Webb was given, Webb also received morphine, nembertal, and morphinbutal. Webb claims this testimony would have been relevant to the issue of voluntariness. The hospital records custodian did testify as a Commonwealth witness at trial, and our examination of her testimony undercuts Webb's argument.
During cross-examination, Webb's counsel asked the hospital records custodian what drugs were administered to Webb from December 16, 1976, his admission date, until December 25, 1976. She testified he received morphinbutal, morphine, nembertal, and percodan during that period. However, during redirect examination, she corrected herself and stated that morphinbutal, morphine, and nembertal were administered on December 16, 1976 only. In reviewing the exhibits entered into evidence at trial, the hospital records show that morphine, nembertal, and morphinbutal were administered only once, at the time of his admission. Since the police questioning took place some thirty-four hours later, the effect of these injections would have been dissipated at the time of the police questioning. Hence, calling the hospital records custodian as a witness or presenting the hospital records as evidence at the suppression hearing would not have aided or supported the suppression motion. Under these circumstances, trial counsel cannot be deemed ineffective. See Commonwealth v. Robinson, 487 Pa. 541, 410 A.2d 744 (1980); Commonwealth v. Lochman, 265 Pa.Super. 429, 402 A.2d 513 (1979).
Webb claims his brothers would have testified that they visited him in the hospital and he appeared to be in intense pain, had trouble talking, was incoherent, and was not in his right mind. Webb contends this evidence would have demonstrated that, at the time he was questioned by detectives, he was incapable of making any statements voluntarily.
Under the circumstances presented, we hold that not calling the brothers at the suppression hearing did not forgo an available course which offered a substantially greater potential for success and that the course chosen had a reasonable basis.
*338 The thrust of the testimony of the brothers who were called by the Commonwealth was that they visited Webb at various times which included visits about the times Webb provided statements to police; that Webb was in pain during all the visits; that he had told them various stories about what had occurred, but had in the main indicated Gloria Jean Jackson had thrown something on him which was ignited by a cigarette. This latter explanation corroborated Webb's testimony at trial.[7] Each brother was confronted during his testimony with statements he made to police in which he indicated Webb admitted that "he did it."
First, the brothers' testimony regarding Webb's condition would have been cumulative of that which was brought out through examination of both the attending physician and Webb himself. Second, had they testified at the suppression hearing, their testimony at trial which in the main corroborated Webb's recount of events would have been seriously weakened by any testimony in support of a claim that Webb was incoherent when they visited him because the Commonwealth would then have been able to show by use of the suppression testimony that Webb's statements to them which corroborated his testimony at trial were given while, in the brothers' opinions, he was incoherent. Hence, the record shows that counsel, rather than weaken this corroborative testimony by having the brothers testify at the suppression hearing that Webb was incoherent when he made statements which corroborated his own testimony, chose to forgo this cumulative testimony regarding Webb's condition in order to preserve the credibility of the corroborative testimony. Accordingly, the record reveals a reasonable course was chosen and one offering a substantially greater potential for success was not forgone.
Judgment of sentence affirmed.
NOTES
[1] An appeal from the sentence imposed on the murder conviction was filed directly in this Court. An appeal from the other judgments of sentence was filed in the Superior Court and certified here.
[2] Sensorium is an individual's ability to speak, hear, and think clearly.
[3] Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966).
[4] Webb also contends that yes and no answers to Miranda are insufficient to establish an effective waiver of constitutional rights. This claim is meritless. See Commonwealth v. Bussey, 486 Pa. 221, 404 A.2d 1309 (1979); Commonwealth v. Walker, 470 Pa. 534, 368 A.2d 1284 (1977) (specifically concurring opinion, Eagen, J.; joined by Jones, C.J., O'Brien and Pomeroy, JJ.).
[5] Webb is represented by counsel other than during any previous stage of these proceedings.
[6] As to the merits of this claim, see Commonwealth v. Silo, 480 Pa. 15, 389 A.2d 62 (1978), wherein a nurse, as opposed to an accused's brother, was held to be without authority to consent to a police seizure of a patient's clothing.
[7] The testimony here recounted, when compared with that of the brother recount supra indicates it was also inherently inconsistent. For this reason also, counsel may have determined it would not be credible.
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280 Pa. Superior Ct. 440 (1980)
421 A.2d 803
Michael J. MALLOY and Helen Malloy, Appellants,
v.
J. Rush SHANAHAN, M.D.
Superior Court of Pennsylvania.
Argued December 3, 1979.
Filed August 22, 1980.
*441 J. Keath Fetter, West Chester, for appellants.
John S.J. Brooks, Media, for appellee.
*442 Before PRICE, WATKINS and HOFFMAN, JJ.
WATKINS, Judge:
This is an appeal from the order of the Court of Common Pleas, Civil Division, of Chester County, which denied appellant's motion for a new trial.
This is a medical malpractice suit brought in trespass and assumpsit but tried only in trespass. The jury returned a verdict in favor of the doctor-appellee and against the appellants.
The record indicates that the appellant, Mrs. Helen Malloy, was suffering from what was diagnosed as rheumatoid arthritis and sought appellee's help as the result of a referral from an arthritis clinic.
After examination and diagnosis, relief from the pain and swelling was sought through use of aspirin, Butazolidin and later Indocin which treatment was discontinued because of the effect of the drugs on the appellant (upset stomach, etc.).
The appellee then prescribed Chloroquine in August of 1958 which gave the appellant relief. The prescription was for 100 tablets, 250 milligrams per tablet to be taken one tablet per day. The same prescription was given to the appellant in October, 1965 and January, 1967.
The prescription as given made no allowance for refilling and was for a drug which was not legally refillable without prescription. The appellant, however, got two pharmacies to continually refill the prescription and she took one tablet a day from 1959 to 1971 without the knowledge or consent of the appellee.
As a result of the prolonged use of the drug, the appellant developed retinopathy and became partially blind.
The appellee testified that he told the appellant of the possible side effects and toxicities associated with the use of the drug. The appellant denied that this was true.
The sole question on appeal is whether a doctor who renders treatment to a patient consisting of the therapeutic *443 administration of a drug with known potentially dangerous side effects is obligated to secure the patient's informed consent to the treatment by disclosing to the patient all the facts, risks and alternatives that a reasonable person, in the situation which the doctor knew or should have known was that of the patient, would deem significant in making a decision to undergo the recommended treatment and should the court below so instruct the jury in the instant case?
Such informed consent is required of patient, absent an emergency, prior to a surgical operation. Smith v. Yohe, 412 Pa. 94, 194 A.2d 167 (1963); Gray v. Grunnagle, 423 Pa. 144, 223 A.2d 663 (1966). However, this has not been extended to therapeutic treatment, which is usually an ongoing treatment upon examination by the treating physician, where any change of condition can be diagnosed and controlled.
As the court below said;
The doctrine of informed consent has been applied only to suits involving surgical operations or procedure, wherein `an operation without the patient's consent is a technical assault': Gray v. Grunnagle, 423 Pa. 144, 155 [223 A.2d 663] (1966). Questions of consent to medical treatment constitute `an area basically covered by contractural concepts': Cooper v. Roberts, 220 Pa.Super. 260 [286 A.2d 647] (1971), 220 Pa.Super. at 268 [286 A.2d 647]. The said doctrine has never been extended to the type of malpractice action brought herein and this Court will no(t) do so. As Cooper v. Roberts, supra, pointed out, 220 Pa.Super. at 268 [286 A.2d 647]:
"However, there is a basic distinction between the normal malpractice suit, where the gist is whether the physician failed to conform to accepted medical practice, and `informed consent' cases, where the salient question is whether the patient made an effective assent to treatment, and where determining whether there was any dereliction of professional duty on the part of the physician is only one facet in the resolution of the ultimate issue."
*444 In any event, in this case the appellant visited the appellee only once between 1959 and 1971 and did not give him the opportunity to use his expertise in discovering any side effects and controlling them.
The proximate cause of her malais was her independent prolonged use of the drug and the pharmacies which supplied them.
Order affirmed.
PRICE, J., concurs in the result.
HOFFMAN, J., files a dissenting opinion.
HOFFMAN, Judge, dissenting:
I dissent. I would hold that the doctrine of informed consent enunciated in Cooper v. Roberts, 220 Pa.Super. 260, 286 A.2d 647 (1971), applies to cases involving prescription of drugs as well as to those involving surgical operations. Accordingly, I would reverse the order of the court below and remand for a new trial.
On June 30, 1972, appellants, Michael and Helen Malloy, filed a complaint against appellee, Dr. J. Rush Shanahan. The complaint alleged that appellee negligently failed to warn Mrs. Malloy of the potential harmful side effects of the drug chloroquine which he prescribed for her. The complaint further alleged that Mrs. Malloy is now partially blind as a result of prolonged use of the drug.
The case was tried before a jury which returned a general verdict against appellants. Appellants filed a motion for new trial challenging the trial court's failure to charge the jury on the issue of informed consent. The lower court denied the motion, stating that "[t]he doctrine of informed consent has been applied only to suits involving surgical operations or procedure, wherein `an operation without the patient's consent is a technical assault.'" Slip op. at 1 (quoting Gray v. Grunnagle, 423 Pa. 144, 155, 223 A.2d 663, 668-669 (1966)). Appellants then took this appeal.
*445 The doctrine of informed consent originally provided that a physician's failure adequately to inform the patient of the risks inherent in a proposed surgical procedure vitiated the patient's consent to the treatment. Thus, in performing the surgery, the physician was deemed to have engaged in a nonconsensual touching or battery. Bang v. Charles T. Miller Hospital, 251 Minn. 427, 88 N.W.2d 186 (1958); Gray v. Grunnagle, 423 Pa. 144, 223 A.2d 663 (1966). The doctrine is based upon the principle that an individual has the right to determine what shall be done with his body. See Schloendorff v. Society of New York Hospital, 211 N.Y. 125, 105 N.E. 92 (1914).
Judge WATKINS concludes that the physician in the instant case was not required to obtain appellant's informed consent because, rather than performing a surgical operation upon appellant, he prescribed a course of drug treatment. Apparently Judge WATKINS relies upon the theory that prescribing drugs does not involve the element of "touching" required to give rise to liability for battery. In concluding that the doctrine of informed consent "has not been extended to therapeutic treatment," however, he overlooks the overwhelming trend among courts in other jurisdictions toward recognizing the doctrine as being grounded on negligence rather than battery. See, e.g., Canterbury v. Spence, 464 F.2d 772 (D.C.Cir. 1972) cert. denied 409 U.S. 1064, 93 S.Ct. 560, 34 L.Ed.2d 518 (1972); Cobbs v. Grant, 8 Cal.3d 229, 104 Cal.Rptr. 505, 502 P.2d 1 (1972); Nishi v. Hartwell, 52 Haw. 188, 473 P.2d 116 (1970); Natanson v. Kline, 186 Kan. 393, 350 P.2d 1093 (1960); Downer v. Veilleux, 322 A.2d 82 (Me. 1974); Sard v. Hardy, 281 Md. 432, 379 A.2d 1014 (1977); Calabrese v. Trenton State College, 162 N.J.Super. 145, 392 A.2d 600 (1978); Shack v. Holland, 89 Misc.2d 78, 389 N.Y.S.2d 988 (1976); Wilkinson v. Vesey, 110 R.I. 606, 295 A.2d 676 (1972); Miller v. Kennedy, 11 Wash.App. 272, 522 P.2d 852 (1974); Trogun v. Fruchtman, 58 Wis.2d 569, 207 N.W.2d 297 (1973). See also Truman v. Thomas, 27 Cal.3d 285, 165 Cal.Rptr. 308, 611 P.2d 902 (1980).
*446 Courts following this trend have recognized that the failure to obtain a patient's informed consent does not correspond to the traditional concept of battery because the doctor's omission rarely results from a wilful intent to injure the patient. Wilkinson v. Vesey, supra; Miller v. Kennedy, supra; Trogun v. Fruchtman, supra. The physician customarily lacks the malicious state of mind associated with intentional torts. See Comment, Informed Consent in Medical Malpractice, 55 Cal.L.Rev. 1396, 1399 n.18 (1967). Similarly, the physician's culpable conduct, the failure to inform, does not itself involve a "touching" of the patient.
In Canterbury v. Spence, supra, the United States Court of Appeals for the District of Columbia recognized the patient's virtually "abject" reliance upon his physician for information affecting his well-being. 464 F.2d at 782. See also Cobbs v. Grant, supra. Based upon the fiducial quality of this relationship, the Court concluded that the duty to disclose risks attendant to treatment is but an element of the physician's general duty to exercise reasonable care for the benefit of his patient. Accordingly, the Court characterized the failure to disclose as a breach of a duty care rather than commission of an intentional tort. See also Miller v. Kennedy, supra, 11 Wash.App. at 282-283, 522 P.2d at 860.
Some courts have cited more practical considerations in support of a change to negligence theory. The California Supreme Court has noted that "a doctor could be held liable for punitive damages under a battery count and if held liable for the intentional tort of a battery, he might not be covered by his malpractice insurance." Cobbs v. Grant, supra, 8 Cal.3d at 240, 104 Cal.Rptr. at 512, 502 P.2d at 8. See also Trogun v. Fruchtman, supra. It would, however, be improper to impose these sanctions upon the physician absent a finding of wilful misconduct.
More fundamentally, the doctrine of informed consent is based upon the concept that "[e]very human being of adult years and sound mind has a right to determine what shall be done with his body." Schloendorff v. Society of New York Hospital, 211 N.Y. 125, 126, 105 N.E. 92, 93 (1914). That *447 principle has, in turn, resulted in recognition of a patient's "right to know," because "[t]rue consent to what happens to one's self is the informed exercise of a choice, and that entails an opportunity to evaluate knowledgeably the options available and the risks attendant upon each." Canterbury v. Spence, supra at 780. In Cooper v. Roberts, supra, 220 Pa.Super. at 267, 286 A.2d at 650, this Court noted that the patient has a "right to know all material facts pertaining to the proposed medical treatment" because he "must bear the expense, pain and suffering of any injury from medical treatment." Where a physician prescribes a drug without properly informing the patient of the risks involved, he invades the patient's bodily integrity and violates the patient's concomitant right to know just as if he had performed a surgical operation without first obtaining the patient's informed consent.
The theory that failure to obtain informed consent to treatment constitutes a form of negligence eliminates the artificial requirement that the physician engage in a "touching" and thus a battery in order to be held liable. Under the negligence standard, a patient may recover for injury which results when a physician prescribes a drug without first obtaining the patient's informed consent. Under the battery theory, however, the patient's ability to recover would depend upon the manner in which the drug was administered. Thus, a patient who received a drug by injection without being informed of the drug's potential side effects could recover, while one who took the same drug orally without knowingly consenting could not recover. By following the trend toward negligence theory, we would eliminate such absurd distinctions from our law of informed consent.
In accordance with the foregoing, I would hold that where a physician fails to inform his patient of the risks attendant to a proposed course of treatment, the patient may properly proceed against the physician on a negligence theory should an undisclosed complication in fact arise.[1] Thus, because *448 appellants alleged that Mrs. Malloy suffered partial blindness as a result of appellee's "careless" failure to inform her of the potential side effects of taking the drug he had prescribed, the complaint properly sounded in negligence. Having determined that this is an appropriate case for the application of negligence theory, it is necessary to consider whether, as appellants contend, their proposed points for charge properly set forth the scope of a physician's duty to inform his patient of risks inherent in treatment.
In Cooper v. Roberts, supra, this Court concluded that the determinative issue in informed consent cases is "whether the physician disclosed all those facts, risks and alternatives that a reasonable man in the situation which the physician knew or should have known to be the plaintiff's would deem significant in making a decision to undergo the recommended treatment." 220 Pa.Super. at 267, 286 A.2d at 650. We expressly rejected a standard which would measure the physician's conduct against "that amount of disclosure which would be made by a reasonable practitioner in the medical community." Id., 220 Pa.Super. at 267, 286 A.2d at 649. In refusing to adopt a community standard of disclosure, we took cognizance of the fiduciary nature of the physician/patient relationship, "the patient's right to be the arbiter of the medical treatment he will undergo," and the difficulty plaintiffs would encounter in attempting to pierce the "community of silence" existing among physicians. Id., 220 Pa. Super. at 266-67, 286 A.2d at 650. Those considerations which prompted our holding in Cooper remain relevant when a negligent failure to disclose risks is alleged. Thus, several of the leading cases adopting the negligence theory of informed consent have employed a similar standard in determining whether the physician breached his duty of care. Thus, the Caterbury Court stated:
*449 In our view, the patient's right of self-decision shapes the boundaries of the duty to reveal. That right can be effectively exercised only if the patient possesses enough information to enable an intelligent choice. The scope of the physician's communications to the patient, then, must be measured by the patient's need, and that need is the information material to the decision.
Canterbury v. Spence, supra at 786 (footnote omitted). Similarly, in Cobbs v. Grant, supra, the court stated that "the test for determining whether a potential peril must be divulged is its materiality to the patient's decision." 8 Cal.3d at 245, 104 Cal.Rptr. at 515, 502 P.2d at 11. See also Miller v. Kennedy, supra, 11 Wash.App. at 282-283, 522 P.2d at 860 ("The scope of the duty to disclose information . . . is measured by the patient's need to know."); Sard v. Hardy, supra, 281 Md. at 444, 379 A.2d at 1022 ("the scope of the physician's duty to inform is to be measured by the materiality of the information to the decision of the patient"). I would therefore hold that a physician breaches his duty of care when he fails to disclose those risks which a reasonable person in the patient's situation would deem material to the decision whether to undergo treatment.
This standard does not mandate disclosure of every risk involved in treatment in every situation. Thus, where immediate emergency treatment is required, the physician may proceed despite the patient's inability to consent. See Canterbury v. Spence, supra, at 788, Cobbs v. Grant, supra, 8 Cal.3d at 243, 104 Cal.Rptr. at 514, 502 P.2d at 10. Similarly, the physician may withhold information in those rare situations in which the patient's condition is so delicate that disclosure of risks would be severely detrimental to the patient or rational decision-making would be unfeasible. Canterbury v. Spence, supra at 789; Miller v. Kennedy, supra, 11 Wash.App. at 286-290, 522 P.2d at 863-64. Additionally, as in any negligence case, the physician's duty to disclose extends only to those risks of which he knew or should have known. Sard v. Hardy, supra, 281 Md. at 444-447, 379 A.2d at 1022-23. Finally, the physician need *450 not engage in "a lengthy polysyllabic discourse on all possible complications" or a discussion of "the relatively minor risks inherent in common procedures, where it is common knowledge that such risks in the procedure are of very low incidence."[2]Cobbs v. Grant, supra, 8 Cal.3d at 244, 104 Cal.Rptr. at 515, 502 P.2d at 11. See also Wilkinson v. Vesey, supra, 110 R.I. at 626-628, 295 A.2d at 689.
One of appellants' proposed points for charge provided: "A physician has a duty of disclosure to his patient. A physician is obligated to disclose to his patient all of those risks which a reasonable man in the situation which the doctor knew or should have known to be patient's situation, would consider important to her decision whether to undergo treatment. Cooper v. Roberts, 220 Pa.Super. 260, 286 A.2d 647 (1971)."[3] This statement properly embodies the negligence theory of informed consent and the materiality standard of care. Accordingly, I would hold that the lower court erred in failing to charge the jury on the substance of appellants' point for charge.[4]
NOTES
[1] By adopting the negligence theory of informed consent, we would not preclude suit on the battery theory in appropriate cases. For example, "[w]here a doctor obtains consent of the patient to perform one type of treatment and subsequently performs a substantially different treatment for which consent was not obtained, there is a clear case of battery." Cobbs v. Grant, 8 Cal.3d at 239, 104 Cal.Rptr. at 511, 502 P.2d at 7.
[2] Thus, for example, where a physician has no reason to know of a patient's peculiar susceptibility, he need not inform the patient of the remote possibility of death or serious bodily harm from treatment with antibiotics. See Cobbs v. Grant, supra, 8 Cal.3d at 244, 104 Cal.Rptr. at 515, 502 P.2d at 11.
[3] Appellants also contest denial of the following proposed point for charge:
Thus, a physician who prescribes for his patient a drug or medication with known dangerous potential side effects or toxicities is obligated to warn or advise his patient of those known dangerous potential side effects and toxicities which a reasonable person would consider important to her decision whether to undergo the treatment prescribed. Cooper v. Roberts, supra; Incollingo v. Ewing, [444 Pa. 263, 282 A.2d 206 (1971)].
The discussion in text applies equally to this point for charge.
In the Incollingo case cited by appellants, a physician was held liable for negligent prescription of the drug chloromycetin. Plaintiffs in that case, however, did not argue that the physician failed to disclose known risks of taking the drug, but rather that the physician breached his standard of care simply by prescribing the dangerous drug.
[4] Although Judge WATKINS concludes that intervening negligence relieved appellee of liability, I would remand for proper determination by the jury of that issue after a new trial.
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777 F.Supp. 1463 (1991)
James ERICKSON and Kathleen Erickson, parents and natural guardians of Christopher Erickson, a minor, Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY, Defendant.
Civ. No. 4-90-666.
United States District Court, D. Minnesota, Fourth Division.
September 25, 1991.
*1464 Wilbur F. Dorn, Jr., and Dorn & Edwards, Ltd., Anoka, Minn., for plaintiffs.
Paula Tamar Weseman, and Faegre & Benson, Minneapolis, Minn., for defendant.
ORDER
DOTY, Judge.
This matter is before the court on defendant's and plaintiffs' cross-motions for *1465 summary judgment. Based on the file, record and proceedings herein and for the reasons stated below, defendant's motion will be granted and plaintiffs' motion denied.
BACKGROUND
Plaintiffs James and Kathleen Erickson ("plaintiffs"), parents and natural guardians of Christopher Erickson ("Christopher"), assert claims of breach of contract and estoppel[1] arising out of defendant's ("Aetna") refusal to pay Christopher's health insurance claim. On December 25, 1984, Christopher, then age 12, suffered a severe head trauma injury in an ATV accident. Since the accident, Christopher has been unable to feed himself, communicate, move about, dress, wash or otherwise assist himself. Christopher is fed through a gastrostomy tube and has a trachea tube to help him breathe. He receives physical and occupational therapy and anti-seizure medication on a daily basis.
Christopher has been institutionalized since the accident. He was first placed in licensed medical institutions, the Gillette Children's Hospital in St. Paul, Minnesota from 1985 to 1986, and then in the Bethesda Lutheran Hospital in St. Paul, Minnesota from 1986 to 1988. In August 1988, Christopher's parents requested that Christopher be transferred to the New Medico Treatment Facility ("New Medico") in Waterford, Wisconsin, in order to take advantage of New Medico's specialization in head trauma injuries. New Medico is not a hospital but provides advanced levels of therapy for its patients. Aetna agreed to allow transfer of Christopher to New Medico and paid for the daily care there pursuant to an extra-contractual agreement between the Ericksons, Aetna and Connecticut Business & Industry Association (CBIA), the policy holder.[2]See Keegan Deposition at 45-46. The agreement provided that Aetna could terminate it at any time on thirty days notice.
Aetna has paid for Christopher's care since 1987, when it took over the liabilities of a previous insurer. Aetna provided health insurance coverage to Christopher pursuant to the terms of a group policy of Erickson Metals of Minnesota, the employer of his father James Erickson. There is no dispute that the insurance policy qualifies as an employee benefit plan within the meaning of the Employee Retirement and Income Security Act (ERISA), 29 U.S.C. § 1002(1).
In December 1989, plaintiffs wanted to move Christopher to a location closer to their Anoka, Minnesota residence. After evaluating several institutions, plaintiffs transferred Christopher to the Trevilla Nursing Home ("Trevilla") in Golden Valley, Minnesota. Trevilla is not a hospital but provides advanced levels of therapy for its patients. At that time, however, Christopher's ICM file came up for Aetna's review. Beatrice Keegan, a registered nurse and Aetna's employee, reviewed Christopher's progress reports and determined that Christopher's care had become "custodial." Because the insurance policy did not cover "custodial care," Keegan determined that Aetna no longer was responsible for Christopher's daily expenses, regardless of whether Christopher resided at New Medico or Trevilla, and terminated the extra-contractual payment agreement effective March 5, 1990.
Plaintiffs brought this lawsuit in state court in May 1990, seeking to have the parties' rights adjudicated under the Uniform Declaratory Judgment Act. Minn. Stat.Ann. Ch. 555 (1988). Aetna removed the case to federal court. Plaintiffs, relying on state law, claim that the custodial care clause in the policy is vague and ambiguous *1466 and that the termination of daily care coverage was a breach of contract. Plaintiffs also claim that Aetna's decision was arbitrary and capricious and in violation of ERISA. In the alternative, plaintiffs claim that Aetna should be estopped from denying responsibility for the costs of Christopher's care. Plaintiffs make claim for the costs of daily care which have been incurred and those that will be incurred in the future. Plaintiffs move for summary judgment on each of their claims and allegations. Aetna claims that ERISA is the sole body of law under which to adjudicate the parties' rights and also moves for summary judgment.
DISCUSSION
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." This standard mirrors the standard for a directed verdict under Federal Rule of Civil Procedure 50(a), which is that the trial judge must direct a verdict if, under the governing law, there can be but one reasonable conclusion as to the verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). Stated in the negative, summary judgment will not lie if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. at 248, 106 S.Ct. at 2510. In order for the moving party to prevail, it must demonstrate to the court that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986); Fed.R.Civ.P. 56(c). A fact is material only when its resolution affects the outcome of the case. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. On a motion for summary judgment, all evidence and inferences are to be viewed in a light most favorable to the nonmoving party. Id. at 250, 106 S.Ct. at 2511. The nonmoving party, however, may not rest upon mere denials or allegations in the pleadings, but must set forth specific facts sufficient to raise a genuine issue for trial. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. Moreover, if a plaintiff cannot support each essential element of its claim, summary judgment must be granted because a complete failure of proof regarding an essential element necessarily renders all other facts immaterial. Id. at 322-23, 106 S.Ct. at 2552-53. With this standard at hand, the court will consider the cross-motions for summary judgment.
A. State Law Claims
In their briefs, plaintiffs argued that ERISA did not completely preempt state common law and statutory remedies in adjudicating disputes arising out of employee benefit plans. Plaintiffs claimed that the insurance contract was ambiguous and should be construed against Aetna, and that Aetna breached the insurance contract. During oral arguments, however, plaintiffs agreed with Aetna that ERISA preempts plaintiffs' state law claims. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48, 107 S.Ct. 1549, 1552-53, 95 L.Ed.2d 39 (1987); Brewer v. Lincoln National Life Ins. Co., 921 F.2d 150, 153-54 (8th Cir.1990); In re Life Ins. Co. of North America, 857 F.2d 1190, 1193-94 (8th Cir. 1988). Because the parties now agree on the applicable law, the court grants Aetna's motion for summary judgment and dismisses plaintiffs' state law causes of action with prejudice.
B. Standard of Review Under ERISA
The United States Supreme Court established the standard of review applicable to ERISA benefit claims in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). In Firestone, the Supreme Court held that:
[A] denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility *1467 for benefits or to construe the terms of the plan.
Id. at 115, 109 S.Ct. at 956. If the plan grants the administrator the discretion to construe the terms of the plan, an arbitrary and capricious standard applies. See id. at 111-12, 109 S.Ct. at 954-55; see also Lakey v. Remington Arms Co., Inc., 874 F.2d 541, 544-45 (8th Cir.1989). Therefore, the threshold issue in reviewing ERISA benefit cases is to determine whether the policy grants the administrator discretion to construe uncertain terms. See Lakey, 874 F.2d at 544.
In Lakey, the Eighth Circuit determined that an ERISA plan gave the administrator discretion to construe disputed terms based on the following provision of the plan:
[The employer] attempts to interpret the more usual situations that may arise in the application of ... the ... policy.
Id. The Eighth Circuit then applied the arbitrary and capricious standard to review the administrator's actions. Id. at 544-45.
The policy in this case gives Aetna the discretion to determine whether care is "custodial" within the meaning of the insurance policy exclusion. The policy states:
Coverage is not provided for the following charges:
8. Charges, as determined by Aetna, to be for custodial care.[3]
See Insurance Policy at 48. Therefore, the court will apply the arbitrary and capricious standard to the insurer's decision on the custodial care issue. See Firestone Tire & Rubber Co., 489 U.S. at 111-12, 109 S.Ct. at 954-55; Lakey, 874 F.2d at 544.
Under the arbitrary and capricious standard, it is proper to uphold the insurer's interpretation of its policy if that interpretation is reasonable, regardless of whether it is the best interpretation possible. See Simmons v. Diamond Shamrock Corp., 844 F.2d 517, 523 (8th Cir.1988). A decision is deemed reasonable if it is based on an evaluation of factors that make a reasonable connection between "the issue to be decided, the evidence in the case, the text under consideration, and the conclusion reached." Exbom v. Central States Health & Welfare Fund, 900 F.2d 1138, 1143 (7th Cir.1990); see also De Nobel v. Vitro Corp., 885 F.2d 1180, 1188 (4th Cir. 1989) (the court must uphold a reasonable interpretation even if it disagrees with the administrator's decision).
Based on the foregoing, the court finds that Aetna's termination of benefits was not arbitrary or capricious. First, Aetna's determination that Christopher was receiving custodial rather than medical care was reasonable. The policy defines custodial care as care that is provided primarily to assist the individual in the activities of daily living. See Insurance Policy at 5. Those activities include eating, dressing, grooming, voiding, and moving the extremities to maintain muscle condition.
While Christopher may have required acute medical care in the past, it is not unreasonable to label the care that he now requires as custodial. None of his daily care is so medically intensive that a registered nurse must perform it. See Nyhus Depo. at 7-19. Furthermore, an experienced registered nurse made the determination that Christopher's care has become custodial. See Keegan Affidavit at ¶¶ 1, 2. She reviewed his medical records and reports and discussed Christopher's condition with his medical case manager before making that determination. Id. at ¶ 8. Christopher's case manager confirmed the information in Christopher's medical records; Christopher was not showing any medically significant improvement at New Medico and was receiving custodial care. See id. The policy gives Aetna the discretion to determine whether care is "custodial," and ample facts exist to support that determination.
Second, the court finds that Aetna's decision to terminate Christopher's care was reasonable because the policy does not cover nursing home care. The insurance provision states that the plan pays a benefit equal to a specified percentage of covered *1468 medical expenses. The policy then lists the types of medical expenses that are covered[4] and none include nursing home care. The "Covered Medical Expenses" provision does include "Hospital Expenses." The policy defines those expenses for in-patient care as:
Charges made by a hospital ... for board and room and other hospital services and supplies ... furnished to ... [a person] confined as full-time patient.
See Insurance Policy at 18. A "hospital" is defined as:
An institution which meets fully every one of the following tests:
It is primarily engaged in providing ... on an in-patient basis, facilities for the surgical and medical diagnosis, treatment and care of injured and sick persons under the supervision of the staff of physicians.
... it is not other than incidentally, a place ... for the aged ... or a nursing home.
Id. at 7. This provision does not cover Christopher's care because Trevilla is a nursing home, not a hospital. See Berglin Depo. at 4, 7-8. Trevilla is licensed as a skilled nursing facility and does not have any surgical facilities. Id. at 10. The facility does not provide a diagnosis of injured people. Id. It does not maintain a staff of physicians and its medical director spends only a few hours a week at the facility. Id. at 11. Residents who require hospital care are transferred to other facilities. Id. at 10.
Trevilla does not fit the definition of a "hospital" because it is not "primarily engaged in providing ... facilities for the surgical and medical diagnosis, treatment and care" of its patients "under the supervision of a staff of physicians." See Insurance Policy at 7.
Based on the foregoing, the court finds that Aetna's determination that Christopher was receiving custodial care, a type of care the policy does not cover, was reasonable. Likewise, Aetna's determination that Christopher was residing in a nursing home and that the policy does not cover nursing home expenses was reasonable. The court thus grants Aetna's motion for summary judgment and denies plaintiffs' motion for summary judgment.
C. Estoppel
At the hearing plaintiffs also argued that Aetna should be estopped from refusing to pay for Christopher's nursing home care. Plaintiffs contend that because Aetna paid for Christopher's care at New Medico, another nursing home, Aetna should also pay for Christopher's nursing home care at Trevilla. Aetna approved Christopher's transfer to New Medico pursuant to its ICM program.[5]
Aetna's policy did not cover Christopher's care at New Medico and Aetna entered into an extra-contractual agreement with CBIA to pay for Christopher's expenses at New Medico. The agreement provided that Aetna could terminate this agreement at any time on 30 days written notice, an option Aetna reasonably exercised on February 2, 1990, to take effect on March 5, 1990. Christopher's coverage under the insurance policy itself was not canceled.
This agreement may be characterized as either an extra-contractual provision outside ERISA, or as a written modification of the ERISA plan. Plaintiffs did not specify *1469 whether they based their claim for relief on common law or ERISA equitable estoppel. This ambiguity is of no consequence, however, because the court finds that the estoppel claim fails under either theory. Applying the principles of common law equitable estoppel to Aetna's actions, the court finds that Aetna complied with the terms of the extra-contractual agreement and gave 30 days written notice prior to terminating Christopher's care at New Medico. The court finds that Aetna did not misrepresent the terms of the extra-contractual provision or the consequences of terminating the provision to the plaintiffs, and plaintiffs did not detrimentally rely on Aetna's actions. Thus, plaintiffs' claim fails under common law equitable estoppel.
Any estoppel claim based on the insurance plan itself also fails. ERISA preempts all state common law claims relating to employee benefit plans, including equitable estoppel. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987); National Cos. Health Plan v. St. Joseph Hosp., 929 F.2d 1558, 1571 (11th Cir.1991). ERISA, however, does permit a beneficiary to enforce a claim based on the federal common law of equitable estoppel where the claim arises from a written modification of an ERISA plan or an oral interpretation of ambiguous plan provisions. National Cos. Health Plan, 929 F.2d at 1572; Kane v. Aetna Life Ins. Co., 893 F.2d 1283, 1285-86 (11th Cir.1990). Under Kane, a plaintiff may bring a federal common law equitable estoppel claim where: (1) the provisions of the plan at issue are ambiguous such that reasonable person could disagree as to their meaning or effect, and (2) representations are made to the employee involving a written modification or an oral interpretation of the plan. Alday v. Container Corp. of America, 906 F.2d 660, 666 (11th Cir.1990) (discussing Kane); Kane, 893 F.2d at 1286-87. A beneficiary must satisfy both conditions to have a federal common law equitable estoppel claim. Alday, 906 F.2d at 666. In the case at hand the court finds that the exclusion provision and the extra-contractual provision are not ambiguous. Accordingly, plaintiffs' estoppel claim under ERISA also fails.
Based on the foregoing, IT IS HEREBY ORDERED that:
1. Defendant's motion for summary judgment on plaintiffs' claim of breach of contract and estoppel is granted; and
2. Plaintiffs' motion for summary judgment is denied.
LET JUDGMENT BE ENTERED ACCORDINGLY.
NOTES
[1] Plaintiffs raised the estoppel claim during oral arguments.
[2] Aetna made the extra-contractual agreement pursuant to its Individual Case Management (ICM) program. The ICM program identifies alternatives to long-term hospitalization in catastrophic cases to ensure that patients receive appropriate and cost effective care. Aetna found that placing Christopher in the ICM program was in Christopher's best medical interest and approved his transfer to New Medico. Because New Medico is a nursing home and nursing home care is not covered under Aetna's policy, Aetna agreed to pay for the care pursuant to the extra-contractual agreement.
[3] The foreward to the insurance policy section describing medical expense coverage also states that coverage is not provided for custodial care. See Insurance Policy at 5.
[4] The policy covers the following medical expenses: (1) Hospital Expenses; (2) Convalescent Facility Expenses; (3) Home Health Care Expenses; (4) Second Surgical Opinion Expenses; (5) Preoperative Testing; (6) Out-patient Surgical Expenses; (7) Birthing Center Expenses; (8) Hospice Care Expenses; (9) Generic Prescription Drug and Medicine Expenses; (10) Mail Order Drug and Medicine Expenses; (11) Hemodialysis Expenses; (12) Routine Physical Exams; (13) Preventive Health Care Services Expenses; (14) Other Medical Expenses (physician's charges, nursing charges for out-patient nurse care only, prescription drugs, diagnostic tests, x-rays, medical equipment rental, anesthetics, artificial limbs and ambulance charges). See Insurance Policy at 18-35.
[5] The ICM program identifies alternatives to long-term hospitalization in catastrophic cases to ensure that the patient receives appropriate and cost-effective care. Facilities that provide alternative care frequently are excluded from the terms of the insured's policy.
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281 Pa. Superior Ct. 62 (1980)
421 A.2d 1147
COMMONWEALTH of Pennsylvania
v.
Stephen DeMARCO, Appellant.
Superior Court of Pennsylvania.
Submitted December 6, 1979.
Filed August 22, 1980.
Robert F. Pappano, Assistant Public Defender, Media, for appellant.
Frank T. Hazel, District Attorney, Media, for Commonwealth, appellee.
*63 Before BROSKY, WICKERSHAM and EAGEN, JJ.[*]
WICKERSHAM, Judge:
In September of 1976, Dale "Bill" Walls, age 19, was arrested on a charge of burglary, and being unable to post bail, was committed to the Delaware County Prison. He was placed in "B" Block-Cell 13. According to his sworn testimony in the trial of Stephen DeMarco,[1] Walls was returning from breakfast on December 12, 1976, when he was confronted by DeMarco and another prisoner named Fumano, grabbed by them and pushed into a cell. They were joined by another prisoner named Rush, a co-defendant, whereupon the victim was punched and beaten. He was then partially stripped of his clothing and sexually assaulted. When finally released he made immediate complaint to prison guards and filed a written report.
DeMarco was arrested and charged with simple assault, involuntary deviate sexual intercourse, forcible compulsion and criminal conspiracy. Following a jury trial before the Honorable John V. Diggins, he was found guilty of all three charges on July 20, 1977. Post-verdict motions were filed, heard and dismissed and the appellant, DeMarco, was sentenced to a term of imprisonment of from one to three years.
We have before us the direct appeal with the defendant being represented by the assistant public defender, who replaced defendant's private trial counsel. Four alleged errors are asserted which we will consider seriatim.[2]
I.
The first contention of the defendant is that he was prejudiced by the fact that he was arrested two and one-half *64 months after the offense occurred. His point being that the lapse of time caused difficulty in establishing an alibi defense and because of the transient nature of his fellow inmates it was difficult for him to garner his witnesses.
The legislature has determined certain periods of limitation for various offenses and specifically has provided that a prosecution relating to involuntary deviate sexual intercourse must be commenced within five years after it is committed. Section 108 of the Crimes Code provides:
"(a) Murder. A prosecution for murder of the first degree or of the second degree may be commenced at any time.
"(b) Other offenses. Except as otherwise provided in this section, prosecutions for other offenses are subject to the following periods of limitation:
(1) A prosecution for any of the following offenses under this code must be commenced within five years after it is committed:
*65 Section 3123 (relating to involuntary deviate sexual intercourse)
Section 3301 (relating to arson and related offenses)
Section 3502 (relating to burglary)
Section 3701 (relating to robbery)
Section 4101 (relating to forgery)
Section 4902 (relating to perjury)
(2) A prosecution for any other offense under this code must be commenced within two years after it is committed."
1972, Dec. 6, P.L. 1482, No. 334, § 1, eff. June 6, 1973, 18 Pa.C.S.A. § 108.
In the case of Commonwealth v. McCloud, 218 Pa.Super. 230, 275 A.2d 841 (1971), opinion by Judge, now President Judge Cercone, the defendant, McCloud, made a pre-trial motion to dismiss the indictments against him. He contended that the delay from the time of the alleged first sale of narcotics, August 8, 1966, to the day of his arrest, April 3, 1967, was in violation of his constitutional right to a speedy trial under the Sixth Amendment, and to due process of law under the Fifth Amendment of the Constitution of the United States, as applied to the states through the Fourteenth Amendment. Defendant, McCloud, was relying heavily on the opinion of the United States Court of Appeals for the District of Columbia in Ross v. United States, 349 F.2d 210 (D.C. 1965), holding that the pre-arrest delay of seven months was, in that case, violative of the defendant's constitutional rights.
The Ross decision was based on a situation not here present, and not present in the McCloud case, namely on the weakness of the identification testimony which consisted solely of the testimony of one police officer who had no personal recollection of the incident in question, having participated in a substantial number of virtually identical transactions in a short period of time during which he had only one brief encounter with the defendant.
As we said in McCloud, "all of the cases subsequent to Ross clearly interpret that decision as applicable only to its *66 particular fact situation and not controlling where the identification testimony is strong and definite." Commonwealth v. McCloud, supra, 218 Pa.Super. at 233, 275 A.2d at 843.
In the present case Walls had been a fellow inmate with appellant, DeMarco, in the Delaware County Prison, identified him without reservation at trial and no issue of identification was presented at the trial.
Appellant, DeMarco, however, points to our opinion in Commonwealth v. De Rose, 225 Pa.Super. 8, 307 A.2d 425 (1973), opinion by Judge Hoffman, in which case we affirmed the dismissal by the lower court of indictments charging the appellee with bribery and corrupt solicitation. The Commonwealth appealed. In De Rose the appellee was arrested twenty-two months after the offense. At a hearing on appellee's motion to dismiss the indictments because of the twenty-two month delay between the incident and his arrest, he testified that he was unable to recall ever having had a conversation with one Robert Frederick, a former police captain, who was the Commonwealth's principal witness. The lower court, in dismissing the indictments found no justification for the delay. It also found that appellee's claimed loss of memory was plausible and that the delay significantly impaired his ability to defend against the charges. In De Rose, we said:
"The Supreme Court of the United States has recognized that a significant delay between an alleged criminal incident and the first notification to an accused that he will be required to answer for the incident may constitute a denial of due process of law, notwithstanding the fact that indictments are brought within the statutory period. United States v. Marion, 404 U.S. 307, 92 S.Ct. 455, 30 L.Ed.2d 468 (1971); see also, Nickens v. United States, 116 U.S.App.D.C. 338, 323 F.2d 808 (1963); Acree v. United States, 418 F.2d 427 (10th Cir. 1969); United States v. Deloney, 389 F.2d 324 (7th Cir. 1968). We recognized this general principle in Commonwealth v. McCloud, 218 Pa. Super. 230, 275 A.2d 841 (1971), but found no denial of due process under the facts of that case.
* * * * * *
*67 "Courts which have confronted due process questions of this nature have employed a balancing test in which the need for the delay is measured against the prejudice to the accused's interest in a reliable process of guilt determination. United States v. Feldman, 425 F.2d 688 (3rd Cir. 1970); United States v. Jones, 322 F.Supp. 1110 (E.D.Pa. 1971); State v. Rountree, 106 N.J.Super. 135, 254 A.2d 337 (N.J.C.C. 1969). This test was approved in Commonwealth v. McCloud, supra, at 237, where we gave full recognition and approval to the legitimate police purposes often served by delaying arrests in order to conduct full criminal investigations.
* * * * * *
"The mere fact of an unjustified delay, however, is insufficient to justify the dismissal of the charges. Rather, an evaluation of the case against the accused and an examination of the prejudice resulting from the delay must now be made. See United States v. Jones, supra."
Id., 225 Pa.Super. at 10-12, 307 A.2d at 427.
We have employed the balancing test referred to hereinabove as applied to the facts of the instant case and we agree with the lower court that the delay period was comparatively slight and that no prejudice has been shown to have resulted to the appellant, DeMarco. The mere assertion of prejudice is not enough to warrant dismissal of the informations. No delay of two and one-half months has been held sufficient to constitute a denial of due process. United States v. Jones, 322 F.Supp. 1110 (E.D.Pa. 1971) (five month delay); Woody v. United States, 370 F.2d 214 (D.C. 1966) (four month delay).
II.
Appellant's second contention is that the prosecution made prejudicial remarks in the closing statement as to require a new trial.
We have carefully examined the closing arguments of counsel as set forth in the record. (N.T. 164-165.) The *68 proper test is set forth in Commonwealth v. Anderson, 490 Pa. 225, 415 A.2d 887, 1980, wherein Chief Justice Eagen said:
"We have repeatedly said the district attorney is a quasi-judicial officer representing the Commonwealth, and his duty is to seek justice, not just convictions. See Commonwealth v. Mayberry, 479 Pa. 23, 387 A.2d 815 (1978); Commonwealth v. Gilman, 470 Pa. 179, 368 A.2d 253 (1977). The district attorney must limit his remarks to facts in evidence and legitimate inferences therefrom. Commonwealth v. Mayberry, supra; Commonwealth v. Gilman, supra; Commonwealth v. Goosby, 450 Pa. 609, 301 A.2d 673 (1973); Commonwealth v. Principatti, 260 Pa. 587, 104 A. 53 (1918). The district attorney may not ask the jury to draw unwarranted deductions from the evidence. Commonwealth v. Touri, 295 Pa. 50, 144 A. 761 (1929). During summation, the district attorney must present the facts in a manner which allows the jury to dispassionately and objectively evaluate the testimony in a sober frame of mind and which produces a verdict warranted by the evidence, not one inspired by emotion. Commonwealth v. Harvell, 458 Pa. 406, 327 A.2d 27 (1974). Finally, we have condemned remarks by the district attorney which stigmatize a defendant."
We have examined the remarks of the District Attorney closely and find no error. What was said in Commonwealth v. Stoltzfus, 462 Pa. 43, 61, 337 A.2d 873, 882 (1975), is pertinent:
"But even where the language of the district attorney is intemperate, uncalled for and improper, a new trial is not necessarily required. Commonwealth v. Crittenton, 326 Pa. 25, 31, 191 A. 358 (1937); Commonwealth v. McHugh, 187 Pa.Super. 568, 577, 145 A.2d 896 (1958). The language must be such that its "unavoidable effect would be to prejudice the jury, forming in their minds fixed bias and hostility toward the defendant, so that they could not weigh the evidence and render a true verdict." Commonwealth v. Simon, 432 Pa. 386, 394, 248 A.2d 289, 292 (1968). See also Commonwealth v. Myers, 290 Pa. 573, 139 A. 374 (1927). The effect of such remarks depends upon the *69 atmosphere of the trial, Commonwealth v. Dickerson, 406 Pa. 102, 110, 176 A.2d 421 (1962); Commonwealth v. Del Giorno, 303 Pa. 509, 519, 154 A. 786 (1931), and the proper action to be taken is within the discretion of the trial court. Commonwealth v. Silvis, 445 Pa. 235, 237, 284 A.2d 740 (1971); Commonwealth v. Simon, supra. Viewing the remarks complained of as inspired, at least in part, by the conduct of defense counsel, we conclude the trial court did not abuse its discretion in refusing to declare a mistrial."
III. and IV.
We have carefully reviewed the briefs and the record as relates to the third and fourth issues raised by appellant and we find no merit in either.
Judgment of sentence is affirmed.
Being of the view that the issue of prosecutorial misconduct warrants the grant of a new trial, EAGEN, J., dissents.
NOTES
[*] Chief Justice Michael J. Eagen of the Supreme Court of Pennsylvania, is sitting by designation.
[1] (N.T. 11 et. seq.)
[2] OF QUESTIONS INVOLVED
"I. WHETHER THE LOWER COURT ERRED IN DENYING APPELLANT'S PRETRIAL PETITION TO DISMISS THE INFORMATION ON THE BASIS THAT A TWO AND ONE HALF MONTH DELAY BETWEEN THE ALLEGED OFFENSE AND THE ARREST PREJUDICE THE APPELLANT?
Answered in the negative by the Lower Court.
"II. WHETHER THE PROSECUTION MADE SUFFICIENTLY PREJUDICIAL REMARKS IN THE CLOSING STATEMENT TO REQUIRE A NEW TRIAL?
Answered in the negative by the Lower Court.
"III. WHETHER THE LOWER COURT ERRED IN REFUSING TO GRANT THE APPELLANT A NEW TRIAL OR AT LEAST A HEARING ON APPELLANT PETITION THAT THERE WAS AFTER DISCOVERED EVIDENCE IN THE NATURE OF WITNESSES TO WHOM THE ALLEGED VICTIM HAD SPOKEN DENYING ANY CRIME HAD BEEN COMMITTED?
Answered in the negative by the Lower Court.
"IV. WHETHER THE LOWER COURT ERRED IN FAILING TO GRANT A MISTRIAL WHEN SEVERAL JURORS LEARNED THE APPELLANTS ASSOCIATION WITH THE WARLOCK MOTORCYCLE GANG AND PREVIOUS CONVICTION OF MANSLAUGHTER IN A NEWSPAPER ARTICLE DURING THE TRIAL?
Answered in the negative by the Lower Court."
(Appellant's Brief, [Page 2)]
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17 Cal.Rptr.3d 13 (2004)
121 Cal.App.4th 186
Janet R. BLOCK, Plaintiff and Appellant,
v.
GOLDEN EAGLE INSURANCE CORPORATION, et al., Defendants and Respondents.
No. B166460.
Court of Appeal, Second District, Division Eight.
July 30, 2004.
*15 Law Offices of James T. Hudson and James T. Hudson, Los Angeles, for Plaintiff and Appellant.
Barger & Wolen, Gregory O. Eisenreich and Jennifer S. Yu, Los Angeles, for Defendant and Respondent Golden Eagle Insurance Corporation.
Ault, Davis & Schonfeld and R. Michael Jordan for Defendant and Respondent Clarendon Insurance Company.
McCormick, Barstow, Sheppard, Wayte & Carruth, Paul J. O'Rourke, Brandon M. Fish and Constance E. Roberts, Fresno, for Defendant and Respondent Blue Ridge Insurance Company.
*14 RUBIN, J.
Plaintiff Janet R. Block appeals from the summary judgment entered against her and in favor of defendants Golden Eagle Insurance Corporation (Golden Eagle), Clarendon Insurance Company (Clarendon) and Blue Ridge Insurance Company (Blue Ridge) on Block's complaint for declaratory relief, breach of contract and insurance bad faith.[1] She contends the trial court erred in granting summary judgment because the insurers had a duty to defend Block under the insurance policies at issue. We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
We garner the following facts from the material presented in connection with the cross-summary judgment motions filed by the parties. Most of the facts are undisputed. Block owned certain real property located within the North Long Beach Redevelopment Project Area. Block's property consisted of two vacant lots, which sat atop an abandoned oil well (the property).[2] Pursuant to a redevelopment plan, the Redevelopment Agency of the City of Long Beach (the agency) sought to acquire the property by eminent domain. On February 23, 1999, the agency offered Block $92,000 ($46,000 per lot) as just compensation *16 for the property. This price reflected an appraised value of $159,000 for both lots, reduced by $67,250, which was the estimated cost to remediate the environmental problems associated with the property. Block disputed the agency's assessment of fair market value and its estimate of the cost to remediate. The agency eventually increased its offer to $126,000, but Block maintained the property had a surface value of $375,000 ($187,500 per lot), plus improvements consisting of a subsurface oil well bore pipe, plus oil and mineral rights estimated at between $30,000 and $50,000, plus drilling rights estimated at between $10,000 and $20,000.
In October 1999, the agency filed an eminent domain action against Block seeking to condemn the property in fee simple. Block cross-complained. On June 25, 2001, the eminent domain action was resolved with a stipulated judgment and final order of condemnation pursuant to which Block received a total of $475,000.
Meanwhile, during the relevant time period, Block maintained property insurance on her residence, which included coverage for vacant land owned by her. Specifically, from July 24, 1990, through July 24, 1996, she was insured by Blue Ridge; from July 24, 1996, through July 24, 1997, by Clarendon; and from July 24, 1998, through July 2001, by Golden Eagle. Block believed that the agency's reduction of its offer to buy the property in an amount equal to the estimated cost to remediate environmental damages constituted a claim for "damages" by the agency against Block. Accordingly, on September 1, 1999, before the eminent domain complaint was filed, Block notified Golden Eagle of the agency's claim upon the property. On July 14, 2000, Block tendered defense of the eminent domain action to Golden Eagle. In a letter dated June 19, 2000, Golden Eagle denied the tender for the reason that the eminent domain action did not constitute "bodily injury," "property damage" or "occurrence" as those terms were defined in the policy of insurance. Block retendered the claim, and Golden Eagle denied it again on September 18, 2001.
On September 12, 2000, while still pressing Golden Eagle to accept the defense of the eminent domain action, Block tendered that defense to both Clarendon and Blue Ridge. Both refused to defend the action.
Block filed this action on October 7, 1999. The operative second amended complaint, in which Block named the three insurers as defendants, was filed on July 1, 2002. On September 11, 2002, Block filed motions for summary judgment against the three defendants. Each insurer filed its own motion for summary judgment or, in the alternative, summary adjudication of the fact that the insurers did not owe Block a duty to defend or indemnify.[3]
*17 The motions were heard together on January 17, 2003. In a written tentative ruling, the trial court granted each of the insurers' motions, therefore finding Block's motion moot. At the hearing, counsel for Block principally argued that the remediation costs constituted damages whether, they took the form of outright reimbursements or reduced compensation. The insurers countered that the eminent domain action involved a determination of the fair market value of the property, and the condition of the property was simply one factor to take into account in determining the fair market value. After taking the matter under submission, the trial court issued a written ruling on January 27, 2003, in which it granted summary judgment in favor of the insurers. The trial court observed that each of the insurance policies had virtually identical provisions regarding defense and indemnification of claims or suits brought against the insured for "bodily injury" or "property damage" caused by a covered "occurrence." It rejected Block's argument that the eminent domain action constituted a claim for damages because the reduced compensation reflected the anticipated cost to remediate the property, reasoning that no governmental entity was seeking to impose cleanup costs upon Block, nor was any such agency seeking to recover from Block remediation costs expended by the agency. Since Block was not legally liable for any "damages" within the meaning of the policies, there was no duty to defend or indemnify. The trial court concluded that the eminent domain action was "neither a `suit' or `claim' for `damages,' but was rather a proceeding to determine just compensation."
STANDARD OF REVIEW
Summary judgment is granted when a moving party establishes the right to the entry of judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843, 107 Cal.Rptr.2d 841, 24 P.3d 493 (Aguilar).) The moving party "bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. . . . There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Id. at p. 850, 107 Cal.Rptr.2d 841, 24 P.3d 493, fns. omitted.) Where all of the evidence presented by the plaintiff shows the existence of an element of the offense only as likely or even less likely than the nonexistence of that element, the court must grant the defendant's motion for summary judgment because a reasonable trier of fact could not find for the plaintiff in such a case. (Id. at p. 857, 107 Cal.Rptr.2d 841, 24 P.3d 493.) Even where the element at issue can be proved by inferences, the inference of the existence of the element must be more likely than the inference of its nonexistence. An inference is reasonable if and only if it implies the existence of an element more likely than the nonexistence of that element. (Ibid.)
In reviewing an order granting summary judgment, we independently examine the record to determine whether triable issues of material fact exist. (Saelzler *18 v. Advanced Group 400 (2001) 25 Cal.4th 763, 766, 107 Cal.Rptr.2d 617, 23 P.3d 1143 (Saelzler).) We view the evidence in the light most favorable to the party opposing the motion. (Aguilar, supra, 25 Cal.4th at p. 843, 107 Cal.Rptr.2d 841, 24 P.3d 493; Saelzler, at p. 768, 107 Cal.Rptr.2d 617, 23 P.3d 1143.)
DISCUSSION
There Was No Potential Liability for Property Damage, and Thus No Duty to Defend
Block contends the insurers had a duty to defend her in the eminent domain action. She argues that such duty arose from the fact that the agency sought to reduce the fair market value of the property by the estimated cost of remediating the environmental condition of the property. These remediation costs, she argues, constituted "damages" for which Block was "legally liable" within the meaning of the policies. We disagree.
As noted by our Supreme Court in Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 295, 24 Cal.Rptr.2d 467, 861 P.2d 1153 (Montrose), the principles governing adjudication of an insurer's duty to defend are familiar. "`[A] liability insurer owes a broad duty to defend its insured against claims that create a potential for indemnity. [Citation.] . . . "[T]he carrier must defend a suit which potentially seeks damages within the coverage of the policy." (Id. at p. 275, 24 Cal.Rptr.2d 467, 861 P.2d 1153, italics in original.) Implicit in this rule is the principle that the duty to defend is broader than the duty to indemnify; an insurer may owe a duty to defend its insured in an action in which no damages ultimately are awarded. [Citations.]' [Citation.] [¶] `The determination whether the insurer owes a duty to defend usually is made in the first instance by comparing the allegations of the complaint with the terms of the policy. Facts extrinsic to the complaint also give rise to a duty to defend when they reveal a possibility that the claim may be covered by the policy. [Citation.]' [Citation.] As one Court of Appeal has put it, `[f]or an insurer, the existence of a duty to defend turns not upon the ultimate adjudication of coverage under its policy of insurance, but upon those facts known by the insurer at the inception of a third party lawsuit. [Citation.] Hence, the duty "may exist even where coverage is in doubt and ultimately does not develop." [Citation.]' [Citation.] [¶] The defense duty is a continuing one, arising on tender of defense and lasting until the underlying lawsuit is concluded [citation], or until it has been shown that there is no potential for coverage. . . ." (Ibid.)
