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https://www.courtlistener.com/api/rest/v3/opinions/1586748/ | 709 F.Supp. 592 (1989)
Philip KOSTA, Ellen M. Donato and Frank Di Maio
v.
Mayor Jerry CONNOLLY, et al.
Civ. A. No. 88-1465.
United States District Court, E.D. Pennsylvania.
March 15, 1989.
*593 Carmen A. Cavacini, Holmes, Pa., for plaintiffs.
Joseph Goldberg, Margolis, Edelstein, Scherlis, Sarowitz & Kraemer, Philadelphia, Pa., for defendants.
MEMORANDUM AND ORDER
VAN ANTWERPEN, District Judge.
This action comes before the court on defendants' motion for summary judgment. In their complaint, plaintiffs allege, inter alia, that defendants violated their constitutional rights by prosecuting them for placing signs and posters on utility poles during a political campaign. For the reasons stated below, defendants' motion for summary judgment is denied.
FACTS
During a 1987 political campaign in the Borough of Morton, plaintiffs Philip Kosta, Ellen M. Donato, and Frank Di Maio placed political posters on various utility poles throughout the Borough. Defendant Mayor Jerry Connolly allegedly received complaints from Borough residents about these posters and contacted one or more of the plaintiffs to inform them that they were in violation of the law. The next day Mayor Connolly allegedly instructed defendant Chief of Police George Souder to cite plaintiffs for violating 18 Pa. Cons. Stat.Ann. § 6503(a) (Purdon 1983) which provides as follows:
A person is guilty of a summary offense if he pastes, paints, brands or stamps or in any manner whatsoever places upon or attaches to any building, fence, bridge, gate, outbuilding or other object, upon the grounds of any charitable, educational or penal institution of the Commonwealth, or upon any property belonging to the Commonwealth government, any political subdivision, or municipal or local authority, any written ... sign or poster ... without first having obtained the written consent of the owner, or tenant lawfully in possession or occupancy thereof.
After Souder issued these citations, a hearing was held in which a district justice found the plaintiffs guilty of the summary offense. Plaintiffs appealed that decision to the Court of Common Pleas of Delaware County and the judge dismissed the charges against plaintiffs when the Borough failed to appear.
Plaintiffs then filed a complaint in this Court alleging, inter alia, malicious prosecution, selective enforcement, a conspiracy to injure, oppress, threaten and intimidate plaintiffs, violation of the First, Fourth, Sixth, and Fourteenth Amendments to the Constitution, and violation of 42 U.S.C. § 1983, § 1985, and § 1986. Defendants now move for summary judgment because: (1) plaintiffs have admitted to violating the statute in question, and therefore, defendants did not violate any of their rights by prosecuting them; (2) the doctrine of qualified immunity shields the individual defendants from civil liability; and (3) Monell v. Department of Social Services, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978), shields the defendant Borough from liability. We disagree with all of defendants' contentions.
*594 DISCUSSION
A. Standard of Review
The standards to be observed in evaluating a motion for summary judgment are clear. Fed.R.Civ.P. 56(c) instructs a court to enter summary judgment when the record reveals 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 rule provides the court with a useful tool when the critical facts are undisputed, facilitating the resolution of a pending controversy without the expense and delay of conducting a trial made unnecessary by the absence of factual dispute. Peterson v. Lehigh Valley Dist. Council, 676 F.2d 81, 84 (3d Cir.1982); Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). Summary judgment is inappropriate, however, where the evidence before the court reveals a genuine factual disagreement requiring submission to a jury. An issue is "genuine" only if the evidence is such that a reasonable jury could find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). At the summary judgment stage, "the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. 106 S.Ct. at 2511. However, if the evidence is merely "colorable" or is "not significantly probative", summary judgment may be granted. Id.
In a summary judgment action, the moving party bears the initial burden of identifying for the court those portions of the record which it believes demonstrate the absence of a material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Following such a showing in a case where the non-moving party is the plaintiff and therefore bears the burden of proof, it must by affidavits or by the depositions and admissions on file "make a showing sufficient to establish the existence of [every] element essential to that party's case." Id. 106 S.Ct. at 2552-53; Anderson, supra, 106 S.Ct. at 2514; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Fed.R.Civ.P. 56(e). In making its ruling on a summary judgment motion, the court must view all inferences in a light most favorable to the non-moving party, United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Continental Ins. Co. v. Bodie, 682 F.2d 436, 438 (3d Cir.1982), must resolve all doubts against the moving party, Gans v. Mundy, 762 F.2d 338, 341 (3d Cir.1985), cert. denied, 474 U.S. 1010, 106 S.Ct. 537, 88 L.Ed.2d 467 (1985), and must take as true all allegations of the non-moving party that conflict with those of the movant, Anderson, supra, 106 S.Ct. at 2513.
B. Request for Admissions
Defendants argue that because plaintiffs have not answered defendants' request for admissions, under F.R.Civ.P. 36(a)[1] we should consider the statements admitted. The requests for admissions would establish that plaintiffs posted signs on various utility poles, that Mayor Connolly requested plaintiffs to remove them, that plaintiff refused to remove them, that the police issued them citations, and that they were found guilty at a hearing before a magistrate. Accepting these statements in the requests for admission as conclusively proven facts, defendants argue that plaintiffs have admitted to violating 18 Pa. Cons. Stat.Ann. § 6503(a) (Purdon 1983).
The purpose of F.R.Civ.P. 36(a) is to expedite trial by eliminating the necessity of proving undisputed and peripheral issues. Peter v. Arrien, 319 F.Supp. 1348, 1349 (E.D.Pa.1970). We should not employ the rule to establish facts which are obviously in dispute or to answer questions of law. Driver v. Gindy Manufacturing Corp., 24 F.R.D. 473, 475 (E.D.Pa.1959). *595 In the case at bar, the question whether the plaintiffs violated the statute is neither undisputed nor peripheral. The plaintiffs not only contested their guilt throughout the state proceedings, but they also prevailed on appeal. Moreover, the question of plaintiffs' guilt is central to this case. If plaintiffs admitted to violating the statute, they would effectively resolve the disputed issues of selective enforcement, malicious prosecution, violation of constitutional rights, etc. Clearly, that is not the plaintiffs' position, and Rule 36 is not intended to make it so. We will require, however, that plaintiffs respond to the requests for admissions within twenty days of this order.
C. Qualified Immunity
Defendants argue that they are entitled to qualified immunity for their actions taken against plaintiffs. In Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982), the court held 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." The Court reasoned that because subjective inquiries generally entail broad ranging discovery that is "peculiarly disruptive of effective government," we must look only to the objective legal reasonableness of the officials' behavior; we must not consider the officials' subjective motivations. Id. 457 U.S. at 817-18, 102 S.Ct. at 2737-38. See also, Anderson v. Creighton, 483 U.S. 635, 107 S.Ct. 3034, 3038-39, 97 L.Ed.2d 523 (1987). Because qualified immunity is an affirmative defense, defendants must show, without material factual dispute, that their actions were objectively reasonable in light of the clearly established law at the time they acted. See Brown v. U.S., 851 F.2d 615, 620 (3d Cir. 1988). Under Harlow, defendants argue that because they prosecuted plaintiffs under a valid statute, they did not violate any of plaintiffs' clearly established statutory or constitutional rights. We disagree.
Defendants' argument is attractive because it appears that plaintiffs' position on selective enforcement[2] and malicious prosecution[3] depends upon an analysis of the defendants' states of mind an inquiry Harlow specifically proscribed. While the Court in Harlow did not explain how courts should apply the objective standard when a plaintiff's claim depends on the state of mind of the defendant officials, Anderson made clear that we need not reintroduce into qualified immunity analysis the inquiry into officials' subjective intentions: The relevant question remains an objective, fact-specific question. Anderson, 107 S.Ct. at 3040. In the case at bar, we will examine only the objective facts surrounding the plaintiffs' prosecution, in a light most favorable to the plaintiffs, and determine whether there remains a genuine issue of material fact whether a reasonable officer could have believed his actions were lawful.
In a hearing before Magistrate Joseph L. DiPietro, Chief of Police Souder testified that he knew of no citations issued under 18 Pa. Cons. Stat.Ann. § 6503(a) (Purdon 1983) in the Borough of Morton in the past five years. (Plaintiffs' Exhibit A at p. 9-10). In addition, photographs submitted by plaintiffs reveal that there are several signs and posters on various Borough *596 utility poles that would appear to be in violation of the statute. (Plaintiff's Exhibit C). On the other hand, defendants Souder and Connolly testified that after they decided to cite the plaintiffs, they attempted to or actually cited others who have posted signs on private property. (Plaintiff's Exhibit A at pp. 24-28, 31-35). The testimony does not clearly establish whether defendants arbitrarily or maliciously enforced the statute against the plaintiffs or whether they began enforcing the statute evenhandedly on the day the plaintiffs were cited.
In Losch v. Borough of Parkesburg, 736 F.2d 903 (3d Cir.1984), the plaintiff alleged that defendants maliciously prosecuted him in retaliation for voicing objections to police conduct. The court held that the district should not inquire whether the Pennsylvania criminal statutes under which they were prosecuted was clear; rather, the court should determine whether the plaintiff had clearly established rights to petition the government in the manner he did without suffering malicious prosecution. Id. at 909-10. See also Bennis v. Gable, 823 F.2d 723, 733 (3d Cir.1987) (defendants not entitled to qualified immunity where law clearly established that a public employee could not be demoted in retaliation for exercising his First Amendment rights). Similarly, in Sullivan v. City of New Port Richey, Case No. 85-459-Civ-T-17 (MD Fla. Sept. 13, 1988) (LEXIS, Genfed library, Dist file), the court denied defendant's motion for summary judgment where defendants allegedly selectively enforced city ordinances. The court held that without inquiring into the officials' subjective beliefs, there remained an objective, factual dispute as to defendants' motives. Thus, in the case at bar, defendants are not entitled to qualified immunity where there remains a factual issue whether they violated plaintiffs' clearly established constitutional rights to air their political views without suffering selective enforcement and malicious prosecution.
D. Municipal Liability
Defendant Borough of Morton argues that Monell v. Department of Social Services, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978), shields it from civil liability. In Monell, the Supreme Court held that a municipality may be liable under § 1983 where the alleged unconstitutional action "implements or executes a policy, statement, ordinance, regulation or decision officially adopted and promulgated by that body's officers." Id. 436 U.S. at 658, 98 S.Ct. at 2019. Defendant argues that because Mayor Connolly and Chief Souder enforced a valid state ordinance which was adopted and promulgated by the state legislature rather than by the defendants, their actions can not be considered an implementation of an official policy. We disagree.
In Pembaur v. City of Cincinnati, 475 U.S. 469, 480, 106 S.Ct. 1292, 1298, 89 L.Ed. 2d 452 (1986), the Supreme Court held that under appropriate circumstances municipal liability may be imposed for a single decision by municipal policymakers. Monell makes clear that decisions made by those "`whose acts or edicts may fairly be said to represent official policy'" may give rise to municipal liability under § 1983. Id. 106 S.Ct. at 1299 (quoting Monell, 436 U.S. at 694, 98 S.Ct. at 2037). See also Colburn v. Upper Darby Township, 838 F.2d 663, 671-72 (3d Cir.1988). The court emphasized, however, that not every decision by a municipal policymaking official automatically subjects the municipality to § 1983 liability. "Municipal liability attaches only where the decisionmaker possesses final authority to establish municipal policy with respect to the action ordered." Pembaur, 475 U.S. at 480, 106 S.Ct. at 1298.
In the case at bar, both Chief of Police Souder and Mayor Connolly testified that Connolly directed Souder to issue the citations to plaintiffs. (Plaintiffs' Exhibit A at pp. 6 & 15-16). Interpreting the facts in a light most favorable to the plaintiff, we find that there is a genuine issue of material fact whether defendants selectively enforced the statute and maliciously prosecuted the plaintiffs. As discussed above, Souder testified that the plaintiffs were the first to be cited and prosecuted under the statute for at least five years, and the *597 photographic exhibits suggest that the defendants may not be as zealous in prosecuting other potential violators. Because the plaintiffs were cited and prosecuted for posting political posters, they have made a sufficient showing that the defendants selectively treated them as a punishment for exercising their First Amendment rights. The question arises, however, whether the Mayor possessed policymaking and final authority with respect to the actions ordered such that the Borough may be held liable for the injuries to plaintiffs. Whether an official has sufficient authority is a question of state law. Pembaur, 106 S.Ct. at 1300.
In a Pennsylvania borough, it is the duty of the mayor "to enforce the ordinances and regulations." 53 Pa.Stat.Ann. § 46029 (Purdon Supp.1978). In addition,
[t]he mayor of the borough shall have full charge and control of the chief of police and the police force, and he shall direct the time during which, the place where and the manner in which, the chief of police and the police force shall perform their duties....
53 Pa.Ann. § 46121 (Purdon 1966). This language makes clear that Mayor Connolly possessed final authority with respect to the issuance of citations to plaintiffs. Thus, Monell does not shield the Borough from liability. Defendants' motion for summary judgment is denied.
An appropriate order follows.
ORDER
AND NOW, this 15th day of March, 1989, upon consideration of MOTION FOR SUMMARY JUDGMENT, filed by defendants on November 28, 1988 and ANSWER thereto, filed by plaintiff on December 13, 1988, it is hereby ORDERED that defendants' Motion is Denied.
It is further ordered, however, that plaintiffs respond to defendants' requests for admissions within twenty days of the date of this order.
NOTES
[1] F.R.Civ.P. 36(a) provides in pertinent part that "[t]he matter is admitted unless within 30 days after service of the request ..., the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter...."
[2] Selective enforcement is not per se violative of the constitution. United States v. Ettorre, 387 F.Supp. 582, 588 (E.D.Pa.1975); See Oyler v. Boles, 368 U.S. 448, 456, 82 S.Ct. 501, 505, 7 L.Ed.2d 446 (1962) In order to succeed on such a claim, the plaintiffs must establish: 1) that the persons, compared with others similarly situated were selectively treated; and 2) that such selective treatment was based on impermissable considerations, such as race, religion, intent to inhibit or punish the exercise of constitutional rights, or malicious or bad faith intent to injure them. United States v. Shober, 489 F.Supp. 393 (E.D.Pa.1979) (citations omitted).
[3] A civil action for § 1983 malicious prosecution requires that: 1) the defendants initiate a criminal proceeding; 2) which ends in plaintiffs' favor; 3) which was initiated without probable cause; and 4) the defendants act maliciously or for a purpose other than bringing the criminal defendants to justice. Lee v. Mihalich, 847 F.2d 66 (3d Cir.1988). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1711784/ | 472 S.W.2d 714 (1971)
OZARK POULTRY PRODUCTS, INC., Appellant,
v.
Roy GARMAN et al., Appellees.
No. 5-5647.
Supreme Court of Arkansas.
November 15, 1971.
*715 Putman, Davis & Bassett, Fayetteville, for appellant.
Eugene Coffelt, and Lloyd C. Burrow, Jr., Bentonville, for appellees.
GEORGE ROSE SMITH, Justice.
The appellant owns a rendering plant between Siloam Springs and Gentry. The appellees nine homeowners in the vicinity brought this suit to abate the plant, as a nuisance polluting both the air and a natural stream. The chancellor found the plant to be a public nuisance and ordered it closed unless conditions at the plant were corrected within a reasonable time fixed by the court. For reversal the appellant argues a single point: The appellees were not entitled to a decree abating a public nuisance, because they failed to show that they have suffered special damage different from that suffered by the public in general.
The facts are not in dispute and need not be narrated in detail. The appellant manufactures an ingredient used in fertilizer and poultry feed, by cooking such organic matter as dead farm animals and the offal discarded by poultry processing plants in northwest Arkansas and southern Missouri. The odors from the plant are so offensive that the plaintiffs and other persons in the vicinity are often unable to sleep at night or to eat their meals without nausea.
The appellant's manager admitted on the witness stand that the plant's operation is in violation of law. That the plaintiffs have been seriously damaged in the enjoyment of their homes is not open to question. Nevertheless, the appellant, citing Stoutemeyer v. Sharp, 89 Ark. 175, 116 S. W. 189, 21 L.R.A.N.S., 74 (1909), and Martin v. Hornor, 83 Ark. 330, 103 S.W. 1134 (1907), insists that since its foul-smelling rendering plant inflicts the same damage upon all homeowners within an area of several square miles, the facility is a public nuisance that can be abated only upon complaint by the attorney general, the prosecuting attorney, or other representative of the public.
The law offers no such immunity to a confessed and flagrant wrongdoer in the circumstances of this case. Even though the chancellor referred to the rendering plant as a public nuisance, which it may be, it is also a private nuisance with respect to the plaintiffs. The difference is *716 that a public nuisance involves a violation of a public right held in common by the community as a whole, while a private nuisance is a violation of the rights of the individual, such as the right to enjoy his home. In both the Stoutemeyer case and the Martin case, supra, relied upon by the appellant, the court was dealing with an obstruction to a public street, clearly constituting a public nuisance.
An excellent statement of the distinction between the two classes of nuisances was made in Fisher v. Zumwalt, 128 Cal. 493, 61 P. 82 (1900), where the court said:
There is no doubt but that there are many nuisances which may occasion an injury to an individual for which an action will not lie by him in his private capacity, unless he can show special damage to his person or property, differing in kind and degree from that which is sustained by other persons who are subjected to similar injury. Among such may be mentioned the invasion of a common and public right which every one may enjoy, such as the use of a highway or canal or public landing place. But this class of nuisances is confined in most cases to where there has been an invasion of a right which is common to every person in the community, and not to where the wrong has been done to private property, or the private rights of individuals, although many individuals may have been injured in the same manner and by the same means. In the one case the invasion is of a public right which injures many individuals in the same manner, although it may be in different degrees. In the other case no public or common right is invaded, but by the one nuisance the private rights and property of many persons are injured. Because the nuisance affects a great number of persons in the same way, it cannot conclusively be said that it is a public nuisance, and nothing more. The fact that a nuisance is public does not deprive the individual of his action in cases where, as to him, it is private, and obstructs the free use and enjoyment of his private property.
The same point of view is expressed in the Restatement of Torts (2d), § 201 (1965):
[A private nuisance] may be some thing which unreasonably interferes with the actor's use or enjoyment of his land, as where the health or safety of himself or a member of his household is threatened, or his use or enjoyment of the land is unduly restricted, whether by a deprivation or curtailment of one of the natural rights to air, water, and support, or otherwise. Thus it may consist of an ill-drained privy, a garbage pile emitting offensive odors * * *
That point of view was also taken in the original Restatement of Torts (1939), in the Introductory Note to Chapter 40:
A public nuisance is an offense against the State, and as such is subject to abatement or indictment on the motion of the proper governmental agency. A private nuisance is a tort to a private person, and actionable by him as such. A public nuisance may arise from an interference with the use by the public of a public place, such as a highway, navigable river, or park, the privilege to use which is given by the State or a municipal subdivision. * * *
Conduct that amounts to a public nuisance may at the same time be a private nuisance, and actionable as such. If a person's interest in the private use and enjoyment of his land is invaded by another's conduct so that the conduct would ordinarily be actionable by the person harmed, it is none the less actionable because the conduct is also a public nuisance.
We conclude that the appellant's plant constituted a private nuisance with respect to these appellees and was properly abated by the chancellor.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1652418/ | 968 S.W.2d 748 (1998)
In the Interest of J.A.R., Plaintiff.
JUVENILE OFFICER, Respondent,
v.
A.R. (Natural Father), Appellant.
No. WD 54392.
Missouri Court of Appeals, Western District.
May 12, 1998.
*749 Laurie Vaskov Snell, Kansas City, for appellant.
Kyla Grove, Kansas City, for Guardian Ad Litem.
Robert M. Schieber, Kansas City, for respondent.
Before LAURA DENVIR STITH, P.J., and HANNA and RIEDERER, JJ.
LAURA DENVIR STITH, Presiding Judge.
A.R. appeals the termination of his parental rights to his daughter, J.A.R. He alleges that the trial court improperly admitted a Division of Family Services (DFS) report for the purpose of determining whether one of the statutory grounds for termination existed, rather than solely for the proper purpose of whether termination was in the child's best interest. Father also claims that there was insufficient evidence to support termination of his parental rights. Finding no merit to his contentions, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
J.A.R. was born on March 26, 1995, to unwed parents. Because J.A.R. had traces of marijuana in her system and was suffering from drug withdrawal at birth, DFS took J.A.R. into protective custody on March 28, 1995. Several months later, on August 16, 1995, the Juvenile Officer of Jackson County filed a Petition alleging that J.A.R. was without proper care, custody, and support in that her mother abused controlled substances, resulting in J.A.R. being born with traces of a controlled substance in her system. The Petition also alleged that J.A.R.'s father had previously been incarcerated and was currently residing at a halfway house, that his parental rights to another child had been terminated due to abandonment and neglect, and that two of his other children had been under the jurisdiction of the court for several years. On September 26, 1995, the court found that J.A.R. was without proper care, custody, and support and placed her in the custody of DFS. She has remained in DFS custody continuously since that date.
On July 23, 1996, the Juvenile Officer filed a Petition for Termination of Parental Rights seeking to terminate both Mother's and Father's parental rights to J.A.R. The Petition alleged, inter alia, that J.A.R. had been under the jurisdiction of the family court for a period in excess of one year, that conditions of a potentially harmful nature continued to exist, that there was little likelihood the conditions would be remedied, and that the continuation of the parent-child relationship greatly diminished J.A.R.'s prospects for early integration into a stable and permanent home. Specifically, the Petition alleged that Mother "has had no contact with the child since March 30, 1995 and has been repeatedly incarcerated and has provided no financial or other support for the care of the child and is unable to provide a stable home for the child." It also alleged that Father had not been in contact with J.A.R. for more than six months and had not provided financial or other support since that time, had failed to attend parenting classes, and had failed to contact DFS to work toward reunification with J.A.R.
After a hearing, the trial judge entered a judgment on April 23, 1997, terminating Father's parental rights under Section 211.447.2(3) on the ground that J.A.R. had been under the family court's jurisdiction for more than one year, potentially harmful conditions continued to exist, and there was little likelihood that those conditions would be remedied so that J.A.R. could be returned to her parents in the near future. The court also found that Father "failed to participate in individual therapy, parenting skills training and generally failed to work toward reunification." The court terminated Mother's parental rights under Section 211.447.2(1) on the ground that she had abandoned J.A.R. "in that for a period of six months or longer *750 the mother left said child without any provision for parental support and without making arrangements to visit or communicate with the child...." Mother has not appealed the termination of her parental rights and that determination is final. Father has appealed the termination of his parental rights. We address his arguments below.
II. STANDARD OF REVIEW
We will affirm the trial court's order terminating a parent's rights unless it is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976); In Interest of D.T.B., 944 S.W.2d 321, 322 (Mo.App.1997). We review the facts and all reasonable inferences therefrom in the light most favorable to the trial court's order. D.T.B., 944 S.W.2d at 322; In Interest of J.M.L., 917 S.W.2d 193, 195 (Mo.App. 1996).
III. ADMISSION OF REPORT
In his first point on appeal, Father claims that the trial court improperly relied on a report prepared by DFS. Father argues that the report contained hearsay which should not have been used as substantive evidence for the purpose of establishing the statutory grounds for termination.
Section 211.447.2 provides that the juvenile court may terminate a parent's rights if it finds both that termination is in the best interests of the child and that one or more statutory grounds for termination exist. § 211.447.2.[1] "The court may reach the issue of the best interests of the children only after it has made a determination that one or more of the statutory grounds for termination exists." In Interest of M.H., 859 S.W.2d 888, 896 (Mo.App.1993). In termination cases, except those conducted upon the consent of the parent, the court must order an investigation and social study to be made by the juvenile officer, by DFS, or by an agency licensed to care for children and the resulting "written report shall be made to the court to aid the court in determining whether the termination is in the best interests of the child." § 211.455.3 (emphasis added).
At the hearing on the termination petition, the attorney representing the Juvenile Officer offered into evidence Exhibit Number 2, which was a termination of parental rights study prepared by Jennifer Smith, a social service worker for DFS. Father's counsel objected, stating:
Your Honor, I object to the admission of the juvenile study to the extent that it should not be used to weigh against the statutory grounds for termination. Missouri case law is clear that the juvenile study can be considered for determining the best interest of the child.
I would like to object to any use of the juvenile study with respect to the statutory grounds for termination because the juvenile study is hearsay. It doesn't satisfy the business records exception to hearsay in that it was not prepared at the time of the events it records.
Specifically Iif the Court would be interested in entertaining this, I know that several aspects of the juvenile study contain hearsay within hearsay. Even if it did qualify as a business record I think it would be inadmissible for those reasons.
Counsel for the Juvenile Officer responded that the report was admissible, pursuant to statute, for the purpose of determining the best interests of the child. She also pointed out that any hearsay concerns were alleviated because the witnesses were present to testify to matters within their personal knowledge. The court overruled the objection, but informed Father's counsel that if he had "specific objections as you go, well, go ahead and object."
On appeal, Father again argues that the social worker's report was admissible only to aid the court in determining whether termination of Father's rights was in J.A.R.'s best interests, and asserts that the court below erroneously also relied on it to establish one of the statutory grounds for termination.
We agree with Father that In re S.P.W., 707 S.W.2d 814 (Mo.App.1986), and similar cases have held that the Section 211.455.3 *751 does not itself authorize the court to use the social report to determine whether one of the statutory grounds of termination exists, and that unless another ground for admission exists for all or part of the report, it should be considered by the court only on the issue of whether termination is in the best interests of the child. The mother in In re S.P.W. similarly argued that the court erred in admitting the social files on each of the children. The mother argued that a hearing for termination of parental rights should be bifurcated and the social worker's report considered only after the court has decided that statutory grounds for termination exist.
Although this Court rejected the suggestion that the hearing should be bifurcated, we did hold that the social worker's report was admissible only on the issue of whether termination is in the best interests of the child and is not admissible on the issue of whether there are statutory grounds for terminating the parent's rights, stating:
In such termination cases, the first concern of the trial court is to focus on the issue of the severance of the parent's personal rights.... All the rules of evidence strictly apply. The severance of the parent-child relationship is an exercise of awesome power which requires literal compliance with statutory authority.... The social reports would not be admissible in connection with this first concern of the court unless they were properly qualified.
. . . .
In termination cases, the second question for the court is whether termination of parental rights is in the best interest of the child. In connection with that issue, the court may consider the social report prepared pursuant to § 211.472.[2]
Id. at 820.
Father claims that "[t]he Court undoubtedly relied on the Exhibit that was accepted by the Court into evidence to find grounds to terminate the parental rights of [Father]." As support, Father states that the court's judgment contains findings based on information contained in the social worker's report. That information was also contained in the in-court testimony of Ms. Smith, the social worker for DFS, and Mark McCarthy, the counselor to whom Father was referred by DFS, however. Father seems to argue that if the social report could not be used to support a finding that a ground for termination exists, then neither could the in-court testimony of these witnesses be used for that purpose. Father cites nothing to support that argument, however, and we do not find it meritorious.
The testimony of Ms. Smith and Mr. McCarthy was independently admissible. It was not hearsay and Section 211.455.3 does not purport to state that social workers cannot testify in person on issues relevant to whether grounds for termination exist. Indeed, such a statute would make no sense, for social workers often will have very relevant information on issues relevant to termination. The fact that some of the information they testified to was relevant to both issues before the court and overlapped with some of the evidence in the social report does not call for a different result. "Trial judges are perfectly capable of receiving some evidence for one purpose and not another." S.P.W., 707 S.W.2d at 820. Moreover, on appeal, this Court presumes "the trial judge, as the trier of fact, was not prejudiced by any inadmissible evidence and was not influenced by such evidence in reaching his decision." State v. Clay, 909 S.W.2d 711, 716 (Mo.App.1995). Finally:
While it is thus clear that a termination order must be grounded upon two technically distinct determinationsone, that termination is in the best interest of the child and two, that one or more of the specified grounds existsit should be equally clear that these determinations cannot as a practical matter be based upon wholly separate considerations. Indeed, it is difficult to imagine a need for judicial inquiry into a child's best interest apart from consideration of such particular circumstances as would give rise in the first instance to some question whether that interest would be served by termination.
*752 In Interest of H.J.P., 669 S.W.2d 264, 271 (Mo.App.1984). Here, there is no evidence that the trial court failed to properly limit its consideration of the social report, and the evidence of the witnesses was relevant to both the determination whether grounds for termination existed and the determination whether termination was in the child's best interests.
IV. SUFFICIENCY OF THE EVIDENCE
Father also argues that, without consideration of the evidence contained in the social report, there was insufficient evidence to support a finding that one of the grounds for termination of parental rights existed. We disagree. There was ample other evidence to support a finding of the existence of one of the statutory grounds to terminate Father's parental rights to J.A.R.
At the hearing on the petition, Ms. Smith and Mr. McCarthy both testified as to matters with their own personal knowledge. Ms. Smith testified that since she had first been assigned to J.A.R.'s case in November 1995, Father's housing situation had been unstable and he had lived in three different residences. These residences needed repair and Ms. Smith considered them unsafe for a child. Father had no visits with J.A.R. between December 8, 1995, and March 15, 1996, and failed to keep scheduled appointments to visit her. Father also failed to attend parenting classes, as called for by his written service agreement, even though Ms. Smith gave Father several options as to the location of these classes. From May 1996 to October 1996, Father did visit with his daughter. Ms. Smith was present during those visits and testified that Father did not display appropriate parenting behavior. He had problems disciplining his daughter and would look to either Ms. Smith or the foster mother to tell him what he should do. Since October 7, 1996, Father has not made any attempt to request visitation with his daughter, has not contacted Ms. Smith to inquire about his daughter's condition, and has not provided any support.
DFS also referred Father to Mr. McCarthy for counseling in May of 1996. Mr. McCarthy scheduled weekly appointments with Father, but saw him a total of only nine times. After attending a few sessions, Father failed to show up for two appointments. Mr. McCarthy rescheduled the appointments twice, but Father failed to arrive for either meeting. Mr. McCarthy attempted to continue the counseling, but Father's attendance continued to be sporadic. Finally, after Father missed an appointment scheduled on August 16, 1996, Mr. McCarthy terminated counseling. During the course of the counseling, Mr. McCarthy had an opportunity to observe Father with two of his other daughters. Mr. McCarthy testified that Father lacked parenting skills, had difficulty asserting himself, and would "disappear" when there was someone else to take responsibility.
Father also testified. He admitted that he had failed to attend parenting classes. He also admitted that he stopped contacting DFS in October 1996, and explained that he did so because he did not want his parole officer to find him. Father also testified that he had been recently incarcerated for not reporting to his parole officer; this had happened several times before. Father also testified that he had five other children, none of whom lived with him, and all of whom were at one time or another in foster care.
This evidence supported the court below's determination that grounds for termination existed in that J.A.R. had been under the family court's jurisdiction for more than one year, potentially harmful conditions continued to exist, and there was little likelihood that those conditions would be remedied so that J.A.R. could returned to her parents in the near future. The evidence further supported the determination that termination was in J.A.R.'s best interests. Accordingly, we affirm.
HANNA and RIEDERER, JJ., concur.
NOTES
[1] Unless otherwise indicated, all statutory references are to Missouri Revised Statutes 1994.
[2] Section 211.472 was then the equivalent of current Section 211.455. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1676617/ | 14 S.W.3d 405 (2000)
Irving Edward KINGSBURY, III, Appellant,
v.
The STATE of Texas, Appellee.
No. 10-99-172-CR.
Court of Appeals of Texas, Waco.
March 1, 2000.
*406 Lateph A. Adeniji, Fort Worth, for appellant.
Tim Curry, Crim. Dist. Atty., Charles M. Mallin, Asst. Crim. Dist. Atty., Fort Worth, for appellee.
Before Chief Justice DAVIS, Justice VANCE, and Justice GRAY.
OPINION
BILL VANCE, Justice.
Irving Kingsbury was convicted of deadly conduct and making a terroristic threat. See TEX. PEN.CODE ANN. §§ 22.05, 22.07 (Vernon 1994). He was sentenced to 180 days for the terroristic threat and one year in jail plus a $2,000 fine for the deadly conduct. Kingsbury brings three issues for appellate review, asserting that: 1) the court erred in admitting evidence; 2) the court erred in making prejudicial statements concerning that evidence; and 3) the evidence is legally insufficient to support the verdict. Finding no error and finding the evidence sufficient to support the verdict, we will affirm the judgment.
FACTS
On October 17, 1998, Kingsbury arrived home around 11:00 p.m. and asked his wife, Doris, where she had placed his guns. He explained to her that he needed the guns to shoot some people who had stolen his spark plug wires. Doris stated that *407 she did not know about any guns, and Kingsbury became angry. He poured gasoline into a bug sprayer, got a propane bottle, and told Doris that he was going to "burn [her] ass up." He pumped the sprayer with the nozzle close to Doris' face and tried to ignite it with a cigarette lighter, but it did not work. Doris ran outside and then returned inside, called her sister, then called 9-1-1. Kingsbury poured gasoline around the house, telling Doris that he was going to "burn this M.F. house up with [her] in it," and tried to light some newspapers on the porch, but could not get them to ignite. When the police arrived, they ordered Kingsbury to put down the cigarette lighter and the bug sprayer, but he refused. The officers had to forcefully stop Kingsbury. At the officers' direction, Doris threw the "hissing" propane bottle into the street. Kingsbury was arrested. The gas can and bug sprayer were not collected by the police.
ADMISSION OF EVIDENCE
In his first issue, Kingsbury argues that the court erred in admitting State's Exhibit 1, the bug sprayer, into evidence during the guilt/innocence phase of trial. The crux of Kingsbury's argument is that, because the police failed to take the bug sprayer into evidence on the night of the incident, no chain of custody can be established and, therefore, no proof made that it has not been tampered with since that time. It is undisputed that the bug sprayer stayed in Doris' custody from October 17, 1998, until trial on May 26, 1999. She brought it with her to court on May 26.
Doris testified that the bug sprayer was in the same condition on the day of trial as it was the night of the incident. She testified that it had not been altered at all and that it was kept in a storage house until the day of trial. The only objection made was that the sprayer was "not from proper custody." That objection was overruled and the bug sprayer was admitted. We interpret Kingsbury's complaint to be that the police did not take custody of the exhibit on the night of the incident and, therefore, cannot establish that it was in the same condition on the day of trial as it was on the night of the incident.
Rule of Evidence 901 provides the requirements for authenticating or identifying evidence. The relevant part states:
Rule 901. REQUIREMENT OF AUTHENTICATION OR IDENTIFICATION
(a) General Provision. The requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.
(b) Illustrations. By way of illustration only, and not by way of limitation, the following are examples of authentication or identification conforming with the requirements of this rule:
(1) Testimony of Witness with Knowledge. Testimony that a matter is what it is claimed to be.
TEX.R. EVID. 901. Although the Rules of Evidence do not specifically address "proper custody," Rule 901(a) states that identification for admissibility purposes is satisfied if the evidence is sufficient to support a finding that the matter in question is what its proponent claims. Silva v. State, 989 S.W.2d 64, 67-68 (Tex.App.-San Antonio 1998, pet. ref'd) (citing Simmons v. State, 944 S.W.2d 11, 12 (Tex.App.-Tyler 1996, no pet.)). Rule 901 requires only a showing that satisfies the trial court that the matter in question is what the State claims. Id. (citing Garner v. State, 939 S.W.2d 802, 805 (Tex.App.-Fort Worth 1997, pet. ref'd)). Thus, proof of custody goes to the weight rather than the admissibility of the evidence. Id. Absent evidence of tampering or commingling, theoretical breaches in the chain of custody do not affect the admissibility of evidence. Moore v. State, 821 S.W.2d 429, 431 (Tex. App.-Waco 1991, no pet.).
Kingsbury made no offer of evidence of tampering or commingling. He *408 merely objected that the evidence was "not from proper custody." We cannot say that the court abused its discretion in admitting the bug sprayer into evidence. See Garner v. State, 848 S.W.2d 799, 803 (Tex. App.-Corpus Christi 1993, no pet.). Issue one is overruled.
COMMENTS BY THE COURT
Kingsbury's second issue asserts that the court made prejudicial statements concerning the bug sprayer. In giving permission to the State to show the bug sprayer to the jury, the Court stated, "Why don't you keep a hold of it. Okay. Since there's gasoline in, keep it ... Just hold it up, and let them see it. That's good enough right now." Kingsbury complains that the court's statement that there was gasoline in the sprayer went to an important element of the offense, i.e., that the sprayer did in fact contain flammable liquid, which is a deadly weapon. However, no objection was made. Therefore, this issue is not preserved for review. See Denison v. State, 651 S.W.2d 754, 761 (Tex.Crim.App.1983); White v. State, 601 S.W.2d 364, 366 (Tex.Crim.App.1980); Marini v. State, 593 S.W.2d 709, 716 (Tex. Crim.App.1980). Issue two is overruled.
LEGAL SUFFICIENCY OF THE EVIDENCE
In his last issue, Kingsbury complains that the evidence is insufficient to support the verdict. Although he does not say whether this is a legal or factual sufficiency complaint, we construe it as a complaint that the evidence is legally insufficient to support the verdict because Kingsbury cites only cases which precede Clewis v. State, 922 S.W.2d 126, 129 (Tex.Crim.App. 1996), which recognized factual sufficiency of the evidence as a review standard. See, e.g., Jackson v. State, 672 S.W.2d 801, 803 (Tex.Crim.App.1984).
In determining whether the evidence is legally sufficient to support the verdict, we view the evidence in the light most favorable to the verdict, asking whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Weightman v. State, 975 S.W.2d 621, 624 (Tex. Crim.App.1998); Lane v. State, 933 S.W.2d 504, 507 (Tex.Crim.App.1996) (citing Jackson v. Virginia, 443 U.S. 307, 318-19, 99 S. Ct. 2781, 2788-89, 61 L. Ed. 2d 560 (1979)); Westfall v. State, 970 S.W.2d 590, 595 (Tex.App.-Waco 1998, pet. ref'd). The evidence is measured by the elements of the offense as defined by a hypothetically correct jury charge for the case. Malik v. State, 953 S.W.2d 234, 238-40 (Tex. Crim.App.1997).
A person commits the offense of terroristic threat if he threatens to commit any offense involving violence to any person or property with intent to place any person in fear of imminent serious bodily injury. TEX. PEN.CODE ANN. § 22.07(a)(2). Kingsbury asserts that he was incapable of forming the necessary intent because he had been drinking prior to the incident. It is well established that voluntary intoxication is not a defense to the commission of a crime. Id. § 8.04(a) (Vernon 1994). Thus, we look to Kingsbury's acts, words, and conduct to see if intent can be inferred. See Dues v. State, 634 S.W.2d 304, 305 (Tex.Crim.App.1982).
A person commits deadly conduct if he recklessly engages in conduct that places another in imminent danger of serious bodily injury. TEX. PEN.CODE ANN. § 22.05(a). Kingsbury asserts that the evidence is legally insufficient to establish that he used a deadly weapon and, therefore, cannot support a finding of deadly conduct.
Doris' testimony that Kingsbury poured gasoline into a bug sprayer, got a propane bottle, and told her that he was going to "burn [her] ass up" while pumping the gasoline into her face and trying to ignite it with a cigarette lighter is evidence from which the jury could have inferred Kingsbury's intent to place Doris in fear of imminent serious bodily injury. His intent *409 can further be inferred from his comments to Doris that he was going to burn the house up with her in it. The evidence is sufficient to establish that Kingsbury made a terroristic threat against Doris. Weightman, 975 S.W.2d at 624.
This same testimony supports a finding that Kingsbury engaged in deadly conduct. He suggests that there is no evidence that he used a deadly weapon, although the evidence is that he used a flammable liquid. Nevertheless, there is no requirement that a deadly weapon was used. See TEX. PEN.CODE ANN. § 22.05(a). The evidence is sufficient to support the jury's verdict on both charges. Issue three is overruled.
Having overruled each issue presented, we affirm the judgment. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2490976/ | 308 F.Supp.2d 791 (2004)
UNITED STATES of America, Plaintiff,
v.
REAL PROPERTY IN SECTION 9, TOWN 29 NORTH, RANGE 1 WEST, TOWNSHIP OF CHARLTON, OTSEGO COUNTY, MICHIGAN, Defendant,
Daniel S. Gahagan, Michael J. Gahagan, and Agnes Riddle-Gahagan, Claimants.
No. 87-10338-BC.
United States District Court, E.D. Michigan, Northern Division.
March 23, 2004.
*792 Neil P. Wackerly, Allsopp, Kolka, Bay City, MI, Daniel Gahagan, pro se, Newberry, FL, Michael J. Gahagan, pro se, Avon, CO, Daniel S. Gahagan, Johannesburg, MI, for Claimants.
*793 OPINION AND ORDER GRANTING GOVERNMENT'S MOTIONS FOR SUMMARY JUDGMENT OF FORFEITURE AS TO CLAIMANTS DANIEL AND MICHAEL GAHAGAN AND AS TO CLAIMANT AGNES RIDDLE-GAHAGAN, DENYING MOTIONS FOR SUMMARY JUDGMENT BY CLAIMANTS DANIEL AND MICHAEL GAHAGAN AND BY CLAIMANT AGNES RIDDLE-GAHAGAN, DENYING MOTION BY CLAIMANT DANIEL GAHAGAN FOR RELEASE FROM ARREST, DENYING MOTION BY CLAIMANT DANIEL GAHAGAN FOR SUMMARY JUDGMENT PURSUANT TO THE EXCESSIVE FINES CLAUSE OF THE EIGHTH AMENDMENT, DENYING MOTION BY CLAIMANT DANIEL GAHAGAN FOR COMPENSATION FOR SUPPRESSION OF EVIDENCE, AND DENYING GOVERNMENT'S MOTION TO STRIKE
LAWSON, District Judge.
This forfeiture action, on remand from the court of appeals, is in its seventeenth year. The government originally filed a verified complaint in 1987 seeking to forfeit certain real estate, personal property, and the proceeds from the sale of certain of those items. The real estate was divided into nine parcels for analytical purposes, however prior adjudications and concessions have narrowed the dispute to focus on three parcels of real estate (including surface and mineral rights) claimed by Daniel and Michael Gahagan, and a mortgage interest in one of those parcels claimed by Agnes Riddle-Gahagan. The layout of the parcels is set forth in the diagram attached as an appendix to this opinion, reference to which is necessary to understand the history of this case and the parties' arguments.
The original judge presiding over this case, the Honorable James P. Churchill, held in 1992 that the government established probable cause to believe that Parcels A, B, C and D (but not parcel E) were used to facilitate the distribution of controlled substances, and that there was probable cause to believe that a limited interest in Parcels D and E were proceeds in exchange for controlled substances, although the installment contract for Parcel E was paid in full before the forfeiture act became effective and therefore no part of Parcel E was subject to forfeiture. Judge Churchill also found that the government had no valid claim to any of the sale proceeds or interests in Parcels A, B, C2, D2, E2, or any of the personal property. He also held that Agnes Riddle-Gahagan's mortgage interest in Parcel D must be determined in later proceedings, although she was entitled to innocent owner status with respect to her interest in Parcels A, B, C and E. See dkt. # s 403, 499, 516. District Judge Robert H. Cleland, the second judge to have presided over this matter, entered judgment in favor of the government in 1997 determining that the claimants failed to overcome the government's probable cause showing, their affirmative defenses, including those based on the Excessive Fines Clause of the Eighth Amendment and the Double Jeopardy Clause of the Fifth Amendment, lacked merit, and the government was entitled to forfeiture of Parcels C1, D1 and D3. See dkt. # 609. In a later proceeding, Judge Cleland found that Agnes Riddle-Gahagan failed to establish by a preponderance of evidence that she was an innocent owner of her mortgage interest in Parcel D1 and declared that interest subordinate to the government's interest in the parcel. The parties conceded that Parcels A and B were subject to forfeiture.
*794 The claimants appealed the decision with respect to Parcels C1, D1 and D3. While the appeal was pending, Congress passed the Civil Asset Forfeiture Reform Act of 2000, 114 Stat. 202, 18 U.S.C. § 983 (2000) (CAFRA), which, among other things, changed the government's burden of proof in forfeiture cases. The court of appeals held that the legislation was remedial and applied to these proceedings. See United States v. Real Property in Section 9, Town 29 North, Range 1 West Tp. of Charlton, Otsego County, Mich., 241 F.3d 796 (6th Cir.2001). The case was remanded to this Court "for further proceedings applying the new forfeiture statute to this case." Id. at 800.
On remand, the parties have filed a variety of motions, some of which encompass matters already ruled upon by predecessor judges. The government has renewed its motion for summary judgment arguing that the undisputed evidence establishes its right to forfeiture under the preponderance of evidence standard, and Judge Cleland's ruling rejecting the claimants' defenses should remain intact. The claimants also moved for summary judgment contending that the government cannot meet the new and higher burden of proof, which requires the government to "establish that there was a substantial connection between the property and the offense." 18 U.S.C. § 983(c). The Court finds that the government has satisfied the requirements of CAFRA, the claimants' motions lack merit, and the government is entitled to a judgment of forfeiture of Parcels C1, D1 and D3.
I. Background
A. Facts
The claimants in this civil forfeiture case are two brothers, Daniel and Michael Gahagan, and their mother, Agnes Riddle Gahagan. The case now concerns three parcels of property in Otsego County, Michigan, identified as Parcels C1, D1 and D3. This case began with an investigation into the drug trafficking activities of Daniel and Michael and Michael's then-girlfriend, Susan Soper. Daniel and Michael eventually entered conditional guilty pleas, and they challenged on appeal the trial court's adverse ruling on a motion to suppress evidence. The court of appeals discussed the facts in its ruling affirming the convictions, United States v. Gahagan, 865 F.2d 1490, 1491-94 (6th Cir.1989):
On May 21, 1987, an indictment was returned against Daniel Gahagan, his brother Michael Gahagan, and Susan Soper. A superseding indictment against the same three individuals was returned on July 29, 1987. The three were charged with conspiracy to possess with the intent to distribute and to distribute marijuana and hashish in count one of the indictment. Daniel Gahagan and Michael Gahagan were also charged in count five with distributing approximately 141 grams of hashish, in count six with possession with the intent to distribute approximately 840 grams of marijuana, and in count seven with possession with the intent to distribute approximately 311 grams of hashish. Michael Gahagan, in addition to being charged in the conspiracy charge in count one, and counts five, six and seven, was charged in count two with distributing approximately 108 grams of marijuana, and count three with distributing approximately eighty-five grams of marijuana, and count four with distributing approximately 110 grams of marijuana.
The Gahagans filed a motion to suppress the evidence and a motion in limine on June 25, 1987. A second motion in limine was also filed on July 13, 1987. Soper joined in the motions and also filed a motion to sever. [District Judge James P. Churchill] heard testimony and oral arguments on the motions on July *795 29 and July 30, 1987. [Judge Churchill] denied the motion to suppress the evidence and granted in part and denied in part the motions in limine. After denying the motion to suppress, [Judge Churchill] acknowledged the closeness of the issues and suggested the possibility of a conditional plea.
Subsequent to the court's rulings, the three defendants entered guilty pleas while reserving their rights for appeal pursuant to Rule 11(a)(2).... The Gahagans pled guilty to count seven of the indictment and each was sentenced to a two-year term of imprisonment, followed by a two-year special parole term. Susan Soper entered a plea of guilty to a superseding information and was sentenced to a sixty-day term of imprisonment. [The three individuals filed a notice of appeal of their sentence and conviction].
Prior to the search in September of 1986, the defendants were under an investigation initiated by Jerry Boerema, an investigator for Otsego County Prosecutor's Office, for a period of approximately nine months. During that period, an informant[, Roger Dale Byars,] allegedly made three separate purchases of illegal narcotics under Boerema's supervision ("controlled buys") at a Gahagan residence in January, February, and March of 1986. In September of 1986 and shortly before the search of the Gahagan residence, Boerema contacted the Drug Enforcement and Administration ("DEA") office in Saginaw, Michigan and requested assistance from the DEA. Michael Vetter, a DEA agent, was assigned to the case.
On September 12, 1986, [Byars] made a fourth controlled buy from the Gahagans. Thereafter, Agent Vetter sought a federal search warrant from Judge William Porter, a circuit court judge in the State of Michigan. Judge Porter issued the warrant based upon the affidavit of Michael Vetter, which was based upon Jerry Boerema's nine month investigation.
The warrant itself listed the premises to be searched as 7609 Douglas Lake Road, Johannesburg, Michigan. Vetter's affidavit described the premises for which the warrant was sought as
7609 Douglas Lake Road, Charleton Township, Otsego County, Johannesburg, Michigan, three story wood frame house with natural wood siding with an unattached four-car garage with natural color siding. Also located on the property is a single story wood frame log cabin-type structure painted dark brown in color. Also located on the property is a small wood frame shed-type building with a metal roof.
Vetter's affidavit incorporated a second affidavit, a multipage document, which set out in detail the investigation, the controlled buys, and facts upon which the officers believed established probable cause.
Vetter used a printed affidavit form calling for a recitation of the grounds for the search and seizure and the facts that established the grounds for the issuance of the search warrant. That recitation was accomplished by the attached and incorporated second affidavit which was seven pages in length and contained thirty-six separate paragraphs of information. The affidavit established that a confidential informant had purchased controlled substances, marijuana and its derivatives, from the Gahagans over a six-year period and that three controlled purchases of marijuana were made at the property known as 7609 Douglas Lake Road on January 29, 1986, February 12, 1986 and March 20, 1986. The affidavit also established that Officer Boerema advised Vetter that the *796 confidential informant had been informed by the Gahagans that narcotics were kept in different locations upon and about the property located at 7609 Douglas Lake Road. The affidavit also established that when controlled substances were purchased from the Gahagans, they would often take place in a one-story wood frame cabin and the Gahagans would obtain the marijuana from other locations on the property. The information in the affidavit also established that the Gahagans engaged in a detailed accounting of the purchases made on a cash basis and a credit basis and recorded such transactions in a separate ledger. The affidavit also set out the factual details regarding the controlled buy on September 12, 1986, the day of the search. The affidavit established that the affiant, Vetter, was in contact with the confidential informant before and after the controlled buy. Officer Vetter searched the confidential informant and his vehicle for controlled substances prior to the controlled buy. Officer Vetter then gave the informant government funds that were pre-marked with instructions to drive his vehicle to 7609 Douglas Lake Road and purchase marijuana from the Gahagans. Officer Vetter kept the confidential informant under direct surveillance and observed the informant drive into and enter the property known as 7609 Douglas Lake Road. Officer Vetter and other law enforcement officials observed the confidential informant exit the property of 7609 Douglas Lake Road and was kept under surveillance until a predetermined meeting place was reached by the confidential informant. After receipt of the marijuana purchased by the confidential informant, another search of the confidential informant was conducted including the search of his vehicle. The confidential informant advised Officer Vetter that he did in fact drive to 7609 Douglas Lake Road, as directed, and exited his motor vehicle near the front door of the main dwelling at 7609 Douglas Lake Road. The confidential informant advised Officer Vetter that he entered the small cabin with Michael John Gahagan and thereafter purchased marijuana from both the Gahagans.
The search warrant was executed on ... September 12, 1986. Vetter conducted a pre search briefing session for those officers who participated in the search and provided them a description of the premises to be searched. Boerema also assisted Vetter in the pre search briefing session and described the places to be searched. Vetter and Boerema instructed the officers that the place to be searched was Cabin # 3 and House B as they later became known.
The search led to the discovery of approximately 840 grams of marijuana and 311 grams of hashish. The search resulted in the discovery of $4000 in U.S. currency, including $700 in marked bills from the controlled buy which had been made earlier on September 12, 1986. Other items discovered as a result of the search included cocaine paraphernalia, a hand scale, a black and brown ledger book, a "dial-a-gram" scale, a forty-five pound capacity triple beam scale, and two calculators. A number of weapons also were discovered, including a loaded .22 caliber semi-automatic pistol, a loaded .44 caliber magnum revolver, a loaded .357 caliber six shot revolver, a loaded .20 gauge pump shotgun, and a .22 caliber six shot revolver. The bulk of the narcotics discovered were found in Cabin # 3 and the remaining narcotics and other items were found generally in House B.
The motion to suppress the evidence was based upon the claim that the warrant failed to particularly describe the place to be searched. Specifically, the *797 [defendants] asserted that the address of "7609 Douglas Lake Road" alone, was insufficient to include Cabin # 3. The [defendants] maintained that Cabin # 3 is a separate residence with its own address of 7577 Douglas Lake Road. The [defendants] did not raise the claim that the probable cause determination by the state court judge was deficient, but instead focused their arguments on the particularity requirement, and in the alternative, the argument that assuming the warrant was valid, the officers exceeded the scope of the warrant in their search.
...
[Judge Churchill] conducted a two-day evidentiary hearing on the motions. During the hearing, a detailed description of the physical lay-out of the area searched was developed. The general area at issue in this case is a rural, large piece of property with multiple dwellings and structures. It was developed at the hearing, that there were four separate dwellings located in the general area.... [T]he dwelling identified as "Cabin 3" was the principal residence of the defendant Daniel Gahagan at the time of the search. Cabin # 3's address is 7577 Douglas Lake Road. Cabin # 3 is a single story wood, cabin-type home. [Cabin # 3 is located on Parcel B. See Appendix to Opinion.] The defendants Michael Gahagan and Susan Soper resided in "House B." The address for House B is 7609 Douglas Lake Road. House B is a multi-story wood frame house with an unattached garage that was partially completed and under construction since 1981. Daniel Gahagan was a co-owner of House B. [House B is located on parcel D1. See Appendix to Opinion.] When the search warrant was executed, the three [defendants] were found in Cabin # 3.
A cabin identified as # 2 and the house identified as # 4 were not owned or occupied by any of the [defendants] at the time of the search. However, prior to May of 1986, Daniel Gahagan owned House # 4 and it was in this house that the first three controlled buys took place. In May of 1986 he sold the property to a third party. House # 4 is a multi-story wood frame house with a two-car unattached garage. The address for House # 4 is 7539 Douglas Lake Road. Cabin # 2 is a single story wood, cabin-type house located approximately one hundred yards north of House # 4. [House # 4 is located on parcel A. Cabin # 2 is not relevant to the civil forfeiture case].
Driveway # 1 was identified as a driveway that serviced House B, 7609 Douglas Lake Road. There was a dispute over whether Driveway # 1 extended through the foliage to Cabin # 3. The Gahagans claim that there was "a path" that extended along Driveway # 1 past House B to Cabin # 3. However, there was testimony from Agent Vetter, Detective Boerema, and a bulldozer operator who had done work for the Gahagans, that the actual driveway extended to Cabin # 3. Agent Vetter testified that he drove a full-size Bronco on the day of the search between House B and Cabin # 3 without using the four-wheel drive capability.
At one time, Driveway # 2 serviced House # 4 and branched off and also serviced Cabin # 3. When House # 4 was sold in 1986, it was agreed by Daniel Gahagan and the buyer that Driveway # 2 would no longer service Cabin # 3. A new driveway, Driveway # 3, was constructed to provide access to Cabin # 3. Driveway # 3, however, did not exist for the majority of the time the defendants were under investigation but was installed in August, 1986.
At the end of Driveway # 1, the address of 7609 Douglas Lake Road was posted *798 on a sign. The address of 7577, Cabin # 3, was posted at the end of Driveway# 2. The address of 7539, House # 4, was also posted at the end of Driveway # 2. There was no address posted at the end of Driveway # 3. There were no address markings on either House B or Cabin # 3.
At the time that Gahagan owned House # 4 a mailbox was at the end of Driveway # 2 and mail for House # 4, Cabin # 3, and House B were all received at that mailbox. After the sale of House # 4, the mailbox was moved to the end of Driveway # 1 and mail was received at that mailbox for both Cabin # 3 and House B. There was no mailbox at the end of Driveway # 3.
The [defendants'] particularity argument was based primarily on the fact that the address of 7609 Douglas Lake Road alone was insufficient to include Cabin # 3 which had its own address of 7577 given the officers' knowledge that the defendants had lived in at least three of the dwellings identified and that there were transactions that occurred in more than one house. Furthermore, the [defendants] argued that the affidavit which was relied upon by the judge could not be looked to for a further description of the property to be searched because the affidavit was neither attached nor specifically incorporated in the warrant.
The [defendants] also argued to the district court that the officers exceeded the scope of the warrant when they executed the warrant. They argued that the officers should have concluded that they were outside the scope of the warrant when they arrived at House B and discovered more than one dwelling. They argued that a reasonable pre-search investigation would have revealed the fact that Cabin # 3 was a separate residence apart from House B.... The [defendants] attempted to underscore Daniel Gahagan's testimony that when he read the warrant after he was served with it, he told the executing officers that they had the wrong address for a search of Cabin # 3.
Gahagan, 865 F.2d at 1491-94 (citations and footnotes omitted).
As mentioned, Judge Churchill ruled from the bench and denied the motions to suppress the evidence. The Sixth Circuit affirmed finding that the search of the property was proper, although the search warrant did not include the specific addresses to the property. See id.
The forfeiture proceedings have generated additional evidence, which the government sets forth in its affidavits, depositions and documentary evidence. Although the claimants dispute some of the facts, they offer no evidence and provide no citations to the record to support their contentions, as explained in more detail below. The government has proceeded on two independent theories of forfeiture suggested by 21 U.S.C. § 881(a). One theory calls for forfeiture of any real property that is used to facilitate the commission of a drug crime. See 21 U.S.C. § 881(a)(7). The other theory is based on the premise that the real estate was acquired with drug sale proceeds. See 21 U.S.C. § 881(a)(6).
1. Facilitation theory
The government points to the testimony of informant Roger Dale Byars, who had been renting a cabin from the Gahagans. Byars decided to become an informant after Michael Gahagan allegedly "turned him in" for stealing a motorcycle. Gov't's Mot. S.J. Ex. D, Byars dep. at 9. Byars' first "controlled buy" was in January 1986. At that time, he purchased marijuana and hashish from Michael Gahagan while Michael was living at House # 4 on Parcel A. Id. at 19. Byars made several other controlled buys from Michael at House # 4 throughout the year. He testified at his deposition that he purchased "illegal *799 drugs" from the Gahagans at House B, on Parcel A and B, and he testified that he saw illegal drugs stored on Parcel D, and in Cabin # 3. Id. at 35-37. In his last controlled buy in September 1986, Byars went to purchase marijuana from Michael at House B; however, he did not find anyone at House B so he went to Cabin # 3. Id. at 24-29. At Cabin # 3 he found Michael Gahagan and purchased "drugs" from him. Id. at 29.
Byars testified that Michael Gahagan kept a black ledger book in which was recorded Byars' indebtedness for past drug purchases and that Byars had seen the ledger book in House # 4, in Cabin # 3, and in House B. Id. at 29-30. The ledger book was seized during the execution of the search warrant. Vetter Test. at Grand Jury, Gov't Ex. H at 23-24. Byars also testified that his sister would leave his cabin with nothing in her hands and come back with drugs and that he assumed she was buying drugs from Michael Gahagan. Id. at 62.
In 1983, Susan Soper moved to Douglas Lake and rented House # 4 on parcel A from Agnes Gahagan. Gov't E. I, Soper dep. at 3, 77-78, 102. Soper testified at her deposition that Michael Gahagan stored marijuana, a triple beam scale, and "baggies" in the basement of House # 4 while Soper was living there and that only Daniel and Michael had access to the marijuana and paraphernalia in the basement. Id. at 36. Soper observed the marijuana, at times contained in a 20 gallon garbage bag, on several different occasions while she was living on the Gahagans' property. Id. at 36, 43.
In the summer of 1984, Soper began an intimate relationship with Michael Gahagan and the two lived together for a while in House # 4 and then eventually moved to House B on parcel D. Id. at 82-86, 102. Daniel Gahagan also apparently lived in House # 4 for a while, see id. at 36, then moved into Cabin # 3. In May 1986, the Gahagans sold House # 4 to a man named Roberts. See Gov't Ex. N., Testimony of Daniel Gahagan at Suppression Hearing, at 229. As a result, Daniel Gahagan moved the marijuana from House # 4 to Cabin # 3. Id. at 102-03. Soper also testified that she saw a marijuana plant growing in the garden behind Cabin # 3. Id. at 103. This testimony is corroborated by the now deceased Ben Taskey, a bulldozer operator who did construction work for the Gahagans, who allegedly told Bailey Sides, another building contractor for the Gahagans, that he saw marijuana growing in the garden at Cabin # 3. Gov't Ex. K, aff. of Bailey Sides at ¶ 5. Marijuana and drug paraphernalia were seized in Cabin # 3 during the search. Gov't Ex. J., Boerema dep. at 20-22; Gov't Ex. E, Vetter dep. at 12-13.
As discussed above, until August 1986, there was no roadway going directly from Douglas Lake Road to Cabin # 3. Instead, one had to access Driveway # 2, or Driveway # 1 to reach Cabin # 3. See Gov't Ex. A; Gov't Ex. I, Soper dep. at 99 The government claims, and the evidence appears to support, that between the time House # 4 was sold in May 1986 to August 1986 when Driveway # 3 was built, the only way the Gahagans or anybody else could reach Cabin # 3, where the drugs were stored, was to pass across parcel C along the two track road from House B. As discussed above, Mr. Roberts blocked the road from House # 4 to Cabin # 3 after he purchased House # 4. See Gov't Ex. N at 245-46. Of course, Parcel B and Cabin # 3 could have been reached by going across the water from Parcel D, see Gov't Ex. S at 119-22, 128-29, but this route seems highly unlikely given the distance between the property and the difficulty in crossing water versus using a common road. Moreover, the claimants never specifically allege that they took an amphibious *800 route to Cabin # 3 from House B. The government contends that although no controlled buys occurred between May and August 1986, per the deposition testimony of Byars and Soper, uncontrolled transactions were conducted during that summer, which were facilitated by the access to Cabin # 3 made possible by Parcel C. Thus, the government argues that Parcel C was used to facilitate drug transactions.
As for the government's facilitation theory for Parcel D, including House B and the adjacent four-car garage, the government contends that the evidence of facilitation on these parcels goes beyond just providing access to Cabin # 3, where the drugs were stored. Instead, the evidence clearly shows that House B and the land were used for drug transactions. Bailey Sides, who built the garage for the Gahagans during the summer 1986, testified that he observed activities at House B which caused him to believe that Michael and Daniel were engaged in drug trafficking there. Sides stated that the Gahagans would have between seven or eight visitors each day, the visitors appeared to be between 18 and 25 years old, and stayed only about 20 minutes. Gov't Ex. K, aff. of Sides at ¶¶ 6-9. Sides also stated that Michael Gahagan told him that the second story of the garage he was building needed a gambrel roof so that a greenhouse could be built there. Id. at ¶ 6. The government alleges that the Gahagans were planning on using the greenhouse to grow marijuana because the Gahagans had a sizeable collection of marijuana seeds and there is no rational purpose for keeping marijuana seeds other than to grow marijuana. In addition, the government alleges that House B had "secret" rooms, which, the government claims, could be used to store narcotics. The government argues, therefore, that the record supports its contention that Parcel D was used to facilitate drug trafficking.
2. Proceeds theory
The government alleges that Parcel D was purchased, at least in part, with proceeds from the claimants' drug trafficking. In 1975, Agnes Gahagan bought 66 acres of land on Douglas Lake from Erma Brackenstose, including what is now referred to as Parcel D. Later that year Agnes transferred her interest in the land to her sons, Michael and Daniel Gahagan, as joint tenants. Gov.'t Ex. S, Brackenstose Testimony at Suppression Hearing at 119-21. Thereafter, Michael and Daniel began sending the payments on the property to Ms. Brackenstose, which are commonly referred to in this case as the "land contract payments." Id. at 121. On November 2, 1987, a warranty deed was issued by Ms. Brackenstose to Michael and Daniel showing that the land had been paid in full for the price of $55,000.00. Gov't Ex. T. At her deposition, Ms. Soper testified that she sent Ms. Brackenstose checks from her checking account each month to pay for the property and that Michael Gahagan would reimburse her for the money she had sent. Soper further testified that in her belief Michael Gahagan got the money to pay for the property from selling marijuana. Gov't Ex. I, Soper dep. at 29-30, 44-45.
The government also points to the luxurious nature of House B, which had, among other things, six natural stone fireplaces, a built in hot-tub and saunas, oak stairways, central heat, air, and vacuum, and a copper roof, see Gov't Ex. O at 13-16; Gov't Ex. H at 15, 20, and the fact that neither Daniel or Michael Gahagan apparently had any legitimate income. Although Michael Gahagan told police that he was employed as a painter, Soper testified that she only saw Michael Gahagan go to work to paint a house on two occasions, see Gov't Ex. I, Soper dep. at 103-04, and Daniel Gahagan stated after his arrest that his occupation *801 was building his own house. See Gov't Ex. H at 24. Moreover, neither brother filed a federal income tax return for the years 1974 through 1986. See Gov't Ex. V. Therefore, the government contends that the record is devoid of any significant, legitimate income for Daniel and Michael Gahagan during the time frame in which they were buying Parcel D from Ms. Brackenstose, building House B, and the two-story, four car garage adjacent to the house. Accordingly, the government maintains that the only means the Gahagans had to pay for Parcel D and the property on it was from the proceeds of their drug trafficking.
B. Procedural history
On November 12, 1987, after Michael and Daniel Gahagan had been sentenced in the criminal case, the government initiated a civil action in rem under 21 U.S.C. § 881(a) by filing a verified complaint of forfeiture in this Court for the forfeiture of various parcels of property owned by the Gahagans that allegedly were used to facilitate a violation of the Controlled Substances Act, 21 U.S.C. § 801 et seq., or were paid for by proceeds from the Gahagans' illegal drug activity. The claimants requested, and Judge Churchill granted, a motion to stay the civil forfeiture case pending the claimants' direct appeals of their conviction and sentence. After the Sixth Circuit rendered its decision affirming the district court in the criminal case, the stay was lifted and a long and contentious period of discovery and motion practice ensued. The issues were narrowed in a series of dispositive motions. On October 29, 1993, Judge Churchill, in a memorandum opinion, ruled that probable cause existed to forfeit Parcels A, B, C and D. In an order dated October 31, 1997, Judge Cleland rejected the claimants' defenses to forfeiture and found that the claimants "failed to meet their burden of proof, the government is entitled to forfeiture of parcels C and D pursuant to 21 U.S.C. § 881(a)(7) and of the land contract payments made on parcel D since mid-1984 pursuant to 21 U.S.C. § 881(a)(6)." Dkt. # 609.
On September 30, 1998, Judge Cleland held a hearing on Agnes Riddle-Gahagan's claim that the mortgage granted to her on Parcel D by her son, Daniel, should be superior to the government's interest because she was an innocent owner. The following are excerpts from the hearing transcript, which are relevant here:
THE COURT: This is the time set by the court for the opportunity to present evidence on the question of innocent ownership claims advanced by the claimant Agnes Gahagan. I believe that all other issues in the case, with this exception, have been resolved by earlier orders of the court.
The posture of the case, I think, Mr. Wackerly [Agnes' attorney], would call upon the claimant to carry a burden, at a minimum, the burden of going forward and probably a burden of proof with respect to whatever is required to establish innocent ownership status and focused upon the remaining parcel or portion of the parcel identified in the file. Are you in accord on those issues?
MR. WACKERLY: Your Honor, it's my understanding that the case law requires the claimant to move forward and places on her a burden of preponderance of the evidence, that's my understanding.
THE COURT: Very good. I think the parcel that we're focused on is parcel D-1, are you in agreement on that?
MR. WACKERLY: I am in agreement on that, that is correct.
THE COURT: Very good. So on parcel D-1 the claimant has the burden of coming forward with evidence and *802 the burden of persuasion by a preponderance.
Gov't Ex. R at 2-3.
After a discussion with the attorney for the government, the court concluded that the rules of evidence applied to the hearing on Agnes Gahagan's innocent owner defense. Id. at 11. Mr. Wackerly, Agnes' attorney, then gave the following opening statement:
Thank you. Your Honor, what I will be presenting today is very limited. I'll be presenting only the testimony of Agnes Gahagan, and that testimony will be limited to what I believe is the time period in question which is 1986 and 1987. I will show that at that time she did not live on the property in question and that she lived at a place called Little Bear Lake which was close to the property in question, but not on the property in question.
We will show that it was her understanding that Michael Gahagan and Daniel Gahagan were living in a house that was located on what we have come to know as either parcel A or B. No one was living in parcel D at the time this even occurred.
Agnes Gahagan knew that the house was being erected on parcel [D][sic]. She also knew that a garage was being erected on parcel [D][sic]. In an effort to assist in the erection of the garage, she lent Michael and Daniel Gahagan the sum of $10,000 to build a garage.
After that occurred, she took a promissory note from Michael Gahagan and Susan Soper, I believe for an automobile that she had, in the amount of $2,500.
And shortly after that, I do believe within days, the property was searched by the federal government and Michael Gahagan and Daniel Gahagan were arrested.
After that time period, she began to lend money to Michael Gahagan, Daniel Gahagan and also to Michael and Daniel on behalf of Susan Soper so that they could pay their attorney fees.
She was advised by counsel that she could obtain a mortgage to secure prepayment. She obtained a mortgage from Michael and Daniel. The mortgage covered parcels D-1, relevant parcels D-1 and E-1, and the mortgage was in the amount of $20,000.
At that time she had advanced for the garage, the car, and attorney fees approximately the amount of $18,500. Within days after taking the note and mortgage, she also advanced the sum of $2,000, taking it over the $20,000 sum for the mortgage note. When Agnes Gahagan did that, she had no idea that criminal activity had taken place on D-1 and E-1. In fact, she believed that the house which on the various diagrams I think has been given a designation as house B was unoccupied.
It was her belief that the boys were living on the northern properties which would be on parcels A and B.
She took a mortgage on D-1 and E-1 having no idea that property was subject to forfeiture; didn't even know what forfeiture was at that time. Didn't have any idea that criminal activity had taken place there. As a matter of fact, shortly before forfeiture action was taken, and we believe this will again show her innocent ownership, she paid the taxes on parcel D-1 and E-1.
Basically what we intend to show is that she had no knowledge that property was used for any criminal activity, and that she took the mortgage in good faith to secure monies that she was giving to her sons Michael and Daniel Gahagan.
Id. at 14-16.
Agnes Gahagan then testified and was cross-examined by the attorney for the government. After Agnes testified, the *803 government called Michael Vetter, who was working as a Drug Enforcement Agency agent at the time of Michael and Daniel Gahagan's arrest, as a witness to testify about events surrounding the government's investigation of the Gahagans. Mr. Vetter was also cross-examined. After closing arguments, the court ruled as follows:
All right. Well the testimony has been received, exhibits have been reviewed, and I take into account the pleadings, proffers of counsel, their arguments, and I think I have enough to rule on the issue with respect to this parcel D and the mortgage interest held by Agnes Ridell Gahagan.
...
Now I don't for any other reason discount her credibility or find her less than rationally credible, and in that regard I accept her testimony that she did not have personal knowledge before the time of the search and the arrest that her sons were then engaged in drug traffic going [sic]. I accept her testimony that she did not have any knowledge before the time of the arrest and the search that any of this property was used for drug trafficking.
Though as counsel has stipulated, as it turns out, it is clear that the large house, the new house sometimes called the duplex [House B], was used, or apparently so at least, for drying marijuana, for storage of a triple beam scale, which I take notice is used in weighing larger quantities of drugs and is a tool of the trade of a drug packager or distributor. So certainly there are reasons to underpin the government's interest in that property.
The question really, it seems to me, is what her state of knowledge was, not at the time of the search but at the time of the July 31 mortgage. And on this I accept a combination of her testimony and the timing of the various events.
I keep in mind here it's the responsibility of the claimant to prove by a preponderance of the evidence that she did not have knowledge of the illegal goings on on the property subject to forfeiture at the time she took the mortgage interest.
Her knowledge at the time of the search and the arrest, I think, is one thing. But even more important is her knowledge and her state of mind as of the 31st of July, 1987 when the mortgage interest was formulated.
And as of that time, I find that Mrs. Gahagan has not proven by a preponderance of the evidence that she was without knowledge of the illegality associated with that parcel on which she took the mortgage interest.
Too much water had passed under the bridge concerning which she was aware, or about which she was aware by that time. There had been extensive court proceedings, though she had been gone I think they said Hawaii. And I accept that for the preceding winter, but by her own statements she was back in May or thereabouts, back to Michigan, living in the lake country. And that's certainly understandable, May, June, July June, July and August being the prime months in that territory, I'm sure.
But by that time, the criminal cases were, in fact, winding to a close, and all of these funds were being paid out with her assistance, which is, I find, understandable; assistance from a mother to her sons financially.
But the suppression hearing, as Miss Parker points out, the timing of that as compared to the taking of the mortgage is just very telling I think. It is clear that it indicates a high degree of awareness and knowledge on her part which she may not now clearly recollect, but *804 which I find borne by the comparison of one date as next to another.
As I said in my introductory comments before the attorneys spoke, the timing of the events and the sequence of events raises suspicion.
...
My conclusion is that the claimant has not proven by a preponderance of the evidence the innocent state of mind that would be required for an innocent owner defense to succeed here.
And I do not need to make any comparative credibility determinations beyond those that I have already noted.
I note, in addition, that there's some evidence certainly in support of her point of view, but some evidence does not translate to evidence that persuades by a preponderance of the evidence. All of that is taken into account.
Id. at 111-115. The court entered an order denying Agnes Gahagan's innocent ownership defense on September 30, 1998 and a judgment was entered for the government on that same day. The order and judgment dismissed the case in its entirety.
The three claimants appealed the adverse rulings. On March 1, 2001, the Sixth Circuit reversed Judge Cleland's decision granting summary judgment for the government on Parcels C and D and remanded the case to this Court with the instruction that the Court should conduct further proceedings applying CAFRA. Although the Sixth Circuit's opinion did not reverse Judge Cleland's ruling that Agnes Gahagan was not an innocent owner of Parcel D1, the court did note that Judge Cleland had "rejected Agnes Gahagan's innocent owner defense and found that the mortgage she held on parcel D should not bar forfeiture." Real Property in Otsego County, Mich., 241 F.3d at 797.
On June 28, 2001, this Court reopened the case and on September 10, 2001 a status conference was held with the parties. On September 17, 2001, the Court entered an order setting deadlines for filing motions for November 13, 2001. The Court later granted the government's motion for an extension of time to file its summary judgment motion. The government filed its motion for summary judgment on December 12, 2001, the claimant's filed a response in opposition on January 17, 2002, and the government filed a reply on January 30, 2002. The claimants filed their motion for summary judgment on December 27, 2001, the government filed a response in opposition on January 18, 2002, and the claimants filed a reply on February 6, 2002. Argument was presented by the government and Daniel Gahagan on December 22, 2003.
II. Summary judgment motions
A. Review standards
As previously mentioned, the government and the claimants each have moved for summary judgment. A motion for summary judgment under Fed.R.Civ.P. 56 presumes the absence of a genuine issue of material fact for trial. The Court must view the evidence and draw all reasonable inferences in favor of the non-moving party, and determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
A fact is "material" if its resolution affects the outcome of the lawsuit. Lenning v. Commercial Union Ins. Co., 260 F.3d 574, 581 (6th Cir.2001). "Materiality" is determined by the substantive law claim. Boyd v. Baeppler, 215 F.3d 594, 599 (6th Cir.2000). An issue is "genuine" if a "reasonable jury could return a verdict for the nonmoving party." Henson v. Nat'l Aeronautics & Space Admin., 14 F.3d 1143, *805 1148 (6th Cir.1994) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505). Irrelevant or unnecessary factual disputes do not create genuine issues of material fact. St. Francis Health Care Centre v. Shalala, 205 F.3d 937, 943 (6th Cir.2000). When the "record taken as a whole could not lead a rational trier of fact to find for the nonmoving party," there is no genuine issue of material fact. Simmons-Harris v. Zelman, 234 F.3d 945, 951 (6th Cir.2000). Thus a factual dispute that "is merely colorable or is not significantly probative" will not defeat a motion for summary judgment that is properly supported. Kraft v. United States, 991 F.2d 292, 296 (6th Cir.1993); see also Int'l Union, United Auto., Aerospace and Agric. Implement Workers of Am. v. BVR Liquidating, Inc., 190 F.3d 768, 772 (6th Cir.1999).
The party bringing the summary judgment motion has the initial burden of informing the district court of the basis for its motion and identifying portions of the record that demonstrate the absence of a genuine dispute over material facts. Mt. Lebanon Personal Care Home, Inc. v. Hoover Univ., Inc., 276 F.3d 845, 848 (6th Cir.2002). The party opposing the motion then may not "rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact" but must make an affirmative showing with proper evidence in order to defeat the motion. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir.1989). A party opposing a motion for summary judgment must designate specific facts in affidavits, depositions, or other factual material showing "evidence on which the jury could reasonably find for the plaintiff." Anderson, 477 U.S. at 252, 106 S.Ct. 2505. If the non-moving party, after sufficient opportunity for discovery, is unable to meet his or her burden of proof, summary judgment is clearly proper. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The party who bears the burden of proof must present a jury question as to each element of the claim. Davis v. McCourt, 226 F.3d 506, 511 (6th Cir.2000). Failure to prove an essential element of a claim renders all other facts immaterial for summary judgment purposes. Elvis Presley Enters., Inc. v. Elvisly Yours, Inc., 936 F.2d 889, 895 (6th Cir.1991).
"The fact that the parties have filed cross-motions for summary judgment does not mean, of course, that summary judgment for one side or the other is necessarily appropriate." Parks v. LaFace Records, 329 F.3d 437, 444 (6th Cir.2003). Thus, when this Court evaluates cross motions for summary judgment, it "must evaluate each motion on its own merits and view all facts and inferences in the light most favorable to the nonmoving party." Westfield Ins. Co. v. Tech Dry, Inc., 336 F.3d 503, 506-07 (6th Cir.2003).
These standards are applicable when deciding a summary judgment motion in a forfeiture action. United States v. $5000.00 in U.S. Currency, 40 F.3d 846, 848 (6th Cir.1994).
B. Applicable law
The civil forfeiture provision of the Controlled Substances Act provides, in pertinent part:
The following shall be subject to forfeiture to the United States and no property right shall exist in them:
...
(6) All moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance or listed chemical in violation of this subchapter, all proceeds traceable to such an exchange, and all moneys, negotiable instruments, and securities used or intended to be used to facilitate any violation of this subchapter.
*806 (7) All real property, including any right, title, and interest (including any leasehold interest) in the whole of any lot or tract of land and any appurtenances or improvements, which is used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of this subchapter punishable by more than one year's imprisonment.
21 U.S.C. § 881(a)(6) and (7). Section 881(a)(6) supports the so-called "proceeds theory" of forfeiture and Section 881(a)(7) constitutes the "facilitation theory."
Before CAFRA, the government had the initial burden of demonstrating that the property was subject to forfeiture. To meet this burden, the government was required to "establish probable cause to believe that a substantial connection exists between the property to be forfeited and the illegal exchange of a controlled substance." United States v. $67,220.00 in United States Currency, 957 F.2d 280, 283 (6th Cir.1992) (quotation omitted). The claimant then was required to come forward with a higher order of proof than required of the government by a preponderance of evidence to defeat a forfeiture claim. With the passage of CAFRA, the government's burden is heightened. Now the government is required to establish by a preponderance of the evidence that the property is subject to forfeiture. 18 U.S.C. § 983(c)(1). The statute provides the following:
In a suit or action brought under any civil forfeiture statute for the civil forfeiture of any property
(1) the burden of proof is on the Government to establish, by a preponderance of the evidence, that the property is subject to forfeiture;
(2) the Government may use evidence gathered after the filing of a complaint for forfeiture to establish, by a preponderance of the evidence, that property is subject to forfeiture; and
(3) if the Government's theory of forfeiture is that the property was used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense, the Government shall establish that there was a substantial connection between the property and the offense.
18 U.S.C. § 983(c). Therefore, the government must still establish a substantial connection that the property at issue is subject to forfeiture; however, it must do so by a preponderance of the evidence, not merely by "probable cause." Pursuant to Real Property in Otsego County, Mich., 241 F.3d at 798, CAFRA applies to this case.
"The burden of showing something by a `preponderance of the evidence,' the most common standard in the civil law, `simply requires the trier of fact "to believe that the existence of a fact is more probable than its nonexistence before [he] may find in favor of the party who has the burden to persuade the [judge] of the fact's existence."'" Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California, 508 U.S. 602, 622, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993) (quoting In re Winship, 397 U.S. 358, 371-72, 90 S.Ct. 1068, 25 L.Ed.2d 368 (1970) (Harlan, J., concurring)). For the government to prevail on its motion for summary judgment, it must persuade the Court that the undisputed facts, while drawing all reasonable inferences in favor of the claimants, establish a substantial connection by a preponderance of the evidence between Parcels C1, D1 and D3 and the drug trafficking crimes alleged, and that no defenses can be proven. For the claimants to prevail on their motions, they must show that the undisputed facts viewed in the light most favorable *807 to the government demonstrate that no substantial connection can be proven, or that the claimants' defenses are established as a matter of law.
C. Analysis as to claimants Daniel and Michael Gahagan
The Court finds that the government has shown by the preponderance of the evidence that the property at issue in this case is subject to forfeiture. See United States v. $99,990.00 in United States Currency, 69 Fed.Appx. 757, 762-63 (6th Cir.2003) (unpublished) (finding that the government had demonstrated by a preponderance of the evidence that property was subject to forfeiture because of the large amount of cash the claimant had in his possession, coupled with the totality of the circumstances of the claimant's drug activity and the fact that the claimant's evidence of legitimate income did not sufficiently explain his possession of $99,900). See also United States v. Six Negotiable Checks in Various Denominations Totaling One Hundred Ninety One Thousand Six Hundred Seventy One Dollars and Sixty Nine Cents ($191,671.69), 207 F.Supp.2d 677, 683 (E.D.Mich.2002) (Rosen, J.) (holding that the government established by a preponderance of the evidence that property at issue was subject to forfeiture).
With respect to Parcel D under the facilitation theory, Byars testified at his deposition that he purchased narcotics from the Gahagans at House B on Parcel D and saw illegal drugs stored on Parcel D. Gov't Mot. S.J. Ex. D, dep. of Byars at 33-37. In his last controlled buy, Byars initially went to House B to purchase drugs, indicating that drugs were likely stored there. He saw Michael's ledger book, which Michael used to facilitate his drug trafficking, at House B. Bailey Sides stated that he saw what appeared to be drug activity occurring at House B. Gov't Ex. K, aff. of Sides at ¶¶ 6-9. Sides also stated that the Gahagans were attempting to build a greenhouse above the garage and the government found a large supply of marijuana seeds in the Gahagans' possession. A triple beam scale was also found at House B, which supported the inference that drug transactions occurred there. Finally, it is appears to be undisputed that between May 1986 and August 1986, the only access the Gahagans had from Douglas Lake Road to Parcel B, where the evidence establishes that the bulk of the narcotics were stored, was across Parcel D. Thus, the government has established by a preponderance of the evidence that Parcels D1 and D3 are subject to forfeiture under the facilitation theory set forth in 21 U.S.C. § 881(a)(7).
With respect to Parcel D and the proceeds theory, the government has offered the direct evidence that some interests in Parcel D are proceeds from the Gahagans' drug sales. Susan Soper disclosed in her deposition testimony that at the time she was living with Michael Gahagan, she would, on more than one occasion, make land contract payments to Erma Brackenstose from the money received from drug sales. Gov't Ex. I, Soper dep. at 29-30, 44-45. The Gahagans have failed to rebut this testimony with evidence that the land contract payments were made with legitimate income. Although they state that they were working during this period and earning a salary, the Gahagans have not provided the Court with pay stubs or other documented proof that would support their contentions. It is more likely than not, therefore, that the proceeds used to pay for the property and to construct and furnish House B on Parcel D were derived from illegal drug sales. See United States v. Thomas, 913 F.2d 1111, 1115 (4th Cir.1990) (finding that because undisputed cash expenditures vastly exceeded the defendant's legitimate income, the government had probable cause for forfeiture); *808 United States v. Dusenbery, 80 F.Supp.2d 744, 754 (N.D.Ohio 1998) (holding that "the absence of legitimate income supports the finding of probable cause in a forfeiture action") (citing United States v. Brock, 747 F.2d 761, 763 (D.C.Cir.1984)). Accordingly, the government has established, by a preponderance of the evidence, that Parcel D is subject to forfeiture under the proceeds theory, 21 U.S.C. § 881(a)(6).
The government has not carried its burden with respect to Parcel C under the proceeds theory. Nor is there is any relevant or credible direct evidence of the use of Parcel C to facilitate a drug transaction. There is, however, circumstantial evidence that supports the facilitation theory. Judge Churchill found: "The record clearly establishes that Parcel B and D were used to facilitate drug transactions. Michael Gahagan was selling drugs on Parcel B while he was living on Parcel D. The most direct, convenient and private route between Parcels B and D is across Parcel C. These facts, when considered with the testimony of the officers who conducted the search, provide convincing circumstantial evidence of probable cause to believe that Parcel C was used as a frequent route of travel between Parcels B and D to facilitate the distribution of controlled substances." See dkt. # 403 at 18. The Court believes that these observations establish that it is more likely than not that Parcel C was used as a means of egress between Parcels B and D and thereby facilitated the drug trafficking activity that Judge Churchill described. The claimants have not come forward with contrary evidence, nor do they point to circumstances giving rise to a factual dispute. Thus, the government has met its burden of proof to forfeit Parcel C under the facilitation theory set forth in 21 U.S.C. § 881(a)(7).
The claimants argue that the mere fact Parcel C provided a "means of access" to Parcel B where the drugs were stored does not establish a substantial connection to drug trafficking, citing United States v. Two Tracts of Real Property With Bldgs., Appurtenances and Improvements Thereto, Located in Carteret County, N.C., 998 F.2d 204 (4th Cir.1993), in support. In that case, the court held that the property could not be forfeited by the government because it's only connection with drug trafficking consisted of the furnishing of a quasi-easement over which drug smugglers hauled contraband. Moreover, the culpable person had no legal interest in the property and the mere fact that the land provided a "means of access" by which contraband reached the public highway did not establish a "substantial connection." Id. at 206. The plaintiff's reliance on this case is misplaced; there is no dispute that the Gahagans have a legal interest in Parcel C and there was no "quasi-easement" over the property that allowed the Gahagans to move from Parcel D to B. Rather, the claimants have not come forth with any evidentiary showing contemplated by Rule 56(e) to dispel the inference that it is more likely than not that Parcel C was used as a means of access to the supply of drugs stored on the property away from Gahagan's residence on Parcel B.
Next, the claimants argue that the Court should not consider Susan Soper's testimony that land contract payments were made from drug proceeds because she later recanted this testimony. In support of this argument, the claimants cite to "Exhibit 8, Letter of Corrections." The government has moved to strike Exhibit 8, which is entitled "synopsis of Susan Soper deposition with corrections," because it is unsworn and therefore not within the class of materials that may be considered pursuant to Federal Rule of Civil Procedure 56(e). Rule 56(e) requires that documentation supporting a summary judgment motion or response consist of "affidavits [that] shall be made on personal knowledge, shall set *809 forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Fed.R.Civ.P. 56(e). The claimants' Exhibit 8 does not measure up to this requirement and therefore is inadequate to create a genuine fact issue that would defeat summary judgment.
The claimants also argue that the government erroneously is mounting an "in personam" attack on the claimants when it should be focused on the "in rem" defendant. This argument might be considered somewhat puzzling until one reads Judge Churchill's August 28, 1992 Memorandum Opinion found at dkt. # 403. In that opinion, Judge Churchill rejected the government's argument that it was entitled to claim the proceeds from the sale of the personal property and portions of the real estate because there was "no statutory authority for seizure of proceeds of the sale of property because it was used to facilitate the distribution of a controlled substance." Dkt # 403 at 9. Judge Churchill reasoned that "[e]ven if there was a legal basis for seizing the proceeds of the sales of the identified parcels ... a judgment for the proceeds of sale would be enforceable only ... if the judgment was treated as a judgment in personam against the claimant who is identified as the seller in the complaint." Ibid. (emphasis in original). Judge Churchill concluded that the court only had control over the "res" in an in rem forfeiture proceeding and, therefore, the government's prayer for relief was not consistent with the nature of an in rem proceeding.
The claimants have conflated this holding with their belief that the government cannot consider the claimants' activity on the land in this civil forfeiture action. This is clearly not the case and Judge Churchill's opinion does not provide any support for that theory.
Next, the claimants contend that allowing the government to use evidence of the claimants' criminal case against them will violate the Double Jeopardy Clause. This issue has already been decided by Judge Cleland in an order dated October 31, 1997. See dkt. # 609. In that order, Judge Cleland correctly stated that "in rem forfeiture proceedings are `neither "punishment" nor criminal for purposes of the Double Jeopardy Clause.'" Id. at 11 (quoting United States v. Ursery, 518 U.S. 267, 274, 116 S.Ct. 2135, 135 L.Ed.2d 549 (1996)). Judge Cleland held that "[t]he current forfeiture action is distinct from the criminal prosecution in that it is against the property and not against the claimants. The property in this case has not been prosecuted for the instances at issue here." Id. at 11-12. That holding was undisturbed by the court of appeals, and the Court agrees with it. Accordingly, the claimants' argument is without merit.
However, the claimants argue that the Sixth Circuit made it clear at oral argument that all of the claimants' issues are preserved and are part of the remand. The claimants, however, did not provide the Court with a copy of the oral argument transcript and the mandate from the Sixth Circuit did not so indicate. This argument is baseless.
The claimants argue that they were never allowed the opportunity to confront witnesses whose testimony the government now seeks to use against them. This is incorrect as the claimants were allowed to cross-examine the witnesses during their deposition testimonies and during various hearings in this case and the underlying criminal case. The argument is not pertinent at the summary judgment stage of proceedings where much of the evidentiary material is typically presented to the court in affidavits. It is the obligation of the claimants, as the parties opposing the motion, *810 to come forward with sworn (and possibly uncross-examined) testimony of their own that demonstrates a genuinely disputed issue of material fact.
Addressing the government's "proceeds" theory, the claimants argue that despite the government's contention, they did have legitimate income and it was from this income that they made the payments on the land contract. The claimants also state that Judge Churchill found that they had legitimate income. The claimants fail to cite to the portion of the record where Judge Churchill found that they had legitimate income; the Court has found no statement from Judge Churchill to that effect. Moreover, the claimants offer nothing but their own self-serving statements to support this argument. They have offered no pay stubs, the income tax returns, receipts for the painting supplies they purchased, testimony from the individuals whose houses they painted, or any other evidence that readily could be provided had the claimants in fact earned any legitimate income. Their allegations are unsupported and are inadequate to defeat summary judgment.
Next, the claimants state that Judge Churchill held that no controlled purchase took place on Parcel D. That is true, but that fact does not overcome the evidence that a triple beam scale was found on Parcel D, suspicious drug-like activity occurred there, and Byars testified that he observed drugs stored on Parcel D. Although the claimants refute Bailey Sides' testimony that individuals were going to House B to purchase narcotics by arguing that these individuals were contractors making bids to perform work on House B, this dispute alone will not defeat summary judgment because there is ample evidence in the record without Sides' testimony to establish that drug trafficking took place at House B.
Finally, the claimants resurrect the issue of mineral rights on the property, but that issue has already been decided by Judge Churchill, who concluded that if the surface rights were determined to be forfeitable, then the claimant's mineral rights would be forfeited as well. See dkt. # 499 at 3, 7.
The Court finds that the government has made the necessary showing for summary judgment in its favor under CAFRA, and the claimants have not come forward with competent evidence demonstrating a material fact issue. They certainly have not established that the government cannot prove its case under CAFRA. The Court will grant the government's motion for summary judgment as to Daniel and Michael Gahagan and deny the summary judgment motion by those claimants.
D. Analysis as to claimant Agnes Riddle-Gahagan
The government argues that Agnes Gahagan can no longer assert a status as an innocent owner of a mortgage interest in Parcel D because her right to maintain an action to enforce the mortgage is barred by Michigan's statute of limitations set forth in Mich. Comp. Laws § 600.5807, which states that "the period of limitations is 10 years for actions founded upon covenants in deeds and mortgages of real estate." The government also points out that Judge Cleland found that Agnes Gahagan failed to show by a preponderance of the evidence that she was an innocent owner, and therefore the burden of proof prescribed by CAFRA has been employed. Finally, the government insists that principles of equity would require Agnes Gahagan to pursue of satisfaction of the underlying debt owed by her sons from the unforfeited collateral Parcel E which enjoys a value substantially in excess of the contractual obligation owed to this claimant.
*811 Agnes Gahagan argues that because the government filed a lis pendens on Parcel D1 prohibiting its sale, the statute of limitations referenced by the government is tolled. She also points to Mich. Comp. Laws § 600.5803 ("no person shall bring ... an action ... to foreclose a mortgage on real estate unless he commences the action or proceeding within 15 years after the mortgage becomes due or within 15 years after the last payment was made on the mortgage") and Mich. Comp. Laws § 600.3175 (allowing an interested person after 15 years to bring an action to have a mortgage discharged if no payment has been made) in support of her argument that time remains on the statute of limitations to enforce the mortgage note, which was due on July 31, 1990. She also insists that Judge Churchill found her to be an innocent owner and that Judge Cleland's decision reversing Judge Churchill was erroneous and contrary to the law of the case. See dkt. # 516, Judge Churchill Order at 3. Finally, the claimant argues that the facts of this case demonstrate that she had no reason to believe Parcel D1 was used for illegal activity when she accepted the mortgage note. As a result, the claimant asks this Court to deny the government's motion and enter a judgment in her favor.
Under CAFRA, "[a]n innocent owner's interest in property shall not be forfeited under any civil forfeiture statute. The claimant shall have the burden of proving that the claimant is an innocent owner by a preponderance of the evidence." 18 U.S.C. § 983(d)(1). CAFRA also speaks to circumstances in which the claimant's interest in the property arose after the occurrence of the criminal activity:
With respect to a property interest acquired after the conduct giving rise to the forfeiture has taken place, the term "innocent owner" means a person who, at the time that person acquired the interest in the property (i) was a bona fide purchaser or seller for value (including a purchaser or seller of goods or services for value); and (ii) did not know and was reasonably without cause to believe that the property was subject to forfeiture.
18 U.S.C. § 983(d)(3)(A).
Contrary to the claimants' argument, Judge Churchill found that Agnes Gahagan was an innocent owner as to all parcels except Parcel D. See dkt. # 499 at 10 (stating that "[f]actual and legal issues with respect to the validity of Agnes Gahagan's mortgage on Parcel D are reserved for future determination"); dkt. # 516 at 3 (observing that "while Agnes Gahagan's mortgage is not subject to forfeiture, there may yet be in this suit an adjudication that, with respect to Parcel D, it is inferior to a title acquired by the government"). Agnes Gahagan already has had a full hearing in which she attempted, without success, to present her innocent owner defense with respect to her mortgagee's interest in Parcel D. Judge Cleland ruled against her by applying the same evidentiary standard as now mandated by CAFRA. Of course, a claimant need not prove innocent owner status or even assert such a defense if the government is unable to establish a right to forfeit the property, which, I believe, is the point of the court of appeals' opinion in this case insofar as Agnes Gahagan is concerned. The case was remanded to determine whether the government could establish a right to forfeit the property under the heightened standard of proof required by the new legislation. This Court has now found that the government has proven that the property is subject to forfeiture, and it sees no cause to relitigate the innocent owner defense.
This Court does not read the opinion of the court of appeals as limiting its authority to revisit Agnes Gahagan's innocent *812 owner defense. Rather, the Court believes it prudent to let stand the prior adjudication rendered after a full hearing, and view it as the law of the case. "[T]he law of the case doctrine merely expresses the practice of courts generally to refuse to reopen what has been decided, not a limit to their power." Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 817, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988) (quotation and citation omitted). "A court has the power to revisit prior decisions of its own or of a coordinate court in any circumstance, although as a rule courts should be loathe to do so in the absence of extraordinary circumstances such as where the initial decision was `clearly erroneous and would work a manifest injustice.'" Ibid. (quoting Arizona v. California, 460 U.S. 605, 618 n. 8, 103 S.Ct. 1382, 75 L.Ed.2d 318 (1983)).
This Court finds no clear error in the determinations of the predecessor judges who have rendered decisions in this case. The Court, therefore, will apply the law of the case doctrine "to prevent the continued litigation of settled issues." United States v. Todd, 920 F.2d 399, 403 (6th Cir.1990). The Court finds that the government is entitled to summary judgment in its favor on the claims of Agnes Gahagan and that her innocent owner defense must be rejected as to Parcel D1 and D3. The government's right to forfeit Parcel D will not be subject to Agnes Gahagan's mortgage. The Court need not reach the statute of limitations arguments.
III. Daniel Gahagan's motion for release from arrest
On September 10, 2001, in year fourteen of this case, claimant Daniel Gahagan filed a pro se motion "for release from arrest" in which he argued that his Fifth Amendment due process rights were violated because he was not provided a hearing prior to the seizure of his property as required by United States v. James Daniel Good Real Property, 510 U.S. 43, 114 S.Ct. 492, 126 L.Ed.2d 490 (1993). Indeed, the Supreme Court has held that absent exigent circumstances, a property owner is entitled to a hearing under the Fifth Amendment's Due Process Clause before the government may seize real property. Ibid."To establish exigent circumstances, the Government must show that less restrictive measures i.e., a lis pendens, restraining order, or bond would not suffice to protect the Government's interests in preventing the sale, destruction, or continued unlawful use of the real property." Id. at 62, 114 S.Ct. 492.
The record in this case indicates that at the time the United States Marshal originally posted the property as subject to seizure, the dwellings were vacant. The parties subsequently entered into a stipulation for occupancy, which required substantial revision when the principal custodians, Daniel and Michael Gahagan, began to serve their criminal sentences. In August 1989, Judge Churchill declared that the United States was the principal custodian but he permitted Agnes Gahagan a right of access, an arrangement that has continued through the litigation.
By the time this claimant filed his motion "for release from arrest," the merits of the forfeiture claims had been determined, the claimants' defenses for the most part were found wanting, and intervening legislation required a new assessment of the government's right to forfeit the property. That determination now has been made, and the question of whether a preseizure hearing is required has been rendered moot. Had the motion been made at the commencement of the proceedings, or eight years later when James Daniel Good was decided, the Court would have been presented with the opportunity to provide meaningful relief if appropriate. *813 However, the stipulation for occupancy and subsequent modifications to the order entered pursuant thereto served as the functional equivalent of the measures described by the Supreme Court ("lis pendens, restraining order, bond"). Moreover, Judge Churchill already determined that there existed probable cause to believe that the property was subject to forfeiture long before the motion was filed and well before the enactment of CAFRA. Although the probable cause standard no longer satisfies the government's ultimate burden to sustain a forfeiture complaint, it does meet the preliminary burden required by the Due Process Clause as set forth in James Daniel Good. See United States v. Real Property Located at 1184 Drycreek Road, Granville, Ohio 43202, 174 F.3d 720, 731 (6th Cir.1999). The Court concludes, therefore, that the motion "for release from arrest" should be denied.
IV. Daniel Gahagan's motion for summary judgment on suppression of evidence
Daniel Gahagan has also filed a motion for summary judgment on the theory that the government violated his right to a preseizure hearing under James Daniel Good, and he contends that all evidence discovered on the property must be suppressed and the forfeiture proceedings dismissed. He also insists that the government is accountable for damages in the form of lost rents and profits he could have made from contracting with an energy corporation to have oil and gas wells drilled on the land. The claimant provides the Court with a letter from Meridian Energy Corporation inquiring into whether or not the claimant is interested in having commercial wells placed on his land. Thus, the claimant contends, but for the government illegally seizing his property, he could have made a profit from the oil and gas wells, as evident by the letter of inquiry from the energy corporation.
The Court has already determined that action was taken as early as 1989 to address the possessory interest in the land during the forfeiture proceedings. On August 17, 1989, Judge Churchill, after providing the claimant with an adequate opportunity to be heard, rendered his decision that the government was the "principal custodian" over the property and thus the "seizure," if one occurred, was proper. The letter from Meridian Energy Corporation inquiring into whether or not the claimant is interested in having commercial oil and gas wells placed on his land is dated September 11, 1991. At that point, a probable cause determination had been made and the Due Process Clause was satisfied. The Court concludes that there is no merit to this motion and it will be denied.
V. Daniel Gahagan's motion for summary judgment under the Eighth Amendment
Daniel Gahagan has also filed a motion for summary judgment pursuant to the Excessive Fines clause of the Eighth Amendment, in which he argues that allowing the government to forfeit his property would constitute an excessive fine because the net worth of the land is 220,000 times the amount of the claimants fine, and 200 times the amount of the value of the seized drugs in this case. Thus, the claimant argues that he is entitled to a judgment as a matter of law that the property cannot be forfeited by the government because the forfeiture would offend the Eighth Amendment.
This identical argument was raised by Daniel and Michael Gahagan before Judge Cleland. On October 31, 1997, Judge Cleland ruled that the "claimants ... provided no evidence of the properties' value nor made any attempt to establish how forfeiture of any of these parcels of property *814 would be `grossly disproportionate' or `unconstitutionally harsh.'" Order, 10/31/97, dkt # 609 at 9 (citations omitted). Judge Cleland also stated that "it is difficult for the court to believe that the value of parcels C and D would exceed the potential $250,000.00 fines claimants each faced for their illegal actions." Id. at 10. Consequently, Judge Cleland rejected the claimants' Eight Amendment defense.
The Court finds no reason to revisit this ruling. The decision of the court of appeals never criticized or even addressed this aspect of Judge Cleland's ruling, and, as with the innocent owner determination, the Court will apply the law of the case doctrine "to prevent the continued litigation of settled issues." Todd, 920 F.2d at 403. The motion, therefore, will be denied.
VI. Conclusion
The Court determines that there is no genuine issue of material fact on the question of the government's right to forfeit Parcels C1, D1, and D3. The government has established by a preponderance of the evidence that a substantial connection exists between these parcels of real estate and the illegal drug trafficking activity alleged. The claimants have not come forward with evidence in a form allowed by Federal Rule of Civil Procedure 56(e) that creates a genuine fact issue or establishes a defense to the forfeiture action as a matter of law. Agnes Gahagan's innocent owner defense already has been determined against her in prior proceedings in this case with respect to her mortgagee's interest in Parcel D. Daniel Gahagan's motions for release from arrest, for summary judgment on suppression of evidence, and for motion for summary judgment pursuant to the Excessive Fines clause of the Eighth Amendment all lack merit and will be denied.
Accordingly, it is ORDERED that the government's motion for summary judgment of forfeiture as to claimants Daniel and Michael Gahagan [dkt. # 709] is GRANTED.
It is further ORDERED that the government's motion for summary judgment of forfeiture as to claimant Agnes Riddle-Gahagan [dkt. # 711] is GRANTED.
It is further ORDERED that the motion for summary judgment by claimants Daniel and Michael Gahagan [dkt. # 713] is DENIED.
It is further ORDERED that the motion for summary judgment by claimant Agnes Riddle-Gahagan [dkt. # 713] is DENIED.
It is further ORDERED that the motion for release from arrest [dkt. # 689] is DENIED.
It is further ORDERED that the motion for summary judgment on suppression of evidence [dkt. # 697] is DENIED.
It is further ORDERED that the motion by claimant Daniel Gahagan for summary judgment pursuant to the excessive fines clause of the Eighth Amendment [dkt. # 698] is DENIED.
It is further ORDERED that the government's motion to strike [dkt. # 718] is DENIED as moot. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1193727/ | 974 P.2d 1017 (1999)
89 Hawai`i 427
FOUR STAR INSURANCE AGENCY, INC.; J.D. Jenkins & Co., Inc.; Insurance Hawaii, Inc.; Big Island Insurance Agency, Inc.; and Pyramid Insurance, Plaintiffs-Appellants,
v.
HAWAIIAN ELECTRIC INDUSTRIES, INC.; Hei Diversified, Inc.; The Hawaiian Insurance & Guaranty Company, Limited; United National Insurance Company, Limited; Hawaiian Underwriters Insurance Co., Ltd.; Robert F. Clarke; Edward J. Blackburn; Thomas S. Adams; Gary L. Kirby; David L. Ward; Neal H. Kunde; Robert F. Mougeot; Reynaldo D. Graulty[1], only in his capacity as Insurance Commissioner of the State of Hawai`i and Rehabilitator and/or Liquidator of Hawaiian Insurance & Guaranty Company, Limited, United National Insurance Company, Ltd. and Hawaiian Underwriters Insurance Co., Ltd., Defendants-Appellees, and DOES 1 through 100, Defendants
No. 20710.
Supreme Court of Hawai`i.
February 26, 1999.
*1018 David K. Lum and Keith S. Agena, of Char, Sakamoto, Ishii, Lum & Ching; Honolulu, Philip Borowsky, pro hac vice, of San Francisco; Jani Iwamoto, pro hac vice, of San Francisco, on the briefs, for Plaintiffs-Appellants Four Star Insurance Agency, Inc.; J.D. Jenkins & Co., Inc.; Insurance Hawaii, Inc.; Big Island Insurance Agency, Inc.; and Pyramid Insurance Agency.
Jeffrey S. Portnoy and Mitchell C. Sockett, of Cades Schutte Fleming & Wright, Honolulu, on the briefs, for Defendants-Appellees Hawaiian Electric Industries, Inc.; HEI Diversified, Inc.; Robert F. Clarke and Robert F. Mougeot
Clifford K. Higa, Joseph N. Kiyose, Rod S. Aoki, John A. Kodachi, of Kobayashi, Sugita & Goda, Honolulu, on the briefs, for Defendants-Appellees United National Insurance Company, Limited, and Hawaiian Underwriters Insurance Co., Ltd.
George W. Playdon, Jr. and Kelvin H. Kaneshiro, of Reinwald, O'Connor & Playdon, Honolulu, on the briefs, for Defendants-Appellees Thomas S. Adams, Gary L. Kirby, David L. Ward, and Neal H. Kunde, Deborah Day Emerson and David A. Webber, Deputy Attorneys General, for Defendant-Appellee Reynaldo D. Graulty, only in his capacity as Insurance Commission of the State of Hawai`i
Jerrold Y. Chun, of Chun Chipchase Takayama Nagatani, Honolulu, on the briefs, for Defendants-Appellees Linda Chu Takayama and Lawrence M. Reifurth, in their respective capacities as Rehabilitators and/or Liquidators of the Hawaiian Insurance & Guaranty Company, Limited, United National Insurance Company, Ltd., and Hawaiian Underwriters Insurance Co., Ltd, join answering brief of Defendants-Appellees United National Insurance Company, Limited and Hawaiian Underwriters Insurance Co., Ltd.
MOON, C.J., KLEIN, LEVINSON, NAKAYAMA, and RAMIL, JJ.
Opinion of the Court by RAMIL, J.
This appeal arises from the rehabilitation of defendant-appellee The Hawaiian Insurance & Guaranty Company, Ltd. (HIGC), and the liquidation of defendants-appellees Hawaiian Underwriters Insurance Co., Ltd. (HUI) and United National Insurance Company, Limited (UNICO). Shortly after the insolvency of HIGC, HUI, and UNICO, the Insurance Commissioner (the Commissioner) seized the assets of HIGC, HUI, and UNICO, and eventually settled all claims against HIGC, HUI, UNICO. The Commissioner also obtained a thirty-two million dollar cash settlement against defendant-appellee Hawaiian Electric Industries, Inc. (HEI), the parent company of HIGC, HUI, and UNICO. Thereafter, plaintiffs-appellants Four Star Insurance Agency, Inc., et al. (collectively, Plaintiffs) brought their own action against HIGC, HUI, UNICO, HEI, and various directors and officers (collectively, Defendants) for alleged unpaid commissions. The circuit court granted Defendants' motions for summary judgment and entered judgment in favor of Defendants. From this judgment, Plaintiffs appealed.
On appeal, Plaintiffs contend, inter alia, that the Commissioner did not have authority to settle their claims because: (1) the claims were "unique and personal" to Plaintiffs; and (2) the unpaid commissions were held "in trust" for Plaintiffs. Because we hold that the Commissioner had exclusive standing to assert Plaintiffs' claims arising out of the insolvency of HIGC, HUI, and UNICO, we affirm the circuit court's judgment filed April 25, 1997.
I. BACKGROUND
A. The Parties
Defendants HIG, HUI, and UNICO were insurance companies in Hawai`i that sold property insurance, vehicle insurance, general casualty insurance, and other types of insurance policies. Defendants HIGC, HUI, and UNICO operated collectively as The Hawaiian Insurance Group (HIG). HIGC, HUI, and UNICO were wholly owned subsidiaries of defendant-appellee HEI Diversified, Inc. (HEIDI). In turn, HEIDI was a wholly *1019 owned subsidiary of HEI.[2]
Plaintiffs are independent insurance agents that serviced HIG's customers.[3] Plaintiffs had a "direct billing" arrangement with HIG. Under this arrangement, Plaintiffs would sell HIG's policies. HIG would then bill its customers directly and collect premiums accordingly. In turn, HIG would then pay Plaintiffs a specified percentage of the collected premiums as Plaintiffs' earned commissions.
B. Hurricane Iniki
On September 11, 1992, Hurricane Iniki caused major property damage to the Island of Kaua`i and parts of O`ahu. As a result of the hurricane, homeowners and property owners flooded HIG and other insurance companies with hurricane-related damage claims. Eventually, the claims overwhelmed HIG's financial resources. In response to these damage claims, on December 3, 1992, HEI announced that it would not contribute additional capital to HIG.
C. The HIG Lawsuit & the Reorganization/Liquidation Plan
On December 18, 1992, the circuit court granted then-Insurance Commissioner Linda Chu Takayama's (the Commissioner) motion to take possession and control of all of HIG's assets. On December 24, 1992, the circuit court placed HIG in rehabilitation and appointed the Commissioner as rehabilitator. As rehabilitator, the Commissioner was directed to take possession of and administer HIG's assets under the court's supervision.
On April 12, 1993, the Commissioner, in her capacity as rehabilitator, filed a motion for approval of a plan for reorganization of HIGC and for liquidation of UNICO and HUI (the plan) in a special proceeding entitled Takayama v. The Hawaiian Insurance & Guaranty Company, Ltd., et al. (the HIG lawsuit). The circuit court approved the plan, which set forth an exclusive procedure whereby policyholders, claimants and creditors of HIG could file proofs of claim for resolution and payment of any monies allegedly due.
The plan gave creditors three options. Under the first option, the creditor would participate in the plan and be entitled to receive twenty-five percent of its claim within ninety days after filing a claim form. The balance of the claim would be paid if and when such sums became available. Under the second option, the creditor would participate in the plan and be entitled to receive fifty percent of its claim within 90 days after filing a claim form. This payment would be paid "in full satisfaction of all sums due such creditor." Under the third option, the creditor would not participate in the plan and be entitled to receive a pro-rata payment only from such sums as may become available in the future.
All of the Plaintiffs elected to participate in the plan by selecting either the first or second option. None of the Plaintiffs selected the third option. Accordingly, each Plaintiff was paid at least fifty percent of the amount claimed.
In addition to the three creditor payment options, the plan stated that the Commissioner would commence and pursue a lawsuit against HEI, HEIDI, and some or all of the officers and directors of HIGC. The plan also stated that the Commissioner could settle such a lawsuit upon terms the Commissioner deemed appropriate, subject to court approval.
D. The HEI Lawsuit
On April 12, 1993, the Commissioner, in her capacity as rehabilitator/liquidator, filed a complaint entitled Takayama v. Hawaiian Electric Industries, Inc., et al. (the HEI *1020 lawsuit). The Commissioner subsequently amended the HEI lawsuit to reflect that the action was brought on behalf of all creditors, potential creditors, policyholders, and claimants of HIG. The HEI lawsuit consisted of thirteen causes of action and alleged, in relevant part, that HEI, HEIDI, and a number of their corporate officers (the HEI defendants) had: (1) misled HIG's creditors, policyholders and the public regarding HEI's and HEIDI's financial support of HIG; and (2) mismanaged and drained financial assets from HIG.
On February 10, 1994, the Commissioner and the HEI defendants signed a global settlement agreement and general release. Under this settlement, HEI agreed to immediately pay thirty-two million dollars in cash to the Commissioner. The payment was intended to help reduce an anticipated seventy million dollar deficit facing HIG. In effect, the payment would be available for distribution to HIG's policyholders, creditors, and claimants in accordance with the plan's claims settlement procedure. In exchange for the immediate cash payment, the Commissioner, in her capacity as rehabilitator/liquidator and on behalf of all the policyholders, claimants and creditors of the HIG Group, agreed to release and discharge each of the HEI defendants.
On March 3, 1994, Insurance Commissioner Lawrence M. Reifurth, who succeeded Commissioner Takayama, filed a motion for approval of the settlement agreement. Prior to the hearing on the motion, notice of the court hearing on the settlement agreement was addressed and sent to all known policyholders, claimants and creditors of HIG, including Plaintiffs.[4] The notice stated that approval of the settlement agreement would result in a release "of any and all claims held by the Commissioner/Rehabilitator/Liquidator and by HIG in their representative capacities" on behalf of the policyholders, claimants and creditors of HIG. On April 6, 1994, having received no objections from Plaintiffs and there being no appearance by Plaintiffs at the hearing, the circuit court granted Reifurth's motion for approval of the settlement agreement finding that it was fair and reasonable. The court also found that
[t]he Settlement Agreement has been entered into in good faith, represents the compromise of disputed claims, and the terms thereof are fair, reasonable and in the respective best interests of the public, the past, present and future policyholders, claimants and creditors....
Consequently, the HEI lawsuit was later dismissed with prejudice.
E. Plaintiffs' Lawsuit Against The HEI Defendants
On December 2, 1994, after the HEI lawsuit had been settled and dismissed, Plaintiffs filed a complaint against HEI, HEIDI, HIGC, UNICO, HUI, various officers and directors of HIGC and HEI, and Insurance Commissioners Takayama and Reifurth (Plaintiffs' lawsuit). Like the HEI lawsuit, Plaintiffs' lawsuit alleged, inter alia, that the HEI Defendants had: (1) misled Plaintiffs regarding HEI's and HEIDI's financial support of HIG; and (2) mismanaged and drained financial assets from HIG.
Defendants brought various motions for summary judgment. The circuit court granted summary judgment in favor of all defendants named in Plaintiffs' suit and entered judgment in favor of all defendants. From this judgment, Plaintiffs filed a timely appeal.
II. STANDARDS OF REVIEW
A. Summary Judgment
We review [a] circuit court's award of summary judgment de novo under the same standard applied by the circuit court. Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 74 Haw. 85, 104, 839 P.2d 10, 22, reconsideration denied, 74 Haw. 650, 843 P.2d 144 (1992) (citation omitted). As we have often articulated:
*1021 [s]ummary judgment is appropriate 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.
Id. (citations and internal quotation marks omitted); see Hawai`i Rules of Civil Procedure (HRCP) Rule 56(c) (1990). "A fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a cause of action or defense asserted by the parties." Hulsman v. Hemmeter Dev. Corp., 65 Haw. 58, 61, 647 P.2d 713, 716 (1982) (citations omitted).
Konno v. County of Hawai`i, 85 Hawai`i 61, 70, 937 P.2d 397, 406 (1997) (quoting Dunlea v. Dappen, 83 Hawai`i 28, 36, 924 P.2d 196, 204 (1996) (citations omitted)) (brackets in original). In addition,
"The evidence must be viewed in the light most favorable to the non-moving party." State ex rel. Bronster v. Yoshina, 84 Hawai`i 179, 186, 932 P.2d 316, 323 (1997) (citing Maguire v. Hilton Hotels Corp., 79 Hawai`i 110, 112, 899 P.2d 393, 395 (1995)). In other words, "we must view all of the evidence and the inferences drawn therefrom in the light most favorable to [the party opposing the motion]." Maguire, 79 Hawai`i at 112, 899 P.2d at 395 (citation omitted).
State Farm Mut. Auto Ins. Co. v. Murata, 88 Hawai`i 284, 287-88, 965 P.2d 1284, 1287-88 (1998) (quoting Estate of Doe v. Paul Revere Ins. Group, 86 Hawai`i 262, 269-70, 948 P.2d 1103, 1110-11 (1997)) (brackets in original).
B. Statutory Construction
The question of whether the Commissioner had exclusive standing to prosecute and settle each cause of action alleged in Plaintiffs' complaint involves the interpretation of HRS § 431:15-310. The interpretation of a statute is a question of law reviewable de novo. Shimabuku v. Montgomery Elevator Co., 79 Hawai`i 352, 357, 903 P.2d 48, 52 (1995) (citation omitted).
III. DISCUSSION
Defendants contend that the Commissioner, as liquidator under HRS § 431:15-310, had exclusive standing to assert common claims on behalf of HIG, its policyholders and creditors against third parties. We agree.
A. Applicable Rules of Statutory Construction
Although we obtain the intention of the legislature primarily from the language of the statute itself,
we have rejected an approach to statutory construction which limits us to the words of a statute, for when aid to construction of the meaning of words, as used in the statute, is available, there certainly can be no rule of law which forbids its use, however clear the words may appear on superficial examination. Thus, the plain language rule of statutory construction, does not preclude an examination of sources other than the language of the statute itself even when the language appears clear upon perfunctory review. Were this not the case, a court may be unable to adequately discern the underlying policy which the legislature seeks to promulgate and, thus, would be unable to determine if a literal construction would produce an absurd or unjust result, inconsistent with the policies of the statute.
Bragg v. State Farm Mut. Auto. Ins. Co., 81 Hawai`i 302, 306, 916 P.2d 1203, 1207 (1996) (quoting Sato v. Tawata, 79 Hawai`i 14, 17, 897 P.2d 941, 944 (1995)). In addition, "[t]he legislature is presumed not to intend an absurd result, and legislation will be construed to avoid, if possible, inconsistency, contradiction and illogicality." State v. Malufau, 80 Hawai`i 126, 137, 906 P.2d 612, 623 (1995) (citation and internal quotation marks omitted). Finally, "[l]aws in pari materia, or upon the same subject matter, shall be construed with reference to each other. What is clear in one statute may be called upon in aid to explain what is doubtful in another." State v. Ake, 88 Hawai`i 389, 395, 967 P.2d 221, 227 (1998) (quoting HRS § 1-16 (1993)).
*1022 B. Scope of Insurance Commissioner's Authority
HRS § 431:15-310 is part of the Insurers Supervision, Rehabilitation and Liquidation Act (ISRLA). See HRS ch. 431:15 (1993). HRS § 431:15-310(a) provides in relevant part:
The liquidator shall have the power to:
....
(13) Prosecute any action which may exist on behalf of the creditors, members, policyholders or shareholders of the insurer against any officer of the insurer, or any other person;
....
(19) Exercise and enforce all the rights, remedies, and powers of any creditor, shareholder, policyholder, or member, including any power to avoid any transfer or lien that may be given by the general law and that is not included with section 431:15-315 through section 431:15-317; [and]
....
(22) Exercise all powers now held or hereafter conferred upon receivers by the laws of this State not inconsistent with the provisions of this article.
(Emphases added.) Likewise, HRS § 431:15-313(b) (1993) provides in relevant part:
The liquidator may, upon or after an order for liquidation, within two years or such time in addition to two years as applicable law may permit, institute an action or proceeding on behalf of the estate of the insurer upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of the filing of the petition upon which such order is entered.
(Emphases added.) Based upon the plain language of HRS §§ 431:15-310 and 431:15-313, the Commissioner, as liquidator of an insurer undergoing liquidation, has the power to prosecute any and all lawsuits on behalf of the insurer and all creditors, shareholders, policyholders, or members of the insurer.
In addition to the broad powers conferred by HRS §§ 431:15-310 and 431:15-313, HRS § 431:15-310(b) (1993) provides:
The enumeration, in this section, of the powers and authority of the liquidator shall not be construed as a limitation upon the liquidator, nor shall it exclude in any manner the liquidator's right to do such other acts not herein specifically enumerated, or otherwise provided for, as may be necessary or appropriate for the accomplishment of or in aid of the purpose of liquidation.
Therefore, read in pari materia with HRS §§ 431:15-310(a) and 431:15-313(b), HRS ch. 431:15 affords broad powers to the Commissioner, as liquidator, to prosecute and settle any action to protect the rights of all interested parties.