An insurance policy is a contract. "Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ.Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. [Citation.] The `clear and explicit' meaning of these provisions, interpreted in their `ordinary and popular sense,' unless `used by the parties in a technical sense or a special meaning is given to them by usage' [citation], controls judicial interpretation. [Citation.] Thus, if the meaning a lay person would ascribe to contract language is not ambiguous, we apply that meaning. [Citations.] [¶] . . . In the insurance context, we generally resolve ambiguities in favor of coverage. [Citations.] Similarly, we generally interpret the coverage clauses of insurance policies broadly, protecting the objectively reasonable expectations of the insured. [Fn. omitted.] [Citations.]" (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, *19 821-822, 274 Cal.Rptr. 820, 799 P.2d 1253 (AIU); see also Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 271-272, 54 Cal.Rptr. 104, 419 P.2d 168.) Accordingly, any doubt as to whether the facts establish the existence of a duty to defend must be resolved in the insured's favor. (Montrose, supra, 6 Cal.4th at p. 299, 24 Cal.Rptr.2d 467, 861 P.2d 1153.)
Here, there is no dispute that the insurance policies are virtually identical in their relevant provisions. For example, Golden Eagle's policy provides, in pertinent part, as follows: "SECTION IILIABILITY COVERAGES [¶] COVERAGE EPersonal Liability [¶] If a claim is made or a suit is brought against an `Insured' for damages because of `bodily injury' or `property damage' caused by an `occurrence' to which this coverage applies, we will: [¶] 1. Pay up to our limit of liability for the damages for which the `Insured' is legally liable. Damages include prejudgment interest awarded against the `Insured'; and [¶] 2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. . . ." (Italics added.) According to the policy, "5. `Occurrence' means an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in: [¶] a. `Bodily injury'; or [¶] b. `Property damage.' [¶] 6. `Property damage' means physical injury to, destruction of, or loss of use of tangible property." We set forth the exact language of each of the other insurers' policy provisions in the margin.[4]
The term "damage" is not defined in any of the policies. In AIU, supra, 51 Cal.3d 807, 274 Cal.Rptr. 820, 799 P.2d 1253, the issue was whether sums an insured was held obligated to pay in third party lawsuits by various government agencies seeking to compel the insured both to pay the cost of environmental remediation incurred by the agencies, as well as additional costs incurred by the insured to clean up hazardous waste on its property, were "damages" under the policies. The court in AIU answered this question in the affirmative.[5] (Id. at pp. 824-825, 832, 274 *20 Cal.Rptr. 820, 799 P.2d 1253 ["damages" includes costs of remediation and mitigation of hazardous waste sites], 840-841 ["damages" includes costs of compliance with injunctive relief].) In concluding that these sums constituted "damages," the court in AIU looked to Civil Code section 3281 ["Every person who suffers detriment from the unlawful act or omission of another, may recover from the person in fault a compensation therefor in money, which is called damages"] (AIU, at p. 825, 274 Cal.Rptr. 820, 799 P.2d 1253), and considered various dictionary definitions of the term "damages."[6] It observed: "Whatever their semantic differences, the statutory and dictionary definitions of `damages' share several basic concepts. Each requires there to be `compensation,' in `money,' `recovered' by a party for `loss' or `detriment' it has suffered through the acts of another." (Id. at p. 826, 274 Cal.Rptr. 820, 799 P.2d 1253, fns. omitted.) Applying this definition, the court held that an insured's obligation to reimburse the agencies for response costs constituted damages because such costs constituted losses or detriment suffered by the agencies and the insured's reimbursement constituted monetary compensation for such losses. (Id. at p. 829, 274 Cal.Rptr. 820, 799 P.2d 1253.) It held further that, although *21 environmental injunctions requiring remedial and mitigative action do not readily fit into the foregoing definition of "damages" because they do not involve monetary compensation of a loss or detriment, they nevertheless "result in costs that constitute `damages' under [the] policies[,]" because they are equivalent or alternative remedies to response costs (i.e., the property owner is required to clean up the property itself, rather than reimbursing the government for its cleanup costs) and an insured would reasonably expect equal coverage for such equivalent or alternative remedies. (Id. at pp. 841-842, 274 Cal.Rptr. 820, 799 P.2d 1253.) The court in AIU, observed, however, that costs incurred to pay for measures taken to avoid future release of hazardous waste are not covered under CGL policies because no property damage had yet occurred. (Id. at p. 843, 274 Cal.Rptr. 820, 799 P.2d 1253.)
Block's reliance on AIU for the proposition that the eminent domain action was a claim for damages because the agency sought to reduce the market value of the property in the amount of the estimated remediation costs, is misplaced. In AIU, the insured was legally obligated to compensate the agencies in money for a loss or detriment, a basic concept of "damages." (AIU, supra, 51 Cal.3d at p. 826, 274 Cal.Rptr. 820, 799 P.2d 1253.) In holding that the cost of compliance with injunctions to clean up hazardous waste was covered under the policies, the court in AIU noted that such costs "do not readily satisfy the statutory or dictionary definitions of `damages.'" (Id. at p. 838, 274 Cal.Rptr. 820, 799 P.2d 1253.) It nevertheless held such costs were covered under the policies, reasoning that it was unlikely the parties to the insurance contract intended to cover reimbursement costs but not injunctive relief where the injunctive relief is incurred for exactly the same purpose as the response costs. (Ibid.) Here, Block was not legally obligated to compensate the agency in money as a result of any loss or detriment suffered by the agency. Nor was she legally obligated to incur any clean up expenses, an alternate remedy to compensating the agency for its response costs. Accordingly, Block suffered no damages. As the court in AIU recognized, an insured could reasonably expect to be covered for having to compensate a governmental agency for response costs or, alternatively, for the costs the insured itself is compelled to incur to cleanup an environmental condition on its property. We believe there is nothing in the language of the policies present here that would cause an insured reasonably to expect there was coverage against the simple diminution in the market value of its property resulting from the condition of that property, even if it were related to the environmental condition of the property.[7]
*22 Block's reliance on Aerojet-General Corp. v. Transport Indemnity Co. (1997) 17 Cal.4th 38, 56, 70 Cal.Rptr.2d 118, 948 P.2d 909 (Aerojet), for a contrary result is not persuasive. Relying on AIU, the court in Aerojet observed that an insurer's liability under a CGL policy "is not narrowly confined to money that the insured must give under law as compensation to third parties, but may also include money that the insured must itself expend in equity in order to provide relief of the same sort." (Italics added.) Here, Block was not required to expend any money to third parties. On the contrary, it was the agency that was compensating Block for the taking of her property. The amount of that loss was calculated by considering the diminution in value of the property as a result of its environmental condition.
Nor would it be appropriate to treat the diminution in value of the property because of its environmental condition as a constructive expenditure. Black's Law Dictionary (8th ed.2004) defines "expenditure" as: "1. The act or process of paying out; disbursement. 2. A sum paid out." (Id., at p. 617, col. 2.) It defines "constructive" as: "Legally imputed; having an effect in law though not necessarily in fact. Courts usually give something a constructive effect for equitable reasons. . . ." (Id., at p. 333, col. 1.) We see no reason to treat diminution in value of property because of environmental conditions as a constructive expenditure. This would essentially convert a liability policy to one that insures against a diminution in market value. Such a construction would dramatically change the nature of the insurance policies at issue here, and would not comport with the parties' reasonable expectations. (AIU, supra, 51 Cal.3d at p. 821, 274 Cal.Rptr. 820, 799 P.2d 1253.)[8]
We are also not persuaded that Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 126 Cal.Rptr.2d 908, 57 P.3d 372 (CPS), is helpful to Block. She argues that CPS stands for the proposition that the remediation costs by which the market value of the property was reduced constituted a "setoff" claim for damages that creates a duty to defend. In that case, the issue was whether a CGL policy that obligates an insurer to defend and indemnify its insured against suits seeking damages thereby obligates the insurer to defend and indemnify the insured against a setoff claim asserted under Code of Civil Procedure section 431.70 (Section 431.70); defendant in a suit for money may assert an otherwise time-barred cross-demand for money as an affirmative defense. (CPS, at p. 192, 126 Cal.Rptr.2d 908, 57 P.3d 372.)[9]*23 Because of the procedural posture of that casean appeal from the sustaining of a demurrerthe court in CPS did not resolve the issue. Observing that, for accounting purposes, a monetary recovery on a suit for damages was no different than a setoff against another debt, the court expressly declined to answer whether a setoff claim should therefore be treated as a suit for damages. Instead, it held that "CPS's complaint adequately stated a prima facie right to relief. . . . In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language. [Citation.] . . . [CPS's complaint] satisfactorily alleged (1) that the insurance policy obligated [the insurer] to defend and indemnify CPS against suits seeking damages, and (2) that under the terms of the policy, [the contractor's] setoff claim fell within the scope of that contractual obligation. Whether CPS can prove these allegations (that is, whether its interpretation of the applicable contractual language is correct in light of what we have said here) remains to be seen, but the allegations are sufficient to establish a prima facie right to relief. [The insurer] may move for judgment on the pleadings or summary judgment, raising the same arguments it raised in its demurrer, and in support of its motion may provide the court with a copy of the insurance policy in question." (Id. at pp. 198-199, 126 Cal.Rptr.2d 908, 57 P.3d 372.)
CPS is inapposite. First, this case comes to us after summary judgment, not after a demurrer. Accordingly, the insurance policies, the pleadings in the eminent domain action and other evidence of the sort that was not before the court in CPS, are in the record here. Thus, we are not faced with determining whether Block has established a prima facie casethe issue in CPSbut whether the evidence would allow a reasonable trier of fact to find that Block potentially suffered an insured loss, a condition precedent to the duty to defend. Second, there is no section 431.70 setoff claim here. Rather, Block seeks to analogize the diminution in value because of the environmental condition of the property to a setoff claim. But the two are not analogous. The setoff claim in CPS, like the clean up costs and response costs in AIU, involved a forced money expenditure by the insured: the insured was allegedly liable for the damage caused by the fire. As we have already discussed, Block is not liable for any money expenditure; the underlying case involved only a determination of the fair market value of the property.[10]
*24 Also unavailing is Block's reliance on Redevelopment Agency v. Salvation Army (2002) 103 Cal.App.4th 755, 127 Cal.Rptr.2d 30 (Salvation Army), for the proposition that the estimated remediation costs constituted damages because the agency could have sued Block to clean up the property.[11] The issue in that case was whether the redevelopment agency had satisfied the legal requirements for recovery of the costs it actually incurred to remediate the environmental condition of the property. There was no issue of insurance coverage. Here, the agency did not proceed against Block under the applicable state laws authorizing reimbursements to state agencies. Accordingly, Salvation Army is inapposite.
We are also unpersuaded by Block's reliance on treatises for the proposition that there was a duty to defend because the reduction in value constituted a setoff claim.[12] The treatises she cites do not suggest that a reduction in market value for the cost of remediation constitutes a section 431.70 setoff claim, only that the cost of remediation will be offset against the market value of the property. Moreover, in their reference to insurance coverage, they do not discuss the distinction between a property owner who is compelled to expend money to cleanup and/or reimburse governmental response costs, and a property owner whose property is simply diminished in market value because *25 of the environmental condition of the property, but is not compelled to pay out any money. By failing to discuss the difference, the secondary sources do not help us.
Our conclusion that the policies at issue did not insure against a diminution in market value as a result of the property's environmental condition because such diminution in value does not constitute "damages" within the meaning of those policies is consistent with Fresno Economy Import Used Cars, Inc. v. United States Fid. & Guar. Co. (1977) 76 Cal.App.3d 272, 142 Cal.Rptr. 681 (Fresno), in which the court held that the diminution in the value of a product by reason of a defective part or faulty workmanship does not constitute property damage within the meaning of the standard insuring clause. In Fresno, the insured car dealer sought declaratory relief arising out of its insurer's refusal to defend two third party lawsuits against the insured, which sought damages for negligent misrepresentation and breach of the implied warranty of fitness as to cars purchased from the insured. The court in Fresno concluded that the third party complaints "set forth no facts which constitute an allegation of personal injury or property damage. . . . [T]he damage [caused by the alleged misrepresentations] was to the plaintiffs' pecuniary interests the out-of-pocket loss caused by the fact that plaintiffs did not receive full value for the money paid for the purchase and lease of the automobiles. Such loss of anticipated value does not constitute an `injury to or destruction of tangible personal property' as defined in the policy."[13] (Id. at p. 279, 142 Cal.Rptr. 681.) By parity of reasoning, a loss of market value attributable to the environmental condition of property does not constitute "damages" under the policies at issue.
There Was No Potential Liability for Personal Injury, and Thus No Duty to Defend
Block contends there was potential liability under the "personal injury" coverage in the policies. She argues that, under Martin Marietta Corp. v. Insurance Co. of North America (1995) 40 Cal.App.4th 1113, 47 Cal.Rptr.2d 670 (Martin Marietta), the cost to remediate soil and groundwater and to re-abandon the old oil well avoided potential claims by third parties, such as adjacent landowners. We find Martin Marietta inapplicable.
"In the world of liability insurance, personal injury coverage applies to injury which arises out of the commission of certain enumerated acts or offenses. [Citations.] Coverage thus is triggered by the offense, not the injury or damage which a plaintiff suffers." (Fibreboard Corp. v. Hartford Accident & Indemnity Co. (1993) 16 Cal.App.4th 492, 511, 20 Cal.Rptr.2d 376.) The offense with which we are concerned is "wrongful entry," which includes trespass claims. (Ibid.) In Martin Marietta, the insured was the subject of actions by various governmental agencies to compel it to remediate groundwater and other contamination emanating from a number of sites. The insured tendered the claim to its insurer. The insurer moved for summary adjudication on the grounds that the claims were not "because of" personal injury as that term was defined in the insurance policies, and that it therefore had no duty to defend or indemnify. (Martin Marietta, supra, 40 Cal.App.4th *26 at p. 1118, 47 Cal.Rptr.2d 670.) The trial court agreed and granted summary judgment. (Id. at p. 1121, 47 Cal.Rptr.2d 670.) The court of appeal reversed, reasoning that the claims against the insured were based in part on nuisance and trespass on lands "owned by individuals, businesses, and, perhaps, governmental entities." (Id. at p. 1134, 47 Cal.Rptr.2d 670.) Accordingly, such claims raise a potential for coverage under language giving coverage for "wrongful entry" and "other invasion of the right of private occupancy." (Id. at p. 1136, 47 Cal.Rptr.2d 670.)
This case involves no claims that have been or might be made by others, including adjacent landowners. Accordingly, Martin Marietta has no application.[14] (Cf. AIU, supra, 51 Cal.3d at p. 843, 274 Cal.Rptr. 820, 799 P.2d 1253 [costs incurred to pay for measures taken to avoid future release of hazardous waste are not covered under the policies because no property damage has yet occurred].)
DISPOSITION
The judgment is affirmed. The insurers are entitled to their costs on appeal.
We concur: COOPER, P.J., and BOLAND, J.
NOTES
[1] Collectively defendants are referred to herein as the insurers.
[2] In answers to interrogatories, Block averred that the oil well had been abandoned and capped in 1952. In a declaration filed in the eminent domain action, Block averred that, although sealed in compliance with the law, the well remained intact and could be re-opened.
[3] The basis of Golden Eagle's motion was that it had no duty to defend or indemnify Block because: (1) Block was never subject to a claim for damages, property damages, bodily injury or personal injury; (2) there was no triggering occurrence under the policies; (3) the policies excluded "business pursuits" from coverage; (4) the policies excluded noninsured locations; and (5) the policies contained pollution exclusions.
Blue Ridge, like Golden Eagle, maintained it had no duty to defend or indemnify Block because Block was not subject to a claim for damages; there was no "personal injury" under the policy; the policy excluded noninsured locations; and the policy excluded business pursuits. Additionally, the Blue Ridge policy included an exclusion for property damage or personal injury arising out of a material or substance containing lead, as well as costs incurred to clean up or abate such material or substance.
Similarly, Clarendon maintained that it had no duty to defend because Block had suffered no damages, there was no personal injury, the policy contained a pollution exclusion, the policy contained an owned property exclusion and the property contained a business pursuits exclusion.
In view of our conclusion that the eminent domain action does not involve a claim for property damage or personal injury (see discussion, post), we do not discuss all of the insurers' arguments made in the trial court or on appeal.
[4] Clarendon's policy provides: "SECTION IILIABILITY COVERAGES [¶] COVERAGE EPersonal Liability [¶] If a claim is made or a suit is brought against an `insured' for damages because of `bodily injury' or `property damage' caused by an `occurrence' to which this coverage applies, we will: [¶] 1. Pay up to our limit of liability for the damages for which the `insured' is legally liable. Damages include prejudgment interest awarded against the `insured'; and [¶] 2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. . . ." Further, "5. `Occurrence' means an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in: [¶] a. `Bodily injury'; or [¶] b. `Property damage.' [¶] 6. `Property damage' means physical injury to, destruction of, or loss of use of tangible property."
Blue Ridge's policy provides: "SECTION IILIABILITY COVERAGES [¶] COVERAGE EPersonal Liability [¶] If a claim is made or a suit is brought against an `insured' for damages because of `bodily injury' or `property damage' caused by an `occurrence' to which this coverage applies, we will: [¶] 1. pay up to our limit of liability for the damages for which the `insured' is legally liable; and [¶] 2. provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. . . ." Further, "5. `occurrence' means an accident, including exposure to conditions, which results, during the policy period, in: [¶] a. `bodily injury'; or [¶] b. `property damage.' [¶] 6. `property damage' means physical injury to, destruction of, or loss of use of tangible property."
[5] In AIU, various governmental agencies brought suit against the insured for alleged violations of the Comprehensive Environmental Response, Compensation, and Liability Act. These suits alleged the insured was responsible for contamination at 79 different hazardous waste disposal sites, groundwater beneath the sites, aquifers beneath adjoining property, and surrounding surface waters. The suits sought injunctions to compel the insured to stop further contamination and to clean up the area around the sites, as well as reimbursement for the agencies' costs of investigating, monitoring and initiating cleanup for which the insured was allegedly responsible. (Id. at pp. 815-816, 274 Cal.Rptr. 820, 799 P.2d 1253.) The insured held various primary and excess comprehensive general loss (CGL) policies with various insurers. Each policy provided coverage for sums the insured was "legally obligated" or "obligated . . . by law" to pay as a result of the insured's liability for "property damage." (Id. at pp. 814-815, 274 Cal.Rptr. 820, 799 P.2d 1253.) The insured brought suit against the insurers seeking a declaration that the CGL policies cover costs the insured may become obligated to pay as a result of the actions brought against it by the agencies. The insurers moved for summary adjudication that, as a matter of law, the CGL policies did not cover the costs of abating and cleaning up hazardous waste and reimbursing governmental agencies for their cleanup efforts. (Id. at p. 816, 274 Cal.Rptr. 820, 799 P.2d 1253.) Our Supreme Court held that there was coverage. It noted that nearly every state court to address the issue had concluded that "cleanup costs incurred under environmental statutes are covered by policies identical to those concerned here." (Id. at pp. 818-819, 274 Cal.Rptr. 820, 799 P.2d 1253.) Those courts reasoned that the costs of reimbursing third parties are plainly "damages" the insured is "legally obligated" to pay as a result of "property damage," or those phrases are ambiguous and should be resolved in favor of coverage. (Id. at p. 819, 274 Cal.Rptr. 820, 799 P.2d 1253.) Likewise, the cost of compliance with environmental injunctions were generally found to be covered because such costs fit within a broad definition of "damages" or because "a contrary holding would unreasonably make coverage hinge on the `mere fortuity' of which recovery mechanism (injunction, reimbursement, or `damages to natural resources') the government selects in enforcing" environmental laws. (Ibid.) Some federal courts, however, have ruled that cleanup costs are not covered. (Id. at p. 820, 274 Cal.Rptr. 820, 799 P.2d 1253.)
[6] "One dictionary, for example, defines `damages' as `the estimated reparation in money for detriment or injury sustained: compensation or satisfaction imposed by law for a wrong or injury caused by a violation of a legal right.' (Webster's New Internat. Dict. (3d ed. 1981) p. 581.) Black's Law Dictionary similarly defines `damages' as `[a] pecuniary compensation or indemnity, which may be recovered in the courts by any person who has suffered loss, detriment, or injury, whether to his person, property, or rights, through the unlawful act or omission of another.' (Black's Law Dict. (4th ed.1951) p. 466, col. 2.)" (AIU, supra, 51 Cal.3d at p. 826, 274 Cal.Rptr. 820, 799 P.2d 1253.) The court in AIU took the word "compensation" to encompass any remunerative payment made to an aggrieved party. (Id. at p. 826, fn. 11, 274 Cal.Rptr. 820, 799 P.2d 1253.)
[7] We find further support for this conclusion in Lick Mill Creek Apartments v. Chicago Title Ins. Co. (1991) 231 Cal.App.3d 1654, 283 Cal.Rptr. 231 (Lick Mill). In that case, the plaintiff purchased property on which hazardous waste had previously been discovered and the prior owner had failed to comply with a state clean-up order. After the plaintiff incurred costs to remedy the hazardous waste condition, it sought indemnification for such expenditure from its title insurance company. The plaintiff's theory was that the policy insured against loss or damage incurred by reason of the "unmarketability" of title, the presence of hazardous waste impaired the marketability of the property and therefore the insurer was obliged to pay the clean-up costs. (Id. at p. 1660, 283 Cal.Rptr. 231.) The court of appeal disagreed. Noting the distinction between marketability of title and marketability of the land, the court in Lick Mill concluded that the title insurance policy insured only against unmarketability of title. (Id. at p. 1661-1662, 283 Cal.Rptr. 231.) "Because marketability of title and the market value of the land itself are separate and distinct, plaintiffs cannot claim coverage for the property's physical condition under this clause of the insurance policies." (Id. at p. 1662, 283 Cal.Rptr. 231.) Under the reasoning of Lick Mill, we find that Block cannot claim coverage under the policies at issue because those policies do not insure against a reduction in the market value of the land.
[8] Interestingly, here Block argues that the abandoned oil well and associated pipeline were conditions that diminished the value of the property and thus constituted damages. In the eminent domain action, she argued these conditions enhanced the value of the land.
[9] In CPS, the insured was hired by a general contractor to provide security services at a construction site. During the course of construction, a fire broke out at the site, which caused damage to the contractor's work. When the contractor refused to pay CPS for its services, CPS brought suit against the contractor. The contractor asserted as an affirmative defense that CPS was responsible for the damages arising out of the fire and that the contractor was therefore entitled to setoff the fire damages against any amount it owed CPS. CPS tendered defense of the setoff claim to its insurer, which refused the tender. After resolving the dispute with the contractor, CPS brought suit against its insurer for breach of contract and of the covenant of good faith and fair dealing. The trial court sustained the insurer's demurrer to the complaint, reasoning that an insurer does not have a duty to defend against affirmative defenses raised in response to an insured's complaint against another party. The court of appeal reversed. The Supreme Court affirmed the judgment of the court of appeal, but for different reasons. (Id. at pp. 193-194, 126 Cal.Rptr.2d 908, 57 P.3d 372.)
[10] Block relies on Redevelopment Agency v. Thrifty Oil Co. (1992) 4 Cal.App.4th 469, 5 Cal.Rptr.2d 687 (Thrifty Oil), for the proposition that remediation costs should be treated as a setoff against the fair market value of the property. That reliance is misplaced. In Thrifty Oil, an eminent domain case, the only issue at trial was the value of the property and the good will of the business. The property had contaminated soil as a result of its prior use as a gasoline station. Experts retained by both the city and the landowner, as well as an expert appointed by the court, agreed that the value of the property should be reduced by the cost of remediation, although they disagreed on what those actual figures should be. On appeal, the reviewing court rejected the landowner's contention that the jury's valuation was not supported by substantial evidence. It concluded that the cost of remediation was a characteristic of the property which would affect its value, and was therefore properly before the trier of fact. (Id. at pp. 473-474 & fn. 9, 5 Cal.Rptr.2d 687.) Thrifty Oil was not an insurance coverage case, nor did it hold that remediation costs were analogous to a section 431.70 setoff claim.
[11] In Salvation Army, the defendant owned property in a redevelopment project area. In accord with the Polanco Redevelopment Act (Health & Saf.Code, § 33459 et seq.), the redevelopment agency gave the defendant notice to submit a timely proposed action plan to remediate hazardous substances on the property. When the defendant failed to do so, the agency undertook the cleanup. The agency then filed suit against the defendant for eminent domain, cost recovery under the Polanco Redevelopment Act, and declaratory relief. The agency paid into court the sum of $289,000, which represented the agreed upon $550,000 amount of just compensation, minus $260,000 for the cost of investigating and remediating the environmental conditions on the property. (Salvation Army, at pp. 761-762, 127 Cal.Rptr.2d 30.) The parties settled the eminent domain portion of the action and, when the matter came on for trial, the only remaining cause of action was for recovery of costs under the Polanco Redevelopment Act. The trial court awarded the agency its costs. The court of appeal affirmed. The case had nothing to do with insurance coverage.
[12] For example, Block cites 1 Matteoni & Veit, Condemnation Practice in California (Cont.Ed.Bar 2d ed.2003) section 4.73, page 193 (Matteoni & Veit). In that treatise, the authors observe that "[c]ontamination or the presence of hazardous materials within a condemned parcel presents procedural and substantive issues concerning valuation. . . . [¶] . . . [T]here may be insurance coverage issues." (Ibid.) The authors recommend that, under AIU, insurance coverage should be investigated. (Id. at p. 199.) They note that, "It is often the condemnor's position, on discovery of contamination (from whatever source) affecting the property under condemnation, that the cost of cleanup should be offset against the value of the land. (See § 4.9 [Physical Nature of Property].) . . . [¶] . . . Procedurally, the property owner may seek to bifurcate or separate the contamination issue from valuation (see § 9.24 [In Limine Motions]) and, at the same time, cross-complain against third parties (see § 8.33 [Cross-Complaint])." (Id. at p. 193.) Matteoni & Veit further states: "Separate trials or bifurcation of issues may be desirable in an action involving toxic contamination and the alleged diminution in value resulting from remedial costs. See § 4.73. Considerations for separating the establishment of contamination from the establishment of value are: [¶] . . . [¶] If an insurance company accepts the defense of the contamination issue in a condemnation case, an insurance defense lawyer represents the property owner in what, to that lawyer, is not an action concerning value." (Id. at § 9.25, p. 453.)
[13] According to the policies at issue in Fresno, "property damage" was defined as "`injury to or destruction of tangible property.' An `occurrence' is defined as `an accident, including injurious exposure to conditions, which results, . . . in bodily injury or property damage neither expected nor intended from the standpoint of the Insured.'" (Fresno, supra, 76 Cal.App.3d at p. 278, 142 Cal.Rptr. 681, original italics.)
[14] We do not decide whether the various policies at issue here would provide coverage for claims that, for example, the abandoned oil well caused damage to third parties, including adjacent landowners. That issue is not before us and was not raised in the eminent domain action.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2259529/
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777 F.Supp. 420 (1991)
Peter IERARDI, and Angela Ierardi
v.
LORILLARD, INC., et al.
Civ. A. No. 90-7049.
United States District Court, E.D. Pennsylvania.
October 28, 1991.
Laurence H. Brown, Steven J. Cooperstein, Howell K. Rosenberg, Brookman, Rosenberg, Brown & Sandler, Thomas F. Johnson, Daniel G. Childs, Johnson & Childs, Philadelphia, Pa., for plaintiffs.
Matthew A. White, Franklin Poul, David I. Bookspan, Wolf, Block, Schorr and Solis-Cohen, Philadelphia, Pa., Walter L. Cofer, William S. Ohlemeyer, Gary R. Long, Patrick *421 M. Sirridge, David K. Hardy, Shook, Hardy and Bacon, Kansas City, Mo., for defendant Lorillard, Inc.
Robert V. Dell'Osa, Kenneth C. Frazier, Drinker, Biddle & Reath, Kim R. Tulsky, Mann, Ungar & Spector, Philadelphia, Pa., Andrew J. Mc Elaney, Jr., Stephen J. Brake, Nutter, Mc Clennen & Fish, Boston, Mass., for defendant Hollingsworth & Vose Co.
Edward J. Wilbraham, Philadelphia, Pa., for movants.
MEMORANDUM
NEWCOMER, District Judge.
Factual Background:
The above-captioned matter is a negligence/products liability action. Between 1952 and 1956, P. Lorillard, Inc., predecessor to defendant Lorillard, Inc., manufactured Kent cigarettes with an asbestos-containing filter the "Micronite" filter. Defendant Hollingsworth & Vose ("H & V") supplied the asbestos containing filter media to P. Lorillard. Plaintiff Peter Ierardi now brings this lawsuit alleging that he contracted mesothelioma as a direct result of his use of Kent cigarettes during the period of 1953-1956.
Plaintiffs have served interrogatories on defendant H & V requesting information regarding H & V's developing knowledge of the dangers of asbestos and testing of the Micronite filter from the time the product was first introduced to the present. H & V objects to this discovery on grounds of relevancy. Clearly, defendant's state of knowledge during the period from 1951-1957 as to the potential hazards of asbestos, and as to any testing of the Micronite filter is relevant to the issue of whether defendant was negligent in manufacturing a cigarette filter containing asbestos during the same period. With regard to H & V's knowledge after that date, however, the question of relevancy can only be answered after the court addresses the question whether a "continuing duty to warn" exists under the circumstances of this case. Accordingly, in this memorandum, I examine plaintiff's theory of liability based on defendant's alleged breach of a continuing duty to warn.
The Supreme Court of Pennsylvania has not yet decided the question whether a post-sale duty to warn may be imposed on a manufacturer.[1] The Pennsylvania Superior Court, has, however, in Walton v. Avco Corp.,[2] spoken on this issue and has imposed a post-sale duty to warn in limited circumstances.
In Walton, Hughes, a helicopter manufacturer, learned from the supplier of the helicopter engine that the oil pumps in the engines of the helicopters were defective. Walton, 557 A.2d at 375. Hughes, however, knowing the consequences of engine *422 failure, failed to pass this information on to his customers. Plaintiff's decedent's helicopter was brought in for servicing after Hughes had received the warning from the supplier but Hughes made no mention of the defect. Id. Shortly afterward, the oil pump in the helicopter failed and the helicopter crashed, killing the plaintiff's decedent. Id. The Superior Court found, that in light of the circumstances, Hughes was strictly liable for failing to issue a post-sale warning. Id.
In imposing on Hughes a post-sale duty to warn, the Walton court relied on the Wisconsin Supreme Court's analysis in Kozlowski v. John E. Smith's Sons Co., 87 Wis.2d 882, 275 N.W.2d 915 (1979). In Kozlowski, plaintiff's decedent was fatally injured by ammonia inhalation while cleaning a sausage stuffing machine. After the sale of the machine in question, the manufacturer had developed a safety valve that could have prevented the accident. A representative of the manufacturer had made two visits to the plant after the safety valve had become standard equipment on all new machines, but did not give any post-sale warning, or notice of the availability of the safety valve. Id. In finding a post-sale obligation the court noted, that "[t]he sale of the sausage stuffer is to a limited market wherein the manufacturer would know of all companies that own its product." Kozlowski, 275 N.W.2d at 923-24 quoted in Walton, 557 A.2d at 379. Indeed, in imposing a post-sale duty to warn, the Walton court itself noted that:
[a] helicopter is not a household good, commonly found in almost any home in this country. It is instead a unique and costly product which is manufactured, marketed and sold to a specialized group of consumers. We believe that Hughes would have communicated safety information and service instructions with relative ease by contacting purchasers of its helicopters, as well as authorized service centers through the mail or otherwise.
Walton, 557 A.2d at 379.
In imposing on manufacturers post-sale obligations to warn of, or to correct defects, courts, have primarily focused on four factors: (1) whether the manufacture assumes a duty to correct a defect but fails to carry out that duty;[3] (2) whether the defect is remediable, (3) whether the product is in continued use, (4) whether the product users can be easily identified.[4]
Here, there is no evidence that H & V assumed a duty to correct any alleged defect. Indeed, H & V continues to contend that no asbestos escaped the Micronite filter. Further, the alleged defect in this instance is not a remediable one. The cigarettes cannot be recalled. Cigarettes are a fungible good. Moreover, the tragedy of this particular case is that even if Lorillard and H & V had managed to warn Peter Ierardi that Kent cigarettes were manufactured with an asbestos containing filter, and that the filter was defective in that the asbestos fibers in the filter escaped from the filter, the post-sale warning would not have prevented Peter Ierardi's illness.
Peter Ierardi has been diagnosed as having mesothelioma. By the admission of *423 plaintiff's own expert, mesothelioma is untreatable and incurable. Even if a warning was warranted and that warning was given, the post-sale warning would not have had any affect on plaintiff's condition. Accordingly, the post-sale failure to warn could not be considered a proximate cause of plaintiff's injuries. Thus, any claim pursuant to a continuing duty to warn must fail. Moreover, this is clearly not a case where a post-sale warning would have prevented any harm caused by the alleged defect, as the product was not in continued use at the time such a warning could have been issued.
Finally, given the extent of the market for Kent cigarettes, neither Lorillard nor H & V could have possibly issued a post-sale warning to every person who smoked Kent cigarettes during the period between 1952 and 1956.
The court further notes that the Pennsylvania Superior Court has given cautionary instructions regarding the application of the "continuing duty" doctrine. Indeed, the court stated in Walton, that, "[i]n our desire to compensate the persons who have been injured by defective products, we should not be willing to impose upon product suppliers legal duties that are unreasonable, and therefore, effectively unobtainable." Walton v. Avco Corp., 557 A.2d 372, 380. To impose a post-sale duty to warn on a strict products liability theory, where the defect is not remediable, where the product is no longer being manufactured and is no longer in use, and where it would be impracticable to personally notify every consumer of the product, would be a perversion of the doctrine as it has been adopted by the Pennsylvania courts.[5] A duty to warn under such circumstances is not only overly burdensome, but is also futile.
In light of the foregoing, I find that there is no basis upon which to impose upon defendant a continuing duty to warn. Accordingly, I find that evidence of H & V's knowledge regarding the dangers of asbestos after 1957 would be irrelevant to this cause of action.
An appropriate order follows.
ORDER
AND NOW, this 28th day of October, 1991, upon consideration of the Plaintiff's Supplemental Brief on defendant's continuing duty to warn, and upon consideration of the Motions of Defendant Lorillard, and defendant Hollingsworth & Vose to Dismiss Plaintiff's Continuing Duty to Warn Claim, consistent with the foregoing memorandum opinion, it is hereby ORDERED that the Motions of defendant Lorillard, Inc. and defendant Hollingsworth & Vose to Dismiss Plaintiff's Continuing Duty to Warn Claim are GRANTED.
AND IT IS SO ORDERED.
NOTES
[1] Plaintiff's urge this court to adopt the holdings of Johns-Manville Sales Corp. v. Janssens, 463 So.2d 242 (Fla.App. 1 Dist.1984) and its progeny. Janssens and the cases adopting Janssens have imposed a "continuing duty to warn" of the dangers of asbestos in cases against asbestos manufacturers. The reasoning for the imposition of such an obligation, however, appears to be based on punitive considerations rather than compensatory considerations. Essentially, the Janssens court held that because Johns-Manville Corp. withheld information about the harmful effects of asbestos exposure from the public, evidence of its continued concealment after the period of plaintiff's exposure to asbestos was relevant to a continuing duty to warn claim. The only analysis in the opinion regarding imposition of a post-sale obligation is that "Johns-Manville's intent to avoid public disclosure and cover up the health hazards caused by exposure to its asbestos products ... [and] Johns-Manville's continued malice, evil intent, and reckless and wanton disregard for the health and safety of those using its products" Id. at 256, was properly at issue on plaintiffs continuing duty to warn claim. There is no discussion of proximate causation of plaintiff's injuries or the reasonableness of imposing such a duty. Similarly, cases following Janssens justify the imposition of a continuing duty to warn against asbestos manufacturers in a discussion of the "conspiracy" of several asbestos manufacturers to prevent the hazards of asbestos from becoming known, while simultaneously continuing to manufacture and actively market asbestos. I decline to follow this line of case law, as there is little reasoning to support such an imposition here and because I find it inconsistent with current Pennsylvania law.
[2] 383 Pa.Super. 518, 557 A.2d 372 (1989) appeal granted Walton v. Avco Corp., 524 Pa. 599, 568 A.2d 1249 (1989).
[3] [in that the manufacture develops a modified part specifically to correct a product defect or provides a remedy for the defect, but does not make any attempt to provide for the installation of the modified part or correction of the defect]. See, e.g., Bell Helicopter Co. v. Bradshaw, 594 S.W.2d 519 (Tex.App.1979) [where Bell, a helicopter manufacturer, after discovering that its tail rotor blades could fail in flight if the blades were not properly maintained, developed a tail rotor blade correcting the defect, the court held that Bell assumed the duty to improve the defective rotor blades, and that "Bell had an obligation to complete the remedy by using reasonable means available to it," Id. at 532, i.e. Bell had an obligation to "cause replacement" of the defective systems. Id. at 532. In imposing the post-sale obligation on Bell the court emphasized the "unique relationship" between Bell's authorized service stations and Bell]; see also Gracyalny v. Westinghouse Electric Corp., 723 F.2d 1311 (7th Cir.1983) [where Westinghouse discovered a design defect in its circuit breaker and provided free baffles to correct the defect, the court reversed summary judgment in favor of Westinghouse stating that, "given the serious nature of a circuit breaker malfunction, a jury could determine that Westinghouse itself should have undertaken to install the baffles." Id. at 1321].
[4] See Walton, 557 A.2d 372; Kozlowski, 275 N.W.2d 915.
[5] The court notes further that in the case of Shires v. Celotex Corp. et al., No. 85-7141 (E.D.Pa.1985) Judge Van Artsdalen, after considering inter alia that such discovery might be relevant under a "continuing duty to warn" claim, granted defendant American Tobacco Company's motion for a protective order vacating plaintiff's notice of deposition regarding the tobacco company's knowledge and conduct after plaintiff's decedent had stopped smoking defendant's cigarettes.
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777 F.Supp. 299 (1991)
William Mullen BAKER, Plaintiff,
v.
Frederick R. PARRIS and Ernie Martinelli, Defendants.
No. 86 Civ. 1283 (WK).
United States District Court, S.D. New York.
November 12, 1991.
*300 Michael Greene, Pollack & Greene, New York City, for defendants.
Albert Silbowitz, Cedarhurst, N.Y., for plaintiff.
OPINION AND ORDER
WHITMAN KNAPP, District Judge.
Plaintiff and defendants both claim the right to use the service mark "The Five Satins," a "doo wop" vocal group,[1] based on their original affiliation with that group. Defendants move for summary judgment dismissing plaintiff's claims arising under the Lanham Act, 15 U.S.C. § 1051 et seq., *301 the Sherman Act, 15 U.S.C. § 1 et seq., and the common law, and for summary judgment granting their own counterclaims under the Lanham Act, New York State law, and common law. For the reasons that follow, both motions are granted.
BACKGROUND
Sometime in 1955, five teenagers from New Haven, Connecticut gathered together to perform a new genre of music: doo wop. Defendant Parris,[2] though then also performing with another group called the "The Scarlets," was the first lead singer of this new group, "The Five Satins." Pl. 3(g) ¶¶ 3-4; Def. 3(g) ¶¶ 1-3; Pl. Exhs. B, E, & F.[3] Parris enlisted in the Army sometime in mid-1955, but while on leave before being stationed in Japan for most of 1956-57, wrote and performed lead vocals on a New Haven church basement recording for the Standord Record label of "I'll Remember," which very shortly became known as "In the Still of the Night." Pl. 3(g) ¶¶ 4, 5; Def. 3(g) ¶¶ 4, 5. This song has since become one of the most popular "oldies" ever. It is also "The Five Satins" signature song and greatest hit. Pl. Exh. F; Def. Aff. ¶ 30.
Parris returned from the Army in late 1957, and by 1958[4] began performing as lead singer for, among other groups, the one billed as "The Five Satins." Since then, Parris has continuously used that name or some variation thereof, such as "Fred Parris and the Five Satins," "The Five Satins, featuring Fred Parris," or "The Five Satins." Parris' performances under "The Five Satins" name include those in "oldies revival shows" throughout the 1970s and in various hotels starting in or about 1977. Def. 3(g) ¶¶ 17, 18. In 1973 Parris applied for and received a trademark registration on "The Five Satins" from the United States Patent and Trademark Office. In his application he declared that "the service mark was first used ... in June 1955; was first used in the sale or advertising of services rendered in commerce among the several states in June 1955 and is now in use in such commerce." Pl. Exh. H. The mark lapsed in 1981. Two years later Parris applied for a second registration, which he received in 1984. Def. 3(g) ¶¶ 15, 22. Parris, since at least 1983, has consistently asserted that he owns the exclusive right to the service mark "The Five Satins" and, by informing people in the music industry of that claimed exclusive right, has sought to prevent Baker from using the name. Pl. 3(g) ¶ 19; Def. 3(g) ¶¶ 27-29.
In early 1956 when Parris was in the army, plaintiff Baker joined "The Five Satins" and within two months became the group's lead singer. During his tenure "The Five Satins" released several records including the successful "To The Aisle," was pictured on the cover of Rhythm & Blues magazine, and toured widely. Pl. 3(g) ¶¶ 9, 10; Def. 3(g) ¶ 9; Pl. Exhs. B, E. Baker left "The Five Satins" in 1958, and until the late 1970s or early 1980s performed with a number of different bands, including "The Chestnuts" and "David and Goliath," and using his own name. Pl. Exhs. D, E, & F.
With respect to his status between the late 1950s and late 1970s or early 1980s, Baker has submitted: (a) his own affidavit; and (b) a variety of documents. Two paragraphs of his affidavit are relevant. Paragraph 12 provides:
After the dissolution [in 1959] of "The Five Satins," I continued performing under my name, as well as with other groups and individuals. Throughout the 1960s, 1970s, and to the present day I have always and continuously utilized *302 the name "The Five Satins" in billing, promoting and advertising my performances and in attempts to obtain performing engagements.
On the other hand, paragraph 15 asserts:
By the late 1970s, I was being billed as "Bill Baker" or "Bill Baker of the Original Five Satins," or "Bill Baker's Fabulous Satins" ... The public and concert promoters, however, still associated me with "The Five Satins" and, as a result, my performances would typically be publicized as "Bill Baker of The Five Satins," "Bill Baker's Satins" or simply "The Five Satins" despite my repeated remonstrances. By 1982, my new group was increasingly referred to as "Bill Baker's Five Satins" ... and in response to continuing demands by my audiences and concert promoters, I adopted th[at] name ... and have continuously performed under such name to date."
(emphasis added).
The documents (which are attached as Exhibit E to Baker's opposition papers) include a 1975 magazine article about Baker by Victor Pearlin that reads in relevant part:
Few people are aware that Bill Baker was the lead singer for the Five Satins in 1956-57. A New Haven native, Bill is heard on five Ember [record label for "The Five Satins"] releases. Of these, only "To The Aisle" achieved any commercial success.
When Fred Parris returned from the Army in 1958, Bill stopped recording for a couple of years. In 1960, he recorded two records ... Bill was accompanied on these by the Chestnuts.
...
Finally in 1966, Bill teamed up with Roger Koob ... recording as David and Goliath.
The remaining documents, insofar as they seem to us to be at all relevant, are the following:
An undated business card for "The Connecticut All-Star '50s & '60's Review," on which below Baker's name appears "The Chestnuts/The Five Satins";
An undated guest pass to a performance by a group called "The Originals"[5] that featured members of "The Five Satins," "The Chestnuts," and "The Scarlets." The card nowhere mentions Baker, and it is unclear whether he or Parris performed at that show;
An undated promotional card for "Bill Baker" on which it is noted, in the smallest print appearing on the card, "as featured with the Five Satins";
A promotional release for the "Connecticut All-Star Fifties & Sixties Revue, Starring Roger Koob and Bill Baker," on which it is stated that "Other songs this show band performs, formerly recorded by groups which included Bill Baker, are: ... `Chestnuts'; ... `The Five Satins'; and one of the biggest selling records in recorded history `In The Still Of The Night'";
An event schedule with the entry dated November 21, 1980 adverting to a "50's Hop, featuring Roger Koob of Premiums and Bill Baker of Five Satins"; and
A September 5, 1971 program for the Connecticut Cancer Crusade that lists among the performers "Bill Baker," with no mention of "The Five Satins."
DISCUSSION
a. Parris' Motion for Summary Judgment Dismissing Baker's Claims
We hold for later discussion Baker's count VI (requesting punitive damages), counts III and IV (alleging Sherman Act violations), and counts II, VII, and VIII (seeking cancellation of Parris' Lanham Act registration). The remaining counts I and V (claiming Lanham Act and common *303 law trademark infringement) require that Baker, as an initial matter, establish two things: (a) that he was the originator i.e. first user of the mark; and (b) that he has been a continuous user of the mark i.e., that he did not abandon it by failing to use it over any considerable period of time. See Rick v. Buchansky (S.D.N.Y.1985) 609 F.Supp. 1522, 1531 (it is axiomatic that "rights in a trademark or service mark are acquired through appropriation and use of the mark in commerce"), Kingsmen v. K-Tel Int'l Ltd. (S.D.N.Y.1983) 557 F.Supp. 178, 181. For the definition of abandonment, see 15 U.S.C. § 1127 ("A mark shall be deemed `abandoned' (a) [w]hen its use has been discontinued with intent not to resume.... Nonuse for two consecutive years shall be prima facie abandonment"); see also Rick, 609 F.Supp. at 1540, Kingsmen, 557 F.Supp. at 183.
There is clearly room for dispute as to whether Baker or Parris was the originator or first user of the mark. Accordingly, if that were the only issue we should have to deny Parris' motion for summary judgment. However it is beyond dispute that Baker can show no use of the mark from the time he left "The Five Satins" in 1958 to when "by 1982" he "adopted" the name. While in the first of the two quoted paragraphs of his affidavit Baker claims to have "continuously utilized" the name during the 1960s and 1970s, this claim is refuted in the second quoted paragraph. The latter paragraph specifically assures us that any pre-1980 use of his name in connection with that of "The Five Satins" was over his "repeated remonstrances." Moreover, the documents Baker submits are consistent with the second rather than the first of these paragraphs. The magazine article specifically fixes his connection to "The Five Satins" as occurring in 1956-58. It further observes that after Parris' return from the army, Baker "stopped recording for a couple of years" and then associated himself with other names and organizations. The remaining submitted items do nothing to negate these clear assertions.
Thus it is apparent from the evidence submitted by Baker that he cannot establish use of the mark during the period between the late 1950s and late 1970s or early 1980s, and therefore can make no claim to the mark that Parris could have infringed. Accordingly, we grant Parris' motion to dismiss counts I and V.
b. Parris's Counterclaims
Parris claims that he holds the exclusive right to the service mark "The Five Satins" and that Baker infringed on it by holding himself out to the music industry and public as "The Five Satins." Such infringement, he asserts, both confuses the public as to which of "The Five Satins" groups is genuine[6] and which it might expect to see at a show and also takes from defendants bookings they legitimately expect to receive. Moreover, he claims that this behavior is unfair competition and dilutes his distinctive mark.
There is no dispute in the pleadings that Parris has continuously used the mark "The Five Satins" since at least 1959. Moreover, as we held above, there can be no dispute that Baker did not continuously use the mark. Finally, Parris' registration of the mark with the United States Patent and Trade Office is "prima facie evidence of the validity of the registered mark ... and of the registrant's exclusive right to use the registered mark in trade," 15 U.S.C. § 1115(a); see also Marshak v. Sheppard, (S.D.N.Y.1987) 666 F.Supp. 590, 597 [Sheppard]; Rick, 609 F.Supp. of 1529; Marshak v. Green, (S.D.N.Y.1981) 505 F.Supp. 1054, 1060 [Marshak].[7] Because *304 Baker has failed to raise a genuine issue of material fact to challenge either Parris' claim of continuous use of the name, or prima facie right in it, we find that Parris indeed owns "The Five Satins" mark. Having so found, we must afford him the protection his exclusive right in the name merits.
Counterclaims I and II allege Baker's violation of the Lanham Act, 15 U.S.C. §§ 1114(1), 1117 and 1125(a).[8] Because Baker freely admits his use of the mark "The Five Satins," and because it is self evident that two groups bearing the "The Five Satins" name will cause confusion, we find that he has infringed on Parris' registered service mark and is liable to Parris under the Lanham Act. We therefore grant summary judgment on these counterclaims.
Counterclaim III asserts trademark and tradename infringement under the common law and The New York State General Business Law § 368-b. The New York State Court of Appeals has applied essentially the same standard to claims brought under the Lanham Act (15 U.S.C. § 1114(1)), New York State law (General Business Law § 368-b), or common law (unfair competition). Allied Maintenance Corp. v. Allied Mechanical Trades, Inc. (1977) 42 N.Y.2d 538, 399 N.Y.S.2d 628, 631, 369 N.E.2d 1162, 1165. Since we have found that Baker has infringed on Parris' mark under the Lanham Act, he has necessarily also done so under New York State and common law, and we grant summary judgment on counterclaim III.
Counterclaim IV asserts dilution of the "distinctive quality" of Parris' "The Five Satins" service mark. New York's anti-dilution statute, GBL § 368-d, protects service marks from a different sort of harm than infringement:
"The evil which the Legislature sought to remedy was not public confusion caused by similar ... services ... but a cancer-like growth of dissimilar ... services which feeds upon the business reputation of an established distinctive trademark or name ... The harm that § 368-d is designed to prevent is the gradual whittling away of a firm's distinctive trademark or name."
Allied, 399 N.Y.S.2d at 632, 369 N.E.2d at 1165. See also Sheppard, 666 F.Supp. at 602-03; Rick, 609 F.Supp. at 1545; Marshak, 505 F.Supp. at 1058, n. 9.
Because it is undisputed that both Baker and Parris are using the name "The Five Satins," it is clear that persons hiring Baker's group will receive a different performance and different sound than the one they expected from Parris' group. This result is not only confusing, but constitutes a "whittling away of [Parris'] distinctive" performance and sound, which is at the heart of his service mark, in violation of § 368-d. Summary judgment on Parris' counterclaim IV is therefore granted.
c. Baker's Remaining Claims
As we concluded earlier in granting Parris's motion for summary judgment dismissing counts I and V, the evidence before us could permit no reasonable jury to find that Baker continuously used the name "The Five Satins" between the late 1950s and late 1970s or early 1980s in any way that could give him a right in the service mark. We have also found that Parris in fact owns the mark.
Accordingly, turning to Baker's remaining claims, we now grant Parris' motion to dismiss to Baker's claims III and IV under the Sherman Act. That act allows *305 the holder of a trademark a monopoly in that mark, so long as it is not otherwise used in violation of the statute. See 15 U.S.C. § 1, Susser v. Carvel Corp. (S.D.N.Y.1962) 206 F.Supp. 636, 641-43. Since Parris' actions were legitimately in defense of his service mark and served no conceivable illegal purpose, these Claims are without merit. And, since there has been no violation and thus no harm to remedy, we dismiss Baker's claim VI for punitive damages.
Baker also claims in counts II, VII, and VIII that Parris violated the Lanham Act 15 U.S.C. §§ 1119, 1120[9] by making false or fraudulent statements in his trademark application, and his registration in the mark should therefore be cancelled. Because these claims arise separately from the competing claims of right in the mark, we address them specifically. Baker contends that "The Five Satins" began as a partnership in which each member had an equal right in the name. Parris, even though he abandoned both the group and his right in the mark when he went to Japan for two years, falsely declared on both his 1973 and 1984 registration applications to the Patent and Trademark Office that he has used the mark continuously since 1955, that he is the owner of the mark, and that no one else has the right to use the mark.
We find that these claims must fail because Baker has not adduced any evidence to raise a question of fact that Parris' declaration is false or, even if inaccurate, that it meets the standard for cancellation. "[M]isstatements in a registration application provide a basis for cancelling the registration only if the misstatements (1) were made with knowledge of their falsity, and (2) were material to the determination to grant the application." Rick, 609 F.Supp. at 1537 (emphasis in original) (citing Five Platters, Inc. 419 F.Supp. at 384); see also Sheppard, 666 F.Supp. at 598.
The only evidence we have before us that Parris' statement of continuous use since 1955 might be false is the 1983 application, which we find determinative over Baker's contentions in his affidavit. Parris' declaration in the application that "the service mark was first used ... in June 1955 ... and is now in use in such commerce," Pl. Exh. H, contains no claim of continuous use from 1955. Thus Parris here made no false or fraudulent statement.
Baker's challenge to Parris' declaration of ownership and sole right to the mark likewise cannot survive his own pleadings and exhibits. The existence of another person claiming a right to the service mark at the time of Parris' 1973 application, a copy of which is not before us, would indeed have been "material to the determination to grant the application," Rick, 609 F.Supp. at 1537. However, there is no evidence before us to suggest that Parris had "knowledge" of any such other claim. Baker does not suggest that Parris knew in 1973 of Baker's partnership theory,[10] which would give each original member of the group an equal claim to the name, nor that if Parris considered "The Five Satins" a partnership, he believed that Baker was a member of the group. Thus it is entirely consistent with Parris' application declaration that he could claim exclusive right to the service mark "The Five Satins," while at the same time Baker might correctly *306 have believed that the mark was owned equally by all the partners.
More importantly, as we held supra, Baker did not continuously use the mark, nor ever hold himself out as "The Five Satins" before the late 1970s or early 1980s, so there is no evidence to suggest that Parris in 1973 had notice that Baker was asserting a claim to the name.
Conclusion
Having found that Parris owns the service mark "The Five Satins" and having granted Parris' motion for summary judgment dismissing Baker's claims and granting his counterclaims, we instruct the parties to appear before us on December 9, 1991 at 4:30 p.m. for a conference as to appropriate relief.
SO ORDERED.
NOTES
[1] "The Five Satins" are still in demand on the "oldies" circuit. For a definition of "doo wop," see Rick v. Buchansky (S.D.N.Y.1985) 609 F.Supp. 1522 at 1525, n. 1.
[2] Defendant Ernie Martinelli has been Fred Parris' manager since 1981.
[3] Unless otherwise specified, the facts here related are uncontroverted and drawn from plaintiff and defendants' statements pursuant to Local Civil Rule 3(g), their affidavits, and the exhibits annexed to their motion papers.
[4] Although Baker contends that Parris "was not a member of the group from 1956 through 1959," Pl 3(g) ¶ 12, the documentary evidence Baker himself provides forces us to find that Baker left "The Five Satins" in early 1958 and shortly thereafter Parris resumed performing and recording with the group as lead singer. PL. Exhs. E, F.
[5] Because the pass is poorly photocopied, it is unclear whether the group is "The Original" or "The Originals"; the distinction, however, is unimportant.
[6] The essence of a Lanham Act or common law trademark claim is infringing behavior that is likely to or actually confuses the public. Stetson v. Wolf (S.D.N.Y.1991) 1991 WL 149753 at *1, 1991 U.S.Dist. Lexis 10319 at *3, Marshak v. Sheppard (S.D.N.Y.1987) 666 F.Supp. 590, 600-01, Rick v. Buchansky (S.D.N.Y.1985) 609 F.Supp. 1522, 1529, Marshak v. Green (S.D.N.Y.1981) 505 F.Supp. 1054, 1058, Five Platters, Inc. v. Purdie (D.Md.1976) 419 F.Supp. 372, 381.
[7] This registration, moreover, gives Parris a presumption of right that imposes on Baker, in essence, the burden of "persuad[ing] the Court that [Parris] does not own the service mark." Rick, 609 F.Supp. at 1531.
[8] Section 1114(1) creates liability in:
"[a]ny person who shall, without the consent of the registrant (a) use in commerce any reproduction ... or colorable imitation of a registered mark in connection with the sale, distribution, or advertising of any ... services ... which use is likely to cause confusion, or cause mistake or to deceive."
Section 1117 describes the relief available for a § 1114 violation.
Section 1125(a) creates liability in:
"[a]ny person who shall ... use in connection with any goods or services ... a false designation of origin, or any false description or representation."
[9] These sections read in relevant part:
In any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations ...
15 U.S.C. § 1119.
Any person who shall procure registration in the Patent and Trademark Office of a mark by false or fraudulent declaration or representation ... shall be liable in a civil action by any person injured thereby.
15 U.S.C. § 1120.
[10] As proof that the group was in fact a partnership he proffers the first page of a 1981 civil complaint in which Parris claims that he and three other early members of "The Five Satins" were "[a]t all times hereinafter mentioned ... a partnership doing business under the trade name and style The Five Satins." Pl. Exh. G. However, that single sheet does not state when those "times hereinafter mentioned" were, nor does the complaint include Baker in the partnership. The complaint is thus insufficient to show that a partnership existed in 1956-1958 when Baker was a member of "The Five Satins," or that Parris ever thought of the group as a partnership before 1981.
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777 F.Supp. 619 (1991)
Antonia A. MOORE, Plaintiff,
v.
The WAUSAU CLUB, Defendant.
The WAUSAU CLUB, Third Party Plaintiff,
v.
DICK JUDSON ORCHESTRAS, INC. and Dick Judson, Third Party Defendants.
No. 90 C 6832.
United States District Court, N.D. Illinois, E.D.
October 8, 1991.
Donald A. Kurasch, Donald A. Kurasch, Ltd., Chicago, Ill., for plaintiff.
Thomas M. Crisham, Thomas C. Hofbauer, Hinshaw & Culbertson, Chicago, Ill., for defendant and third-party plaintiff.
John F. Pacocha, Laughlin, Cunningham, Hare & Fanone, Chicago, Ill., for third-party defendants.
MEMORANDUM OPINION AND ORDER
NORDBERG, District Judge.
Antonia Moore, a resident of Illinois, filed suit against The Wausau Club ("Wausau"), *620 a Wisconsin corporation with its principal place of business in Wisconsin, for injuries arising from her performance at the club as a member of the Dick Judson Orchestra. Wausau subsequently filed a third party complaint against the Orchestra, an Illinois Corporation with its principal place of business in Illinois, and Dick Judson, an Illinois resident (collectively "Judson"), alleging they are partially responsible for Moore's injuries. Judson has filed a motion to dismiss the third party complaint on the grounds that under Wisconsin law a third party may not maintain an action for contribution against an employer arising out of injuries to its employee if the employer makes workers' compensation payments. While not disputing Judson's conclusions about Wisconsin law, Wausau asserts that law to be applied is Illinois', which allows third party contribution actions against employers under Illinois' workers' compensation statute for injuries to their employees. It is the issue of which states law to apply which is at the heart of this dispute.
Federal Courts sitting in diversity apply the conflict of laws rules of the forum state. DeValk Lincoln Mercury v. Ford Motor Co., 811 F.2d 326, 329 (7th Cir.1987). Illinois has adopted the approach of the Restatement (Second) of Conflict of Laws for issues of tort law. Ingersoll v. Klein, 46 Ill.2d 42, 262 N.E.2d 593, 595 (1970); Mech v. Pullman Standard, 136 Ill.App.3d 939, 92 Ill.Dec. 45, 46, 484 N.E.2d 776, 777 (1984). Both parties are in agreement the Wisconsin law controls on the issue of the tort against Moore. Judson contends that Wisconsin workers' compensation law also controls whether it is immune from suit by third parties, arguing that where the employee files for workers' compensation is merely one factor in determining which state's law to apply to the overall tort. Wausau, pointing out that Moore's claim for workers' compensation benefits is in Illinois, argues that Judson's statutory immunity under workers' compensation law is a separate issue, requiring a separate choice of law analysis.
The court finds Wausau's characterization of the issues to be the correct one. In all choice of law questions Illinois courts follow a tripartite procedure. First the courts isolate the issues involved. Second, they identify the relevant policies embraced in the conflict. Finally, they examine the contacts and determine which jurisdiction has the greater interest in having its policy applied. Vickrey v. Caterpillar Tractor Co., 146 Ill.App.3d 1023, 100 Ill.Dec. 636, 639, 497 N.E.2d 814, 817 (1986). Whether Judson is immune from a claim for contribution by Wausau for Moore's injuries is a distinct issue from Wausau's liability for Moore's injuries, requiring a separate determination of which state's law to apply. See also Restatement (Second) of Conflict of Laws § 145 cmt. d (1969) (courts are not bound to decide all issues under local law of a single state).
Wisconsin and Illinois take opposite views of the question of employer immunity from suits for contribution under workers' compensation law, reflecting different philosophies as to who should be responsible for work related injuries to employees. Outwardly, the differences between the two states appear to be largely technical. Wisconsin does not allow third party suits for contribution because its courts have held the sources of workers' compensation liability to be exclusively statutory. Therefore common law tort principles of contribution do not apply. Mulder v. Acme-Cleveland Corp., 95 Wis.2d 173, 290 N.W.2d 276, 278 (1980). In Illinois, employer immunity from suit under workers' compensation is treated as an affirmative defense, so employers are still "subject to liability" under the Contribution Among Tortfeasors Act. Toomer v. United Resin Adhesives, Inc., 652 F.Supp. 219, 223 (N.D.Ill.1986). However, the Illinois Supreme Court has recently held that an employer's contribution to a third party in this situation must be limited to its liability under Illinois' workers' compensation law. Kotecki v. Cyclops Welding Corp., No. 68568, 1991 WL 57336, 1991 Ill Lexis 26, at 16 (April 18, 1991).
However more fundamental differences about spreading the cost of employee injuries exist. Generally, the Wisconsin courts have correctly realized that all worker's *621 compensation laws are "basically economic regulations by which the legislature as a matter of public policy, has balanced competing social interests." Mulder, 290 N.W.2d at 280. Making workers' compensation the exclusive remedy against an employer in Wisconsin reflects a compromise for making employers absolutely liable for employees' work related injuries. Id. Illinois, on the other hand, has adopted a policy of spreading losses for employee injuries equitably among all parties contributing to the injury. Miller v. Long-Airdox Co., 914 F.2d 976, 980 (7th Cir.1990), Vickrey, 497 N.E.2d at 817. This policy must steer a course between the workers' compensation statutes, and the Contribution Among Tortfeasors Act, which allows an employer to recover contribution from a third party for the amount paid to an employee under workers' compensation. Ill. ann.Stat. ch. 48, para. 138.5(b) (Smith-Hurd 1969). Although allowing an unlimited third party right to contribution would thwart the protections the workers' compensation statute gives to employers, no contribution would result in third parties subsidizing the system in proportion greater than their own fault, and in excess of scheduled awards. Kotecki, 1991 WL 57336, 1991 Ill Lexis at 13, citing Lambertson v. Cincinnati Corp., 312 Minn. 114, 257 N.W.2d 679, 684 (1977).
An underlying issue for the court in determining which state's law to apply to the statutory immunity issue is whether and to what extent the place of the employer's workers' compensation coverage should be considered in the court's examination of the contacts. Contacts normally considered by the Illinois courts include the place of injury, place of conduct causing the injury, the domicile, place of incorporation or principal place of business of the parties, and the place where the relationship of the parties is centered. These contacts are evaluated according to their relative importance to the issue presented and the underlying policy factors important to the tort area. Mech, 92 Ill.Dec. at 47, 484 N.E.2d at 778; Vickrey, 100 Ill.Dec. at 639, 497 N.E.2d at 817. The place of the employer's benefits coverage is never included among the official factors examined by the courts. Further, Illinois presumes that for contribution issues the law of the place of conduct and injury will control, unless another state can demonstrate a more significant relation to the occurrence or the parties. Mech, 92 Ill.Dec. at 47-8, 484 N.E.2d at 778-9. The reason for this presumption is that it rarely makes sense to separate apply one state's contribution law to a case involving another state's tort law, since contribution is one of the factors each state analyzes in creating its overall tort law scheme. Miller, 914 F.2d at 979.
Nevertheless, examination of federal and state Illinois conflicts cases involving contribution claims in the workers' compensation area reveals that the place of the employer's benefits coverage is the single most important factor in determining which state's workers' compensation law to apply. In Kabak v. Thor Power Tool Co., 106 Ill.App.2d 190, 245 N.E.2d 596 (1969), a case decided before Illinois officially adopted the Restatement (Second), the court applied Ohio law to prohibit a third party claim against an Ohio employer where the employer's coverage was in Ohio. The court noted that all contacts, including the place of injury and the underlying tort law, were Ohio's, but also noted that not applying the law of the state where benefits are paid would unjustifiably interfere with that state's workers' compensation system:
[T]o deny a person the immunity granted him by a workmen's compensation act of a given state would frustrate the efforts of that state to restrict the cost of industrial accidents and to afford a fair basis for predicting what those costs will be.
Kabak, 245 N.E.2d at 599, citing Elston v. Industrial Lift Truck Co., 420 Pa. 97, 216 A.2d 318, 323 (1966); See also Restatement (Second) of Conflict of Laws § 6 cmt. g (1969) (unfair and improper to hold person to local law of one state where they justifiably molded conduct to laws of another state).
*622 In Vickrey, the court applied Missouri workers' compensation law to prohibit a third party claim against a Missouri employer where the place of injury and the employer's coverage were both in Missouri. The court found a lack of policy concerns in not applying Illinois law, where no Illinois employer was responsible for the employee's injuries and no benefits were recovered pursuant to Illinois workers' compensation statutes. Vickrey, 100 Ill.Dec. at 640, 497 N.E.2d at 818. Conversely, the court found that not applying Missouri law would gravely undermine that state's workers' compensation system. Id.
Similarly in Miller the court decided which state's workers' compensation law to apply on the state where the employer had benefits coverage and the interest of each state in protecting its workers' compensation system. Although the employee's injury in Miller occurred in Indiana, Indiana law itself dictated that Illinois law was to apply to the employee's workers' compensation claim, and the employer had coverage in Illinois. Miller, 914 F.2d at 979. The court found no interest in protecting Indiana's workers' compensation scheme or Indiana employers because Indiana had no interest in limiting payments made pursuant to another state's workers' compensation system. Id., at 980.
Finally in Toomer, the court indicated that the same set of contacts could result in application of either state's workers' compensation law, depending on the place of the employer's coverage and the aspect of the workers' compensation statute in question. Toomer involved two conflicts between Illinois and Texas law: whether the state's workers' compensation statute prohibited third party contribution suits, which Texas' did, and whether it prohibited claims for exemplary damages, which Illinois' did. Toomer, 652 F.Supp. at 223-24. The place of injury was in Missouri, while the conduct causing the injury occurred in Texas and Illinois, and the parties were located in both states. Texas however, was the place where coverage existed. Id., at 224. The court found that applying Texas law would ensure stability and certainty to Texas' workers' compensation scheme by not subjecting employers paying benefits under the Texas scheme to unexpected contribution claims. However, the court also indicated that no threat to the stability and certainty of Illinois' scheme existed because no claim for exemplary damages was being made on an employer paying benefits pursuant to Illinois' workers' compensation laws. Id. The clear implication of the Toomer court was that had the employer's coverage been in Illinois, Illinois law would have applied because expectations about exemplary damages and contribution claims would have been reversed.
In the case at hand, the injury to Moore occurred in Wisconsin, as did any conduct by Wausau or Judson causing Moore's injury. The domicile or principal place of business of Moore and Judson is Illinois, while Wausau's principal place of business is in Wisconsin. Because the events surrounding Moore's injury occurred during a performance by Moore with Judson at The Wausau Club, it is safe to say that the relationship between the parties was centered in Wisconsin. Although these contacts might indicate that Wisconsin law should apply to Wausau's contribution claim against Judson, the fact that Judson has workers' compensation coverage in Illinois and the significance of this factor in Illinois conflicts law means that Illinois workers' compensation law should apply to Wausau's claim for contribution. Consequently, under Doyle v. Rhodes, 101 Ill.2d 1, 77 Ill.Dec. 759, 461 N.E.2d 382 (1984) Wausau may maintain an action for contribution against Judson for Judson's partial responsibility for Moore's injuries, regardless of Judson's immunity from direct suit by Moore under Illinois workers' compensation law. However the amount of recovery Wausau may obtain from Judson is limited to Judson's liability to Moore under Illinois' workers' compensation law. Kotecki, 1991 Ill Lexis at 16.
For the foregoing reasons, third-party defendants' motion to dismiss defendant's third party complaint is denied.
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777 F.Supp. 10 (1991)
Esther LE DUC, Plaintiff,
v.
Jacqueline BUJAKE, et al., Defendants.
No. 90-1813C(6).
United States District Court, E.D. Missouri, E.D.
October 29, 1991.
*11 Christopher Carenza, Hoffman & Wallach, St. Louis, Mo., for plaintiff Le Duc.
Kortenhof & Ely, Ben Ely, Jr., St. Louis, Mo., for defendant Bujake.
Gary Rutledge, Karen Menghini, Armstrong, Teasdale, Schafly, Davis & Di, St. Louis, Mo., for defendant Gelven.
MEMORANDUM AND ORDER
GUNN, District Judge.
This matter is before the Court on plaintiff's motion to remand plaintiff's complaint to the Circuit Court of the City of St. Louis and defendants' motions to dismiss and/or sever plaintiff's claim against defendant Terra Gelven.
Plaintiff Esther Le Duc, a Missouri resident, originally filed this complaint against Jacqueline Bujake, a Wisconsin resident, in the Circuit Court for the City of St. Louis seeking to recover for personal injuries allegedly sustained in a 1985 automobile accident. On September 24, 1990 Bujake removed the action to this Court on the basis of diversity of citizenship. At the time of removal Bujake also filed answer to plaintiff's complaint. On December 11, 1990 plaintiff obtained leave to file a first amended complaint adding an additional count and an additional non-diverse defendant, Terra Gelven. In the first amended complaint plaintiff sought to recover for injuries allegedly sustained in a 1988 automobile accident involving Gelven. Plaintiff contended that the injuries sustained in both accidents "involve common issues of fact, discovery, proof and law and are so inextricably entwined that it is necessary to join Count I and Count II in the same cause of action...." First Amended Complaint at ¶ 3. Although the proposed amendment added a nondiverse party and thereby deprived the Court of subject matter jurisdiction, plaintiff failed to bring this issue to the attention of the Court until October 7, 1991, less than a month before the scheduled trial date and ten months after the filing of the amended complaint. At that time plaintiff filed a motion to remand this action to St. Louis County Circuit Court contending that the joinder of defendant Gelven as a necessary and indispensable party to this cause of action defeats diversity and divests this Court of subject matter jurisdiction.
The resolution of this motion is governed by 28 U.S.C. § 1447(e):
If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court.
Where, as here, the record indicates that the problem of the addition of the nondiverse defendant was not brought to the attention of the Court or recognized by the parties, the filing of the amended complaint should be considered a nullity and the Court given an opportunity to consider whether justice requires that Le Duc be permitted to join Gelven as a defendant. *12 See Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir.1987), appeal after remand, 869 F.2d 879 (5th Cir.1989), reh'g denied, 875 F.2d 858 (5th Cir.1989).
In determining whether justice requires joinder of the nondiverse party, the Court is directed to balance the original defendant's interest in maintaining the federal forum against the interest in avoiding multiple or piecemeal litigation of the same claim. See Id. Specifically, the Court is required to consider 1) the extent to which the joinder of the nondiverse party is sought to defeat federal jurisdiction, 2) whether plaintiff has been dilatory in asking for amendment, and 3) whether plaintiff will be significantly injured if amendment is not allowed. See Id. Despite plaintiff's contention to the contrary, consideration of the aforementioned factors rather than "a rigid distinction of whether the proposed added party is an indispensable or permissive party" should govern the Court's determination concerning the propriety of the proposed joinder. Id.
Consideration of the aforementioned factors persuades the Court that plaintiff should not be permitted to amend its complaint to add the nondiverse party. The fact that the 1988 incident on which the proposed amendment is based occurred two years prior to the filing of the original state court complaint and almost three years prior to the request for leave to amend the complaint warrants a conclusion that plaintiff has been dilatory in seeking leave to add defendant Gelven as a party. In addition, the temporal proximity of the petition for removal and the request for joinder of the nondiverse party at least suggests an attempt to defeat this Court's diversity jurisdiction over the action. Finally, there is no indication that plaintiff will be significantly injured if the amendment is not permitted. Plaintiff is free to pursue her claim against Gelven in the state courts and a judgment for or against plaintiff in the federal court will in no way impede her ability to recover against Gelven for injuries sustained in the separate action.
The Court's analysis of these factors persuades it that interest of the diverse defendant Bujake in a federal forum outweighs plaintiff's interest in judicial economy or unity of action.
Accordingly, IT IS HEREBY ORDERED that the December 11, 1990 filing of plaintiff's first amended complaint shall be and it is considered a nullity.
The Court having construed plaintiff's first amended complaint as a request for leave to amend its complaint to add a nondiverse party, IT IS FURTHER ORDERED that plaintiff's request for leave to so amend shall be and it is denied. Accordingly, IT IS FURTHER ORDERED that plaintiff's motion to remand shall be and it is denied pursuant to 28 U.S.C. § 1447(e).
IT IS FURTHER ORDERED that the motions of defendants Bujake and Gelven to dismiss and/or sever plaintiff's claim against defendant Terra Gelven shall be and they are denied as moot.
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281 Pa. Superior Ct. 193 (1980)
421 A.2d 1214
Floyd C. LEWIS, Jr., Appellant,
v.
ERIE INSURANCE EXCHANGE.
Superior Court of Pennsylvania.
Argued November 13, 1979.
Filed September 19, 1980.
*196 Harry O. Falls, New Castle, for appellant.
Charles W. Garbett, Ellwood City, for appellee.
Before PRICE, HESTER and CAVANAUGH, JJ.
PRICE, Judge:
This appeal challenges the order of the trial court dismissing appellant's petition to vacate an arbitration award and dismiss the board of arbitrators, which was entered on the ground that the verification of the petition was not in conformity with Pa.R.C.P. No. 1024. While we agree that the verification was deficient, we find that dismissal of the petition was improper, and we reverse the order of the trial court.
A brief review of the facts giving rise to this appeal follows. Appellant was involved in an automobile accident on November 16, 1976, and sought arbitration pursuant to the uninsured motorist provision of his insurance agreement with Erie Insurance Exchange (Erie). A board of arbitrators was selected pursuant to the Uniform Arbitration Act *197 of April 25, 1927, P.L. 381, 5 P.S. § 161 et seq., and the hearings were scheduled on August 23 and October 18, 1978. The October 18 hearing was scheduled to receive the testimony of appellant and his witnesses, but they did not appear, nor did appellant's counsel. On October 27, 1978, counsel received the board's decision denying appellant's claim.
Thirty-one days later, on November 28, 1978, appellant filed a petition pursuant to the Uniform Arbitration Act requesting that the award be vacated[1] because he had been denied an opportunity to be heard. The petition alleged that appellant, his counsel, and his witnesses had failed to appear at the hearing because appellant's counsel was ill and, after requesting a continuance at 9:00 a.m. on the morning of the hearing, had understood that the hearing would be rescheduled. Erie objected to the petition on the grounds that it was improperly verified and that it was not timely filed. President Judge John F. Henderson of the Court of Common Pleas of Lawrence County found that the latter objection lacked merit but that the former compelled dismissal.
The affidavit attached to the instant petition was signed by appellant's attorney and stated that "the facts contained in the foregoing Petition are true and correct to the best of his information, knowledge, belief, and the reason Gordon C. Post, Jr., is signing for Floyd Lewis, Jr. is that Floyd Lewis Jr. is unavailable at this time." Although Pa.R.C.P. No. 1024 is not directly applicable to petitions, we have determined that the form of affidavits to petitions should be governed with reference to that rule, which states in pertinent part:
"(c) The verification shall be made by one or more of the parties filing the pleading unless all the parties (1) lack sufficient knowledge or information, or (2) are outside the jurisdiction of the court and the verification of none of them can be obtained within the time allowed for filing the pleading. In such cases, the verification may be *198 made by any person having sufficient knowledge or information and belief and shall set forth the source of his information as to matters not stated upon his own knowledge and the reason why the verification is not made by a party."
Monroe Contract Corp. v. Harrison Square, Inc., 266 Pa.Super. 549, 405 A.2d 954 (1979).
Examination of the second alternative of paragraph (c) indicates that the affidavit herein at issue did not sufficiently set forth the reason why the verification was not made by a party. Merely stating that the party is unavailable, as was done in the instant affidavit, does not demonstrate the necessary prerequisites for permitting a non-party to make the verification that the party is outside the jurisdiction of the court and could not be reached in sufficient time to file the pleading.[2]See Hercoform Marketing v. Brolon, 15 Lebanon 274, 75 Pa.D. & C.2d 394 (1975); Warner v. Joseph F. Allias, Baird, Inc., 52 West. 153, (C.P. Pa. 1970); 2A Anderson Pa.Civ.Prac. § 1024.8 (1976).
Appellant concedes in his brief that the verification did not conform with the requirements of Rule 1024(c) but submits that it was an abuse of discretion for the trial court to have dismissed the petition without affording him an opportunity to file an amended verification. We agree. *199 The admonition of Pa.R.C.P. No. 126 is particularly applicable in situations of this sort:
"The rules shall be liberally construed to secure the just, speedy and inexpensive determination of every action or proceeding to which they are applicable. The court at every stage of any such action or proceeding may disregard any error or defect of procedure which does not affect the substantial rights of the parties."
The Rules of Civil Procedure are designed to achieve the ends of justice and are not to be accorded the status of substantive objectives requiring rigid adherence. As we have often repeated, "courts should not be astute in enforcing technicalities to defeat apparently meritorious claims." Safeguard Investment Co. v. Davis, 239 Pa.Super. 300, 306, 361 A.2d 893, 896 (1976); General Mills, Inc. v. Snavely, 203 Pa.Super. 162, 167, 199 A.2d 540, 543 (1964).[3]
Thus, before dismissing a petition on the basis of a defective verification, a court should allow the petitioner to amend. Monroe Contract Corp. v. Harrison Square, Inc., supra. Since appellant attempted to comply with the rules and the error was of a de minimus technical nature that did not prejudice the substantive rights of Erie, we do not believe it is necessary to remand this matter for a purely formal amendment.[4]Id.
*200 Our task is not completed, however, for appellee contends that section 5571 of the Judicial Code, 42 Pa.C.S. § 5571,[5] providing a uniform thirty day appeal period should control the instant case rather than the older provision of the Uniform Arbitration Act mandating that notice of a motion to vacate an award be filed within three months of the award,[6] which was applied by the trial court. We disagree with appellee's interpretation of section 5571 of the Judicial Code, and we find that the trial court correctly applied the time limits of the Uniform Arbitration Act.
Section 5571 of the Judicial Code specifies that "an appeal from a tribunal or other government unit to a court. . . shall be commenced within 30 days after the entry of the order from which the appeal is taken . . . ." 42 Pa.C.S. § 5571(b). Although in common usage the term `tribunal' would encompass all boards of arbitration, the Judicial Code explicitly limits the scope of this term to "[a] court, district justice or other judicial officer vested with the power to enter an order in a matter. The term includes a government unit, other than the General Assembly and its officers and agencies, when performing quasi-judicial functions." 42 Pa.C.S. § 102. Further delving into the definition section of the Judicial Code reveals that the term `judicial officer' includes only judges, district justices and appointive judicial officers. Although `appointive judicial officers' is defined by the Judicial Code to include arbitrators, that term by its very wording excludes arbitrators sitting to decide a controversy that has been voluntarily submitted for settlement by arbitration. Act of April 25, 1927, P.L. 381, No. 248, § 4, 5 P.S. § 164. In those circumstances, the arbitrators are selected by the parties, and are not appointed by personnel from within the unified judicial system.[7] Examining the *201 final portion of the definition of `tribunal,' we find the term `government unit,' which term encompasses agencies of the courts of the Commonwealth. 42 Pa.C.S. § 102. Arbitrators, however, do not act as agents of the court of common pleas. While their position is judicial in nature, they lack the authority of a court since their power does not stem from the law of the land but, instead, is derived from the contract or agreement of submission made by the parties, and they are limited by the terms thereof. Sley System Garages v. Transport Workers Union of America, 406 Pa. 370, 178 A.2d 560 (1962); Wark & Co. v. Twelfth & Swanson Corp., 378 Pa. 578, 107 A.2d 856 (1954). Thus, it appears that the Judicial Code, by its own terms, excludes an appeal from an arbitration award from the ambit of section 5571 governing appeal times.
Furthermore, an expansive reading of section 5571 is not warranted in this instance because section 13 of the Uniform Arbitration Act, 5 P.S. § 173, was not specifically repealed by the Judiciary Act Repealer Act of April 28, 1978, P.L. 202, No. 53, § 2, 42 P.S. § 20002. Although that Act further states that other acts not specifically repealed are repealed insofar as they are inconsistent with the Judicial Code, 42 P.S. § 20002(g), we are mindful that statutory repeals by implication are not favored and that we must attempt to find a reasonable way to reconcile the statutes. Wyoming Sand & Stone Co. v. Department of Revenue, 477 Pa. 488, 384 A.2d 1193 (1978); Pennsylvania Turnpike Commission v. Sanders & Thomas, Inc., 461 Pa. 420, 336 A.2d 609 (1975). Since we are able to reconcile these two statutes, we find that the ninety day appeal time provided in the Uniform Arbitration Act is applicable and that appellant's petition was timely filed.
The order of the trial court is reversed, and the court is instructed to issue on Erie a rule to show cause why the *202 award of the arbitrators should not be vacated and the board dismissed.
NOTES
[1] Act of April 25, 1927, P.L. 381, No. 248, § 10, 5 P.S. § 170.
[2] Erie alleges that the verification was also deficient because it was made by appellant's counsel, which Erie contends is prohibited by Pa.R.C.P. No. 1002. This court rejected that claim in Monroe Contract Corp. v. Harrison Square, Inc., 266 Pa.Super. 549, 405 A.2d 954 (1979), in which we held that a petitioner's counsel may verify when the conditions delineated in Pa.R.C.P. No. 1024(c) are present. Erie additionally alleges that the affidavit was not sufficient because it did not set forth the source of counsel's information as required by Pa.R.C.P. No. 1024(c). Once again, in Monroe, we held that the source of information need only be indicated for those matters not stated upon the signer's own knowledge. 266 Pa.Super. at 556, 405 A.2d at 958 n. 4. All information pertinent to the instant petition was indeed within counsel's knowledge and the failure to state from whence the other information was derived was an inconsequential error which, while not to be condoned, was not prejudicial. See Safeguard Investment Co. v. Davis, 239 Pa.Super. 300, 361 A.2d 893 (1976).
[3] We note that appellant filed the instant petition on November 28, 1978, prior to our decision in Monroe on June 6, 1979, which explicitly governs the form of the affidavit for a petition. We hasten to add, of course, that we maintain a firm expectation that counsel will thoroughly read the rules of procedure, and although we will not enforce a hypertechnical reading of these rules, we will not condone willful noncompliance.
[4] Erie argues that appellant has waived the right to amendment by his failure to request this relief from the trial court. We agree that when amendment would involve a matter of substance, a party may not ask for leave to amend at the appellate level after having failed to request this relief from the trial court. DiSante v. Russ Financial Co., 251 Pa.Super. 184, 380 A.2d 439 (1977). Nevertheless, since the instant case involves a technical defect rather than one affecting the substantive merits and we have deemed a formal amendment unnecessary in the interests of judicial economy, we believe those principles are not applicable to this case.
[5] This section became effective June 27, 1978, prior to the filing of appellant's petition.
[6] Act of April 25, 1927, P.L. 381, No. 248, § 13, 5 P.S. § 173.
[7] Since the manner of choosing arbitrators differs when a case is subject to compulsory arbitration under 42 Pa.C.S. § 7361, an award by a board of arbitrators in a compulsory arbitration would be subject to the thirty day appeal period specified in the Judicial Code, 42 Pa.C.S. § 5571. In that situation, the arbitrators are appointed by the prothonotary from a list of qualified attorneys and would be included within the definition of `appointive judicial officers.'
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17 Cal.Rptr.3d 175 (2004)
121 Cal.App.4th Supp. 7
Jose OROZCO, Plaintiff and Respondent,
v.
Olivo CASIMIRO, Defendant and Appellant.
No. BV 024891.
Appellate Division, Superior Court, Los Angeles County.
June 24, 2004.
*176 Legal Aid Foundation of Los Angeles and Kenyon F. Dobberteen for Defendant and Appellant.
Law Office of Michael J. Meade and Michael J. Meade, Sacramento, for Plaintiff and Respondent.
OPINION AND JUDGMENT
LEE, P.J.
Proceedings Below
On December 9, 2002, plaintiff and respondent Jose Orozeo filed a complaint in unlawful detainer against defendant and appellant Olivo Casimiro. Respondent alleged that he leased property to appellant at a monthly rent of $550, which was later increased to $601, and appellant was served with a "3-day notice to perform covenants or quit." The three-day notice, attached as an exhibit to the complaint, stated that "YOU HAVE BREACHED the rental agreement ... by: NOT PAYING YOUR LATE FEE WHEN RENT IS NOT PAID BY THE 13TH OF THE MONTH IN THE AMOUNT OF $50.00 PURSUANT TO OUR RENTAL AGREEMENT PARAGRAPH (2). FOR THE MONTH OF NOVEMBER THE RENT WAS NOT PAID UNTIL THE 21ST THEREFOR[E] MAKING YOUR RENT LATE." On December 18, 2002, appellant, in propria persona, filed a general denial which denied the allegations of respondent's complaint and set forth a variety of affirmative defenses, including breach of the warranty of habitability. On December 19, 2002, the Legal Aid Foundation of Los Angeles substituted in as counsel for appellant.
The matter proceeded to a court trial on January 30, 2003. The first amended settled statement on appeal reflects that the parties stipulated that all facts alleged in the complaint were true, except that the correct commencement date of the lease was July 10, 1998, not July 10, 1999, as alleged in the complaint. The rental agreement and three-day notice were received into evidence. The lease provided that rent was due on the tenth of the month, as well as providing for a "Late Rent Charge" of "$50.00 3.days.GRACe [sic]." The parties additionally stipulated that neither party "spoke, read or wrote in the English language." At respondent's request, the matter was continued to February 18, 2003, to permit respondent to file a trial brief.
Although not reflected in the settled statement, appellant was also apparently given leave to file a trial brief, since he did so on January 30, 2003. Appellant contended that the $50 late fee was punitive in nature and not a "good faith estimate of the damages likely to be suffered by [respondent] in the case of a late payment." Therefore, according to appellant, the late fee, which bore no rational relationship to any actual damages suffered by respondent, was "void and unenforceable." In his brief filed on February 13, 2003, respondent countered that the late fee was presumptively valid under Civil Code section 1671.[1] Respondent further noted that appellant specifically agreed in the lease to the late fee amount of $50.
The matter went forward on the scheduled date of February 18, 2003. Both sides moved for judgment based upon the stipulated facts and the trial briefs. The *177 trial court took the matter under submission. In its judgment issued later the same day, the trial court found for respondent. It ordered the lease forfeited and awarded respondent possession of the premises, as well as statutory damages of $1,380. 40, attorney fees of $500, and costs of $106.30. Appellant filed a notice of appeal of the judgment on March 4, 2003.
Contentions on Appeal
Appellant makes two contentions in this appeal. His first contention is that a provision in a residential lease that requires a tenant to pay a set amount whenever rent is paid late is always void. Appellant's theory is as follows: (a) late fees are only allowed when it is impracticable or extremely difficult to fix actual damages; (b) respondent was only entitled to interest for a late payment of rent; (e) interest is not impracticable or extremely difficult to fix; and (d) therefore, contractual provisions for late fees in residential leases are never valid. Appellant's second contention is that even if such fees are allowed, the landlord must plead and prove that such damages were impracticable or extremely difficult to fix, which respondent did not do in this case.
Discussion
1. Applicable Law.
Section 1951.5 provides that "[s]ection 1671, relating to liquidated damages, applies to a lease of real property." Section 1671, unofficially entitled "Validity; standards for determination; applicability of section," provides in relevant part as follows: "(b) Except as provided in subdivision (c), a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made. [¶] (c) The validity of a liquidated damages provision shall be determined under subdivision (d) and not under subdivision (b) where the liquidated damages are sought to be recovered from either: [¶] (1) A party to a contract for the retail purchase, or rental, by such party of personal property or services, primarily for the party's personal, family, or household purposes; or [¶] (2) A party to a lease of real property for use as a dwelling by the party or those dependent upon the party for support. [¶] (d) In the cases described in subdivision (c), a provision in a contract liquidating damages for the breach of the contract is void except that the parties to such a contract may agree therein upon an amount which shall be presumed to be the amount of damage sustained by a breach thereof, when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage."
As is apparent from the language of section 1671, a liquidated damages provision in a residential lease is normally void, except where the parties specifically agree and "when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage." (Id., subd. (d).) Once the landlord shows that it was impracticable or extremely difficult to fix actual damages, the amount the parties agreed upon is presumed to represent the amount of damage suffered by the breach. Appellant argues that, notwithstanding such language, late fee provisions in a residential lease are never valid, since the landlord is only entitled to interest on the late-paid rent as damages, which is easily ascertainable as a matter of law. Appellant's legal premise, however, is simply wrong. A landlord is not limited to interest as damages as a consequence of the late payment of money. He is also entitled to "`"administrative costs reasonably *178 related to collecting and accounting for"'" late payments. (See Hitz v. First Interstate Bank (1995) 38 Cal.App.4th 274, 278, 44 Cal.Rptr.2d 890, quoting Beasley v. Wells Fargo Bank (1991) 235 Cal.App.3d 1383, 1390, 1 Cal.Rptr.2d 446; see also Garrett v. Coast & Southern Fed. Sav. & Loan Assn. (1973) 9 Cal.3d 731, 741, 108 Cal.Rptr. 845, 511 P.2d 1197.)
Section 1671, subdivision (d), applies to contracts for retail purchases or services, as well as real property leases. (Id., subd. (c)(1); Beasley v. Wells Fargo Bank, supra, 235 Cal.App.3d at p. 1399, 1 Cal. Rptr.2d 446.) Therefore, cases discussing the applicability of section 1671, subdivision (d), to contracts for retail purchases or services are instructive on the issues presented in this appeal. For example, Hitz involved a class action which challenged a bank's imposition of late fees against credit card holders who did not make minimum monthly payments. (Hitz v. First Interstate Bank, supra, 38 Cal. App.4th at p. 279, 44 Cal.Rptr.2d 890.) The trial court ruled that such fees were void under section 1671, subdivision (d). (Hitz, at p. 279, 44 Cal.Rptr.2d 890.) The appellate court, in a thorough discussion of section 1671, subdivision (d), noted that subdivision (d), not subdivision (b), applied to situations described in subdivision (c), and that the issuance of a credit card was a "service" within the ambit of subdivision (c)(1). (Hitz, at pp. 286-287, 44 Cal. Rptr.2d 890.)
Hitz also outlined the relevant law in this area. First, "[f]or liquidated damages to be valid under subdivision (d) of Civil Code section 1671, it must have been `impracticable or extremely difficult to fix the actual damage.' [Citation.]" (Hitz v. First Interstate Bank, supra, 38 Cal. App.4th at p. 288, 44 Cal.Rptr.2d 890.) Additionally, "the amount of liquidated damages `must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.' [Citation.]" (Ibid.) Finally, "[a]bsent either of these elements, a liquidated damages provision is void, although breaching parties remain liable for the actual damages resulting from the breach. [Citation.]" (Ibid.) The court noted that there was evidence at trial that the bank's late fee was intended "`to generate new revenue'" and "`increase . . . profitability.'" (Id. at p. 289, 44 Cal.Rptr.2d 890.) As is apparent, such testimony did not tend to support a conclusion that the late fee was merely intended to recoup damages suffered by late payments.
2. Respondent neither pleaded nor proved that damages were impracticable or extremely difficult to fix, and thus he was not entitled to the presumption that the late fee represented actual damages. Under these circumstances, the late fee was void.
Respondent's complaint did not plead that the late fee was impracticable or extremely difficult to fix. Furthermore, respondent did not present any such evidence at trial. Although respondent appears to rely on the trial stipulation that neither party spoke, read, or wrote in the English language, this is not evidence that damages for late payment of rent were impracticable or extremely difficult to fix. To the extent that respondent may be arguing that notices would have to be prepared in a language other than English, we note that the lease agreement was in English, as well as the three-day notice regarding the late fee. Although respondent may have been able to present evidence below that would have shown in this particular case that damages resulting *179 from the late payment of rent were impracticable or extremely difficult to fix, he did not do so. In the absence of such evidence, he was not entitled to the presumption that the late fee was the amount of damage caused by the late payment. Thus, under the evidence in this case, the late fee was void and unenforceable.
The judgment is reversed. The matter is remanded to the trial court with instructions to enter judgment for appellant. Appellant to recover costs on appeal.
We concur: P. McKAY and WASSERMAN, JJ.
NOTES
[1] All further statutory references are to the Civil Code unless otherwise indicated.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2259552/
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16 Cal.Rptr.3d 818 (2004)
121 Cal.App.4th 301
Tony BELLO et al., Plaintiffs and Appellants,
v.
ABA ENERGY CORPORATION, Defendant and Appellant.
No. A102287.
Court of Appeal, First District, Division One.
August 2, 2004.
*820 Bernheim, Gutierrez & McCready, William S. Bernheim, Dixon, for Plaintiffs and Appellants.
Downey Brand, Julie A. Carter, Tracy K. Hunckler, David A. Livingston, Sacramento, for Defendant and Appellant.
*821 Jennifer Henning for League of California Cities and California State Association of Counties as Amici Curiae on behalf of Defendant and Appellant.
Anderson & Poole, Edward G. Poole, San Francisco, Shannon M. Childs for California Natural Gas Producers Association as Amicus Curiae on behalf of Defendant and Appellant.
*819 MARGULIES, J.
Plaintiffs own a parcel of land in rural Solano County bounded by a county road. The land underlying and immediately adjoining the road is subject to a public right-of-way. Defendant ABA Energy Corporation (ABA) is a private company that operates a natural gas field located near plaintiffs' parcel. After obtaining an appropriate permit from the county, but without notice to plaintiffs, ABA installed a pipeline in the right-of-way on plaintiffs' land to transport natural gas recovered from ABA's drilling operations. Plaintiffs sued for trespass, contending that ABA was required to obtain their consent before laying pipe in the right-of-way. The trial court agreed with plaintiffs, finding that ABA's pipeline constituted a trespass, but the court refused to require ABA to remove the line and awarded only nominal damages.
ABA contends that the trial court erred in finding a trespass. Plaintiffs contend in their cross-appeal that the trial court erred in permitting the pipeline to remain, in awarding only nominal damages, and in refusing to award attorney fees. We reverse the trial court's finding that ABA is a trespasser, direct entry of judgment for ABA, and dismiss plaintiffs' cross-appeal as moot.
I. BACKGROUND
Plaintiffs Tony, Virginia and Frank Bello (Bellos) are the trustees of three living trusts that together own a 320-acre parcel of agricultural land in Solano County. At the time of trial, the parcel was farmed by tenants and planted with clover and alfalfa. The northern border of the Bellos' property is subject to a 30-foot-wide public right-of-way in favor of the county. The full width of the right-of-way is 60 feet, containing a 30-foot-wide paved county road, Midway Road, and 15 feet of unpaved reserve on either side. Because the right-of-way is shared by the parcel across the road, the Bellos' parcel supports one longitudinal half of the road and one of the unpaved shoulders.
ABA is a privately owned natural gas exploration and production company. In the year 2000, ABA drilled natural gas wells on property near the Bellos' parcel. ABA anticipated that the unprocessed natural gas recovered from these wells would be transported by pipeline to a metering station operated by the local natural gas utility, Pacific Gas & Electric Company (PG & E). At that point, ABA's gas would be mixed with gas from other producers. ABA's customers, rather than receiving the actual gas recovered by ABA, would be entitled to draw from PG & E's natural gas delivery system a cubic yardage equivalent to that delivered into the system by ABA. As ABA's president testified, the system "is similar to a bank."
To transport the gas recovered from the well, ABA applied to the county for a right-of-way encroachment permit authorizing the burial of a four-mile-long, four-inch metal pipeline in the shoulder along local roads. Approximately one mile of the proposed pipeline was to be buried in the right-of-way alongside Midway Road, including that portion of Midway Road on the Bellos' parcel. The county approved *822 the permit, and ABA installed the pipeline. ABA neither sought nor received the consent of the underlying landowners to installation of the pipeline.
The Bellos filed this action for trespass and ejectment after ABA had completed construction of the pipeline. Their complaint asserted that ABA was required to obtain their consent prior to burying a pipeline in the roadway right-of-way on their property and sought damages and an injunction requiring ABA to remove the pipeline.
The case was tried without a jury. In its statement of decision, the trial court concluded that ABA's installation of the pipeline was not within the scope of uses permitted in the public right-of-way because "[t]he installation of a natural gas pipeline within [the] easement is not a use incidental to the road purposes for which the right-of-way was acquired by the county." Based on its conclusion that the pipeline was not a proper use of the right-of-way, the court found that ABA, having never obtained the Bellos' consent to installation of the pipeline, was a trespasser. Nonetheless, the court granted only nominal damages, finding that the pipeline did not interfere with the Bellos' use of their land and that they had provided no evidence to support their claim that the pipeline had diminished the value of their property. Because ABA's trespass was made in good faith and did not injure the Bellos, the court found that the balance of hardships weighed against their request for removal of the pipeline and denied injunctive relief. The trial judge also declined to award attorney fees.
II. DISCUSSION
We first address ABA's contention that the trial court erred in finding that it was required to obtain the Bellos' consent before installing a pipeline in the public right-of-way on their property.[1] Although the trial court cited no legal authority in its decision, the language of its ruling suggests that the court was relying on Gurnsey v. Northern Cal. Power Co. (1911) 160 Cal. 699, 117 P. 906 (Gurnsey), in which the Supreme Court held that the defendant's installation of electrical transmission poles and lines in the right-of-way along a "public wagon road" across a "large tract of land" in Tehama County (id. at p. 702, 117 P. 906) constituted a trespass because the electric lines did not serve "purposes incidental to the effective use by the public of the highway." (Id. at p. 705, 117 P. 906.)
Gurnsey represents one of two distinct lines of authority in the Supreme Court's right-of-way jurisprudence. The second line was established nearly 20 years prior to Gurnsey by Montgomery v. Railway Company (1894) 104 Cal. 186, 37 P. 786 (Montgomery), in which the Supreme Court allowed an interurban railway to be constructed in a public right-of-way without the landowner's consent. Montgomery holds that, as a result of the demands of urbanization, public rights-of-way located in developed areas are subject to a wide range of "other and further uses" besides surface transportation, including the installation of sewage, water, gas, and communications lines. (Id. at p. 189, 37 P. 786.) This expansive approach was reaffirmed by Colegrove W. Co. v. City of Hollywood (1907) 151 Cal. 425, 90 P. 1053 (Colegrove), decided only four years prior to Gurnsey.
We find Gurnsey distinguishable in these circumstances and hold that the *823 standard adopted in Montgomery governs use of the right-of-way along the Bellos' property. The rule of law announced by Gurnsey is applicable only to rights-of-way that have yet to be subjected to the "other and further uses" that are incident to modern development. (Montgomery, supra, 104 Cal. at p. 189, 37 P. 786.) Because public rights-of-way even in rural portions of the San Francisco Bay Area are now subject to the intensive use described in Montgomery, the rule of law adopted in that case must govern here.
A. The Supreme Court's Public Right-of-way Jurisprudence
A public right-of-way is a form of easement, in that it grants use rights in a particular parcel of land to nonowners of the land. (Civ.Code, § 801, subd. (4); City of Manhattan Beach v. Superior Court (1996) 13 Cal.4th 232, 240, 52 Cal.Rptr.2d 82, 914 P.2d 160.) A private easement ordinarily vests those use rights in the owner of a particular parcel of neighboring property, the "dominant tenement." (Moylan v. Dykes (1986) 181 Cal.App.3d 561, 568, 226 Cal.Rptr. 673.) Unlike a private easement, the use rights of a public right-of-way are vested equally in each and every member of the public. (In re Anderson (1933) 130 Cal.App. 395, 398-399, 19 P.2d 1027.) The city or county government ordinarily administers use of the right-of-way. (E.g., Sts. & Hy.Code, §§ 1450, 1460.)
The late 19th century saw a dramatic change in the judicially recognized scope of public rights-of-way in California. Before the widespread adoption of railroads, electricity, and the telephone, the term "right-of-way" was given its literal meaninga public right to construct, maintain, and use a road over private land. Any other use required the landowner's consent. (See, e.g., Muller v. Railway Co. (1890) 83 Cal. 240, 243-244, 23 P. 265; S.P.R.R. Co. v. Reed (1871) 41 Cal. 256, 261-262.) Shortly before the turn of the century, however, the Supreme Court recognized that urbanization was placing a much greater demand on public resources than could be accommodated by this literal view of public rights.
In Montgomery, supra, the court expressly overruled the prevailing narrow interpretation of rights-of-way in holding that a municipality could grant a private company the right to construct and operate a railroad in a public right-of-way without the landowner's consent. Summarizing its holding, the Montgomery court "affirm[ed] that when a public street in a city is dedicated to the general use of the public, it involves its use subject to municipal control and limitations for all the uses and purposes of the public as a street, including such methods for the transportation of passengers and freight as modern science and improvements may have rendered necessary, and that the application of these methods and indeed of those yet to be discovered, must have been contemplated when the street was opened and the right of way obtained, ... and hence that such a user imposes no new burden or servitude upon the owner of the abutting land." (Montgomery, supra, 104 Cal. at pp. 191-192, 37 P. 786.)
In justifying this departure from what the court acknowledged was contrary prior precedent, it summed up the basis for its holding in three words: "The world moves.... [¶] The trend of judicial opinion ... is to a broader and more comprehensive view of the rights of the public in and to the streets and highways of city and country...." (Montgomery, supra, 104 Cal. at p. 192, 37 P. 786.) The court was not deterred by its recognition that in granting a broad scope to public rights it was depriving underlying landowners of *824 the rights of use and control that traditionally accompany private land ownership. On the contrary, it quoted approvingly an Oregon case which concluded that "`[t]he establishment of a public highway practically divests the owner of a fee to the land upon which it is laid out of the entire present beneficial interest of a private nature which he has therein. It leaves him nothing but the possibility of a reinvestment of his former interest in case the highway should be discontinued as such....'" (Id. at p. 193, 37 P. 786, quoting Paquet v. Mt. Tabor St. R'y Co. (1889) 18 Or. 233, 235, 22 P. 906, 907.)
The Montgomery court expressly limited the application of its ruling to areas in which the public rights-of-way were being used to contain significant public infrastructure. Before stating its holding, the court noted that there is a "wide distinction between a highway in the country and a street in a city or village, as to the ... servitude in the land upon which they are located." (Montgomery, supra, 104 Cal. at p. 188, 37 P. 786.) This "wide distinction" was not based on any inherent difference between rights-of-way in city and countryside. Rather, it was based on the practical recognition that development was placing ever-greater demands on streets in urban areasdemands that, in 1894, had not yet reached the enormous expanse of California outside its cities. As the court noted, while country roads were used only for surface transit, "[i]n the case of streets in a city there are other and further uses, such as the construction of sewers and drains, laying of gas and water pipes, erection of telegraph and telephone wires, and a variety of other improvements, beneath, upon, and above the surface, to which in modern times urban streets have been subjected." (Id. at p. 189, 37 P. 786.)
The expansive interpretation of rights-of-way in developed areas was reaffirmed in Colegrove, supra, 151 Cal. 425, 90 P. 1053, which concerned the right of an underlying landowner to lay pipe in a previously dedicated roadway right-of-way. The road in question ran through a lemon orchard in the City of Hollywooda developed area, by the court's reckoning, despite the property's agricultural use. (Id. at p. 427, 90 P. 1053.) Discussing the scope of the right-of-way, the court noted that "[i]n city streets the easement of the public is, as a result of the conditions of urban life, more extensive than in roads through sparsely inhabited regions. In cities, it is customary to devote not only the surface of the street and the space above the street to public use, but the municipality may, and frequently does, occupy the soil beneath the surface for the accommodation of sewers, gas and water pipes, electric wires, and conduits for railroads. Where the city undertakes to occupy the space above or below the surface of the street for any purpose within the scope of the public uses to which highways may be put, the use by the owner of the fee must yield to the public use." (Id. at pp. 429-430, 90 P. 1053.) Colegrove also recognized that the scope of roadway rights-of-way is not fixed but responds to changing societal conditions, noting that "`... [t]his right of the owner may grow less and less as the public needs increase....'" (Id. at p. 430, 90 P. 1053, quoting Allen v. Boston (1893) 159 Mass. 324, 335, 34 N.E. 519.)
Four years later, in Gurnsey, the Supreme Court had occasion to rule on the scope of public rights-of-way underlying what Colegrove had described as "roads through sparsely inhabited regions." (Colegrove, supra, 151 Cal. at p. 429, 90 P. 1053.) At issue was the scope of a public right-of-way underlying a 40-year-old "public wagon road" crossing a large ranch in Tehama County. (Gurnsey, supra, 160 Cal. at p. 702, 117 P. 906.) The defendant *825 power company had obtained a franchise from the county that permitted it to erect poles and string electrical transmission wires in public rights-of-way. (Ibid.) Relying on that franchise, it ran wires along the road crossing the plaintiff's ranch to bring electricity to two other private ranches. (Id. at pp. 707-708, 117 P. 906.) In ruling on the scope of this right-of-way, the court held that "[a]ll that the public acquires under the easement is declared by [former] section 2631 of the Political Code, as follows: `By taking or accepting land for a highway, the public acquire only the right of way, and the incidents necessary to enjoying and maintaining the same....'" (Id. at p. 705, 117 P. 906.)[2] Acknowledging the statutory right of the local government to grant franchises to private companies for "lawful" use of the right-of-way, the court held that the lawful uses of the wagon road were restricted to "something which will promote the public comfort and convenience in the use of the highway." (Id. at p. 706, 117 P. 906.) Because the defendant's power lines served no transit-related function, the Gurnsey court found them not to be "incident" to the wagon road and therefore to be outside the rights granted to the public in the right-of-way. (Id. at p. 709, 117 P. 906.)
Since Gurnsey, the Supreme Court has only twice addressed the scope of roadway rights-of-way, both times adopting a broad construction. In Hayes v. Handley (1920) 182 Cal. 273, 187 P. 952, the court reaffirmed Montgomery and Colegrove, holding that the City of Los Angeles was permitted to construct a traffic tunnel beneath a street without paying compensation to abutting landowners. In doing so, the court quoted the expansive view of public rights-of-way from both Colegrove ("`... [i]t is well settled that the manner and extent of such public use is not limited by any standard of methods of use in vogue at the time of dedication....'") and Montgomery (a public right-of-way includes "`"... such methods for the transportation of passengers and freight as modern science and improvements may have rendered necessary ... and, indeed, of those yet to be discovered...."'"). (Hayes v. Handley, at p. 282, 187 P. 952.) Somewhat more recently, in Faus v. City of Los Angeles (1967) 67 Cal.2d 350, 62 Cal.Rptr. 193, 431 P.2d 849, the court again applied a flexible approach, holding that a public easement granted expressly for the operation of an electric interurban railway must be interpreted to allow the operation of equivalent motorbus service. Although the decision was not a general pronouncement on the scope of roadway rights-of-way, being limited to the specific language of the easement dedication, it interpreted that language broadly, holding that such easements are deemed "`... to have been intended to accommodate future needs.' [Citation.] Our courts have been receptive to the contention that changed economic and technological conditions require reevaluation of restrictions placed upon the use of real property.... [Citations.]" (Id. at p. 355, 62 Cal.Rptr. 193, 431 P.2d 849.)
The Courts of Appeal have also consistently adopted a broad and flexible interpretation of the scope of public rights-of-way. In In re Anderson, supra, 130 Cal. *826 App. 395, 19 P.2d 1027, the court approved the establishment of a public market in Los Angeles as an appropriate use of a public right-of-way. In discussing the breadth of uses permitted in a right-of-way, the court quoted approvingly an earlier Massachusetts case, which held: "`"The easement which the public acquires includes every reasonable means of transportation for persons, and commodities, and of transmission of intelligence which the advance of civilization may render suitable for a highway[,]"'" including "`"gas and water pipes, sewer, telephone, telegraph, electric light and power poles, wires and conduits, electric and horse railways, the ... subway and private railroads...."'" (Id. at p. 398, 19 P.2d 1027, quoting Commonwealth v. Morrison (1908) 197 Mass. 199, 203, 83 N.E. 415, 416.) Other decisions have echoed this breadth. (See, e.g., Galeb v. Cupertino Sanitary Dist. (1964) 227 Cal.App.2d 294, 303, 38 Cal.Rptr. 580 [right-of-way includes below-ground use rights]; Mancino v. Santa Clara County Flood etc. Dist. (1969) 272 Cal.App.2d 678, 682, 77 Cal.Rptr. 679 [same]; Smith v. County of San Diego (1967) 252 Cal.App.2d 438, 444, 60 Cal.Rptr. 602 [approving a flood control channel as a proper use, holding that "[a]ny use which was rendered necessary for the public by future development or discovery would also have been contemplated"]; Norris v. State of California ex rel. Dept. Pub. Wks. (1968) 261 Cal.App.2d 41, 47, 67 Cal.Rptr. 595 ["`[w]hen land is taken or dedicated for use as a highway, the taking or dedication should be presumed to be not merely for such purposes and uses as were known and customary, at that time, but also for all public purposes, present or prospective, whether then known or not, consistent with the character of such highways....'"]; Collopy v. United Railroads (1924) 67 Cal.App. 716, 723, 228 P. 59 [highway right-of-way includes "new and improved methods" of transportation, such as rail].)
B. Applying Montgomery and Gurnsey
The rule of Montgomery and Colegrove, rather than the rule of Gurnsey, is more appropriate for the right-of-way at issue here. Both Montgomery and Colegrove justified their adoption of a broad interpretation of public rights by the need to accommodate the extensive infrastructure that accompanies modern development. (See Montgomery, supra, 104 Cal. at p. 189, 37 P. 786; Colegrove, supra, 151 Cal. at p. 429, 90 P. 1053.) As summed up by Colegrove, the scope of public rights-of-way in developed areas is "more extensive" because of the need to "accommodat[e] ... sewers, gas and water pipes, electric wires, and conduits for railroads." (Colegrove, at p. 429, 90 P. 1053.) In areas where intensive use of the rights-of-way is necessary to support public infrastructure, "the use by the owner of the fee must yield to the public use." (Id. at p. 430, 90 P. 1053.) In contrast, the right-of-way under consideration in Gurnsey, a "wagon road," appears to have been used solely for private surface transportation. It crossed land that was "sparsely inhabited" (Colegrove, at p. 429, 90 P. 1053) and, because the area had yet to receive even electricity, presumably also lacked the other public infrastructure that served to justify a broad scope in Montgomery and Colegrove. (See Montgomery, supra, 104 Cal. at p. 189, 37 P. 786; Colegrove, supra, 151 Cal. at p. 429, 90 P. 1053.)
Since 1894, the intensive use of rights-of-way found in Montgomery and Colegrove has migrated with city populations into the countryside. Today, much of California now shares in the type of public services described in Montgomery and Colegrove, which have only expanded in number since the turn of the century. Rural *827 homes that once used a well and a septic tank or outhouse are now often connected to a water main and sewer. Drainage lines are common. Rural electricity, a novelty in 1900, is universally available, as is the telephonea service similarly restricted to urban areas at the turn of the century. Now added to these is the availability of cable television and even the Internet, causing the rights-of-way in the countryside to be as filled with the transmission hardware of public services as were city rights-of-way in the time of Montgomery and Colegrove.
Rural Solano County is no exception.[3] The advance of public services into the Solano County countryside is dramatically illustrated by the record in this case. ABA had originally intended to bury its pipeline in the shoulder on the opposite side of Midway Road, an arrangement that would have avoided the Bellos' property altogether. The change in routing occurred because, upon opening a trench on the opposite side of the road, ABA discovered that the right-of-way was already occupied by fiber-optic cable laid down by AT & T.
Although it may be objected that the scope of public rights in a right-of-way should not depend upon trends of development beyond the control of local landowners, the Supreme Court instructed to the contrary in Colegrove, holding that "`... [t]his [residual] right of the owner may grow less and less as the public needs increase....'" (Colegrove, supra, 151 Cal. at p. 430, 90 P. 1053, quoting Allen v. Boston, supra, 159 Mass. 324, 34 N.E. 519.) It is important to remember that the "modern" trendwhich began in California with Montgomery in 1894is to construe public rights-of-way to accommodate technological advancement in the conveyance of goods and people, an approach that has been adopted invariably by California courts in right-of-way decisions since Gurnsey.
This flexible approach is consistent with the conclusions reached by courts in most other states. In addition to the pioneering decisions from Massachusetts and Oregon dealing primarily with urban areas, cited in Montgomery and Colegrove, a predominant plurality of states has adopted a broad scope for rights-of-way outside cities. Notably, Ohio courts had originally developed a distinction between the scope of rights-of-way in developed and rural areas similar to that drawn by Montgomery and Gurnsey. However, in Ziegler v. Service Co. (1969) 18 Ohio St.2d 101, 247 N.E.2d 728, the Ohio Supreme Court concluded that "the steadily increasing process of rural urbanization" had rendered the distinction untenable. (Id. at pp. 729, 731.) Accordingly, the court allowed the installation of a water line in a rural right-of-way without the *828 consent of or compensation to the landowner, adopting a uniformly broad scope for rights-of-way regardless of location. In Bogart v. CapRock Communications Corp. (Okla.2003) 69 P.3d 266, 273, the plaintiff owned property adjoining a county road in Oklahoma. The defendant, a telecommunications company, sought to lay fiber-optic cable in the right-of-way alongside the county road. As here, the landowner contended that the installation constituted a trespassing, requiring his consent. The Oklahoma Supreme Court rejected this contention, holding that "`... [t]he new or different use of the highway, or new or different method of transmission or transportation, is but a further proper use of the highways.... [¶] ... As new methods of transportation develop they are used upon the highway whether that use is by bus, truck, or oil pipeline....'" (Id. at p. 272, quoting Nazworthy v. Illinois Oil Co. (1936) 176 Okla. 37, 54 P.2d 642, 645.) Similar reasoning led the Supreme Court of West Virginia to find the installation of a natural gas pipeline to be within the proper scope of a public right-of-way, noting that "there is no difference whether the question arises in regard to a rural highway right of way or to a city street." (Herold v. Gas Co. (1955) 141 W.Va. 182, 90 S.E.2d 451, 456, 458.) Equivalent cases are legion,[4] although other states' courts are not unanimous.[5]
Because the Bellos' property is located in an area with well-developed public infrastructure occupying the public rights-of-way, we find that the trial court erred in applying the standard of Gurnsey, rather than that of Montgomery and Colegrove, to the right-of-way along the Bellos' property. We now proceed to consider whether ABA's pipeline was properly within the scope established by Montgomery and Colegrove.