The legislature enacted the ISRLA to facilitate the orderly and fair liquidation of an insolvent insurer for the "protection of the interests of insureds, claimants, creditors, and the public generally[.]" HRS 431:15-101(d) (1993). To achieve the ISRLA's purposes, the legislature designed the ISRLA to result in:
(3) Enhanced efficiency and economy of liquidation, through clarification of the law, to minimize legal uncertainty and litigation;
(4) Equitable apportionment of any unavoidable loss; [and]
(5) Lessening the problems of interstate rehabilitation and liquidation by facilitating cooperation between states in the liquidation process, and by extending the scope of personal jurisdiction over debtors of the insurer outside this State[.]
HRS § 431:15-101(d) (emphases added). The ISRLA further mandates that the provisions of HRS ch. 431:15 "be liberally construed" to protect the interests of policyholders, claimants, creditors, and the public generally. See HRS § 431:15-101(c) (1993).
To promote the legislature's goals to minimize litigation and equitably apportion any unavoidable loss, the ISRLA provides for an automatic stay of all proceedings against the insolvent insurance company and the liquidator. HRS § 431:15-313(a) provides in relevant part:
*1023 Upon issuance of an order appointing a liquidator ..., no action at law or equity shall be brought against the insurer or liquidator, whether in this State or elsewhere, nor shall any such existing actions be maintained or further presented after issuance of such order. The courts of this State shall give full faith and credit to injunctions against the liquidator or the company or the continuation of existing actions against the liquidator or the company, when such injunctions are included in an order to liquidate an insurer issued pursuant to corresponding provisions in other states.
(Emphases added.) In addition, HRS § 431:15-307(a) (1993) provides:
An order to liquidate the business of a domestic insurer shall appoint the commissioner and the commissioner's successors in office liquidator, and shall direct the liquidator forthwith to take possession of the assets of the insurer and to administer them under the general supervision of the court. The liquidator shall be vested by operation of law with the title to all of the property, contracts, and rights of action and all of the books and records of the insurer ordered liquidated, wherever located, as of the entry of the final order of liquidation.
(Emphases added.) Based upon the statutory scheme and the underlying purposes of the ISRLA, the legislature intended to grant the Commissioner the broad powers to facilitate an orderly liquidation of an insolvent insurance company and to ensure an equitable apportionment between creditors of any losses that may result.
The Hawai`i legislature adopted the ISRLA in 1987, patterning it, in part, after the Uniform Insurers Liquidation Act (UILA) created by the National Association of Insurance Commissioners (NAIC). See Insurers Rehabilitation and Liquidation Model Act (National Association of Insurance Commissioners 1995). The provisions of New York's insurance laws regarding the liquidation of an insolvent insurance agency are similar to the provisions contained in Hawaii's ISRLA. See N.Y. Ins. Law § 7405(b) (McKinney 1985).[5] Accordingly, because Hawai`i appellate courts have not yet addressed the scope of the insurance commissioner's powers in rehabilitating/liquidation an insolvent insurer, New York's interpretation of their insurance law's provisions governing liquidation is useful in construing HRS ch. 431:15.
In Corcoran v. Frank B. Hall & Co., Inc., 149 A.D.2d 165, 545 N.Y.S.2d 278 (N.Y.App. Div.1989), the Appellate Division of the Supreme Court of New York held that the superintendent of insurance, as liquidator of an insolvent insurance company, had exclusive standing to assert claims on behalf of the insurance company, its policyholders and creditors against third parties. Id. at 280-81. The liquidator in Corcoran brought an action against the parent company of the insolvent insurer, its subsidiaries, and its former officers and directors. Id. at 279. The *1024 liquidator brought the action on behalf of the insolvent insurer and its policyholders and creditors. Id. The liquidator's claims sought to hold the parent company of the insolvent insurer responsible for fraud and misrepresentation as to the insurer's true financial condition and breach of fiduciary duty. Id. at 279-80. Subsequent to the liquidator's action, the creditors in Corcoran brought a separate action against the parent company of the insolvent insurer that alleged virtually the same claims as those raised by the liquidator's suit. Id.
In rejecting the creditors' argument that the liquidator did not have standing to sue on behalf of the creditors of the insolvent insurer, the court noted that the liquidation provisions were designed to
furnish a "comprehensive, economical, and efficient method for the winding up of the affairs" of ... insurance companies by the... [liquidator]. [The liquidation] provisions... "are exclusive in their operation and furnish a complete procedure for the protection of the rights of all parties interested."... The ... [liquidation court], in the liquidation proceeding, must take cognizance of the interests of the policyholders, creditors, stockholders, and the public... and it may issue such orders "as may be deemed necessary to prevent interference with the ... [liquidator] or the proceeding, or waste of the assets of the insurer".... Clearly does the plan emerge that the ... [liquidation court], with the agency of the ... [liquidator], was intended to have exclusive jurisdiction of claims both for and against an insurance company in liquidation.
Id. at 282 (quoting Knickerbocker Agency, Inc. v. Holz, 4 N.Y.2d 245, 173 N.Y.S.2d 602, 607, 149 N.E.2d 885 (1958)) (some alterations in original and some added) (emphasis in original). The court also concluded that the "pre-eminent purpose" of the liquidation provisions, which was the equitable treatment of all creditors and the avoidance of preferences, would be frustrated if creditors were allowed to bring separate actions in addition to that brought by the liquidator. See id. at 282-83. Therefore, the court held, pursuant to N.Y. Ins. Law § 7405(b),[6] that: (1) the liquidator had paramount and exclusive standing to assert claims on behalf of its policyholders and creditors; and (2) the statute's liquidation provisions were exclusive and furnish a complete procedure to protect the rights of all interested parties. Id. at 280-84.
We agree with the reasoning of Corcoran. As discussed above, the relevant liquidation provisions of ISRLA are similar to those in New York's Insurance Law. See supra note 5 (comparing N.Y. Ins. Law § 7405(b) with HRS § 431:15-307). In fact, by expressly granting the Commissioner the power to "[p]rosecute any action which may exist on behalf of the creditors" and to "[e]xercise and enforce all the rights, remedies, and powers of any creditor," the ISRLA contemplates even broader powers for our insurance commissioner than does the New York statute for New York's superintendent of insurance. HRS §§ 431:15-310(a)(13) and 431:15-310(a)(19) (emphases added).[7]
Like the "pre-eminent purpose" discussed in Corcoran, the underlying purposes of the ISRLA include the equitable treatment of all creditors and the avoidance of preferences. Indeed, a flood of claims arising from an insurer's insolvency brought by each creditor of the insolvent insurer would potentially result in an award to one creditor that could be disproportionate to that of another creditor. Under such a system, which encourages creditors to race to the courthouse, it is difficult to imagine how a party faced with the prospect of numerous lawsuits from various creditors would be able to settle the multitude of lawsuits in an orderly and equitable manner. Such a construction of the ISRLA would be inconsistent to its purposes of ensuring the equitable apportionment of losses and minimizing litigation. Because we presume that the legislature did not intend such an absurd result, the exclusivity *1025 of the Commissioner's standing is necessary to minimize litigation and to ensure the equitable apportionment of losses. Given these considerations and considering the statutory scheme of the ISRLA, we hold that the Commissioner has exclusive standing to assert claims arising out of the liquidation or rehabilitation of an insurance company on behalf of not only the insolvent insurer, but also its policyholders, creditors, and all other interested parties.
Having adopted the reasoning of the Corcoran court, we now turn to the facts of this case. In this case, the material facts, which are undisputed, are exactly the same as those in Corcoran. Like the liquidator in Corcoran, who brought an action against the parent company of the insolvent insurer, the Commissioner, in this case, brought an action against HEI, which was the parent company of HIGC, HUI, and UNICO. Like the lawsuit against the parent company in Corcoran, the lawsuit against HEI was brought on behalf of all creditors, potential creditors, policyholders, and claimants of HIG, including Plaintiffs. The Commissioner in this case also asserted claims that were similar to those brought by the liquidator in Corcoran (i.e., that the parent company of the insolvent insurer intentionally undercapitalized the insurer and misled the insurer's creditors, policyholders and the public).
The Commissioner's lawsuit against HEI concluded in a thirty-two million dollar settlement in favor of HIG. The proceeds from this settlement were used to help reduce an anticipated seventy million dollar shortfall in HIG's estate. In effect, the Commissioner's settlement with HEI was used to pay the claims of HIG's creditors, including Plaintiffs, in accordance with the plan's claims settlement procedure.[8]
Despite the Commissioner's success in securing a settlement from HEI, Plaintiffs subsequently filed their own complaint against HEI for essentially the same causes of action as that brought against HEI by the Commissioner. Like the Commissioner's complaint against HEI, the Plaintiffs alleged, in essence, that HEI: (1) misled HIG's creditors, policyholders and the public regarding HEI's and HEIDI's financial support of HIG; and (2) mismanaged and drained financial assets from HIG. Indeed, like the creditors in Corcoran, Plaintiffs brought this suit after the conclusion of a similar suit brought by the liquidator. The complaint filed by Plaintiffs against HEI alleged similar causes of action as the suit brought by the Commissioner.
Given the factual similarity between this case and Corcoran, we hold as a matter of law that the Commissioner in this case had exclusive standing to assert all claims arising out of HIG's liquidation and rehabilitation on behalf of not only HIG, but also its creditors, including Plaintiffs.[9] Because Defendants *1026 were entitled to judgment as a matter of law and there being no genuine issues of material fact, the circuit court properly granted summary judgment in favor of Defendants.
IV. CONCLUSION
For the reasons discussed above, we affirm the circuit court's judgment filed April 25, 1997.
NOTES
[1] Linda Chu Takayama and Lawrence M. Reifurth are no longer in the position of Insurance Commissioner, Department of Commerce and Consumer Affairs of the State of Hawai`i. Pursuant to Hawai`i Rules of Appellate Procedure (HRAP) Rule 43(c)(1), Reynaldo D. Graulty has been substituted automatically in this case.
[2] In addition to HIGC, HUI, UNICO, HEIDI, and HEI, the other defendants in this case are Robert Clarke, Robert Mougeot, Thomas Adams, Gary Kirby, David Ward, and Neal Kunde. Robert Clarke is the president and CEO of HEI and was HIGC's former chairman and director. Robert Mougeot is HEI's Financial Vice-President and was a former HIGC director. Thomas Adams, Gary Kirby, David Ward, and Neal Kunde were former HIGC officers.
[3] The Plaintiffs in this appeal are: (1) Four Star Insurance Agency, (2) J.D. Jenkins & Company, Insurance Hawaii, (3) Big Island Insurance Agency, and (4) Pyramid Insurance Agency.
[4] Although Plaintiffs contend that they never received notice of the hearing on the Commissioner's motion for approval of the settlement agreement, the circuit court specifically found that appropriate notices were mailed to all policyholders, claimants, and creditors of HIG. In addition, notice of the hearing was published in a newspaper of general circulation.
[5] N.Y. Ins. Law § 7405(b) (McKinney 1985) provides in relevant part:
The superintendent and his successors shall be vested by operation of law with the title to all property, contracts and rights of action of such insurer as of the date of the entry of the order so directing them to liquidate. The filing or recording of such order in any record office of the state shall impart the same notice that a deed, bill of sale or other evidence of title duly filed or recorded by such insurer would have imparted. The rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members and all other persons interested in its estate shall, unless otherwise directed by the court, be fixed as of the date the order is entered in the office of the clerk of the county where such insurer had its principal office on the date the proceeding commenced....
(Emphases added.) Similarly, HRS § 431:15-307 provides in relevant part:
The liquidator shall be vested by operation of law with the title to all of the property, contracts, and rights of action and all of the books and records of the insurer ordered liquidated, wherever located, as of the entry of the final order of liquidation. The filing or recording of the order with the clerk of the circuit court of the first judicial circuit and at the bureau of conveyances shall impart the same notice as evidence of title.... Upon issuance of the order, the rights and liabilities of any such insurer and of its creditors, policyholders, shareholders, members and all other persons interested in its estate shall become fixed as of the date of entry of the order of liquidation ....
(Emphases added.)
[6] See supra note 5.
[7] Unlike Hawaii's ISRLA, New York's Insurance Law does not expressly grant the liquidator of an insolvent insurance company powers similar to those in HRS §§ 431:15-310(a)(13) and 431:15-310(a)(19).
[8] Plaintiffs assert that the Commissioner had no authority to retain the "earned" commissions that were "vested" in Plaintiffs and held in "trust" by the Commissioner. Plaintiffs assertion is without merit and is not relevant to the issue of whether Plaintiffs had standing to bring an action against the parent company of HIG.
HRS § 431:15-103(a)(8) defines "general assets" as "all property, real, personal, or otherwise, not specifically mortgaged, pledged, deposited, or otherwise encumbered for the security or benefit of specified persons or classes of persons." (Emphasis added.) In this case, the record indicates that the premiums paid by the insureds were paid directly to HIG and were the property of HIG. In turn, HIG would pay Plaintiffs a commission based on a percentage of the amount of premiums collected. Because the premiums collected by HIG were not specifically set aside (i.e., encumbered) for the benefit of the Plaintiffs, the commissions collected were part of HIG's general assets. In addition, Plaintiffs have not cited to any section of HRS ch. 431:15 that would support their contention that earned commissions of agents are to be treated differently from general assets. Therefore, inasmuch as the Commissioner takes possession of the assets of the insurer and administers them under the general supervision of the court once the liquidation order is filed, we reject Plaintiffs' contention that part of the premiums collected by HIG were earned commissions held in trust for the benefit of Plaintiffs.
[9] In addition, Plaintiffs argue that the Commissioner did not have authority to settle their claims against HEI because: (1) the Commissioner lacked authority to file Plaintiffs' alter ego claims against the HEI defendants; and (2) the Commissioner had authority to prosecute and settle only "common" claims, as opposed to "unique and personal" claims. However, inasmuch as the plain language of HRS §§ 431:15-310(a)(13) and (19) expressly state that the liquidator has the power to "[p]rosecute any action which may exist on behalf of the creditors" and "exercise and enforce all the rights, remedies, and powers of any creditor," we reject Plaintiffs' argument that the Commissioner did not have authority to file alter ego claims against the HEI. HRS §§ 431:15-310(a)(13) and (19) (emphases added). In addition, because all of Plaintiffs' claims against HEI stem from the insolvency of HIG, we reject Plaintiffs' contention that their claims against HEI were "unique and personal" as compared to the claims of other HIG creditors. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1695296/ | 426 So.2d 1196 (1983)
In re ESTATE OF Anna H. BALLETT, Deceased.
No. 81-1458.
District Court of Appeal of Florida, Fourth District.
February 9, 1983.
Rehearing Denied March 10, 1983.
*1197 George H. Aslanian, Jr., of Casoria, Goff & Friedman, P.A. (withdrawn), and Russell E. Carlisle of Carlisle & Lecates, Fort Lauderdale, for appellant-Edward L. Baron.
Romney C. Rogers of Rogers, Morris & Ziegler, Fort Lauderdale, for appellee-Anna R. Ballett, as Personal Representative of the Estate.
DOWNEY, Judge.
Edward L. Baron appeals from an order dismissing his petition to revoke the probate of the will of Anna H. Ballett.
On October 6, 1980, Baron, the brother and sole survivor of Anna H. Ballett, filed a petition for the intestate administration of the Estate of Anna H. Ballett. The petition was granted and letters of Administration were issued to Baron. However, on November 13, 1980, a petition for revocation of probate was filed by the appellee, Anna R. Ballett, the deceased's sister-in-law, in which she alleged that an order had been previously entered appointing Baron a personal representative of the intestate estate of Anna H. Ballett. The petition alleged that the deceased left a last will and testament dated June 20, 1980, the original of which was filed with the court. The petition prayed for revocation of the letters of administration issued to Baron, admission of the will to probate, and appointment of Anna R. Ballett as personal representative. On the same date Anna R. also filed a petition for administration that listed the beneficiaries named in the will and her nomination as personal representative.
From Anna R.'s brief we glean that, upon receipt of the petition, the probate judge *1198 contacted counsel for Anna R., stating that it would be necessary for the parties to "either have a hearing on the revocation or, in the alternative, a Stipulation be entered, before the Court could render an Order." Thereupon, counsel for Baron and Anna R. filed a stipulation that provided that the order appointing Baron as personal representative and the issuance of letters of administration be revoked; that the will of Anna H. Ballett be admitted to probate; and that Anna R. be appointed personal representative. All of the foregoing was confirmed by order dated December 3, 1980. Notice of administration and notice to creditors were first published December 22, 1980. The notice of administration was served only on Anna R. and St. Gregory's Catholic Church.
On March 24, 1981, Baron filed a petition for revocation of probate of the decedent's will dated June 20, 1980, alleging that Anna R. had procured the will by the exercise of undue influence. Anna R. moved to dismiss Baron's petition on the grounds that: (a) Baron was not an interested person within the meaning of the probate statutes and so had no standing to attack the probate of the will; (b) Baron's entry into the stipulation and the court's entry of the order of December 4, 1980, precluded Baron's petition for revocation because he waived his right to attack the will; (c) the petition was not timely filed since it was not filed within three months of the first publication of the notice of administration. From the order granting that motion, Baron has perfected this appeal.
It is apparent from the order denying petition for rehearing that the trial court dismissed Baron's petition for revocation of probate a) because of Baron's earlier stipulation that the order appointing him as personal representative and issuing letters of administration to him be revoked and that the will be admitted to probate and letters issue to Anna R., and b) because Baron's petition to revoke probate of the will was filed more than three months from the date of the order entered upon the earlier stipulation. Thus, the trial court concluded that Baron had waived any right to such revocation of the probate of said will.
Baron contends on appeal that the stipulation was not intended as a waiver of any right to attack the will but was entered into by the parties to allow the will to be filed and the administration proceed without necessarily affecting anyone's rights. It is Baron's position that the time constraints of Sections 733.212 and 733.2123, Florida Statutes (1979), are not applicable to preclude his attack upon the will because Anna R., as personal representative, did not invoke those provisions to shorten the time within which an interested person could file a petition to revoke probate.
Revocation of probate is controlled by Section 733.109(1), which provides:
(1) Any interested person, including a beneficiary under a prior will, except those barred under s. 733.212 or s. 733.2123, may, before final discharge of the personal representative, petition the court in which the will was admitted to probate for revocation of probate.
However, if an interested person has been served with formal Notice of Administration pursuant to Section 733.212[1], Florida Statutes, he must file his objection to the *1199 will within three months of the first publication of Notice of Administration. If, pursuant to 733.2123[2] the petitioner serves formal notice of Petition for Administration on an interested person prior to issuance of letters, that person may not thereafter challenge the validity of the will except in proceedings prior to issuance of the letters.
An interested person is defined in Section 731.201(21), Florida Statutes, as any person who may reasonably be expected to be affected by the outcome of the particular proceeding, including an heir at law or devisee who has not received his distribution. Parenthetically, appellee contends this statute excludes heirs at law, but we reject his proposed construction and hold the statute includes both heirs at law and devisees unless they have received their distribution.
If interested persons are to be limited by special time constraints, the personal representative must strictly comply with the statute authorizing such limitations. Nardi v. Nardi, 390 So.2d 438 (Fla. 3rd DCA 1980). In this case the strict requirements of Sections 733.212 and 733.2123 were not complied with. Baron was not served with the Notice of Administration as required by Section 733.212(1)(b), nor was he served with formal notice of the petition for administration as required by 733.2123. Anna R. pooh-poohs the slight difference between formal and informal notice, particularly because it is asserted that Baron had actual notice. However, the court held in In Re Estate of Dalton, 206 So.2d 264 (Fla. 3rd DCA 1968), that, where statutory notice had not been furnished, actual notice of the filing of a will for probate is not sufficient to shorten the time for filing a petition for revocation of probate pursuant to Section 732.28, Florida Statutes (1963); the reason being that the written notice puts the interested person on notice of the time limitations for him to act.
Finally, Anna R. contends the stipulation itself should be sufficient to constitute a waiver on Baron's part. However, considering the setting, we disagree. It appears that, when Baron filed his petition for administration, he was under the impression that the deceased had not left a will. When he learned that there was an alleged will and when he was faced with the trial judge's suggestion that the parties either stipulate to revocation of Baron's letters or have a hearing thereon, he did not by his stipulations intend to waive any objections to the will which he might later determine were valid. At that point in time, if he did not know of the existence of the will, he could hardly be held to know the circumstances surrounding its procurement. Waiver implies knowledge of the facts and one's rights arising therefrom and the intention to relinquish such rights. 72 Fla. Jur.2d, Estoppel and Waiver, § 89.
In view of the foregoing the judgment appealed from is reversed and the cause is remanded to the trial court for further proceedings on Baron's petition to revoke probate of the will of Anna H. Ballett.
REVERSED AND REMANDED with directions.
BERANEK and GLICKSTEIN, JJ., concur.
NOTES
[1] Section 733.212 provides in pertinent part:
(1) The personal representative shall promptly publish a notice of administration and serve a copy of the notice on the surviving spouse and all beneficiaries known to the personal representative by mail in the manner provided for service of formal notice, unless served under s. 733.2123. He may similarly serve other heirs or devisees under a known prior will... . The notice shall require all interested persons to file with the court, within 3 months of the first publication of the notice:
(a) All claims against the estate.
(b) Any objection by an interested person to whom notice was mailed that challenges the validity of the will, the qualifications of the personal representative, venue, or jurisdiction of the court.
* * * * * *
(3) Objections under paragraph (1)(b), by persons to whom notice was mailed, that are not filed within 3 months following the date of first publication of the notice are forever barred. Claims under paragraph (1)(a) are barred as provided in s. 733.702.
[2] Section 733.2123 provides in pertinent part:
A petitioner may serve formal notice of his petition for administration on interested persons. No person who is served with formal notice of the petition for administration prior to the issuance of letters or who has waived notice may challenge the validity of the will, testacy of the decedent, qualifications of the personal representative, venue, or jurisdiction of the court, except in connection with the proceedings before issuance of letters. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1652411/ | 498 F. Supp. 213 (1980)
Bart DURHAM
v.
Hon. Ray L. BROCK, Jr., Chief Justice; Hon. Joseph W. Henry, Justice; Hon. Robert E. Cooper, Justice; Hon. William H. D. Fones, Justice; Hon. William J. Harbison, Justice, all of the Supreme Court of Tennessee, and Hon. William E. Leech, in his official capacity as Attorney General of the State of Tennessee.
No. 80-3019-NA-CV.
United States District Court, M. D. Tennessee, Nashville Division.
March 18, 1980.
*214 *215 Bart C. Durham, III, pro se.
William M. Leech, Jr., Atty. Gen., Claudius C. Smith, Asst. Atty. Gen., Nashville, Tenn., for defendants.
MEMORANDUM
MORTON, Chief Judge.
The plaintiff in this action seeks declaratory and injunctive relief against two portions of amendments adopted by the Tennessee Supreme Court and thereby made a part of the state's Code of Professional Responsibility. The amendments have the effect of limiting the content of lawyer advertising which the plaintiff contends are regulations violative of first amendment protections which are guaranteed to legitimate commercial speech.
A federal question is presented in which the value of the right asserted exceeds $10,000 exclusive of interest and costs. Jurisdiction is accordingly conferred by 28 U.S.C. §§ 1331, 1343 and relief authorized by 28 U.S.C. § 2201 and Fed.R.Civ.P. 57. Venue is proper under 28 U.S.C. § 1391(b).
The two challenged regulations are an Ethical Consideration and a Disciplinary Rule of Tennessee's Code of Professional Responsibility (Code). They state:
I.
EC 2-8 is amended as follows: ...
lawyers may not specify in any advertisement (1) one or more fields of law in which he or she practices except for the purpose of designating fees for routine legal services allowed under the decision of the Supreme Court in Bates v. State Bar of Arizona, [433 U.S. 350], 97 S. Ct. 2691 [53 L. Ed. 2d 810] (1977)....
IV.
DR 2-101(B)(2) is amended by adding thereto the following:
however, no such advertisement shall indicate areas of practice or specialization except when listing routine legal services accompanied by a fee schedule for such services.
Tennessee Supreme Court Order of December 19, 1979.
The plaintiff has alleged that he is a licensed attorney who has been advertising his services since July of 1977 in accordance with Bates v. State Bar of Arizona, 433 U.S. 350, 97 S. Ct. 2691, 53 L. Ed. 2d 810 (1977) and as further defined by the Tennessee Supreme Court in an amendment dated April 15, 1978, 563 S.W.2d XXV-XXXVIII. The plaintiff is doing business with three other attorneys and an office staff as the "Legal Clinic of Bart Durham." The plaintiff asserts that the great majority of the cases accepted by the clinic are in the five areas of divorce, bankruptcy, criminal law, injuries on the job, and automobile accidents. *216 He states that very few cases are accepted in the fields of labor, civil rights, taxation, landlord and tenant, administrative, corporate, real estate, contracts and other areas.
The media employed for the plaintiff's advertisements include newspapers, radio, television, and the yellow pages of the telephone directory.
The defendants have the responsibility for the licensing and regulation of attorneys and failure to abide by those regulations may result in suspension or disbarment from the profession, in addition to other sanctions.
In short, the plaintiff wishes to advertise the areas of law to which he has limited the majority of his practice and do so without also listing a price for the fields advertised. It would also appear that the plaintiff wishes to advertise routine legal services for which he seeks clients, also without listing a fee for those services. The plaintiff claims that this form of commercial speach is protected by the first amendment and may not be properly banned.
The defendants have asserted that such advertising would be false, misleading or deceptive and that, under the Bates decision, it may be properly regulated by the state.
Standing
The threshold question in this matter is one of standing to sue. It is the position of the defendants that the plaintiff has not been prosecuted or threatened with prosecution and that, therefore, there is no case or controversy within Article III of the Federal Constitution. In analyzing the question of standing, the court is faced with both the question of constitutional limitations on the jurisdiction of the federal courts as well as prudential limitations on the exercise of that jurisdiction in the sound discretion of the court. Barrows v. Jackson, 346 U.S. 249, 73 S. Ct. 1031, 97 L. Ed. 2d 1586 (1953). In the former dimension, the question is one of justiciability, i. e., whether the plaintiff has "alleged such a personal stake in the outcome of the controversy" as to warrant the invocation of federal jurisdiction and the remedial powers thereof. Baker v. Carr, 369 U.S. 186, 82 S. Ct. 691, 7 L. Ed. 2d 663 (1962). Federal jurisdiction, then, will lie only where the plaintiff has suffered some "threatened or actual injury resulting from the putatively illegal action ...." Linda R.S. v. Richard D., 410 U.S. 614, 93 S. Ct. 1146, 35 L. Ed. 2d 536 (1973); Data Processing Service v. Camp, 397 U.S. 150, 90 S. Ct. 827, 25 L. Ed. 2d 184 (1970). The personal stake in the outcome is "to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions." Baker v. Carr, 369 U.S. 186, 204, 82 S. Ct. 691, 7 L. Ed. 2d 663, 678 (1962). See generally, Warth v. Seldin, 422 U.S. 490, 498-502, 95 S. Ct. 2197, 45 L. Ed. 2d 343, 354-56 (1975).
It is true that, in this case, the plaintiff has not been prosecuted (as were the plaintiffs in Bates) nor has he been directly threatened with prosecution. In Doe v. Bolton, 410 U.S. 179, 93 S. Ct. 739, 35 L. Ed. 2d 201 (1973), the Supreme Court found that Georgialicensed physicians had standing to challenge the constitutionality of the abortion laws of that state. Id. at 188, 93 S.Ct. at 745-746, 35 L.Ed.2d at 210. The physicians "do have standing despite the fact that the record does not disclose that any of them has been prosecuted or threatened with prosecution, for violation of the State's abortion statutes. The physician is the one against whom these criminal statutes operate ... [and the statutes] therefore assert a sufficiently direct threat of personal detriment. [The doctors] should not be required to await and undergo a criminal prosecution as the sole means of seeking relief." Id. citing Crossen v. Brekenridge, 446 F.2d 833, 839-40 (6th Cir. 1971). See also Planned Parenthood Association v. Fitzpatrick, 401 F. Supp. 554, 561-62 (E.D.Pa.1975), vacated, Beal v. Franklin, 428 U.S. 901, 96 S. Ct. 3201, 49 L. Ed. 2d 1204 (1976) and aff'd, Franklin v. Fitzpatrick, 428 U.S. 901, 96 S. Ct. 3202, 49 L. Ed. 2d 1205 (1976).
In the case sub judice, the plaintiff faces severe penalties for the exercise of *217 what he believes to be a constitutional right illegally abridged by the State of Tennessee. These penalties range up to and include being barred from the practice of a learned profession. The court notes that the standing hurdle is formidable in this type of case and that the major prior restraint cases do not involve declaratory relief.[1]See, e. g., Shuttlesworth v. Birmingham, 394 U.S. 147, 89 S. Ct. 935, 22 L. Ed. 2d 162 (1969); Cox v. Louisiana, 379 U.S. 536, 85 S. Ct. 453, 13 L. Ed. 2d 471 (1965); Kunz v. New York, 340 U.S. 290, 71 S. Ct. 312, 95 L. Ed. 280 (1951). Moreover, Bates refused to apply the doctrine of "overbreadth," a traditional one in the area of first amendment rights, to commercial speech. 433 U.S. at 380-81, 97 S.Ct. at 2707-2708, 53 L.Ed.2d at 833-34. As such, a person may not challenge a commercial speech regulation on the grounds that it may be applied unconstitutionally in circumstances other than those before the court. Id. at 380, 97 S.Ct. at 2707, 53 L.Ed.2d at 833. The reasoning of the court was that commercial speech is different from political or ideological speech. Since commercial speech is directly connected with economic well-being, it is unlikely that it will be crushed by overbroad regulation. Id. at 381, 97 S.Ct. at 2707-2708, 53 L.Ed.2d at 834. More importantly, the Court reasoned that the "advertiser seeks to disseminate information about a product or service that he provides, and presumably he can determine more readily than others whether his speech is truthful and [therefore] protected." Id. But that approach subsumes the idea that the speaker will have a choice, i. e., to speak if truthful and non-deceptive or not speak if misleading. That is not the case here. The plaintiff asserts that his advertisement is truthful, not deceptive, and not misleading. Therefore, the plaintiff claims that his protected speech has been banned and that he has standing to litigate the issue.
It is axiomatic that on a motion[2] to dismiss for lack of standing the court must accept as true all the material allegations of the complaint and construe the complaint in favor of the complaining party. Warth v. Seldin, 422 U.S. 490, 501, 95 S. Ct. 2197, 2206, 45 L. Ed. 2d 343, 356 (1975).
In Poe v. Menghini, 339 F. Supp. 986 (D.Kan.1972), it was stated that "[i]t is not necessary that plaintiffs have violated the statute or that a prosecution be pending before the constitutionality of a statute may be challenged, so long as the actual interference with fundamental rights is alleged or is shown." Id. at 990. See also Epperson v. Arkansas, 393 U.S. 97, 89 S. Ct. 266, 21 L. Ed. 2d 228 (1968) (teacher seeking declaratory and injunctive relief claiming that state statute making the teaching of evolution a criminal act was unconstitutional).
This was the position taken in a declaratory judgment case based on Bates, Bolton v. Kansas State Board of Healing Arts, 473 F. Supp. 728 (D.Kan.1979). There, the court analyzed the standing requirement under Bates and concluded that chiropractors, who believed that they had a constitutional right to truthfully and non-deceptively advertise, did not have to place their licenses in jeopardy in order to challenge the constitutionality of the state's ban. They were permitted to pursue declaratory and injunctive relief.[3]Id. at 732-34.
Accordingly, the court concludes that the plaintiff has "a personal stake and interest [which is] arrayed against persons with adverse legal interests in a sufficiently immediate adversary context to warrant declaratory relief" consideration.[4]Poe v. *218 Menghini, 339 F. Supp. 986 (D.Kan.1972) citing Golden v. Zwickler, 394 U.S. 103, 89 S. Ct. 956, 22 L. Ed. 2d 113 (1969). See generally Wright & Miller, Federal Practice and Procedure, §§ 2757, 2767 (1973).
Abstention
The defendants next argue that this court not only abstain, but dismiss under Younger v. Harris, 401 U.S. 37, 91 S. Ct. 746, 27 L. Ed. 2d 669 (1971). The defendants have cited no case in support of their proposition in the area of first amendment freedom and the court is aware of none. For a cogent analysis of why the doctrine of abstention under Younger does not apply to challenges of attorney advertising regulations, see Consumers Union of the United States v. American Bar Association, 427 F. Supp. 506, 513-16, (E.D.Va.1976) (per Merhige, J., with one judge specially concurring), vacated, 433 U.S. 917, 97 S. Ct. 2993, 53 L. Ed. 2d 1104 (1977) for reconsideration in light of Bates.
Accordingly, the court will decide the issue on the merits.
Injunctive Relief
Federal court injunctions against state prosecutions constitute extraordinary judicial measures which are appropriate only in "special circumstances." Younger v. Harris, 401 U.S. 37, 43-49, 91 S. Ct. 746, 750-753, 27 L. Ed. 2d 669, 675-78 (1971). In order to obtain an injunction, the plaintiff must show more than merely the threat of injury that is "incidental to every criminal proceeding brought lawfully and in good faith." Douglas v. City of Jeanette, 319 U.S. 157, 164, 63 S. Ct. 877, 881, 87 L. Ed. 1324, 1330 (1943). See also Dombrowski v. Pfister, 380 U.S. 479, 85 S. Ct. 1116, 14 L. Ed. 2d 22 (1965).
Here, the plaintiff has not alleged that the regulation in question has been used against him in bad faith or that it has been an instrument of harrassment or intimidation in the exercise of protected constitutional freedoms. The allegation of a chilling effect upon first amendment rights is insufficient for injunctive relief. Y.W. C.A. v. Kugler, 342 F. Supp. 1048 (D.N.J. 1972), vacated and remanded, 475 F.2d 1398 (3d Cir. 1973), and affirmed, 493 F.2d 1402 (3d Cir.), cert. denied, 415 U.S. 989, 94 S. Ct. 1587, 39 L. Ed. 2d 885 (1974). Moreover, there is no indication that state officials will fail to enforce and protect the plaintiff's constitutional rights as they are determined by this court nor are there indications that they will ignore those rights. Id. Therefore, the special circumstances necessary for the issuance of an injunction are not present and that claim for relief is hereby denied.
Declaratory Relief
The issue here is a narrow one. May the State of Tennessee, by and through its Supreme Court, promulgate a rule which forbids an attorney from advertising routine legal services or fields of law to which practice is limited unless the advertisement is accompanied by a listing of the price for such services consistent with the first and fourteenth amendments?
This question, like many others,[5] was not answered by Bates. Other substantial questions left open in this area include who has the burden of proof, whether there is a presumption of constitutionality, and the scope or extent of the emerging protection of commercial speech under the first amendment. Comment, The Commercial Speech Doctrine and the First Amendment, 12 Tulsa L.J. 699, 707 (1977). Also unresolved is the very fundamental question of what are routine legal services?
*219 It is unnecessary to retrace the entire evolution of commercial speech and its relationship with the first amendment,[6] but a review of Bates would seem appropriate. In essence, Bates focuses on the right of consumers to be recipients of commercial information rather than the right of commercial speakers to speak. "The listener's interest is substantial: the consumer's concern for the free flow of commercial speech may be far keener than his concern for urgent political dialogue." 433 U.S. at 364, 97 S.Ct. at 2699, 53 L.Ed.2d at 823. Such speech on the one hand may involve important issues of the day,[7] or it may inform the public as to the availability, nature, and prices of products and services which performs "an indispensable role in the allocation of resources in a free enterprise system."[8]Id. Because such speech serves valuable individual and societal interests in facilitating reliable and informed decisionmaking it is entitled to first amendment protection. Id., Virginia Pharmacy Board v. Virginia Consumer Council, 425 U.S. 748, 96 S. Ct. 1817, 48 L. Ed. 2d 346 (1976). This, of course, does not mean that commercial speech is not subject to reasonable regulation. It is. The state may insure that "the stream of commercial information flow[s] cleanly as well as freely." Id. at 772, 96 S.Ct. at 1831, 48 L.Ed.2d at 365.
The Supreme Court has thus far recognized only three categories of permissible regulation of commercial speech consistent with the first amendment. These are:
(1) reasonable time, place, and manner restrictions;
(2) prohibitions of false, deceptive, or misleading advertisements; and
(3) prohibitions on the advertising of illegal transactions.
Bates embraces and adopts all three limitations. Because the case at bar clearly falls within the second category above, that will be the focus of the ensuing discussion.
False or misleading speech, commercial or otherwise, has never been protected for its own sake. 425 U.S. at 771, 96 S.Ct. at 1830-1831, 48 L.Ed.2d at 364. "Advertising that is false, deceptive, or misleading of course is subject to restraint." 433 U.S. at 383, 97 S.Ct. at 2709, 53 L.Ed.2d at 835. That much is made clear by Bates. Thereafter, the channel markers are indistinct. The Court did not make clear the test employed to find that the Bates ad was not false or misleading or the standards against which it was held.[9] Nevertheless, it does provide a departure point for the court: That is, under the second classification above, unless an advertisement is false, misleading or deceptive, it may not be banned.
That must also be the initial function of this court. Before doing so, however, several preliminary questions must be determined. First, who has the burden of proof? Traditionally, in free speech cases, once a state regulation appears to impinge on first amendment rights, the burden of proof is upon the state to show a compelling state interest in such regulation.[10] One commentator has observed:
*220 [T]here are indications in Bates that the Court's attitude toward future restrictions in the area of commercial speech will not be tolerant. The burden of persuasion appears to lie with the proponents of continued restrictions, rather than on the proponents of advertising, and that burden appears to be a fairly heavy one.[11]
The State acceded to this position at the hearing on this matter and was first to present its evidence. Therefore, the court finds that the defendants' initial burden is to prove by a preponderance of the evidence that advertisements of the type which are prohibited are inherently false, misleading, or deceptive.
The next question which must be answered is, by what test, formula or standard is the proscribed advertising to be evaluated? The Supreme Court may have unwittingly supplied guidance in a footnote. The Court states therein: "The determination of whether an advertisement is misleading requires consideration of the legal sophistication of its audience." 433 U.S. at 383, 97 S.Ct. at 2709 n. 37, 53 L.Ed.2d at 835 n. 37. The Court cites the Federal Trade Commission (FTC) case of Feil v. FTC, 285 F.2d 879, 897 (9th Cir. 1960). This court finds no impediment to the adoption of the tests and standards which the FTC has developed in cases involving deceptive advertising pursuant to 15 U.S.C. § 45.
In looking to the most restrictive of these standards, i. e., those most protective of the public, it appears that the test is not whether an advertisement does deceive, but rather whether it is capable of deceiving. Courts have held that the FTC may look both to the meaning of the words and all that is reasonably implied, not only to a careful reader, but it may envision that advertisement as it would be viewed by the public generally-including the ignorant, unthinking, and credulous. Niresk Industries, Inc. v. FTC, 278 F.2d 337 (7th Cir.), cert. denied, 364 U.S. 883, 81 S. Ct. 173, 5 L. Ed. 2d 104 (1960). In the Feil case, supra, the court held that the FTC could "limit the use of language [in advertisements] which, although seemingly innocuous to the expert was likely to deceive the unlearned and gullible." Feil v. FTC, 285 F.2d 879, 897 (9th Cir. 1960).
The defendants have offered no proof tending to show that an advertisement of routine legal services or of fields of practice without prices is deceptive. However, the court notes that the determination of a capacity to deceive may be made without consumer testimony and it may be made from the point of view of the least sophisticated. Exposition Press, Inc. v. FTC, 295 F.2d 869 (2d Cir. 1961), cert. denied, 370 U.S. 917, 82 S. Ct. 1554, 8 L. Ed. 2d 497 (1962). It has been said that the FTC need not hear witnesses attest to the deceptive nature of the advertisement but may determine the matter through its own inspection and analysis. United States Retail Credit Association v. FTC, 300 F.2d 212 (4th Cir. 1962).
Coupled with the foregoing is a second concept, however, based upon first amendment considerations. That is, any regulation of potentially deceptive advertising must be narrowly drawn. In the area of commercial speech, "the remedy for the perceived violation [of the FTC Act] can go no further in imposing a prior restraint on protected commercial speech than is reasonably necessary to accomplish the remedial objective of preventing the violation." Beneficial Corp. v. FTC, 542 F.2d 611, 619 (3rd Cir. 1976), cert. denied, 430 U.S. 983, 97 S. Ct. 1679, 52 L. Ed. 2d 377 (1977).
*221 At first blush, this might appear to conflict with the overbreadth discussion in Bates. Therein, the Court reasoned:
[T]he justification for the application of overbreadth analysis applies weakly, if at all, in the ordinary commercial context. [T]here are "commonsense differences" between commercial speech and other varieties. Since advertising is linked to commercial well-being, it seems unlikely that such speech is particularly susceptible to being crushed by overbroad regulation. Moreover, concerns for uncertainty in determining the scope of protection are reduced; the advertiser seeks to disseminate information about a product or service that he provides, and presumably he can determine more readily than others whether his speech is truthful and protected. Since overbreadth has been described by this Court as "strong medicine," which "has been employed ... sparingly and only as a last resort," we decline to apply it to commercial advertising, a context where it is not necessary to further its intended objective.
433 U.S. at 381, 97 S.Ct. at 2707, 53 L.Ed.2d at 834 (citations omitted).
It is apparent from the Court's analysis that it applies to the advertiser who must ferret out what is protected speech and what is not. Clearly, that presupposes that once an advertisement is determined to be protected by the first amendment, it may be distributed to the public. That is not the case here. The regulation being challenged does not permit that determination; it flatly prohibits an advertisement based on content. While it is true that the state may regulate false, deceptive and misleading advertisements, it may not go further and prohibit protected speech. "A remedy [or regulation] for deceptive advertising which is broader than is necessary to prevent future deception or correct past deception is impermissible under the First Amendment." Encyclopaedia Britannica, Inc. v. FTC, 605 F.2d 964, 972 (7th Cir. 1979). See also Standard Oil of California v. FTC, 577 F.2d 653, 662 (9th Cir. 1978).
As for a presumption of constitutionality on the part of the challenged regulations, none will be entertained by the court. While state supreme court regulations and legislative and congressional acts are generally entitled to a presumption of constitutionality,[12] the preferred position of the first amendment greatly weakens such a presumption involving that amendment. See, e. g., Turchick v. United States, 561 F.2d 719, 724 (8th Cir. 1977); United States v. Dellinger, 472 F.2d 340 (7th Cir. 1972), cert. denied, 410 U.S. 970, 93 S. Ct. 1443, 35 L. Ed. 2d 706 (1973). See generally, Cahn, The Firstness of the First Amendment, 65 Yale L.J. 464 (1956). It is also inappropriate to apply such a presumption where the practical effect of so doing would be to greatly reduce the burden of proof on the part of the state in justifying its speech restrictions.
Finally, the court must address the question of what constitutes a "routine legal service."[13] The Tennessee Supreme Court has previously declined to define that term. In re Petition for Rule of Court Governing Lawyer Advertising, 564 S.W.2d 638, 644 (Tenn.1978). To the court's knowledge, no other court has ventured a proposed meaning. It is deemed necessary to define the term because both the ethical consideration and the disciplinary rule incorporate and rely upon that language.
The Tennessee Supreme Court has approached the problem from the standpoint of a given lawyer's expertise in a particular field. Under such an approach, the court concluded that patents or copyrights may be routine to some lawyers, and, if they were competent in those fields, they could *222 advertise them.[14] This is clearly not the import in Bates. Bates is not a decision for the benefit of the bar; it is a decision for the benefit of consumers of legal services, and it is from their standpoint that the problem must be approached. Reading Virginia Pharmacy and Bates together, there emerges a pattern as to the types of goods and services which the Supreme Court had in mind. In short, they are essentially standardized. The court in Bates acknowledged that legal services are not fungible per se, but it noted that there are a number of services which may be performed which are not so unique that a fixed price may not be set for those services in advance. The Court observed that "`rarely are two haircuts identical, but that does not mean that barbers cannot quote a standard price. Lawyers perform countless relatively standardized services which vary somewhat in complexity but are not so much as to make each job utterly unique.'" 433 U.S. at 373 n. 27, 97 S.Ct. at 2703 n. 27, 53 L.Ed.2d at 829, quoting Morgan, The Evolving Concept of Professional Responsibility, 90 Harv.L. Rev. 702, 714 (1977). So while it is literally true that legal services are not fungible in the sense that one pre-packaged pharmaceutical may be replaced upon the shelf by another, still, that is the idea which underlies "routine legal services." They must be objectively capable of standardization so that any licensed attorney at law is deemed qualified to perform them, and secondly, they are so uniform in the requirements of the service that they vary very little in their performance. By this definition, a routine legal service could include such things as a form contract, mortgage preparation, or a title opinion. See Kentucky Bar Association v. Stuart, 568 S.W.2d 933 (Ky.1978). The bar retains the right to define those services; but, until it does, the foregoing test at least provides guidance in assessing the challenged regulations. 433 U.S. at 373 n. 28, 97 S.Ct. at 2704 n. 28, 53 L.Ed.2d at 829.
With these parameters established, the court must address the question of whether the State of Tennessee may constitutionally forbid lawyers to advertise routine legal services or fields of law to which their practice is limited without also advertising a price for the services involved. In order to proscribe such advertising based on content, it must, according to Bates, be found to be false, deceptive, or misleading. 433 U.S. at 383, 97 S.Ct. at 2708-2709, 53 L.Ed.2d at 835. Secondly, if such advertisements are found to be deceptive, the least drastic alternative must be employed to remedy the defect consistent with the first amendment.[15]
That the states have broad power to regulate the practice of law within their respective borders is beyond dispute. United Mine Workers v. Illinois Bar Association, 389 U.S. 217, 222, 88 S. Ct. 353, 356, 19 L. Ed. 2d 426, 431 (1967). "But it is equally apparent that broad rules framed to protect the public and to preserve respect for the administration of justice can in their actual operation significantly impair the value of [first amendment] freedoms." Id.
Here, it is alleged that the State of Tennessee overstepped those broad boundaries and imposed a regulation which absolutely prohibits a form of speech protected by the first amendment as made applicable to the *223 states through the fourteenth. Schneider v. State, 308 U.S. 147, 60 S. Ct. 146, 84 L. Ed. 155 (1939).
It may first be concluded, in analyzing the propriety of the regulation, that the prohibited advertisements are not false. The only contention is that advertisements which list only fields of practice or proffered routine legal services are deceptive or misleading.
Such statements are calculated to convey to the lay public the impression that the lawyer is a specialist and, therefore possesses particular expertise in the advertised field. At the present time so advertising, be it ever so well intentioned, would be deceptive and misleading.
. . . . .
When we permit a lawyer to advertise, we must insure that the public is not victimized by any form of advertising that has the effect of a holding out to the public of special or unique qualification or expertise.
In re Petition for Rule of Court Governing Lawyer Advertising, 564 S.W.2d 638, 645 (Tenn.1978). The defendants do not give this court the benefit of the analysis used in reaching that conclusion, nor did they do so at the hearing in this matter. They also did not explain why offering a routine legal service by way of an advertisement with a price is not deceptive but omission of the fee is. Finally, the defendants' regulation permits an attorney to state the areas or fields of law in which he or she practices without prices if it is done in a law list or directory which is certified by the American Bar Association. EC 2-8. These lists and directories are not confidential. They are available for public use, housed in public libraries, etc. It is not immediately apparent to the court how listing fields of law to which practice is limited is not deceptive to the public in that form, but is when done in the yellow pages.
Nevertheless, the court must answer the question of whether the type of advertisement prohibited is misleading or deceptive in order to determine the protection to which it is entitled under the first amendment.
When a lawyer is licensed to practice in the State of Tennessee, he or she is deemed to have mastered the basic skills of the legal profession which will permit the attorney to become sufficiently competent in any area of the law to adequately represent a client therein. It in no way implies pastdemonstrated competence in all areas of the law.[16] The lawyer, then, begins as a generalist. Presumably, a lawyer who advertised himself thusly would not be implying any specialization or expertise in a given field of law. If every field of law were advertised,[17] that would be a truthful, verifiable statement of fact which could not be prohibited under Bates.[18] The alleged deception appears to come about as one begins to delimit one's practice. Where the line of deception is crossed is difficult to delineate. The court is unwilling to say that one who advertised that only civil law was practiced is implying any specialtyan incredibly vast area of law is covered by the term "civil." But, on the other hand, if one advertises "Aircraft Crash Litigation," it would probably appear to the layman that that person had some expertise in that complex field and was therefore a specialist. This is problematical because the Supreme Court has reserved judgment on whether, or, to what extent, a lawyer may advertise concerning the quality of legal services offered. *224 433 U.S. at 366, 97 S.Ct. at 2700, 53 L.Ed.2d at 825.
What is not apparent from the foregoing is why any deception is cured by adding a price quotation. Indeed, such a requirement borders on the irrational. To say that one who advertised "Aircraft Crash Litigation Fee: 25% of Recovery" or "Antitrust $100 per Hour" is not implying a special expertise is falacious.
Although unarticulated, it may be that the underlying rationale for this argument is that only simple, routine legal services are capable of having a predetermined price attached thereto. But the foregoing indicates the error of this premise. The test should be the degree of standardization of the service involved and not the mere quotation of a price along with the service.
In short, the deception claimed by the defendants is not cured by the regulation. And the question of whether deception exists still remains unanswered. However, under the standards of the FTC, reviewed supra, the court is willing to concede that a lawyer's advertisement which listed only a few legal services or fields of practice would imply expertise therein to all or a part of the lay public and would thereby imply a higher quality of service offered.
Therefore, it is concluded that the content of the advertisements in question may be regulated. But reasonable regulation and total prohibition are two different things. To the extent that the regulation sweeps too broadly it is an unconstitutional restraint of free speech. The state is required to us the least restrictive means[19] in the regulation of commercial speech.[20] A *225 blanket prohibition of any advertisement of a routine legal service or a field of law without an accompanying fee therefor is unconstitutional. There are many ways in which any deception in a facially truthful advertisement may be cured short of total prohibition. Bates appears to approve of either supplementation or warnings or disclaimers as a method of curing an advertisement which might otherwise have the potential to mislead. 433 U.S. at 384, 97 S.Ct. at 2709, 53 L.Ed.2d at 836. See generally, Note, First Amendment Limitations, supra, n. 14. Certainly a lawyer's advertisement which stated that his practice was limited to domestic relations but which was accompanied by a warning or disclaimer that no particular expertise above that of the general legal community was asserted or implied would not mislead a consumer as to the quality of the legal services being offered. That is the kind of truthful advertising, susceptible of precise measurement or verification, which Bates and the first amendment protect against prohibition.[21]
Listing the area of one's practice or the availability of routine legal services is information which is valuable to the consumer. It is a practical reality of the legal profession that not all lawyers practice all law. The large metropolitan firms tend to represent major corporations and wealthy individuals. Comment, Advertising, Solicitation and the Profession's Duty to Make Legal Counsel Available, 81 Yale L.J. 1181, 1203 (1972) citing J. Carlin, Lawyers on Their Own: A Study of Individual Practitioners in Chicago (1962). These firms do little, if any, work which is of a type sought after by the general public such as divorce, simple wills, real estate closings, and the like. Hence, the firms which are perhaps best known are of the least usefulness to the individual legal consumer. It is the small firms and solo practitioners, generally, who supply both the services sought by the general public and those which lend themselves to advertising with or without a fee structure: Property conveyances, most aspects of mortgage lending, administration of decedent's estates, small debt collection, preparation of income tax returns for salaried persons, real estate tax contests, and complaints about governmentadministered programs such as social security and welfare. Id. at 1205. Without doubt, an advertisement in a newspaper or telephone directory listing those services would be of assistance in enabling a consumer to locate a lawyer or firm who handles the routine legal services required of and by the public at large. Bates prevents the state from cutting off the free flow of this information. The first paragraph of the Code of Professional Responsibility strongly reinforces the foregoing:
The continued existence of a free and democratic society depends upon the recognition of the concept that justice is based upon a rule of law grounded in respect for the dignity of the individual and his capacity through reason for enlightened self-government. Law so grounded makes justice possible, for only through law does the dignity of the individual attain respect and protection. Without it, individual rights become subject to unrestrained power, respect for law is destroyed, and rational self-government is impossible.
The first amendment of the United States Constitution has set its mandate, the Supreme Court has interpreted it, and, against this, the restrictions of the State of Tennessee cannot stand.
Attorney Fees
Attorney fees are awarded, in the discretion of the court,[22] to successful litigants in suits for the preservation of constitutional rights. The policy underlying this provision is to encourage citizens to sue for *226 civil rights violations without being deterred by the cost of litigation.
In the case at bar, the action was brought by a licensed attorney pro se to secure personal and professional rights. Minimal expenses and time lost from other cases were incurred. The court is not of the opinion that attorneys will be deterred from litigating questions of this nature for themselves by the cost of litigation.
In addition, there is no indication that the State of Tennessee acted without good faith in every particular. The circumstances of this case are such that an award of attorney fees is not justified, and the same is hereby denied. The court adopts the analysis of Consumers Union of United States v. American Bar Association, 470 F. Supp. 1055, 1058-63 (E.D.Va.1979) on this point.
An appropriate order will be entered.
NOTES
[1] Of course, it is likely that the doctrine of prior restraints is wholely inappropriate given the greater hardiness and objectivity of commercial speech. See Virginia Pharmacy Board v. Virginia Consumer Council, 425 U.S. 748, 771, 96 S. Ct. 1817, 1830, 48 L. Ed. 2d 346, 364 n. 24 (1976).
[2] The motions in this case were adopted and argued at the hearing on the merits.
[3] The Bolton case is distinguishable in that one of the plaintiffs was charged with a violation of the challenged statutes after the challenge was begun, but that is not considered controlling.
[4] Since not all advertising, but only that without prices, has been proscribed by the regulation, the court finds it unnecessary to reach a conclusion as to whether the plaintiff suffered actual damages in the form of lost revenues which would form an alternative basis for standing. There is nothing in the record on this point, and the court refuses to speculate.
[5] For example, the Supreme Court reserved the question of whether a lawyer could advertise the quality of the service offered and whether in-person solicitation is permissible. As for the latter, see In re Primus, 436 U.S. 412, 98 S. Ct. 1893, 56 L. Ed. 2d 417 (1978); Ohralik v. Ohio State Bar Assoc., 436 U.S. 447, 98 S. Ct. 1912, 56 L. Ed. 2d 444 (1978); Note, Attorney Solicitation: The Scope of State Regulation After Primus and Ohralik, 12 U.Mich.J.L.Ref. 144 (1978).
[6] See generally, Comment, The Commercial Speech Doctrine and the First Amendment, 12 Tulsa L.J. 699 (1977); Note, Constitutional Law-First Amendment-Commercial Speech-Lawyer Advertising Protected by the First Amendment-Bates v. State Bar of Arizona, 433 U.S. 350, 97 S. Ct. 2691, 53 L. Ed. 2d 810 (1977), 11 Creighton L.Rev. 577 (1977).
[7] Citing Bigelow v. Virginia, 421 U.S. 809, 95 S. Ct. 2222, 44 L. Ed. 2d 600 (1975).
[8] Citing FTC v. Procter & Gamble Co., 386 U.S. 568, 603-04, 87 S. Ct. 1224, 1242-1243, 18 L. Ed. 2d 303, 324-25 (1967) (Harlan, J., concurring).
[9] "In the usual case involving a restraint on speech, a showing that the challenged rule served unconstitutionally to suppress speech would end our analysis." 433 U.S. at 379-80, 97 S.Ct. at 2707, 53 L.Ed.2d at 833. However, the Court in Bates determined that the "over-breadth" doctrine does not apply to commercial speech and, hence, it had to decide whether the particular advertisement before it was false, misleading or deceptive. Id. at 379-81, 97 S.Ct. at 2706-2708, 53 L.Ed.2d at 833-34. See also Friedman v. Rogers, 440 U.S. 1, 99 S. Ct. 887, 59 L. Ed. 2d 100 (1979).
[10] See, e. g., NAACP v. Button, 371 U.S. 415, 83 S. Ct. 328, 9 L. Ed. 2d 405 (1963).
[11] Hellman, Oklahoma Supreme Court's Rules on Lawyer Advertising: Some Practical, Legal and Policy Questions, 31 Okl.L.Rev. 509, 544 (1978). In Consumers Union of the United States v. American Bar Association, 427 F. Supp. 506 (E.D.Va.1976), vacated, 433 U.S. 917, 97 S. Ct. 2993, 53 L. Ed. 2d 1104 (1977) for reconsideration in light of Bates, Judge Merhige, with one judge specially concurring, held:
The question in the instant action becomes, then, whether the regulation imposed by the State Bar on legal advertising in the Commonwealth of Virginia is a permissible regulation of commercial speech. Since commercial speech is admittedly protected by the First Amendment, the state carried a heavy burden of justifying incidences of its curtailment.
427 F.Supp. at 518.
[12] However, the Supreme Court has recognized that enactments are subject to different presumptions of validity. Parham v. Hughes, 441 U.S. 347, 99 S. Ct. 1742, 60 L. Ed. 2d 269, 274 (1979).
[13] What is a "field of law" would not appear to present much controversy. It would be essentially demarcated as the law school curriculum: contracts, administrative law, domestic relations and the like.
[14] has been said that "one man's poison is another man's meat." So with routine legal services. The procurement of patents and copyrights is "routine" to the practitioners in those fields but is wholly beyond the ken of the general practitioner. A so-called simple will or simple deed or a simple divorce, contested or not, may present significant tax problems that are routine to some practitioners and yet beyond the ability of others.
Instead of permitting advertisement of "routine legal services," the rule we adopt today permits the advertisement of any legal service, restricted only by the guidelines and standards contained in various portions of the Code.
564 S.W.2d at 644. It is the change, with emphasis upon advertising only routine legal services with prices, which requires that the term be defined.
[15] In addition to the cases cited above, see generally Hellman, supra, n. 10 at 547-51; Note, First Amendment Limitations on FTC Corrective Advertising Orders, 66 Geo.L.J. 1473 (1978).
[16] An analogous profession would appear to be veterinary medicine. It is not possible in four years of medical school to learn the metabolisms of every species of animal on earth or the contraindications of medicines within those metabolisms. As in law, answers to specialized questions may be provided by research. However, the veterinarian is licensed to treat every variety of affliction, whether through medicine or surgery, in the animal kingdom. The court wonders, by virtue of this case, whether a veterinarian who limits his practice to small animals and equines is holding out as a specialist in dogs and horses if he or she so advertises.
[17] This is not to say that that is possible.
[18] Of course, other sections of the Code define the required proficiency for actually accepting a case.
[19] Although not articulated in Bates, this standard is clearly implied and it was the formula used in Virginia Pharmacy where the Court noted that the state had an alternative to its "highly paternalistic approach" which banned the advertisements in question. 425 U.S. at 770, 96 S.Ct. at 1829-1830, 48 L.Ed.2d at 363.
[20] In Virginia Pharmacy, the Court observed that, because the restriction under attack was challenged under the first rather than the fourteenth amendment, it called for a "close inspection" of the justifications propounded by the state. There is little doubt that the Court was calling forth a least restrictive means analysis. In noting less restrictive alternatives, the Court stated:
[T]he choice among these alternative approaches is not ours to make or the Virginia General Assembly's. It is precisely this kind of choice, between the dangers of suppressing information and the dangers of its misuse if it is freely available, that the First Amendment makes for us. Virginia is free to require whatever professional standard it wishes of its pharmacists; it may subsidize them or protect them from competition in other ways. But it may not do so by keeping the public in ignorance of the entirely lawful [and truthful] terms that competing pharmacists are offering.
425 U.S. at 770, 96 S.Ct. at 1829, 48 L.Ed.2d at 363 (citations omitted).
In reviewing that passage, one commentator wrote that this
sounds very much like the absolutist statement which is the holding of Bates: A state may not "prevent the publication in a newspaper of ... [a] truthful advertisement ..." But in neither opinion did this language mean that the states were prohibited from imposing any content restrictions on advertising. In each case, the Court said that states are free to regulate the contents of advertising by prohibiting the publication of false, deceptive, or misleading information. This tends to imply that the Court was applying, sub silentio, a "least restrictive alternative" test on the issue of content restrictions. The Court was recognizing that (1) there is a legitimate state interest in protecting consumers from being abused by sellers of goods and services, and (2) this obvious state interest might prompt a state to attempt to regulate advertising with this consumer protection objective in mind. Having recognized this legitimate state interest, however, the Court did not open the door for the states to advance that interest in any way they might deem to be rational. Instead, the court observed that this state interest can be adequately protected simply by prohibiting false, deceptive, and misleading advertising. The implication and it is only an implication is that this is the only way the states may advance this interest because it is the least restrictive way the states can achieve their legitimate consumer protection interest while at the same time securing the zone of interests protected by the first amendment. This is the only way to reconcile (1) the Court's absolutist statements against any restraints on truthful advertising, (2) the Court's language tolerating some consumer protection restrictions, and (3) the Court's "close [and critical] inspection" of the consumer protection arguments raised by the states in both Virginia Pharmacy and Bates.
Hellman, supra, n. 10 at 549 (citations omitted).
See also, Wall & Ochs, Inc. v. Hicks, 469 F. Supp. 873 (E.D.N.C.1979), in which the court observed: "The state may, of course, restrain false, deceptive or misleading advertising as long as it refrains from unduly burdening commercial speech." Id. at 880.
[21] See the discussion in Friedman v. Rogers, 440 U.S. 1, 99 S. Ct. 887, 59 L. Ed. 2d 100, 116-21 (1979) (Blackmun, J., dissenting).
[22] 42 U.S.C. § 1988. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1695298/ | 426 So. 2d 1213 (1983)
Jeannie FARKAS, Appellant,
v.
Richard FARKAS, Appellee.
No. 82-417.
District Court of Appeal of Florida, Fourth District.
February 9, 1983.
*1214 Don Lacy and Earle Lee Butler of Butler & Pettit, P.A., Fort Lauderdale, for appellant.
Hans C. Feige, Coral Springs, for appellee.
HERSEY, Judge.
On November 27, 1979, in contemplation of a dissolution of marriage, the parties entered into a property settlement agreement. Subsequently, in January, 1980, a final judgment was entered dissolving the marriage and ratifying and incorporating the property settlement agreement. The provisions of that agreement material to this appeal are:
Furthermore, notwithstanding the incorporation of this Agreement in any Judgment in the suit for Dissolution of Marriage now pending between the parties, or in any future suit for Dissolution of Marriage brought by either party hereto this Agreement shall not be merged in such Judgment but shall survive the same and be binding on the parties for all time.
ALIMONY: The Wife hereby irrevocably waives any and all alimony from the Husband.
VI
CHILD SUPPORT: The Husband recognizes his obligation to the minor child of the parties for his support and in satisfaction of same, agrees to pay to the Wife *1215 the sum of Twenty Dollars ($20.00) per week. Said child support of Twenty Dollars ($20.00) per week shall commence upon execution of this Agreement, and continuing thereafter each and every week until the happening of one of the following events, whichever event first occurs:
a. The child dies.
b. The child reaches the age of eighteen (18).
c. The child becomes self-supporting, and/or
d. The child marries.
e. The child no longer lives with the Wife and is not attending school.
It is further agreed that the Wife shall have exclusive right to occupy the property from and after the date of this Agreement until such time as the Husband's obligation for child support terminates pursuant to Paragraph VI of this Agreement.
The only real property mentioned in the agreement is the marital residence.
Appellant wife remarried subsequent to the dissolution and continued living in the marital home with the minor child and her new husband. However, none of the conditions set forth in Article VI occurred.
On June 9, 1981, appellee husband filed a Motion for Enforcement and Clarification of Rights Under Final Judgment of Dissolution and Property Settlement Agreement, alleging that because the wife had remarried her right to exclusive occupancy should terminate.
The issue went to hearing before a general master who determined that, as a matter of law, husband was entitled to partition of the former marital domicile upon the remarriage of the wife. The general master's report was adopted and ratified by the trial court.
The issue we are asked to determine is whether the trial court erred in modifying the provision of the property settlement agreement which granted the wife exclusive use and occupancy of the marital home to create an exception when the former wife remarried.
[A] spouses right, as custodian of the children of the dissolved marriage, to exclusive possession of a marital home granted by a dissolution decree terminates upon that spouse's remarriage.
Lambert v. Lambert, 403 So. 2d 484, 486 (Fla. 1st DCA 1981). (Emphasis supplied.)
In the present case, exclusive possession of the marital residence was granted not by the judgment of dissolution but by a property settlement agreement between the parties which was incorporated into the final judgment. We therefore immediately distinguish the rationale in cases like Briner v. Briner, 425 So. 2d 211 (Fla. 4th DCA 1983) where no contractual rights are involved. "Generally, where a property settlement agreement has been executed prior to a dissolution of marriage, purporting to resolve the property rights of the parties," its provisions are to be interpreted in the same manner as any other contract. Sosnowitz v. Sosnowitz, 342 So. 2d 524, 525 (Fla. 3d DCA 1977). Therefore, where the terms of the agreement are unambiguous, the meaning and intention of the parties is to be gleaned from the content of the instrument itself. Sosnowitz v. Sosnowitz.
Property settlement agreements that relate to alimony or to the adjustment of the property rights of the parties should be upheld unless fraud, duress, deceit, coercion or overreaching is alleged and proved. Baker v. Baker, 394 So. 2d 465 (Fla. 4th DCA 1981). Where, however, the circumstances or financial ability of either party has changed since execution of an agreement to pay alimony or child support, either party may apply for modification. § 61.14, Fla. Stat. (1981). Thus, the crux of this appeal is whether the agreement pertaining to possession of the marital home involves a property right or is simply an incident of child support.
*1216 We determine that while the provision at issue incidentally constitutes an element of child support, it also confers a property right. It is therefore not subject to modification because the terms of the agreement are clear and unambiguous and the enumerated contingencies that extinguish the right to possession have not occurred.
We therefore reverse and remand for further proceedings consistent with this determination.
REVERSED and REMANDED.
ANSTEAD and WALDEN, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1520110/ | 587 S.W.2d 775 (1979)
TEJAS TOYOTA, INC., Appellant,
v.
Ronald L. GRIFFIN, Appellee.
No. 6023.
Court of Civil Appeals of Texas, Waco.
September 13, 1979.
Eugene J. Pitman, Paul J. McConnell, III, De Lange, Hudspeth, Pitman & Katz, Houston, for appellant.
L. Kirk Kridner, Michael C. Neel, Neel & Gregg, Houston, for appellee.
OPINION
McDONALD, Chief Justice.
Appellant Toyota as plaintiff sued appellee Griffin for $250 alleged to be balance due on an automobile purchased by Griffin from Toyota.
Griffin answered by general denial and filed cross action against Toyota under the Deceptive Trade Practices-Consumer Protection Act seeking $527.50 damages for denial of use of his automobile; $2500 damages to his credit reputation; prayed that both items be trebled ($527.50 + $2500 = $3027.50 × 3 = $9082.50); plus $1500 attorneys' fees.
At the conclusion of the evidence Toyota filed motion to dismiss Griffin's cross action because it sued for an amount in excess of $5000, the jurisdiction of the County Court at Law.
The trial court permitted Griffin to file a trial amendment to his cross action (which we assume was intended to plead for amounts within the jurisdiction of the court); and overruled Toyota's motion to dismiss.
Griffin's trial amendment to his cross action reduced the amount sought for damages to his credit reputation from $2500 to $1000, and the amount sought for attorneys' fees from $1500 to $993. Thus, cross plaintiff *776 Griffin still sought $527.50 + $1000 = $1527.50 to be trebled equals $4582.50; plus $993 attorneys' fees which amounts to $5575.50.
The trial court submitted issues to the jury which found:
1) Griffin does not owe Toyota the $248.30 [$250.00].
2), 3) Toyota was guilty of deceptive trade practices and/or unconscionable actions.
4) Griffin was adversely affected by such deceptive trade practices and/or unconscionable actions.
5) Awarded Griffin $1950 actual damages.
6) Awarded Griffin $1188 attorneys' fees.
The trial court rendered judgment for cross plaintiff Griffin for $3000 plus $1188 attorneys' fees.
Toyota appeals contending "the [trial] court erred in overruling [its] motion to dismiss the cross action, as the amount claimed in such cross action exceeded the limits of the jurisdiction of the trial court.
The trial court was created by Article 1970-110c VATS; and Article 1970a fixed the civil jurisdiction of such court "when the matter in controversy * * * shall not exceed $5000".
Where the amount in controversy exceeds the trial court's maximum jurisdiction any judgment rendered is void. Regian v. Sowell, Tex.Civ.App. (Waco), NWH, 534 S.W.2d 175; Williams v. Steele, Tex. Sup., 108 S.W. 155.
And the amount in controversy is the amount of damages claimed in the pleading. Gimbel v. Gomprecht, 89 Tex. 497, 35 S.W. 470.
Cross actions are treated as separate suits and must meet the same maximum jurisdictional requirements as an original action, when brought in a court of limited jurisdiction. Gimbel v. Gomprecht, Tex. Sup., supra; Commercial Inv. Trust, Inc. v. Smart, Tex.Com.App., Opinion Adopted, 67 S.W.2d 858; Bates v. Capps, Tex.Civ.App. (Houston 1) NWH, 349 S.W.2d 311; Manly v. Citizens Nat. Bank in Abilene, Tex.Civ. App. (Eastland) NWH, 110 S.W.2d 993; Pennant Oil & Gas Co. v. Lightfoot, Tex. Com.App., 292 S.W. 517; Mumme v. Spies, Tex.Civ.App. (San Antonio) 15 S.W.2d 137; Brook Mays & Co. v. Osborne, Tex.Civ.App. (Waco) NWH, 70 S.W.2d 755.
Since Griffin's cross action as amended by the trial amendment demanded a sum in excess of the jurisdiction of the trial court, such court had no jurisdiction of such cross action.
Appellant's contention is sustained.
The judgment is reversed and judgment here rendered dismissing the cross action.
REVERSED AND RENDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2591235/ | 77 N.Y.2d 175 (1990)
In the Matter of Niagara Venture, a Limited Partnership, Respondent,
v.
Sicoli & Massaro, Inc., et al., Appellants, et al., Respondents.
Court of Appeals of the State of New York.
Argued November 13, 1990.
Decided December 27, 1990.
Robert W. Michalak and Lisa G. Massaro for Sicoli & Massaro, Inc., appellant.
Craig L. Miller for Patterson-Stevens, Inc., appellant, relying on the brief of Sicoli & Massaro.
Richard G. Collins for Niagara Venture, respondent.
Chief Judge WACHTLER and Judges SIMONS and HANCOCK, JR., concur with Judge KAYE; Judge BELLACOSA dissents and votes to affirm in a separate opinion in which Judges ALEXANDER and TITONE concur.
*177KAYE, J.
Are private improvement (or mechanics') liens valid against a property owner's interest in the undeveloped portion of a tract when, at the time the liens are filed, the owner has conveyed the developed portion of the tract to a third party? For the reasons stated below, we answer that question in the affirmative, and dismiss petitioner property owner's petition to discharge respondents' liens.
This controversy centers on the construction of a water theme park "The Niagara Splash" in the City of Niagara Falls. The project was initiated by a series of agreements among Niagara Venture (petitioner), the City of Niagara Falls (the City) and the Niagara Falls Urban Renewal Agency, and was funded in part by public grants and loans from the City. Pursuant to an agreement dated October 15, 1986, the City and the Urban Renewal Agency conveyed a total of 20.6 acres to petitioner. As provided in the agreement, the northerly portion of the parcel was to be the site of the theme park structures, and the southerly portion, fronting on Rainbow Boulevard in the City, was to become part of a previously *178 approved hotel complex. The agreement further contemplated a later sale-and-leaseback between petitioner and the City.[1]
In March 1987, petitioner entered into agreements with various contractors and suppliers, including respondents, for labor and materials to construct the theme park. It is undisputed that at the time of these arrangements, petitioner owned the unified 20.6 acre tract upon which the improvements were made.
On September 3, 1987, in accordance with the sale-and-leaseback arrangement contemplated by the October 15, 1986 agreement, petitioner conveyed the developed 16.1-acre portion of the tract, containing the theme park structures, to the City for a nominal amount, and retained the undeveloped 4.5-acre portion of the tract. The City thus became record owner of the 16.1 acres and leased it back to petitioner, who was to pay rent in the amount of its debt service obligations to the City. The agreement specifies that the lease will run until all such obligations are paid, at which time petitioner will repurchase the parcel for a nominal amount. Petitioner, under the agreement and its amendments, is meanwhile obligated to pay taxes based on the full assessment value of the 20.6 acres and in addition is to receive all depreciation and tax losses, deductions or credits relating to the theme park buildings, machinery and equipment.
It is undisputed that petitioner gave respondents no prior notice of the September 3, 1987 conveyance, and that at the time of the conveyance respondents had not yet demanded and been refused final payment for their work. In November 1987 and May 1988, respondents filed public improvement and mechanics' liens against the entire 20.6 acres. Petitioner soon after instituted the present proceeding under Lien Law §§ 19 and 20 to discharge all liens against the property, on the theory that it was no longer the owner of the improvements.
The trial court denied the request to discharge the public improvement liens, discharged the mechanics' liens to the extent they encumbered property owned by the City, and upheld the mechanics' liens on the 4.5 acres. On appeal of so *179 much of the order as upheld the mechanics' liens as against the 4.5 acres, a divided Appellate Division reversed and discharged those liens, reasoning that petitioner retained no improved property that could be the subject of private improvement liens. We now reverse, agreeing with the trial court and the Appellate Division dissenters that the mechanics' liens were valid as against the 4.5-acre balance of the tract still owned by petitioner at the time the liens were filed.
A first principle, accepted by the parties and the Appellate Division unanimously, is that a lien filed against a unified parcel operates against the owner's interest in the entire parcel even if improvements are physically made on only a portion of the property (see, W. L. Dev. Corp. v Trifort Realty, 44 N.Y.2d 489). Thus, had the liens been filed before petitioner conveyed away any portion of the parcel, those liens would have encumbered its interest in the entire parcel, including the 4.5 undeveloped acres (see, Jannotta v Noslac Realty Corp., 231 App Div 864; Woolf v Schaefer, 103 App Div 567).[2] The question that divides the parties and the Appellate Division Justices is whether petitioner is freed of the encumbrances on the 4.5-acre undeveloped portion of the tract because of its prior conveyance of the developed portion. We conclude that it is not.
Our analysis centers on the Lien Law, which creates the interests at issue here, and particularly on sections 3 and 4 of the Lien Law. Section 3 provides that: "[A] contractor [or] subcontractor * * * who performs labor or furnishes materials for the improvement of real property with the consent or at the request of the owner thereof * * * shall have a lien for the principal and interest, of the value, or the agreed price, of such labor * * * or materials upon the real property improved or to be improved and upon such improvement, from the time of filing a notice of such lien as prescribed in this chapter."
Petitioner contends that the statutory words "upon the real property improved" limit the scope of a lien to the precise site of an improvement a reading of the statute that would immediately put it at variance with the long-accepted principle that a lien filed against a unified parcel operates against *180 the entire parcel. But additionally, it seems plain that the purpose of those words in section 3 is to differentiate mechanics' liens from equitable liens created by contract (see, James v Alderton Dock Yards, 256 N.Y. 298, 303) and common-law liens on personal property (see, Deeley v Dwight, 132 N.Y. 59, 63). The mechanic's lien is, by contrast, a statutory creature, fashioned by the Legislature to protect those who, by their labor and materials, enhance the value of real property (see, Matter of Perrin v Stempinsky Realty Corp., 15 AD2d 48, 49, appeal dismissed 11 N.Y.2d 931; see generally, Bowmar, Lien Priorities in New York § 3.1 [1987]; Jensen, Mechanics' Liens § 1 [2d ed 1924]; Griffin, Mechanics' Liens of State of New York §§ 2, 3 [1929]).
It is the function of section 3 to define both who qualifies as a "mechanic" and the type of lien such a person secures. Section 3 does not purport to fix the extent of the lien; indeed, read literally, section 3 provides for a mechanic's lien to apply to an entire improved parcel, with no protection for a subsequent good-faith purchaser. Lien Law § 4, explicitly captioned "Extent of lien," defines the scope of the lien.
Section 4 provides that a mechanic's lien "shall extend to the owner's right, title or interest in the real property and improvements, existing at the time of filing the notice of lien." Petitioner urges that the words "real property and improvements" must be read in the conjunctive, that a lien can attach only to real property and improvements coexisting in the possession of the owner at the moment of filing. Again, petitioner's hypertechnical reading of the statute must be rejected. Section 4 explicitly creates a lien on the owner's "right, title or interest" in the real property, not in any particular segment of it (see, Gates & Co. v National Fair & Exposition Assn., 225 N.Y. 142, 156). Petitioner's interest in the improved parcel was subject to the liens prior to the conveyance, and its remaining interest is still subject to those liens.
Petitioner's strict reading of the relevant sections runs afoul also of Lien Law § 23, which specifies that the statute, being remedial, should be read liberally to secure its beneficial interests and purposes. As the Appellate Division dissenters observed, petitioner's construction "subverts the beneficial interests and purpose of the Lien Law by permitting an owner of land to escape his responsibility to his contractors and suppliers by enabling him to retain lands free and clear of the mechanic's liens filed by them, solely because the owner conveys a portion of his lands to another." (162 AD2d 992, 995.)
*181The result we reach is fully consistent with both the letter of the Lien Law and the policy underlying the statute. The Lien Law may be said to have a dual purpose: first, to provide security for laborers and materialmen and second, to provide notice and a degree of certainty to subsequent purchasers (see, Carl A. Morse, Inc. v Rentar Indus. Dev. Corp., 56 AD2d 30, 37, affd 43 N.Y.2d 952, appeal dismissed 439 US 804). "Time of filing" in the context of section 4 is a balancing of those interests, providing security for the lienor and protection for the subsequent purchaser, not a haven for property owners seeking to escape their commitments to contractors and materialmen. Reading the statute as petitioner urges would be contrary to the first goal of the Lien Law and would not advance the second. But both statutory purposes are served when the lien is recognized as valid against the interest in the improved parcel remaining in the hands of the owner, and invalid against the portion conveyed to good-faith purchasers before the time of filing.
Applying those principles to the facts before us: had respondents' liens been filed prior to petitioner's conveyance of the developed portion of the property,[3] they would have operated against petitioner's interest in the entire parcel, irrespective of the actual physical location of the improvements on that parcel. By reason of the "time of filing" provision of section 4, respondents' liens can operate only against petitioner's remaining interest in the parcel at the time the liens are filed; they cannot reach the interest conveyed to good-faith purchasers before respondents' filings. But to say that petitioner, simply by conveying the developed portion of the parcel, can free itself of all encumbrances relating to the improvements is wholly at odds with the intent of the Lien Law. That result is especially appropriate in the present case, where petitioner continues to enjoy significant benefits of ownership of the entire parcel.
Two matters remain. First, the Appellate Division erred in its conclusion that the liens were invalid because of a failure to apportion the work and materials against distinct and independently owned premises. Such a requirement applies where several transactions, involving the improvement of distinct parcels of property, have been effected at the *182 request of independent owners (see, Contelmo's Sand & Gravel v J & J Milano, 96 AD2d 1090; Matter of Twin County Tr. Mix v Ingula Bldrs. Corp., 27 AD2d 939). A requirement of apportionment under such circumstances is found in Lien Law § 3; the work must be done at the request or with the consent of the owner of the property, or it would be plainly unfair to allow a lien. But we have no such concern in this case. There is no possibility here that an owner will be burdened with a lien related to improvements it did not request.
Second, there is no merit in petitioner's contention that respondents are amply protected by the public improvement liens. Public improvement liens are valid against "moneys of the state or of such [public] corporation applicable to the construction or demolition of such improvement, to the extent of the amount due or to become due on such contract." (Lien Law § 5.) Such liens protect subcontractors who supply labor or material for an improvement on public lands where mechanics' liens are unavailable (see, Lien Law § 2 [8]; § 3) by allowing them to encumber the moneys due the contractor under its contracts with the government entity. Here, the loan-leaseback structure of the transaction creates a cash flow from petitioner to the City, rather than a corpus of government funds subject to public improvement liens.
Finally, we agree that "certainty, reliability and predictability are at a premium" in this area of the law (dissenting opn, at 183). The rule that promotes those desirable objectives is that a laborer or materialman who improves a unified tract can obtain a lien on the interest in the possession of the original owner at the time of filing. To leave to case-by-case determination the question whether, and to what extent, the retained portion of a unified tract has been improved by particular work defeats those objectives.
Accordingly, the order of the Appellate Division should be reversed, with costs, and the petition dismissed to the extent it seeks to discharge the private improvement liens filed against petitioner's property.
BELLACOSA, J. (dissenting).
Individuals who perform labor or provide materials to improve real property are authorized by Lien Law §§ 3 and 4 to file liens upon the real property so improved and upon the improvements; the liens extend to the owner's right, title or interest in the property and improvements existing at the time the notice of lien is filed. After the owner in this case conveyed the improved property to a third *183 party, the putative lienors filed their liens on the owner's retained unimproved property. The plain language of Lien Law §§ 3 and 4 does not recognize such a lien. Even the majority concedes that the governing provision does not literally provide this important remedy. Yet, the Court validates the liens filed in this case by deviating from the plain language of the statute regulating real property matters and titles, where certainty, reliability and predictability are at a premium.
Moreover, the majority's analysis turns on a conjectural factual hypothesis: That it is "appropriate" to construe the Lien Law to protect respondents, despite its plain governing language, because "had respondents' liens been filed prior to petitioner's conveyance of the developed portion of the property, they would have operated against petitioner's interest in the entire parcel" (majority opn, at 181 [emphasis added]).
A review of the Appellate Division cases cited to support this "long-accepted principle" shows that its application has been limited to cases where "[i]t does not appear that there was any separate contract for furnishing material to be used on the different lots, nor does it appear that the owner held title to the lots by virtue of separate conveyances or descriptions, or that they did not in fact constitute but a single parcel." (Woolf v Schaefer, 103 App Div 567, 571.) This is not such a case. Indeed, the affected owner held title to the two parcels through separate conveyances from two different owners, and contracted with the putative lienors to furnish labor and materials on only one parcel. There is, thus, no basis for this Court to make a finding of fact categorizing the two parcels as "unified" and this Court is powerless to make such a finding.
Nor is this case like W. L. Dev. Corp. v Trifort Realty (44 N.Y.2d 489), where we held that a prior recorded mortgage for materials and labor provided during the construction of street and utility improvements in a subdivision had priority over a subsequently filed mechanic's lien.
To be sure, if the owner in this case had obtained only the 16.1-acre parcel, and thereafter improved it and conveyed it to the City, a subsequently filed mechanic's lien on that parcel would have no legal consequence whatsoever. A different result should not obtain merely because the owner, at the same time the 16.1-acre parcel was obtained, also obtained an adjoining parcel from a different party for a different use.
*184An individual who supplies labor or materials to improve a parcel which is subsequently conveyed before a lien is timely filed in compliance with the Lien Law may have a remedy under contract law, but not under the Lien Law provisions. To acquire the benefit of the latter necessarily requires explicit compliance with the statutory prerequisites because, wherever the equities may lie in this case, this Court should not unsettle statutory legal precepts in this area which are designed to avoid clouds on title, not to create them.
Order reversed, etc.
NOTES
[1] Contrary to the dissent's description of the initial series of conveyances (dissenting opn, at 183), the record indicates that the original boundary line between the two parcels was not the basis for the reconveyance to the City that is, the deed back to the City conveyed "all of `Parcel I' and most of `Parcel II.'" It therefore cannot be said that the 16.1-acre parcel was obtained as a separate and distinct parcel from the City and reconveyed according to those original boundary lines.
[2] The premise of the dissent that there was no unified tract here (dissenting opn, at 183) is contrary to the explicit finding by the trial court that the parcel "was, in fact, a unified tract or parcel of land." The Appellate Division, while disagreeing on the effect of the reconveyance to the City, in no way disagreed with that factual finding by the trial court.
[3] There is no suggestion that the liens were untimely; apparently, when the conveyance was made respondents had not yet demanded and been refused final payment for their work. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1549300/ | 140 B.R. 752 (1992)
In re AUDRA-JOHN CORPORATION, Debtor.
Bankruptcy No. 3-91-3786.
United States Bankruptcy Court, D. Minnesota, Third Division.
May 28, 1992.
*753 Ronald J. Walsh, Minneapolis, Minn., for debtor.
Douglas L. Hertlein, Columbus, Ohio, for Petland, Inc.
Julia A. Christians, Minneapolis, Minn., for Unsecured Creditors Committee:
Raymond Lallier, Minneapolis, Minn., for Citizens Independent Bank.
ORDER GRANTING DEBTOR'S MOTION FOR APPROVAL OF REJECTION OF EXECUTORY FRANCHISE AGREEMENT
GREGORY F. KISHEL, Bankruptcy Judge.
This Chapter 11 case came on before the Court on March 3, 1992, for hearing on Debtor's motion for approval of its rejection of an executory franchise agreement with Petland, Inc. ("Petland"). Debtor appeared by its attorney, Ronald J. Walsh. Petland appeared by its attorney, Douglas L. Hertlein. Other appearances were noted in the record. Upon the moving and responsive documents, the evidence adduced at the hearing, and the arguments and post-hearing briefing of counsel, the Court makes the following order.
Debtor filed a voluntary petition for reorganization under Chapter 11 on July 11, 1991. Debtor operates a retail pet store at a location in the Knollwood Mall, St. Louis Park, Minnesota.[1] When Debtor filed for reorganization, Joseph H. Kaplan and Bruce I. Nathanson were its principals.[2] Petland is an Ohio-based corporation which franchises a merchandising system for the operation of retail pet stores under a prescribed format with distinctive trade and service marks.
On November 26, 1983, Petland, as franchisor, and Kaplan and Nathanson, as franchisees, had entered into a franchise agreement for the Knollwood Mall location. Kaplan and Nathanson later assigned their rights under this agreement to Debtor. Under the agreement, Petland licensed Debtor to use its trade and service marks and agreed to provide Debtor with advertising and promotional materials, management consulting, and various other forms of assistance. In return, Debtor was to comply with various operational standards, and was obligated to pay Petland a royalty fee based on a percentage of its gross sales. Debtor was entitled, but not obligated, to purchase supplies and inventory from Petland. The record does not reveal whether Debtor was obligated to maintain the floor layout of the store in a design mandated by Petland; section 7 of the franchise agreement does require Debtor to *754 comply with an operations manual promulgated by Petland, though, and it is likely that the manual prescribes store layouts.[3]
Section 13 of the agreement provided:
Upon termination of this agreement, for whatever cause, [Debtor] shall not for a period of three (3) years thereafter, or any lesser part thereof, as a court of competent jurisdiction finds to be reasonable, directly or indirectly engage in, have a financial interest or be associated in any manner with any business similar or substantially similar to the business authorized by [Petland] hereunder within a five mile radius, or any lesser part thereof, as a court of competent jurisdiction finds to be reasonable, of [Debtor's] operation pursuant to this agreement, or any other then existing Petland retail pet store. [Debtor] acknowledges that this prohibition is necessary and reasonable due to its being in possession of business methods, trade secrets, know-how and related matters, disclosure of which would prejudice the business operation and interests of [Petland] and its other licensees.
During Debtor's years of operation under the Petland franchise at the Knollwood Mall, it has invested between $130,000.00 and $150,000.00 in leasehold improvements to its premises there.
Petland itself is now a debtor under Chapter 11 in a case pending in the United States Bankruptcy Court for the Southern District of Ohio, having filed for relief on December 2, 1991. Petland has not furnished management or marketing consultation to Debtor for at least a year; it did not respond to Nathanson's overtures for a renegotiation of the royalty fee or other terms of the franchise relationship, when Debtor began to experience financial distress in early 1991; and Debtor has not had to purchase inventory or supplies from Petland for at least several months, having found such goods available locally for more prompt delivery at competitive prices.[4]
In the fall of 1991, Debtor received substantial adverse publicity as a result of a local television station's "investigative report" on its operations, which focused on alleged shortcomings in the care of its pet livestock.[5] After the broadcast, Debtor's sales volume dropped markedly. Debtor continued to use Petland's merchandising formats and trade and service marks until December 30, 1991. At that time, Kaplan substantially rearranged the internal layout of the store; removed the Petland designation from all signage, advertising, packaging, and other public promotions; and stopped using all of Petland's trade and service marks. He testified that, since then, business had been "maybe a little better," but he was unable to say so with utter certainty.
Since assuming full responsibility for Debtor's management around January 1, 1992, Kaplan has attempted to reduce ongoing business expenses, and has evaluated Debtor's financial position. At present, Debtor is not generating a net operating profit from which debt could be serviced under a plan of reorganization, if it were to continue paying Petland's royalty fees. Kaplan has no proposal for further reducing expenses, augmenting income, or otherwise changing Debtor's cash flow dynamics, so as to generate additional net revenues; nor, apparently, does Debtor have sources of equity capital which would permit any great amount of debt retirement via lump-sum payment. As a result, funds for debt service under a confirmed plan of reorganization would have to come from revenues which are currently subject to Petland's claim for royalty fees, and nowhere else. Debtor lacks the financial resources to propose a plan based on a relocation of operations away from its current location. Such a move would risk the loss of goodwill associated with the current location, *755 however fragile at present; Debtor lacks the funds or access to financing to cover the cost of relocation; and were it to move, it would sacrifice the value of its leasehold improvements, which it cannot recover from its premises landlord.
Via the present motion, Debtor both rejects its franchise agreement with Petland pursuant to 11 U.S.C. § 365(a)[6], and seeks the Court's approval of that rejection.[7] As its factual basis, Debtor maintains that the benefits of a continuing franchise relationship with Petland do not justify the cost. Debtor points to several key facts established by the record: the utter lack of operational support it has had from Petland; the prospect that ongoing stigma will be attached to the Petland name as a result of the adverse publicity last fall[8]; and the possibility that Petland, due its own status in bankruptcy, may not be able to carry out its future obligations as franchisor. Given the drain on its own revenues caused by its obligation to pay the royalty fee, Debtor maintains that a continuation of the franchise relationship will thwart any chance of a reorganization under its own control.
In an interesting twist, Petland responds by garbing itself as a guardian of Debtor's estate. On two different bases, it argues that rejection of the franchise agreement is not in the best interests of Debtor's creditors, and will unduly prejudice their chances of financial realization from this case.
First, Petland argues that its franchisees' rights are valuable assets in and of themselves, which parties such as Debtor should not relinquish out of hand.[9] Second and more to the point it notes that court approval of the rejection will give rise to a deemed breach of the lease under 11 U.S.C. § 365(g).[10] This breach, it argues, will trigger the covenant of noncompetition in Section 13 of the franchise agreement. As Petland casts it, its subsequent enforcement of the covenant at equity would terminate Debtor's reorganization and destroy the bankruptcy estate: since such enforcement would bar continued operation at the Knollwood Mall, or renewed operation within five miles of it, and since Debtor lacks capital to fund a move from its present location, it would have to close up shop. Liquidation would follow, generating little or no distribution on account of unsecured claims.
As a general rule, the courts have required the proponent of a rejection under § 365(a) to satisfy a "business judgment" test. N.L.R.B. v. Bildisco and Bildisco, 465 U.S. 513, 520, 104 S. Ct. 1188, 1193, 79 L. Ed. 2d 482 (1984); In re Huff, 81 B.R. 531, 537 (Bankr.D.Minn.1988); In re Briggs Transp. Co., 39 B.R. 343, 352 (Bankr. D.Minn.1984). Under the test, the proponent must show that rejecting the contract will benefit the estate; it need not show *756 that continued performance would result in an actual loss of value from the estate. In re Huff, 81 B.R. at 537. The primary focus of the inquiry should be on the value of the rejection to general unsecured creditors; the interests of other affected parties must be balanced against theirs. Id. The test embodies considerable deference to the proponent of the rejection, id., so long as it can articulate sound business reasons for repudiating the contract.
The issue at bar, then, is whether an effective rejection of the franchise agreement would produce a cognizable economic gain for the estate, to the benefit of unsecured creditors. The evidence does establish that Debtor would generate an operating profit, however slim, were it not bound to pay Petland's royalty fees, and that it cannot do so if it is so bound. For some time, Debtor has received nothing of real economic value from its status as franchisee; there is no indication that it would in the future. As the rejection impacts on Debtor's reorganization, then, the difference is between a plan which would provide for some distribution to unsecured creditors, and one which would provide them with much less of a distribution, or none. If considered only from this operational aspect, then, the rejection passes the business-judgment test; rejection offers a real chance of financial return to Debtor's unsecured creditors, while continuation of the agreement does not.
The published cases' formulation of the business-judgment test means that its application will usually be a question of fact, turning on the dollars-and-cents considerations just discussed. If the issue is cast as such, a debtor's use of the statute will require the Bankruptcy Court to ascertain the pecuniary gain or loss to be expected from a rejection. Here, however, the economic facts are uncontroverted, and the application of § 365 triggers a question largely legal in nature. As the parties frame it, the basic issue is whether, upon the rejection, the franchise agreement's covenant of noncompetition would bar Debtor from continuing operations at its present location. Because Debtor lacks the financial resources to move, the outcome of this legal question not only controls the present motion, it almost certainly will dictate whether Debtor has any chance of reorganization.[11]
The parties argue the controlling bankruptcy statutes to opposite effect. 11 U.S.C. § 365(g) gives a court-approved rejection of an executory contract the effect of a deemed breach of the contract. Debtor presumes that its rejection relieves it from all duties of performance under the franchise agreement, including those under the covenant of noncompetition, and that Petland has no more rights in consequence of the rejection than the allowance of a claim against the estate. Petland, on the other hand, impliedly argues that the covenant of noncompetition was not subject to rejection even though it was a part of the integrated agreement which is the subject of Debtor's motion and that it is entitled *757 to full equitable enforcement of the covenant.
Both parties' analysis on this threshold point is mistaken, though not to pivotal effect. An executory contract is rejected in its entirety; a trustee or debtor in possession cannot reject isolated duties under a contract, or component parts of an integrated agreement. See, e.g., United States Dept. of the Air Force v. Carolina Parachute Corp., 907 F.2d 1469, 1472 (4th Cir.1990); Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1311 (5th Cir.1985); Lee v. Schweiker, 739 F.2d 870, 876 (3d Cir.1984); In re Nitec Paper Corp., 43 B.R. 492, 498 (S.D.N.Y.1984); In re Metro Transp. Co., 87 B.R. 338, 342-343 (Bankr.E.D.Pa.1988); In re David Orgell, Inc., 117 B.R. 574, 575-576 (Bankr.C.D.Calif.1990) (all holding that trustee or debtor in possession may not assume only beneficial provisions of integrated contract, and then reject burdensome provisions).[12] Thus, contrary to Petland's unspoken theory, Debtor's rejection encompasses the covenant of noncompetition.
The next step, however, is not as perfunctory as Debtor urges. Section 365(g) does not provide by its terms that every rejection is remedied solely by the allowance of a claim; nor, really, does its companion provision, 11 U.S.C. § 502(g).[13] The wording of § 365(g) is crucial; Congress specifically incorporated the common-law concept of breach of contract into its treatment of contracting parties subjected to rejection. By that incorporation, it clearly implicated a whole body of nonbankruptcy law to govern the fixing of those rights. See, e.g., In re Re-Trac Corp., 59 B.R. at 259 (rights of parties to lease or contract subjected to § 365 are governed by state law, to extent state law does not contravene the Bankruptcy Code). This principle also is embodied in the structure of the Code itself. The statute defines the time as of which a rejection of an executory contract constitutes such a breach, H.REP. No. 595, 95th Cong., 1st Sess. 349 (1977) and S.REP. No. 989, 95th Cong., 2d Sess. 60 (1978), U.S.Code Cong. & Admin.News 1978, p. 5787, and fixes the date as the time immediately before the debtor's bankruptcy filing. The purpose of going back to this point "is to treat rejection claims as pre-petition claims." Id.
State law, then, must govern the parties' rights in consequence of a deemed breach under § 365(g) not the least because those rights are deemed to have arisen before federal bankruptcy law overlay the pre-petition legal configuration. State law not federal bankruptcy law identifies the remedies which the non-rejecting party has upon the deemed breach, and dictates the relief that the Bankruptcy Court must accord to the non-rejecting party.[14]
*758 Here, the parties' agreement specifies the governing law as being that of Ohio.[15] The question, then, becomes: what are the consequences under Ohio law, at law and/or at equity, of a breach of a covenant of noncompetition? To what remedies is the protected party entitled, and what deference, if any, must the Court give to the party which gave the covenant and now wishes to renege? Most pointedly given Petland's assertions is the protected party absolutely entitled to an injunction against the competing business activity, and, if not, what must it show to obtain one?
Luckily, the Ohio courts have addressed these issues frequently, with thoughtfulness and in some detail. They have developed a two-part test to determine whether a covenant of noncompetition should be enforced by injunction.
First, it must be determined whether the covenant is valid. To do so, "each case must be decided on its own facts...." Raimonde v. Van Vlerah, 42 Ohio St. 2d 21, 325 N.E.2d 544, 547 (1975) (citing Extine v. Williamson Midwest, 176 Ohio St. 403, 200 N.E.2d 297 (1964)). Prior to Raimonde, Ohio courts called upon to enjoin business activity alleged to be in violation of covenants of noncompetition had applied the so-called "blue pencil" rule. See Extine v. Williamson Midwest; Briggs v. Butler, 140 Ohio St. 499, 45 N.E.2d 757 (1942). Under this rule, restrictive covenants in employment contracts were to be separated, to the extent possible, and examined for "reasonableness." Raimonde, 325 N.E.2d at 546. The court then was to enforce all "reasonable," divisible restrictions; to decline to enforce "unreasonable" ones; and to strike down entire contracts if the covenants could not be divided, and an unreasonable covenant tainted the contract. Id. Re-examining the "blue pencil" doctrine, and concluding that it led to "arbitrary and inconsistent results,"[16] the Raimonde court held that a covenant of noncompetition will be enforced at equity only to the extent reasonably necessary to protect the protected party's legitimate interest. 325 N.E.2d at 547. Under Raimonde, a covenant of noncompetition is reasonable "if it is no greater than is required for the protection of the employer, does not impose undue hardship on the employee, and is not injurious to the public." Id.[17] Thus, *759 courts are empowered to modify or amend employment agreements to achieve such "reasonable" results. Id.
The protected party seeking an injunction must produce clear and convincing evidence of the three elements of reasonableness. In addition it is "required to establish actual irreparable harm where the equitable remedy of injunction is sought." Miller Medical Sales, Inc. v. Worstell, 1992 WL 31988, *3, 1992 Ohio App. LEXIS 779 (Ohio Ct.App.1992) (emphasis added). See also Levine v. Beckman, 48 Ohio App. 3d 24, 548 N.E.2d 267, 270-71 (1988). See also Arthur Murray Dance Studios of Cleveland v. Witter, 105 N.E.2d 685, 701-712 (Ohio Ct.C.P.1952) (extensive discussion of irreparable injury in context of request for injunction to enforce covenant of noncompetition).
Actual irreparable injury is usually not presumed, but instead must be proved. Levine v. Beckman, 548 N.E.2d at 271. The Arthur Murray court acknowledged that irreparable injury is very difficult to define. It did, however, accept the definition of irreparable injury as stated in its contemporary edition of AM.JUR.:
... [t]o be irreparable, the injury need not be beyond the possibility of repair or beyond possible compensation in damages, nor need it be very great. The term "irreparable damage" does not have reference to the amount of damage caused, but rather to the difficulty of measuring the amount of damages inflicted.
105 N.E.2d at 703 (citing to 28 AM.JUR. at 243-245 (edition and year of publication not indicated)). The Arthur Murray court also found that though the difficulty of measuring damages may suggest that an injury is irreparable, the "[m]ere difficulty of proving the injury ... does not automatically mean irreparable injury has occurred." Arthur Murray, 105 N.E.2d at 703 (emphasis added). The obverse of this proposition, of course, is that where there is
a full, complete, and adequate remedy in a court of law, for an injury, it is not irreparable; and if full compensation can be obtained by damages in an action in that form, equity will not apply the extraordinary remedy by [sic] injunction.
Id. at 702 (quoting 28 AM.JUR. at 243-245).
Once Debtor made its prima facie case under the business judgment test, Petland had the burden to prove up the predicates of its objection. The central such predicate was the financial disaster which Petland alleges would follow, once it enforced its contractual rights after the rejection. As the proponent of the injunction which it asserted as its main remedy, then, Petland had the burden to prove up its right to such relief in the context of this motion. It clearly failed to do so, on the second element irreparable injury.[18]
Under the franchise agreement, Petland's direct contractual benefit consisted of its right to royalty fees from Debtor, and the opportunity to sell products to Debtor as a supplier. Its indirect benefit, of course, lay in the promotion of goodwill for its business identity, as generated by the cumulation of successful franchises' operations. Its benefits from the agreement's negative covenants were less obvious; however, they clearly included the protection of such things as its trade secrets, its distinctive operational formats and practices, customer goodwill, and the value of management continuity and stability at established franchised locations.
Loss of the royalty income is the most obvious and direct consequence of a rejection of the franchise agreement. Under Ohio law, this, standing alone, does not constitute irreparable harm. Although the damages resulting from the cessation of payment may be difficult to estimate, they would not be impossible to prove. Other than this, the record proves up no other possibility of direct pecuniary loss. Petland cannot credibly complain that it would *760 lose wholesaling business, as Debtor is not required to purchase inventory and supplies from Petland. Even if Debtor's past voluntary purchases were of a level sufficient to merit consideration and redress for a loss of future wholesaling patronage, the amount of the resultant damages certainly can be ascertained, and the injury is not irreparable.
The negative covenants protecting Petland's more abstruse interests might require a more involved discussion, were the record to merit it. It does not. Petland declined to present any evidence on this motion, though it had ample opportunity to do so. It has not proved that its formats and programs included any unique element, or any special trade secret capable of unfair exploitation in the hands of a breaching franchisee. Debtor is not using Petland's trade and service marks, or a store layout which it prescribes or suggests. Petland had not even shown that repeat customer business is a major factor in its franchisees' income generation, let alone that customer goodwill, general or specific, may be usurped unfairly by Debtor. While Petland's management programs may have been of some initial benefit to Debtor in its early years of operation, there is no showing that Kaplan has developed unique expertise at Petland's expense, or that he would use it to draw business away from a successor franchisee. There simply is no evidence that Petland would suffer irreparable harm to the more intangible interests protected under its franchise agreement, were Debtor not enjoined from continuing a non-franchised operation at its present location.
While not addressing the legal standards for injunctive relief under Ohio law, Petland argues that it "has no alternative right to monetary damages" and that injunctive relief is its only remedy. This argument is without merit.[19] As noted earlier at pp. 758-59, the precept of earlier Ohio law that injunction was a favored remedy in cases like this has been supplanted by a new rule, one more cognizant of franchisees' rights to continue their businesses by using their own abilities and business acumen. In any event, even under general principles of equity, the granting of injunctive relief is not a "strict right." See Arthur Murray Dance Studios, 105 N.E.2d at 694; OGIA/Rogers Agency, Inc. v. Estep, 1990 WL 174100, 1990 Ohio App. LEXIS 4908 (Ohio Ct.App.1990). Rather, it is an equitable remedy that is to be used sparingly. As evidenced by the development of the governing standard from Briggs, through Raimonde, to Miller Medical Sales, the Ohio courts have been increasingly disinclined to grant broad injunctive relief against parties in breach of covenants of noncompetition. One general pronouncement, however, persists throughout the cases: the granting of an injunction "rests in the sound not the arbitrary discretion of the court." Arthur Murray Dance Studios of Cleveland v. Witter, 105 N.E.2d at 694. Moreover, "[a]llowance is not a matter of strict right." Id. (emphasis added). See also Perkins v. Village of Quaker City, 165 Ohio St. 120, 133 N.E.2d 595 (1956) ("Injunctions are an extraordinary remedy equitable in nature and their issuance may not be demanded as a matter of right."); OGIA-Rogers Agency, Inc., 1990 WL 174100, 1990 Ohio App. LEXIS 4908. Where the proponent of such injunctive relief has not even met its own burden of proof, the court obviously cannot exercise its discretion in favor of that party.
In objecting to Debtor's motion, Petland asserted that the legal consequences of an effective rejection would be too onerous for the estate to bear. These consequences, of course, are fixed by nonbankruptcy law, and are those which would have ensued had Debtor breached the franchise agreement outside bankruptcy. Once Debtor met its own initial burden under § 365, Petland had the burden as objector to show that the alleged consequences would follow. Though the consequences were legal, their inevitability was largely a matter controlled by underlying facts the existence of grounds for the according of the equitable *761 relief alleged by Petland to have been its, as of right. Petland did not carry this burden; it failed to produce the evidence of irreparable harm predicate to its right to an injunction. The sparse evidence of record supports the conclusion that a full and adequate remedy at law for Debtor's deemed breach is available to Petland the allowance of a claim for its actual damages consequent to the breach. Debtor having met its own burden under § 365 without viable rebuttal by Petland, then,
IT IS HEREBY ORDERED that Debtor's rejection of its executory franchise agreement with Petland, Inc. is approved.
NOTES
[1] When this case was commenced, Debtor also had a location in the Rosedale Mall in Roseville. On September 9, 1991, its premises lease for that location was deemed rejected by operation of 11 U.S.C. § 365(d). Debtor then terminated operations there. Petland did not object to court approval of the rejection of the separate franchise agreement for the Rosedale location; the Court dealt with that issue by a separate order.
[2] Nathanson has since terminated his involvement with Debtor's management; Kaplan currently directs all operations.
[3] As a stroll through any enclosed shopping mall or a drive down a "strip" development will reveal, such enforced architectural conformity is a characteristic aspect of the franchise relationship in these days and times.
[4] Kaplan's testimony on these points is uncontroverted.
[5] In testimony, Kaplan acknowledged that Petland had no direct fault for any deficiencies in Debtor's operating practices.
[6] In pertinent part, this statute provides that "the trustee, subject to the court's approval, may assume or reject any executory contract ... of the debtor." As a debtor in possession under Chapter 11, of course, Debtor has all of the rights and duties of a trustee in bankruptcy. 11 U.S.C. § 1107(a). Neither party disputes that the franchise agreement in question is an executory contract within the ambit of § 365.
[7] Under the rule adopted in this Court, the acceptance or rejection of an executory contract or unexpired lease is accomplished via the rejecting party's communication of an unequivocal intent to assume or reject. In re 1 Potato 2, Inc., 58 B.R. 752, 754-755 (Bankr.D.Minn.1986); In re Re-Trac Corp., 59 B.R. 251, 255 (Bankr. D.Minn.1986). This is an act with legal significance completely distinct from the motion for court approval. In re 1 Potato 2, Inc., 58 B.R. at 755. There is no reason why both acts cannot be accomplished in the text of a single motion, though it is not necessary to do so.
[8] The latter point is a rather fatuous dodge of responsibility, given Kaplan's acknowledgement that Petland had nothing to do with the root sources of the negative press, at least "directly."
[9] Its counsel argues this point in somewhat lackluster fashion quite understandably, given the evidence of record.
[10] Subject to two nonmaterial exceptions, this statute provides in pertinent part that:
the rejection of an executory contract ... of the debtor constitutes a breach of such contract ...
(1) if such contract ... has not been assumed under [11 U.S.C. § 365] or under a plan confirmed under chapter ... 11 ... of [the Bankruptcy Code], immediately before the date of filing of the [bankruptcy] petition ...
[11] The totality of the circumstances gives the lie to Petland's pose as a disinterested protector of the interests of Debtor's creditors. Absent relief from its royalty-fee obligations, Debtor cannot make a distribution to unsecured creditors. If Petland has its way on the present motion, then, Debtor could not propose a confirmable plan of reorganization. If it proposed a plan with no distribution to unsecured creditors, that class would be deemed to have rejected the plan. 11 U.S.C. § 1126(g). Upon this deemed rejection, the absolute priority rule of 11 U.S.C. § 1129(b)(2)(B) would raise a substantial hurdle to the confirmation of a plan which preserved pre-petition equity interests. Debtor's chances of a self-directed reorganization, then, would be nonexistent, absent one of two circumstances: a large pre-confirmation increase in net revenues, to enable a distribution to unsecured creditors after all; or, assuming the legal viability of the "new capital" exception to the absolute priority rule, a substantial equity investment which appears not to be in the offing. (To make things even more uncertain, the predicate legal assumption for the latter is currently a point of controversy in this District, as in many others. See In re Lumber Exchange Ltd. Partnership, 125 B.R. 1000 (Bankr.D.Minn.1991), aff'd, 134 B.R. 354 (D.Minn.1991), appeal to Eighth Circuit pending). Under any of these possible scenarios, unsecured creditors would come up short, or empty-handed. By opposing this motion, Petland may be protecting its own generalized interest in its franchising program, and may even be attempting in ham-handed fashion to make an example of Debtor. Contrary to its counsel's blandishments, it is not really watching out for any interest broader than that.
[12] Interestingly, most, if not all, of the reported decisions use this principle to deny the attempt of a rejecting trustee or debtor to have it both ways. The obverse of the proposition, of course, is that the opposing party cannot have it both ways either.
[13] In pertinent part, this statute provides:
A claim arising from the rejection, under [11 U.S.C. §] 365 ... of an executory contract ... of the debtor that has not been assumed shall be determined, and shall be allowed ... or disallowed ..., the same as if such claim had arisen before the date of filing of the [bankruptcy] petition.
This language only delimits claims which arise from rejections under § 365; it says nothing about the availability of other remedies to the non-debtor party, or the ability of such a party to invoke those remedies against a debtor or trustee in bankruptcy.
[14] Many courts have published decisions treating the status of covenants of noncompetition upon rejection under § 365. Few of them, however, seem to have recognized the governance of state law upon rejection, or the need under that law to address the competing equities in a thoroughgoing way. (At least one court has explicitly rejected state-law governance, apparently on the time-worn notion that some undefined federal common law should govern just because the debtor is in a federal court. See In re JRT, Inc., 121 B.R. 314 (Bankr.W.D.Mich.1990).) Some courts have perfunctorily concluded that the non-rejecting party is relegated to filing a claim for damages, and participating in the estate on the basis of that claim as ultimately allowed. See, e.g., In re Register, 95 B.R. 73 (Bankr.M.D.Tenn.1989), aff'd, 100 B.R. 360 (M.D.Tenn.1989); In re Allain, 59 B.R. 107 (Bankr.W.D.La.1986); In re Norquist, 43 B.R. 224 (Bankr.E.D.Wash.1984); In re Rovine Corp., 6 B.R. 661 (Bankr.W.D.Tenn.1980). Just as perfunctorily, others have granted equitable relief against the debtor implicitly concluding, with little or no discussion, that an injunction was the primary and favored remedy upon the debtor's deemed breach. See, e.g., In re Don & Lin Trucking Co., Inc., 110 B.R. 562 (Bankr.N.D.Ala. 1990); In re Noco, Inc., 76 B.R. 839 (Bankr. N.D.Fla.1987); In re Carrere, 64 B.R. 156 (Bankr.C.D.Calif.1986). At least one has concluded, again without discussion of state law, that both remedies are available to the nonrejecting party. In re Thomas, 133 B.R. 92 (Bankr.N.D.Ohio 1990). Only one of these courts the District Court ruling on the appeal in In re Register properly recognized the governance of nonbankruptcy principles of equity, and applied those precepts to the evidentiary record before it. See 100 B.R. at 362-363.
[15] Section 24 of the Franchise Agreement provides:
This agreement has been drawn and will be executed, in part, in the State of Ohio. All questions concerning the meaning, intention, or validity of this agreement and all questions relating to performance hereunder shall be judged and resolved in accordance with the laws of that State.
[16] In support of the argument that an injunction must lie in Petland's favor under Ohio law, its counsel cited only one case: Briggs v. Butler. Strictly speaking, Briggs v. Butler has not been "overruled"; however, the Raimonde court clearly rejected its "blue pencil" test. Petland's counsel either failed to investigate the legal bases for their argument so as to uncover the major caselaw development since Briggs v. Butler, or did not disclose the existence of known, potentially-adverse authority. Either possibility is equally troubling.
[17] The Raimonde court noted a number of factors which bear on these three elements:
[t]he absence or presence of limitations as to time and space, ... whether the employee represents the sole contact with the customer; whether the employee is possessed with confidential information or trade secrets; whether the covenant seeks to eliminate competition which would be unfair to the employer or merely seeks to eliminate ordinary competition; whether the covenant seeks to stifle the inherent skill and experience of the employee; whether the benefit to the employer is disproportional to the detriment of the employee, whether the covenant operates as a bar to the employee's sole means of support; whether the employee's talent which the employer seeks to suppress was actually developed during the period of employment; and whether the forbidden employment is merely incidental to the main employment.
325 N.E.2d at 547 (citations omitted).
[18] Because this point is dispositive, the Court need not reach the issue of the reasonableness of the negative covenant. Neither party even recognized this as an issue, let alone made a record on it.
[19] Petland cites no authority to support this proposition. Rather, Petland merely cites Congressional floor remarks. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1369761/ | 530 F. Supp. 818 (1979)
RURAL WATER DISTRICT # 3, Washington County, Oklahoma, Plaintiff,
v.
OWASSO UTILITIES AUTHORITY, Its Board of Trustees, Consisting of Jerrald Holt, Chairman, Bill Williams, Vice-Chairman, Boyd Spencer, Secretary and V. D. Duncan, Treasurer, Defendants,
and
Farmer's Home Administration, United States Department of Agriculture, United States of America, Defendant.
No. 77-C-99-D.
United States District Court, N. D. Oklahoma.
July 3, 1979.
*819 Lewis C. Johnson, Tulsa, Okl., for plaintiff.
Kenneth P. Snoke, Asst. U. S. Atty., Tulsa, Okl., C. F. DeLaFleur, Harold Charney, Owasso, Okl., Douglas Mann, Tulsa, Okl., for defendants.
ORDER
DAUGHERTY, Chief Judge.
A non-jury trial was had in the above captioned case on December 19, 1977 and January 4, 1978, before the United States Magistrate, pursuant to the agreement of all parties, Order of the Court No. M-128 and Title 28 U.S.C. § 636.
Thereafter, the Magistrate filed his Findings and Recommendations (including Findings of Fact and Conclusions of Law).
Objections and Exceptions to the Findings and Recommendations of the Magistrate were duly filed by the defendant, Owasso Utilities Authority. The matter has been briefed by the parties and is ready for final disposition by the Court.
The Plaintiff, Rural Water District # 3, Washington County, Oklahoma, was incorporated by the County Commissioners of Washington County, Oklahoma, on the 25th day of January, 1965. The Water District operated under a franchise to serve the public within certain territorial limits. It is noted that the use of the word "franchise" by the parties connotes "the territory which they have authority to operate under, by creation of Rural Water District # 3." (Tr. 6). The territory serviced by Plaintiff encompasses certain areas within Washington, Tulsa and Rogers Counties.
The Defendant, Owasso Utilities Authority, is a public trust with the City of Owasso, Oklahoma, as the beneficiary. The trust was created pursuant to the laws of the State of Oklahoma, Okla.Stat. Tit. 60, §§ 176-180, as amended. The Declaration of Trust is dated July 6, 1966, and was accepted on July 18, 1966.
The purpose of the public trust is to provide utility service, including water and sanitary sewer service, to areas inside and outside the corporate limits of the City of Owasso.
The Defendant, Farmer's Home Administration, holds two real estate mortgages as security for construction money loaned to Rural Water District # 3. The Rural Water system was built with money loaned by the Farmer's Home Administration, and the amount of the mortgages is approximately $1,000,000.00.
The Defendant, Owasso Utilities Authority, is providing services to individuals who reside in the franchised territory (as hereinabove defined) granted to Plaintiff by serving approximately 118 homes (approximately 12 homes are located on a tract of land which has a boundary on State Highway 169 North of 106th Street North to State Highway 20; and, approximately 106 homes located in the Joe Steed Addition, North of 116th Street North, Range 14 East). None of the territory so described has been annexed by the City of Owasso to bring it within the corporate limits of the City of Owasso.
The Farmer's Home Administration in addition to supporting the position of Plaintiff herein, requests that a judgment be entered decreeing the mortgages to be first and prior liens on the real estate.
The Defendant, Owasso Utilities Authority, in the Objections and Exceptions filed, specifically objects to Finding Number 8, Finding Number 9, and the Conclusions of Law submitted by the Magistrate.
The Court will limit its examination of the record and disposition to those objections specifically raised, and will adopt and affirm the Findings of the Magistrate not objected to.
Objection is made to Finding Number 8, which reads as follows:
8. Based on an average water bill of $12.75 per home, Plaintiff has sustained a loss of revenue in the sum of $1,504.50 *820 per month or $18,054.00 per year. Such loss of revenue impairs the ability of the Plaintiff to repay its loan to the Farmers Home Administration.
It was stipulated in the pretrial order that the average water bill was $12.75 per home and the loss per month was $1,504.50 or $18,054.00 per year loss of revenue. (See additionally Tr. 18).
At page 47 of the transcript, Mr. Edwin R. Cape, Chairman of the Board of Directors of Rural Water District # 3, Washington County, testified on direct examination by Mr. Snoke, commencing at line 19:
Q And in that connection let me ask you this; taking into consideration the intrusion of the Owasso Water District into the areas serviced by Rural Water District # 3, does that in any way impede or will it impede the ability of the Rural Water District to pay back the loan now outstanding to the Farm Home Administration?
A Yes, that's where the bulk of our capital investment is, south of Highway 20.
At page 49 of the transcript, commencing at line 23, in response to a question propounded by Mr. Johnson, counsel for Plaintiff, the following testimony was elicited:
MR. JOHNSON: Do you remember, Ed, how much the payments are per year?
THE WITNESS: The payments are approximately $50,000 a year.
The Court notes that there is no testimony in the record as to the total revenue received by Rural Water District # 3 per month, from all subscribers and what ratio the stipulated amount bears to the total revenue. There is no evidence that Rural Water District # 3 is in default on any payment due on said loans.
Attached as Exhibit "C" and Exhibit "D" to the Answer of the Defendant, Farmer's Home Administration, are copies of Financing Statements. One Financing Statement secured the indebtedness due Farmer's Home Administration under date of December 8, 1972, and covers all of "the proceeds, revenue, water charges, assessments, and income of all kinds and nature whatever derived from the operation by debtor of its water works system." The other Financing Statement secured the indebtedness due Farmer's Home Administration under date of August 13, 1976, and covers "all proceeds, revenue, water charges, assessments, and income of all kinds and nature whatever derived from the operation by debtor of its water works system."
The mere fact that a witness makes a statement does not require an acceptance of such statement as creditable evidence. However, there is no controverting testimony or evidence in the record as to the statement made by Mr. Cape. Evidence of an actual default is not required to show that ability to repay is impaired. Based upon the totality of the record, the Court cannot agree that the Conclusion of the Magistrate is not substantiated by the evidence or testimony.
Defendant, Owasso Utilities Authority objects to Finding No. 9 and the Conclusions of Law of the Magistrate. Finding No. 9 reads as follows:
9. The furnishing of water by the Defendant OUA to inhabitants within the territory of RWD # 3 curtails or limits the service provided by RWD # 3 within its franchise territory.
The Owasso Utilities Authority argues that the curtailment found by the Magistrate is not "curtailment" contemplated in Title 7 U.S.C. § 1926(b).
Title 82, § 1301, et seq. of the Oklahoma Statutes, covers Rural Water and Sewer Districts. Section 1324.10(A)-4 provides in pertinent part:
A Every district incorporated hereunder ... shall have power:
4. to borrow money and otherwise contract indebtedness for the purposes set forth in this act, and, without limitation of the generality of the foregoing, to borrow money and accept grants from the United States of America, or from any corporation or agency created or designated by the United States of America, and, in connection with such *821 loan or grant, to enter into such agreement as the United States of America or such corporation or agency may require; ... (Emphasis supplied).
Title 7 U.S.C. § 1926(b) provides:
(b) The service provided or made available through any such association shall not be curtailed or limited by inclusion of the area served by such association within the boundaries of any municipal corporation or other public body; or by the granting of any private franchise for similar service within such area during the term of such loan; ...