C. ABA's Status as a Private Company
The Bellos argue that ABA should be denied use of the right-of-way because ABA is a private company rather than a public utility. Although it is true that most prior decisions have addressed the use of rights-of-way by publicly regulated utilities or public agencies,[6] we can find no statutory or doctrinal basis for a per se exclusion of private users from below-ground rights-of-way. On a fundamental level, every member of the public has an equal right in the use of a public right-of-way. (In re Anderson, supra, 130 Cal.App. at pp. 398-399, 19 P.2d 1027; People v. Henderson (1948) 85 Cal.App.2d 653, 657, 194 P.2d 91.) ABA's status as a private corporation no more disqualifies it from access to the underground portion of *829 the right-of-way than it would justify excluding ABA's trucks from using the above-ground right-of-way.
Significantly, Streets and Highways Code section 1460, which grants to county governments the right to issue encroachment permits in county rights-of-way, makes no distinction between public agencies or utilities and other proposed users. Indeed, Streets and Highways Code section 1463, which implements section 1460, expressly anticipates that encroachment permits will be granted to private users. It notes that permits "issued to a public agency or a public utility" must contain a particular provision,[7] while "[a]ll permits other than those issued to public agencies or a public utility" are subject to a somewhat different rule. (Sts. & Hy. Code, § 1463, italics added.) Consistent with this view, People v. Sweetser (1977) 72 Cal.App.3d 278, 140 Cal.Rptr. 82 interpreted section 1450 as granting counties "the statutory authority to issue a written encroachment permit allowing any person, including the underlying landowner, to place fences or other structures or objects upon portions of a county highway easement." (Id. at p. 284, 140 Cal.Rptr. 82, citing Sts. & Hy.Code, §§ 1450, subds. (a)-(b) & 1460, subd. (b), italics added.)[8]
D. The Standard for Use of a Public Right-of-way
Although there is no per se ban on private users of a public right-of-way, every encroachment permit should be measured against the standards governing the permissible uses of a public right-of-way. As discussed above, the scope of public rights-of-way has been the subject of a number of prior decisions. Although these cases have not established uniform criteria for evaluating the propriety of a permitted use of a public right-of-way, a synthesis of the examples found in them establishes that a proposed use of a public right-of-way should: (1) serve as a means, or be incident to a means, for the transport or transmission of people, commodities, waste products or information, or serve public safety (Montgomery, supra, 104 Cal. at p. 192, 37 P. 786; In re Anderson, supra, 130 Cal.App. at p. 398, 19 P.2d 1027; Mancino v. Santa Clara County Flood etc. Dist., supra, 272 Cal.App.2d at p. 683, 77 Cal. Rptr. 679); (2) serve either the public interest or a private interest of the underlying landowner that does not interfere with the public's use rights (People v. Henderson, supra, 85 Cal.App.2d at p. 656, 194 P.2d 91); and (3) not unduly endanger or interfere with use of the abutting property. (Norris v. State of California ex rel. Dept. Pub. Wks., supra, 261 Cal.App.2d at p. 47, 67 Cal.Rptr. 595.)
The initial task of determining whether a proposed use of a county road right-of-way satisfies these criteria is vested by statute in the county road commissioner. (See People v. Henderson, supra, *830 85 Cal.App.2d at p. 657, 194 P.2d 91.) Streets and Highways Code section 1460 grants to the road commissioner the authority to issue permits for the use of rights-of-way, including the making of any opening or excavation in the right-of-way and the placement of any encroachment. (Sts. & Hy.Code, § 1460, subds. (a) & (b).) The road commissioner's decision will be reversed only if it is found "to have been the result of capricious or arbitrary action or abuse of discretion." (People v. Henderson, at p. 657, 194 P.2d 91.)[9]
We find no abuse of discretion here. The ABA pipeline is used for the transportation of unprocessed natural gas. As a raw material sold for energy production, this is no less a commodity than natural gas transported by public utilities.[10] Although ABA is not a public utility, the installation of ABA's pipeline serves precisely the public interest that rights-of-way were intended to promote: efficient and effective travel and transportation of goods. As testified to at trial, a pipeline is both the most efficient and the safest means of transport for unprocessed natural gas. Particularly in light of the importance of natural gas to the nation's energy economy, encouraging the domestic production of such gas by providing a means for safe and efficient transport is clearly in the public interest. Moreover, the ABA pipeline is part of the network of natural gas supply maintained by PG & E, a state-regulated public utility. Finally, although the Bellos' counsel raises the issue of natural gas pipeline safety in his brief, at trial the Bellos offered no evidence that the pipeline presented any significant risk of danger or interference with use of their property. There is no basis for finding an abuse of discretion in the issuance of an encroachment permit to ABA.
E. The Absence of Express Grant Language
The Bellos next contend that the ABA permit should have been denied because ABA did not produce a document setting forth the language of the original grant of the right-of-way.[11] Prior to the *831 trial, the parties had stipulated that the county "has a right of way" on the Bellos' property and "maintained and controlled" a road within that right-of-way. Beyond the stipulation, no evidence was offered at trial as to the nature, origin or text, if any, of the grant of the right-of-way. On appeal, the Bellos concede that the right-of-way is for purposes of a public highway.[12]
Specific language has never been required in California to establish the scope of a public right-of-way. Roadway rights-of-way have been recognized since the very beginning of California statehood. (Breed v. Cunningham (1852) 2 Cal. 361, 368; Wood v. San Francisco et al. (1854) 4 Cal. 190, 193.) The public may obtain a right-of-way not only through an affirmative granta dedicationby private owners but also through persistent public use of private land, whether or not permissive. (County of Los Angeles v. Berk (1980) 26 Cal.3d 201, 213, 161 Cal.Rptr. 742, 605 P.2d 381; Hays v. Vanek (1989) 217 Cal.App.3d 271, 281, 266 Cal.Rptr. 856.) Indeed, when private property abuts an established street or road, a right-of-way is simply presumed without further inquiry. (E.g., Breed v. Cunningham, supra, 2 Cal. at p. 368; Montgomery, supra, 104 Cal. at p. 188, 37 P. 786.) Because many rights-of-way have existed for a long period of time, as was apparently the case here, it may be difficult or impossible to locate the original grant language. Moreover, a prescriptive right-of-way has no express grant language. Yet even when grant language exists, the scope of the right-of-way is often expressed in very summary language, such as "`... for public highway purposes'" (e.g., People v. Sweetser, supra, 72 Cal.App.3d at p. 282, 140 Cal.Rptr. 82) or the equivalent. (Norris v. State of California ex rel. Dept. Pub. Wks., supra, 261 Cal.App.2d at p. 46, 67 Cal.Rptr. 595 ["`... State highway right of way....'"]; People v. Henderson, supra, 85 Cal.App.2d at p. 654, 194 P.2d 91 ["public highway"].) Grants using such summary language and rights-of-way for which no specific grant language exists consistently have been treated as subject to a common law establishing generic rights in a public right-of-way. Only where the right-of-way conveyance is shown to contain specific language beyond the general reference to a road or highway have courts been guided by the specific language of the grant. (E.g., Faus v. City of Los Angeles, supra, 67 Cal.2d at p. 352, 62 Cal.Rptr. 193, 431 P.2d 849.) Even in Faus, a flexible construction departing from the literal language of the grant was adopted. (Id. at pp. 355-357, 62 Cal.Rptr. 193, 431 P.2d 849.)
There is no dispute that the Bellos' property was subject to a roadway right-of-way. In light of the long tradition of applying a common law of public rights to such rights-of-way, ABA was under no requirement to produce evidence of express grant language in order to take advantage of the public's rights in the right-of-way. In the absence of such language, the right-of-way will be deemed to have the scope established by the common law.
F. The County Encroachment Permit
The Bellos also argue that ABA was required to obtain their consent under the terms of the encroachment permit issued by the county. Under the heading *832 "Encroachment Permit Standard Conditions," condition No. 8 states that "[t]he permittee shall be responsible for obtaining all other necessary permits and permissions from affected property owners, public agencies, and others."
When construing the language of an administrative agency, we must defer to the interpretation of the agency itself unless that interpretation is "unauthorized or clearly erroneous" (Communities for a Better Environment v. State Water Resources Control Bd. (2003) 109 Cal.App.4th 1089, 1107, 1 Cal.Rptr.3d 76) or unreasonable. (No Oil, Inc. v. City of Los Angeles (1987) 196 Cal.App.3d 223, 249, 242 Cal.Rptr. 37.) Deference is particularly appropriate where, as here, the agency is interpreting its own language, drafted to suit a particular circumstance, rather than language drafted by the Legislature. (Cf. Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 12, 78 Cal.Rptr.2d 1, 960 P.2d 1031 [deference is "situational" when an agency interprets a statute].)
A representative of the county transportation department, testifying at trial with respect to the meaning of condition No. 8 of the encroachment permit, stated that it is not, and never has been, the intent of the county to require encroachment permittees to obtain the consent of underlying landowners before installing an encroachment. Rather, the purpose of condition No. 8 is "to let the permittee understand that this is a permission granted by the County, and there may or may not be other permissions required by other agencies, or other parties." In other words, condition No. 8 was intended to ensure that ABA was aware of its responsibility to obtain the permission of other public agencies or private persons or entities, if that permission was legally required. Condition No. 8 was not intended independently to create such a requirement.
Based on the plain language of the permit condition and the agency's role, we find this interpretation reasonable. Condition No. 8 requires a permittee to obtain "all other necessary permits and permissions from affected property owners, public agencies, and others." The plain meaning of this language is that a permittee must obtain "permits and permissions" from affected property owners if those permits and permissions are "necessary"that is, if some independent legal ground exists to make them a requirement. Adopting the Bellos' interpretation would require that the word "necessary" modify only "permits" and not "permissions," but there is no logical basis for separating the two words. Rather, "permits and permissions" are meant to indicate the type of authorization that can be obtained from "affected property owners, public agencies, and others." As such, both terms must be modified jointly by "necessary."
The agency's interpretation is also consistent with its limited function. The transportation department is called upon to issue encroachment permits for projects of varying size, some of which may be overseen by other county, state or federal agencies. The department's function is simply to authorize use of the right-of-way, not to address the concerns these other agencies might have. The cautionary language included in condition No. 8, ensuring that the applicant is aware that the encroachment permit does not necessarily constitute legal permission to proceed, is therefore appropriate. Such clauses appear to be a common feature of county encroachment permits. A similar, if differently worded, condition was contained in the encroachment permit issued in Salvaty v. Falcon Cable Television (1985) 165 Cal.App.3d 798, 800, 212 Cal.Rptr. 31 (requiring applicant to obtain from "`private owners of real property any and all permits, *833 licenses or grants necessary for the lawful exercise of the permission granted by any application approved hereunder....'"). In light of these factors, we find no reason to reject the county's interpretation of its own permit language.
In summary, we conclude the progressive spread of public services into the countryside that has occurred over the last century requires us to apply to the right-of-way along the Bellos' property the standard announced in Montgomery, supra, 104 Cal. 186, 37 P. 786, rather than that of Gurnsey, supra, 160 Cal. 699, 117 P. 906. As noted above, in Montgomery the Supreme Court explained that "`[t]he establishment of a public highway practically divests the owner of a fee to the land upon which it is laid out of the entire present beneficial interest of a private nature which he has therein. It leaves him nothing but the possibility of a reinvestment of his former interest in case the highway should be discontinued as such,....'" (Montgomery, at p. 193, 37 P. 786, quoting Paquet v. Mt. Tabor St. R'y Co., supra, 18 Or. 233, 22 P. 906, 907.) Because the county acted within its discretion in concluding that use of the right-of-way for routing this particular natural gas pipeline was in the public interest and would not unduly harm the underlying landowners, we affirm the county's grant of a right-of-way encroachment permit.
III. DISPOSITION
The trial court's entry of judgment in favor of the Bellos is reversed. Because the Bellos are no longer prevailing parties, the issues in their cross-appeal are moot. The cross-appeal is accordingly dismissed.
We concur: MARCHIANO, P.J., and STEIN, J.
NOTES
[1] Because it is a pure issue of law, this question must be reviewed "under a nondeferential standard, affording plenary review." (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 800, 35 Cal.Rptr.2d 418, 883 P.2d 960.)
[2] Former Political Code section 2631 has long since been repealed. In 1935, a somewhat amended section 2631 was recodified as former Streets and Highways Code section 905. (See Stats.1935, ch. 29, § 905, p. 303; Stats.1935, ch. 29, §§ 14, 15 & 25, p. 249.) In 1961, the Legislature repealed section 905, enacting no similar statute to take its place. (Stats.1961, ch. 1788, § 2, p. 3803; Abar v. Rogers (1972) 23 Cal.App.3d 506, 512, fn. 3, 100 Cal.Rptr. 344.)
[3] Although there is a tendency to think of agricultural lands as remote and sparsely populated, that was not always the case even in 1907, and it is certainly not the case today. The right-of-way in Colegrove, which was given a broad interpretation, ran through a lemon orchard. (Colegrove, supra, 151 Cal. at p. 427, 90 P. 1053.) Because the orchard was located in rapidly developing Hollywood, however, the court applied the right-of-way scope that it deemed appropriate for developed areas.
Solano County, bisected by the heavily traveled Interstate 80 corridor between San Francisco and Sacramento, is no more than 45 miles from either of these large urban areas. In 2003, the county itself contained three cities each with a population of over 90,000, and a total county population of over 400,000. (County Administrator's Office, County of Solano, Solano County: 2003 Facts & Figures (2003) p. 4 .)
[4] A uniformly broad approach to rights-of-way has been adopted by courts in over a dozen other states. We have discussed the most closely analogous cases in the text.
[5] Despite being adopted in the plurality of states, the broad approach to rural rights-of-way is not universal. (See, e.g., Cathey v. Arkansas Power & Light Co. (1936) 193 Ark. 92, 97 S.W.2d 624, 625-626; Keokuk Junction Ry. Co. v. IES Industries, Inc. (Iowa 2000) 618 N.W.2d 352, 362; Berry v. Southern Pine Elec. P. Assn. (1954) 222 Miss. 260, 76 So.2d 212, 219; Louisiana Power & Light Company v. Dileo (La.App.1955) 79 So.2d 150, 154.)
[6] A notable exception is the seminal Montgomery case, which approved use of a public right-of-way for what appears to have been a private railway company without ever mentioning the company's private status. (Montgomery, supra, 104 Cal. at p. 187, 37 P. 786.) Section 862, subdivision 13, of the Municipal Corporations Act of 1883, then in effect, authorized municipalities to permit railway service and lay tracks on public streets. (Montgomery, at p. 192, 37 P. 786; see Stats. 1883, ch. XLIX, § 862, p. 270.)
[7] The exact nature of this provision is not relevant here.
[8] Streets and Highways Code section 1450, which defines terms used in sections 1460 and 1463 (as well as other sections), does contain a somewhat ambiguous sentence applicable only to "works or facilities of any public agency or public utility," but the sentence does not preclude the granting of encroachment permits to private users. Rather, its meaning appears to be best captured in a paraphrase contained in a statutory summary published at the time of its enactment: "Sections 1450-1470 do not apply to works or facilities of any public agency or public utility unless such works or facilities ... are installed under a franchise." (Review of Selected 1965 Code Legislation (Cont.Ed.Bar 1965) p. 257.) Rather than suggesting a limitation to public agencies and utilities, the statute appears by implication to anticipate permittees other than public agencies and utilities.
[9] We do not accept the argument of amici curiae League of California Cities and California State Association of Counties that the Streets and Highways Code vests "plenary" authority in the road commissioner in the issuance of encroachment permits. Although Streets and Highways Code section 1460 purports to grant the road commissioner authority to issue a right-of-way permit for "any purpose," Gurnsey makes clear that the property rights of the underlying landowner necessarily limit the government's discretion; the road commissioner has no discretion to issue an encroachment permit for a purpose outside the scope of the public's rights in the right-of-way. (Gurnsey, supra, 160 Cal. at p. 708, 117 P. 906.) Available statutory history suggests that section 1460 was not intended to expand the scope of rights-of-way but only to clarify that use of a public right-of-way required issuance of an encroachment permit. (Review of Selected 1965 Code Legislation (Cont.Ed.Bar 1965) pp. 256-257.)
[10] We fail to understand the Bellos' argument that natural gas cannot be considered a commodity until it has been processed for home use. "Commodity" is defined broadly to mean "[a]n article of trade or commerce," which would plainly include both processed natural gas and unprocessed natural gas produced for sale. (American Heritage Dict. (2d college ed.1985) p. 298.) ABA's gas is sold much like a traditional agricultural commodity. As noted above, ABA's gas, after traveling though the installed pipeline, is mixed with gas from other producers, and ABA loses physical possession of it. Like corn, wheat or petroleum, ABA's gas is treated as a fungible commercial good.
[11] We can find no evidence that this issue was raised before the trial court, suggesting that it has been waived. (Whiteley v. Philip Morris, Inc. (2004) 117 Cal.App.4th 635, 688, 11 Cal.Rptr.3d 807; Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 91, fn. 13, 7 Cal.Rptr.3d 267.) Because ABA does not contend that the issue was waived, however, we address its merits.
[12] In ABA's reply brief, its counsel states that ABA was unable to find the source of the right-of-way because it "was established in the 1800s." In the trial court, the Bellos' counsel stated that the "easement ... is an 1864 ordinance passed by the County Board of Supervisors," but the Bellos provided no evidence to support that assertion.
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16 Cal.Rptr.3d 791 (2004)
121 Cal.App.4th 250
Jon E. RIETVELD et al., Plaintiffs and Appellants,
v.
ROSEBUD STORAGE PARTNERS, L.P. et al., Defendants and Respondents.
No. C044766.
Court of Appeal, Third District.
July 30, 2004.
*792 Havens Law Firm and Lyle Havens for Plaintiffs and Appellants.
Law Offices of Hugh Duff Robertson and Vivian M. Lum, Los Angeles, for Defendants and Respondents.
Certified for Partial Publication.[*]
NICHOLSON, J.
Jon and Carole Rietveld sued their former employer, Rosebud Storage Partners, L.P. (Rosebud), alleging breach of contract and fraud. The trial court granted Rosebud's motion for summary judgment, and the Rietvelds appeal. They assert the evidence presented to the trial court shows breach of the implied covenant of good faith and fair dealing and fraud. In addition, the Rietvelds' attorney, Lyle Havens, contends the trial court erred in imposing sanctions on him for failure to participate meaningfully in judicial arbitration. We affirm.
FACTS AND PROCEDURE
Rosebud runs Armor Mini Storage in Sacramento. Rosebud is a limited partnership, in which defendant Plaza Enterprises, Inc. (Plaza) is the general partner. Hugh Duff Robertson is the president of Plaza.
Jon and Carole Rietveld resided on the property of the storage facility and managed the business. On January 1, 1997, the Rietvelds notified Rosebud that they intended to retire on May 1, 1997.
Robertson asked the Rietvelds to put out the word that Armor Mini Storage was for sale. Jon Rietveld had some experience in valuing storage facilities, so he and Robertson worked together and came up with an asking price of $3.8 million. Public Storage, Sentry Storage, Storage USA, and others immediately showed interest in buying the property. Ben Eisler of Baco Realty toured the facility and submitted an offer for $3.8 million, apparently on behalf of a national chain. The offer letter stated it was a firm offer for $3.8 million with the remaining terms to be negotiated. Eisler's offer was made on March 25, 1997, and expired on March 28, 1997.
When Robertson received the offer letter, he informed Carole Rietveld that she was not to talk to prospective buyers or show them the property or the financials. She was only to notify him that someone was interested. He further stated that he did not want to sell to a national chain.[1] Eisler continued to express his interest in *793 buying the property after the expiration of his offer, at least until April 14, 1997, the date of a note Jon Rietveld sent to Robertson relaying a message from Eisler.
Concerning Eisler's offer letter, Robertson told Carole Rietveld he did not feel it was realistic to provide the information in the timeframe requested in the letter. He also told her that two of his business associates in Los Angeles were vying to purchase the property, which information led her to believe he was not interested in selling the property to Eisler. As a result of discussions with other interested parties, Robertson decided the property could be sold for more than $3.8 million. He made a counteroffer to Eisler, but Eisler was unwilling to pay the higher price. The evidence does not show when Robertson made this counteroffer.
On August 3, 1997, Jon Rietveld entered into an agreement to continue his employment with Rosebud until May 1, 1998, or until escrow for the sale of the property closed. The agreement provided for a payment to Rietveld of $30,000 on May 1, 1998. It also provided for an additional payment as follows: "If we sell the property prior to May 1, 1998, you will receive an additional [$30,000] upon the close of escrow." The agreement also provided that Rosebud would pay the additional $30,000 even if the property did not sell before May 1, 1998, on condition it was sold within one year after that date to a party with whom Rosebud was negotiating before May 1, 1998. The Rietvelds received the first $30,000 payment, which is not at issue in this case, but did not receive the additional $30,000.
In his declaration, Robertson stated Rosebud intended to perform under the contract and tried to sell the property but could not. Ultimately, the property was not sold, even after expiration of the contract between Rosebud and Jon Rietveld.
The Rietvelds sued Rosebud and Plaza, alleging causes of action for breach of contract and fraud.[2] Rosebud and Plaza moved for summary judgment. They argued that the breach of contract cause of action was flawed because the condition precedent (sale of the property) to the payment of the additional $30,000 never occurred. They claimed that the fraud cause of action was without merit because the property was available for sale during the term of the contract and the defendants did not intend to defraud the Rietvelds. Rosebud and Plaza also asserted that neither Carole Rietveld nor Plaza were proper parties to the lawsuit. The Rietvelds opposed the motion, arguing that, even though the condition precedent was not satisfied, Rosebud and Plaza breached the implied covenant of good faith and fair dealing by not selling the property. Concerning the fraud cause of action, the Rietvelds did not make a separate argument against the motion for summary judgment but simply referred to the argument concerning the implied covenant of good faith and fair dealing.
The trial court granted the motion for summary judgment. It first determined that Plaza was not a proper party to the contract cause of action but there remained a disputed issue of material fact concerning whether Carole Rietveld was a party to the contract. It concluded that the evidence submitted did not show a breach of the implied covenant of good faith and fair dealing because to conclude otherwise would add a term to the contract that the Rietvelds were entitled to the *794 additional $30,000 simply for finding a buyer. It also found the fraud cause of action was not supported by the evidence, relying on Robertson's declaration that, when the contract was formed, the defendants did not intend to defraud the Rietvelds.
The trial court also ordered Lyle Havens, attorney for the Rietvelds, to pay $2,380 in sanctions for willful failure to participate meaningfully in judicial arbitration. The facts concerning this sanction order are recounted in the discussion, below.
The trial court entered judgment in favor of the defendants on June 16, 2003, and the Rietvelds filed their notice of appeal on August 13, 2003.
DISCUSSION
I-III[**]
IV
Sanctions Against Counsel
On May 3, 2002, this case was ordered to judicial arbitration. The arbitrator set a hearing date of June 13, 2002, at 10:00 a.m. and notified Lyle Havens, counsel for the Rietvelds, that he was required to provide copies of the complaint and answer and a short arbitration brief 10 days prior to the hearing. On June 13, Havens arrived at the arbitration hearing 25 minutes late, having failed to provide the requested copies of the complaint and answer and an arbitration brief.
The Rietvelds did not attend the arbitration hearing and were not available by telephone. During the hearing, Havens did not present any evidence in support of the Rietvelds' claims. Instead, he stated that he agreed with the facts in Rosebud's arbitration brief.
The arbitrator entered an award in favor of Rosebud, also awarding Rosebud its costs. Soon thereafter, Havens filed a request for trial de novo. Rosebud filed a motion requesting sanctions against the Rietvelds and Havens for willful failure to participate meaningfully in judicial arbitration. Havens filed an opposition to the motion for sanctions in which he stated that it was unnecessary to present evidence at the arbitration because judicial arbitration often proceeds in the form of a mediation or settlement conference. He further suggested that the ability to request a trial de novo essentially renders judicial arbitration meaningless. Finding Havens violated a local rule in his conduct with respect to arbitration, the trial court awarded sanctions against Havens, but not the Rietvelds, in the amount of $3,055.50, later reduced to $2,380.00.
Havens contends the sanction order must be reversed because such an award is not permissible based on the willful failure to participate meaningfully in judicial arbitration. He also contends he did not willfully fail to participate meaningfully in arbitration. We find no merit in his contentions.
Code of Civil Procedure section 575.2 allows a court to impose sanctions for noncompliance with local rules. The trial court "may strike out all or any part of any pleading of that party, or dismiss the action or proceeding or any part thereof, or enter a judgment by default against that party, or impose other penalties of a lesser nature as otherwise provided by law...." (Code Civ. Proc., § 575.2, subd. (a).)
Rule 12.04(A) of the Superior Court of Sacramento County (Local Rule 12.04) provides: "For the willful failure to meaningfully participate in arbitration proceedings the court, on noticed motion, may *795 impose sanctions; including arbitrator's fees, attorney's fees and costs. [¶] (1) The following may be considered failures to meaningfully participate in arbitration: [¶] (a) Non-appearance, at the time set for hearing, of any person necessary to proceed to a meaningful conclusion. (Phone calls to the arbitrator at the time set for hearing will not be deemed an appearance.) [¶] (b) Failure to offer any evidence or rebuttal. [¶] (c) Submission of a motion to continue the arbitration hearing less than five days before the scheduled date, except upon a showing of good cause. [¶] (d) Failure to complete arbitration within the time fixed therefor." (See www.saccourt.com/geninfo/localrules/PDFChapters/CH12.PDF.)
In its order awarding sanctions, the trial court found that Havens arrived late to the arbitration, failed to provide the pleadings and brief requested by the arbitrator, failed to have the Rietvelds appear or be available by telephone, and failed to produce evidence, including testimony that was necessary to support the Rietvelds' case. Havens asserted that it would have been futile to produce evidence because the arbitrator determined the contract did not obligate Rosebud to sell the property. The trial court ruled, however, that "[t]his after-the-fact rationalization fail[ed] to explain why Mr. Havens appeared at the arbitration, prior to any determination by the arbitrator concerning the contract, with no evidence whatsoever." The court concluded that Havens's decision not to produce evidence was based on his "belief that mandatory judicial arbitration is an essentially meaningless proceeding for which minimal effort should be made."
Havens's conduct with respect to the judicial arbitration violated two parts of Local Rule 12.04 which allows sanctions for willful failure to participate meaningfully in judicial arbitration. He failed to have the Rietvelds appear. Their presence was "necessary to proceed to a meaningful conclusion" because they were witnesses concerning the conduct they alleged in their complaint and because they could have approved any settlement negotiated at the arbitration hearing. Havens also failed to produce evidence. This is especially egregious and showed his lack of good faith because he represented the plaintiffs, who bore the burden of proof in this action.
Havens asserts the Rietvelds could not attend because they resided in Arkansas and were visiting their daughter in Maryland at the time of the arbitration. There is no indication, however, that Havens attempted to procure the presence of the Rietvelds or to reschedule the arbitration to accommodate them. Instead, he claims: "They had nothing to say that they had not already said in their responses to the special interrogatories which were before the arbitrator as an attachment to the defendants' arbitration brief." This statement merely exhibits Havens's failure to take seriously the arbitration hearing. The arbitrator was empowered to make factual findings. Although much of the content of the Rietvelds' testimony may have been included in the answers to interrogatories, the arbitrator should have been given the opportunity to evaluate their testimony and determine their credibility. Furthermore, unlike in the summary judgment proceedings, the arbitrator was not bound to deem the Rietvelds' interrogatory answers credible.
Havens further contends that the provision of Local Rule 12.04 requiring the attendance of those who are "necessary to proceed to a meaningful conclusion" conflicts with state laws which allow litigants to use the subpoena power (Cal. Rules of Court, rule 1613) and permit an arbitrator to go forward with the hearing even if a *796 party fails to attend (Cal. Rules of Court, rule 1610). Havens does not explain the alleged conflict between these rules of court and Local Rule 12.04 and we discern no conflict. Neither of the rules of court state that a party need not attend the arbitration hearing unless subpoenaed.
As he did in the trial court, Havens continues to assert it was unnecessary for him to produce evidence because it was all contained in the attachments to Rosebud's arbitration brief. The trial court responded to this assertion in its order, and Havens offers no reply. The court stated: "It appears to the Court that parole [sic] evidence may have been necessary to explain and/or fill in the terms of the contract. Additionally, [the Rietvelds'] allegation in their complaint that they had performed all conditions on their part, including finding and negotiating with the qualified buyers for the property, would require an evidentiary showing by [the Rietvelds]." Havens's retort that all of the evidence was contained in the answers to special interrogatories is of no assistance because, as noted, the arbitration was a fact-finding affair and the arbitrator needed to make credibility determinations.
Accordingly, we conclude that the record supports the trial court's conclusion Havens violated Local Rule 12.04 and that Local Rule 12.04 does not conflict with state law.
Havens further contends that Code of Civil Procedure section 575.2 does not authorize monetary sanctions and, even if it does, the sanctions imposed here were excessive. Code of Civil Procedure section 575.2, subdivision (a), allows, as a penalty for violation of local rules, striking of pleadings, dismissal of part or all of an action, or "penalties of a lesser nature as otherwise provided by law...." It also allows the moving party to recover fees and costs incurred in making the motion for sanctions. (Ibid.) Monetary sanctions are penalties of a lesser nature than dismissal. And, Local Rule 12.04 provides for monetary sanctions to recompense fees and costs. The award here was based on the fees and costs Rosebud incurred in arbitration and in making the motion for sanctions. Thus, the award was provided for by law.
Havens's argument that the award was excessive is also without merit. He complains "the amount of sanctions awarded is grossly and unfairly excessive, representing an entire month's income for an attorney who represents the indigent such as plaintiff's counsel in the instant case, and this one month's income is to compensate for a one hour arbitration hearing, and is fully 10% of the damages demanded in the complaint." He then goes on to assert that arbitrators only receive $150 per hour and that judicial arbitration is not binding. Nonetheless, he does not dispute the fact that the sanction award was based on Rosebud's fees and costs incurred in arbitration and in making the sanctions motion, which totaled $3,055.50, later reduced to $2,380. It was not excessive, under the circumstances.
DISPOSITION
The judgment is affirmed.
NICHOLSON, J.
We concur: SIMS, Acting P.J., and DAVIS, J.
NOTES
[*] Pursuant to California Rules of Court, rule 976.1, this opinion is certified for publication with the exception of parts I through III of the Discussion.
[1] Robertson claimed he did not tell Carole Rietveld he would not sell to a national chain. For the purpose of summary judgment review, we credit Carole Rietveld's statement.
[2] The Rietvelds also alleged a common count for labor, which repeated the allegations of the breach of contract cause of action. Since the common count duplicates the breach of contract cause of action, we need not discuss it separately.
[**] See footnote *, ante.
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18 Cal.Rptr.3d 162 (2004)
121 Cal.App.4th 1187
In re MARRIAGE OF Maria and Randy JACOBSEN.
Maria Jacobsen, Appellant,
v.
Randy Jacobsen, Respondent.
No. B161615.
Court of Appeal, Second District, Division Six.
August 26, 2004.
*163 Price, Postel & Parma, Penny Clemmons and Timothy E. Metzinger, Santa Barbara, for Appellant.
Misho, Kirker & Brown, Vanessa Kirker, Santa Barbara, and Jacqueline Misho for Respondent.
Fred J. Hiestand, Sacramento, and Howard L. Dickstein for the Pala Band of Mission Indians, the Rumsey Band of Wintun Indians and the United Auburn Indian Community as Amici Curiae on behalf of Appellant.
Certified for Partial Publication.[*]
GILBERT, P.J.
Federal law directs state courts to give full force and effect to American Indian tribal law and custom in civil matters. Chumash tribal custom and tradition provides that funds distributed by the tribe to its members should not be used to pay spousal support to nonmembers. Here we hold that the family law court is not required *164 to give full force and effect to the Chumash custom and tradition because it is inconsistent with California law.
Maria Jacobsen, an enrolled member of the Santa Ynez Band of Mission Indians ("the Tribe"), appeals an order of the family law court awarding $7,415 monthly temporary spousal support to her former husband, Randy Jacobsen. We affirm.[1]
Randy also appeals and challenges a subsequent order of the family law court awarding him $3,500 monthly temporary spousal support pending determination of this appeal. We affirm.
FACTS
On May 31, 2000, Maria filed a petition to dissolve her 11-year marriage to Randy. They have two minor children and formally agreed that Randy would have physical custody of the children approximately 20 percent of the time.
Maria is not employed and is a full-time homemaker. As an enrolled member of the Tribe, she receives a "per capita distribution" of Chumash Indian gaming revenues in accordance with a revenue allocation plan approved by the Bureau of Indian Affairs. The annual per capita distribution has steadily increased following the initial distribution in 1995. In 2001 it amounted to $312,000 and in 2002, it increased to $316,000. Maria uses the after-tax distributions to support herself and her children. She has also invested a substantial amount of the distributions in stock brokerage accounts.
Randy is employed as a herdsman at his parents' dairy farm, "Jacobsen Dairy Farm." In an amended income and expense declaration, Randy declared that his annual salary in 2002 was $28,519. Randy also owns a hay and feed business. During the years 1998 through 2001, the business had earned annual profits varying between $40,180 (1999) and $3,158 (2000). On average, the hay and feed business earned $20,000 annually.
On February 5, 2002, Randy filed a motion seeking, among other things, an award of temporary spousal support pursuant to Family Code section 3600.[2] Maria responded, in part, that it is the custom and tradition of the Tribe that per capita distributions not be provided to nontribal members for spousal support. She relied upon title 28 United States Code section 1360(c), requiring states to accord "full force and effect" to tribal ordinance or custom unless the ordinance or custom is "inconsistent with any applicable civil law."[3]
Maria also presented evidence of Tribal Resolution 852, providing that per capita distributions shall not be allocated to former spouses who are not members of the Tribe. In part, the resolution states: "It is the custom and tradition of said Tribe that said distributed funds should not be provided, distributed or allocated to nonmember spouses of Tribal members or nonmember ex-spouses of Tribal members in the form of spousal support awards. . . . [¶] Pursuant to 28 U.S.C. § 1360(c) all *165 State courts shall give full force and effect to this Tribal law in determining civil causes of action involving this Tribal law and policy." (Ibid.) The Tribe adopted the resolution on August 1, 2002.
After a hearing during which Maria and Randy testified, the family law court ordered Maria to pay $7,415 monthly support to Randy, commencing July 1, 2002. The court rejected Maria's arguments, reasoning in part that the Tribe's custom and tradition is "counter to the very important policy and interest of the State . . . in providing for support of families." In fixing the amount of the award, the family law court also stated that "it is unreasonable to conclude that [Randy] is only making the amount he claimed [$3,158] for the amount of hay he bought and sold. If that were [the] case, he is underemployed. . . ."
Randy then sought a writ of execution upon Maria's stock brokerage accounts. At Maria's request, the family law court stayed enforcement of its order pending appeal. It required Maria to post a $100,000 bond.
Randy later sought temporary spousal support pending this appeal. After a hearing, the family law court ordered Maria to pay Randy $3,500 monthly spousal support, based upon the "Santa Clara Support Schedule." (Rule 1415(c), Santa Barbara Superior Court Rules ["The court has adopted the Santa Clara Support Schedule for the purposes of determining the correct amount of temporary spousal support"].) The court stated that $3,500 "was the adequate figure," and that Randy was "underemployed." It also stated that the $3,500 award was "based upon the facts and circumstances" presented at the spousal support hearing two months earlier. In awarding temporary support pending appeal, the court reasoned in part that "the children should have someplace to visit [their father] which . . . does not depart radically from the place they have when they visit their mother."
Maria appeals and contends the family law court erred by not according "full force and effect" to the tribal custom and tradition set forth in Tribal Resolution 852. (28 U.S.C. § 1360(c).) Randy also appeals and contends that the family law court erred by reconsidering and reducing the amount of temporary spousal support pending appeal.
Amici curiae Pala Band of Mission Indians, Rumsey Band of Wintun Indians, and the United Auburn Indian Community have filed a thoughtful brief and assert, in part, that Tribal Resolution 852 is consistent with California law because family law courts have discretion to exclude separate property in setting support and to consider "any other factors (e.g. Tribal Resolution 852) [that] are just and equitable." (§ 4320, subd. (n).)
DISCUSSION
[[/]][**]
Maria argues that the family law court did not possess jurisdiction to order temporary spousal support to be paid from her tribal gaming distributions to Randy. She relies upon 28 United States Code section 1360, and correctly asserts that Indian tribes are "semi-independent . . . with the power of regulating their internal and social relations." (White Mountain Apache Tribe v. Bracker (1980) 448 U.S. 136, 142, 100 S.Ct. 2578, 65 L.Ed.2d 665 [Indian tribes retain attributes of sovereignty over their members and territories]; Boisclair v. Superior Court (1990) 51 Cal.3d 1140, 1147, 276 Cal.Rptr. 62, 801 P.2d 305 ["deeply rooted" policy of leaving *166 Indians free from state jurisdiction and control].) Maria also points out that section 1360 is not a congressional waiver of the sovereign immunity of Indian tribes. (Middletown Rancheria v. Workers' Comp. Appeals Bd. (1998) 60 Cal.App.4th 1340, 1347, 71 Cal.Rptr.2d 105 [for example, state workers' compensation laws do not apply to Indian gaming employer].)
Maria also argues that Tribal Resolution 852 is not inconsistent with California law because California law does not mandate payment of temporary spousal support from the paying spouse's separate property. (§ 3600; § 4320, subds. (e) & (n) ["In ordering spousal support . . . the court shall consider . . . (e) The obligations and assets, including the separate property, of each party. . . . (n) Any other factors the court determines are just and equitable."]; In re Marriage of Smith (1990) 225 Cal. App.3d 469, 481, 274 Cal.Rptr. 911 [trial court possesses broad discretion in applying spousal support guidelines].) She also points to the strong policies of Indian autonomy and self-sufficiency. (E.g., In re Humboldt Fir. Inc. (N.D.Cal. 1977) 426 F.Supp. 292, 296 ["Section 1360(c) is designed to encourage tribal autonomy and self-government, which is a prerequisite to the economic self-development necessary to enable Indian participation in American life"].) Maria adds that she presented expert legal opinion concerning the effect of Tribal Resolution 852.
For several reasons, we reject Maria's arguments.
First, the family law court had jurisdiction to order Maria to pay temporary spousal support to Randy because Maria initiated the dissolution proceedings, appeared, and participated therein. (In re Marriage of Purnel (1997) 52 Cal.App.4th 527, 538, 60 Cal.Rptr.2d 667 [family law court possesses jurisdiction to order Indian spouse to pay child support and attorney's fees to non-Indian spouse].) "[W]hen a Native American . . . undertakes to avail himself or herself of the services of a state court in a domestic relations matter, . . . the state court has jurisdiction to act and to grant whatever relief is contemplated by the action initiated by the Native American." (Ibid.)
Second, the tribal custom and tradition set forth in Tribal Resolution 852 is inconsistent with California law and public policy regarding temporary spousal support.
Section 3600 authorizes the family law court to award temporary spousal support as is necessary "for the support of the wife or husband." Temporary spousal support allows the parties to maintain living conditions and standards pending trial and division of the community property and obligations. (In re Marriage of Murray (2002) 101 Cal.App.4th 581, 594, 124 Cal.Rptr.2d 342.) It results from the mutual duty of support inherent in marriage. (§§ 720 [spouses have obligations of mutual support] & 4300 [spouses shall support each other].) The family law court possesses broad discretion to award temporary spousal support, subject only to the moving party's needs and the other party's ability to pay. (In re Marriage of Murray, supra, 101 Cal.App.4th 581, 594, 124 Cal.Rptr.2d 342.)
Tribal Resolution 852 is at odds with the strong public policy, as evidenced by California statutory law, requiring spouses to support each other. As such, the tribal custom and tradition is "inconsistent" with California law.
Of importance here is that the family law court did not order the Tribe to satisfy Maria's obligation of temporary spousal support. Facially, the support orders also are independent of and unrelated to any particular source of funds that may be used to satisfy them. (In re Marriage of *167 Purnel, supra, 52 Cal.App.4th 527, 540, 60 Cal.Rptr.2d 667.) Furthermore, once Maria deposited her tribal distribution in a bank account or a securities account, for example, "the money involved lost its identity as immune Indian property." (Id., at p. 541, 60 Cal.Rptr.2d 667.)
[[/]][***]
The orders concerning temporary spousal support are affirmed. Each party shall bear his or her own costs on appeal.
We concur: YEGAN, J., PERREN, J.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for partial publication. The portions of this opinion to be deleted from publication are identified as those portions between double brackets, e.g., [[/]].
[1] We refer to the parties by their first names, not from disrespect, but to ease the reader's task.
[2] All further statutory references are to the Family Code, unless stated otherwise.
[3] 28 United States Code section 1360(c), provides:
"(c) Any tribal ordinance or custom heretofore to hereafter adopted by an Indian tribe, band, or community in the exercise of any authority which it may possess shall, if not inconsistent with any applicable civil law of the State, be given full force and effect in the determination of civil causes of action pursuant to this section."
[**] See footnote *, ante.
[***] See footnote *, ante.
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720 A.2d 275 (1998)
T.J. JEMISON, et al., Appellants,
v.
NATIONAL BAPTIST CONVENTION, USA, INC., et al., Appellees.
NATIONAL BAPTIST CONVENTION, USA, INC., et al., Appellants,
v.
T.J. JEMISON, et al., Appellees.
Nos. 95-CV-972, 95-CV-973, 95-CV-1031, 96-CV-414, 96-CV-415, 96-CV-593, 96-CV-620.
District of Columbia Court of Appeals.
Argued June 3, 1997.
Decided November 5, 1998.
*277 Jerry A. Moore, III, and John D. Maddox, Washington, DC, for appellants T.J. Jemison and Jo A. Fleming.
Philip J. Harvey, Washington, DC, for appellant Felix N. Nixon.
Clifton S. Elgarten, with whom Laurel Pyke Malson, James J. Regan, Amy J. Mauser, and Monica G. Parham, Washington, DC, were on the brief, for appellees, National Baptist Convention, USA, Inc., and Henry J. Lyons, et al.
Before TERRY and REID, Associate Judges, and KING, Associate Judge, Retired.[*]
TERRY, Associate Judge:
The Alabama State Baptist Missionary Convention, Inc., and its president, Dr. Felix Nixon, filed a complaint against the National Baptist Convention, USA, Inc. (NBC), and others, alleging breach of contract and seeking injunctive relief. Along with the complaint, they filed a motion for a temporary restraining order (TRO) to prevent the transfer of authority from NBC's prior president, Dr. T.J. Jemison, to its newly elected president, Dr. Henry Lyons, because of allegedly defective election procedures at the September 1994 NBC convention in New Orleans.
The trial court eventually granted the motion of NBC and Dr. Lyons for summary judgment. No party contests the merits of that decision. The court then turned its attention to the motion of NBC and Dr. Lyons for sanctions based on improper affidavits offered in support of the original request for a TRO. There followed numerous depositions, additional discovery, and evidentiary hearings over a period of several weeks. About five months after the last hearing, in a thorough and meticulously detailed 61-page order, the court found Dr. Nixon, Dr. Jemison, Jo A. Fleming, Esquire (Jemison's attorney),[1] and the former board of directors of NBC under Dr. Jemison jointly and severally liable for $150,000 in punitive damages for "perpetrating a gross and serious fraud against the court." The court imposed additional sanctions on the same individuals by directing them to reimburse NBC and Dr. *278 Lyons for their attorneys' fees, costs, and expenses, the amount of which was yet to be determined.[2]
In a second order, issued after further submissions relating to attorneys' fees, the court awarded NBC and Dr. Lyons $237,322.00 for their attorneys' fees, costs, and expenses. The court also denied Jemison and Fleming's motion to alter or amend the judgment under Super.Ct.Civ.R. 59(e), their separate motion for reconsideration, and their motion to strike evidence. Nixon, Jemison, and Fleming appeal from both the award of punitive damages and the imposition of sanctions. We affirm.[3]
I. FACTUAL BACKGROUND
NBC held its annual convention in New Orleans in September 1994 to elect a new president, officers, and members of the board of directors. The term of the former president, Dr. Jemison, would expire at the end of the convention, and he was barred by a term limitation in the NBC constitution from running for a new term. Dr. W. Franklyn Richardson was Jemison's choice for a successor, and Dr. Nixon also supported Richardson. There were, however, three additional candidates for the presidency, including Dr. Henry Lyons.
This was the first time in the history of NBC that the election was to be held by a secret ballot. To conduct the election, each of the four candidates chose two representatives to a multi-partisan Election Committee, which selected Rev. James S. Allen as its chairman. Under procedures adopted by the Committee, each delegate was required to obtain a badge and an identification card before proceeding to the voting booth. The Election Committee was to distribute the identification cards on the basis of delegate registrations.
A problem arose in the initial distribution of cards to the Alabama delegation, which was the largest of the state delegations. There were 1127 Alabama registrants entitled to vote, but only 511 cards were ready for distribution. After those 511 cards were distributed, the delegates who did not receive cards went to the Election Committee, which then directed that cards be distributed to all of the Alabama delegates who requested them, including Dr. Nixon. The voting proceeded without further incident, and the votes were tabulated by independent, professional election officials. Dr. Lyons was declared the winner of the election by a margin of more than 500 votes, and later he addressed the convention as its president. While the convention remained in session, no one complained that he or she had been denied the right to vote.
Although Dr. Lyons and the new board had assumed office upon election, Jemison asked Lyons for a month to complete some "paperwork" before turning over the organization's books and records. Lyons was thus separated from control of NBC's administrative offices and financial resources. Jemison, Nixon, and Fleming used this additional time to implement a scheme to prevent Lyons from serving as president.
Upon returning to Alabama, Nixon told Jemison that he was dissatisfied with the election. At Jemison's urging, Nixon called a special meeting of the Executive Board of the Alabama State Convention to obtain approval to file suit in the Convention's name contesting the election. Dr. Nixon presented to the Board a memorandum prepared by Jemison's attorney, Jo Fleming, which would serve as the foundation for the lawsuit. Ms. Fleming claimed to have reviewed the election records and determined that 616 delegates from Alabama had been denied their right to vote. A resolution was passed approving the suit.
Ms. Fleming then began making arrangements for the filing of the suit by Dr. Nixon, in which Dr. Jemison would purport to be the defendant and Fleming would be his counsel. Fleming called Demetrius Newton, an attorney *279 who had previously represented the Alabama State Convention, to discuss where the suit should be brought. Some time later, Ms. Fleming called Newton again to say that the suit would be filed in the District of Columbia and that Dr. Nixon had retained R. Kenneth Mundy, a prominent Washington attorney (now deceased), to represent him.
Before any litigation was begun, Fleming and Mundy communicated extensively with each other by phone and facsimile machine. Ms. Fleming reviewed preliminary drafts of the complaint and the TRO application several days before they were filed. The twofold purpose of the TRO application was to persuade the court that there were serious problems with the election results and to obtain an order declaring Dr. Lyons not yet in office. The trial court later found that it was the defendants' and plaintiffs' "mutual objective to convince the court to defer ruling and to send the case to the Election Committee for resolution of the alleged election irregularities."
Fleming and Jemison, with the assistance of Nixon, began assembling documents to support their claims that more than 600 Alabama delegates had been denied the right to vote, that Lyons had not yet been officially installed as president, and that it was widely recognized that there were serious questions about the conduct of the election. To that end they prepared two letters, ostensibly signed by Nixon and Jemison and addressed to each other, which would be filed with the TRO application. Nixon's letter, dated September 27, 1994, stated that 600 Alabama delegates had been denied the right to vote. Jemison's letter in response, dated September 28, asserted that there were widely recognized problems with the election and that other prominent members of the convention supported his view. It was later established that Nixon's supposed letter was forged by Fleming and Jemison in Nixon's name, that Nixon never signed it, and that Jemison's purported "response" was written in an effort to create the basis for a TRO.
Appellants then initiated a campaign to persuade Rev. Allen, the chairman of the Election Committee, that there was a serious controversy over the election and that the Committee should take action to resolve this dispute. Rev. Boise Kimber, Dr. Richardson's campaign manager, told Allen about purported complaints and tried to persuade Allen to intervene. When Jemison also urged Allen to set aside the election, Allen yielded to the pressure. At Jemison's request, Allen wrote Jemison a letter acknowledging complaints about election irregularities and stating that his Committee would address them. In fact, the only people from whom Allen had heard any references to complaints were Jemison and Kimber. This letter, along with the fabricated Nixon-Jemison exchange of correspondence, was faxed to Mr. Mundy to be filed with the TRO application.
The complaint and the TRO application requested that the installation of the new officers be enjoined, leaving Jemison in power. NBC's constitution provided that the newly elected board would assume responsibility upon the recess or adjournment of the convention. However, the copy of the constitution that was attached to the TRO application was photocopied in such a way that the relevant passages of Article VI, § 1, referring to the duties of the newly elected board, were omitted. This copy of the constitution was among those documents provided to Mr. Mundy, Nixon's counsel, by Ms. Fleming.
To support their allegation that hundreds of Alabama delegates had been denied the vote, appellants presented more than forty "affidavits of disenfranchisement." All of these affidavits were false, and all but a few had been forged in the names of various Alabama citizens who never knew that their names were being used in this way. The affidavits were prepared, in part, with the aid of Rev. Tommy Lee Lewis, who had been appointed by Dr. Nixon to the Executive Board of the Alabama State Convention and had been made chairman of the committee to gather evidence for the lawsuit. The affidavits were sent to Mr. Mundy by Boise Kimber, Richardson's campaign manager. Throughout this time, Fleming and Jemison did not inform Dr. Lyons of their efforts.
On September 29, 1994, Mr. Mundy filed the complaint and the TRO application. Fleming and Jemison wrote to Mundy stating *280 that they had received a copy of the complaint and the TRO papers and purporting to accept service on behalf of NBC. Fleming added that she had no objection to the scheduled hearing date for the TRO application and waived her presence.
On the basis of the fraudulent allegations and documentation, the TRO was granted on September 29 after an ex parte hearing before a judge of the Superior Court. Ms. Fleming then contacted Dr. Lyons, notifying him that the court's order barred NBC from installing the officers who had been elected on September 8. She instructed Dr. Lyons that the officers remained as they were before the election.
A status conference was scheduled before another judge a week later, on October 6. On the morning of October 6, however, Dr. Lyons filed a written submission indicating that the facts were not what they appeared to be. Following the status conference, the judge set a consolidated hearing on the preliminary injunction and the merits for October 26, but she denied appellants' request to order the Election Committee to resolve the asserted factual issues about the conduct of the election.
Dr. Lyons and the new board then entered the case as intervenors and filed a motion for summary judgment, based primarily on the First Amendment. By the time of the October 26 hearing, Dr. Lyons was able to present evidence that at least six of the affidavits were forgeries. He therefore filed a motion for sanctions, with supporting affidavits. At the hearing, the court granted the motion for summary judgment. The court then asked whether there was any additional evidence to be considered in connection with the motion for sanctions. After presenting the testimony of several witnesses, Dr. Lyons' counsel advised the court that Dr. Jemison might also have participated in the fraud. The court decided that it was appropriate to conduct discovery and scheduled a further hearing.
After discovery and two additional hearings, the trial court issued an order on June 26, 1995, stating in part:
Virtually every document submitted in support of the TRO, and to support the central allegation that six hundred (600) or more persons were denied the right to vote, though qualified to do so, is based upon manufactured, false, or forged evidence which was known to be false or should have been known to be false by the plaintiffs, the defendants, and their counsel.
The court found that Nixon, Jemison, Fleming, the Alabama State Convention, and the members of the former NBC board of directors had
orchestrated a collusive effort to invoke the jurisdiction of the court and to mislead the court into entering orders designed to prejudice the rights of parties who were not before the court. Because they acted jointly and corruptly in initiating and maintaining this action, and in preparing and in causing to be submitted to the court false, fabricated, and fraudulent documents, and in otherwise perpetrating a gross and serious fraud against the court in furtherance of their tortious scheme, the sanctions which the court shall impose will run jointly and severally against them pursuant to Superior Court Civil Rule 11 and the inherent authority of the court to regulate and to preserve the integrity of the judicial process.
From the inception, this action was without evidentiary support and was designed to allow a few to retain the reins of power and to control the hierarchy of the National Baptist Convention contrary to the Convention's mission, its principles, tenets, and Constitution.
The court specifically found that Dr. Nixon and the Alabama State Convention were "directly responsible for the false and fraudulent affidavits, since it was pursuant to their directive that Rev. Lewis prepared and collected the same. Similarly, Dr. Jemison, through counsel, also prepared at least two of the affidavits, if not more...." The court further found that Dr. Nixon "knew firsthand that the allegations ... of widespread election irregularities were not well grounded in fact," and that both Jemison and Fleming were likewise well aware of the fraudulent nature of the lawsuit.
*281 On the basis of these and similar findings, the court assessed punitive damages in the amount of $150,000 against Dr. Nixon, Dr. Jemison, and Ms. Fleming. They were also ordered to pay all reasonable attorneys' fees, costs, and expenses of the intervenors, Dr. Lyons and NBC. Those costs were later determined to be $237,322.00.[4]
II. THE COURT'S FINDINGS OF FACT
Appellants make numerous challenges to the trial court's findings of fact and conclusions of law. Most of them, reduced to essentials, are contentions that the evidence was insufficient to support the findings, and hence that the imposition of sanctions against each and all of them was legally erroneous. Intertwined with these assertions are others of a more purely legal nature. We will strive to address them all in this section of our opinion even though, strictly speaking, they are not all claims of evidentiary insufficiency.
Our standard of review is well established. In a case tried without a jury, we address legal issues de novo, but the judge's findings of fact can be reversed only if they are "plainly wrong or without evidence to support [them]." D.C.Code § 17-305(a) (1997); see, e.g., Washington Medical Center v. Holle, 573 A.2d 1269, 1284 (D.C.1990); Simpson v. Chesapeake & Potomac Telephone Co., 522 A.2d 880, 885 (D.C.1987). Applying this standard, we hold that the findings as to each appellant are amply supported by the evidence.
A. Jemison's Involvement
Dr. Jemison claims that because he was not a party to the underlying lawsuit, the court had no jurisdiction to assess attorneys' fees and punitive damages against him. The complaint names only a singular defendant, "National Baptist Convention, USA, Inc.," listing "President, T.J. Jemison, Sr." in lower-case letters as the person to be served with process. Similarly, the TRO application requests "enjoining the National Baptist Convention, USA, Inc." and does not mention Jemison. Dr. Jemison, however, does not offer any legal support for the proposition that the court has no jurisdiction to sanction a non-party, and we conclude, in the particular circumstances of this case, that the court had the power to do so.
The trial court's authority to sanction Dr. Jemison was based on his involvement in the fraudulent scheme and the filing of the suit that arose from it, even though he was technically not a party. Jemison arranged for the filing of a collusive lawsuit and was actively involved in the submission of forged documents to the court. The evidence showed that Jemison wired legal fees directly to Mr. Mundy, knowing that Mundy was filing the suit. Jemison also forwarded to Mundy a letter to himself from Dr. Allen, referring to complaints about election irregularities, in order to bolster the TRO application. This letter was written by Dr. Allen at the request of Dr. Jemison and simply acknowledged complaints that Jemison himself had made.
Probably the most egregious of Jemison's activities was the fabrication of an exchange of letters between himself and Nixon, which he hoped would lend credence to the suggestion of massive irregularities so as to require court intervention. The letter bearing Nixon's signature was never seen by Nixon; it had been forged by Jemison and Fleming. The letter signed by Jemison was carefully tailored to "respond" to the fabricated letter which purportedly came from Nixon. Both letters were then sent to Mr. Mundy, along with the letter from Dr. Allen.
Jemison contends (without citing a single case) that because he was not a named party to the litigation, the trial court had no power to impose sanctions on him for his involvement in the fraudulent activities which culminated in the filing of a collusive lawsuit. But whether he was or was not a party is not the real issue. Rather, as appellees point out, the issue is whether the trial court had personal jurisdiction over Dr. Jemison which *282 would enable the court to impose sanctions on him for his wrongful conduct.[5]
We note, first of all, that Jemison never raised his "not a party" claim in the trial court until long after the sanctions order was entered. It first surfaced in his motion for reconsideration (which we shall address in part V of this opinion), filed more than eight months after issuance of the order. It is settled law that a lack of personal jurisdiction can be waived, and we conclude that Jemison waived it in this case by failing to raise it at any time before filing the motion for reconsideration. We agree with appellees that "one cannot, after receiving an unfavorable ruling from the trial judge, concoct objections for use on appeal." Copeland v. Marshall, 205 U.S.App.D.C. 390, 415, 641 F.2d 880, 905 (1980) (en banc).