The Supreme Court of the State of Oklahoma had occasion to deal with these two statutes in Comanche County Rural Water Dist. No. 1 v. City of Lawton, 501 P.2d 490 (Okl.1972), which the Defendant here asserts, is dispositive of the issues now before the Court. The case involved an appeal from the judgment of the trial court granting a petition for writ of mandamus sought by the Comanche Rural Water District No. 1 against the City of Lawton, some of its officials, and one Edward A. Hilliary (an intervenor). The district was a non-profit rural water district organized in 1965 pursuant to the provisions of 82 O.S.Supp.1963, §§ 1301 et seq. Mr. Hilliary, both before and after the organization of the District, operated a small water distribution system in the same general vicinity as the District. Both the District and Hilliary purchased water for resale from the City, which had water pipelines and facilities nearby. A substantial portion of the District's funding consisted of a loan from, or insured by, the Farmer's Home Administration, pursuant to 7 U.S.C. § 1926. The City's sale to Hilliary was made pursuant to authority found in Okla.Stat. Tit. 11, §§ 303 and 304 (now codified as Okla.Stat. Tit. 11, §§ 37-119, 37-120 and 37-123). Under § 304, the water-sale contract with Hilliary could be abrogated at any time by the governing body of the City, by resolution that the water being sold was required by such City for its own use and the use of its inhabitants. The City's sales to the District were authorized by Okla.Stat. Tit. 11, §§ 330.51 et seq. (now § 37-121), concerning sales of water to non-profit organizations. Under § 330.52, the City's activities in selling water to non-profit organizations were expressly declared to be governmental in nature, with no liability for negligence accruing against the City. (In Parks v. City of Oklahoma City, 559 P.2d 1266 (Okl.App. 1976), however, the Court of Appeals found that this section did not change the existing Oklahoma law that operation of a water system by the city was a proprietary function.) The Supreme Court found that the same was not true of § 303 et seq. concerning water sales to privately owned water distribution systems. The Rural Water District commenced the action against the City, detailing allegations that Hilliary in the operation of his water distribution system, was violating certain of his contractual commitments to the City and certain restrictions and conditions allegedly imposed upon him by the City and that the City should be ordered to abrogate its agreement with Hilliary because of his noncompliance, and for the further reason that the contract was in violation of the laws of the United States. There was no allegation that the water sold to Hilliary was needed for the use of the City or its inhabitants. There was no direct allegation that the District had an exclusive franchise for the sale and distribution of water within its geographical boundaries.
The trial court entered judgment in favor of the Water District, making no findings as to whether Hilliary violated his contract, and no finding that the water sold to Hilliary was needed for use by the City or its inhabitants. The trial court granted equitable relief based entirely upon a finding that the District had an exclusive franchise to operate and maintain a water distribution system and a corollary finding that the City had no right to interfere directly or indirectly, or to compete with the District by selling water to Hilliary for resale.
The Supreme Court of the State of Oklahoma stated:
After a careful examination of the Oklahoma Rural Water Districts Act, 82 O.S. *822 Supp.1963, §§ 1301 et seq., under which District was formed, we find no language purporting to grant an exclusive franchise. This is undoubtedly due to Article 5, § 51, Oklahoma Constitution, which prohibits the granting of "exclusive rights, privileges or immunities" by the Legislature.
District argues, however, that the agreements for the sale of water between City and Hilliary amount to a violation of 7 U.S.C.A. § 1926(b), under which District's loan from the Farmer's Home Administration was made.
The Section of the United States Code is a portion of the Consolidated Farmer's Home Administration Act of 1961. This Act, as amended, provides for loans to be made, or insured, by the Farmer's Home Administration to provide for various services in rural areas, such as the loan to District in this case. Sec. 1926(b) provides that the services "shall not be curtailed or limited ... by the granting of any private franchise for similar services within such area during the term of such loan..."
District argues that in this case, the City has in effect granted such a "private franchise."
We do not agree. We know of no statute authorizing a municipality of this state to grant a "franchise" for any purpose, exclusive or otherwise, outside of its corporate boundaries. In the grant of a franchise inside its corporate boundaries, a municipality in this state clearly acts in a governmental capacity, since the grant may be made only by the people themselves at an election for that purpose. Art. 18, § 5, Oklahoma Constitution.
In this case, in its dealings with Hilliary, the City was clearly acting in a proprietary, and not a governmental, capacity.
Comanche County, supra, at 492.
The Legislative history of Title 7 U.S.C. § 1926(b) is found in U.S.Code Congressional and Administrative News, 87th Cong. 1961, Vol. 2, pages 2243, 2309, which states:
By interpretation loans to associations cannot now be made unless a major part of the use of the facility is to be by farmers. This section would broaden the utility of this authority somewhat by authorizing loans to associations serving farmers, ranchers, farm tenants, and other rural residents. This provision authorizes the very effective program of financing the installation and development of domestic water supplies and pipelines serving farmers and others in rural communities. By including service to other rural residents, the cost per user is reduced and the loans are more secure in addition to the community benefits of a safe and adequate supply of running household water. A new provision has been added to assist in protecting the territory served by such an association facility against competitive facilities, which might otherwise be developed with the expansion of the boundaries of municipal and other public bodies into an area served by the rural system. (Emphasis added.)
And at page 2305, under the "Short Explanation" of Title III of the Agricultural Act of 1961, it is stated that
This title
9. Prohibits curtailment of a water association borrower's service as a result of inclusion of its service area within the boundaries of any public body or as a result of the granting of any private franchise for similar service in such area.
This Court finds that the Comanche County case, supra, is distinguishable from the instant litigation. The Comanche County case did not involve an "encroachment" by the municipality into areas within the confines of the Water District territory by either annexation or otherwise. It involved the sale of water by the City to a private water supplier located within the confines of the Water District territory. This Court finds no fault with the Oklahoma Supreme Court's interpretation of its own State Constitution as to "exclusive franchises." The question before the Oklahoma Supreme Court was whether the action of the City, in selling water to Hilliary outside of its city limits, amounted to the granting of a private franchise. That question is not before this Court.
*823 It is noted, however, that the Oklahoma Supreme Court did not stop with their decision as to governmental or proprietary functions. The Court went on, by analogy, to strike down an opinion of the Attorney General relating to § 1926(b). The Court did not deal with the constitutionality of § 1926(b), nor did the Court consider the question of the supremacy of the Federal Act.
Federal Courts are not bound by State Court precedents on federal questions. The Federal Courts are not bound by State Court decisions as to the effect of the Federal Constitution or the effect of Federal Statutes. Sola Electric Co. v. Jefferson Electric Co., 317 U.S. 173, 63 S. Ct. 172, 87 L. Ed. 2d 165 (1942); Standard Oil Co. v. Johnson, 316 U.S. 481, 62 S. Ct. 1168, 86 L. Ed. 1611 (1942); D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 62 S. Ct. 676, 86 L. Ed. 956 (1942); Silas Mason Co. v. Tax Comm'n, 302 U.S. 186, 58 S. Ct. 233, 82 L. Ed. 187 (1937). The State Court decision is persuasive authority only.
In construing agricultural legislation which provides for governmental assistance or aid to agriculture and those involved therein, the real object of the legislation, the method adopted to accomplish the purpose, and relation of the aid prescribed to the general welfare, and the effect of the statute upon constitutional rights of those in other classes of citizenry, are all deserving of close attention when an individual statute comes up for scrutiny. 3 Am. Jur.2d, Agriculture, § 19.
In this connection, the Court notes that much time was expended and testimony elicited as to the adequacy of the Water District system for the purposes of fire protection. The Court finds that § 1926(b) of the Agricultural Credit Act, Title 7 U.S.C. § 1921 et seq. was not enacted for the purposes of fire protection it was enacted to provide means of securing a "safe and adequate supply of running household water." There is no evidence in the record that the Water District is not effectuating the purpose of the Statute with the implementation of its water system.
The Court finds that the purpose of § 1926(b), as reflected by the legislative history, is clear, i.e., "protecting the territory served by such an association facility against competitive facilities which might otherwise be developed with the expansion of the boundaries of municipal and other public bodies into an area served by the rural system." There is nothing in the Act itself to preclude the Owasso Utilities Authority from maintaining a water line for the purposes of fire protection only. Section 1926(b) does not encompass such a purpose.
It is well settled that Courts will not pass on the constitutionality of an act of the legislature if the merits of the case at hand may be fairly determined otherwise without so doing.
It is apparent in this case that the United States, in the passage of the Agricultural Credit Act, has a paramount interest, not only in the supply of running household water in rural areas, but also for the repayment of funds advanced for the implementation of such systems. Section 1926(b) serves the purpose for which it was enacted.
Defendant OUA argues in its Objections to the Magistrate's Findings as follows:
[7 U.S.C. § 1926(b)] merely prevents a city or anyother [sic] public body from granting a franchise which would exclude an association such as the Rural Water District from selling water ... the statute never intended to give Rural Water Districts an exclusive monopoly over vast territories such as is the case here.
* * * * * *
It is submitted that Section 1926(b) does not state that there shall be no open competition for the sale of water within the district. It does not say that a municipal corporation or public body may not impede the repayment of the loan by reason of competition. Section 1926(b) merely states that a corporation or public body may not legislate away the right of the district to operate within its district.
While it is true that 7 U.S.C. § 1926(b) does not explicitly state that "there shall be *824 no open competition," it is clear from the legislative history quoted supra that the intent of Congress was to protect rural water districts from "competitive facilities," especially those which would be developed as a result of the expansion of neighboring municipalities.
Although Plaintiff has strenuously urged that this Court consider the application of the Supremacy Clause of the United States Constitution, U.S.Const. Art. VI, cl. 2, the Court is mindful of the established principle that constitutional questions will be avoided if possible, in the absence of compelling necessity. See, e.g., Bowen v. United States, 422 U.S. 916, 95 S. Ct. 2569, 45 L. Ed. 2d 641 (1975); Spector Motor Co. v. McLaughlin, 323 U.S. 101, 65 S. Ct. 152, 89 L. Ed. 101 (1944); Life Ins. Co. of North America v. Reichardt, 591 F.2d 499 (Ninth Cir. 1979); Uhl v. Ness City, Kansas, 590 F.2d 839 (Tenth Cir. 1979).
There is no conflict between the Oklahoma Statutes empowering municipalities to furnish water outside of their city limits and the Federal Act. Title 11 Okla. Stat. §§ 37-119 to 37-123 (formerly §§ 303-307 and 330.51-330.52) expressly authorize cities to do so, and specify how such contracts may be made. See Comanche County, supra; Town of Skiatook v. Brummett, 387 P.2d 115 (Okl.1963); State ex rel. City of Tulsa v. Mayes, 174 Okl. 286, 51 P.2d 266 (1935); Hodges v. Town of Forgan, 581 P.2d 931 (Okl.App.1978).
Title 7 U.S.C. § 1926(b) does not negate the power of municipalities to sell water as provided for in the Oklahoma Statutes, nor does it affect the authorization thereof. It does, however, place federally-imposed limitations upon that power, limitations designed to effectuate the legislative scheme of Congress embodied in the Agricultural Act of 1961 (7 U.S.C. § 1921 et seq.). Section 1926(b) prohibits the municipalities' exercise of these powers when their exercise would result in competition with a Rural Water District. In any case, it is established that the prohibition of a federal statute may not be set at naught by state statutes or common law rules. Sola Electric Co. v. Jefferson Electric Co., supra; Laverne v. Corning, 316 F. Supp. 629 (S.D.N. Y.1970); United States v. Board of Harbor Commissioners, 73 F.R.D. 460 (D.Del.1977). See also 81A C.J.S. States § 24 (1977).
Neither is there a conflict between the federal statute and the provisions of the Oklahoma Constitution. Article 5, § 51 of the Oklahoma Constitution is an express limitation upon the power of the State Legislature, and reads as follows:
The Legislature shall pass no law granting to any association, corporation, or individual any exclusive rights, privileges, or immunities within this State.
In Comanche County, supra, the Oklahoma Supreme Court discussed this provision in the context of a rural water district's franchise, saying:
The reasoning in the Attorney General's opinion, as applied by analogy by trial court in this case, may fairly be summarized as follows: (1) under 7 U.S.C.A. § 1926(b), the services provided by a rural water district holding a Farmers Home Administration loan may not be curtailed by the granting of a private franchise for similar services in the area; (2) under 82 O.S.Supp.1963, § 1309(4), our Legislature authorized the District "to enter into such agreements" as the United States or its designated agency may require, in order to obtain the loan; (3) therefore, our Legislature must have intended for the District to have an exclusive franchise for the operation of a water distribution system within its geographical boundaries.
However, we will not ascribe to our Legislature an intention to violate Art. 5, § 51, of the Oklahoma Constitution. As we have seen, under that section our Legislature is without power to grant an exclusive franchise. Such being true, the theory advanced amounts to a suggestion that the Legislature intended to evade that restriction upon its power by authorizing the District to create for itself an exclusive franchise by entering into the loan contract with the Farmers Home Administration. Under this theory, the contracting power of the District, authorized by the Legislature, becomes a sort *825 of "intermediate link" between the power of the Legislature and the creation of an exclusive franchise. This Court has previously rejected a line of reasoning which included a similar "intermediate link" in a case involving other constitutional limitations. See State ex rel. Settles v. Board of Education, Okl., 389 P.2d 356, at page 360.
Comanche County, supra at 493. See also Opinion No. 71-115 of the Attorney General of the State of Oklahoma. As previously mentioned, this Court finds no fault with the Oklahoma Supreme Court's interpretation of the State Constitution. The instant question, however, does not for its resolution depend upon the power of the Oklahoma Legislature to grant exclusive franchises, whether directly or through an "intermediate link." Title 7 U.S.C. § 1926(b) is an Act of Congress prohibiting certain activities during the life of loans made pursuant to the Agricultural Act of 1961 (7 U.S.C. § 1921 et seq.).
The power of the Oklahoma Legislature to grant franchises has nothing whatsoever to do with the power of Congress to prohibit those things which it views as detrimental to the accomplishment of its lawful objectives.
The Court, therefore, finds that the Objections and Exceptions to Findings and Recommendations of Magistrate filed by the Defendant, Owasso Utilities Authority, be and the same should be overruled and the Findings and Recommendations of the Magistrate should be affirmed and adopted by this Court, insofar as the same are in conformity with this Order of the Court, and that Judgment should be entered in favor of the Plaintiff, Rural Water District # 3, and the Defendant, Farmer's Home Administration, and against Defendant, Owasso Utilities Authority, and Defendants, Jerrald Holt, Chairman; Bill Williams, Vice-Chairman; Boyd Spencer, Secretary, and V. D. Duncan, Treasurer, enjoining said Defendants, their agents, servants and employees, or anyone acting under their direction, from any additional or further expansion of its services within the geographical confines of the territory of Plaintiff, but permitting the Owasso Utilities Authority to continue to serve the 223 homes which it is presently serving within the territory of the Plaintiff.
The Court further finds that since this is an action for declaratory judgment and injunction and no monetary damages are sought, no monetary damages have been considered or awarded, except in respect to the issuance of an injunction.
The Court further finds that it need not reach the issue as to the validity of the notes and mortgages of the Defendant, Farmer's Home Administration, for the reason that there is no dispute between the parties as to the validity of such notes and mortgages, and neither the Plaintiff nor the Defendant seek any affirmative relief against the Defendant, Farmer's Home Administration, on that issue. In this connection, the Court finds that the cause of action and complaint as against Farmer's Home Administration should be dismissed without prejudice on the issue as to the validity of the notes and mortgages. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1517067/ | 905 S.W.2d 620 (1995)
COLOR TILE, INC., Appellant,
v.
Ron RAMSEY, Appellee.
No. 14-94-00285-CV.
Court of Appeals of Texas, Houston (14th Dist.).
June 15, 1995.
Rehearing Overruled August 24, 1995.
*621 Quentin D. Brogdon, Houston, for appellant.
Stephen Schechter, Houston, for appellee.
Before YATES, FOWLER and DRAUGHN,[*] JJ.
OPINION
FOWLER, Justice.
This breach of contract suit comes to us on appeal from county court, which heard an appeal from justice court. We find the county court lacked subject matter jurisdiction over appellee's counterclaims and reverse the trial court's judgment in his favor and dismiss his causes of action. However, we affirm the take-nothing judgment against appellant, because appellant did not bring a point of error challenging the verdict on its breach of contract action.
PRIOR POSTURE AND BRIEF FACTS
Ron Ramsey contracted with Color Tile to install a tile floor in his home. Ramsey was unhappy with Color Tile's work, and refused to pay the balance owed on his contract. Color Tile filed suit against him in justice court for the balance owedabout $2000. Ramsey answered, asserting the defenses of failure of consideration and fraud. Ramsey also counterclaimed for breach of warranty and misrepresentation. Color Tile obtained a $1179.50 judgment in the justice court.
Ramsey appealed the judgment to county court and amended his pleadings to assert counterclaims for: (1) breach of contract, (2) DTPA, (3) fraud, and (4) breach of warranty. In his answer and counterclaim, Ramsey pled for damages of $5000 for the breach of contract, *622 or alternatively for DTPA damages including triple damages, or alternatively for fraud damages. In county court, the parties were realigned so that Ramsey was styled the plaintiff, and Color Tile the defendant. The jury awarded Ramsey $7756.94 in damages for breach of warranty, of which the first $1000 was trebled under the DTPA. The jury also found Color Tile breached the warranty "knowingly," and that Ramsey was entitled to $1000 in additional damages. Further, the jury awarded Ramsey $20,000 in attorney's fees, plus attorney's fees for appeals. The jury awarded Color Tile no damages on its breach of contract action.
Color Tile brings five points of error, alleging that (1) the county court lacked subject matter jurisdiction over the appeal; (2) the trial court erred in allowing Ramsey to call a surprise fact witness; (3) the trial court erred in submitting DTPA questions to the jury because Ramsey did not follow the DTPA's notice provisions; and (4) the evidence is insufficient to support the amount of attorney's fees awarded.[1] Ramsey brings two cross points, alleging that the trial court erred in allowing certain photographs into evidence, and that this Court should sanction Color Tile under Tex.R.App.P. 84 for bringing a frivolous appeal.
SUBJECT MATTER JURISDICTION
Color Tile contends in its first point of error that the county court lacked subject matter jurisdiction over Ramsey's claims, because the amount in controversy exceeded the jurisdictional limits of the justice court, where the suit was originally filed. Ramsey counters that the jurisdiction of the justice court is determined by the plaintiff's petition at the time the suit is filed, and later events cannot serve to divest the court of jurisdiction.
Subject matter jurisdiction is essential to the authority of a court to decide a case. Texas Ass'n of Business v. Texas Air Control Bd., 852 S.W.2d 440, 443 (Tex.1993). Subject matter jurisdiction may not be waived by the parties, and may be raised for the first time on appeal. Id. at 445; Gorman v. Life Ins. Co. of N. Am., 811 S.W.2d 542, 547 (Tex.), cert. denied 502 U.S. 824, 112 S. Ct. 88, 116 L. Ed. 2d 60 (1991). If a trial court lacks subject matter jurisdiction, the appellate court must reverse the judgment of the trial court, and dismiss the cause of action entirely. City of Garland v. Louton, 691 S.W.2d 603, 605 (Tex.1985). See also Montgomery Elevator Co. v. Tarrant County, 604 S.W.2d 363, 365 (Tex.Civ.App.Fort Worth 1980, no writ) (dismissing cause of action when counterclaim exceeded jurisdictional limits of county court).
An appeal from a justice court judgment is tried de novo in the county or district court. Tex.R.Civ.P. 574b. However, the appellate jurisdiction of the county court is confined to the jurisdictional limits of the justice court, and the county court has no jurisdiction over the appeal unless the justice court had jurisdiction. Goggins v. Leo, 849 S.W.2d 373, 375 (Tex.App.Houston [14th Dist.] 1993, no writ). As creatures of statute, justice courts are governed by a legislative grant of jurisdiction. At the time this suit was filed, justice courts had jurisdiction in cases where the amount in controversy was not more than $2500, excluding interest. Tex.Gov't Code Ann. § 27.031 (Vernon 1988).[2]
Ramsey claims that the county court had jurisdiction over the entire suit between Color Tile and Ramsey, including Ramsey's counterclaims, because Color Tile's original petition was within the jurisdictional limits of the justice court. We agree with the general proposition Ramsey asserts that the plaintiff's original petition determines the jurisdiction of the court over the claims before it. "Where jurisdiction is once lawfully and properly acquired, no subsequent fact or event in the particular case serves to defeat jurisdiction." Flynt v. Garcia, 587 S.W.2d 109, 109-110 (Tex.1979); *623 Blake v. Blake, 725 S.W.2d 797, 799 (Tex. App.Houston [1st Dist.] 1987, no writ). In spite of this general rule, however, a trial court has no jurisdiction to hear a claim brought by either a plaintiff or a defendant that is not within its subject matter jurisdiction. As stated in Rule 97(c) of the Texas Rules of Civil Procedure, a counterclaim may exceed the amount of relief sought by the opposing party, so long as the subject matter is within the jurisdiction of the court. TEX. R.CIV.P. 97 (emphasis added). Clearly, then, counterclaims are judged on their own merits and must independently comport with a court's jurisdiction. Clary Corp. v. Smith, 886 S.W.2d 570, 572-73 (Tex.App.Fort Worth 1994, writ filed).
Here, while Color Tile's original breach of contract suit was within the jurisdictional limits of the justice court, Ramsey "pleaded himself out of court" when he filed a counterclaim on appeal in the county court demanding relief clearly in excess of the jurisdictional limits of the justice court. See Peek v. Equipment Serv. Co., 779 S.W.2d 802, 804 (Tex.1989) (citing Richardson v. First Nat'l Life Ins. Co., 419 S.W.2d 836, 839 (Tex.1967)). As succinctly stated by the Galveston Court of Appeals:
It thus clearly appears that the amount sought by appellee in his cross-action ... is in excess of the maximum jurisdictional limits of the justice court, and, as the jurisdiction of said county court at law to which this suit was carried by appeal was appellate and not original, the court acquired no jurisdiction to render the judgment from which this appeal was prosecuted.
United Finance Corp. v. Quinn, 149 S.W.2d 148, 149 (Tex.Civ.App.Galveston 1941, writ dism'd). See also Kitchen Designs, Inc. v. Wood, 584 S.W.2d 305, 307 (Tex.Civ.App. Texarkana 1979, writ ref'd n.r.e.), a case factually identical to the case before us, except that the original suit in that appeal was filed in county court.
Ramsey contends that the only reason his claim exceeded the jurisdictional limits of the justice court was due to the passage of time, because the ceramic tile die lot that matched Ramsey's tile was no longer available and it therefore became necessary to sue for the replacement cost of the entire floor, rather than just the damaged individual tiles. Citing Flynt v. Garcia, 587 S.W.2d 109, 110 (Tex.1979), he points out that when the original suit is within the jurisdictional limits of the court, subsequent amendments that seek additional damages accruing because of the passage of time will not defeat the jurisdiction of the court. This case does not fall within the Flynt exception. When the suit in Flynt was brought originally, the damages requested were within the court's jurisdiction. While the suit was still pending, however, additional note payments became due and interest accrued, together pushing the damages over the county court's jurisdictional limit. Ramsey's damages, on the other hand, were over the county court's jurisdictional limit from the outset because he was having to replace his entire tile floor, not because of the passage of time. Furthermore, unlike the plaintiff in Flynt, who originally pled for damages within the county court's jurisdiction, Ramsey never filed a pleading requesting damages within the justice court's jurisdiction. The first pleading he filed requested damages in excess of the justice court's jurisdiction.
Finally, we find no merit in Ramsey's argument that he initially did not expect his claim to exceed $2500, but because of the unavailability of matching tile, he had to sue to replace the entire floor at an increased cost. Ramsey's focus on his own expectations is misplaced. As noted earlier, the purpose of the pleadings is to invoke the jurisdiction of the court. The invocation of jurisdiction occurs not as a result of the intent of the parties, but because of what is contained on the face of the pleadings. Ramsey's original written pleading in this case, by requesting $5000 in damages, showed on its face that it was not within the subject matter jurisdiction of the justice court.
We therefore sustain appellant's first point of error and reverse the judgment of the county court as to Ramsey and dismiss Ramsey's causes of action, because the county court lacked the power to adjudicate his claims. City of Garland, 691 S.W.2d at 605; Kitchen Designs, 584 S.W.2d at 307.
*624 Color Tile did not specifically appeal the take-nothing judgment rendered against it by the county court on its breach of contract action. We therefore affirm the take-nothing judgment against Color Tile. Id.
Because of our disposition of Color Tile's first point of error, it is unnecessary to address Color Tile's remaining points and Ramsey's first cross point, which alleged error by the trial court in admitting photographs during the trial. We shall, however, briefly discuss Ramsey's second cross point.
RAMSEY'S CROSS POINT FOR SANCTIONS UNDER TEXAS RULE OF APPELLATE PROCEDURE 84
In his second cross point, Ramsey asks this Court to award him sanctions pursuant to Tex.R.App.P. 84. Rule 84 provides that the appellate court may award damages when the appellant takes an appeal for delay and without sufficient cause. However, appellate courts only assess sanctions where an appeal could have been taken only for purposes of delay and where no reasonable hope of reversal exists. Valenzuela v. St. Paul Ins. Co., 878 S.W.2d 667, 671 (Tex.App.San Antonio 1994, no writ). In determining whether sanctions for delay are appropriate, we view the record from the point of view of the advocate at the time the appeal was taken to determine whether reasonable grounds existed to believe the case should be reversed. Olmos v. Pecan Grove Mun. Util. Dist., 857 S.W.2d 734, 742 (Tex.App.Houston [14th Dist.] 1993, no writ) (quoting Ambrose v. Mack, 800 S.W.2d 380, 383 (Tex. App.Corpus Christi 1990, writ denied)). We apply Rule 84 only with prudence, caution, and after careful deliberation. Francis v. Marshall, 841 S.W.2d 51, 54 (Tex.App. Houston [14th Dist.] 1992, no writ).
Appellate courts are reluctant to sanction parties except in truly egregious circumstances. Clearly, sanctions are inappropriate in this case, as we are sustaining Color Tile's point of error and reversing the trial court's judgment. We therefore deny sanctions under Rule 84 and overrule Ramsey's second cross point.
The judgment of the trial court in favor of appellee is REVERSED and his causes of action are ordered DISMISSED. The judgment of the trial court that appellant take nothing is AFFIRMED.
NOTES
[*] The Honorable Joe L. Draughn sitting by assignment.
[1] Under the fifth point of error, Color Tile requests a remittitur of the attorney's fees.
[2] Amended by Acts 1991, 72nd Leg., ch. 776, § 2, effective September 1, 1991 (current version at Tex.Gov't Code Ann. § 27.031 (Vernon Supp. 1995), providing justice court has jurisdiction over matters where amount in controversy is not more than $5000). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1260302/ | 245 S.C. 461 (1965)
141 S.E.2d 129
Carrie Lee PARKS, Respondent,
v.
MORRIS HOMES CORPORATION, Appellant.
18323
Supreme Court of South Carolina.
March 15, 1965.
*462 *463 Frank Sawyer, Esq., of Spartanburg, for Appellant.
John C. Monneyham, Esq., of Spartanburg, for Respondent.
*464 March 15, 1965.
LEWIS, Justice.
The plaintiff Carrie Parks brought this action against the defendant Morris Homes Corporation for the recovery of damages allegedly sustained by her on account of the fraud and deceit of the defendant's agents in procuring her signature to a building contract and a mortgage. This appeal is by the defendant from a judgment in favor of the plaintiff for $6,804.00 actual damages and $1,196.00 punitive damages. The exceptions charge error on the part of the trial judge (1) in refusing defendant's motions for a nonsuit and directed verdict, (2) in his rulings as to the admissibility of certain testimony, (3) in certain comments made during the trial, and (4) in refusing defendant's motion for a new trial upon the ground that the verdict was so grossly excessive as to show that it was the result of caprice, passion or prejudice.
The plaintiff owned three unencumbered, vacant lots located on Andrews Road in or near the limits of the City of Spartanburg, South Carolina. These lots were designated as Nos. 6, 7 and 8 on a subdivision plat, each with a frontage on Andrews Road of 100 feet. The defendant, which was engaged in the sale and construction of shell homes in the Spartanburg area at the time, secured on May 29, 1962, through its agents, the plaintiff's signature to a building contract for the purchase of a shell home and her signature to a note and mortgage over a portion of her lots to secure the time purchase price of $6,804.00. The mortgage was subsequently recorded on the public records of Spartanburg *465 County and the building was constructed by the defendant. This controversy arises out of the claim by the plaintiff that she never intended to purchase the shell home in question and was induced to sign the foregoing instruments through the fraud and deceit of defendant's agents.
While the testimony relating to the material issues in the case is in sharp conflict, in determining whether the trial judge erred in refusing the motions for a nonsuit and directed verdict, the evidence must be viewed in the light most favorable to the plaintiff, and our review thereof is so limited.
The plaintiff testified that, on the night of May 29, 1962, two agents of the defendant went to her home on Highland Street in Spartanburg for the purpose of selling her a shell home. She said that she told them that she was not ready to purchase a home and refused to buy. When she evidenced an interest in buying a shell home at some future time, the agents requested that they be allowed to run a credit report on her so that, when she did decide to build, there would be no delay in completing the transaction. Upon the insistence of the agents, she agreed for them to secure the credit report. When she agreed, she said that the agents produced a number of papers which they insisted she would have to sign for them to run the credit report. Due to her very limited education, she did not read the papers but, upon assurance by the agents that the papers, which she was asked to sign, related only to the credit report and did not affect her land, she signed them. She further testified that, since she lived some distance from her lots (approximately two miles away in another section of the city), and had no occasion to visit her property during the time, she did not know that the defendant had constructed a dwelling on her lots until she was asked to sign a completion receipt. When she discovered that the defendant had constructed a building on her property, she went to her attorney who, after investigation, informed her for the first time that a mortgage over her property had been recorded on the public *466 records by the defendant. The plaintiff denied that she purchased a building from the defendant or that she ever intended to sign a building contract or note and mortgage, and testified that her signature to the foregoing instruments was obtained through the fraudulent misrepresentations of the agents of the defendant that she was only signing papers to authorize them to run a credit report on her.
In order to make a case of actionable fraud, the plaintiff was required to prove that the agents of the defendant made a material representation; that it was false; that when it was made the speaker knew it was false, or made it recklessly, without any knowledge of its truth and as a positive assertion; that it was made with the intention that it should be acted upon by the plaintiff; that plaintiff was ignorant of its falsity; that she relied on its truth; that she had a right to rely thereon; and that she thereby suffered injury. Gomillion v. Forsythe, 218 S.C. 211, 62 S.E. (2d) 297, 53 A.L.R. (2d) 169.
With reference to the exceptions charging error in the refusal of the trial judge to grant defendant's motion for a nonsuit or directed verdict, the sole contention of the defendant on appeal is that there was no showing of actionable fraud on the part of its agents in that the plaintiff failed to prove her right to rely on any representation made, because the evidence conclusively showed that plaintiff failed to read the instruments which she signed and failed to avail herself of every opportunity to understand the nature and contents thereof. In other words, the position of the defendant is that any right of the plaintiff to rely upon the representations of defendant's agents as to the nature and contents of the instruments was lost by her failure to exercise reasonable prudence for her own protection.
It is well settled in this jurisdiction that the right to rely upon representations as to the contents of a written instrument must be determined in the light of the duty on the part of the representee to use reasonable prudence *467 and diligence under the particular circumstances for his own protection. In the application of this test to the conduct of the defrauded party, no fixed rule can be formulated, but the question must be determined upon the facts of the particular case. Thomas v. American Workmen, 197 S.C. 178, 14 S.E. (2d) 886, 136 A.L.R. 1.
What constitutes reasonable prudence and diligence with respect to reliance upon a representation in a particular case and the degree of fault attributable to such reliance will depend upon the various circumstances involved, such as the form and materiality of the representation, the respective intelligence, experience, age, and mental and physical condition of the parties, the relation and respective knowledge and means of knowledge of the parties, etc. J.B. Colt Company v. Britt, 129 S.C. 226, 123 S.E. 845.
The duty on the part of the defrauded party to exercise reasonable care to protect himself requires that he read the contract which he signs and, if he cannot read, that he get some one to read it for him. While the failure of the defrauded party to read his contract before signing, or to have it read for him, will ordinarily bar him of recovery, this is not an absolute rule. It is subject to the just doctrine that a wrongdoer cannot shield himself from liability by asking the law to condemn the credulity of the ignorant and the unwary. Thomas v. American Workmen, supra, 197 S.C. 178, 14 S.E. (2d) 886.
The plaintiff was a widowed negro woman, the mother of six children, two of whom resided in the home with her at the time of the execution of the instruments in question. She was of very limited education and business experience. Her testimony was that she "just went to the third grade in school" and could read "very little". The instruments were signed in blank at her home on the night of May 29, 1962. The two daughters were at home but did not engage in the discussions which preceded the signing of the papers, although one testified that she heard parts of the conversation while passing through the room where her mother and defendant's *468 agents were seated. The daughters were busy at the time getting ready to go to the picture show. One of the daughters was twenty years of age and the other twenty-three, one having gone to the seventh grade in school and the other to the ninth. Both were without business experience. While here daughters were at home at the time, the plaintiff did not consult with them about the propriety of her signing the papers, nor were they asked to read them for her. However, there is some question as to the ability of the daughters to intelligently interpret the instruments, even if they had been asked to read them.
Therefore, viewing the record in the light most favorable to the plaintiff, we have a case of an ignorant negro woman, a widow, with two daughters present of doubtful help and with no circumstances to incite suspicion, dealing with the agents of the defendant who were experienced in the business of selling shell homes, and who fraudulently misrepresented the nature and contents of the instruments so as to obtain the signature of the plaintiff thereto. Under all of the facts and circumstances we are satisfied that the issues were properly presented to the jury for determination, and the trial judge correctly refused the defendant's motions for a nonsuit and directed verdict.
The next group of exceptions relate to the alleged error in the rulings of the trial judge relative to the admissibility of certain testimony.
First, it is contended that it was error to allow the witness Smith to give his opinion as to the value of the house placed on plaintiff's property by the defendant and as to the cost of moving it from the premises. Objection was made to this testimony on the ground that the witness was not qualified as an expert on values or the cost of moving houses. The witness testified that he had been in the real estate business for twenty-seven years and had experience in both the construction and moving of houses. He gave the basis of his opinion by testifying in detail as to the size of the house involved, the materials used, and the type of construction.
*469 Whether a witness has qualified to testify as an expert is a matter resting largely in the discretion of the trial judge. South Carolina State Highway Dept. v. Hines, 234 S.C. 254, 107 S.E. (2d) 643. We find no abuse of discretion in the ruling of the trial judge in this regard.
Next, the defendant says that it was error to permit the cross examination, over objection, of one of the agents of the defendant as to his prior employment with other companies who also sold shell homes. It is contended that such testimony would have been proper only if there had been an attempt to qualify the witness as an expert. This exception is without merit. The basis of the charge of fraud in this case was that the experienced and trained agents of the defendant obtained the signature of the plaintiff, an ignorant Negro woman, to certain documents through misrepresentations as to the nature and contents of the instruments signed. The testimony in question had a direct bearing upon the experience and training of the agents who allegedly perpetrated the fraud and was properly admitted.
The remaining exceptions to the rulings of the trial judge on the admissibility of testimony are as follows:
"3. The trial court erred in not sustaining the defendant's objection to the plaintiff testifying about the death of her husband.
"4. The trial judge erred in not sustaining objection to the plaintiff testifying to what the defendant's agents knew.
"6. The trial judge erred in not sustaining defendant's objection to the questions that the defendant was trying to rob the State of South Carolina."
The foregoing exceptions clearly violate Rule 4, Section 6, of the Rules of the Supreme Court, in that neither contains any assignment of error, and will, therefore, not be considered. Love v. Love, 57 S.C. 530, 35 S.E. 398; Watts v. South Bound R.R. Co., 60 S.C. 67, 38 S.E. 240.
*470 The next exception relates to alleged prejudicial remarks made by the trial judge during the examination of one of the witnesses.
During the trial of the case, the note and mortgage signed by the plaintiff were placed in evidence. The required State Documentary stamps were not affixed to the note and one of the agents of defendant was cross-examined relative to their absence. While this witness was testifying, the trial judge also questioned him concerning the failure to place stamps on the note. When the witness stated that he knew nothing about the stamps, the trial judge commented: "I just wanted to know. That has nothing to do with the case. I think as a matter of public policy, it ought to be looked into."
No objection was made during the trial to the remarks of the trial judge. The first contention that they were prejudicial was made in defendant's motion for a new trial. If the defendant considered the remarks of the trial judge prejudicial, it was its duty to call the matter to the attention of the court at that time by proper objection or motion. There is no sound reason to place matters of this nature upon a different basis from other occurrences during the trial of a case, in which the duty has been placed upon litigants to make timely objection in order to preserve the right of review. The fact that counsel may have some hesitancy in making objection during the trial to remarks or conduct of the court, which are considered prejudicial, does not excuse the failure to do so. An objection timely made to improper remarks or conduct of the court during the trial will afford in many instances an opportunity for correction of the error at that time or the granting of a mistrial as the particular situation requires. The interest of the trial court is only to see that a fair trial is had and objections to improper remarks or conduct on its part will be received in that spirit.
*471 If the remarks of the trial judge were considered prejudicial, it was the duty of the defendant to call the matter to the court's attention at some appropriate time during the trial, and the failure to do so amounts to a waiver of the alleged error. See: Green v. Boney, 233 S.C. 49, 103 S.E. (2d) 732, 66 A.L.R. (2d) 1370; Cross v. Southern Coal & Coke Co., 151 S.C. 309, 149 S.E. 14.
Finally, the defendant contends that a new trial should be granted on the ground that the verdict was so grossly excessive as to show that it was the result of caprice, passion or prejudice. No reason or argument is stated in defendant's brief to sustain the contention. In fact, the entire argument in the brief on this question is as follows:
"That his Honor should have granted the appellant's motion for judgment non obstante veredicto or, in the alternative, should have granted a new trial. (Transcript Folios 678-685.) That the verdict is excessive."
The foregoing is nothing more than a repetition of the assignment of error. Since no reason or argument is stated or authority cited to sustain the exception, it is properly considered abandoned. We have, however, reviewed the testimony and agree with the trial judge that the amount of the verdict is not so excessive as to indicate bias, passion or prejudice on the part of the jury.
Questions relating to the right of offset or credit, if any, of the defendant against the judgment for actual damages are not involved in this appeal, and we indicate no opinion thereabout.
Affirmed.
TAYLOR, C.J., MOSS and BUSSEY, JJ., and LEGGE, Acting J. concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1524447/ | 814 S.W.2d 385 (1991)
JOSEPH E. SEAGRAM & SONS, INC. et al., Petitioners,
v.
Ronald Wayne McGUIRE et al., Respondents.
No. C-9983.
Supreme Court of Texas.
May 1, 1991.
Rehearing Overruled October 2, 1991.
Edward H. Green, Michael R. McGown, Weller, Wheelus & Green, Beaumont, John C. Maloney, Jr., James E. Tyrrell, Jr., Pitney, Hardin, Kipp & Szuch, Florham Park, N.J., Rebecca Schupbach, Brown-Forman Corp., Louisville, Ky., Gilbert I. Low, Orgain, Bell & Tucker, Beaumont, Theodore Voorhees, Jr., Covington & Burling, Washington, D.C., Harry M. Reasoner, Clara L. Meek, Erica L. Kennerich, Ernest J. Blansfield, Jr., and Page I. Austin, Vinson & Elkins, Houston, Kent M. Adams, Adams & Duesler, Beaumont, Nancy Ratchford, Michelle E. Robberson, Hopkins & Sutter, Dallas, David W. Ledyard, Richard L. Scheer, Strong, Pipkin, Nelson & Bissell, Beaumont, David W. Ichel, Mark G. Cunha, Michael R. Isby, and David S. Smith, Simpson, Thacher & Bartlett, New York City, O.J. Weber, Mehaffey & Weber, Beaumont, W. James Kronzer, Jr., and David M. Gunn, Law Offices of W. James Kronzer, Houston, for petitioners.
Walter Umphrey, Umphrey, Eddins & Carver, Beaumont, and Robert M. Campbell, Harold W. Nix & Associates, Daingerfield, for respondents.
OPINION
HIGHTOWER, Justice.
In these consolidated actions, we consider whether manufacturers and distributors of alcoholic beverages have a duty to warn of the danger of developing the disease of alcoholism from prolonged and excessive consumption of their products. The trial court determined that no duty existed and dismissed the actions. The court of appeals reversed and remanded. 790 S.W.2d *386 842, 850 (1990). We reverse the judgment of the court of appeals and render judgment that plaintiffs take nothing.
I.
Three separate lawsuits in Jefferson County were consolidated for appeal. The plaintiffs are Ronald Wayne McGuire, John W. Benoit, individually and as representative of the Estate of Eva Mae Benoit, Willie J. Benoit, Roy A. Benoit and Judy M. Galley, and David E. Freeman and Inez Freeman. At the time of suit, Ronald Wayne McGuire was approximately 43 years of age. During the course of his adult life, he consumed alcohol productsspecifically Seagram 7. Eva Mae Benoit was 62 years of age at the time of her death. During the course of her adult life, she consumed alcohol productsspecifically Seagram 7, Crown Royal, Hiram Walker, Private Cellar and Canadian Mist. At the time of suit, David E. Freeman was approximately 61 years of age. During the course of his adult life, he consumed alcohol products specifically Canadian Club Whiskey and Calvert Whiskey. Defendants Joseph E. Seagram & Sons, Inc., Hiram Walker Incorporated, Private Cellar Company, d/b/a Medley Distilling Company, Brown-Forman Corp., d/b/a B-F Spirits LTD., Tarrant Distributors, Inc., Lone Star Company and Distilled Spirits Council of the United States, Inc. are manufacturers and wholesale distributors of alcoholic beverages and the manufacturers' trade association.[1] Plaintiffs, who suffer or suffered from the disease of alcoholism,[2] brought suit against Seagram alleging a duty to warn and instruct them of the danger of developing alcoholism from prolonged and excessive consumption of alcoholic beverages. Seagram filed special exceptions to plaintiffs' pleadings asserting, among other things, a failure to state any actionable claims and the absence of any duty to warn consumers of the danger of developing alcoholism because it is commonly known. After affording plaintiffs several opportunities to amend their pleadings, the trial court sustained the special exceptions and dismissed all of plaintiffs' claims with prejudice.
II.
In determining whether plaintiffs' pleadings state a cause of action, we must assume that all of the alleged material facts are true. Wheeler v. White, 398 S.W.2d 93, 95 (Tex.1966). Plaintiffs' lengthy pleadings consist largely of an encyclopedic condemnation of the use of alcohol and its effects. However, the gravamen of their complaint is that they are alcoholics. They allege that they have suffered certain unspecified illnesses, bodily injuries, financial ruin, mental anguish and loss of consortium from their prolonged consumption and resulting addiction to alcoholic beverages during the course of their adult lives. They further allege that while they were drinking alcoholic beverages, Seagram was advertising and promoting the products to increase consumption, to maintain regular customers, to attract new markets and to suppress vital information. At the time suit was filed, Seagram had totally failed to warn consumers (including plaintiffs) of the danger of developing alcoholism related to the prolonged and excessive consumption of their products.[3] Plaintiffs allege *387 that they were unaware of the signs and symptoms of alcoholic addiction and that they relied upon the public advertisements in newspapers, magazines, and on billboards placed by Seagram. These pictorials and writings created the false illusion and false belief that drinking was safe. They further allege that if Seagram had warned plaintiffs or their families and friends that alcohol was an addictive drug and warned them of the signs and symptoms of alcoholism, they would have recognized the addiction and sought medical and psychological help.
Plaintiffs asserted causes of action against Seagram for products liability and misrepresentation under sections 402A and 402B of the Restatement (Second) of Torts, negligence, breach of the implied warranties of merchantability and fitness, violations of the DTPA and conspiracy. The essence of these causes of action is Seagram's alleged duty to warn or instruct of the danger of developing the disease of alcoholism from prolonged and excessive consumption of alcoholic beverages.
III.
In Texas, the existence of a duty to warn of the dangers or instruct as to the proper use of a product is a question of law. See Munoz v. Gulf Oil Co., 732 S.W.2d 62, 65 (Tex.App.Houston [14th Dist] 1987, writ ref'd n.r.e.). "A product may be proven to be defective if ... it is unreasonably dangerous because adequate warnings or instructions are not provided." Lucas v. Texas Industries, Inc., 696 S.W.2d 372, 377 (Tex. 1984). See also Bristol-Myers Co. v. Gonzales, 561 S.W.2d 801, 804 (Tex.1978). Even a product which is safely designed and manufactured may be unreasonably dangerous as marketed because of a lack of adequate warnings or instructions. Lucas v. Texas Industries, Inc., 696 S.W.2d at 377.
Seagram concedes that there are health dangers in drinking too much and too long and, for some people, in drinking at all. However, Seagram nonetheless argues that, as a matter of law, it had no duty to warn or instruct regarding characteristics of its products under any and all circumstances. Seagram's argument is premised upon comments to section 402A of the Restatement (Second) of Torts, principally comment j, which excuses a seller from the duty to warn as to dangers that are "generally known and recognized."[4] These *388 comments appropriately identify alcoholic beverages as an example of a product some of whose dangers may be apparent to the public. Under the Restatement, one selling alcoholic beverages is not, however, excused from warning of all product dangers, but only those of which the public has "common knowledge". See Restatement (Second) of Torts § 402A comments i, j (1965). The existence of a duty to warn or instruct in this cause is thus determined by the extent to which the danger of developing the disease of alcoholism from prolonged and excessive consumption of alcoholic beverages is "common knowledge."[5] Encompassed within the term "common knowledge" are those facts that are so well known to the community as to be beyond dispute.[6]
Texas courts have recognized that there is common knowledge among the public of a most obvious danger of alcohol consumptionthat intoxicating liquor can cause intoxication and impair the ability of the imbiber to operate a motor vehicle. Malek v. Miller Brewing Co., 749 S.W.2d 521, 524 (Tex.App.Houston [1st Dist] 1988, writ ref'd n.r.e.); Morris v. Adolph Coors Co., 735 S.W.2d 578, 583 (Tex. App.Fort Worth 1987, writ denied); see also El Chico Corp. v. Poole, 732 S.W.2d 306, 311 (Tex.1987). One court has held that the fatal propensities of acute alcohol poisoning were not, as a matter of law, generally known to the community. Brune v. Brown Forman Corp., 758 S.W.2d at 831.
From ancient times, the danger of alcoholism from prolonged and excessive consumption of alcoholic beverages has been widely known and recognized. See generally G. Austin, Alcohol in Western Society From Antiquity to 1880: A Chronological History 3-45 (1985); M. Lender & J. Martin, Drinking in America: A History 16-21, 36-40, 44-46, 64-74 (1982). See also Ex Parte Townsend, 64 Tex. Crim. 350, 144 S.W. 628, 631-33 (1911). Consequently, we hold that, because the danger of developing the disease of alcoholism from prolonged and excessive consumption of alcoholic beverages is and has been generally known and recognized, it is within the ordinary knowledge common to the community. Therefore, under the limited circumstances present in this cause, Seagram had no duty to warn or instruct of this particular danger arising from the prolonged and excessive consumption of alcoholic beverages.
For the reasons explained herein, we reverse the judgment of the court of appeals and render judgment that plaintiffs take nothing.
NOTES
[1] In this opinion, these parties will be collectively referred to as "Seagram."
[2] Alcoholism is a primary, chronic disease characterized by continuous or periodic (1) impaired control over drinking, (2) preoccupation with the drug alcohol and (3) use of alcohol despite adverse consequences and distortions in thinking. American Society of Addiction Medicine and the National Council on Alcoholism and Drug Dependence, Joint Committee to Study the Definition and Criteria for the Diagnosis of Alcoholism (April 26, 1990). Ten percent of the drinking population (those who drink most heavily) consume one-half of all alcoholic beverages consumed in the United States. National Institute on Alcohol Abuse and Alcoholism, Sixth Special Report to U.S. Congress on Alcohol and Health from the Secretary of Health and Human Services 21 (January 1987).
[3] In 1988, the United States Congress determined "that the American public should be informed about the health hazards that may result from the consumption or abuse of alcoholic beverages ..." and enacted the Alcohol Beverage Labeling Act. 27 U.S.C.A. §§ 213-219a (1988). Section 215(a) of the Act provides:
On or after the expiration of the 12-month period following November 18, 1988, it shall be unlawful for any person to manufacture, import, or bottle for sale or distribution in the United States any alcoholic beverage unless the container of such beverage bears the following statement:
"GOVERNMENT WARNING: (1) According to the Surgeon General, women should not drink alcoholic beverages during pregnancy because of the risk of birth defects. (2) Consumption of alcoholic beverages impairs your ability to drive a car or operate machinery, and may cause health problems."
27 U.S.C.A. § 215(a) (Supp.1990). The Act further provides that "[n]o statement relating to alcohol beverages and health, other than the statement required by section 215 ... shall be required under State law to be placed on any container of an alcoholic beverage, or any box, carton, or other package ... that contains such a container." 27 U.S.C.A. § 216 (Supp.1990). Since we determine that the danger of developing the disease of alcoholism from prolonged and excessive consumption of alcoholic beverages is a matter of common knowledge such that Seagram had no duty to warn or instruct as to that danger, it is unnecessary to consider whether plaintiffs' causes of action are preempted by the Alcohol Beverage Labeling Act.
[4] Comment j, entitled "Directions or warning," states in pertinent part:
In order to prevent the product from being unreasonably dangerous, the seller may be required to give directions or warning, on the container, as to its use. The seller may reasonably assume that those with common allergies, as for example to eggs or strawberries, will be aware of them, and he is not required to warn against them. Where, however, the product contains an ingredient to which a substantial number of the population is allergic, and the ingredient is one whose danger is not generally known, or if known is one which the consumer would reasonably not expect to find in the product, the seller is required to give warning against it, if he has knowledge, or by the application of reasonable, developed human skill and foresight should have knowledge, of the presence of the ingredient and the danger. Likewise in the case of poisonous drugs, or those unduly dangerous for other reasons, warning as to use may be required.
But a seller is not required to warn with respect to products, or ingredients in them, which are only dangerous, or potentially so, when consumed in excess quantity, or over a long period of time, when the danger, or potentiality of danger, is generally known and recognized. Again the dangers of alcoholic beverages are an example....
Restatement (Second) of Torts § 402A comment j (1965) (emphasis added).
[5] Obviously, there is a certain irony in the "common knowledge" defense. Because the pervasive danger of alcoholism from prolonged and excessive consumption of alcoholic beverages is so well known, Seagram has no duty to warn or instruct. However, while Seagram argues that the danger of alcoholism is a matter of common knowledge such that it had no duty to warn or instruct, it continues to spend billions of dollars advertising the consumption of alcoholic beverages as a particularly positive activity. See Note, 58 SO.CAL.L.REV. 1107 (1985):
There is ... substantial evidence that alcohol commercials do encourage alcohol use. By presenting drinkers in carefree social and sexual situations, alcohol commercials connote the harmlessness and acceptability of alcoholic beverages and suggest that alcohol consumption is a particularly positive activity. This visual barrage of attractive and seductive messages infiltrates the audience's consciousness and creates an unconscious presumption in favor of drinking.
Id. at 1121-22 (footnotes omitted).
[6] Because Seagram is asking this court to determine common knowledge as a matter of law, we find the judicial notice rule helpful in providing a standard. Compare 33 S. Goode, 0. Wellborn, III & M. Sharlot, Guide to Texas Rules of Evidence § 201.2 (Tex.Prac.1988) (requiring "high degree of indisputability" as prerequisite to judicial notice) with Brune v. Brown Forman Corp., 758 S.W.2d 827, 830-31 (Tex. App.Corpus Christi 1988, writ denied) ("common knowledge is information known by the public generally based upon indisputable facts"). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1534625/ | 813 S.W.2d 628 (1991)
Charles Benjamin MALLIA, Jr. and Sharon Joy Mallia, Appellants,
v.
Thomas G. BOUSQUET and Bousquet & Associates, Appellees.
Nos. 01-90-00675-CV, 01-90-01113-CV.
Court of Appeals of Texas, Houston (1st Dist.).
July 11, 1991.
*629 John H. Jenkins, Houston, for appellants.
Charles B. Mallia, pro se.
Thomas G. Bousquet, Houston, for appellees.
Before TREVATHAN, C.J., and DUNN and PRICE[1] JJ.
OPINION
DUNN, Justice.
The appellants, Charles Benjamin Mallia, Jr. and Sharon Joy Mallia, appeal the judgment holding them jointly and severally liable to the appellees, Thomas G. Bousquet and Bousquet & Associates (collectively referred to as "Bousquet"), for $9,152.20.
On December 16, 1988, Sharon Mallia filed a petition for divorce against Charles Mallia. Bousquet was Sharon Mallia's attorney in the divorce proceeding. On May 15, 1989, Bousquet filed a motion to withdraw as Sharon Mallia's attorney. The trial court set Bousquet's motion to withdraw for a hearing on June 5, 1989. On May 17, 1989, Bousquet intervened in the Mallias' divorce proceeding. Bousquet sought to recover attorney's fees from Sharon Mallia for services rendered in the divorce proceeding. On June 5, 1989, the trial court entered an order allowing Bousquet to withdraw as Sharon Mallia's attorney. On October 30, 1989, Sharon Mallia filed a motion for voluntary nonsuit of her divorce proceeding, and on October 31, 1989, the trial court granted the motion for nonsuit. On December 12, 1989, Bousquet amended his intervention to include claims against Charles Mallia.
On April 3, 1990, the trial court entered judgment that Charles and Sharon Mallia were jointly and severally liable to Bousquet for attorney's fees in the amount of $9,152.20. Charles Mallia appeared at the trial on the intervention, but Sharon Mallia did not appear. The trial court ruled that the attorney's fees were for services rendered in the divorce proceeding and in prosecuting the intervention and were necessary for the proper representation of Sharon Mallia and her minor child in a suit affecting the parent-child relationship.
The trial court filed findings of fact and conclusions of law. The trial court found that Sharon Mallia retained Bousquet to represent her in the divorce proceeding but did not pay Bousquet. The trial court also found that Bousquet withdrew as Sharon Mallia's attorney before filing the intervention. In addition, the trial court found that Sharon Mallia had proper notice of the intervention and the trial setting on the intervention. The trial court concluded that Charles and Sharon Mallia were responsible for attorney's fees incurred on her behalf in the divorce proceeding and in the suit to collect the fees. The trial court also concluded that since Sharon Mallia was given proper notice of the trial on the intervention, the trial court had jurisdiction over Bousquet's claim against her.
Sharon Mallia brings this appeal by writ of error from the default judgment rendered against her. In her second point of error, Sharon Mallia contends that she was not served with process in Bousquet's intervention; thus, she contends that the trial court was without jurisdiction to render a judgment against her.
To prevail on a writ of error, a party must demonstrate that the application *630 for writ of error was filed within six months of the date of the judgment by a party to the suit who did not participate in the trial, and error is apparent from the face of the record. Stubbs v. Stubbs, 685 S.W.2d 643, 644 (Tex.1985); Barnes v. Barnes, 775 S.W.2d 430, 431 (Tex.App. Houston [1st Dist.] 1989, no writ).
Judgment was rendered on April 6, 1990, and Sharon Mallia filed her petition for writ of error on October 6, 1990, six months from the date of the judgment. Moreover, it is undisputed that Sharon Mallia was a party to the present suit who did not appear at trial. The trial court stated in its judgment that Sharon Mallia did not appear. Hence, we must determine whether error is apparent from the face of the record.
When an intervenor seeks affirmative relief from a plaintiff, the intervenor must serve the plaintiff unless the plaintiff subsequently appears in the intervention. McWilliams v. Snap-Pac Corp., 476 S.W.2d 941, 950 (Tex.Civ.App.Houston [1st Dist.] 1971, writ ref'd n.r.e.) (op. on reh'g). In the present case, Bousquet sought affirmative relief from Sharon Mallia, who was the plaintiff in the divorce proceeding. In addition, Sharon Mallia did not appear in the intervention. Therefore, Bousquet was required to serve citation on Sharon Mallia.
The judgment in the present case stated that Sharon Mallia "had notice of the trial." However, since this writ of error proceeding is a direct attack on the default judgment, a recitation of due service in the judgment is not conclusive. Whitney v. L & L Realty Corp., 500 S.W.2d 94, 95 (Tex.1973); Franecke v. Dolenz, 668 S.W.2d 481, 482 (Tex.App.Austin 1984, writ dism'd). The record must affirmatively show that service was properly given. Whitney, 500 S.W.2d at 95; Popkowsi v. Gramza, 671 S.W.2d 915, 917 (Tex.App.Houston [1st Dist.] 1984, no writ).
The record before this Court contains no service of citation in the intervention for Sharon Mallia. Among the items
Sharon Mallia requested in the transcript were "all returns of service." Consequently, the record does not show Sharon Mallia was served in Bousquet's intervention. We find error is apparent on the face of the record.
We sustain Sharon Mallia's second point of error. Due to the disposition of her second point of error, we do not address Sharon Mallia's first point of error.
In his second point of error, Charles Mallia contends that the trial erred in entering judgment against him for attorney's fees when Bousquet was not entitled to attorney's fees under Tex.Fam.Code Ann. § 3.77 (Vernon Supp.1991).
In its judgment, the trial court did not state that it was awarding attorney's fees to Bousquet under section 3.77. Furthermore, while Bousquet did refer to section 3.77 in his amended intervention, he did not claim attorney's fees under section 3.77 only. Rather, he made a general request for attorney's fees.
Under Tex.Fam.Code Ann. § 11.18(a) (Vernon 1986), in a suit affecting the parent-child relationship, a trial court may award reasonable attorney's fees as costs. In her petition for divorce, Sharon Mallia stated that she and Charles Mallia had a minor child and asked the trial court to appoint a managing conservator of the child. In its judgment, the trial court found that the services rendered by Bousquet were necessary in a suit affecting the parent-child relationship. Moreover, in the findings of fact and conclusions of law filed by the trial court, the trial court found that the attorney's fees were reasonable and necessary in a suit affecting the parentchild relationship. Hence, the trial court did not err in entering judgment against Charles Mallia for attorney's fees because Bousquet was entitled to attorney's fees under section 11.18.
We overrule Charles Mallia's second point of error.
In his first point of error, Charles Mallia contends that the trial court erred in entering judgment against him when it lacked jurisdiction over him. Specifically, *631 Charles Mallia contends that Bousquet failed to serve Sharon Mallia with the intervention, and only after she nonsuited her divorce proceeding did Bousquet amend the intervention to include claims against Charles Mallia. Consequently, Charles Mallia contends that the intervention was not properly before the trial court.
Regardless of whether the intervention was pending before the trial court when Sharon Mallia nonsuited the divorce proceeding, Bousquet filed the amended intervention, which included the claims against Charles Mallia, with the trial court and served Charles Mallia. Additionally, Charles Mallia appeared at the trial on the intervention. Therefore, Charles Mallia was before the trial court, and it properly rendered judgment against him. Cf. Ex parte Bowers, 671 S.W.2d 931, 935 (Tex. App.Amarillo 1984, no writ) (court's jurisdiction over person could be established by litigant's entry into court); Bullock v. Briggs, 623 S.W.2d 508, 511 (Tex.App Austin 1981, writ ref'd n.r.e.) (in personam jurisdiction existed if party voluntarily participated in trial), cert, denied, 457 U.S. 1135, 102 S. Ct. 2962, 73 L. Ed. 2d 1352 (1982).
We overrule Charles Mallia's first point of error.
In two cross-points of error, Bousquet requests damages against Sharon Mallia and Charles Mallia pursuant to Tex. R.App.P. 84.
This Court has authority to award damages to an appellee when it determines that an appeal was taken for delay and without sufficient cause. Tex.R.App.P. 84. However, this Court will not do so absent a clear showing that the appellants had no reasonable ground to believe the judgment would be reversed. Stewart v. Texco Newspapers, Inc., 734 S.W.2d 175, 177 (Tex.App.Houston [1st Dist] 1987, no writ). We reversed the judgment against Sharon Mallia. In addition, we find the record does not clearly show that Charles Mallia had no reasonable ground to believe the judgment against him would be reversed.
We deny Bousquet's request for damages pursuant to Tex.R.App.P. 84.
We reverse the judgment against Sharon Mallia and remand the cause for further proceedings consistent with this opinion. We affirm the judgment against Charles Mallia.
NOTES
[1] The Honorable Frank C. Price, former Justice, Court of Appeals, First District of Texas at Houston, participating by assignment. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1775827/ | 776 S.W.2d 567 (1989)
Walter A. CARR and Al Thiel, Petitioners,
v.
Lynn BRASHER, Respondent.
No. C-7248.
Supreme Court of Texas.
May 10, 1989.
Rehearing Denied June 21, 1989.
*568 Mithoff & Jacks, Richard Warren Mithoff, Tommy Jacks, Scott Rothenberg, Houston, for Carr.
Craig Smyser, Paul E. Stallings, Houston, for Thiel.
Beatrice Maldenka-Fowler, Houston, for respondent.
GONZALEZ, Justice.
This is a defamation action brought by a public figure. Lynn Brasher, former mayor of the City of South Houston, Texas, sued the victorious candidate, Al Thiel, alleging that Thiel had libeled him in the course of the campaign in a series of campaign brochures authored by the second defendant, Walter Carr. The court of appeals reversed the trial court's summary judgment in favor of the defendants in part on the basis that the defendants had failed to establish the absence of malice as a matter of law and remanded the cause to the trial court. 743 S.W.2d 674. We reverse the judgment of the court of appeals and affirm the judgment of the trial court.
In early 1985, Brasher, the incumbent mayor, was embroiled in an intense campaign for reelection. During the campaign, Thiel printed and published four campaign brochures. These brochures, which were written by Carr, were highly critical of Brasher and his administration. On April 6, 1985, Brasher lost his bid for reelection and Thiel was elected mayor. Several months later, Brasher filed this lawsuit alleging that Carr and Thiel published libelous statements in the four brochures which were mailed to every voter in South Houston. The brightly colored brochures criticized and ridiculed Brasher and his administration through the use of pictures, political cartoons and statements, such as:
The mayor said no tax raise? Bologna! What's wrong with City Hall?
Here's what kind of `management' he's brought to City Government.
Brasheryou better hurry. You only have four months left to ruin us before the April Election.
On April 6, 1985, we have a choice. Continue as a `banana republic' with a police state mentality or vote your conscience and throw the rascal and his puppets out.
The bottom line is that this public servant has no administrative ability, is totally inept, and makes up for his shortcomings and incompetence by uttering loud strident vulgarities.
Let us see if cronyism and more is involved.
One brochure stated that Brasher paid thousands of dollars with general fund checks of the City of South Houston to his "personal bookkeeper." Another brochure alleged "payoffs" were made to Brasher's "cohorts" on a grass mowing contract.
Carr and Thiel filed separate motions for summary judgment asserting, among other things, that:
(1) The statements contained in the brochures are not libelous as a matter of law;
(2) The statements are not actionable because they are either opinions or true statements of fact;
(3) Brasher is a public figure, and as a matter of law, no malice existed to support recovery for libel.
Carr, in support of his motion for summary judgment, introduced summary judgment evidence consisting of his deposition, Brasher's answers to interrogatories propounded by Carr and Thiel, and his affidavit in which he stated that:
*569 (a) he was an attorney in Texas since 1959;
(b) he served as municipal court judge of the City of South Houston for approximately 20 years;
(c) the statements made the basis of Brasher's complaints are statements of opinion;
(d) any statements of fact contained therein are true; and
(e) he did not have any serious doubts about the truth of the statements.
In his deposition, Carr identified sources of the alleged statements of fact made in the brochures.
Thiel, in support of his motion for summary judgment, introduced summary judgment evidence consisting of his deposition and affidavit in which he stated that he:
(a) was elected mayor of South Houston in April 1985;
(b) had been in the printing business for twenty years;
(c) on many occasions, had printed material for Carr;
(d) did not edit the material or otherwise alter it but merely reproduced what was submitted by Carr;[1] and
(e) did not have any doubts about the truth of the statements.
He further stated that:
(f) the statements Brasher complains about are statements of opinion; and
(g) the other statements in the newsletters are true statements of fact.
Brasher filed a response to the defendants' motions for summary judgment and charged that the defendants had accused him of various things which, if true, would be official misconduct and that the defendants had manipulated "untruths, part truths, omission, juxtaposition and innuendo," to damage his good reputation.
The trial court granted summary judgment for the defendants without specifying the ground or grounds on which it relied. The court of appeals held that summary judgment could not be affirmed on any of the grounds asserted by the defendants. Particularly, the court of appeals, relying on this court's decisions in Bessent v. Times-Herald Printing Co., 709 S.W.2d 635 (Tex.1986) and Beaumont Enterprise & Journal v. Smith, 687 S.W.2d 729 (Tex. 1985), held that the summary judgment proof of Carr and Thiel did not negate actual malice, one of the elements of Brasher's cause of action, as a matter of law. Thus, the court of appeals reversed the judgment of the trial court and remanded the cause to the trial court for trial on the merits. We must analyze this case in light of our decision today in Casso v. Brand, 776 S.W.2d 551 (Tex.1989).
When a trial court's order granting summary judgment does not specify the ground or grounds relied on for its ruling, summary judgment will be affirmed on appeal if any of the theories advanced are meritorious. See Borg-Warner Acceptance Corp. v. C.I.T. Corp., 679 S.W.2d 140, 142 (Tex.App.-Amarillo 1984, writ ref'd n.r.e.). We will now consider whether any of the grounds asserted by Carr and Thiel support the summary judgment.
Not Libelous as a Matter of Law
Carr and Thiel contend that the statements contained in the brochures cannot be libelous as a matter of law. To sustain a defamation cause of action, a public official or public figure must prove that the defendant (1) published a statement; (2) that was defamatory concerning the public official or public figure; and (3) that the false statement was made with actual malice. New York Times Co. v. Sullivan, 376 U.S. 254, 279-80, 84 S. Ct. 710, 725-26, 11 L. Ed. 2d 686 (1964); Casso, 776 S.W.2d at 555, Channel 4, KGBT v. Briggs, 759 S.W.2d 939, 941 (Tex.1988). Whether words are capable of the defamatory meaning the plaintiff attributes to them is a question of law for the court. Musser v. Smith Protective Serv., Inc., 723 S.W.2d 653, 654-55 (Tex.1987).
In Musser, Smith, the owner of a security and protective firm, wrote a letter to a *570 former client hoping to reattract that former client's business. The letter noted that Musser was a former employee and competitor of Smith and read: "When Mr. Musser left us, he was able, as so many of our ex-employees have in the past, to relieve us of certain of our polygraph accounts." Musser brought a libel action against Smith based on the statements contained in the letter. We concluded the letter was not defamatory as a matter of law. Id. at 655. In reaching this conclusion, we stated that allegedly libelous statements must be construed as a whole, in light of surrounding circumstances based upon how a person of ordinary intelligence would perceive the entire statement. Only when the court determines the language to be ambiguous or of doubtful import should a jury be permitted to determine the statement's meaning and the effect the statement has on the ordinary reader. Id.; Denton Publishing Co. v. Boyd, 460 S.W.2d 881, 884 (Tex.1970).
In the present case, some of the statements contained in the brochures are not capable of defamatory meaning. Others are ambiguous or of doubtful import. Still other statements in the brochures are nothing more than constitutionally protected political speech. However, we need not decide this issue as we dispose of the cause on other grounds.
Fact or Opinion
Carr and Thiel next contend that the statements contained in the brochures are constitutionally protected expressions of opinion. All assertions of opinion are protected by the first amendment of the United States Constitution and article I, section 8 of the Texas Constitution. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 339-40, 94 S. Ct. 2997, 3006-07, 41 L. Ed. 2d 789 (1974); O'Quinn v. State Bar, 763 S.W.2d 397, 402 (Tex.1988); El Paso Times, Inc. v. Kerr, 706 S.W.2d 797, 798 (Tex.App.-El Paso 1986, writ ref'd n.r.e.), cert. denied, 480 U.S. 932, 107 S. Ct. 1570, 94 L. Ed. 2d 761 (1987).
The core values of the first amendment reflect a "recognition of the fundamental importance of the free flow of ideas and opinions on matters of public interest and concern." Hustler Magazine v. Falwell, 485 U.S. 46, 108 S. Ct. 876, 879, 99 L. Ed. 2d 41 (1988). In Gertz, the Supreme Court stated:
Under the First Amendment there is no such thing as a false idea. However pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries but on the competition of other ideas. But there is no constitutional value in false statements of fact. Neither the intentional lie nor the careless error materially advances society's interest in "uninhibited robust, and wide-open debate on public issues."
Gertz, 418 U.S. at 339-40, 94 S.Ct. at 3006-07 (quoting New York Times, 376 U.S. at 270, 84 S.Ct. at 720). By this statement, Gertz elevated to constitutional principle the distinction between fact and opinion. Ollman v. Evans, 750 F.2d 970, 975 (D.C. Cir.1984). Thus, whether the publication is a protected expression of opinion or an actionable statement of fact is a question of law for the court. Since the United States Supreme Court had failed to provide guidance as to the manner in which the distinction between fact and opinion is to be discerned, the Ollman court devised a four factor test to facilitate this distinction. Ollman, 750 F.2d at 979; Kerr, 706 S.W.2d at 798. We need not adopt or apply the Ollman factors here, as we decide this cause on other grounds.
Actual Malice
Carr and Thiel argue that even if the statements in question are fact and not opinion and even if they failed to prove that the statements were true, summary judgment should have been sustained because Brasher failed to prove that actual malice existed. In New York Times, 376 U.S. at 279-80, 84 S.Ct. at 725-26, the Supreme Court declared that the first amendment "prohibits a public official from recovering damages for a defamatory falsehood relating to his official conduct unless he proves that the statement was made with `actual *571 malice'...." The New York Times requirements were later extended to libel suits brought by public figures as well. Curtis Publishing Co. v. Butts, 388 U.S. 130, 164, 87 S. Ct. 1975, 1996, 18 L. Ed. 2d 1094 (1967) (Warren, C.J., concurring). In the present case, both sides agree that Brasher is a public figure. Thus, as an element of his cause of action, Brasher has the burden at trial of proving by clear and convincing evidence that Carr and Thiel acted with actual malice. See Gertz, 418 U.S. at 342, 94 S.Ct. at 3008; Bose Corp. v. Consumers Union of United States, Inc., 466 U.S. 485, 511 n. 30, 104 S. Ct. 1949, 1965 n. 30, 80 L. Ed. 2d 502 (1984). Actual malice is not ill will; it is the making of a statement with knowledge that it is false, or with reckless disregard of whether it is true. Gertz, 418 U.S. at 328, 94 S.Ct. at 3001. "Reckless disregard" is defined as a high degree of awareness of probable falsity, for proof of which the plaintiff must present "sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication." St. Amant v. Thompson, 390 U.S. 727, 731, 88 S. Ct. 1323, 1325, 20 L. Ed. 2d 262 (1968); Casso, 776 S.W.2d at 558. An error in judgment is not enough. See Time, Inc. v. Pape, 401 U.S. 279, 290, 91 S. Ct. 633, 639, 28 L. Ed. 2d 45 (1971); Briggs, 759 S.W.2d at 941.
In Texas, a summary judgment may be based on "uncontroverted testimonial evidence of an interested witness ... if the evidence is clear, positive and direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted." Tex.R.Civ.P. 166a(c) (emphasis added).
Although we chose in Casso not to carve out a special exception to our summary judgment practice for public figure and public official defamation cases, the court, in overruling Bessent and Beaumont Enterprise, made it possible for defendants to obtain a summary judgment in such cases. In Casso, the defendant (Casso) submitted an affidavit and supporting evidence establishing that he did not believe that certain allegations he made were false and that he did not act with reckless disregard as to their truth or falsity in repeating those allegations in his campaign advertising. As evidence supporting his motion for summary judgment, Casso submitted his affidavit and certain testimony from a pending federal trial. He asserted in his affidavit that this testimony formed the basis of his allegedly defamatory statements. The court in Casso held that because the plaintiff, Brand, "presented no controverting proof, summary judgment as to these statements was proper." Id. at 558.
Similarly, in the present case, both Carr and Thiel submitted affidavits with their motions for summary judgment which stated, in relevant part, that the statements published in the brochures "are not false" and neither Carr nor Thiel "had any doubts, and certainly no serious doubts about the truth of the statements." As we previously stated, Carr submitted his deposition testimony as evidence supporting his motion for summary judgment. In that deposition, Carr identified sources of the allegedly defamatory statements of fact made in the brochures. Thiel also submitted his deposition testimony as evidence supporting his motion for summary judgment. In that deposition, Thiel testified that "Mr. Carr, being a judge for twenty years ... I had no reason to question this man about anything in the [brochures]." As Brasher presented no controverting proof that Carr and Thiel believed that the statements in question were false or published with reckless disregard for the truth, the trial court correctly granted summary judgment in favor of Carr and Thiel.
The judgment of the court of appeals is reversed and that of the trial court is affirmed.
MAUZY, J., files a concurring and dissenting opinion.
PHILLIPS, C.J., files a dissenting opinion in which COOK, J., joins.
RAY, J., files a dissenting opinion.
HECHT, J., not sitting.
*572 MAUZY, Justice, concurring and dissenting.
I concur in the result reached by the court but dissent because the court follows Casso v. Brand, decided today, in overruling Bessent v. Times-Herald Printing Co., 709 S.W.2d 635 (Tex.1986), and Beaumont Enterprise & Journal v. Smith, 687 S.W.2d 729 (Tex.1985).
PHILLIPS, Chief Justice, dissenting.
Because of the reasons set forth in my dissenting opinion today in Casso v. Brand, I respectfully dissent.
While I agree that Carr and Thiel have met their burdens to obtain a summary judgment under the standards we announce today, I would remand this cause in the interest of justice to allow Brasher the opportunity to raise a fact issue in response to the summary judgment motions.
COOK, J., joins in this opinion.
RAY, Justice, dissenting.
I dissent in this cause for the same reason as expressed in my dissenting opinion delivered today in Casso v. Brand, 776 S.W.2d 551 (Tex.1989). As in Casso, I feel that if the majority insists on overturning established Texas summary judgment law, the very least it could do is to remand for a new trial in the interest of justice.
NOTES
[1] Thiel urges us to recognize a privilege of "accurate republication." In view of the fact that we are disposing the case on other grounds, we do not reach this issue. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1093799/ | 473 So. 2d 861 (1985)
CALIFORNIA UNION INSURANCE COMPANY, Allianz Underwriters, Inc., Columbia Casualty Insurance Company, Federal Insurance Company, First State Insurance Company, Harbor Insurance Company, Home Insurance Company, Integrity Insurance Company, Mutual Fire Marine & Inland Insurance Company, Northbrook Insurance Company, and Gulf States Utilities Company
v.
BECHTEL CORPORATION and Westinghouse Electric Corporation.
No. CA 2841.
Court of Appeal of Louisiana, Fourth Circuit.
June 26, 1985.
Rehearing Denied August 27, 1985.
*862 Robert A. Vosbein, Edward D. Markle, Deborah B. Rouen, Adams and Reese, New Orleans, for plaintiffs-appellants.
John V. Baus, Madeleine Fischer, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, for defendants-appellees.
Before REDMANN, C.J., and SCHOTT and BARRY, JJ.
SCHOTT, Judge.
This is a suit by Gulf States Utilities Company (GSU) and its subrogated insurers for damage resulting from an explosion in a transformer at a power station operated by GSU. The named defendants were Bechtel Corporation which contracted with GSU to build the station and Westinghouse Electric Corporation which furnished the transformer. Bechtel was voluntarily dismissed from the case after the first day of trial. At the conclusion of plaintiff's case, Westinghouse filed a motion for involuntary dismissal of the case in accordance with LSA-C.C.P. Art. 1672 B., and the trial court granted the motion. From this judgment plaintiff has appealed raising numerous specifications of error regarding sufficiency of the evidence, expert opinion testimony, and evidentiary rulings. From these alleged errors plaintiff argues that it had made out a prima facie case against Westinghouse so that the judge wrongfully dismissed its case. However, we do not reach these factual issues because we have concluded that Westinghouse is insulated from liability because of contractual limitations agreed to by plaintiff when the contract with Westinghouse was confected.
On January 6, 1972 Bechtel acting as plaintiff's agent submitted a Bid Request to Westinghouse for Normal and Reserve Station Service Transformers at a power station being constructed at St. Gabriel, Louisiana. The Bid Request specified that the following warranty would be provided by the supplier:
"8. WARRANTIES GUARANTEES:
Seller warrants that the goods shall be free from defects in design, material, workmanship, and title, and shall conform in all respects to the terms of this purchase order, and shall be of the best quality, if no quality is specified. If it appears within one year from the date of placing the equipment into service for the purpose for which it was purchased that the equipment, or any part thereof, does not conform to these warranties, and Buyer so notifies Seller within a reasonable time after its discovery, Seller shall thereupon promptly correct such noncomformity at its sole expense. The conditions of any subsequent tests shall be mutually agreed upon and Seller shall be notified of and may be represented at all tests that may be made. Except as otherwise provided in this purchase order, Seller's liability hereunder shall extend to all damages proximately caused by the breach of any of the foregoing warranties or guarantees, but such liability shall in no event include loss of profit *863 or loss of use. NO IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR PURPOSE SHALL APPLY."
In addition, Bechtel's specifications contained under 2.20 the following under "Warranty":
"Seller agrees that the Warranties Guarantees Provisions of Bechtel Corporation General Conditions, Paragraph 8, shall apply hereto. The statement "within one year from the date of placing the equipment into service for the purpose for which it was purchased".... means "one year following commercial operation of Willow Glen Station Unit 5" except that if Seller's standard warranty provisions exceed this period, then said standard warranty shall apply."
On February 7 Westinghouse submitted its proposal under a covering letter which specifically notified Bechtel that its quote was in accordance with warranty provisions found on page PE-1 of its proposal in lieu of the above quoted warranty provision requested by Bechtel. This page PE-1 was as follows:
"GENERAL CONDITIONS:
The General Conditions appearing on the reverse of Page 1 of this Purchase Order and any modifications thereto appearing herein shall govern, except that Clause 8, Warranties Guarantees, is hereby deleted and the following shall apply in lieu thereof:
WARRANTY
The Seller warrants to the Buyer that the equipment to be delivered hereunder will be free from defects in material or workmanship and will be of the kind and quality designated or specified in this Purchase Order.
This warranty shall apply only to defects appearing within 18 months from the date of shipment by the Seller, or one year from the date the equipment is placed in service, whichever occurs first. If the Seller installs the equipment or supplies technical direction of installation by contract, the warranty period shall run from the completion of installation, provided same is not unreasonably delayed by the Buyer. The conditions of any test shall be mutually agreed upon and the Seller shall be notified of, and may be represented at, all tests that may be made.
If the equipment delivered hereunder does not meet the above warranty, and if the Buyer promptly notifies the Seller, the Seller shall thereupon correct any defect, including non-conformance with the Specifications, either (at its option) by repairing any defective or damaged parts of the equipment, or by making available at the Seller's plant, necessary repaired or replacement parts. The liability of the Seller under this warranty (except as to title), or for any loss or damage to the equipment whether the claim is based on contract or negligence, shall not exceed the cost of correcting defects in the equipment as herein provided, and upon the expiration of the warranty period, all such liability shall terminate. The foregoing shall constitute the exclusive remedy of the Buyer and the exclusive liability of the Seller.
LIMITATION OF LIABILITY
The following Clause shall apply in addition to the General Conditions appearing on the reverse of Page 1:
The Seller's liability on any claim of any kind, including negligence, for any loss or damage arising out of, connected with, or resulting from this Purchase Order, or from the performance or breach thereof, or from the design, manufacture, sale, delivery, resale, or repair or use of any equipment covered by or furnished under this Purchase Order shall in no case exceed the price allowable to the equipment or part thereof which gives rise to the claim, except as provided for in the Clause of the General Conditions entitled "Infringement" (Clause 9). In no event shall the Seller be liable for special or consequential damages."
Included in Westinghouse's proposal along with the special PE-1 was a printed copy of Westinghouse's "Selling Policy 48-000" dated July 15, 1971 with regards to *864 transformers and certain other equipment sold by Westinghouse. This Selling Policy 48-000 provided the following "Standard Warranty" on such equipment.
"Westinghouse warrants that the equipment delivered by it will be of the kind and quality described in the order or contract and will be free of defects in workmanship and material. Should a failure to conform to this warranty appear within one year after date of shipment, Westinghouse shall, upon prompt notification thereof and substantiation that the equipment has been stored, installed, operated and maintained in accordance with Westinghouse recommendations and standard industry practice, correct such non-conformities, at its option, either by repairing any defective part or parts or by supplying a repaired or replacement part or parts f.o.b. Westinghouse repair plant or factory. However, if Westinghouse has installed the equipment or furnished field engineering services with respect to its installation, and provided such installation has not been delayed by the purchaser, said one year shall run from completion of the installation. In no event shall Westinghouse be responsible for providing working access to the defect, including disassembly and reassembly of the equipment.
* * * * * *
This warranty is in lieu of all warranties of merchantability, fitness for purpose, or other warranties, express or implied, except of title and against patent infringement. Correction of non-conformities in the manner and for the period of time provided above, shall constitute fulfillment of all liabilities of Westinghouse to the purchaser, whether based on contract, negligence or otherwise with respect to or arising out of such equipment. (Underscored portion was in italics.)"
The Selling Policy went on to provide for an "Extended Warranty" as follows:
"The Westinghouse standard warranty covers a period of twelve months from date of shipment. When purchaser's specification calls for a longer period, this warranty may be extended up to two additional years at a price addition of 1% for the second year and 2% for the third year. It is Westinghouse policy not to extend the warranty beyond 36 months."
Finally the Selling Policy contained the following "Limitation of Liability":
"Neither party shall be liable for special, indirect, incidental or consequential damages. The remedies of the purchaser, as set forth herein, are exclusive, and the liability of Westinghouse with respect to any contract or sale or anything done in connection therewith, whether in contract, in tort, under any warranty, or otherwise, shall not, except as expressly provided herein, exceed the price of the equipment or part on which such liability is based."
On February 24 Bechtel advised Westinghouse that in the course of evaluating the proposal a number of questions had been developed including the following:
"8. Please affirm the Bechtel warranty described in paragraph 2.20 is included in the quoted price and is not subject to the adder mentioned in paragraph "Extended Warranty", page 3 of Selling Policy 48-000."
On March 9, 1972 Westinghouse responded as follows:
"8. We are quoting in strict accordance with the warranty provisions of Bechtel General Condition Sheet PE-1 which states the equipment is warranted for one year from date of operation or 18 months from date of shipment, whichever occurs first."
On March 10 Westinghouse offered an "extended warranty" as follows:
"The normal station service transformer and the reserve station service transformer will be warranted from date of shipment through one year of commercial operation or until September 1, 1976, whichever occurs first. This is based on promised delivery dates in the proposal. The price addition for this extended warranty will be $4,571.00."
*865 Finally on May 9 Westinghouse wrote to Bechtel confirming a telephone conversation that Westinghouse accepted Bechtel's order for the normal service transformer only for the total price of $94,497 which included $1,750 for extended warranty as defined in the March 10 letter.
On May 30 Bechtel issued its formal written purchase order to Westinghouse for the transformer which again contained under "General Conditions" its warranty clause quoted above as "8. Warranties Guarantees". On June 28, Westinghouse formally and in writing accepted the purchase order but under terms and conditions which included the following:
"Warranty
Unless a different warranty was stated or referred to in the Westinghouse quotation, in which event such warranty shall be exclusive, Westinghouse warrants that the products sold hereunder shall be of the kind and quality described in the quotation and shall be free of defects in workmanship or materials, and Westinghouse shall, in complete fulfillment of its liabilities under this warranty and if given prompt notice by the Purchaser, correct, by repair or replacement, f.o.b. its factory, any nonconformity which shall appear under proper and normal use of the products within one year after the date of shipment. THIS WARRANTY, OR ANY OTHER WARRANTY STATED OR REFERRED TO IN THE WESTINGHOUSE QUOTATION, IS EXCLUSIVE AND IS IN LIEU OF ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR PURPOSE, OR OTHER WARRANTY OF QUALITY, WHETHER EXPRESS OR IMPLIED."
On August 4 a revised purchase order was issued Westinghouse by Bechtel identical to the above referred to May 30 purchase order as far as warranty is concerned and this was formally accepted by Westinghouse on November 16 with the same last quoted warranty provision.
The transformer was shipped by Westinghouse on June 17, 1974 and was placed into commercial operation on December 19, 1975. The explosion occurred on July 10, 1979. Under Westinghouse's PE-1, General Conditions, its warranty applied only to defects appearing within 18 months from June 17, 1974 or one year from December 19, 1975 whichever occurs first. Westinghouse contends that this precludes recovery for plaintiff.
Before trial Westinghouse had moved for summary judgment on the basis of its warranty limitations, but GSU convinced the court that at trial it could show that Westinghouse's warranty provisions were "confusing" and unclear and, thus, not binding on GSU. The first witness called by GSU was Donald Charles Robinette, the buyer for Bechtel who handled the transformer negotiations with Westinghouse. GSU attempted to elicit from this witness testimony that he found the warranty provisions confusing. Westinghouse's timely objections to this testimony were sustained by the trial judge because he found the provisions clear regardless of Robinette's perception of them.
In this court GSU contends the court erred in disallowing the proffered testimony. C.C. Art. 1945 (as written prior to passage of Act 331 of 1984) provided that the intent of the parties to a contract is to be determined by the words of the contract when these are clear and explicit and lead to no absurd consequences. We find the words of the warranty to be clear so that Robinette's testimony as to what he thought they meant was irrelevant and properly excluded.
The trial court in reasons for judgment emphatically concluded that the warranty was clear and unambiguous. He stated that he had overruled Westinghouse's motion for summary judgment on GSU's representation that evidence of confusion would be forthcoming but that no such admissible evidence was produced. We agree with this conclusion. The documents are clear and need no interpretation, clarification, or supplementation. In a word they speak for themselves.
*866 After all negotiations between these parties had been completed the initial purchase order and revised purchase order were submitted to Westinghouse. It accepted Bechtel's (GSU's) offer with a clear reference to the warranty contained in its original proposal on PE-1. It would not be liable for defects appearing 18 months after delivery or one year after start-up. Furthermore, the documentation concerning the extended warranty created no substantial confusion or lack of clarity. This simply extended the warranty from date of shipment through one year of operation or until September 1, 1976 whichever occurred first. Under the warranty contained in PE-1 it would extend for 18 months from May 6, 1974 or one year from start-up, whichever occurred first. Start-up did not occur until December 1975 so that the original warranty would have expired on November 6, 1975. There is no support for the argument that the casualty of July 10, 1979 was covered by the warranty.
Finally, GSU contends that Westinghouse, in a letter of June 17, 1974, modified the contract between the parties to the extent that Westinghouse completely abrogated all warranty limitations included therein. The facts leading up to the June 17 letter were that the contract provided for various "hold points" while the transformer was being constructed at each of which Westinghouse was to notify Bechtel that a point in the construction had been reached and Bechtel was to inspect the work before Westinghouse resumed construction. One of these points was at the completion of the core and coil assembly but before the tank was built around them thereby closing them in. Westinghouse failed to notify Bechtel of this hold point and the inspection was not made. Construction proceeded and the core and coil could not be inspected. As a result one E.C. Hoyt, a Westinghouse Design Engineer, on June 17, 1974 wrote Bechtel as follows:
"Customer's coil and core inspection of the above unit was an official hold point, previously established for this order.
"However the shop did not notify Order Service Department when this unit was ready for customer's inspection.
"Core and coil inspection was given to this unit by Westinghouse Quality Control and inspection proved satisfactory. Thus, Westinghouse will assume all responsibility on the core and coil assembly."
The evidence does not indicate exactly what Westinghouse intended by this letter. Perhaps by stating that it would now assume "all responsibility" Westinghouse would go beyond mere replacement and pay consequential damages in the event the core and coil assembly proved to be defective. Perhaps the intention was to provide, without the additional charge for which it had been offered, a full thirty-six month extended warranty from the time the transformer was shipped (which would have been an extension to June, 1977). But we cannot construe this letter to be a total abrogation of the warranty limitations which had been bargained for at such length. GSU would have us interpret this letter by adding words such as "for an indefinite period of time"; in effect to guarantee the transformer forever. Such a result is not only improbable but incongruous. At this point it would have been more reasonable for Westinghouse to dismantle the tank than to assume absolute unlimited liability. Rather, we believe the clear intent was for Westinghouse to acknowledge that Bechtel had not voluntarily waived the inspection which paragraph 2.16 of the specifications provided for. Westinghouse was obliged under the contract to warrant its workmanship whether the inspection was made or not. When Bechtel accepted the transformer with full knowledge that it had not made the inspection it was reserving its right on the strength of Westinghouse's assurance that it would be responsible for the core and coil assembly within the contractual warranty period and at whatever risk might be involved in its failure to have Bechtel make its inspection.
The contract under consideration was a commercial undertaking between two highly *867 sophisticated parties. While courts are reluctant to enforce warranty limitations on consumers they recognize that parties such as Bechtel (acting for GSU) and Westinghouse are free to bargain as they see fit and are bound by their contracts. See Lazy Bug Shops, Inc. v. American District Telegraph Co., 374 So. 2d 183 (La.App. 4th Cir.1979), writ denied 376 So. 2d 1271 (La.); FMC Corporation v. Continental Grain Co., 355 So. 2d 953 (La.App. 4th Cir. 1977), writ denied 356 So. 2d 1001 (La.). We have concluded that these parties freely limited Westinghouse's warranty so that it was not liable for a defect if any in the transformer appearing in July 1979.
The judgment appealed from is affirmed.
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1418660/ | 699 F. Supp. 1227 (1988)
SOUTHERN MORTGAGE COMPANY, Plaintiff,
v.
Richard W. O'DOM, Defendant.
Civ. A. No. E86-0121(L).
United States District Court, S.D. Mississippi, E.D.
August 11, 1988.
*1228 Thomas L. Webb, Bourdeaux & Jones, Meridian, Miss., for plaintiff.
Kenneth A. Rutherford, Thomas, Price, Alston, Jones & Davis, Jackson, Miss., for defendant.
MEMORANDUM OPINION AND ORDER
TOM S. LEE, District Judge.
This cause is before the court on the motion of plaintiff Southern Mortgage Company (SMC) for summary judgment as to all issues in this cause pursuant to Rule 56 of the Federal Rules of Civil Procedure. Defendant Richard W. O'Dom timely responded to the motion and the court has considered the memoranda of authorities together with attachments submitted by the parties.
SMC instituted this action seeking recovery from defendant of $500,000, together with interest and attorney's fees, based on a promissory note executed by O'Dom. By its terms, the note became due 180 days following its execution on February 18, 1986. Upon O'Dom's failure to pay as provided in the note, SMC brought this action to collect the amount owed. O'Dom responded by denying any right of recovery in SMC and asserting affirmatively that the note is void as it was procured by fraud and that SMC is estopped from recovery by its actions. As the basis for these defenses, O'Dom admits that he indeed executed the promissory note to SMC, but claims that at the time he signed the note, it was his understanding, based on oral assurances from Paul Broadhead, owner and president of SMC, that the note "would not be called at its expiration date but could be renewed until O'Dom had obtained enough money to pay the note off. In the alternative, O'Dom could, at his option, not pay the note at all if his financial condition did not allow repayment." By way of counterclaim and set-off, O'Dom seeks recovery from SMC of one million dollars compensatory damages and five million dollars punitive damages, charging SMC with fraud, breach of its fiduciary duty to O'Dom, breach of contract, breach of the duty of good faith and fair dealing and abuse of process. On this motion for summary judgment, SMC seeks judgment in its favor on all claims raised by both its complaint and the counterclaim of O'Dom.[1] The primary *1229 question for consideration by the court on this motion is whether the representations by SMC, through its agent, Broadhead, if in fact made, amount to fraud which would enable O'Dom to escape the repayment obligation otherwise imposed by the note.
This court has previously held that the alleged representation by Broadhead was a promise as to a future event. A claim of fraud may not be based on a promise to perform an act in the future or on a representation as to future matters because there is no right to rely on such statements, unless a relation of trust and confidence exists between the parties or unless the speaker, at the time of making the representations, had the "present undisclosed intention not to fulfill his promises." Davidson v. State Farm Fire and Casualty Co., 641 F. Supp. 503, 512 (N.D. Miss.1986); see also Kidd v. Kidd, 210 Miss. 465, 49 So. 2d 824 (1951). As this court recognized in its previous opinion, O'Dom did not allege that Broadhead, at the time of making the alleged representation, had an intention not to perform as promised. Even assuming that to be the case, however, the claim of fraud must fail for an even more fundamental reason.
Under Mississippi law, a claim of fraud requires proof, by clear and convincing evidence, of each of the following elements: "(1) a representation, (2) its falsity, (3) its materiality, (4) the speaker's knowledge of its falsity or ignorance of its truth, (5) his intent that it should be acted on by the hearer and in the manner reasonably contemplated, (6) the hearer's ignorance of its falsity, (7) his reliance on its truth, (8) his right to rely thereon, and (9) his consequent and proximate injury." Franklin v. Lovitt Equipment Co., Inc., 420 So. 2d 1370, 1373 (Miss.1982). Most troubling in the case at bar is the reliance element, or the lack of reliance. The cases make it clear that not only must the party claiming fraud have relied on the allegedly false statement, but his reliance must have been reasonable and, more importantly for our purposes, his reliance must have been to his detriment.
[Running] deep in our law is the notion that a person must respond where his statements or conduct reasonably induce another to rely to his detriment.
Berkline Corporation v. Bank of Mississippi, 453 So. 2d 699, 702 (Miss.1984) (emphasis supplied); see also First American National Bank of Iuka v. Mitchell, 359 So. 2d 1376, 1379-80 (Miss.1978) (bank's liability for misrepresentation of its officers limited to acts and representations made by officer within scope of authority when they are proved to have been relied on to detriment of plaintiff).
Even if one could assume that O'Dom, in signing a note and accepting the $500,000, reasonably believed that he would never be required to repay the money, it nevertheless appears that the element of detriment, that is, reliance to O'Dom's detriment, is wholly lacking. In essence, O'Dom asserts that he relied on the assurances of Broadhead in signing the note and accepting the money. Had he known he would actually be required to repay the bank, he would not have borrowed the money from SMC but would have obtained financing elsewhere. He needed the money, yet claims he could have gotten it from another lending institution. In the court's view, O'Dom's acceptance of the $500,000 evidenced by the note can hardly be characterized as detrimental, given his assertion that he was in desperate need of the money. That SMC now wishes that he repay the loan in accordance with the terms of the note is likewise difficult to reconcile with the claim of detrimental reliance. There has been no showing by O'Dom that he could have obtained the money on more favorable terms than those offered by SMC in terms of time for repayment, interest rate, etc. Certainly he has made no claim that another lending institution would have simply given him money without requiring that he repay it. O'Dom's contentions strain the bounds of logic and those of the law. Accordingly, his claim for fraud must fail. For the same reason, O'Dom's claim *1230 that Southern Mortgage Company is estopped to seek recovery on the note based on Broadhead's assurances is without merit, since promissory estoppel, like fraud, requires proof of detrimental reliance. See PMZ Oil Co. v. Lucroy, 449 So. 2d 201, 206 (Miss.1984) (estoppel requires change of position in reliance upon conduct of another and suffering of detriment caused by change of position). To establish the existence of promissory estoppel under Mississippi law, it is also essential that the representation relied upon must relate to a present intention or purpose of the party to be estopped, because a party cannot be precluded from changing his intention in the future. Jackson Rapid Delivery Service, Inc. v. Jones Truck Lines, Inc., 641 F. Supp. 81, 86 (S.D.Miss. 1986). Neither of these elements being present in this case, O'Dom's estoppel argument cannot excuse his obligations on the note.
In support of his charge that SMC breached a fiduciary duty, a duty to treat him fairly and in good faith, O'Dom has recounted a history of friendship and business dealings with Broadhead, SMC's owner. According to O'Dom, because of his relationship with Broadhead, based on a lifelong friendship and history of business associations, SMC, in the loan transaction, stood in a position of trust and confidence with O'Dom.
In Carter Equipment Company v. John Deere Industrial Equipment Company, 681 F.2d 386 (5th Cir.1982), the Fifth Circuit set out four factors which may provide evidence that a fiduciary relationship has arisen in a particular transaction: (1) whether the activity of the parties goes beyond their operating on their own behalf and the activity is for the benefit of both; (2) whether the parties have a common interest and profit from the activities of the other; (3) whether the parties repose trust and confidence in one another; and (4) whether one party has the power to control or dominate the other. Id. at 390, 391; see also Jackson Rapid Delivery Service, 641 F.Supp. at 84. O'Dom urges that in this loan transaction, both he and SMC stood to benefit; O'Dom was to obtain the money he needed and SMC was to be rewarded for making the loan with interest on its money. However, if one were to accept as true O'Dom's allegation that Broadhead, and hence SMC, assured him the money need not be repaid, then clearly there was no benefit to SMC. That is, if O'Dom were never to repay the loan, as he asserts was and is his right, then SMC would never receive repayment of principal or interest on its money. Furthermore, there is nothing to indicate that SMC had an interest in and/or stood to profit from the activities of O'Dom, nor vice versa.
Similarly, O'Dom's contention that Southern, "as the lender holding all the marbles," had the power to dominate and control O'Dom by virtue of SMC's "economic power over O'Dom" overlooks a contrary assertion by O'Dom that "although other sources of financing were available to O'Dom ..., O'Dom went to his lifelong friend [Broadhead] first." Thus, O'Dom, by his own admission, was under no compulsion to deal with SMC and was free to seek financing elsewhere. Under these circumstances, one could not reasonably conclude that SMC had the sort of power and domination contemplated by the court in Carter Equipment. See Jackson Rapid Delivery, 641 F.Supp. at 84.
The final element established in Carter Equipment as tending to indicate a fiduciary relationship is "trust and confidence by one party in the integrity and fidelity of the other." Although O'Dom claims that the "trust and confidence" he reposed in his friend Broadhead is "evident," in the court's view, the contrary appears. According to O'Dom, he and Broadhead had been friends since their boyhood days. Their families had done business together and had been close social acquaintenances, and O'Dom and Broadhead had assisted each other in various ways for over forty years. O'Dom alleges that as a result of their close friendship, there "developed a relationship of trust and confidence." The loan, he claims, was based upon this trust and confidence O'Dom placed in Broadhead because of the *1231 close association between the two. Yet in his counterclaim against SMC and brief in opposition to SMC's motion for summary judgment, O'Dom described certain business dealings with Broadhead, commencing in December of 1983 and continuing through the time of O'Dom's execution of the promissory note at issue, in which Broadhead "underhandedly took over, at O'Dom's great loss, the two largest sources of O'Dom's income[.]" According to his description, set forth in detail in this court's prior memorandum opinion, Broadhead forced O'Dom to transfer his ownership interest in the First United Bank of Meridian to Broadhead and Broadhead subsequently, by threats, forced the sale of an insurance company owned by O'Dom, Financial Security Life of Mississippi, to Broadhead at a price substantially below the market value of the insurance company. This, according to O'Dom, amounted to Broadhead's taking "O'Dom's primary source of income without any payment." Further, O'Dom charges that Broadhead, at the time of acquiring the bank and the insurance company, agreed to pay substantial management and consulting annual fees to O'Dom, yet reneged on that promise.[2] In his counterclaim against SMC, O'Dom recites that
because of the defalcations and misdeeds of Broadhead, O'Dom's financial condition deteriorated to the extent that he had to borrow money to meet obligations and to rebuild his business. When O'Dom discussed this matter with Broadhead, Broadhead offered to let O'Dom have $500,000 to help him meet his obligations. When O'Dom obtained the $500,000 from Broadhead in February, 1986, it was with the understanding that any note signed by O'Dom would not be called at its expiration but it could be renewed until O'Dom had obtained enough money to pay the note off. In the alternative, O'Dom could, at his option, not pay the note at all if his financial condition did not allow repayment (emphasis supplied).
Moreover, in a memorandum submitted by O'Dom opposing the motion of Broadhead to dismiss the third-party complaint, the following appears:
O'Dom claims in his Third-Party Complaint against Broadhead and in his counterclaim against Southern Mortgage that his borrowing of money from Southern Mortgage was necessitated by Broadhead's and Southern Mortgage's breach of fiduciary duties, breach of contract, breach of duty of good faith and fair dealing and fraud in their business and contractual dealings with O'Dom (emphasis supplied).
The close friendship alleged by O'Dom had thus apparently deteriorated significantly before the loan transaction. Under the circumstances and facts as alleged by O'Dom, there was absolutely no basis for his having "trust and confidence in his friend Broadhead, and Broadhead's company, Southern [.]"[3] The court is of the opinion that none of the factors indicative of a fiduciary relationship is present in the case at bar. And, while the determination of whether a fiduciary relationship exists is typically a question of fact for the jury, Carter Equipment, 681 F.2d at 390, there is insufficient evidence from which a jury could reasonably find the existence of such a relationship. Accordingly, O'Dom's claim for breach of fiduciary relationship fails as a matter of law and of fact.[4]
*1232 O'Dom's final claim, for abuse of process, is premised upon an allegation that SMC was aware that the note was not to be called when due based on the alleged assurances by Broadhead. In the court's opinion, this claim is obviously inadequate to withstand the present motion for summary judgment. The note on which SMC seeks to recover is clearly delinquent and there is nothing on the face of the note to indicate otherwise. Moreover, the court has heretofore held that O'Dom is not excused from payment of the note based on any of the various defenses or claims alleged by him. Accordingly, the filing of this lawsuit to obtain payment on the note is not, and could not be, considered an abuse of process.
Inasmuch as each of the defenses asserted and affirmative matters alleged by O'Dom to excuse payment of the note have been considered by the court and held inadequate as a matter of law, it follows that SMC's motion for summary judgment on its complaint for recovery on the note itself is well taken and should be granted.[5]
Accordingly, it is ordered that plaintiff's motion for summary judgment is granted; plaintiff is entitled to judgment against the defendant in the sum of $500,000, together with interest at a rate of eleven percent per annum as provided in the contract and attorney's fees in the amount of ten percent of the principal and interest, also as provided in the note executed by the defendant, and defendant's counterclaim will be dismissed with prejudice. A separate judgment will be entered in accordance with Federal Rule of Civil Procedure 58.
NOTES
[1] In addition to the counterclaim asserted against SMC, O'Dom brought a third-party complaint against Paul Broadhead seeking recovery over against Broadhead by way of set-off for any judgment obtained by SMC on the underlying action. The third-party complaint was dismissed by this court by memorandum opinion and order dated September 10, 1987, 699 F. Supp. 1223.
[2] In connection with the sale of O'Dom's interest in First United Bank in 1983, Broadhead allegedly agreed to pay O'Dom $250,000 per year as consulting fees for assistance in the management and administration of First United Bank. O'Dom further alleged that Broadhead agreed in 1984 to pay him $250,000 annually for management of Financial Security, once Broadhead acquired ownership. No payments were ever made.
[3] Although O'Dom now claims that he was unaware of Broadhead's misdeeds prior to the time he approached Broadhead for the purpose of obtaining a loan, O'Dom is bound by the allegations contained in his complaint and will not be permitted to manipulate and create disputed issues of fact as it suits him to avoid summary judgment.
[4] Although O'Dom has cited cases in which lending institutions have been held to occupy a fiduciary status relative to their clients or customers, those cases have gone beyond a mere debtor/creditor relationship and have typically involved mortgagor/mortgagee relationships and are otherwise distinguishable. See First American National Bank of Iuka v. Mitchell, 359 So. 2d 1376, 1380 (Miss.1978) (mortgagor/mortgagee relationship already in existence at time of alleged active fraud and misrepresentation by bank officer). In any event, O'Dom's claim that a fiduciary relationship existed in the loan transaction is based not upon his status as a client of SMC but rather as a lifelong friend and business acquaintance of Broadhead, SMC's president.
[5] In Matsushita Electrical Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 1361, 89 L. Ed. 2d 538 (1986), the Supreme Court, in considering a claim of an antitrust conspiracy, held that "the absence of any plausible motive to engage in the conduct charged is highly relevant to whether a `genuine issue for trial' exists within the meaning of Rule 56(c)." The motive which O'Dom attributes to Broadhead's alleged fraudulent representation is revealed in his affidavit submitted in response to this motion for summary judgment:
"He just wanted to ruin me, for reasons only known to him."
Whether this vague assertion could be construed as a "plausible" explanation of Broadhead's motivation for his allegedly attempting to deceive O'Dom is highly questionable and lends support to this court's conclusion that summary judgment is in order. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1479185/ | 83 F.2d 322 (1936)
DALLAS JOINT STOCK LAND BANK
v.
DAVIS.[*]
No. 7966.
Circuit Court of Appeals, Fifth Circuit.
May 5, 1936.
Chas. S. McCombs, C. C. Renfro, and James A. Kilgore, all of Dallas, Tex., for appellant.
John Davis, of Dallas, Tex., for appellee.
Before SIBLEY, HUTCHESON, and WALKER,[1] Circuit Judges.
HUTCHESON, Circuit Judge.
Appellees are farmer debtors, who, when their homestead was about to be sold under a state foreclosure decree, applied in their pending bankruptcy proceedings for relief under subdivision (s) of section 75 of the Bankruptcy Act, as amended August 28, 1935, 11 U.S.C.A. § 203 (s). Appellant is the holder of the mortgage. Insisting that the amendment has not cured the defects in the statute pointed out in the Radford Case (Louisville Joint Stock Land Bank v. Radford), 295 U.S. 555, 55 S.Ct. 854, 79 L.Ed. 1593, 97 A.L.R. 1106, appellant moved for a dismissal of the application on the ground that the act, in undertaking in effect to provide for a transfer of foreclosure proceedings to the bankruptcy *323 court and a stay of them there, deprives movant of substantial rights in its security, in violation of the Fifth Amendment.
The District Judge thought the act as amended did not take, but safeguarded, appellant's substantial rights as a secured creditor. He found, on sufficient evidence, that at that stage of the proceedings there was no such showing of inability to finance the debt with the assets involved as would justify the court in refusing to take jurisdiction. He ordered the case referred to a special conciliation commissioner for statutory proceedings. It was at this juncture and from this order that this appeal was taken.
The record before us stops at this point. We do not know, there is no showing, whether appellees could or did comply with the provisions of the act to obtain, there is no order granting, the statutory stay. The only order here for review is the one refusing to dismiss the application, and referring it for statutory proceedings. On the record we have, the only effect of this order on appellant at this time is to prevent the collection of its debt through the state court proceedings, by requiring its collection through the bankruptcy court. Though the attack is predicated upon the claim that the necessary effect of the order under the act will be to deprive appellant of substantial property rights, no evidence is offered to show this. The appeal is here on the broad claim that on its face, and as a necessary result of its operation, the invoked section takes away substantial rights of appellant in its security, and within the Radford Case is unconstitutional and void.
This claim raises a preliminary question of prime importance whether, at this stage of the proceedings, when nothing has been done but to take jurisdiction, appellant's constitutional attack is premature. It is urged that an inquiry will not be conducted into a complainant's constitutional rights until there has been a substantial invasion of them, and that nothing of that kind has occurred here. It is insisted that while the act as amended does direct the granting of a stay of collection for a maximum period of three years, this stay is not granted as of right absolutely and at all events, but only upon conditions, the prime one of which is the exercise of judicial discretion whether the stay may be granted with a due regard for the substantial rights of creditors in their securities.
It may not be doubted that if the necessary result of the act is to take away appellant's substantial rights in its security, it need not wait until all the forms prescribed for that taking away have been gone through with, but may sue at once to save itself. Pierce v. Society of Sisters, 268 U.S. 510, 45 S.Ct. 571, 69 L.Ed. 1070, 39 A.L.R. 468; Village of Euclid v. Ambler, 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303, 54 A.L.R. 1016; Terrace v. Thompson, 263 U.S. 197, 44 S.Ct. 15, 68 L.Ed. 255. It is equally without doubt, however, that the action is premature, and that no constitutional question is presented for decision if the pinch of the act will be felt by appellant not as a necessary, but only as a possible, result of its application. For it is a settled rule in the federal courts that questions of constitutional law will not be anticipated, but will be decided only where a present necessity for such decision exists, and then only no more broadly than the precise situation in question requires. Liverpool, N. Y. & P. S. S. Co. v. Commissioners, 113 U.S. 33, 5 S.Ct. 352, 28 L.Ed. 899; Massachusetts v. Mellon, 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078; Chicago & Grand Trunk R. Co. v. Wellman, 143 U.S. 339, 12 S.Ct. 400, 36 L.Ed. 176.
In approving the amendment, the judiciary committees of both House and Senate agreed that its object and purpose was the clarification of section 75 and the addition of a new subsection (s) in place of the subsection (s) held unconstitutional. Both committees in recommending the bill for passage declared that the new subsection had been written so as to conform to the decision of the Supreme Court and that they felt that it did conform. We think it not a strained construction to hold that it does.
On its face the act merely transfers the liquidation of the indebtedness from state courts to the court of bankruptcy. It remits to the judicial discretion of that court the administration of the property of a bankrupt, with the end in view to bring about, if a due regard for the property rights and interests of his creditors permits it, a gradual and therefore more just and equitable liquidation, in lieu of an unduly hasty and forced one. Subsection (s) of the act as amended does indeed authorize a stay of collection for a maximum period *324 of three years, during which time the debtor may remain in possession, but the stay so granted is not an absolute one. It is one granted and continued in the judicial discretion of the court if, and only if, this may be done without deprivation of or injury to, and upon conditions looking to the preservation of, the creditor's security. Under its provisions the court must fix, and require the debtor to pay, a reasonable rental on the property, to be applied upon the debt. Under its provisions, the court may, and if in the exercise of a sound discretion the protection and preservation of the security demand it, must require additional payments on the principal sum due and owing. Under its provisions, the court may, upon a finding that the preservation of the security requires it, revoke the stay order and direct the sale of the property.
These provisions of the act make it clear, we think, that the act grants no absolute stay, permits no arbitrary or unjust interference with creditors. It merely remits all questions regarding the collection of the debt to an informed judicial discretion, a discretion which, keeping the preservation of the security paramount, may yet, if circumstances permit, afford a means of relief to the debtor. They make it clear that the controlling, the dominant purpose and effect of the act as amended is not to deprive creditors of their security to give it to debtors, but to remit to judicial discretion in each case, whether the facts justify giving the debtor an equitable opportunity in an orderly way, to liquidate his indebtedness, provided always that the essential security of the creditor is not impaired, but preserved. A law on the subject of bankruptcy having this purpose and effect is not, in our judgment, violative of the Fifth Amendment. The authority of Congress to make uniform laws on the subject of bankruptcy is a broad one. It extends to and authorizes not merely ordinary bankruptcy laws, as they were understood and in existence at the time of the adoption of the Constitution, but insolvency laws in general. It extends to and authorizes all just laws, having for their object the liquidation of indebtedness. It lawfully embraces in its scope and purpose not only the just protection of the creditor, but the relief of the debtor. Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 55 S.Ct. 854, 79 L.Ed. 1593, 97 A.L.R. 1106; In re Landquist (C.C.A.) 70 F.(2d) 929; In re Chicago, R. I. & Pac. R. Co. (C.C.A.) 72 F. (2d) 443; Local Loan Co. v. Hunt, 292 U. S. 234, 54 S.Ct. 695, 78 L.Ed. 1230, 93 A. L.R. 195; Continental Bank v. Chicago, R. I. & P. R. Co., 294 U.S. 648, 55 S.Ct. 595, 79 L.Ed. 1110; Van Huffel v. Harkelrode, 284 U.S. 225, 52 S.Ct. 115, 76 L.Ed. 256, 78 A.L.R. 453; Hanover National Bank v. Moyses, 186 U.S. 181, 22 S.Ct. 857, 46 L.Ed. 1113. Under its bankruptcy powers Congress lawfully provides for the complete abrogation of the personal obligation of debts, the discharge of the debtor. Under these powers Congress lawfully provides for the making of compositions; under them it lawfully marshals the properties of debtors and provides for their equitable distribution among the secured creditors, to the extent even of authorizing a complete rearrangement and rewriting of the obligations. Authorities, supra. Under these powers it may, we think, make just provision for the exercise of judicial discretion in granting reasonable stays of liquidations in bankruptcy.
We think the act on its face is within the bankruptcy powers of Congress; that nothing in the record we have shows that the necessary result of its application to appellant will deprive it of its property; that appellant is at this stage of the proceeding in no position to raise a constitutional question; and that the order appealed from should be affirmed. The affirmance, however, is without prejudice to the right of appellant to apply at any further stage of the proceeding, for relief from actions or orders which it is advised have the effect of depriving it of any substantial rights.
Affirmed.
NOTES
[*] Rehearing denied June 5, 1936.
[1] Judge Walker heard the argument, but died before the case was decided. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2984994/ | January 23, 2014
JUDGMENT
The Fourteenth Court of Appeals
CITY OF HOUSTON AND DANIEL W. KRUEGER, IN HIS OFFICIAL
CAPACITY AS DIRECTOR OF PUBLIC WORKS AND ENGINEERING
DEPARTMENT, Appellants
NO. 14-12-01157-CV v.
LITTLE NELL APARTMENTS, L.P., ET AL., Appellees
________________________________
This cause, an accelerated appeal from the order partially denying the plea to
the jurisdiction filed by appellants the City of Houston and Daniel W. Krueger, in
his official capacity as Director of Public Works and Engineering Department, in
favor of appellees Little Nell Apartments, L.P., et al., signed January 11, 2013, was
heard on the transcript of the record. We have inspected the record, and find no
error in the order of the court below and order it AFFIRMED.
We order appellants City of Houston and Daniel W. Krueger, in his official
capacity as Director of Public Works and Engineering Department, jointly and
severally, to pay all costs incurred in this appeal.
We further order this decision certified below for observance. | 01-03-2023 | 09-22-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1628617/ | 217 So. 2d 166 (1968)
253 La. 105
E. M. FREEMAN, d/b/a E. M. Freeman and Associates
v.
DEPARTMENT OF HIGHWAYS.
No. 48729.
Supreme Court of Louisiana.
June 4, 1968.
On Rehearing November 12, 1968.
Rehearing Denied December 16, 1968.
*167 Morgan, Baker, Skeels & Coleman, by Ado C. Skeels, Shreveport, Breazeale, Sachse & Wilson, by Victor A. Sachse, Baton Rouge, for plaintiff-relator.
Kantrow, Spaht, Weaver & Walter, Carlos G. Spaht, Baton Rouge, amici curiae for plaintiff-relator.
Philip K. Jones, D. Ross Banister, Norman L. Sisson, Elven E. Ponder, Baton Rouge, for defendant-respondent.
SUMMERS, Justice.
Certiorari was granted to review a judgment of the First Circuit rejecting, in part, the claim for damages for breach of contract asserted by the plaintiff E. M. Freeman against the Department of Highways. See 197 So. 2d 188 and 250 La. 928, 199 So. 2d 925.
Plaintiff's suit arose out of two contracts entered into with the Department of Highways, wherein he agreed to perform engineering service on two segments of the national system of interstate highways in Louisiana.
The first contract, Number 13, dated June 25, 1957, represented that the Department had completed a topographic survey; and, by the terms of the contract, the Department engaged plaintiff to perform engineering services in connection with the preparation of preliminary and contract plans, specifications and estimates of costs, including supplemental topographic surveys, for the Greenwood-Shreveport section of the interstate system. The service to be performed by the engineers was to be divided into two successive phases covering: (I) All investigations, studies and surveys necessary or required for, and the preparation of, preliminary plans; and (II) the making of right of way survey and map, the preparation of construction contract plans and specifications, and the checking of contractors' shop drawings.
The Department agreed to furnish to the engineers for use in the preparation of the required plans and designs certain services and data, consisting of: (1) Information showing locations of route, and location and schematics of interchanges, bridges and grade separations, (2) topographic survey, (3) traffic assignments for determining design of the project, (4) information in the Department's files as to boring data, surveys, plan and studies within the area and assistance in securing similar data from others, and (5) prints of standard plans of bridges, culverts and incidental drainage structures.
Phase I of Contract Number 13, including completion of the subsurface investigation and delivery of the preliminary plans and estimates, was required by the contract to be completed within six months after receipt of notice to proceed. Phase II was to be completed within four months.
The other contract, Number 37 dated May 19, 1958, covers the Texas State Line-Greenwood Section of the interstate system. It differs from Contract No. 13 in effective dates and the segments of the highway affected. The contracts are otherwise essentially the same.
One provision of the contracts which is of special concern to us relates to delays and extensions, for it is this provision which the Department relies upon to defeat the claims of plaintiff in this suit. It is an exculpatory clause which reads as follows:
"Delays and Extensions:
"The Engineers will be given credit and extension of time for delays beyond their control or for those caused by tardy approvals of work in progress by various official agencies, but no additional compensation shall be allowed for such delays."
While conceding that delays occurred which were not attributable to the plaintiff engineers, the Department maintains that the quoted clause relieved it of responsibility for the delays notwithstanding the fact that the Department may have caused them. The plaintiff, on the other hand, contends that the clause does not exculpate *168 the Department, for it applies only to delays attributable to "various official agencies", meaning agencies other than the Department; and since the Department is not relieved of responsibility for delays which it caused, it must compensate plaintiff for the damage which plaintiff incurred by reason of the delays.
The trial court gave judgment for the contractor, being of the opinion that the Department had unduly and unnecessarily delayed plaintiff's compliance with the contracts. The Department's contention that the quoted exculpatory "Delays and Extensions" clause of the contracts relieved it of liability for damages for delays was disallowed. The trial judge reasoned that the clause did not refer to delays of the Department, but, instead, referred to delays by agencies other than the Department itself. In its decision, the court cited and relied upon Sandel & Lastrapes v. City of Shreveport, 129 So. 2d 620 (La.App.1961) decided by the Second Circuit Court of Appeal.
In the Sandel & Lastrapes Case, the City of Shreveport was sued by the contractor under a construction contract for damages caused by the City's failure to timely furnish concrete pipe to be used in the construction project as provided for in the contract. The City resisted liability for damages caused by delays for which it was admittedly responsible, urging in support of its position an exculpatory clause of the contract, which it contended relieved it from liability for "any delays". The Second Circuit held that "It is contrary to public policy to allow a contractee to stipulate exemption from negligent acts which cause injury." Accordingly, the City was held to respond for the damage incurred by the contractor due to the City's delay in providing the concrete pipe.
In the instant matter, the First Circuit Court of Appeal stated that it did not agree with the Sandel & Lastrapes Case, but in the final analysis it distinguished the Sandel Case from the case at bar. The apparent conflict created by the statement of the First Circuit prompted us, at the urging of the plaintiff, to grant certiorari.
Now that the record is before us and we have had an opportunity to study the contracts in detail and have considered them in the light of the facts disclosed by the voluminous record, we are aware that this case involves the application of facts to a contractual provision distinguishable from the facts and the contract in the Sandel and Lastrapes Case. We find it unnecessary, therefore, to reconcile the alleged conflict between these cases and address ourselves, instead, to the merits of the case at hand.
The Delays and Extensions Clause
The first issue presented is whether the Department is contractually responsible for actions or nonactions which may have hindered plaintiff in his work and caused damages. This involves an interpretation of the "Delays and Extensions" clause; for if the Department is not contractually responsible for delays caused by it, we need not inquire into whether the delays were or were not caused by the Department.
We find, however, that the "Delays and Extensions" clause does not exonerate the Department. The clause refers to official agencies other than the Departmentthird parties whose approval or actions might be involved in the contract. For example, because this project was in large measure financed by Federal funds, the Bureau of Public Roads may, conceivably, have delayed approval of plans and designs submitted by plaintiff. A delay by the Bureau would have been caused by one of the "official agencies" referred to in the contract and would have been beyond the control of the Department. Plaintiff would, under the language of the clause, be entitled to credit and extensions of time, but no additional compensation would be due by the Department for actions of third parties. Thus the clause seeks to exculpate the engineers and the Department for delays "beyond their control" or for delays "caused by tardy approvals of work in progress by *169 various official agencies". For, while the clause provides that the engineer is not responsible for such delays, he receives no extra compensation from the Department for the delays caused by others, but, instead, is granted extensions of time to compensate for these delays, thus avoiding a default under the contract if the work is not completed on time. In like manner the Department is exculpated from the payment of compensation for the delays of third parties, but, at the same time, it must grant additional delays. Nothing is said otherwise about relieving the contracting parties from violations of their contractual obligations. Certainly nothing is said about relieving the Department of the obligation to pay the engineers for damages caused by delays of the Department.
When the contract is considered as a whole, the Department's argument is readily disclosed to be untenable. La.Civil Code art. 1948. There are numerous references to the "Department" throughout the contract. In each instance we have noted where the Department is intended to be referred to, "Department" is used. We think the reference to "various official agencies" is, therefore, a reference to agencies other than the Departmentagencies whose influence upon the contract could not have been foreseen when the contract was confected and over which the Department had no control. If the Department intended to include itself within the "Delays and Extensions" clause provisions, it would have said so. The contract was its own, prepared by it and in general use. La.Civil Code art. 1958.
To include the Department within the meaning of "various official agencies" as used in the "Delays and Extensions" clause would, moreover, be to say that the Department could provide, contractually, that work must be performed within a stipulated time subject to approvals by it, and, at the same time, that it would bear no responsibility for damages incurred by the contractor resulting from its failure to timely approve performance. The provision would, in effect, make the performance of the agreement depend entirely upon the will of the Department, one of the contracting parties, who, by deliberate delays in approvals of plans or designs, could hinder the contractor in the performance of his contractual obligations without any responsibility on the part of the Department for the hindrance. The contract would then be subject to a potestative condition and null. La. Civil Code art. 2024, 2034. We do not construe a contract to nullify it when its language does not unequivocally require such a construction. La. Civil Code art. 1951; Sporl v. New York Indemnity Co., 176 La. 363, 145 So. 771 (1932); Note, 8 Tul.L.Rev. 124 (1933). We are bound to give effect to all contracts according to the true intent of the parties determined by the words of the contract. La. Civil Code art. 1945. Accordingly, we reject the Department's contention and give the language of the contract effect by saying the clause "various official agencies" does not include the Department.
Who Caused the Delays?
Notice to proceed with the work on Phase I of Contract Number 13 was issued July 9, 1957, and on November 27, 1957 the proceed order was issued for Phase II. It was agreed that Phase I of this contract would be completed within six months, and Phase II was to be completed within four months, meaning that both phases of Contract Number 13 should have been completed prior to March 27, 1958. The contract, however, was not accepted as completed until July 19, 1960. Thus, plaintiff was required to be engaged in the performance of this contract almost 27 months beyond the date when completion was contracted for. Nowhere in the record is it established that the delay involved was due to plaintiff's action or nonaction; rather, it is convincingly established that plaintiff held a fully complimented staff ready at all times to expedite the completion of work required by the contract and *170 plaintiff did in fact perform its obligations under the contract with dispatch.
The work order for Phase I of the second contract, Number 37, was issued May 20, 1958, shortly after the anticipated completion date of the first contract, and on January 7, 1959 the work order was issued for Phase II. The job was, therefore, expected to be finished on May 7, 1959, four months after issuance of the work order on Phase II; it was not accepted, however, until August 19, 1960. Plaintiff was, in consequence, engaged in the performance of the work under this contract 15 months longer than the time agreed upon. Again, as in the first contract, no action or nonaction on plaintiff's part is assigned as a reason for the inordinate delays which admittedly occurred.
The delays attributed by plaintiff to the Department about which plaintiff complains are that (1) the Department's employees tardily supplied or failed to supply standard plans for bridges, culverts and other structures as required by the contract; (2) the Department failed to furnish necessary preliminary right of way information, made revisions during the course of the work requiring the acquisition of additional rights of way and failed to provide access to certain properties in order that plaintiff could complete right of way maps; (3) defendant delayed, ignored or deferred repeated requests for certain soil reports required by plaintiff for design work; and (4) the Department was guilty of immoderate delays in approving plans.
The delays which did occur, as we have noted, were not caused by plaintiff. To the contrary, plaintiff maintained his fully complimented staff throughout the period during which he was attempting to accomplish the work called for by the contract. We understand this was necessary to avoid delaying the work and in order to have adequate and properly trained personnel on hand when work could be performed. The Department makes no convincing effort to assign the cause of delay to plaintiff and, unexplainably, makes no effort to assign the cause for delay to others.
Without reviewing the evidence in detail here, we are satisfied from our study of the record that the Department was responsible for inordinate delays which plaintiff could not be expected to anticipate. The delays were a violation of the Department's contracts with plaintiff and brought about damage to plaintiff for which recovery should be allowed.
The principal delay, which we shall cite, was brought about by the Department in making a contract with Engineering Testing Laboratory, Inc., for subsurface soil testing required by plaintiff before designs of certain bridges and other structures could be finalized. Changes in procedure of the Department's right of way section entailed innumerable other delays, and the Department's failure to timely furnish standard plans and specifications for plaintiff's use, changes in standards relating to vertical clearances, sidewalk dimensions, the position of a bridge, the type of foundations required for overpasses, a change in the location or routing of the highway, a change in location of a segment of the highway because of a subsurface pipeline, delays in approval of plans and designs submitted, relocation of the bridge or overpass at Broadacres Road to the White Pines Road, requiring a new schematic plan for the Greenwood and T & P location, revision of Greenwood Interchange and Buncomb Road Crossing, the Fournoy-Lucas Road Crossing and U.S. 79 connection, together with others, all caused delays because of the Department's action or nonaction making performance within the time stipulated impossible.
When plaintiff entered into these contracts he properly assumed that his services would be required during the time stipulated for performance by the contractapproximately 14 months. Instead he was required to hold his staff in readiness from June 25, 1957 to August 19, 1960more than three
*171 yearswith the resulting additional expense which he asserts.
Quantum
In support of his claim for damages, plaintiff submits his added payroll costs which he allocated to the work performed. Careful records were kept of these payroll costs which the Department audited. There is no claim that these figures are not correct. Plaintiff has not exaggerated his claim in the least. To the contrary, he has not sought profit or reimbursement for general overhead, or compensation for his own services, but only the added money it cost him to keep his organization intact to finish these contracts. The claim should be allowed.
We adopt, as our own, the formula used by the trial court in making the awards for damages on account of the violation of the contract by the Department.
"Allowing twelve months, which the court considers reasonable under the evidence in this case, for the completion of the first contract, plaintiff has calculated his payroll attributable to this job subsequent to July, 1958. It amounts to $56,028.33, and the sum of $21,238.67 for overhead payroll, making a total of $77,267.00. Also allowing twelve months for the completion of the second contract, which this court deems to be reasonable and fair under the evidence in this case, plaintiff has calculated his payroll directly attributable to that job from May 20, 1959, which amounts to the sum of $33,198.51, and the sum of $16,249.18 for overhead payroll, making a total of $49,447.69."
Plaintiff also claimed the Department had not reimbursed him properly under provisions of the contract for work he performed. The district court awarded $15,208.46 under Contract Number 13 and $9,711.30 under Contract Number 37. The $9,711.30 award was approved by the Court of Appeal and no appellate review was sought of the $15,208.46 award. We do not consider these latter awards to be disputed. The application for writs made no reference to a review of these awards and there is no mention of them in brief by the Department.
Putting in Default
The Department asserts plaintiff cannot recover, for even if a breach of contract occurred it was a passive breach, and plaintiff is not entitled to damages prior to filing suit because he did not put the defendant in default prior thereto. Articles 1933 and 1911 of the Civil Code are relied upon to support the contention.
In answer, we find several letters written by the plaintiff to the Department calling upon it to meet its obligations under the contract, and pleading with it to expedite the work. In addition, plaintiff made several trips to Baton Rouge in an effort to persuade defendant to meet its obligations and to expedite the work.
"Demands for the performance of a contract are not to be considered ineffective because couched in polite terms; all that is necessary is that the terms be sufficient to let the obligor know that performance of the contract is expected." Hafner Mfg. Co. v. Lieber Lumber and Shingle Co., 127 La. 348, 53 So. 646 (1909).
For the reasons assigned, the judgment of the Court of Appeal, First Circuit is reversed in part and affirmed in part and judgment is rendered herein reinstating and affirming the judgment of the trial court.
McCALEB, J., dissents, being of the opinion that the judgment of the Court of Appeal is correct. See La., 197 So. 2d 188.
HAMLIN, J., dissents, being of the opinion that the decision of the Court of Appeal is correct.
*172 ON REHEARING
McCALEB, Justice.
A rehearing was granted in this case for the purpose of reconsidering the correctness of our interpretation of identical clauses appearing in two contracts between plaintiff and the Department of Highways wherein the Department engaged plaintiff to perform engineering services in the construction of two segments of the national system of interstate highways in Louisiana.
The decree rendered by this Court on first hearing affirmed the judgment of the trial court awarding plaintiff the sum of $151,634.45 plus interest and costs. The Court of Appeal had amended the district court's judgment by reducing the award to plaintiff to $24,919.76 with legal interest and assessing only stenographic costs against the defendant, and all remaining costs were ordered to be paid by plaintiff. See 197 So. 2d 188.
The facts of the case are set forth in detail by the Court of Appeal and also in our opinion on first hearing. The salient question presented to this Court is the meaning and interpretation to be given to a certain provision appearing in both contracts[1] which controls plaintiff's right to redress from the Department for damages occasioned by delays allegedly caused by the Department's tardy approvals of work in progress and the quantum of damages, if any, recoverable thereunder.
Plaintiff's position is that certain delays in approval of work in progress were due to the fault of the Department of Highways, and he seeks recovery for the payroll costs of his entire engineering work crew during the period of these delays, extending for twenty-six months on one contract and fifteen months on the other. The Department, on the other hand, while denying in any case any liability for workcrew payrolls during periods when no work was performed, maintains that the contractual clause at issue relieved it of responsibility for such delays even though they may have been caused by its tardy approval of work in progress or for any other cause.
Plaintiff contends the contractual clause in ambiguous and proclaims that the exculpating provisions apply only to delays attributable to "various official agencies" other than the Department, i.e., the United States Bureau of Public Roads. Defendant asserts that the clause is clear and explicit and, hence, needs no interpretation.
The provision of the contract reads:
"Delays and Extensions:
"The ENGINEERS will be given credit and extension of time for delays beyond their control or for those caused by tardy approvals of work in progress by various official agencies, but no additional compensation shall be allowed for such delays."[2]
This Court on first hearing, unlike the Court of Appeal, found the above-quoted provision ambiguous, insofar as the phrase "various official agencies" was concerned, and ruled that such phrase referred to all third party official agencies, other than the Department of Highways, "* * * *173 third parties whose approval or actions might be involved in the contract * * *", such as the United States Bureau of Public Roads which financed the major portion of these projects. It was reasoned that, when the language of the exculpating clause is considered in connection with the other provisions of the contract containing numerous references to the "Department", it was intended by the parties that the phrase "various official agencies" was to apply to non-contracting agencies other than the Department. Further, in reconstructing the meaning of the phrase "various official agencies," it was deduced that, should the exculpating provision be construed to mean that the Department would bear no responsibility for damages incurred by the contractor as a consequence of tardy approvals of work in progress by the Department, then the contracts would be subject to potestative conditions and null under Articles 2024 and 2034 of the Civil Code.
In its application for rehearing, as well as in argument, the Department urges that our opinion on first hearing has, in effect, rewritten the exculpating provisions to read "various official agencies exclusive of the Department of Highways" and that such an interpretation is wholly unwarranted since the Department of Highways is an official agency and no such exclusive term was provided. The Department also asserts the opinion on first hearing has lost sight of the fact that these contracts are for the employment of engineering services, and it was certainly not contemplated by the parties that the Department would be responsible to plaintiff for the cost of keeping a full-time staff during periods of delay.[3]
A review of the case convinces us that our initial ruling, which would interpret the "Delays and Extensions" clause so as to render the Department liable to plaintiff for additional compensation for delays resulting from the Department's tardy approval of work in progress, is not well founded. In fact, after reconsidering the contracts involved herein, we have no hesitancy in holding that the above-quoted "Delays and Extensions" clause explicitly and unequivocally denies to plaintiff any right to recover from the Department additional compensation or damages occasioned by delays in progress of the work resulting, either from causes beyond the control of plaintiff, or for those caused by tardy approvals of work in progress by any official agency, including the Department.
The contracts under which this suit is filed are contracts of employment by the Department of Highways of plaintiff's engineering firm to perform various engineering services in connection with the construction by the Department of two segments of the national system of interstate highways in Louisiana. Under these agreements the plaintiff is the obligor, and he was required to furnish the services specified in the contracts which were divided into two phases, the first phase in both contracts to be completed within six months following date of notice to proceed, and Phase II to be completed within four months following notice to proceed with that phase. The contracts, as we have also noted in footnote 2, provided for additional compensation in the form of a lump-sum payment to plaintiff in the event of revision of the plans by the Department, either during or after completion of the work. And following the contractual provisions for payment of *174 the provision requiring payment of ad-this additional compensation occasioned by revisions of plans is found the clause in controversy entitled "Delays and Extensions" which we have quoted above.
It will be noted at the outset that, unlike the provision requiring payment of additional compensation for revisions of plans, the delays and extension provision declares that "The ENGINEERS will be given credit and extension of time for delays beyond their control or for those caused by tardy approvals of work in progress by various official agencies, but no additional compensation shall be allowed for such delays." (Italics ours.) We doubt that the intention of the parties could be expressed more succinctly and understandably than in this provision. Indeed, since it clearly specifies, and the contracting parties stipulate, that the obligee, the Department of Highways, is not to be liable for any additional compensation occasioned by such delays, that is, the delays which may occur from causes beyond plaintiff's control, it matters not whether such delays are caused by the Department or by third persons.
Therefore, it is actually immaterial whether or not the Department was intended to be included among the "various official agencies" since the Department as the other contracting party was not liable to plaintiff for additional compensation occasioned by delays in the completion of the contract, whatever the cause of the delay. This was the contract of the parties and, as stated in Article 1901 of the Civil Code, it had the effect of law. Further, Article 1945 of the Civil Code, which treats of the interpretation of agreements, provides in part: "Legal agreements having the effects of law upon the parties, none but the parties can abrogate or modify them." Upon this principle the article establishes the following rules applicable to this case:
"SecondThat courts are bound to give legal effect to all such contracts according to the true intent of all the parties;
"ThirdThat the intent is to be determined by the words of the contract, when these are clear and explicit and lead to no absurd consequences; (Italics ours)
"FourthThat it is the common intent of the partiesthat is, the intention of all,that is to be sought for; if there was a difference in this intent, there was no common consent and, consequently, no contract."
Let us consider the contracts in question guided by the rules set forth in Article 1945. It was a contract of employment between Department and plaintiff for engineering services to be furnished under the terms of that agreement. And that agreement, in explicit and clear language provides that the plaintiff shall not be entitled to additional compensation in the event his performance is delayed as a result of acts beyond his control or whether it is occasioned by tardy approvals of work in progress by various official agencies. In such instances, the plaintiff is entitled only to credit and extension of time for his performance.
Under this view of the case, it would normally be superfluous to determine whether the Department was included in the part of the "Delays and Extensions" clause which refers to delays attributable to tardy approvals of work in progress by various official agencies.
However, since our original opinion was based on the conclusion that the Department was excluded from the term "various official agencies", it is apt to express our present views concerning this conclusion. Initially, the conclusion had to be reached by determining that the provisions of the "Delays and Extensions" clause were vague *175 and indefinitea holding with which we do not agree for the reasons stated above.[4]
Furthermore, we do not perceive why the Department by any process of construction should be excluded from the term "various official agencies." The fact that the word "Department" is used throughout the contract is not indicative of an intent to exclude it from the term "various official agencies." The reason why the word "Department" is used throughout the contract is because it is one of the parties thereto (the obligee thereunder). The Department is an official agency, and the term "various official agencies" necessarily includes, we think, all official agencies which might be required to give approval of work in progress. The United States Bureau of Public Roads was one of these agencies, and there might have been others, besides the Department of Highways, which were required to give approval to the construction work in progress.
Nor do we find substance in the alternative reason for our conclusion on first hearing that, should the Department be included within the meaning of the term "various official agencies" as used in the "Delays and Extensions" clause, it would render that provision null as containing a potestative condition in violation of Articles 2024 and 2034 of our Civil Code.
In the first place, we entertain grave doubt that the "Delays and Extensions" clause is a condition of the contracts. It is simply one of the mutual covenants of the commutative contracts wherein the parties agree that credit and extension of time for performance will be given plaintiff for all delays of work beyond his control or for delays caused by official agencies in approving work in progress, but it is understood and agreed that no additional compensation would be due plaintiff for such delays.
Moreover, should the provisions of the clause be regarded as a condition, it cannot be considered as potestative under any aspect of the case. For a potestative condition, according to Article 2024 of the Civil Code, is one "* * * which makes the execution of the agreement depend on an event which it is in the power of the one or the other of the contracting parties to bring about or to hinder." Surely, a contractual provision stipulating that the obligee shall not be liable for additional compensation, should he delay performance of the obligor by tardy approval of the progress of the work, cannot be adjudicated to be potestative. For the agreement did not vest the Department with the power *176 of preventing plaintiff from performing his obligation under the contract and, had the Department attempted to do so, it would unquestionably have been required to respond in damages for breach of contract. On the contrary, the provision which has been said to be potestative, if it is enforced as written, does not have to do with performance. It merely provides that the Department shall not be liable for any compensation attributable to delays caused by "tardy approvals of work in progress"; it does not vest in defendant the absolute right to prevent plaintiff's performance, which is an essential quality of potestative conditions.[5]
This case, as noted in our original opinion, was brought to this Court because of an asserted conflict between the decision herein of the Court of Appeal, First Circuit, and that of the Court of Appeal, Second Circuit, in Sandel & Lastrapes v. City of Shreveport, 129 So. 2d 620, which authority the First Circuit refused to follow. On first hearing, we found it unnecessary to discuss the Sandel case because of the interpretation given to the "Delays and Extensions" clause. Since we reject our previous interpretation, we feel obliged to determine whether the Sandel case is correct, and, if so, whether it is distinguishable from the case at bar.
In the Sandel case, the contractors, Sandel and Lastrapes, entered into a written agreement with the City of Shreveport to construct an outfall pumping station for a fixed price. The contract provided that the City was to furnish the contractor with the necessary reinforced concrete pipe in 16 foot lengths which the contractors were to install after completion of the excavation. As a result of inordinate delays by the City in delivering this pipe, the contractors sustained damages and brought suit for recovery, contending that the City, by its deliberate delay in furnishing the materials for construction, had breached the contract. In denying liability, the City pleaded two provisions of the contract, the first of which (SC-6) declared in substance, "the Contractor's attention is directed to the fact that he will have to accept the risk of any delays in delivery of equipment to be furnished by the Owner and that in the event he is delayed in the prosecution and completion of the work because of this condition of delay, he shall have no claim for damages or contract adjustment, other than an extension of time and the waiving of liquidated damages for and during the period of time occasioned by such delay."
The Court of Appeal held, on the merits, that this provision (SC-6) was not applicable since it referred only to delays in the delivery of equipment, whereas the delays were occasioned by failure in the delivery of material, i.e., concrete pipe, which could not be considered as equipment.
The other provision of the contract pleaded by the City was SC-15, which declared in similar terms that the contractor will have to accept the risk of any delays "* * * caused by the rate of progress of the work to be performed under other contracts or by the City or Others and that in the event he is delayed in the prosecution and completion of his work because of such conditions, * * *" the contractor shall have no claim for damages or contract adjustment during the period *177 of time occasioned by such delay or delays. Again, on the merits of the case, the Court of Appeal held that, since the City had deliberately failed to comply with its contract by furnishing the material required of it within a reasonable period, it was liable for the damages sustained by the contractor, and that the exculpating clause SC-15 was without application because the delays were not caused by the rate of progress of work "* * * to be performed under other contracts * * *" either by the City or others.
On the facts found by the Court of Appeal on the merits of the case, we think it clear that the matter may be distinguished from the case at bar. However, it is true that, in considering an exception of no cause of action filed by the City, which was predicated on the provisions of Sections SC-6 and SC-15 of the contract, the Court of Appeal ruled that the exception was without merit because the exculpating clauses were contrary to public policy since they would permit a contractee "* * * to stipulate exemption from negligent acts which cause injury." No authority is cited for this holding, and we know of none which supports the view that it is against public policy for contracting parties to agree that, in case one of them fails to perform a certain act timely and thus delays the other in the performance of his obligations, the former will not be held responsible for any damages caused by the delay. Accordingly, in this respect, we find that the Court of Appeal, First Circuit, was correct in refusing to follow the decision in the Sandel case.
For the reasons assigned, the judgment of the Court of Appeal is affirmed. The right is reserved to plaintiff to apply for a rehearing.
SUMMERS, J., dissents and adheres to the original opinion of the Court.
SUMMERS, J., dissents from the refusal to grant a rehearing.
NOTES
[1] Since the provision is identical in both contracts of employment, we shall refer to it in the singular in our discussion of the issues presented.
[2] Other provisions of the contract having pertinence to this case are quoted at length in the opinion of the Court of Appeal, particularly the above-quoted provision and the paragraph entitled "Revisions of Plans" (see page 191 of 197 So.2d). Defendant admitted owing plaintiff a balance of $15,208.48 for work done under Contract 13, and the Court of Appeal found that the trial judge was correct in awarding plaintiff additional compensation for work performed under Contract 37 in the sum of $9,711.30. The total unpaid compensation of $24,919.76 for all balance due for services actually performed in no longer at issue in the case inasmuch as the Department has acceded to the Court of Appeal judgment.
[3] It is conceded that numerous delays occurred in the progress of the work in the instant case, which no doubt were taken into consideration by the parties at the time the exculpating clause was placed in the contracts. Apart from these delays, a number of revisions or changes took place, as well as additions to the project. (The Monkhouse Drive Interchange was one of these; an interchange initially was planned for Curtis Lane.) The opinion of the Court of Appeal discusses these revisions in detail.
[4] In this connection, the Court of Appeal in its opinion correctly observes:
"Before considering the hereinabove cited clear and unambiguous contract provisions which we deem decisive of the case at hand, we note that the parties are experienced in the complexities of highway construction and its attendant problems. We also find from the evidence that all concerned were or should have been aware of the delays normally to be expected in the course of road construction of the scope involved in these contracts. Nothing in the record indicates an overzealousness on defendant's part to include exculpatory provisions in the contracts to diminish the effect of the agreements or take advantage of an inexperienced or naive party. The previously quoted paragraphs entitled `Revision of Plans' and `Delays and Extensions' expressly provide for the eventuality of delays and specifically and lucidly establish the mode of payment to plaintiff in the event delays should occur.
"We also find that as an experienced engineer, plaintiff was or should have been aware of the likelihood of such delays and signed the contracts with full knowledge and appreciation of the possibility that progress of the work would from time to time be delayed by circumstances revealed during planning and construction, by changes dictated by the defendant during work progress and by the necessity of approval of plans both by various segments of the Department involved in a project of such magnitude and by at least one agency of the Federal Government." (See 197 So.2d at page 198.)
[5] In addition, it is to be observed that there are only certain potestative conditions which render an agreement null under Article 2034 of the Civil Code. These are called purely potestative conditions. See, among other cases, Morrison v. Mioton, 163 La. 1065, 113 So. 456; Stephen L. Guice & Co. v. Perkowski, La.App., 12 So. 2d 692; and Humble Oil & Refining Co. v. Guillory, 212 La. 646, 33 So. 2d 182. See also Article 2035 of the Civil Code, and Brown, The Potestative Condition in Louisiana, 6 Tul.L.Rev. 23; Long v. Foster & Associates, Inc., 242 La. 295, 136 So. 2d 48. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1638950/ | 675 F. Supp. 1100 (1987)
OLD WEST END ASSOCIATION, et al., Plaintiffs,
v.
BUCKEYE FEDERAL SAVINGS & LOAN, et al., Defendants.
No. C85-7814.
United States District Court, N.D. Ohio, W.D.
July 22, 1987.
*1101 Stephen M. Dane, Cooper, Straub, Walinski & Cramer, Toledo, Ohio, for plaintiffs.
Rolf H. Scheidel, Shumaker, Loop & Kendrick, Toledo, Ohio, Nanci L. Danison, Vorys, Sater Seymour & Pease, Columbus, Ohio, for defendants.
*1102 OPINION AND ORDER
McQUADE, District Judge.
This action is a housing discrimination case. Plaintiff's suit is brought under 42 U.S.C. § 1981 (the Civil Rights Act of 1870), 42 U.S.C. § 1982 (the Civil Rights Act of 1866), 42 U.S.C. § 3601 et. seq. (Title VIII of the Civil Rights Act of 1968, Title VIII), and 42 U.S.C. § 1985(3). Plaintiffs seek both monetary and injunctive relief. Plaintiffs, the sellers of a Toledo residence, the sellers' real estate agent, and the Old West End Association accuse defendants Mortgage Investors Corporation (MIC), and Buckeye Federal Savings & Loan Association (Buckeye) of engaging in the discriminatory practice of redlining. Plaintiffs allege that defendants have discriminated in the financing of housing based upon the racial composition of the neighborhood in which the property is located. Defendants, MIC and Buckeye, have each filed a motion for summary judgment. Plaintiffs oppose both motions. Each defendant has also filed, with leave of court, a reply to plaintiffs' opposition brief.
The parties involved in the transaction underlying this suit are white. This factor, however, is irrelevant to the determination of defendants' motions for summary judgment. This court has previously found that non-minorities have standing to maintain discrimination actions for injuries suffered by them as a result of racially discriminatory practices. See Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 93 S. Ct. 364, 34 L. Ed. 2d 415 (1972); Harrison v. Otto G. Heinzeroth Mortgage Co., 414 F. Supp. 66 (N.D.Ohio 1976); Watts v. Boyd Properties, Inc., 758 F.2d 1482 (11th Cir.1985).
The transaction underlying this dispute involves the sale of residential property located in the Old West End in Toledo, Ohio. In late 1984, plaintiffs Michael and Gale Mahaffey retained plaintiff Michael Murray of the Danberry Company to list and sell their residence. The sellers, in January, 1985, accepted the offer of Michael McMahon and Vicki Plant to purchase the Mahaffey residence. The agreed upon purchase price was $78,500.00. The buyers, McMahon and Plant are not parties to this action.
On behalf of the buyers, the sellers' real estate agent contacted defendant MIC to inquire about interest rates, closing costs, loan details and to review the buyers' financial background and potential creditworthiness. On February 4, 1985, the two buyers met with the real estate agent and defendant MIC. During that meeting, the buyers completed a real estate mortgage loan application and the associated paperwork. Defendants, at that time, requested an appraisal of the Old West End residence. The appraisal arrived at a value equal to the sale price. The appraisal also noted the predominant value of properties in the area to be $70,000.00. Upon completion of the necessary paperwork, MIC packaged and then transmitted the loan application to defendant Buckeye's office in Columbus for its review.
In late February, 1985, Buckeye notified MIC that it was rejecting the McMahon/Plant loan application. The reasons given for the rejection were that: (1) the property did not qualify for maximum financing, and (2) the property appraisal was unacceptable. MIC alleges that it suggested several alternatives to plaintiffs as well as attempted to cure the factors to which Buckeye objected. The evidence indicates that the appraisal showed a predominant value of $70,000.00 for other homes in the area. There is conflicting evidence that the loan would be limited to this figure.
In March 1985, allegedly all parties were notified that the loan application would be rejected absent a reduction of the sale price. After exploring several alternatives to overcome Buckeye's objections to the loan, the parties executed a revised purchase contract, the result of which was that the mortgage loan was reduced to the amount of $70,000.00. MIC submitted a revised loan application package to Buckeye on March 6, 1985. On March 11, 1985, defendant Buckeye approved the new loan application. On March 14, 1985, the closing on the Old West End property took place. Immediately thereafter, the McMahon/Plant mortgage was assigned to defendant *1103 Buckeye by defendant MIC. In July of that same year, the mortgage was purchased by Fannie Mae from defendant Buckeye.
The objective of a summary judgment is to pierce the pleadings and to assess the proof to determine if there is a genuine need for trial. Bryant v. Commonwealth of Kentucky, 490 F.2d 1273 (6th Cir.1974). A motion for summary judgment may be granted only when no material facts are in dispute, Fed.R.Civ.P. 56(c); Fitzke v. Shappell, 468 F.2d 1072 (6th Cir.1972), and when those facts when viewed in the light most favorable to the non-moving party, entitle the moving party to judgment as a matter of law. Willetts v. Ford Motor Company, 583 F.2d 852 (6th Cir.1978).
BUCKEYE'S MOTION FOR SUMMARY JUDGMENT
The order of presentation of proof in discrimination cases was established in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). Although McDonnell Douglas was a Title VII employment discrimination case, its standards have been applied to Title VIII and Sections 1981 and 1982 claims. Shaw v. Cassar, 558 F. Supp. 303 (E.D. Mich.1983); See Drain v. Friedman, 422 F. Supp. 366 (N.D.Ohio 1976); United States v. Parma, 494 F. Supp. 1049 (N.D. Ohio) appeal dismissed 633 F.2d 218 (6th Cir.1980); Smith v. Anchor Bldg. Corp., 536 F.2d 231 (8th Cir.1976). McDonnell Douglas establishes that first, the plaintiff has the burden of demonstrating by a preponderance of the evidence a prima facie case of discrimination. McDonnell Douglas, 411 U.S. at 802, 93 S.Ct. at 1824. Once the plaintiff has established its prima facie case, the defendant must articulate a legitimate, non-discriminatory reason for its action. Id. If the defendant satisfies this burden, the plaintiff must, to be successful, prove that the defendant's legitimate, nondiscriminatory reason is in fact a mere pretext. Id. at 804, 93 S.Ct. at 1825.
The phrase "prima facie case" denotes the establishment of a legal, mandatory, rebuttable presumption. Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 254 n. 7, 101 S. Ct. 1089, 1094 n. 7, 67 L. Ed. 2d 207 (1981).
Construing, as we must, the evidence most favorably toward the plaintiffs, the plaintiffs have established that: (1) the housing sought to be secured was in a minority neighborhood; (2) that an application for a loan to purchase the housing located in a minority neighborhood was made; (3) that an independent appraisal concluded that the value of the housing equaled the sale price; (4) that the buyers were creditworthy; and (5) that the loan was rejected. These facts, the court believes, are sufficient to establish a prima facie case under both the Fair Housing Act and the Civil Rights Act.
The next step under McDonnell Douglas is that the defendant must produce admissible evidence which would allow a trier of fact rationally to conclude that the decision to reject the loan had not been motivated by a discriminatory animus. Burdine, 450 U.S. at 255, 101 S.Ct. at 1094-95.
Leeb has testified that the property did not qualify for maximum financing because "the value of the property exceeded the predominant value in the area, and therefore, that posed a marketing problem should the borrower default on his loan." Leeb Deposition at 24.
Leeb further testified that in reaching her decision to reject the loan, she utilized "Fannie Mae's guidelines regarding maximum financing...." Id. at 23. The guideline appears in Fannie Mae's underwriting policy, Section 103. Defendant contends that it applied Fannie Mae standards to insure that it could resell its mortgages to Fannie Mae.
Section 103 of Fannie Mae's guidelines states:
When the property has a sales price that approaches the upper price level, the loan is acceptable on maximum terms as long as the lender believes that it does represent a significant overimprovement and that it would appeal to enough qualified purchasers to create an active market. When the property has a sales price that *1104 exceeds the upper price level, the loan terms should generally be more conservative since it may not be acceptable to the typical buyer. However, a lender should consider the possibility that a property in an urban area is among those being rehabilitated.
O'Connell Deposition, Exhibit 30.
Patricia Leeb's interpretation of § 103 is disputed by plaintiffs' expert, Calvin Bradford. However, to satisfy its intermediate burden of proof, the defendant need not persuade the trier of fact that the action was lawful. Burdine, 450 U.S. at 257, 101 S.Ct. at 1095-96. This exceeds defendant's burden of production. Id. The prima facie case is rebutted when the defendant articulates lawful reasons for its action. Id. Beyond a doubt, a trier of fact could rationally find that Patricia Leeb's application of the predominant value policy to plaintiffs' loan was not motivated by a discriminatory animus.
Having successfully rebutted the prima facie case, "the factually inquiry proceeds to a new level of specificity." Id. at 255, 101 S.Ct. at 1095. The presumption of discrimination drops from the case. United States Postal Service v. Aikens, 460 U.S. 711, 715, 103 S. Ct. 1478, 1481-82, 75 L. Ed. 2d 403 (1981). The factual inquiry in a § 1981, § 1982 and § 1985 case becomes whether the defendant intentionally discriminated against plaintiffs. In terms of Buckeye's motion for summary judgment, the inquiry is whether there is evidence from which reasonable minds could find that defendant's actions were motivated by an intent to discriminate.
Buckeye's documentation of the original McMahon/Plant loan indicates that the loan was rejected by underwriter Patricia Leeb because the property did not qualify for maximum financing and that the appraisal was unacceptable. See Exhibit A attached to Buckeye's motion for summary judgment. During her deposition, Leeb expanded on the reasons underlying the rejection. Leeb Deposition at 23-42. Leeb testified that the loan application could have been properly rejected based solely on either of the two reasons given. She testified that the property did not qualify for maximum financing because "the value of the property exceeded the predominant value in the area, and therefore, that posed a marketing problem should the borrower default on his loan." Id. at 24. Moreover, the appraisal was unacceptable because "based on what the appraiser has given me, as far as the comparables, he is working the value range, indicated value range from $71,900 to $81,700 ... the value range is excessive...." Id. at 35.
Leeb further testified that in reaching her decision to reject the loan, she utilized "Buckeye's guidelines and ... Fannie Mae's guidelines regarding maximum financing. ..." Id. at 23. Buckeye, however, points out that it has no predominant value policy as defined by plaintiffs. The policy appears in Fannie Mae's underwriting guidelines, Section 103. Buckeye's alleged legitimate, non-discriminatory justification states that it was Fannie Mae's guidelines which it applied to the McMahon/Plant application. Defendant contends that it applied Fannie Mae standards to insure that it could resell its mortgages to Fannie Mae.
Patricia Leeb's interpretation of § 103, Id. at 24, is disputed by plaintiffs' expert, Calvin Bradford. Bradford Deposition at 66-67 and 83. Bradford testified that § 103 sets a different standard for determining the marketability of property in an area that's been rehabilitated. Id. at 83. Moreover, it is important to note that the sales price on the resubmitted loan application also exceeded the predominant value figure, but the loan was approved and resold to Fannie Mae. Additionally, O'Connell testified that while it is relevant to compare the sales price with the predominant value, nowhere in Fannie Mae's guidelines is it stated that based on this comparison alone, a loan should be rejected. O'Connell Deposition at 27-30.
Fannie Mae's guidelines also contain express circumstances under which a maximum financed property will not be considered for repurchase. See Gray Deposition, Exhibit 4, Sections 405, 405.02, 405.03, 405.04, 406.01, 406.02 and 409.02. Buckeye's *1105 Exhibit B attached to its motion for summary judgment indicates that the subject property could not be determined unmarketable based on the Fannie Mae's guidelines which expressly define the conditions under which a loan will not be repurchased. This evidence is supplemented by plaintiffs' expert Calvin Bradford's deposition testimony. See Bradford Deposition p. 66-74. Bradford's testimony disputes both Leeb's deposition testimony and the deposition testimony of Robert O'Connell, in which both Leeb and O'Connell interpret the predominant value guideline expressed in Fannie Mae's Section 103.
Defendant Buckeye contends that a second reason existed for the rejection of the McMahon/Plant loan application. Buckeye found the first appraisal unacceptable. Buckeye contends the appraisal was deficient because the adjustments made to the comparable properties exceeded an acceptable percentage of the comparable property's value. Plaintiffs' expert Bradford testified that the comparables used were appropriate because the Old West End was being rehabilitated, and that the comparables used in the second appraisal were essentially the same as those used in the first application.
Defendant incorrectly suggests that direct evidence of discriminatory intent is required to prevail on claims of violations of Sections 1981, 1982, 1985 and the Fair Housing Act. See e.g., U.S. Postal Service Board of Governors v. Aikens, supra at 714 n. 3, 103 S.Ct. at 1481 n. 3. "Determining whether invidious discriminatory purpose was a motivating factor demands a sensitive inquiry into such circumstantial and direct evidence of intent as may be available." Village of Arlington Hts. v. Metro. Housing Dev. Corp., 429 U.S. 252, 266, 97 S. Ct. 555, 564, 50 L. Ed. 2d 450 (1977). An intent to discriminate is most often determined from the manner in which it was done and the means used. An intent to discriminate is rarely openly expressed. The patterns of defendants' past treatment of loan applications from minority neighborhoods, and departures from standard underwriting or loan acceptance procedures may shed some light on the defendants' purposes. See, e.g., Dailey v. City of Lawton, 425 F.2d 1037 (10th Cir.1970) (Racial motivation may be inferred where questioned action was found to be arbitrary and unreasonable). On balance, the court believes that genuine issues of material fact exist sufficient to place with the trier of fact the ultimate decision of whether the defendant Buckeye violated the Civil Rights Act.
In support of their Fair Housing Act claim, plaintiffs argue that Buckeye's underwriting practices have resulted in discriminatory effects. Proof of a pattern or practice of discrimination is sufficient to sustain a violation of the Fair Housing Act. Metropolitan Housing Dev. Corp. v. Village of Arlington Heights, 558 F.2d 1283 (7th Cir.1977), cert. denied, 434 U.S. 1025, 98 S. Ct. 752, 54 L. Ed. 2d 772 (1978) (Arlington II). Under the Fair Housing Act, courts have also recognized two types of discriminatory effects which a housing decision that is neutral on its face may have. Id. at 1290. First, discriminatory effect may take the form of a greater or disparate impact on a minority group than on a non-minority group. Id. Second, discriminatory effect may arise from disparate treatment of different racial groups. Id.
Defendant Buckeye urges that plaintiffs have no admissible evidence of discriminatory effect. Plaintiffs, however, offer the affidavit of George Galster. Galster states that based upon a statistical analysis, that he has formed an opinion that "there exists statistically significant differences between Buckeye's treatment of conventional mortgage loan applications originating from white neighborhoods and Buckeye's treatment of similar applications from integrated or minority neighborhoods." Galster Affidavit ¶ 5. This expert opinion is admissible. Rule 703, Federal Rules of Evidence. It raises the issue of whether Buckeye's underwriting policies in fact result in discriminatory effects regardless of whether the facts or data relied upon by Bradford are admissible into evidence.
*1106 Plaintiffs also rely upon the statistical evidence contained in Exhibits 2-10 as proof that Buckeye's underwriting policy resulted in discriminatory effects. Defendant Buckeye urges that Exhibits 2-10 are inadmissible for several reasons: (1) The tables are not properly authenticated as required by Rule 901 of the Federal Rules of Evidence; (2) The calculations do not meet the test of relevancy as required by Rules 401 and 402 of the Federal Rules of Evidence; and (3) In the alternative, the tables are inadmissible under Rule 403 of the Federal Rules of Evidence.
Rule 401 of the Federal Rules of Evidence defines relevant evidence as evidence "having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Fed.R.Evid. 401. Defendants argue that all mortgage loans, rather than only conventional mortgages, should be considered. However, the practices at issue refer solely to conventional mortgages and not to government approved and guaranteed mortgages. i.e., FHA and VA loans. For this reason, the court finds that plaintiffs' statistical tables contained in Exhibits 2-10 are relevant as required by Rule 401 of the Federal Rules of Evidence. Because the exhibits are relevant, Rule 402 does not exclude Exhibits 2-10. Fed.R.Evid. 402.
Buckeye argues as a preliminary matter that the calculations are not identified and authenticated by any witness with knowledge as required by Rule 901(b)(1) of the Federal Rules of Evidence. Plaintiffs' statistical tables are authenticated, however, based on the affidavit, Exhibit 1, and the footnote on Exhibits 2-10 which indicates the source of the calculations.
Defendant Buckeye urges further that Exhibits 2-10 should be excluded based on Rule 403 of the Federal Rules of Evidence. Rule 403 states in pertinent part that "although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury...." Fed.R.Evid. 403. Defendant argues that the number of conventional loans are too small to be statistically significant, and therefore, the evidence is prejudicial and confusing.
Plaintiffs' statistics indicate that from 1981 until January, 1987, slightly over one hundred seventy seven conventional loans were tendered to Buckeye for purchase. Of these loan applications, only ten applications were submitted from areas with a racial composition of over 20% black. Of these ten applications, four were submitted from neighborhoods comparable to the Old West End in which the composition of blacks exceeded 40%. The tables then calculate the percentage of loans in white areas rejected verses the percentage of the four loans rejected out of the ten submitted from black areas. The resulting figure indicates a rejection rate of 40% of the applications submitted from neighborhoods of over 20% black composition.
The total number of conventional loans submitted to Buckeye is admittedly small, probably because the majority of loans in minority neighborhoods are FHA or VA loans, rather than conventional loans. Small numbers are not necessarily misleading. Defendant has taken great pains in its brief to explain its reasons for the rejections of the conventional loans. The same reasons can be detailed to the trier of fact. Defendant's objection goes to the weight to be given to the evidence, not its admissibility. The trier of fact weighs the evidence. Plaintiffs have evidence from which reasonable minds could conclude that defendant's actions had a discriminatory effect. Defendant Buckeye, therefore is not entitled to summary judgment on plaintiffs' Fair Housing Act claim.
MIC'S MOTION FOR SUMMARY JUDGMENT
Defendant MIC also demands summary judgment. Plaintiffs do not attempt to impute Buckeye's allegedly discriminatory policies to MIC under an agency theory. Rather, plaintiffs contend that MIC has fully adopted and routinely applies the racial discriminatory practices of Buckeye when it denies a mortgage loan application. *1107 MIC is responsible, as a principal, because MIC was the entity who refused "the equal right to contract" according to plaintiffs.
Absent is a factual basis for plaintiffs' theories of liability against MIC. Indeed, plaintiffs have no evidence to support a prima facie case of discrimination against MIC. The loan was not rejected by MIC, but by Buckeye based on an allegedly discriminatory policy that was Buckeye's, not MIC's. Plaintiffs have presented no factual basis from which reasonable minds could conclude that MIC adopted and routinely applied Buckeye's allegedly discriminatory policy. Rule 56(e) Fed.R.Civ.P. No genuine issue of material fact exists as to MIC's responsibility here, and MIC's motion for summary judgment must be sustained.
Having dismissed plaintiffs' claims against MIC, it follows that plaintiffs' § 1985(3) claim for conspiracy must also fail.
It is therefore
ORDERED that plaintiffs' § 1985(3) claim is dismissed;
FURTHER ORDERED that, in all other respects, defendant Buckeye's motion for summary judgment is denied;
FURTHER ORDERED that defendant MIC's motion for summary judgment is sustained and said defendant is hereby dismissed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1668451/ | 665 F.Supp. 289 (1987)
BAGLAB LIMITED, Strongsay Limited and Parklane Investments, Inc. Plaintiffs,
v.
JOHNSON MATTHEY BANKERS LIMITED and the Bank of England, Defendants.
No. 85 Civ. 8993 (RJW).
United States District Court, S.D. New York.
July 24, 1987.
*290 Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson & Casey, New York City, for plaintiffs; Arthur H. Ruegger, of counsel.
Sullivan & Cromwell, New York City for defendants; William E. Willis, Robinson B. Lacy, Deborah C. Moritz, of counsel.
OPINION
ROBERT J. WARD, District Judge.
Plaintiffs Baglab Limited ("Baglab"), Strongsay Limited ("Strongsay"), and Parklane Investments, Inc. ("Parklane") have sued Johnson Matthey Bankers Limited ("JMB") and the Bank of England (the "Bank"), asserting a number of causes of action stemming from defendants' allegedly wrongful refusal to honor an agreement to provide financing. The Bank has moved to dismiss the complaint for lack of subject matter jurisdiction and for failure to state a claim upon which relief may be granted. For the reasons to follow, the Court grants the Bank's motion to dismiss the complaint.
BACKGROUND
A. Parties.
Baglab, Strongsay, and Parklane are corporations organized under the laws of *291 Rhode Island, the Island of Jersey, and Texas respectively. Baglab is authorized to do business in New York and maintains its principal place of business in New York City. Strongsay, now defunct, had its principal place of business in Providence, Rhode Island. Parklane owns a warehouse located in East Providence, Rhode Island.
The Bank of England is an English Crown Corporation wholly owned by the Government of the United Kingdom. The Bank is the central bank of the United Kingdom. In that capacity, it is authorized to issue currency, to manage the nation's gold and foreign exchange reserves, and to regulate deposit-taking institutions in the United Kingdom. The Bank is an agency or instrumentality of a foreign state within the meaning of section 4(a) of the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1603(a).
Defendant Johnson Matthey Bankers Limited ("JMB") is a banking corporation organized under the laws of England. JMB's principal place of business is London. Prior to October 1, 1984, when its ownership and control were transferred to the Bank of England, JMB was a wholly-owned subsidiary of Johnson Matthey Public Limited Company ("JM-PLC"), an English holding company.
B. Events.
In deciding this motion, the Court accepts plaintiffs' well-pleaded allegations as true. In 1983, JM-PLC determined to sell Johnson Matthey Jewelry Corporation ("JMJC"), a financially troubled and insolvent jewelry and luggage business it owned and operated in the United States. In an effort to sell JMJC, an officer of JMB contacted Mr. Shamji, a long-time customer of JMB to determine whether he might be interested in purchasing the business. Shamji referred JMB to a relative, Mr. Walji. Walji, allegedly upon the urging and encouragement of JMB and in reliance upon JMB's offer to finance the purchase, agreed to purchase the two businesses and a warehouse in Providence, Rhode Island.
Shamji's companies, the Gomba Group, entered into letter agreements to purchase JMJC in contemplation of transferring the businesses to plaintiffs. The letter agreements specified the purchase price for the businesses and set out a schedule of payments to be made to JMJC.
In January of 1984, Walji took possession of the jewelry and luggage operations even though the parties had not yet closed the transaction. New York counsel for JMB and JMJC prepared the closing documents. Plaintiffs contend that they allowed JMB and JMJC to dictate the terms of the agreement on the basis of their representations as to the bright prospects for their future business association. The terms, which plaintiffs now contend are unfair, included provisions that JMB could withdraw financing without cause, that plaintiffs would pay counsel fees, and that plaintiffs would have to pay whatever fees and expenses JMB would incur in connection with the agreement.
By plaintiffs' account, the jewelry and luggage operations improved steadily through 1984. JMB, however, did not fare so well. During 1984, the grave problems which had surfaced in JMB's loan portfolio threatened its solvency. To avoid serious disruption of the gold bullion market in England, the Bank of England acquired JMB from JMB-PLC on October 1, 1984 for the nominal sum of one dollar. As part of that agreement, JMB-PLC contributed fifty million pounds toward JMB's losses. At the time it acquired JMB, the Bank of England announced its intention to return the bank to the private sector. JMB is now Minories Finance Limited.
After October 1, 1984, Stephen Grady handled JMB's business dealings with plaintiffs. Plaintiffs assert that Grady originally assured them that JMB still intended to provide the funds and that the anticipated financing would encounter no problems. At a meeting on December 10, 1984 in Providence, Rhode Island, however, JMB raised, assertedly for the first time, certain unresolved items including an inventory of the jewelry stock. Plaintiffs agreed to allow an independent firm to audit and appraise the inventory. Up until this point, plaintiffs aver, JMB had not *292 openly repudiated its stated intention to follow through with the financing on December 30, 1984. JMB, however, delayed payment of the funds past the anticipated closing date. JMJC then served a default notice on plaintiffs, but when plaintiffs explained that JMB had assured them that the money would be forthcoming, JMJC withheld legal proceedings. When the payment remained outstanding in February, JMJC commenced an action to attach the assets of the business and to restrain plaintiffs from further dealing with the business. Johnson Matthey Florida, JMJC's assignee, is now disposing of the assets of the jewelry business.
After losing the jewelry business, plaintiffs turned to Baglab, which was also dependent upon JMJB for financing. On March 22, 1985, Walji sent a financial statement to Grady in anticipation of receiving funding on the scheduled closing date of June 30, 1985. Plaintiffs contend that Grady simply requested further information. Grady subsequently met with Walji in Baglab's offices in New York City. At that meeting on May 22, 1985, Grady supposedly stated that JMB saw its role as an English bank whose proper role involved English rather than international financing and informed plaintiffs that in light of Baglab's earlier default on its agreement with JMB, JMB considered itself relieved of its obligation to proceed with the June 30 financing.
When the June 30 financing date passed without any action by JMB, Johnson Matthey Florida threatened to foreclose on the luggage operation. Plaintiffs turned over the assets of the luggage operation to Johnson Matthey Florida.
Plaintiffs then instituted the present action against JMB and against the Bank of England who, plaintiffs aver, directed and controlled the actions of JMB after October 1, 1984. Plaintiffs seek a declaration that defendants wrongfully breached their financing agreement and request injunctive and monetary relief for the destruction of their businesses. The Bank of England asserted the defense of sovereign immunity and moved to dismiss the complaint under Rule 12(b)(1), Fed.R.Civ.P., for lack of subject matter jurisdiction pursuant to the Foreign Sovereign Immunities Act, 28 U.S.C. § 1602 et seq., under Rule 12(b)(6), Fed.R. Civ.P., for failure to state a claim upon which relief may be granted, and under Rule 11, Fed.R.Civ.P., for attorneys' fees and sanctions. JMB moved for summary judgment under Rule 56, Fed.R.Civ.P. In order to consider deposition testimony submitted by the parties, the Court, upon notice to the parties, converted the Bank's motion to dismiss the complaint for failure to state a claim upon which relief could be granted into one for summary judgment under Rule 56, Fed.R.Civ.P. The Court scheduled a conference and heard oral argument on all motions October 10, 1986.
At oral argument, counsel for the Bank of England pragmatically conceded that while the acquisition of JMB itself was a sovereign act, JMB was clearly engaged in commercial activity and that should JMB's conduct be deemed to be that of the Bank of England, the motion to dismiss the complaint on grounds of sovereign immunity should be denied. Nevertheless, although numerous Bank personnel had been seconded to JMB, the Bank maintained that once it had replaced and restructured JMB management, it had not exercised day-to-day management over JMB but rather the two institutions had operated as separate entities under independent management.[1] For their part, plaintiffs asserted that the Bank exercised sufficient direction and control over JMB to incur liability under the commercial activity exception to the FSIA. Plaintiffs argued alternatively that they *293 should be permitted discovery on the issue of the degree of control the Bank actually exercised over JMB.
Because the intent of the parties formed a factual issue concerning liability under the financing agreement, the Court denied both motions for summary judgment. Inasmuch as the degree of control actually exercised by the Bank of England over JMB also presented a factual issue, the Court denied without prejudice the Bank's motion to dismiss the complaint. The Court directed the parties to conduct limited discovery from JMB, and from Bank of England personnel who had been seconded to JMB, concerning the role the Bank of England had played in JMB's business activities after acquiring the bank.
In response to plaintiffs' discovery requests, JMB produced (1) a list of all individuals whom the Bank of England had brought in to assist JMB after October 1, 1984, and (2) all documents concerning any communication between or among those individuals, JMB, and the Bank of England relating to the plaintiffs or to any category of JMB customers of which the plaintiffs would be a part. Portions of certain documents were redacted. Plaintiffs' counsel reserved the right to apply to the Court to review the redacted documents in camera, to order document production from the Bank of England or to order further discovery. On October 31, 1986, the parties took the deposition of Martin J. Harper, the loan officer at JMB who had recommended to the JMB executive committee that the bank not advance additional funds to plaintiffs.
On the basis of the discovery and Harper's deposition, the Bank of England renewed its motion to dismiss the complaint for lack of subject matter jurisdiction. The Court held oral argument on the renewed motion on January 30, 1987. On the basis of that argument and particularly Harper's deposition testimony, the Court suggested that plaintiffs voluntarily dismiss the complaint as against the Bank of England without prejudice to a motion to vacate the judgment should discovery uncover evidence that the Bank of England had specifically directed JMB personnel to repudiate the financing agreement with plaintiffs. Defendants' counsel agreed that should plaintiffs consent to dismiss the Bank of England, the Bank would not challenge as irrelevant proper discovery requests directed (1) to learning the direct involvement, if any, of the Bank of England in the decision not to proceed on the loan to plaintiffs or (2) to ascertaining the degree of direct control the Bank of England exercised over JMB. Counsel also agreed to make Mr. Rodney Galpin, an executive director of the Bank of England who had been appointed Chairman of JMB, available for deposition.
After presenting the Court's suggestions to his clients, plaintiffs' counsel informed the Court in April that plaintiffs could not agree to dismiss the Bank of England voluntarily. On July 22, 1987, The Court held a status conference with the parties. Neither party had conducted any additional discovery. Inasmuch as the parties energetically dispute the significance of the discovery taken so far and pointedly disagree about the need to conduct further discovery on the issue, the Court must determine whether subject matter jurisdiction exists over plaintiffs' claims against the Bank of England. To do so, the Court must decide the narrow issue of whether plaintiffs have sufficiently supported their contentions that Bank of England personnel directed the decision not to loan funds to plaintiff and that the supervisory activities of the Bank of England with respect to JMB warrant looking beyond their separate juridical status to hold the Bank liable for the concededly commercial activities of JMB.
DISCUSSION
The Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602-1611, immunizes foreign states, their agencies, and instrumentalities except as otherwise provided in the Act.[2] When a plaintiff alleges that the complaint arises out of purely commercial *294 acts, the defendant must establish a prima facie case that it is a sovereign state or an instrumentality of a sovereign state. This proof establishes a presumption that immunity applies. Plaintiff then has the burden of going forward with evidence that the FSIA does not apply. Once plaintiff has done this, defendant must prove its entitlement and that none of the exceptions apply by a preponderance of the evidence. Meadows v. Dominican Republic, 817 F.2d 517, 522 (9th Cir.1987); DeLetelier v. Republic of Chile, 748 F.2d 790, 795 (2d Cir.1984); De Sanchez v. Banco Central de Nicaragua, 515 F.Supp. 900, 903 (E.D.La.1981), aff'd, 770 F.2d 1385 (5th Cir.1985); Behring International, Inc. v. Imperial Iranian Air Force, 475 F.Supp. 396, 405 n. 9 (D.N.J.1979). If any of the exceptions appears in the pleadings or is not refuted by the foreign state asserting the defense, the motion to dismiss the complaint must be denied. See Gibbons v. Undaras na Gaeltachta, 549 F.Supp. 1094, 1107 (S.D.N.Y. 1982). Of the listed exceptions, only that for commercial activities applies here.[3]
In evaluating a claim of immunity under the FSIA, courts must first define with precision the activity or the act in connection with that activity that gives rise to plaintiff's claims. Braka v. Bancomer, S.A., 589 F.Supp. 1465 (S.D.N.Y.), aff'd, 762 F.2d 222 (2d Cir.1985). This step assumes more significance when, as here, the parties dispute which activities actually give rise to plaintiffs' claims.
The acquisition of JMB by the Bank of England was, in reality, the temporary nationalization of a financially troubled private bank. The nationalization of a bank is a quintessentially sovereign activity and may not serve as the basis for a suit against the Bank. Alberti v. Empresa Nicaraguense, 705 F.2d 250 (7th Cir.1983); Carey v. National Oil Corp., 453 F.Supp. 1097 (S.D.N.Y.1978), aff'd, 592 F.2d 673 (2d Cir.1979). Nor may the activities strictly necessary to consummate that acquisition provide a basis for a suit against the Bank of England.
As plaintiffs contend, however, this action arises not out of the nationalization of JMB per se, but rather out of the specific repudiation of JMB's financing agreement with plaintiffs. As the Bank concedes, should the Court determine that JMB's activity in this regard be deemed the activity of the Bank, the claim for immunity must be denied.
The FSIA does not affect the substantive law determining the liability of a foreign state or instrumentality, or the attribution of liability among instrumentalities of a foreign state. First National City Bank v. Banco Para El Comercio Exterior De Cuba, 462 U.S. 611, 620, 103 S.Ct. 2591, 2596-97, 77 L.Ed.2d 46 (1983). Rather, "principles ... common to both international law and federal common law, which in these circumstances [are] necessarily informed both by international law principles and by articulated congressional policies," govern the decision. Id. at 623, 103 S.Ct. at 2598. By those principles, "government instrumentalities established as juridical entities distinct and independent from their sovereign should normally be treated as such." Id. at 627, 103 S.Ct. at 2600. The presumption that a foreign government is distinct from its instrumentalities or that two instrumentalities are separate may be overcome (1) when the corporate entity was so controlled that a relationship of principal and agent is created or (2) when regarding the entity as distinct from the state or from another state instrumentality would work fraud or injustice. Id. at 629-30, 103 S.Ct. at 2601-02; Hercaire International Inc. v. Argentina, 821 F.2d 559 (11th Cir.1987) (presumption of independent status may be *295 overcome only by showing an abuse of the corporate form); Letelier v. Republic of Chile, supra, 748 F.2d at 794-95 (foreign instrumentality answerable if it has abused the corporate form); see Gibbons v. Republic of Ireland, 532 F.Supp. 668, 671 (D.D.C. 1982) (sovereign subject to suit for actions of instrumentality only where representatives of the sovereign "participated at least to some degree in the events giving rise to the action"); cf. United Euram Corp. v. Union of Soviet Socialist Republics, 461 F.Supp. 609 (S.D.N.Y.1978) (instrumentality was a subdivision, or acting on behalf of another instrumentality).
Plaintiffs assert that the Bank of England directed and controlled the alleged repudiation of their financing agreement with JMB. They rely on the following specific actions by the Bank:
1. the Bank of England appointed one of its highest-ranking executive directors, Mr. Rodney Galpin, as Chairman of JMB, to run JMB while continuing his responsibilities with the Bank of England;
2. Mr. Galpin's successor as JMB Chairman in October 1985 was another high-ranking Bank of England executive director, Mr. David Walker;
3. the Bank of England fired all JMB's banking directors, replacing them with Bank of England officials or ex-officials, or other non-JMB retired banking executives;
4. the Bank of England appointed its own lawyers, Freshfields, and its own accountants/auditors, Price Waterhouse, to analyze JMB's situation and guide JMB/Bank of England actions regarding various accounts, including plaintiffs;
5. Beyond Mr. Galpin and the other directors, its accountants and its lawyers, the Banks of England sent over one hundred other people, including over fifty of the Bank's permanent staff and executives, to manage JMB or its accounts after the takeover;
6. critical loan analyses by Price Waterhouse, including examinations of plaintiffs, were delivered only to Mr. Galpin, for forwarding either to the JMB Board or the Bank of England offices, or for any other use Mr. Galpin deemed appropriate;
7. Mr. Galpin had repeated, confidential discussions with officials of plaintiffs' creditors Johnson Matthey PLC concerning JMB's dealings with the plaintiffs;
8. the Bank of England considered itself responsible for all JMB commitments, including those to plaintiffs;
9. the Bank of England not only analyzed JMB's loans and loan procedures, but implemented new information and loan-recovery systems pertinent to plantiffs and monitored all loan-extension and loan-recovery transactions in detail;
10. Bank of England personnel, including Mr. Galpin, either personally conducted, or were kept continually advised of, all dealings pertaining to the plaintiffs; and
11. Mr. Galpin chaired the JMB Board and its Executive and Audit Committees, which were the only bodies to make the decisions injuring plaintiffs and complained of in this action.
Plaintiffs' Supplemental Memorandum in Opposition to The Bank of England's Motion to Dismiss at 4-5 ("Plaintiffs' Supplemental Memorandum").
The Bank of England has contradicted plaintiffs' assertions by submitting Harper's deposition testimony. See Supplemental Declaration of Robinson B. Lacy, Ex. C (executed November 14, 1986) (October 31, 1986 deposition of Martin J. Harper). Harper testified that he made the recommendation to JMB's executive committee that JMB not advance additional funds to plaintiffs. Id. 181-83, 186. As Harper elaborated, he made the recommendation after consulting two other JMB officers, *296 George Copus and Steven Grady,[4] but he testified that neither he nor, to his knowledge, any other member of the JMB executive committee had received advice or instructions from the Bank of England on the decision. The JMB executive committee, in accordance with Harper's recommendation, made the final decision not to advance additional funds to plaintiffs. Id. 183. Harper explained that the committee had the authority to make the final decision, and was not required to and in fact did not seek the approval of the Bank of England. Id. 184, 186.
Harper also testified that throughout his tenure as a director, JMB's duly constituted board of directors ran the bank's business. Id. 178. While certain personnel from the Bank of England's Banking Supervision Division were present at JMB immediately following the acquisition on October 1, 1984, he explained that their role in the ongoing affairs of JMB "diminished very rapidly." Id. 70. By the end of October, the board had assumed full responsibility for JMB's management, id. 67-70, and neither sought nor took instructions concerning specific lending decisions, id. 179. In sum, Harper testified that none of the efforts of the Bank of England to rehabilitate JMB involved interference in its day-to-day affairs.
Q Could you tell us generally how the Bank of England has gone about trying to rehabilitate JMB?
MR. RUEGGER: I will object. Go ahead.
A By giving every support and encouragement to the board of JMB. I think that's all I can say on that.
MR. LACY: No further questions.
BY MR. RUEGGER:
Q Concerning your last answer, Mr. Harper, specifically how the Bank of England had [sic] given its support and encouragement to the Johnson Matthey board.
A Well, they have kept out of our hair. They haven't interfered in any way. They have not queried or questioned our decisions. They have just been extremely supportive.
When we required money, additional capital, they have provided it. The indemnity agreement only filled in the hole created by the losses. It didn't restore the capital.
The board of Johnson Matthey Bankers pointed out to its stockholders that in order to operate the business we needed capital. The Bank of England supplied it.
Q So they supplied capital and otherwise done nothing?
A They have done nothing but they have done nothing in the sense of not interfering and getting in our hair. Whenever we required support from the service arms of the Bank of England, that has been readily forthcoming.
Id. at 200-02.
Despite the discovery already conducted on this issue and the opportunity to depose Galpin, plaintiffs have not presented the Court with any solid evidence that the Bank of England directed or participated in the specific decision not to lend to plaintiffs nor have they offered anything beyond conjecture to challenge Harper's account that in fact the independent management of JMB made the decision.
Similarly, beyond wishful characterization, plaintiffs have not substantiated their allegations that the Bank of England so closely supervised JMB that the Court would be warranted in imputing the decision not to lend to plaintiffs to the Bank of England even if Bank personnel, in their capacity as Bank personnel, did not directly participate in the decision. Of the eleven *297 instances plaintiffs suggest indicate this close supervision, points 1, 2, 3, 4, 5, 6, 8, and 9 would all seem, at this point, to concern emergency steps the Bank took to rehabilitate JMB immediately following its acquisition. Given the gravity of a potential collapse of JMB, that the Bank of England would decide to replace JMB's directors, to hire counsel and auditors, and to guarantee JMB's obligations does not seem particularly surprising, nor would it appear to provide plaintiffs a cause of action. While the allegations concerning Galpin's dual responsibilities at JMB and at the Bank of England contained in points 7, 10, and 11 might conceivably support an argument that the Bank of England may have participated directly in the decision on their loans, plaintiffs have neither substantiated those contentions with documentary evidence nor availed themselves of the opportunity to depose Galpin.
In sum, the Bank of England has demonstrated that the FSIA exception for commercial activity does not apply to its activities concerning JMB. Plaintiffs have failed to rebut the Bank's evidence that it neither made the specific loan decision at issue nor exercised general control over the day-to-day activities of JMB such that JMB might be considered its agent.
Plaintiffs have made no persuasive argument that the Court should permit further discovery on this issue. Holding that the Bank of England is immune to plaintiffs' suit and dismissing the complaint without prejudice works no fraud or injustice in this instance. JMB's successor, Minories Finance Limited, remains liable for the alleged breach of the finance agreement plaintiffs had with JMB and could readily satisfy any judgment should plaintiff prevail on the merits at trial. If, as plaintiffs contend, the Bank specifically influenced the decision by JMB not to loan them funds, that fact could be elicited from personnel who worked at JMB or records of those instructions could be obtained from Minories Finance Limited. Inasmuch as defendants' counsel has already agreed to respond to reasonable discovery requests directed to JMB's records, or to Bank of England personnel who worked at JMB, concerning the Bank of England's involvement in JMB activities as it might relate to plaintiffs' asserted causes of action, the Bank's immunity in no way prejudices plaintiffs' rights or obstructs the conduct of this litigation.
CONCLUSION
Through its submissions to this Court, the Bank of England has demonstrated that the commercial activity exception to the Foreign Sovereign Immunities Act does not apply to its activities in rehabilitating Johnson Matthey Bankers Limited. Inasmuch as the Bank of England is immune from suit concerning those activities, the Court lacks subject matter jurisdiction to hear plaintiffs' claim that the Bank directed JMB to breach a financing agreement. Accordingly, the Court grants the Bank of England's motion and hereby dismisses the complaint as against the Bank. The dismissal is without prejudice to a subsequent motion to vacate the dismissal or to amend the complaint to include the Bank of England should discovery reveal that one of the statutory exceptions to sovereign immunity does apply. Defendants' renewed application for attorneys' fees and sanctions is without merit and is denied. The parties are directed to confer and to submit to the Court by July 31, 1987 proposed dates by which they expect to complete discovery and to file a joint pretrial order.
It is so ordered.
NOTES
[1] As counsel explained, secondment of staff is a regular practice in London. The secondee remains on the payroll of the seconding employer, but is subject to the rules and requirements of the organization to which he or she is seconded. The employees seconded to JMB worked for it on a full-time basis and owed their exclusive loyalty to JMB. They took their instructions from the officers and directors of JMB, not from their seconding employer. All secondees at JMB, including those from the Bank of England, signed an undertaking not to discuss the business of JMB or any of its customers with anyone other than the officers and directors of JMB.
[2] Whenever the foreign state or entity enjoys no immunity, the federal courts have jurisdiction to hear the controversy under 28 U.S.C. § 1330(a).
[3] The FSIA states, in pertinent part:
(a) A foreign state shall not be immune from the jurisdiction of the courts of the United States or of the States in any case
* * * * * *
(2) in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States; ...
28 U.S.C. § 1605(a).
[4] Copus had been corporate finance director and later a senior director and chairman of the credit committee of Standard Chartered Merchant Bank before the Bank of England asked him to become the executive commercial banking director of JMB in October of 1984. Grady had been seconded from Barclays Bank where he had worked in its department responsible for borrowers in financial difficulty. He joined JMB as its senior banking executive in charge of a team of personnel seconded by Barclays who reviewed loans and prepared reports on which JMB based its decision whether to continue banking relationships with specific clients. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/819790/ | United States Court of Appeals
For the Eighth Circuit
___________________________
No. 12-2047
___________________________
United States of America
lllllllllllllllllllll Plaintiff - Appellee
v.
Rocio Chavez
lllllllllllllllllllll Defendant - Appellant
____________
Appeal from United States District Court
for the District of Nebraska - Omaha
____________
Submitted: December 13, 2012
Filed: February 6, 2013
____________
Before WOLLMAN, BYE, and BENTON, Circuit Judges.
____________
BENTON, Circuit Judge.
Rocio Chavez pled guilty to misuse of a social security number, in violation of
42 U.S.C. § 408(a)(7)(B). Her conditional plea allows this appeal. Chavez alleges
that the district court should have dismissed the indictment because her arrest and
detention violated Federal Rule of Criminal Procedure 5(a). Having jurisdiction
under 28 U.S.C. § 1291, this court affirms.
I.
In January 2011, the Department of Homeland Security investigated all I-9
forms of Nebraska Beef, Inc. DHS identified 178 as possibly suspect, and 14 as
matching identity-theft complaints on file with the Federal Trade Commission. One
of these 14 was “Gloria Ester Blanco.”
On May 3, 2011, DHS agents went to Nebraska Beef for interviews. The
woman purporting to be Blanco did not speak English. Once a Spanish-speaking
agent arrived, the woman refused to answer any questions. She was arrested without
a warrant and taken to the Office of Enforcement and Removal Operations in Omaha.
There, the woman’s fingerprints were taken and she received Miranda warnings. She
remained unresponsive to questions about her identity. The agents did not know her
identity.
Agents learned that Nebraska Beef planned to remove and destroy the contents
of the woman’s locker. In response to the agents’ request, a Nebraska Beef employee
gave them her purse. Inside it, agents found identifying documents in the names of
Gloria Blanco and Rocio Chavez, and a business card of an Omaha Public Schools
employee.1 Shown a picture of the woman, the employee identified her as “Rocio.”
At this point, the agents believed that “Blanco” was Rocio Chavez, and processed her
for removal proceedings.
On May 5, the agents referred the case to the United States Attorney for
consideration of the identity-theft charges. Chavez was indicted on May 20, and
taken before a magistrate judge for initial appearance on May 27. She moved to
dismiss the indictment, arguing that a hearing was required within 48 hours of her
1
The district court later suppressed this evidence, which is not at issue on
appeal.
-2-
initial arrest, pursuant to Rule 5(a). A magistrate judge issued findings,
recommending that the motion be denied. United States v. Chavez, No. 8:11CR165,
2011 WL 5570696 (D. Neb. Oct. 3, 2011). The district court adopted the findings,
and denied Chavez’s motion to dismiss.
II.
Because this case involves a rule of procedure, this court reviews the legal
conclusions de novo and the findings of fact for clear error. United States v.
Shepard, 462 F.3d 847, 861 (8th Cir. 2006), citing United States v. Vanhorn, 296
F.3d 713, 719 (8th Cir. 2002). Claims of constitutional error are reviewed de novo.
United States v. Smith, 656 F.3d 821, 826 (8th Cir. 2011).
“A person making an arrest within the United States must take the defendant
without unnecessary delay before a magistrate judge . . . .” Fed. R. Crim. P.
5(a)(1)(A). The Fourth Amendment requires “a fair and reliable determination of
probable cause as a condition for any significant pretrial restraint of liberty, and this
determination must be made by a judicial officer either before or promptly after
arrest.” Gerstein v. Pugh, 420 U.S. 103, 125 (1975) (footnotes omitted). This
constitutional requirement generally requires defendants to be brought before a
magistrate within 48 hours of arrest. County of Riverside v. McLaughlin, 500 U.S.
44, 56-57 (1991).2
2
Rule 5(a) and the Gerstein/Riverside standard, while related and analogous,
are distinct concepts. See United States v. Garcia-Echaverria, 374 F.3d 440, 452
n.17 (6th Cir. 2004) (“It is not entirely clear to what extent the McLaughlin rule and
Fed. R. Crim. P. 5(a) overlap.”); United States v. Encarnacion, 239 F.3d 395, 398
n.2 (1st Cir. 2001) (“While the Rule 5(a) and Fourth Amendment contexts are
certainly analogous, the 48-hour rule is a requirement of the Fourth Amendment, not
Rule 5(a).” (citation omitted) (internal quotation marks omitted)).
-3-
In this case, Chavez was arrested without a warrant. Immigration officials can
make warrantless arrests in certain circumstances. 8 U.S.C. § 1357(a). First, an
official has the power
to arrest any alien in the United States, if he has reason to believe that
the alien so arrested is in the United States in violation of any such law
or regulation and is likely to escape before a warrant can be obtained for
his arrest, but the alien arrested shall be taken without unnecessary delay
for examination before an officer of the Service having authority to
examine aliens as to their right to enter or remain in the United States.
Id. § 1357(a)(2). “Reason to believe” requires the official to have probable cause that
the person is in the United States illegally. United States v. Quintana, 623 F.3d
1237, 1239 (8th Cir. 2010). Because immigration proceedings are civil, persons
arrested under § 1357(a)(2) do not have the protections of Rule 5(a). Id. at 1240 n.1,
citing United States v. Encarnacion, 239 F.3d 395, 398-99 (1st Cir. 2001); United
States v. Perez-Perez, 337 F.3d 990, 997 (8th Cir. 2003).
Additionally, an immigration official has the authority, without a warrant,
(4) to make arrests for felonies which have been committed and which
are cognizable under any law of the United States regulating the
admission, exclusion, expulsion, or removal of aliens, if he has reason
to believe that the person so arrested is guilty of such felony and if there
is likelihood of the person escaping before a warrant can be obtained for
his arrest, but the person arrested shall be taken without unnecessary
delay before the nearest available officer empowered to commit persons
charged with offenses against the laws of the United States; and
(5) to make arrests –
(A) for any offense against the United States, if the offense
is committed in the officer’s or employee’s presence, or
-4-
(B) for any felony cognizable under the laws of the United
States, if the officer or employee has reasonable grounds to
believe that the person to be arrested has committed or is
committing such a felony, if the officer or employee is
performing duties relating to the enforcement of the
immigration laws at the time of the arrest and if there is a
likelihood of the person escaping before a warrant can be
obtained for his arrest.
8 U.S.C. § 1357(a)(4)-(5). These arrests are criminal, and Rule 5(a) applies. Fed. R.
Crim. P. 5(a)(1)(A). Subsection 4, relating to immigration-related felonies, confirms
this point by stating that “the person arrested shall be taken without unnecessary
delay before the nearest available officer empowered to commit persons charged with
offenses against the laws of the United States.” 8 U.S.C. § 1357(a)(4).
The parties agree that the issue here is whether Chavez was taken into civil,
non-pretextual custody. See Encarnacion, 239 F.3d at 399-400. If so, Rule 5(a) does
not apply. If the arrest was criminal, however, Rule 5(a) applies.
The district court said: “In this case, Agent Wimer initially arrested Chavez
based on probable cause that she had committed the crime of identity theft. At the
same time, Agent Wimer had reasonable suspicion to detain Chavez as an illegal
alien.” Chavez, 2011 WL 5570696, at *4. This characterization is correct. The
social security number Chavez used on her I-9 form was the subject of an FTC
complaint for identity theft – giving probable cause for criminal arrest. Conversely,
the only evidence of her illegal immigration status was her inability to speak English,
her refusal to answer questions, and her use of a social security number subject to an
identity-theft complaint. Agent Wimer testified that he had probable cause as to the
identity-theft offense, but only reasonable suspicion of the immigration offense. See
Alabama v. White, 496 U.S. 325, 330 (1990) (“Reasonable suspicion is a less
demanding standard than probable cause not only in the sense that reasonable
-5-
suspicion can be established with information that is different in quantity or content
than that required to establish probable cause, but also in the sense that reasonable
suspicion can arise from information that is less reliable than that required to show
probable cause.”).
The district court nonetheless ruled that Chavez was taken into civil custody.
Chavez, 2011 WL 5570696, at *4. This is incorrect. A warrantless arrest for a civil
immigration offense requires probable cause. Quintana, 623 F.3d at 1239. The
agent, therefore, lacked authority to arrest Chavez pursuant to § 1357(a)(2),3 because
the only ground for arrest was criminal. This court holds that Chavez was taken into
criminal custody.
That Chavez’s illegal status was confirmed “within a couple hours” is
irrelevant to determining of the type of arrest in this case. See Chavez, 2011 WL
5570696, at *4. So too are the deportation procedures after the arrest. The type of
arrest must be measured when the arrest was made. Devenpeck v. Alford, 543 U.S.
146, 152 (2004) (“Whether probable cause exists depends upon the reasonable
conclusion to be drawn from the facts known to the arresting officer at the time of the
arrest.”). As no authority then existed for civil arrest, Chavez’s arrest was criminal.
This case is dissimilar from cases involving alleged Rule 5(a) violations when the
arrest was properly civil. See, e.g., United States v. Dyer, 325 F.3d 464, 470 (3d Cir.
3
Chavez argues in her reply brief – for the first time – that there also was no
authority under § 1357(a)(2) because agents did not establish that Chavez was likely
to escape before a warrant could be obtained. This court will not consider this
argument because it was raised for the first time in the reply brief. Allen v. United
States, 590 F.3d 541, 543 n.1 (8th Cir. 2009). Further, the argument was not raised
before the district court, and this court will generally not consider arguments made
for the first time on appeal. United States v. Green, 691 F.3d 960, 965 (8th Cir.
2012).
-6-
2003); Encarnacion, 239 F.3d at 399; United States v. Noel, 231 F.3d 833, 837 (11th
Cir. 2000) (per curiam).
As Chavez was taken into criminal custody, she was entitled to the protections
of Rule 5(a). She was not taken promptly before a magistrate judge. Rule 5(a) was
violated. See Fed. R. Crim. P. 5(a)(1)(A). The district court’s contrary ruling was
error. Additionally, the lack of a prompt probable-cause determination violated the
Fourth Amendment. See Gerstein, 420 U.S. at 125.
III.
Even so, the appropriate remedy is not dismissal of the indictment. Chavez
claims that there must be some remedy for the violation of these rights. Remedies
may exist for violations like those here, but dismissal is not one of them.
This court – among others – has held that a Rule 5(a) violation will not affect
a conviction absent a showing of prejudice. United States v. Nazarenus, 983 F.2d
1480, 1483 (8th Cir. 1993); see also United States v. Causey, 835 F.2d 1527, 1529
(5th Cir. 1988); United States v. Studley, 783 F.2d 934, 937 n.2 (9th Cir. 1986).
Further, the Third Circuit has explained,
the remedy for [a Rule 5(a)] violation is not dismissal of the indictment.
Rather, since the provisions of Fed. R. [Crim.] P. 5(a) are procedural,
not substantive, the sanction imposed by federal courts for failure to
comply with Rule 5(a) is suppression of statements taken during the
period of unnecessary delay.
Dyer, 325 F.3d at 470 n.2 (citations omitted) (internal quotation marks omitted); see
also Studley, 783 F.2d at 937 n.2. In this case, there is no showing of prejudice to
Chavez from the delay between arrest and appearance. Even if there were, the
-7-
appropriate remedy would be suppression of the statements made during that period,
not dismissal of the indictment.
Dismissal is also not the appropriate remedy for a Gerstein violation. Gerstein,
420 U.S. at 119 (“[I]llegal arrest or detention does not void a subsequent
conviction. . . . [A] conviction will not be vacated on the ground that the defendant
was detained pending trial without a determination of probable cause.”); United
States v. Means, 252 F. Appx. 830, 835 (9th Cir. 2007) (mem. op.) (“[E]ven if a
Gerstein violation occurred, dismissal of the charges is not a correct remedy.”);
United States v. Garcia-Echaverria, 374 F.3d 440, 452 n.17 (6th Cir. 2004) (noting
that a dismissal of the indictment would not be an appropriate remedy, and citing
United States v. Fullerton, 187 F.3d 587, 590-92 (6th Cir. 1999), which suggests that
the exclusionary rule or a Bivens action would be appropriate); United States v.
Davis, 785 F.2d 610, 616 (8th Cir. 1986) (“It has been held time and time again that
an illegal arrest and detention, without more, does not void a subsequent
prosecution.”). This court and the Supreme Court have not decided whether even a
suppression remedy is available for a Gerstein violation. United States v. Davis, 174
F.3d 941, 946 n.8 (8th Cir. 1999), citing Powell v. Nevada, 511 U.S. 79, 85 n.*
(1994).
Chavez cites to several Speedy Trial Act cases, arguing that her arrest was a
“mere ruse,” and dismissal is therefore appropriate. See, e.g., United States v. De La
Pena-Juarez, 214 F.3d 594, 598 (5th Cir. 2000); United States v. Grajales-Montoya,
117 F.3d 356, 366 (8th Cir. 1997); United States v. Cepeda-Luna, 989 F.2d 353, 355-
56 (9th Cir. 1993). First, these situations are incongruent. The prejudice in the mere-
ruse cases is that civil arrest does not trigger the time clock under the Act, giving
investigators more time to develop charges. Here, Chavez does not demonstrate any
prejudice. Further – contrary to her contention – the remedy in the mere-ruse cases
is not dismissal of the charges; the remedy is for the time clock to begin at initial
arrest. See De La Pena-Juarez, 214 F.3d at 598; Grajales-Montoya, 117 F.3d at 366.
-8-
Although recalculating the time clock may result in dismissal of the charges if they
were not timely filed, the recalculation itself does not automatically dismiss the
charges.
Moreover, there is no “ruse” in this case. Chavez’s argument incorrectly
assumes she was being held in civil custody. As the district court explained, probable
cause existed for the criminal charges at the time of arrest. Chavez was thus properly
arrested in criminal custody. She is therefore entitled to the rights and remedies
available to criminal detainees (but not to dismissal of her indictment). The
immigration officials did not arrest Chavez pursuant to civil authority as a mere ruse
to further investigate criminal charges.
Despite the district court’s error in finding no Rule 5(a) or Fourth Amendment
violation, dismissal is not the appropriate remedy.
*******
The judgment of the district court is affirmed.
______________________________
-9- | 01-03-2023 | 02-06-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2389083/ | 708 F.Supp. 1118 (1988)
OIL HEAT INSTITUTE OF OREGON, an Oregon Nonprofit Corporation, Plaintiff,
v.
NORTHWEST NATURAL GAS, an Oregon corporation, Defendant.
Civil Nos. 87-853-FR, 88-825-FR.
United States District Court, D. Oregon.
September 23, 1988.
*1119 John W. Stephens, Kim T. Buckley, Esler, Stephens & Buckley, Portland, Or., for plaintiff.
Barnes K. Ellis, Leslie K. Bonney, Stoel, Rives, Boley, Jones & Grey, Portland, Or., Kirk H. Gibson, Northwest Natural Gas Co., Portland, Or., for defendant.
*1120 OPINION
FRYE, District Judge:
The matter before the court is the motion of defendant Northwest Natural Gas Co. (Northwest) for summary judgment or partial summary judgment of the federal claims in each of these consolidated cases. Northwest also moves to dismiss the pendent state claims if summary judgment is granted.
In each of these consolidated cases plaintiff Oil Heat Institute of Oregon (Oil Heat) seeks injunctive relief and/or damages against Northwest for violations of the Lanham Act of 1946, 15 U.S.C. § 1125(a). Oil Heat claims that promotional materials distributed by Northwest contain false descriptions and representations comparing the use of home heating oil and natural gas.
UNDISPUTED FACTS
Oil Heat is an Oregon nonprofit corporation whose members are located in the States of Oregon and Washington. Northwest is an Oregon corporation and a public utility providing gas utility service in western Oregon and portions of southwestern Washington. Northwest causes its natural gas to enter interstate commerce.
Oil Heat filed CV87-853-FR in July 1987, alleging that two pieces of sales literature used by Northwest, "Gas vs. Oil Comparison" (Exhibit A) and "Natural Gas vs. Oil You Decide," (Exhibit B) violated the Lanham Act. Northwest does not dispute that it distributed Exhibits A and B. Northwest ceased using or distributing Exhibits A and B in January of 1988.[1]
On May 26, 1988 Oil Heat was granted leave to file an amended complaint which alleged that two new pieces of sales literature distributed by Northwest violated the Lanham Act. Those advertisements are titled ""What to Ask About Gas, Oil and Electric Heat" (Exhibit C) and "Natural Gas vs. Oil You Decide" (Exhibit D). Exhibit D is a revised version of the discontinued Exhibit B. Northwest does not dispute that it distributed Exhibits C and D.
Oil Heat filed CV88-825-FR on July 22, 1988. In CV88-825-FR, which has been consolidated with CV87-853-FR, Oil Heat alleges that an additional piece of promotional literature distributed by Northwest violates the Lanham Act. This material consists of a letter and reply card (Exhibit E) which were sent to recent purchasers of houses, beginning in the summer of 1987. Northwest does not dispute that it distributes Exhibit E.
In its various complaints Oil Heat also alleges pendent state law claims for unfair competition as to each of the described promotional materials. Trial of the consolidated cases is set to begin on October 4, 1988.
APPLICABLE LAW
Summary judgment is appropriate where "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Fed.R. Civ.P. 56(c). The initial burden is on the moving party to point out the absence of any genuine issues of material fact. Once this initial burden is satisfied, the burden shifts to the opponent to demonstrate through the production of probative evidence that there remains an issue of fact to be tried. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).
CONTENTIONS OF THE PARTIES
Northwest contends that Oil Heat's claims regarding the two pieces of promotional literature described in the original complaint (Exhibits A and B) are moot, because Oil Heat asks only for injunctive relief as to those materials and Northwest has stopped distributing those materials. Oil Heat does not appear to contest the mootness of the claims relating to Exhibits A and B.
*1121 Regarding Exhibits C and D (the subject of the Amended Complaint), Northwest contends that Oil Heat does not allege the first of five essential elements of a false advertising claim under the Lanham Act, which is that Northwest made false statements of fact about its own product. Northwest contends that the only statements which Oil Heat claims are false are statements that Northwest made about Oil Heat's product. Northwest also contends that the omissions claimed by Oil Heat do not constitute false representations.
Oil Heat responds that Northwest's definition of false representations is incorrect, and that when Northwest's statements and omissions in Exhibits C and D are considered in context they constitute false advertising.
Northwest also contends that Oil Heat has no evidence to support the second, third and fifth elements of its prima facie case as to Exhibits C and D. Oil Heat contends that it has produced sufficient evidence to support each of those elements.
Regarding Exhibit E, Northwest contends that when viewed as a whole the letter is not false or deceptive, so that Oil Heat cannot establish the first element of its prima facie case. Oil Heat responds that the letter can reasonably be interpreted as making a false representation about natural gas.
Northwest also contends that Oil Heat has no evidence that the letter actually deceived or has a tendency to deceive a substantial segment of the audience; that the deception is material; or that Oil Heat or its members have been injured as a result of the letter. Oil Heat contends that it has produced sufficient evidence as to each of these elements.
Northwest contends that if the court grants its motion for summary judgment the pendent state law claims should be dismissed. Oil Heat responds that dismissal is inappropriate at this stage of the actions.
In the alternative, if the court declines to grant full summary judgment, Northwest asks the court to grant to Northwest partial summary judgment regarding Exhibits C and D "as to all statements contained in its comparative advertising that do not concern natural gas, Northwest's own product, and all statements that are indisputably true." (Defendant's Reply Memorandum at 16.) Northwest also asks for partial summary judgment as to all statements in Exhibit E "that are indisputably true when read in the context of the letter as a whole." (Memorandum in Support of Defendant's Amended Motion at 7.)
DISCUSSION
The elements of a Lanham Act claim regarding comparative advertising are set out in Skil Corporation v. Rockwell International Corp., 375 F.Supp. 777, 783 (N.D.Ill.1974):
1) in its comparison advertisements, defendant made false statements of fact about its own product;11
2) those advertisements actually deceived or have the tendency to deceive a substantial segment of their audience;
3) such deception is material, in that it is likely to influence the purchasing decision;
4) defendant caused its falsely advertised goods to enter interstate commerce; and
5) plaintiff has been or is likely to be injured as a result of the foregoing either by direct diversion of sales from itself to defendant, or by lessening of the good will which its products enjoy with the buying public.
(Footnote omitted).
With the exception of the fourth element, each element of Oil Heat's claim is at issue. Northwest contends that Oil Heat has not alleged the first element with respect to Exhibits C and D, and that there is no issue of fact regarding the first element with respect to Exhibit E. Northwest contends that there is no issue of fact regarding the second, third, and fifth elements with respect to Exhibits C, D and E.
The court will consider each of the promotional materials in turn.
*1122 1. Exhibits A and B
Northwest contends that Oil Heat's claims as to these documents are moot, because it is undisputed that Northwest ceased distributing them in January, 1988. Oil Heat's complaint asks only for injunctive relief as to these materials. Therefore, the claims relating to Exhibits A and B are deemed moot.
2. Exhibit C
Exhibit C is a three page brochure entitled "What to Ask About Gas, Oil and Electric Heat." Oil Heat contends that three statements in a "Conversion Comparison Chart" contained in the brochure constitute false advertising. The chart compares various home heating methods, including natural gas forced air furnace, electric baseboard, electric forced air furnace, electric heat pump, and oil forced air furnace.
Oil Heat's Amended Complaint alleges that Exhibit C contains "a Conversion Comparison Chart' for natural gas forced air furnaces and oil forced air furnaces that contains false descriptions or representations, including words or other symbols tending falsely to describe or represent the same." Northwest argues that in each of these comparisons the statement regarding natural gas furnaces is literally true, and the only alleged falsehood is in the statement regarding oil furnaces.
Oil Heat argues that false representations about Oil Heat's product as well as Northwest's product may violate the Lanham Act. However, Oil Heat fails to cite persuasive authority for this position. The Second and the Seventh Circuits have held that the Lanham Act applies only to false representations regarding the defendant's product. Fur Information & Fash. Coun., Inc. v. E.F. Timme & Son, 501 F.2d 1048, 1051-52 (2d Cir.), cert. denied, 419 U.S. 1022, 95 S.Ct. 498, 42 L.Ed.2d 296 (1974); Bernard Food Industries, Inc. v. Dietene Co., 415 F.2d 1279, 1284 (7th Cir. 1969), cert. denied, 397 U.S. 912, 90 S.Ct. 911, 25 L.Ed.2d 92 (1970).
The Ninth Circuit has indicated that the Lanham Act applies only to false descriptions or representations of the defendant's product. SSP Agricultural Equipment, Inc. v. Orchard-Rite Ltd., 592 F.2d 1096, 1103 n. 6 (9th Cir.1979). Oil Heat relies upon the district court opinion in U-Haul International, Inc. v. Jartran, Inc., 522 F.Supp. 1238, 1247 (D.Ariz.1981), which states that the false representation may be as to either plaintiff's or defendant's product. However, that case was primarily concerned with false representations regarding the defendant's product, and the Ninth Circuit's opinion affirming the district court considers only representations regarding the defendant's product. U-Haul International, Inc. v. Jartran, Inc., 681 F.2d 1159, 1160-62 (9th Cir.1982). In the absence of Ninth Circuit authority for a more expansive reading of the Lanham Act, this court will apply the definition of a false advertising claim set out in Skil Corporation, supra, 375 F.Supp. at 783, and consider only false representations regarding Northwest's products.
Oil Heat alleges that three statements in Exhibit C violate the Lanham Act. The first statement compares the average warranty for natural gas forced air furnaces ("15 to 20 years on heat exchanger") and for oil forced air furnaces ("10 years on heat exchanger"). Oil Heat contends that the average warranty on heat exchangers in oil furnaces is as long or longer than the average warranty on heat exchangers in natural gas furnaces. Oil Heat does not contest Northwest's statement that the average warranty on heat exchangers in natural gas furnaces is 15 to 20 years. Therefore, Oil Heat does not show a false representation regarding Northwest's own product in this instance.
The second statement compares routine maintenance for natural gas forced air furnaces ("change filters twice yearly") and oil forced air furnaces ("change filters twice yearly; check & clean oil lines & nozzles"). Oil Heat alleges that routine maintenance on gas furnaces includes more than merely changing the filters twice yearly, so that Northwest's statement regarding *1123 its own product misrepresents the amount of maintenance needed.
Northwest contends that such an omission does not bring a statement within the Lanham Act. However, "[a] statement actionable under the Lanham Act may be an affirmatively misleading statement, a partially incorrect statement, or a statement which is untrue as a result of a failure to disclose a material fact." U-Haul, supra, 522 F.Supp. at 1247; American Home Products Corp. v. Johnson & Johnson, 577 F.2d 160, 165 (2d Cir.1978). Oil Heat has produced evidence that routine maintenance of gas furnaces requires more than changing filters twice yearly as represented by Northwest. A factfinder could reasonably conclude that Northwest failed to disclose material facts about its product, making the statement untrue.
This discussion assumes that Northwest's products include natural gas heating equipment as well as natural gas itself. Oil Heat has presented evidence which could support a finding that Northwest promotes the sale of natural gas heating equipment in addition to its primary product, natural gas.
The third statement compares the delivery system for natural gas ("24 hour uninterrupted delivery of natural gas through underground gas lines") and heating oil ("oil delivery must be arranged with oil company"). Oil Heat does not contest Northwest's statement regarding the natural gas delivery system, but asserts that the proper comparison is with the automatic delivery program available to oil customers. The only false representation alleged by Oil Heat regarding this comparison relates to oil heating, and not to natural gas.
Therefore, of the three allegedly false statements in Exhibit C, only the second statement, regarding routine maintenance, requires further consideration. Partial summary judgment will be granted as to the statements in Exhibit C regarding average warranty and delivery system.
Northwest contends that Oil Heat has produced no evidence supporting the second, third or fifth elements of its claim regarding the routine maintenance comparison. The second element is that the advertisement actually deceived or has the tendency to deceive a substantial segment of its audience. Northwest contends that Oil Heat has not established this element of its case because Oil Heat has produced no customer surveys or other direct evidence showing that Northwest's statements have a tendency to deceive a substantial segment of the audience.
Oil Heat has cited authority that when a statement in an advertisement is actually false, relief can be granted on the court's own findings without reference to the reaction of the buyer or consumer of the product. PPX Enterprises v. Audiofidelity Enterprises, 818 F.2d 266, 272 (2d Cir.1987); American Home Products Corp. v. Johnson & Johnson, 577 F.2d 160, 165 (2d Cir.1978). Oil Heat has presented evidence which could support a finding that the statement regarding routine maintenance is false. Therefore, the factfinder could conclude without further evidence that the statement deceived or had a tendency to deceive a substantial segment of its audience.
The third element is that the deception is material in that it is likely to influence the purchasing decision. Northwest argues that any deception in its promotional materials was immaterial, because the consumer's choice of an energy source or heating equipment is a complex decision which is unlikely to be based on a single piece of promotional literature. A deception is material if it is "likely to influence the purchasing decision," and need not be the only basis for the consumer's decision. A factfinder could reasonably conclude that information regarding the amount of maintenance required for natural gas equipment is likely to influence the purchasing decisions of consumers.
The fifth element of a false advertising claim is that the plaintiff has been or is likely to be injured as the result of the ads, either by direct diversion of sales from itself to defendant, or by lessening of good will. In Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d 186 (2d Cir.1980), the court held that a plaintiff alleging a *1124 Lanham Act claim meets its burden by showing that it is a competitor, and that its sales position is such that a sale by the defendant could represent a loss of a sale by the plaintiff. 631 F.2d at 190-191. The court held that the plaintiff need not prove a loss of sales, and that the actual harm "might be relatively slight," where the plaintiff sought only injunctive relief. Id. at 191.
Oil Heat has produced evidence from which it could be found that its members are competitors of Northwest and that sales by Northwest (particularly conversions to natural gas) represent a loss of business to Oil Heat's members. Thus, Oil Heat has presented evidence sufficient to support the fifth element of a Lanham Act claim for injunctive relief.
Accordingly, Northwest's motion for summary judgment is denied as to the statement regarding routine maintenance in Exhibit C. Northwest's motion for partial summary judgment is granted as to the statements in Exhibit C regarding average warranty and delivery system.
3. Exhibit D
Exhibit D is a one page flyer distributed with Exhibit C which is entitled "Natural Gas vs. Oil You Decide!" Exhibit D consists in large part of a comparison chart regarding natural gas and oil. Oil Heat contends that six of the comparisons in the chart constitute false advertising. Northwest contends that the statements in the chart regarding natural gas are true, and that the only false representations alleged by Oil Heat concern oil, and not natural gas, as required under Skil Corporation.
The first statement compares the cleanliness of gas ("cleaner burning, non-polluting") and oil ("soot may build-up (which reduces efficiency)"). Oil Heat alleges that the statement regarding natural gas is false because natural gas furnaces can produce carbon monoxide, a pollutant, and because both gas and oil equipment are subject to soot build-up when not maintained and adjusted.
Oil Heat has produced evidence that natural gas is not completely non-polluting and that it can cause soot build-up, which evidence Northwest has attempted to controvert. The court finds that Oil Heat has raised a material issue of fact as to the falsity of this statement with regard to natural gas.
The second statement compares maintenance for natural gas heating equipment ("MINIMAL (change filters)") and oil equipment ("HIGHER; change filters, clogged nozzles, plugged oil lines, etc."). This statement is essentially the same as Northwest's representation regarding routine maintenance in Exhibit C. Oil Heat contends that both natural gas and oil heating equipment require minimal maintenance, but that minimal maintenance consists of more than changing filters. Oil Heat has produced evidence sufficient to support a finding that Northwest omitted material facts regarding maintenance of natural gas equipment. Thus, there is an issue of fact regarding the falsity of Northwest's description of the maintenance of natural gas equipment.
The third statement compares service for natural gas equipment ("FREE inspections, diagnostic calls and minor adjustments by Gas Co.") and oil equipment ("$75-$100 in annual maintenance typical"). Oil Heat contends that all furnaces (gas and oil) should have annual maintenance in addition to the free services listed by Northwest for natural gas equipment. Oil Heat also contends that most oil dealers offer services equal to or better than those listed by Northwest, for less than $75-$100 per year. These arguments do not indicate any falsity or material omission in Northwest's statement regarding service of natural gas equipment. Therefore, partial summary judgment will be granted as to this statement.
The fourth statement compares storage for natural gas ("none; dependable on demand supply") and oil ("periodic refills necessary in above ground or buried oil tanks, tank replacement expensive"). Oil Heat does not argue that this comparison misrepresents or omits facts regarding natural gas storage, but challenges only the assertions regarding oil storage. Therefore, *1125 partial summary judgment will be granted as to this statement.
The fifth statement compares delivery of natural gas ("underground reliability") and oil ("subject to delivery truck scheduling"). Oil Heat does not challenge the assertion regarding natural gas, but contends only that the statement regarding oil is false because delivery truck scheduling is not a problem. Therefore, partial summary judgment will be granted as to this statement.
The sixth statement compares pricing of natural gas ("regulated by Oregon Public Utility Commission") and oil ("unregulated, subject to foreign influence"). Oil Heat has presented evidence that the statement regarding natural gas omits the facts that natural gas prices are subject to foreign influence and that natural gas prices are affected by the fluctuating price of oil. There is a genuine issue whether Northwest's statement regarding natural gas pricing is false because it omits material facts.
In summary, of the six allegedly false statements in Exhibit D, only the first statement, regarding cleanliness, the second statement, regarding maintenance, and the sixth statement, regarding pricing, require further consideration.
Northwest contends that Oil Heat has not produced evidence supporting the second, third and fifth elements of a false advertising claim for the statements in Exhibit D. For the reasons set out in the discussion relating to Exhibit C, a factfinder could reasonably conclude that the statements in Exhibit D deceived or have the tendency to deceive a substantial segment of their audience, that the deception is material in that it is likely to influence the purchasing decision, and that Oil Heat has been or is likely to be injured by the statements.
Accordingly, Northwest's motion for summary judgment is denied as to the statements in Exhibit D regarding cleanliness, maintenance and pricing. Northwest's motion for partial summary judgment is granted as to the statements in Exhibit D regarding service, storage and delivery.
4. Exhibit E
Exhibit E is a letter and reply card sent out to recent house purchasers. The letter invites homeowners to consider converting to a different type of home heating equipment. The portion of the letter attacked by Oil Heat states:
If you are using oil or electricity for space or water heating, you are paying much more than is necessary for energy. Conversion to modern high-efficiency gas space heating and water heating will often provide a three or four year return of the original investment and provide cleaner, more dependable, and comfortable sources of heat. Find out why natural gas costs a lot less.
Oil Heat contends that the letter contains two false and misleading statements: 1) if you are using oil for space or water heating, you are paying much more than is necessary for energy, and 2) natural gas costs a lot less. Northwest contends that when the letter is considered as a whole, it is not false or misleading. The first statement does not refer to natural gas, and need not be considered further. The second statement is fairly implied from the letter as a whole, and does make a representation of fact regarding natural gas.
Northwest argues that the letter was aimed at homeowners with older, inefficient heating equipment, that such homeowners are, indeed, paying more than is necessary for heating and that conversion to natural gas would in the long run cost them less. However, the language of the letter does not distinguish between older and newer equipment, but between natural gas, oil and electricity. The evidence presented by Northwest shows that the letter was sent out "randomly" to recent purchasers of houses, without regard to the age of the house or its heating equipment.
In support of its contention that the letter contains false or misleading statements, Oil Heat has produced evidence that oil heating equipment is available which is just *1126 as efficient and economical as natural gas equipment. A factfinder could reasonably accept this evidence and could conclude that the letter contains a false representation that natural gas heating costs less than the most efficient oil heating. The court is not allowed to weigh the conflicting evidence on a motion for summary judgment. Oil Heat's evidence presents a material issue of fact regarding the first element of a Lanham Act claim.
Northwest contends that Oil Heat cannot establish the second, third and fifth elements of its false advertising claim with respect to Exhibit E. For the reasons set out in the discussion of Exhibit C, Oil Heat has presented evidence on these elements sufficient to support injunctive relief regarding Exhibit E. However, Oil Heat seeks damages as well as injunctive relief in its claim for Exhibit E. Northwest points out that a claim for damages may require a higher showing of actual damage or intent to deceive to support the fifth element of a false advertising claim. U-Haul International, Inc. v. Jartran, Inc., 793 F.2d 1034, 1041 (9th Cir.1986).
The court finds that Oil Heat has presented evidence from which a factfinder reasonably could conclude that Oil Heat's members sustained actual damage due to Exhibit E. Mr. Bonaduce, Northwest's employee and the signator of Exhibit E, testified in his deposition that the letter was sent to 9800 recent house purchasers and that Northwest planned to make further mailings. He also testified that about 550 reply cards had been returned by house purchasers seeking information, and that some house purchasers have switched from home heating oil to gas as a result of the letter.
Oil Heat also presents evidence from which a factfinder could conclude that Northwest intended to create a deceptive impression with the letter. Although Northwest contends that the letter was aimed only at homeowners with older, inefficient heating equipment, the letter does not distinguish between efficient and inefficient equipment, simply stating "natural gas costs a lot less." Oil Heat has presented evidence indicating that Northwest's employees knew that this statement was not true for all recipients of the letter and that Mr. Bonaduce thought about whether the letter might be misleading for customers who already had high efficiency furnances, but that he did not change the letter or instruct sales representatives who dealt with response cards to correct any misconceptions by consumers.
The court concludes that Oil Heat has presented evidence sufficient to support all of the elements of its false advertising claim regarding Exhibit E, as to both injunctive relief and damages. Northwest's motion for summary judgment is denied as to Exhibit E.
5. Pendent Claims
Northwest urges that if summary judgment is granted as to any of Oil Heat's claims, the pendent state claims based on the same statements should be dismissed. Oil Heat counters that at this late stage of the litigation the court should exercise its discretion to retain all of the pendent claims in the interests of justice. Northwest has not moved against the pendent claims on the merits.
This court is granting partial summary judgment on the Lanham Act claims against five statements in Exhibits C and D. The pendent unfair competition claims regarding these five statements will be largely, though not completely, based on the same evidence as the remaining federal claims. Generally, at this late stage of litigation it would be in the interests of justice and judicial economy to retain jurisdiction over the pendent claims. However, there is a substantial potential for jury confusion if the pendent claims are included in the trial of this action because some of the statements at issue will be the subject of both federal and state claims, while other statements in the same advertising materials will be the subject only of state claims. Therefore, the court will dismiss Oil Heat's pendent claims relating to the five statements in Exhibits C and D for which partial summary judgment is granted.
*1127 This action is deemed moot as to the claims regarding Exhibits A and B. Northwest's motion for summary judgment in these consolidated cases is denied. Northwest's motion for partial summary judgment is granted as to the statements regarding average warranty and delivery system in Exhibit C ("What to Ask About Gas, Oil and Electric Heat" conversion comparision chart), and denied as to the statement regarding routine maintenance in Exhibit C. Northwest's motion for partial summary judgment is granted as to the statements regarding service, storage and delivery in Exhibit D ("Natural Gas vs. Oil You Decide!"), and denied as to the statements regarding cleanliness, maintenance and pricing in Exhibit D. Northwest's motion for partial summary judgment is denied as to Exhibit E (letter and reply card sent to recent house purchasers). The court grants Northwest's motion to dismiss the five pendent claims based upon statements as to which summary judgment was granted under the Lanham Act.
*1128 EXHIBIT A
*1129 EXHIBIT B
*1130 EXHIBIT C
*1131
*1132
*1133 EXHIBIT D
*1134 EXHIBIT E
*1135
NOTES
[1] The terms, Exhibit A through Exhibit E, are adopted by the court to clarify references to the various promotional materials because the parties do not use consistent terms to identify these materials. A copy of each of the exhibits is attached. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1184419/ | 531 P.2d 1229 (1975)
87 N.M. 256
STATE of New Mexico, Plaintiff-Appellee,
v.
Daniel Joe SANCHEZ, Defendant-Appellant.
No. 1523.
Court of Appeals of New Mexico.
January 29, 1975.
*1230 Chester H. Walter, Jr., Chief Public Defender, Bruce L. Herr, Appellate Defender, Donald Klein, Jr., Asst. Appellate Defender, Santa Fe, for defendant-appellant.
David L. Norvell, Atty. Gen., F. Scott MacGillivray, Ralph W. Muxlow, Asst. Attys. Gen., Santa Fe, for plaintiff-appellee.
OPINION
HERNANDEZ, Judge.
Defendant was convicted in Bernalillo County of robbery while armed with a deadly weapon. See State v. Sanchez, Ct. App., 530 P.2d 404, issued December 11, 1974. He was then charged by Supplemental Information as an habitual offender, contrary to § 40A-29-5, N.M.S.A. 1953 (2d Repl.Vol. 6, 1972), tried by a jury and convicted. From that judgment and the sentence rendered pursuant thereto, defendant appeals, alleging six points of error. We affirm.
Of appellant's six points on appeal, those numbered II through VI, all hinge on the correctness or incorrectness of the last felony conviction in Bernalillo County on October 26, 1973. State v. Sanchez, supra. Since we have already passed on defendant's arguments in that regard and have affirmed the correctness of that proceeding and its result, we believe that none of these points merits further discussion here. Thus, we address ourselves exclusively to the argument raised under the first point on appeal, which reads as follows:
"POINT I: THE TRIAL COURT ERRED IN GIVING INSTRUCTION NO. 1, OVER OBJECTION, AND IN DENYING DEFENDANT'S MOTION TO DISMISS THE SUPPLEMENTAL INFORMATION, AND THE ENHANCED SENTENCE IS VOID, AS THE RECORD ESTABLISHES THAT THE FELONY ENHANCED WAS THE FIFTH FELONY AND N.M. STAT.ANN., SECTION 40A-29-5 (1972) IS NOT APPLICABLE."
The Supplemental Information alleged the following felony convictions: (1) *1231 Aggravated Assault, DeBaca County, October 12, 1965; (2) Robbery, Guadalupe County, January 9, 1970; (3) Aggravated Battery, Guadalupe County, January 9, 1970; (4) False Imprisonment, Guadalupe County, January 9, 1970; and (5) Robbery while armed with a deadly weapon, Bernalillo County, October 26, 1973. At issue is the propriety of the trial court's instruction to the effect that the three 1970 convictions in Guadalupe County should be combined and counted by the jury as one. Appellant's counsel argues, and we believe rightly so, that combination of the three convictions was unsupported by the evidence introduced at trial. Indeed, the only conclusion we can draw from the record before us is that the convictions were all entered on the same date; but whether they were the result of several counts of a "single transaction" crime, or whether they resulted from three unrelated crimes does not appear. Although we have found no New Mexico cases on this point, guidance from other jurisdictions is not unavailable. In general, the cases may be summarized to say that where a conviction on two or more counts arising out of acts committed in the course of a single transaction has been entered, the convictions should count as one for the purpose of sentencing under an habitual offender statute. I.e., State v. Simpson, 152 Wash. 389, 277 P. 998 (1929). On the other hand, where multiple convictions are obtained for crimes unrelated to one another, no prohibition has been found to prevent counting each conviction separately in habitual offender proceedings. I.e., Cox v. State, 255 Ark. 204, 499 S.W.2d 630 (1973).
The question we are left with by the absence of proof on this point is two-fold: first, if the state had proven that the three Guadalupe County convictions resulted from unrelated acts, would it have been barred, as counsel for appellant argues, from proceeding under § 40A-29-5, supra, at all; and second, does the instruction combining the three convictions into one, constitute reversible error?
On the first part of the question, appellant would have us hold that by omitting the phrase, "* * * or subsequent offense * * *", from the 1963 reinactment of the Habitual Offender Statute [Laws 1963, ch. 303, § 29-5], the legislature intended to increase punishment for fourth felony offenders to, "* * * imprisonment in the state penitentiary for the term of his natural life.", § 40A-29-5(C), supra, but to leave the fifth, sixth and so forth, felony offender free from enhanced punishment liability. Suffice it to say that principles of construction in the courts of this state do not permit us to construe this statute so as to achieve an absurd result. State v. Herrera, 86 N.M. 224, 522 P.2d 76 (1974). Thus, we hold that prosecution under the New Mexico Habitual Offender Statute, § 40A-29-5, supra, is not barred upon any conviction in addition to the fourth felony conviction, and that such additional conviction may be prosecuted for the purpose of enhancing sentence at any time, otherwise lawful, as if it were the fourth felony conviction.
On the second part of the question, we note that by instructing as it did, the trial court reduced the enhanced sentence liability of appellant from possible treatment as a fourth offender [life, § 40A-29-5(C), supra], to treatment as a third offender [from not less than the longest term, to not more than three times the longest term as could have been prescribed upon a first conviction, § 40A-29-5(B), supra]. Thus, we do not see that appellant was in any way prejudiced by the erroneous instruction. See Rule 51, Rules of Criminal Procedure, § 41-23-51, N.M.S.A. 1953 (2d Repl.Vol. 6, 1973 Supp.).
With regard to the point raised by counsel for appellant in the Memorandum of Oral Argument, we believe the answer to be factual. Since the 1973 conviction in Bernalillo County for robbery while armed with a deadly weapon was the first such conviction, the enhancement provisions of § 40A-16-2, N.M.S.A. 1953 (2d Repl.Vol. 6, Supp. 1973) do not apply.
*1232 The judgment and sentence appealed from are affirmed.
It is so ordered.
LOPEZ, J., concurs.
SUTIN, J., specially concurring.
SUTIN, Judge, (specially concurring).
The trial court intended to and did instruct the jury on only three separate felonies on three separate dates. The jury found defendant guilty of three separate felonies and sentenced the defendant upon enhancement of the third felony pursuant to § 40A-29-5(B).
The majority opinion if ruled to be enhancement of a fourth or fifth felony, the trial court was mandated by § 40A-29-5(C) to sentence defendant "to imprisonment in the state penitentiary for the term of his natural life." This case should, then be remanded for resentencing. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2126969/ | 906 F.Supp. 572 (1995)
Eugene L. McKENZIE, Plaintiff,
v.
ATLANTIC RICHFIELD COMPANY, et al., Defendant.
No. 94-D-2507.
United States District Court, D. Colorado.
November 14, 1995.
*573 Elizabeth Lamb Kearney, Denver, CO, for Plaintiff.
Charles W. Newcom, Sherman & Howard, L.L.C., Denver, CO, for Defendants.
MEMORANDUM OPINION AND ORDER
DANIEL, District Judge.
Plaintiff, Eugene McKenzie, filed a Title VII claim against his current employer, ARCO Coal Company (ARCO), based on his assertion that the company impermissibly retaliated against him for sexual harassment *574 claims made by his wife when she worked for another division of the parent company. The defendants now move for summary judgment, arguing that plaintiff is unable to establish a prima facie case under Title VII.
FACTS
In April 1990, McKenzie, a trained accountant, joined Atlantic Richfield, the parent company of ARCO as a grade level four senior auditor. Soon thereafter, he was transferred to ARCO, where from April 1992 until May 1994 he worked in ARCO's U.S. Marketing and Operations ("USMO") Group, a business unit of ARCO. During this time, plaintiff consistently received favorable performance reviews, though his aggressiveness and somewhat dominant personality were noted, and was in fact ranked as an "A" grade employee, thus designating him as a "high potential" individual. Additionally, in April 1991, plaintiff was promoted to grade five pay and likewise promoted to grade six pay in November 1993. In early May 1994, ARCO underwent a major reorganization that resulted in the loss of approximately 24% of its Denver work force. As part of its restructuring, ARCO disbanded the USMO group to which plaintiff was assigned. Plaintiff, however, was retained and incorporated into a restructured planning and evaluation group headed by Denise Ramos, Manager of Planning and Evaluation.
Of significance, plaintiff's spouse, Linda McKenzie, previously worked in a separate division of the parent company wholly distinct and independent from plaintiff's division. Ms. McKenzie joined ARCO in September 1985, and in March 1993, she took a leave from the company. After informing representatives of ARCO in late June 1993 that she had been sexually harassed, Ms. McKenzie filed a sexual discrimination claim against ARCO with the EEOC in November 1993, the same month plaintiff was promoted to grade six pay. In April 1994, Ms. McKenzie and ARCO came to terms on settlement of her discharge. She received her settlement check on May 4, 1994 and withdrew her EEOC complaint on May 7, 1994.
This brings us to May 19, 1994. On that day, Michael DeGenring, Vice President of Finance and Administration for ARCO (and Denise Ramos' supervisor), met with the newly reorganized Planning and Evaluation Group which plaintiff was then a new member. The purpose of the meeting was to describe the new organizational structure of the company. Nine employees were present at this meeting. In short, defendants claim that plaintiff was insubordinate, belligerent, and arrogant during the meeting as evidenced by his comment to DeGenring, his bosses' boss, that he was "talking out of both sides of his mouth." As DeGenring later stated in deposition testimony, "the issue, in general, wasn't so much the questions Mr. McKenzie asked [but rather] the manner in which he asked them." Accordingly, the next day, May 20, 1994, DeGenring and Ramos decided to suspend plaintiff with pay pending an investigation of his conduct. After the investigation, it was determined that plaintiff's behavior at the meeting did not justify termination, though Ms. Ramos did issue plaintiff a written warning which stated that his behavior was "disruptive, hostile, lacking in discretion, and inappropriate." In addition to the paid suspension and written warning, ARCO limited plaintiff's interactions with senior management for four and one-half months while encouraging him to improve his interpersonal skills.
Plaintiff claims that his suspension was in retaliation for his wife having filed a complaint against ARCO rather than any purported inappropriate behavior on his part at the May 19, 1994 meeting. Plaintiff further claims that this retaliation is on-going and has effectively thwarted his "fast track" status with the company. More precisely, he claims that he has been denied promotion opportunities and his upward potential with the company is limited. In this regard, plaintiff points to the fact that prior to May 1994, he was internally classified as an "A" employee whereas in January 1995, his classification changed to "B" status.
Defendants respond that plaintiff cannot establish a prima facie Title VII case, discussed in detail below. To this effect, defendants argue that the persons responsible for plaintiff's disciplinary action DeGenring and Ramos were never even aware that plaintiff's wife had filed a complaint against *575 the company. Thus, defendants contend that it was impossible for them to have a retaliatory motive when those responsible for disciplining plaintiff lacked knowledge of the underlying protected conduct.
ANALYSIS
As previously stated, plaintiff asserts his impermissible retaliation claim under Title VII, 42 U.S.C. § 2000e-3(a), which provides that
[i]t shall be an unlawful employment practice for an employer to discriminate against any of his employees ... because he has opposed any practice made an unlawful employment practice by this subchapter, or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter.
This statute has been well litigated and as a result, its parameters are well defined by existing case law. As stated in Sorensen v. City of Aurora, 984 F.2d 349 (10th Cir.1993), to support a claim of retaliation,
[a] plaintiff must first establish a prima facie case of retaliation. If a prima facie case is established, then the burden of production shifts to the defendant to produce a legitimate, nondiscriminatory reason for the adverse action. If evidence of a legitimate reason is produced, the plaintiff may still prevail if she demonstrates the articulated reason was a mere pretext for discrimination. The overall burden remains on the plaintiff.
Id. at 353. To make a prima facie case, a plaintiff must prove: (1) protected opposition to discrimination or participation in a proceeding arising out of discrimination; (2) adverse action by the employer; and (3) a causal connection between the protected activity and the adverse action. Williams v. Rice, 983 F.2d 177, 181 (10th Cir.1993).
Though defendants focus on the third element of plaintiff's prima facie case the causal connection the first two elements are briefly discussed since this Court must independently satisfy itself that plaintiff can make a prima facie case. As for element one of plaintiff's prima facie case, the protected conduct in this instance is the filing of a sexual discrimination complaint by plaintiff's wife. Though somewhat unique, plaintiff is claiming that the impermissible retaliatory actions by ARCO are derivative in nature. That is, McKenzie claims that he is being retaliated against for his wife's protected conduct. As other courts have held, however, the antireprisal provision of Title VII precludes an employer from discriminating against an individual because that person's spouse has engaged in protected activities. See, e.g., Wu v. Thomas, 863 F.2d 1543 (11th Cir.1989); De Medina v. Reinhardt, 444 F.Supp. 573 (D.D.C.1978). It is clear that the person who is discriminated against because of the spouse's protected activities may maintain the action. De Medina, 444 F.Supp. at 580-81.
As for element two of plaintiff's prima facie case adverse action by ARCO McKenzie claims that he was improperly suspended and that his future at the company is limited (i.e. no potential for promotion). If true, these actions are indeed "adverse" since "[e]xamples of retaliatory treatment include disciplinary demotion, termination, unjustified evaluations and reports, loss of normal work assignments, and extension of probationary period." Cooper v. Cobe Labs., Inc., 743 F.Supp. 1422, 1433 (D.Colo.1990) (J. Sparr). See also Sauers v. Salt Lake County, 1 F.3d 1122 (10th Cir.1993) (holding that transfer or reassignment of duties constitutes impermissible retaliation); Kenworthy v. Conoco, Inc., 979 F.2d 1462 (10th Cir.1992) (holding that denial of promotion constitutes adverse action); and Rutherford v. American Bank of Commerce, 565 F.2d 1162 (10th Cir. 1977) (holding that a negative reference by an employer who had previously given a positive reference constitutes impermissible retaliation). In short, the requirement that McKenzie demonstrate adverse action by ARCO is liberally construed to encompass the sort of conduct alleged in this case. But see Meredith v. Beech Aircraft Corp., 18 F.3d 890, 896 (10th Cir.1994) (affirming summary judgment after holding that employer's evaluation that employee "meets expectations" does not constitute adverse action).
*576 As for element three of plaintiff's prima facie case causal connection ARCO argues that since the individuals responsible for suspending plaintiff, Ramos and DeGenring, have testified that they were unaware that Ms. McKenzie had filed a complaint against the company, plaintiff is incapable of demonstrating that his suspension was retaliatory in nature. As stated in Williams, 983 F.2d at 180:
We have previously assumed, without deciding, that to establish a "causal connection," plaintiff must show that the individual who took adverse action against him knew of the employee's protected activity. Anderson [v. Phillips Petroleum Co.], 861 F.2d [631] at 635 [(10th Cir.1988)]. We embrace the assumption of Anderson in our holding today.
Williams stands for a simple, somewhat self-evident, proposition: if the decision-maker is unaware of plaintiff's protected activity, such activity, by definition, cannot be the motivating factor behind any subsequent adverse employment decisions.
In addressing whether plaintiff is able to satisfy element three of his prima facie case, the Court is mindful of the posture it assumes on summary judgment. That is, summary judgment is appropriate if, and only if, "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The court views the evidence and draws any inferences in the light most favorable to the party opposing summary judgment, but that party must identify sufficient evidence which would require submission of the case to the jury. Furthermore, the Court is particularly mindful that "the question of retaliation is particularly inappropriate for summary judgment disposition, since the primary issue is one of intent and motive." Romero v. Union Pacific Railroad, 615 F.2d 1303, 1309 (10th Cir.1980).
In this instance, "[t]he ultimate question is whether [plaintiff's] evidence establishe[s] an inference" that ARCO retaliated against him based on his wife's complaint against the company. Cone v. Longmont United Hosp. Ass'n, 14 F.3d 526, 528 (10th Cir.1994). In considering whether McKenzie can raise such an inference, and thus defeat summary judgment, the Court acknowledges that "[a] causal connection may be proven by circumstantial evidence that justifies an inference of retaliatory motive." Sahs v. Amarillo Equity Investors, Inc., 702 F.Supp. 256, 259 (D.Colo.1988) (J. Babcock). Also, "[t]he causal connection can be demonstrated by direct or circumstantial evidence that creates an inference of retaliatory motive, such as protected conduct closely followed by adverse action." Cooper, 743 F.Supp. at 1433.