But even assuming, for the sake of argument, that the claim was adequately preserved by its inclusion in the motion for reconsideration, we would have to reject it. The Supreme Court has stated that "if in the informed discretion of the court, neither the statute nor the rules are up to the task, the court may safely rely on its inherent power" to sanction those who engage in bad faith conduct in the course of litigation. Chambers v. NASCO, Inc., 501 U.S. 32, 50, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991). Although in Chambers the sanctioned person was an actual party to the case, a recent case in the Ninth Circuit used similar reasoning to affirm the imposition of attorneys' fees against a non-party, in circumstances comparable to what we have here. Corder v. Howard Johnson & Co., 53 F.3d 225 (9th Cir.1994), involved a dispute over the management of a private pension plan; the suit alleged a breach of fiduciary duty by the plan's investment advisor. After ruling on the merits of the underlying claim, the trial court awarded attorneys' fees against Gary Baugh, the president of the company that had established the plan. Even though he was not a party to the litigation "in his individual capacity,"[6] the court found that Mr. Baugh had "induced the Beneficiaries to sue [the investment advisor] and was motivated to do so to spread the loss resulting from the Beneficiaries' action against him." Id. at 232. Expressly rejecting Baugh's claim that the trial court had erred in assessing attorneys' fees against him because he was not a party, the court held that "even in the absence of statutory authority, a court may impose attorney's fees against a non-party as an exercise of the court's inherent power to impose sanctions to curb abusive litigation practices." Id. (citations omitted).
Similarly, in Lockary v. Kayfetz, 974 F.2d 1166 (9th Cir.1992), cert. denied, 508 U.S. 931, 113 S.Ct. 2397, 124 L.Ed.2d 298 (1993), the same court affirmed the imposition of sanctions on a non-party corporation (PLF) which had
contacted and organized the plaintiffs and paid for the litigation ... [and had] sometimes... held itself out as the representative of the plaintiffs, sometimes as the employer of the plaintiffs' lawyers, and always as the entity directing the litigation and "calling the shots."
Id. at 1168. After the case was resolved against the plaintiffs, the trial court imposed sanctions
on PLF, the entity which had controlled the litigation ... and was, in the court's view, responsible for the substantial abuse of the court system.
Id. at 1169. Relying heavily on Chambers v. NASCO, Inc., supra, the Court of Appeals upheld this ruling as a proper exercise of the trial court's "inherent powers to sanction PLF as the responsible entity." Id. at 1170.
We agree with the reasoning of the Ninth Circuit in these two cases and adopt it here. We hold that the trial court had the inherent power to sanction Dr. Jemison, given the clear proof of his flagrant abuse of the judicial process. Like Mr. Baugh in the Corder case and PLF in the Lockary case, Dr. Jemison *283 was deeply involved in the fraudulent scheme from the very beginning. He took an active part in the planning of the litigation and in the preparation of the false documents on which the TRO request was based. The evidence clearly showed that Jemison, along with Fleming and Nixon, was at the very heart of the fraud. We reject his argument that the evidence was insufficient to support the court's imposition of sanctions.
B. Fleming's Involvement
Ms. Fleming likewise maintains that her involvement in the fraudulent activities was minimal, and that she therefore should not have been sanctioned. She asserts, for example, that she had nothing to do with the selection of Mr. Mundy as counsel for the suit that was filed in the District of Columbia. While it is quite possible that Fleming may not have made the final selection, the evidence showed that she was actively involved in choosing the venue for the suit and in finding Mr. Mundy. She was in direct contact with Mundy's office from the beginning, consulting about jurisdiction and TRO standards. After the TRO was obtained, there were numerous phone calls between Mundy's office and Fleming's office.
Fleming also contends that the evidence failed to show that she participated in the drafting of the complaint and the TRO application. She cites Mr. Mundy's statement that there were "several calls back and forth to myself and Ms. Fleming in which I was trying to identify who the members of the Election Committee were." Mundy went on to say that this "wasn't for the purpose of filing. [It was for] setting forth the grievances and asking for official action by the National Baptist Convention." The trial court could properly infer, as it did, that while there was no direct proof that Fleming participated in the drafting of the legal papers, the repeated calls and faxes between Fleming and Mundy showed that Fleming at least had some role in their preparation.
Finally, Fleming asserts that she had no knowledge that fraudulent affidavits were being collected or that any affidavits were to be submitted with the complaint and the TRO application. She states that Rev. Lewis and Rev. Kimber conceived the idea of affidavits, prepared them, and provided them to Mr. Mundy. Ms. Fleming, however, admitted preparing the single affidavit signed and submitted by Rev. Kimber. As the trial court noted, all of the affidavits are significantly similar in form, in format, and even in typeface to the Kimber affidavit. Furthermore, the Kimber affidavit had to have been prepared by someone with knowledge of the other affidavits. All of these facts support the court's finding that Ms. Fleming was involved in filing a collusive and fraudulent lawsuit.
C. Nixon's Involvement
Dr. Nixon claims that his role in the fraud was minimal, far less than that of the other participants. While that is true to some extent, we are satisfied that his involvement was sufficient for a bad faith finding and that he should therefore be subject to the sanctions imposed by the trial court.
Nixon asserts that he did not engage in any bad faith conduct, much less participate (as plaintiff) in a massive conspiracy with the defendants. He points out that the trial court found that he never saw the four dozen false "affidavits of disenfranchisement" which were filed with the court. The court also found that Nixon did not write or authorize the forged letter to Jemison which was attached to the complaint.
Despite these findings favorable to Dr. Nixon, however, the trial court also found that Nixon played a major role in the institution of the fraudulent lawsuit. It was Nixon who arranged the special meeting of the Alabama State Convention's Executive Board to obtain the board's approval of a suit challenging the election in its name. He helped to gain votes to support the suit by relieving certain officials of their positions and then appointing others to the board, including Rev. Lewis. Dr. Nixon presented to the Executive Board a memorandum, prepared by Ms. Fleming, which served as the "factual" foundation for the complaint. Fleming purported to document that 616 voters from Alabama had been denied their right to vote at the convention. Nixon knew that this memorandum had been fabricated and was *284 not accurate. He also told Mr. Mundy that more than 600 Alabama delegates had been denied the right to vote the central allegation of the fraudulent complaint. Dr. Nixon then assigned Rev. Lewis the task of gathering false statements to support the suit.
While there is no way of knowing just how closely Dr. Nixon collaborated with Rev. Lewis in arranging for the forged affidavits, the fact that Nixon assigned the task amply demonstrates his role in the fraud. When one of the purported affiants, Rev. Willie McClung, approached Dr. Nixon about his forged affidavit, Nixon told him to "mind [his] own business." Although Nixon left the active management of the suit to Jemison and Fleming, he helped to provide the fabricated allegations upon which the suit was based and, when confronted with the fraud and forgery, did nothing to mitigate it in any way. The court found:
The plaintiff, Dr. Nixon, knew firsthand that the allegations raised in the complaint and the application for TRO, consisting of mass denials of 600 or more eligible delegates' right to vote; the assertions that the new Board and President had not been installed; unspecified breaches of the Convention Constitution, and assertions of widespread election irregularities, were not well grounded in fact.
This finding is abundantly supported by the evidence.
Nixon also argues that the court could not award punitive damages without first assessing compensatory damages,[7] and that the court erred in awarding punitive damages because the trial court never considered evidence of his net worth. We reject both arguments. In this case the award of attorneys' fees was itself compensatory. In the context of bad faith litigation, repayment of the fees incurred in defending against the litigation is properly treated as compensatory damages. See Chambers v. NASCO, Inc., supra, 501 U.S. at 46, 111 S.Ct. 2123. Furthermore, under District of Columbia law, evidence of net worth is not always a prerequisite to an award of punitive damages. See Town Center Management Corp. v. Chavez, 373 A.2d 238, 246 (D.C.1977); see also Jonathan Woodner Co. v. Breeden, 665 A.2d 929, 938 (D.C.1995), modified, 681 A.2d 1097, 1098 (1996) (net worth must be shown only when punitive damages are based on the wealth of the person from whom such damages are sought), cert. denied, ___ U.S. ___, 117 S.Ct. 1083, 137 L.Ed.2d 217 (1997).
D. The NBC Constitution
Jemison and Fleming claim that they had no knowledge of the altered excerpt from the NBC constitution filed by Mr. Mundy as an attachment to the TRO application. They also argue that the omissions from the constitution were simply faxing errors. Mr. Mundy's testimony, however, as well as his answers to interrogatories, showed that he specifically asked Ms. Fleming to send him a copy of the NBC constitution. The trial court was aware of the importance of the omitted language, and could reasonably find that the likelihood that this one crucial section would be inadvertently omitted was quite remote. The finding that the alteration of the constitution was deliberate and culpable is well supported by the record.[8]
E. Mr. Mundy's Retainer
The trial court found that Nixon asked Jemison to pay the attorneys' fees for the legal proceedings against NBC. Dr. Nixon had earlier advised the Executive Board of the Alabama State Convention that it would *285 not have to pay any money toward this litigation. Following Nixon's conversation with Jemison on September 28, 1994, Jemison sent $9,500 to Mr. Mundy in Washington. The court found that there were no documents or discussions supporting Nixon's claim that the retainer fee was a personal loan to him from Jemison, and ruled that the payment of the fee by Dr. Jemison to the attorney representing his purported adversary was improper.
Appellants continue to assert that this money was simply a personal loan to Mr. Mundy. They contend that there was no evidence that either Dr. Jemison or Ms. Fleming was in control of Mr. Mundy and his handling of the lawsuit. We disagree. The evidence showed that Dr. Jemison wired the money directly to Mr. Mundy, knowing that Mundy was about to file the complaint and the TRO application. Suits in which one side pays both sides' fees are presumed to be collusive because "one of the parties has dominated the conduct of the suit by payment of the fees of both." United States v. Johnson, 319 U.S. 302, 304, 63 S.Ct. 1075, 87 L.Ed. 1413 (1943). There was, as the trial court found, no evidence to rebut this presumption, and thus the court did not err in holding that the payment was improper.
III. PUNITIVE DAMAGES
Appellants assert that the trial court did not have authority to assess punitive damages as a civil sanction for bad faith litigation, citing Synanon Foundation, Inc. v. Bernstein, 517 A.2d 28 (D.C.1986). They misread Synanon. In Synanon we held that when a suit has been filed in bad faith, the court in its discretion may "award the entire legal expenses incurred by the defendant." Id. at 38. If the award of attorneys' fees is greater than the actual amount of expenses incurred, then to the extent that it exceeds that amount, "that award is not truly attorneys' fees at all but rather punitive damages under another name." Id. at 39. This court did not say, however, that punitive damages could not also be awarded in addition to attorneys' fees, but only that a trial is a prerequisite to such an award:
We do not suggest that an award of punitive damages would have been inappropriate in the present case, but such an award was not made, nor could it have been absent a trial.
Id. (emphasis added). Appellees argue, and we agree, that if there is a trial (or, as in this case, a trial-type hearing), then neither Synanon nor any other case bars an award of punitive damages in a case such as this.
Appellees also assert that in this case "the trial court followed Synanon to the letter." Again, we agree. The court allowed generous discovery and held three evidentiary hearings, and when they were over, the court made express and detailed findings that each of the three appellants had acted with the malicious state of mind required for punitive damages. See, e.g., Daka, Inc. v. Breiner, 711 A.2d 86, 98-99 (D.C.1998); Washington Medical Center v. Holle, supra, 573 A.2d at 1284. Particularly when the activity in question contains the elements of a classic intentional tort, for which punitive damages are permissibly granted,[9] we see no reason why a court may not award punitive damages. See, e.g., Weisman v. Middleton, 390 A.2d 996, 999 (D.C.1978) (both attorneys' fees and punitive damages may properly be awarded on a malicious prosecution claim).
"Whether punitive damages will lie depends on the intent with which the wrong was done, and not on the extent of the actual damages." Washington Medical Center, supra, 573 A.2d at 1284 (citation omitted). That intent has been described in a variety of ways, but its nature can be discerned from the language used in our case law.[10] The finder of fact can infer the requisite *286 state of mind from the surrounding circumstances; indeed, it is usually impossible to do otherwise, for direct evidence of that state of mind is rare. See Robinson v. Sarisky, 535 A.2d 901, 906 (D.C.1988).
The trial court found appellants' conduct to be of an egregious nature, accompanied by ill will and willful disregard of the rights of others. Throughout its opinion the court used such terms as "despicable," "collusive," "dastardly," "false and misleading," "pernicious and odious," "gross and serious fraud," and "a most serious fraud upon the integrity of the court" to describe what appellants had done. There was no exaggeration in this language. Appellants engaged in a collusive scheme characterized from the outset by fraud and deception, subverting the judicial process itself in their outrageous efforts to overturn the results of a clearly valid election. The court found conscious and purposeful fraud with respect to both the overall scheme and many specific fraudulent or collusive acts, and the evidence abundantly supported those findings.[11]
Appellants further maintain that as a matter of law there can be no joint and several liability for punitive damages. They assert that there are strict limitations on the vicarious imposition of punitive damages which include "full knowledge of the facts" by the person being vicariously charged. See Woodard v. City Stores Co., 334 A.2d 189, 191 (D.C.1975). Appellants argue that the trial court did not find that each individual against whom punitive damages were jointly and severally assessed had full knowledge of the culpable conduct of the others.
This court has held, however, that persons who jointly participate in wrongful conduct may be jointly and severally liable for punitive damages. See Harris v. Wagshal, 343 A.2d 283, 289 (D.C.1975). In this case, in addition to finding joint and several liability, the trial court held that even if the actions of each appellant were to be considered separately, they would warrant the imposition of sanctions. After spelling out what each appellant had done to further the fraudulent scheme, the court concluded, "Their actions, whether viewed individually or jointly, resulted in a most serious fraud upon the integrity of the court, for which the imposition of sanctions is mandated and is wholly appropriate." We discern no factual or legal error in this ruling, especially in light of Harris.
Appellants further maintain that the award of punitive damages was really a disguised penalty for criminal contempt, imposed without the required notice or legal safeguards, and was thus plain error. We disagree; this was not a matter that called for criminal contempt proceedings, nor can the award be construed as a criminal penalty. An award of punitive damages to a private party based on a civil claim or claims is a civil penalty, not a criminal sanction to which criminal law protections apply. See, e.g., BMW of North America, Inc. v. Gore, 517 U.S. 559, 574 n. 22, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996) (although civil penalties must meet due process requirements, "[t]he strict constitutional safeguards afforded to criminal defendants are not applicable to civil cases"); Browning-Ferris Industries of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 260, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989) ("[a]wards of punitive damages do not implicate [Eighth Amendment] concerns"). "If the relief provided is a fine, it is remedial when it is paid to the complainant, and punitive when it is paid to the court...." Hicks *287 v. Feiock, 485 U.S. 624, 632, 108 S.Ct. 1423, 99 L.Ed.2d 721 (1988). Because the punitive damages in this case were ordered to be paid to the appellees, not the court, and because the trial court emphasized that they were being awarded for "the severe harm caused" by appellants to Dr. Lyons and NBC, we find no merit in appellants' argument.[12]
For all of these reasons, we reject appellants' various challenges to the punitive damages award.
IV. ATTORNEYS' FEES
Jemison and Fleming claim that at the time of the alleged violations, prior to June 1, 1995, Civil Rule 11 applied only to a party or attorney who signed and filed a motion or other paper. While this assertion is essentially correct, a court may nevertheless impose sanctions (albeit not under Rule 11) when it finds that the attorney or party has engaged in bad faith litigation, even if that person has not signed any court papers.[13]
This court recently addressed a similar situation in Bredehoft v. Alexander, 686 A.2d 586 (D.C.1996), in which we reversed an order imposing sanctions under Rule 11 because the sanctioned attorney did not sign the challenged pleading. In doing so, however, we made clear that if the trial court had made a finding of bad faith, it could have imposed sanctions under its inherent "authority to impose sanctions" for bad faith conduct regardless of whether the attorney had signed the papers. Id. at 589 (citing Chambers v. NASCO, Inc., supra, 501 U.S. at 45-46, 111 S.Ct. 2123); accord, Chevalier v. Moon, 576 A.2d 722, 724 (D.C.1990) (affirming award of attorneys' fees when trial court had made a finding that party had acted in bad faith by misrepresenting facts to judge orally at a hearing, even though Rule 11 did not apply because misrepresentations were not made in a written pleading).
In light of Bredehoft and Chevalier, we hold that, to the extent that the court relied on Rule 11, it erred insofar as neither Jemison nor Fleming had signed any pleading or other document on which the court's sanctions were based. We also hold, however, that any such error was harmless because the court also found that Jemison and Fleming had acted in bad faith and exercised its inherent authority well founded in the case law (including Bredehoft and Chevalier) to punish bad faith litigation, and because there was overwhelming evidence to support the court's findings.
Appellants also contend that the trial court erred when it relied on aggregated time entries in calculating the attorneys' fees. The Supreme Court has held that "the applicant... should maintain billing time records in a manner that will enable a reviewing court to identify distinct claims." Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). Courts in the District of Columbia have never imposed a requirement of daily task-specific billing, even under statutes authorizing awards of "reasonable" attorneys' fees. "[T]he fee application need not present `the exact number of minutes spent nor the precise activity to which each hour was devoted nor the specific attainments of each attorney.'" National Ass'n of Concerned Veterans v. Secretary of Defense, 219 U.S.App.D.C. 94, 102, 675 F.2d 1319, 1327 (1982) (citations omitted).
Appellees' fee submission comported with the requirement that it provide sufficiently detailed descriptions of the work performed and the hours billed. The submission consisted of the daily time entries of each of the attorneys and legal assistants involved. *288 These documents were prepared in the same manner in which the law firm maintained its time entries for billing purposes, and included a description of the activities performed by each attorney on a given day and the total time spent by each attorney on that day. The fee submission was accompanied by detailed explanatory affidavits, including an affidavit describing the overall services performed, particular staffing decisions, and "write-offs" made in the exercise of counsel's judgment. We are satisfied that the documentation supporting the calculation of attorneys' fees was sufficient to meet the requirements of Hensley v. Eckerhart and other relevant cases.
V. THE MOTION FOR RECONSIDERATION
On June 26, 1995, the trial court awarded punitive damages against appellants in the amount of $150,000 and ruled that appellants would be liable for reasonable attorneys' fees, costs, and expenses, the amount of which would be determined after further proceedings. On July 20 they filed separate notices of appeal from that order. The court did not determine the precise amount of attorneys' fees and expenses until February 7, 1996, when it entered an order assessing those costs at $237,322.00. On February 29, 1996, appellants filed a motion to reconsider the court's June 26 sanction order. In an order dated April 10, 1996, the trial court held that the motion for reconsideration was untimely and declined to consider it.[14] Jemison and Fleming now contend that the court abused its discretion in so ruling.
The court's pre-trial order set a ten-day limit for filing motions for reconsideration. Appellants would thus have had to file their motion within ten days after June 26, 1995, in order to challenge the punitive damages award (as appellees contend), or, at the very latest, within ten days after February 7, 1996, in order to challenge the attorneys' fees award.[15] Because appellants failed to do either and failed to explain this failure, their motion filed February 29 was untimely, and the trial court did not err in refusing to address it.[16]
VI. CONCLUSION
We find no reversible error in any part of the trial court's decision. Accordingly, in the five appeals of Jemison, Fleming, and Nixon, the orders before us for review are affirmed in all respects. The two cross-appeals noted by NBC are dismissed; see note 3, supra.
It is so ordered.
REID, Associate Judge, concurring in part and dissenting in part:
I fully support and join Judge Terry's opinion, except for that part which imposes the sanction of punitive damages against Dr. Jemison. I agree that the factual circumstances of this matter warrant sanctions. What is most troublesome for me, however, is the use of the court's inherent power to impose punitive damages, in addition to attorneys fees, as a sanction on a non-party.
The trial court's order of June 26, 1995, treats Dr. Jemison as a party. At the time plaintiffs filed their complaint, Dr. Jemison was not made a party to the litigation. On October 6, 1994, the trial court inquired whether Dr. Jemison "is the appropriate party in this case." On October 7, 1994, the trial court added additional defendants to the case, but did not include the name of Dr. *289 Jemison in its order. Nor was Dr. Jemison identified as a party in plaintiffs' amended complaint. Despite appellees' argument that Dr. Jemison acted like a party and did not challenge the court's jurisdiction after receiving notice that sanctions would be sought against him, I find nothing in the record showing that Dr. Jemison was ever made a party to the suit in his individual capacity. Hence, I can only regard him as a non-party.
I agree that Corder v. Howard Johnson & Co., 53 F.3d 225 (9th Cir.1994), which relied on Chambers v. NASCO, Inc., 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991), supports the exercise of the court's inherent power to award sanctions, in the form of attorneys' fees, against a non-party for the filing of a collusive lawsuit. I also agree that Lockary v. Kayfetz, 974 F.2d 1166 (9th Cir. 1992), cert. denied, 508 U.S. 931, 113 S.Ct. 2397, 124 L.Ed.2d 298 (1993), permitted sanctions, in the form of attorneys' fees, against a non-party based on misconduct, although some of the factual circumstances differed from the case before us.[1] However, in the absence of any authority, I am unwilling to affirm the exercise of the court's inherent power to award punitive damages, in addition to attorneys' fees, against a non-party. The Supreme Court has reminded us that "[b]ecause of their very potency, inherent powers must be exercised with restraint and discretion." Chambers, supra, 501 U.S. at 44, 111 S.Ct. 2123. A double award of sanctions against a non-party, based solely on the inherent power of the court, creates an awesome weapon. I am not prepared to join in the creation of such an awesome weapon at this time.
NOTES
[*] Judge King was an Associate Judge of the court at the time of argument. His status changed to Associate Judge, Retired, on September 1, 1998.
[1] Ms. Fleming practices law in Baton Rouge, Louisiana, and is a member of the Louisiana bar.
[2] The court later modified its decision in part and ruled that the former board of directors of NBC would not be held liable.
[3] NBC noted two protective cross-appeals, Nos. 95-CV-1031 and 96-CV-414, but they have not been briefed, and at oral argument counsel for NBC told us that they would not be pursued. They are moot, in any event, in light of our decision in the other five appeals. The two cross-appeals are therefore dismissed.
[4] No sanctions, however, were imposed on the plaintiffs' counsel, Mr. Mundy. The court found that it was reasonable for him to rely on the representations of his client, and that a reasonable pre-filing inquiry would not have disclosed that the pleadings and other papers were not well grounded in fact. No one takes issue with these findings.
[5] Our dissenting colleague agrees that the court could permissibly order Jemison to pay attorneys' fees, but not punitive damages. Jemison, however, draws no such distinction. Rather, his contention is that because he was not a party, the court could not impose sanctions of any kind upon him.
[6] Baugh had been named as a defendant only in his capacity as a trustee of the pension plan.
[7] In the District of Columbia, there must be at least a basis in the evidence for actual i.e., compensatory damages before punitive damages may be awarded. See, e.g, Maxwell v. Gallagher, 709 A.2d 100, 104-105 (D.C.1998) (citing cases).
[8] Jemison and Fleming also argue that the two purported letters from Nixon to Jemison and from Jemison to Nixon were not fabricated or fraudulent. Given the copious evidence of the fraudulent scheme, which we need not here repeat, this argument is essentially frivolous. We note also that Ms. Fleming's input into the letters is unmistakable, as the trial court concluded. There was evidence, for example, that in all her correspondence she placed "In re:" (rather than the more customary "Re:") in the middle of the page and followed it, after double spacing, with the subject. The forged Nixon letter of September 27 was prepared in Fleming's characteristic form.
[9] In the District of Columbia, with rare exceptions, punitive damages are available only for intentional torts. See Bernstein v. Fernandez, 649 A.2d 1064, 1073 (D.C.1991); Washington Medical Center v. Holle, supra, 573 A.2d at 1284 n. 24.
[10] "Punitive damages are warranted only when the defendant commits a tortious act `accompanied with fraud, ill will, recklessness, wantonness, oppressiveness, willful disregard of the plaintiff's rights, or other circumstances tending to aggravate the injury.'" Washington Medical Center v. Holle, supra, 573 A.2d at 1284 (citations omitted); see, e.g., Arthur Young & Co. v. Sutherland, 631 A.2d 354, 372 (D.C.1993) ("evil motive or actual malice"); Vassiliades v. Garfinckel's, Brooks Brothers, Miller & Rhoades, Inc., 492 A.2d 580, 593 (D.C.1985) ("outrageous conduct which is malicious, wanton, reckless, or in willful disregard for another's rights" (citations omitted)).
[11] Appellants also contend that the trial court did not use a "clear and convincing" standard in awarding punitive damages, as required by Jonathan Woodner Co. v. Breeden, supra, 665 A.2d at 938. While the court did not specifically use that language, appellants never asked it to do so. We note, moreover, that the court's order was filed almost three months before we decided the Jonathan Woodner case, at a time when the standard of proof was not yet settled. Because the issue was not timely raised in the trial court, we decline to consider it now, as we declined in similar circumstances in two prior cases, Daka, supra, 711 A.2d at 99 n. 25, and Dyer v. William S. Bergman & Associates, Inc., 657 A.2d 1132, 1139 (D.C.1995). See Jonathan Woodner, 665 A.2d at 937 (discussing Dyer). That aspect of Jonathan Woodner has not been challenged here.
[12] We agree with appellees that the imposition of sanctions in this case closely resembles an award of damages in a civil action for malicious prosecution or abuse of process. For such conduct, the law recognizes that courts may award both compensatory damages and punitive damages without criminal contempt protections. See, e.g., Weisman v. Middleton, supra, 390 A.2d at 999 (both attorneys' fees and punitive damages are "proper elements of [a] damage award" in a malicious prosecution case).
[13] Appellants assert that the court erred "in holding that either Jemison or Fleming signed any filed document in violation of Rule 11." The court, however, never made any such finding; on the contrary, it was plainly aware that only the signer (or a client whose attorney filed a document on his or her behalf) can be liable under Rule 11.
[14] The court noted, nevertheless, that it had "already considered most of the issues raised in defendants' motion to reconsider in its previous orders."
[15] Appellees additionally contend that the June 26 order was final and appealable, and that because appellants appealed from that order, they could not also file a motion for reconsideration. They are only partially correct. The June 26 order was final as to punitive damages, but it was not final with respect to attorneys' fees and costs, and thus to that extent it was not appealable. See Marlyn Condominium, Inc. v. McDowell, 576 A.2d 1346, 1347 n. 1 (D.C.1990) ("[a]n award of attorney's fees is final when the trial court has `determined the quantum of attorney's fees to be paid,' not when the trial court `merely establishe[s] entitlement to attorney's fees in an amount to be later determined'" (citation omitted)).
[16] Even if the motion to reconsider is treated as a motion to amend the judgment under Civil Rule 59(e), appellants would still have had to file it within ten days after February 7. Because they did not, the motion was untimely under Rule 59(e).
[1] Lockary, supra, involved a complaint "alleg[ing] regulatory takings, substantive and procedural due process violations and equal protection violations ... [as well as] antitrust claims" in which plaintiffs "sought damages of $30 million ($10 million trebled under the Sherman Act), and declaratory and injunctive relief." 974 F.2d at 1168. The magistrate appointed as special master imposed sanctions on the non-profit corporation in the amount of $136,434.50. Id. at 1169. Because sanctions were imposed erroneously with respect to a procedural due process claim and an abstention motion, and because there were errors in the calculation of the attorneys' fees, the matter was remanded to the district court for recalculation of the amount of the sanctions. Id. at 1179.
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279 Pa. Superior Ct. 530 (1980)
421 A.2d 326
John A. DIETTERLE and Arlene P. Dietterle, Husband and wife, and John P. Dietterle, a minor, by his parents and natural guardians, John A. Dietterle and Arlene P. Dietterle, in their own right
v.
James F. HARDING, and James D. Morrissey, Inc., and Bensalem Township, two cases.
Appeal of BENSALEM TOWNSHIP.
Appeal of JAMES D. MORRISSEY, INC.
Superior Court of Pennsylvania.
Argued June 21, 1979.
Filed August 8, 1980.
Petition for Allowance of Appeal Denied November 14, 1980.
*532 James D. Wilder, Philadelphia, for Bensalem Tp.
G. Taylor Tunstall, Philadelphia, for Dietterle, appellees.
Joseph M. Hankins, Philadelphia, for Harding, appellee.
William J. McKinley Jr., Philadelphia, for Morrissey.
Before HESTER, HOFFMAN and CATANIA, JJ.[*]
CATANIA, Judge:
This is an appeal from a verdict entered in favor of plaintiffs and defendant James F. Harding, and against *533 defendants James D. Morrissey, Inc., and Bensalem Township.
This case arose out of an automobile accident on the evening of January 4, 1970 involving the appellant, Harding, and the appellees on Street Road in Bensalem Township, Bucks County.
At the point of collision, the highway narrowed from a new four-lane structure, to an older two-lane road with a sharp left turn required to be made at that juncture. At that point in the road, there was an earthen embankment, which the Harding car collided with before striking the Dietterle car.
Appellant Morrissey had contracted with the Pennsylvania Department of Transportation to construct approximately 4392 linear feet of separated highway consisting of reinforced cement concrete pavement 24 feet wide on each side of a paved median 4 feet, 19 feet and variable in width including one composite steel multi-girder bridge superstructure; also one prestressed concrete bridge having a total overall length of 82 feet and 858 linear feet of highway. The project covered approximately one mile in length and covered the cost for the maintenance and safety of traffic approaching and throughout the construction site.
Prior to submitting its bid on the contract, Morrissey warranted to the Department of Transportation that they had examined the entire project area and were fully aware of the conditions to be encountered. Additionally, they further represented that they had read and were completely familiar and understood thoroughly the "General Conditions, Specifications of the Department of Highways, Forms 408 and 409, contained in and governing the performance of the contract". Consequently, Appellant Morrissey knew of the dangerous condition of the embankment, which completely blocked the two-southern most lanes of traffic, and a part of their performance consisted in removing the embankment and constructing the highway. Morrissey argues that it should not be liable for an accident that resulted due to a pre-existing defect in the highway, that was not within the *534 immediate work area, and the negligence of the Appellee Harding for not having observed the embankment.
Appellant Morrissey cites McClendon et al. v. T.L. James and Company, 231 F.2d 802 (1956), where a contractor was not liable for an accident that resulted when an automobile heading west struck a broken piece of cement in the highway, that contractors were repairing, and lost control and hit an automobile heading in an easterly direction. In that case, the defect in the road was six miles from the actual work site and the Court determined that the contract imposed no duty upon contractor to warn motorists of the defect. However, in the instant case, the facts are quite distinguishable. Not only was the defect within one mile from the actual work area, as opposed to six in the McClendon Case, but the earthen embankment was to be removed as part of their contract. Further, appellant's administrator testified at trial that although he was aware of Bulletin # 43 that concerns warning the public about construction by adequate advance warning devices and by suitable lighting devices at night, the Company took neither of these precautionary measures. In Hawk v. Trumbull Construction Company, 401 Pa. 570, 166 A.2d 41, it was held that road construction companies should give motorists adequate and proper warning of the existence of dangerous conditions within their project area, particularly when the project area covers such a limited area as the one in question. Consequently, the lower court was correct in its finding of negligence concerning appellants' admitted failure to erect warning and channelling devices for traffic moving easterly into the construction area.
The lower court erred in finding Bensalem Township jointly liable. It is undisputed that Street Road, at the time and place of the accident, was designated a state highway under Section 2 of the Act of June 22, 1931, P.L. 720, 36 PS § 103. The exclusive authority and jurisdiction of state highways concerning maintenance and repair rests with the State Highway Department, also known as the Pennsylvania Department of Transportation (PennDOT). It was their *535 duty, and not Bensalem Township's, to erect fences, sawhorses, and the barrels in question. Even though Bensalem Township police issued traffic citations and investigated accidents on Street Road, as did the State Police, the Township had no right to locate or relocate the signs and devices which the State required Morrissey to provide.
In finding Bensalem Township jointly liable, the lower court determined that an intervening act by the Township on the night preceding the accident, took them from under the prophylactic shield that they claimed protected them. The intervening act occurred after a similar accident only twenty-four hours preceding the instant one. Bensalem Township was summoned to the scene of that accident and placed flares on the road so that the approaching vehicles would be able to avoid the danger area. The lower court reasoned that this act of placing the flares on the road was sufficiently an act of dominion and control of the area, that their subsequent removal of the flares after the accident was cleared up, amounted to an act of negligence in failing to maintain safe conditions, if only temporarily until PennDOT could alleviate the problem.
In Stevens v. Reading Street Railway Company, 384 Pa. 390, 121 A.2d 128 (1956), it was held that the Commonwealth has relieved the municipalities of the obligation to construct, repair or maintain state highways. According to this precedent, Bensalem Township owed no duty to motorists traveling on Street Road on the night of the accident. Under the most critical analysis of the facts the only negligence that could be attributed to Bensalem Township is that they were put on notice of the potential hazard of the area by the accident of January 3rd, and their failure to act immediately was the one contributing element to the Dietterle-Harding accident. However, even under such scrutiny, their liability is still only secondary to that of Morrissey who was under contract with the State to maintain safe conditions on Street Road. Therefore, Bensalem Township *536 is indemnified by Morrissey, and are consequently not liable for any damages assessed by the lower court.
The record supports the lower court's finding that the accident was not due to the negligent driving of Harding. The question of the visibility of the embankment, considering the lack of any warning of its existence, was a question of fact for the jury, whose finding shall not be disturbed absent the inability of two reasonable people to agree in the conclusion. Cummings v. Nazareth Borough, 427 Pa. 14, 233 A.2d 874 (1967). It was argued at trial by Appellant Morrissey that Harding violated the assured clear distance ahead rule, and was negligent as a matter of law. At night, this would be within the distance illuminated by the headlights. Obviously, if road conditions change, the driver must adjust his speed accordingly. However, where the change is so drastic as the earthen embankment in this case was, a driver need not be extraordinarily diligent or exercise superhuman sensory perception to comply with the rule. Lathrop v. Henkels and McCoy, Inc., 351 F.Supp. 1052 (D.C.Pa. 1972). It was brought out at trial that Harding was totally unfamiliar with the area; that there were no lights illuminating the area; that the barrels and barricades were on the opposite side of the dirt embankment from which Harding was approaching, and therefore not visible; that he was travelling 30 m.p.h., looking ahead and paying attention to where he was going; and, most importantly, that there were no signs or warnings of any kind alerting him to the existence of the embankment or warning him that it was necessary for him to change lanes ahead. Based on this information, it was entirely proper for the jury to conclude that Harding did not violate the assured clear distance rule, or that he failed to exercise all due care under the circumstances.
For the foregoing reasons, the verdict of the lower court is affirmed as to the liability of James D. Morrissey, Inc., and reversed concerning Bensalem Township.
HOFFMAN, J., concurs in result.
NOTES
[*] President Judge FRANCIS J. CATANIA, of the Court of Common Pleas of Delaware County, Pennsylvania, is sitting by designation.
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720 A.2d 645 (1998)
316 N.J. Super. 487
Arthur WILDONER, Plaintiff-Appellant,
v.
The BOROUGH OF RAMSEY, Ramsey Police Department, Officer Kane Zuhone and Officer Brian[1] O'Donahue, Defendants-Respondents, and
Helen Gannon and Margaret Diefert, Defendants.
Superior Court of New Jersey, Appellate Division.
Submitted October 28, 1998.
Decided December 8, 1998.
*647 Thomas L. Ferro, Ridgewood, for plaintiff-appellant.
Harwood Lloyd, attorneys; (Thomas A. Keenan, of counsel, Hackensack; Christine M. Vanek, on the brief, Oradell).
Before Judges KING, WALLACE and FALL.
*646 The opinion of the court was delivered by WALLACE, Jr., J.A.D.
Plaintiff Arthur Wildoner, a seventy-year-old disabled veteran, was arrested for domestic violence against his wife by defendants police officers, Kane Zuhone and Brian O'Donahue, employees of defendant Ramsey Police Department and of defendant Borough of Ramsey, (together the defendants). Defendant Helen Gannon, a neighbor of plaintiff, reported a disturbance to defendant Margaret Diefert, the manager of the senior citizens' apartment complex where they resided, who in turn called the police. Plaintiff was arrested.
Plaintiff filed suit against each party who played a role in his arrest. He subsequently dismissed his negligence claims against Gannon and Diefert. In his complaint, he claimed that defendants falsely arrested and imprisoned him; mistreated him; improperly obtained a temporary restraining order (TRO) against him; and maliciously prosecuted him for assault. The motion judge granted summary judgment in favor of defendants.
On appeal, plaintiff contends the judge erred in (1) finding probable cause; (2) determining that defendants were immune under 42 U.S.C.A. § 1983; (3) dismissing plaintiff's state tort claims of false arrest and false imprisonment; (4) dismissing his malicious prosecution claim under state and federal law; (5) discounting a finding by the judge who heard the domestic violence matter that the police improperly obtained the TRO against plaintiff; and (6) determining that defendants were immune under N.J.S.A. 59:9-2(d).
We conclude plaintiff raised genuine issues of material facts necessary to determine whether there was probable cause for his arrest and whether defendants were protected by good faith immunity under § 1983. Because plaintiff's claims of false arrest and false imprisonment depend on whether there was probable cause for the arrest, it was error to dismiss those claims and the claim for malicious prosecution. We affirm the dismissal of the state-law claim for damages for pain and suffering against all defendants and affirm the dismissal of the claim for punitive damages and malicious prosecution against the Ramsey Police Department and the Borough of Ramsey.
I
This case arises out of the arrest of plaintiff by Ramsey police officers Kane Zuhone and Brian O'Donahue. Plaintiff and his wife Cecilia resided in a senior citizen complex in Ramsey. On September 15, 1993 Helen Gannon, a neighbor, reported to Margaret Diefert that she heard a disturbance coming from plaintiff's apartment. Gannon claimed she heard plaintiff use loud and abusive language and threaten to throw a knife at Cecilia. Diefert then called the police.
A short while later, Zuhone and O'Donahue arrived at the complex. After speaking with Gannon and Diefert the police knocked on plaintiff's apartment door. Cecilia let the police enter. After interviewing Cecilia, the police arrested plaintiff, obtained a temporary order restraining him from going back to his home, and filed a criminal complaint against him for assault and battery.
Cecilia had not sought a restraining order against plaintiff and checked the block on the *648 Bergen County Domestic Violence Rights Form indicating that "she did not want a restraining order at this time."
The next day, at a hearing on the domestic violence complaint, the temporary restraining order was dismissed with a notation on the order that:
Testimony in Court. No complaint filed by [Cecilia]. Police improperly obtained TRO.
Later, when the assault and battery complaint filed in Ramsey Municipal Court was heard, it was dismissed at the end of the State's case.
In September 1995, plaintiff filed his complaint against defendants alleging assault and battery, intentional infliction of emotional distress, mistreatment, false arrest, false imprisonment and malicious prosecution claiming violations of both state law and 42 U.S.C.A. § 1983. Plaintiff alleged he suffered mental anguish, ridicule and embarrassment, expense incurred in his defense, and deprivation of his civil rights. He sought compensatory and punitive damages, along with costs, interest, and attorney's fees. Defendants answered, denying the material allegations.
Following discovery defendants moved for summary judgment, claiming immunity from suit because the arresting officers acted in good faith and with probable cause. In support of their motion, pursuant to R. 4:46-2, defendants submitted, in part, the following facts:
4. Officers Kane ZuHone and [Brian] O'Donahue of the Ramsey Police Department were dispatched to the Woodlands Senior Homes after receiving a call from Ms. Diefert regarding the domestic situation in the Wildoner's apartment.
5. Officers ZuHone and O'Donahue consulted Ms. Diefert and Ms. Gannon before investigating the Wildoner's residence.
6. Upon the officers' arrival, Mrs. Wildoner admitted the officers into her apartment and told them that Plaintiff had been drinking, and that she did not want him to drive the car.
7. Officers ZuHone and O'Donahue observed a red mark on Mrs. Wildoner's arm.
8. When Mrs. Wildoner was questioned about the red mark on her arm, she pointed to Plaintiff and said, "He did it to me."
9. Mrs. Wildoner reported that her husband had thrown a knife at her.
10. Officers ZuHone and O'Donahue observed a knife on the kitchen floor of the Wildoner's apartment.
11. After being placed under arrest, Plaintiff was wheeled out of the apartment in a wheelchair, covered by a blanket.
12. Complaining of dizziness, plaintiff was driven to the Ramsey Police Station in an ambulance.
13. A criminal complaint charging simple assault (N.J.S.A. 2C:12-1a) was signed by Officer ZuHone against Plaintiff Wildoner.
14. Plaintiff, Cecilia Wildoner, refused to sign a domestic violence complaint.
15. Ramsey Police Officers applied to the Municipal Court Judge for a Temporary Restraining Order. Judge Leddy issued a Temporary Restraining Order for Mrs. Wildoner's protection.
16. Plaintiff was released into the custody of his son, Arthur Wildoner, Jr., a police officer of 21 years.
17. Mrs. Wildoner told her son that her husband threw a knife at her that evening.
18. Plaintiff never mentioned his "treatment" by the Ramsey Police to his son.
Plaintiff disputed many of the facts as alleged by defendants. He referred to Cecilia's deposition of February 11, 1997 where she denied telling the police officers that she had an argument with plaintiff and denied that she had taken plaintiff's car keys from him because he had consumed too much alcohol that day. In fact she said that nothing unusual happened on September 15, 1993, but that she and plaintiff talk loud because plaintiff does not hear very well. Cecilia explained that she hurt her arm attempting to help plaintiff put his pants on after the police arrived. She did not notice the red mark on her arm until the officer pointed it out. Cecilia recalled hearing the officer say: "We'll put ... down your husband did that."
Cecilia also denied telling the officers that plaintiff threw a knife at her, hit her, slapped *649 her, verbally abused her, or that he was intoxicated. Further, she denied seeing a knife on the kitchen floor. She also noted that plaintiff needed a walker or a cane to walk, and said, "I'd give him a push and he'd be down if he ever fought with me." She added, "he would never hit me. He ain't that type. We're married all these years and he couldn't."
Plaintiff also submitted his deposition of February 11, 1997, wherein he stated that he spoke in a loud voice because Cecilia had difficulty hearing but denied he ever attacked her, threw a knife at her, or bruised her. He said at one point when his wife was in the bedroom, he may have dropped his dinner knife on the floor. Plaintiff stated that when the police arrived they pushed Cecilia into the bedroom to talk to her. When they returned one officer asked him about a red mark on Cecilia's arm. Shortly, thereafter, one officer said to the other, "[w]e don't have nothing here" but as they were about to leave, the one officer said "I'm going to try something." The officer then read plaintiff his rights, handcuffed him behind his back and placed him under arrest.
Plaintiff testified that a piece of shrapnel remained in his knee from World War II. He said he never recovered the full use of his knee and for the past eight or nine years he had difficulty bending it. He developed arthritis in his other knee and had difficulty putting weight on his legs. He needed a cane to walk and getting out of a chair took him ten minutes because he needed to grab onto something to pull himself up. He claimed he was physically incapable of attacking his wife on September 15, 1993, because "[s]he could give me a shove and that would be the end of it."
Plaintiff explained that the officers never told him why they were arresting him, and that he did not put up any resistance. He did ask them for permission to put his pants on but the police denied his request. This request was denied. He said the officers obtained a wheelchair, "shoved" him into it, and took him outside where the people laughed at him because he was not dressed. The officers called an ambulance to transport plaintiff to headquarters. He said that his son arrived at headquarters and took him to his home for the night.
Plaintiff claimed that his shoulders and arms were permanently injured and as a result of the officers' rough treatment, he sustained a pulled muscle and a broken blood vessel.
After considering the evidence and the arguments of counsel, the motion judge granted defendants' motion and dismissed plaintiff's complaint. The judge concluded that the police officers acted in good faith and had probable cause to believe that plaintiff had committed an offense. The judge held that defendants were immune from liability under 42 U.S.C.A. § 1983 and N.J.S.A. 59:2-1, 3-3, and 9-2(d).
II
Plaintiff contends the motion judge erred in finding probable cause for his arrest in view of the existence of disputed genuine issues of material fact.
Initially, we note that summary judgment is appropriate if "there is no genuine issue as to any material fact challenged and ... the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). A fact issue is genuine if "the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." R. 4:46-2(c); Brill v. Guardian Life Ins. Co., 142 N.J. 520, 540, 666 A.2d 146 (1995). Thus, we view the evidence in the light most favorable to plaintiff, the non-moving party.
42 U.S.C.A. § 1983 provides:
Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State ... subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured....
"To establish a claim under section 1983, a plaintiff must prove that the defendant acted under color of state law and that the defendant *650 deprived the plaintiff of a federal statutory or constitutional right." Kirk v. City of Newark, 109 N.J. 173, 185, 536 A.2d 229 (1988) (citation omitted).
Plaintiff argues that his arrest was made pursuant to the Prevention of Domestic Violence Act, N.J.S.A. 2C:25-17 to -33. N.J.S.A. 2C:25-21(a) authorizes a law enforcement officer to arrest an alleged offender "[w]hen a person claims to be a victim of domestic violence," if there is probable cause to believe that domestic violence has occurred, and if the victim is injured, or if a weapon is involved. If the conditions of this subsection are not present, a police officer may still arrest an alleged offender "where there is probable cause to believe that an act of domestic violence has been committed." N.J.S.A. 2C:25-21(b). Plaintiff contends that giving him the benefit of his favorable evidence, his wife never claimed to be a victim of domestic violence and the police lacked probable cause to believe domestic violence had occurred.
N.J.S.A. 2C:25-22, provides:
A law enforcement officer or a member of a domestic crisis team or any person who, in good faith, reports a possible incident of domestic violence to the police shall not be held liable in any civil action brought by any party for an arrest based on probable cause, enforcement in good faith of a court order, or any other act or omission in good faith under this act.[2]
This section protects defendants from liability for an arrest only if the arrest was based on probable cause.
In addition to establishing that defendants acted under color of state law when they arrested him, plaintiff claims a deprivation of his constitutional right to freedom from an unreasonable seizure of his person under the Fourth Amendment of the United States Constitution. An arrest without probable cause is actionable under § 1983. Kirk, supra, 109 N.J. at 185, 536 A.2d 229.
A police officer may defend a § 1983 claim "by establishing either that he or she acted with probable cause, or, even if probable cause did not exist, that a reasonable police officer could have believed in its existence." Kirk, supra, 109 N.J. at 184, 536 A.2d 229. However, where there are disputed genuine issues of fact upon which the probable cause issue depends, then the issue of probable cause to arrest is a question for the factfinder. Sharrar v. Felsing, 128 F.3d 810, 818 (3rd Cir.1997). ("The question is for the jury only if there is sufficient evidence whereby a jury could reasonably find that the police officers did not have reasonable cause to arrest.")
The crucial issue under both state law and § 1983 is whether defendant had probable cause to arrest plaintiff. Probable cause exists if at the time of the arrest "the facts and circumstances within [the officers'] knowledge and of which they had reasonably trustworthy information were sufficient to warrant a prudent man in believing that the [suspect] had committed or was committing an offense." Beck v. Ohio, 379 U.S. 89, 91, 85 S.Ct. 223, 225-26, 13 L.Ed.2d 142, 145 (1964) (citations omitted); see also State v. Waltz, 61 N.J. 83, 87, 293 A.2d 167 (1972) (citations omitted) (probable cause is "more than mere naked suspicion but less than legal evidence necessary to convict.... It has been described by this Court as a `well grounded' suspicion that a crime has been or is being committed.")
It is clear that when an injured victim complains to the police that she was assaulted and identifies her husband as the attacker, there is probable cause to arrest the husband. See Sharrar, supra, 128 F.3d at 818. On the other hand, if the victim does not complain but an informant who is not an eyewitness is the complainant, the informant's "`veracity,' `reliability,' and `basis of knowledge' are all highly relevant in determining the value of his report." Illinois v. *651 Gates, 462 U.S. 213, 230, 103 S.Ct. 2317, 2328, 76 L.Ed.2d 527, 543 (1983). "Without a basis for determining the reliability of informants' hearsay, there can be no probable cause finding." Siligato v. State, 268 N.J.Super. 21, 30, 632 A.2d 837 (App.Div.1993). The reviewing court must consider the totality of the circumstances. Illinois v. Gates, supra, 462 U.S. at 238, 103 S.Ct. at 2332, 76 L.Ed.2d at 548.
Accepting as true all of the evidence which supports plaintiff's position, we are satisfied that plaintiff submitted sufficient evidence from which a jury could reasonably find the police lacked probable cause to arrest plaintiff. Defendants' contention that there was probable cause to arrest plaintiff assumes that Cecilia initially reported to the police that she had argued with plaintiff, but subsequently changed her story. However, Cecilia denied she told the police plaintiff attacked her, verbally abused her, or was intoxicated. Cecilia also explained the mark on her arm was not caused by plaintiff and denied there was a knife on the floor. While plaintiff admitted there might have been a knife on the floor, he asserted that he accidentally dropped it.
The remaining evidence was Gannon's report that she heard plaintiff threaten to throw a knife at Cecilia. This might constitute a terroristic threat. The officers investigated this complaint and attempted to confirm Gannon's account by questioning Cecilia. Again, accepting Cecilia's testimony that she denied telling the officers that plaintiff either threatened or attacked her, Gannon's account remained uncorroborated.
In addition, plaintiff's poor physical condition was a circumstance which a reasonable police officer should have considered. Plaintiff, Cecilia, and their son, concurred that plaintiff was physically incapable of inflicting injury upon Cecilia.
In short, plaintiff submitted sufficient evidence to support a finding that a reasonable police officer would not have believed probable cause existed that plaintiff had committed domestic violence. Plaintiff raised genuine issues of material fact to preclude summary judgment.
III
Plaintiff next challenges the motion judge's determination that defendants were entitled to qualified immunity for acts done in good faith under 42 U.S.C.A. § 1983. In finding no abuse of police power, the motion judge reasoned that public employees "charged with protection of the public" must be permitted "to perform their duties unfettered by the litigious whims of certain members of the public while at the same time allowing obvious abuses to be dealt with by the Court."
In Harlow v. Fitzgerald, 457 U.S. 800, 817-18, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396, 410 (1982) (citations and footnote omitted), the Supreme Court explained the defense of qualified or good faith immunity:
[W]e conclude today that bare allegations of malice should not suffice to subject government officials either to the costs of trial or to the burdens of broad-reaching discovery. We therefore hold that government officials performing discretionary functions generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known....
Reliance on the objective reasonableness of an official's conduct, as measured by reference to clearly established law, should avoid excessive disruption of government and permit the resolution of many insubstantial claims on summary judgment.
In Malley v. Briggs, 475 U.S. 335, 341, 106 S.Ct. 1092, 1096, 89 L.Ed.2d 271, 278 (1986), considering a claim that a police officer caused the arrest of plaintiff by obtaining a warrant without probable cause, the Court commented that the defense of qualified immunity
provides ample protection to all but the plainly incompetent or those who knowingly violate the law.... Defendants will not be immune if, on an objective basis, it is obvious that no reasonably competent officer would have concluded that a warrant would issue; but if officers of reasonable competence could disagree on this issue, immunity should be recognized.
*652 In Anderson v. Creighton, 483 U.S. 635, 641, 107 S.Ct. 3034, 3040, 97 L.Ed.2d 523, 532 (1987), dealing with a warrantless search of plaintiffs' home, conducted because of exigent circumstances, the Court elaborated on this standard: "The relevant question ... is the objective (albeit fact-specific) question whether a reasonable officer could have believed [defendant's] warrantless search to be lawful, in light of clearly established law and the information the searching officers possessed. [Defendant's] subjective beliefs about the search are irrelevant."
Our Supreme Court adopted the federal "objective reasonableness" standard when determining whether a law enforcement officer is entitled to qualified immunity. Kirk v. City of Newark, supra, 109 N.J. at 187, 536 A.2d 229 (a reasonable officer could have believed that defendant police detective had probable cause to arrest plaintiff for scalding his girlfriend's child); see also Plummer v. Department of Corrections, 305 N.J.Super. 365, 373, 702 A.2d 535 (App.Div.1997) (corrections officers' arrest of plaintiff, a former inmate, seen on or near state prison grounds, was objectively reasonable); McKinney v. East Orange Mun. Corp., 284 N.J.Super. 639, 651, 666 A.2d 191 (App.Div.1995), certif. denied, 143 N.J. 519, 673 A.2d 277 (1996) (obtaining search warrant and manner of its execution were both objectively unreasonable); Gurski v. New Jersey State Police Dep't, 242 N.J.Super. 148, 159, 576 A.2d 292 (App.Div.1990) (probable cause existed for warrant for search of plaintiff's home but manner in which search was conducted was objectively unreasonable).
Thus a law enforcement officer who acts without probable cause is protected if his or her "decision was reasonable, even if mistaken." Hunter v. Bryant, 502 U.S. 224, 229, 112 S.Ct. 534, 537, 116 L.Ed.2d 589, 596 (1991) (citation omitted). Further, we noted in McKinney, supra, at 647, 666 A.2d 191, that "the standard of objective reasonableness is liberally construed in the officer's favor."
The question of qualified immunity is a question of law to be decided by the court as early in the proceedings as possible, because "[t]he entitlement is an immunity from suit rather than a mere defense to liability." Hunter, supra, 502 U.S. at 227, 112 S.Ct. at 536, 116 L.Ed.2d at 595 (quoting Mitchell v. Forsyth, 472 U.S. 511, 526, 105 S.Ct. 2806, 2815, 86 L.Ed.2d 411, 425 (1985)); see also Kirk, supra, 109 N.J. at 182, 536 A.2d 229.
In Sharrar, supra, the court addressed the "`tension ... as to the proper role of the judge and jury where qualified immunity is asserted.'" 128 F.3d at 826 (citations omitted). The court held that the issues of whether the law is clearly established and whether the actions of the officers were objectively reasonable are both to be decided by the court, but added: "Only if the historical facts material to the latter issue are in dispute ... will there be an issue for the jury." 128 F.3d at 828.
We apply there principles to the case here. Neither side contends the law regarding probable cause to arrest plaintiff was not clearly established. However, as noted above, the historical facts necessary to decide whether the officers' actions were objectively reasonable are in dispute. If the officers' versions are credited there is no doubt they had probable cause to arrest plaintiff and their actions were objectively reasonable. On the other hand, if plaintiff's version is believed, the police would not have had an objectively reasonable belief there was probable cause to arrest plaintiff. Because there are essential underlying historical facts in dispute, a jury must decide the issue of qualified immunity.
Defendants nevertheless contend they are entitled to qualified immunity because plaintiff failed to prove "conduct beyond mere negligence." Vallejo v. Rahway Police Dep't, 292 N.J.Super. 333, 347, 678 A.2d 1135 (App.Div.), certif. denied, 147 N.J. 262, 686 A.2d 763 (1996). In Vallejo, plaintiff suffered brain damage when he attempted suicide while imprisoned by defendants. There plaintiff's claim under § 1983 was based on a failure to train officers in suicide prevention and to provide him with medical care. We held that at most this was a case of negligence and dismissed the claim. Id. at 348, 678 A.2d 1135.
*653 Defendants also rely on Fielder v. Stonack, 141 N.J. 101, 117-30, 661 A.2d 231 (1995), where our Supreme Court held that police officers are immune from liability under N.J.S.A. 59:5-2(b)(2), when, in pursuit of a fleeing automobile, their vehicle collides with an innocent third party's vehicle. The Court commented that defendants might still be liable on a federal due process claim if plaintiffs can show more than "mere negligence" on the part of the officers. Id. at 133, 661 A.2d 231.
Contrary to defendants' contention, the actions of the officers could be found to be more than mere negligence which accidentally or inadvertently caused harm to plaintiff. If plaintiff's evidence is believed then the police officers intentionally arrested plaintiff knowing that they lacked probable cause to arrest him. Under these circumstances, it was error to decide the issue of qualified immunity as a matter of law.
IV
Plaintiff contends the judge erred in dismissing his claims of false arrest and false imprisonment on the ground that defendants were immune from liability under N.J.S.A. 59:2-1 and 3-3.
N.J.S.A. 59:2-1(a) provides: "Except as otherwise provided by this act, a public entity is not liable for an injury, whether such injury arises out of an act or omission of the public entity or a public employee or any other person."
N.J.S.A. 59:3-3 provides: "A public employee is not liable if he acts in good faith in the execution or enforcement of any law. Nothing in this section exonerates a public employee from liability for false arrest or false imprisonment." The 1972 Task Force Comment under this section explains that:
This section does not, however, immunize law enforcement officials from false arrest and false imprisonment. It is recognized that law enforcement officers are not now immune in the State of New Jersey and it is believed that existing principles of law provide sufficient protection for the officer from frivolous suits. Therefore it is the intent of this section to emphasize the importance of compensating a citizen whose freedom has been unreasonably restricted.
[N.J.S.A. 59:3-3 (comment).]