Having set the proverbial table, the Court now turns to the proffered evidence in this case. As already stated, the two individuals responsible for disciplining McKenzie were DeGenring and Ramos, and in their depositions they testified that they were unaware of Linda McKenzie's charge against the company. Plaintiff responds that an inference can be drawn that DeGenring and Ramos did in fact have knowledge of Linda McKenzie's complaint. First, plaintiff generally notes that both Ramos and DeGenring routinely interacted and met with other company officials who in fact were aware of Linda McKenzie's charges. Also, both Ramos and DeGenring were aware that Linda McKenzie was on disability leave, and they both in fact occasionally asked plaintiff how his wife was managing. Additionally, plaintiff highlights the fact that at the May 20, 1994 meeting wherein Ramos and DeGenring discussed plaintiff's conduct and discipline, company officials who were aware of Linda McKenzie's charges were present and took part in the discussion, though these same officials deny ever informing Ramos or DeGenring of Linda McKenzie's complaint. Finally, plaintiff notes that an internal August 1993 company memo between ARCO executives in Los Angeles references plaintiff's status with the company after discussing his wife's charges, thus implying that plaintiff's status was somehow tied to his wife's status. Thus, though all company officials have testified that neither Ramos nor DeGenring were aware of Linda McKenzie's charges, the record indicates that they had ample opportunity to learn of her charges.
Though the Court is mindful of defendants' argument that plaintiff's evidence, even if *577 inferential, must be more than merely speculative,[1] in this instance, though a close call, an inference can be drawn that Ramos and DeGenring had knowledge of Linda McKenzie's complaint. In making this determination, the Court is particularly persuaded by the holding in Anderson v. Phillips Petroleum Co., 861 F.2d 631 (10th Cir.1988), which states:
Although the evidence in this case is very thin and purely circumstantial, we find that the evidence and reasonable inferences flowing therefrom were sufficient to support Mr. Anderson's claim of retaliation. ... The dispute in this case centers upon whether Phillips' failure to transfer Mr. Anderson was casually connected to his participation in protected activity. Phillips argues that there can be no causal connection unless the actual individual who took the adverse action against him knew of the employee's protected activity. Assuming, without deciding, that a plaintiff must show that the individual who took the adverse action against him knew of the employee's protected activity, there was evidence in the record from which the jury could infer that the individual decisionmakers in this case were aware that Mr. Anderson had filed an age discrimination charge. For example, Phillips' witnesses who were responsible for hiring at Borger and Hobbs testified that they were unaware of Mr. Anderson's charge. However, the jury could have inferred that they were aware of the charge if it believed testimony of the supervisor ... that he sometimes communicated adverse job-related information by telephone after he forwarded an employee's name and work history to the hiring locations. The supervisor testified that he was aware of Mr. Anderson's age discrimination charge at the time of the refinery closing.
Id. at 635.
Similarly, in this case, though the evidence is also "very thin and purely circumstantial," a reasonable inference can be drawn that Ramos and DeGenring were aware of Linda McKenzie's charges, notwithstanding their deposition testimony to the contrary. Also, in Anderson, the court was reviewing a jury verdict whereas here the question is whether this case even proceeds to trial. Given that the issue presented involves a "close call," the Court believes that if it errs, it should err on the side of caution. That is, the Court would rather wrongly submit a close question to the jury than wrongly deny a litigant his or her day in court. However, the Court also cautions that its denial of defendants' motion for summary judgment in no way precludes defendants from rearguing the issue of "causal connection" once plaintiff has presented its case.
Finally, as defendants note, if a plaintiff can establish a prima facie case, the burden of production then shifts to the employer to produce a legitimate, nondiscriminatory reason for the adverse action. Sauers, 1 F.3d at 1128. If such evidence is produced, the plaintiff's claims must fail unless the plaintiff demonstrates that the employer's articulated reason in this case insubordination and employee misbehavior is merely a pretext for discrimination. Id. Applied to the instant case, in order to survive summary judgment, McKenzie must also create a genuine issue of material fact as to pretext.
Though defendants argue that any pretext argument advanced by plaintiff again rests on mere conjecture and speculation, plaintiff also satisfies this hurdle. First, insofar as the defendants' argument rests on Ramos' and DeGenrings' lack of knowledge, defendants' argument fails for the reasons stated above. Also, and more specifically, plaintiff offers evidence which indicates that an employee at plaintiff's level has never been disciplined for like conduct. Thus, plaintiff does offer evidence of pretext which a reasonable jury could accept. For these *578 reasons, defendants' motion for summary judgment is denied.
NOTES
[1] See Panis v. Mission Hills Bank, 60 F.3d 1486, 1490 (10th Cir.1995) ("The existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.") (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986)). See also Cone, 14 F.3d at 530; Branson v. Price River Coal Co., 853 F.2d 768, 772 (10th Cir.1988); and Setliff v. Memorial Hosp., 850 F.2d 1384, 1393 (10th Cir.1988). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1487148/ | 675 S.W.2d 243 (1984)
Charles D. ARMENTROUT, Appellant,
v.
TEXAS DEPARTMENT OF WATER RESOURCES, et al., Appellees.
No. 13919.
Court of Appeals of Texas, Austin.
June 13, 1984.
Rehearing Denied September 5, 1984.
*244 Will R. Wilson, Jr., Small, Craig & Werkenthin, Austin, for appellant.
Jim Mattox, Atty. Gen., Jim Mathews, Nancy N. Lynch, Asst. Attys. Gen., Austin, for Texas Dept. of Water Resources.
Bernard D. Skip Newsom, Booth, Lloyd & Simmons, Austin, for City of Arlington, Tex.
Before PHILLIPS, C.J., and POWERS and BRADY, JJ.
PHILLIPS, Chief Justice.
Charles D. Armentrout appeals from the trial court's grant of a summary judgment to appellees, the Texas Department of Water Resources and the City of Arlington, Texas, based upon appellant's application for declaratory relief from and judicial review of an administrative order.
We affirm.
On October 16, 1979 the Department of Water Resources issued an order approving the City of Arlington's reclamation project wherein the City proposed to construct levees and make channel modifications on Hurricane Creek and the west fork of the Trinity River for the purpose of protecting a 590-acre sanitary landfill. The Department order recites that the order was issued after a public hearing; that notice by publication was given the public; and that notice by first-class mail was given to all known property owners within the area to be affected. The City was ordered to commence and complete construction within a specified time frame.
On April 3, 1980 appellant filed a complaint with the Department complaining of the issuance of the October, 1979 administrative order. Appellant alleged that he owned land upon which a lake was located; that the lake was approximately one mile downstream from the City's project; that the lake was fed by Hurricane Creek; and that the City's project will take and divert water from the creek's ordinary flow. Appellant claimed that the City had, in violation of Department rules, failed to inform the Department of his lake's existence, and that such failure had caused the Department to issue its October, 1979 order without giving appellant the actual notice mandated by due process considerations and by the Department's rules. He requested that the Department cancel its approval of the project. On September 22, 1980, the Department dismissed appellant's complaint for lack of jurisdiction.
Thereafter appellant petitioned the trial court, seeking judicial review of the September, 1980 order of dismissal; seeking, pursuant to Tex.Rev.Civ.Stat.Ann. art. 2524-1 (1965 & Supp.1984) a declaration that the October, 1979 administrative order was void; seeking an injunction; and seeking damages. The trial court severed the action for damages and action for injunctive relief from the present cause. The trial court then granted the City and Department's motions for summary judgment as regards the requests for judicial review and declaratory relief.
In four points of error, presented by able counsel, the contention is made that the trial court erred in granting the motions for summary judgment. Appellant pleaded, and appellees in their motions for summary judgment did not dispute, that appellant was denied riparian rights as a result of the October, 1979 order.
I.
Appellant contends that the Commission erred in concluding that it lacked jurisdiction to reconsider its October, 1979 approval of the City's project. All parties agree that the October, 1979 order had *245 become administratively final prior to the filing of appellant's subsequent complaint. Administrative orders, like judgments, must be afforded some degree of finality.
The October, 1979 order, which vested certain rights in the City, is not void on its face. Appellant has not alleged that the City fraudulently misled the Department. We conclude that the Department correctly determined that they lacked authority to reconsider the October, 1979 order. See Railroad Commission v. Texas v. McKnight, 619 S.W.2d 255 (Tex.Civ.App. 1981, no writ).
II.
Appellant contends that the trial court erred in failing to declare that the October, 1979 order was void, at least as to appellant, by virtue of the Department's failure to give appellant the notice to which he was entitled under the Department's rules and under due process considerations. In their motions for summary judgment, appellees do not contest that appellant was denied adequate notice of the October, 1979 hearing.
An Art. 2524-1 action for declaratory judgment is neither equitable nor legal but is sui generis (peculiarthe only one of its kind). Texas Liquor Control Board v. Canyon Creek Land Corp., 456 S.W.2d 891 (Tex.1970). The availability of another remedy that might be entirely adequate does not necessarily deprive the court of jurisdiction to grant declaratory relief. Id. However, having recognized these principles, it must be stated that in many respects an action for declaratory judgment partakes of the properties of both legal actions and suits in equity; both legal and equitable principles can be applicable thereto. 1 Anderson, Actions for Declaratory Judgments §§ 214-16 (1951).
Here, at the time the action was filed in the trial court, the City's project had been essentially completed. Courts will not grant a futile or useless declaratory judgment. 1 Anderson, supra § 222.
Also, we conclude that the declaratory judgment sought is sufficiently akin to an equitable remedy such as to make the public's interest a valid consideration. The operators of public projects are occasionally permitted to avoid orders that others would not be permitted to avoid, because of the public interests involved. Dobbs, Law of Remedies § 2.5 at 65 (1973).
With these considerations in mind, and mindful of the fact that appellant had an adequate legal remedy (a suit for damages and/or inverse condemnation), we conclude that the trial court had the discretion in the instant case to deny declaratory relief. We are unable to ascertain that the trial court abused its discretion.
Appellant's points of error are overruled. The trial court's judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1603425/ | 645 So. 2d 1240 (1994)
TIDELANDS LIMITED I, Tidelands Limited II, and Tidelands Offshore Drilling, Inc. as Successor to Temple Drilling Company
v.
The LOUISIANA INSURANCE GUARANTY ASSOCIATION.
No. 94 CA 0128.
Court of Appeal of Louisiana, First Circuit.
November 10, 1994.
Writ Denied February 17, 1995.
D.C. Panagiotis, Lafayette, for plaintiffs-appellees.
Thomas E. Balhoff, Baton Rouge, for defendant-appellant.
*1241 Before LOTTINGER, C.J., and CARTER, and PITCHER, JJ.
LOTTINGER, Chief Judge.
Plaintiff seeks to recover from Louisiana Insurance Guaranty Association (LIGA) amounts it paid in settlements and judgments after its insurer became insolvent. The main issue arising in this case is whether the 1989 amendments to the LIGA statute, which define "ocean marine insurance," should be applied retroactively to a claim which arose prior to the amendments.
FACTS
Ideal Mutual Insurance Company (Ideal) issued to plaintiff several Standard Workers' Compensation and Employers' Liability policies, which were in force from 1981 through 1984. Ideal was declared insolvent on February 7, 1985. Various claims had arisen during the years of coverage, which were pending at the time of Ideal's insolvency. Plaintiff initially filed suit in federal court to recover money it paid in connection with the pending claims. After the federal suit was dismissed for lack of subject matter jurisdiction, this claim was filed. In granting plaintiff's motion for summary judgment, the trial court ruled that the 1989 amendments to LIGA were substantive in nature and therefore were not retroactive. The court then concluded that it was bound by the supreme court's pre-amendment definition of "ocean marine insurance." Under this definition, plaintiff's claim was not excluded from LIGA's coverage as "ocean marine insurance." Accordingly, the court awarded plaintiff $322,772.10 and denied LIGA's exceptions of no right of action, no cause of action and prescription. LIGA appeals the grant of plaintiff's motion for summary judgment and the denial of its exceptions and raises the following arguments:
1) The 1989 amendments are interpretive and should be applied retroactively to prohibit plaintiff's claim.
2) This is not a "covered claim" under LIGA because neither the claimant nor the insured are Louisiana residents.
3) As a Texas resident, plaintiff is required to seek recovery from the Texas Insurance Guaranty Association.
4) LIGA is entitled to the deductibles contained in the original policies.
5) Plaintiff's claim has prescribed.
LAW AND JURISPRUDENCE
Although "ocean marine insurance" has always been excluded from LIGA coverage under La. R.S. 22:1377, until 1989, the term was undefined. In Deshotels v. SHRM Catering Services, Inc., 538 So. 2d 988 (La.1989), the Louisiana Supreme Court promulgated a definition of "ocean marine insurance" in response to a certified question by the United States Fifth Circuit Court of Appeals.[1] The supreme court interpreted La. R.S. 22:1377 as excluding from LIGA's coverage "different kinds of insurance policies, rather than different risks." Id. at 993. Utilizing this interpretation, the court concluded that "the exclusion for ocean marine insurance does not apply to employers' liability policies which incidently cover risks associated with maritime activities." Id. In essence, the court held that the "name" or "label" on the policy was controlling in determining coverage, not the nature or character of the claim.
In the legislative session following the supreme court's opinion in Deshotels, the legislature overruled the supreme court's definition of "ocean marine insurance." By Act 618 of 1989, the legislature added paragraph B to La. R.S. 22:1377, which provided:
Scope; policy coverage determination
A. This Part shall apply to all kinds of direct insurance, except life, health and accident, title, disability, mortgage guaranty, and ocean marine insurance.
B. The kind and coverage of insurance afforded by any policy shall be determined solely by the coverage specified and established in the provisions of that policy regardless *1242 of any name, label, or marketing designation for the policy.
By Act 688 of 1989, the legislature also amended La. R.S. 22:1379 to provide a definition for the term "ocean marine insurance." Rather than creating a new definition, the legislature merely inserted into the LIGA statute, the existing definition of "marine insurance" contained in the general provisions of Title 22. As amended, La. R.S. 22:1379(9) provided:
Definitions:
As used in this Part:
(9) "Ocean marine insurance" includes marine insurance as defined in R.S. 22:6(13), except for inland marine, as well as any other form of insurance, regardless of the name, label or marketing designation of the insurance policy, which insures against maritime perils or risks and other related perils or risks, which are usually insured against by traditional marine insurances such as hull and machinery, marine builders' risks, and marine protection and indemnity. Such perils and risks insured against include without limitation loss, damage or expense or legal liability of the insured for loss, damage, or expense arising out of or incident to ownership, operation, chartering, maintenance, use, repair or construction of any vessel, craft or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness or death or for loss or damage to the property of the insured or another person.
Through these amendments, the legislature made it clear that the name or label on the insurance policy was not controlling, rather it was the type of claim involved which determined if the insurance was "ocean marine insurance."
RETROACTIVITY
The question presented here is whether plaintiff's claim, which arose prior to the amendments, should be governed by the 1989 amendments. Under the Deshotels definition, plaintiff's claim is not excluded from LIGA coverage as "ocean marine insurance." However, if plaintiff's claim is governed by the 1989 amendments, then the claim is clearly barred under the legislature's definition of "ocean marine insurance." Plaintiff contends that the amendments are substantive and thus cannot be applied retroactively so as to destroy vested rights. LIGA contends that the amendments were interpretive and apply retroactively. Unless there is a legislative expression to the contrary, substantive laws apply prospectively only, and procedural and interpretive laws apply both prospectively and retroactively. La.Civ.Code art. 6. Substantive laws are those which establish new rules, rights, and duties or change existing ones. Interpretive laws, on the other hand, do not create new rules, but merely establish the meaning that the original statute had from the time of its enactment. St. Paul Fire & Marine Insurance Company v. E.R. Smith, Jr., 609 So. 2d 809, 817 (La.1992). It is the original statute, not the interpretive one, that establishes the rights and duties. Id. Thus, the interpretive statute may be given retrospective effect because it does not change, but merely clarifies, pre-existing law. Id.; Gulf Oil Corp. v. State Mineral Board, 317 So. 2d 576, 591 (La.1974).
Addressing the subject of interpretive legislation, the Louisiana Supreme Court, in St. Paul, utilized five factors in determining whether a law was interpretive. Applying these factors, we conclude that the 1989 amendments are interpretive.
First, the amendments were a "prompt" rather than a delayed legislative response to the Deshotels decision. The legislature acted immediately by amending the statutes in the next legislative session. The fact that the amendment came immediately after the supreme court's decision indicates the legislature's intent to clarify the meaning of the term "ocean marine insurance," a phrase which had been part of the LIGA statute since its inception in 1970.[2]
*1243 Second, the amendments overruled a single supreme court decision rather than a long line of established jurisprudence. The legislature acted quickly to clarify the definition of "ocean marine insurance" before the Deshotels definition became entrenched in the jurisprudence.
Third, the parties could not have relied on the Deshotels' definition in making their claims. Plaintiff initially filed suit in federal court on April 15, 1987. Deshotels was not decided until January 30, 1989. By the time plaintiff filed this claim in state court in 1991, the legislature had overruled Deshotels by providing a specific definition for "ocean marine insurance." Thus, unlike the parties in St. Paul, the parties in the present case did not rely on the overruled jurisprudence in making their claims.
Fourth, the acts which amended La. R.S. 22:1377 and 22:1379 were not part of an extensive revision of the LIGA statute. The amendments merely clarified the scope of policy coverage, amended the definition of "member insurer," and added definitions for "insurance policy" and "ocean marine insurance."
Finally, there is no evidence that the legislature intended the amendments to have prospective effect only. Absent legislative expression to the contrary, interpretive laws apply both prospectively and retroactively. La.Civ.Code art. 6.
Considering these factors, we conclude that the amendments are interpretive only and thus should have been applied retroactively to exclude plaintiff's claim.[3] Additionally, we note that the fourth circuit reached the same conclusion in H & B Construction Co. of La., Inc. v. Louisiana Insurance Guaranty Association, 580 So. 2d 931 (La. App. 4th Cir.), writ denied, 587 So. 2d 695 (La.1991). In addressing the issue of the retroactivity of the 1989 "ocean marine insurance" amendments, the fourth circuit concluded that the action taken by the Louisiana legislature in 1989, to amend the LIGA statute, coupled with the jurisprudential history of the term "ocean marine insurance," compelled the conclusion that the legislature intended to retroactively alter the result reached by the Louisiana Supreme Court in Deshotels. In concluding that the amendments were retroactive, the fourth circuit stated:
The jurisprudential history and response of the legislature support the inference that these amendments were intended to interpret and clarify the law. La. C.C. art. 6, which addresses the retroactive effect of laws, clearly provides that interpretive laws are to be given retroactive effect absent legislative expression of contrary intent. We believe that this was the intent here, and hold that the provisions of the LIGA statutes, as amended by the sections specified above, are retroactive in effect and should have been applied by the trial court in this case.
Id. at 933.
Plaintiff asserts that retroactive application of the amendments is impermissible as this would deprive it of the vested right to recover against LIGA. Such an "argument reflects a misunderstanding concerning the exception relating to interpretive laws ...". Laubie v. Sonesta International Hotel Corporation, *1244 752 F.2d 165, 168 (5th Cir.1985). Interpretive laws cannot divest vested rights because it is the existing law, not the interpretive law, which established the rights and duties of the parties. St. Paul Fire & Marine Insurance Company, 609 So.2d at 817. Interpretive laws merely clarify those pre-existing rights and duties. Id.
"Ocean marine insurance" has been excluded from LIGA's coverage since LIGA's inception in 1970. According to the foregoing discussion, the exclusion has always applied to the type of coverage presently at issue. Retroactive application of the 1989 amendments will not disturb plaintiff's vested right, as plaintiff never had a right to recover from LIGA.
Having concluded that the amendments are interpretive and apply retroactively so as to exclude plaintiff's claim, we need not address the remaining assignments of error.
CONCLUSION
For the foregoing reasons, the trial court's judgment granting plaintiff's motion for summary judgment is reversed. LIGA's peremptory exception raising the objection of no cause of action is granted and plaintiff's suit is dismissed. Costs of this appeal are assessed against plaintiff.
REVERSED AND RENDERED.
NOTES
[1] The question was certified in Deshotels v. SHRM Catering Services, Inc., 845 F.2d 582, 585 (5th Cir.1988).
[2] The Louisiana Supreme Court addressed the retroactivity issue in Segura v. Frank, 93-1271 (La. 1/14/94); 630 So. 2d 714. In concluding that the amendment in question was retroactive, the court found it significant that the amendment at issue was a delayed legislative response (over 10 years), rather than a "prompt" legislative response to the supreme court's previous interpretation of the statute. Unlike the sequence of events present in Segura, the amendments at issue here were not delayed, but instead were as "prompt" a legislative response as could possibly have occurred.
[3] In brief, plaintiff cites International Matex Tank Terminals v. LIGA, 633 So. 2d 712 (La.App. 1st Cir.1993), and submits that the reasoning therein applies in the present case. In Matex, this Court ruled that the portion of Act 688 of 1989, which added a definition for "insurance policy" to La. R.S. 22:1379, was substantive in nature and applied prospectively only. In reaching that conclusion, we noted that at the time of the amendment, "there was no definition or even mention, of the term `cut-through' endorsement in the Guaranty Association Law." Additionally, we emphasized that the jurisprudence consistently held that such endorsements constituted direct insurance as a matter of law.
The present case is distinguishable from Matex. First, the term "ocean marine insurance" has always been included in the LIGA statute. Second, although the term was not specifically defined in the LIGA statute, "marine insurance," a synonymous term, was defined in the general provisions of the insurance code. Finally, the jurisprudence did not consistently define "ocean marine insurance." Thus, the Matex reasoning is inapplicable in this case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1872110/ | 594 So. 2d 606 (1992)
Kenneth PATTERSON
v.
STATE of Mississippi.
No. 91-KP-0606.
Supreme Court of Mississippi.
January 29, 1992.
Kenneth Patterson, pro se.
Mike C. Moore, Atty. Gen., Wayne Snuggs, Asst. Atty. Gen., Jackson, for appellee.
Before DAN M. LEE, P.J. and PITTMAN and BANKS, JJ.
PITTMAN, Justice, for the Court:
I.
Kenneth Patterson, a prisoner presently incarcerated in the South Mississippi Correctional Institution at Leakesville, prosecutes this direct appeal from an order issued on May 24, 1991, by the Circuit Court of Lamar County summarily dismissing as time-barred his pro se "Motion To Vacate Guilty Plea" filed on May 10, 1991. The specific target of Patterson's post-conviction motion to vacate was a plea of guilty to armed robbery entered in Lamar County on November 28, 1983. We affirm the circuit court's denial of Patterson's motion to vacate his plea of guilty.
II.
On November 28, 1983, Patterson, upon the advice and with the consent of his attorney, entered a plea of guilty in Lamar County to armed robbery. On December 5, 1983, in the wake of a presentence investigation, Patterson was sentenced to serve a term of twenty (20) years in the custody of the Mississippi Department of Corrections. This sentence was to run concurrently with a previous sentence that Patterson was serving at that time. By virtue of Miss. Code Ann. § 47-7-3(d) Patterson would not be eligible for parole until he had served ten (10) years of the sentence imposed.
On May 10, 1991, over seven (7) years after the entry of his 1983 plea of guilty, *607 Patterson, following his transfer in March of 1991 to the South Mississippi Correctional Institution, filed in the Circuit Court of Lamar County a "Motion To Vacate Guilty Plea" claiming his plea was involuntary because (1) neither his lawyer nor the trial judge ever informed him of the maximum and minimum sentence for armed robbery and (2) the mandatory portion of his sentence was imposed in violation of the circuit court's sentencing authority.
On May 24, 1991, the circuit judge who had entertained Patterson's plea of guilty in 1983 entered an order summarily denying the motion to vacate on the ground it clearly was time-barred by the three (3) year statute of limitations contained in the Mississippi Uniform Post-Conviction Collateral Relief Act. Accordingly, the court held "... that it plainly appears on the face of the motion and prior proceedings in the case ... that the movant is not entitled to any relief ..."
In his direct appeal to this Court Patterson suggests (1) the time bar contained in the post-conviction collateral relief act is unconstitutional but (2) even if it is not the time bar is inapplicable to his case because the foundation for his claim of involuntariness falls within the intervening decision exception contained in the post-conviction collateral relief act.
III.
A. Time Bar
Patterson's motion was time-barred by virtue of the three (3) year statute of limitations set forth in § 99-39-5(2), Mississippi Code 1972 Annotated (Supp. 1991). The judgment of conviction of armed robbery and sentence of twenty (20) years, which was based upon a plea of guilty, was entered on November 28, 1983. The present motion to vacate assailing that conviction and sentence was filed with the clerk on May 10, 1991.
Section 99-39-5(2), supra, identifies, in plain and ordinary English, the time limitations for motions to vacate guilty pleas. It reads as follows:
(2) A motion for relief under this chapter shall be made within three (3) years after the time in which the prisoner's direct appeal is ruled upon by the supreme court of Mississippi or, in case no appeal is taken, within three (3) years after the time for taking an appeal from the judgment of conviction or sentence has expired, or in case of a guilty plea, within three (3) years after entry of the judgment of conviction. Excepted from this three-year statute of limitations are those cases in which the prisoner can demonstrate either that there has been an intervening decision of the supreme court of either the state of Mississippi or the United States which would have actually adversely affected the outcome of his conviction or sentence or that he has evidence, not reasonably discoverable at the time of trial, which is of such nature that it would be practically conclusive that had such been introduced at trial it would have caused a different result in the conviction or sentence. Likewise excepted are those cases in which the prisoner claims that his sentence has expired or his probation, parole or conditional release has been unlawfully revoked. [emphasis supplied]
The post-conviction relief act applies prospectively from its date of enactment, April 17, 1984. Individuals such as Kenneth Patterson who entered a plea of guilty prior to April 17, 1984, "... have three (3) years from April 17, 1984, to file their petition for post-conviction relief." Odom v. State, 483 So. 2d 343, 344 (Miss. 1986). See also Freelon v. State, 569 So. 2d 1168, 1169 (Miss. 1990); Jackson v. State, 506 So. 2d 994 (Miss. 1987).
In Odom, supra, we find the following language supporting these observations:
* * * * * This act applies prospectively from its date of enactment, April 17, 1984. Individuals convicted prior to April 17, 1984, have three (3) years from April 17, 1984, to file their petition for post-conviction relief. * * * * *
Odom entered his plea of guilty on December 19, 1978 prior to the enactment of § 99-39-5. Therefore, he had *608 three (3) years from April 17, 1984, the date of its enactment, to file his petition. 483 So.2d at 344-45 [emphasis supplied]
Patterson, much like Odom, entered his plea of guilty on November 28, 1983, prior to the enactment of the Mississippi Uniform Post-Conviction Collateral Relief Act (UPCCRA). He had three (3) years from April 17, 1984, the date of enactment, to file his motion to vacate in the trial court. Consequently, the deadline for Patterson's post-conviction papers was April 17, 1987.
His complaint, however, was not filed until May 10, 1991, more than four (4) years after the time for assailing his guilty plea had expired. This was excruciatingly tardy and, in fact, too late. Since Patterson's claim did not involve the deprivation of a fundamental constitutional right, the old adage that "it's better late than never" does not apply here.
B. Intervening Decision Exception to Time Bar
Excepted from the three year statute of limitations are those cases in which the prisoner can demonstrate that there has been an intervening decision of the supreme court of either the State of Mississippi or the United States which would have actually adversely affected the outcome of his conviction or sentence. See Miss. Code Ann. § 99-39-5(2) and § 99-39-23(6) (Supp. 1991). Patterson contends that Vittitoe v. State, 556 So. 2d 1062 (Miss. 1990), and Schmitt v. State, 560 So. 2d 148 (Miss. 1990), qualify under this exception and operate to excuse his procedural default.
One of the claims contained in Patterson's "Motion To Vacate Guilty Plea" filed in the lower court was that his 1983 plea of guilty to armed robbery, a conviction for which he received twenty (20) years, was involuntary because he was not advised, and did not know, the maximum or the mandatory minimum penalty for the offense. To be sure, the transcript of the plea-qualification hearing, while containing references to the reading by the defendant of the prosecutor's recommendation and the filing by Patterson of the defendant's position on sentencing, does not affirmatively reflect that Patterson was so advised.
While it may appear, given the contours of our holding in Vittitoe, that Patterson has a facially viable post-conviction claim, his claim, whether meritorious or not, is time-barred by virtue of § 99-39-5(2). It will not be reviewed by this Court absent a finding the claim is embraced by the statutory exceptions.
Patterson states in his appellate brief he "... is not barred by the three year statute of limitations in that [his] claims for relief arose subsequent to the recent decisions rendered by this... Court in Vittitoe ... and Schmitt ..." According to Patterson "[t]he language of the Post Conviction Relief Act has operated to bar defendant from asserting claims which he only became aware of because of the recent rulings by this ... Court."
We are sympathetic but not persuaded. Our decision in Vittitoe is based on the failure of the trial court to follow the mandates of Miss.Unif.Crim.R.Cir.Ct.Prac. 3.03 (1979). Vittitoe does not qualify under the intervening decision exception because this exception applies only to those decisions that create new intervening rules, rights, or claims that did not exist at the time of the prisoner's conviction or during the three (3) year period circumscribed by the statute of limitations.
Far from creating a new rule, right, or claim, Vittitoe simply recognized and applied a pre-existing rule, a rule that had been in existence for at least four years when Patterson entered his 1983 plea of guilty in Lamar County.[1] Stated differently, the requirements of Rule 3.03 existed at the time Patterson entered his plea. The rule was just as available to him between *609 November 28, 1983, and April 17, 1987, as it was to Joseph Vittitoe between May 31, 1983, when Vittitoe, a first offender, entered his plea, and November 9, 1984, when Vittitoe, unlike Patterson, filed a timely motion for post-conviction collateral relief.
Patterson's reliance upon Rule 3.03 is reflected in paragraph IV.(a) and paragraph VI.(1)(c) of his motion to vacate guilty plea. Indeed, Patterson, a six (6) time felony offender with a twelfth grade education, freely admits in his reply brief "that these settled principles were in place before he entered his plea in 1983."
Since Patterson's motion was filed well beyond the three (3) year statute of limitations, and because Vittitoe is not an "intervening decision" within the meaning and purview of the statute, the trial judge was correct in overruling the prisoner's motion to vacate guilty plea on the basis of a procedural default.
C. Constitutionality of Post-Conviction Relief Act
Patterson, citing Reynolds v. State, 521 So. 2d 914 (Miss. 1988), asserts, for the first time, "[t]he Post Conviction Relief Act is unconstitutional and unenforceable because it constitutes a suspension of the writ of habeas corpus in violation o[f] Miss. Const. Art. 3, § 21 (1890), ther[e]by depriving defendant of due process and equal protection of the law."
Neither this claim nor argument in support thereof was made in the lower court. Patterson's "Motion To Vacate Guilty Plea" is devoid of any rhetoric aimed at the constitutionality of the post-conviction relief act or at the constitutional vitality of the time bar(s) found within its four corners. Patterson obviously contemplated the State would assert the time bar as a defense since the brief filed in support of his motion to vacate guilty plea claims "... that this procedural bar cannot apply in this cause where an individual's fundamental constitutional rights are violated as in this case."
It is clear that Patterson's constitutional claims, which appear only on the pages of the briefs filed in this Court, have been raised for the very first time here. We have repeatedly held, however, that "[o]nly matters of jurisdiction may be raised for the first time on appeal." Colburn v. State, 431 So. 2d 1111, 1114 (Miss. 1983) citing Williamson v. State, 330 So. 2d 272 (Miss. 1976). See also Jefferson v. State, 386 So. 2d 200, 202 (Miss. 1980) ["It is elemental that errors cannot be raised in this Court for the first time on appeal."]; Ponder v. State, 335 So. 2d 885, 886 (Miss. 1976) ["A trial judge cannot be put in error on a matter which was not presented to him for decision."]
These rules apply to our review of appeals involving collateral attacks originating in the lower court as well as our review of convictions flowing in the wake of direct appeal. In Leverett v. State, 197 So. 2d 889, 890 (Miss. 1967), this Court, quoting from Collins v. State, 173 Miss. 179, 180, 159 So. 865 (1935) held:
The Supreme Court is a court of appeals, it has no original jurisdiction; it can only try questions that have been tried and passed upon by the court from which the appeal is taken. Whatever remedy appellant has is in the trial court, not in this court. This court can only pass on the question after the trial court has done so. 197 So.2d at 890.
The rule that questions not raised in the lower court will not be reviewed on appeal is particularly true where constitutional questions are involved. Stewart v. City of Pascagoula, 206 So. 2d 325 (Miss. 1968). These questions are waived forfeited, if you please if not asserted at the trial level. Contreras v. State, 445 So. 2d 543, 544 (Miss. 1984) [Appellant did not raise in lower court the constitutionality of statute proscribing crime against nature, and for that reason the question could not be considered on appeal]; Colburn v. State, supra, 431 So. 2d 1111, 1113 (Miss. 1983) [Constitutionality of aggravated assault statute could not be considered for the first time on appeal]; Smith v. State, 430 So. 2d 406, 407 (Miss. 1983) [Constitutional argument not asserted in court below was waived and could not be asserted in Supreme Court].
*610 Patterson, by failing to attack the constitutionality of the post-conviction relief act in the lower court, waived any error in this regard and cannot now seek reversal of the trial court's ruling in this Court.
DENIAL OF MOTION TO VACATE GUILTY PLEA, AFFIRMED.
ROY NOBLE LEE, C.J., HAWKINS and DAN M. LEE, P.JJ., and PRATHER, ROBERTSON, SULLIVAN, BANKS and McRAE, JJ., concur.
NOTES
[1] The requirement found in Rule 3.03(3)(B) that the accused be informed of the maximum and minimum penalties provided by law has existed at least since 1979 when the uniform rules, which were promulgated and published by the circuit judges in 1977, were first approved by this Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1505359/ | 665 S.W.2d 756 (1984)
BIG H AUTO AUCTION, INC., Petitioner,
v.
SAENZ MOTORS, Respondent.
No. C-2267.
Supreme Court of Texas.
February 1, 1984.
Rehearing Denied April 4, 1984.
Green, Downey, Patterson & Schultz, William T. Green III, Houston, for petitioner.
Cardenas & Whitis, William E. Corcoran, McAllen, for respondent.
CAMPBELL, Justice.
This is a deceptive trade practices case. Saenz Motors, a used car dealer, sued Big H Auto, for damages resulting from the purchase of two vehicles. The trial court held Saenz Motors was not a consumer under the Deceptive Trade Practices Act (DTPA) and rendered judgment for actual damages only. The court of appeals reversed the trial court judgment holding that Saenz Motors was a consumer and awarded treble damages and attorneys' fees. 653 S.W.2d 521. We affirm the judgment of the court of appeals.
In December 1978, Saenz Motors bought from Big H Auto Auction, Inc. a 1976 Dodge Van and a 1979 Ford Thunderbird for $9,340.00. At the sale, Big H told Saenz Motors that the original titles had been lost, and provided certified copies of the original titles. The cars were resold by Saenz Motors and the new owners were refused certificates of title by the Department of Public Safety because the automobiles had been stolen. Saenz Motors then requested Big H to return its money. When Big H refused, Saenz Motors sued *757 Big H for treble damages, attorneys' fees and costs under the DTPA.
Our question is whether a buyer of goods for resale is a consumer under the DTPA. Specifically, the issue is whether resale of goods constitutes "use" as required by the DTPA. The statutory provisions that govern are those in effect at the time the act occurred, 1978. Woods v. Littleton, 554 S.W.2d 662, 666 (Tex.1977). At the time of these actions, the pertinent parts of the DTPA then applicable were:
Sec. 17.45 Definitions
As used in this subchapter:
1) "Goods" means tangible chattels or real property purchased or leased for use.
* * * * * *
4) "Consumer" means an individual, partnership, corporation, or governmental entity who seeks or acquires by purchase or lease, any goods or services.
Unfortunately the legislature failed to define use and failed to define the scope of the Act. To determine legislative intent we will study the history of the Act.
In 1973, the Act was introduced in the House of Representatives as H.B. 417. The same bill was introduced in the Senate as S.B. 75. Both forms defined goods, services and consumer as:
(1) "Goods" means tangible chattels bought for use primarily for personal, family, or household purposes, including certificates or coupons exchangeable for such goods, and including goods, which, at the time of the sale or subsequently, are to be affixed to real property, as to become a part of the real property whether or not severable.
(2) "Services" means work, labor, and services for other than commercial or business use, including services furnished in connection with the sale or repair of goods.
(3) "Consumer" means an individual who seeks or acquires by purchase or lease, any goods or services for personal, family, or household purposes.
On the Senate floor, Senator Snelson offered an amendment to the proposed Act and stated:
Mr. President and members of the Senate, in reading the definition of "goods," it seems to me that business people also could be the victims of deceptive practices in purchases of various equipment which they use and I don't see the purpose of nailing down the definition to the extent that they have it there because even if I am victimized in my business, I feel that I should have a right to an action under this particular bill. So that's the purpose of it. I think that the definition simply draws it down to what we are talking about and if there has been a deceptive practice in the sale of tangible goods to one that they should have access to the remedy, and that is the whole purpose of it.
Transcript of a Portion of the Floor Debate on S.B. 75, April 13, 1973. The personal, family or household purpose was stricken and the Act passed the Senate with new definitions of "Goods" and "Consumer."
"(1) `Goods' means tangible chattels bought for use.
"(2) `Consumer' means an individual who seeks or acquires by purchase or lease any goods or services."
The House of Representatives concurred with the amended Senate Bill and H.B. 417, as amended, was signed by the Governor.
In 1975, the scope of "consumer" was again changed in what we consider to be a broadening of the term. Senate Bill 48 sought to add the word "final" so that "goods" would mean "tangible chattels or real property purchased for final use" and "services" means "work, labor, or service purchased or leased for final use and for other than commercial or business use...." The word "final" was stricken prior to final passage. In support of deleting "final," a representative of the Texas Automobile Dealer Association testified that if "use" were restricted to "final use" automobile dealers would lose their standing to sue companies or individuals who sell products which are intended to be sold *758 to dealers' customers. In Senate floor debate, Senator Mauzy stated that "final" had been inadvertently added by the Senate Human Resources Committee, and that the amendment to delete the word was a committee amendment; that a consumer is a person who makes use of the goods but may not be the final user, and, that inserting the word would be restrictive and less broad than the present law. Senator Meier argued that the purpose of the Act was not to protect those buying goods for further processing or further marketing. Also, the Act was further amended to add to the definition of "consumer" corporations and partnerships. Tex.Laws 1975, ch. 62, § 1 at 149; Tex.Laws 1977, ch. 216, § 1 at 600. By a vote 28 to 3, the amendment passed and "final" was deleted.
In 1977, the Act was again amended. The "commercial or business use" exemption was deleted, thus removing all possible restriction on the word "use." Also, governmental entities were added to the definition of consumer.
The Act, as originally passed in 1973, included a definition of "merchant" as meaning a party to a consumer transaction other than a consumer. Merchant was deleted from the definition section in 1977. With this history, we now have the Act as it existed in 1978.
Sec. 17.45 Definitions
As used in this subchapter:
1) "Goods" means tangible chattels or real property purchased or leased for use.
* * * * * *
4) "Consumer" means an individual, partnership, corporation, or governmental entity who seeks or acquires by purchase or lease, any goods or services.
Did the legislature intend that goods bought for resale be covered by the DTPA? It is a common statutory construction rule that if the legislature does not define a term, its ordinary meaning will be applied. Satterfield v. Satterfield, 448 S.W.2d 456 (Tex.1969). "Use" was defined in Southwestern Telegraph & Tel. Co. v. City of Dallas, 174 S.W. 636 (Tex.Civ.App. Dallas 1915, writ ref'd), as follows: "`Use' means to make use of; to convert to one's own service; to put to a purpose; to hold, occupy, enjoy, or take the benefit of." BLACK'S LAW DICTIONARY (Rev. 4th Ed., 1968) says that in the non-technical sense, the "`use' of a thing means that one is to enjoy, hold, occupy, or have some manner of benefit thereof." The word "use," as used in The Texas Tort Claims Act, was defined in Beggs v. Texas Dep't of Mental Health & Mental Ret., 496 S.W.2d 252, 254 (Tex.Civ.App.San Antonio 1973, writ ref'd), as "`to put or bring into action or service; to employ for or apply to a given purpose.'" However, in Pennington v. Singleton, 606 S.W.2d 682 (Tex. 1980), this Court held that in construing the DTPA, a court is not necessarily confined to the literal meaning of the words used and that legislative intent rather than the strict letter of the Act will control. The intent should be determined from the entire Act and not from an isolated part. We are mandated by § 17.44 of the DTPA that the Act be liberally construed and applied to promote its underlying purposes, which are to protect consumers against false misleading and deceptive business practices, unconscionable actions, and breaches of warranty and to provide efficient and economical procedures to secure such protection.
Consumer, under the 1977 Act, means any individual, partnership or corporation who seeks or acquires by purchase or lease any goods or services. Saenz Motors is a consumer. The sale and representation by Big H of stolen vehicles was a deceptive business practice and an unconscionable action. Saenz, whether an individual, partnership or corporation, whether large or small, was deprived of $9,340.00 for whatever use was intended to be made of the cars. To limit "use" would be contrary to the statutory mandate of § 17.44 on construction and application of the Act.
The cases holding that a purchase for resale is not a use are inapplicable. The case of Ratcliff v. Trenholm, 596 S.W.2d *759 645 (Tex.Civ.App.Tyler 1980, writ ref'd n.r. e.), holding that a purchaser of lots for resale was not a consumer, was based on the 1975 Act. The Act then included the definition of "merchant" and had the "for other than business or commercial use" exception. That court stated that "The Plaintiffs clearly acted as merchants with respect to the purchase and resale of the lots. It is thus clear that at the time of the accrual of plaintiffs' cause of action, which was before the `merchant' definition and the `for other than commercial or business use' exceptions to the definition of `services' were removed from the DTPA, plaintiffs were not consumers under the Act...."
In Person v. Latham, 582 S.W.2d 246 (Tex.Civ.App.Beaumont 1979, writ ref'd n.r.e.), the court stated that the plaintiff did not purchase the lots for use, but to become a link in a chain designed to fleece the mythical Mrs. Gigglia of her funds. That court, citing Satterfield v. Satterfield, 448 S.W.2d 456 (Tex.1969), that because the legislature did not specifically define "use" its ordinary meaning will be applied, held that "... we decline to permit one conspirator to recover treble damages against his co-conspirator in a scheme to defraud a third person." Additionally, the court held the plaintiff had pleaded and proved a cause of action under Texas Business and Commerce Code, § 27.01, which governs suits involving fraudulent representation in land transactions. The court stated: "We have a special statute governing corporate stock and real estate transactions and we find no imperative need to torture this case into one covered by the Deceptive Trade Practices Act."
We disapprove the holding in Voss v. May, 646 S.W.2d 606 (Tex.App.Fort Worth 1983, writ dism'd w.o.j.), to the extent that it conflicts with this opinion. In this plea of privilege case involving a contract for sale of an automobile dealership, the court held that it is unclear what specific violations of the DTPA were relied upon and that dependence on the Act was misplaced because the case should have been a common law action for breach of an indemnification agreement. After disposing of the case by holding that breach of an indemnification agreement would not constitute misconduct under the DTPA and that there was a complete lack of proof of a breach, the court went on to state there was another reason the DTPA does not apply. The court then held that a purchase for resale was not a purchase for use and the buyer was not a consumer. The Voss court relied on Person v. Latham, 582 S.W.2d 246 (Tex.Civ.App.Beaumont 1979, writ ref'd n.r.e.), and South Texas Irrigation Systems, Inc. v. Lockwood Corp., 489 F. Supp. 256 (W.D.Tex.1980).
We have already pointed out the inapplicability of Person v. Latham. We also disagree with South Texas Irrigations Systems which held that a seller of irrigation systems purchased for resale was not a consumer. This case cites a 1976 unpublished opinion, Rod East Volkswagen v. Auranthetic Corporation, No. SA-74-CA-6 (W.D.Tex.)[1] and Person v. Latham. We cannot determine which version of the Act was construed in the Rod East Volkswagen case, whether the 1973 or 1975, but it certainly has no application to the case before us because of the amendments to the Act.
We hold that the purchase by Saenz Motors of two vehicles from Big H Auto Auction, Inc., for resale, is a "use" within the meaning of the Act. The judgment of the court of appeals is affirmed.
BARROW, J., dissents.
BARROW, Justice, dissenting.
I respectuflly dissent. See Ratcliff v. Trenholm, 596 S.W.2d 645 (Tex.Civ.App. Tyler 1980, writ ref'd n.r.e.); Person v. Latham, 582 S.W.2d 246 (Tex.Civ.App. Beaumont 1979, writ ref'd n.r.e.).
NOTES
[1] Unpublished opinions are not regarded as precedent. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1666833/ | 382 So. 2d 215 (1980)
ASSOCIATES FINANCIAL SERVICES COMPANY, INC., Plaintiff-Appellee,
v.
William J. RYAN, Defendant-Third Party Plaintiff-Appellee,
Huffman Motor Company, Third Party Defendant-Appellant.
No. 7437.
Court of Appeal of Louisiana, Third Circuit.
March 5, 1980.
*216 William P. Polk, Alexandria, for defendant-appellant.
George Griffing, Jonesville, Sanders, Downing, Kean & Cazedessus, Robert A. Hawthorne, Jr., Baton Rouge, Virgil Purvis, Jr., Jonesville, for plaintiff-appellee.
Before DOMENGEAUX, FORET and SWIFT, JJ.
*217 FORET, Judge.
Associates Financial Services Company, Inc. (hereinafter Associates) brought suit against the defendant, William J. Ryan, to enforce payment of a note secured by a chattel mortgage, in favor of Associates, on a 1973 Mack truck, as a result of Ryan's failure to pay an installment. Ryan answered the suit, reconvened against Associates, and third partied the seller of the truck, Huffman Motor Company, Inc. (hereinafter Huffman), alleging that the truck had redhibitory vices at the time of the sale. Huffman denied these allegations and reconvened against Ryan on a separate claim alleging that Ryan owed it $4,348.44 for repairs made to certain other vehicles owned by Ryan.
Associates moved for and was granted a summary judgment recognizing their chattel mortgage and ordering that the vehicle in question be sold at a sheriff's sale, at which Associates acquired the vehicle, being the highest bidder at $2,500.00.[1] This judgment is final and is not presently before us.
The trial court rendered judgment as follows:
1. Rescinding the sale from Huffman to Ryan of the Mack truck and returning the truck to Huffman;
2. Ordering Huffman to pay to Associates on behalf of Ryan the sum of $20,482.16, thereby discharging Ryan's obligation to Associates;
3. Granting judgment in favor of Ryan on his reconventional demand against Huffman in the sum of $14,994.99, together with legal interest from date of judicial demand;[2]
4. Granting judgment in favor of Huffman on its reconventional demand against Ryan in the sum of $4,348.44, together with legal interest thereon from date of judicial demand, until paid;
5. Ordering that the cost of the proceedings be borne equally by Ryan and Huffman.
From this judgment, Huffman has appealed, seeking a reversal of that part of the trial court's judgment rescinding the sale, granting judgment in favor of Ryan on his reconventional demand, and ordering Huffman to discharge Ryan's obligation to Associates.
The first issue raised is whether or not evidence dealing with the history of the subject vehicle prior to its acquisition by Huffman is relevant. Counsel for Huffman argues that it is not. We disagree.
For evidence to be relevant, it must have some probative value and be reasonably connected to the transaction in question. Vignes-Bombet Company, Inc. v. Rowe, 288 So. 2d 889 (La.App. 1 Cir. 1973). We are of the opinion that the evidence of the history of the Mack truck in question prior to its acquisition by Huffman in a used condition is relevant to the issue sub judice and is admissible. Surely the history of a thing is relevant in an action in redhibition, especially when the buyer is attempting to prove that the seller knew of the vice or vices and was in bad faith. Evidence should not be excluded where it is admissible to prove any hypothesis included in plaintiff's alleged cause of action. Goltzman v. Goltzman, 372 So. 2d 1262 (La.App. 3 Cir. 1979).
On February 9, 1976, William J. Ryan purchased from Huffman Motor Company, Inc., located in Alexandria, Louisiana, a used 1973 Mack truck. This truck was acquired *218 by Huffman from the Roy O. Martin Lumber Company as a trade-in on a new GMC truck purchased by the lumber company.
The truck had been overhauled twice, once by Shreveport Mack Sales, Inc. in March of 1975, and once by Huffman in November of 1975. The truck was overhauled a third time in May of 1976, four months after it had been purchased by Ryan. Additional maintenance and repair work was necessitated throughout the life of the truck, some of which included the following, which we take the liberty of copying from counsel for defendant-appellee's brief:
WHILE THE TRUCK WAS OWNED BY
ROY O. MARTIN LUMBER COMPANY
-------------------------------------
PLAINTIFF'S DATE NAME OF SHOP COMPLAINT
EXHIBIT NO.
-----------------------------------------------------------------------------------------
6 10-23-73 Monroe Mack Sales Oil seal on ax.drive
5 12-26-73 Shreveport Mack Sales Check for oil leak at front
of truck
5 1-10-74 Shreveport Mack Sales Stop fuel leak
2 10-12-74 Shreveport Mack Sales Check for bad oil leak and
repair; tighten oil dipstick
tube at bottom for leaking
oil; check for getting
water in oil
4 11-19-74 Shreveport Mack Sales Replace rear main seal
10 1-21-75 Jackson Mack Sales Repair oil leak and oil filter
11 2-11-75 Jackson Mack Sales Replace U joint behind
front rear end
1 3-10-75 Shreveport Mack Sales Check for getting water
in oil; overhaul engine
complete
8 7-18-75 Monroe Mack Sales Oil leak
3 9-30-75 Shreveport Mack Sales Check for oil leak
7 10-24-75 Monroe Mack Sales Wheels locked up south
of Tallulah
-----------------------------------------------------------------------------------------
WHILE TRUCK WAS OWNED BY
HUFFMAN MOTOR COMPANY
-------------------------------------
17 11-26-75 Huffman Motor Co., Check oil leaks
Inc.
17 12-20-75 Huffman Motor Co., Check for fuel leak
Inc.
-----------------------------------------------------------------------------------------
WHILE TRUCK WAS OWNED BY
WILLIAM J. RYAN
-----------------------------
13 2-9-76 Huffman Motor Co., Service call to check for
Inc. no power
14 4-7-76 Huffman Motor Co., Replace fan, fan hub and
Inc. repair radiator
*219
15 5-12-76 Natchez Equip. Co. Repair oil light
9 5-28-76 Monroe Mack Sales Complete engine overhaul
costing $5,295.59
Mr. A. M. Tomlinson, a former employee of Ryan, testified that he had trouble with the truck in Mississippi. As a result of this trouble, he had to call Ryan, who in turn informed Huffman Motors about the difficulties. Huffman Motors sent a wrecker to Mississippi to retrieve the truck and bring it back for repairs. Tomlinson testified that it was necessary to put oil in the truck both when going to Hattiesburg, Mississippi from DeRidder, Louisiana, and when returning from Hattiesburg to DeRidder. He also said that it was necessary to return the truck to Huffman on six or seven occasions due to problems that arose with the operation of the truck. Tomlinson relates that on a trip he made to Brooklyn, New York, that it was necessary to put one gallon of oil in the truck for every three hundred to three hundred fifty miles that the truck was driven. A universal joint twisted out on a trip to Pennsylvania, which necessitated repairs.
Leo Ryan, the plaintiff's brother, testified that it was necessary to put from one gallon to ten quarts of oil in the truck when it would stop at his service station in Jonesville in route to Hattiesburg from DeRidder. Additionally, he noted that the truck did not have enough power to pull the loads which it was supposedly designed to pull. He stated that on a trip that he had made with Mr. Tomlinson to Memphis, Tennessee; Pennsylvania; and New York, that it was necessary that they stop on several occasions and buy oil in order to keep the truck operating.
William Ryan, plaintiff, took the truck back to Huffman for repairs more than five times. He testified that some of these repairs were made without cost to him, the truck still being under warranty. Ryan testified, as did Tomlinson, that the truck broke down in Mississippi while it was being driven by Tomlinson. Tomlinson had called Ryan and told him that the truck was making unusual noises and that he did not feel that it was safe to drive the truck. Huffman was notified about this and subsequently went and got the truck and brought it back to their shop where they made valve adjustments on it. A Mr. Rudd, an employee of one of the lessees of the truck, called Ryan from Florida and stated that there was a knock in the motor. Ryan had to hire a wrecker to drive to Florida and pull the truck back to Huffman Motors. Some months later the truck broke down again while it was being operated by a driver of another lessee, Pine Belt.
The redhibitory action is one which comes squarely within the scheme of our Civil Code, in particular, Civil Code Article 2520, which provides:
"Redhibition is the avoidance of a sale on account of some vice or defect in the thing sold, which renders it either absolutely useless, or its use so inconvenient and imperfect, that it must be supposed that the buyer would not have purchased it, had he known of the vice."
To prevail in an action for redhibition, the purchaser must establish that the thing sold is absolutely useless for its intended purpose or that its use is so inconvenient that it must be supposed that the purchaser would not have made the purchase had he known of the defects. He must also prove that the defects existed at the time of the purchase, but were neither known nor apparent to him, and that seller could not, or would not, correct the defects when given the opportunity to do so. LSA-C.C. Articles 2520, 2521, 2530, 2531; Purvis v. Statewide Trailer Sales, Inc., 339 So. 2d 403 (La.App. 1 Cir. 1976).
*220 When a seller is in good faith, he must be given an opportunity to repair the thing before a redhibitory action can be brought. LSA-C.C. Article 2531;[3]Jordan v. LeBlanc and Broussard Ford, Inc., 332 So. 2d 534 (La.App. 3 Cir. 1976). If a seller is in bad faith, LSA-C.C. Article 2545 applies. A buyer is not required to tender the defective product to a manufacturer before instituting suit. Laughlin v. Fiat Distributors, Inc., 368 So. 2d 742 (La.App. 3 Cir. 1979); Bernard v. Bradley Automotive, 365 So. 2d 1382 (La.App. 2 Cir. 1978). The logic of this is that LSA-C.C. Article 2531 requires that a tender be made prior to the institution of a suit in redhibition if the seller is in good faith. A seller is in good faith if he did not know of the vices of the thing. Since a manufacturer is presumed to know the vices of the thing he sells, he can never be in good faith if a defect in fact exists. Burns v. Lamar-Lane Chevrolet, Inc., 354 So. 2d 620 (La.App. 1 Cir. 1977). For this reason, our courts have held that a tender is not a necessary prerequisite to a suit in redhibition against a manufacturer. The same reasoning applies to a bad-faith seller, i. e., one who knows of the vice of the thing he sold but who failed to declare it. Therefore, a tender need not be made to a bad-faith seller prior to bringing a suit in redhibition.
The issue which now arises is, was Huffman a bad-faith seller. We think it was. A. M. Tomlinson testified that the truck was leaking oil when he and Ryan first picked it up at Huffman's lot. He stated that he told a salesman about the leak and was assured that the leak would be repaired. Tomlinson also testified that it was necessary to add oil to the crank case of the truck after having driven it approximately one hundred seventy-five miles. We are convinced that this testimony, in conjunction with the fact that numerous repairs were made to the truck both before and after Huffman acquired it, shows that Huffman was in bad faith. We are therefore of the opinion that a tender by Ryan was not necessary. In deciding as we do, however, we make the following observations.
Ryan was put in the unfortunate position of having to pay the note on the truck, pay for repairs done to the truck, pay for a driver's salary, and tender the truck to the seller for numerous repairs. It had been repeatedly tendered for repair, but to no avail. Obviously Ryan became unable to meet the payments on the truck, and it was subsequently seized, thereby making a formal tender impossible. Undoubtedly Ryan's inability to meet the payments on the truck resulted in part from the cost of repairs and the substantial amount of down time which was needed to make these repairs. It is not necessary to make a formal tender where such would be futile. Wiltz v. Dixie Auto Sales, Incorporated, 315 So. 2d 811 (La.App. 3 Cir. 1975); Purvis v. Statewide Trailer Sales, Inc., supra.
After a full review of the record, we conclude that the defendant-third party plaintiff, Ryan, carried his burden of proof, and accordingly affirm the portion of the trial court's judgment rescinding the sale and ordering Huffman to discharge Ryan's obligation to Associates. Also, that portion ordering that the truck be returned to Huffman is affirmed.
We next address the question of Ryan's reconventional demand against Associates. We find this claim totally without *221 merit. Associates did nothing but finance the purchase of the truck. They are neither the seller nor manufacturer. For this reason Ryan's reconventional demand is dismissed.
The trial judge awarded the sum of $4,348.44 to Huffman as per their reconventional demand against Ryan. Ryan offered no defense to this claim, and we find that the record shows that none existed. Therefore, we hold that the granting of judgment in favor of Huffman and against Ryan in the sum of $4,348.44 is proper.
The next matter to be dealt with is the amount, if any, to be awarded to Huffman for the use of the truck. Ryan had the use of the truck from February 9, 1976, until approximately January 10, 1977. The truck was driven in excess of 15,000 miles during that time.
The seller of a thing is entitled to reimbursement from the purchaser for the latter's use prior to the rescission of the sale. LSA-C.C. Article 2531; Smith v. Max Thieme Chevrolet Company, Inc., 315 So. 2d 82 (La.App. 2 Cir. 1975); Gour v. Daray Motor Co., Inc., 373 So. 2d 571 (La.App. 3 Cir. 1979). The purpose for allowing a credit to the seller for the buyer's use of a vehicle is to return the parties as nearly as possible to the status quo. Nugent v. Stanley, 336 So. 2d 1058 (La.App. 3 Cir. 1976); Gour v. Daray Motor Co., Inc., supra.
Our Supreme Court, in Alexander v. Burroughs Corp., 359 So. 2d 607 (La.1978), stated:
"Compensation for the buyer's use, however, ought not be granted automatically by the courts; even the value of an extensive use may be overridden by great inconveniences incurred because of the defective nature of the thing and constant interruptions in service caused by the seller's attempts to repair."
Ryan did derive a certain amount of use from the truck. However, our determination of this issue must be made in light of the numerous repairs and corresponding down time which were necessitated throughout the time Ryan had possession of the truck. In the past, this Court has calculated the amount due the seller for the buyer's use of a vehicle by multiplying $.08 times the number of miles driven before rescission of the sale. See Gour v. Daray Motor Company, Inc., supra, and Robertson v. Jimmy Walker Chrysler-Plymouth, Inc., 368 So. 2d 747 (La.App. 3 Cir. 1979), writs denied, 371 So. 2d 833 (La.1979). In this case, however, the exact number of miles the truck was driven prior to seizure and rescission of the sale is unknown. Mr. Ryan testified that the truck had been driven approximately 15,000 miles before it was overhauled in May of 1976. Plaintiff's exhibits No. 12 and 13 show that the odometer reading of the truck at the time of purchase was 341,671 miles. Plaintiff's exhibit No. 14 shows that on April 7, 1976, the odometer reading was 357,024 miles, for a distance of 15,353 miles. There is no other evidence in the record with regard to the total number of miles the truck was driven while Ryan had use of it. For this reason, we rely on the Supreme Court's language in Jordan v. Travelers Insurance Co., 257 La. 995, 245 So. 2d 151 (La.1971) which states:
"Where there is a legal right to recovery but the damages cannot be exactly estimated, the courts have reasonable discretion to assess same based upon all the facts and circumstances of the case."
This reasoning was followed by the Fourth Circuit in Brouillette v. National Remodelers and Rebuilders, Inc., 321 So. 2d 525 (La.App. 4 Cir. 1975), and by the Second Circuit in Hardie v. Pylant, 375 So. 2d 189 (La.App. 2 Cir. 1979).
We can assume that between April 7, and November, 1976, the truck was driven for a considerable number of miles in addition to the 15,000 miles mentioned above. Accordingly, in view of the cited jurisprudence, we feel that an award to Huffman for use of the vehicle by Ryan of $2,500.00 is justified.
We next address the issue of the amount of damages due to the third party plaintiff, Ryan.
Civil Code Article 2545 declares that a seller who knows the vice of the thing he sells and omits to declare it, is *222 liable for attorney's fees, damages, restitution of the price and repayment of the expenses of the sale. We are of the opinion that the record shows that Huffman was aware of the vices of the truck and failed to declare them. Ryan is therefore entitled to the following damages:
1. Payment for repairs done by Huffman $ 842.01
2. Natchez Equipment Company___________ 94.53
3. Monroe Mack - overhaul______________ 2,863.16
4. Wrecker service_____________________ 575.00
5. Attorney's fees ____________________ 3,000.00
Also, Ryan is entitled to recover the amount he paid on the note owed to Associates; $2,720.92. Likewise, he is entitled to compensation for Huffman's use of that part of the purchase money which was not borrowed. See Smith v. Max Thieme Chevrolet Co., Inc., supra. Ryan is therefore entitled to the return of his down payment of $4,500.00, plus 7% interest thereon from the date of the sale until the date of seizure, January 10, 1977, which we determine to be $295.68. We do not feel that Ryan is entitled to reimbursement for the $400.00 he expended on new tires to replace the original ones.
For the above and foregoing reasons, the judgment of the trial court is recast to read as follows:
IT IS ORDERED, ADJUDGED AND DECREED that there be judgment herein in favor of the plaintiff-defendant-in-reconvention, Associates Financial Services Company, Inc. and against the defendant, William J. Ryan, dismissing Ryan's reconventional demand.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that there be judgment herein in favor of third party defendant, Huffman Motor Company, Inc., and against William J. Ryan on its reconventional demand in the sum of $4,348.44, together with legal interest thereon from date of judicial demand until paid.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that there be judgment herein in favor of the third party plaintiff, William J. Ryan, and against Huffman Motor Company, Inc., rescinding the sale from Huffman Motor Company, Inc. to William J. Ryan on February 9, 1976, of a used 1973 Mack truck, Serial # FA795LST, and that said truck be returned to Huffman.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that Huffman pay and discharge the remaining obligation of William J. Ryan to Associates Financial Services Company, Inc., originally in the amount of $20,482.16, payable in twenty-nine monthly installments of $682.73 each, and a final installment of $682.99, contingent that upon payment of said sum, Associates Financial Services Company, Inc. deliver the subject truck to Huffman Motor Company, Inc.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that there be judgment herein in favor of third party plaintiff, William J. Ryan, and against Huffman Motor Company, Inc. in the amount of $11,891.30 as damages and expenses occasioned by the sale, together with legal interest thereon from the date of the third party demand until paid.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that there be judgment in favor of Huffman Motor Company, Inc. and against William J. Ryan in the amount of $2,500.00 as compensation for the use of the subject truck.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that there be judgment in favor of William J. Ryan and against Huffman Motor Company, Inc. for $3,000.00 as attorney's fees, with judicial interest thereon from June 27, 1979.
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the costs of these proceedings be borne equally by William J. Ryan and Huffman Motor Company, Inc.
AFFIRMED IN PART, REVERSED IN PART AND RENDERED.
NOTES
[1] The Sheriff's Sale of the truck was with benefit of appraisement.
[2] This amount can be broken down as follows: $4,500.00 being the amount as down payment; $2,720.92, being the amount paid on the promissory note to Associates; $842.01, the amount paid to Huffman for repairs on the truck; $94.53, the amount paid to Natchez Equipment Co. for repairs on the truck; $2,863.16, the amount paid to Monroe Mack Sales for overhaul to the truck; $575.00, the amount paid to Plunk's Wrecking Service, West Monroe, La., for wrecker service to Florida and back; $400.00, the amount paid for tires on the truck; $3,000.00, attorney's fees.
These figures total $14,995.62; obviously a typographical error or an error in addition was made.
[3] "Art. 2531. The seller who knew not the vices of the thing is only bound to repair, remedy or correct the vices as provided in Article 2521, or if he be unable or fails to repair, remedy or correct the vice, then he must restore the purchase price, and reimburse the reasonable expenses occasioned by the sale, as well as those incurred for the preservation of the thing, subject to credit for the value of any fruits or use which the purchaser has drawn from it.
In any case in which the seller is held liable because of redhibitory defects in the thing sold, the seller shall have a corresponding and similar right of action against the manufacturer of the thing for any loses sustained by the seller, and further provided that any provision of any franchise or manufacturer-seller contract or agreement attempting to limit, diminish or prevent such recoupment by the seller shall not be given any force or effect." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1932394/ | 536 So. 2d 394 (1989)
Jean E. HARRIS, Appellant,
v.
CARIBANK, a Florida Banking Association, and A.T.H. Corporation, Etc., et al., Appellees.
Howard Harris, Appellant,
v.
Caribank, a Florida Banking Association, and A.T.H. Corporation, Etc., et al., Appellees.
Nos. 88-1665, 88-1666.
District Court of Appeal of Florida, Fourth District.
January 11, 1989.
*395 Ronald E. D'Anna of Mattlin, McClosky & North, Boca Raton, for appellants.
Scott B. Newman and Christopher N. Bellows of Holland & Knight, Miami, for appellee-Caribank.
ANSTEAD, Judge.
This is an appeal from a non-final order denying a motion to dismiss for lack of personal jurisdiction. This court has jurisdiction to hear this appeal pursuant to section 9.130(a)(3)(c)(i), Florida Rules of Appellate Procedure. See also Fibreboard Corp. v. Ward, 455 So. 2d 1151 (Fla. 1st DCA 1984) (non-final order denying motion to dismiss for lack of jurisdiction was appealable). We affirm.
The appellee, Caribank, brought an action against the appellants, Howard and Jean E. Harris, as guarantors of a loan made by Caribank, a Florida banking association, to ATH Corporation, a Florida corporation. The complaint alleged that Caribank loaned money to ATH for improvements on condominium buildings located in Coral Springs, Florida, and that ATH executed and delivered a mortgage agreement and a note to Caribank. It was also alleged that the Harrises individually executed and delivered personal guarantees to Caribank for payment of the loan in case of default by ATH and that ATH defaulted on its payments. The loan documents and the guaranties were attached to the complaint and contained a choice of law clause that specified Florida as the place of the agreement and the jurisdictional forum for deciding legal disputes between the parties.
To obtain in personam jurisdiction over a nonresident defendant, the plaintiff has the burden of pleading sufficient facts to permit Florida courts to exercise jurisdiction. Cosmopolitan Health Spa, Inc. v. Health Industries Inc., 362 So. 2d 367 (Fla. 4th DCA 1978). Section 48.193(1)(g), Florida Statutes (1987), provides that a foreign resident who breaches a contract in Florida, by failing to perform acts in Florida required by the contract, submits itself to the jurisdiction of Florida. However, to fall within the scope of section 48.193(1)(g), a foreign resident must have an association with Florida other than just being a party to a contract with a choice-of-law provision specifying Florida as the jurisdictional forum. McRae v. J.D./M.D. Inc., 511 So. 2d 540 (Fla. 1987). See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985). A plaintiff must show that a foreign defendant has sufficient contacts with a forum state so that an assertion of jurisdiction would comport not only with a state's jurisdictional scheme but also with fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945). In Manrique v. Fabbri, 493 So. 2d 437 (Fla. 1986), the Florida Supreme Court adopted a test espoused by this court in Maritime Limited Partnership v. Greenman Advertising Associates, Inc., 455 So. 2d 1121 (Fla. 4th DCA 1984), for enforcing forum selection clauses.[1] In Maritime, a contractual provision designating Florida as the judicial *396 forum was upheld because one of the parties was located in Florida, and because part of the contract was to be performed in Florida. Id. at 1123. Typically, contacts that have been found sufficient to invoke Florida's jurisdiction have involved a party to a contract that resided in Florida; an agreement to be performed in Florida; or an agreement negotiated in Florida. Id. Jefferson Savings and Loan Association v. The Greenman Group Inc., 531 So. 2d 428 (Fla. 4th DCA 1988); Unger v. Publisher Entry Service Inc., 513 So. 2d 674 (Fla. 5th DCA 1987); Kane v. American Bank of Merritt Island, 449 So. 2d 974 (Fla. 5th DCA 1984).
In the instant case, the guaranty agreements do not clearly specify the place of payment. However, they do state that Caribank may control the place of payment, and that in the case of default by the guarantors, the appellee's payment would be to Caribank, a Florida banking association, on a mortgage on property located in Florida. When a promissory note does not mention the place of payment, it is payable at the residence of the payee. The First Nat. Bank of Kissimmee v. Dunham, 342 So. 2d 1021 (Fla. 4th DCA 1977). See also Chen v. Watter, 421 So. 2d 771 (Fla. 4th DCA 1982). Given Dunham and the above facts, it would appear that payments by the guarantors, the Harrises, were to be made in Florida. The fact that payment was to be made in Florida, and the fact that payment was not made, would appear to be enough to bring the Harrises within the scope of section 48.193(1)(a). See Burger King Corp., supra; Manrique, supra.
Considering all of the circumstances of the transaction, it would appear that the exercise of Florida jurisdiction over the Harrises also complies with fair play and substantial justice. The loan agreement to which the guaranties pertain is between two Florida based entities. The purpose of the loan was to make improvements on Florida realty. The loan agreement specifically referred to the Harrises as personal guarantors of a loan to be repaid on Florida. In Kane, the court found such a reference as indicative of the fact that a Florida bank relied on the guaranties in making a loan to a Florida corporation. Kane, supra, at 976. The parties themselves agreed that Florida would be an appropriate forum to litigate. In sum, the Harrises' connection with Florida in this transaction is such that they should have reasonably anticipated being haled into a Florida court. See Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980).
For the reasons enunciated above, we affirm the lower court's order denying appellants' motion to dismiss.
DOWNEY and GUNTHER, JJ., concur.
NOTES
[1] Parties to a contract may agree to submit to the jurisdiction of a particular forum if 1) the forum is not chosen because of one party's overwhelming bargaining power, 2) enforcement would not contravene public policy, and 3) the purpose of such an agreement is not to transfer a local dispute to a remote and alien forum in order to inconvenience one or both of the parties. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2064125/ | 298 N.W.2d 324 (1980)
STATE of Iowa, Appellee,
v.
Sandra Kay FRANK, Appellant.
No. 63321.
Supreme Court of Iowa.
November 12, 1980.
*326 William Pappas, Mason City, for appellant.
Thomas J. Miller, Atty. Gen., and John P. Messina, Asst. Atty. Gen., for appellee.
Considered by REYNOLDSON, C. J., and LeGRAND, HARRIS, LARSON and SCHULTZ, JJ.
SCHULTZ, Justice.
This is an appeal from a conviction of first-degree murder in violation of section 707.2, The Code 1977. Defendant contends that (1) media publicity during the course of the trial denied her a fair trial, and (2) the trial court committed prejudicial error by allowing the jury to consider incriminating testimony by a state's witness which was subsequently recanted during the trial. We affirm the trial court.
On August 30, 1978, eighty-eight year old George E. O'Harrow was beaten to death at his residence in Mason City, where he lived alone. On November 1 defendant, Sandra Kay Frank, was charged by information with committing the murder. Defendant entered a plea of not guilty, and trial commenced on February 5, 1979, in Cerro Gordo District Court. The trial was adjourned and continued on February 7 because two of the state's witnesses-Penny Frank, the defendant's sister and the state's principal witness, and Andrew Rupar-failed to respond to subpoenas. The witnesses were arrested in Tempe, Arizona, brought back to Cerro Gordo County to testify, and held in custody as material witnesses during the remainder of the trial.
During the continuance, the local news media reported stories on the missing witnesses. When the trial resumed on February 27, defendant, citing this publicity, unsuccessfully moved for a continuance of two weeks or in the alternative for a mistrial. Defendant contends the mistrial should have been granted because there is a substantial likelihood that the jury's verdict was influenced by exposure to the news reports.
On February 27 Penny Frank testified that the defendant had admitted committing the murder. The following day she recanted her entire testimony, stating that she had lied. The jury, which was allowed to consider her testimony, returned a guilty verdict. Defendant alleges that due to the recantation Penny Frank's testimony had no probative value and thus should not have been considered by the jury.
I. Prejudicial trial publicity.
During the continuance, the news media gave the absent witnesses what defendant refers to as "widespread" publicity. These news accounts contained various statements referring to Penny Frank as a "key witness" having "key testimony" that would be essential in implicating her sister. Stories reported that bench warrants had been issued, and that a nationwide search for the missing witnesses was under way. One news item quoted the prosecutor as stating that the state had sworn statements from the witnesses but that they "are not admissible as evidence in the trial ... unfortunately." Another story reported the sheriff as stating that the witnesses were in contempt of court and would be jailed if apprehended. After the witnesses had been returned, another news account reported the sheriff as stating that the witnesses were being held and that contempt citations had been issued.
Defendant contends that there is a substantial likelihood that the jury's verdict was influenced by exposure to this publicity, and that a new trial must be granted. Unquestionably, a person accused of committing a crime has a fundamental right to a fair trial by an impartial jury whose determination of guilt or innocence is based exclusively on evidence admitted at trial. The media, however, have a competing right to report factually accurate information. These rights must be accommodated in the best manner possible. State v. Sefcheck, 261 Iowa 1159, 1173, 157 N.W.2d 128, 136 (1968).
*327 In State v. Bigley, 202 N.W.2d 56, 58 (Iowa 1972), we adopted standard 3.5(f), A.B.A. Standards Relating to Fair Trial and Free Press, as the procedure to be applied when the issue of possible jury exposure to potentially prejudicial material is raised at trial. That standard provides:
If it is determined that material disseminated during the trial goes beyond the record on which the case is to be submitted to the jury and raises serious questions of possible prejudice, the court may on its own motion or shall on motion of either party question each juror, out of the presence of the others, about his exposure to that material. The examination shall take place in the presence of counsel, and an accurate record of the examination shall be kept. The standard for excusing a juror who is challenged on the basis of such exposure shall be the same as the standard of acceptability recommended in section 3.4(b), above, except that a juror who has seen or heard reports of potentially prejudicial material shall be excused if reference to the material in question at the trial itself would have required a mistrial to be declared.
(emphasis added).[1] Standard 3.5(f) therefore imposes a mandatory duty on the trial court to question jurors when a proper request has been made. Unless a specific request is made, however, the matter rests in the sound discretion of the trial court.
Defendant did bring the matter of the publicity concerning the missing witnesses to the attention of the trial court by moving for a mistrial. Defendant did not move to have the jurors questioned regarding their exposure to the publicity, however. Thus, under standard 3.5(f), there was no mandatory duty for the trial court to examine the jurors. Defendant nevertheless maintains that the issue was adequately raised and that the trial court chose to ignore it.
Matters committed to the discretion of a lower court are not reviewable upon appeal; only the alleged abuse of that power is reviewable. Rath v. Sholty, 199 N.W.2d 333, 336 (Iowa 1972). We must, therefore, determine whether the trial court abused its discretion in not examining the jury. Generally, abuse of discretion will be found only when there is no support in the record for the trial court's action. Id.
Defendant argues that the number and contents of the news accounts surrounding the missing witnesses are of sufficient magnitude to establish a substantial likelihood of probable jury prejudice. We find no merit in this contention. We will not presume prejudice from the mere publication or broadcast of news stories. State v. Sefcheck, 261 Iowa at 1173, 157 N.W.2d at 136. The trial court need not act on mere speculation.
When a jury has been clearly admonished not to expose themselves to media publicity of the trial in which they are serving as jurors, a presumption arises that they will not violate that admonition. State v. Sallis, 262 N.W.2d 240, 246 (Iowa 1978) (quoting Rizzo v. United States, 304 F.2d 810, 815 (8th Cir.), cert. denied, 371 U.S. 890, 83 S. Ct. 188, 9 L. Ed. 2d 123 (1962)). Not only is the burden on the defendant to demonstrate jury exposure to trial publicity, but unless specific examples are presented of jurors being affected by such publicity, it weighs heavily against the defendant's position. Id. at 247. Throughout the trial, the court was careful to admonish the jury not to expose themselves to publicity concerning the case. We have thoroughly examined the record and cannot find anything which would overcome the presumption of nonviolation of these admonitions.
In asserting that the trial court had an affirmative duty to examine the jury in this case, defendant relies on United States *328 v. Titsworth, 422 F. Supp. 587 (D.Neb.1976), and State v. Williams, W.Va., 230 S.E.2d 742 (1976). In both of these cases, however, there was evidence of jury exposure to trial publicity. These cases are, therefore, inapposite. Defendant also cites United States v. Hall, 536 F.2d 313 (10th Cir.), cert. denied, 429 U.S. 919, 97 S. Ct. 313, 50 L. Ed. 2d 285 (1976). Hall dealt with the examination of prospective jurors when there is a possibility of exposure to prejudicial pretrial publicity and is therefore also distinguishable. In the case before us, the jury had been impaneled and admonished not to expose themselves to media publicity about the case when the witnesses failed to respond to subpoenas.
We find no abuse of discretion on the part of the trial court in failing to examine the jurors sua sponte.
II. Recanted testimony.
On February 27, 1979, defendant's sister, Penny Frank, was called as a witness on behalf of the state. She testified that approximately one month before the murder she and the defendant went to the victim's home because the defendant "wanted to see what he had in the house." They gained entrance under the pretense of having car trouble, by asking if they could use the victim's telephone. The witness testified in detail about a conversation she had with the victim. She recalled that the victim had stated that the next-door neighbor, who leased a house owned by the victim, was a year behind in her rent and that the victim was having an airconditioner in the living room repaired. She outlined in specific terms the physical layout of the house, its condition, and the location of physical objects such as a chair, refrigerator, telephone, and garbage sacks. She also recalled seeing a picture of the victim's son. While there, according to her testimony, the defendant stole a watch. The witness also stated that the defendant subsequently talked about going back to the victim's house.
Penny Frank further testified that on the night of August 30, 1978, the date of the murder, defendant told her that she thought she had killed the victim. She also recalled a later conversation in which defendant described events preceding the murder. The defendant stated that she had sneaked into the house, and when the victim spotted her he attempted to make a telephone call. The defendant then pulled the telephone cord from the wall. A struggle ensued, the defendant struck the victim with a wrench, and when the defendant left the premises the victim was lying on the kitchen floor. Later, the defendant reportedly said to the witness, "[H]ow do you like that, Penny. You can get away with murder and the cops won't find out."
The following day Penny Frank was called as a defense witness. She recanted her testimony and prior statements, saying that she had lied: "I did it because I was awful mad at Sandy since I figured she had made a phone call to the social worker and that's why my daughter was taken away from me for a week." After the close of testimony, defendant moved for a directed verdict of not guilty, contending that the recanted testimony should not be considered and that without it there was not sufficient evidence to submit the case to the jury. The motion was overruled, and the jury considered all of Penny Frank's testimony. Defendant alleges that the trial court erred in so ruling because the recanted testimony had no probative value.
The issue of recanted testimony usually arises when the recantation occurs after a verdict has been rendered. In such cases the recantation of testimony by a witness for the prosecution does not necessarily entitle the defendant to a new trial. The determination as to whether a new trial should be granted is within the discretion of the trial court. State v. Thompson, 241 Iowa 16, 29, 39 N.W.2d 637, 645 (1949). That determination will not be disturbed upon appeal unless it is reasonably clear that such discretion was abused. State v. Taylor, 287 N.W.2d 576, 578 (Iowa 1980). Each case must be judged on its own peculiar facts. State v. Thompson, 241 Iowa at 29, 39 N.W.2d at 645.
*329 In determining whether a new trial should be granted, the trial court is not required to believe the recantation. The court must make its decision on the basis of the whole trial and matters presented in conjunction with the motion. State v. Compiano, 261 Iowa 509, 517, 154 N.W.2d 845, 849 (1967). In Compiano we said that a person
convicted of a crime should not be granted a new trial unless the trial court is satisfied that the testimony of a material witness was false or mistaken, and unless a jury might reach a different conclusion without such testimony.
A witness' recantation of his testimony is looked upon with utmost suspicion.
Id. at 516, 154 N.W.2d 849. Thus, a witness' recantation of testimony subsequent to trial does not give a litigant an automatic objection that the recanted testimony has no probative value and therefore could not be used to support a judgment.
This is a case in which the witness' recantation occurred during trial. Either Penny Frank's testimony as a state's witness or her recanting testimony as a defense witness was perjured. The question that is raised by this witness' recantation goes to her credibility, which is ordinarily a question for the jury.
Generally, there are no limitations on the rule that the credibility of a witness is to be determined by the jury. Defendant, however, contends that the exception established in Graham v. Chicago & Northwestern Ry. Co., 143 Iowa 604, 119 N.W. 708 (1909), is applicable in this case. In Graham this court stated:
This court has gone its full length to protect the right of jury trial against encroachment by the courts under any guise, and one of the rights of jury trial is the right to have the credibility of the witness determined by the jury. Generally speaking there are no limitations upon this rule, but there are limitations upon the application of it. The testimony of a witness may be so impossible and absurd and self-contradictory that it should be deemed a nullity by the court.
Id. at 615, 119 N.W. at 711. Graham involved a witness' testimony concerning events surrounding an accidental death. Although the witness had been fully interrogated about the details of the accident in the first trial, he gave a different and self-contradictory account of certain facts during a second trial. The only explanation given for the change of testimony was that the witness had not been asked at the first trial, which was untrue. This court found that absent explanation the witness' testimony was "so manifestly insincere and absurd that no person could candidly believe it." Id. at 614, 119 N.W. at 711.
The Graham limitation was also addressed in State ex rel. Mochnick v. Andrioli, 216 Iowa 451, 249 N.W. 379 (1933):
The rule that it is for the jury to reconcile the conflicting testimony of a witness does not apply where the only evidence in support of a controlling fact is that of a witness who so contradicts himself as to render finding of facts thereon a mere guess. We may concede that, ordinarily, contradictory statements of a witness do not make an issue of fact; and that such situation may deprive the testimony of all probative force.
Id. at 453, 249 N.W. at 380. The Andrioli court went on to find the limitation inapplicable, however, because other competent testimony existed which corroborated the witness' changed testimony. Id. at 453, 249 N.W. at 380.
We need not determine whether the Graham limitation applies to recanted, as opposed to merely self-contradictory, testimony in this case because, even if applicable, the recantation here does not fall within that limitation. First, the alleged reason for Penny Frank's recantation was explained to the jury, thus giving the jury full opportunity to judge the credibility of the witness and ascertain the veracity or falsity of her testimony or any part thereof. Second, the recanted testimony was not the only evidence supporting defendant's conviction. There was circumstantial evidence linking the defendant to the scene of the crime. Defendant was in the vicinity of the *330 victim's home on the date of the murder. In addition, a palm print, which was identified by an expert witness as being the defendant's, was found on the side of a refrigerator in the victim's home near the area where the body was discovered. There was also evidence that defendant sold a clock that, in the opinion of an expert witness, once hung on a wall at the victim's residence.
Third, there is evidence which corroborates the recanted testimony. In her written recantation statement, which was prepared in the office of defendant's attorney and introduced in evidence by defendant, Penny Frank said that she had revealed to law enforcement officials prior to the defendant's arrest that defendant stated that she had pulled the victim's telephone cord from the wall and struck the victim with a wrench. According to the trial testimony of one of these officials, information regarding the identity of the murder weapon was not released to the public until October 27, 1978, seven days after defendant's arrest, and information concerning the telephone cord was not released prior to the commencement of the trial. Furthermore, Penny Frank's alleged reason for giving testimony which incriminated the defendant-because she thought defendant was responsible for her daughter being taken away-was discredited by a social worker.
In light of the independent evidence corroborating the recanted testimony of Penny Frank, we conclude that her recantation did not deprive her former testimony of all probative force. The jury was not placed in a position of having to speculate or make a "mere guess" on the fact of defendant's guilt. Both Penny Frank's recantation and the independent corroborating evidence went to the credibility of her former testimony. The reconciliation of the recantation with the evidence corroborating the witness' prior testimony was properly a matter for the jury. The trial court, therefore, did not err in allowing the jury to consider the recanted testimony of Penny Frank.
We find no merit in defendant's assignments of error. The judgment of the trial court is
AFFIRMED.
NOTES
[1] Section 3.4(b), which is incorporated in standard 3.5(f) by reference, establishes criteria for determining when a juror who has been exposed to publicity should be dismissed. Among the factors to be considered are: the degree of exposure to the publicity, the juror's testimony regarding his or her state of mind, whether or not an opinion has been formed, the significance of information which is inadmissible as evidence, and whether the material is inflammatory. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2389809/ | 708 F. Supp. 984 (1989)
AMANDA ACQUISITION CORPORATION, Plaintiff,
v.
UNIVERSAL FOODS CORPORATION, Alan R. Anderson, Michael E. Batten, Dr. Olan D. Forker, Dr. Carol I. Waslien Ghazaii, Leon T. Kendall, Paul L. Kohnstamm, Charles S. McNeer, Orville R. Mertz, John L. Murray, Dr. Bernard S. Schweigert, Guy A. Osborn, Gerard E. Veneman, and Darrell E. Wilde, Defendants.
UNIVERSAL FOODS CORPORATION, Counterclaim Plaintiff,
v.
AMANDA ACQUISITION CORPORATION, Counterclaim Defendant,
and
High Voltage Engineering Corporation, Hyde Park Partners, L.P., Hyde Park Holdings, Inc., Laurence S. Levy, Clifford Press, Oxbridge Capital Corporation, Berisford Capital Corporation, and S. & W. Berisford PLC, Additional Counterclaim Defendants.
No. 88-C-1296.
United States District Court, E.D. Wisconsin.
March 18, 1989.
*985 *986 William H. Levit, Jr., Michael B. Apfeld, Godfrey & Kahn, Milwaukee, Wis., Gregory P. Joseph, Stephen Lew, Fried, Frank, Harris, Shriver & Jacobson, New York City, for plaintiff and counterclaim defendants, Amanda Acquisition Corp. High Voltage Engineering Corp. Hyde Park Partners, L.P., Hyde Park Holdings, Inc., Laurence S. Levy and Clifford Press.
David E. Beckwith, John R. Dawson, Foley & Lardner, Milwaukee, Wis., Michael W. Schwartz, Peter C. Hein, Wachtell, Lipton, Rosen & Katz, New York City, for defendants and counterclaim plaintiff.
Richard P. Carr, Mary E. Triggiano-Hunt, Reinhart, Boerner, Van Deuren, Norris & Rieselbach, Milwaukee, Wis., Jonathan I. Blackman, Jessica Sporn Tavakoli, Michael R. Chayet, Cleary, Gottlieb, Steen & Hamilton, New York City, for counterclaim defendants, Oxbridge Capital Corp., Berisford Capital Corp. and S. & W. Berisford PLC.
Donald J. Hanaway, Atty. Gen., and Daniel D. Stier, Asst. Atty. Gen., Madison, Wis., for intervenor State of Wis.
DECISION AND ORDER
STADTMUELLER, District Judge.
This matter is before the court on four separate motions each of which seeks preliminary injunctive relief. These motions, three of which were filed by the plaintiff *987 and one of which was filed by the defendants, include
1. plaintiff's motion to enjoin operation of the defendants' shareholders rights plan (the poison pill);
2. plaintiff's motion for injunctive relief declaring Wisconsin's Business Combination Act, Wis.Stat. § 180.726, unconstitutional;
3. plaintiff's motion for injunctive relief regarding defendants' alleged Federal securities laws claims; and
4. defendant/counterclaim plaintiff's motion to enjoin plaintiff's tender offer on account of alleged violations of Federal securities laws as well as alleged violations of the margin rules promulgated by the Federal Reserve Board.
Following expedited discovery and briefing the issues, a two-day evidentiary hearing was held in conjunction with these motions on February 2 and 3 of this year.
At the outset I wish to commend the parties and their counsel for the thoroughness in their presentations to the court, considering the severe time constraints under which voluminous documents were reviewed, witnesses deposed, and legal authorities presented in support of their respective positions.[1] Following a review of the parties' submissions, I am now ready to render my decision on each of the four motions.
Plaintiff's claims arise under the United States Constitution and §§ 14(d), 14(e) and 28 of the Exchange Act, (the Exchange Act) 15 U.S.C. §§ 78n(e) and 78bb, and the rules and regulations promulgated thereunder. Defendant's counterclaims arise under §§ 7, 14(d), 14(e), 27 and 28 of the Exchange Act, 15 U.S.C. §§ 78(g), 78n(d), 78n(e), 78aa and 78bb, and the rules and regulations promulgated thereunder. Jurisdiction is conferred on this court under § 27 of the Exchange Act, 15 U.S.C. § 78aa and 28 U.S.C. §§ 1331 and 1337, and the doctrine of pendent jurisdiction.
I. FACTS
The parties have agreed to a limited number of facts in this case. The remainder of the facts are derived from the testimony at the hearing, the exhibits, affidavits, and deposition transcripts which have been filed with the court.
A. The Parties
Plaintiff Amanda Acquisition Corporation (Amanda) is a Delaware corporation with its principal executive offices in Burlington, Massachusetts. It was formed on November 23, 1988 for the purpose of acquiring defendant Universal Foods Corporation (Universal, Universal Foods, or the Company) and is not engaged in any other business. Amanda is a wholly owned subsidiary of counterclaim defendant High Voltage Engineering Corporation (HVE), a Massachusetts corporation with its principal executive offices also located in Burlington, Massachusetts. HVE was purchased in a hostile tender offer in early 1988 by counterclaim defendant Hyde Park Partners, L.P. (Hyde Park).
Hyde Park is a Delaware limited partnership, 50 percent of which is owned by defendant Hyde Park Holdings, Inc. (Holdings), a New York corporation, and affiliates controlled by defendants Laurence S. Levy and Clifford Press. The remaining 50 percent interest is owned by additional counterclaim defendant Oxbridge Capital Corporation (Oxbridge), a Delaware corporation and a wholly owned subsidiary of another additional counterclaim defendant, Berisford Capital Corporation (Berisford Capital), a New York corporation which is itself an indirect wholly owned subsidiary *988 of additional counterclaim defendant S. & W. Berisford PLC (Berisford PLC), an English public limited company.[2]
Holdings is controlled by Messrs. Levy and Press and is the sole general partner of Hyde Park. The business address of Levy and Press is New York, New York. Levy is chairman of the board and secretary of Amanda. He is also chairman of the board and vice president of HVE, and chairman of the board, secretary and treasurer of Holdings. Press serves as president, treasurer and a director of Amanda. He is also deputy chairman of the board and vice president of HVE and president and a director of Holdings.
Defendant and counterclaim plaintiff Universal Foods is a Wisconsin corporation with its principal executive offices located in Milwaukee, Wisconsin. Universal is a diversified manufacturer and marketer of food ingredients and certain consumer food items. Products manufactured by Universal include cheese, yeast, frozen food, dehydrated products, and flavoring and coloring ingredients. Universal Foods' common stock is registered pursuant to § 12 of the Exchange Act, 15 U.S.C. § 781, and is listed and traded on the New York Stock Exchange and the Pacific Stock Exchange. The market price for Universal's common stock, adjusted for stock splits, was $9.67 per share on September 30, 1984, and rose to $24.00 per share by September 30, 1988.
Defendant Guy A. Osborn became chief executive officer of Universal Foods on October 1, 1988 and has served as president since 1984 and as a director of the company since 1983. Defendant John L. Murray is chairman of the board of Universal Foods and was, until October 1, 1988, chief executive officer of the company. Defendant Darrell E. Wilde is a senior vice president and a director of Universal Foods.
The remaining defendants, Alan R. Anderson, Michael E. Batten, Dr. Olan D. Forker, Dr. Carol I. Waslien Ghazaii, Leon T. Kendall, Paul L. Kohnstamm, Charles S. McNeer, Dr. Bernard S. Schweigert and Gerard E. Veneman are all directors of Universal Foods. Defendant Orville R. Mertz was a director of Universal until he retired on January 26, 1989, after reaching the mandatory retirement age.
Each of the individual defendants, other than Osborn, Murray and Wilde, are non-management and independent directors of Universal. Each is also a business or professional person with either experience in general business matters or special expertise in the particular areas in which Universal transacts business. For instance, Veneman is the retired president of Nekoosa Papers, Inc. Kendall is chairman of the board of the Mortgage Guarantee Insurance Company. McNeer is chairman of the board and chief executive officer of Wisconsin Energy Corporation. Anderson is chairman of the board and chief executive officer of P.A. Bergner and Company. Batten is president and chief executive officer of Twin Disc, Inc. Dr. Forker is a professor in the department of agricultural economics at Cornell University. Dr. Waslien Ghazaii is a professor and program director for the nutrition and food service program at the City University of New York, Hunter College. Kohnstamm is president of General Color Company. Mertz is chairman of Mertz, Inhorn and Associates. Dr. Schweigert is chairman of the department of food science and technology in the college of agriculture and environmental sciences at the University of California, Davis.
B. The Tender Offer
On December 1, 1988 Amanda announced a tender offer to acquire all shares and rights of Universal Foods at a price of $30.50 per share in cash. This offer was communicated to Universal management by way of a phone call from Mr. Press to *989 Mr. Osborn at approximately 3:12 P.M. CST on December 1, 1988. The letter from Press to Universal's management announcing the offer was hand delivered to Osborn about 4:00 P.M. Between these two occurrences this action was filed, at approximately 3:45 P.M. Amanda officially commenced its offer with the filing of its schedule 14D-1 with the Securities and Exchange Commission (SEC) on December 2, 1988.
Amanda's offer was conditioned upon the following:
(a) Seventy five percent of the outstanding shares being tendered by the shareholders;
(b) A final judgment finding the Wisconsin Business Combination Act to be either unconstitutional or inapplicable to the offer;
(c) Redemption of the shareholders rights plan (Rights Plan or Poison Pill)
(d) A declaration of ineffectiveness against Amanda of Article 10 of Universal's restated Articles of Incorporation, the "put" provision;[3] and
(e) Amanda being able to obtain sufficient financing to enable it to purchase all outstanding shares and pay all related fees and expenses.
For purposes of the pending motions only the first three conditions are relevant.
On December 8, 1988 the Universal board of directors voted to recommend that its shareholders reject the offer at the $30.50 price. On December 15, 1988 Amanda announced that it was increasing its offer to $35.00 per share. After a meeting on December 20, 1988 the Universal board voted to recommend that its shareholders reject this revised offer. Amanda had filed its first motion for a preliminary injunction (regarding the statute) on December 14, 1988. A status conference was held with the parties on December 19, 1988, at which the hearing dates of February 2-3, 1989 were established. Shortly thereafter, it was reported in the national press that Amanda was not strenuously pursuing its offer until resolution of the issues before the court. At the time of the February hearing, approximately 17 percent of the outstanding shares of the Universal stock had been tendered or "put into the box" as a result of Amanda's offer. This number includes approximately 3.6 percent of Universal Foods' common stock presently owned by Amanda or its affiliates. As of February 17, 1989, as reported in the New York Times, Amanda and HVE had announced that approximately 27 percent of the shares of Universal have been tendered. Additional facts, as they relate to and have an impact on resolution of the individual motions, shall be stated below.
II. LEGAL STANDARDS
It must be remembered that each of the motions before the court is a motion for preliminary injunction. When seeking a preliminary injunction, the movant bears the burden of establishing the five requirements necessary for the issuance of the injunction:
(1) That it has no adequate remedy at law;
(2) that it will suffer irreparable harm if the preliminary injunction is not issued;
(3) that the irreparable harm it will suffer if the preliminary injunction is not granted outweighs the irreparable harm the defendant will suffer if the injunction is granted;
(4) that it has a reasonable likelihood of prevailing on the merits; and
(5) that the injunction will not harm the public interest.
Curtis v. Thompson, 840 F.2d 1291, 1296 (7th Cir.1988); Baja Contractors, Inc. v. City of Chicago, 830 F.2d 667, 675 (7th Cir.1987), cert. denied, ___ U.S. ___, 108 S. Ct. 1301, 99 L. Ed. 2d 511 (1988), citing Manbourne, Inc. v. Conrad, 796 F.2d 884, 887 (7th Cir.1986). There is persuasive authority *990 that the movant's demonstration of irreparable injury implies that the remedies at law are inadequate. See Fleet Wholesale Supply Co., Inc. v. Remington Arms Co., Inc., 846 F.2d 1095 (7th Cir.1988).
There can be little question that if either of Amanda's two principal motions relating to the Wisconsin statute and shareholders rights plan were denied, it would suffer irreparable injury. Failure on either of those two motions may well preclude a successful hostile takeover by Amanda since the hurdles posed by the Wisconsin Business Combination Act (the Act, or Wisconsin act) and the shareholders rights plan may well prove insurmountable. However, it is my conclusion that granting the injunction on either of those issues would be equally harmful to Universal. If Amanda succeeds on those issues Universal's defensive measures become nonexistent. If the takeover offer is allowed to proceed on present terms and is successful, it is impossible for Universal to turn the clock back because the company will be sold. Under these circumstances, the balance of the injuries to the respective parties is approximately equal. See, e.g., Dynamics Corp. of America v. C.T.S. Corp., 794 F.2d 250, 252 (7th Cir.1986), reversed on other grounds, C.T.S. Corp. v. Dynamics Corp. of America, 481 U.S. 69, 107 S. Ct. 1637, 95 L. Ed. 2d 67 (1987). In deciding these two motions, I find that the determining factor in granting or denying the injunction turns on the likelihood of plaintiff's ultimate success on the merits.
As concerns the other two motions, plaintiff's motion regarding the Williams Act violations and defendants' motion regarding Williams Act and margin rules violations, as will be seen below, the balance of harms to the respective parties is not as equal and will play a more determining role in resolution of those two motions.
III. UNIVERSAL'S MOTION
In its two-part motion, Universal seeks to enjoin the tender offer pending complete compliance with both the margin rules and the Williams Act disclosure requirements. Plaintiff and counterclaim defendants oppose the motion, arguing
(1) that Universal has no standing to litigate margin rule violations;
(2) that Universal's Williams Act claims are without merit; and
(3) in any event, any margin rule or Williams Act violations have been mooted by the January 30, 1989 filing of amendment 13 to Amanda's schedule 14d-1.
Plaintiff and counterclaim defendants contend that this latest amendment does everything which the law requires of them, even if Universal's claims had merit. I will address this motion first because if this motion is successful, the need to resolve the other motions may be moot. However, my review of the materials and legal authorities brought to the court's attention convince me that Universal's motion should be denied.
Defendants' motion raises questions about the financing and control structure of the Amanda offer. Through discovery in this case, it has been determined that the relationships among the Acquisition Group parties are extremely complex. The corporate structure as presented by Universal at the hearing and modified in the testimony of Mr. Press is attached as Appendix B.
The financing is almost as complex. Amanda is contributing $10 million in equity to the total cost of the offer. Press's testimony established that this $10 million contribution could realistically be traced back to Berisford. Berisford Capital is purchasing $110 million in preferred stock in Amanda. The preferred stock has no right of redemption and at present has no stated dividend rate. Amendment 13 to Amanda's Schedule 14D-1 states that the stock will pay such dividends as are declared from time to time by the board of the purchaser (i.e. Amanda). The parties anticipate that following the offer, the board of the purchaser will determine a fair and appropriate dividend rate in light of the circumstances of the time.
Additional funds will be provided by Chase Manhattan Bank. Chase will provide up to 50% of the purchase price, which *991 is to be secured by the stock of Universal. All parties agree that this is a margin loan. (The offer does have an alternative financing structure in the event of a friendly merger. I do not find this relevant, notwithstanding Amanda's experts' contentions to the contrary, because at this juncture this is a hostile takeover and there seems to be little chance of it converting to a friendly merger.) In addition to the Chase loan, Kidder Peabody & Co. will supply financing in the amount of $159 million, which will be senior subordinated debt. Kidder will raise the money by issuing high yield bonds, or "junk bonds." The final amount of money will be provided by Berisford Capital which will supply $75 million in junior subordinated debt. Both the Kidder and Berisford Capital investments are subordinate to the Chase loan.
HVE has guaranteed the loans to both Kidder and Berisford Capital. This, Amanda argues, brings them within one of the safe harbors of the Federal Reserve's margin rules to escape the presumption that these type of loans would be indirectly secured by the stock of the target and so also be a margin loan. In turn, HVE's guarantees are backed by Berisford PLC.
Universal also raises the issue of who is really controlling this offer. Universal contends that Berisford PLC is controlling this offer and Messrs. Levy and Press are just agents or fronts for Berisford PLC. Universal asks that the court enjoin the tender offer and force the Acquisition Group to sit down and prepare a concise, clear and complete tender offer which reflects the relationship of the parties and complies in full with the margin rules, and communicate such offer to the shareholders.
A. Margin Rules
Both parties rely on Bassler v. Central National Bank in Chicago, 715 F.2d 308 (7th Cir.1983), in disputing whether Universal has a right to assert Amanda's violation of the margin requirements as set forth in § 7(d) of the Exchange Act, 15 U.S.C. § 78g(d) and the regulations promulgated thereunder. Amanda finds support for the simple proposition that there is no right of action under the margin rules. Universal claims the holding in Bassler is limited to its own facts, and that the court did not consider the possibility of a right of action existing in a target corporation. The discussion in Bassler does support Universal's position, as the court only clearly considered application of the rules to individual investors and stated its conclusion in narrow terms: "[T]here is no indication of legislative intent, explicit or implicit, to create a private right of action in individuals in Bassler's position as against lenders in Central's position." Id. at 313. Similarly, while other circuits probing the question have denied a private right of action, often in broad terms, they do not appear to have considered the issue of standing vis-a-vis the target corporation. Bassler, 715 F.2d at 312 (and sources cited therein).
The guidelines set out in Cort v. Ash, 422 U.S. 66, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (1975), rev'g 496 F.2d 416 (3d Cir.1974) for determining the existence of a private right of action govern this case. Cort outlined four requirements for an implied right of action:
(1) Whether plaintiff belongs to the class for whose "especial benefit" the statute was enacted;
(2) whether there is any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one;
(3) whether implying such a remedy is consistent with the underlying purpose of the legislative scheme; and
(4) whether the cause of action is "traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law." Id. 422 U.S. at 78, 95 S. Ct. at 2087.
In Bassler, the seventh circuit explicitly recognized that the second of the above four factors legislative intent is the key and that the Cort mode is but one of several permissible approaches to ascertainment of that intent. Bassler, 715 F.2d at 310. Despite the narrow wording of the Bassler court's conclusion, its analysis has broader implications, indicating that no congressional *992 intent to create a private right of action exists in pertinent legislative history. Id. at 311-13. In fact, "[t]he main purpose [of the 1934 act was] to give a Government credit agency an effective method of reducing the aggregate amount of the nation's credit resources which can be directed by speculation into the stock market and out of other more desirable uses of commerce and industry...." House Comm. on Interstate and Foreign Commerce, Report on H.R. 9323, H.R.Rep. No. 1383, 73d Cong., 2d Sess. 8 (1934) (quoted in Bassler, 715 F.2d 308 (1983)).
The margin regulations provide the government with tools for use in credit regulation. That a target company might incidentally benefit from these regulations does not necessarily create a right in favor of such companies. Cf. Santa Fe Industries, Inc. v. Green, 430 U.S. 462, 478, 97 S. Ct. 1292, 1303, 51 L. Ed. 2d 480 (1976) ("As in Cort v. Ash, 422 U.S. 66, 80, 95 S. Ct. 2080, 2089, 45 L. Ed. 2d 26 (1975), we are reluctant to recognize a cause of action here to serve what is `at best a subsidiary purpose' of the federal legislation."); Bassler, 715 F.2d at 313.
A few courts have found that target companies had a private right of action under § 7. Perhaps the best reasoning toward this end is found in Pabst Brewing Co. v. Jacobs, [1982-83 Transfer Binder] Fed.Sec.L.Rep. (CCH) ¶ 99,042, 1982 WL 1370 (D.Minn. March 8, 1982). Noting the Exchange Commission's concern for instability in the prices of individual securities, the Pabst court reasoned:
The issuer is clearly a member of the class whom Congress intended to benefit by enactment of the statute. Cort, 422 U.S. at 78 [95 S.Ct. at 2087].
The language of § 7, itself, suggests the availability of a private cause of action. In Touche Ross [v. Redington], 442 U.S. [560] at 569 [99 S. Ct. 2479, 2485, 61 L. Ed. 2d 82], the Supreme Court refused to find a private right of action because the language of the statute at issue `neither confers rights on private parties nor proscribes any conduct as unlawful.' In contrast, § 7 expressly proscribes as unlawful the extension or receipt of credit in contravention of the margin rules....
Congressional intent to create a private right of action can also be inferred from the "contemporary legal context" in which amendments to the statute were enacted. Cannon [v. University of Chicago], 441 U.S. [677] at 698-99 [99 S. Ct. 1946 at 1958, 60 L. Ed. 2d 560]. At the time Congress enacted the 1968 and 1970 amendments to § 7, a number of courts had held that there was an implied right of action under § 7. See, e.g., Livingston v. Weis, Voisin, Cannon, Inc., 294 F. Supp. 676, 681 (D.N.J.1968); Sezysko [Serzysko] v. Chase Manhattan Bank, 290 F. Supp. 74 (S.D.N.Y.1958 [1968]), aff'd per curiam on opinion below, 409 F.2d 1360 (2d Cir.), cert. denied, 396 U.S. 904, 90 S. Ct. 218, 24 L. Ed. 2d 180 (1969); Remar v. Clayton Securities, 81 F. Supp. 1014 (D.Mass.1949).
The third Cort factor also supports implication of a private right under Section 7. The SEC and the Federal Reserve Board have both encouraged courts to imply such a private action as a necessary supplement to the SEC's enforcement efforts. See, e.g., Palmer v. Thomson & McKinnon, Auchincloss, Inc., 427 F. Supp. 915, 917 n. 1 (D.Conn. 1977); Pargas, Inc. v. Empire Gas Corp., 423 F.Supp. [199] at 251-256 (D.Md.1976).
Id. at 94,953.
The Pabst court's reasoning is persuasive in several respects. I realize that allowing a target company a private right of action under § 7 may well serve as a useful supplement to government enforcement efforts. And Congress, in enacting the statute, undoubtedly had some concern for the instability of individual securities issues. But the statute and regulations are distinctly regulatory, proscribing certain conduct without suggesting a corresponding extension of rights. Of course, the central issue is specific congressional intent. While Pabst correctly cites cases for the proposition that an implied right of action existed prior to the 1968 and 1970 amendments, none of these cases consider, *993 or offer an analogue to, target company or issuer standing. The Pabst court implicitly relied on the fact that the 1970 amendments specifically eliminated investor standing, see Stern v. Merrill Lynch, Pierce, Fenner & Smith, 603 F.2d 1073 (4th Cir.1979) (citing cases), without eliminating issuer standing. But I find no authority suggesting that any court ever considered that issuer standing might even be possible under the statute prior to the amendments. Rather, it appears that issuers' rights are simply not within the contemplation of the statute.
Given the "strict approach" to implying private rights of action required by Cort, and the seventh circuit's impliedly "uninhibited" but vain search for intent in Bassler, I must conclude there is no private right of action under § 7. Cf. Pargas, Inc. v. Empire Gas. Corp., 423 F. Supp. 199 (1976) (finding standing because issuer has personal stake, is subject to injury from violation, and is arguably within the statute's regulatory zone of interests, or because protection of such parties is supplemental aim of regulations, rather than applying Cort standards), aff'd mem., 546 F.2d 25 (4th Cir.). This absence of intent is affirmed by the clear indication that the margin regulations were not created for the "especial benefit" of target companies.
Notwithstanding the unavailability of a private right of action under § 7 of the Exchange Act or the regulations promulgated thereunder, a number of courts have found that a target company does have standing to allege failure to disclose margin violations. See, e.g., Koppers Co., Inc. v. American Express Co., 689 F. Supp. 1371, 1397 (W.D.Pa.1988); Revlon, Inc. v. Pantry Pride, Inc., 621 F. Supp. 804, 814 (D.Del.1985) (and sources cited therein). Each of these courts considered the allegations of margin violations as a violation of Williams Act disclosure requirements. The Acquisition Group contends that amendment 13 to Amanda's 14D-1, filed January 30, 1989, discloses the allegations which Universal raises and this is sufficient to meet its legal obligations. Avnet, Inc. v. Scope Industries, 499 F. Supp. 1121, 1125 (S.D.N.Y.1980). See also USG Corp. v. Wagner & Brown, 689 F. Supp. 1483, 1492-93 (N.D.Ill.1988) (disclosure of a dispute regarding alleged Hart-Scott-Rodino violations, as opposed to violations themselves, sufficient to defeat a motion for a preliminary injunction). I believe that, because I do not reach the issue of whether the margin rules were actually violated, a disclosure of alleged violations, without actually admitting that violations exist, does satisfy Amanda's and the Acquisition Group's legal obligations. However, while the alleged violations will not support enjoining the tender offer (because without standing or a right to challenge the margin financing Universal has no chance of success on the merits), they will play a role in the outcome of this suit.
B. Williams Act
Universal has also raised what has been termed by the counterclaim defendants as the "bidder" issue. Universal contends that Berisford PLC is the real party controlling this tender offer and that the Acquisition Group has failed to disclose this material information to the company and the shareholders. Again, the counterclaim defendants contend that amendment 13 moots any of Universal's claims because Berisford has done everything which would be required of a bidder. Universal responded, at the hearing, that court acceptance of the Acquisition Group's argument will foster unlawful activity. Universal contends that merely requiring disclosure, without additional sanctions, will lead others to violate the law. The argument continues that parties will violate because at worst all that they will face is the prospect of having to file amendments. Therefore, if they get away with it, well and good; if not, simply correct the matter later.
It is settled that the appropriate remedy for a violation of the Williams Act disclosure requirements is disclosure. Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 95 S. Ct. 2069, 45 L. Ed. 2d 12 (1975). Universal asks this court to impose an obligation on the parties to turn back the clock, write a new offer to purchase, and communicate *994 that to the shareholders. (Amendment 13 was filed with the SEC but not mailed to the shareholders.) Amanda's counsel stated to the court that it would communicate whatever information to the shareholders the court required, but requiring a new offer to purchase was not warranted. Berisford counsel argue that all material information has been disclosed and that information which is not disclosed is immaterial.
The issue of whether Berisford is really the party on behalf of whom the offer is made is a fact specific question. Messrs. Levy and Press testified that they were the persons actually controlling this offer and the Berisford parties were only kept informed of their decisions. Numerous documents have been brought to the court's attention which imply that Berisford has the right to control the terms and conditions (including price) of the offer and would control Universal after the acquisition. Levy and Press both testified that those documents did not control the present offer, but admitted that the documents were used in planning the offer. The documents included such control for Berisford as approving the timing and amount of the offer, appointing a majority of the Universal board, providing management expertise in running Universal (Berisford is in the food industry), and providing the majority of the equity for the investment. Berisford officers have testified that they are involved in this offer solely for investment purposes. All Acquisition Group parties have stated they have a good working relationship and as a matter of courtesy inform the others of what events occur and what future steps are planned, which explains the trip to London by Levy and Press to meet with Berisford people prior to increasing the amount of the offer.
At present, no complete written agreement between Amanda and Berisford exists with respect to the tender offer for Universal. Certain matters are defined. These include Berisford's obligation to indemnify the parties for costs incurred through the back end merger, to pay Levy and Press a specified fee for their services both through the merger and (as a management fee) after the merger, and agreed to guarantee the financing guarantees made by HVE to Kidder, Chase, and Berisford Capital. The lack of a written agreement contrasts sharply with the HVE takeover by Hyde Park in early 1988. Levy, Press and Berisford were also involved in that transaction. In that, the parties operated under a comprehensive document which was termed the Hyde Park I Partnership Agreement. The agreement defined the parties respective roles during the acquisition and after the takeover.
Universal's contentions regarding the alleged violations on this issue relate to the failure on the part of the Acquisition Group to completely reveal the relationship and agreements between the parties making the offer, the failure of Berisford to admit it is the party for whom the offer is made, the failure of the Acquisition Group to reveal the margin rule violations, the failure to reveal that Berisford will have to consolidate the debt from this deal on its own balance sheet, and the failure to reveal that Berisford will have to get shareholder approval for its participation in this offer. All of these contentions have been disclosed by the Acquisition Group in its amendments which have been filed with the SEC. Universal, as noted, wants more disclosure.[4]
Based on the present record, it is not possible to conclusively state that Berisford is a bidder and controlling this offer. Certainly in the broad sense the tender offer for Universal makes more economic and *995 practical sense if Berisford is viewed as the real party in interest. Berisford is a British food company with growth aspirations in the American market. Berisford is allegedly providing massive sums of capital for this investment, with a relatively small return. And Philip Aaronberg, a director of Berisford PLC, stated that at some point in the next few years they may look to Universal with their "own covetous eyes." (After reviewing the transcript, it is difficult to ascertain whether the "they" meant Berisford PLC or Hyde Park, of which Berisford indirectly owns 50%.) Levy and Press are young men with no experience in the industries in which Universal operates. HVE has no product lines in common with those of Universal. HVE is also a small company which just recently was purchased by Hyde Park and has little extra cash flow to invest in an offer of this size.
However, the only factual testimony presented demonstrates that Levy and Press are the controlling parties to this transaction and Berisford PLC and its subsidiaries are participants for investment purposes. The matters raised by Universal are based on its own inferences and conclusions gleaned from documents which involved the prior discussions between Hyde Park, Berisford and Resource Planning, Inc., a nonparty in this suit. No testimony was presented to rebut that of the Acquisition Group witnesses. For the purpose of this motion, I find that Universal has not met its burden of demonstrating a reasonable likelihood of success on the merits to diminish the need to weigh the respective harms to the parties.
If the motion is denied, Amanda's offer remains on the table, and Universal is forced to use other means which are in the best interests of the shareholders and the corporation to deal with the offer. If the motion is granted, Amanda must in essence start from scratch and may miss a unique business opportunity, namely the acquisition of Universal. Clearly, the harms weigh in favor of Amanda. In addition, the public could be harmed by granting the injunction. If the offer is enjoined pending a full trial on the merits, the shareholders may face the prospect of Amanda withdrawing the offer without a substantial likelihood that Universal will succeed in challenging Berisford's role. Therefore, Universal's motion to enjoin the offer pending trial or the Acquisition Group creating a new offer will be denied. As with the alleged margin violations, however, the ambiguities raised by the lack of an agreement, and the prior agreements which the Acquisition Group contends are no longer operable, are relevant to other issues raised by this suit.
IV. WILLIAMS ACT MOTION
Amanda contends that Universal has violated both sections 14(d)(4) and 14(e) of the Exchange Act, 15 U.S.C. §§ 78n(d)(4) and 78n(e), by making recommendations without complying with the rules and by making untrue statements of material fact. The statutes state in relevant part:
(d)(4) Any solicitation or recommendation to the holders of such a security to accept or reject a tender offer or request or invitation for tenders shall be made in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
(e) It shall be unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation for tenders, or any solicitation of security holders in opposition to or in favor of any such offer, request or invitation. The Commission shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reasonably designed to prevent such acts and practices as are fraudulent, deceptive, or manipulative.
The first allegations concern rules 14e-2(a) and 14d-9(a) promulgated by the SEC pursuant *996 to § 14(d), 17 C.F.R. §§ 240.14e-2(a) and 240.14d-9(a). Rule 14e-2(a) provides that the target company shall provide within ten days of the tender offer a statement to shareholders which either (a) recommends acceptance or rejection of the tender offer, or (b) expresses no opinion and is remaining neutral to the offer, or (c) is unable to take a position with respect to the offer and the reasons why the target management cannot take a position. Rule 14d-9(a) provides that any recommendation must include information and the reasons for the recommendation.
The statements which Amanda claims are in violation of the rules include
John Murray's statement on December 1, 1988 in which he told the press that a meeting of the board would be held in due course and he would recommend the board reaffirm its "not for sale" position. (A schedule 14D-9 was filed by Universal with regard to this statement on December 2, 1988.)
Guy Osborn's statement in the December 2 14D-9 which said that the statement of Murray was not a recommendation of the board. (The SEC sent a letter to Universal which said the press release violated the rules and to file the proper forms. Universal's response to the SEC explaining its position on the matter was not answered.)
Lack of reasons for the recommendation in the 14D-9 of December 2.
Statement of Ken Manning, Universal vice president, to the Milwaukee Business Journal for the week of December 5 that Murray planned to recommend rejection of the offer. Amanda claims no 14D-9 was ever filed.
December 7, 1988 filing of a petition by Universal with the Wisc.Comm.Sec. under Wis.Stat. § 552.05(4) which Amanda contends is another recommendation for which no 14D-9 was filed.
At the hearing, Amanda withdrew all the issues from consideration except the alleged disclosure violation relating to the December 1, 1988 press release. Amanda contends that when Murray recommended rejection of the offer, he was required to provide reasons for that recommendation. Amanda feels it is important that this failure be disclosed to the shareholders because they have a right to know that Murray had, in its opinion, no reason for his opposition to the offer. The other issues were withdrawn due to the complexity of the record before the court.
First of all, it is debatable whether the press release was a recommendation or a "stop, look and listen" communication to the shareholders. The latter is perfectly within a target's prerogatives without filing a 14D-9. 17 C.F.R. § 240.14d-9(e); Anaconda Co. v. Crane, 411 F. Supp. 1210, 1215 (S.D.N.Y.1975). If it was a "stop, look and listen" communication, no reasons need be given. Secondly, I find that if it was a recommendation, it came from management, not the board of directors. Perhaps more importantly, even if it was a recommendation which did not contain reasons, the issue is moot because of the increased offer. Thus, there is no irreparable injury justifying injunctive relief. See Gulf Corp. v. Mesa Petroleum Co., 582 F. Supp. 1110 (D.Del.1984).
Amanda's other allegations concern violations of § 14(e) which involve the matters of misrepresentations. I construe counsel's comments as withdrawing these from the court's consideration as well. Therefore, I need not reach the issue of whether any material misrepresentations were made and whether they would support injunctive relief.
V. THE WISCONSIN BUSINESS COMBINATION ACT
Amanda's tender offer is conditioned on, among other things, invalidation of Wisconsin's Business Combination Act, Wis.Stat. § 180.726, or Amanda's otherwise being satisfied that the Act is inapplicable to the offer.
Amanda contends that the Act is preempted by the Williams Act, 15 U.S.C. §§ 78m(d) and 78n(d)-(e), and therefore violative of the supremacy clause, art. VI, cl. 2 of the United States Constitution. In addition, Amanda contends the Act violates the commerce clause, art. I, § 8, cl. 3 of the *997 United States Constitution because it places an excessive burden on interstate commerce. In taking up the question of whether the Act is violative of the Constitution, I note the well-established principle that every duly enacted state law is entitled to the presumption of constitutionality. See, e.g., Lockport v. Citizens for Community Action, 430 U.S. 259, 272, 97 S. Ct. 1047, 1056, 51 L. Ed. 2d 313 (1977), motion denied, 431 U.S. 902, 97 S. Ct. 1692, 52 L. Ed. 2d 385.
Because a second-step merger is the purpose of the offer, defendants' reply memorandum at 32, the chief provision in dispute is Wis.Stat. § 180.726(2), which provides:
Except as provided in sub. (5), a resident domestic corporation may not engage in a business combination with an interested stockholder of the resident domestic corporation for 3 years after the interested stockholder's stock acquisition date unless the board of directors of the resident domestic corporation has approved, before the interested stockholder's stock acquisition date, that business combination or the purchase of stock made by the interested stockholder on that stock acquisition date.
"Business Combination" is defined in § 180.726(1)(e) and includes various forms of self-dealing between an interested stockholder and the corporation. An "interested stockholder" of a resident domestic corporation is a person other than the resident domestic corporation or a subsidiary of the resident domestic corporation who is a) "the beneficial owner of at least 10% of the voting power of the outstanding voting stock of the resident domestic corporation," or b) "an affiliate or associate of that resident domestic corporation and at any time within 3 years immediately before the date in question was the beneficial owner of at least 10% of the then outstanding voting stock of that resident domestic corporation." Wis.Stat. § 180.726(1)(j)1. "`Stock acquisition date', with respect to any person, means the date that that person first becomes an interested stockholder of that resident domestic corporation." Wis.Stat. § 180.726(1)(n). The Act is set forth, in full, in Appendix A to this opinion. Particular provisions will be referenced where helpful.
A. The Williams Act Challenge
Amanda contends that the Williams Act preempts the Wisconsin act, making the latter violate the supremacy clause. The Supreme Court's decisions on preemption leave no doubt that "absent an explicit indication by Congress of an intent to preempt state law, a state statute is preempted only" where complying with both federal and state regulations is physically impossible, or where the state law is an obstacle to accomplishing and executing Congress' full purposes and objectives. C.T.S. Corp. v. Dynamics Corp. of America, 481 U.S. 69, 107 S. Ct. 1637, 1644, 95 L. Ed. 2d 67 (1987) (citations omitted) rev'g Dynamics Corp. of America v. C.T.S. Corp., 637 F. Supp. 389 (N.D.Ill.1986), aff'd, 794 F.2d 250 (7th Cir.). Entities can comply with both the Williams Act and the Wisconsin act. Therefore, the Wisconsin act can be preempted only if it frustrates the Williams Act's purposes.
In making both their Williams Act and commerce clause arguments, the parties in this case chiefly rely on CTS, 107 S. Ct. 1637, 95 L. Ed. 2d 67 (1987), and Edgar v. MITE Corp., 457 U.S. 624, 102 S. Ct. 2629, 73 L. Ed. 2d 269 (1982), aff'g MITE Corp. v. Dixon, 633 F.2d 486 (7th Cir.1980). In MITE, a divided Court struck down on commerce clause grounds an Illinois statute that provided for a twenty-day precommencement period, during which time management could disseminate its views on an upcoming tender offer but offerors could not publish their offer. The statute also provided that the fairness of tender offers would be reviewed by the Illinois secretary of state. A three member plurality found the statute preempted by the Williams Act. In CTS, the Court upheld an Indiana statute requiring a majority vote of disinterested shareholders before an entity acquiring controlling shares is entitled to voting rights. The acquiror can require management to hold a shareholder vote within fifty days if the acquiror files the appropriate statement, requests a special *998 meeting and agrees to pay the expenses of the meeting. The Seventh Circuit Court of Appeals found the statute preempted under the Williams Act based on the view that the law's practical effect was to delay consummation of tender offers until fifty days after their commencement. CTS, 107 S.Ct. at 1647. Though both the Illinois and the Indiana statute are distinct from Wisconsin's act, the Court's reasoning is instructional to the present case.
The Williams Act governs disclosure and procedure with respect to tender offers. See generally CTS, 107 S.Ct. at 1644 (summarizing structure and purposes of Williams Act). In MITE, 457 U.S. 624, 102 S. Ct. 2629, 73 L. Ed. 2d 269 (1982), as interpreted by the CTS Court, the three-member plurality "concluded that the Williams Act struck a careful balance between the interests of offerors and target companies, and that any state statute that `upset' this balance was preempted." CTS, 107 S.Ct. at 1645 (citing Edgar v. MITE Corp., 457 U.S. at 632-634, 102 S. Ct. at 2635-36). The CTS Court found its holding to fall within the scope of the MITE plurality's analysis, but effectively cast doubt on that analysis in not expressly adopting the plurality's reasoning:
As the plurality opinion in MITE did not represent the views of a majority of the Court, we are not bound by its reasoning. We need not question that reasoning, however, because we believe the Indiana act passes muster even under the broad interpretation of the Williams Act articulated by Justice WHITE in MITE.
CTS, 107 S.Ct. at 1645. This court need not question the correctness of Justice White in MITE, if the present case is governed by the reasoning applied in CTS. But a discussion of the Williams Act's purposes is illuminating, particularly given the limited precedential value of the MITE plurality's reasoning.
Carefully considering the Williams Act's legislative history in Piper v. Chris-Craft Industries, 430 U.S. 1, 97 S. Ct. 926, 51 L. Ed. 2d 124 (1977), reh'g denied, Bangor Punta Corp. v. Chris-Craft Industries, Inc., 430 U.S. 976, 97 S. Ct. 1668, 52 L. Ed. 2d 371, the Supreme Court concluded "that the sole purpose of the Williams Act was the protection of investors who are confronted with a tender offer." Id. at 35, 97 S. Ct. at 946. The Court recognized that
Congress was indeed committed to a policy of neutrality in contests for control, but its policy of even-handedness does not go either to the purpose of the legislation or to whether a private cause of action is implicit in the statute. Neutrality is, rather, but one characteristic of legislation directed toward a different purpose the protection of investors. Indeed, the statements concerning the need for Congress to maintain a neutral posture in takeover attempts are contained in the section of the Senate Report entitled "Protection of Investors." Taken in their totality, these statements confirm that what Congress had in mind was the protection of shareholders, the "pawn[s] in a form of industrial warfare." The Senate Report expressed the purpose as "plac[ing] investors on an equal footing with the takeover bidder," Senate Report 4, without favoring either the tender offeror or existing management.
* * * * * *
The sponsors of this legislation were plainly sensitive to the suggestion that the measure would favor one side or the other in control contests; however, they made it clear that the legislation was designed solely to get needed information to the investor, the constant focal point of the committee hearings.
Id. at 29-31, 97 S. Ct. at 943-44.
As this passage reflects, any balance of power between bidder and management afforded by the Williams Act is incidental to the legislation's "sole purpose": providing information to shareholders. The Williams Act's policy-neutrality as to bidder and management is properly described as a characteristic rather than a purpose of the statute. The Williams Act responded to takeover bidders who operated covertly to the detriment of shareholders, see S.Rep. No. 550, 90th Cong., 1st Sess., 2 (1967); Piper, 430 U.S. at 28, 97 S. Ct. at 942, and is concerned with neutrality *999 between bidder and management insofar as this neutrality protects shareholders' access to necessary information. Any other balance of power between bidder and management must arise from outside this federal law.
The MITE plurality's preemption analysis, as ostensibly applied by the CTS Court, was summarized in BNS Inc. v. Koppers Co., Inc., 683 F. Supp. 458, 469 (D.Del.1988):
First, does the statute protect independent shareholders from coercion? Second, does the statute give either management or the offeror an advantage in communicating with stockholders? This question may be reformulated to fit the circumstances of the present case by phrasing as whether the statute gives either management or the offeror an advantage in consummating or defeating an offer. Third, does the statute impose an indefinite or unreasonable delay on offers? And fourth, does the statute allow the state government to interpose its views of fairness between willing buyers and sellers?
The latter two questions are of little assistance in the present case. The state does not interpose its views of fairness by virtue of having passed the Act, which itself expresses no view of transactions or invokes the state's power to intercede in a transaction. Any questions of fairness are appropriately considered in terms of management's relative power under the Act. Further, the Act by its terms does not directly impede a tender offer in any respect. It does not address disclosure requirements or prevent a tender offer from going forward. Rather, the statute affects business combinations following a successful tender offer.
The fundamental question implicated by the Williams Act analysis in CTS and MITE is whether the Wisconsin act impairs shareholder autonomy, providing management with an undue advantage that could hinder the shareholders' exercise of an informed choice concerning the tender offer.
It appears undisputed that the Act was intended to deter hostile tender offers for Wisconsin corporations; and it is reasonably likely that the statute will have this effect. But the extent of this effect is speculative, and nothing about the Act prohibits any entity from purchasing or offering to purchase shares in Wisconsin corporations, or from attempting thereby to gain control. Cf. CTS, 107 S.Ct. at 1652. Considering Indiana's anti-takeover law, the Court stated:
Of course, by regulating tender offers, the act makes them more expensive and thus deters them somewhat, but this type of reasonable regulation does not alter the balance between management and offeror in any significant way. The principle result of the act is.... fully in accord with the purposes of the Williams Act.
Id. at 1646 n. 7. The "balance" properly required here is that of the power to communicate concerning tender offers. Though the CTS Court found no need to step beyond the MITE plurality's reasoning, the clear light of Piper leaves MITE very much in the shadows on this point.
To the extent the MITE plurality requires a balance of strategic power between bidder and management, the nature of the deterrence is relevant. The Act bans second-step mergers for three years following the interested stockholder's stock acquisition date, absent prior approval by the board of directors. After three years, a business combination may take place if: a) the prior board approval existed; b) the business combination is approved by the affirmative vote of the holders of a majority of the voting stock not beneficially owned by the interested stockholder at a meeting called for that purpose; or c) if certain stock price conditions are met. Wis.Stat. § 180.726(3). The Act does not ban takeovers per se, but merely delays for three years the successful bidder's ability to attain complete control over the corporation.
A delay of the free exercise of power is not unconstitutional, for "the Williams Act would preempt a variety of state corporate laws of hitherto unquestioned validity if it were construed to preempt any state statute that may limit or *1000 delay the free exercise of power after a successful tender offer." CTS, 107 S.Ct. at 1647. For example, staggered terms for directors and cumulative voting provisions, allowed in most states, may delay the time when a successful bidder gains control over corporate affairs. Id. at 1647-48. "The long-standing prevalence of state regulation in this area suggests that, if Congress had intended to preempt all state laws that delay the acquisition of voting control following a tender offer, it would have said so explicitly." Id. at 1648.
The delay protects shareholders by discouraging unapproved freezeouts, or second-step mergers whereby remaining shareholders are forced to sell their stock for cash or securities. Tender offers contemplating freezeouts may be particularly coercive. The Supreme Court has recognized that protecting shareholders against the possibility of coercion in tender offers is a legitimate state concern. Id. at 1651.
Further, to find the three year delay unconstitutional would be to implicitly adopt an economic policy favoring tender offers as inherently good. The fundamental reason for the Williams Act's neutrality concerning management and bidder reflects a comprehensive view of tender offers:
It was strongly urged during the hearings that takeover bids should not be discouraged because they serve a useful purpose in providing a check on entrenched but inefficient management. It was also recognized that these bids are made for many other reasons, and do not always reflect a desire to improve the management of the company.
S.Rep. No. 550, 90th Cong., 1st Sess. at 3. The Wisconsin act effectively eliminates hostile leveraged buyouts, in which the assets of the target company provide resources for servicing the debt incurred by the bidder in taking control. To the extent hostile offers of this nature might be deterred, shareholders may not be offered the opportunity to take advantage of the escalating stock prices likely to accompany the speculation often attending tender offers. But the state, through its legislation, may favor long-term growth and capital investment over short-term speculation.
Reflecting to some extent the 1967 Senate Report quoted above, the Supreme Court has recently given voice to the flux of economic theory enmeshing theoretical discussion of tender offers:
No one doubts that some successful tender offers will provide more effective management or other benefits such as needed diversification. But there is no reason to assume that the type of conglomerate corporation that may result from repetitive takeovers necessarily will result in more effective management or otherwise be beneficial to shareholders. The divergent views in the literature and even now being debated in the Congress reflect the reality that the type and utility of tender offers vary widely. Of course, in many situations the offer to shareholders is simply a cash price substantially higher than the market price prior to the offer.
CTS 107 S.Ct. at 1651 n. 13. Absent clear legislative directive, it is inappropriate for this court to posit all the world as Wall Street, where all the shareholders would be arbitrageurs. "The Constitution does not require the States to subscribe to any particular economic theory. [The courts] are not inclined `to second-guess the empirical judgments of lawmakers concerning the utility of legislation,' Kassel v. Consolidated Freightways Corp., 450 U.S. at 679, 101 S. Ct. at 1321 (Brennan, J., concurring in judgment)." CTS, 107 S.Ct. at 1651. Individual shareholders remain free to invest their money in corporations domiciled in legislative environments more conducive to speculation. If they feel hindered in this regard because they believe their shares are undervalued, they should perhaps be mindful that any stock investment bears a number of inherent risks, including the possibility that a tender offeror may never appear and bully market prices momentarily skyward.
The Act can not reasonably be said to impair shareholder decision-making in the tender offer process. The Act neither affects disclosure or timing, nor forbids *1001 tender offers themselves. The Act does provide shareholder protection in an area of legitimate state concern. Assuming the Act prevents potential bidders from ever making some tender offers, the impact of this deterrence presently appears incalculable and irrelevant. What might be of consequence is the extent to which bidders fail to receive board approval. However, a target attractive to one suitor will generally be attractive to others. Shareholders who feel the board is responding inappropriately to bidders maintain their power to effect changes in corporate control, thereby enhancing receptivity to offers. If management, for its part,
were to take actions designed to diminish the value of the corporation's shares [to fend off suitors], it may incur liability under state law. But this problem does not control our preemption analysis. Neither the [Williams] act nor any other federal statute can assure that shareholders do not suffer from the mismanagement of corporate officers and directors.
Id. at 1647.
In view of the shareholders' presumed influence over management, the three year delay is not logically distinguishable from other delays or inhibitions of takeovers, such as staggered terms for directors and supermajority merger vote requirements, currently permitted in many states, notwithstanding that the latter limitations often may be more directly controlled by shareholders. The Act prevents business combinations for three years, but does not hinder the successful offeror's exercise of any other attributes of control. Nothing in the Act prevents a potential bidder from seeking board approval in the first place. Nor does anything prevent an offeror from making a tender offer conditioned on board approval, whereby the suitor can effectively communicate its message to shareholders and enhance shareholder awareness. "A person is not the direct or indirect beneficial owner of stock tendered pursuant to a tender or exchange offer ... until the tendered stock is accepted for purchases or exchange." Wis.Stat. § 180.726(1)(d)(2).
Based on its reading of Supreme Court case law, the court in BNS v. Koppers Co., Inc., 683 F.Supp. at 469 (D.Del.1988), indicated that, notwithstanding a statute's "substantial alteration of the balance between management and the offeror.... even statutes with substantial deterrent effects on tender offers do not circumvent Williams Act goals, so long as hostile offers which are beneficial to target shareholders have a meaningful opportunity for success." But the Supreme Court does not appear to have formulated a "meaningful opportunity" test. Indeed, such a test would raise perplexing problems of determining which hostile offers are "beneficial to shareholders," measuring "substantial deterrence," and defining "meaningful opportunity for success." And, of course, not all initially "hostile" offers remain hostile: many will inevitably result in negotiated transactions between the offeror and the target. The BNS court itself evidently found "meaningful opportunity" to exist, despite its conclusion that opportunities left open by the statute were heavily weighted against the offeror. Id. at 470-72. The same court subsequently found meaningful opportunity to exist based on statistical analysis in RP Acquisition Corp. v. Staley Continental, Inc., 686 F. Supp. 476 (D.Del.1988), but similar arguments made to this court were less than convincing on either side, particularly given the controversy surrounding these matters in the academic community and legislatures. Cf. West Point-Pepperell, Inc. v. Farley Inc. and Trust Co. Bank, 711 F. Supp. 1096 (N.D.Ga.1989) (noting difficulty of accurately applying "hostile/hostile" and other labels, as well as inadequacy of available data to show lack of meaningful opportunity). Ultimately, meaningful opportunity for success under the Wisconsin act can be controlled by shareholder vote in the light of board response to potential suitors. The board of directors itself, it should be remembered, remains subject to scrutiny under fiduciary standards for decisions made on behalf of the corporation.
Universal contends that even if a meaningful opportunity for tender offer success *1002 is required, the Act offers it. A hostile offeror may wage a proxy contest, purchase a controlling interest, elect sympathetic board members, dictate corporate policies, or otherwise assume voting control. Amanda contends that the Act makes a proxy contest impracticable if not legally impossible. Without finding a clear legal or practical foundation for a "meaningful opportunity" requirement, I note that foreclosing a proxy contest opportunity could frustrate or even preclude shareholder autonomy and the exercise of informed choice.
Under Wis.Stat. § 180.726(1)(j)(1)(a), an "interested stockholder" includes one who is the "beneficial owner of at least 10% of the voting power of the outstanding voting stock." Wis.Stat. § 180.726(1)(d)(1)(d) defines "beneficial owner" as including one who "has a written or unwritten agreement, arrangement or understanding with another person that is directly or indirectly a beneficial owner ... of the stock, if the agreement, arrangement or understanding is for the purpose of acquiring, holding disposing of or voting the stock, unless the voting is pursuant to a revocable proxy or consent described in subd. 1.c."
Amanda argues that if it attempted to engage in a proxy contest, "any `agreements' or `understandings' it had with other shareholders whose holdings together with Amanda's total more than 10% would alone trigger the prohibitions of the Anti-Takeover Act before any shareholder vote." Plaintiff's Reply Memorandum at 35. In making its argument and reciting § 180.726(1)(d)(1)(d), Amanda neither quotes nor considers that provision's closing phrase, "unless the voting is pursuant to a revocable proxy or consent described in subd. 1.c." Wis.Stat. § 180.726(1)(d)(1)(c) provides in pertinent part:
[A] person is not the beneficial owner of stock under this subd. 1. c if the agreement, arrangement or understanding to vote that stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made in accordance with the applicable regulations under the exchange act and is not reportable under the report required under 17 CFR 240.13d-1(1)(a) [sic] or a comparable or successor report.
A shareholder must file a disclosure report under 17 CFR 240.13d-1(a) upon becoming beneficial owner of 5% of any equity or security of a specified class. In turn, 17 CFR § 240.13d-3(b) provides:
Any person who, directly or indirectly, creates or uses a trust, proxy, power of attorney, pooling arrangement or any other contract, arrangement, or device with the purpose of [sic] effect of divesting such person of beneficial ownership of a security or preventing the vesting of such beneficial ownership as part of a plan or scheme to evade the reporting requirements of section 13(d) or (g) of the act shall be deemed for purposes of such sections to be the beneficial owner of such security.
Under these provisions, it appears possible that a potential offeror could wage a campaign pursuant to revocable proxy as long as that offeror does not otherwise beneficially own 5% of the stock specified, and as long as the proxy is not used "as part of a plan or scheme to evade the reporting requirements." To ensure clarity of intention, the potential offeror has available 17 CFR § 240.13d-4, allowing him to "expressly declare in any statement filed that the filing of such statement shall not be construed as an admission that such person is, for the purposes of sections 13(d) or 13(g) of the Act, the beneficial owner of any securities covered by the statement." Presumably, these provisions allow the shareholder sufficient room to avoid conflict with the Wisconsin act. While such a proxy campaign may require only a modicum of planning, some degree of foresight is expectable from most potential offerors. Though one who is or will become an offeror may cross the share ownership threshold inadvertently, see Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 95 S. Ct. 2069, 45 L. Ed. 2d 12 (1975), such an error is not necessarily fatal under federal law and appears reversible under the Wisconsin act. Wis.Stat. § 180.726(5).
This question may be a close one, though other grounds for distinguishing interested *1003 stockholders from those conducting proxy contests also may be conceivable under the Act. Amanda, however, did not even engage in a proxy battle that might clearly invoke the need for further analysis. If the issue calls for any consideration, it presently suffices that a possible distinction appears on the statute's face. Given the presumption of constitutionality, and the evident continued availability of proxy opportunities to those interested, I can not find a constitutional violation on this ground.
Finally, I emphasize that corporations, as well as related powers and rights, are defined by state law. Federal law has long recognized the states' power to regulate the internal affairs of corporations. See, e.g., Santa Fe Industries v. Green, 430 U.S. at 479, 97 S. Ct. at 1304 (1977); Cort v. Ash, 422 U.S. at 84, 95 S. Ct. at 2090 (1975). The Williams Act itself is subject to § 28(a) of the Exchange Act, 15 U.S.C. § 78bb(a), providing:
Nothing in this title shall affect the jurisdiction of the Securities Commission (or any agency officer performing like functions) of any state over any security or any person insofar as it does not conflict with the provisions of this title or the rules and regulations thereunder.
With Justice Scalia I must agree: "[u]nless it serves no function, that language forecloses preemption on the basis of conflicting "purpose" as opposed to conflicting "provision." CTS, 107 S.Ct. at 1653. Nonetheless, because the CTS majority saw no need to explicitly question the MITE plurality's reasoning, I have considered this case under the Supreme Court's careful analysis of the Williams Act's purposes. Having done so, I must conclude that the Williams Act does not preempt the Wisconsin act.
B. The Commerce Clause Challenge
Amanda also argues that the Wisconsin act violates the commerce clause. This argument is effectively considered by using the CTS commerce clause analysis.
"The principal objects of dormant Commerce Clause scrutiny are statutes that discriminate against interstate commerce." CTS 107 S.Ct. at 1648 (citations omitted). But the Wisconsin act does not fall into this category since it has the same effect on tender offers whether or not the offeror is a Wisconsin resident or domiciliary. The Act affects both interstate and local business equally. That the Act, as a practical matter, might most often affect out of state entities because most hostile tender offers for Wisconsin corporations will come from offerors outside Wisconsin does not disturb this conclusion. Because the Act does not impose any greater burden on out-of-state offerors than it does on similarly situated Wisconsin offerors, it does not discriminate against interstate commerce. Id. at 1649 (quoting Lewis v. BT Investment Managers, Inc., 447 U.S. 27, 36, 100 S. Ct. 2009, 2015, 64 L. Ed. 2d 702 (1980)).
The commerce clause will also invalidate statutes that adversely affect interstate commerce by subjecting activities to inconsistent regulations. Id. at 1649 (citations omitted). However,
[n]o principle of corporation law and practice is more firmly established than a State's authority to regulate domestic corporations, including the authority to define the voting rights of shareholders. See Restatement (Second) of Conflict of Laws § 304 (1971) (concluding that the law of the incorporating State generally should "determine the right of the a shareholder to participate in the administration of the affairs of the corporation").
Id. at 1649. Because the Act only regulates corporations chartered by Wisconsin, it creates no impermissible risk of inconsistent regulation by different states.
A majority of the MITE Court subscribed to a balancing test, under which "even when a state statute regulates interstate commerce indirectly, the burden imposed on that commerce must not be excessive in relation to the local interests served by the statute." MITE, 457 U.S. at 643, 102 S. Ct. at 2641 (citing Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S. Ct. 844, 847, 25 L. Ed. 2d 174 (1970)). However, the Illinois *1004 statute under consideration in MITE obviously failed the more traditional commerce clause tests: it applied to tender offers for any corporation for which 10% of the outstanding shares were held by Illinois residents and it purported to give Illinois the power to determine whether a tender offer for such a corporation could proceed anywhere. MITE, 457 U.S. at 643, 102 S. Ct. at 2641. At the same time, in assessing the Illinois statute's impact on interstate commerce, MITE presented a rather idealized vision favoring tender offers as a seemingly faultless mechanism for reallocating economic resources to their highest valued use and thereby improving efficiency and competition. Id. at 643, 102 S. Ct. at 2641. The Court has since viewed the securities market in a more realistic light, recognizing that some successful tender offers will provide these economic benefits, but "there is no reason to assume that ... [what] will result is more effective management or otherwise ... beneficial to shareholders." CTS, 107 S.Ct. at 1651 n. 13. The CTS Court did not explicitly apply or even accept the balancing test. Speaking specifically of corporations and securities, it merely concluded that a state need not define "commodities [owing their existence and attributes to state law] as other states do; it need only provide that residents and nonresidents have equal access to them." Id. at 1652.
To the extent CTS does implicitly compare burdens on interstate commerce with statutory benefits, its discussion is grounded on two vital assumptions. First, making corporation law is the states' prerogative:
A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence. These are such as are supposed best calculated to effect the object for which it was created.
Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, 636, 4 L. Ed. 629 (1819), quoted in CTS, 107 S.Ct. at 1649-50. Second, state laws regulating corporate governance, in prohibiting certain transactions and regulating others, "necessarily affect certain aspects of interstate commerce." Id. at 1650. "A State has an interest in promoting stable relationships among the parties involved in corporations it charters, as well as in ensuring that investors in such corporations have an effective voice in corporate affairs." Id. at 1651.
The CTS Court found only one specific benefit of the Indiana statute: protecting shareholders from coercive tender offers. Id. at 1651. The Wisconsin act not only provides this benefit, but also protects against highly leveraged buyouts that threaten to strip the target's assets without necessarily improving economic efficiency or shareholders' positions. Amanda counters that the Act fails to prevent management-approved abuses of this very nature. Certainly the state has a "substantial interest in preventing the corporate form from becoming a shield for unfair business dealing." Id. at 1651-52. The Act preserves management liability for breaching its duties to shareholders. Nothing obligates a state legislature to cure every related corporate ill when enacting corporate regulations aimed at particular problems.
Amanda further argues that the Act infringes shareholder autonomy, giving management a virtual veto power over nationwide tender offers. Whether the Act disenfranchises shareholders is more appropriate in relation to the Williams Act preemption issue, where it has already been discussed, supra. Amanda's argument does raise the commerce clause question of whether the Act grants a power to management that results in an excessive burden on interstate commerce.
The Act may deter some tender offers. But it also appears designed to promote careful choice concerning allocation of economic resources to maximize managerial efficiency. Again, tender offers are not necessarily beneficial, and absent clear violation of federal law, the economic utility of legislation is best left to the empirical judgment *1005 of legislatures rather than the courts. Id. at 1651. The Supreme Court has "rejected the `notion that the Commerce Clause protects the particular structure or methods of operation in a ... market." Id. at 1652 (quoting Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 127, 98 S. Ct. 2207, 2214, 57 L. Ed. 2d 91 (1978), reh'g denied, Shell Oil Co. v. Governor of Maryland, 439 U.S. 884, 99 S. Ct. 232, 58 L. Ed. 2d 200. Clearly, the Act focuses on legitimate state interests.
To reiterate points made with respect to the Williams Act, the Wisconsin act does not prevent tender offers. The CTS Court's statement on Indiana's statute is applicable to Wisconsin's law: "This act does not prohibit any entity resident or nonresident from offering to purchase, or from purchasing, shares in [domestic] corporations, or from attempting thereby to gain control." CTS, 107 S.Ct. at 1652. The Act limits certain kinds of self-dealing. Ultimate decision-making power remains with the shareholders, who can elect directors reflecting the shareholders' receptivity to tender offers. And as with management, the Act preserves directors' responsibility for decisions made on behalf of the corporation. The Act's actual effect on tender offers is uncertain. Some degree of deterrence is acceptable. Because the Act regulates matters properly within the ambit of state power, while treating residents and nonresidents equally, "even if the act should decrease the number of successful tender offers for [domestic] corporations, this would not offend the Commerce Clause." Id. at 1652. At best, any effect on interstate commerce is incidental to legitimate state regulation.
Some legislative purposes underlying the Act may well reflect protectionist motivations, such as the evident desire to protect resident domestic corporations against hostile takeovers that might result in target corporation operations leaving Wisconsin. But the Act appears no more indicative of such interests than the Indiana act upheld in CTS. To probe legislative history or intent in this case is not helpful. As CTS suggests, it is inappropriate for this court to define an economic policy concerning the inherent economic value of tender offers. In my view, Justice Scalia is again correct in stating that
[a]s long as a State's corporation law governs only its own corporations and does not discriminate against out-of-state interests, it should survive this Court's scrutiny under the Commerce Clause, whether it promotes shareholder welfare or industrial stagnation. Beyond that, it is for the legislature to prescribe its invalidity.
Id. at 1653 (Scalia, J., concurring in part and concurring in judgment). But in reaching my conclusion it is not necessary to recognize the practical impossibility and judicial imprudence of assessing the propriety and importance of local values, measuring a statute's effectiveness in promoting these values, and making "the ultimate (and most ineffable) judgment as to whether, given importance-level x, and effectiveness-level y, the worth of the statute is "outweighed" by impact-on-commerce z." Id. at 1653. Rather, in the absence of actual discrimination against interstate commerce or an impermissible risk of inconsistent regulation, motivations underlying the Act's passage are not accurately probative of constitutionality.
Insofar as the Act might arise from protectionist purposes, these purposes are subsumed by the statute's legitimate functions. Where statutory language has a plain and unambiguous meaning, "only the most extraordinary showing of contrary intentions from those data would justify a limitation on the `plain meaning' of the statutory language. When we find the terms of a statute unambiguous, judicial inquiry is complete, except in `rare and exceptional circumstances.'" Garcia v. United States, 469 U.S. 70, 75, 105 S. Ct. 479, 483, 83 L. Ed. 2d 472 (1984) (citations omitted), reh'g denied, 469 U.S. 1230, 105 S. Ct. 1235, 84 L. Ed. 2d 371 (1985). Cf. Piper, 430 U.S. at 24-27, 97 S. Ct. at 940-42 (analysis begins with the statute itself; reliance on legislative history in defining legislative intent is "a step to be taken cautiously"); cf. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 201, 96 S. Ct. 1375, 1385, 47 *1006 L.Ed.2d 668 (1976) (language of statute is controlling when sufficiently clear in its context); cf. United States v. Oregon, 366 U.S. 643, 648, 81 S. Ct. 1278, 1281, 6 L. Ed. 2d 575 (1961) (if statutory language is unequivocal, there is no need to resort to legislative history), reh'g denied, 368 U.S. 870, 82 S. Ct. 24, 7 L. Ed. 2d 70. This conclusion is underscored by the presumption of constitutionality. The Wisconsin act, on the record before this court, does not effectively burden interstate commerce in violation of the commerce clause.
VI. THE SHAREHOLDERS RIGHTS PLAN
On September 8, 1988 at a regularly scheduled board meeting, the Universal board adopted its shareholders rights plan without shareholder approval. The rights plan had been under consideration by the Universal board beginning with its board meeting in November 1987. At almost every board meeting since that time, the board discussed the plan and received advice from both its regular outside counsel and New York counsel on the operation and benefits of the plan. New York counsel described the rights plan as common and stated that it was "designed to counteract the advantages enjoyed by corporate raiders and to enable boards of directors to better protect shareholder interests in the face of coercive acquisition techniques." New York counsel also described as one of the principal purposes of the plan the option of permitting a company to remain independent "to preserve for shareholders the long-term value of the company in the event of a takeover." In adopting the plan on September 8, 1988 the board reviewed and considered the takeover policy statement previously adopted by the board on June 5, 1980. That policy statement declared that in considering any acquisition proposal, the board shall consider, among other things,
the board's estimate of the then current value of the company in a freely negotiated transaction,
the board's estimate of the future value of the company as an independent and ongoing business entity, and
the adequacy of the price offered.
The rights plan adopted by Universal is a second generation rights plan and is known in Wall Street parlance as a poison pill.
Universal's rights plan operates in the following manner. The board has issued rights to each of its shareholders which attach to the shareholders' stock and do not trade separately until there is a triggering event as defined in the plan which causes the rights to detach and trade separately. In Universal's plan, that event is the accumulation of more than 20 percent of the corporation's stock or a tender offer for more than 20 percent of the stock. In the case of a tender offer, after ten days from the announcement of the tender offer the rights detach, certificates for the rights are issued, and they trade separately. Detachment of the rights may be delayed by the board, and in the instant case Universal's board has delayed the separation of the rights from the underlying shares. Under the plan the Universal board is empowered to redeem the rights at a nominal cost to the company at any time before certain triggering events which are described below. It is the redemption of these rights that Amanda seeks by its motion.
Universal's plan contains both "flip in" and "flip over" provisions. The triggering event for the "flip in" provision is the purchase of 20 percent or more of Universal's shares by the tender offeror, in this case Amanda. This triggering event gives each Universal shareholder other than the tender offeror, immediately and without board intervention, the right to purchase additional Universal shares at one-half the then quoted market value. The purchase price of the shares as stated in the plan is $75.00. Therefore, each Universal shareholder will be able to purchase $150.00 of Universal's stock for the $75.00. If one assumes that the offer price of $35.00 is the then quoted market value, this "flip in" provision allows each shareholder to purchase over four new shares for each share now held at a 50 percent discount. If Amanda meets its minimum tender condition of 75 percent of the Universal stock, the "flip in" provision would be triggered *1007 and would dilute Universal's stake in Amanda from 75 percent to 36.2 percent. Amanda's experts testified that this would cost Amanda over $115 million in lost equity investment.[5]
There is however an exception to the "flip in" provision. If Amanda is able to purchase 80 percent or more of the outstanding Universal shares the "flip in" provision does not function and will cause no dilution to Amanda's stake in the company. Universal's experts testified that this provision affords a reasonable limitation upon the plan and is one respect in which Universal's plan differs from many other rights plans.
The "flip over" provision is triggered if Amanda seeks to merge Universal into Amanda or a subsidiary of Amanda, or if Amanda or an entity which it controls purchases substantially all of the assets of Universal.[6] Under the "flip over" provision, once one of the triggering events occurs the holders of the rights can purchase shares of Amanda at a 50 percent discount. By way of example, if Amanda acquired 90 percent of Universal's outstanding shares in the offer and attempted to merge with Universal, the remaining 10 percent shareholders would be able to purchase $150.00 worth of Amanda's shares at $75.00. This would dilute Amanda's equity interest in Universal from 90 percent to approximately 63 percent, and testimony showed that the financial stake would be diluted by approximately $80 million.
Universal contends that the "flip over" provision of the rights plan subjects an acquiror to the substantial dilution only if it tries to squeeze out shareholders who choose not to sell in a tender offer. Universal contends that this provision chiefly affects only those offerors who are pursuing highly leveraged financing deals and who seek a prompt squeeze-out merger to enjoy unfettered use of corporate assets to pay down the debt incurred in the acquisition. Universal argues that a suitor of more substantial means, whose financing did not compel it to immediately liquidate corporate assets and business units to repay debt, would not be deterred by the "flip over" provision. The "flip over" provision would not prevent an offeror from purchasing a majority of shares and then operating Universal as a subsidiary. However, testimony at the hearing did establish that the majority of nationwide tender offers in 1988 contemplated a back end merger between the target and the offeror companies. Amanda's experts testified that the operation of the "flip over" provision would make the acquisition prohibitively expensive for Amanda.
There is another provision of the plan which provides an exception to the poison pill operation. This provision states that if a potential offeror holds no more than 1 percent of Universal's stock, and meets certain other conditions, it can request a shareholder meeting and seek a vote of the shareholders approving the offer. If the shareholders approve the offer, the rights must be redeemed for that offer at or above the offer price. This provision was not available to Amanda because affiliates owned approximately 3.6 percent of the Universal shares when the pill was adopted in September. Universal maintains that Amanda could sell down its shares to less than 1 percent and request the shareholder vote. However, the experts agreed that this would be a very unusual course for a tender offeror to take.
Amanda contends that the poison pill is the latest of a number of measures adopted by the board which establish its management entrenching and "Fort Apache" mentality. The first step was the payment of *1008 greenmail in February 1988 to an investment group which owned approximately 4.9 percent of Universal stock and had approached the board with an unsolicited leverage buy out (LBO) overture. This greenmail payment took the form of Universal's repurchase price of $33.00 per share for approximately 544,000 shares of Universal's stock held by the investment group. At the time of repurchase, Universal's stock was trading at approximately $27 5/8 on the New York Stock Exchange, and the greenmail payment represented a premium over market value for the repurchased shares of about $5.375 per share.[7]
The other two defensive measures adopted by the board at the September 8 meeting included a 3 for 2 stock split and the creation of an employees' stock ownership plan (ESOP). Amanda contends that each of these measures, in addition to the poison pill, was adopted specifically in response to the takeover speculation concerning Universal during the summer of 1988. As previously noted, Amanda's tender offer was commenced on December 2, 1988. It is undisputed that the Universal rights plan was not adopted in response to the Amanda offer.
The offer initially was $30.50 per share for all shares of Universal common stock and included a number of conditions. The initial offer was set by its terms to expire December 30, 1988 at midnight. The offer was increased on December 15, 1988 to $35.00 per share. The present offer is due to expire on April 4, 1989. Amanda contends that the Universal management and board response to not only the initial offer but also the increased offer was not in accord with the board's fiduciary duties of loyalty and care which it owes to the shareholders of the company. Amanda also contends that the continued refusal to redeem the rights is a breach of the board's fiduciary duties.
Amanda is challenging Universal's use of its rights plan to effectively stop the offer without a vote by its shareholders. While it is disputed that the poison pill has the effect Amanda claims, the issue is ripe for a decision at this juncture because the redemption of the poison pill is one of the conditions of the offer and the experts agree that Amanda's offer will not proceed absent the redemption. The parties agree that redemption of the pill is governed by Wisconsin law (redemption is sought for breach of fiduciary duty, a pendent state law claim in this suit) and that, in the absence of Wisconsin precedent, a Wisconsin court would look to Delaware case law for resolution of this issue. See, Wanvig v. Johnson Controls, Inc., No. 663-487 (Milw. Co.Cir.Ct. March 29, 1885) (found at Def. App.L.); Steven v. Hale-Haas Corp., 249 Wis. 205, 221, 23 N.W.2d 620, 628 (1946).
It is undisputed that the Universal board's adoption of the rights plan as a defensive mechanism to combat hostile tender offers is a valid exercise of its business judgment to be protected by the business judgment rule, see Moran v. Household International, Inc., 500 A.2d 1346, 1348 (Del.1985), and specifically authorized by Wisconsin law. Wis.Stat. § 180.155. This specific authorization by the Wisconsin legislature of a rights plan as adopted by Universal distinguishes this case from West Point Pepperell, Inc. v. Farley, Inc., 711 F. Supp. 1096 (N.D.Ga.1988) (found at Pl.App.L) (where the court found no authority in either state law or the corporate articles of incorporation authorizing the adoption of a rights plan). Wis.Stat. § 180.155 authorizes a board of directors to adopt a rights plan without shareholder approval.
What is in dispute in this case is whether the board's decision to refuse to redeem the rights plan in the face of Amanda's offer is a violation of its fiduciary duties of loyalty and care which are owed to the shareholders of the company. Universal argues that its decision is entitled to the protections of the business judgment rule *1009 and should not be disturbed by the court absent a showing by Amanda of bad faith or self dealing on the part of the board. Amanda argues that a Wisconsin court would use the Delaware approach first adopted in Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del.1985). Unocal requires, in a takeover context, a threshold showing by the board of "reasonable grounds for believing that a danger to corporate policy and effectiveness existed" and that their actions were "reasonable in relation to the threat posed." Id. at 955.
The Delaware supreme court recognized in Unocal that in takeover context there is an "omnipresent specter that a board may be acting predominantly in its own interests, rather than those of the corporation and its shareholders ...," 493 A.2d 954, which would call for judicial examination at the threshold before the protections of the business judgment rule may be conferred." Id. Adoption of takeover measures presents the board with the initial burden of establishing reasonable grounds for believing that a danger to corporate policy and effectiveness existed. Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del.1986). The board must show initially that it acted on an informed basis, in good faith, and in the honest belief that the action was taken in the best interests of the corporation. Moran, 500 A.2d at 1356. If a board meets its threshold burden, the business judgment rule applies to the board's decision and the plaintiff must show bad faith or self-dealing by the board. Id.
I agree with Amanda that a Wisconsin court would apply the Unocal standard for reviewing a board's actions in connection with a hostile takeover offer, notwithstanding other jurisdictions' rejection of this standard. See, e.g., Ohio Rev. Code § 1701.59(C) (rejection of Unocal and codification of existing common law). In this regard I note that Wis.Stat. § 180.155 appears to have codified the holding of Moran (regarding adoption of shareholders rights plans), and Wis.Stat. § 180.305 allows a director to consider other constituencies in the discharge of his or her duties (which appears to have codified Revlon's holding that a board can consider other constituencies in the context of a tender offer). However, as the facts stated below will demonstrate, even under the shifting burdens imposed by Unocal, I find that the Universal board acted reasonably in relation to a threat to the corporate policies and effectiveness which it in good faith believed was posed by Amanda's offer.
As previously noted, Mr. Press called Mr. Osborn on December 1 mid-afternoon to announce that the hostile tender offer would be initiated the next day and to inform Osborn that Amanda intended to initiate litigation against Universal in connection with the tender offer. Osborn advised Press to submit a written offer. A letter was telecopied from Mr. Press to Mr. Murray, chairman of Universal Foods and received by Osborn at approximately 4:00 P.M. The letter stated that all aspects of the offer were negotiable including the consideration to be paid. Osborn has described the tone of the phone conversation as the functional equivalent of Press putting a gun to his head. Later that afternoon, Murray called Osborn from Newark, New Jersey. Murray was advised of the phone call and the substance of Press' letter. Both Murray and Osborn determined that the offer was clearly inadequate based upon their familiarity with Universal's long-range business plan and the company's future prospects. The two had discussions with Universal's general counsel and chief financial officer concerning High Voltage (the parent of Amanda) and determined that High Voltage was a small company with no product lines related to those of Universal. On the evening of December 1 Murray and Osborn had Mr. O'Reily, the general counsel, draft a press release to publicly disclose the fact of the offer, to state that the board of directors would meet in due course, and that Murray and Osborn would recommend to the board that it adopt or maintain its "not for sale" position. It is undisputed that both Murray and Osborn adopted their respective positions with regard to the offer prior to seeing the actual offer to purchase.
*1010 Numerous events occurred on December 2 and over the next couple of days. Osborn and Murray contacted each of the directors to inform them of the offer and to arrange a board meeting to discuss and determine how to respond to the offer. The December 1 press release was issued, which actually crossed the Wall Street wires in the early morning of December 2. Later in the morning on December 2, Osborn issued a memo to all Universal Foods locations announcing his and Murray's intentions to recommend that the board reaffirm its "not for sale" position. Osborn ordered the company's Washington lobbyist to contact relevant government officials to tell them that Universal opposes the tender offer. Murray and Osborn calculated, on December 2, 1988, the number of friendly shares that could be counted on to oppose the offer.[8] Amanda also claims that Osborn and Murray spent the weekend contacting the independent directors and lining up the directors' uninformed opposition to this offer. However, the testimony shows that the directors, after learning of the offer, determined on their own to remain independent, to avoid contact with Universal's management, and to await review of the offer and the board of directors meeting to determine the company's response to the offer.
The board of directors meeting was scheduled for December 8, 1988. After scheduling the meeting, Murray and Osborn requested that William Sword and Company, Inc., an investment banking firm, prepare for the meeting a list of all the alternatives a board could consider in responding to Amanda's offer. Additionally, Goldman, Sachs & Co., Universal's investment banking advisor, was given free access to all financial and business information it requested. However, no investment banker's opinion as to the adequacy of the offer was requested by Murray and Osborn. Both gentlemen, as well as the independent directors who testified at the hearing (Veneman and Kendall), felt that they were familiar enough with Universal and its business plans and the future of the company to know without an investment banker's opinion that the $30.50 offer was inadequate.
At the December 8 meeting, all thirteen directors were in attendance, and the meeting lasted between seven and eight hours. The board heard the presentation of Sword and Company, and also heard from its legal counsel, both regular outside counsel and specially retained counsel. The investment banking advisor, Goldman Sachs and Company, was also in attendance at the December 8 meeting. However, Goldman Sachs did not give a presentation at the meeting concerning the economics of the Amanda offer, or an opinion as to the fairness of the offer or the value of the company as an independent and ongoing business entity. Legal counsel advised the directors of all aspects of the offer, and also advised the directors of their duties as fiduciaries for the shareholders under the law. Legal counsel stated that the directors could, consistent with their fiduciary responsibility, make a well-informed decision that the company and the shareholders would be better off by not tendering and remaining independent.
The presentation by Sword and Company involved at least 12 alternative courses of action which the board could pursue in responding to the offer which included recapitalization, management LBO, white knight/"Crown Jewel" lock-up options, further acquisitions by Universal, use of a pac-man defense, etc. The board rejected recapitalization and LBO options as being unviable due to the amount of debt which Universal would incur, and rejected negotiations with the bidder because of the low price of the $30.50 offer. At the hearing, the directors testified that they did not request an adequacy opinion from Goldman Sachs because they did not want to signal Wall Street that this offer was too low and Amanda should sweeten the pot and come back with a higher offer. The board felt that it was in the best interests of the *1011 company and the shareholders to remain independent so that the shareholders could reap the benefits of the repositioning of the company which was begun in 1984 and was only now being realized.
Amanda has gone to great pains throughout these proceedings to show by affidavit, exhibit or testimony that Universal did not get an adequacy opinion from Goldman Sachs, did not fully comply with its own takeover policy, and acted in a completely self-serving fashion in rejecting the offer at the December 8 meeting. However, testimony and the board minutes show that after the various presentations, the management board of directors left the room, and the ten independent directors, in the presence of legal counsel, discussed for some considerable time the offer and its impact on the company. The Universal board of directors went to great lengths to maintain its independence in connection with this offer and, considering ten of the thirteen members are actually independent, I find no evidence in the record which convinces me that the board failed to review this offer in a dispassionate and neutral manner. The independent directors had informally decided to recommend to the shareholders to reject Amanda's offer and remain independent. At that juncture management directors returned to the room, and the independent directors explained to Goldman Sachs the course of action they intended to follow. They asked for the Goldman Sachs position on that and whether or not the investment banker would stand behind the board. The Goldman Sachs advisor answered in the affirmative. It was at that point the board formally voted to recommend the shareholders reject the Amanda offer.
Were the actions of the board of directors at the December 8 meeting in violation of their fiduciary duties to their shareholders? I think not. As I noted, the meeting lasted for seven to eight hours, the directors thoroughly reviewed the offer, and the independent directors remained independent and did not rubber-stamp the initial position of management. Even if there were some indiscretion on the part of management in initially opposing the offer, that in itself would not support this court ordering redemption of the poison pill or the rights plan. Professor Gerald, an economic expert who testified on behalf of Amanda at the hearing, was asked during his testimony whether the board made a mistake in recommending at the December 8 meeting that the shareholders not tender. His answer was, "They got $35.00 after that." None of the shareholders are any worse off for the actions taken by the Universal board through the December 8 meeting and in fact are much better off due to the increased offer which Amanda made on December 16, 1988.
On December 20, 1988 the board again met, this time to review the increased $35.00 per share offer made by Amanda. This meeting lasted almost four hours. At the December 20, 1988 directors meeting, the board again received presentations from legal counsel, both concerning the revised offer and the course of the litigation which Amanda had commenced. The ten independent directors again considered the offer outside of the presence of the management directors. The directors testified that they considered the revised offer in light of Universal's long-range plans, the future growth of the company, the lack of experience and lack of any connection with the food industry on the part of HVE, Levy and Press. Goldman Sachs made a presentation to the board involving the financing and debt to be incurred in the tender offer and Universal's cash flow and determined that the cash flow after the Amanda acquisition would be insufficient to cover both Universal's cash needs and the heavy acquisition debt.[9] Joseph R. Zimmel, Goldman Sachs' representative, informed the board at the December 20 meeting that the reductions in research and development, capital expenditures, and personnel layoffs *1012 would be likely considering its analysis in the negative cash flow. Another source of servicing that cash flow would be additional borrowings by Amanda or HVE. This analysis led the board to determine that it would not only be in the best interests of the shareholders to reject the tender offer because it was inadequate, but also in the best interests of its other constituencies as contemplated in Wis.Stat. § 180.305.
It is undisputed, however, that none of Universals' board of directors has ever discussed Amanda's plans for Universal with either Levy or Press, nor have they shared the financial analysis completed by Goldman Sachs with Levy and Press. Amanda argues that by failing to bring these concerns to the attention of Levy and Press, Universal has effectively closed its ears to any thoughts Amanda, Levy or Press may have for overcoming a projected negative cash flow.
By the time of the January 26, 1989 board meeting, Goldman Sachs had completed its analysis of the Kidder Peabody and Chase Manhattan Bank reports used for preparing the financing for the Amanda tender offer. Both Kidder Peabody and Chase Manhattan assumed drastic reductions in capital expenditures and almost a 50 percent reduction in what was described as "headquarters expense." Zimmel informed the board that the Kidder and Chase financial models would necessitate significant changes in Universal's business plans in order to meet the interest and principal payments required by the current financing structure. The financial models reduced capital expenditure dollar amounts to levels below the amount spent in any fiscal year since 1985. To Amanda's credit, Levy and Press testified that those were only models and have not been adopted by them or Amanda. They have no plans for reducing research and development or capital expenditures budgets and have no plans for changing the operation of Universal.
The highly leveraged nature of the tender offer was and is a concern to the board of directors. Veneman testified that in all his years of experience in the business community he has never seen a financing structure as confusing as the one proposed in Amanda's tender offer. Murray testified that notwithstanding good intentions on the part of Levy and Press, he was of the opinion that the two men would have no choice but to cut research and development and capital expenditures as well as philanthropic activity, all of which represents an integral part of Universal's status as a corporate role model.[10]
Amanda presented the testimony of Professor Nichols, a professor of economics at the University of Wisconsin, Madison. He stated that he had analyzed the operations of HVE since it was purchased by Hyde Park in March 1988, has met with its employees and managers, and talked with Mr. Press. He concluded that based upon his research, Levy and Press and HVE had no plans for Universal which would adversely affect any other constituencies, be they suppliers, customers, or employees of Universal. Professor Nichols' analysis, which may indeed be correct, demonstrates that at best the prospects for Universal's other constituencies, like the other constituencies of HVE are, for the short term, not endangered by the Amanda offer. However, simply due to the short period of time (March 1988 through January 1989) which Professor Nichols' research of HVE encompassed, his testimony cannot in any sense overcome the concerns which the Universal board of directors has for Universal's other constituencies in the long run. Universal's business plans extend for several years into the future. While I may or may not have reached the same conclusion as to Amanda's plans for Universal as did the *1013 Universal board, the fact remains that this is a business judgment call not to be second-guessed by this or any other court. The board has the responsibility to exercise its business judgment in accord with the best interests of the shareholders, the company, and the other constituencies.
Amanda contends that in failing to request a formal adequacy opinion from Goldman Sachs, the board acted in an uninformed manner as a matter of law. Smith v. Van Gorkum, 488 A.2d 858 (Del. 1985). However, Smith involved the sale of the corporation, an entirely different circumstance than is present in this case. In Smith, the board acted in a grossly negligent manner in failing to investigate the value of the company, accepting a managing director's recommendation on the price and failing to investigate the offer to determine that the managing director was also interested in the purchasing company. 488 A.2d at 874. In this case, the independent directors ascertained from their own knowledge and experiences that the offer was inadequate in light of the future prospects of the company.
Amanda further challenges the board's actions in failing to negotiate with Amanda, or to do anything other than "just say no" to the offer, such as finding other potential purchasers including a "white knight" or pursuing a management LBO or recapitalization. Universal contends that it is within its prerogatives to reject these other responses to hostile tender offers and to simply remain independent. In the opinion of Universal management, they are not "just saying no", but are instead saying yes yes to the future prospects of the company. I find no support in the case law that a company must negotiate with a tender offeror. This is especially true where, as here, the offeror has not approached the company prior to commencing the offer and related litigation.
I also disagree with Amanda that Unocal and its progeny require a target company, faced with a hostile tender offer, to place itself on the auction block or burden itself with debt in an amount such as would reasonably threaten its continued existence. If faced with a tender offer which the board reasonably believes to be a serious threat to the corporation and its shareholders, then the board should take measures to alleviate that threat.
The Unocal court, in describing the threats which may confront a company in a tender offer setting, included, "inadequacy of the price offered, nature and timing of the offer, questions of illegality, the impact on `constituencies' other than shareholders (i.e., creditors, customers, employees, and perhaps even the community generally), the risk of non-consummation, and the quality of the securities being offered in exchange." 493 A.2d at 955. Amanda argues that no threat is present in this offer because the offer is all cash for all shares and contemplates a back end merger at the same price and consideration shortly after the offer expires. Amanda contends that such an offer is noncoercive and must be allowed to be voted on by the shareholders.
There is an element of coercion or risk even in an all cash, all shares offer such as Amanda's, and this was recognized by the Delaware Chancery Court in Grand Metropolitan v. The Pillsbury Company, Case No. 10319, Memo.Op. at 13, 1988 WL 144830 (December 16, 1988) (found at Def. App.Exh. P). In Pillsbury, the tender offer retained an escape clause allowing Grand Met to avoid the second-step merger, just as Amanda's does. The Pillsbury court noted, and it is borne out in the testimony in this case, that such clauses are commonly used in tender offers, and may even be boilerplate language. Amanda places considerable reliance on Pillsbury, since in that case the Chancery Court enjoined Pillsbury's use of its poison pill or rights plan to defeat Grand Met's offer. While the Chancery Court recognized the possibility of risk to the non-tendering shareholders, it did not feel that the risk "as to a 12%/13% minority is so serious as to deprive the holders of the 87% majority of their right to elect whether to accept or reject the Grand Met offer." Mem.Op. at 31. The 87% majority had already tendered their shares to Grand Met and the Pillsbury management was using the pill to *1014 protect its own restructuring plan which (1) did not guarantee an equal or greater value to the shareholders and (2) included the sale of the company in the next three- to five-year period.
Pillsbury is fully distinguishable from this case. Approximately 87% of the shareholders had tendered, compared with at present approximately 27% of the Universal shareholders. Pillsbury had been experiencing a prolonged period of low productivity and decreasing earnings, while Universal is in the midst of now realizing the full potential of its restructuring and has enjoyed both increasing earnings and stock prices. The Universal board reasonably sees a threat to the shareholders who will not tender and also to the shareholders in general, based on the overall timing of the Amanda offer. The shareholders have the potential of reaping the benefits of not only the past successes but the future potential.
The threat relied on by Universal from the outset concerns the adequacy of the offer. The Universal board determined that the initial offer of $30.50 was inadequate, and I do not find that this conclusion was made on an uninformed basis. The board has also determined, even without a formal investment banker's opinion, that the $35.00 offer is inadequate. This conclusion is based on its determination of the future value of the company, market analyses done by Robert W. Baird & Co. and Donaldson, Lufkin & Jenrette, and the market price of the stock. (The Baird study projects a Universal stock price of $37.00 $39.00 in 9-12 months and $45.00 $47.00 in 21-24 months. The Donaldson study projects a better than expected year for Universal in relation to other food and beverage companies. Universal's stock has been trading above or very close to the offer price since the offer was first commenced.) Amanda submitted a Fairness Evaluation from Houlihan, Lokey, Howard & Zukin, Inc. which states that the $35.00 offer price is fair and adequate, to rebut the board's conclusions.
I have already concluded that the board's failure to secure an adequacy opinion was not, under the facts of this case, a breach of its fiduciary duties. Moreover, my decision today does not require that I determine the adequacy of the offer. That is a matter best left to financial professionals, the market forces and the shareholders. The question for the moment is whether the perceived inadequacy of the offer presents a threat of sufficient magnitude to permit the board to continue to block the offer from going to the shareholders in the tender context. Or stated another way, is the poison pill a reasonable response to the threat posed by the inadequacy of the offer or, is it one of those Draconian defenses which cannot be sanctioned?
In City Capital Associates Limited Partnership v. Interco Inc., 551 A.2d 787 (Del.Ch.1988), the court questioned whether a board could forever bar a shareholder choice based on a good-faith belief that the offer was inadequate.
It would not be surprising or unreasonable to claim that where an offer is not coercive or deceptive (and therefore what is in issue is essentially whether the consideration it offers is attractive or not), a board even though it may expend corporate funds to arrange alternatives or to inform shareholders of its view of fair value is not authorized to take preclusive action. By preclusive action, I mean action that, as a practical matter, withdraws from the shareholders the option to choose between the offer and the status quo or some other board sponsored alternative.
551 A.2d at 787. Amanda argues that Universal should not be allowed to do this except possibly in the short term. See, e.g., MAI Basic Four, Inc. v. Prime Computer, Inc., C.A. No. 10428 (Del.Ch. Dec. 20, 1988) (available on West Law, 1988 WL 140221 (Del.Ch.)) (refusing to issue injunction requiring redemption of rights plan due to limited pendency of the offer). Universal argues that it is within the power of the board to manage corporations and if, in its good business judgment, it decides the offer is inadequate, its decision should not be disturbed.
Applying the Unocal standards, I am unable to conclude that a board may in *1015 all instances preclude shareholder choice solely on the basis of its own perception of the inadequacy of the offer. If no other threat is posed to the corporation and shareholders, a board must at some point allow shareholders to choose between the offer and some alternative. Whether the alternative is to remain independent and reap the future benefits with the company, as the board proposes here, or a financial restructuring as proposed in Pillsbury, or an auction of the company as was done in Revlon, the shareholders must at some point be allowed to choose. To do otherwise is to disenfranchise the shareholders.
In the instant case, however, there are other threats in the offer. As noted, there is at this juncture a threat to the nontendering shareholders, who presently constitute the majority. There is also the threat posed by the offer and recognized by the Interco court, of a structurally noncoercive offer which contains false or material misleading information. See 551 A.2d at 797, n. 10. From the record before me, one might readily conclude that the offer has not passed what might be best described as the "aroma test." The financing is extremely complex, if not convoluted, and lacks the detail one would reasonably expect to find in transactions of this nature. Whether this was deliberate or the product of a hurried effort to get the offer on the table, can only be left to speculation. However, Berisford's role in the offer was not completely disclosed until January 30, 1989 when amendment 13 to Amanda's 14D-1 was filed. Even with amendment 13, there remain questions concerning Berisford's actual control of the offer, and its role after the offer is complete. This is true despite the testimony of Press and Levy that they are the only ones with control of the offer and Universal if the offer is successful.
It is undisputed that during the planning of the offer, Levy and Press were to contribute 1% of the equity investment in return for their management fees and a 1% return on the profits of the Universal deal. Berisford and Resource were to contribute 49.5% of the equity investment in return for a 49.5% share of the profits. On November 28, 1988, three days prior to the offer, Press sent a letter to Resource stating that the deal as planned was unworkable from Berisford's perspective. At that juncture, the present structure took form. Berisford is now contributing 98% of the equity investment and receiving only a 44% stake in the company. Press and Levy, who are now contributing no equity, will get a 56% share of the company, and the sole right to control it. From these facts it comes as no surprise that serious questions concerning the roles of Messr. Press and Levy remain unresolved in the board's mind.
Another threat which exists, and distinguishes this case from either Interco or Pillsbury, is the threat to the corporation itself. The parties have addressed this as the constituencies issue. I believe it might be more appropriately described as the corporate issue. This threat encompasses not only a danger to a corporation's other constituencies (customers, suppliers, employees) but to the corporation itself. This offer is highly leveraged. In addition, the financial agreements between Levy, Press and the Berisford parties are very unclear in their terms. While the relationship between the various Acquisition Group parties worked for the HVE tender early in 1988, each of the terms was specifically delineated. In the instant offer, no written agreement governs the relationship of the parties. If later disputes arise, the corporation will suffer, both the long-range plans and policies (which Levy and Press want to continue) and the other constituencies (employees and suppliers and customers and communities).
The combination of problems which the board perceived in the offer, and now has a better first-hand knowledge of was a result of this litigation, the board's honest perception that the offer as inadequate, and finally the board's perception that the timing of the offered also offers a threat to corporate policies, and to shareholder return on investment, all offer a significant threat which the board has so far reasonably responded to by refusing to redeem the rights plan. Other courts have approved defensive measures which effectively precluded *1016 shareholder choice on a particular offer. See, e.g., Ivanhoe Partners v. Newmont Mining Corp., 535 A.2d 1334 (Del. 1987) (upholding the company's facilitation of a "street sweep" by issuance of a dividend and consummation of a new stand still agreement with largest shareholder, all without shareholder approval, as reasonable in light of the threat the coercive, two tiered tender offer posed).
Whether the board's continued refusal to redeem will remain reasonable will depend on facts yet unknown. Amanda may raise its offer price, which may in turn necessitate the board requesting an adequacy opinion. Another offeror may emerge to challenge Amanda and the board's alternative of remaining independent. The Acquisition Group may clear up the ambiguities within its own relationship, and may establish beyond any doubt (through the Federal Reserve Board or the SEC) that the financing is in accord with the margin rules (an issue not reached today). Thus, any number of eventualities may occur, any one of which may require the board to reevaluate its position. However, on the record before me I find no basis to conclude other than that the board has acted in accord with its fiduciary responsibilities in a manner reasonably related to the perceived threat to the corporation, its shareholders, and other constituencies. Amanda's motion for a preliminary injunction requiring redemption of the shareholders rights plan will therefore be denied.
VII. CONCLUSION
In conclusion then, each of the motions presently before the court will be denied. Universal's motion to enjoin the offer pending a new offer to purchase will be denied because (a) it lacks standing to challenge the alleged margin rule violations, and (b) it has not demonstrated a substantial enough likelihood of success on the merits to overcome the harm which granting such an injunction would cause to Amanda. In addition, I find that Universal will not be irreparably harmed by denying the injunction.
Amanda's motion for injunctive relief under the Williams Act will be denied because the alleged violations upon which Amanda relies are moot and will not support the relief sought. Amanda's motion regarding the statute will be denied, for it neither hinders interstate commerce in violation of the commerce clause nor is preempted by the Williams Act. Finally, Amanda's motion for injunctive relief regarding Universal's use of its shareholders rights plan will be denied because it has not demonstrated a likelihood of success on the issue of the alleged breach of fiduciary duty by the Universal board of directors.
Accordingly,
IT IS ORDERED that Amanda's motion for a preliminary injunction regarding Universal's alleged violations of the securities laws be and the same is hereby DENIED; and
IT IS FURTHER ORDERED that Amanda's motion for injunctive and declaratory relief regarding the Wisconsin Business Combination Act be and the same is hereby DENIED; and
IT IS FURTHER ORDERED that Amanda's motion for a preliminary mandatory injunction requiring redemption of the Universal shareholder rights plan be and the same is hereby DENIED; and
IT IS FURTHER ORDERED that Universal's motion for preliminary injunction enjoining counterclaim defendants' pursuit of the tender offer be and the same is hereby DENIED.
APPENDIX A
180.726. Restrictions on certain business combinations involving a resident domestic corporation and interested stockholder
(1) Definitions. In this section:
(a) "Affiliate" has the meaning given in s. 180.725(1).
(b) "Announcement date" means the date of the first public announcement of the final, definitive proposal for a business combination.
*1017 (c) "Associate" of a person means any of the following:
1. A corporation or organization of which the person is an officer, director or partner or is the beneficial owner of at least 10% of any class of voting stock.
2. A trust or other estate in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity.
3. A relative or spouse of the person, or a relative of the spouse, who has the same principal residence as the person.
(d)1. "Beneficial owner" of stock means a person, except as provided in subd. 2, that meets any of the following conditions:
a. Individually, or with or through any of the person's affiliates or associates, beneficially owns the stock, directly or indirectly.
b. Individually, or with or through any of the person's affiliates or associates, directly or indirectly has the right, whether exercisable immediately or only after the passage of time, to acquire the stock pursuant to a written or unwritten agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise.
c. Individually, or with or through any of the person's affiliates or associates, directly or indirectly has the right to vote the stock pursuant to a written or unwritten agreement, arrangement or understanding, except that a person is not the beneficial owner of stock under this subd. 1. c if the agreement, arrangement or understanding to vote that stock arises solely from a revocable proxy or consent given in response to a proxy or consent soliciation made in accordance with the applicable regulations under the exchange act and is not reportable under the report required under 17 CFR 240.13d-1(1)(a) or a comparable or successor report.
d. Has a written or unwritten agreement, arrangement or understanding with another person that is directly or indirectly a beneficial owner, or whose affiliates or associates are direct or indirect beneficial owners, of the stock, if the agreement, arrangement or understanding is for the purpose of acquiring, holding, disposing of or voting the stock, unless the voting is pursuant to a revocable proxy or consent described in subd. 1.c.
2. A person is not the direct or indirect beneficial owner of stock tendered pursuant to a tender or exchange offer which is made by that person or an affiliate or associate of that person until the tendered stock is accepted for purchase or exchange.
(e) "Business combination" means any of the following:
1. A merger, including a merger under s. 180.685, or consolidation of the resident domestic corporation or any subsidiary of the resident domestic corporation with any of the following:
a. An interested stockholder.
b. A corporation, whether or not it is an interested stockholder, which is, or after a merger or consolidation would be, an affiliate or associate of an interested stockholder.
2. A sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions, to or with an interested stockholder or an affiliate or associate of an interested stockholder of assets of the resident domestic corporation or a subsidiary of the resident domestic corporation if those assets meet any of the following conditions:
a. Have an aggregate market value equal to at least 5% of the aggregate market value of all the assets, determined on a consolidated basis, of the resident domestic corporation.
b. Have an aggregate market value equal to at least 5% of the aggregate market value of all the outstanding stock of the resident domestic corporation.
c. Represent at least 10% of the earning power or income, determined on a consolidated basis, of the resident domestic corporation.
3. The issuance or transfer by the resident domestic corporation or a subsidiary of the resident domestic corporation, in one transaction or a series of transactions, of *1018 any stock of the resident domestic corporation or a subsidiary of the resident domestic corporation if all of the following conditions are satisfied:
a. The stock has an aggregate market value equal to at least 5% of the aggregate market value of all the outstanding stock of the resident domestic corporation.
b. The stock is issued or transferred to an interested stockholder or an affiliate or associate of an interested stockholder, except for stock of the resident domestic corporation or such subsidiary issued or transferred pursuant to the exercise of warrants, rights or options to purchase such stock offered, or a dividend paid, or distribution made, proportionately to all stockholders of the resident domestic corporation.
4. The adoption of a plan or proposal for the liquidation or dissolution of the resident domestic corporation which is proposed by, on behalf of, or pursuant to a written or unwritten agreement, arrangement or understanding with, an interested stockholder or an affiliate or associate of an interested stockholder.
5. Any of the following, if the direct or indirect effect is to increase the proportionate share of the outstanding stock of a class or series or securities convertible into voting stock of the resident domestic corporation or a subsidiary of the resident domestic corporation beneficially owned by the interested stockholder or an affiliate or associate of the interested stockholder, unless the increase is the result of immaterial changes due to fractional share adjustments:
a. A reclassification of securities, including, without limitation, a stock split, stock dividend or other distribution of stock in respect of stock, or reverse stock split.
b. A recapitalization of the resident domestic corporation.
c. A merger or consolidation of the resident domestic corporation with a subsidiary of the resident domestic corporation.
d. Any other transaction, whether or not with, into or involving the interested stockholder, which is proposed by, on behalf of, or pursuant to a written or unwritten agreement, arrangement or understanding with, the interested stockholder or an affiliate or associate of the interested stockholder.
6. Receipt by an interested stockholder or an affiliate or associate of an interested stockholder of the direct or indirect benefit of a loan, advance, guarantee, pledge or other financial assistance or a tax credit or other tax advantage provided by or through the resident domestic corporation or any subsidiary of the resident domestic corporation, unless the interested stockholder receives the benefit proportionately as a holder of stock of the resident domestic corporation.
(g) "Consummation date" means the date of consummation of a business combination.
(h)1. "Control", "controlled by" or "under common control with" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, except as provided in subd. 2, by contract, or otherwise.
2. "Control" of a corporation is not established under subd. 1 if a person, in good faith and not for the purpose of circumventing this section, holds voting power as an agent, bank, broker, nominee, custodian or trustee for one or more beneficial owners who do not individually or as a group have control of that corporation.
(i) "Exchange act" means the securities exchange act of 1934[1] and amendments thereto.
(j)1. "Interested stockholder", with respect to a resident domestic corporation, means a person other than the resident domestic corporation or a subsidiary of the resident domestic corporation that meets any of the following conditions:
a. Is the beneficial owner of at least 10% of the voting power of the outstanding *1019 voting stock of that resident domestic corporation.
b. Is an affiliate or associate of that resident domestic corporation and at any time within 3 years immediately before the date in question was the beneficial owner of at least 10% of the voting power of the then outstanding voting stock of that resident domestic corporation.
2. For the purpose of determining whether a person is an interested stockholder, the number of shares of voting stock of the resident domestic corporation considered outstanding includes shares beneficially owned by the person but does not include any other unissued shares of voting stock of the resident domestic corporation which may be issuable pursuant to an agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
(1)1. "Resident domestic corporation" means a domestic corporation that, as of the stock acquisition date in question, satisfies any of the following:
a. Its principal executive offices are located in this state.
b. It has significant business operations located in this state.
c. More than 10% of the holders of record of its shares are residents of this state.
d. More than 10% of its shares are held of record by residents of this state.
2. For purposes of subd. 1.c and d, the record date for determining the percentages and numbers of shareholders and shares is the most recent shareholder record date established under s. 180.26 before the stock acquisition date in question, and the residence of each shareholder is the address of the shareholder which appear on the records of the resident domestic corporation.
(m) "Stock" means any of the following:
1. Shares, stock or similar security, certificate of interest, participation in a profit sharing agreement, voting trust certificate, or certificate of deposit for any of the items described in this subdivision.
2. Security which is convertible, with or without consideration, into stock, or any warrant, call or other option or privilege of buying stock, or any other security carrying a right to acquire, subscribe to or purchase stock.
(n) "Stock acquisition date", with respect to any person, means the date that that person first becomes an interested stockholder of that resident domestic corporation.
(o) "Subsidiary" of a resident domestic corporation means any other corporation, whether or not a domestic corporation, of which voting stock having a majority of the votes entitled to be cast is owned, directly or indirectly, by the resident domestic corporation.
(p) "Voting stock" means capital stock of a corporation, whether or not a domestic corporation, entitled to vote generally in the election of directors.
(2) Business combinations during the 3 years after the stock acquisition date. Except as provided in sub. (5), a resident domestic corporation may not engage in a business combination with an interested stockholder of the resident domestic corporation for 3 years after the interested stockholder's stock acquisition date unless the board of directors of the resident domestic corporation has approved, before the interested stockholder's stock acquisition date, that business combination or the purchase of stock made by the interested stockholder on that stock acquisition date.
(3) Business combinations more than 3 years after the stock acquisition date. At any time after the 3-year period described in sub. (2), the resident domestic corporation may engage in a business combination with the interested stockholder but only if any of the following is satisfied:
(a) The board of directors of the resident domestic corporation has approved, before the interested stockholder's stock acquisition date, the purchase of stock made by the interested stockholder on that stock acquisition date.
(b) The business combination is approved by the affirmative vote of the holders of a *1020 majority of the voting stock not beneficially owned by the interested stockholder at a meeting called for that purpose.
(c) The business combination meets all of the following conditions:
1. Holders of all outstanding shares of stock of the resident domestic corporation not beneficially owned by the interested stockholder are each entitled to receive per share an aggregate amount of cash and the market value, as of the consummation date, of noncash consideration at least equal to the higher of the following:
a. The highest of: the market value per share on the announcement date with respect to the business combination, the market value per share on the interested stockholder's stock acquisition date, the highest price per share paid by the interested stockholder, including brokerage commissions, transfer taxes and soliciting dealers' fees, for shares of the same class or series within the 3 years immediately before and including the announcement date of the business combination, or the highest price per share paid by the interested stockholder, including brokerage commissions, transfer taxes and soliciting dealers' fees, for shares of the same class or series within the 3 years immediately before and including the interested stockholder's stock acquisition date; plus, in each case, interest compounded annually from the earliest date on which that highest per share acquisition price was paid or the per share market value was determined, through the consummation date, at the rate for one-year U.S. treasury obligations from time to time in effect; less the aggregate amount of any cash and the market value, as of the dividend payment date, of any noncash dividends paid per share since that date, up to the amount of that interest.
b. The highest preferential amount per share, if any, to which the holders of shares of that class or series of stock are entitled upon the voluntary or involuntary liquidation of the resident domestic corporation, plus the aggregate amount of dividends declared or due which those holders are entitled to before payment of dividends on another class or series of stock, unless the aggregate amount of those dividends is included in the preferential amount.
2. The form of consideration to be received by holders of each particular class or series of outstanding stock in the business combination is in cash or, if the interested stockholder previously acquired shares of that class or series, the same form as the interested stockholder previously used to acquire the largest number of shares of that class or series.
(d) The business combination is a business combination as described in sub. (5)(a), (b), (c), (d) or (e).
(4) Determination of market value. For purposes of this section, the market value of stock or property other than cash or stock is determined as follows:
(a) In the case of stock by:
1. The highest closing sale price during the 30 days immediately before the date in question of a share of that class or series of stock on the composite tape for stocks listed on the New York stock exchange, or, if that class or series of stock is not quoted on the composite tape or if that class or series of stock is not listed on the New York stock exchange, on the principal U.S. securities exchange registered under the exchange act on which that class or series of stock is listed.
2. If that class or series of stock is not listed on an exchange described in subd. 1, the highest closing bid quotation for a share of that class or series of stock during the 30 days immediately before the date in question on the national association of securities dealers automated quotation system, or any similar system then in use.
3. If no quotations described in subd. 2 are available, the fair market value on the date in question of a share of that class or series of stock as determined in good faith by the board of directors of the resident domestic corporation.
(b) In the case of property other than cash or stock, the fair market value of the property on the date in question as determined in good faith by the board of directors of the resident domestic corporation.
*1021 (4m) Presumption of control. For purposes of this section, a person's beneficial ownership of at least 10% of the voting power of corporation's outstanding voting stock creates a presumption that the person has control of the corporation.
(5) Exclusions from section. This section does not apply to any of the following:
a. Unless the articles of incorporation provide otherwise, a business combination of a resident domestic corporation with an interested stockholder if the resident domestic corporation did not have a class of voting stock registered or traded on a national securities exchange or registered under section 12(g) of the exchange act on the interested stockholder's stock acquisition date.
b. Unless the articles of incorporation provide otherwise, a business combination with an interested stockholder who was an interested stockholder immediately before September 10, 1987, unless subsequently the interested stockholder increased its beneficial ownership of the voting power of the outstanding voting stock of the resident domestic corporation to a proportion in excess of the proportion of voting power that the interested stockholder beneficially owned immediately before September 10, 1987, excluding an increase approved by the board of directors of the resident domestic corporation before the increase occurred.
c. A business combination of a resident domestic corporation with an interested stockholder which became an interested stockholder inadvertently, if the interested stockholder satisfies all of the following:
1. As soon as practicable divests itself of a sufficient amount of the voting stock of the resident domestic corporation so that the interested stockholder is no longer the beneficial owner of at least 10% of the voting power of the outstanding voting stock of the resident domestic corporation, or a subsidiary of that resident domestic corporation.
2. Would not at any time within the 3 years before the announcement date with respect to the business combination in question have been an interested stockholder except for the inadvertent acquisition.
(d) A business combination of a resident domestic corporation with an interested stockholder which was an interested stockholder immediately before September 10, 1987, and inadvertently increased its beneficial ownership of the voting power of the outstanding voting stock of the resident domestic corporation to a proportion in excess of the proportion of voting power that the interested stockholder beneficially owned immediately before September 10, 1987, if the interested stockholder divests itself of a sufficient amount of voting stock so that the interested stockholder is no longer the beneficial owner of a proportion of the voting power in excess of the proportion of voting power that the interested stockholder held immediately before September 10, 1987.
(e) A business combination of a resident domestic corporation if the business combination is governed by s. 180.04(6), with respect to acquiring or holding stock of a state bank or trust company, or by s. 186.31, 186.41, 215.36, 215.53, 215.73, 221.25, 221.58 or 223.11.
(6) Relationship of section to other laws. (a) The requirements of this section are in addition to the requirements of other applicable law, including the other provisions of this chapter, and any additional requirements contained in the articles of incorporation or bylaws of a resident domestic corporation with respect to business combinations.
(b) For purposes of applying this section, if any other provision of this chapter is inconsistent with, in conflict with or contrary to this section, that provision does not apply to the extent that it is inconsistent with, in conflict with or contrary to this section.
(7) Sunset. This section does not apply after September 10, 1991.
*1022
NOTES
[1] One measure of the intensity with which the parties have pursued this litigation may be found in the sheer volume of materials presented to the court for consideration. These materials include the following:
(1) 27 affidavits or declarations totaling hundreds of pages in all;
(2) 23 transcripts of depositions totaling more than 3,400 pages;
(3) 522 exhibits, in all totaling many thousands of pages;
(4) the transcript of the evidentiary hearing which lasted more than 18 hours over two days and produced a transcript of 829 pages; and finally,
(5) more than a dozen briefs and letter memoranda in all totaling 614 pages.
[2] S. & W. Berisford PLC has recently changed its name to Berisford International PLC. Unless noted otherwise, the term Berisford will collectively refer to Oxbridge, Berisford Capital and Berisford PLC. The interests of these three companies and their relationship to this offer are substantially similar and have been represented throughout the proceedings by their own counsel. When necessary to refer to all counterclaim defendants collectively, I will use the term Acquisition Group.
[3] This "put" provision is triggered by a tender offer in which a buyer becomes the owner of more than 50 percent of Universal's common stock or the holder of more than 50 percent of the common stock initiates a tender offer which results in a higher level of ownership. In either event the remaining holders of Universal stock are entitled to "put" their shares to the company at the highest price determined under a number of alternate formulas set forth in the articles.
[4] The issue of whether Berisford needs shareholder approval has been recently resolved by the London Stock Exchange. On March 7, 1989 the exchange determined that based on Berisford's contribution of $195 million, which represents 24% of Berisford's assets, no shareholder vote is needed. If the contribution increases to more than 25% of Berisford's assets, a vote by Berisford's shareholders will be required. This information has been included in amended filings with the SEC. The parties have made much of this issue in recent submissions to the court, each side drawing its own inferences. While I find this information interesting, particularly the fact that Berisford may be required to secure shareholder approval under certain conditions, that fact is of no significance in reaching my decision today.
[5] Amanda further contends that under Wis.Stat. § 180.725, it would not be able to restore the millions of shares it bought to full voting power, and the voting stake would be reduced from the 36.2 percent to approximately 25 percent. Amanda describes Wis.Stat. § 180.725 as providing that every share of Universal stock owned by Amanda in excess of 20 percent of the total is reduced in voting power to one-tenth vote per share.
[6] A condition of Amanda's financing is a back end merger of the company with Amanda. Therefore, even if Amanda does manage to procure 80 percent of the outstanding stock, fulfillment of the offer's financing conditions would trigger the "flip over" provision.
[7] The Pioneer Group, a substantial Universal shareholder since about January 1976, sent a letter of protest to the board complaining of the greenmail payment. Murray's testimony at the hearing established that the board offered the Pioneer Group exactly the same deal for the repurchase of its shares, and the group rejected that offer.
[8] These shares included 195,000 shares in the company pension plan, 32,150 shares held by Universal's charitable foundation, 276,953 held by Universal's 401K Benefit Plan, and 116,292 shares held by Universal's ESOP and 554,936 owned by Universal's officers and directors.
[9] At the January 26, 1989 board meeting which immediately preceded the annual shareholders' meeting, Goldman Sachs did a similar presentation for the board. The January 26 presentation increased Goldman Sachs' analysis of the negative cash flow resulting from the tender offer, for a total negative cash flow after the offer of $169,000,000.
[10] In this later regard Murray testified that Universal is a member of the Greater Milwaukee Initiative and contributes 2 percent of its pretax earnings for charitable purposes. Universal and its managerial executives participate in numerous charitable and community activities such as YMCA, the Boys and Girls Clubs, the University of Wisconsin Milwaukee Foundation, Marquette University, and the National Council of Blindness. Recipients of charitable organizations include the Repertory Theatre, Cardinal Strich College, Alverno College, and a variety of other social agencies.
[1] 15 U.S.C.A. § 78a et seq. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2396474/ | 825 S.W.2d 151 (1992)
F. Michael SCHULTZ, Appellant,
v.
The CADLE COMPANY, Appellee.
No. 05-90-01473-CV.
Court of Appeals of Texas, Dallas.
January 16, 1992.
Rehearing Denied March 4, 1992.
David Evans, Anthony J. Interrante, Dallas, for appellant.
Randall K. Lindley, Michael L. Jones, Dallas, for appellee.
Before ENOCH, C.J., and STEPHENS[1] and BISSETT[2], JJ.
OPINION
BISSETT, Justice (Retired).
F. Michael Schultz ("Schultz"), defendant in the trial court, appeals from a "turnover order" requiring him to turn over to Eddie *152 Vassallo, as receiver for the Cadle Company ("Cadle"), certain income in accordance with the "turnover" statute. See Tex.Civ. Prac. 31.002 (Vernon 1986).
Schultz presents two points of error. He contends in his first point that the turnover order should be vacated because under the newly amended turnover statute, current wages are exempt from turnover orders. Schultz further contends in his second point that the turnover order should be vacated because Cadle failed to adequately plead or prove the requirements for receivership and that the trial court omitted the statutorily required bond for the receiver, Vassallo. We modify the trial court's order and, as modified, affirm.
In 1986, Sunbelt National Bank filed suit against Douglas L. Miller and Schultz to collect sums due on a promissory note. Schultz, as co-maker with Miller, guaranteed all sums due on the note. On October 14, 1986, the trial court entered an Order for Interlocutory Default Judgment against Schultz for $43,725.08, plus postjudgment interest and court costs.
On May 9, 1989, Cadle purchased the note and judgment from the Federal Deposit Insurance Corporation, receiver for Sunbelt National Bank. Cadle was then substituted into the lawsuit as plaintiff.
On November 6, 1989, the trial court's order for interlocutory default judgment became a final, valid, and subsisting judgment against Schultz after Cadle nonsuited Miller. The judgment decreed:
[P]laintiff Sunbelt National Bank shall have and recover Interlocutory Default Judgment in the sum of Forty-One Thousand Seven Hundred and Twenty-Five Dollars and Eight Cents ($41,725.08) as the principal debt, plus accrued interest under the promissory notes executed by said Defendant in favor of Plaintiff Sunbelt National Bank through date of final judgment herein, plus reasonable attorneys' fees for the filing and prosecution of this suit, which the Court finds to be $2,000.00 through entry of this Order, aggregating to the sum of $43,725.08 plus interest on said aggregate amount at the rate of ten percent (10%) per annum from date of judgment until paid, plus all costs of court incurred.
Thereafter, Cadle instituted several postjudgment collection proceedings against Schultz, who refused to pay the judgment. The trial court, pursuant to Cadle's Amended Application for Orders for Collection of Judgment by Court Proceedings, signed an order on October 5, 1990, wherein the court stated:
[T]he Court, having reviewed the Application, the pleadings on file in this cause and the judgment entered in favor of Cadle against Defendant Schultz on October 14, 1986 in the amount of $41,725.08, plus post-judgment interest, attorney's fees, and court costs and is of the opinion that the Motion should be granted....
The court decreed:
1. Schultz and his agent, shall deliver all of the following described property ("Property") to EDDIE VASSALLO as receiver, at 5710 Rawling #1200, Dallas, Texas 75219 and that such receiver shall collect the Property and distribute 50% of it to Cadle and the remainder shall be returned to Schultz after deducting reasonable and necessary receiver's fees and expenses. The Property consists of:
the income Schultz constructively possesses and/or actually possesses or receives, including, but not limited to any and all negotiable instruments, paychecks, cash or other funds received and/or constructively received by Schultz as income from the Central Texas Women's Clinic, P.A.;
2. The Property shall be delivered as described above in United States currency or other fully negotiable form;
3. The foregoing acts by the receiver shall continue until such time as Cadle has received the following amounts:
a) $41,725.08 representing the principal amount of the Judgment;
b) $493.00 representing costs of court; and
c) Post-judgment interest at 10% from the date of the judgment.
*153 FACTS
At some indefinite time after the interlocutory judgment was rendered, but before the turnover order (now on appeal) was signed, Schultz made a series of asset transfers. He executed two contracts of sale covering certain real property he owned, established two family trusts, partitioned community property, and formed a limited partnership under the name of "Szulc, Lt'd" into which he transferred numerous personal assets, including several Arabian horses. He also owned a fifty percent interest in the Central Texas Women's Clinic, a Professional Association ("the Clinic"), from which he received a salary of $23,000 per month. In early 1989, Schultz directed the Clinic to deposit his monthly salary into the Szulc Lt'd checking account. The Clinic deposited $11,500 every two weeks into the Szulc, Lt'd account, and Schultz and his wife wrote checks on the account.
Since the trial court did not make or file any findings of fact, all questions of fact are presumed found in support of the turnover order. See In the Interest of W.E.R., 669 S.W.2d 716, 717 (Tex.1984); Goodyear Tire & Rubber Co. v. Jefferson Constr. Co., 565 S.W.2d 916, 918 (Tex. 1978). Therefore, the trial court's turnover order must be affirmed if it can be upheld on any legal theory that finds support in the evidence. In the Interest of W.E.R., 669 S.W.2d at 717.
THE FIRST POINT OF ERROR
The sole question presented by the first point is whether the property sought to be turned over to the receiver was "current wages" as claimed by Schultz, or "non-exempt income" as contended by Cadle.
The "turnover" statute is a procedural statute by which judgment creditors may reach assets of a judgment debtor through court proceedings. See Tex.Civ.Prac. & Rem.Code Ann. § 31.002 (Vernon 1986). These proceedings allow the appointment of a receiver who has the authority to take possession of nonexempt property, to sell it, and to pay the proceeds from the sale to the judgment creditor to the extent necessary to satisfy the judgment. Effective June 15, 1989, the legislature added the following section to the statute:
(f) A court may not enter or enforce an order under this section that requires the turnover of the proceeds of, or the disbursement of, property exempt under any statute, including Section 42.0021, Property Code. This subsection does not apply to the enforcement of a child support obligation or a judgment for past due child support.
Tex.Civ.Prac.& REM CODE ANN. § 31.002(f) (Vernon Supp.1991). The new section was intended to specifically exempt "current wages" (and other exempt property) from the operation of the turnover statute. See Tex.Prop.Code Ann. § 42.002(8) (Vernon 1984); Caulley v. Caulley, 806 S.W.2d 795, 797-98 (Tex.1991).
The explicit language of the turnover order requires the turnover of "income" Schultz receives, not "current wages." While the turnover order is inclusive of funds he receives from the Clinic, it is not restricted or limited to this source of income. This would include interest income from any source. In the instant proceeding, the evidence considered by the trial court focused on Schultz's income from Szulc, Lt'd. A review of the evidence adduced at the hearing on the application for turnover reveals that the property ordered to be turned over was nonexempt income from a limited partnership, not current wages. As a result of the voluntary transfer of Schultz's salary to Szulc, Lt'd, the salary simply became another asset owned by Szulc, Lt'dthe transfer caused the salary to lose its character as "current wages."
In Sutherland v. Young, the court explained how current wages can lose their exempt status:
We have reached the conclusion that, when wages are paid to and received by the wage-earner, they thereby cease to be current wages, and the exemption statute does not apply thereto. Appellant, having taken his wages and voluntarily placed them in the bank, and *154 thereby created the relation of debtor and creditor between himself and the bank, caused the funds to be subject to garnishment, the same as if he had invested the same in property that was not exempt to him under the statutes.
Sutherland v. Young, 292 S.W. 581, 583 (Tex.Civ.App.Waco 1927, no writ) (emphasis added). Just as the wage-earner in Sutherland placed his wages to the bank and created the relationship of debtor and creditor, Schultz placed his wages to the Szulc, Lt'd account and, with respect to those wages, created the relationship of partner and partnership. Schultz's wages thereby lost their exempt status.
Schultz, as a shareholder and owner of the Clinic, had sufficient control over his wages to direct them to be transferred to Szulc, Lt'd. Consequently, once Schultz, a judgment debtor, directed that his wages be transferred to Szulc, Lt'd, they became "income" and lost their status as current wages.
The trial court stated at the rehearing of Cadle's application for turnover:
[I]n my opinion, once those wages are received, then they are no longer current wages and they lose their status. And particularly in this case, we've got it transferred. Once it's transferred, I believe that they are no longer current wages and are subject to turnover, and I'm going to grant the turnover.
"Wages" are compensation given to a hired person for his or her services. Black's Law Dictionary 1416 (5th ed. 1979). Schultz was not performing services for Szulc, Lt'd, which was purportedly established for estate and tax planning purposes.
The trial court ordered the turnover of income received by Schultz, including but not limited to, funds received by him as income from the Clinic. The order is broad enough to include the income received by Schultz from Szulc, Lt'd. The first point of error is overruled.[3]
THE SECOND POINT OF ERROR
Schultz argues that the trial court erred in appointing a receiver to effect the turnover order because Cadle failed to comply with the statutes and rules of procedure applicable to receivership and that the trial court failed to require and settle the amount of the receiver's bond. To the contrary, Cadle and the trial court complied with the requirements of the turnover statute concerning the appointment of the receiver.
The Texas Legislature has specifically authorized the use of a receiver to assist Texas courts in enforcing their turnover orders:
The Court may ... appoint a receiver with the authority to take possession of the nonexempt property, sell it, and pay the proceeds to the judgment creditor to the extent required to satisfy the judgment.
Tex.Civ.Prac.& REM. CODE ANN. § 31.002(b)(3) (Vernon 1986). Schultz also asserts that Cadle did not plead the requirements for the appointment of a receiver. To the contrary, Cadle specifically pleaded for the appointment of a receiver pursuant to the turnover statute in its Amended Application for Orders for Collection of Judgment by Court Proceedings.
This Court previously addressed the requirements of appointing a receiver in a postjudgment turnover proceeding. Childre v. Great Southwest Life Ins. Co., 700 S.W.2d 284, 285 (Tex.AppDallas 1985, no writ). We specifically held that the "traditional requirements" for the appointment of a receiver are inapplicable in a postjudgment turnover proceeding. Id. at 288.
Indeed, if the Texas Legislature had intended for the appointment of receivers in turnover proceedings to meet the requirements of the receivership statutes, it would have provided for or at least referred to these requirements in the turnover statute. See Tex.Civ.Prac. & Rem.Code Ann. §§ 64.001-64.092 *155 (Vernon 1986 & Supp.1991). Since the turnover statute does not provide specific requirements for the appointment of a receiver, this decision falls within the trial court's discretion.
Schultz also argues that the trial court erred in failing to set a receivership bond. This Court, quoting Judge David Hittner's article, said:
There is a strong view that since the underlying obligation has been determined by final judgment, the judgment debtor mil not be harmed if no bond... is required.
Childre, 700 S.W.2d at 289 (quoting Hittner, Texas Post-Judgment Turnover and Receivership Statutes, 45 Tex.Bar J., 417, 420 (Apr.1982)) (emphasis added). The only possible rationale for requiring a receiver's bond in a postjudgment turnover proceeding is to indemnify the receiver against possible claims. Id. Consequently, Schultz cannot assert that he was prejudiced by the trial court's appointment of a receiver without a bond.
The decision as to whether a bond is necessary is within the discretion of the trial court. Childre, 700 S.W.2d at 289. In this case, the trial court after considering the receivership issue, did not set a bond. Schultz has demonstrated neither abuse of discretion by the trial court nor prejudice to himself as a result of the appointment of the receiver. The second point of error is overruled.
THE TRIAL COURT'S ORDER
The trial court erred when it ordered Schultz to turn over to the receiver certain properties including "paychecks" received by him from the Clinic. We, therefore, modify the trial court's order by deleting therefrom the word "paychecks" and, as modified, affirm the order.
NOTES
[1] The Honorable Bill J. Stephens, Retired, sitting by assignment.
[2] The Honorable Gerald T. Bissett, Retired, sitting by assignment.
[3] We note the recent decision of Caulley v. Caulley, wherein the Supreme Court held that the proceeds of exempt property under any statute are also exempt. Caulley v. Caulley, 806 S.W.2d 795, 798 (Tex.1991). As Schultz transferred his income to another corporation as an asset of that corporation, we do not consider Caulley controlling under these facts. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2407501/ | 524 S.W.2d 79 (1975)
Jim WADE et ux., Madeline H. Wade, Appellants,
v.
Jac A. AUSTIN, d/b/a Jac A. Austin Co., Realtors, Appellee.
No. 8247.
Court of Civil Appeals of Texas, Texarkana.
May 27, 1975.
*80 Robert F. Ashley, Ashley & Welch, Dallas, for appellants.
Fred H. Benners, Benners, Shettle & Hill, Dallas, for appellee.
RAY, Justice.
This is a suit for a realtors commission based upon an exclusive listing agreement, plus attorney's fees. Appellee (plaintiff) Jac A. Austin, d/b/a Jac A. Austin Co., Realtors, a duly licensed Texas real estate broker, brought suit against Jim Wade and wife, Madeline H. Wade, appellants (defendants) to recover a realtors commission of six per cent of the sales price of the property and attorney's fees under Article 2226, Vernon's Tex.Rev.Civ.Stat.Ann. plus *81 interest at the rate of six per cent per annum from October 24, 1972.
The trial court determined as a matter of law that the exclusive listing agreement was not unconscionable, and then submitted the fact issues to a jury for its determination. The court entered judgment in favor of appellee for the sum of $13,500.00 with interest at the rate of six per cent per annum from October 24, 1972 until paid, plus attorney's fees in the sum of $6,500.00 with six per cent interest per annum from the date of the judgment until paid, and provided that the sum of $6,500.00 for attorney's fees should be reduced by $1,500.00 to $5,000.00 in the event no application for writ of error or other appeal was thereafter initiated to the Supreme Court of Texas; and further provided, that the sum of $5,000.00 should be reduced by an additional $1,500.00 to $3,500.00 in the event no appeal was taken to the Court of Civil Appeals; and all court costs incurred.
Appellants have perfected their appeal and submit twenty points of error for our consideration.
The contract made the basis of this suit was entered into by and between the appellants and the appellee on August 29, 1972, and was to continue for a duration of ninety days thereafter. In accordance with the contract, appellee listed the appellants' property located at 3918 Normandy, Dallas, Texas, with the Multiple Listing Service of the Dallas Board of Realtors. Appellee Austin also ran two newspaper advertisements in the classified section of the Dallas Morning News, advertising the property for sale on the second and third days of September 1972. The property appeared in the Multiple Listing Service book for the North Dallas Sector on September 8, 1972. The property was shown to two prospective purchasers by appellee. On September 26, 1972, the appellee conducted a Multiple Listing Service open house and showed the property to members of the Dallas Real Estate Board. No sign was placed in the yard of the house advertising the property for sale because appellants had asked appellee not to do so.
On September 21, 1972, appellant Jim Wade called appellee to tell him that he had been called by a David Florence, who had informed appellant Wade that he was interested in purchasing the property. Mr. Florence further stated that he did not want to work through a real estate broker. Appellee Austin contacted Mr. Florence on September 21, 1972, and Mr. Florence again stated that he did not want to work through a real estate broker.
Mr. Florence submitted to Jim Wade a written offer to purchase his property. Appellant Wade took the Florence offer to appellee Austin on September 28, 1972, for appellee's advice concerning such offer. Appellee advised appellant Wade that the Florence offer would require Wade to obtain a current survey and that the survey deletion exception as required in the offer would be a fifteen per cent additional charge to the cost of the title policy that Wade would be required to pay. Austin further advised Wade that Wade was at the negotiating stage and this was the time to make a counter offer if appellant so desired. Appellant Jim Wade stated that he desired to make a counter offer for the sale of the property in the sum of $265,000.00. Appellee then marked out the price of $200,000.00 on the Florence offer and wrote in the figure $265,000.00 and advised appellant Jim Wade to initial that change and all other changes that had been made in the Florence offer. Jim Wade then initialed the changes which had been made in the Florence offer.
Appellant Wade delivered the Florence offer with the changes and initials to Mr. Florence on September 29, 1972. Wade called Florence on October 6, 1972 and went to his office and negotiated for the sale of the property at a price of $225,000.00. Wade and Florence entered into a contract of sale for the property on October 6, 1972.
*82 Appellant Wade elected to negotiate directly with the prospective purchaser, David Florence, and at appellants' request, appellee Austin did not attend the closing of the sale at the title company and, therefore, did not receive his commission at the closing. Upon appellants' refusal to pay appellee a settlement offer of a five per cent commission, appellee Austin filed suit for the full six per cent commission set out in the exclusive listing agreement.
Under the contract, appellee had the sole right to sell the property during the listing period, and the contract expressly provided that appellee would be compensated for services rendered in the event of sale, regardless of who sold the property.
Jac Austin was out of town to see his new born grandchild at the time Wade concluded direct negotiations with Florence. However, other members of the Jac A. Austin Co. were available during the complete transaction.
Appellants contend that appellee had not endeavored with all reasonable efforts to find a purchaser for appellants' real estate and, consequently, should not be compensated. However, the jury expressly found that appellee did endeavor with all reasonable efforts to find a purchaser for the property, and we have concluded that the record substantiates that finding.
Appellants' first point of error contends that appellee Austin was not entitled to recover reasonable attorney's fees pursuant to Tex.Rev.Civ.Stat.Ann. art. 2226, because appellee Jac A. Austin, was not the procuring cause of the sale of the real property nor did he produce a purchaser ready and willing to purchase the property on the terms of the contract. Appellants did not request a "procuring cause" special issue nor did they request findings of fact relative to procuring cause. However, we are convinced that the "procuring cause" contention is without merit under an "exclusive right to sell" contract. The test is whether the broker rendered services as required by the contract and whether the property is sold during the listing period, regardless of by whom. The purpose of the "exclusive right to sell" contract is to avoid a broker rendering all reasonable efforts to sell a piece of listed property and then encounter the claim of the owner that the broker is not entitled to be compensated because the owners sold the property directly without the broker being the procuring cause. The "procuring cause" contention is tenable under an "exclusive agency to sell" contract but not "exclusive agency with sole right to sell" contract.
It is undisputed that the Wade property was sold to Florence during the listing period, and the jury found that appellee endeavored with all reasonable efforts to find a purchaser for the Wade Real Estate on the terms set forth in the exclusive listing agreement.
The evidence is undisputed that appellee performed the usual and customary services consistent with reasonable efforts to find a purchaser for the Wade Real Estate and only failed to perform those services which Wade asked Austin not to perform.
Appellee brought suit for specific performance under the contract asking to be paid for services rendered, as requested and contracted for by appellants. The exclusive listing contract provided, "If said property is sold prior to the termination of this agreement, whether by you, by me, or by any other person, or if the property is sold within 180 days after the termination of this agreement to anyone with whom you or any member of Mutltiple Listing Service negotiated during the period of this contract and of whose name you have notified me by written notice delivered to me personally or mailed to me at the address stated below within 10 days after the termination of this agreement, in either such event, I agree to pay to you in Dallas, Texas, a commission in cash equal to 6% of the selling price . . .".
*83 In Texas Reserve Life Insurance Co. v. Security Title Company, 352 S.W.2d 347, 352 (Tex.Civ.App. San Antonio 1961, writ ref'd n.r.e.). the court said, "It has been repeatedly held by the courts of this State that the services of a real estate broker in effecting a sale of real estate are personal services within the meaning of Article 2226, supra, and in suits by such brokers for commission on such sales, attorney's fees are properly allowed. Bradshaw v. Marcum, Tex.Civ.App., 321 S.W.2d 352; Reinke v. West, Tex.Civ.App., 303 S.W.2d 419; Craft v. Netherton, Tex.Civ.App., 276 S.W.2d 855."
The contract for the sale of the real property was consummated between the Wades and Florence, during the 90 day period of the exclusive listing agreement, the property sold and title delivered with the advice of and consultation with appellee Austin and such other service as appellants would allow appellee to perform. The contract between the seller and purchaser of the real estate involved, was fully performed. Appellee had fully performed the obligations required of him under the terms of the exclusive listing agreement (a bilateral contract) and sought the specific performance of that portion of the contract allowing him 6% of the sales price for his realtors' commission. Appellants did not breach their contract by revoking the exclusive listing agreement, but only refused to pay the realtors commission. The amount of the attorney's fee having been stipulated between the parties, the liability therefore was established by appellee Austin.
Under the pleadings of appellee for specific performance, as contrasted to a suit for breach of contract, and under the facts of this case in which appellee fully performed his end of the bargain under the exclusive listing agreement by extending numerous services in behalf of his client, and where the Wades had not revoked the exclusive listing agreement prior to substantial performance by Austin, we conclude that the trial court properly allowed appellee his attorney's fee pursuant to Article 2226, Tex.Rev.Civ.Stat.Ann.
Appellants' first point of error is overruled.
In point of error number two appellants contend that the trial court erred in overruling their challenge for cause related to the juror James Philip Glasgow. Glasgow stated that he derived his income from the brokerage of real estate and that he did not know if he were capable of answering whether he could be fair and impartial in this case. However, he later stated that he could be fair and impartial and that he could make an impartial decision. Subsequently, Glasgow was asked by appellants' attorney, "All right, then I will simply ask you if you have any reservations about your ability to make an impartial decision?"
Glasgow answered, "Yes, I do. As far asI'm waiting for that moment to see. I think that my decision would be impartial, but I think that being in the shoes and making my income that way, that I tend to have the feelingI can identify, that's my environment, I can identifynot to say anything against the Defendant whatsoever. I just mean that I think that I can be impartial, but . . .".
Later juror, Homer E. Warlick, III, a high school and college friend of Calvin Hill of Fred Benner's Law Firm, became juror number 24 when another juror was excused. Appellants exercised all six of their peremptory challenges which included using one of their peremptory challenges on the juror Glasgow. Appellee exercised all six of his peremptory challenges. Because there were no double strikes, the juror Warlick became juror number 12 selected to serve on the jury that tried the case.
Appellants made no objection to the court concerning Mr. Warlick's being an objectionable juror.
*84 The voir dire testimony of Glasgow raised a fact question for the trial court to decide regarding the existence or not, of bias or prejudice so as to disqualify Mr. Glasgow for cause. The trial court had an opportunity to hear the testimony of the prospective juror, to observe his demeanor and to determine whether Mr. Glasgow could be a fair and impartial juror. Appellants did not establish that Glasgow would be biased or prejudiced as a matter of law. We conclude that the trial court was in a better position to evaluate the sincerity and capacity for fairness and impartiality of the juror than this court. The Swap Shop v. Fortune, 365 S.W.2d 151 (Tex.1963); Compton v. Henrie, 364 S.W.2d 179 (Tex.1963). In order to have properly complained of having to use a peremptory challenge to strike Mr. Glasgow from the jury list, and thereafter having to take an objectionable juror (Warlick), it was necessary that appellants object to taking Mr. Warlick as a juror before appellants exercised their peremptory strike of Mr. Glasgow. Carpenter v. Wyatt Construction Company, 501 S.W.2d 748 (Tex.Civ. App. Houston 14th Dist.1973, writ ref'd n. r.e.); O'Day v. Sakowitz Brothers, 462 S.W.2d 119 (Tex.Civ.App. Houston 1st Dist. 1970, writ ref'd n.r.e.); and, Hammon v. Texas & New Orleans Railroad Company, 382 S.W.2d 155 (Tex.Civ.App. Tyler 1964, writ ref'd n.r.e.). Appellants' second point of error is overruled.
We have reviewed appellants' point of error number three suggesting that the trial court erred in refusing to submit special issues and an instruction to the jury on the defense of fraud in the inducement to enter into the exclusive listing agreement. It is doubtful that the pleadings or the evidence would support the submission of the requested issues or instruction, but more fundamental is the fact that the jury found that appellee did endeavor with all reasonable efforts to find a purchaser for appellants' property. Thus, such was tantamount to a finding that appellee Austin had fully performed his end of the bargain. The appellants did not revoke the exclusive listing agreement, but made the sale of their property after accepting and following the advice of their realtor, Jac Austin. Under the facts of this case, appellants have waived their right of recision based upon fraud in the inducement to enter into the exclusive listing agreement. Rosenbaum v. Texas Bldg. & Mortg. Co., 140 Tex. 325, 167 S.W.2d 506, 508 (Tex. Com.App.1943, opinion adopted). There the court stated ". . . if a person who is induced by fraud to enter into a contract continues to receive benefits under the contract after he becomes aware of the fraud, or if he otherwise conducts himself in such manner as to recognize the contract as subsisting and binding, he thereby affirms the contract and waives his right of rescission. An express ratification is not necessary; any act based upon a recognition of the contract as subsisting or any conduct inconsistent with an intention of avoiding it has the effect of waiving the right of rescission."
The testimony reveals that after David Florence had contacted Jim Wade and Wade had sought the advice of Jac Austin concerning the future negotiations between Wade and Florence, there was no attempt by Jim Wade to cancel the exclusive listing agreement with realtor, Jac Austin. Jim Wade testified that after it was decided that he would negotiate directly with Florence and seek the advice of Jac Austin, who would remain in the background, that Wade never had any discussion with appellee about wanting to cancel the listing agreement. Austin was continuing to list the property and trying to do what he could to sell the property. Jim Wade stated, "I intended for him [Jack Austin] to try and sell it and advise me on my dealings with Mr. Florence." Appellants' point of error number three is overruled.
Appellants' points of error four through sixteen complain of the finding of the trial court that the exclusive listing agreement was not unconscionable.
*85 The testimony established that a person wishing to list his residential property with the Multiple Listing Service must sign the form exclusive listing agreement made the basis of this suit. The listing must be for a minimum number of days and the agreement provides for payment of a commission to equal to six per cent of the selling price of the property if sold during the term of the listing, whether sold by the realtor, owner, or any other person. It is not compulsory that a real estate broker belong to the Multiple Listing Service, but only a member of the Multiple Listing Service can list property with the Multiple Listing Service in Dallas.
Appellants called appellee and requested appellee to sell their property and to place the listing with the Multiple Listing Service.
Section 2.302 of the Tex.Bus. & Comm. Code Ann., V.T.C.A., gives the court the power to determine, as a matter of law, whether a contract is unconscionable at the time it was made. If it appears to the court that the contract or any clause thereof may be unconscionable, then the court shall afford the parties a reasonable opportunity to present evidence as to the contract's commercial setting, purpose and effect to aid the court in making the determination of unconscionability. This section is intended to allow the court to pass directly on the unconscionability of the contract or particular clause therein and to make a conclusion of law as to its unconscionability. The official code comment states the following:
"The basic test is whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract. Subsection (2) makes it clear that it is proper for the court to hear evidence upon these questions. The principle is one of the prevention of oppressions and unfair surprise (Cf Campbell Soup Company v. Wentz, 172 F.2d 80, 3d Circuit 1948) and not of disturbance of allocation of risks because of superior bargaining power." In 1 Anderson's Uniform Comm. Code 147, the author states relative to Section 2.302 that "the Code gives the court power to refuse to enforce unconscionable contracts or clauses but does not define unconscionability. To some extent content may be given to the concept by regarding this power as the successor to the historic power of equity courts to refuse to grant specific performance on the ground of unconscionability, and of courts of law to refuse to enforce contracts on grounds of public policy.
"The Code provision is not designed, however, to relieve a person from what proves to be a bad bargain, for the principle is not aimed at `disturbance of allocation of risks because of superior bargaining power,' and the fairness of the contract at the time it was made is the time as of which the contract is to be judged."
In the instant case, we have reviewed the contract and have concluded that the trial court was correct in deciding that the exclusive listing agreement was not unconscionable.
Appellants contend that the exclusive listing agreement was unconscionable because it provided for the payment of a commission to the appellee in the absence of any services by appellee. We disagree with appellants. The plain language of the contract provides that appellee will file the listing with the Multiple Listing Service of the Dallas Board of Realtors. It further provides that the realtor shall endeavor with all reasonable efforts to find a purchaser for said real estate on the terms set forth and may take such actions to sell the property as the realtor may deem advisable in his discretion, including the listing of the property with cooperating brokers, as well as the other members of the Multiple Listing Service. It is undisputed that the listing was filed with the Multiple Listing Service of Dallas, and the jury found that *86 appellee had endeavored with all reasonable efforts to find a purchaser for the real estate. We do not have a case in which the realtor performed no services, and we do not pass upon that question.
In determining whether a contract is unconscionable or not, the court must look to the entire atmosphere in which the agreement was made, the alternatives, if any, which were available to the parties at the time of the making of the contract; the non-bargaining ability of one party; whether the contract is illegal or against public policy, and, whether the contract is oppressive or unreasonable. At the same time, a party who knowingly enters a lawful but improvident contract is not entitled to protection by the courts. "In the absence of any mistake, fraud, or oppression, the courts, as such, are not interested in the wisdom or impolicy of contracts and agreements voluntarily entered into between parties compos mentis and sui juris. Such parties to contracts have the right to insert any stipulations that may be agreed to, provided they are neither unconscionable nor otherwise illegal or contrary to public policy. It has accordingly been said that, almost without limitation, what the parties agree upon is valid, the parties are bound by the agreement they have made, and the fact that a bargain is a hard one does not entitle a party to be relieved therefrom if he assumed it fairly and voluntarily. A contract is not unenforceable on the ground that it yields a return disproportionate to the expenditures in time and money, where there has been no mistake or unfairness and the party against whom it is sought to be enforced has received and enjoyed the benefits." 17 Am.Jur.2d 561 Contracts, Sec. 192, Improvident, oppressive, or unconscionable agreements. Two types of abuses must generally be present to produce a finding of unconscionability. The first abuse is a procedural abuse which may arise in the contract formation, such as the non bargaining ability of one party. The second type of abuse usually required to be present to warrant a finding of unconscionability would be an abuse concerning substantive contract terms. Whether the printed terms of a form contract are so one-sided as to be unreasonable is an example of a substantive abuse. See Spanogle, Analyzing Unconscionability Problems, 117 U.Pa.L.Rev. 931, at 932 (1969).
There appears to be only one case construing Section 2.302 of the Tex.Bus. & Comm.Code Ann. as it related to a listing agreement such as that with which we are concerned in the present case. In Kaye v. Coughlin, 443 S.W.2d 612 (Tex.Civ.App. Eastland 1969, no writ) the court concluded that an exclusive listing agreement similar to the one here involved, was not unconscionable at the time that it was made and that the contract contained no provisions which were against public policy. However, we must point out that the court stated, "We find nothing in the record to indicate that the appellee contended in the trial of the case that any portion of the listing contract was unconscionable." There the court awarded Kaye his six per cent commission under the terms of the exclusive listing contract though Kaye and his agents were not the procuring cause of the sale of the property. The court concluded that the expressed provisions of the contract were complied with when the realtor showed the property to prospective purchasers who subsequently purchased the property directly from the owner after the ninety day listing period but within thirty days following the termination of the listing period as provided for in the contract.
Our determination of the circumstances surrounding the Dallas exclusive listing agreement and the entering into the agreement by the parties does not lead us to the conclusion that the agreement is unconscionable.
Appellants do not contend that the contract violates public policy or any particular statute.
Appellants urge that a procedural abuse existed which made the listing contract unconscionable. *87 The Wades state that the contract was oppressive because they were forced to accept all the terms of the exclusive listing agreement and, therefore, had no bargaining power when they entered into the agreement. Appellants had listed other property with appellee apparently on similar terms and specifically requested that this listing be filed with the Multiple Listing Service. There were alternatives available such as an open listing contract, an exclusive agency to sell, a special contract between the parties and the right to sell the property themselves without using a realtor. Thus, appellants had other methods by which they could have elected to dispose of their property, but they voluntarily chose an exclusive right to sell contract which afforded them the benefits of the Multiple Listing Service which they would not have otherwise had. This meant that their property had the possibility of being exposed for sale by all of the members of the Dallas Board of Realtors as well as other licensed realtors. Procedural abuse is not present in this case.
Appellants' contentions that substantive abuse existed is also without merit. Appellee was required to file the listing with the Multiple Listing Service and to endeavor with all reasonable efforts to find a purchaser for the real estate, but the method of finding a purchaser is left to the realtors. Appellee used the customary methods such as showing the property, advertising, taking calls from other realtors, cooperating with other brokers, filing the listing with the Multiple Listing Service and allowing other members of the Multiple Listing Service to show the property.
We do not believe appellants have suffered any injury by the failure of the trial court to make and file appellants' requested findings of fact and conclusions of law in view of what we have already said relative to unconscionability. Appellants' points of error four through sixteen are overruled.
This court has considered appellants' seventeenth point of error in which it is contended that the exclusive listing agreement is unenforceable because of the lack of mutuality. In view of our holding that appellee had fully performed his end of the bargain, the contract is therefore not now subject to recision for lack of mutuality. 31 Tex.Jur.2d 238 Contracts, Sec. 91 Performance of agreement. Appellants' point of error number seventeen is overruled.
In appellants' points of error eighteen and nineteen it is urged that the findings of the jury in response to special issues 1 and 2 were against the overwhelming weight and preponderance of the evidence. In special issue No. 1 the jury found that Jac A. Austin Co., Realtors, endeavored with all reasonable efforts to find a purchaser for the Wade Real Estate on the terms set forth in the exclusive listing agreement and in special issue No. 2 found in favor of appellee Austin on a negative submission of the same issue. The testimony and evidence presented at the trial support the findings of the jury. Appellants' points of error eighteen and nineteen are overruled.
We have examined appellants' twentieth point of error stating that the cumulative effect of all the errors established the appellant did not receive a fair trial and would require a reversal of the judgment. Since we have found no error committed by the trial court, appellants' twentieth point of error is overruled.
The judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2431905/ | 710 S.W.2d 740 (1986)
UVALDE COUNTY, Appellant/Cross Appellee,
v.
Jerry D. BARRIER, Appellee/Cross Appellant.
No. 04-85-00179-CV.
Court of Appeals of Texas, San Antonio.
May 7, 1986.
*742 Eugene B. Wilshire, Jr., Jacalyn D. Scott, Bonham, Carrington & Fox, Houston, for appellant/cross appellee.
Mark J. Cannan, San Antonio, for appellee/cross appellant.
Before CADENA, C.J., and BUTTS and DIAL, JJ.
OPINION
BUTTS, Justice.
This is an appeal from a judgment following a declaratory judgment action. The trial court granted Jerry Barrier, the plaintiff, damages of $19,360.00 against the defendant, Uvalde County. The trial court upheld use of an easement as a public road. Both parties appeal.
Barrier brought suit after Uvalde County employees went upon his property (the Ranch), cut a new road along the western boundary, where the Nueces River runs, and constructed a new low water crossing. He alleged he suffered $50,000.00 damages resulting from the County's trespass, and he continued to suffer damages from trespass by the general public. He sued for (1) declaratory judgment that the western boundary of his property is the gradient boundary of the Nueces River; (2) injunctive relief to prevent trespass; and (3) actual damages arising from trespass.
The trial court made the following pertinent findings of facts and conclusions of law:
FINDINGS OF FACT
4. A roadway traverses the ranch in an east/west direction at the northern boundary of the ranch and terminates at the east bank of the Nueces River where it connects with a low water crossing known as the Tom Nunn Crossing (hereinafter "the roadway").
5. The Tom Nunn Crossing is a low water crossing of the Nueces River which connects the roadway in question.
6. The Tom Nunn Crossing has been located up to and within 400 yards from a line that would be a direct extension of the roadway by means of an extension of that roadway along the east bank and bed of the Nueces River to the point at which the crossing is made.
7. The roadway and crossing were established prior to 1917 and have generally been used by the public for access to the west side of the Nueces River since that time. That use by the public has included use of the connecting roadway along the east bank and bed of the Nueces River.
8. The roadway, crossing and connection thereof have never been fenced or closed to the public and permission has never been required to use the roadway, crossing and connection thereof by members of the general public.
9. The roadway, crossing and connection thereof have been established and/or maintained by the County through the use of County employees, equipment and funds since at least 1934.
10. At the present time, the roadway, crossing and connection thereof provide the only access for members of the public to the area on the west side of the Nueces River at that point, such members of the public including at least seven *743 families who have no other access to their property.
11. In May of 1982 the Defendant removed 3,872 cubic yards of material from the Plaintiff's property for use in reestablishing the washed out portions of the Tom Nunn Crossing and the access thereto.
12. The market value of the material removed was $19,360.00.
CONCLUSIONS OF LAW
1. For the following reasons, the roadway and connection to the Tom Nunn Crossing by way of an extension to the roadway along the east bank of the Nueces River for a distance of at least 400 yards from a direct extension of the east/west roadway are impliedly dedicated to public use:
A. For a period of at least 60 years the owners and occupiers of the land in question have thrown open the roadway and access to the crossing to public use.
B. For a period of at least 60 years the roadway and access to the crossing within 400 yards of the road have been used by the public without interruption and not by mere permission.
C. The road and access to the crossing within 400 yards of the road have the reputation of being public.
D. The road and access to the crossing within 400 yards of the road have been maintained by the County with the consent and acquiescence of the landowners in question for a period of more than 40 years.
E. Members of the public will be injured if the roadway and access to the crossing are closed.
F. The use of the roadway and access to the crossing have not been limited to a particular class of persons.
G. The appropriation of the roadway and access to the crossing have been accepted by the public use thereof.
2. The Plaintiff is entitled to recover $19,360.00, the market value of the dirt removed from [Plaintiff's] property by the County to reconstruct the Tom Nunn Crossing and the access thereto.
Uvalde County brings four points of error complaining there is no evidence, or insufficient evidence, to support the award of damages. However, the County fails to challenge specific findings of fact relating to those damages. Barrier asserts such failure constitutes waiver of any error concerning damages. See Ervin v. Ervin, 624 S.W.2d 264, 266 (Tex.Civ.App.Eastland 1981, writ dism'd); Texas State Board of Pharmacy v. Gibson's Discount Center, Inc., 541 S.W.2d 884, 886 (Tex.Civ.App. Austin 1976, writ ref'd n.r.e.); Whitten v. Alling & Cory Co., 526 S.W.2d 245, 248 (Tex.Civ.App.Tyler 1975, writ ref'd).
Uvalde County addresses its argument to the measure of damages employed and want of proof of damages. The findings of fact are devoid of mention of measure of damages and do not preclude an appellate review of the method employed. Moreover, findings of fact, although unchallenged, are not conclusive on appeal when, as in this case, a statement of facts appears in the record. Swanson v. Swanson, 148 Tex. 600, 228 S.W.2d 156, 157 (1950); Block v. Waters, 564 S.W.2d 113, 115 (Tex. Civ.App.Beaumont 1978, no writ); Hanover Insurance Co. v. Sonfield, 386 S.W.2d 160, 164 (Tex.Civ.App.Houston 1965, no writ).
In the first and second points of error, Uvalde County complains there was no evidence, or insufficient evidence, related to the proper measure of damages which the County says is the difference in value of the property before and after the incident; and further that it was error to award damages for restoration where evidence of restoration was based solely on hearsay.
The type of compensation to be awarded for an injury to real property depends upon the nature of the injurypermanent or temporary. Kraft v. Langford, 565 S.W.2d 223, 227 (Tex.1978). The measure of damages in a suit for permanent damage to land is the difference in market value of the land immediately before and *744 immediately after trespass. Porras v. Craig, 675 S.W.2d 503, 504 (Tex.1984). Where the injury to realty is repairable or temporary, the proper measure of damages is the reasonable cost of repairs necessary to restore the property to its prior condition. Bayouth v. Lion Oil Co., 671 S.W.2d 867, 868 (Tex.1984); Kraft v. Langford, supra; Moren v. Pruske, 570 S.W.2d 442, 444 (Tex.Civ.App.San Antonio 1978, writ ref'd n.r.e.).
While the court did not expressly characterize the injury in question, conclusion of law two implies it was temporary in nature.[1] Holding the proper measure of damages to be the reasonable cost of repairs necessary to restore the property to its prior condition, we overrule point of error one. We now inquire whether there is sufficient evidence to sustain the award of restoration damages.[2]
The trial judge, as finder of fact, determined the controlling facts. In doing so, he had a right to accept or reject all or any part of the witnesses' testimony. Hood v. Texas Indemnity Insurance Co., 146 Tex. 522, 209 S.W.2d 345, 346 (1948); Wright v. Wright, 699 S.W.2d 620, 621 (Tex.App. San Antonio 1985, no writ). Unless the record shows to the contrary, every reasonable presumption must be indulged in favor of the findings and judgment of the trial court. Hursey v. Thompson, 141 Tex. 519, 174 S.W.2d 317, 319 (1943); Wright v. Wright, supra.
Barrier testified concerning the value of the dirt removed from his property. Over the County's hearsay objection, he stated that a homebuilder in Houston "who happens to move in dirt and do excavation and move in land fill ... said ... that five dollars a yard was a reasonable price." No other evidence regarding the reasonable cost of restoration was admitted. Barrier argues this testimony is sufficient to sustain the award of damages, relying on Porras v. Craig, supra at 504.
The evidence is hearsay, to which the County objected. TEX.R.EVID. 802; Delhi Gas Pipeline Co. v. Newman, 512 S.W.2d 741, 743-44 (Tex.Civ.App.Tyler 1974, no writ); Orr Chevrolet, Inc. v. Courtney, 488 S.W.2d 883, 886 (Tex.Civ. App.Texarkana 1972, no writ); Stafford v. Powell, 148 S.W.2d 965, 967 (Tex.Civ. App.Eastland 1941, no writ); Rathbun v. Miller, 266 S.W. 818, 821 (Tex.Civ.App.El Paso 1924, no writ).
Barrier erroneously relies on Porras v. Craig, supra. While the Court in Porras held that a property owner may qualify as a witness as to damages to his property, the damages involved in that case were permanent in nature, requiring testimony as to market value. As already noted, the instant case involves temporary injury to property, and requires evidence as to reasonable cost of restoration. Although a property owner may testify to the market value of his property, he is not recognized as an expert qualified to testify as to cost of restoration, absent the proper predicate. There was no such predicate laid in the instant case. Further, the objected-to testimony was inadmissible hearsay. We therefore, hold there was no admissible evidence of probative force showing reasonable cost of restoration. Accordingly, we sustain the second point.
Finding no evidence to support the award of damages, we need not reach the County's final points of error which also address the damages question.
Barrier's Appeal
In his first point of error, Barrier contends the trial court erred in failing to declare that the western boundary of the Ranch is the gradient boundary of the *745 Nueces River. Uniform Declaratory Judgments Act, TEX.REV.CIV.STAT.ANN. art. 2524-1 (Vernon 1965).[3] . . . . . .