In Hayes v. County of Mercer, 217 N.J.Super. 614, 618-19, 526 A.2d 737 (App.Div.), certif. denied, 108 N.J. 643, 532 A.2d 226 (1987), plaintiff was arrested and defendants commenced an extradition proceeding against him, but the action was dismissed when the victim could not identify plaintiff. We determined that the investigator's conduct was objectively reasonable, and he was thus entitled to qualified immunity under § 1983. Id. at 621, 526 A.2d 737. We further adopted "the objective good-faith standard" of Harlow v. Fitzgerald, supra, for the good-faith defense set forth in the first sentence of N.J.S.A. 59:3-3. 217 N.J.Super. at 622-23, 526 A.2d 737. However, we noted that this section "withholds the defense of subjective good faith where the claim ... is for `false arrest or imprisonment.' Id. at 622-23, 526 A.2d 737.
To be sure, probable cause is a defense to claims of false arrest and false imprisonment. Hayes, supra, 217 N.J.Super. at 623, 526 A.2d 737. However, as noted above, the issue of whether defendants had probable cause to arrest plaintiff must be decided by the factfinder. Therefore, it was error to conclude that defendants were immune from liability under N.J.S.A. 59:3-3.
V
Plaintiff next contends the motion judge erred in dismissing his claim of malicious prosecution because Zuhone's complaint against him for simple assault was later dismissed at trial.
In an action for malicious prosecution, plaintiff "must show that the suit was brought without reasonable or probable cause, that it was actuated by malice, and that it terminated favorably to the plaintiff." Penwag Property Co., Inc. v. Landau, 76 N.J. 595, 598, 388 A.2d 1265 (1978) (citation omitted). The plaintiff must also establish a special grievance, other than counsel fees and costs necessary to the defense, which *654 "consists of interference with one's liberty or property." Ibid. (citation omitted).
N.J.S.A. 59:3-8 provides: "A public employee is not liable for injury caused by his instituting or prosecuting any judicial or administrative proceeding within the scope of his employment." The 1972 Task Force Comment to this section states that "the immunity does not extend to conduct ... constituting actual malice ... or willful misconduct. See § 59:3-14."
N.J.S.A. 59:3-14(a) provides: "Nothing in this act shall exonerate a public employee from liability if it is established that his conduct ... constituted ... actual malice or willful misconduct." Although a public employee is generally not liable for injury caused by his prosecuting any judicial proceeding, N.J.S.A. 59:3-8, this provision does not apply if the employee's conduct constituted actual malice or willful misconduct. N.J.S.A. 59:3-14(a). Here, plaintiff has raised a genuine issue of material fact regarding whether the officers' acted with malice or willful misconduct.
Further, malicious prosecution is a constitutional tort actionable under § 1983. In James v. Price, 602 F.Supp. 843, 845 (D.N.J.1985), plaintiff alleged that malicious prosecution of a criminal offense was a deprivation of his liberty without due process. The court held that defendants were not entitled to immunity under Harlow v. Fitzgerald, supra, because, "at least within the District of New Jersey, the right to be free from malicious prosecution is `clearly established.' " 602 F.Supp. at 847.
Here, defendants do not contest plaintiff's assertion that the criminal complaint was dismissed at the close of the State's case. Viewing the evidence favorably to plaintiff, a reasonable factfinder could conclude the officers acted with malice in arresting him without probable cause and in obtaining a temporary restraining order against the wishes of Cecilia. Consequently, we conclude that plaintiff submitted sufficient evidence to raise a material issue of fact regarding the officers' malice in prosecuting him. It was error to summarily dismiss plaintiff's claim for malicious prosecution.
VI
Plaintiff next contends that the motion judge improperly rejected the notation on the order vacating the TRO that "[p]olice improperly obtained TRO." Specifically, plaintiff contends this "ruling is binding on this proceeding under the principle of collateral estoppel." We disagree.
In order for collateral estoppel to apply;
the party asserting the bar must show that: (1) the issue to be precluded is identical to the issue decided in the prior proceeding; (2) the issue was actually litigated in the prior proceeding; (3) the court in the prior proceeding issued a final judgment on the merits; (4) the determination of the issue was essential to the prior judgment; and (5) the party against whom the doctrine is asserted was a party to or in privity with a party to the earlier proceeding.
[In re Dawson, 136 N.J. 1, 20, 641 A.2d 1026 (1994) (citations omitted).]
Here, the prior proceeding, captioned Cecilia Wildoner v. Arthur Wildoner, which resulted in the vacation of the temporary restraining order apparently consisted solely of Cecilia's testimony, because the judge checked boxes on the form order indicating that he had considered plaintiff's "certification and/or affidavit" and noted "testimony in court." The order of September 16, 1993, is the only portion of this proceeding that is in the record. Thus, it cannot be determined whether the issue of the officers' propriety in obtaining the restraining order was litigated. In any event, none of the defendants here were parties to or in privity with parties to the domestic violence proceeding. Consequently, the motion judge properly rejected plaintiff's attempt to use collateral estoppel.
VII
Plaintiff finally contends the motion judge erred in determining that N.J.S.A. 59:9-2(d) precluded his claims.
N.J.S.A. 59:9-2(d) provides:
*655 No damages shall be awarded against a public entity or public employee for pain and suffering resulting from any injury; provided, however, that this limitation on the recovery of damages for pain and suffering shall not apply in cases of permanent loss of a bodily function, permanent disfigurement or dismemberment where the medical treatment expenses are in excess of $1,000.
Plaintiff submitted no evidence of his medical treatment expenses and submitted no medical evidence that he suffered any permanent loss of a bodily function.
Nevertheless, plaintiff contends that section 9-2(d) applies only to pain and suffering resulting from a physical injury and does not apply to pain and suffering resulting "from an injustice, deprivation of constitutional rights and loss of liberty." This view has been rejected. See Ayers v. Township of Jackson, 106 N.J. 557, 565, 525 A.2d 287 (1987), ("the subjective symptoms of depression, stress, health concerns and anxiety described by the plaintiffs and their expert witness constitute `pain and suffering resulting from any injury' and the Tort Claims Act bars recovery for such damage.")
Plaintiff also contends that he should be permitted to assert his claim of punitive damages against the officers, even in the absence of compensatory damages. Defendants argue that an award of punitive damages against the officers is barred by N.J.S.A. 59:3-1(c) which bars liability of public employee where the public entity is immune from liability.
The case of Marion v. Borough of Manasquan, 231 N.J.Super. 320, 323-24, 555 A.2d 699 (App.Div.1989), is instructive. There, plaintiffs claimed they were unlawfully arrested and detained for walking on a beach without a beach badge. We determined that their claims of emotional distress amounted to pain and suffering and were barred by N.J.S.A. 59:9-2(d). Id. at 332, 555 A.2d 699. However, we noted that although punitive damages could not be awarded against a public entity under N.J.S.A. 59:9-2(c), "no such immunity exists for public employees." Id. at 333, 555 A.2d 699. Moreover, we noted that "in a false imprisonment case, punitive damages may be awarded even where there are no compensatory damages." Ibid. (citations omitted).
Here, a factfinder, crediting plaintiff's evidence, could conclude the officers' conduct in arresting and handcuffing plaintiff was wantonly reckless or malicious. See Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 49, 477 A.2d 1224 (1984) ("To warrant a punitive award, the defendant's conduct must have been wantonly reckless or malicious. There must be an intentional wrongdoing in the sense of an `evil-minded act' or an act accompanied by a wanton and wilful disregard of the rights of another"). Furthermore, counsel fees incurred in defending a false complaint are a part of the damages for a malicious prosecution claim. See Penwag Property Co., supra, 76 N.J. at 598, 388 A.2d 1265 ("[c]ounsel fees and costs in defending the action maliciously brought may be an element of damage in a successful malicious prosecution").
Consequently, we affirm the determination that N.J.S.A. 59:9-2(d) precluded an award of compensatory damages. However, plaintiff may maintain his claims for punitive damages against O'Donahue and Zuhone.
We reverse in part and remand for further proceedings consistent with the views expressed herein.
NOTES
[1] Respondents' brief incorrectly identifies Brian O'Donahue as Ryan O'Donahue.
[2] The version of this statute in effect in September 1993 did not contain the language "or any person who, in good faith, reports a possible incident of domestic violence to the police." These additional words were added by L.1994, c. 94, § 2, effective August 11, 1994. The clear intent of the amendment was to expand the immunity by enlarging the class of persons covered to include persons who report, in good faith, a possible incident of domestic violence to the police.
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279 Pa. Superior Ct. 570 (1980)
421 A.2d 346
Mamie FARLEY
v.
SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY and Richard Harrow, Jr.
Appeal of SEPTA.
Richard HARROW, Jr.
v.
SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY and Henry T. Plonski, Appellants.
Superior Court of Pennsylvania.
Argued March 21, 1979.
Filed August 1, 1980.
Reargument Denied October 7, 1980.
Petition for Allowance of Appeal Denied April 10, 1981.
*573 Norman M. Hegge, Jr., Philadelphia, for appellants.
Richard W. Berlinger, Philadelphia, for Mamie Farley, appellee.
Joseph Litt, Philadelphia, for Richard Harrow, Jr., appellee.
Before CERCONE, President Judge, and WATKINS and HOFFMAN, JJ.
WATKINS, Judge:
These are appeals growing out of a trespass action in an intersectional vehicular accident. The cases were consolidated for trial. Richard Harrow, Jr., the plaintiff-appellee, sued the defendant, Henry T. Plonski, a bus driver and his employer, Southeastern Pennsylvania Transportation Authority (SEPTA), for injuries he sustained when his car was struck by a bus, owned by SEPTA and operated by Plonski. Richard Harrow, Jr., was brought in as an additional defendant on the basis that he contributed or was fully responsible for the accident, but the court below during trial entered a non-suit.
The jury returned verdicts in favor of Harrow in the amount of $10,000 and in favor of Farley in the amount of $25,000. Post-trial motions for judgment notwithstanding *574 the verdict and for a new trial were denied and judgments were entered on the verdicts.
The facts briefly as stated by the court below are as follows:
"On June 2, 1971, at approximately 12:30 P.M., the plaintiff, Richard Harrow, Jr., was proceeding along Green Street in an easterly direction. At the same time, the defendant, Plonski, was operating a Septa bus in a southerly direction on 23rd Street. The intersection of 23rd and Green Streets only has a stop sign for Green Street. Mr. Harrow came to a complete stop at the corner and looked at the left. What he saw was Mr. Plonski waving his arm to indicate that it was alright (sic) for the plaintiff to proceed through the intersection. At this point the bus was approximately three (3) or four (4) car lengths from the corner, was moving at about five (5) miles per hour, and was continuing to slow down as if to stop when it reached Green Street. The plaintiff, seeing no other traffic, and having received the go ahead from the bus driver drove his 1968 Ford into the intersection. At a point a little more than halfway through the intersection, Harrow's car was struck by the bus on the rear portion of the driver's side of the vehicle. The bus was damaged on its right front side. Both vehicles were being driven down the center lanes of what are three (3) lane streets. The remaining four (4) outer lanes are used for parking.
"Just after the accident, the plaintiff got out of his car but before he could take more than a few steps he collapsed into unconsciousness and was rushed to the hospital. Insofar as the bus is concerned, while the driver was not hurt, four (4) passengers, including the other plaintiff, Mamie Farley, were injured."
Under these facts there is no merit in the motion for judgment notwithstanding the verdict and the court below properly denied it.
We will discuss the questions involved as to a new trial as follows:
*575 A. The learned trial judge erred in refusing to charge the jury that Richard Harrow, Jr., had a continuing duty to look for approaching traffic as he entered the intersection regardless of any signals he allegedly received from the bus operator and his failure to do so was negligence.
Harrow testified that after he received the hand signal from Plonski he did not look back for other traffic on 23rd Street since he was looking at the bus and that was the only possible traffic. The bus was several car lengths away and it would serve no purpose if Plonski had given him the go ahead signal. SEPTA argues that its vehicle had the right of way but Harrow testified he had come to a complete stop and looked to his left and saw Plonski waving him ahead. The bus was being driven slowly and according to Harrow seemed to be slowing down to stop at Green Street so he drove into the intersection. He was a little more than halfway through the intersection when he was struck by the bus on the rear portion of the driver's side of his car. The damage to the bus was on its right front side.
Harrow had a right to assume that Plonski would not move into the intersection if the jury believed that he had been given the go-ahead signal. SEPTA argues that Plonski had the right of way and could not give it up. As the court below commented: "This theory would permit a defendant to proceed with reckless abandonment knowing that whatever occurred he could not be held responsible. Fortunately such is not the law." Peters v. Shear, 351 Pa. 521, 526, 41 A.2d 556 (1945) where the court stated:
"`A right-of-way' possessed by a motorist, is like a green light, not a command to proceed but a qualified permission to do so . . . A motorist, regardless of his possessing a theoretical `right-of-way' must exercise such due care as is required by the situation confronting him."
The court below properly refused this point for charge.
B. The Learned trial court erred in charging that even though the bus driver had the right of way he was required to have his vehicle under such control as to avoid *576 the accident. This charge was proper. See Peters v. Shear, supra.
C. The Learned trial judge erred in permitting Harrow to testify regarding his alleged loss of vision over a three year period without requiring competent medical testimony to show that such an injury was the natural and probable consequence of the accident.
We quote with approval from the disposition made of this complaint by the court below as follows:
"The testimony at trial established that when the plaintiff collapsed in the street immediately after the accident he was rushed to Hahnemann Hospital. When he became conscious he complained of a severe headache and that his left eye hurt. He was hospitalized for nine days during which time a head wound was stitched up, his eye was treated with medication, he had numerous skull x-rays taken and a compress was kept on his eye during his entire stay. When the plaintiff left the hospital he was still suffering from the headaches and a partial loss of vision. In addition to Harrow's own testimony, all of this was admitted into evidence as part of the medical records submitted at the trial.
"The plaintiff also testified that before the accident he had never had any problems with his head or, in particular, his eyes. He also noted that as a result of instructions given to him by the treating physician he did not seek additional attention for his eye but rather waited for the problem to clear up on its own. This occurred approximately three years after the accident.
"The defendants argue that expert medical testimony is mandatory in order to connect the injury to the accident. Such is not the law in this Commonwealth.
"In Simmons v. Mullen, 231 Pa.Super. 199, 212 [, 331 A.2d 892] (1974), the court said:
"Clearly, a plaintiff has the burden of establishing that injuries were proximately caused by the defendant's negligence. Medical testimony, however, is not always necessary to make the causal link . . . Expert testimony [is] *577 not required to show proximate cause. Since [if] the injury was so `immediately and directly or naturally and probably', the direct result of the accident . . . Only when the cause of the injury is not readily apparent is there a need for medical testimony.'
"Since the above stated medical history clearly indicates a firm basis for concluding that the accident caused eye injury, defendant's fourth reason for a new trial is denied."
The most serious question raised in this appeal is the decision by the court below to permit the jury to determine whether a proper excuse had been made for the failure of the appellant to produce Plonski, the bus driver, and his instruction to the jury if they found that the explanation was not satisfactory an adverse inference could be drawn from his failure to testify.
We find this to be error.
"It is the general rule that where a party fails to produce evidence which is within its control and would naturally be in his interest to produce and he fails to give any satisfactory reason for the omission, the jury had a right to infer that the evidence, if produced, would have been unfavorable to him; in such case the inference is permissive not conclusive." Davidson v. Davidson, 191 Pa.Super. 305, 156 A.2d 549 (1959) (Emphasis-the writer's). See also, Bentivoglio v. Ralston, 447 Pa. 24, 27, 288 A.2d 745 (1972).
This is perhaps the most important piece of evidence in this case in determining negligence as the testimony of the plaintiff Harrow was that this witness, the bus driver, had signalled him to go ahead. This, with the failure of the witness to appear, remains unrebutted even though certain passengers in the bus testified that they did not see the signal. An examination of this record shows clearly the reason for his non-appearance and the determination of whether the reasons advanced were satisfactory should have been made by the court. It appears to be a similar decision to be made by the court as the determination of competency *578 of a minor and if the court held the excuse to be reasonable the jury could not have been advised as to the inference.
SEPTA called Elizabeth Adomanes, a registered nurse, to verify the medical records showing the reason Plonski left SEPTA. He had suffered a right hemiplegia with aphasia, commonly known as stroke. His condition was known to both sides. The crucial testimony upon which the court relied was given by a Samuel B. Atkins who was employed by SEPTA as a process server. He visited Plonski at his home on Friday, September 30, 1977, and testified in court the following Monday. Portions of his testimony are as follows:
Mr. Lachat:
Q. How about his facial features, Mr. Atkins?
A. Yes. It was not the best.
Q. Could you describe what you mean by that a little more particularly? What was different about his face from the normal face?
A. Oh, his face was to the angle, as though he has to keep his head at a certain angle.
Q. Did you attempt to communicate or speak with Mr. Plonski?
A. I did.
Q. Could he speak back to you?
A. No.
Q. You mentioned that his wife was present?
A. Right.
Q. Could she kind of communicate with him?
A. She could understand him.
Q. Did he mumble or anything like that?
A. Right. He had a low tone mumble.
Q. Could you understand him?
A. I couldn't understand him, no.
Mr. Plonski had to be assisted into the room by his wife and neighbors.
*579 THE COURT: What could you see about him when you saw him? What was he doing, walking, jumping around or what?
THE WITNESS: He had to be assisted into the front room by his wife and neighbors and he sat there and to me he held his head at an angle and his hand was and I know he had suffered.
Only his wife was able to understand the few mumbles and groans which he made.
Mr. Berlinger:
Q. And his wife translated that to you to say he's not well.
A. He's not well.
Q. Now, how long did you stay there?
A. Approximately twenty to twenty-five minutes.
Q. And did you carry on a conversation of sorts with Mr. Plonski?
A. With Mr. Plonski and then with his wife.
Q. What sort of things did you talk about?
A. Well, mostly she did the talking about his condition and what had happened over the years to him.
Q. How many comments or how much did you actually say directed at Mr. Plonski as opposed to Mrs. Plonski?
A. I suppose I directed about in twenty minutes maybe ten questions.
Q. And he would respond in the same fashion through his wife?
A. Through his wife.
Q. Did these responses indicate to you that he understood your questions?
A. No. No.
Q. What would happen? Give us an example of a question that you asked him and that he didn't understand.
A. I asked him how long was he on active duty as an operator, and then he responded by saying what hospital he had been in.
*580 Q. Were you able to understand anything that Mr. Plonski said?
A. No.
The trial judge in his opinion concentrated on certain portions of his testimony as follows:
Mr. Berlinger:
A. Maybe be being assisted by his neighbor and his wife, I think, which I'm positive one of them had the cane, and when he took his seat I think they just set him there and he simply rest on it. But when he got up he took it up with the left hand.
Q. Oh, he stood up in your presence?
A. Yeah, he got up.
Q. Did he get up by himself?
A. Yeah, with the assistance of his walker he sprung up.
Q. Out of his chair?
A. Right.
Q. What kind of a chair was he seated in?
A. He was seated in something like a rocker, wooden
Q. A rocking chair?
A. Yes.
He also commented on the fact that on an earlier visit to Plonski's home by Mr. Atkins, he did not appear to be at home. However, there is nothing in the record that would show that he was not actually in the house.
Under the record in this case "satisfactory reasons for the failure of Plonski to testify are obvious and the jury should never have been instructed as to permissive inferences because of his failure to testify.
The other questions raised are without merit.
The judgments entered on the verdicts are reversed and new trials granted.
CERCONE, P.J., and HOFFMAN, J., concur in the result.
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16 Cal.Rptr.3d 687 (2004)
121 Cal.App.4th 44
Suzanne MALEK et al., Plaintiffs and Appellants,
v.
BLUE CROSS OF CALIFORNIA, Defendant and Appellant.
No. B168146.
Court of Appeal, Second District, Division Three.
July 29, 2004.
*691 Law Office of Mark F. Didak and Mark F. Didak, Los Angeles, for Plaintiffs and Appellants Suzanne and Michael Malek.
Stephan, Oringher, Richman & Theodora, Gordon E. Bosserman, Los Angeles, Robert M. Dato, Costa Mesa and Terrence M. King, Los Angeles, for Defendant and Appellant Blue Cross of California.
CROSKEY, J.
In this appeal, we must determine the consequences of failing to comply with the arbitration disclosure requirements of Health & Safety Code section 1363.1.[1] That statute requires health care service plans to disclose in clear and understandable language, appearing "as a separate article" and "prominently displayed on the enrollment form" "immediately before the signature line" that the plan requires binding arbitration of any dispute, and that both parties are giving up their constitutional right to have the dispute decided in a court of law. Blue Cross's enrollment form violated section 1363.1 because the arbitration provision was not prominently displayed immediately before the signature line. Despite these violations, the trial court initially concluded that section 1363.1 was preempted by the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) and granted Blue Cross's petition to compel arbitration. Almost three years later, the trial court reconsidered its ruling based on our decision in Smith v. PacifiCare Behavioral Health of Cal., Inc. (2001) 93 Cal.App.4th 139, 113 Cal.Rptr.2d 140, cert den. (2002) 537 U.S. 818, 123 S.Ct. 92, 154 L.Ed.2d 23 (Smith), and thereafter denied the petition to compel arbitration.
Though both parties raise procedural challenges to the trial court's orders, we are principally concerned with whether the technical violations of Blue Cross's enrollment form render its arbitration provision unenforceable. Our decision in Smith did not so hold, but Imbler v. PacifiCare of *692 Cal., Inc. (2002) 103 Cal.App.4th 567, 126 Cal.Rptr.2d 715 (Imbler), does. In that case, the court concluded that strict compliance with section 1363.1 is required to enforce the arbitration provision. We agree with the Imbler court. A violation of section 1363.1 renders a contractually binding arbitration provision in a health service plan enrollment form unenforceable. Although we do not foreclose the possibility that under the appropriate circumstances the doctrine of substantial compliance might apply, we conclude that the Blue Cross enrollment form at issue here does not substantially comply with section 1363.1. We therefore affirm the trial court's order denying the petition to compel arbitration, along with its challenged orders vacating the arbitrator's award and vacating its original decision to grant the petition to compel arbitration.
FACTUAL AND PROCEDURAL BACKGROUND
Our recitation of the factual and procedural aspects of this appeal is limited to those necessary for the resolution of the legal issues before us. Suffice it to say, Suzanne and Michael Malek (the Maleks) did not want to arbitrate this dispute and relentlessly attacked the trial court's order compelling them to do so. Three years after that order, the parties are back in court. Obviously, the "simplicity, informality, and expedition of arbitration," alluded the parties here.
1. The Blue Cross Enrollment Form Contained an Arbitration Provision
In 1996 and 1997, the Maleks enrolled in Blue Cross health care plans. The Maleks each signed an enrollment form that contained an arbitration provision (collectively, enrollment form).[2] The arbitration provision appears at the bottom of the one-page enrollment form. It is the second provision in the text at the bottom of the enrollment form and follows the section entitled "deduction authorization." Following the arbitration provision are additional sections entitled, "to non-participating provider," "declining coverage," and "authorization to obtain or release medical information." These section headings are in bold and capitalized letters. The text follows each section heading and is set in three columns. The arbitration provision is in the first column on the left-hand side of the enrollment form. The signature block is in the bottom right-hand side of the form, appearing below the authorization for the release of medical information.
Before the Maleks initiated this lawsuit, they also received finalized Evidences *693 of Coverage (EOC), which set forth the terms and conditions of their Blue Cross group health care coverage. These EOC's contained arbitration provisions. The Maleks also received numerous letters from Blue Cross, and explanation of benefits forms, all of which advised them of their arbitration requirement.
2. The Maleks' Complaint and Blue Cross's Petition to Compel Arbitration
In October 1999, the Maleks filed a complaint alleging numerous causes of action against defendant Blue Cross and five other named defendants, who are not subject to this appeal, based on Blue Cross's allegedly improper denial of benefits for infertility treatment.
On November 18, 1999, Blue Cross filed a notice of petition and petition to compel arbitration and for stay of proceedings (hereafter petition). After supplemental briefing, on June 28, 2000, the trial court granted Blue Cross's petition to compel arbitration (June order). The trial court concluded that the Maleks' enrollment form constituted an arbitration agreement covered under the FAA.[3] Although the arbitration provision in the enrollment form did not meet the disclosure requirements of section 1363.1, the trial court concluded that based on Erickson v. Aetna Health Plans of California, Inc. (1999) 71 Cal. App.4th 646, 651-652, 84 Cal.Rptr.2d 76, the FAA preempted those requirements. Therefore, the trial court granted Blue Cross's petition, with the exception of the Maleks' injunctive relief claim brought under the Consumer Legal Remedies Act (CLRA).
In October 2000, the trial court appointed an arbitrator. After the arbitration proceedings commenced, the Maleks filed an amended complaint against Blue Cross, which included, among other things, an additional claim for injunctive relief, restitution, and disgorgement on behalf of the public under Business and Professions Code section 17200(UCL).
On April 1, 2002, the arbitrator ruled that he had jurisdiction over the Maleks' individual statutory claims under the UCL and CLRA for monetary relief but did not have jurisdiction to hear the "private attorney general" claims under those statutes.
3. The Maleks Attempted to Vacate the Trial Court's Order Compelling Arbitration based on Smith[4]
In October 2002, the Maleks moved to vacate the trial court's June order compelling arbitration based upon our decision in Smith, supra, 93 Cal.App.4th 139, 113 Cal. Rptr.2d 140. The trial court denied the motion because it lacked jurisdiction to consider the matter.
*694 4. The Arbitrator Dismissed the Arbitration based on Smith and its Progeny
The Maleks then filed their motion to dismiss the arbitration before the arbitrator. The motion was based on the grounds that Smith and its progeny, Pagarigan v. Superior Court (2002) 102 Cal.App.4th 1121, 126 Cal.Rptr.2d 124, and Imbler, supra, 103 Cal.App.4th 567, 126 Cal.Rptr.2d 715, required dismissal for, among other things, failure to comply with the disclosure requirements of section 1363.1. Blue Cross opposed the motion on the grounds that the arbitrator could not, in essence, reverse the trial court's order finding the existence of a valid arbitration agreement and compelling arbitration. The arbitrator granted the motion.[5]
5. Blue Cross Filed a Petition to Vacate the Arbitrator's Award
On March 17, 2003, Blue Cross filed a petition to vacate the arbitrator's decision to dismiss the arbitration on the grounds that the arbitrator exceeded his powers under the arbitration agreement. The Maleks opposed the petition, arguing that Blue Cross had agreed that the arbitrator could decide jurisdictional issues, that the decision was correct, and that since the arbitrator's decision was legally correct, it could not be vacated.
The trial court concluded that the arbitrator's dismissal order was an award, and thereafter opted to exercise its limited jurisdiction under Code of Civil Procedure section 1285 to vacate the award. In so ruling, the trial court concluded that the arbitrator exceeded his power by making the determination that he lacked jurisdiction to proceed with the arbitration.
Having vacated the arbitration award, the trial court issued an order to show cause based on Code of Civil Procedure section 1008, subdivision (c), in which it noticed the parties that it intended to reconsider its June order to grant Blue Cross's petition to compel arbitration. The trial court's order to show cause was based on a change in the law. The court reasoned that Erickson v. Aetna Health Plans of Cal., supra, 71 Cal.App.4th 646, 84 Cal.Rptr.2d 76, the case upon which it had originally relied in its order to compel arbitration, had been overturned by Smith and its progeny. Following a hearing on the issue, the trial court, citing our opinion in Blake v. Ecker (2001) 93 Cal.App.4th 728, 113 Cal.Rptr.2d 422, concluded that it would be error for it not to reconsider its prior order in view of the change in the law. Thereafter, the trial court entered a different order denying Blue Cross's petition to compel arbitration. These appeals followed.
THE PARTIES' CONTENTIONS
Both the Maleks and Blue Cross challenge the trial court's orders.
The Maleks attack the trial court's decision to vacate the arbitration award. They *695 contend that the trial court erred in vacating, as opposed to confirming, the award under Code of Civil Procedure section 1286.2, subdivision (a)(4), because even if the arbitrator exceeded his authority, any error in the award could have been corrected without affecting the merits of the decision. The Maleks further contend that Blue Cross waived this issue by submitting what it characterizes as a jurisdictional question to the arbitrator.
Blue Cross challenges the trial court's order to vacate its June order to compel arbitration. Blue Cross contends that the trial court lacked subject matter jurisdiction to reconsider the matter. Blue Cross further contends that the arbitration provision in the enrollment form was enforceable even though it did not strictly comply with section 1363.1, and that based on Code of Civil Procedure section 1281, the trial court could only invalidate the arbitration provision on grounds that exist at common law for the revocation of a contract.[6]
DISCUSSION
1. The Trial Court Did Not Err in Vacating the Arbitration Award
The Maleks contend that the trial court should have confirmed the arbitrator's award and not vacated it for two reasons. First, the requirements of Code of Civil Procedure section 1286.2, subdivision (a)(4), were not satisfied. Second, although the Maleks achieved the result they wanted, that is, to proceed in a judicial forum, the trial court's order delays that process because the denial of a petition to compel is an appealable order. (Code Civ. Proc., § 1294, subd. (a).) We need not dwell on the latter point, given the delays arguably attributable to the Maleks through the course of this three-year arbitration. Moreover, we conclude that the trial court did not err in vacating the arbitrator's award.
a. The Applicable Grounds to Vacate an Arbitrator's Award and Standard of Review
An award reached by an arbitrator pursuant to a contractual agreement to arbitrate is not subject to judicial review except on the grounds set forth in Code of Civil Procedure sections 1286.2 (to vacate) and 1286.6 (for correction). At issue here are the requirements of subdivision (a)(4) of Code of Civil Procedure section 1286.2.
Code of Civil Procedure section 1286.2 sets forth the grounds for vacation of an arbitration award. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 12, 10 Cal.Rptr.2d 183, 832 P.2d 899.) One of the grounds for which the court "shall vacate the award" is if it determines that "[t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted." (Code Civ. Proc., § 1286.2, subd. (a)(4).)
On appeal from an order vacating an arbitration award, we review the trial court's order (not the arbitration award) under a de novo standard. (Reed v. Mutual Service Corp. (2003) 106 Cal. App.4th 1359, 1364-1365, 131 Cal.Rptr.2d 524.) To the extent that the trial court's ruling rests upon a determination of disputed factual issues, we apply the substantial evidence test to those issues. (Id. at p. 1365, 131 Cal.Rptr.2d 524; see also Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 376, fn. 9, 36 Cal. Rptr.2d 581, 885 P.2d 994.) Applying these principles, we conclude that both the statutory requirements of Code of Civil Procedure section 1286.2, subdivision (a)(4), have been met.
*696 1) The Arbitrator Exceeded His Authority
An arbitrator exceeds his powers when he acts in a manner not authorized by the contract or by law. (Jordan v. Department of Motor Vehicles (2002) 100 Cal.App.4th 431, 443, 123 Cal.Rptr.2d 122.) The "gateway" question of whether the parties are bound by a particular arbitration agreement is a question of arbitrability for the court. (Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 83-84, 123 S.Ct. 588, 154 L.Ed.2d 491; see also Code Civ. Proc., § 1281.2 ["the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists...."].)
Here, the arbitrator exceeded his authority by reexamining whether the parties were bound by the arbitration provision in the Blue Cross enrollment form. That decision was in the province of the trial court, which had previously determined arbitrability. The arbitrator's attempt to distinguish in his ruling an "agreement to arbitrate," which already had been determined to exist, and the "legal validity," which he purportedly decided, was a distinction without a difference. The legal validity of the arbitration provision, that is, whether an agreement to arbitrate exists, is a judicial determination, which the trial court made in its June order.
2) The Arbitration Award Could not be Corrected Without Affecting the Merits of the Arbitrator's Decision
The Maleks contend that even if the arbitrator exceeded his authority, the trial court could not vacate the award under Code of Civil Procedure section 1286.2, subdivision (a)(4), because the second requirement of that statute has not been satisfied. According to the Maleks, the second requirement of the statute requires the arbitrator's award to be "wrong on the merits." The Maleks assert that the award was not wrong because the trial court ultimately agreed with the arbitrator. We find this argument meritless.
We differ with the Maleks in our understanding of the second requirement of Code of Civil Procedure section 1286.2, subdivision (a)(4). That section provides that "the award cannot be corrected without affecting the merits of the decision upon the controversy submitted." It does not require that in order to vacate an arbitration award it must be wrong on the merits. (Cf. Advanced Micro Devices, Inc. v. Intel Corp., supra, 9 Cal.4th at pp. 376-377, 36 Cal.Rptr.2d 581, 885 P.2d 994.) Rather, this requirement simply means that the arbitration award cannot be corrected without affecting the arbitrator's decision (whether right or wrong) on the merits.
Here, the trial court could not correct the arbitrator's award without affecting the merits of his decision. The arbitrator made a determination of arbitrability, which rested solely with the trial court, not the arbitrator. The only way to "correct" such an award would have been to reverse the arbitrator, which affects the merits of his decision.
We further reject the Maleks' argument relying on Code of Civil Procedure section 1286.6, subdivision (b).[7] That subdivision *697 of the statute contains language similar to the second requirement of subdivision (a)(4) of section 1286.2 of the Code of Civil Procedure. As we have stated, the award could not be corrected without affecting the merits of the arbitrator's decision.
Finally, while the Maleks rely on Lindenstadt v. Staff Builders (1997) 55 Cal. App.4th 882, 892-893, 64 Cal.Rptr.2d 484, to advance their argument, we fail to see the relevancy of that case. The Lindenstadt court concluded that where one of the parties contends the entire contract or transaction underlying the award is illegal, the trial court is required to review the evidence de novo to determine whether the arbitration award was based on an illegal agreement or transaction. (Id. at pp. 888-889, 893, 64 Cal.Rptr.2d 484.) That is not the issue here.
b. Blue Cross did not Waive the Right to Challenge the Arbitrator's Decision
The Maleks argue that Blue Cross has waived its right to challenge the arbitrator's award because in January 2002, Blue Cross submitted to the arbitrator the question of whether the Maleks' UCL claim was arbitrable. According to the Maleks, under California law, by submitting that issue to the arbitrator, Blue Cross became bound by the arbitrator's subsequent decision on whether the arbitration agreement was enforceable. We disagree. Neither logic nor the law supports the Maleks' position.
Blue Cross would not have submitted an issue to the arbitrator that would have jeopardized the June order compelling arbitration. The issue before the arbitrator was limited to the scope of the arbitration and whether the Maleks' UCL claim was subject to the arbitration agreement.[8] This question did not leave open the possibility of revisiting the "gateway" issue that the parties had agreed to arbitration, which had already been decided in Blue Cross's favor and was not within the province of the arbitrator.
Moreover, the Maleks overstate the law to make their point. In both the cited cases, the parties agreed to submit the question of arbitrability to the arbitrator and challenged the arbitrator's authority only after the unfavorable award. In United Food & Commercial Workers Union v. Clougherty Packing Co. (1984) 154 Cal.App.3d 282, 201 Cal.Rptr. 183, the parties by agreement asked an arbitrator to decide if a particular seniority provision was arbitrable. The arbitrator answered in the affirmative but also went further by declaring the provision illegal under the Labor Code and existing case law. (Id. at pp. 285-286, 201 Cal.Rptr. 183.) The company challenged the award, claiming the arbitrator exceeded his jurisdiction to decide whether the provision was illegal. The trial court disagreed and confirmed the award. The Court of Appeal affirmed, concluding that the issue had been submitted by agreement to the arbitrator. (Id. at p. 288, 201 Cal.Rptr. 183.) The legality finding was upheld for two reasons. First, both parties had clear knowledge, well in *698 advance of the hearing, that the legality aspect would be an issue even though not formally submitted. Second, it was the arbitrator's opinion that the underlying controversy could not be resolved without addressing the legality issue. (Id. at pp. 288-289, 201 Cal.Rptr. 183.)
Likewise, in University of San Francisco Faculty Assn. v. University of San Francisco (1983) 142 Cal.App.3d 942, 191 Cal.Rptr. 346, the faculty association successfully contended that the trial court erred in upholding the university's claim that the arbitrator exceeded his authority in making an award relating to the supplemental pension benefits. The parties had agreed to negotiate on an annual basis the plan benefits and expressly agreed that an arbitrator would determine whether or not changes, durations, and modifications in that plan were within the scope of the arbitration. (Id. at pp. 948, 952-954, 191 Cal.Rptr. 346.) Moreover, the parties had stipulated to permit the arbitrator to determine his jurisdiction. (Id. at p. 954, 191 Cal.Rptr. 346.) As the court stated: "A claimant may not voluntarily submit his claim to arbitration, await the outcome, and if the decision is unfavorable, challenge the authority of the arbitrator to act. [Citations.]" (Ibid.)
As noted, these cases do not advance the Maleks' argument, and are inapposite. Blue Cross and the Maleks did not agree to confer jurisdiction on the arbitrator to determine arbitrability, did not acquiesce to the determination of arbitrability by briefing the issue of the scope of the arbitration, and did not implicitly agree to the resolution of this issue by the arbitrator. There was no waiver here.
2. The Trial Court Did Not Lack Jurisdiction to Reconsider its June Order to Compel Arbitration
Blue Cross contends that the trial court could not vacate its June order compelling arbitration until completion of the arbitration. In support of this argument, Blue Cross relies on Code of Civil Procedure section 1281.4, which provides that once arbitration is ordered, the court in which the action or proceeding is pending shall "stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies."
Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790, 13 Cal.Rptr.2d 678 (Brock), described the settled principles applicable to this jurisdictional issue. "Once a court grants the petition to compel arbitration and stays the action at law, the action at law sits in the twilight zone of abatement with the trial court retaining merely a vestigial jurisdiction over matters submitted to arbitration. This vestigial jurisdiction over the action at law consists solely of making the determination, upon conclusion of the arbitration proceedings, of whether there was an award on the merits ... or not.... [Citations.]" (Id. at p. 1796, 13 Cal.Rptr.2d 678.) As pertinent here, the court's "vestigial" jurisdiction included confirming, correcting, or vacating the arbitration award. (Code Civ. Proc., § 1285.)
While Brock sets forth the rule, that case, and Titan/Value Equities Group, Inc. v. Superior Court (1994) 29 Cal. App.4th 482, 35 Cal.Rptr.2d 4, upon which Blue Cross also relies, are inapposite because neither case involved a motion for reconsideration under Code of Civil Procedure section 1008, subdivision (c). In Brock, the court held that the superior court had no power to dismiss an action for failure to prosecute once it had granted the motion to compel arbitration. (10 Cal. App.4th at pp. 1801, 1808, 13 Cal.Rptr.2d 678.) Likewise, Titan/Value Equities Group, Inc. v. Superior Court, supra, at *699 pp. 487-489, 35 Cal.Rptr.2d 4, held that the trial court could not make discovery and scheduling orders to move along the arbitration proceedings.
Although Blue Cross attempts to distinguish our opinion in Blake v. Ecker, supra, 93 Cal.App.4th 728, 113 Cal.Rptr.2d 422, we find that decision controlling. In that case, like here, a change in the law required the trial court to reconsider its prior ruling compelling arbitration. (Id. at pp. 738-739, 113 Cal.Rptr.2d 422.) Blue Cross's distinction of Blake is based on the parties' near completion of arbitration. The progress of the arbitration is not material when considering a change in the law affecting whether the arbitral forum was a correct one. Based on Code of Civil Procedure section 1008, subdivision (c), the trial court could reconsider its order to compel arbitration in light of our decision in Smith, supra, 93 Cal.App.4th 139, 113 Cal.Rptr.2d 140. As we will explain, however, the trial court's reliance on Smith as a basis for holding that strict compliance with section 1363.1 was required to enforce the arbitration provision, is misplaced. The conclusion the trial court reached, however, was a correct one. As we shall explain, the arbitration provision is unenforceable.
3. Blue Cross's Arbitration Provision Failed to Comply with the Disclosure Requirements of Section 1363.1
"As a part of its regulation of health care service plans, California imposes certain disclosure requirements as a predicate to the enforcement of arbitration clauses contained in plan subscriber agreements." (Smith, supra, 93 Cal.App.4th at p. 143, 113 Cal.Rptr.2d 140.) Those disclosure requirements are set forth in section 1363.1.
Section 1363.1 provides:
"Any health care service plan that includes terms that require binding arbitration to settle disputes and that restrict, or provide for a waiver of, the right to a jury trial shall include, in clear and understandable language, a disclosure that meets all of the following conditions:
"(a) The disclosure shall clearly state whether the plan uses binding arbitration to settle disputes, including specifically whether the plan uses binding arbitration to settle claims of medical malpractice.
"(b) The disclosure shall appear as a separate article in the agreement issued to the employer group or individual subscriber and shall be prominently displayed on the enrollment form signed by each subscriber or enrollee.
"(c) The disclosure shall clearly state whether the subscriber or enrollee is waiving his or her right to a jury trial for medical malpractice, other disputes relating to the delivery of service under the plan, or both, and shall be substantially expressed in the wording provided in subdivision (a) of Section 1295 of the Code of Civil Procedure.
"(d) In any contract or enrollment for a health care service plan, the disclosure required by this section shall be displayed immediately before the signature line provided for the representative of the group contracting with a health care service plan and immediately before the signature line provided for the individual enrolling in the health care service plan." (Italics added.)
In this case, upon reconsideration the trial court found that Blue Cross's enrollment form did not comply with subdivision (d) of section 1363.1 because the arbitration provision did not immediately appear before the signature line. The trial court therefore concluded that the arbitration provision was unenforceable and denied Blue Cross's petition to compel arbitration.
Though the Maleks renew their argument that the enrollment form did not *700 comply with any of the disclosure requirements,[9] we need not address them because Blue Cross concedes that the enrollment form does not comply with subdivision (d) of section 1363.1. We also conclude that the enrollment form does not meet the prominence requirement of section 1363.1, subdivision (b).
a. Blue Cross's Enrollment Form Violates Section 1363.1, Subdivision (b), by Failing to Meet the Prominence Requirement
As stated, section 1363.1, subdivision (b), requires that the disclosure "shall be prominently displayed on the enrollment form...." (Italics added.) The Blue Cross enrollment form contains plan conditions toward the bottom of the form. The arbitration provision is in the same type size and font as provisions authorizing deductions and release of medical information. While the arbitration provision constitutes a separate numbered paragraph, it does not stand out and was not readily noticeable from these other provisions. We fail to see how this is prominently displayed in compliance with section 1363.1, subdivision (b).
b. Blue Cross's Enrollment Form Violates Section 1363.1, Subdivision (d), by Failing to Meet the Placement Requirement
Section 1363.1, subdivision (d), requires that the arbitration disclosure be "displayed immediately before the signature line." (Italics added.) It is undisputed that the arbitration provision in the enrollment form is not immediately before the signature line. Instead, the signature line appears immediately following the paragraph authorizing the release of medical information. The juxtaposition of the arbitration provision does not satisfy the statute's placement requirement. We must therefore determine the effect of Blue Cross's noncompliance, which is at the heart of Blue Cross's appeal.
4. Noncompliance with Section 1363.1 Renders the Contractual Arbitration Provision in Blue Cross's Enrollment Form Unenforceable
Blue Cross presents several arguments to support its contention that a technical violation of the requirements of section 1363.1 is not a defense to the enforcement of a contractual arbitration agreement. As discussed below, we are not persuaded and conclude that an arbitration provision in a health care service plan is unenforceable if it does not meet the mandatory disclosure requirements of section 1363.1.
a. Imbler Concluded that a Violation of Section 1363.1 Rendered the Contractual Arbitration Agreement Unenforceable
We begin with Imbler, supra, 103 Cal. App.4th 567, 126 Cal.Rptr.2d 715, the only *701 published case to directly address compliance with section 1363.1. In that case, the court concluded that the arbitration agreement could not be enforced based on noncompliance with section 1363.1. (Imbler, supra, at pp. 577-579, 126 Cal.Rptr.2d 715.) The court determined that PacifiCare's benefits enrollment form did not comply with the notice requirements of section 1363.1, subdivision (b), which requires that the arbitration provision be "prominently displayed" on the enrollment form. The arbitration disclosure in the PacifiCare form was included in a paragraph authorizing the release of medical records. (Imbler, supra at pp. 578-579, 126 Cal.Rptr.2d 715.) The Imbler court reasoned that this did not meet the prominence requirement because "`[p]rominent' is defined as `standing out or projecting beyond a surface or line,' or readily noticeable.'" (Id. at p. 579, 126 Cal.Rptr.2d 715, fn. omitted.) In the Imbler court's view, this definition was not satisfied because a disclosure sentence in the same paragraph which was not "bolded, underlined, or italicized," was not prominent. Because the arbitration disclosure failed to meet the prominence requirement of section 1363.1, subdivision (b), Imbler concluded that the trial court properly denied PacifiCare's petition to compel arbitration. (Id. at p. 579, 126 Cal.Rptr.2d 715.)
Imbler, supra, 103 Cal.App.4th 567, 126 Cal.Rptr.2d 715, however, is the only case holding that strict compliance with section 1363.1, is necessary to enforce a health care service plan arbitration provision. In Smith, supra, 93 Cal.App.4th 139, 113 Cal.Rptr.2d 140, PacifiCare had conceded noncompliance. (Id. at pp. 148-149, 113 Cal.Rptr.2d 140.) Our focus in that case was on whether the McCarran-Ferguson Act precluded preemption of section 1363.1 by the FAA. Likewise, in Pagarigan v. Superior Court, supra, 102 Cal.App.4th 1121, 126 Cal.Rptr.2d 124, the court assumed that any failure to comply with section 1363.1 rendered the arbitration clause void, but that case did not decide the issue. (Pagarigan, at p. 1128, 126 Cal.Rptr.2d 124.) The Pagarigan court concluded that the general preemption provision of the Medicare Act did not preclude application of section 1363.1. (Pagarigan, at pp. 1147-1149, 126 Cal.Rptr.2d 124; see also Zolezzi v. PacifiCare of California (2003) 105 Cal.App.4th 573, 580, fn. 6, 129 Cal.Rptr.2d 526.)
Although we agree with Blue Cross that neither Smith nor Pagarigan addressed the issue before us, we do not agree with the Blue Cross that we should depart from the decision reached in Imbler, supra, 103 Cal.App.4th 567, 126 Cal.Rptr.2d 715. While the Imbler court assumed, without any discussion, that any transgression of section 1363.1 invalidated the arbitration provision, we reach the same conclusion based on our construction of section 1363.1. We conclude that based on the statutory language of section 1363.1 noncompliance with the arbitration disclosure requirements of that section renders the arbitration provision in the Blue Cross enrollment form unenforceable.
b. The Arbitration Disclosure Requirements of Section 1363.1 are Mandatory
As previously discussed, health care service plans containing arbitration provisions must disclose in clear and understandable language, ... appearing "as a separate article" ... and "prominently displayed on the enrollment form" ... "immediately before the signature line" that the plan requires binding arbitration of any dispute, and that both parties are giving up their constitutional right to have such dispute decided in a court of law. (§ 1363.1.)
Blue Cross contends that despite this mandatory language, noncompliance with the arbitration disclosure requirements of section 1363.1 is not a defense to a contractual arbitration agreement based *702 on the language of Code of Civil Procedure section 1281. That statute provides that written arbitration agreements are "valid, enforceable and irrevocable, save upon such grounds as exist for revocation of any contract." (Code Civ. Proc., § 1281.) "In other words, under California law, . . ., an arbitration agreement may only be invalidated for the same reasons as other contracts." (Armendariz v. Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th at p. 98, 99 Cal.Rptr.2d 745, 6 P.3d 669.) Thus, according to Blue Cross, because only contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate the arbitration provision in its enrollment form, noncompliance with section 1363.1 does not render its arbitration agreement unenforceable. We disagree.
When presented with a question of statutory construction, our primary task is to determine the Legislature's intent. (Allen v. Sully-Miller Contracting Co. (2002) 28 Cal.4th 222, 227, 120 Cal. Rptr.2d 795, 47 P.3d 639.) "We begin by examining the statutory language because it generally is the most reliable indicator of legislative intent. [Citation.] We give the language its usual and ordinary meaning, and `[i]f there is no ambiguity, then we presume the lawmakers meant what they said, and the plain meaning of the language governs.' [Citation.]" If the statutory language is ambiguous, we consider the legislative history and select the construction that comports most closely with the legislative intent. We must promote, rather than defeat, the general purpose of the statute. (Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995, 1003, 111 Cal.Rptr.2d 564, 30 P.3d 57.)
The plain language of section 1363.1 is clear the arbitration disclosure requirements are mandatory. Section 1363.1 specifies that the arbitration agreement "shall" contain each of the enumerated disclosures in subdivisions (a) through (d). It is well settled that the word "shall" is usually construed as a mandatory term. (Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 443, 261 Cal.Rptr. 574, 777 P.2d 610.) This is particularly true here where to construe the statute as optional would render it ineffective, a construction that we must avoid. Moreover, it would be inconsistent with the legislative intent that these disclosures be included in "any health care service plan that includes the terms that require binding arbitration. . . ." This language evidences an implicit legislative determination that these disclosures must be included in a health care service plan to safeguard against patients unknowingly waiving their constitutional right to a jury trial. Section 1363.1, therefore, establishes the requirements that must be satisfied in order to arbitrate disputes involving a health care service plan. Accordingly, even though section 1363.1 is silent on the effect of noncompliance, because the disclosure requirements are mandatory, the failure to comply with those requirements renders an arbitration provision unenforceable.
Nothing in Code of Civil Procedure section 1281 prohibits the Legislature from establishing the requirements for the lawful contractual arbitration between a health care service plan and its participants. Section 1363.1 is not directed at arbitration agreements in general but is specifically applicable only to such provisions in health care service plan contracts. In this regard, the Legislature has specified these requirements in the context of health care service plans based on general state law contract principles. In doing so, the Legislature has determined that if the arbitration disclosure requirements are satisfied, by definition, binding arbitration is a contract term and the arbitration provision is enforceable subject only to contract defenses. The converse must also be true. That is, absent the arbitration *703 disclosure requirements of section 1363.1, the minimal requirements under state law contract principles have not been met and there is no contract to arbitrate that can be enforced.
c. Rosenfield v. Superior Court Reached the Same Conclusion When Construing the Mandatory Notice Provisions Related to Medical Malpractice Arbitration
Although there is no published case[10] addressing whether noncompliance with section 1363.1 is a defense to an arbitration agreement, a similar argument related to mandatory arbitration disclosure requirements was raised and rejected in Rosenfield v. Superior Court (1983) 143 Cal.App.3d 198, 203, 191 Cal.Rptr. 611 (Rosenfield). That case addressed the issue of whether the mandatory disclosure requirements to arbitrate medical malpractice claims as set forth in Code of Civil Procedure section 1295 were a basis for denying arbitration under Code of Civil Procedure section 1281.2. That statute *704 compels a court to order arbitration if it "determines that an agreement to arbitrate the controversy exists, unless it determines that: [¶] ... [¶] (b) Grounds exist for the revocation of the agreement."
The Rosenfield court concluded that the jury-waiver advisements were mandatory and failure to so advice would render an arbitration agreement unenforceable. (143 Cal.App.3d at pp. 202-203, 191 Cal.Rptr. 611.) The Rosenfield court reasoned: "To conclude that section 1281.2 takes precedence over section 1295, setting aside an arbitration agreement only if grounds exist for revocation of that agreement, would be plainly inconsistent with the Legislature's intent expressed in section 1295. The Legislature has specified the manner in which the communication of significant contractual consequences must be made to a patient. A clear understanding of those consequences assures the enforceability of the agreement." (Id. at p. 202, 191 Cal. Rptr. 611.) According to the Rosenfield court, the enforceability of the contract rested on the reasonable expectation of the parties and if the arbitration agreement did not contain the notices of section 1295, "factual issues are then created concerning the parties' reasonable expectations and whether the contract is in fact oppressive or unconscionable." (Id. at p. 203, 191 Cal.Rptr. 611.)
We find the Rosenfield court's reasoning equally applicable in construing whether the mandatory notice requirements of section 1363.1, can be reconciled with the defenses available to revoke a contract under Code of Civil Procedure section 1281. The disclosure requirements are necessary to form a contractual arbitration agreement. The disclosures communicate the contractual consequences of the jury waiver to ensure a knowing waiver of the right to a jury trial. Absent these disclosure requirements, there is no contractual agreement to arbitrate. This construction does not conflict with Code of Civil Procedure section 1281, which assumes the formation of a contract.
Although Blue Cross attempts to distinguish Rosenfield, supra, 143 Cal.App.3d 198, 191 Cal.Rptr. 611, we find its arguments unpersuasive. The Rosenfield court's decision did not turn on the specific language of Code of Civil Procedure section 1295, or the lack of an administrative remedy, but rather, like here, on general contract principles of the reasonable expectations of the contracting parties. We therefore conclude that the Legislature's determination in section 1363.1 as to the specific manner in which to communicate the contractual consequences of arbitration are necessary to enforce the arbitration provision in a health care service plan. If these requirements have not been met, there is no indicia that the health care service plan enrollee knowingly assented to arbitration. Therefore, noncompliance with section 1363.1 renders the arbitration agreement unenforceable.
d. The Knox-Keene Act is not the Exclusive Remedy for Noncompliance of Section 1363.1
Blue Cross contends that absent an express statutory prohibition, a contract entered into in violation of section 1363.1 is not for that reason void because the exclusive penalties for noncompliance are those provided in the Knox-Keene Act (Act).[11]
*705 1) The Omission of Statutory Language Relating to the Consequences of Violating Section 1363.1 is of no Legal Significance
Blue Cross contends that since section 1363.1 is silent on the consequences of failing to comply with the disclosure requirements, the Legislature must have concluded that failure to comply would not render an arbitration provision unenforceable. Invoking the doctrine of expressio unius est exclusio alterius, that is, the expression of certain things in a statute necessarily involves the exclusion of other things not expressed, Blue Cross asserts that had the Legislature wanted to make the arbitration provision void for failure to comply with the disclosure requirements, it would have explicitly said so in section 1363.1. To support this argument, Blue Cross cites two sections of the Act in which the Legislature explicitly stated the consequences of noncompliance. Section 1374.5, provides that a health service plan's lifetime waiver of mental health service coverage in a nongroup plan "shall be deemed unenforceable." Section 1358.10, subdivision (d), prohibits a health service plan from entering into Medicare supplement contracts that contain prohibited provisions. Although these statutes contain explicit language, we find any comparison to section 1363.1 unpersuasive based on the mandatory language of section 1363.1 and the jury-waiver involved.
Moreover, the express mention in one particular statute of enforceability does not imply that a statute silent on that matter compels the opposite conclusion. Instead, as noted, section 1363.1 creates a mandatory obligation on the contracting parties. The language itself implies that an enrollment form complying with these notice requirements will be enforced. Such a contract cannot be enforced against the party that did not knowingly waive his or her right to a jury trial. There is no need to explicitly state the consequences of failure to comply when this statutory language is clear and unambiguous.
For this reason, Blue Cross's reliance on Gonzales v. Concord Gardens Mobile Home Park, Ltd. (1979) 90 Cal.App.3d 871, 153 Cal.Rptr. 559, is misplaced. That case involved violations of the notice requirements in the state contractors' license laws. The contractor violated statutes related to notice of the state's lien laws (Bus. & Prof.Code, § 7018) and notice on a written contract of the state's contractors' license requirement (Bus. & Prof Code, § 7030). (Gonzales at pp. 872-873, 875, 153 Cal.Rptr. 559.) The court concluded that since the statute did not include a penalty for noncompliance, and another provision in the contractors license law had, the doctrine of expressio unius est exclusio alterius must reasonably be applied. (Id. at pp. 874-875, 153 Cal.Rptr. 559.) The similar principle of statutory construction does not apply here because to do so would contravene the plain meaning of section 1363.1, and such application would, therefore, be unreasonable.
2) The Administrative Penalty is not the Exclusive Remedy for Noncompliance with Section 1363.1
We also reject Blue Cross's argument that the Act treats violations of section *706 1363.1 and similar provisions as regulatory matters subject to the administrative penalties set forth in the Act[12] that are within the exclusive enforcement powers of the Department of Managed Health Care (Department). (Cf. Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 Cal.App.4th 1284, 1299, 22 Cal.Rptr.2d 20, cert den. (1994) 511 U.S. 1084, 114 S.Ct. 1835, 128 L.Ed.2d 463.)
Section 1363.1 is different from other regulatory provisions of the Act that Blue Cross cites in support of its argument. (See, e.g., §§ 1363.01 [disclosure of prescription drug formulary], 1363.02 [notice of reproductive health services], and 1363.5 [disclosure of denial of health care services process].) Those sections are pure notice requirements. Section 1363.1 requires notice that is necessary to ensure consent to a binding agreement to arbitrate. (§ 1363.1.) The very purpose of the disclosure requirement of section 1363.1 is to ensure that the parties agree to be bound to contractual arbitration.[13] It would be absurd to impose an administrative penalty on a health service plan provider for failure to comply with the arbitration disclosure requirements but permit arbitration to go forward. Under those circumstances, there would be no consent to arbitrate. Therefore, we find inapposite the authorities construing other provisions of the Act and concluding that no private right of action exists (e.g., Samura v. Kaiser Foundation Health Plan, Inc., supra, 17 Cal.App.4th at pp. 1301-1302, 22 Cal.Rptr.2d 20), and stating the broad authority of the Department to enforce provisions of the Act (e.g., Van de Kamp v. Gumbiner, supra, 221 Cal.App.3d at pp. 1284-1285, 270 Cal.Rptr. 907).
e. The Legislative History Supports Our Conclusion that the Disclosure Requirements of Section 1363.1 are Mandatory
We are not persuaded by Blue Cross's argument that we must reach a different result based on the absence of any discussion on noncompliance in the legislative history of section 1363.1. Blue Cross asked that we take judicial notice of the legislative history, which it contends reveals that the bill enacting section 1363.1 was introduced for several reasons, none of which included the intent to invalidate arbitration provisions in enrollment forms for noncompliance with the notice requirements of that statute.[14] This is true. Nevertheless, we have found that the scant legislative history confirms that the disclosure requirements of section 1363.1 were intended to be mandatory in order to ensure that health care consumers were aware that the execution of the enrollment form containing an arbitration provision would constitute a waiver of the right to a *707 jury trial.[15] Consistent with this legislative purpose, we read section 1363.1 as requiring health service plan enrollment forms to contain the advisements of that statute as a condition to the enforcement of the arbitration agreement.