While the availability of another remedy does not deprive the court of jurisdiction to grant declaratory relief, Texas Liquor Control Board v. Canyon Creek Land Corp., 456 S.W.2d 891 (Tex.1970), the court has sole discretion to determine whether to grant such relief. Bexar-Medina-Atascosa Counties Water Control & Improvement District No. 1 v. Medina Lake Protection Association, 640 S.W.2d 778, 780 (Tex.App.San Antonio 1982, writ ref'd n.r.e.); Crawford v. City of Houston, 600 S.W.2d 891, 894 (Tex.Civ.App.Houston [1st Dist.] 1980, writ ref'd n.r.e.). We find the trial court did not abuse its discretion in not declaring the boundary of the Ranch and in denying statutory attorney's fees. We overrule Barrier's first point of error.
In point of error three Barrier complains of trial court error in failing to award damages against the County for its destruction of Barrier's trees. Barrier alleges that the trespass was willful, intentional and not in good faith and he is, therefore, entitled to damages for the 37 trees that were destroyed, resulting in $75,000 damages.
The following constitutes the only evidence by Barrier substantiating his damages:
[Plaintiff's attorney]: Mr. Barrier, have you had occasion to investigate your property and determine how many trees have been cut or irreparably damages subsequent to the construction... in May of 1982?
* * * * * *
A: Yes, I have.
* * * * * *
Q: And what did you determine?
A: There was thirty-seven trees damaged. I've got the exact number in here. there was thirty-six natural pecans and one live oak.
* * * * * *
Q: And neither you nor anyone acting at your direction cut, destroyed or mutilated those trees in any way?
A: No, sir.
Q: Do you know the value or do you know the replacement value of those trees?
* * * * * *
A: Seventy-five thousand dollars.
On cross-examination, Barrier testified that the $75,000 figure was derived from estimates received from a nursery and construction company. However, the estimates were not admitted into evidence. The County moved to strike the testimony; the court overruled the motion stating the testimony would go to the weight of the evidence. Further cross-examination revealed the following:
Q: When did you make your count of trees that were damaged in some respect?
A: I think that was either this past December or early January.
* * * * * *
Q: Did you make a count of the trees or an inventory of the trees in March of 1981 when you purchased the property?
A: No, but I was down there. If you are asking me if I counted anything, no, I didn't.
* * * * * *
Q: Some of them could have been sawed down in March of '81, couldn't they?
A: I guess they could have. You know, I guess they could have ... I know that the trees were sawed down because we caught people sawing them down. . . .
* * * * * *
*746 Q: The people that you caught weren't employees of the County, were they?
A: I don't know whether they were or not.
Q: But you can't say that they were?
A: No, and I can't say that they were not.
The record does not reveal error in the trial court's refusal to grant damages for the replacement value of Barrier's trees. Barrier failed to establish that the County was responsible for the damages and failed, over objection, to present competent evidence as to the replacement value. Barrier's third point of error is overruled.
In point of error four Barrier requests the trial court's findings and conclusions [that the private road easement and the extension up to 400 yards along the Nueces River are impliedly dedicated to public use] be stricken as they contradict the court's judgment denying all such relief. Barrier alleges the recitation in the judgment "All other relief sought and not herein expressly granted is denied" reflects the court's refusal to find for the County on the theory of implied dedication. This point is without merit.
The County sought no affirmative relief; rather, they asserted the affirmative defense of implied dedication. Only Barrier requested relief. Therefore, the findings of fact and conclusions of law do not contradict the court's judgment.
In points of error five through fourteen, Barrier alleges there is no evidence, or insufficient evidence, to support the trial court's findings of fact and conclusions of law. In point of error two he complains of the refusal to grant a permanent injunction against the County enjoining it from entering the Ranch and interferring with Barrier's right to exclude the general public.
The elements of implied dedication are: (1) the acts of the landowner induced the belief that the landowner intended to dedicate the road to public use; (2) he was competent to do so; (3) the public relied on these acts and will be served by the dedication; and (4) there was an offer and acceptance of the dedication. Lindner v. Hill, 691 S.W.2d 590, 592 (Tex.1985); Las Vegas Pecan & Cattle Co. v. Zavala County, 682 S.W.2d 254, 256 (Tex.1984).
The County called six witnesses; there was testimony that the road in question had been used by the public generally since at least 1930. One witness said this was a public road since at least 1917; another since 1919. Three of the witnesses testified to such use dating back to 1930. It is located about two miles downstream from the U.S. 90 Highway bridge and existed before U.S. 90 was completed. They further testified that the County has maintained the road since the 1930's. Each witness testified to personally using the road for various reasons, including access to town, the White's mines, dancehalls, and for general recreational purposes. Moreover, to their knowledge no one had ever asked permission to use the road. They all agreed it was a public road. Seven landowners use the road to reach their land; six of these have no other means of access. At one time this was the road from Uvalde to Cline and to Del Rio. Such evidence is sufficient to support the findings and conclusions of implied dedication. Las Vegas Pecan & Cattle Co. v. Zavala County, supra, at 256-57.
There is also support in the record for the court's finding and conclusion that the "Tom Nunn Crossing has been located up to and within 400 yards from a line that would be a direct extension of the roadway" and that said extension is "impliedly dedicated to public use." While the testimony on this issue varied a great deal as to the distance of the extension, there was evidence that it had been up to a "quarter of a mile" after the rain washed out the existing extension; another witness testified the extension had been moved as much as three hundred yards after heavy rains in 1978.
The trial judge, as sole finder of fact, could accept or reject all or any part of the witnesses' testimony and every reasonable presumption must be indulged in favor of *747 the findings and judgment of the trial court. Wright v. Wright, supra. Applying this standard, we find sufficient evidence to support the court's judgment concerning the implied dedication of the 400 yard extension.
Barrier contends that a 1963 deed reservation, which reserved the road in question as a "private easement," disposes of this issue of implied dedication. However, the record reflects that an implied dedication of the road had occurred at least thirty years prior to the 1963 reservation by deed. A road remains dedicated to the public unless it is abandoned, Lindner v. Hill, supra at 592. Accordingly, we overrule this argument.
Finding sufficient evidence to support the findings of fact and conclusions of law that the road in question and an extension up to 400 yards are impliedly dedicated to public use, we find no error in the trial court's refusal to grant a permanent injunction against the County. Points of error two and five through fourteen are overruled.
In point of error fifteen Barrier alleges that any implied dedication violates TEX.REV.CIV.STAT.ANN. art. 6812h (Vernon Supp.1986). Article 6812h, § 2(a), effective August 31, 1981, provides that in any county where the population is less than 50,000 ... that "county may not establish, acquire or receive any public interest in a road except under ... express dedication."
The record shows the county acquired an implied dedication of the road in question prior to the effective date of the statute. As the statute is given prospective application only, it does not operate to divest the County of the easement. Las Vegas Pecan & Cattle Co. v. Zavala County, supra at 256; Lindner v. Hill, supra at 592.
We also reject Barrier's argument under his final point of error: that the trial court's finding of implied dedication of the easement to a low water crossing within 400 yards constitutes an undefined wandering easement and is unenforceable. We find the description of the land which is impliedly dedicated to be sufficient and overrule the point.
The judgment is affirmed in all things except the amount of damages. We reverse and remand only that portion of the case for determination of damages for the reasonable cost of repairs to restore the property. Costs of appeal are assessed ¾'s to Barrier and ¼ to County.
NOTES
[1] Conclusion of Law no. 2. The Plaintiff is entitled to recover $19,360.00, the market value of the dirt removed from [Plaintiff's] property by the County. . . .
[2] We note it is proper to also award damages for the loss of use and enjoyment of the property during the time the repairs are being made. See Lone Star Development Corp. v. Reilly, 656 S.W.2d 521, 525-26 (Tex.App.Dallas 1983, writ ref'd n.r.e.). However, Barrier did not plead for such damages nor was this issue raised on appeal.
[3] Article 2524-1, supra, has been recodified in TEX.CIV.PRAC. & REM.CODE, chapter 37 (Vernon 1986). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2442906/ | 638 S.W.2d 867 (1982)
Paul COX, Petitioner,
v.
Glenn JOHNSON, Respondent.
No. C-1237.
Supreme Court of Texas.
July 7, 1982.
Rehearing Denied October 6, 1982.
Kim Cox and Paul Dodson, Corpus Christi, for petitioner.
Charles R. Cunningham, Corpus Christi, for respondent.
PER CURIAM.
This is a suit brought by Paul Cox to recover on a promissory note executed by Glenn Johnson. The trial court rendered a default judgment for Cox and overruled Johnson's motion for new trial. The court of appeals reversed the judgment of the trial court and remanded the cause for a new trial, holding that the trial court had committed fundamental error in allowing recovery on the note without the joinder of a joint payee. 630 S.W.2d 492. We refuse the application for writ of error of Paul Cox, no reversible error; however, we disapprove *868 the holding of the court of appeals that the failure to join an additional party constituted fundamental error.
The court of appeals held the trial court erred in rendering judgment for Cox without joinder of Dan M. Bates, the joint payee on the note. This error was raised for the first time on appeal. The court of appeals relied upon our decision in Petroleum Anchor Equip v. Tyra, 406 S.W.2d 891 (Tex. 1966) and its own decision in Hinojosa v. Love, 496 S.W.2d 224 (Tex.App.Corpus Christi 1973, no writ), in holding that failure to join Bates was fundamental error.
Fundamental or unassigned error is a discredited doctrine. See American General Fire and Casualty Co. v. Weinberg, 639 S.W.2d 688, 25 Tex.Sup.Ct.J. 405 (1982); Texas Industrial Traffic League v. Railroad Commission of Texas, 633 S.W.2d 821 (Tex. 1982); Buckholts Ind. School Dist v. Glaser, 632 S.W.2d 146 (Tex.1982); Pirtle v. Gregory, 629 S.W.2d 919 (Tex.1982); Greater Fort Worth & Tarrant County Community Action Agency v. Mims, 627 S.W.2d 149 (Tex. 1982); Vondy v. Commissioners Court of Uvalde County, 620 S.W.2d 104 (Tex.1981); Hooks v. Texas Dept. Water Resources, 611 S.W.2d 417 (Tex.1981). Fundamental error survives today only in those rare instances in which the record shows on its face that the court lacked jurisdiction or that the public interest is directly and adversely affected as that interest is declared in the statutes and constitution of this state. Texas Ind. Traffic League v. Railroad Commission of Texas, supra; Pirtle v. Gregory, supra; Ramsey v. Dunlop, 146 Tex. 196, 205 S.W.2d 979 (1947).
Petroleum Anchor Equip v. Tyra was decided before amendments to the Texas Rules of Civil Procedure changed our approach in dealing with a defect of parties from one which emphasized jurisdiction to an approach based solely upon pragmatic considerations. Cooper v. Texas Gulf Industries, Inc., 513 S.W.2d 200, 203 (Tex. 1974). Under our present rule, "[i]t would be rare indeed if there were a person whose presence was so indispensable in the sense that his absence deprives the court of jurisdiction to adjudicate between the parties already joined." Cooper v. Texas Gulf Industries, Inc., supra at 204. The failure to join Dan M. Bates was not a matter of fundamental error. Pirtle v. Gregory, supra; Cooper v. Texas Gulf Industries, supra. The contrary holdings of the court of appeals in the present case as well as in Hinojosa v. Love are disapproved.
Johnson raised other meritorious defenses in his motion for new trial and his brief in the court of appeals. Therefore, the judgment of the court of appeals is correct, and we refuse the application for writ of error of Paul Cox, no reversible error. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2425583/ | 620 S.W.2d 718 (1981)
David Bryce LONDON, Appellant,
v.
TEXAS POWER & LIGHT CO., Appellee.
No. 20742.
Court of Civil Appeals of Texas, Dallas.
June 23, 1981.
Michael R. Millican, Millican & Waldrep, Richardson, for appellant.
*719 Robert H. Roeder, McKinney, for appellee.
Before ROBERTSON, CARVER and STEPHENS, JJ.
STEPHENS, Justice.
This is a wrongful death case arising out of an automobile accident. David Bryce London, plaintiff, sued Larry Edmond Martin and Texas Power & Light Company. Texas Power & Light was awarded summary judgment on the grounds that Larry Edmond Martin, its employee, was not acting within the course and scope of his employment at the time and on the occasion of the accident. The sole question presented is whether mileage compensation, paid by the employer, places the employee in the course and scope of employment while traveling to and from a temporary work site in the employee's automobile. We hold that it does not, and therefore, appellant's summary judgment evidence raises no genuine issue as to a material fact, and we, therefore, affirm.
Martin, a resident of Blue Ridge, Texas, was an employee of Texas Power & Light, who regularly worked at TP&L's generating station located at Frisco, Texas. For some three months prior to the date of the accident in question, Martin had been assigned to temporary duty at TP&L's Lake Savoy Plant, in Savoy, Texas. Although Savoy, Texas, was closer to Martin's home at Blue Ridge, Texas, TP&L had agreed to pay mileage from the Frisco Plant to the Savoy Plant while Martin was on this temporary duty. On the morning of March 5, 1979, while driving his own vehicle enroute to the Savoy Plant, Martin was involved in a collision with a vehicle driven by London, resulting in the death of London's wife. London sued Martin and TP&L, contending that Martin's negligence was the proximate cause of his wife's death, and that at the time of the accident Martin was acting within the course and scope of his employment as an employee of TP&L. ALthough it is undisputed that the accident occurred at a time earlier than Martin was required to report for work, London argues that the additional mileage compensation paid Martin by TP&L placed Martin within the course and scope of his employment from the time he left home until the time he arrived at work.
Appellant's sole point of error complains that the trial court erred in granting summary judgment for TP&L because a genuine issue of material fact existed as to whether defendant Martin was acting within the course and scope of his employment for TP&L.
TP&L's summary judgment evidence consisted of the depositions on file and an affidavit by Mr. R. T. Craig, who is also an employee of TP&L, and who was the immediate supervisor of Martin. The affidavit was clear and unequivocal that Martin's employment began each day at 8:00 a. m. when he arrived at the Savoy Plant; that TP&L did not furnish transportation to Martin from his home to the job site; that at the time of the accident Martin was not driving a vehicle owned by TP&L; that TP&L neither directs what manner of transportation Martin uses to arrive at the job site, nor the particular route he shall take, nor the method and mode of operation of the vehicle; and finally that the accident occurred at a time when Martin was not on duty for TP&L.
These same facts were borne out by Martin's deposition, which showed that on the date of the collision Martin was not carrying or transporting any other employees of TP&L to the job; that he was not transporting any tools or equipment to the job site; that he made no stops on behalf of his employer TP&L, from the time he left home that morning until the time of the collision; that he never used his vehicle in connection with his employment with TP&L; and that the mileage compensation paid for the mileage from the Frisco Plant to the Savoy Plant was in lieu of motel expenses for those employees of TP&L who wished to live close to the job site.
The general rule in Texas is that an employee is not considered in the course and scope of his employment while driving his own vehicle to and from his place of *720 work, absent other factors. Barr v. Colorado Interstate Gas Co., 217 F.2d 85 (5th Cir. 1954); Kennedy v. American National Insurance Co., 130 Tex. 155, 107 S.W.2d 364 (1937); Norvell Service Co. v. Spell, 288 S.W.2d 133 (Tex.Civ.App. Beaumont 1955, writ ref'd n.r.e.); Fountain v. Walker, 260 S.W.2d 717 (Tex.Civ.App. Eastland 1953, writ ref'd n.r.e.); Antilley v. Jennings, 183 S.W.2d 982 (Tex.Civ.App. Eastland 1944, writ ref'd); American National Insurance Co. v. O'Neal, 107 S.W.2d 927 (Tex.Civ.App. San Antonio 1937, no writ). In such cases there are requisites that must be met to place an employee in the course and scope of employment. The test of a master's liability for the negligent acts of his servant is whether at the time and occasion in question, the master has the right and power to direct and control the servant in the performance of the causal act or omission at the very instance of its occurrence. Parmlee v. Texas & New Orleans Railroad Co., 381 S.W.2d 90 (Tex.Civ.App. Tyler 1964, writ ref'd n.r.e.). Stated another way, for an act to be within the course and scope of a servant's employment, it is necessary that it be done within the general authority of the master in furtherance of the master's business, and for the accomplishment of the object for which the servant is employed. Thompson v. B. B. Saxon Co., 472 S.W.2d 325 (Tex.Civ.App. San Antonio 1971, no writ).
Facts similar to the case at bar were present in American National Insurance Co. v. O'Neal, 107 S.W.2d 927 (Tex.Civ.App. San Antonio 1937, no writ). There the employee traveled to various offices of the employer to make inspections. He was paid traveling expenses equivalent to railroad fare, and there was no evidence as to any direction or control by the employer as to how he should travel. The court reasoned that when an employer does not require any particular means of travel, the employee is not engaged in the furtherance of the master's business so as to render the master responsible for the negligence of such employee while so traveling.
In the instant case, Martin was neither directed as to what manner of transportation he was to use to get to the temporary job site, nor was he directed what route to take. Consequently, we hold that notwithstanding the mileage allowance, TP&L's undisputed summary judgment evidence was conclusive that Martin was not acting within the course and scope of his employment at the time and on the occasion of the accident in question.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1871922/ | 98 So. 2d 225 (1957)
233 La. 885
STATE of Louisiana
v.
Mrs. Sam M. EMERSON
No. 43496.
Supreme Court of Louisiana.
November 12, 1957.
*226 Campbell & Campbell, Minden, for defendant-appellant.
Jack P. F. Gremillion, Atty. Gen., M. E. Culligan, Asst. Atty. Gen., Louis H. Padgett, Jr., Dist. Atty., Bossier City, John B. Benton, Jr., Asst. Dist. Atty., Minden, Roy M. Fish, City Atty., Springhill, for plaintiff-appellee.
HAWTHORNE, J.
The defendant in this case, Mrs. Sam M. Emerson, was charged in the City Court of Springhill, Webster Parish, Louisiana, with selling beer to minors under the age of 18 years, in violation of R.S. 26:285(1). She was convicted as charged, and sentenced to pay a fine of $350 and to serve 30 days in jail.
Bills of Exception Nos. 1 and 2 were taken to the overruling, respectively, of appellant's motion for a new trial and motion in arrest of judgment.
The motion for a new trial alleges only that the verdict is contrary to the law and the evidence. It is well settled that a motion for a new trial on that ground presents nothing for an appellate court to review. State v. Posey, 157 La. 55, 101 So. 869; State v. Harvey, 159 La. 674, 106 So. 28; State v. Hart, 183 La. 443, 164 So. 166; State v. Digilormo, 200 La. 895, 9 So. 2d 221.
The motion in arrest of judgment sets forth merely that the affidavit alleges no offense against the accused under the laws of the State of Louisiana. We agree with the trial judge that the affidavit is sufficient. It charges the offense in the language of the statute and also sets out all facts and circumstances surrounding the alleged offense. It fully informs the court of the offense charged for the proper regulation of evidence sought to be introduced, it fully informs the accused of the nature and cause of the accusation against her, and it is sufficient to support a plea of former jeopardy. State v. Scheuering, 226 La. 660, 76 So. 2d 921, and authorities there cited.
In brief and in argument in this court appellant does not contend that the averments of the affidavit are insufficient to charge an offense, but argues that the statute under which the offense is charged, R.S. 26:285(1),[1] is unconstitutional in that *227 it discriminates against licensees in favor of non-licensees.
The motion in arrest does not state any ground of unconstitutionality or point out in what respect the statute is unconstitutional, and, indeed, does not even allege that the statute is unconstitutional. Under these circumstances the question of constitutionality is not before us, and we are not required to pass upon it. State v. Rosborough, 152 La. 945, 94 So. 858; State v. Ellington, 153 La. 676, 96 So. 529; State v. Hudson, 162 La. 543, 110 So. 749; City of New Orleans v. Plotkin, 205 La. 490, 17 So. 2d 719; see State v. Herring, 211 La. 1083, 31 So. 2d 218.
We might add, however, that we do not think there is any merit in appellant's argument that the act is discriminatory, for the statute applies to all persons in the same circumstances and conditions, that is, to all holders of retail dealers' permits. See State v. Saia, 212 La. 868, 33 So. 2d 665, and authorities there cited. Moreover, we might also observe that under the law of Louisiana it is a crime for any person to sell beer who is not the holder of a permit or license. See R.S. 26:274.
Bill of Exception No. 3 discloses that the marshal of Ward II of Webster Parish secured the services of two minors under 18 to go to appellant's place of business and make an effort to buy beer; that both of these minors had the appearance of being over 18 because of their height and weight, which are specifically set forth; that both shaved regularly; that the accused asked one of these minors his age, and he replied that he was "old enough to sleep by himself"; that the accused sold one of these boys the beer, for which he paid with money furnished by the marshal; that after buying the beer the boys left appellant's premises and delivered the beer to the marshal.
Appellant contends that the conviction and sentence should be set aside because the facts and circumstances above alleged constitute entrapment.
Under the jurisprudence of this state the evidence obtained in the manner set out above was clearly admissible on the trial of appellant. It was said in State v. Rainey, 184 La. 547, 166 So. 670, 671:
"We have read the testimony of the state witnesses which is attached to and made a part of the judge's per curiam to the defendant's bill of exception, and we fail to find in it a suggestion that any inducement was offered the accused, by any one, to commit the crime for which he was prosecuted and convicted. A narcotic addict was used by the witnesses to make the purchase, and by this means evidence of the guilt of the accused was obtained. This may be the setting of a trap to catch the unwary, but, under the jurisprudence of Louisiana, evidence thus obtained is admissible on the trial of the case. In State v. Numa Dudoussat, 47 La.Ann. 977, 17 So. 685, this court held, quoting from the syllabus, the following:
"`It is legitimate and proper to adopt devices or traps to detect crime, provided the device is not a temptation and solicitation to commit it.'"
In State v. Abraham, 158 La. 1021, 105 So. 50, 51, the defendant was convicted of the crime of selling intoxicating liquor on evidence which he claimed was inadmissible because it was secured by entrapment. In the course of the opinion in that case this court stated:
"The transaction of purchasing the liquor in this case was the ordinary one of a person calling for a certain article and purchasing it. The officers, in sending two prisoners from jail into the place of business of defendant, and in furnishing them with money for the purchase of the liquor, were acting within legal bounds in securing evidence of guilt.
*228 "`The holdings are that it is not a defense to a prosecution for an illegal sale of intoxicating liquors to show that the purchase was made by a detective or a hired informer. There is a clear distinction between inducing a person to do an unlawful act for the purpose of prosecuting him, and catching him in the execution of a criminal design of his own conception.' Blakemore on Prohibition, 1925 Ed. p. 81; 18 A.L.R. 162 et seq.; Saucedo v. United States, 5 Cir., 268 F. 830; Rose v. United States, 6 Cir., 274 F. 245; State v. See, 177 Iowa 316, 158 N.W. 667."
In the instant case the facts disclosed by the bill of exception fail to show or even suggest that any inducement to commit the crime was offered to the accused by any person, and consequently we do not think there is any merit in this bill.
For the reasons assigned the conviction and sentence are affirmed.
NOTES
[1] This statute reads:
"No person holding a retail dealer's permit and no servant, agent, or employee of the permittee shall do any of the following acts upon the licensed premises:
"(1) Sell or serve beverages of low alcoholic content to any person under the age of eighteen years. * * *" | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2342216/ | 9 S.W.3d 929 (2000)
Rory EHRHART, Appellant,
v.
The STATE of Texas, Appellee.
No. 09-99-462CR.
Court of Appeals of Texas, Beaumont.
Submitted January 24, 2000.
Decided February 16, 2000.
Rehearing Overruled March 9, 2000.
*930 Roger Neil Moss, Lufkin, for Appellant.
Clyde M. Herrington, Dist. Atty., Albert J. Charanza, Jr., Asst. Dist. Atty., Lufkin, for State.
Before WALKER, C.J., BURGESS, and STOVER, JJ.
OPINION
BURGESS, Justice.
Rory Ehrhart pleaded guilty to third degree felony possession of a controlled substance. The trial court sentenced Ehrhart to three years' confinement in the Texas Department of Criminal Justice Institutional Division. Ehrhart appeals, claiming the trial court erred in denying his motion to suppress. See Tex. R. App. P. 25.2(b)(3)(B).
Ehrhart argues the initial stop of his car was unlawful. Officer Holley testified he stopped Ehrhart for failing to maintain a single marked lane. According to Officer Holley, Ehrhart's car touched the solid white line on the right-hand side and crossed the white line on the left-hand side. Officer Saucier testified he observed Ehrhart's vehicle touch the solid white line twice, but only on the right-hand side. It is Ehrhart's contention that failure to maintain a single marked lane is not a traffic offense unless it done in an unsafe manner. Because there is no evidence Ehrhart's driving endangered other cars, he contends, the State did not establish a traffic violation occurred justifying the stop.
The State argues the stop was justified under the "community caretaking" exception recognized by this court in Cunningham v. State, 966 S.W.2d 811 (Tex. App.-Beaumont 1998, no pet.)(holding that "when a police officer has a demonstrable reason to believe that a particular individual may need assistance, a temporary stop is justified for the limited purpose of determining if assistance is appropriate"). However, in the present case there is no evidence that Officer Holley believed, reasonably or otherwise, that Ehrhart needed assistance. Officer Holley testified he stopped the vehicle only for the traffic violation of failing to maintain a single lane of traffic. No other explanation was given for the stop except for the testimony of Officer Saucier that they "didn't recognize the vehicle" as "being a local vehicle," and "not from around here."
The State cites Davis v. State, 923 S.W.2d 781, 788 (Tex.App.-Beaumont 1996), for the proposition that failure to maintain a single lane gives rise to reasonable suspicion that the driver is intoxicated. We first note the State erroneously cites Davis as having no subsequent petition history but Davis was reversed by the Texas Court of Criminal Appeals. Davis v. State, 947 S.W.2d 240 (Tex.Crim.App. 1997). Davis is unlike the present case. The Court of Criminal Appeals did not consider the issue of the reasonableness of the stop as it was not contested by the parties. Id. at 245. Furthermore, the court noted the defendant was stopped for suspicion of driving while intoxicated. Id. Likewise, this court in its original opinion noted the officers testified the defendant's weaving within the lane caused them to believe he was driving while intoxicated or simply tired. Davis, 923 S.W.2d at 788. Here, there is no testimony by either officer that they suspected Ehrhart was intoxicated.
The State concedes in its brief that Ehrhart's failure to maintain a single lane is "not an inherently illegal act." Neither Officer Holley nor Officer Saucier testified that Ehrhart's "weaving" was unsafe or dangerous. As the record contains no evidence the movement was unsafe or dangerous, an actual traffic violation did not occur. See Hernandez v. State, 983 S.W.2d 867, 870 (Tex.App.-Austin 1998, pet. ref'd); see also Atkinson v. State, 848 S.W.2d 813, 815 (Tex.App.-Houston [14th *931 Dist.] 1993, pet. ref'd) (one element of failure to drive in a single marked lane is that the driver moves without first ascertaining it can be made with safety). Thus, there was no basis for the stop. See Garcia v. State, 827 S.W.2d 937, 944 (Tex. Crim.App.1992) (holding that "[a]s long as an actual violation occurs, law enforcement officials are free to enforce the laws and detain a person for that violation"). As the consent to the search is a fruit of the illegal stop, the evidence obtained in the search should have been suppressed. See Viveros v. State, 828 S.W.2d 2, 4 (Tex. Crim.App.1992). Accordingly, the trial court abused its discretion in denying Ehrhart's motion to suppress. Ehrhart's sole issue is sustained. The judgment of the trial court is reversed and the cause remanded for a new trial.
REVERSED AND REMANDED.
WALKER, Chief Justice, dissenting.
In little over a year, the Court of Criminal Appeals has twice bestowed enlightenment upon this Court in the form of complete abrogation or significant revision of decades of precedent. See Young v. State, 8 S.W.3d 656 (Tex.Crim.App.2000); and Leday v. State, 983 S.W.2d 713 (Tex.Crim. App.1998). It is therefore with extreme trepidation that I dredge up, as the bases of this dissent, law that has been part of Texas jurisprudence for a significant number of years.
The first axiom recognizes that the law requires a suppression ruling be sustained if it can be upheld on any valid theory regardless of whether the State argued it at trial or on appeal, Lewis v. State, 664 S.W.2d 345, 347 (Tex.Crim.App.1984), and regardless of the fact that the trial judge gave the wrong reason for his decision. See Villalobos v. State, 999 S.W.2d 132, 134 (Tex.App.-El Paso 1999, no pet.). The second axiom was ably set out in Hernandez v. State, 983 S.W.2d 867, 869 (Tex. App.-Austin 1998, pet. ref'd), as follows:
[A]t the suppression hearing the State had the burden of proving the reasonableness of the stop. See Russell v. State, 717 S.W.2d 7, 9-10 (Tex.Crim. App.1986); ...
A police officer can stop and briefly detain a person for investigative purposes if the officer has a reasonable suspicion supported by articulable facts that criminal activity may be afoot, even if the officer lacks evidence rising to the level of "probable cause." Terry v. Ohio, 392 U.S. 1, 29, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968); Woods v. State, 956 S.W.2d 33, 35 (Tex.Crim.App.1997).
[T]he reasonableness of a temporary detention must be examined in terms of the totality of the circumstances and will be justified when the detaining officer has specific articulable facts, which taken together with rational inferences from those facts, lead him to conclude that the person detained actually is, has been, or soon will be engaged in criminal activity.
Woods, 956 S.W.2d at 38. The court of criminal appeals has also stated the standard as follows: "In assessing whether the intrusion was reasonable, an objective standard is utilized: would the facts available to the officer at the moment of the seizure or search warrant a man of reasonable caution in the belief that the action taken was appropriate." Davis v. State, 947 S.W.2d 240, 243 (Tex. Crim.App.1997). Because the historical facts in the present case are not in dispute, we make a de novo determination of whether those facts give rise to a reasonable suspicion of criminal activity. See Loesch v. State, 958 S.W.2d 830, 832 (Tex.Crim.App.1997); Guzman v. State, 955 S.W.2d 85, 87 (Tex.Crim.App.1997).
In Hernandez, the State raised two possible theories for the detention of the defendant, "reasonable suspicion of driving while intoxicated," and "reasonable suspicion of traffic offense." Id. at 870. The majority in our case relies on the Austin Court's analysis with regard to reasonable suspicion of traffic offense. I take issue *932 with the fact that the majority ignores the possibility that Officer Holley stopped appellant for suspicion of D.W.I., taking into account the following exchange between Officer Holley and appellant's trial counsel:
Q. [Trial Counsel] Do you think perhaps that Mr. Ehrhart could have been wondering why you were stopping him?
A.[Officer Holley] I advised Mr. Ehrhart why he had been stopped and felt that the reason for stopping was to further investigate why he was failing to maintain a single marked lane.
Q. Well, he wasn't intoxicated, was he?
A. No.
Q. You didn't smell any alcohol on him?
A. No, sir.
Q. You didn't say anything about him being unsteady on his feet or had the odor of alcohol about him; right?
A. He had stated that he was tired.
Q. Well, did you observe him to be tired?
A. Hejust from training and experience, he looked like he may be somewhat tired from being on the road quite a bit or something.
From the fact that trial counsel was inquiring of Officer Holley as to whether or not appellant appeared to be intoxicated once Holley encountered appellant, trial counsel was virtually conceding that the stop was a reasonable one so that Holley could investigate whether or not the reason for appellant's failure to maintain a single marked lane stemmed from appellant possibly being intoxicated. The Hernandez Court found no reasonable suspicion of D.W.I. and rightly so because the quoted testimony did not even hint at intoxication being a factor in making the stop. In our case, regardless of the fact that a traffic offense may or may not have occurred, I believe that the testimony at least gives rise to a reasonable suspicion of the possibility that appellant could have been intoxicated, and that the subsequent temporary detention of appellant was justified. Because the majority focuses only on the reasonable suspicion of the existence of a traffic offense, and finds no evidence of an offense, I must dissent to their reversal and remand. I would affirm the conviction. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1426691/ | 18 S.W.3d 787 (2000)
Elbert Eugene DAGLEY, Jr., et al., Appellant,
v.
HAAG ENGINEERING CO., Appellee.
No. 14-98-01053-CV.
Court of Appeals of Texas, Houston (14th Dist.).
March 23, 2000.
*789 Bruce Feichtinger, Houston, for appellants.
James L. Sowder, Erin L. Williams, Jacquelyn Chandler, Dallas, for appellees.
Panel consists of Justices MAURICE E. AMIDEI, EDELMAN and WITTIG.
CORRECTED OPINION
MAURICE E. AMIDEI, Justice.
Appellants appeal the summary judgment granted in favor of Haag Engineering Co. in a suit arising out of the alleged wrongful denial of insurance claims under appellants' homeowner's policies for damage purportedly sustained in a hail storm. We affirm.
Background
Appellants are owners of 45 homes, which they claim sustained significant damage as the result of a hail storm. Appellants are also policyholders with State Farm Fire and Casualty Company and *790 State Farm Lloyds (collectively "State Farm"). State Farm either denied appellants' claims or offered appellants' less than what they believed was the actual damage to their homes.
State Farm hired Haag to perform certain engineering services on five homes with regard to the hail storm.[1] Prior to the storm, Haag also had provided State Farm with materials regarding the evaluation of hail storm damage. Those materials generally state that hail stones less than one inch in diameter will not cause damage to composition shingle roofs. Appellants contend that based on Haag's estimates that the hail stones were ½" to ¾" in diameter, State Farm's rejection of their claims was "preordained."
Appellants brought claims against Haag for negligence, conspiracy, tortious interference, and violations of the Texas Deceptive Trade Practices Act ("DTPA") and the Texas Insurance Code related to wrongful denial of their claims. The trial court granted summary on all of appellants' claims against Haag.[2]
Standard of Review
To prevail on a motion for summary judgment, the defendant must establish that no material fact issue exists and it is entitled to judgment as a matter of law. See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222 (Tex.1999). Once the defendant establishes that no genuine issue of material fact exists regarding an element of the plaintiff's claim, the plaintiff must present competent summary judgment evidence raising a fact issue on that element. See Guest v. Cochran, 993 S.W.2d 397, 401 (Tex.App.-Houston [14 th Dist.] 1999, no pet.). In conducting this review, we take as true all evidence favorable to the nonmovant, and we make all reasonable inferences in the nonmovant's favor. See KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999).
Negligence
Appellants contend the trial court erred in granting summary judgment on their negligence claim against Haag. To prevail on a cause of action for negligence, the plaintiff must satisfy three elements: (1) a legal duty owed by the defendant to the plaintiff; (2) breach of that duty; and (3) damages proximately caused by the breach. See Van Horn v. Chambers, 970 S.W.2d 542, 544 (Tex.1998). The threshold issue in a negligence case is whether the defendant owed a duty to the plaintiff. See Thapar v. Zezulka, 994 S.W.2d 635, 637 (Tex.1999). Whether the defendant owed a duty to the plaintiff is a question of law for the court to decide from the particular facts of the case. See Golden Spread Council, Inc. v. Akins, 926 S.W.2d 287, 289 (Tex.1996).
The duty of good faith and fair dealing emanates from the special relationship between an insurer and its insured. See Natividad v. Alexsis, Inc., 875 S.W.2d 695, 697-98 (Tex.1994). The special relationship exists because the insured and the insurer are parties to a contract that is the result of unequal bargaining power. See id. at 698. Without such a contract, there is no special relationship. See id. Absent privity of contract with the insured, an insurance carrier's agents or contractors owe no such duty to the insured. See id.
The Dallas Court of Appeals has extended the rationale of Natividad to negligence claims against parties not in privity of *791 contract with an insured. See Dear v. Scottsdale Ins. Co., 947 S.W.2d 908, 916-17 (Tex.App.-Dallas 1997, writ denied). In Dear, the insured sued the independent adjuster, which the insurance company had hired, for improperly or negligently investigating its claims. See id. at 916. The court found that the independent adjuster, having been hired by the insurer, had no relationship with the plaintiff and, therefore, did not owe the plaintiff a duty. See id. at 917.[3]
The San Antonio Court of Appeals considered similar facts in a case involving both State Farm and Haag. See Muniz v. State Farm Lloyds, 974 S.W.2d 229 (Tex. App.-San Antonio 1998, no pet.). In Muniz, the dispute centered on whether damage to the plaintiff's home was covered under the homeowner's policy. See id. at 231. The original dispute centered on what caused the soil beneath the plaintiff's house to shift. See id. The plaintiffs contended that water leaking from the house's plumbing caused the clay beneath the foundation to swell, which would be covered by the policy. See id. State Farm claimed the shift was cause by the "inherent vice" of the neighborhood's soil, which would not be covered by the policy. See id. In support of its position, State Farm cited a report by Haag noting that its investigation showed the plumbing did not cause the shifting. See id.
The Muniz court noted the lack of privity between Haag and the plaintiffs, i.e., that Haag had never worked for the plaintiffs, but was acting as an agent of State Farm in investigating the plaintiffs' claim. See id. at 235. Relying on reasoning in Dear, the court found the trial court properly granted summary judgment on the plaintiffs' negligence claim because Haag owed no duty to the plaintiffs. See id. at 236-37.[4]
Here, there is no dispute that State Farm, not appellants, hired Haag to investigate appellants' storm damage claims. Finding Dear and Muniz persuasive, we conclude that Haag did not owe a duty to appellants in its investigation of their claims or providing evaluation materials to State Farm. Therefore, trial court did not err in granting summary judgment on appellants' negligence claim.
DTPA
Next, appellants assert the trial court erred in granting summary judgment on their claims that Haag violated the DTPA.[5] The DTPA prohibits "[f]alse, misleading, or deceptive acts or practices in the conduct of any trade or commerce..." TEX. BUS. & COM. CODE ANN. § 17.46(a) (Vernon Supp.2000). To recover under the DTPA, the plaintiff must establish: (1) he was a consumer of the defendant's goods or services; (2) the defendant committed false, misleading, or deceptive acts in connection with the lease or sale of goods or services; and (3) such acts were a producing cause of actual damages to the plaintiff. *792 See Brown v. Bank of Galveston, N.A., 963 S.W.2d 511, 513 (Tex.1998).
The Texas Supreme Court has found the defendant's deceptive trade act or practice is not actionable under the DTPA unless it was committed in connection with the plaintiff's transaction in goods and services. See Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 650 (Tex.1996). The "in-connection-with" requirement imposes a limitation of liability consistent with the underlying purposes of the DTPA, i.e., to protect consumers in consumer transactions. See id. at 649-50.
The Amstadt case involved DTPA claims by homeowners against manufacturers of, and suppliers of raw material used in the manufacture of, polybutylene plumbing systems. See id. at 650. At issue was whether the Legislature intended that upstream suppliers of raw material and component parts be liable under the DTPA when none of their misrepresentations reached consumers. See id. at 647. The court found the upstream manufacturers and suppliers never directly marketed or promoted their product to the homeowners; therefore, any misrepresentations made with regard to their product were not made with the relevant consumer transactions, i.e., the purchase of the homes. See id. at 650-652. Although one defendant marketed the plumbing system to homebuilders, this fell short of the nexus required for DTPA liability. See id. at 651-52. The court's analysis applies with equal force to allegations based on misrepresentations and unconscionable acts. See id. at 652.
Although Amstadt concerns defendants who were suppliers and manufacturers, we find its underlying analysis pertinent to the facts of this case. As in Amstadt, none of Haag's alleged misrepresentations were directly communicated to appellants. State Farm hired Haag to investigate certain hail storm damage claims. Haag submitted its evaluation materials, findings, and opinions to State Farm, not to appellants.
Moreover, in the absence of a special relationship, Haag cannot be liable under the DTPA for its alleged improper investigation of appellants' claims. See Dear, 947 S.W.2d at 917 (stating the adjuster could not be liable to the plaintiff "for improper investigation and settlement advice, regardless of whether Dear phrased his allegations as negligence, bad faith, breach of contract, tortious interference, or DTPA claims"). Therefore, we find the trial court did not err in granting summary judgment on appellants' DTPA claims.
Insurance Code
Appellants contend the trial court erred in granting summary judgment on their claim that Haag violated Article 21.21 of the Texas Insurance Code. The purpose of article 21.21 "is to regulate trade practices in the business of insurance by defining, or providing for the determination of, all such practices in this state which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined." Tex. Ins.Code Ann. art. 21.21, § 1(a) (Vernon Supp.2000). An action under article 21.21 may be maintained against "the person or persons engaging in such acts or practices." Id. at § 16(a). "Person" is defined as: "any individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyds insurer, fraternal benefit society, and any other legal entity engaged in the business of insurance, including agents, brokers, adjusters and life insurance counselors." Id. at § 2(a) (emphasis added).
Appellants argue that Haag is an entity "engaged in the business of insurance" because it was involved in the investigation of its claims and because it provided State Farm material on hail storm damage evaluation. In support of this argument, appellants cite to former Article 1.14-1, § 2(a)(6) of the Insurance Code, which provides, among other things, that "[d]irectly or indirectly acting as an agent *793 for or otherwise representing or aiding on behalf of another any person or insurer in the ... investigation ... of claims ..." is an act of the business of insurance in Texas. Act of May 28, 1987, 70th Leg., R.S., ch. 254, § 1, 1987 Tex. Gen. Laws 1573, repealed by Act of May 17, 1999, 76 th Leg., R.S., ch. 101, § 5, 1999 Tex. Gen. Laws 528 (current version at Tex. Ins.Code Ann. § 101.051(b)(6)(G) (Vernon Supp.2000)) (emphasis added).
The Texas Supreme Court, however, holds that former article 1.14-1 does not govern the scope of the term "business of insurance" as used in article 21.21. See Great Am. Ins. Co. v. North Austin Mun. Util. Dist. No. 1, 908 S.W.2d 415, 424 (Tex.1995).[6] Therefore, the term "business of insurance" has never been defined under article 21.21. See id. at 420.
State Farm hired Haag to determine the extent of damage, if any, from the storm. Haag did not: (1) participate in the sale or servicing of the policies, (2) make any representations regarding the coverage of the policies, or (3) adjust any claims. As an independent firm hired to provide engineering services, it cannot be said that Haag is engaged in the business of insurance. The trial court did not err in granting summary judgment on appellants' Insurance Code claims.
No Evidence Summary Judgment Standard of Review
Haag moved for summary judgment on appellants' tortious interference and conspiracy claims under Texas Rule of Civil Procedure 166a(i). On review of a "no evidence" summary judgment, the appellate court reviews the evidence in the light most favorable to the nonmovants and disregards all evidence and inferences to the contrary. See Blan v. Ali, 7 S.W.3d 741, 747 (Tex.App.-Houston [14 th Dist.] 1999, no pet.). We sustain a no evidence summary judgment if: (1) there is a complete absence of proof in a vital fact; (2) the court is barred by rules of law or evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence conclusively establishes the opposite of a vital fact. See id. Less than a scintilla of evidence exists when the evidence is so weak as to do no more than create a mere surmise of suspicion of a fact. See Isbell v. Ryan, 983 S.W.2d 335, 338 (Tex.App.-Houston [14 th Dist.] 1998, no pet). More than a scintilla of evidence exists when the evidence rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. See id.
Tortious Interference
Appellants contend the trial court erred in denying their claim for tortious interference against Haag. The elements of tortious interference are: (1) the existence of a contract subject to interference; (2) the occurrence of an act of interference that was willful and intentional; (3) the act was a proximate cause of the plaintiff's damage; and (4) actual damage or loss occurred. See Powell Indus., Inc. v. Allen, 985 S.W.2d 455, 456 (Tex.1998).
Appellants contend that Haag interfered with their contracts with State Farm by preparing false reports minimizing or denying hail storm damage and preparing materials regarding hail storm damage evaluations in an attempt to justify. *794 State Farm's refusal to pay the full policy benefits due to appellants. Appellants cite the following evidence from which they claim a reasonable inference can be drawn that Haag was aware that State Farm relied on its damage evaluations and materials in denying or minimizing claims: (1) Haag does not dispute that State Farm improperly minimized or denied appellants' damage claims; (2) Haag and State Farm have a longstanding, financially significant relationship;[7] (3) Haag knew its actions would affect State Farm's insureds; (4) Haag failed to consider certain factors in its inspection of appellants' homes; and (5) Haag provided materials that allowed State Farm to conclude, without inspection, that appellants' roofs had not sustained hail storm damage.
Because a defendant accused of tortious interference rarely admits his guilt, a plaintiff must prove his cause of action with circumstantial evidence. See Meza v. Service Merchandise Co., 951 S.W.2d 149, 152 (Tex.App.-Corpus Christi 1997, pet. denied). Circumstantial evidence may raise a fact issue if, from the evidence, a reasonable person would conclude that the existence of the fact is more reasonable than its nonexistence. See id. The circumstances need only point to ultimate facts sought to be established with such a degree of certainty as to make the conclusion reasonably probable. See id.
The circumstantial evidence produced by appellants is insufficient to raise a fact issue, i.e., that a reasonable person would conclude that Haag's willful and intentional interference with appellants' homeowner's policies with State Farm is more reasonable than Haag's not interfering with their policies. Whether Haag's failure to deny appellants' allegations that State Farm improperly denied their claims is irrelevant; it is not necessary for Haag make this denial in defense of appellants' claim against it. Likewise, Haag knowing that its opinions and material regarding hail storm damage could affect claimants does not raise a fact issue. Because Haag was hired to perform engineering services in the evaluation of damage claims and to submit its findings to State Farm, it could reasonably assume that State Farm would rely on those findings. Finally, evidence demonstrating an extended business relationship between two entities is not sufficient to create a fact issue on the element of intent.
Moreover, absent a special relationship, Haag cannot be held liable for tortious interference. See Dear, 947 S.W.2d at 917 (stating the adjuster could not be liable to the plaintiff "for improper investigation and settlement advice, regardless of whether Dear phrased his allegations as negligence, bad faith, breach of contract, tortious interference, or DTPA claims"). Appellants have failed to raise a fact issue with respect to the willful and intentional interference element of their claim for tortious interference.
Appellants also complain of the affidavits of a State Farm claims adjuster and a Haag engineer submitted in support of Haag's motion for summary judgment because they are from interested witnesses and cannot be readily controverted because they go to the element of intent. Haag, however, moved for summary judgment on appellants' tortious interference claim under the no evidence summary judgment rule. Rule 166a(i) does not require us to review the affidavits submitted in support of Haag's no evidence motion for summary judgment.[8] Accordingly, we *795 find the trial court did not err in granting summary judgment on appellants' claim for tortious interference.
Civil Conspiracy
Appellants claim the trial judge erred in granting summary judgment on its conspiracy claims against Haag. Civil conspiracy is a combination by two or more persons to accomplish an unlawful purpose by unlawful means. See Operation Rescue-Nat'l v. Planned Parenthood of Houston & S.E. Tex., Inc., 975 S.W.2d 546, 553 (Tex.1998). The elements of conspiracy are: (1) two or more persons, (2) an object to be accomplished, (3) a meeting of minds on the object or course of action, (4) one or more unlawful, overt acts, and (5) damages. See id.
In their first amended petition, appellants allege that State Farm and Haag conspired in the investigation of their claims in an effort "to deny Plaintiffs' the Policy benefits rightfully due Plaintiffs." "The mere agreement to resist a claim, however, is not an actionable civil conspiracy." Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex.1983). For liability to attach, there must be an unlawful, overt act in furtherance of the conspiracy. See id. We cannot conclude that submitting a report to State Farm with a conclusion that there was no hail storm damage to appellants' homes is an unlawful, overt act to support a conspiracy. Moreover, having found that Haag is not liable to appellants on their other claims, Haag cannot be liable for conspiracy. Therefore, trial court did not err in granting summary judgment on appellants' conspiracy claim.
Time for Discovery
In their response to Haag's no evidence motion for summary judgment, appellants objected that the motion was "premature" because adequate discovery had not been conducted and attached an affidavit from trial counsel.[9] Having considered the substantive law, however, we do not find that the trial court abused its discretion. With respect to their claim for tortious interference, appellants rely on inferences, which if carried to their full conclusion, are insufficient to establish a fact issue as to whether Haag willfully and intentionally interfered with appellants' homeowner's policies with State Farm. Appellants' conspiracy claim rests on the allegation that Haag and State Farm conspired to deny their insurance claims, which is not sufficient to establish an unlawful, overt act in furtherance of a conspiracy. See Massey, 652 S.W.2d at 934.
Conclusion
In sum, we find the trial court did not err in entering summary judgment in favor of Haag on all of appellants' claims. Accordingly, the judgment of the trial court is affirmed.
NOTES
[1] Specifically, State Farm asked Haag: (1) to inspect two homes and provide State Farm with an engineering evaluation on those homes; (2) to evaluate one home as an appraiser; and (3) to participate in arbitration proceedings concerning two other homes.
[2] The trial court initially granted summary judgment on appellants' DTPA and Insurance Code claims. After Haag filed a supplemental motion for summary judgment, the trial court granted summary judgment on the negligence, tortious interference, and conspiracy claims, and entered an order severing appellant's claims against Haag from their remaining claims against State Farm.
[3] Finding that the defendant was an independent adjuster, retained and paid by the insurer, which had never entered into a contract with the insured, and had performed its work solely in its role as an independent adjusting firm, the court determined it was an agent or independent contractor of the insurance company. See Dear, 947 S.W.2d at 917.
[4] The Muniz court also noted other precedent "unfriendly" to the plaintiff's claims. See id. at 235-36 (citing Bui v. St. Paul Mercury Ins. Co., 981 F.2d 209, 210 (5 th Cir.1993) (holding dismissal of claim of negligent investigation against an independent adjuster was proper under Texas law because the adjuster was not a party to the insurance contract and did not owe a duty to the insured); Hartman v. Urban, 946 S.W.2d 546, 550 (Tex.App.-Corpus Christi 1997, no writ) (holding that an engineering company hired by a developer is not ultimately liable to the party who bought the platted piece for negligence for an inaccurate plat on the basis of lack of privity)).
[5] Appellants' DTPA claims are based on Haag's allegedly engaging in an unconscionable action or course of action, representing that its services were of a particular standard when they were of another, representing that its services have characteristics and/or benefits which they do not have, and representing that an agreement confers or involves rights, remedies, or obligations which it did not have.
[6] The court noted that the purpose of former article 1.14-1, which is titled "Unauthorized Insurance," is "`to subject certain persons and insurers to the jurisdiction of the State Board of Insurance, of proceedings before the Board, and of the courts of this state in suits by or on behalf of the state and insureds or beneficiaries under insurance contracts.'" Great Am. Ins. Co., 908 S.W.2d at 422-23 (quoting former art. 1.14-1). "[T]he Legislature provides for substituted service of process on unauthorized insurers, and `in doing so exercises its power to protect residents of this state and to define what constitutes doing an insurance business in this state.'" Id. at 423 (quoting former art. 1.14-1). Nowhere in the "purpose" clause of former art. 1.14-1 did the Legislature suggest that the list of acts which constitute "doing an insurance business" is applicable throughout the Insurance Code. See id.
[7] Appellants allege that from 1989 through 1996, Haag received $11,000,000 from State Farm.
[8] Even if we were to consider these affidavits, we find they could properly serve as a basis for Haag's summary judgment. We recognize that issues of intent and knowledge are not susceptible of being readily controverted and are generally inappropriate for summary judgment. See Frias v. Atlantic Richfield Co., 999 S.W.2d 97, 106 (Tex.App.-Houston [14 th Dist.] 1999, pet. filed); RRR Farms, Ltd. v. American Horse Protection Ass'n, 957 S.W.2d 121, 132 (Tex.App.-Houston [14 th Dist.] 1997, pet. denied) (finding that affidavit, which stated that defendant "never acted with the intent to prohibit the plaintiffs from entering into any contract or business relationship" did not meet standard for readily controverted). While these affidavits are from interested witnesses, they, nonetheless, are susceptible of being readily controverted. Each affidavit is based on objective facts and in no way makes any assertions of Haag's or State Farm's intent with respect to the outcome of the evaluation of the hail storm damage or the investigation of appellants' claims.
[9] By granting Haag's motion for summary judgment, the trial court implicitly overruled appellant's objection. See Tex. R. App. P. 33.1(a)(2)(A). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1434394/ | 590 F.3d 767 (2009)
Carl BRYAN, Plaintiff-Appellee,
v.
Brian McPHERSON; Coronado Police Department; City of Coronado, a municipal corporation, Defendants-Appellants.
No. 08-55622.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted October 9, 2009.
Filed December 28, 2009.
*770 Steven E. Boehmer, David Stotland, Carrie L. Mitchell of McDougal, Love, Eckis, Smith, Boehmer & Foley, El Cajon, CA, for the appellant.
Eugene G. Iredale, Julia Yoo of Law Offices of Eugene G. Iredale, San Diego, CA, for the appellee.
Before: HARRY PREGERSON, STEPHEN REINHARDT and KIM McLANE WARDLAW, Circuit Judges.
WARDLAW, Circuit Judge:
Early one morning in the summer of 2005, Officer Brian McPherson deployed his taser against Carl Bryan during a traffic stop for a seatbelt infraction. Bryan filed this action under 42 U.S.C. § 1983, asserting excessive force in violation of the Fourth Amendment. Officer McPherson appeals the denial of his motion for summary judgment based on qualified immunity. We affirm the district court because, viewing the circumstances in the light most favorable to Bryan, Officer McPherson's use of the taser was unconstitutionally excessive and a violation of Bryan's clearly established rights.
I. FACTUAL AND PROCEDURAL BACKGROUND
Carl Bryan's California Sunday was off to a bad start. The twenty-one year old, having stayed the night with his younger brother and some cousins in Camarillo, which is in Ventura County, planned to drive his brother back to his parents' home in Coronado, which is in San Diego County. However, Bryan's cousin's girlfriend had accidentally taken Bryan's keys to Los Angeles the previous day. Wearing the t-shirt and boxer shorts in which he had slept, Bryan rose early, traveled east with his cousins to Los Angeles, picked up his keys and returned to Camarillo to get his car and brother. He then began driving south towards his parents' home. While traveling on the 405 highway, Bryan and *771 his brother were stopped by a California Highway Patrolman who issued Bryan a speeding ticket. This upset him greatly. He began crying and moping, ultimately removing his t-shirt to wipe his face. Continuing south without further incident, the two finally crossed the Coronado Bridge at about seven-thirty in the morning.
At that point, an already bad morning for Bryan took a turn for the worse. Bryan was stopped at an intersection when Officer McPherson, who was stationed there to enforce seatbelt regulations, stepped in front of his car and signaled to Bryan that he was not to proceed. Bryan immediately realized that he had mistakenly failed to buckle his seatbelt after his earlier encounter with the police. Officer McPherson approached the passenger window and asked Bryan whether he knew why he had been stopped. Bryan, knowing full well why and becoming increasingly angry at himself, simply stared straight ahead. Officer McPherson requested that Bryan turn down his radio and pull over to the curb. Bryan complied with both requests, but as he pulled his car to the curb, angry with himself over the prospects of another citation, he hit his steering wheel and yelled expletives to himself. Having pulled his car over and placed it in park, Bryan stepped out of his car.
There is no dispute that Bryan was agitated, standing outside his car, yelling gibberish and hitting his thighs, clad only in his boxer shorts and tennis shoes. It is also undisputed that Bryan did not verbally threaten Officer McPherson and, according to Officer McPherson, was standing twenty to twenty-five feet away and not attempting to flee. Officer McPherson testified that he told Bryan to remain in the car, while Bryan testified that he did not hear Officer McPherson tell him to do so. The one material dispute concerns whether Bryan made any movement toward the officer. Officer McPherson testified that Bryan took "one step" toward him, but Bryan says he did not take any step, and the physical evidence indicates that Bryan was actually facing away from Officer McPherson. Without giving any warning, Officer McPherson shot Bryan with his taser gun. One of the taser probes embedded in the side of Bryan's upper left arm. The electrical current immobilized him whereupon he fell face first into the ground, fracturing four teeth and suffering facial contusions. Bryan's morning ended with his arrest[1] and yet another drivethis time by ambulance and to a hospital for treatment.
Bryan sued Officer McPherson and the Coronado Police Department, its police chief, and the City of Coronado for excessive force in violation of 42 U.S.C. § 1983, assault and battery, intentional infliction of emotional distress, a violation of California Civil Code § 52.1, as well as failure to train and related causes of action. On summary judgment, the district court granted relief to the City of Coronado and Coronado Police Department, but determined that Officer McPherson was not entitled to qualified immunity at this stage of the proceedings. The court concluded that a reasonable jury could find that Bryan "presented no immediate danger to[Officer McPherson] and no use of force was necessary." In particular, it found that a reasonable jury could find that Bryan was located between fifteen to twenty-five feet from Officer McPherson and was not facing him or advancing toward him. The court also found that a reasonable officer would have known that the use of the taser *772 would cause pain and, as Bryan was standing on asphalt, that a resulting fall could cause injury. Under the circumstances, the district court concluded it would have been clear to a reasonable officer that shooting Bryan with the taser was unlawful.
II. STANDARD OF REVIEW
The district court's denial of qualified immunity is reviewed de novo. Blanford v. Sacramento County, 406 F.3d 1110, 1114 (9th Cir.2005). Where disputed issues of material fact exist, we assume the version of the material facts asserted by the non-moving party. See KRL v. Estate of Moore, 512 F.3d 1184, 1188-89 (9th Cir.2008). All reasonable inferences must be drawn in favor of the non-moving party. John v. City of El Monte, 515 F.3d 936, 941 (9th Cir.2008).
III. DISCUSSION
In evaluating the denial of a police officer's assertion of qualified immunity, we ask two distinct questions. First, we must determine whether, taking the facts in the light most favorable to the non-moving party, the officer's conduct violated a constitutional right; and second, if a violation occurred, whether the right was "clearly established in light of the specific context of the case." al-Kidd v. Ashcroft, 580 F.3d 949, 964 (9th Cir.2009) (citing Saucier v. Katz, 533 U.S. 194, 201, 121 S. Ct. 2151, 150 L. Ed. 2d 272 (2001)). We may "exercise [our] sound discretion in deciding which of the two prongs of the qualified immunity analysis should be addressed first." Pearson v. Callahan, ___ U.S. ___, 129 S. Ct. 808, 818, 172 L. Ed. 2d 565 (2009). Where we affirm the district court's denial of summary judgment, however, we must address both questions.
A. Did Officer McPherson Employ Constitutionally Excessive Force?
Allegations of excessive force are examined under the Fourth Amendment's prohibition on unreasonable seizures. Graham v. Connor, 490 U.S. 386, 394, 109 S. Ct. 1865, 104 L. Ed. 2d 443 (1989); Deorle v. Rutherford, 272 F.3d 1272, 1279 (9th Cir.2001). We ask "whether the officers' actions are `objectively reasonable' in light of the facts and circumstances confronting them." Graham, 490 U.S. at 397, 109 S. Ct. 1865. We must balance "`the nature and quality of the intrusion on the individual's Fourth Amendment interests' against the countervailing governmental interests at stake." Id. at 396, 109 S. Ct. 1865 (quoting Tennessee v. Garner, 471 U.S. 1, 8, 105 S. Ct. 1694, 85 L. Ed. 2d 1 (1985)); see also Scott v. Harris, 550 U.S. 372, 383, 127 S. Ct. 1769, 167 L. Ed. 2d 686 (2007). Stated another way, we must "balance the amount of force applied against the need for that force." Meredith v. Erath, 342 F.3d 1057, 1061 (9th Cir.2003).
1. Nature and Quality of the Intrusion
We begin by analyzing the quantum of forcethe type and amount of forcethat Officer McPherson used against Bryan.[2]See Deorle, 272 F.3d at 1279; Chew v. Gates, 27 F.3d 1432, 1440 (9th Cir.1994). Officer McPherson shot Bryan with a Taser X26 provided by the Coronado Police Department. The X26 uses compressed nitrogen to propel a pair of "probes" aluminum darts tipped with stainless steel barbs connected to the X26 by insulated wirestoward the target at a rate of over 160 feet per second. Upon striking a person,[3]*773 the X26 delivers a 1200 volt, low ampere electrical charge through the wires and probes and into his muscles.[4] The impact is as powerful as it is swift. The electrical impulse instantly overrides the victim's central nervous system, paralyzing the muscles throughout the body, rendering the target limp and helpless. See Draper v. Reynolds, 369 F.3d 1270, 1273 n. 3 (11th Cir.2004); Hickey v. Reeder, 12 F.3d 754, 757 (8th Cir.1993). The tasered person also experiences an excruciating pain that radiates throughout the body. See Lewis v. Downey, 581 F.3d 467, 475 (7th Cir.2009) ("[O]ne need not have personally endured a taser jolt to know the pain that must accompany it ...."); Hickey, 12 F.3d at 757.
Bryan vividly testified to experiencing both paralysis and intense pain throughout his body when he was tasered. In addition, Officer McPherson's use of the X26 physically injured Bryan. As a result of the taser, Bryan lost muscular control and fell, uncontrolled, face first into the pavement. This fall shattered four of his front teeth and caused facial abrasions and swelling. Additionally, a barbed probe lodged in his flesh, requiring hospitalization so that a doctor could remove the probe with a scalpel. A reasonable police officer with Officer McPherson's training on the X26 would have foreseen these physical injuries when confronting a shirtless individual standing on asphalt. We have held that force can be unreasonable even without physical blows or injuries. See, e.g., Headwaters Forest Def. v. County of Humboldt, 240 F.3d 1185, 1199 (9th Cir.2000), vacated and remanded on other grounds 534 U.S. 801, 122 S. Ct. 24, 151 L. Ed. 2d 1 (2001);[5]Tekle v. United States, 511 F.3d 839, 845 (9th Cir.2007). The presence of non-minor physical injuries like those suffered by Bryan, however, is certainly relevant in evaluating the degree of the Fourth Amendment intrusion.
We, along with our sister circuits, have held that tasers and stun guns fall into the category of non-lethal force.[6]See, e.g., Lewis, 581 F.3d at 476; United States v. Fore, 507 F.3d 412, 413 (6th Cir.2007); San Jose Charter of Hells Angels Motorcycle Club v. City of San Jose, 402 F.3d 962, 969 n. 8 (9th Cir.2005).[7] Non-lethal, however, is not synonymous with non-excessive; all forcelethal and *774 non-lethalmust be justified by the need for the specific level of force employed. Graham, 490 U.S. at 395, 109 S. Ct. 1865; see also Deorle, 272 F.3d at 1285 ("Less than deadly force, like deadly force, may not be used without sufficient reason; rather, it is subject to the Graham balancing test."). Nor is "non-lethal" a monolithic category of force. A blast of pepper spray and blows from a baton are not necessarily constitutionally equivalent levels of force simply because both are classified as non-lethal. Rather than relying on broad characterizations, we must evaluate the nature of the specific force employed in a specific factual situation. See Chew, 27 F.3d at 1441 (stating that the Graham factors "are not to be considered in a vacuum but only in relation to the amount of force used to effect a particular seizure.").
The physiological effects, the high levels of pain, and foreseeable risk of physical injury lead us to conclude that the X26 and similar devices are a greater intrusion than other non-lethal methods of force we have confronted. In Headwaters, we held that a jury could conclude that pepper spray was more than a "minimal intrusion" as it caused "intense pain ..., an involuntary closing of the eyes, a gagging reflex, and temporary paralysis of the larynx." 240 F.3d at 1200. We rejected the district court's characterization of pepper spray's intrusiveness as "merely the infliction of transient pain without significant risk of physical injury." Id. at 1199. We similarly reject any contention that, because the taser results only in the "temporary" infliction of pain, it constitutes a nonintrusive level of force. The pain is intense, is felt throughout the body, and is administered by effectively commandeering the victim's muscles and nerves. Beyond the experience of pain, tasers result in "immobilization, disorientation, loss of balance, and weakness," even after the electrical current has ended. Matta-Ballesteros v. Henman, 896 F.2d 255, 256 n. 2 (7th Cir. 1990); see also Beaver v. City of Federal Way, 507 F. Supp. 2d 1137, 1144 (W.D.Wash.2007) ("[A]fter being tased, a suspect may be dazed, disoriented, and experience vertigo."). Moreover, tasering a person may result in serious injuries when intense pain and loss of muscle control cause a sudden and uncontrolled fall.
The X26 thus intrudes upon the victim's physiological functions and physical integrity in a way that other non-lethal uses of force do not. While pepper spray causes an intense pain and acts upon the target's physiology, the effects of the X26 are not limited to the target's eyes or respiratory system. Unlike the police "nonchakus" we evaluated in Forrester v. City of San Diego, 25 F.3d 804 (9th Cir.1994), the pain delivered by the X26 is far more intense and is not localized, external, gradual, or within the victim's control. Id at 807, 805 n. 5. In light of these facts, we agree with the Fourth and Eighth Circuit's characterization of a taser shot as a "painful and frightening blow." Orem v. Rephann, 523 F.3d 442, 448 (4th Cir.2008) (quoting Hickey, 12 F.3d at 757). We therefore conclude that tasers like the X26 constitute an "intermediate or medium, though not insignificant, quantum of force," Sanders v. City of Fresno, 551 F. Supp. 2d 1149, 1168 (E.D.Cal.2008); Beaver, 507 F.Supp.2d at 1144 ("[T]he Court first finds that the use of a Taser constituted significant force.").
We recognize the important role controlled electric devices like the Taser X26 can play in law enforcement. The ability to defuse a dangerous situation from a distance can obviate the need for more severe, or even deadly, force and thus can help protect police officers, bystanders, and suspects alike. We hold only that the X26 and similar devices constitute *775 an intermediate, significant level of force that must be justified by "`a strong government interest [that] compels the employment of such force.'" Drummond ex rel. Drummond v. City of Anaheim, 343 F.3d 1052, 1057 (9th Cir.2003) (quoting Deorle, 272 F.3d at 1280 (9th Cir.2001)).
2. Governmental Interest in the Use of Force
Under Graham v. Connor, we evaluate the government's interest in the use of force by examining three core factors, "the severity of the crime at issue, whether the suspect poses an immediate threat to the safety of the officers or others, and whether he is actively resisting arrest or attempting to evade arrest by flight." 490 U.S. at 396, 109 S. Ct. 1865; see also Deorle, 272 F.3d at 1280. These factors, however, are not exclusive. Rather, we examine the totality of the circumstances and consider "whatever specific factors may be appropriate in a particular case, whether or not listed in Graham." Franklin v. Foxworth, 31 F.3d 873, 876 (9th Cir.1994). This analysis allows us to "determine objectively `the amount of force that is necessary in a particular situation.' " Deorle, 272 F.3d at 1280 (quoting Graham, 490 U.S. at 396-97, 109 S. Ct. 1865). Viewing the facts in the light most favorable to Bryan, the totality of the circumstances here did not justify the deployment of the Taser X26.
The "most important" factor under Graham is whether the suspect posed an "immediate threat to the safety of the officers or others." Smith v. City of Hemet, 394 F.3d 689, 702 (9th Cir.2005) (en banc) (quoting Chew, 27 F.3d at 1441). "A simple statement by an officer that he fears for his safety or the safety of others is not enough; there must be objective factors to justify such a concern." Deorle, 272 F.3d at 1281. The district court correctly concluded that Bryan's volatile, erratic conduct could lead an officer to be wary. While Bryan's behavior created something of an unusual situation, this does not, by itself, justify the use of significant force. "A desire to resolve quickly a potentially dangerous situation is not the type of governmental interest that, standing alone, justifies the use of force that may cause serious injury." Id. Rather, the objective facts must indicate that the suspect poses an immediate threat to the officer or a member of the public.
We agree with the district court that Bryan did not pose an immediate threat to Officer McPherson or bystanders despite his unusual behavior. It is undisputed that Bryan was unarmed, and, as Bryan was only dressed in tennis shoes and boxer shorts, it should have been apparent that he was unarmed. Cf. id. at 1281 ("Deorle was wearing no shirt or shoes, only a pair of cut-off jeans shorts. There was nowhere for him to secrete any weapons."). Although Bryan had shouted expletives to himself while pulling his car over and had taken to shouting gibberish, and more expletives, outside his car, at no point did he level a physical or verbal threat against Officer McPherson. See Smith, 394 F.3d at 702-03 (recognizing that although the victim was shouting expletives, there was no threat leveled against the officer). Bryan was standing, without advancing, fifteen to twenty-five feet away from Officer McPherson between the door and body of the car. We reject Officer McPherson's contention that Bryan constituted a threat by taking a step in Officer McPherson's direction. First, when explicitly asked if he "[took] a step out of the car" or a "step out away from the car," Bryan testified "no." There is, therefore, a genuine issue of fact on this point, one that, on this procedural posture, we must resolve in Bryan's favor and conclude that Bryan did *776 not advance towards the officer.[8] Second, even if Bryan had taken a single step toward Officer McPherson, this would not have rendered him an immediate threat justifying an intermediate level of force, as he still would have been roughly nineteen to twenty-four feet away from Officer McPherson, by the officer's own estimate.
Not only was Bryan standing, unarmed, at a distance of fifteen to twenty-five feet, but the physical evidence demonstrates that Bryan was not even facing Officer McPherson when he was shot: One of the taser probes lodged in the side of Bryan's arm, rather than in his chest, and the location of the blood on the pavement indicates that he fell away from the officer, rather than towards him.[9] An unarmed, stationary individual, facing away from an officer at a distance of fifteen to twenty-five feet is far from an "immediate threat" to that officer. Nor was Bryan's erratic, but nonviolent, behavior a potential threat to anyone else, as there is no indication that there were pedestrians nearby or traffic on the street at the time of the incident.[10] Finally, while confronting Bryan, Officer McPherson had unholstered and charged his X26, placing him in a position to respond immediately to any change in the circumstances. The circumstances here show that Officer McPherson was confronted by, at most, a disturbed and upset young man, not an immediately threatening one.
Officer McPherson relies heavily on the Eleventh Circuit opinion in Draper v. Reynolds, 369 F.3d 1270 (11th Cir.2004), which addressed the use of a taser during the arrest of an aggressive, argumentative individual. Although we do not adopt Draper as the law of this circuit, the present case is clearly distinguishable from the one before the Eleventh Circuit. Unlike Bryan, who was yelling gibberish and gave no sign of hearing or understanding Officer McPherson's orders, it was undisputed in Draper that Draper heard and understood the officer's commands, and not only failed to comply, but engaged the officer in an increasingly heated argument. Id. at 1273. Four times the officer asked Draper to retrieve paperwork from the cab of his truck and four times Draper heard the officer, turned toward the truck to comply, but then turned around, walked back toward the officer and loudly accused the officer of "harassing" and "disrespecting" him, displaying a growing belligerence. Id. It was not until the fifth time that the officer requested the paperwork and Draper refused to comply, yelled at the officer, and paced toward him in agitation that the officer resorted to the taser. Id. The *777 Eleventh Circuit determined that a verbal arrest command (when Draper had refused to comply with the first five commands) accompanied by an attempt to physically handcuff Draper "in these particular circumstances, may well have or would likely have escalated a tense and difficult situation into a serious physical struggle, in which either Draper or [the officer] would be seriously hurt." Id. at 1278.
Bryan never addressed, let alone argued with, Officer McPherson once he left his car. In addition, whereas Bryan remained stationary at a distance of approximately twenty feet, or at most took a single step forward, Draper was located close to the officer and pacing in an agitated fashion while arguing with him. Id. Thus, the officer in Draper was confronting a belligerent, argumentative individual who was angrily pacing within feet of his position. Officer McPherson, by contrast, was confronted with a half naked, unarmed, stationary, apparently disturbed individual shouting gibberish at a distance of approximately twenty feet. The only similarity to the factual circumstances in Draper is that both Draper and Bryan were stopped for a traffic violation, were loud, and were tasered by the police.
The severity of Bryan's purported offenses "provide[ ] little, if any, basis for [Officer McPherson's] use of physical force." Smith, 394 F.3d at 702. It is undisputed that Bryan's initial "crime" was a mere traffic infraction failing to wear a seatbeltpunishable by a fine. Traffic violations generally will not support the use of a significant level of force. See Deville v. Marcantel, 567 F.3d 156, 167 (5th Cir.2009) ("Deville was stopped for a minor traffic violation ... making the need for force substantially lower than if she had been suspected of a serious crime."). Officer McPherson also claims that he reasonably believed Bryan had committed three misdemeanorsresisting a police officer, failure to comply with a lawful order, and using or being under the influence of any controlled substance[11] and that these constitute "seriousand dangerouscriminal activity." We disagree with Officer McPherson's assessment. While "the commission of a misdemeanor offense is `not to be taken lightly,' it militates against finding the force used to effect an arrest reasonable where the suspect was also nonviolent and `posed no threat to the safety of the officers or others.'" Headwaters, 240 F.3d at 1204 (quoting Hammer v. Gross, 932 F.2d 842, 846 (9th Cir.1991)). None of the offenses for which Bryan was cited or of which he was suspected is inherently dangerous or violent, and as already discussed, Bryan posed little to no safety threat. Cf. Parker v. Gerrish, 547 F.3d 1, 9 (1st Cir.2008) ("Though driving while intoxicated is a serious offense, it does not present a risk of danger to the arresting officer that is presented when an officer confronts a suspect engaged in an offense like robbery or assault."). Therefore, there was no substantial government interest in using significant force to effect Bryan's arrest for these misdemeanor violations that even the State of California has determined are minor.[12]Cf. Miller v. *778 Clark County, 340 F.3d 959, 964 (9th Cir. 2003) (finding a felony to be "by definition a crime deemed serious by the state").
Officer McPherson now argues that use of the taser was justified because he believed Bryan may have been mentally ill and thus subject to detention. To the contrary: if Officer McPherson believed Bryan was mentally disturbed he should have made greater effort to take control of the situation through less intrusive means. As we have held, "[t]he problems posed by, and thus the tactics to be employed against, an unarmed, emotionally distraught individual who is creating a disturbance or resisting arrest are ordinarily different from those involved in law enforcement efforts to subdue an armed and dangerous criminal who has recently committed a serious offense." Deorle, 272 F.3d at 1282-83. Although we have refused to create two tracks of excessive force analysis, one for the mentally ill and one for serious criminals, we have found that even "when an emotionally disturbed individual is `acting out' and inviting officers to use deadly force to subdue him, the governmental interest in using such force is diminished by the fact that the officers are confronted ... with a mentally ill individual." Id. at 1283. The same reasoning applies to intermediate levels of force. A mentally ill individual is in need of a doctor, not a jail cell, and in the usual case where such an individual is neither a threat to himself nor to anyone elsethe government's interest in deploying force to detain him is not as substantial as its interest in deploying that force to apprehend a dangerous criminal. Moreover, the purpose of detaining a mentally ill individual is not to punish him, but to help him. The government has an important interest in providing assistance to a person in need of psychiatric care; thus, the use of force that may be justified by that interest necessarily differs both in degree and in kind from the use of force that would be justified against a person who has committed a crime or who poses a threat to the community. Thus, whether Officer McPherson believed that Bryan had committed a variety of nonviolent misdemeanors or that Bryan was mentally ill, this Graham factor does not support the deployment of an intermediate level of force.
Turning to Bryan's "resistance," we note that Bryan in fact complied with every command issued by Officer McPherson except the one he asserts he did not hearto remain in the car. Even if Bryan failed to comply with the command to remain in his vehicle, such noncompliance does not constitute "active resistance" supporting a substantial use of force. Following the Supreme Court's instruction in Graham, we have drawn a distinction between passive and active resistance. See Forrester, 25 F.3d at 805 (finding that protestor's "remaining seated, refusing to move, and refusing to bear weight" despite police orders to the contrary constituted "passive resistance"); see also Headwaters, 276 F.3d at 1130-31 (finding that protestors, who were chained together with devices and refused to exit a building when ordered, passively resisted).
By shouting gibberish and hitting himself in the quadriceps, Bryan may not have been perfectly passive. "Resistance," however, should not be understood as a binary state, with resistance being either *779 completely passive or active. Rather, it runs the gamut from the purely passive protestor who simply refuses to stand, to the individual who is physically assaulting the officer. We must eschew ultimately unhelpful blanket labels and evaluate the nature of any resistance in light of the actual facts of the case. For example, in Smith v. City of Hemet, we confronted an individual who "continually ignored" officer commands to remove his hands from his pockets and to not re-enter his home. In addition, he "physically resisted ... for only a brief time." 394 F.3d at 703. Although Smith was not perfectly passive in the encounter, we stated that it did not appear "that Smith's resistance was particularly bellicose" and thus found that this factor provided little support for a use of significant force. Id. Even purely passive resistance can support the use of some force, but the level of force an individual's resistance will support is dependent on the factual circumstances underlying that resistance.
Reviewing Bryan's conduct, we conclude that even if we were to consider his degree of compliance solely from the officer's subjective point of view, this case would be closer to the passive resistance we confronted in Forrester and Headwaters or the minor resistance in Smith, than it would be to truly active resistance. The only resistance Officer McPherson testified to was a failure to comply with his order that Bryan remain in his car. Shouting gibberish and hitting one's quadriceps is certainly bizarre behavior, but such behavior is a far cry from actively struggling with an officer attempting to restrain and arrest an individual. Compare Abdullahi v. City of Madison, 423 F.3d 763, 776 (7th Cir.2005) (involving an arrestee swinging a belt at an officer and "strenuously resist[ing]" as the police attempted to handcuff him); McCormick v. City of Fort Lauderdale, 333 F.3d 1234, 1241-42 (11th Cir.2003) (involving an arrestee engaging and advancing on officers with a stick); Jackson v. City of Bremerton, 268 F.3d 646, 653 (9th Cir.2001) (involving an individual interfering with an attempted arrest of an individual by engaging the officer in a "melee"). As in Smith, Bryan's "resistance" was not "particularly bellicose." Smith, 394 F.3d at 703. Indeed, when we view the facts in the light most favorable to Bryan, as we must at this stage of the proceedings, his conduct does not constitute resistance at all.[13]
Two additional considerations militate against finding Officer McPherson's use of force reasonable. First, it is undisputed that Officer McPherson failed to warn Bryan that he would be shot with the X26 if he did not comply with the order to remain in his car.[14] We recognized in Deorle that police officers normally provide such warnings where feasible, even when the force is less than deadly, and that the failure to give such a warning is a factor to consider. See 272 F.3d at 1284; see also Jackson, 268 F.3d at 653 (finding that the officer's "safety interest" "increased further when the group was *780 warned by police that a chemical irritant would be used if they did not move back... and the group refused to comply"). Here, it was feasible to give a warning that the use of force was imminent if Bryan did not comply. While a warning to Bryan may or may not have caused him to comply, there was "ample time to give that order or warning and no reason whatsoever not to do so." Deorle, 272 F.3d at 1284.
Second, we have held that police are "required to consider `[w]hat other tactics if any were available' to effect the arrest." Headwaters, 240 F.3d at 1204 (quoting Chew, 27 F.3d at 1443).[15] Officer McPherson argues that there were no less intrusive alternatives available to apprehend Bryan. Objectively, however, there were clear, reasonable, and less intrusive alternatives. Officer McPherson knew additional officers were en route to the scene. He was, or should have been, aware that the arrival of those officers would change the tactical calculus confronting him, likely opening up additional ways to resolve the situation without the need for an intermediate level of force. Thus, while by no means dispositive, that Officer McPherson did not provide a warning before deploying the X26 and apparently did not consider less intrusive means of effecting Bryan's arrest factor significantly into our Graham analysis.
3. Balancing the Competing Interests
Our review of the Graham factors reveals that the government had, at best, a minimal interest in the use of force against Bryan. This interest is insufficient to justify the use of an intermediate level of force against an individual. We are cognizant of the Supreme Court's command to evaluate an officer's actions "from the perspective of a reasonable officer on the scene, rather than with the 20/20 vision of hindsight." Graham, 490 U.S. at 396, 109 S. Ct. 1865. We also recognize the reality that "police officers are often forced to make split-second judgmentsin circumstances that are tense, uncertain, and rapidly evolvingabout the amount of force that is necessary in a particular situation." Id. at 397, 109 S. Ct. 1865. This does not mean, however, that a Fourth Amendment violation will be found only in those rare instances where an officer and his attorney are unable to find a sufficient number of compelling adjectives to describe the victim's conduct. Nor does it mean that we can base our analysis on what officers actually felt or believed during an incident. Rather, we must ask if the officers' conduct is "`objectively reasonable' in light of the facts and circumstances confronting them" without regard for an officer's subjective intentions. Id.
We thus conclude that the intermediate level of force employed by Officer McPherson against Bryan was excessive in light of the governmental interests at stake. Bryan never attempted to flee. He was clearly unarmed and was standing, without advancing in any direction, next to his vehicle. Officer McPherson was standing approximately twenty feet away observing Bryan's stationary, bizarre tantrum with his X26 drawn and charged. Consequently, the objective facts reveal a tense, but static, situation with Officer McPherson ready to respond to any developments while awaiting back-up. Bryan was neither a flight risk, a dangerous felon, nor an immediate threat. Therefore, *781 there was simply "no immediate need to subdue [Bryan]" before Officer McPherson's fellow officers arrived or less-invasive means were attempted. Deorle, 272 F.3d at 1282; see also; Blankenhorn v. City of Orange, 485 F.3d 463, 480 (9th Cir.2007) ("`[I]t is the need for force which is at the heart of the Graham factors' " (quoting Liston v. County of Riverside, 120 F.3d 965, 976 (9th Cir.1997))). Officer McPherson's desire to quickly and decisively end an unusual and tense situation is understandable. His chosen method for doing so violated Bryan's constitutional right to be free from excessive force.
B. Did Officer McPherson Violate Bryan's Clearly Established Rights?
Having concluded that Officer McPherson's actions violated Bryan's Fourth Amendment rights, we next must ask whether his conduct "violate[d] clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982). If an officer's use of force was "premised on a reasonable belief that such force was lawful," the officer will be granted immunity from suit, notwithstanding the fact excessive force was deployed. Deorle, 272 F.3d at 1285; see also Saucier, 533 U.S. at 202, 121 S. Ct. 2151 (asserting that the qualified immunity analysis asks "whether it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted"). We must, therefore, turn to the state of the law at the time of the current incident to determine if Officer McPherson could have reasonably believed his use of the taser against Bryan was constitutional. See Saucier, 533 U.S. at 202, 121 S. Ct. 2151.
All of the factors articulated in Grahamalong with our recent applications of Graham in Deorle and Headwaters placed Officer McPherson on fair notice that an intermediate level of force was unjustified. See Fogarty v. Gallegos, 523 F.3d 1147, 1162 (10th Cir.2008) ("Considering that under Fogarty's version of events each of the Graham factors lines up in his favor, this case is not so close that our precedents would fail to portend the constitutional unreasonableness of defendants' alleged actions."); Boyd v. Benton County, 374 F.3d 773, 781 (9th Cir.2004) (asking whether "a reasonable officer would have had fair notice that the force employed was unlawful"). Officer McPherson stopped Bryan for the most minor of offenses. There was no reasonable basis to conclude that Bryan was armed. He was twenty feet away and did not physically confront the officer. The facts suggest that Bryan was not even facing Officer McPherson when he was shot. A reasonable officer in these circumstances would have known that it was unreasonable to deploy intermediate force.
That there is no direct legal precedent dealing with this precise factual scenario is not dispositive. Rather, where an officer's conduct so clearly offends an individual's constitutional rights, we do not need to find closely analogous case law to show that a right is clearly established. Moreno v. Baca, 431 F.3d 633, 641 (9th Cir.2005); see also Hope v. Pelzer, 536 U.S. 730, 741, 122 S. Ct. 2508, 153 L. Ed. 2d 666 (2002) ("[O]fficials can still be on notice that their conduct violates established law even in novel factual circumstances."); Oliver, 586 F.3d at 907 (finding that a right can be clearly established where the officer's conduct "lies so obviously at the very core of what the Fourth Amendment prohibits that the unlawfulness of the conduct was readily apparent to[the officer], notwithstanding the lack of fact-specific case law"). In the excessive force context, it is *782 clearly established that "force is least justified against nonviolent misdemeanants who do not flee or actively resist and pose little or no threat to the security of the officers or the public." Brown v. City of Golden Valley, 574 F.3d 491, 499 (8th Cir. 2009); see also Casey v. City of Federal Heights, 509 F.3d 1278, 1285 (10th Cir. 2007). No reasonable officer confronting a situation where the need for force is at its lowestwhere the target is a nonviolent, stationary misdemeanant twenty feet awaywould have concluded that deploying intermediate force without warning was justified. We thus hold that Officer McPherson's use of significant force in these circumstances does not constitute a "reasonable mistake" of either fact or law. Deorle, 272 F.3d at 1286. Officer McPherson is therefore not entitled to qualified immunity for his use of the Taser X26 against Bryan.
CONCLUSION
Viewing the facts, as we must, in the light most favorable to Bryan, we conclude, for the purposes of summary judgment, that Officer McPherson is not entitled to qualified immunity. We therefore AFFIRM the district court's denial of summary judgment and REMAND this case for further proceedings.
NOTES
[1] Bryan was charged with resisting and opposing an officer in the performance of his duties in violation of California Penal Code § 148. Bryan was tried on this violation, but following a hung jury, the state dismissed the charges.
[2] Although the taser used by Officer McPherson was the X26 model, our holding applies to the use of all controlled electric devices that cause similar physiological effects.
[3] According to the manufacturer, the probes do not need to penetrate the skin of the intended target to result in a successful connection. The probes are capable of delivering their electrical charge through up to two inches of clothing. Here, Bryan was shirtless when confronted by Officer McPherson. As a result, one probe penetrated his skin.
[4] Tasers have been described as delivering a 50,000 volt charge. See, e.g., Brown v. City of Golden Valley, 574 F.3d 491, 495 n. 3 (8th Cir.2009). While technically accurate, this does not entirely describe the electrical impulse encountered by a taser victim. According to the manufacturer, this 50,000 volt charge is needed to ensure that the electrical current can "jump" through the air or victim's clothing, thus completing a circuit. The manufacturer maintains, however, that the full 50,000 volts do not enter the victim's body; rather, it represents that the X26 delivers a peak voltage of 1,200 volts into the body.
[5] On remand from the Supreme Court in light of its then-recent opinion in Saucier, the Headwaters panel reaffirmed its earlier excessive force analysis. See Headwaters Forest Def. v. County of Humboldt, 276 F.3d 1125 (9th Cir.2002).
[6] "Lethal force" is force that creates a substantial risk of death or serious bodily injury. See Smith v. City of Hemet, 394 F.3d 689, 705-07 (9th Cir.2005) (en banc).
[7] We recognize, however, that like any generally non-lethal force, the taser is capable of being employed in a manner to cause the victim's death. See, e.g., Oliver v. Fiorino, 586 F.3d 898, 906 (11th Cir.2009).
[8] Counsel for Officer McPherson argued that there is no genuine issue regarding whether Bryan took a step towards Officer McPherson on the basis of Bryan's response to the question of "Did you move your feet in any way?" Bryan answered, "I don't think so." There are, however, any number of ways one can move one's feet without taking a "step." Because Bryan specifically denied taking a step when expressly asked, we find a genuine issue exists as to this fact.
[9] Officer McPherson's deposition testimony only bolsters this conclusion. He testified that Bryan fell "faced forward" onto the pavement while Bryan similarly testified that he fell straight forward.
[10] Officer McPherson testified in his deposition that the intersection where he tasered Bryan does not have a lot of traffic on it early on Sunday mornings and that he did not remember the presence of any traffic on the specific morning in question. Other than Bryan, his younger brother, and Officer McPherson, the record indicates that the only individuals near the scene were an individual playing tennis nearby and a jogger located across the street. Their declarations indicate that they were fifty to seventy-five feet and forty feet away, respectively.
[11] Cal. Veh.Code § 2800(a) (making it a misdemeanor to willfully fail or refuse to comply with an order of a peace officer); Cal. Health & Safety Code § 11550 (making it unlawful to "use, or be under the influence of any controlled substance"); Cal.Penal Code § 148 (punishing every individual "who willfully resists, delays, or obstructs any public officer... in the discharge ... of his or her office" with a fine up to $1000 or up to 1 year in a county jail).
[12] Our sister circuits have likewise concluded that misdemeanors are relatively minor and will generally not support the deployment of significant force. See, e.g., Fogarty v. Gallegos, 523 F.3d 1147, 1160 (10th Cir.2008); Reese v. Herbert, 527 F.3d 1253, 1274 (11th Cir.2008). In addition, we have previously suggested that felonies not involving violence provide limited support for the use of significant force under Graham. See Meredith, 342 F.3d at 1063; Chew, 27 F.3d at 1442-43 & n. 9.
[13] The jury may credit Bryan's testimony that he did not hear the officer's order to remain in the car. The evidence suggests that Bryan thought the officer would again approach from the passenger side of his car and that Bryan turned to face that way. That the officer was instead yards away in the other direction may have prevented Bryan from hearing the commands.
[14] Officer McPherson now argues that he did warn Bryan. However, Officer McPherson's own testimony belies this claim. Officer McPherson has consistently testified that he repeatedly ordered Bryan to remain in his vehicle. This clearly constitutes a command, but it hardly warns him that if he failed to return to his car he would be shot with a taser.
[15] We do not challenge the settled principle that police officers need not employ the "least intrusive" degree of force possible. See Gregory v. County of Maui, 523 F.3d 1103, 1107 (9th Cir.2008) (citing Forrester, 25 F.3d at 807-08). We merely recognize the equally settled principle that officers must consider less intrusive methods of effecting the arrest and that the presence of feasible alternatives is a factor to include in our analysis. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1389027/ | 459 F.Supp. 962 (1978)
Shelia Jane JOHNSON et al., Plaintiffs,
v.
Donald Lee KNIGHT, doing business as Knight Electric Company, and Knight Electric Co., Inc., Defendants.
No. EC 76-24-K.
United States District Court, N. D. Mississippi, E. D.
November 9, 1978.
*963 Claude A. Chamberlin, D. W. Houston, Jr., Aberdeen, Miss., Arthur Fite, Hamilton, Ala., for plaintiffs.
Douglas C. Stone, Thomas L. Segrest, Columbus, Miss., for defendants.
MEMORANDUM OF DECISION
KEADY, Chief Judge.
In this diversity action, plaintiffs Shelia Jane (Johnson) Rowland, Bobby Max Satterfield and Sharon Denise (Lacey) Byrd and their parents, Wendell S. Satterfield and Marilyn Satterfield, citizens of Marion County, Alabama, sue defendants Donald Lee Knight, d/b/a Knight Electric Company (Knight), and Knight Electric Company, Inc. (Knight Company), citizens of Monroe County, Mississippi, for negligence and breach of warranty in installing an allegedly defective electrical system which plaintiffs claim caused the total loss by fire of plaintiffs' residence located near Detroit, Alabama, and practically all contents therein situated. The three Satterfield children sue as owners of the residence, which they assert had a market value of $160,000 on December 25, 1975, the date of the fire; the parents, owners of the furniture and furnishings within the residence, seek the recovery of $23,964 as the fair value of the contents loss.
The defendants admitted that Knight, prior to incorporating his business on October 8, 1975, contracted for and installed the electrical system in the plaintiffs' residence and admitted that it and the furniture therein situated were totally destroyed by fire, but they denied that they were negligent in the installation and servicing of the electrical system or that they improperly performed the work; furthermore, they denied *964 that the fire was caused by defects in the wiring system.
In pretrial conference before the U. S. Magistrate, plaintiffs took the position that the defendants negligently installed # 12 wire which led across wooden beams in the loft of a large living room of the house to connect with three chandeliers hung from the beams, with each fixture equipped to burn 24 40-watt bulbs; that the residence was wired for 120 voltage current; that # 12 wire was too small to pull such a load on one circuit; and, moreover, that the wires connected to the chandeliers spanned too great a distance from the circuit breaker to be safe and were tied into a circuit breaker that was improperly installed for the purpose, thereby creating an unreasonably dangerous condition which caused the fire. Defendants contend that their installation and servicing of the electrical system were done in a proper and workmanlike manner without negligence or breach of warranty on their part and asserted that the plaintiffs' losses were sustained by a fire of unknown origin.
In a nonjury trial, both parties presented live testimony from lay and expert witnesses, documentary exhibits and depositions of appraisers. The court, having called for and received legal memoranda, incorporates in this opinion findings of fact and conclusions of law as required by Rule 52, F.R. Civ.P.
I. FACTS
Mr. and Mrs. Satterfield, in 1972, deeded a 40-acre tract of land to their children, the other plaintiffs, for a family homestead; and the entire Satterfield family proceeded to erect, in stages extending over several years, a large residence, which contained 6,620 square feet. It was a two-story structure with a basement. The ground floor principally comprised kitchen, breakfast and dining room areas, a library and a large living room approximately 40 feet wide and 70 feet long, with a fireplace erected at one end of the room. At the opposite end, stairs went up to the second level forming a balcony which led to four bedrooms.
The downstairs living room had a vaulted roof which rose 30 feet from the floor; spanning this open area at the second floor level were 30 rough-sawed wooden beams 12" thick and spaced 30" apart. At the center of three of the beams were hung heavy, wagon-wheel chandeliers; each of these fixtures was six feet in diameter and bolted into the underside of the beam. The various stages of the construction had been directed by Mr. Satterfield, a mobile home manufacturer, who himself bought much of the material which went into the house and supervised the workmen who subcontracted different jobs. Sometime during 1974, Satterfield contacted the defendants, who had an office at Amory, Mississippi, and engaged them to do the electrical wiring. Under their verbal agreement, Satterfield procured some materials, such as switches, panel boxes, circuit breakers and all of the light fixtures. Defendant Knight furnished all labor, working on a time and material basis, for he also supplied some of the wire, panels and multibreakers used on the job.
Knight installed in the basement two 200 ampere panels which tied into a number of 20 ampere circuits; he also installed a 100 ampere panel in an upstairs closet which connected with 20 ampere circuits. There is a dispute in the evidence as to which multibreaker controlled the circuit for the chandelier lights. Knight testified that the upstairs multibreaker controlled that circuit, while Satterfield contended that the chandelier lights were controlled by the basement multibreaker. In any case, Knight used one circuit for all three lights with # 12 wire which was stapled on the topside of the three beams. At the location of each fixture, knight drilled a hole through the wooden beam and inserted the wire downward to join the fixture, which was nailed to the underside of the beam. The wire passing through the beams was not placed in conduits, and despite Knight's contrary testimony, no junction boxes were used at the point of connection with the chandeliers. The basement multibreaker was 100 feet distant from the chandeliers.
*965 In the fall of 1975 the house was substantially completed, the Satterfield family moved in, and about December 1 they began to experience trouble with the chandelier lights going off. When this occurred, Satterfield went to the basement, where he found the multibreaker open and kicked it on to make the chandelier lights become operative. After the chandelier lights went off a number of times, Satterfield complained to Knight. One of the defendants' servicemen, a Mr. Westbrook, during the early part of December worked on the multibreaker located in the basement. Westbrook told Satterfield that he had removed the 20 ampere breaker and installed a 60 amp fuse temporarily until he could change it to proper size. A month later, after the fire, Knight told Satterfield that Westbrook had reportedly installed a "split-30" ampere breaker, or connected two 30 ampere breakers to the same circuit. In any case, after this work was done by Westbrook, no further difficulties were encountered with the chandelier lights going off. Satterfield stated that he never had any difficulty with the upstairs multibreaker. The court finds as a fact that despite Knight's testimony, the basement multibreaker controlled the circuit for the chandelier lights; moreover, the 20 amp fuse originally installed for that multibreaker was removed by Westbrook, who placed larger size fuses of 30 amperes to prevent the chandelier lights from going off.
On December 24, the Satterfield family was occupying the residence, they had a fire in the fireplace some hours earlier in the day but not at night, and the family members were busy preparing for the Christmas holiday. The chandelier lights had been on for a number of hours during that day and night. Except for Shelia Jane, who was away from home at the time, Mrs. Satterfield was the last of the family to retire. Upon entering the upstairs master bedroom at 1:30 a.m., she cut off the chandelier lights and went to bed. She was awakened about 2 a.m. by a popping, or cracking noise. Sensing that something was wrong, she went to the bedroom door and saw a flame six to eight inches high extending along the topside of the beam from where the chandelier was hung to where the beam joined the wall. Mrs. Satterfield turned on the switch controlling the chandeliers and all lights came on. This particular beam on which she noticed fire was the one nearest the fireplace and further from the switch and downstairs multibreaker than the other chandeliers. She detected no odor from the blaze nor fire at any other place in the house, but awakened her husband and other members of the household, who confirmed that the fire was first seen on the beam holding the chandelier nearest the fireplace. The fire quickly spread through the upper portion of the house, and the entire structure was soon engulfed in flames. The Satterfields were able to save only a few articles of furniture.
The undisputed evidence is that the spacious Satterfield home had fair market value of $160,000 as of the date of the fire, and the furniture and contents loss amounted to $23,964. Satterfield neglected to procure permanent insurance after the builder's risk coverage expired on December 1, 1975.
The uncontradicted proof also is that defendants installed # 12 wire to wire the chandelier circuit, and the National Electric Code specified a maximum of 20 amps to be pulled by wire of that size. With 120 voltage household current, each chandelier held 24 40-watt bulbs which pulled 960 watts on each fixture, or a total of 2880 watts for the three chandeliers. This wattage on one circuit therefore pulled 24 amperes, or four amperes in excess of the maximum allowed by the code. Knight denied that the fixtures were overloaded, testifying that each chandelier had no more than 7 bulb positions for 60-watt bulbs. The testimony of Satterfield, his wife and son that each chandelier held 24 bulbs, and that 40-watt bulbs were inserted, is more credible. Mrs. Satterfield selected the fixtures, her husband ordered them directly from a supply house, and their knowledge of the chandeliers is more trustworthy and accurate than Knight's uncorroborated recollection. The court finds as a fact that Knight installed wire of a size not recommended to pull *966 more than 20 amperes and connected it to the chandelier fixtures with a combined load of 24 amperes. Also, Knight failed to enclose the wires with conduits where the 12 inch holes were drilled through the wooden beams, nor did he install junction or outlet boxes to connect with the chandeliers; these omissions violated other provisions of the National Electric Code.
Expert testimony was presented by both sides. J. W. King, an experienced electrician from Hamilton, Alabama, testified for plaintiffs that the National Electric Code was in effect in Alabama during 1975; he was of the opinion that 24 amperes[1] pulled through # 12 wire, rated for 20 amperes, 100 feet away from a multibreaker equipped with "split-30" fuses, was hazardous. He expressed the view that the longer the wire, the more the voltage drops, thus making heat rise in the wire. His conclusion was that, without conduit or a junction box in the hole-drilled beam, the wire likely ignited within the hole, and upon being exposed to air, burst into flame which spread along the topside beam to which the wire was stapled. He also testified that using two 30 amp fuses would increase the ampere capacity of the circuit breaker beyond that which could be safely conducted by # 12 wire. On cross-examination, King stated that the purpose of the multibreaker was to protect against overload although increasing its size would not cause the amperes to rise; only the load of the light fixtures would cause amperes to increase. He conceded, however, that if the full load of 24 amperes was fed through junction boxes from which a separate wire ran to each of the chandeliers, no more than one-third of the total load, or about 8 amperes, could be pulled by a single chandelier, and that 8 amperes would not make # 12 wire hot enough to ignite. King nevertheless stood by his opinion that the wiring system was unsafe because of the length of time the chandeliers had been on, the size and length of the wire from the downstairs multibreaker to the chandeliers, the absence of proper conduit, or casing, in the beam hole and of a junction box at the fixture's connection, and particularly the oversized fuses used; and that these conditions were capable of causing a fire. Furthermore, King explained that the fact that the chandelier lights came on when Mrs. Satterfield pulled the switch, after observing the fire, was evidence that the circuit had not been broken by the oversized "split-30" configuration.
Defendants offered two expert witnesses, Donald F. Fitzgerald, Professor of Electrical Engineering at Mississippi State University, and Damon Wall, Professor of Electrical Engineering at the University of Mississippi. Both of these experts agreed that # 12 wire is rated by the National Electric Code for no more than 20 amperes, yet a total 24 ampere load, in their opinion, would not appreciably raise the temperature in the wire, or overload the wire to the point of ignition. Each also agreed that, regardless of whether the chandelier circuit was tied into the downstairs multibreaker, or the multibreaker in the upstairs closet, the wire leading to each chandelier, under normal conditions, should have no more than 8 amperes; and they were further in agreement that the size of the multibreaker, whether a "split-30", or whatever size fuse, would not increase the voltage, the sole purpose of a multibreaker being to kill the electricity in case of an overload or short circuit.
Fitzgerald disputed King's opinion that the length of the wire from the downstairs multibreaker was a contributing factor. He stated the resistance factor, if # 12 copper wire were used, would be 1.5880, as prescribed in standard tables; that if 24 amperes were carried in a wire 100 feet long, the total drop would be 8.6 volts, which if distributed over 100 feet of line would dissipate heat at the rate of one watt per foot of wire. Fitzgerald stated this should cause only a small rise in the wire's temperature. According to Fitzgerald, the absence of a junction box, a protective cover on the underside of the beam where the chandeliers were attached, would generate only a small amount of heat in the wire, *967 and, with no more than 8 amperes flowing through the wire, would not cause a fire. He further stated that a margin of safety was built into the code wire ratings, and that he had conducted experiments by passing 40 amperes through a # 12 wire and, after an hour, found the wire barely warm to the touch. He therefore concluded that a full load of 24 amperes, had all three chandeliers been on a single load, could not possibly cause # 12 wire to burn. Fitzgerald pointed out that if the wire did ignite, the burning insulation would have caused a detectable odor, which had not been noticed by plaintiffs.
Wall's opinions were in general agreement with those of Fitzgerald that the fire was not caused by overload of the chandelier circuit. He also expressed the opinion that if one chandelier wire had ignited, its insulation would probably have been destroyed, causing a short circuit which would make the breaker open as soon as the light switch was thrown. Wall necessarily reasoned that, given the proper size multibreaker, a burning wire would probably have prevented the chandelier lights from coming on as Mrs. Satterfield testified they did when she turned on the switch. This expert conceded that if the chandelier lights had kept going off before the day of the fire, that would indicate that the breaker for the chandelier circuit was overloaded. It is reasonably deducible from the testimony of the experts that an oversize multibreaker would fail to function in case of a short circuit or ampere overload which did not exceed the breaker's capacity, which in this case exceeded 30 amperes. Westbrook was deceased at time of trial and thus no explanation was made of how he rigged the chandelier multibreaker by using 30 amp fuses.
II. APPLICABLE LAW
At the outset of the case, the court inquired whether the substantive law of Alabama or of Mississippi governed. Counsel have correctly briefed the case on the theory that Alabama law is controlling. The choice of law, in federal diversity cases, is determined by conflict of law principles recognized by the forum state. If this case is viewed as one arising out of contract, or the negligent performance thereof, Mississippi is in accord with the general rule that where a contract is made in one state and is wholly performed in another, the law of the latter jurisdiction applies. Shannon v. Georgia State Building & Loan Ass'n, 78 Miss. 955, 30 So. 51, 54-55 (1901); National Mutual Building & Loan Ass'n v. Brahan, 80 Miss. 407, 31 So. 840, 843 (1902); First National Life Ins. Co. v. Fidelity & Deposit Company of Maryland, 525 F.2d 966, 967 (5 Cir. 1976) (applying Alabama's place-of-performance rule); 16 Am.Jur.2d, Conflict of Laws, § 40, 62-63. Here, although the contract for the electrical wiring was entered into in Mississippi, it was wholly performed in Alabama. Alternatively, should the action be considered one ex delicto, solely sounding in tort, Alabama law would equally apply, since the alleged tortious acts and injury occurred in that jurisdiction. New Orleans & N. E. R. Co., v. Scogin, 243 Miss. 1, 137 So.2d 539 (1962); Browning v. Schackelford, 196 So.2d 365 (Miss.1967).
In contracts for work or services, Alabama law imposes upon the contractor an implied duty to perform the work "with that degree of skill or workmanship which is possessed by those of ordinary skill in the particular trade for which one is employed. Sherrill v. Alabama Appliance Co., 240 Ala. 46, 197 So. 1." C. P. Robbins & Associates v. Stevens, 53 Ala.App. 432, 301 So.2d 196, 199 (1974). In the Robbins case, a failure of the contractor's assurance to follow building plans and to do the work in a good and workmanlike manner was held to constitute a breach of warranty.
The Alabama cases also hold that in every case based upon actionable negligence, "there are three essential elements to a right of recovery: First, a duty owing from defendant to the plaintiff; second, a breach of that duty; and third, an injury to the plaintiff in consequence of that breach." Stokely-Van Camp, Inc. v. Ferguson, 271 Ala. 120, 122 So.2d 356, 358 (1959); Malone Freight Lines, Inc. v. McCardle, 277 Ala. *968 100, 167 So.2d 274, 276 (1964). The Fifth Circuit, in Spurlin v. General Motors Corp., 528 F.2d 612 (1976), applying Alabama law, restated the definition by setting forth four elements necessary for recovery in a negligence action: "(1) [t]he existence of a duty on the part of the defendant; (2) a breach of that duty; (3) the existence of a causal relationship between the defendant's conduct and the plaintiff's injury; and (4) resulting injury to the plaintiff." p. 615. It is interesting to note that the Court of Appeals cited Ward v. Hobart Manufacturing Company, 450 F.2d 1176 (5 Cir. 1971), construing Mississippi law, in support of the stated definition. This confirms our belief and that of counsel in the case at bar that there is no great difference between the substantive negligence law of Alabama and Mississippi.
In Alabama, however, the rule as to burden of proof upon a plaintiff is a somewhat different standard than Mississippi's requirement of establishing facts by a preponderance of evidence. The measure of proof required in Alabama is "belief of fact to the reasonable satisfaction of the jury [or trier of fact].[2]American Lumber & Export Co. v. Love, Sheriff et al., 17 Ala.App. 251, 84 So. 559, 560 (1919); Arndt v. City of Cullman, 132 Ala. 540, 31 So. 478, 480 (1902). It is well settled in federal diversity cases that the local law controls issues of burden of proof. Transammonia Export Corp. v. Conserv, Inc., 554 F.2d 719 (5 Cir. 1977); Palmer v. Hoffman, 318 U.S. 109, 117, 63 S.Ct. 477, 87 L.Ed. 645, rehearing den'd 318 U.S. 800, 63 S.Ct. 757, 87 L.Ed. 1163 (1943).
In the instant case, the defendants unquestionably owed a duty to plaintiffs, whether stated in terms of warranty or of the ordinary care and skill required of a prudent contractor; and this duty was breached by not complying with pertinent requirements of the National Electric Code by (1) using # 12 wire to pull 24, rather than 20, amperes on the chandelier circuit, (2) failing to enclose the wire going through the beam within a conduit or other approved casing, and (3) failing to install junction boxes at the connections with the chandelier fixtures. Additionally, the frequent opening of the downstairs multibreaker, when equipped with a 20 ampere fuse, was indicative of poor workmanship to provide reliable lighting for the chandeliers; and Westbrook's increasing the size of the multibreaker fuse to two 30 ampere fuses made it impossible to shut off the overload on the # 12 wire or to close off the electricity in case of a short circuit. We have no hesitation in holding that the defendants were negligent in these particulars. Nor can there be any doubt as to the very substantial property losses sustained by the plaintiffs.
The crux in the case is whether plaintiffs have, to our reasonable satisfaction as the trier of fact, shown a causal relationship between the defendants' dereliction of duty and the plaintiffs' loss. Stated simply, have plaintiffs shown that the fire was caused by the manner in which the defendants wired the residence? Plaintiffs concede there is no direct evidence as to the cause of the fire, and their case must stand or fall upon the sufficiency of the circumstantial evidence. Plaintiffs contend that proof of the circumstances surrounding and preceding the fire indicates a logical sequence of cause and effect vis-a-vis defendants' wiring installation and the fire, and that no other plausible explanation for the origin of the fire has been shown to have existed. Defendants maintain that, although causation may be shown circumstantially, the weight of the testimony, including that of plaintiffs' expert Mr. King, shows the fire could not have been caused by an electrical overload or other acts in wiring the house for which defendants are responsible. The resolution of this case hinges altogether upon how this issue should be decided.
Plaintiffs cite three Alabama cases, Southern Railway Company v. Dickson, 211 *969 Ala. 481, 100 So. 665, 669 (1924), Griffin Lumber Company v. Harper, 247 Ala. 616, 25 So.2d 505, 508-9 (1946), Southeast Alabama Gas District v. Killingsworth, 278 Ala. 48, 175 So.2d 741, 745 (1965), in support of their reliance upon circumstantial evidence as a basis for recovery. Alabama has consistently followed the principle first announced in Southern Railway Company, supra:
Proof, which goes no further than to show an injury could have occurred in an alleged way, does not warrant the conclusion that it did so occur, where from the same proof the injury can with equal probability be attributed to some other cause.
But a nice discrimination must be exercised in the application of this principle. As a theory of causation, a conjecture is simply an explanation consistent with known facts or conditions, but not deducible from them as a reasonable inference. There may be two or more plausible explanations as to how an event happened or what produced it; yet, if the evidence is without selective application to any one of them, they remain conjectures only. On the other hand, if there is evidence which points to any one theory of causation, indicating a logical sequence of cause and effect, then there is a juridical basis for such a determination, notwithstanding the existence of other plausible theories with or without support in the evidence.
100 So. at 669.
Circumstantial evidence was sufficient to uphold jury verdicts in Southern Railway Co. and Killingsworth, but legally inadequate in Griffin Lumber Co., as well as a Fifth Circuit decision, Green v. Reynolds Metals Co., 328 F.2d 372 (5 Cir. 1964), which applied Alabama law and is cited by defendants. A close examination of these cases reveals that the result turned upon the particular facts of each case, when tested by the guiding principles that the plaintiff is bound to remove the issue of proximate cause from the realm of speculation by proof of facts affording a reasonable basis for inferences which he asserts, and that the evidence must point to a reasonable likelihood of probability, rather than possibility, favoring plaintiff.
In Southern Ry. Co. v. Dickson, supra, a switchman-plaintiff in a Federal Employers' Liability suit recovered for injuries sustained by falling from the train due to a sudden and violent jerk to the cars while the plaintiff was serving at his post of duty on one of the hindmost cars. The court concluded that, while opinions might differ, the testimony of the plaintiff and his fellow employees, including the engineer, was sufficient to support a finding that the negligent operation of the train caused the injury-producing fall. In Killingsworth, recovery was upheld for property damage caused by fire which occurred about one hour after the defendants' agents had changed a switch controlling a gas furnace to eliminate prior malfunctioning. The purpose of the control switch was to prevent the furnace from overheating when gas flow was not shut off by a thermostat control located in a central area of the building outside the furnance room. The origin of the fire was shown to be in the furnace room, the ceiling of which, just above the heater, was deeply charred. There were no combustible or flammable chemicals in the building which could have caused the fire. There was conflicting expert testimony as to whether the control switch was correctly wired and whether the gas heater was capable of generating excessive heat to cause a fire. The jury verdict was upheld on the issue of causation.
On the other hand, circumstantial evidence was inadequate as a matter of law for recovery in a death case of a guest passenger, which required proof of wantonness to establish liability, where the truck in which the deceased was riding ran off the highway into a ditch. There were no eyewitnesses since the truck driver was also killed. There was proof that the truck struck the curb wall with great force after coming down a hill. Plaintiff argued that the great force of the impact was a basis for inferring excessive speed and wantonness *970 on the part of the truck driver. Rejecting this contention, the court held:
The proof in this case, in our opinion, goes no further than to show that the force with which the truck hit the curb wall could have been caused by defendants' truck driver driving at an excessive rate of speed. But we do not think that the proof warrants the conclusion that it did so occur, since from the same proof the force of the impact can with equal probability be attributed to mechanical failure of the truck. As we view the evidence, it is without selective application to either of the theories of causation and, therefore, they remain conjectures only. The evidence does not point to any one theory of causation indicating a logical sequence of cause and effect. We conclude, therefore that the fact that the truck hit the curb with terrific force does not justify a reasonable inference that the truck was being driven at an excessive rate of speed.
25 So.2d at 509.
In Green v. Reynolds Metals Co., supra, an opinion authored by District Judge Frank Johnson, recovery was denied for personal injuries to a workman who fell from the roof of defendant's plant. Plaintiff contended that defendant had negligently allowed a large amount of dust to accumulate on the unguarded ledge from which he fell. No one saw the plaintiff fall, and the plaintiff, who suffered retrograde amnesia by reason of the fall, testified that he did not know what caused the fall; the last thing he remembered was removing his dust respirator. From undisputed evidence, the working conditions on the roof were generally in the same condition which the plaintiff had observed during his thirteen weeks on the job. The court stated:
There was no evidence presented in this case that indicated what caused Green to fall. There was not as much dust on the ledge as usually accumulated. In any event, there was no showing that the dust or debris on the ledge had anything to do with the fall. To base a finding of negligence on the fact that excessive dust was allowed to accumulate and that Green fell as a proximate cause of such condition would, in the first place, be contrary to all the evidence, and, in the second place, be entirely speculative and conjectural.
328 F.2d at 374.
The Killingsworth decision, strongly relied upon by plaintiffs, is not without force as it illustrates that "Proximate cause is a mixed question of law and fact for the jury [or trier of fact]," Underwood v. Smith, 261 Ala. 181, 73 So.2d 717, 725 (1954), citing 65 C.J.S. Negligence § 264, pp. 1183-1185:
The Underwood court stated:
It [proximate cause] "is not a question of science or of legal knowledge, but is to be determined as a fact in view of the circumstances, and from a consideration of all the attending facts and circumstances, and in the exercise of practical common sense rather than by the application of abstract definitions." 65 C.J.S. Negligence § 264, p. 1187, notes 81-83. It is a juridical question, not one of expert knowledge. It involves many factors not of an expert nature, some are legal and some factual.
The circumstantial evidence in the case sub judice suffices to raise a substantial issue of fact on proximate causation and presents us, as the trier of fact, with the problem of weighing all of the evidence, including the testimony of both lay and expert witnesses, in resolving the disputes shown by the proof. In view of the conflicting testimony of the expert witnesses offered by the parties and being mindful of the prestigious credentials of the two experts offered by the defendants, the case on its facts is a close one which makes our decision a difficult, if not perplexing, choice of reasonable inferences. We have concluded, however, that there are certain circumstances which point to a fire originating within the electrical system, although the precise defects within the system which caused the fire cannot be pinpointed with absolute certainty. The factors which persuade us that the defendants' manner of *971 installing the electrical system caused a fire to result include the following cogent circumstances: Defendants used # 12 wire for the chandelier circuit which carried an ampere load greater than that prescribed by the National Electric Code; an oversized multibreaker, installed by defendants' agent to control the chandelier circuit, nullified the intended safety effect of the multibreaker in the event of a short-circuit or excessive overload within the circuit which was already vulnerable to excessive heat; the absence of conduits and of junction boxes at the point where the chandeliers were attached made it possible for heat to generate from the wire in close proximity to the wooden beam; the chandelier lights burned for long hours during the day and past midnight, which probably increased the heat within the overall circuit wired with # 12 wire; the crackling or popping sound which occurred frequently accompanies an electrical disturbance; the fire undeniably originated on the top side of a wooden beam, 20 feet from the floor, where only the # 12 wire was located; there was no evidence of fire in any other part of the living room; and finally, that the chandelier lights did turn on even after the fire was discovered strongly indicates that the overload, short-circuit or whatever specific cause of ignition, had not tripped, or exceeded the capacity of, the oversized multibreaker. Moreover, defendants were unable to advance any other reason or explanation for the fire in the light of the foregoing circumstances. Thus, the evidence is not without selective application of cause and effect, and points to the conclusion that the wiring system caused the fire. As in the Killingsworth case, the circumstances are sufficiently strong to outweigh expert opinion that defendants' methods of installing the electrical system could not be responsible for the fire. Therefore, we are reasonably satisfied, as the trier of fact, that the wiring installation by defendants did cause the fire, and we are satisfied that this conclusion is one which may be reached through a logical sequence of cause and effect and without resort to conjecture or speculation.
Let judgment enter accordingly.
NOTES
[1] King, during his testimony, miscalculated the peak load of the chandeliers as 22.4 amperes.
[2] Alabama, unlike Mississippi, also recognizes that a scintilla of evidence is sufficient to submit any factual issue to the jury. Ridgeway v. Sullivan-Long & Hagerty, Inc., 39 Ala.App. 341, 98 So.2d 665, 669 (1957). Cf. Harpole v. Harrison, 279 So.2d 150, 153 (Miss.1973). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/819284/ | 162 F.Supp.2d 676 (2001)
U.S. STEEL GROUP, a Unit of USX Corporation, et al., Plaintiffs,
v.
UNITED STATES, Defendant.
JSC Severstal, Defendant-Intervenor.
SLIP OP. 01-110. No. 99-08-00523.
United States Court of International Trade.
August 29, 2001.
*677 Dewey Ballantine LLP, Washington, DC (Michael H. Stein, Bradford L. Ward, Navin Joneja), for Plaintiffs.
Stuart E. Schiffer, Acting Assistant Attorney General, David M. Cohen, Director, Lucius B. Lau, Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Peter G. Kirchgraber, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, for Defendant, of counsel.
Powell, Goldstein, Frazer & Murphy LLP (Neil R. Ellis), for Defendant-Intervenor.
OPINION
POGUE, Judge.
On November 21, 2000, this Court issued U.S. Steel Group v. United States, 24 CIT ___, 123 F.Supp.2d 1365 (2000) ("U.S. Steel I"). That opinion ordered the Department of Commerce ("Commerce" or "the Department") to reconsider on remand its determination that a suspension agreement entered into with the Ministry of Trade of the Russian Federation ("the Agreement") was in the public interest and prevented price suppression or undercutting, as required by the statute. See 19 U.S.C. § 1673c(l)(1) (1994). Familiarity with that opinion is presumed.
The Court now reviews Commerce's Final Redetermination Pursuant to Court Remand ("Redetermination"). Jurisdiction lies under 28 U.S.C. § 1581(c).
Standard of Review
Commerce's Redetermination must be sustained unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).
Substantial evidence is "something less than the weight of the evidence." Consolo v. Federal Maritime Com., 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966). Nonetheless, Commerce must present "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) (quoted in *678 Gold Star Co. v. United States, 12 CIT 707, 709, 692 F.Supp. 1382, 1383-84 (1988), aff'd sub nom. Samsung Electronics Co. v. United States, 873 F.2d 1427 (Fed.Cir. 1989)). The possibility of drawing two inconsistent conclusions from the same evidence does not mean that the agency's finding is unsupported by substantial evidence. See Consolo, 383 U.S. at 620, 86 S.Ct. 1018. In other words, Commerce's determination will not be overturned merely because the plaintiff "is able to produce evidence ... in support of its own contentions and in opposition to the evidence supporting the agency's determination." Torrington Co. v. United States, 14 CIT 507, 514, 745 F.Supp. 718, 723 (1990) (internal quotation omitted), aff'd, 938 F.2d 1276 (Fed.Cir.1991).
Commerce's conclusions must in any event be "reached by `reasoned decisionmaking,' including an examination of the relevant data and a reasoned explanation supported by a stated connection between the facts found and the choice made." Electricity Consumers Resource Council v. Federal Energy Regulatory Com., 747 F.2d 1511, 1513 (D.C.Cir.1984) (citing Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962)).
Discussion
I. Commerce's "Public Interest" Determination
Under the first prong of the statute, 19 U.S.C. § 1673c(l)(1)(A), Commerce may enter into a suspension agreement only if it is "satisfied that suspension of the investigation is in the public interest." 19 U.S.C. § 1673c(d)(1). In evaluating Commerce's determination that the Agreement is in the public interest, the Court first decides whether Commerce's interpretation of the statute is in accordance with law.
In the Redetermination, Commerce reads the statute to confer to it broad discretion in making a subsection (1) public interest determination. In support of this position, Commerce points to the lack of a definition of the "public interest" in both the statute and the legislative history, as well as the use of the word "satisfied," which it suggests connotes a highly subjective state of mind. See Redetermination at 14 & n. 23.
U.S. Steel does not deny that Commerce has broad discretion in making a public interest determination, but asserts that,
in analyzing the effects and benefits on the U.S. industry, the Department must take into account the alternatives available to the domestic industry in the absence of a suspension agreement. That is, the benefits to the U.S. industry should be evaluated relative to the effects of an antidumping duty investigation (and order) rather than by comparing the effects of the Suspension Agreement to no relief at all.
Pl.'s Comments at 16. Further, U.S. Steel argues that Commerce is required by the statute to explain how "other" factors it considered in making its public interest determination "outweigh the very real, direct and vital interests of the domestic steel industry." Id. at 18.