5. The Arbitration Agreement Does Not Fall Within An Exception to the Rule Permitting Enforcement of an Illegal Contract
In the alternative, Blue Cross contends that the arbitration provision cannot be revoked on the grounds that it is an illegal contract because to do so would result in a disproportionately harsh penalty in relation to the gravity of a violation of a purely regulatory statute. We disagree and conclude that the common law defense of illegality is a separate and alternative ground for upholding the trial court's order denying Blue Cross's petition to compel.
"[G]enerally speaking, `a contract made in violation of a regulatory statute is void,' ... [however,] `"the rule is not an inflexible one to be applied in its fullest rigor under any and all circumstances."'" (Arya Group, Inc. v. Cher (2000) 77 Cal.App.4th 610, 615, 91 Cal.Rptr.2d 815, citing Asdourian v. Araj (1985) 38 Cal.3d 276, 291, 211 Cal.Rptr. 703, 696 P.2d 95.) "In compelling cases, illegal contracts will be enforced in order to `avoid unjust enrichment and a disproportionately harsh penalty upon the plaintiff.' [Citation.]" (Asdourian v. Araj, supra, at p. 292, 211 Cal.Rptr. 703, 696 P.2d 95.) "`"In each case, the extent of enforceability and the kind of remedy granted depend upon a variety of factors, including the policy of the transgressed law, the kind of illegality and the particular facts."' [Citation.]" (Ibid.)
Application of these factors to the arbitration provision at issue here supports the conclusion that it should not be enforced. First, the policy of section 1363.1 is to protect health care consumers from the consequences of unknowingly waiving their right to a jury trial in a dispute with their health care service plan. The Maleks are members of the group primarily in need of the statute's protection. It would defeat the statutory purpose to allow Blue Cross to compel arbitration without first complying with the necessary disclosure requirements.
Second, although the violation of section 1363.1 does not involve the kind of illegality that automatically renders an agreement *708 void, nevertheless, the parties were not equally at fault. Blue Cross knew or should have known of the disclosure requirements under section 1363.1. Indeed, as Blue Cross has admitted, the enrollment forms at issue here were printed after the enactment and effective date of section 1363.1.
Third, under the facts of this case, the arbitration provision should not be enforced. Blue Cross cites to several factors, suggesting that such a decision is a harsh one. It characterizes the violation of the statute as a technical one,[16] points to the fact that the arbitration was nearing completion, that the Maleks failed to bring Smith, supra, 93 Cal.App.4th 139, 113 Cal. Rptr.2d 140, to the attention to the trial court for nearly a year after the decision was published; and that the Maleks had actual notice of their obligation to arbitrate this dispute. These factors overlook one important point; that is, the juxtaposition of the arbitration provision and the Maleks' signatures on the enrollment form, raises a concern as to whether the Maleks agreed to waive their right to a jury trial. This factor alone makes the arbitration provision unenforceable. This consequence is not disproportionately harsh because the purpose of section 1363.1 is to ensure that health care consumers knowingly waive their right to a jury trial.
This is not a case where the defendant retained the benefit of the bargain and would be unjustly enriched if the agreement were not enforced. In that respect, this case is distinguishable from Felix v. Zlotoff (1979) 90 Cal.App.3d 155, 163, 153 Cal.Rptr. 301. Nor, as discussed, do the equitable factors support upholding the agreement upon which Blue Cross relies. (See, e.g., Homestead Supplies, Inc. v. Executive Life Ins. Co. (1978) 81 Cal.App.3d 978, 989-990, 992-993, 147 Cal.Rptr. 22.)
As a health care service plan provider, Blue Cross should have been aware that section 1363.1 provided specific disclosure requirements. In this factual context, enforcing the arbitration provision would defeat the policy of section 1363.1. We therefore conclude that the penalty, namely unenforceability for noncompliance with the arbitration disclosure requirements, is not disproportionately harsh in relation to the gravity of the violation.
6. The Blue Cross Enrollment Form Does not Substantially Comply with Section 1363.1
Blue Cross next contends that the facts of this case merit the application of the doctrine of substantial compliance. Though no cases have applied the doctrine of substantial compliance in this context, Blue Cross asserts that it should be applied here because the violation of section 1363.1 is technical and inconsequential, as the Maleks repeatedly received actual notice of their arbitration obligation, making the fact that the signature block is not immediately below the arbitration provision "of no moment given the prominent placement of that [arbitration] provision on a one page form." We disagree with Blue Cross's position.
As discussed, we have concluded that the disclosure requirements of section 1363.1 are mandatory. That statute provides that the disclosures "shall appear" and "shall clearly state" and "shall be prominently displayed," and does not expressly sanction mere substantial compliance with its provisions. Nevertheless, to the extent that Blue Cross raises the substantial *709 compliance doctrine in connection with mandating literal compliance of the statutory disclosure requirements to effectuate its objectives, we do not rule that doctrine out in the appropriate case. We find, however, that this is not such a case because the Blue Cross enrollment form did not substantially comply with section 1363.1.
"`"Substantial compliance, as the phrase is used in the decisions, means actual compliance in respect to the substance essential to every reasonable objective of the statute." [Citation.] Where there is compliance as to all matters of substance technical deviations are not to be given the stature of noncompliance. [Citation.] Substance prevails over form. When the plaintiff embarks [on a course of substantial compliance], every reasonable objective of [the statute at issue] has been satisfied.' [Citation.]" (Cal-Air Conditioning, Inc. v. Auburn Union School Dist. (1993) 21 Cal.App.4th 655, 668, 26 Cal.Rptr.2d 703.)
Our primary concern is the objective of the statute. As we have discussed, contrary to Blue Cross's position, section 1363.1 is not just a notice statute. The purpose of section 1363.1 is to disclose the requirement to arbitrate and to ensure a knowing waiver of the right to a jury trial. The signature of the "individual enrolling in the health service plan" is required in order to ensure a knowing waiver of his or her rights.
In our view, the Blue Cross enrollment form did not satisfy these statutory objectives. It is disputable whether the arbitration provision satisfied the prominence requirement. As discussed, the arbitration notice provision was one of many indistinguishable paragraphs on the one-page form related to the plan. Nevertheless, assuming the notice requirement was satisfied with actual notice at a later date, there is no indication that the Maleks knowingly waived their right to a jury trial based on the juxtaposition of the signature line. The arbitration provision is on the left-hand side of the enrollment form while the signature line is on the lower right-hand side of the form. The signature line appears directly below the authorization to obtain or release medical information. This placement is not a technical defect of form because it leaves in doubt whether the Maleks knowingly waived their right to a jury trial. Under these circumstances, the statutory objectives of section 1363.1 have not been met.
Blue Cross contends that the facts of this case are distinguishable from those in Imbler, supra, 103 Cal.App.4th 567, 126 Cal.Rptr.2d 715, where the court required strict compliance with the prominence requirement of subdivision (b) of section 1363.1. The Imbler court did not address substantial compliance because PacifiCare's failure to comply with the statute was not merely a technical violation. Likewise, Blue Cross's violations of section 1363.1 are not technical ones. Therefore, we conclude the substantial compliance doctrine does not apply.
In sum, the trial court correctly denied Blue Cross's petition to compel arbitration.
DISPOSITION
For the reasons expressed herein, we affirm the trial court's orders vacating the arbitration award and denying Blue Cross's petition to compel arbitration. Each party to bear its own costs on appeal.
We Concur: KLEIN, P.J., and KITCHING, J.
NOTES
[1] Unless otherwise specified, all further statutory references are to the Health and Safety Code.
[2] The arbitration provision in Suzanne Malek's enrollment form provides: "ARBITRATION AGREEMENT: I understand any dispute between myself (and/or any enrolled family member) and Blue Cross of California/California Care Health Plans/WellPoint Life must be resolved by binding arbitration, if the amount in dispute exceeds the jurisdictional limit of the Small Claims Court, and not by law suit or resort to court process, except as California law provides for judicial review of arbitration proceedings. Under this coverage, both the member and Blue Cross of California/California Care Health Plans/WellPoint Life are giving up the right to have any dispute decided in a court of law before a jury." (Bold in original.) In the lower right-hand corner of the form is a number followed by "3/95." Blue Cross's counsel has represented that "3/95" is the date the form initially was printed.
The format and operative language of the arbitration clause in Michael Malek's enrollment form was the same, differing only in identifying the Blue Cross entity to be bound and in the date it was printed. That form has a "9/96" in the bottom right-hand corner, which indicated the date it initially was printed. Both of these forms were prepared after section 1361.1 went into effect on January 1, 1995. (§ 1363.1, added by Stats.1994, c. 653 (A.B.3260), § 3.)
[3] In ruling on the Maleks' motion for reconsideration, the trial court clarified its ruling in that it also relied on Michael Malek's EOC, which contained an arbitration provision.
[4] Following the trial court's order compelling arbitration, the Maleks filed a petition for writ of mandate, which was denied. (Malek v. Superior Court (Aug. 8, 2000, B1424654). Their petition for review in the Supreme Court also was denied. (Malek v. Superior Court (Aug. 30, 2000, S090789). Undaunted, the Maleks then filed a motion for reconsideration on the ground that Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 99 Cal.Rptr.2d 745, 6 P.3d 669, constituted a change in the law. The trial court denied that motion. Almost a year later, the Maleks unsuccessfully moved to vacate the arbitration order based on Cruz v. PacifiCare Health Systems, Inc. (2001) 91 Cal. App.4th 1179, 111 Cal.Rptr.2d 395, review granted Oct. 31, 2001 (S101003) which was not final at the time of the motion, and the judgment was later affirmed in part and reversed in part by Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 133 Cal. Rptr.2d 58, 66 P.3d 1157.
[5] The arbitrator's ruling states: "There is no necessity of discussing the issue of whether or not there was an agreement to arbitrate in the first instance, since the Court has decided that there was an arbitration agreement and ordered the arbitration to proceed before me. However, as to the legal validity of the arbitration clause, I am still free to make an appropriate finding. In that respect, I am satisfied that the decisions in Smith v. PacifiCare, Pagarigan v. Superior Court and Imbler v. PacifiCare reflect the law of the State of California and require that there be compliance with section 1363.1 before an arbitration clause can be enforced. In the instant case, the arbitration clause is subject to the same deficiencies as those described in Smith, Pagarigan and Imbler. Accordingly, the arbitration cannot proceed, and the matter must be returned to the Court for further proceedings."
[6] Before addressing the enforceability of the arbitration provision contained in Blue Cross's enrollment form, we address the procedural issues that led up to that decision.
[7] Code of Civil Procedure section 1286.6, subdivision (b) provides in part: "Subject to Section 1286.8, the court, unless it vacates the award pursuant to Section 1286.2, shall correct the award and confirm it as corrected if the court determines that: [¶] ... [¶] (b) The arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted...."
[8] The arbitrator wrote, in part: "[A]n arbitrator has jurisdiction in the first instance to determine the extent of his or her jurisdiction. To state the matter specifically, as arbitrator I have the jurisdiction (or power, if one prefers) to determine (1) the arbitrability of the Maleks' claims for disgorgement of profits and restitution under the Unfair Competition Law (Bus. & Prof. Code [§§] 17200 & 17500, et seq.), both on behalf of themselves and the public generally (as private attorneys general) and (2) to adjudicate only those claims over which I find I have jurisdiction."
[9] The Maleks first contend that section 1363.1 requires the disclosure to appear as a separate article in both the agreement to the employer group or individual subscriber (i.e., EOC's) and the enrollment form, and since the Maleks did not receive their EOC's at the time of enrollment Blue Cross did not meet the requirements of section 1363.1.
The trial court, however, concluded that Michael Malek had received his EOC and that it contained an arbitration provision. Moreover, the Maleks admitted that they received EOC's that contained arbitration provision before the commencement of this action.
The Maleks also contend that the text of the arbitration provision in the enrollment form was insufficient.
Finally, the Maleks contend that the enrollment form violated section 1363.1, subdivision (c), because it did not contain the proper disclosures required to arbitrate medical malpractice claims. This, however, is not a medical malpractice case.
[10] The Maleks requested judicial notice of Ciccarelli v. Blue Cross of California (Jan. 22, 2003, B158965) 2003 WL 150045 [nonpub. opn.] ) (Ciccarelli), in which Division Five of this court concluded in an unpublished opinion that noncompliance with section 1363.1 rendered Blue Cross's arbitration agreement unenforceable in a medical malpractice action. In that case, the arbitration provision failed to specifically disclose that the arbitration requirement applied to medical malpractice claims, simply referring to "any dispute." In addition, the arbitration provision in Ciccarelli, like the one here, failed to meet the placement and prominence requirements of section 1363.1. The Maleks contended that the holding of Ciccarelli "collaterally estops Blue Cross from denying the invalidity and unenforceability of its arbitration provisions at issue here."
Blue Cross opposed the Maleks' request for judicial notice. It argued that the request was based on the "fundamental misconception that an unpublished opinion from Division Five ... can somehow be used to collaterally estop Blue Cross from arguing an issue that was not raised in Ciccarelli."
We granted the Maleks' request for judicial notice, noting that Blue Cross's opposition addressed the merits of Ciccarelli, not whether it could be judicially noticed. We further stated: "Our notice of this unpublished opinion constitutes no determination of the significance to our decision on the merits."
Following oral argument, Blue Cross brought to our attention Kilroy v. State of California (2004) 119 Cal.App.4th 140, 14 Cal. Rptr.3d 109, for the purpose of reiterating its argument that the Maleks cannot use offensive collateral estoppel here. In Kilroy, the court held that a federal court order suppressing evidence seized in a search pursuant to a disputed warrant was not the proper subject of judicial notice in a claim against the state for civil rights violations and related torts. The court concluded that it would have been proper for the trial court to take judicial notice of the order, at least to prove the truth of the fact that such an order was issued. (Id. at p. 145, 14 Cal.Rptr.3d 109.) It would not have been proper, however, to take judicial notice of the facts found and recited in the order, which led the judge to conclude that the evidence had been obtained from an illegal search. (Ibid.) The court noted, however, that taking judicial notice of whether a factual finding is true is a different question than whether the truth of the factual finding can be litigated again. It concluded that the doctrines of res judicata and collateral estoppel will, when applicable, serve to bar relitigation of a factual dispute even in those instances where the factual dispute was erroneously decided in favor of a party. (Id. at p. 148, 14 Cal.Rptr.3d 109.) Nevertheless, in that case the court concluded that collateral estoppel did not apply.
In the trial court, the Maleks did not raise collateral estoppel. Generally, a party may not raise issues for the first time on appeal. (Johanson Transportation Service v. Rich Pik'd Rite, Inc. (1985) 164 Cal.App.3d 583, 589, fn. 2, 210 Cal.Rptr. 433.) In any event, collateral estoppel is not appropriate here because the issues decided in Ciccarelli are not identical to the ones raised here, and the issues decided were based on a different Blue Cross enrollment form. (See Clemmer v. Hartford Insurance Co. (1978) 22 Cal.3d 865, 874, 151 Cal.Rptr. 285, 587 P.2d 1098.) More importantly, we have not relied on Ciccarelli to decide this case.
[11] When enacted "the Knox-Keene Act expressly conferred upon the Department [of Corporations] the authority to license health plans (Health & Saf.Code, §§ 1349-1356) and health plan solicitors (former Health & Saf. Code, §§ 1357-1358), to enforce prohibitions against false or misleading advertising (Health & Saf.Code, §§ 1360-1361), to review disenrollment decisions (Health & Saf.Code, § 1365, subd. (b)), to require annual reports regarding financial status (Health & Saf. Code, § 1383), to conduct on-site surveys to assess the quality of medical services being administered (Health & Saf.Code, § 1380), to `approve, disapprove, suspend, or postpone the effectiveness of' any `material modification' of a health plan or its operation (Health and Saf.Code, § 1352, subd. (b)), and to enforce through disciplinary and other enforcement measures the law regarding operation of health plans (Health & Saf.Code, § 1386 et seq.).)" (Van de Kamp v. Gumbiner (1990) 221 Cal.App.3d 1260, 1273, 270 Cal.Rptr. 907.)
[12] In support of this argument, Blue Cross lists a number of provisions in the Act setting forth penalties and remedies for violation of provisions of the Act, including sections 1386, subd. (b) [suspension or revocation of licenses], 1387 [civil penalties], 1391 [cease and desist orders]; 1392 [injunctive relief], 1394.1-1394.3 [involuntary dissolution], and 1390 [criminal prosecution].
[13] We do not address whether the violation of other notice requirements of the Act would render a health service plan contract unenforceable.
[14] Blue Cross argued in its request for judicial notice that "if the Legislature had intended a violation of section 1363.1 to automatically render an arbitration clause unenforceable, or that the statute impliedly overruled Code of Civil Procedure section 1281, there would be some discussion of these topics in the legislative history. The absence of such a discussion supports Blue Cross's argument that section 1363.1 was not intended to have such a sweeping effect." For the reasons discussed in this opinion, we reject that argument.
[15] The author and sponsor of the bill, former Assemblymember Julie Bornstein, stated that the bill "addresses several public disclosure issues that would help health care consumers." (Assem. Com. on Health, Analysis of Assem. Bill No. 3260 (1993-1994 Reg. Sess.) as amended April 7, 1994, p. 3.)
The legislative material, of which we took judicial notice, contains a memorandum on Borenstein's letterhead that states: "This bill will require any health or disability insurance policy that contains a jury trial waiver or restriction clause to be prominently displayed on the form when signed by the enrollee. Last year, the Department of Corporations recommended that the Governor sign AB 2170, which included this provision only for health care service plans. However, they asked for the introduction of legislation this year to expand the bill beyond health care service plans. The aim is to ensure consumer understanding of the waiver to jury trial if a dispute should arise. The waiver clause is required to be printed immediately above the signature line to confirm knowledge of such waiver. Too many times enrollees sign health care contracts, failing to understand or read all the fine print regarding their rights. Requiring the waiver clause to be printed before the signature block should prevent any misunderstanding on the part of the consumer of their waiver of rights to a jury trial...." (Assem. Borenstein, mem. re: Assem. Bill No. 3260 (1993-1994 Reg. Sess.) [italics added].)
[16] Blue Cross takes the position that the arbitration provision in the enrollment form satisfied subdivision (b) of section 1363.1.
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https://www.courtlistener.com/api/rest/v3/opinions/2259737/
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17 Cal.Rptr.3d 517 (2004)
121 Cal.App.4th 946
Lorena ACKERMAN et al., Plaintiffs and Appellants,
v.
Tracy EDWARDS, Individually and as Chairperson, etc., et al., Defendants and Respondents.
No. C045118.
Court of Appeal, Third District.
August 18, 2004.
Review Denied December 15, 2004.
Certiorari Denied May 23, 2005.
*518 Cibula & Cibula, Franklin S. Cibula, Redding; and Michael V. Stuhff for Plaintiffs and Appellants.
Rapport & Marston and David J. Rapport, Ukiah, for Defendants and Respondents.
Certiorari Denied May 23, 2005. See 125 S.Ct. 2300.
RAYE, J.
Plaintiffs Lorena Ackerman et al. (Ackerman) claim membership in the Redding Rancheria Tribe (Rancheria), a federally recognized Indian tribe. Ackerman filed a petition for writ of mandate against defendant members of the Rancheria Tribal Council (Council) challenging a resolution adopted by the Council. The resolution set forth procedures for conducting hearings on the reconsideration of a member's enrollment in the tribe. Lorena Ackerman and her fellow plaintiffs argued the resolution violated their right to due process under the Rancheria's constitution and the Indian Civil Rights Act (ICRA).[1]
In response, the Council filed a motion to quash service of summons, a motion to dismiss, and a demurrer. The trial court granted the motion to quash, finding it lacked jurisdiction over Ackerman's claim. Ackerman appeals, arguing the trial court possesses jurisdiction under the ICRA, and the resolution, by shifting the burden of proof to Ackerman, denied Ackerman's right to due process. We shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
The Rancheria
The Rancheria is a federally recognized Indian tribe operating pursuant to a constitution adopted in 1987 and amended in 1989. Under the constitution, a tribal council consisting of seven elected members governs the Rancheria. The Council possesses the power to adopt an enrollment ordinance governing tribal membership.
Under the constitution, members of the Rancheria consist of: "a) All of the seventeen (17) original distributees listed *519 on the plan of distribution of the Redding Rancheria, dated October 8th, 1959.[¶] b) All lineal descendents of the seventeen (17) original distributees . . . ."
The Council, in 1987, adopted the Redding Rancheria Enrollment Procedures Act (Act), which sets forth the requirements for enrollment in the Rancheria. Under the Act, the Council shall review each application for enrollment together with the recommendation of the enrollment committee and determine whether the applicant is eligible to be enrolled as a member of the Rancheria. "The person filing an application has the burden of proof of establishing to the satisfaction of the . . . Council that the applicant meets all of the requirements for tribal membership." The Council shall consider all relevant evidence regarding an applicant's eligibility, "but the relevancy, weight, and sufficiency of such evidence shall be determined by the . . . Council."
The Act requires the Council to make a written decision that includes findings of fact. The Act does not require a formal hearing. If the Council determines an applicant is not eligible, the rejected applicant can appeal to the membership of the tribe at a regular meeting of the general council.
In 1994 the Council amended the Act, adding article V, governing reconsideration of enrollment. Under article V, if the Council or enrollment committee discovers, after an application for enrollment has been approved or denied, that a member may have misrepresented or omitted facts affecting eligibility, the application shall be reconsidered in accordance with the procedure for processing an original application.
Reconsideration at Issue
In the summer of 2002 the enrollment committee received two letters from a Rancheria elder casting doubts upon the eligibility of member Lorena Butler. The letters suggested Butler was not the daughter of Virginia Timmons, an original distributee listed on the Rancheria distribution plan.
Lorena Ackerman and her fellow plaintiffs are all members of the Foreman family, who are the children and grandchildren of Butler. The Foreman family claims membership in the Rancheria through Timmons.
The enrollment committee reviewed Butler's application for membership. The application file contained neither a birth certificate nor baptismal records establishing Timmons as Butler's mother. The enrollment committee notified the Council about the deficiencies.
On the basis of the review of the application file, the enrollment committee found that Butler might have omitted facts affecting her eligibility for enrollment in the Rancheria. Under the Act, this determination required the Council to reconsider Butler's enrollment.
Because of the size of the Foreman family and the potential impact on the Rancheria, the Council adopted resolution 014-04-01-03 (Resolution). The Resolution is titled: "Resolution of the Tribal Council of the Redding Rancheria Establishing Procedures for Conducting Hearings on a Recommendation by the Enrollment Committee to Reconsider Enrollment of a Tribal Member."
The Resolution establishes a procedure requiring a hearing officer to preside over a formal hearing on the reconsideration of eligibility. The hearing officer must be an impartial and experienced attorney. The Resolution specifies that the hearing officer preside over the hearing, questioning witnesses, ruling on issues of law, and preparing a written decision for Council consideration. Nothing in the Resolution *520 alters the standard governing the burden of proof as set forth in the Act.
According to the Council, the resolution provides Rancheria members subject to disenrollment procedures greater procedural protections than those contained in the Act.
The Present Action
Ackerman filed a petition for writ of mandate in the trial court against the Council members, challenging the resolution. In response, the Council filed a motion to quash service of summons, motion to dismiss, and demurrer to the petition. The Council argued the trial court lacked both personal and subject matter jurisdiction over Ackerman.
The trial court granted the Council's motion to quash service of summons based on a lack of jurisdiction. The court found the Council made a sufficient showing of entitlement to sovereign immunity.
The court, in granting the motion, quoted from Santa Clara Pueblo v. Martinez (1978) 436 U.S. 49, 98 S.Ct. 1670, 56 L.Ed.2d 106 (Santa Clara Pueblo) that "[n]othing on the face of Title 1 of the ICRA purports to subject tribes to the jurisdiction of the federal courts in civil actions for injunctive or declaratory relief." (436 U.S. at p. 59, 98 S.Ct. 1670.) The trial court explained, "While the petitioners argue that this case dealt only with the federal court's jurisdiction, there is nothing in the reasoning of Santa Clara Pueblo that would limit its application only to federal courts. In addition, to find an exception for state courts would be inconsistent with the rationale of the decision. Further, the reasoning of the Santa Clara Pueblo case makes clear that there is no private right of action created by the ICRA. The petitioners cannot establish jurisdiction pursuant to this section whether the suit is considered against the tribe or individual members."
The court also found no jurisdiction by virtue of Public Law 280 (Pub. L. No. 83-280; 28 U.S.C. § 1360), concluding Bryan v. Itasca County (1976) 426 U.S. 373, 96 S.Ct. 2102, 48 L.Ed.2d 710 (Bryan) makes clear that the purpose of Public Law 280 was not to resolve disputes that affect the tribe and its ability to govern itself. The court ruled: "This is consistent with the rule of law that a petitioner cannot avoid the application of sovereign immunity of the tribe, by suing individual members where the real effect of the suit is on the tribe."
Following entry of judgment of dismissal, Ackerman filed a timely notice of appeal.
DISCUSSION
I
We begin with a brief review of Indian tribal sovereignty. Indian tribes are distinct, independent political communities that retain their original natural rights in matters of local self-government. Although no longer possessing the full attributes of sovereignty, they remain a separate people possessing the power of regulating their internal and social relations. Indian tribes have the power to make their own substantive law in internal matters and to enforce that law in their own forums. (Santa Clara Pueblo, supra, 436 U.S. at pp. 55-56, 98 S.Ct. 1670.)
As separate sovereigns pre-existing the United States Constitution, tribes have historically been regarded as unconstrained by those constitutional provisions framed specifically as limitations on federal or state authority. However, Congress retains the plenary authority to limit, modify, or eliminate the powers of local self-government that tribes otherwise possess. *521 (Santa Clara Pueblo, supra, 436 U.S. at pp. 56-58, 98 S.Ct. 1670.)
Title 1 of the ICRA, 25 United States Code sections 1301-1303 represents an exercise of this authority. Section 1302(8) states: "No Indian tribe in exercising powers of self-government shall[¶] . . . [¶] . . . deny to any person within its jurisdiction the equal protection of its laws or deprive any person of liberty or property without due process of law." "In 25 USC 1303 [25 USCS § 1303], the only remedial provision expressly supplied by Congress, the `privilege of the writ of habeas corpus' is made `available to any person, in a court of the United States, to test the legality of his detention by order of an Indian Tribe.'" (Santa Clara Pueblo, supra, 436 U.S. at p. 58, 98 S.Ct. 1670.)
Indian tribes have long been recognized as possessing the common law immunity from suit traditionally enjoyed by sovereign powers. This immunity is subject to the superior and plenary control of Congress. However, absent congressional authorization, the tribes are exempt from suit. (Santa Clara Pueblo, supra, 436 U.S. at p. 58, 98 S.Ct. 1670.)
II
Both parties urge application of the Supreme Court decision in Santa Clara Pueblo, but to very different ends. In Santa Clara Pueblo, the respondent, a female member of the Santa Clara Pueblo tribe, brought an action for declaratory and injunctive relief against enforcement of a tribal ordinance denying membership to children of female members who marry outside the tribe. However, the ordinance extended membership to children of male members who marry outside the tribe. The respondent claimed the rule discriminated on the basis of both sex and ancestry in violation of title 1 of the ICRA. (Santa Clara Pueblo, supra, 436 U.S. at pp. 51-52, 98 S.Ct. 1670.)
The Santa Clara Pueblo court found that nothing on the face of title 1 of the ICRA purports to subject the tribes to the jurisdiction of the federal courts in civil actions for injunctive or declaratory relief. (Santa Clara Pueblo, supra, 436 U.S. at p. 59, 98 S.Ct. 1670.) However, the court considered whether the relief sought by the respondent, although not expressly authorized by the ICRA, was nonetheless implicit in its terms. (Ibid.)
The court delineated two distinct and competing purposes of the ICRA: to strengthen the position of individual tribal members vis-à-vis the tribe and to promote the well-established federal policy of furthering Indian self-government. (Santa Clara Pueblo, supra, 436 U.S. at p. 62, 98 S.Ct. 1670.) The court found that imposition of a federal cause of action for enforcement of the rights created in title 1 of the ICRA, however useful in securing compliance with 25 United States Code section 1302, would undermine the authority of tribal forums and impose serious financial burdens on financially disadvantaged tribes. (Santa Clara Pueblo, supra, 436 U.S. at p. 64, 98 S.Ct. 1670.)
The court ultimately determined: "Tribal forums are available to vindicate rights created by the ICRA, and § 1302 has the substantial and intended effect of changing the law which these forums are obliged to apply. Tribal courts have repeatedly been recognized as appropriate forums for the exclusive adjudication of disputes affecting important personal and property interests of both Indians and non-Indians. [Citations.] Nonjudicial tribal institutions have also been recognized as competent law-applying bodies. [Citation.] Under these circumstances, we are reluctant to disturb the balance between the dual statutory objectives which Congress *522 apparently struck in providing only for habeas corpus relief. [Fns. omitted.]" (Santa Clara Pueblo, supra, 436 U.S. at pp. 65-66, 98 S.Ct. 1670.)
In addition, "By not exposing tribal officials to the full array of federal remedies available to redress actions of federal and state officials[,] Congress may also have considered that resolution of statutory issues under [25 United States Code] § 1302, and particularly those issues likely to arise in a civil context, will frequently depend on questions of tribal tradition and custom which tribal forums may be in a better position to evaluate than federal courts." (Santa Clara Pueblo, supra, 436 U.S. at p. 71, 98 S.Ct. 1670.)[2] Therefore, the Supreme Court found section 1302 does not impliedly authorize actions for declaratory or injunctive relief against either a tribe or its officers. (Santa Clara Pueblo, supra, 436 U.S. at p. 72, 98 S.Ct. 1670.)
III
Lorena Ackerman and the other plaintiffs contend Public Law 280 grants jurisdiction to California courts to consider their action for writ of mandate against Council members. Title 28 United States Code section 1360, Public Law 280 provides, in pertinent part: "[California] shall have jurisdiction over civil causes of action between Indians or to which Indians are parties[.]" Ackerman construes Public Law 280 to grant California courts jurisdiction over a dispute between a tribal member and the tribe. According to Ackerman, "Here in California, the role of tribal courts has been given to the State by Congress in PL 280."
Ackerman's assertion rests on very tenuous reasoning. Under Ackerman's theory, the Santa Clara Pueblo court determined that Congress rejected direct action by the federal courts, instead finding jurisdiction in "other courts." According to Ackerman, in most other states these are "tribal courts," but in California it is the state court.
Such reasoning turns Santa Clara Pueblo on its head. The Supreme Court discussed only tribal courts and nonjudicial tribal institutions as possessing jurisdiction over tribal matters. The Supreme Court did not leave jurisdiction open to "courts" in general or state courts in particular. The Supreme Court carefully explained its rationale for leaving disputes over the ICRA to tribal courts and institutions. This rationale does not support any conferral of jurisdiction on state courts.
As the Council points out, the Supreme Court explicitly denied that Public Law 280 confers jurisdiction in the states over the tribes themselves: "The Act itself refutes such an inference: there is notably absent any conferral of state jurisdiction over the tribes themselves." (Bryan, supra, 426 U.S. at pp. 388-389, 96 S.Ct. 2102.) California courts are in accord. "No case has been cited to us, and we have found none, which concludes or even suggests, that 28 United States Code section 1360 [Public Law 280] conferred on California jurisdiction over the Indian tribes, as contrasted with individual Indian members of the tribes." (Long v. Chemehuevi *523 Indian Reservation (1981) 115 Cal.App.3d 853, 857, 171 Cal.Rptr. 733.)
We find no merit in Ackerman's assertion that the courts of California have jurisdiction over disputes between tribal members and tribes through Public Law 280. As the trial court correctly observed, to extend jurisdiction to state courts would be inconsistent with the reasoning of Santa Clara Pueblo.
IV
Ackerman argues the tribe's sovereign immunity is subject to the exception enunciated in Ex parte Young (1908) 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (Young).) In Young, the Supreme Court found a suit challenging the constitutionality of a state official's action not barred by sovereign immunity. Ackerman draws a parallel between the Council and the official in Young, arguing the exception to immunity is applied against "abusive or overreaching officials [who] have attempted to shield themselves in a cloak of sovereign immunity."
However, as the Council points out, federal courts have imposed two requirements on litigants seeking to apply the Young exception to tribal officials. "According to the Second Circuit in Garcia [v. Akwesasne Housing Authority (2d Cir. 2001) 268 F.3d 76], there are at [sic] two qualifications to obtaining such prospective injunctive relief against tribal officials sued in their official capacity. `First, any law under which [the plaintiffs] seek[ ] injunctive relief must apply substantively to the agency. . . . Second, [the plaintiffs] must have a private cause of action to enforce the substantive rule.' Garcia, 268 F.3d at 88." (Bassett v. Mashantucket Pequot Museum and Research (D.Conn.2002) 221 F.Supp.2d 271, 278, fn. 12.)
Ackerman seeks to enforce both the ICRA and the tribe's constitution. However, in Santa Clara Pueblo, the Supreme Court found the ICRA does not confer a private right of action as an enforcement mechanism. Instead, the court found the Congress, in implementing 25 United States Code section 1303, decided that review by way of habeas corpus would adequately protect the individual interests at stake while avoiding unnecessary intrusions on tribal governments. The court also noted the Congress had considered and rejected proposals for federal review of alleged violations of the ICRA arising in a civil context. (Santa Clara Pueblo, supra, 436 U.S. at pp. 66-69, 98 S.Ct. 1670.)
Nor does the Rancheria constitution provide a private right of action to enforce its provisions in state court. The constitution states: "The rights of the Redding Rancheria members are those which are guaranteed by the Indian Civil Rights Act of 1968." The constitution states the Council, in exercising powers of self-government, shall not violate the rights enumerated in the ICRA. In addition, the constitution grants the Council the power to adopt an enrollment ordinance and to ensure the ordinance is "reasonable, fair, and just and that the Ordinance reflects the will of the people." Nothing in this language creates a private right of action in state court to enforce those rights.
Since neither the ICRA nor the Rancheria constitution creates a private cause of action, Ackerman cannot invoke the exception codified in Young. We find no exception to the Rancheria's sovereign immunity.[3]
*524 DISPOSITION
The judgment is affirmed. The Rancheria shall recover costs on appeal.
We concur: DAVIS, Acting P.J., and MORRISON, J.
NOTES
[1] Indian Civil Rights Act of 1968, 82 Stat. 77, 25 U.S.C. § 1301 et seq.
[2] As the court noted, "A tribe's right to define its own membership for tribal purposes has long been recognized as central to its existence as an independent political community. [Citations.] Given the often vast gulf between tribal traditions and those with which federal courts are more intimately familiar, the judiciary should not rush to create causes of action that would intrude on these delicate matters." (Santa Clara Pueblo, supra, 436 U.S. at p. 72, fn. 32, 98 S.Ct. 1670.)
[3] Since we find the Rancheria entitled to sovereign immunity, we do not address the substance of Ackerman's due process arguments.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2259739/
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16 Cal.Rptr.3d 717 (2004)
121 Cal.App.4th 95
William McLeod REEVES, Plaintiff and Appellant,
v.
SAFEWAY STORES, INC., Defendant and Respondent.
No. H024375.
Court of Appeal, Sixth District.
July 29, 2004.
*720 Theresa L. Pfeiffer, Los Gatos, for Plaintiff and Appellant William McLeod Reeves.
Littler Mendelson, Nancy E. Pritikin, San Francisco, Neda N. Dal Cielo, San Jose, for Defendant and Respondent Safeway Stores, Inc.
RUSHING, P.J.
The Fair Employment and Housing Act, Government Code sections 12900 et seq. (FEHA), prohibits an employer from firing a worker in retaliation for the worker's complaining about incidents of sexual harassment in the workplace. (Gov.Code, § 12940, subds. (h), (j).)[1] An employer can defeat such a claim by showing that it acted not in response to the worker's complaints but for legitimate, nonretaliatory reasons. This case presents the question whether an employer may be liable for retaliatory discharge when the supervisor who initiates disciplinary proceedings acts with retaliatory animus, but the cause for discipline is separately investigated and the ultimate decision to discharge the plaintiff is made by a manager with no knowledge that the worker has engaged in protected activities. We hold that so long as the supervisor's retaliatory motive was an actuating, but-for cause of the dismissal, the employer may be liable for retaliatory discharge. Here the evidence raised triable issues as to the existence and effect of retaliatory motive on the part of the supervisor, and as to whether the manager and the intermediate investigator acted as tools or "cat's paws" for the supervisor, that is, instrumentalities by which his retaliatory animus was carried into effect to plaintiff's injury. We therefore reverse a summary judgment granted to the employer.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff William McLeod Reeves worked for defendant Safeway Stores, Inc. (Safeway) as a food clerk from May 1969 until his discharge in July 1998. In or before late 1997, he became aware of conduct that he believed constituted sexual harassment of female employees in the store where he worked. The main offenders seemed to be Brian Sparks and Steve Prodes, the night manager. At least two female workers complained to plaintiff about the problem, and at least one of them asked him to speak to store management about it. In December 1997, and several times thereafter, plaintiff complained to store manager Fred Demarest. Plaintiff testified that Demarest seemed resentful and sought to "trivialize" the complaints, initially saying something to the effect that women were "not such pure innocent things" as plaintiff supposed, and later telling plaintiff, "Bill, as far as I'm concerned, unless these gals come to me and complain about it ..., the problem exists between your ears." Demarest testified that in response to plaintiff's complaints he asked "many employees" if they were experiencing sexual harassment, and "got absolutely nothing back that was conclusive or that even hinted of sexual harassment." However Stephanie Alves testified that she herself complained directly to Demarest, with no apparent result, about an episode of what she considered sexual harassment by Sparks and Prodes. She also heard store manager Henry Sukovaty refer to plaintiff sarcastically as "Mr. Sexual Harassment."[2] Sukovaty *721 himself had, according to Alves, made inappropriate sexual comments to her. Within a year after plaintiff's dismissal, Prodes was discharged for sexual harassment.
District manager Moira Susan Hollis testified that "if someone makes a complaint to the store manager about sexual harassment, the store manager is supposed to ... give that complaint to [the human resources department]" for investigation. She further testified that Demarest behaved inappropriately if, as he and plaintiff testified, he conducted his own investigation rather than referring plaintiff's complaints to human resources.
Although plaintiff's shift ended at midnight, he sometimes remained past that time to socialize with co-workers. Demarest testified that he "asked" plaintiff "on a couple of occasions not to enter the store after closing." Plaintiff asserted that coworker Ricky Bloor had relayed a statement by Demarest that plaintiff "should not stay too long" after his shift ended. Plaintiff declared that he "respected" this request. Contrary to repeated suggestions in Safeway's brief, there is no evidence, controverted or otherwise, that Demarest ever gave plaintiff an order, instruction, or directive on this point, as distinct from a request or suggestion.
At 12:00 a.m. on May 31, 1998, plaintiff ended his last shift before taking a few days' vacation. He left the store shortly after midnight, but returned almost immediately in response to an urgent need to use the rest room.[3] Sandy Juarez, who was apparently in charge of the night crew, opened the door enough to talk to plaintiff, but refused to let him enter the store. Plaintiff testified that he told her he needed to come in so he could "get some stuff out of my locker and ... use the [men's] room." She replied that she had been instructed not to let anybody into the store after it closed. He said, "This is important. This is an emergency. I have to use the rest room." She said, "[I]f you come in, I'm going to call security."
Juarez testified that when she refused to admit plaintiff to the store, he became very agitated and irate, and began swearing. She said he "shoved [her] through the door to enter into the store," pushing her backwards with both hands. Brian Sparks testified in deposition that he saw the door hitting Juarez and defendant's "hand pushing her," and that, right after the incident, plaintiff approached Sparks and another employee in the parking lot to say he had pushed Juarez "gently" out of his way. However, plaintiff denies that he *722 touched Juarez at all, and denies that he told the two coworkers he had done so.[4]
After entering the store plaintiff went to a back room where he encountered Sparks. Plaintiff told Sparks that Juarez had "hassled" him "about getting back into the store to use the bathroom." He added that Juarez was a "fucking waste of air." On his way up the stairs he encountered Barbara Flagen-Spicher, who demanded an apology, which he gave her, for his language.
Meanwhile Juarez had called the police. When they arrived, Juarez told them plaintiff had pushed her. There is no indication that they took a report, or indeed took the matter seriously. Plaintiff testified that after advising him to take the matter up with his union, they left him talking to Juarez. He himself then left, but returned about an hour later in hopes of seeing fellow clerk Staci Siaris at the beginning of her shift. He testified that he wanted to give her some reading material, repay a small debt, and tell her about the incident with Juarez. He followed her into the store while carrying a lit cigarette. He testified that he had forgotten he had a cigarette in his hand, and that he left the store after a few seconds.
About 7:15 the next morning, after the store had opened, plaintiff returned in the hope of talking to Demarest about the previous night's incident. He knew that Demarest was on vacation but thought he might come in to check the books. When Demarest did not appear, plaintiff lingered around the store, making a series of purchases. During this time he spoke to several employees and customers. Two workers testified that he had alcohol on his breath.[5] Plaintiff admitted he had a small amount to drink during the night, but one coworker testified that he detected no signs of intoxication. Juarez reportedly received a call from a self-described customer, complaining that the store should not permit employees on the premises after they had been drinking. She referred the call to assistant manager Sukovaty, who confronted plaintiff, implying that the customer said plaintiff was rude and had been drinking. Sukovaty told plaintiff to leave the store, stating that "this is a termination offense." Plaintiff complied, but returned to the store less than half an hour later to make another purchase.
When Demarest returned to work the next day (June 2, 1998), Juarez told him about her confrontation with plaintiff. He discussed the incident with Sparks and Flagen-Spicher, but never with plaintiff, who returned from vacation on June 7. On June 8, Demarest called Safeway's Security Department and spoke with security officer Darrell Harrison. Harrison testified that Demarest told him, "I have a problem at the store. Mr. Reeves is suspected of pushing Sandy Juarez, his front end manager, and I'd like you to take a look at it. I started a preliminary investigation. I talked to a couple employees. This is what they're telling me. It's obviously a security issue, possibly workplace violence, and come in and take over the investigation." There is no evidence that Demarest spoke to human resources before *723 contacting security. He testified that he referred the matter to security merely because "they were a little more experienced with it." Harrison apparently endorsed this action because, as he testified, "Workplace violence is always a security issue."
On June 10, 1998, Demarest and Harrison summoned plaintiff away from his checkstand and told him they wanted to ask some questions. Plaintiff was troubled by the seriousness of their tone and said he wanted to arrange for union representation. Harrison postponed the meeting for that purpose while placing plaintiff on suspension. On June 17, plaintiff met with Harrison, another Safeway security agent, and a union representative. Plaintiff testified that the investigators asked him to recount the events of the evening of May 31 and peruse "a thick stack of Safeway rules." He told them that while he "did get in [Juarez's] face," he "didn't physically touch her." They asked why other witnesses would lie about what happened, and he said that there had been some incidents of sexual harassment and "other continuing problems" that might have supplied motives. Plaintiff explained that Sparks, in particular, felt "a lot of resentment ... for me after I had complained to him [sic] and after Sparks had apologized to four females in the store for having harassed them." Asked again if he explained these matters to investigators, he testified that Sparks and Prodes "did ... come up."
On or before June 30, 1998, Harrison called district manager Hollis to tell her the results of his investigation.[6] Hollis testified that the conversation lasted 15 to 20 minutes. Harrison told her that the facts, as he had determined them, were that "there had been a situation at the store, the employee had been abusive with the person in charge, he had been under the influence of alcohol, and he had pushed the employee, and he had also been using profanity with and around other employees."[7] He recommended that plaintiff be discharged. Hollis decided to terminate plaintiff's employment before the conversation ended. In a declaration she stated that she made this decision because "Mr. Reeves' conduct on May 31, 1998 violated Safeway's store rules and policies/procedures." She gave no more specific explanation for this decision than in her deposition, where she stated, "We don't allow one employee to push another employee period."
Hollis did not review plaintiff's personnel file before deciding to dismiss him. She considered the length of his service to Safeway but was unaware of his several commendations and did not consider them. She was unfamiliar with his version of the incident, including his claimed need to use the restroom, and did not know whether Harrison had talked to plaintiff during his investigation. She was also unaware of any reasons for any of the witnesses to shade the truth, and in particular had no knowledge that plaintiff had complained about sexual harassment prior to his discharge.
At some point after his phone call to Hollis, Harrison prepared a 10-page "Investigation *724 Report."[8] It referred to an "incident" of "Misconduct/Assault/Use of Profanity/Public Intoxication," occurring at 12:15 a.m. on May 31, 1998. It identified Sandra Juarez as "Victim" and plaintiff as "Suspect." It recounted the confrontation between plaintiff and Juarez as related by Juarez and Sparks, and separately described the "interview" of plaintiff in which he gave his account of events.
On July 1, 1998, Hollis sent plaintiff a letter stating that he was terminated "for violation of company policy and/or procedures." On March 4, 1999, the Department of Fair Employment and Housing sent him a "Right-to-Sue Notice." A year later, plaintiff brought this action charging Safeway and fictitious defendants with violating FEHA by discharging him in retaliation for his complaints about sexual harassment. Safeway moved for summary judgment, contending that plaintiff could not establish a causal link between these complaints and his discharge, and that even if he could, Safeway had a legitimate reason for the discharge which plaintiff could not show to be pretextual. The court rejected the first argument, finding that plaintiff had made a threshold showing of a causal link. However, the court ruled that "Defendant met its burden of showing that it had a legitimate, non-discriminatory reason for terminating Plaintiff," and that "Plaintiff failed to raise a triable issue of material fact in this regard." The court granted the motion, and entered judgment for Safeway. Plaintiff filed this timely appeal.
DISCUSSION
I. Defective Statement of Undisputed Facts
At the threshold we observe that defendant has made our taskand that of the trial courtconsiderably more burdensome by its failure to comply with the requirement of Code of Civil Procedure section 437c, subdivision (b)(1), that the moving party set forth "plainly and concisely all material facts which the moving party contends are undisputed." (Italics added.) Instead of stating clearly those material facts which actually are without substantial controversy, defendant offers a number of obliquely stated "facts" that are material only to the extent they are controverted, and uncontroverted only to the extent they are immaterial. For instance, defendant asserts various "undisputed facts" in terms not of relevant events but of what a witness has said about events, e.g., two Safeway employees "stated that Plaintiff followed them out of the store, telling them that he had moved Sandy Juarez out of the way by lightly/gently pushing her aside." It seems indisputably *725 true that Brian Sparks so testified in deposition, though there is no competent evidence of such a report by the other worker, Barbara Flagen-Spicher. (See fn. 9, post.) But what Sparks (or for that matter Flagen-Spicher) might have said in deposition is not, as such, a "material fact." It is of interest only as evidence of a material fact, e.g., that plaintiff made a damaging admission about his confrontation with Juarez. That "fact" is squarely controverted by plaintiff's declaration that he made no such statement. We emphatically condemn Safeway's attempt to circumvent that conflict by stating the supposed "fact" in an attributive form.
This stratagem takes an arguably even worse turn in Safeway's assertion of "facts" in the form of supposed perceptions by witnesses. Thus it is said to be undisputed that "Brian Sparks overheard" something, and that "Sandy Juarez and Staci Siaris both witnessed" something. Ordinarily, however, the perceptions of witnesses are simply not "material facts," as that term is used in the summary judgment statute. The relevant question is whether the underlying factsthe events or conditions witnesses say they perceivedare established without substantial controversy. Defendant merely clouds the inquiry into that question by formulating the operative facts in the intermediate form of a witness's perceptions or statements.
We believe trial courts have the inherent power to strike proposed "undisputed facts" that fail to comply with the statutory requirements and that are formulated so as to impede rather than aid an orderly determination whether the case presents triable material issues of fact. If such an order leaves the required separate statement insufficient to support the motion, the court is justified in denying the motion on that basis. (See § 437c, subd. (b)(1).) Here, however, the court reached the merits of the motion, and we will do likewise.
II. Defense of Ignorance
On appeal from an order granting summary judgment "we must independently examine the record to determine whether triable issues of material fact exist. [Citations.]" (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767, 107 Cal.Rptr.2d 617, 23 P.3d 1143 (Saelzler).) The question is whether defendant "`"conclusively negated a necessary element of the plaintiff's case or demonstrated that under no hypothesis is there a material issue of fact that requires the process of trial." [Citation.]' [Citation.]" (Ibid.; Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 673-674, 25 Cal.Rptr.2d 137, 863 P.2d 207; see Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 335, fn. 7, 100 Cal.Rptr.2d 352, 8 P.3d 1089 (Guz) ["the issue ... is simply whether, and to what extent, the evidence submitted for and against the motion ... discloses issues warranting a trial"].) We must "consider[] all the evidence set forth in the moving and opposition papers except that to which objections have been made and sustained. [Citation.]" (Guz, supra, 24 Cal.4th at p. 334, 100 Cal.Rptr.2d 352, 8 P.3d 1089.) Moreover, "we must view the evidence in a light favorable to plaintiff as the losing party [citation], liberally construing [his] evidentiary submission while strictly scrutinizing defendants' own showing, and resolving any evidentiary doubts or ambiguities in plaintiff's favor. [Citations.]" (Saelzler, supra, 25 Cal.4th at p. 768, 107 Cal.Rptr.2d 617, 23 P.3d 1143; see Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843, 107 Cal.Rptr.2d 841, 24 P.3d 493 (Aguilar) [trial court must view evidence and inferences "in the light most favorable to the *726 opposing party"].) And a plaintiff resisting a motion for summary judgment bears no burden to establish any element of his or her case unless and until the defendant presents evidence either affirmatively negating that element (proving its absence in fact), or affirmatively showing that the plaintiff does not possess and cannot acquire evidence to prove its existence. (Aguilar, supra, 25 Cal.4th at pp. 854-855, 107 Cal.Rptr.2d 841, 24 P.3d 493; Saelzler, supra, 25 Cal.4th at p. 768, 107 Cal. Rptr.2d 617, 23 P.3d 1143.)
Safeway first asserts that because Hollis did not know about plaintiff's complaints of sexual harassment, plaintiff cannot possibly show that his discharge was caused by those complaints. There is no doubt that a necessary element of plaintiff's case is a "causal link between [his] protected activity and the employer's action. [Citation.]" (Flait v. North American Watch Corp. (1992) 3 Cal.App.4th 467, 476, 4 Cal.Rptr.2d 522.) After all, FEHA prohibits adverse treatment "because of" protected activities. (Gov.Code, § 12940, subd. (h).) However, on this record Hollis's ignorance of plaintiff's protected activities is not enough, by itself, to either conclusively negate this element or to establish plaintiff's inability to prove it at trial.
Defendant cites cases holding that an employer cannot be liable for retaliation (or discrimination) if it was unaware of the plaintiff's protected activities (or attributes). (Cohen v. Fred Meyer, Inc. (9th Cir.1982) 686 F.2d 793, 796 (Cohen); Morgan v. Regents of University of California (2000) 88 Cal.App.4th 52, 70, 105 Cal.Rptr.2d 652 (Morgan); see Gunther v. County of Washington (9th Cir.1979) 623 F.2d 1303, 1316 (Gunther); McCollum v. Bolger (11th Cir.1986) 794 F.2d 602, 610 (McCollum); Talley v. United States Postal Service (8th Cir.1983) 720 F.2d 505, 508 (Talley); Moore v. Reese (D.Md.1993) 817 F.Supp. 1290, 1298 (Moore).) These cases are rooted in the commonsense notion that one cannot be motivated by an event or condition of which one is wholly ignorant. I may have many reasons to plant a tree in front of my neighbor's window, but retaliation for his trespassing on my property cannot be one of them if I have no inkling of his having done it. By the same practical logic, if a worker's protected activities are completely unknown to his or her employer, no act by the employer can be said to have been taken "because of" those activities.
This conceptwhich for convenience we will call the "defense of ignorance" poses few analytical challenges so long as the "employer" is conceived as a single entity receiving and responding to stimuli as a unitary, indivisible organism. But this is often an inaccurate picture in a world where a majority of workers are employed by large economic enterprises with layered and compartmentalized management structures. In such enterprises, decisions significantly affecting personnel are rarely if ever the responsibility of a single actor. As a result, unexamined assertions about the knowledge, ignorance, or motives of "the employer" may be fraught with ambiguities, untested assumptions, and begged questions.
The issue in each case is whether retaliatory animus was a but-for cause of the employer's adverse action. (See Clark v. Claremont University Center (1992) 6 Cal.App.4th 639, 665, fn. 6, 8 Cal.Rptr.2d 151 (Clark), quoting McDonald v. Santa Fe Trail Transp. Co. (1976) 427 U.S. 273, 282, fn. 10, 96 S.Ct. 2574, 49 L.Ed.2d 493 [plaintiff need not show action was taken "`solely on the basis of his race'"; "`no more is required to be shown than that race was a `but for' cause'"]; Brown v. Smith (1997) 55 Cal.App.4th 767, 783, 64 Cal.Rptr.2d *727 301 [elements of claim for sexual harassment include "that the offensive act would not have happened but for" plaintiff's sex].) Logically, then, the plaintiff can establish the element of causation by showing that any of the persons involved in bringing about the adverse action held the requisite animus, provided that such person's animus operated as a "but-for" cause, i.e., a force without which the adverse action would not have happened. Certainly a defendant does not conclusively negate the element of causation by showing only that some responsible actors, but not all, were ignorant of the occasion for retaliation.
This point was implicitly recognized in Clark, where the court wrote that a plaintiff claiming discrimination in the denial of academic tenure "`need not prove intentional discrimination at every stage of the review process.... [I]t plainly is permissible for a jury to conclude that an evaluation at any level, if based on discrimination, influenced the decisionmaking process and thus allowed discrimination to infect the ultimate decision.' [Citation.]" (Clark, supra, 6 Cal.App.4th at pp. 665-666, 8 Cal.Rptr.2d 151, quoting Roebuck v. Drexel University (3d Cir.1988) 852 F.2d 715, 727.)
Again the point may be easily illustrated. A supervisor annoyed by a worker's complaints about sexual harassment might decide to get rid of that worker by, for instance, fabricating a case of misconduct, or exaggerating a minor instance of misconduct into one that will lead to dismissal. Another manager, accepting the fabricated case at face value, may decide, entirely without animus, to discharge the plaintiff. It would be absurd to say that the plaintiff in such a case could not prove a causal connection between discriminatory animus and his discharge. The situation is equivalent to one in which the supervisor simply fires the worker in retaliation for protected conduct. The supervisor's utilization of a complex management structure to achieve the same result cannot have the effect of insulating the employer from a liability that would otherwise be imposed.[9]
Of the pertinent cases we have reviewed, the vast majority may be understood to acknowledge, at least by implication, that ignorance of a worker's protected activities or status does not afford a categorical defense unless it extends to all corporate actors who contributed materially to an adverse employment decision. (See Fisher v. Vassar College (2d Cir.1997) 114 F.3d 1332, 1338, fn. 4 (en banc) ["the fact of multiple decision-makers should not insulate decisions permeated by the discrimination *728 of individual participants"]; Morgan, supra, 88 Cal.App.4th at p. 73, 105 Cal.Rptr.2d 652 ["all of the actual decision makers responsible for failing to rehire appellant in 1996 affirmatively stated in their declarations that they were not aware of appellant's grievance or past complaints"]; Cohen, supra, 686 F.2d at p. 797, fn. 5 [there was "no evidence that any company official or employee who had knowledge of [plaintiff's protected conduct] had any part in the [adverse] policy decision"]; Gunther, supra, 623 F.2d at p. 1316 [no showing that "defendants" knew plaintiff had sought higher pay for female workers]; Brown v. Sears Automotive Center (M.D.N.C.2002) 222 F.Supp.2d 757, 762-764 [supervisor declared that "she alone made the decision to terminate" and did not know plaintiff had filed protected complaint]; Featherson v. Montgomery County Public Schools (D.Md.1990) 739 F.Supp. 1021, 1025-1026 (mem.) [noting "absolutely no evidence that the persons involved in any of the alleged adverse decisions ... knew at the time that the decisions were made that plaintiff had filed any EEO claims"]; Garcia v. American Airlines, Inc. (D.Puerto Rico 1987) 673 F.Supp. 63, 65, 67 [neither supervisor who decided to fire plaintiff nor manager who reviewed decision knew of protected activity]; Lihosit v. I & W, Inc. (N.M.App.1996) 121 N.M. 455, 457, 459 [913 P.2d 262, 264, 266], italics added ["[n]o employee" of employer, including "in particular" the supervisor who fired plaintiff, knew of plaintiff's claim that statutory work-time limitations precluded compliance with order; "an employee fails to prove the causal connection necessary to sustain a claim for retaliatory discharge when there is no evidence that the persons responsible for his discharge had any knowledge the employee engaged in an activity alleged to be protected" (italics added)].)
A few decisions fail to reflect this awareness.[10] However no case known to us holds that the ignorance of a "decisionmaker" would still categorically shield the employer from liability if other substantial contributors to the decision bore the requisite animus. (But see Hill v. Lockheed Martin Logistics Management, Inc. (4th Cir.2004) 354 F.3d 277, 290-291 (fn.16, post).)
Here defendant's claim of ignorance focuses exclusively on the undisputed fact that district manager Hollis, who made the formal decision to terminate plaintiff's employment, did not know of plaintiff's complaints about sexual harassment. But it is clear that Hollis was not the only actor who materially contributed to plaintiff's discharge. Judging from her deposition testimony, her decision really amounted to little more than the ratification of Harrison's recommendation, which was itself the penultimate event in a chain commencing with a report to Demarest from night manager Juarez, followed by Demarest's referral to Safeway's security department, which produced a debatably evenhanded "investigation" by Harrison (see following part), which concluded with the recommendation adopted by Hollis. Hollis's decision to discharge plaintiff was based entirely on *729 what Harrison told her in a 20-minute telephone conversation, the contents of which she appeared largely unable to recall. Under such circumstances Safeway could not conclusively negate the element of causation merely by showing Hollis's ignorance of plaintiff's protected conduct.
III. Nonretaliatory Motive
A. Principles
Defendant's second argument is, in essence, that plaintiff failed to present sufficient evidence of retaliatory animus to effectively controvert defendant's showing that his discharge rested on a genuinely held, nonretaliatory motive, i.e., a belief that he had engaged in serious misconduct warranting dismissal.
Both parties seem to accept that defendant's claim of a legitimate nondiscriminatory reason for discharging plaintiff should be analyzed within the three-step analytical framework adopted by the United States Supreme Court in McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792, 802-804, 93 S.Ct. 1817, 36 L.Ed.2d 668 (McDonnell Douglas).[11] Under that framework, the plaintiff may raise a presumption *730 of discrimination by presenting a "prima facie case," the components of which vary with the nature of the claim, but typically require evidence that "(1) [the plaintiff] was a member of a protected class, (2) he was qualified for the position he sought or was performing competently in the position he held, (3) he suffered an adverse employment action, such as termination, demotion, or denial of an available job, and (4) some other circumstance suggests discriminatory motive. [Citations.]" (Guz, supra, 24 Cal.4th at p. 355, 100 Cal.Rptr.2d 352, 8 P.3d 1089.) A satisfactory showing to this effect gives rise to a presumption of discrimination which, if unanswered by the employer, is mandatory it requires judgment for the plaintiff. (Ibid.) However the employer may dispel the presumption merely by articulating a legitimate, nondiscriminatory reason for the challenged action. (Id. at pp. 355-356, 100 Cal.Rptr.2d 352, 8 P.3d 1089.) At that point the presumption disappears. (Id. at p. 356, 100 Cal.Rptr.2d 352, 8 P.3d 1089.) Indeed, when the employer proffers a facially sufficient lawful reason for the challenged action, the entire McDonnell Douglas framework ceases to have any bearing on the case, and the question becomes whether the plaintiff has shown, or can show, that the challenged action resulted in fact from discriminatory animus rather than other causes. (Clark, supra, 6 Cal.App.4th at p. 664, 8 Cal.Rptr.2d 151, quoting Texas Dept. of Community Affairs v. Burdine (1981) 450 U.S. 248, 256, 101 S.Ct. 1089, 67 L.Ed.2d 207 [once employer puts forward nondiscriminatory reason, plaintiff's burden "`merges with the ultimate burden of persuading the court that [he] has been the victim of intentional discrimination'" which he meets "`by persuading the court that a discriminatory reason more likely motivated the employer or indirectly by showing that the employer's proffered explanation is unworthy of credence. [Citation.]'"].)[12]
Here it is undisputed that Safeway has articulated a legitimate nondiscriminatory reason for its actions with respect to district manager Hollis, who made the ultimate decision to discharge plaintiff.[13] The *731 record supports a finding that her motive was not discriminatory, but disciplinary, growing out of plaintiff's own conduct on May 31, 1998, which she believed included a battery on Juarez. Limited as it is to the motives of Hollis, however, this showing fails to establish an entitlement to summary judgment for reasons similar to those set forth in the previous section: Safeway has failed to make a threshold showing that all material contributors to the decision acted for legitimate nondiscriminatory motives. Nor has defendant shown that plaintiff cannot present sufficient proof to establish that retaliatory animus on the part of one or more contributors to the decision was a substantial contributing factor in bringing about his dismissal. Rather, the evidence of record raises triable issues of fact concerning the role and motives of these additional actors.
B. Cat's Paw
As previously noted, ignorance of an occasion for retaliation can only constitute a defense as to those actors who were in fact ignorant of the plaintiff's protected activities. Similar principles apply to characterizing an action as resting on a discriminatory or nondiscriminatory motive. To establish an entitlement to judgment as a matter of law, it is not enough to show that one actor acted for lawful reasons when that actor may be found to have operated as a mere instrumentality or conduit for others who acted out of discriminatory or retaliatory animus, and whose actions were a but-for cause of the challenged employment action. If a supervisor makes another his tool for carrying out a discriminatory action, the original actor's purpose will be imputed to the tool, or through the tool to their common employer.
The clearest explication of this concept was provided by Judge Posner in Shager v. Upjohn Co., supra, 913 F.2d 398. The district court there granted the employer's motion for summary judgment, in part because the plaintiff had been discharged by decision of a "Career Path Committee," whose members did not appear to have acted with discriminatory animus. In reversing, Judge Posner wrote that the committee's decision to fire the plaintiff did not necessarily insulate the employer from the age-related animus exhibited by the plaintiff's supervisor Lehnst; rather the decision "was tainted by Lehnst's prejudice" because he "not only set up Shager to fail by assigning him an unpromising territory but influenced the committee's deliberations by portraying Shager's performance to the committee in the worst possible light." (Id. at p. 405.) In language with distinct parallels to the facts a jury might find here, Judge Posner explained further: "Lehnst's influence may well have been decisive. The committee's deliberations ... were brief, perhaps perfunctory; no member who was deposed could remember having considered the issue. A committee of this sort, even if it is not just a liability shield invented by lawyers, is apt to defer to the judgment of the man on the spot. Lehnst was the district manager; he presented plausible evidence that one of his sales representatives should be discharged; the committee was not conversant with the possible age animus that may have motivated Lehnst's recommendation. If it acted as the conduit of Lehnst's prejudicehis cat's-pawthe innocence of its members would not spare the company from liability. *732 For it would then be a case where Lehnst, acting within (even if at the same time abusing) his authority as district manager to evaluate and make recommendations concerning his subordinates, had procured Shager's discharge because of his age. Lehnst would have violated the statute, and his violation would be imputed to [the employer]. The committee would be out of the picture." (Id. at p. 405, italics added; see id. at p. 406 [supervisor's conduct could be found willful for purposes of extended statute of limitations, and could be imputed to employer if committee operated to "rubber stamp personnel actions" by supervisors; question for trial was whether committee was a "mere rubber stamp," or "made an independent decision"].)
The Supreme Court cited Shager with approval in Burlington Industries, Inc. v. Ellerth (1998) 524 U.S. 742, 762, 118 S.Ct. 2257, 141 L.Ed.2d 633. Moreover, in Reeves v. Sanderson Plumbing Products, Inc. (2000) 530 U.S. 133, 151-152, 120 S.Ct. 2097, 147 L.Ed.2d 105 (Reeves), the court substantially adopted such a theory, holding that an employer was not entitled to judgment as a matter of law where a discharged worker presented evidence of age-based animus on the part of his supervisor and where, although the decision to terminate was made by the company president (the supervisor's wife), the supervisor could be found principally responsible for the decision. The "cat's paw" model, or a functional equivalent, has also been adopted or referred to approvingly in all but one of the federal circuits.[14] (See Griffin v. Washington Convention Center (D.C.Cir.1998) 142 F.3d 1308, 1310, 1312 [prejudicial error to exclude evidence of bias on part of immediate supervisor who "participated at every stage of the process that led to [plaintiff's] termination"; "we join at least four other circuits in holding that evidence of a subordinate's bias is relevant where the ultimate decision maker is not insulated from the subordinate's influence"]; Santiago-Ramos v. Centennial P.R. Wireless Corp. (1st Cir.2000) 217 F.3d 46, 55 [one way to show pretext "is to show that discriminatory comments were made by the key decisionmaker or those in a position to influence the decisionmaker"]; Gierlinger v. Gleason (2d Cir.1998) 160 F.3d 858, 872-873 [supervisor liable if his recommendations and actions proximately led to plaintiff's ultimate discharge and *733 were "substantially motivated" by retaliatory animus]; Abrams v. Lightolier, Inc. (3d Cir.1995) 50 F.3d 1204, 1214 [evidence of supervisor's discriminatory animus was properly admitted and supported verdict for plaintiff where evidence supported finding that supervisor "played a role" in decision to discharge]; Russell v. McKinney Hosp. Venture (5th Cir.2000) 235 F.3d 219, 226["[i]f the employee can demonstrate that others had influence or leverage over the official decisionmaker, and thus were not ordinary coworkers, it is proper to impute their discriminatory attitudes to the formal decisionmaker"], citing Long v. Eastfield College (5th Cir.1996) 88 F.3d 300, 307, fn. 8, 308-309 [error to grant summary judgment based on college president's nondiscriminatory motive, where trier of fact could find that president "rubber stamp[ed]" supervisors' retaliatory recommendations to discharge plaintiffs for supposed misconduct]; Christian v. Wal-Mart Stores, Inc. (6th Cir. 2001) 252 F.3d 862, 877 [discriminatory eviction from store; following cases "in which an employee challenges his termination as improperly motivated by a supervisor's discriminatory animus and then seeks to impute that animus to the neutral decisionmaker who ultimately terminated the employee"]; Rogers v. City of Chicago (7th Cir.2003) 320 F.3d 748, 754 ["if there were competent evidence that the Personnel Division had acted as [supervisor's] `cat's-paw' and rubber-stamped his recommendation, we would consider [supervisor] to be the decisionmaker"]; Kientzy v. McDonnell Douglas Corp. (8th Cir.1993) 990 F.2d 1051, 1060 [immediate supervisor's discriminatory investigation and referral to disciplinary committee was sufficient to support judgment for discharged worker]; Bergene v. Salt River Project Agr. Imp. and Power (9th Cir.2001) 272 F.3d 1136, 1141 ["Even if a manager was not the ultimate decisionmaker, that manager's retaliatory motive may be imputed to the company if the manager was involved in the hiring decision"][15]; English v. Colorado Dept. of Corrections (10th Cir. 2001) 248 F.3d 1002, 1011, bracketed material in original [to recover under cat's paw theory, plaintiff "must show `that the decisionmaker followed the biased recommendation [of a subordinate] without independently investigating the complaint against the employee'"]; Llampallas v. Mini-Circuits, Lab, Inc. (11th Cir.1998) 163 F.3d 1236, 1249["[i]n a cat's paw situation, the harasser clearly causes the tangible employment action, regardless of which individual actually signs the employee's walking papers"].)[16]
We have no doubt that California law will follow the overwhelming weight of federal authority and hold employers responsible where discriminatory or retaliatory actions by supervisory personnel bring about adverse employment actions through the instrumentality or conduit of other corporate actors who may be entirely innocent of discriminatory or retaliatory animus. We now consider the application of these principles to the facts of record.
*734 C. Application
The situation here is more complicated than in Shager because the process leading to plaintiff's dismissal involved not two principal actors but four: Juarez, who reported the May 31, 1998 confrontation with plaintiff as a battery; Demarest, who reported the incident to security as an instance of "possible workplace violence"; Harrison, who conducted an investigation of the incident; and Hollis, who adopted Harrison's recommendation and formally discharged plaintiff. To establish an entitlement to judgment Safeway had to address the conduct, role, and motives of each of these actors; instead it addressed only the role and motives of the last, Hollis. This showing was arguably insufficient to carry Safeway's threshold burden on summary judgment, because it failed to show that "the employer" acted for a legitimate nondiscriminatory reason or that plaintiff could not prove otherwise. However, even if Safeway is assumed to have carried its moving burden, thereby shifting the burden to plaintiff to raise one or more material triable issues of fact, we find that the record does raise such issues because it justifies an inference that lower level actors engaged in retaliation under circumstances justifying an imputation of their conduct and motives to Safeway.
We address the role of the first actor, Juarez, only in passing, because neither party has directed any attention to the question of whether her position would justify an imputation of her motives to Safeway. (See fn. 9, ante.) We note only the bare possibility that she may have occupied some sort of supervisory role, and might be found to have engaged in retaliation, as suggested by Stephanie Alves's listing of Juarez among the coworkers by whom she had been sexually harassed at Safeway. Another employee testified that a few days after the incident, when he asked Juarez what had happened, and whether "Bill had pushed her or knocked her down," she replied, "`He touched me, and that's all there is' or `all it takes.'"
Whatever the role of Juarez may have been, the evidence presents ample basis for finding retaliatory motives and conduct on the part of plaintiff's unquestioned supervisor, Demarest. There is evidence that Demarest resented and opposed plaintiff's efforts to secure relief for the women in the store from what plaintiff believed (with the agreement of at least some of them) was a pattern of sexual harassment. Demarest did not relay these complaints to human resources (as Hollis said he should have done), but professed to have conducted an investigation of his own (as she said he should not have done). A jury could doubt the zeal and sincerity with which the investigation was conducted, and even question whether it occurred, given Demarest's denial that anyone corroborated plaintiff's complaintsa denial which stands in stark contrast to Stephanie Alves's testimony that she directly complained to Demarest, with no discernible effect. The record contains other evidence that Demarest showed insensitivity, at best, to matters of gender: He assigned a female worker to paint the men's room, and he made comments to two other female workers that they found overly personal and offensivetelling one that she "needed to start working out" and that he was going to pull out all her gray hairs.
Further, Demarest's conduct following receipt of Juarez's report could be found to be retaliatory in character. Although he apparently had ample time and opportunity to speak to plaintiff about the underlying incident, he did not do so. Instead he acted entirely on the basis of accounts from Juarez and Sparks, each of whom had a reasonwhich could well have been *735 readily apparent to Demarestto portray plaintiff's conduct "in the worst possible light." (Shager, supra, 913 F.2d at p. 405.) Citing only their version of events, Demarest referred the matter to security rather than to the human resources department, characterizing the incident as "possible workplace violence" and "obviously a security issue."
Finally there is substantial evidence that Demarest knew such a referral was substantially certain to result in the dismissal of a 29-year veteran employee. He testified that every case he ever referred to security resulted in dismissal where it involved "an allegation of improper conduct" comparable to the allegations against plaintiff.[17] A fact finder could also draw an adverse inference (see Evid.Code, § 412) from his arguably pointed evasion of the direct question whether he expected the referral in this case to result in plaintiff's termination.[18]
This brings us to the third actor, Harrison. Again the record is devoid of direct evidence that he acted without retaliatory motive. The record includes no testimony by him concerning his reasons for recommending that Hollis dismiss plaintiff. Defendant made some attempt to establish as an undisputed fact that Harrison was unaware of plaintiff's protected activities, but the attempt failed. Harrison's only positive denial of knowledge in deposition concerned awareness that plaintiff had complained about Sparks, and even that testimony could be found both equivocal and controverted. When asked whether he recalled plaintiff speaking of "complaints by a woman of sexual harassment describing a sniffing incident," Harrison replied, "No. [¶] ... [¶] Sniffing, no." Asked whether he recalled plaintiff mentioning that he had complained about Sparks's behavior, Harrison said, "No. I don't recall that." His memory also failed him with respect to why his file on plaintiff's case contained a copy of "the corporate policy on the prevention of sexual harassment that is signed by Bill Reeves."
Likewise Harrison acknowledged that he probably asked plaintiff whether he "ha[d] anything against any individuals," or thought "anyone doesn't like you." Harrison could not recall plaintiff's answers, and when he was specifically asked in deposition whether plaintiff "mention[ed] anything about [sexual harassment]," he seemed uncertain or evasive, replying, "I'm trying to recall. He mentioned something about pulling the girls' hair, and that's what kind of stuck in my mind. And I didn't know if that was a physical situation or a description that he was using." Either way, of course, the phrase may be found to suggest either an incident or an ongoing course of sexual harassment.
While Harrison's deposition testimony on these matters may support conflicting interpretations, "the task of disambiguating ambiguous utterances is for trial, not for summary judgment." (Shager, supra, *736 913 F.2d at p. 402.) Further, a fair reading of plaintiff's testimony indicates that he did tell Harrison about the sexual harassment complaints. He testified that during the interview he was asked "why Brian [Sparks] or ... Sandy [Juarez] would lie about it, would lie about what happened. Would they have any reason to lie about what happened." In response he told the investigators "that there had been some problems in the store. Some complaints of sexual harassment, especially the incident involving Stephanie, the sniffing incident ... which happened ... January the 18th. But there had been other continuing problems that I thought might have a bearing on it." Asked again whether he "provide[d] them with some explanation as to why [he] believed these two other witnesses were possibly lying," he said, "I knew that there was a lot of resentment by Sparks for me after I had complained to [sic] him and after Sparks had apologized to the four females in the store for having harassed them. . . ." Asked yet again whether he "relay[ed] this information to the two investigators at that meeting," he replied, that "[t]he subject of Sparks did ... come up ... and the subject of Steve Prodes came up."
Read most favorably to plaintiff, as is required on summary judgment, this evidence raised a triable issue of fact as to whether plaintiff told Harrison about the complaints of sexual harassment plaintiff had relayed to Demarest. Defendant made no affirmative showing to the contrary. Nor did it attempt to show that Harrison acted for honestly held nondiscriminatory reasons, and even if it had, the evidence supports an inference that Harrison acted as a sort of institutionalized "cat's paw" to effectuate the retaliatory intentions of supervisors by substantiating their claims of misconduct and presenting the claims, thus reinforced, to upper management.
The evidence supports an inference that Harrison's investigation of the alleged misconduct was not truly independent, but was heavily skewed to favor the ostensibly tentative conclusions of the reporting supervisor, Demarest. Describing his general role in deposition, Harrison hypothesized a situation where two employees are arrested in the act of stealing and stated, "I know [when] dealing with Ms. Hollis . . ., if we have a case that solid termination is inevitable." (Italics added.) We note the contrast between this construction, which contemplates having a "solid case" against an employee, and a more neutral construction such as, "When the facts are that clear, dismissal is inevitable." A fact finder would be entitled to infer that an investigator who speaks and thinks in terms of "solid cases" against workers is revealing a predisposition to confirm disciplinary charges rather than objectively ascertain their truth. This in itself is not actionable, but it means that such an investigator is of necessity a cat's pawa conduit for imputation of discriminatory animusas to any supervisor who wishes to discriminate against a worker by exploiting a disciplinary process predisposed to confirm all charges.
A fact finder could easily find that Harrison conducted just such a predetermined investigation. His report describes Juarez as "Victim"not "complainant" or "accuser"and plaintiff as "Suspect"not "accused." Insofar as it concerns the all-important confrontation between Juarez and plaintiff, its purported "account of what ... occurred" depends exclusively on the accounts of Juarez and Sparksone of whom had committed herself to a claim of battery by attempting to escalate plaintiff's reentering the store into a police incident, and the other of whom had an obvious and substantial motive to wish plaintiff ill. Plaintiff's own account of the *737 incident was relegated to a later section of the report describing his "interview" by investigators. In short, plaintiff's account is presented as a story, while the Juarez/Sparks version is presented as history.
Further, in describing plaintiff's account Harrison uses vaguely disparaging language, stating most strikingly, "Reeves claimed that he had an attack of diarrhea due to medication he was taking." (Italics added.) In an appendix to the report Harrison attempted to debunk this "claim" on grounds a fact finder could find highly conjectural and partisan.[19]
Moreover, Harrison could be found to have presented plaintiff's "case" to Hollis in a highly unbalanced way, making it appear "solid," largely by failing to tell her about the numerous potential ameliorating circumstances. These included plaintiff's claim of an urgent biological necessity for reentering the store, the potential reasons for Sparks and Juarez to exaggerate plaintiff's conduct, and the presence at the store of a claimed atmosphere of sexual harassment that might have colored the decision of the complaining supervisor, Demarest, to treat plaintiff's conduct as an issue for security rather than for human resources.
More basically, and in marked contrast to Harrison's searching examination of plaintiff's excuse for re-entering the store, there is no evidence that he ever questioned Demarest's view that the incident was a case of "workplace violence." Indeed there is no evidence that he thought it was his function to do soor for that matter, to investigate exculpatory information of any kind. A jury could find a telling lack of thoroughness in the fact that, for all the time that passed between the incident and Harrison's call to Hollis, two witnesses who gave exculpatory testimony in deposition were never interviewed.[20]
A fact finder could conclude that Harrison saw his function not as gathering objective evidence to pass to Hollis but as lending credence to Demarest's report that "workplace violence" had occurred. From this it follows that whether or not Harrison personally felt retaliatory animus towards plaintiff, the purpose and effect of his involvement was merely to effectuate the will of Demarest. He made himself a tool, witting or unwitting, for a supervisor who might wish, as Demarest could be found to wish, to retaliate against workers for protected activities.
We emphasize that our analysis is confined to evaluating inferences which may, but need not, be drawn from this record. It is not for us to say whether they represent the best or only inferences. Our task must end with the conclusion that they are inferences a reasonable fact finder could draw. Here a rational fact finder could *738 conclude that an incident of minor and excusable disregard for a supervisor's stated preferences was amplified into a "solid case" of "workplace violence," and that this metamorphosis was brought about in necessary part by a supervisor's desire to rid himself of a worker who created trouble by complaining of matters the supervisor preferred to ignore.[21] Since those complaints were protected activities under FEHA, a finder of fact must be permitted to decide whether these inferences should in fact be drawn.
DISPOSITION
The judgment is reversed.
WE CONCUR: PREMO and ELIA, JJ.
NOTES
[1] At the time of the events in question, subdivisions (h) and (j) of section 12940 were numbered (f) and (h), respectively. (Stats.1993, ch. 711, § 2, pp. 4042-4043; Stats.2000, ch. 1049, § 7.5.) For convenience we refer to these provisions by their current numbering.
[2] After plaintiff's discharge, Sukovaty was heard to remark that "the reason why [plaintiff is] not here after 28 years is because all the women would go up to him and talk to him about sexual harassment and ask him what they should do." Defendant does not object to this evidence, or seek to limit the purposes for which it may be considered.
[3] Plaintiff asserts that he was suffering from diarrhea. He neglected to provide a sworn statement squarely to this effect in opposition to the motion, but the record does contain evidence in the form of (1) his deposition testimony that he "needed to use the men's room," and that he described this need to Juarez as "an emergency"; (2) his sworn statement that in the spring of 1998 he was experiencing diarrhea as a side-effect of medication; and (3) his unsworn statement that he "had an attack of diarrhea due to medication he was taking," which is found in Harrison's investigation report. Defendant has at no time contended that plaintiff failed to adequately substantiate the existence of this medical condition for purposes of summary judgment, or that he will have any difficulty presenting competent evidence of it at trial.
[4] We also note some basis to question Sparks's testimony that he witnessed the confrontation between Juarez and plaintiff. Juarez testified that she did not recall Sparks being in the vicinity of the confrontation, and thought he had left the area when it occurred. Plaintiff testified that Sparks appeared surprised to see him when, immediately following the confrontation, he encountered Sparks in a back room of the store.
[5] Defendant cites the testimony of one co-worker to this effect, and plaintiff admits that a second witness, Juarez, also so testified. Defendant also cites unsworn witness statements which, as noted below, were inadmissible. (See fn. 8, post.)
[6] The date is inferred from the fact that Harrison's report, which is dated June 30, 1998, refers to his telephone conversation with Hollis as a past event.
[7] In fact there is no evidence that plaintiff had consumed any alcohol at the time of his confrontation with Juarez. The reference to intoxication may reflect Hollis's conflation of the Juarez confrontation with the events of later that morning, after the store opened, or it may reflect conflation or coloring by Harrison.
[8] In opposition to the motion for summary judgment, plaintiff objected to the report, and all unsworn statements offered by defendant, as hearsay not within any exception. The report might have been admissible for a non-hearsay purpose if it were shown that Safeway relied on it in deciding to dismiss plaintiff, but Hollis flatly testified that she had never seen the report, which she supposed Harrison had prepared because "Safeway likes to have documentation on any terminations." Safeway made no attempt to lay a foundation for admission of these materials as, e.g., business records. (See Evid.Code, § 1271, subd. (c).) Indeed we doubt the competency of the attorney witness who purported to identify and thereby authenticate these materials. (See Evid.Code, §§ 1400, 1401, subd. (a), 1413.) The trial court stated in its minute order that it had disregarded all incompetent and inadmissible evidence under Biljac Associates v. First Interstate Bank (1990) 218 Cal.App.3d 1410, 1419-1420, 267 Cal.Rptr. 819. We have likewise considered the investigation report and other unsworn materials only insofar as they contain or constitute statements admissible against defendant under Evidence Code sections 1220 et seq.
[9] Our emphasis on the conduct of supervisors is not inadvertent. An employer can generally be held liable for the discriminatory or retaliatory actions of supervisors. (Shager v. Upjohn Co. (7th Cir.1990) 913 F.2d 398, 404-405 (Shager).) The outcome is less clear where the only actor possessing the requisite animus is a nonsupervisory coworker. (See ibid., and cases cited; cf. Birschtein v. New United Motor Manufacturing, Inc. (2001) 92 Cal.App.4th 994, 1007, 112 Cal.Rptr.2d 347 [managerial failure to prevent sexual harassment by coworker could operate as ratification, rendering employer liable]; Knox v. State of Ind. (7th Cir.1996) 93 F.3d 1327, 1334 [employer can be liable for retaliatory actions by plaintiffs' coworkers when it "know[s] about and fail[s] to correct the offensive conduct"]; Gunnell v. Utah Valley State College (10th Cir.1998) 152 F.3d 1253, 1265 [to similar effect].) We have assumed for present purposes that these principles would permit imputation to Safeway of retaliatory conduct by persons properly found to be supervisorsa status we assume was held by Demarest. However these issues have not yet been addressed by the parties, and we should not be understood to have actually decided them.
[10] In some decisions only a single actor is involved and the facts present no occasion to consider the multiple-actor problem. (E.g., McCollum, supra, 794 F.2d at p. 606 [claim based on employment actions by local postmaster with whom plaintiff and his family were "feuding"]; Talley, supra, 720 F.2d at p. 508 [temporary letter carrier discharged after twice losing keys; assistant branch manager, who fired her, was unaware of her prior EEOC claims].) We have examined two other decisions in which the authoring courts evinced no awareness of the multiple-actor problem, even though it was arguably implicated by the facts. (Dowe v. Total Action Against Poverty in Roanoke Valley (4th Cir. 1998) 145 F.3d 653, 655, 657; Moore, supra, 817 F.Supp. 1290.) Nothing in those decisions causes us to question the rule we adopt.
[11] Plaintiff has not invoked the competing model of "`"mixed motive"'" analysis, under which a case goes to the jury if there is evidence that an impermissible criterion "`"was a motivating factor for any employment practice."'" (Desert Palace, Inc. v. Costa (2003) 539 U.S. 90, 94, 123 S.Ct. 2148, 156 L.Ed.2d 84 (Desert Palace); see Price Waterhouse v. Hopkins (1989) 490 U.S. 228, 277, 109 S.Ct. 1775, 104 L.Ed.2d 268 (conc. opn. of O'Connor, J.) (Price Waterhouse); Heard v. Lockheed Missiles & Space Co., Inc. (1996) 44 Cal.App.4th 1735, 1748, 52 Cal.Rptr.2d 620; Fernandes v. Costa Bros. Masonry, Inc. (1st Cir.1999) 199 F.3d 572, 579-580.) This model presents its own perplexitiesbeginning with its labelbut has the virtue of a more direct and logical method for the assessment of conflicting proofs of motive than has developed under what Judge Posner calls "the McDonnell Douglas quadrille." (Shager v. Upjohn Co. (7th Cir.1990) 913 F.2d 398, 401.)
"Mixed motive" analysis was formerly held unavailable unless the plaintiff offered "direct" evidence of discriminatory motive whatever that means. (Price Waterhouse, 490 U.S. at pp. 277-278, 109 S.Ct. 1775.) However Congress and the Supreme Court have lifted that restriction for at least some federal claims. (Desert Palace, 539 U.S. at pp. 101-102, 123 S.Ct. 2148.) This raises the possibility some would say "hope"that the "mixed motive" approach may displace all but the first stage of the McDonnell Douglas framework. That framework is perfectly serviceable when confined to its proper field of operation, but its frequent misconstruction has led too many courts to replace basic principles of procedure, evidence, and logic with elaborate and essentially arbitrary obstacles to relief.
Foremost among these is the notion, which pervades innumerable decisions, that on summary judgment in a case of this kind, the "ultimate issue" is "pretext." (Hugley v. Art Institute of Chicago (N.D.Ill.1998) 3 F.Supp.2d 900, 906, fn. 7.) Certainly "pretext" is a useful term for encapsulating certain recurring concepts or patterns in a discrimination case, but calling it the "ultimate issue" is like saying, in a traffic case where two drivers give mutually irreconcilable testimony about who had the green light, that the "ultimate issue" is "perjury." In both cases one can decide the real ultimate issuethe state of the traffic signal, or the role of discriminatory animuswithout deciding that one version of events was perjurious, or that a stated reason was "pretextual." We do not doubt that a general correlation exists between pretext and discrimination: If the fact finder in a FEHA case refuses to credit an employer's innocent explanation, and finds that the employer really acted for retaliatory or discriminatory reasons, it will usually be accurate to also conclude that the innocent explanation was a "pretext." The confusion arises when the correlative conclusion is viewed as a necessary prerequisite, so that the "pretext" tail wags the whole anti-discrimination dog. As conceived by the high court in McDonnell Douglas and its sequelae, "pretext" is merely one way of raising an inference of discrimination-not an indispensable precondition to such an inference.
[12] Thus, rather than speaking of a McDonnell Douglas "test" or "framework," courts would reduce confusion by speaking of "the McDonnell Douglas presumption," since the only real effect of the case, properly understood, is to grant the plaintiff a presumption, sufficient to survive the early stages of litigation, by showing circumstances consistent with, or suggestive of, actionable discrimination. The presumption thus so easily erected is just as easily torn down; even the guiltiest employer can almost certainly concoct some facially plausible explanation for its actions. The explanation need not be sound, fair, or correct, but only colorable enough that a rational jury could believe it to have been the employer's true motivation. (See Guz, supra, 24 Cal.4th at p. 358, 100 Cal.Rptr.2d 352, 8 P.3d 1089.) Of course, evidence that the explanation was trumped up or is "unworthy of credence" will tend to support a finding that the action was actually motivated by discriminatory animus, but the burden remains squarely on the plaintiff to convince a jury of that fact by a preponderance of the evidence. (Id. at pp. 356, 361, 363, 100 Cal.Rptr.2d 352, 8 P.3d 1089.)
[13] We note that on this record the only conduct by plaintiff sustainable as a reason for his dismissal was his confrontation with Juarez on trying to reenter the store immediately after his shift ended. The other grounds now suggested by Safewayinsubordination, intoxication, and profanitycannot be sustained as explanations for Hollis's decision. First it is far from clear that she relied on anything other than his supposed "push[ing]" of Juarez in deciding to terminate him. Second, there is no evidence that any of his other conduct was sufficient to warrant dismissal. Hollis testified that an appropriate response to employees' use of profanity was to "verbally counsel them." Safeway's policies and procedures prohibit "consumption of alcohol on store premises, [and] reporting to work under the influence of ... alcohol," but are silent, as is the record as a whole, concerning intoxication on the premises while off duty. As for Safeway's latter-day claim of insubordination, we note that Demarest claimed only to have "asked" plaintiff not to frequent the store after his shift, and plaintiff testified that he was told only that he "should not stay too long."
[14] The term "cat's paw," in this context, is apparently traced to Aesop: "A cat and a monkey were sitting one day in the chimney corner watching some chestnuts which their master had laid down to roast in the ashes. The chestnuts had begun to burst with the heat, and the monkey said to the cat, `It is plain that your paws were made especially for pulling out those chestnuts. Do you reach forth and draw them out. Your paws are, indeed, exactly like our master's hands.' The cat was greatly flattered by this speech, and reached forward for the tempting chestnuts, but scarcely had he touched the hot ashes than he drew back with a cry, for he had burnt his paw; but he tried again, and managed to pull one chestnut out; then he pulled another, and a third, though each time he singed the hair on his paws. When he could pull no more out he turned about and found that the monkey had taken the time to crack the chestnuts and eat them." (Fables from Aesop (1909) at (as of July 26, 2004).) We note, however that the term has a second meaning of relevance in this context: a particular carpenter's tool used to extend the reach when pulling nails. (Ettlinger, Homeowners Menagerie (2004) at (as of July 28, 2004).) Thus while the fable contemplates that the instrumentality has been duped or flattered into carrying out the will of the actuator, the concept here is broader: Imputation of retaliatory animus will be justified by any set of facts that would permit a jury to find that an intermediary, for whatever reasons, simply carried out the will of the actuator, rather than breaking the chain of causation by taking a truly independent action.
[15] The Ninth Circuit explicitly endorsed the cat's paw model in Pacheco v. New Life Bakery (9th Cir.1999) 187 F.3d 1055, 1060, but then declared that opinion "withdrawn" upon settlement of the parties. (Pacheco v. New Life Bakery (9th Cir.1999) 187 F.3d 1063, 1064.) The opinion remains on the books, but is presumably not binding on the court that rendered it.
[16] The Fourth Circuit may be understood to have rejected the theory, or restricted it to arguable invisibility, in Hill v. Lockheed Martin Logistics Mgmt (4th Cir.2004) 354 F.3d 277, 282-285, 290-291 (en banc), reversing Hill v. Lockheed Martin Logistics Management, Inc. (4th Cir.2003) 314 F.3d 657, 659. We find the analysis in that case unpersuasive, and decline to intrude on its splendid solitude.
[17] Demarest testified as follows:
"Q. Have you ever referred a matter to security during your tenure at Store 741 which involved stealing or an allegation of improper conduct, such as that concerning Mr. Reeves or Mr. Prodes, and not had the referral to security result in the termination of the employee complained about?
"A. No"
[18] "Q. When you referred this matter to security, did you understand that this would likely result in the termination of Mr. Reeves' employment with Safeway?
"A. Are you saying did I think he was going to be terminated; is that the question?
"[Question read back.]
"THE WITNESS: No.
"Q. Why not?
"A. I don't make those decisions."
[19] Harrison suggested that (1) the prescription on which plaintiff blamed the diarrhea should have been used up by May 25, and any such side effect "should [have] disappeared" within a "few days" thereafter; and (2) plaintiff may have been in the store as briefly as five minutes, which "does not appear to be sufficient time for Mr. Reeves to use the restroom." A fact finder could find these suppositions and deductions so dubious as to cast doubt on Harrison's objectivity, particularly since Juarez told him that plaintiff was in the store for "around 10 min[utes]." The report contains no indication that Harrison had even asked other witnesses whether, for instance, they saw plaintiff enter or emerge from the restroom.
[20] Harrison never talked to Wayne Kenney, who testified that Juarez told him, "He [defendant] touched me, and that's all there is," or perhaps, "all it takes." Nor did anyone ever talk to Bill Dupre about the events of the next morning, when contrary to the reports of certain other workers, he detected no alcohol on plaintiff's breath or other signs of alcohol ingestion.
[21] In view of our analysis we find it unnecessary to consider plaintiff's argument that the inadequacies in Safeway's investigation are evidence of pretext, by extension of the holding in Cotran v. Rollins Hudig Hall Internat., Inc. (1998) 17 Cal.4th 93, 107-108, 69 Cal. Rptr.2d 900, 948 P.2d 412.
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167 Cal.App.4th 518 (2008)
Estate of RICHARD FELDER, Deceased.
RICHARD FELDER, JR., as Administrator, etc., Petitioner and Respondent,
v.
JOHN GRIGSBY, Objector and Appellant.
No. B205027.
Court of Appeals of California, Second District, Division Five.
October 9, 2008.
*520 Corey & Corey and Edward E. Corey for Objector and Appellant.
Comstock & Sharpe, Inc., and Richard W. Sharpe for Petitioner and Respondent.
OPINION
TURNER, P. J.
I. INTRODUCTION
Objector, John Grigsby, was the defaulting purchaser of real property owned in part by the estate of Richard Felder (the estate). Mr. Grigsby appeals from a November 9, 2007 order on the first and final account. Mr. Grigsby challenges the probate court's order insofar as it allows the estate to retain his entire $48,000 deposit toward the purchase price. We conclude the probate court properly allowed the estate to retain the entirety of Mr. Grigsby's $48,000 deposit as damages under Probate Code[1] section 10350, subdivision (e). Accordingly, we affirm the order.
II. BACKGROUND
The estate owned an undivided one-half interest in a parcel of real property. In settlement of a partition action, the owner of the other one-half interest in the parcel agreed to sell the property on the same terms and conditions as the estate. Mr. Grigsby agreed to purchase the entirety of the property for a total price of $480,000 with $240,000 payable to the estate. However, Mr. Grigsby was unable to complete the transaction. The probate court vacated the order confirming the sale to Mr. Grigsby and ordered, "Petitioner shall retain the total deposit ... until such time as there is a determination of the damages, if any, resulting from the original buyer['s] inability to complete the sale." The property was then sold to Quincy Carlisle for a total price of $368,500 with $184,250 being paid to the estate. The estate incurred $3,800 in expenses. In his first and final account and petition for distribution, the estate's administrator, Richard Felder, Jr., sought to retain Mr. Grigsby's $48,000 deposit toward the failed purchase as damages under section 10350, subdivision (e). The probate court so ordered over Mr. Grigsby's objection. This appeal followed.
*521 III. DISCUSSION
Mr. Grigsby contends the probate court exceeded its authority or otherwise erred in ordering that the estate retain his $48,000 deposit. We disagree. Section 10350 unambiguously states: "(a) If after court confirmation of sale of real or personal property the purchaser fails to comply with the terms of sale, the court may, on petition of the personal representative, vacate the order of confirmation, order a resale of the property, and award damages to the estate against the purchaser. [¶] ... [¶] (e) If the property is resold, the defaulting purchaser is liable to the estate for damages equal to the sum of the following: [¶] (1) The difference between the contract price of the first sale and the amount paid by the purchaser at the resale. [¶] (2) Expenses made necessary by the purchaser's breach. [¶] (3) Other consequential damages."
(1) This is an issue of statutory interpretation. We apply the following standard of statutory review described by our Supreme Court: "When interpreting a statute our primary task is to determine the Legislature's intent. [Citation.] In doing so we turn first to the statutory language, since the words the Legislature chose are the best indicators of its intent." (Freedom Newspapers, Inc. v. Orange County Employees Retirement System (1993) 6 Cal.4th 821, 826 [25 Cal.Rptr.2d 148, 863 P.2d 218]; see People v. Jones (1993) 5 Cal.4th 1142, 1146 [22 Cal.Rptr.2d 753, 857 P.2d 1163].) Our Supreme Court has emphasized that the words in a statute selected by the Legislature must be given a "commonsense" meaning when it noted: "`Our first step [in determining the Legislature's intent] is to scrutinize the actual words of the statute, giving them a plain and commonsense meaning. (Mercer v. Department of Motor Vehicles (1991) 53 Cal.3d 753, 763 [280 Cal.Rptr. 745, 809 P.2d 404]; Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735 [248 Cal.Rptr. 115, 755 P.2d 299].)' (People v. Valladoli (1996) 13 Cal.4th 590, 597 [54 Cal.Rptr.2d 695, 918 P.2d 999].)" (California Teachers Assn. v. Governing Bd. of Rialto Unified School Dist. (1997) 14 Cal.4th 627, 633 [59 Cal.Rptr.2d 671, 927 P.2d 1175].) Further, our Supreme Court has noted: "`If the language is clear and unambiguous there is no need for construction, nor is it necessary to resort to indicia of the intent of the Legislature (in the case of a statute)....'" (Delaney v. Superior Court (1990) 50 Cal.3d 785, 798 [268 Cal.Rptr. 753, 789 P.2d 934]; accord, People v. Talibdeen (2002) 27 Cal.4th 1151, 1154 [119 Cal.Rptr.2d 922, 46 P.3d 388].)
It is undisputed Mr. Grigsby, the defaulting purchaser, failed to comply with the terms of the sale. The order confirming the sale was vacated and the property was resold. Mr. Grigsby, the defaulting purchaser, was liable to the estate for $59,550 calculated as follows. The sum of $55,750 is the difference between the contract price of the first sale as to the estate's one-half interest *522 in the real property ($240,000) and the amount paid by Mr. Carlisle at the resale. When the property was sold to Mr. Carlisle, the estate's one-half interest in the proceeds was only $184,250. Additionally, expenses in the sum of $3,800 were incurred as a result of Mr. Grigsby's breach. Therefore, the estate was entitled to statutory damages in an amount that exceeded Mr. Grigsby's $48,000 deposit.
(2) Mr. Grigsby argues the probate court had no jurisdiction to, in effect, force a forfeiture of his deposit as to the one-half interest in the real property not owned by the estate. He challenges this "forfeiture" only as to one-half of the deposit or $24,000. He states, "The Appellant does not dispute the forfeiture of the $24,000 portion of the deposit made for the purchase of the estate owned one-half interest in the [real] property." However, section 10350, subdivision (e)(1) expressly states the probate court may award the estate damages equal to the difference between the first contract price and the amount paid on resale. The statutory language is unequivocal. Nothing in the language of section 10350, subdivision (e)(1) is consistent with Mr. Grigsby's assertion that the estate could only receive one-half of his $48,000 deposit. The defaulting purchaser is obligated to pay the estate, in the words of section 10350, subdivision (e)(1), the "difference between the contract price of the first sale and the amount paid by the purchaser at the resale"; not a pro rata share depending on the sellers' respective interests in the property. Moreover, our Supreme Court, in cases construing predecessor provisions of section 10350 has held: when a purchaser defaults, the estate may hold the deposit as security; the deposit may be held pending a determination of the defaulting purchaser's statutory liability to the estate; and, upon resale, the probate court determines the parties' respective rights to the deposit. (Estate of Mesner (1951) 37 Cal.2d 563, 567 [233 P.2d 551]; accord, Estate of Williamson (1957) 150 Cal.App.2d 334, 337 [310 P.2d 77]; 25 Cal.Jur.3d (2006) Decedents' Estates, § 1083; see Caplan v. Schroeder (1961) 56 Cal.2d 515, 519 [15 Cal.Rptr. 145, 364 P.2d 321]; Bay Shore Homes, Inc. v. San Diego Trust & Sav. Bk. (1969) 276 Cal.App.2d 108, 113 [80 Cal.Rptr. 849].) (3) Here, Mr. Grigsby's statutory liability to the estate, $55,750, exceeded the amount of the $48,000 deposit. Therefore, the probate court could order that the estate retain the entire deposit. The estate was entitled to retain the entire $48,000 as statutory damages and not as a deposit. It makes no legal difference that Mr. Grigsby's $48,000 deposit as such covered both the estate's interest in the real property and that of the co-owner. Section 10350, subdivision (e)(1) expressly allows the probate court to award to the estate damages in an amount equal to the difference between the defaulting and successful purchase prices. Section 10350, subdivision (e)(1)says what it says and that is why traditional statutory interpretation principles dictate the outcome of this appeal.
*523 Mr. Grigsby also appealed from the order insofar as it awarded $3,800 in attorney fees. However, no issue has been raised on appeal in connection with the $3,800 attorney fee award. Thus, any arguments in that regard have been waived. (Tiernan v. Trustees of Cal. State University & Colleges (1982) 33 Cal.3d 211, 216, fn. 4 [188 Cal.Rptr. 115, 655 P.2d 317]; Johnston v. Board of Supervisors (1947) 31 Cal.2d 66, 70 [187 P.2d 686], overruled on another point in Bailey v. County of Los Angeles (1956) 46 Cal.2d 132, 139 [293 P.2d 449].)
IV. DISPOSITION
The November 9, 2007 order on the first and final account is affirmed. Petitioner, Richard Felder, Jr., as the administrator of the estate of Richard Felder, is to recover his costs on appeal from objector, John Grigsby.
Armstrong, J., and Kriegler, J., concurred.
NOTES
[1] All further statutory references are to the Probate Code unless otherwise noted.
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18 Cal.Rptr.3d 157 (2004)
121 Cal.App.4th 1171
FAIR POLITICAL PRACTICES COMMISSION, Plaintiff and Respondent,
v.
AMERICAN CIVIL RIGHTS COALITION, INC. et al., Defendants and Appellants.
No. C045570.
Court of Appeal, Third District.
August 26, 2004.
*158 Bell, McAndrews & Hiltachk, Charles H. Bell, Jr., and Thomas W. Hiltachk, Santa Monica, for Defendants and Appellants.
Steven Benito Russo, Placerville, William L. Williams, Jr., Sacramento, and Jennie Unger Eddy for Plaintiff and Respondent.
NICHOLSON, J.
An anti-SLAPP[1] motion must be heard within 30 days after service of the motion unless docket conditions require a later hearing. (Code Civ. Proc., § 425.16, subd. (f).)[2] Here, the motion was not heard within 30 days after service and the moving parties did not establish that the court's docket conditions required a later hearing. The trial court therefore denied the motion. We affirm.
BACKGROUND
On September 3, 2003, the Fair Political Practices Commission (FPPC) filed suit against the American Civil Rights Coalition, Inc., and Ward Connerly. Defendants answered the complaint and, on October 15, 2003, filed an anti-SLAPP motion, noticed for hearing on November 21, 2003. The FPPC opposed the motion, both on the merits and because the motion was not heard within 30 days after service of the motion.
Concerning the timing of the hearing, defendants filed the declaration of Stephanie Alison, an assistant to the defense attorneys. The declaration states: "On October 8, 2003, I contacted the clerk of Department 54 of the Superior Court, Judge Thomas Cecil, to obtain a hearing date for notice purposes. I sought a hearing *159 date within the 30-day window but was advised by the clerk that they were scheduling dates beyond that date. I requested the earliest available date, consistent with Charles H. Bell, Jr.'s out-of-office schedule calendar. The clerk offered the date of November 21, 2003, and we immediately noticed that date for hearing. [¶][] No other factors other than the court's own calendar were considered in seeking such a hearing date."
The trial court issued a tentative ruling in which it concluded that the hearing was untimely. It found the declaration "[did] not meet defendant's burden of showing the docket conditions of the court required a later hearing."[3] After a hearing, the trial court affirmed its tentative ruling.
DISCUSSION
In a brief argument, defendants assert the trial court erred in denying the anti-SLAPP motion because, according to defendants, the Alison declaration "makes clear the defendants sought a timely hearing on the `anti-SLAPP' motion, but accepted a later date only after the court clerk indicated none was available within 30 days of the notice date." This argument overstates the Alison declaration and understates a moving party's duty to comply with the 30-day limitation.
"The anti-SLAPP statute provides that a cause of action arising out of an act of the defendant in furtherance of the exercise of the constitutional right of petition or free speech is subject to a special motion to strike. (§ 425.16, subd. (b)(1).) `The Legislature enacted the anti-SLAPP statute to protect defendants, including corporate defendants, from interference with the valid exercise of their constitutional rights, particularly the right of freedom of speech and the right to petition the government for the redress of grievances.' [Citation.]
"Subdivision (f) of section 425.16 provides specific time deadlines for bringing a special motion to strike. Subdivision (f) consists of these two sentences: `The special motion may be filed within 60 days of the service of the complaint or, in the court's discretion, at any later time upon terms it deems proper. The motion shall be noticed for hearing not more than 30 days after service unless the docket conditions of the court require a later hearing.'" (Decker v. U.D. Registry, Inc. (2003) 105 Cal.App.4th 1382, 1387, 129 Cal.Rptr.2d 892 (Decker).)
In Decker, a defendant filed several anti-SLAPP motions addressed to different groups of plaintiffs, but the motions were not heard within 30 days after service. Concerning the timeliness of the hearing, the defendant's attorney filed a declaration stating that the court clerk notified him of several dates on which the trial court could hear the motions. After checking the availability of other defendants, the defendant chose the "`earliest option under the circumstances.'" (105 Cal.App.4th at p. 1387, 129 Cal.Rptr.2d 892.) The trial court denied the motions, and the Court of Appeal affirmed. (Id. at pp. 1385, 1393, 129 Cal.Rptr.2d 892.)
The Decker court determined that the defendant had failed to show that the delay beyond 30 days after service of the motions was due to docket conditions. Instead, the delay was for the defendant's convenience. (105 Cal.App.4th at p. 1388, 129 Cal.Rptr.2d 892.) The court further held that the 30-day limit for obtaining a *160 hearing, except as prevented by the court's docket conditions, is jurisdictional. (Id. at p. 1389, 129 Cal.Rptr.2d 892.) Therefore, a defendant who files an anti-SLAPP motion and does not obtain a hearing within 30 days after service of the motion bears the burden of showing that the condition of the court's docket required a later hearing. (Id. at p. 1385, 129 Cal.Rptr.2d 892.) If the defendant does not carry this burden, the trial court must deny the motion.
The reason for this strict timeline is that filing of the anti-SLAPP motion triggers suspension of discovery in the case until notice of entry of the order ruling on the motion. (§ 425.16, subd. (g).) "[T]he Legislature required a prompt hearing on the special motion to avoid a prolonged discovery stay." (Decker, supra, 105 Cal.App.4th at p. 1388, 129 Cal. Rptr.2d 892.)
Because the anti-SLAPP motion was heard more than 30 days after service of the motion, the question presented here is whether defendants carried their burden of showing that "the docket conditions of the court require[d] a later hearing." (§ 425.16, subd. (f).) This determination requires close scrutiny of the Alison declaration and the rules and practices of the trial court.
Viewing the Alison declaration filed in support of the anti-SLAPP motion in the light most favorable to the trial court's ruling, we conclude, as did the trial court, that it does not establish that the court's docket condition required a hearing later than 30 days after service. Regarded closely, the declaration is vague and ambiguous. The first sentence states: "I sought a hearing date within the 30-day window but was advised by the clerk that they were scheduling dates beyond that date." While the first part of the sentence states she sought a hearing date within the statutory time period, the second part of the sentence fails to state there was no date within the statutory time period available. Instead, it merely states that the court "was scheduling dates beyond that date." This does not state whether the court was able to schedule a hearing within the statutory period. The ambiguous statement could mean that the court was scheduling dates both within and beyond the statutory period. It could well be that the clerk's response to the request was ambiguous, either meaning that there were no available hearing dates within the statutory period or simply that there were dates available on the court's docket beyond the 30 days mentioned by Alison. There is no indication, however, that Alison made an attempt to resolve this ambiguity.
The next sentence of the declaration makes it appear that the attorney's calendar was the most important factor in selecting a date, rather than whether the date was within the statutory period. It states: "I requested the earliest available date, consistent with Charles H. Bell, Jr.'s out-of-office schedule calendar." This still does not answer the question of whether the court's docket condition required a hearing beyond the 30-day period. Instead, it appears the hearing was set for the first date on which the court and the attorney were available.
Alison's declaration that "[t]he clerk offered the date of November 21, 2003," says nothing about whether other dates were available. And finally, the statement, "[n]o other factors other than the court's own calendar were considered in seeking such a hearing date," is obviously contradicted by the earlier statement that Alison sought the earliest date consistent with the attorney's calendar.
Accordingly, resolving ambiguities and vagueness in favor of the trial court's ruling, *161 we must conclude this declaration did not carry defendants' burden of showing that the condition of the court's docket required a later hearing. (Decker, supra, 105 Cal.App.4th at p. 1385, 129 Cal.Rptr.2d 892.) Consequently, we conclude the court did not err in denying the anti-SLAPP motion.
Two additional reasons support the trial court's denial of the anti-SLAPP motion: (1) as the trial court noted, defendants could have obtained a hearing within the statutory period simply by asking the court for a hearing by ex parte motion and (2) defendant could have waited to serve the motion until less than 30 days before the scheduled hearing.
During the hearing on the motion, the trial court discussed its policy of "oversetting" hearings for which there is a deadline. The court stated: "I don't mean to be overly critical of the declaration . . ., but just as a cautionary note, let me suggest the following: . . . When you have a deadline that is mandatory such as this deadline, simply ask the clerk if you can set an ex parte hearing, and come in and ask to be overset. [¶] . . . [W]e have a fair number of attorneys who simply make a telephonic appearance, asking specifically for the judge to overrule the staff and to overset certain matters, and it is a fairly common practice. . . ."
Beyond the failure of defendants to establish that the trial court's docket required a hearing beyond the 30-day limit, defendants also made no attempt, citing the mandatory nature of the deadline, to obtain from the court a date within the statutory period. As the trial court here noted, such requests may be granted, even routinely. Such an attempt, if it is itself made in a timely manner but still denied, would also establish, beyond dispute, that the condition of the court's docket was the reason for the failure to hear the anti-SLAPP motion within 30 days after service. A trial court has a duty to hear a timely motion in a manner consistent with the rights of the parties and the requirements of the statute. (See Wells Fargo Bank v. Superior Court (1988) 206 Cal.App.3d 918, 922, 254 Cal.Rptr. 68 [local rule for handling extensive and complicated motions for summary judgment invalid because it conflicted with the timing requirements of the Code of Civil Procedure].)
Finally, perhaps the easiest way to comply with the 30-day time limit is to obtain a hearing date and then wait until 30 days before the hearing to serve the motion.[4] Since, under section 1005, a motion must be personally served "at least 21 calendar days before the hearing" or served by mail at least 26 days before the hearing "if the place of mailing and the place of address are within the State of California," this means the moving party has a certain window of time in which to serve the motion.
This strategy of reserving a hearing date and delaying service of the motion is more desirable than obtaining an earlier hearing date by ex parte motion because the ex parte motion requires a more significant amount of time and resources on the part of the attorney and the court. Furthermore, the court, working through its supporting personnel, should cooperate with the attorney or the attorney's supporting personnel in setting the hearing to comply with section 425.16, subdivision (f). *162 (See Wells Fargo Bank v. Superior Court, supra, 206 Cal.App.3d at p. 922, 254 Cal. Rptr. 68 [requiring trial court to comply with timing requirements of Code of Civil Procedure].)
Here, defendants obtained the November 21, 2003, hearing date on October 8, 2003. They immediately served the anti-SLAPP motion on the FPPC, but they did not file the motion until October 15, 2003, seven days later, thus staying discovery. (§ 425.16, subd. (g).) If they had waited until October 23, 2003, for example, to serve the motion, the date they obtained would have been within the statutory 30-day limit for hearing the motion.[5] The complaint here was filed on September 3, 2003; therefore, a filing date of October 23, 2003, for the anti-SLAPP motion would have been within the statutory period for filing the motion. (§ 425.16, subd. (f).)
Defendants' opening brief relies solely on the Alison declaration concerning the scheduling of the hearing in arguing that the trial court erred in determining that the motion should be denied because it was not heard within 30 days after service. Even though the FPPC, in its respondent's brief, discussed the two methods we have mentioned of complying with the statutory requirements, defendants filed no reply brief. Because it was, at all times, within defendants' power to comply with subdivision (f) of section 425.16 by delaying service of the motion, there is simply no way that "the docket conditions of the court" had anything to do with the noncompliance.
In summary, we conclude the declaration submitted by defendants did not establish that the court's docket condition required a hearing on the anti-SLAPP motion more than 30 days after service. We additionally observe that defendants could have avoided this jurisdictional problem by asking the court, by ex parte motion, for a date within the statutory period or, more preferably, by waiting until October 23, 2003, to serve the motion for which they had obtained a November 21, 2003, hearing date.[6]
DISPOSITION
The order is affirmed.
We concur: SIMS, Acting P.J. and ROBIE, J.
NOTES
[1] A "SLAPP" is a strategic lawsuit against public participation. (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1109, fn. 1, 81 Cal.Rptr.2d 471, 969 P.2d 564.)
[2] Hereafter, statutory references, though unspecified, are to the Code of Civil Procedure.
[3] The tentative ruling also concluded that the FPPC is not subject to anti-SLAPP motions and that defendants were not entitled to relief because the FPPC showed a probability of prevailing on the merits.
[4] The FPPC requests judicial notice of Local Rule 3.20 of the Sacramento Superior Court, which requires parties to reserve hearing dates for anti-SLAPP motions in advance by telephoning the calendar clerks. We grant the request because the local rule establishes that, at least in Sacramento, the hearing date is reserved before the motion is filed.
[5] Defendants did not serve and file their points and authorities on the anti-SLAPP motion until October 31, 2003.
[6] Our conclusion that the trial court did not err in denying the anti-SLAPP motion because it was not heard within 30 days after service renders unnecessary a consideration of the merits of the motion.
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