Commerce's broad understanding of "the public interest" accords with the clear intent of Congress. See Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The language of section 1673c(d)(1), "in the public interest," does not include any further limiting language, such as that of section 1673c(a)(2)(B), which requires Commerce to take three specific public interest factors *679 into account.[1]See 19 U.S.C. § 1673c(a)(2)(B). Thus, the plain language of the statute indicates that Congress intended Commerce to have broad discretion in making its public interest determination, and this Court will not impose limits on Commerce's discretion that were not imposed by Congress. See Whitman v. Am. Trucking Ass'ns, 531 U.S. 457, 121 S.Ct. 903, 913, 149 L.Ed.2d 1 (2001) (finding an "intelligible principle" in various statutes authorizing regulation in the "public interest") (citing National Broadcasting Co. v. United States, 319 U.S. 190, 225-226, 63 S.Ct. 997, 87 L.Ed. 1344 (1943); New York Cent. Sec. Corp. v. United States, 287 U.S. 12, 24-25, 53 S.Ct. 45, 77 L.Ed. 138 (1932)).
Moreover, the Court finds no support in the legislative history for Plaintiffs argument that Commerce's discretion is limited by the interest of the domestic industry. Congress did state its intent that "investigations be suspended only when that action serves the interest of the public and the domestic industry affected," which could suggest that one of the factors Commerce must consider is the interest of the domestic industry.[2]See S.Rep. No. 96-249, at 71 (1979), reprinted in 1979 U.S.C.C.A.N. 381, 457. And a different part of the statute directs Commerce to suspend an investigation only if suspension is "more beneficial to the domestic industry" than the continuation of investigation. See 19 U.S.C. § 1673c(c)(2)(A)(i); see also S.Rep. No. 96-249, at 68 (1979), reprinted in 1979 U.S.C.C.A.N. at 454. Congress did not, however, apply this language to agreements with nonmarket economies under subsection (1). Thus, while the legislative history may indicate that a suspension agreement must benefit the domestic industry to be in the public interest, there is nothing to suggest that a suspension agreement must be more beneficial than an order, or that "other" factors must outweigh the interest of the domestic industry, in order for the agreement to be legal under the statute.
The Court next reviews whether Commerce's public interest determination is supported by substantial evidence, and whether Commerce adequately explained its conclusion that the Agreement is in the public interest. In the Redetermination, Commerce considers three public interest factors: U.S. producer and worker interests, consumer benefits of the suspension agreement, and the international economic interest of the United States. See Redetermination at 15-19.
U.S. Steel does not contest that the Agreement serves the interests of consumers and the international economic interest of the United States, but objects to Commerce's finding that the Agreement serves U.S. producer interests. U.S. Steel asserts that "where, as here, antidumping duty margins are so high as to be prohibitive, the certainty of no imports at all provided by an order is plainly preferable" to the Agreement, which allows in certain quantities of Russian steel. Pl.'s Comments at 17. U.S. Steel also argues that Commerce cannot claim a "market certainty" benefit, because the adjustment procedures that are part of the Agreement make it just as uncertain as an order *680 subject to administrative review.[3]See id.
While the domestic producers may prefer an antidumping order, as discussed above, Commerce is not required under the statute to provide substantial evidence that the Agreement serves the domestic producers' interest more than an order would; Commerce is rather required to provide substantial evidence that the Agreement is in the public interest. Similarly, it is not incumbent upon Commerce to provide substantial evidence that the Agreement is more stable and certain than an order (though Commerce makes this claim); rather, Commerce is required to provide substantial evidence that the Agreement achieves stability and certainty, and explain how stability and certainty serve the public interest.
Under this standard, Commerce's Redetermination withstands scrutiny. First, Commerce points to the price and quantity limits contained in the Agreement, which inherently introduce stability and certainty into the market. See Redetermination at 15-16. Stability and certainty benefit the domestic industry by allowing it "to invest and plan for future growth." Id. at 16. While, as U.S. Steel points out, the price limits are subject to adjustment, Commerce explains that the reference price mechanism in the Agreement creates certainty because it adjusts Russian steel prices to account for changes in the market, so that the price floor is maintained in "real" terms. See id. at 11-12.
Further, Commerce explains that market certainty and stability created by the Agreement benefit consumers by allowing them to continue to purchase hot-rolled steel the largest merchant steel product from Russia, albeit in limited quantities and above a price floor. See id. at 18-19. Commerce also explains that the price and volume limits of the Agreement serve the international economic interest of the United States in economic stability and a transition to a market economy in Russia, by allowing Russia to continue to export hot-rolled steel, subject to the limits of the Agreement. Id. at 19.
Commerce relies as well on other features of the Agreement that serve the public interest. For example, the Agreement contains anti-circumvention provisions that promote the integrity and transparency of the Agreement. See Redetermination at 16. Additionally, the Agreement is linked to a comprehensive agreement covering a broad array of steel products exported from Russia to the United States, such that if Russia withdraws from the comprehensive agreement, Commerce will terminate the suspension agreement. See id. at 16-17. This provision protects integrated steel producers who produce hot-rolled steel as well as other steel products covered by the comprehensive agreement. See id. Lastly, the Agreement benefits domestic producers by limiting Russian market share to a level prevailing before imports of Russian steel were harming the domestic industry. See id. at 17.
As Commerce observes, the benefits of the Agreement "are different from those that would accrue to the domestic industry under an antidumping order"; this does not mean, however, that the Agreement is not in the public interest. Id. at 31. Commerce *681 points to specific features of the Agreement and then explains how these features serve the public interest, taking into account the interests of the domestic industry and domestic consumers, and the international economic interests of the United States. Accordingly, Commerce's determination that the Agreement is in the public interest is supported by substantial evidence and otherwise in accordance with law.
II. Commerce's Determination that the Agreement will Prevent Price Suppression or Undercutting
Under the second prong of the statute, Commerce must determine that a suspension agreement "will prevent the suppression or undercutting of price levels of domestic products by imports of the merchandise under investigation." 19 U.S.C. § 1673c(l)(1)(B). As above, in evaluating Commerce's determination that the Agreement prevents price suppression or undercutting, the Court first decides whether Commerce's interpretation of the statute is in accordance with law.
In U.S. Steel I, the Court held that the language of the statute is ambiguous. See 24 CIT at ___, 123 F.Supp.2d at 1371. The next question, then, is whether or not Chevron deference should be given to the agency's interpretation of the statute. See United States v. Mead Corp., ___ U.S. ___, ___-___, 121 S.Ct. 2164, 2171-73, 150 L.Ed.2d 292 (2001). An agency's interpretation of a statute,
qualifies for Chevron deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority. Delegation of such authority may be shown in a variety of ways, as by an agency's power to engage in adjudication or notice-and-comment rulemaking, or by some other indication of a comparable congressional intent.
Mead, 121 S.Ct. at 2171.
In concluding that Commerce's interpretation of the statute governing suspension agreements qualifies for Chevron deference, the Court notes first that Congress appears to have delegated primary authority to Commerce to interpret the antidumping laws generally. See id. at 2172 ("[I]t can [] be apparent from the agency's generally conferred authority ... that Congress would expect the agency to be able to speak with the force of law when it addresses ambiguity in the statute...."). Congress stated that, in enacting title 19 with its limited standard of review, it "by law entrusted the decision-making authority in a specialized, complex economic situation to [Commerce]." See S.Rep. No. 96-249, at 251-52, reprinted in 1979 U.S.C.C.A.N. at 638; compare Mead, 121 S.Ct. at 2174 (pointing to this court's power of de novo review of Customs classification rulings as evidence that Chevron deference not warranted). Furthermore, our appellate court has repeatedly stressed its view that Congress vested Commerce, and not the court, with primary authority to interpret the antidumping laws. See, e.g., Koyo Seiko Co. v. United States, slip op. 00-1500, at 10 (Fed.Cir. July 20, 2001) ("In antidumping cases, this court has repeatedly recognized `Commerce's special expertise,' and it has `accord[ed] substantial deference to its construction of pertinent statutes.'") (quoting Micron Tech v. United States, 117 F.3d 1386, 1394 (Fed. Cir.1997)); Daewoo Elecs. Co. v. International Union of Elec., Tech., Salaried & Mech. Workers, 6 F.3d 1511, 1516 (Fed. Cir.1993) (referring to Commerce as the "`master' of antidumping law, [and] worthy of considerable deference" in questions *682 of statutory interpretation) (internal citations omitted); see also, American Silicon Technologies, et al. v. United States, slip op. 00-1400, at 10 (Fed.Cir. Aug. 16, 2001).
Though it appears that Congress has made a general delegation of authority to Commerce to interpret the statute, Mead makes clear that, where notice-and-comment or formal adjudication procedures are not used, a court should also consider whether Congress "provides for a relatively formal administrative procedure tending to foster the fairness and deliberation that should underlie a pronouncement [with the effect of law]." Mead, 121 S.Ct. at 2172. Because the agencies this court reviews so often interpret the antidumping and countervailing duty statutes in less formal formats than those provided for in the Administrative Procedure Act, we make clear that, our conclusion in this case notwithstanding, less deference may be owed by the Court of International Trade to agency interpretations in other contexts.
The provisions governing subsection (l) suspension agreement determinations do not reach the level of formality of the provisions of the Administrative Procedure Act for formal adjudications and notice-and-comment rulemaking.[4] Nonetheless, this case presents "circumstances reasonably suggesting that Congress ... thought of [interpretations contained in suspension agreement determinations] as deserving the deference claimed for them here." Id. at 2173. In particular, Congress gave Commerce explicit power to suspend an investigation upon acceptance of a suspension agreement with a nonmarket economy in accordance with subsection 1673c(l). Subsection 1673c(l) requires Commerce to publish a determination that satisfies specific statutory criteria in order to enter into a suspension agreement. Subsection (d), to which subsection (l) refers, further requires Commerce, if it decides not to accept a proposed agreement and thus does not issue a determination, to, "[w]here practicable ... provide to the exporters who would have been subject to the agreement the reasons for not accepting the agreement and, to the extent possible, an opportunity to submit comments thereon." 19 U.S.C. § 1673c(d).
Commerce's suspension agreement determinations are "relatively formal" and "foster [] fairness and deliberation," insofar as the statute requires Commerce to explain in writing and with reference to specific criteria its reasons for entering into an agreement. Cf. Mead, 121 S.Ct. at 2174-75 (describing the informalities of administrative procedure related to issuance of Customs classification rulings such that these rulings are "best treated like contained in policy statements, agency manuals, and enforcement guidelines[,]" and thus "beyond the Chevron pale") (quoting Christensen v. Harris County, 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000)). It therefore appears to this Court that Chevron deference is warranted in this instance, and, accordingly, the Court reviews Commerce's interpretation of the statute for reasonableness. See Chevron, 467 U.S. at 844, 104 S.Ct. 2778.
In the Redetermination, Commerce interprets the language of 1673c(l)(1)(B) to mean that, "a subsection (1) agreement that prevents significant price suppression or undercutting satisfies the statutory requirement that such an agreement prevent price suppression or undercutting, and provides effective relief to the domestic industry." Redetermination at 7 (emphasis added). U.S. Steel argues that this interpretation is not in accordance with *683 law because it gives Commerce unbounded discretion, "as the Department can find practically any amount of price suppression to be insignificant." Pl.'s Comments at 7. According to U.S. Steel, Commerce must explain how much price suppression is "significant" in order to comply with this Court's order on remand. Id. at 8.
In U.S. Steel I, the Court found that the word "prevent" is subject to two possible interpretations. Under one interpretation, tied to the "preclude" definition of "prevent," an agreement would have to prevent all price suppression. 24 CIT at ___, 123 F.Supp.2d at 1371. Under the second interpretation, tied to the slightly more flexible "impede" or "avert" definition of "prevent," an agreement would have to effectively counteract without necessarily eliminating price suppression. Id.
The Court finds that Commerce's interpretation of the statute is reasonable because it is in accord with the interpretation tied to the latter definition of "prevent," and because, contrary to U.S. Steel's suggestions, this interpretation creates a reviewable standard. How much price suppression is "significant" may be determined on a case-by-case basis. See SEC v. Chenery Corp., 332 U.S. 194, 203, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947); see also Fabrique De Fer De Charleroi S.A. v. United States, slip op. 01-82, at 21 (CIT July 3, 2001) (holding that Commerce may "reach[] a determination after examining the particular circumstances of the case without formally promulgating an all-inclusive standard"). And any conclusion that an agreement prevents "significant" price suppression must be supported by substantial evidence and explained in a reasoned way.[5]
The Court now considers whether Commerce's conclusion that the Agreement prevents "significant" price suppression and thus provides effective relief to the domestic industry is supported by substantial evidence and explained in a reasoned way, and finds that it is. On remand, Commerce explains that price suppression in the domestic industry was caused by both the large volume and low price of imports of Russian hot-rolled steel; consequently, in negotiating the Agreement, Commerce took both price and volume factors into account. The Agreement provides for a moratorium, during which no imports are permitted, followed by a period during which the quantity and price of imports are restricted. See Redetermination at 8, 11-12. By comparing the amount of price undercutting that occurred during the ITC preliminary report period (i.e., from October 1997 through September 1998), to the amount of undercutting eliminated by the restrictions on price and volume for the first year of the Agreement, Commerce demonstrates that the amount of undercutting allowed by the Agreement following the moratorium is less than fourteen percent of the undercutting which occurred during the comparison period; in other words, eighty-six percent of price undercutting is prevented.[6]Id. at 9-10. This "summary *684 statistic," explains Commerce, is evidence that the price suppression prevented is substantial. See id. at 29.
In subsequent, "out" years, Commerce asserts that the volume increases are "moderate," such that the largest annual volume allowed is less than thirty percent of the import volume for the comparison period.[7]See id. at 11. Price limits in the "out" years will be tied to a reference price established in the first year of the Agreement, and adjusted based on prices of steel from countries not subject to an order. See id. at 11-12. This "reference price" mechanism will have the effect of maintaining price restrictions in "real terms," in relation to fairly priced imports. See Redetermination at 12.
U.S. Steel does not appear to challenge Commerce's conclusion on substantial evidence grounds, but rather challenges the analysis Commerce uses to arrive at its conclusion on several grounds. See Pl.'s Comments at 9-16. First, U.S. Steel argues that price undercutting is not a measure of price suppression, because if domestic producers refrain from lowering their prices in response to low-priced imports, domestic prices won't be suppressed, but domestic producers will cede market share. See id. at 10-12. In order to effectively prevent price suppression, suggests U.S. Steel, Commerce must analyze how domestic producers will respond in the future to unfairly priced imports. See id. at 12-13. Second, according to U.S. Steel, Commerce's approach is, contrary to the statute, "backward-looking." See id. at 13 (emphasizing the "will prevent" language of section 1673c(l)(1)(B)). Third, because Commerce can't predict the future, U.S. Steel claims that there is no reasoned basis for the volume limits for the "out" years of the Agreement.[8]See id. at 14. Finally, U.S. Steel faults Commerce for "concoct[ing] a post hoc rationalization for a particular decision with no intention of making it generally applicable to future cases." Pl.'s Comments at 15.
While the Court appreciates U.S. Steel's observation that price undercutting and price suppression are not always directly related, it does little to undercut the validity of Commerce's analysis in the case at hand. The statute requires Commerce to prevent price suppression or price undercutting, so an agreement that prevents significant price undercutting is acceptable, especially where, as here, price undercutting caused price suppression. See 19 U.S.C. § 1673c(l)(1)(B). Indeed, U.S. Steel does not dispute that what caused price suppression in this case was a high volume of extremely low-priced imports. See Pl.'s Comments at 11. The Court *685 agrees with Commerce that, here, price undercutting is a suitable proxy for price suppression "because price underselling is, in this case, the root cause of price suppression. By materially eliminating the cause of price suppression, the Department is preventing price suppression itself." Redetermination at 29.
U.S. Steel succeeds in demonstrating that Commerce's analysis may not always be appropriate, if applied generally across different factual scenarios, but fails to demonstrate that Commerce's analysis is inappropriate in this specific instance. Commerce explains in the Redetermination the connection between the facts it found regarding the causes and amounts of price suppression and the choices it made in the Agreement, namely, a moratorium followed by significant restrictions on the price and volume of Russian imports. In addition, "[t]he methodologies relied upon by Commerce in making its determinations are presumptively correct." Thai Pineapple Pub. Co. v. United States, 187 F.3d 1362, 1365 (Fed.Cir.1999) (citing Fujitsu Gen. v. United States, 88 F.3d 1034, 1044 (Fed.Cir.1996)), cert. denied, 529 U.S. 1097, 120 S.Ct. 1830, 146 L.Ed.2d 775 (2000). While the use of econometric modeling or other methods to determine how domestic producers will respond to a certain amount of imports at a certain price may also be appropriate, this Court cannot find that the method Commerce uses, which analyzes historical data to determine how to effectively control the impact of future imports on domestic producers, is inappropriate in this case.
The remainder of U.S. Steel's arguments are also unpersuasive. Commerce's analysis is "backward-looking" only to the extent that it relies on historical data to provide a basis for setting price and volume limits at a level that will prevent significant price suppression in the future. And, to the extent that Commerce fails to predict the future accurately, there are adjustment mechanisms built into the Agreement, as well as statutory provisions for administrative review, see 19 U.S.C. § 1675(a)(1)(c), and for termination of subsection (l) suspension agreements that fail to prevent suppression or undercutting of domestic producer prices, see 19 U.S.C. § 1673c(l)(2).
Lastly, in U.S. Steel I, the Court did not require Commerce on remand to issue generally applicable regulations or guide-lines in support of the analysis used in the Agreement; rather, the Court asked Commerce to demonstrate that it "exercised reasoned discretion in arriving at the conclusion that the Agreement prevents price suppression or undercutting." 24 CIT at ___, 123 F.Supp.2d at 1371. There is no post hoc rationalization problem where the agency re-examines its conclusion on remand, and, though arriving at the same conclusion, explains the conclusion in a reasoned way as guided by the facts of the case and its reasonable interpretation of the statute. See Mitsubishi Heavy Industries, Ltd. v. United States, 24 CIT ___, ___, 97 F.Supp.2d 1203, 1209 n. 9 (2000).
Conclusion
Commerce's Redetermination is supported by substantial evidence and is otherwise in accordance with the law, and is therefore affirmed in all respects.
NOTES
[1] Commerce considered, but was not controlled by, the factors articulated in subsection (a)(2)(B), using them as a "useful conceptual framework that the Department has used to inform its analysis...." Redetermination at 14.
[2] It is clear in this case that Commerce did take the interest of the domestic industry into account. See Redetermination at 15-17.
[3] U.S. Steel raised a similar objection to the draft of the Redetermination. Commerce responds in the Redetermination that the price and volume limits contained in the Agreement make the Agreement "inherently more stable and predictable than conditions under an order," noting that an order does not contain volume limits and that the amount of duties actually imposed could change significantly through the administrative review process. See Redetermination at 31 & n. 33.
[4] It should be noted that Commerce did give the domestic producers the opportunity to comment on both the Agreement and the Redetermination. See Redetermination at 2, 3.
[5] Because Commerce's interpretation of the statute is reasonable for the reasons given above, the Court declines to address the merits of the parties' arguments addressed to whether it is acceptable to "import" the "significant degree" language from the statute governing the ITC's injury determinations. See Redetermination at 6-7; Pl.'s Comments at 7, 8-9.
[6] According to Commerce, the "eighty-six percent" figure is conservative, because it attributes all of the price difference between domestic and Russian hot-rolled steel to undercutting, rather than other differences such as quality. See Redetermination at 10-11 & n. 21. Also, Commerce used the highest perton price for domestic steel reported by the ITC; if Commerce had used one of the lower prices reported in other sources for the same period, the amount of undercutting for the comparison period would be less, and thus the amount prevented by the Agreement would be more. See id. at 10 n. 19.
[7] Commerce also notes that import volumes surged in the fourth quarter of 1998. See Redetermination at 11. The largest annual volume of imports allowed under the Agreement would be less than twenty percent of imports recorded for calendar year 1998. See id. Furthermore, though there is no ITC undercutting data for the fourth quarter of 1998, if the margin of underselling remained the same as in the ITC data for the preliminary report period, then for the calendar year 1998, ninety percent of price suppression was prevented. See id.
[8] U.S. Steel also asserts that Commerce has not explained how it arrived at its allocation of price to volume limits, see Pl.'s Comments at 13-14, but U.S. Steel failed to raise this argument at the agency level. Because none of the recognized exceptions to the doctrine of exhaustion is applicable here, see FAG Kugelfischer Georg Schafer AG v. United States, 25 CIT ___, ___, 131 F.Supp.2d 104, 113-114 (2001), U.S. Steel's argument is not appropriately before the court. | 01-03-2023 | 02-05-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1184418/ | 524 P.2d 60 (1974)
James Edward FOX et al., Appellants,
v.
The STATE of Oklahoma, Appellee.
Nos. F-73-241 through 246.
Court of Criminal Appeals of Oklahoma.
June 18, 1974.
Rehearing Denied July 15, 1974.
Oyler & Smith, Milton Keen, Don Anderson, Public Defender, Oklahoma City, for appellants.
Larry Derryberry, Atty. Gen., Robert McDonald, Asst. Atty. Gen., for appellee.
*61 CONSOLIDATED DECISION AND OPINION
BRETT, Judge:
Appellants, James Edward Fox, Gary Thomas Smith, Johnny Lee Valentine, and Ronald Allen Hedrick, were charged conjointly in the Oklahoma County District Court with two charges of Robbery with Firearms, After Former Conviction of a Felony. Appellants will hereinafter be referred to as defendants as they appeared in the trial court. Prior to trial co-defendant Hedrick pled guilty and defendants Valentine, Smith, and Fox were tried conjointly on the two charges of robbery with firearms, after former conviction of a felony. Defendants were represented by counsel and received a jury trial. A verdict of guilty was returned by the jury and the punishment for each was assessed at fifty (50) years imprisonment. Proper motions for new trial were filed and denied by the trial court, and from their convictions this appeal has been perfected.
Prior to trial defendant Fox's attorney filed a motion for commitment in the State Hospital at Norman, Oklahoma, under the provisions of 22 O.S. 1971, § 1171, asserting that defendant Fox did not possess sufficient mental capacity to assist his counsel in preparing and conducting his defense. That motion was denied by the trial court. There was also a motion for severance filed on behalf of defendants Smith and Valentine. Defendant Smith asserted his reason for severance to be that he wished to solicit certain testimony from the wife of defendant James Fox, which would be exculpatory to him, but prejudicial to the rights of Fox. Defendant Valentine's motion for severance asserted that there was a possible conflict of interest which might arise between defendant Valentine and the other defendants, and for that reason he should not be tried conjointly. The motions for severance were denied.
At their trial defendants Smith and Fox were represented by the same counsel, Mr. H.C. Cooper and Mr. Robert Smith. Defendant Valentine was represented by court appointed counsel, Mr. James P. Neal of the Public Defenders Office.
The facts briefly stated reveal that on January 6, 1973, defendants Fox and Hedrick went to the Veazey Drug Store at 6329 No. Portland in Oklahoma City at about 10:00 p.m. When they arrived at the drug store it was closed, so Hedrick rapped on the locked door and said he had a prescription for his sick daughter. Mr. *62 Walter B. Grant, the pharmacist, saw the second man wearing a mask and stated they were highjackers and he was going to call the police. While Mr. Grant was calling the police he heard shots fired and heard the glass door shatter. At the time two customers were still in the store, Mr. Melvin Camp and Mrs. Lena E. Mitchell. Mrs. Mitchell ran to the back of the store and hid in the store room, but Mr. Camp remained in the front of the store. Defendant Fox attempted to find Mrs. Mitchell, but was unable to do so and returned to the front of the store where he held his pistol at the temple of the pharmacist and directed him to open the safe and give him the money and the narcotics. While the safe was being opened defendant Fox took the billfold from Mr. Camp, removed fifteen dollars from it, and then threw the billfold on the floor. At the conclusion of the robbery the two men ran out of the drug store. In the meantime the alert had been placed on the police radio and Officer Gary Oden approached the vicinity where he observed a vehicle parked on the north side of Kimberling's Grocery, which is adjacent to the drug store. The motor to the vehicle was still running and he observed the car's trunk lid slightly opened. Officer Oden advised the radio dispatcher that he was checking the vehicle out and approached the parked vehicle from the driver's side. While Officer Oden was checking the vehicle, Officer Steve Young approached the scene also. While the two officers were checking the parked vehicle, they observed two men come running around the corner of Kimberling's Grocery Store. The two men stopped momentarily and Hedrick jerked a black bandana from his face. The two officers advised the two men to stop, but they proceeded on toward the vehicle. Because of the icy condition of the ground, defendant Hedrick slipped to the ground and the contents of the satchel he was carrying fell into the snow. After some struggle all four men were arrested. The officers gathered up the satchel and its contents and transported the four men to the city jail.
To prove its case the State offered the testimony of nine witnesses, including two young men who encountered Fox and Hedrick as they ran from the drug store. Numerous exhibits were introduced, including the narcotics and money taken from the pharmacist.
At the second stage of the proceedings the State offered sufficient evidence to show that the three men had been formerly convicted.
We will discuss first the objections that defendants Smith and Valentine express wherein they assert the trial court committed error in not granting the requested severance. In this respect, defendant Smith's contention that co-defendant Fox's wife would have testified pertaining to a certain telephone conversation she overheard defendant Fox make; and that the alleged telephone conversation would offer exculpatory evidence in his behalf, is without merit. It is a general rule that a granting of a severance is discretionary with the trial court, and that the Court of Criminal Appeals will not disturb the trial court's ruling, absent a showing the prejudice resulting therefrom. Curcie v. State, Okl.Cr., 496 P.2d 387 (1972). The record reveals that the trial judge had heard the testimony of Mrs. Fox when he was considering defendant Fox's motion for commitment to the mental hospital for observation. We believe the court was correct when he stated to the effect that the conversation Mrs. Fox heard occurred before the commission of the robbery and had little bearing on the facts presented at the trial against the defendants herein. Likewise "It is not error alone that reverses judgments of conviction of crime in this State, but error plus injury, and the burden is upon the plaintiff in error [appellant] to establish to the Court of Criminal Appeals the fact that he was prejudiced in his substantial rights by the commission of error." Barber v. State, Okl.Cr., 388 P.2d 320 (1963). We therefore conclude that this alleged error is not sufficient to cause a reversal of the convictions of Smith and Valentine.
*63 The three defendants also assert that the evidence presented at trial was not sufficient to sustain their conviction. It is Valentine's contention that insofar as he was apprehended while he was sitting in the vehicle and did not actually participate in the act of armed robbery, that he should not be given punishment equal to that of his co-defendants. The rule of law is well established that when a conspiracy is entered into to do an unlawful act, the conspirators are responsible for all that is said or done pursuant to the conspiracy by their co-conspirators until the purpose has been fully accomplished. This Court held in Parnell v. State, 96 Okl.Cr. 154, 250 P.2d 474 (1952), and in Carle v. State, 34 Okl.Cr. 24, 244 P. 833 (1962), that if two or more persons conspire or combine to commit a felony, each is criminally responsible for the acts of his associates and confederates in furtherance of the common design, if the criminal act thoroughly results from the common enterprise, or where the connection between them is reasonably apparent. There is absolutely no question concerning the part played by defendants Fox and Hedrick, both of whom entered the drug store and committed the armed robberies. Likewise, whether or not defendants Valentine and Smith were waiting in the vehicle for their other two co-defendants to return with the loot, was a question of fact for the jury to determine. In this instance the jury decided that question contrary to the interest of defendants Valentine and Smith. As we view the evidence contained in the records before this Court, the evidence was sufficient to sustain the jury's verdict as to all three defendants. The United States Supreme Court held in Pereira v. United States, 347 U.S. 1, 74 S.Ct. 358, 98 L.Ed. 435 (1954):
"Aiding, abetting, and counseling are not terms which presuppose the existence of an agreement. Those terms have a broader application, making the defendant a principal when he consciously shares in a criminal act, regardless of the existence of a conspiracy."
This Court also held in Battles v. State, Okl.Cr., 459 P.2d 623 (1969):
"Proof that defendant aided and abetted the principals in the commission of the crime can be proven by circumstantial evidence, and if sufficient, as in the instant cause, will support the verdict."
We therefore deny defendants' complaint that the evidence was not sufficient to sustain the jury's verdict.
Defendant Fox's next complaint contends that error occurred when defendant Smith called Mrs. Fox as a witness, thereby forcing him to object to her competency in view of the privilege existing between husband and wife. The record in this case reveals that certain discussions between counsel and the court, concerning this issue, were previously entered into prior to trial. Counsel was advised by the court to forwarn the court before proceeding to call Mrs. Fox in order that the court might address the matter outside the presence of the jury, but without notice to the court, counsel called this witness with the jury present. Consequently, defendant Fox's counsel objected to her appearing. We are of the opinion that if this constitutes error, it is invited error upon which a reversal of conviction may not be predicated.
This trial was conducted after the United States Supreme Court rendered its decision in Furman v. Georgia; Jackson v. Georgia, and Branch v. Texas, 408 U.S. 238, 92 S.Ct. 2726, 33 L.Ed.2d 346 (1972). However, at this trial, over the objection of defense counsel, the trial court instructed the jury on the death penalty. In the United States Supreme Court decision in Furman v. Georgia, supra, the death penalty had been found to be unconstitutional. Defendants now assert that reversible error was committed when the court gave the instruction on the death penalty. We fail to see how the defendants were prejudiced by this instruction, because the sentence assessed by the jury did not exceed the limits provided by the statutes of this *64 State. This Court recited in Stidham v. State, Okl.Cr., 512 P.2d 1190 (1973):
"The final proposition asserts that the trial court erred in instructing the jury as to death penalty when the death penalty had already been ruled to be violative of defendant's constitutional rights by the United States Supreme Court. Defendant argues that such instructions could not help but inflame the passion of the jury to find against the defendant, whether or not they found for death. In view of the overwhelming evidence of defendant's guilt and the verdict of the jury, we are of the opinion that the defendant was not prejudiced by the court's instruction. The judgment and sentence is affirmed." See also Virgin v. State, Okl.Cr., 514 P.2d 1404 (1973).
The above statement applies in the instant case. Likewise, in the instant case, in view of the overwhelming evidence of the guilt of the defendants herein, and the verdict of the jury, we are of the opinion that the defendants in this case were not prejudiced by the court's instruction.
Another complaint offered is that the verdicts as to punishment were so vague, uncertain and indefinite as to constitute a nullity. It is to be remembered that each defendant herein was confronted with two charges of armed robbery, i.e., the robbery of the drug store manager and the robbery of Mr. Melvin Camp. The informations were consolidated for trial under the provisions of 22 O.S. 1971, § 438, which provides:
"The court may order two or more indictments or informations or both to be tried together if the offenses and the defendants, if there is more than one, could have been joined in a single indictment or information. The procedure shall be the same as if the prosecution was under such single indictment or information."
Separate jury verdicts were returned on each defendant which clearly showed both case numbers on each respective verdict. Each verdict fixed the punishment for each respective defendant at "imprisonment for a term of 50 years." Likewise, each judgment and sentence includes both case numbers of each respective defendant thereon, and provides that each defendant shall be imprisoned for a term of fifty (50) years. We therefore conclude and hold that each defendant shall serve one term of fifty (50) years imprisonment for the commission of both armed robbery offenses.
In addition, the record reflects that no objection was made to the verdicts when they were returned by the jury. If counsel for the accused believes that the verdict is irregular or not in proper form, he should object to its sufficiency at the time it is returned into court, so as to give the trial court an opportunity to have the verdict corrected before the jury is discharged. Born v. State, Okl.Cr., 397 P.2d 924 (1965).
We consider now the contention of the defendant, James Edward Fox, wherein he asserts that the trial court committed error when defendant was not committed to the State Mental Hospital at Norman, Oklahoma, pursuant to 22 O.S. 1971, § 1171. Defendant filed his motion for commitment for the alleged reason that defendant was insane and did not possess the necessary mentality to assist his counsel in preparing and conducting his defense. We acknowledge that counsel for defendant Fox has filed an excellent brief, which properly sets out the law in general as it pertains to the incompetency of a defendant at trial when supported by the facts. However, insofar as we are bound by the record before this Court, we find the same conflict in the testimony offered by defendant's wife that the trial judge must have observed. Mrs. James E. Fox testified that her husband was mentally incompetent and could not assist in his defense; that she had visited her husband in the county jail since he had been incarcerated there; that she observed emotional problems in her husband; and she stated that she thought he needed medical help. On direct examination she was asked the question, *65 "In your opinion is your husband emotionally stable enough to stand trial at this time?" She answered the question, "No."
The record reflects, however, on cross examination the prosecutor inquired of Mrs. Fox concerning her visit with her husband pertaining to other matters. He asked, "Have you talked to your husband about this case when you visited him in jail on Tuesdays?" She answered, "I visited with him but we talked about other things." The prosecutor then asked, "You have been able to discuss other things with him?" She answered, "Yes." The next question asked was, "In fact, you were in Federal Court the other day before Judge Bohanon and that time you had an opportunity to talk to your husband, did you not?" Mrs. Fox answered, "A few seconds." The prosecutor asked, "Did you discuss the case with him then?" She answered, "Yes." Later, in the same testimony, the prosecutor asked her, "Now, you testified in front of Judge Bohanon last Friday, did you not?" The answer was "Yes." The witness was asked, "Did you tell Judge Bohanon you wanted to get your husband out on bail so he could go to work, that he had a job waiting for him and he needed out for that reason?" The witness answered, "Yes." The prosecutor asked, "He is capable of going out and going to work? I believe that he is a welder, isn't he?" Mrs. Fox answered, "Yes. He is a welder." The prosecutor then inquired as to whether or not either the defendant's uncle or his father would help him with a job. The witness answered that his uncle and father were both in the Federal Court with defendant. The prosecutor then asked, "In fact the defendant himself testified, didn't he?" The witness answered, "un-huh." Later, the prosecutor asked Mrs. Fox, "Did you at any time tell Judge Bohanon there was anything wrong with the defendant mentally?" Mrs. Fox answered, "No."
It is not sufficient for the defense counsel merely to say that he is unable to communicate with his client; and, that his client's mental processes seem to waver while he is discussing the case with him; and, that his client does not understand the seriousness of a charge, to constitute justification for a finding that the defendant is mentally incompetent. In considering this question it is necessary that we consider the entire record; and, according to the testimony of defendant's wife a few days before the date set for trial, the defendant was clearly not considered to be incompetent and there was no contention that he was incapable of assisting in his defense; but instead, defendant's wife testified that if her husband were released on bail he would be able to go to work as a welder.
This Court has stated in Baker v. State, Okl.Cr., 433 P.2d 525 (1967):
"The defendant's right to a jury trial concerning his sanity is predicated upon the trial judge's doubt as to the issue of present sanity."
In Helms v. State, Okl.Cr., 456 P.2d 907 (1969), it was held that a mere statement by defense counsel that defendant is not capable of assisting in his defense, does not make it imperative for a judge to order a separate jury hearing on the issue of defendant's present sanity. In the instant case we conclude from the record that there was sufficient evidence before the trial judge, coupled with the presence of the defendant himself, for the judge to reach a conclusion in his own mind that the defendant was not mentally incompetent in the legal sense.
However, insofar as the question was raised at trial, and was again raised on this appeal, this Court entered an Order on February 14, 1974, requiring that James Edward Fox be taken to the Eastern State Hospital at Vinita, Oklahoma, for the purpose of determining his mental condition. The Order required, insofar as possible, that the medical authorities make a determination of the present mental condition of the defendant, as well as his mental condition at the time of trial. On March 25, 1974, this Court received a communication *66 from the Eastern State Hospital which provides, in part, the following:
"As to his present mental condition, he was diagnosed by our medical authorities on the 19th of March, 1974, as Phoebic neurosis with Anti-social personality and Drug dependent, opium, opium alkaloids and their derivatives as corollaries. As mentioned above, Mr. Fox was staffed on March 19, 1974, and at that time, as well as during his stay at Eastern State Hospital, was medicated with 150 milligrams of Mellaril q.i.d. During the interview, he was able to distinguish right from wrong and in a mental condition commensurate with the ability to aid legal counsel in his own behalf."
This communication was signed by D.R.W. Shupe, M.D., Acting Superintendent of Eastern State Hospital.
We therefore conclude from the evidence contained in the record that there was not sufficient showing before the trial court to indicate the mental incompetence of the defendant at the time of trial, and there was not sufficient showing on March 19, 1974, when defendant was evaluated at Eastern State Hospital, to reflect that he is of such mental incompetence that he cannot satisfy the judgments and sentences rendered against him. We therefore deny the contention of defendant Fox that the trial Court committed error when he was not committed to the Central State Hospital at Norman, Oklahoma, on his own motion to be observed and evaluated as to his mental incompetence.
We have carefully considered the briefs submitted by all three appellants, and the reply brief of defendant Smith, as well as the trial records, and for the reasons stated herein we conclude that the numerous complaints offered in these appeals are without merit. Defendant Fox's demurrer was properly denied; and after considering this trial record in its entirety, we fail to see how the punishment assessed by the jury resulted from prejudice and passion; and we further conclude that each defendant received the protections provided them by both the United States Constitution and the Constitution of the State of Oklahoma.
We are therefore of the opinion that James Edward Fox, Gary Thomas Smith and Johnny Lee Valentine each received a fair trial in accordance with due process of law; and therefore, that the judgments and sentences imposed in Oklahoma County District Court Cases numbered CRF-73-69, and CRF-73-70, wherein they were convicted for the offenses of Armed Robbery and each was sentenced to serve fifty (50) years imprisonment, should be affirmed.
It is so ordered.
BLISS, P.J., concurs
BUSSEY, J., concurs in result. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1452869/ | 700 F. Supp. 1422 (1988)
Barbara MAJOR, et al.
v.
David C. TREEN, etc., et al.
Civ. A. No. 82-1192.
United States District Court, E.D. Louisiana.
September 16, 1988.
*1423 *1424 *1425 R. James Kellogg, William P. Quigley, New Orleans, La., Lani Guinier, New York City, Stanley Halpin, Steven Sheckman, Armand Derfner, Charleston, S.C., Larry T. Menefee, Birmingham, Ala., for plaintiffs.
William Guste, Jr., John D. Fricke, Robert A. Kutcher, New Orleans, La., Kenneth C. DeJean, David R. Poynter, Baton Rouge, La., Patricia Nalley Bowers, Kendall L. Vick, Eavelyn T. Brooks, New Orleans, La., for defendants.
ROBERT F. COLLINS, District Judge.
This matter is before the Court for determination of appropriate attorneys' fees in the above-captioned matter. For the following reasons, the Court will award attorneys' fees in the amount of $335,846.15 and costs in the amount of $28,288.16 to plaintiffs, Barbara Major, Michael Darnell, Bernadine St. Cyr, Brenda Quant, and Annie A. Smart.
This litigation arose as a class action suit instituted by five black plaintiffs, individually and on behalf of all of those similarly situated. Plaintiffs sought declaratory and injunctive relief pursuant to the Thirteenth, Fourteenth and Fifteenth Amendments to the Constitution, the Civil Rights Act of 1871, 42 U.S.C. § 1983, § 2 of the Voting Rights Act, as amended, 42 U.S.C. § 1973, and 28 U.S.C. § 2201 and § 2202. The plaintiffs objected to the realignment of the State's congressional districts brought about as a result of Act 20 of the 1981 first extraordinary session of the Louisiana legislature. The basis of plaintiffs' claim for relief was that Act 20 in design and effect cancelled, minimized and diluted minority voting strength by dispersing the black majority of Orleans Parish into two congressional districts.
On October 18, 1983, judgment was entered by a three-judge panel composed of United States Circuit Judge Henry Politz and United States District Judges Fred J. Cassibry and Robert F. Collins. The Court found in plaintiffs' favor that Act 20 impermissibly resulted in dilution of minority voting strength. Act 20 was declared illegal and unenforceable, and the defendants were enjoined from taking any action to enforce its provision. The Court further found that the Louisiana legislature was to be given reasonable opportunity to confect a new plan for the election of members to the United States House of Representatives. On February 6, 1984, the Court was presented with a proposal remedy. It was then ordered that the plan be presented to the Attorney General of the United States for approval.
At the February 6, 1984 court hearing, it was decided that the three-judge panel would not be needed to determine the amount of attorney fees and costs to be awarded to plaintiffs. Counsel were ordered to attempt to resolve this matter amicably and to submit an affidavit as to time and expenses. However, the parties were unable to settle the matter, and plaintiffs made a motion for an award of attorneys' fees and expenses. This motion was subsequently referred to the United States Magistrate Alma Chasez for hearing and to make findings of fact and recommendations pursuant to Rule 53, Fed.R.Civ.P.
In her Report and Recommendation, Magistrate Chasez rejected the fee claim by the plaintiffs' attorneys as excessive *1426 and held that such an award would be inequitable and burdensome to the taxpayers of the State of Louisiana as well as an unwarranted windfall to counsel for the plaintiffs. Plaintiffs seek approximately $750,000.00 in legal fees for investing approximately 2600 hours of legal work in this litigation. Magistrate Chasez held that figure to be in stark contrast to the sum of approximately $80,000.00 which was paid to counsel for the defendants in both fees and cost reimbursement. Consequently, the Magistrate recommended that counsel for plaintiffs be awarded $135,969.40 in fees and $12,572.62 in costs for prosecution of the main action, and $39,618.00 in fees and $6,221.17 in costs in connection with the motion to assess attorneys' fees. Both plaintiffs and defendants have filed objections to the Report and Recommendation of Magistrate Chasez. The matter is presently before the Court for a determination of whether Magistrate Chasez was correct in her recommendations.
Generally, a determination by the magistrate of nondispositive motions that have been referred by a district judge will not be modified by the district court unless clearly erroneous or contrary to law. 28 U.S.C. § 636(b)(1)(A); Industrial Risk Insurers v. Creole Production Services, Inc., 568 F. Supp. 1323, (D.C.Alaska 1983), aff'd, 746 F.2d 526 (9th Cir.1983). However, a district judge is not limited to a clearly erroneous standard when reviewing a magistrate's recommendations on the issue of attorney fees. He may reject a magistrate's recommendation on the basis of a different determination of credibility. Louis v. Blackburn, 630 F.2d 1105 (5th Cir.1980). The Court is therefore not bound to follow the recommendation of Magistrate Chasez and may exercise its discretion in determining the attorneys' fees in the instant action. Yates v. Mobile County Personnel Board, 719 F.2d 1530 (11th Cir.1983).
Plaintiffs have objected to: (1) the 50% across-the-board reduction in the hours claimed by their attorneys; (2) the deduction of all hours billed by their attorneys in connection with the administrative proceeding under Section 5 of the Voting Rights Act; (3) the disallowance of recovery of all fees for expert witnesses; (4) the hourly rates which the Magistrate recommended for each attorney; (5) the Magistrate's recommendation that attorneys who did not appear on the pleadings receive no compensation for work performed; (6) the findings of the Magistrate that there was nothing novel or difficult in the questions presented in the litigation, that the litigation required no exceptional legal skill on the part of plaintiffs' attorneys, that plaintiffs incurred no risk of not prevailing in this litigation and that civil rights litigation is not undesirable as being contrary to the facts in this litigation and the law; (7) the disallowance of certain litigation expenses; and (8) the fact that the Magistrate did not award fees and expenses which are adequate to attract competent counsel to represent other plaintiffs in civil rights litigation. Defendants maintain that plaintiffs are not entitled to attorneys' fees and costs and object to the Magistrate's Recommendation on that basis.
A. Attorneys' Fees are Appropriate
Defendants have flatly denied that plaintiffs are entitled to any fees because plaintiffs have won only a Pyrrhic victory which is not worthy of a fee award. Although the State concedes that plaintiffs did achieve a reapportionment of the metropolitan New Orleans congressional districts, they argue that this was a hollow victory because the black plaintiff class elected the same white representative that they had before. It is clear to the Court that this attitude of defendants is partially what has made the instant litigation balloon to its current proportions.
42 U.S.C. § 1988[1] provides:
*1427 In any action or proceeding to enforce a provision of sections 1977, 1978, 1979, 1980, and 1981 of the Revised Statutes [42 U.S.C. §§ 1981-83, 1985, 1986] title IX of Public Law 92-318 ... or title VI of the Civil Rights Act of 1964 ... the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs.
Similarly, 42 U.S.C. § 1973l(e) states:
In any action or proceeding to enforce the voting guarantees of the fourteenth or fifteenth amendment, the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs.
Therefore, the threshhold question is: who is the prevailing party in this case? It is clear and undisputed that the plaintiff class prevailed. The fact that the first set of elections held under the new congressional plan did not produce a black congressperson is irrelevant. What is important is that plaintiffs' goal in creating the opportunity for the election of a black candidate was realized. Hennigan v. Ouachita Parish School Board, 749 F.2d 1148 (5th Cir.1985). As the Supreme Court has stated in Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 1939, 76 L. Ed. 2d 40 (1983), "A typical formulation is that `plaintiffs may be considered prevailing parties' for attorney's fees purposes if they succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bringing the suit." Id. 103 S.Ct. at 1939, quoting Nadeau v. Helgemoe, 581 F.2d 275, 278-279 (1st Cir.1978). See also, Maher v. Gagne, 448 U.S. 122, 100 S. Ct. 2570, 65 L. Ed. 2d 653 (1980); Brown v. Culpepper, 559 F.2d 274, reh. denied, 561 F.2d 1177 (5th Cir.1977).
Modern civil rights legislation reflects a heavy reliance on the salutary effect of the award of adequate attorney fees. Judge Sharp, of the Northern District of Indiana, urged this point quite clearly when he stated in Grooms v. Snyder, 474 F. Supp. 380 (N.D.Indiana 1979):
All of these Civil Rights laws depend heavily upon private enforcement and fee awards have proved an essential remedy. In many cases arising under our civil rights laws, the citizen who must sue to enforce the law has little or no money with which to hire a lawyer. If private citizens are to be able to assert their civil rights, and if those who violate the Nation's fundamental laws are not to proceed with impunity, then citizens must have the opportunity to recover what it costs them to vindicate those rights in court. 1976 U.S.Code Cong. & Adm. News 5910. If successful plaintiffs were routinely forced to bear their own attorney fees, few aggrieved parties would be in a position to advance the public interest by invoking the powers of the federal courts.
474 F.Supp. at 384.
The standard for awarding fees to successful plaintiffs arguably contains an exception to the almost automatic award of attorneys fees under 42 U.S.C. § 1988. As the Court in Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 88 S. Ct. 964, 19 L. Ed. 2d 1263 observed, a court may use its discretion to deny an award of fees where "special circumstances" would render an award unjust. However, defendants have not presented any "special circumstances" which would justify a denial of attorneys' fees in this case. As a result, the State's allegation that this case represents a hollow victory is unfounded. The Court therefore has no reservations in holding that plaintiffs are the prevailing party and are entitled to a reasonable amount of attorneys' fees and reimbursement of costs.
In analyzing the amount of fees and costs to be compensated, the Court will differentiate the fees and expenses sought in connection with the handling of the principal *1428 litigation from those sought in connection with the handling of the motion for attorneys' fees. The plaintiffs' claim for fees on the main litigation are as follows:
FEES AND EXPENSES RE PRINCIPAL LITIGATION
Attorney Total Hours Hourly Rate Total Fee Total Expenses
Stanley A. Halpin 573.25 $160.00 $ 91,720.00 $ 1,863.61
C. Lani Guinier 691.10 $160.00 $110,576.00 $15,187.52
$ 3,220.00 [2]
R. James Kellogg 510.20 $135.00 $ 68,877.00 -0-
Steven Scheckman 214.70 $125.00 $ 26,837.50 $32,240.46
William P. Quigley 483.43 $125.00 $ 60,428.75 -0-
Armand Derfner 28.0 $175.00 $ 4,900.00 -0-
________ _______ ___________ __________
Total Lodestar 2,500.68 $363,339.25 $52,511.59
The plaintiffs also request a multiplier of two which would give a total attorneys' fee award on the principal litigation of $776,678.50.
In determining reasonable attorney fees and expenses, the Court must apply the factors articulated in Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir.1974). The Johnson court applied what is known as the lodestar method and then adjusted this figure upward or downward on the basis of twelve factors. These elements are: (1) time and labor required; (2) novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) experience, reputation and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the clients; (12) awards in similar cases. The lodestar figure is obtained by determining the number of hours reasonably spent on the case by plaintiffs' attorneys and a reasonable hourly rate for those services. These two factors are then multiplied. The result constitutes the lodestar amount. This approach has consistently been approved by the Fifth Circuit and the United States Supreme Court as well. Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983); Copper Liquor, Inc. v. Adolph Coors Co., 624 F.2d 575 (5th Cir.1980).
There is some argument that the Johnson factors are now obsolete in light of Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984), in which the United States Supreme Court indicated that most of the Johnson factors will ordinarily be reflected in the lodestar. For example, novelty and complexity of the issues and the "quality" factor should be reflected in the number of hours required. 465 U.S. at 899, 104 S.Ct. at 1549; accord, Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 106 S. Ct. 3088, 3098-99, 92 L. Ed. 2d 439 (1986). However, the effect of the Supreme Court's ruling in Blum v. Stenson does not diminish the importance of the Johnson factors. Blum merely provides that many of the factors will be reflected in the time and rate, or lodestar computation, rather than at the second, or adjustment, stage of the calculation. Daly v. Hill, 790 F.2d 1071 (4th Cir.1986). Thus, the method enunciated in Blum gives more meaning to the lodestar computation and the use of the Johnson factors.
B. Time and Labor Required
Plaintiffs request compensation for 2,500.68 hours of attorneys' time in connection with the principal litigation. This time is documented by affidavits supplied by *1429 counsel, their depositions and testimony before the Magistrate. While the State does not contest the accuracy of counsel's affidavit as to the number of hours expended, it does contest the necessity for the investment of so much time. More specifically, defendant argues that there was duplication of effort amongst counsel, and performance of non-legal work by an attorney when such work could have been performed by clerical staff or paralegals. Defendants also contend that there was a disproportionate amount of time spent in preparation for court as compared with time spent in trial, an excessive amount of conference and telephone calls, working time was included with travel time, and non-working travel time was erroneously billed. Additionally, the State objects to being charged for counsel's time which was devoted to the administrative proceeding under Section 5 of the Voting Rights Act which formed no part of this litigation, which, according to the State's calculations, amounts to 207.40 hours of attorneys' time.
Plaintiffs' attorneys testified by affidavit and direct testimony at the hearing before the Magistrate that in their professional opinion this time was both reasonable and necessary for the proper representation of their client's interest in this litigation. As a general rule, the statement of counsel as to his independent professional judgment on how to best represent his client carries great weight with the Court. Nevertheless, the Court must arrive at a fee which is fair, just and equitable to counsel for plaintiffs and to the citizens of the State of Louisiana who must ultimately bear the burden of paying for the attorney fees in this case.
Where hours are fully documented and there is no question that the time has in fact been spent by an attorney, the trial court can only reduce time based on specific factual findings justifying particular reductions. See, e.g., Northcross v. Bd. of Education of Memphis, 611 F.2d 624 (6th Cir.1979); Tasby v. Estes, 651 F.2d 287, 289-90 (5th Cir.1981); see also, National Ass'n of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319 (D.C.Cir.1982).
Although some courts have approved of a small percentage reduction for duplication of effort where there are multiple attorneys (see, e.g., Northcross, supra), in no instance has an across-the-board reduction of half of documented hours without explanation and without specific fact finding been approved.[3] Thus, a fact finder should not engage in "monday-morning quarter-backing," but should follow the basic principle that if hours spent could have been properly billed to a client, then they should be presumed to reflect a reasonable amount of time spent. See Johnson v. University College of the University of Alabama, 706 F.2d 1205, 1207-208 (11th Cir.1983); Pennsylvania v. Delaware Valley Citizens' Council, 106 S.Ct. at 3098-99. It has been held that once a plaintiff has established the amount of fees, a defendant may not respond by generalized objections but must come forward with particularized evidence to justify reduction of the amount requested. National Ass'n of Concerned Veterans v. Secretary of Defense, supra, 675 F.2d at 1337-38; Tasby v. Estes, 651 F.2d 287, 289-90 (5th Cir.1981).
In the present case, the 50% across-the-board reduction is unsupported by any evidence and, indeed, does not purport to be supported by any factual determination, but rather because the Magistrate "simply feels" that the case could have been tried in that time.[4] F & R, p. 8. The only evidence which justifies such a decision seems to be the hours billed by private counsel for the defendants.
Defendants argue that a comparison of the hours that their counsel expended and the number of hours for which *1430 plaintiffs' counsel has submitted bills support a 50% across-the-board reduction. Time spent by counsel for defendants is not a controlling factor in limiting the number of hours for which plaintiffs' counsel may seek reimbursement. It is but one element to be weighed and considered for a determination of what work was necessary and whether it was done in an expeditious manner. Harkless v. Sweeny Independent School District, 608 F.2d 594 (5th Cir. 1979).
It appears from the record that six lawyers were active in the trial of this matter on behalf of the plaintiffs. For the most part, Martin Feldman and one associate handled this matter on the part of the defendants. Other factors become relevant, however. Moreover, the time billed by private counsel for the defendants does not reflect at all the time spent by the three attorneys employed by the State, and there is nothing in the record that reflects the total amount of time those attorneys spent.
Feldman (later to become Judge in this Court) and three other members of his firm billed the State for 864.75 hours over a period of five quarters. Plaintiffs claim compensation for 2,502.48 hours expended over a period of 11 quarters.[5] Feldman explained in his deposition that there were a number of matters that he did not bill the State for before he entered and after he terminated his work in this litigation, and he apparently agreed that plaintiffs' extra effort in this litigation provided the winning margin (Feldman Deposition at p. 2). It is, therefore, illogical to assume that attorneys who win should have spent no more time than attorneys who lose. In the typical civil rights case, where virtually all of the evidence and witnesses are in the hands of the defendants and where the plaintiffs have the burden of proof, it can be expected that plaintiffs' lawyers must spend more time than defendants'.
Defendants argue and the Magistrate recommends that the time billed by Armand Derfner was not necessary to the litigation and it should be disregarded in its entirety. As evidence, defendants contend that Derfner was not enrolled as counsel of record, therefore, his services could not be very important. There is no precedent that the Court is aware of which states that an attorney may not be reimbursed unless he is enrolled as counsel. Indeed, a court will frequently award fees for law students who are certainly not enrolled on a case. See, e.g., Jordan v. United States Dept. of Justice, 691 F.2d 514 (D.C.Cir.1982); Powell v. United States, Dept. of Justice, 569 F. Supp. 1192 (N.D.Cal.1983). It is not disputed that Derfner performed the tasks that he has billed, or that these tasks were in furtherance of this litigation. The Court therefore sees no reason to disallow his fees in their entirety.
Defendants have asked the Court to reduce the billable time on conferences which lasted over two hours. Their reasoning is that it is not likely that any conference which is over an hour in length is strictly business. Defendants have not presented the Court any evidence that plaintiffs' attorneys were doing tasks other than those related to this case. Those hours will therefore be compensated.
Defendants also argue that plaintiffs should not be reimbursed for time spent on the administrative proceedings. On December 17, 1981, shortly after the adoption of Act 20, the State of Louisiana submitted the plan to the Attorney General of the United States for preclearance as required by § 5 of the Voting Rights Act, 42 U.S.C. § 1973c. On June 18, 1982, the Attorney General, through his head of the Civil Rights Section, William Bradford Reynolds, informed the State that he would not object to the plan. Between December and June, plaintiffs' attorneys devoted 207 *1431 hours and related expenses to lobbying the Justice Department to object to Act 20.
Work that is "useful and of a type ordinarily necessary" for the enforcement of civil rights may be compensated even if performed in an administrative proceeding. Pennsylvania v. Delaware Valley Citizens' Council for Clear Air, 106 S.Ct. at 3093, citing, Webb v. Board of Education of Dyer County, 471 U.S. 234, 105 S. Ct. 1923, 85 L. Ed. 2d 233 (1985).
Defendants argue that Webb stands for the proposition that attorney fees are not automatically available under § 1988 for work performed in administrative actions. Webb involved the termination of a black teacher's employment. The teacher claimed that his firing was unjustified. He challenged his dismissal by way of appeal to a state board. The teacher appeared before the board with his lawyer, but obtained no relief. Subsequently, suit was filed in federal court, complaining of both the dismissal and the board's allegedly racially based decision. Plaintiff received damages and his lawyer petitioned for fees under 42 U.S.C. § 1988. The Supreme Court ultimately ruled that the lawyer was not entitled to fees under § 1988 for the work he did before the board. Although the Supreme Court did not specify its reasons for denying the fee request, it did note that:
Congress only authorized the district courts to allow the prevailing party a reasonable attorney's fee in an "action proceeding to enforce [§ 1983]." Administrative proceedings established to enforce tenure rights created by state law simply are not any part of the proceedings to enforce § 1983....
* * * * * *
When the attorney's fee is allowed "as part of the costs" to use the language of the statute it is difficult to treat time spent years before the complaint was filed as having been "expended on the litigation" or to be fairly comprehended as "part of the costs" of the civil rights action.
105 S.Ct. at 1928 (footnotes omitted).
* * * * * *
The petitioner made no suggestion below that any discrete portion of the work product from the administrative proceedings was work that was both useful and of a type orginarily necessary to advance the civil rights litigation to the stage it reached before settlement.
105 S.Ct. at 1929. Webb seems implicitly to endorse the idea that materials from a proceeding for which one could not normally receive compensation under 42 U.S.C. § 1988, if used in a proceeding for which a fee award is available, may be compensable. See also, Arriola v. T.L. Harville, 781 F.2d 506 (5th Cir.1986), (prevailing party is not precluded compensation for services rendered in a preclearance submission that bear directly on the issues in an independent lawsuit and where that work is "required and necessary to resolve the issues of the independent lawsuit.")
In another important case, North Carolina Dept. of Transp. v. Crest Street, 479 U.S. 6, 107 S. Ct. 336, 93 L. Ed. 2d 188 (1986), the Supreme Court specifically held that:
"[a] court hearing one of the civil rights claims covered by § 1988 may still award attorneys fees for time spent on administrative proceedings to enforce the civil rights claim prior to the litigation.... Moreover, even if the prior proceeding is not a `proceeding to enforce' one of the § 1988 civil rights laws, the `discrete portion of the work product from the administrative proceedings' that `was both useful and of a type ordinarily necessary to advance the civil rights litigation' ... can be part of the attorney's fees awarded under § 1988."
107 S.Ct. at 342-43 (citations omitted).
The case at bar is a proper candidate for the recovery of attorney fees in accordance with Arriola, Webb and Crest. Plaintiffs have demonstrated that the services performed before the Justice Department for preclearance submissions was both useful and of a type ordinarily necessary to advance the civil rights litigation. The hours spent on the preclearance are therefore compensable.
*1432 Defendants' next objection is that plaintiffs' attorneys should not be compensated for non-legal work or legal work which a paralegal, law clerk or secretary could have done. The Court agrees. If work which was done by an attorney could have been done by someone less qualified, that work should be compensated at a lower rate equivalent to the expertise needed. The dollar value of the work is not enhanced just because a lawyer does it. Johnson v. Georgia Highway Express, 488 F.2d at 717.
Plaintiffs argue that statistical work can be done only by an attorney. However, it has been held that paralegals can competently perform complex statistical work. Richardson v. Byrd, 709 F.2d 1016, 1023 (5th Cir.1983). Additionally, Mr. Derfner, one of plaintiff's counsel, has written at least one article where he states that law clerk or paralegal work
"typically includes such activities as statistical analysis and preparation, factual investigation, and document abstracting, and some aspect of administering a settlement. This is the underside of the court's current willingness to pay for paralegal time. Even when an attorney is a sole practitioner, or one who does not have access to paralegal assistance, rates for performing tasks which might have been performed by such personnel may nonetheless be cut, although the rates of practitioners who do not have paralegals or law clerks will generally be lower than those of practitioners who do."
M. Derfner and A. Wolf, 2 Court Awarded Attorney Fees, ¶ 16.03, 16-73 n. 140 (1984). The Court will therefore follow the advice of Mr. Derfner and cut the hourly rate by 50% for the non legal tasks which counsel for plaintiffs performed. See Rybicki v. State Board of Elections of State of Ill., 584 F. Supp. 849, 861 (N.D.Ill.1984).
Defendants have furnished the Court with 147 entries totaling 306.86 hours in which plaintiffs' attorneys did non-legal work. Review of those hours revealed that only a fraction of them involved truly non legal tasks. As a result, the Court will cut the hourly fee by 50% from the lodestar computation for the following hours which were spent in non-legal tasks (see Appendix A).
Attorney Hours
William P. Quigley 34.06
R. James Kellogg 2.83
Steven Scheckman 5.97
Stanley J. Halpin 18.60
C. Lani Guinier 3.35
The next objection is that plaintiffs' submission on travel time is not compensable or is alternatively compensable at a lower rate. Work done while traveling is not as efficient as work done in the office and should therefore be compensated at a lower rate. White v. City of Richmond, 559 F. Supp. 127, 131 (N.D.Cal.1982), aff'd, 713 F.2d 458 (9th Cir.1983); McPherson v. School District No. 186, 465 F. Supp. 749, 758 (S.D.Ill.1978). Similarly, travel time with no work claimed is not compensable, Ramos v. Lamm, 539 F. Supp. 730, 745 (D.Colo.1982), or compensable at a low hourly rate. Cruz v. Beto, 453 F. Supp. 905 (S.D.Tex.1977), aff'd, 603 F.2d 1178 (5th Cir.1979); Kirksey v. Danks, 608 F. Supp. 1448 (S.D.Miss.1985). In its discretion, the Court will award only 50% of the hourly fees for non working and working travel time (see Appendixes B and C). The following hours will be compensated at a 50% rate.
Attorney Hours
Stanley J. Halpin 23.40
C. Lani Guinier 29.6
R. James Kellogg 14.52
Steven Scheckman 10.2
William P. Quigley 9.58
Defendants next argument is that there was excessive duplication in plaintiffs' handling of the case. The Court agrees. The Court is empowered to deduct time spent by counsel that is counter-productive. Henson v. Columbia Bank & Trust Co., 651 F.2d 320, 329-30 (5th Cir. 1981); Northcross v. Board of Education of Memphis City Schools, 611 F.2d 624, 636-37 (6th Cir.1979), cert. denied, Board of Education of the Memphis City Schools v. Northcross, 447 U.S. 911, 100 S. Ct. 2999, 64 L. Ed. 2d 862, (1980), cert. denied, City of Memphis v. Northcross, 447 U.S. 911, 100 S. Ct. 3000, 64 L. Ed. 2d 862 (1980).
*1433 The Court arrived at 128.73 hours of duplicative work by allowing fees for two attorneys to do any given task by dropping the lowest duplicative hours for the third, fourth or fifth attorney. This method allows collaboration but does not foster excessive billing. On the trial dates where all five attorneys billed for their time, the Court allowed fees for those attorneys who led the trial on that particular day.
It would be impossible for the Court to tell which attorney would be best suited to do the work duplicated. The excess 128.73 hours represents approximately 1% of the total hours requested by plaintiffs. Therefore, the following hours which represent a reduction of each attorney's time by 1% should be subtracted from the hours requested by each attorney.
Attorney Hours
Stanley J. Halpin 5.73
C. Lani Guinier 6.91
R. James Kellogg 5.10
Steven Scheckman 2.14
William P. Quigley 4.83
Armand Derfner .28
1. Novelty of the Issues
This litigation did not present unduly novel or difficult issues. It is not a case such as Bolden v. City of Mobile, 446 U.S. 55, 100 S. Ct. 1490, 64 L. Ed. 2d 47 (1980), which traveled on more than one occasion to the United States Supreme Court. This case was tried once at the district level and did not proceed past that point. At the time that this suit was instituted, the burden of proof in litigation such as this was established in Bolden. Within a matter of months thereafter, Congress amended § 2 of the Voting Rights Act in order to legislatively overrule the Bolden case. In so doing, the standard established in White v. Regester, 412 U.S. 755, 93 S. Ct. 2332, 37 L. Ed. 2d 314 (1973); and Zimmer v. McKeithen, 485 F.2d 1297 (5th Cir.1973), was reinstated. The standard in White and Zimmer is substantially lower insofar as burden of proof is concerned than it was in Bolden, supra. Bolden required that the plaintiff show intent on the part of the legislature to discriminate. White and Zimmer merely required that a discriminatory result be established regardless of the intent of the legislature in enacting the questionable statute.
As correctly noted by the State, Stanley Halpin, one of the attorneys seeking fees herein, was lead counsel in Zimmer v. McKeithen, and, as such, must be considered intimately familiar with the burden of proof necessary on plaintiffs' part. The Court does not note this fact to say that any voting rights litigation is simple. What it does indicate is that there is no reason to enhance the award given to counsel. The case was not so easy for plaintiffs to prove so as to make the submitted hours unnecessary. The one fact that complicated things was that defendants fought every aspect of this suit. This made it necessary for plaintiffs to work more hours than normal.
2. Time Limitation Imposed by the Client or the Circumstances of the Litigation
The record reflects that this litigation proceeded along a reasonable time table. The Court sees no undue constraints imposed upon counsel either by the client or the circumstances of the litigation in bringing this matter to trial.
3. Amount Involved and the Results Obtained
The relief requested in this litigation was that Act 20 of the 1981 legislature be declared unconstitutional and that the State be enjoined from attempting to place it into effect. The purpose for which this relief was sought was to have a fairly proportioned congressional district for the State of Louisiana, which would not dilute or minimize the vote of the black citizens. Plaintiffs achieved a 100% victory in that respect. The State was forced to reconsider and pass additional legislation demarcating the various congressional districts in the Orleans, Jefferson and St. Bernard Parish area. The results obtained by the plaintiffs were important and significant and support a substantial fee for the results obtained.
*1434 The Court, therefore, finds that plaintiffs should receive attorneys' fees for a total of 2,370.605 hours divided as follows:
Requested Non- Travel Hours
Attorney Hours Legal Duplication Time Allowed
Halpin 573.25 18.60 5.73 11.70 537.22
Guinier 691.10 3.35 6.91 14.8 666.04
Kellogg 510.20 2.83 5.10 6.26 496.01
Scheckman 214.70 5.97 2.14 5.1 201.49
Quigley 483.43 34.06 4.83 2.415 442.125
Derfner 28.0 -0- .28 -0- 27.72
Hourly Rate
The Supreme Court has held that the primary element a court should use to determine a reasonable hourly rate is the rate that can be commanded by the attorney in the marketplace. Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984). This determination is to be made by reference to the 12 factors set out in Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir.1974). Moreover, where the record is undisputed as to what the appropriate rates are, the fact finder is not free to disregard that evidence and substitute its subjective judgment. Neely v. City of Grenada, 624 F.2d 547 (5th Cir.1980).
Counsel for plaintiffs argue that the requested rates are amounts that they bill paying clients for similar work. They also argue that the rates are reasonable, and that they were in the low end of the market range for attorneys with similar experience in complex federal litigation in New Orleans, New York, Washington, D.C., and Mobile, Alabama. As the Supreme Court decisions have also made clear, experienced and expert attorneys who exhibit a high degree of skill have the right to have those factors calculated into the hourly rates. Pennsylvania v. Delaware Valley Citizens' Council, supra. Thus, an attorney of high skill will command a higher rate than a less experienced attorney doing the same work.
1. Fixed or Contingent Fee
The plaintiffs' attorneys handled this matter on a contingency fee basis. Counsel received no monies from their clients during this litigation to compensate them for the services rendered. Had they not prevailed, they would have been unable to have collected any fee as a result of their efforts. As was stated in Jones v. Diamond, 636 F.2d 1364 (5th Cir.1981):
"Lawyers who are to be compensated only in the event of victory expect and are entitled to be paid more when successful than those who are assured of compensation regardless of the result. This is neither less nor more appropriate in civil rights litigation than in personal injury cases. The standard of compensation must enable counsel to accept apparently just causes without awaiting sure winners."
636 F.2d at 1382. Therefore, one of the most important factors to be considered is what precisely was the risk of plaintiffs' failure in this particular litigation.
Once the standard of proof was changed to eliminate the aspect of intent which had been enunciated in Bolden v. City of Mobile, the risk of loss on the part of plaintiff was greatly diminished. This legislative overruling of Bolden by Congress occurred early on in this litigation, and from that point forward the plaintiffs had a large degree of control over their risk of loss in terms of how well and articulately they could present the facts of the matter to the Court.
In this instance also, the plaintiffs mitigated their risk by working in a team fashion. This was not a question of one lead attorney and one or two associates investing all of their time in one file. Part of the reason that more than one attorney was involved in this case was to spread the risk.
*1435 2. Length of the Relationship with the Client
Plaintiffs' attorneys had no prior relationship with the client. The plaintiffs are not especially likely to generate any additional fee paying work. Therefore, an amount greater than the fee which one might charge to a regular paying client would be in order in connection with this factor.
3. Preclusion of Other Employment
As was succinctly stated by the district court in the fee hearing opinion in Bolden, "when an attorney decides to handle a case, he necessarily precludes some other employment because of time constraints. This preclusion is reflected in any fee." In the instant case, however, the court finds that counsel suffered no relevant preclusions. All of them hold themselves out to be experts in the field of civil rights and civil rights litigation. Mr. Halpin and Ms. Guinier were, during the time of the principal litigation, employees of organizations dedicated to the preservation of civil rights and civil liberties. As such, preclusion does not apply to them. Loewen v. Turnip Seed, 505 F. Supp. 512 (N.D.Miss.1980). It is not even suggested that the organization with which each is associated was precluded from other employment as a result of this case.
Additionally, shortly before the institution of this litigation, Quigley and Scheckman had only recently entered the private practice of law as partners. The Court has heard of no significant work open to these attorneys during the same time period that Major v. Treen was litigated from which they were precluded as a result of their efforts herein. Neither can the Court pinpoint, as far as Mr. Kellogg is concerned, any specific or large client or fees which he has lost as a result of his activities in this litigation.
4. Undesirability of the Case
There has been testimony to the fact that civil rights type litigation is undesirable to private attorneys. There is much to be said in support of this proposition. However, for these particular lawyers, who have built their reputations and practice on civil rights litigation, who hold themselves out as specialists in this area, this type of case is not only not undesirable but most advantageous.
Mr. Halpin and Ms. Guinier at time of trial were both associated with organizations entirely devoted to advancement of civil rights. Messrs. Kellogg, Quigley and Scheckman, although private practitioners in other areas, take pride in the civil rights work which they have done. The defendants have argued that since the majority of the citizens of New Orleans are black, it would appear that these attorneys acted on behalf of the majority rather than on behalf of the minority interests in becoming involved with this litigation. This may be true. However, the majority of the people who would be able to finance future litigation would not be the poorer Blacks whose interests were advanced by this case. They are more likely to be the people who benefitted from the passage of Act 20. The Court therefore finds that these lawyers may suffer economic loss by their inability to attract clients with other types of litigation from the community as a whole.
5. The Requisite Legal Skill
This Court certainly recognizes that there is a heavy burden on counsel for plaintiffs in voting rights litigation because they represent an entire class of citizens on an issue that is fundamental to the democratic process. Certainly, there is no basis upon which to criticize any of these attorneys in this litigation for the quality of the work which they put forth.
6. The Experience, Reputation and Ability of the Attorneys
The plaintiffs' attorneys have an excellent reputation and considerable experience in the area of civil rights litigation. All of the attorneys appearing before the Court displayed excellent skill and competence and deserve to be justly compensated for turning their talents to fighting an issue of extreme public importance.
*1436 7. The Customary Fee
R. James Kellogg graduated from Columbia University School of Law in May, 1976. Since graduation, Mr. Kellogg has been, as he states, "overwhelmingly devoted to civil rights and civil liberties issues" in his law practice. He has been a staff attorney for the American Civil Liberties Union and the Louisiana Center for the Public Interests. He has served as a consultant to the New Orleans Legal Assistance Corporation, Northwest Louisiana Legal Services, North Louisiana Legal Services, Acadiana Legal Services, Southeast Louisiana Legal Services and New Mexico Legal Services. In addition, he has been affiliated as counsel in various civil rights and civil liberties litigation with the N.A.A. C.P. Legal Defense Fund, the American Civil Liberties Union of Louisiana, the National Prison Project, the Mental Health Law Project, the National Senior Citizens Law Center and many other such groups.
Mr. Kellogg advised the Court that 90% of his litigation experience has been in the federal court system on civil rights and civil liberties issues and that at the time he litigated Major v. Treen, he had been involved in approximately ten voting rights cases. Mr. Kellogg seeks an hourly rate of $135.00 in connection with the work he performed herein. Mr. Kellogg has stated that his responsibilities in Major v. Treen were the day-to-day operation of the case, handling of the motion practice aspect of this case, and acting as supervisor of trial preparation and overall coordinator of the efforts of counsel.
It is obvious that some of Mr. Kellogg's activities, although necessary to achieve an orderly result, were not entirely legal work. However, the Court has already taken that into consideration in Appendix A. Under the circumstances, the Court finds that an hourly rate of $95.00 would adequately compensate Mr. Kellogg for the work performed. Mr. Kellogg functioned in the capacity of an associate counsel as opposed to lead counsel herein. The above rate is commensurate to what local firms would bill for an associate's time.
Steven Scheckman graduated from Tulane University School of Law in 1978. Thereafter, he has been heavily engaged in civil rights and civil liberties issues. Mr. Scheckman states that he was a staff attorney for the New Orleans Legal Assistance Corporation from 1978 through 1981, at which time he entered private practice of law as a partner in the firm of Quigley and Scheckman. Mr. Scheckman was also a member of the Board of Directors of the American Civil Liberties Union on whose behalf he has litigated.
Mr. Scheckman advised the Court that his specialty is litigation involving the institutionalized at local and state juvenile facilities and adult penal institutions. His special emphasis in civil rights and civil rights litigation surrounds the rights of juveniles and juvenile law, the mentally handicapped and prisoners.
In this litigation, Mr. Scheckman's role was to establish the legislative history applicable herein, to analyze and review all documents received in discovery and to determine how they might be used at trial. Additionally, he interviewed various expert witnesses. The Court is of the opinion that an hourly rate of $80.00 would adequately compensate him for the work he performed.
William P. Quigley graduated in 1977 from the Loyola Law School. He has served as the general counsel for the American Civil Liberties Union in Louisiana and, in addition, has been counsel to various other public interest and civil rights groups, including the Louisiana Chapter of the Southern Christian Leadership Conference, the Louisiana Coalition on Jails and Prisons, the New Orleans Public Housing Tenants, Inc. He has been co-counsel with the N.A.A.C.P. Legal Defense Fund and with the National Housing Law Project on federal litigation.
At present, Mr. Quigley is associated with Mr. Scheckman in the private practice of law. In connection with this litigation, Mr. Quigley was involved with the legislative history of the Voting Rights Act and with the § 5 submission to the Justice Department. Mr. Quigley advised in connection *1437 with other matters which he handles that he attempts to obtain an hourly fee rate of between $75.00 and $125.00. The Court is of the opinion that an hourly rate of $80.00 would adequately compensate Mr. Quigley for the work performed.
C. Lani Guinier is presently employed as assistant counsel for the N.A.A.C.P. Legal Defense and Educational Fund, a nonprofit corporation originally founded in 1940 to furnish legal assistance in cases involving claims of racial discrimination and deprivation of constitutional rights. Ms. Guinier graduated from Yale Law School in 1974 and since that time has specialized in civil rights and constitutional litigation. She has served as special assistant to the head of the Civil Rights Division in the United States Justice Department where she helped reorganize the voting rights § 5 unit. Ms. Guinier states that since April, 1981, she has worked primarily on voting rights cases as a staff attorney at the Legal Defense Fund.
Insofar as her activities in connection with this matter, Ms. Guinier testified that she was responsible for drafting all pleadings, amending the original complaint filed herein, drafting all pre-trial findings and conclusions of law, drafting the pretrial memorandum along with Stan Halpin, drafting the post trial findings and conclusions of law, summarizing all trial testimony accurately and succinctly, and formulating the strategy to overcome the advantage to the defendant as a result of preclearance of the Act by the Justice Department. Along with Mr. Halpin, Ms. Guinier worked with the experts to obtain testimony responsive to the new standard under § 2. Additionally, she cross-examined Governor Treen and, in general, worked to establish the lack of fairness of the Act sought to be overturned. Ms. Guinier seeks an hourly rate of $160.00 for the work which she has performed in connection with this matter.
There is no doubt that Ms. Guinier is a very well-trained, highly qualified professional in the area of civil rights. However, the Court is of the opinion that an hourly rate of $130.00 will adequately compensate Ms. Guinier for the work performed in this matter.
Stanley A. Halpin, Jr. graduated from Tulane Law School in 1965. Prior to that time, he had received a PhD in political science from George Washington University having written his doctoral dissertation on the Voting Rights Act of 1965. Shortly after his graduation from law school, Mr. Halpin began litigating voting and redistricting cases in Louisiana, and since that time has litigated over fifty redistricting matters on the state, county and local level. Mr. Halpin has stated that he was either lead counsel or sole counsel during those efforts.
From 1971 through 1974, Mr. Halpin litigated as lead counsel the matter of Bussie v. McKeithen, 333 F. Supp. 452 (E.D.La. 1971), aff'd, 457 F.2d 796 (5th Cir.1971); remanded, 407 U.S. 191, 92 S. Ct. 1980, 32 L. Ed. 2d 648 (1972), 499 F.2d 893 (5th Cir. 1974). From 1974 through 1976, Mr. Halpin served as lead counsel on behalf of black intervenors in the matter of Beer v. United States, 374 F. Supp. 357 (E.D.La. 1974), 425 U.S. 130, 96 S. Ct. 1357, 47 L. Ed. 2d 629 (1976). In addition, Mr. Halpin was intimately involved in the matter of Zimmer v. McKeithen, 485 F.2d 1297 (5th Cir. 1973), wherein the so called Zimmer factors important in redistricting litigation were established.
It is obvious that Mr. Halpin had his hands on every aspect of this case commencing with his examination of census data and statistical evidence for purposes of analyzing the act for potential discrimination, and continuing with meeting with experts, gathering data and facts, discussing and confecting strategy, updating research on the Zimmer factors, researching black participation in the political process and analyzing the effects of past discrimination and representation on the present political spectrum as well as refining the tasks of the various experts. Mr. Halpin not only brought his talents as an attorney to this litigation but also his considered talents as a political scientist. Whereas it appears that Ms. Guinier did much of the reduction of ideas to paper, it does appear *1438 that Mr. Halpin formulated the structure and the direction that this litigation was to take. The Court therefore finds that an hourly rate of $140.00 will adequately compensate Mr. Halpin for the work he did on this case.
Armand Derfner graduated from Yale Law School in 1963. He served as Staff Counsel for the Lawyers Constitutional Defense Committee in Mississippi. Mr. Derfner is now in private practice in Charleston, South Carolina, where he is a partner in the firm of McClain & Derfner. Mr. Derfner has been actively involved in vote dilution cases under the Voting Rights Act, arguing several before the United States Supreme Court. Mr. Derfner was a key figure in the legislative developments which resulted in the 1982 amendments to the Voting Rights Act. The Court is of the opinion that an hourly rate of $150.00 would adequately compensate Mr. Derfner for the work he did on this case.
The Court therefore finds that counsel for plaintiffs should receive the following hourly rates:
Attorney Rate
R. James Kellogg $ 95.00
Steven Scheckman $ 80.00
William P. Quigley $ 80.00
C. Lani Guinier $130.00
Stanley J. Halpin $140.00
Armand Derfner $150.00
Multiplier
Plaintiffs have requested that the Court use a multiplier of two to increase their fees. Multipliers are granted only under certain circumstances. Pennsylvania v. Delaware Valley Citizens Council for Clean Air, 483 U.S. 711, 107 S. Ct. 3078, 97 L. Ed. 2d 585 (1987). The standard for granting a multiplier is succinctly stated in Blum v. Stenson, 465 U.S. 886, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984), wherein the Court noted as follows:
"Neither complexity nor novelty of the issues, therefore, is an appropriate factor in determining whether to increase the basic fee award ... The quality of representation may justify an upward adjustment only in the rare case where the fee applicant offers specific evidence to show [1] that the quality of service rendered was superior to that one reasonably should expect in light of the hourly rates charged and [2] that the success was exceptional ... Because acknowledgment of the `results obtained' generally will be subsumed within other factors used to calculate a reasonable fee, it normally should not provide an independent basis for increasing the fee award ... Nor do we believe that the number of persons benefitted is a consideration of significance in calculating fees under § 1988."
Blum, 465 U.S. at 898-99, 104 S.Ct. at 1549. The Court does not find that any of the circumstances listed by the Blum case exist here, and will therefore decline to grant a multiplier.
8. Awards in Similar Cases
The Court has reviewed the appropriate jurisprudence with regard to fee awards in voting rights litigation. The following constitutes a synopsis of cases on this issue.
(a) Wallace v. House, 377 F. Supp. 1192 (W.D.La.1974)
Plaintiffs challenged the at-large scheme for aldermanic counsel elections in the town of Ferriday, Louisiana. Plaintiffs proved their claim that the scheme effectively deprived them of their right to vote by cancelling out black voting strength. The trial court awarded successful plaintiffs attorneys' fees on theories of common benefit and private attorneys general.
Plaintiffs' counsel, Stanley Halpin, indicated that he spent 138.5 hours on preparation and trial which was undisputed. The Court awarded Halpin an hourly rate of $50.00 despite finding the customary fee in Louisiana to begin at $35.00 per hour. Noting that Mr. Halpin's expertise in redistricting and voting rights cases allowed him to use time more efficiently than a less experienced attorney, the Court found the hours expended reasonable. In addition to the attorneys' fee award, expert witness fees were awarded in the amount of $250.00, and $65.28 was awarded for airfare. The Court also categorized the cost of developing precinct and registration data as a legitimate plaintiffs' expense. The *1439 total award was for 138.5 hours at $50.00 per hour. The $6,925.00 award was held appropriate; any less would have been unfair, according to the court.
(b) Coalition to Preserve Houston v. Interim Board of Trustees, 494 F. Supp. 738 (S.D.Tex.1980)
Plaintiffs in this case prevailed in a Section 5 challenge to the Board. Plaintiffs sought declaratory and injunctive relief against the Board. Plaintiffs' counsel submitted time records reflecting the expenditure of a total of 632.5 hours over approximately 3 years. 105.25 of those hours were expended by paralegals. The court allowed a 10% downward adjustment to account for duplicative legal work.
The Court also categorized the hours according to legal work, legally related activities, such as phone conferences, etc., and routine administrative activities. The hourly rates were higher for those who had been in practice longer, $75-$100; the rate for more recent graduates was set at $50. The result was a rate of $100 per hour for the most experienced attorney, $85 per hour for his informal communications, and $20 per hour for non-legal work performed by him. For the less experienced attorneys, the rates for informal communications were $60 and $30, and the rate for non-legal work was $20 per hour. The total number of hours was 339.50. The total fee award was $44,482.21.
(c) Bolden v. City of Mobile, No. 75-297-P (S.D.Ala.1983)
Plaintiffs successfully challenged the at-large election scheme in Mobile, Alabama. Their success came after appealing to the U.S. Supreme Court twice over a period of eight years.
Plaintiffs' attorney sought a total lodestar of $507,748.80 as well as a multiplier of three, which would have resulted in an award of $1,523,245.50. In addition to fees, they sought $96,018.69 in expenses.
The Court found the outstanding skill and determination warranted an enhancement of the hourly fee. The total lodestar was $444,843.00 and a multiplier of two was awarded. The total recovery of attorney fees was $889,686.00. The multiplier was also applied to hours expended preparing their fee request.
(d) Flowers v. Wiley, 675 F.2d 704 (5th Cir.1982)
District court ordered defendants to pay plaintiffs a total of $41,659.00 in attorney fees and $971.69 in expenses in a successful voting rights case. The Fifth Circuit's modification of the district court award was based in part on the trial court's allowance of a $150 hourly rate "across the board" without regard to experience and qualifications, the nature of the professional activity or the particular contribution to the success of the lawsuit.
In addition, the court's modification of the award was necessary to prevent compensation for duplicative activity or passive observance while other attorneys performed. The court reduced the enhancement from 50% to 33 1/3 % for the contingency allowance, holding that a 50% enhancement was an abuse of discretion.
(e) Lacomb v. Growe, 541 F. Supp. 160 (D.C.Minn.1982)
Plaintiffs successfully challenged Minnesota's legislative and congressional districts on grounds of malapportionment. Plaintiffs sought to recover $39,982.00 in fees based on an hourly rate of $90 for 444¼ hours and costs in the amount of $9,009.71. There was no dispute as to the reasonableness of the request, the issue was whether the award should be taxed against defendants or against the intervenors. No multiplier was awarded.
(f) Burton v. Hobbie, 561 F. Supp. 1029 (M.D.Ala.1983)
Plaintiffs successfully challenged the reapportionment plan implemented by the Alabama legislature and sought attorney fees in the amount of $233,730.00 and $107,297.25 in expenses. The defendants objected to recovery for hours expended on plaintiffs' Supreme Court appeal, alleging that plaintiffs did not prevail.
*1440 The district court refused to reduce the compensable hours because plaintiffs failed to prevail on all issues or because some relief was obtained through settlement. Plaintiffs also sought a multiplier of 1.5, but none was granted. The court ultimately awarded plaintiffs $151,575.00 in fees and $106,629.35. There was no dispute as to the reasonableness of the hours claimed or the hourly rates sought.
(g) Farnum v. Burns, 571 F. Supp. 45 (D.C.R.I.1983)
Plaintiff made successful challenge to a Senate redistricting plan. The only issue was whether the overall fee should be increased by some percentage to compensate for the contingency factor in the case. Plaintiffs sought a 100% multiplier. The Court awarded plaintiffs $105,700.00 in fees for lost hours, a 10% multiplier of $10,570.00 and costs in the amount of $24,306.76.
(h) Graves v. Barnes, 700 F.2d 220 (5th Cir.1983)
District Court for the Western District of Texas awarded fees to plaintiffs as prevailing parties in an action challenging multimember districts in Texas. Defendants challenged the court's award as excessive.
On appeal, the court upheld the application of a multiplier of two in order to account for the contingent nature of the case. The court also noted that a multiplier may be appropriate due to delay in receipt of payment and to reflect the quality of representation. The court emphasized that a multiplier is not due in every case, as reasonable calculation of the lodestar may provide adequate compensation. The total award was in the amount of $780,263.20.
(i) In Re Ill. Congressional Districts Reappor. Cases, 704 F.2d 380 (5th Cir.1983)
The district court increased a fee award by a multiplier of three primarily because of the complexity of the case and the high quality of legal work performed by plaintiffs' attorneys. The only issue at trial was which redistricting plan should be implemented. The district court awarded fees of $128,215.00 for 915.5 hours of legal work by three lawyers; there was no dispute as to the hours spent or the rate of compensation.
The district court increased the lodestar rate by a factor of three, and defendants appealed. The multiplier was based on several factors: (1) contingent nature of the case; (2) complexity of the case; (3) excellent quality of legal work; and (4) service to the public interest.
The Seventh Circuit found that the trial court did not err in considering the contingent nature of the case as one of several factors. The issues involved detailed demographic analyses and required the application of constitutional requirements to these analyses resulting in the complex intertwining of facts and law. The factual issues were not simple nor were the legal issues straight forward. Public interest was served by successfully persuading the court that one map was the best of the three at issue.
The Appellate Court found the multiplier of three excessive. Although the work quality was fine, it did not justify an hourly rate increase from $165 to $495. The court reasoned that the hourly rate took into account the attorneys' expertise. Where the hourly rate is high, a multiplier of three results in an excessive bonus. Accordingly, the Appellate Court reduced the multiplier of three to 20%.
(j) Rybicki v. State Board of Elections, 584 F. Supp. 849 (N.D.Ill.1984)
Black and Hispanic plaintiffs successfully challenged an Illinois legislative redistricting plan and sought attorney fees. However, the classes of Republican and suburban interest plaintiffs were unsuccessful, and their petition for attorneys fees was denied. Defendants objected to Black and Hispanic plaintiffs' request on several grounds, including duplicative efforts, excessive hourly rates and the 20% multiplier.
The court found the hourly rates reasonable and customary for the firm seeking *1441 fees and cost incurred in representing the black plaintiffs. Although the case was complex, the Court reasoned that no multiplier was warranted, finding that the $170 hourly rate reflected the quality of the attorneys' work as well as the complexity of the case. The lodestar was $230,695.25 for the firm representing one group of plaintiffs.
Two Illinois legislators filed the initial complaint and continued to act as co-counsel during trial. The defendants objected to fees for the pro se litigants who were state legislators. The court made a fee award. However, it reduced the lodestar because there were no contemporaneous time records, some work was duplicative of attorneys' efforts and some of the work was non-legal. The two legislators were awarded fees based on a $100 hourly rate.
Attorneys for the Hispanic plaintiffs were awarded a lodestar of $78,580 at an hourly rate of $100 with the exception of travel time for which the court found $35 per hour reasonable. No multiplier was awarded, as the hourly rate was adequate compensation reflecting the complexity of the case.
(k) Jordan v. Allain, 619 F. Supp. 98 (N.D.Miss.1985)
Plaintiffs successfully challenged two Mississippi redistricting plans and moved for an award of attorney fees. This case involved two evidentiary hearings and a Supreme Court appeal as well as work expended on post-judgment relief and preparation of motion for an award of attorney fees.
The Court found that even though five attorneys were involved and large number of hours were spent on the second hearing, the number of hours considered were reasonable. However, the court reduced the hourly rates ranging from $75 to $135 to rates ranging from $65 to $100 based on the prevailing rates in the Northern District of Mississippi. Only one attorney, Frank R. Parker, whose representation was considered superior was granted an enhancement of 50%. The court found an across-the-board enhancement unwarranted.
(l) Kirksey v. Danks, 608 F. Supp. 1448 (S.D.Miss.1985)
The Court found that plaintiffs' lawsuit was a significant catalyst in achieving passage of referendum which changed the form of government in Jackson, Mississippi. As a result of this finding, the court held that plaintiffs were a prevailing party.
The court held that the complexity of the case made the number of hours reasonable. The court held that the hourly rates should reflect the prevailing rate in Mississippi and awarded fees at $100 per hour for one attorney and $60 per hour for another. The court also awarded a multiplier of 25%.
Upon review of the aforementioned cases, the Court finds that the award rendered in this case is in keeping with what other Courts have done.
Expenses Requested by Counsel in Connection with Principal Litigation
The Court has adopted most of the recommendations made by the Magistrate in regard to expenses. The majority of the expenses requested by counsel were apparently borne by Scheckman and the Legal Defense Fund.
Steven Scheckman requests reimbursement for expenses totalling $32,240.42. Of this amount, the following amounts were not initially disputed by the State and had been stipulated as reasonable:
Expert and Professional Assistance Amount
Richard Engstrom
74.25 hrs @ $100/hr $ 7,425.00
Joseph Logsdon
32.00 hrs @ $100/hr 3,200.00
Raphael Cassimere, Jr.
34.00 hrs @ $100/hr 3,400.00
Shirley Laska
13.0 hrs @ $25/hr 325.00
Expenses 56.49
Mapmakers and Supplies 3,500.00
Photographer 350.00
Depositions
Treen 356.40
Hainkel 99.90
Henderson 161.90
Selle 276.14
Logsdon 70.00
Cassimere, Chehardy 143.90
Lewis, Engstrom 128.30
Morial 446.40
Express Mail 400.00
__________
TOTAL EXPENSES $20,339.43
*1442 However, in light of the recent holding of the Fifth Circuit in IWA v. Champion International Corp., 790 F.2d 1174 (5th Cir.1986), the State now contests all of those items listed as expert witness fees above. In that opinion, the appellate court ordered districts courts "to apply the rule announced today to all pending cases." 790 F.2d at 1181. Accordingly, as to expert witnesses Engstrom, Logsdon, Cassimere and Laska, all expert fee charges over and above the normal court attendance fee of $30.00 per diem shall be disallowed. Since the work billed on behalf of these experts does not establish that a court appearance or depositions were involved, no amount will be awarded on these claims.
As the State does not contest the reasonability of any other above listed amounts, there is no necessity to discuss these items. The Court will award $5,932.94 for these items.
The following fees submitted by Mr. Scheckman are also contested by the State:
Item Amount
Witness Fees for Depositions of M.
Landrieu, E. Bruno, L. Watermeier
$30.00 each incurred 12/18/82 $ 90.00
Payment to Metropolitan Agency for
serving deposition subpoenas and providing
mileage incurred 12/13/82 256.00
Depositions of M. Landrieu, E. Bruno,
and L. Watermeier incurred 12/23/82 475.00
Kinko's copying for exhibits incurred
2/28/83 555.03
Fees for expert Gordon Henderson 9,325.00
Travel 1,200.00
__________
TOTAL EXPENSES $11,901.03
The first four above expenses are objected to by the State because plaintiffs failed to comply with a discovery order of the Magistrate. On March 26, 1985, Magistrate Chasez entered an order directed to plaintiffs mandating that the defendants be furnished with any documentation supporting expenses other than expert witness fees claimed in this matter. This documentation was to be furnished to the defendants on or before April 2, 1985. The documentation was submitted somewhat late. However, the Court sees no reason to disallow the expenses as they are fully documented.
Again, expert fees for Gordon Henderson will not be allowed pursuant to IWA. Mr. Scheckman seeks reimbursement for travel expenses in the amount of $1,200.00. However, due to Scheckman's inability to produce receipts and other documentation, the Court is unable to verify the expenses as relating to matters connected with this case. Accordingly, of the sums requested by Mr. Scheckman, the total of $7,308.97 will be allowed as reimbursable expenses.
The following constitutes the itemized expenses of Stanley A. Halpin in connection with the principle litigation:
Date Item Amount
2/28/83 Trial and Travel Expenses
thru Parking, gas, ground transportation
3/13/83 $ 349.50
Credit card food expenses 134.62
Car Rental 200.00
Gas 52.45
Airfare 190.00
1/18/83 Deposition Travel Expenses
thru Food, parking, misc. 141.95
1/24/83 Car Rental 135.49
Airfare 215.00
Credit card food 70.24
Gas 23.72
12/17/82 Travel to New Orleans for
thru case preparation
12/19/82 Food, parking 116.70
Gas 23.94
Airfare 210.00
Long distance phone calls N/C
_________
TOTAL $1,863.61
The major problem with all of these expenses appears to be largely the failure on the part of Mr. Halpin to produce a receipt or any other documentation that the expenses were actually incurred. For example, regarding parking, gas and ground transportation expenses incurred by Mr. Halpin from February 28, 1983 through March 13, 1983 in the amount of $349.50, only $4.50 has been documented by a receipt. For the same time period with regard to the $52.45 in gas reimbursement, only receipts for $15.00 have been produced.
Regarding deposition travel expenses incurred from January 18, 1983 through January 24, 1983, again receipts present a problem on Mr. Halpin's food, parking and miscellaneous expense requests of $141.95. In that instance, receipts have been produced *1443 for only $99.50 of the requested amount. For the time period, December 17, 18, and 19, 1982, receipts have not been forthcoming to support $112.70 of the requested $116.70 in food and parking sought by Mr. Halpin, nor have receipts been forthcoming to support $10.94 of the requested $23.94 in gas reimbursement sought by Mr. Halpin.
The Court is of the opinion that defendants' position of calling for strict proof of expense money incurred is well founded. As receipts are not available to support and corroborate the incurring of the aforementioned expense, the amount sought will be reduced to those sums for which a receipt has been provided.
With regard to Mr. Halpin's request for reimbursement for food expenses incurred from February 28, 1983 through March 13, 1983 in the amount of $134.62, the reasonableness of the cost is disputed by the State. Of that amount, $37.45 is attributable to a meal at Chez Helene restaurant and the remainder to one meal at Brennan's. The bill at Chez Helene indicates three people were present, i.e., Mr. Halpin, Ms. Guinier and Mr. Scheckman. The bill at Brennan's is silent as to who was present. Of the amount requested, the total sum of $37.45 will be allowed on the Chez Helene bill. The bill is not exorbitant and there is no basis to determine how much is attributable to each person. On the Brennan bill, $30.00 will be allowed as sufficient for a reasonable meal. All other amounts are disallowed.
The State does not object to the reasonableness of the $200.00 sought by Mr. Halpin for rental car expense nor the $190.00 air fare reimbursement likewise requested.
With regard to the deposition travel expenses incurred January 18 through 24, 1983, the State does not object to the reasonableness of the $215.00 air fare reimbursement sought by Mr. Halpin. However, $90.33 of the $135.49 sought for rental car reimbursement is objected to on the basis that Mr. Halpin was not needed except for January 21st and 22nd in connection with these depositions. The Court will not second guess the wisdom of counsel with regard to remaining for the extra four days in question herein and the full amount of the rental car reimbursement sought by Mr. Halpin will be granted to him.
Of the $70.24 credit card food reimbursement expense for this same time period, i.e., January 18-24, 1983, the State objects to $21.08 of same on the grounds that this amount is attributable to a meal eaten by Mr. Kellogg for which Mr. Halpin paid and now seeks reimbursement. Since Mr. Kellogg, being a native of New Orleans, would not have been entitled to a per diem, the State seeks disallowance of a prorated amount of the total bill which it allows to Mr. Kellogg's food consumption. This is not an exorbitant bill, and the Court will therefore order reimbursement of the full amount to Mr. Halpin.
Of the $23.72 gas reimbursement sought by Mr. Halpin, the State objects to $15.79 on the grounds that Mr. Halpin was not needed in New Orleans except for two of the six days in question. Again, the Court will not second guess the wisdom of counsel on what amounts to a non-consequential expense. Mr. Halpin will be reimbursed for the full amount sought on this item.
With regard to Mr. Halpin's expenses for December 17, 18 and 19, 1982, the $4.00 for which receipts have been furnished the State as to food and parking will be allowed. Despite the fact that the State urges that Mr. Halpin was not needed in New Orleans at this time, the Court will not second guess counsel on such a non-consequential amount. The same rationale holds for the gas reimbursement sought by counsel. Thirteen Dollars ($13.00) in receipts have been furnished to the State and this amount will be allowed to Mr. Halpin. Accordingly, the following amounts will be awarded to Mr. Halpin in connection with the expenses which he has sought.
Date Item Amount
2/28/83 Trial and Travel Expenses
thru Parking, gas, ground transportation
3/13/83 $ 4.50
Credit card food expenses 67.45
Rental car 200.00
Gas 15.00
Airfare 190.00
1/18/83 Deposition Travel Expenses
thru Food, parking, misc. 99.50
1/24/83 Rental car 135.49
Airfare 215.00
*1444
Date Item Amount
Credit card food $70.24
Gas 23.72
12/17/82 Travel to New Orleans for
thru case preparation
12/19/82 Food, parking 4.00
Gas 13.00
Airfare 0
Long distance phone calls N/C
__________
TOTAL $1,037.90
C. Lani Guinier requests reimbursement for expenses totalling $18,407.52 in connection with the principle litigation. Of this amount, the following items were not initially disputed by the State and had been stipulated as reasonable.
Date Item Amount
1/10/83 Motion and brief to Kellogg by
Federal Express $ 32.00
1/12/83 Supplementary affidavit to
Kellogg by Federal Express 19.00
3/11/83 Trial material to Lani Guinier
by UPS 10.27
6/9/83 Findings of Fact & Conclusions
of Law, Purolator, to
Kellogg 31.00
3/11/82 Compensation to G. Henderson
for analysis of data 3,558.25
7/14/83 Court cost 60.00
3/28/83 Shirley Laska, expert witness
fee 381.49
G. Henderson, expenses only
for deposition 1,654.90
4/8/83 J.H. Echezabal, trial transcript 1,126.85
5/26/83 Trial transcript 658.63
__________
TOTAL $7,532.39
In light of IWA, the State now contests and seeks disallowance of those amounts attributable to experts Henderson and Laska over and above the amount allowed by statute. 28 U.S.C. § 1821. The clear dictate of IWA supports defendants' position. The Court will award $30.00 for payment to each expert. As the State does not contest the reasonability of the other above listed amounts, it is not necessary to discuss these items. The Court will award $3,592.65 from these line items.
The following fees submitted by Ms. Guinier are contested by the State:
Item Amount
Conference with co-counsel and plaintiffs
in New Orleans (LG) in December,
1981 $ 626.00
Travel to D.C. to review Justice Department
files (LG) in June, 1982 92.25
Travel to D.C. to review DOJ files (LG)
in December, 1982 146.00
Hearing on Pre-trial motions, depositions,
trial preparation (LG) in January,
1983 703.95
Trial preparation and trial (LG) in
March, 1983 $1,896.67
Post-trial brief, review exhibits, confer
with co-counsel New Orleans (LG) in
May, 1983 508.05
Local taxis (LG) in June, 1983 35.65
Hearing, New Orleans (LG) in June,
1983 478.59
Hearing, New Orleans (NBW) in June,
1983 535.75
Local taxis (LG) in July, 1984 10.00
Photocopying at .15 per page from January,
1983 through January, 1984 1,289.07
Postage paid on opposition to intervention
forwarded to W. Quigley on December
12, 1983 34.00
Long distance telephone calls from November
12, 1982 through June 5, 1984 166.78
Legal printing paid for July 14, 1983 53.50
Service of subpoenas by Associated Investigators
paid for February 16, 1983 86.65
Expenses of expert G. Henderson in
connection with his deposition paid for
March 28, 1983 1,654.90
Expenses of expert G. Henderson in
connection with trial paid on May 31,
1983 1,002.19
Services of Janice McCaughan from
May 14, 1983 through May 29, 1983
80.5 hours time at $40.00 per hour 3,220.00
__________
TOTAL $12,540.00
With regard to the first of the hereinabove contested expenses, that being the $626.00 item incurred in December, 1981, the Court disallows $111.71 for lack of a receipt to document this expense. Receipts have been presented in the amount of $450.00 for air fare and $64.29 in connection with hotel expenditures, both of which the Court finds to be reasonable. Accordingly, an amount of $514.29 will be allowed reimbursable to Miss Guinier on behalf of the N.A.A.C.P. Legal Defense Fund. The State has argued that these expenses should be disallowed on the grounds that Miss Guinier had no need to meet with plaintiffs or with co-counsel herein. The fact is, however, that Miss Guinier was a moving force in this litigation. The Court has handled the question of duplication of time and hours spent at an earlier stage of this opinion. Certainly plaintiffs might have carried forward this litigation in a different fashion, but that was not done, and this expense was incurred in bringing this matter to fruition. Accordingly, the State's argument will be disregarded, and the aforementioned sum awarded.
The $92.25 expense in connection with travel to Washington, D.C. to review Justice Department files in June of 1982 will *1445 be allowed. The Legal Defense Fund expense report filled out by Miss Guinier and submitted to her employer has been entered into evidence and is deemed sufficient.
As to the December, 1982 travel, food and lodging expenses regarding Miss Guinier's trip to Washington, D.C. to review Department of Justice files, this entire sum is disallowed. No receipts have been produced to support the payment of the $146.00. The same result will be reached as to the travel, food and lodging expenses claimed by Miss Guinier in the amount of $703.95 in January, 1983. Again, no receipts were produced to substantiate these sums.
On the $1,896.67 requested for food, transportation and lodging in connection with the trial in March, 1983, $860.00 of this amount will be allowed as receipts have been presented to document this sum. The State has argued that this amount should be further reduced because Miss Guinier was not needed for more than six days in New Orleans in connection with the trial, since the time expended by her was duplicative of that spent by other counsel. The Court rejects this argument insofar as legitimate expenses incurred at a time when she was in New Orleans and working on this litigation are concerned. The duplicative nature of the hours of counsel has already been handled at an earlier point in this opinion.
The $508.05 expenditure for food, travel and lodging to New Orleans in May of 1983 requested by Miss Guinier will be denied in its entirety. Included in this amount is $123.51 in hotel bills paid to the Radisson Plaza Hotel in Raleigh, North Carolina. The Court finds no nexus between Miss Guinier's stay in Raleigh, North Carolina and this litigation.
Three hundred eighty-one dollars ($381.00) represent air fare from New York City to Raleigh-Durham on May 3, 1983 and from Raleigh-Durham to New Orleans via Atlanta on May 5, 1983. It likewise includes air fare from New Orleans back to New York on May 8, 1983. Assuming in Miss Guinier's favor that this trip was, in fact, a necessary component of this litigation, obviously the entire amount was not attributable to Major v. Treen. It is clear that the stop made by Miss Guinier in Raleigh-Durham was in connection with other litigation which she was handling, namely, Gingles v. Edmisten, a case which is totally unrelated to the present matter before the Court. Miss Guinier made no attempt to suggest or prove to the Magistrate or the Court the cost of round trip air flight from Raleigh-Durham to New Orleans and back to Raleigh-Durham, which would be the cost of air fare reasonably attributed to Major v. Treen. Since it is Miss Guinier's burden to establish the amount for which she should be reimbursed, this claim will not be adjudicated until Ms. Guinier provides the Court with creditable proof as to the amount which should be allocated to that portion of her air travel from Raleigh-Durham to New Orleans and back to Raleigh-Durham. Ms. Guinier was allowed to so supplement the record by the Magistrate. She has not done so to this date. The entire amount will therefore be disallowed.
The request for reimbursement in connection with fees paid to local taxis in June of 1983 shall be disallowed in its entirety for the failure to present receipts to document these expenses.
The $478.59 requested for food, travel and lodging expenses incurred in June of 1983 in connection with the hearing in New Orleans shall be allowed in its entirety. The State has argued that someone other than Miss Guinier could have argued this motion. The Court will not substitute its judgment for the strategic judgment of counsel viewed with hindsight and will award the full amount of this claim.
The claim of $535.75 for food, travel, and lodging on behalf of Napoleon B. Williams incurred in June, 1983 will be disallowed in its entirety. Mr. Williams was not counsel of record. The Court agrees with the Magistrate's finding that Williams was not actively involved in this litigation and was not necessary to a proper representation of plaintiffs' claims. Therefore, this amount shall be disallowed.
*1446 As with other claims where there has been a lack of receipt furnished to the State to substantiate the amount expended, the claim for reimbursement for local taxi fares in July, 1984 will be disallowed.
Miss Guinier requests reimbursement on behalf of the Legal Defense Fund for photocopying in the amount of $1,289.07. Of that amount, $35.55 will be disallowed for lack of a receipt to substantiate the expense. In addition, the State argues that an additional $332.10 should be disallowed as representing excessive or unnecessary photocopying. The Court will allow Miss Guinier to be reimbursed on behalf of the Legal Defense Fund in the amount of $1,253.52. The number of photocopies made herein should not necessarily be limited to the number needed for service on counsel. According to Miss Guinier's affidavit, it was necessary that this photocopying be done, and the Legal Defense Fund will therefore be reimbursed in this amount.
Insofar as the postage necessary to mail the opposition to the intervention to Mr. William Quigley in the amount of $34.00 is concerned, this amount will be disallowed, because no receipts have been provided to substantiate this amount. As there are no receipts to substantiate the full $166.78 on the long distance reimbursement sought on behalf of the Legal Defense Fund, the full amount of this requested reimbursement will not be granted. The amount of $93.70 will be granted as having been verified expenditures. The entire amount requested for legal printing which was paid on July 14, 1983 in the amount of $53.50 will likewise be denied for failure to produce a receipt to substantiate the sum sought.
Reimbursement in the amount of $86.65 is requested in connection with the payment of Associated Investigators for service of subpoenas. The State objects to this expense on the grounds that there is no record or itemized receipt of who was served, for what purpose the service was needed or when the service was accomplished. The Court notes that at the time a requisition was requested from the Legal Defense Fund by Miss Guinier, the charge was categorized as one for special research rather than for service of subpoenas. Although the Court is unsure as to who was to be served or when the service was to be accomplished, either purpose was still necessary for the prosecution of this case. The $86.65 will therefore be allowed.
Reimbursement in the amount of $1,654.90 is sought in connection with the expenses of Gordon Henderson, expert witness, on March 28, 1983 in connection with his deposition. Of this amount, $671.92 will be disallowed, as no receipts were produced to substantiate the sums claimed. Of the amounts for which receipts were produced, $6.00 in ground transportation has been stipulated as reasonable by the State. Air fare in the amount of $524.00 is requested. However, the record reflects that this sum was expended by Mr. Henderson for purposes of traveling from New Orleans to Cincinnati to Dayton by first class instead of by coach. The Court finds that there should be some reimbursement for the amount of this air fare, but on the basis of a coach ticket as opposed to a first class ticket. The Magistrate gave Miss Guinier the option to present some type of proof by way of affidavit from Delta Air Lines, Inc. as to the cost of a coach ticket from New Orleans to Cincinnati to Dayton during the relevant time period. This was not done, and the air fare will therefore be disallowed. The full amount of Mr. Henderson's bill at the Royal Orleans will be allowed, which is $419.23 as well as the restaurant bill at Gins Mee Hong Restaurant for $38.75. The Court will exercise its discretion and allow reimbursement for the expenses of an out of town witness like Mr. Henderson for $463.98. Dasher v. Mutual Life Ins. Co. of N.Y., 78 F.R.D. 142 (S.D.Ga.1978).
Expenses in the amount of $1,002.19 paid to G. Gordon Henderson in connection with his trial appearance before this Court is sought. This amount will be denied in its entirety, because no receipts have been produced to substantiate the amount requested.
Lastly, reimbursement is sought for the services of Janice McCougham, a law student *1447 working at the behest of Ms. Guinier on certain aspects of this litigation. After review of this time sheet, the Court does not feel all of these hours were necessary. Liberal amounts of time have been allowed counsel of record in this litigation to properly represent their respective clients. The Court will therefore award expenses for 40 hours at $10.00 per hour for a total of $400.00.
Of the contested amounts, the following constitutes the expenses allowed to Ms. Guinier on behalf of the Legal Defense Fund:
Item Requested by Legal Defense Amount
Fund for Travel, Food and Lodging Allowed
Conference with counsel and plaintiffs
in New Orleans December, 1981 $ 514.29
Travel to Washington to review Justice
Department files June, 1982 92.25
Travel to Washington to review Justice
Department files December, 1982 -0-
Hearing on pre-trial motions, depositions
and trial preparation January,
1983 -0-
Trial preparation and trial March,
1983 860.00
Post-trial brief, review of exhibits, confer
with co-counsel in New Orleans
May, 1983 -0-
Local taxis June, 1983 -0-
Hearing in New Orleans June, 1983 478.59
Hearing in New Orleans (Napoleon B.
Williams) June, 1983 -0-
Local taxis July, 1984 -0-
Photocopying $1,253.52
Postage in connection with transporting
opposition to intervention to W. Quigley -0-
Long distance telephone calls 93.70
Legal printing -0-
Associated Investigators for service of
subpoena February 1983 86.65
Gordon Henderson expenses for deposition,
plus an undetermined amount for
air fare March, 1983 463.98
Expenses Gordon Henderson in connection
with trial plus an undetermined
amount for air fare May 31, 1983 -0-
Services of Janice McCaughan 400.00
__________
TOTAL $4,242.98
The Court will therefore award a total of $7,835.63 to C. Lani Guinier as representative of the Legal Defense Fund for expenses incurred in the principal litigation.
The Court will now turn its attention to the request of plaintiffs' counsel for attorneys' fees for litigating the above captioned motion to assess fees. After reviewing the record, the Court has adopted the majority of the Magistrate's recommendations. Again, the Johnson factors will be considered as a part of determining the loadstar.
The following constitutes the amounts sought by counsel for fees and expenses expended in the determination of attorney fees:
FEES AND EXPENSES ON MOTION FOR ATTORNEY'S FEES
Attorney Total Hours Hourly Rate Total Fee Total Expenses
Stanley A. Halpin 73.75 $160.00 $ 11,800.00 $ 437.40
C. Lani Guinier 60.0 $160.00 $ 9,600.00 $ 1,815.80
R. James Kellogg 46.25 $135.00 $ 6,243.75 -0-
Steven Scheckman 34.6 $125.00 $ 4,325.00 -0-
William P. Quigley 39.65 $125.00 $ 4,956.25 -0-
Armand Derfner 25.9 $175.00 $ 4,532.50 $ 229.65
Larry Menefee 562.4 $120.00 $ 67,488.00 $16,187.84
Julius Chambers 15.0 $300.00 $ 4,500.00 $ 732.35
________ _______ ___________ __________
Total 857.55 $113,445.50 $19,403.04
The plaintiffs have also requested a multiplier of two which would give a total attorney fee award in connection with the motion to assess fees of $226,891.00.
A. Time and Labor Required
1. Novelty and Difficulty of the Question
The matter of calculating fees herein did not present a novel or difficult question. It was basically the collection of bookkeeping information in order to ascertain number of hours, hourly rate and customary fee.
2. Time Limitations Imposed by the Client or the Circumstances of the Litigation
Again, this litigation proceeded along a reasonable time table. The Court perceives *1448 no undue constraints upon counsel in meeting this Court's deadlines.
3. The Amount Involved and the Result Obtained
Plaintiffs seek approximately $800,000.00 in connection with this fee application. The result obtained is to recover approximately 45 percent of that amount.
4. Hours Allowed
C. Lani Guinier seeks 60 hours time at $160.00 per hour for a total fee of $9,600.00. With regard to the itemized statement of attorney time designated in Appendix A on plaintiffs' exhibit 8 for the time period July 27, 1984 through October 24, 1985, the Court disallows all telephone conversations with Mr. Quigley and Mr. Kellogg re attorneys' fees. Mr. Quigley and Mr. Kellogg did not represent Miss Guinier in the attorney fee hearing and such discussions between co-plaintiffs are not productive to moving this matter forward expeditiously. Therefore, 3.9 hours will be disallowed from this billing.
On Miss Guinier's statement of attorney time from November 18, 1984 through March 29, 1985, the Court makes the following allowances:
Hours
Services Rendered Allowed
Conversation with Larry Menefee on
10/24/84 .6
Conversation with Larry Menefee 11:30
to 12:05 on 11/19/84 .6
Preparation for deposition on attorneys'
fee motion 7:30 to 9:30 p.m. on 11/20/84 2.0
Review time slips, etc., for deposition
11/21/84. All other time billed on
11/21/84 is disallowed. 1.0
Telephone conversation with Larry Menefee
11:35 to 12 noon discussion re deposition
on 11/26/84. All other itemizations
on this date are disallowed. .4
Entries for 11/27/84 of .4 hours. All of
these entries are disregarded. .0
Travel to Washington, D.C. to deposition
and preparation on plane on 11/28/84 3.0
Met with Larry Menefee for 45 minute
deposition by Kendall Vick 1½ hours on
11/29/84 2.3
Reviewed and corrected deposition
12/11/84 1.0
Meeting with Quigley and Kellogg
12/13/84 disallowed in its entirety -0-
Conversation re attorneys' fees with Armand
Derfner 12/19/84 disallowed in
its entirety -0-
Thirty minutes reviewing Larry Menefee's
draft motion setting case for
Judge 1/23/85 disallowed entirely -0-
Conversation with Larry Menefee and
Richard Lawson re attorneys'
fees 1/30/85 .4
Conversation with Larry Menefee re defendants'
motion to produce. Reviewed
Menefee's letter 3/15/85. .5
Production of documents for defendants
pursuant to court order 3/18/85 1.8
Preparation of response to defense motion
for production of documents
3/22/85 2.5
Preparation of response to defense motion
to produce documents 3/25/85 1.9
Conversation with Menefee re production
of documents in response to defense motion
on attorneys' fees 3/25/85 .3
Preparation of response to defendants'
request for documents per court order
3/26/85 2.1
Conversation with Larry Menefee re
preparation of response to defendants'
request for production 3/27/85 3.0
Conference with Bill Quigley and Steve
Scheckman re preparation of response to
defendants' request to produce 3/28/85.
Disallowed entirely. -0-
Conversation with Stan Halpin re deposition
of Martin Feldman 3/24/85. Disallowed
entirely. -0-
Attended deposition of Gervis Leonard
from 9:15 to 11:45, travel from Gervis
Leonard's office to Legal Defense Fund
office and discussed strategy re Department
of Justice deposition from 11:45 to
1:00 p.m. on 4/24/85. Disallowed entirely. -0-
Conversation with Larry Menefee re
hearing on 4/29/85 .4
Conversation with Stan Halpin re Feldman's
deposition. Disallowed entirely. -0-
Preparation of supplemental affidavit
and exhibits work on 5/1/85 1.9
Review of Gervis' closing statement
5/1/85 -0-
Preparation of supplemental affidavit
and preparation for hearing on 5/2/85 2.7
Conference with co-counsel and expert re
hearing before Magistrate and travel and
reviewing defense objections and exhibits
on 5/5/85 -0-
Hearing before Magistrate and various
conference with counsel on 5/6/85 10.0
Court appearance on 5/7/85 8.3
____
TOTAL 46.7
In all other respects, Ms. Guinier's requests for compensation in connection with the fee hearing are DENIED.
William Quigley requests compensation for 39.65 hours for his work in connection with assessment of attorneys' fees. By way of a supplemental affidavit, Mr. Quigley has specified the activity, the date and the time for which he seek reimbursement. The following constitutes the activities for which the Court grants compensation to Mr. Quigley:
*1449
Hours
Services Rendered Allowed
Preparation of attorneys' fees affidavit
from records 2/9/84 5.75
Deposition preparation, deposition and
meeting with Menefee re discovery
1/7/85 2.5
Letter to Court and letter to Menefee re
change of address 1/15/85 .1
Received and reviewed Louisiana interrogatories
and letter from counsel
3/17/85 .7
Pretrial conference and meeting with
counsel regarding trial preparation
3/30/85 2.5
Preparation of expert affidavits and letters
to experts, preparation of supplemental
expense, research affidavits
4/5/85 1.5
Received and reviewed Louisiana objections
to hours 1.2
Telephone conference with Larry Menefee
re testimony 5/3/85 .5
Meeting with all counsel re trial preparation
5/5/85 1.2
Trial and trial preparation re exhibit
maps, documentation for hours 5/6/85 10.0
Trial 5/7/85 8.0
Preparation of affidavit to
State 5/10/85 1.5
Preparation of affidavit for
State 5/28/85 3.5
_____
TOTAL 38.95
In all other respects, the activities for which Mr. Quigley seeks reimbursement are DENIED.
Steven Scheckman seeks reimbursement for 34.6 hours in connection with the fee petition. The following constitutes the items for which the Court allows reimbursement to Mr. Scheckman:
Hours
Services Rendered Allowed
Preparation of affidavit and time sheet
from records 1/19/85 2.0
Deposition of Attorney General's Office
1/7/85 2.0
Analysis for Larry Menefee of number of
depositions with number of attorneys for
each party and number of exhibits, including
subparts and letter re same to
Menefee 2/13/85 .8
Preliminary review and analysis of
State's objections to our attorneys' fee
request 4/9/85 .9
Attorneys' fees trial and preparation for
trial 5/6/85 11.0
Attorneys' fees trial (I did not attend the
entire day) 5/7/85 2.0
Preparation of supplemental affidavit
and time sheet 5/11/85 .7
Preparation of testimony by review of
State's objection to my fee request, detail
analysis of State's exhibits A-K and outline
of other testimonial topics of importance
5/11/85 2.0
Attorneys' fee trial 5/14/85 4.2
Preparation of affidavit re State's objections
to my fee request 6/2/85 3.5
_____
TOTAL 29.1
In all other respects, Mr. Scheckman's requests for compensation in connection with the fee hearing is DENIED.
R. James Kellogg has petitioned the Court to allow 46.2 hours in compensable time in connection with the attorney fee litigation. The following constitutes the items which will be allowed to Mr. Kellogg:
Hours
Services Rendered Allowed
PCT Patricia Bowers re attorneys'
fees 3/19/84 .25
Meet with Ms. Bowers 4/2/84 1.50
Phone calls with Bowers and Guinier
4/9/84 .50
Phone call with Menefee, Lani, Bill and
Steve 6/15/84 .50
Phone call to Menefee 9/6/84 .25
Phone call from Menefee 11/20/84 .50
Deposition 1/7/85 1.00
Response to request for production of
documents pursuant to court order
3/10/85 2.00
Ibid 3/12/85 2.00
Letter to Menefee re request for production
3/13/85 .25
Review Louisiana interrogatories and letter
from counsel 3/17/85 1.25
Phone call from Menefee 3/29/85 .25
Preparation for testimony; meet with
Larry, Frank, Stan, etc. 5/4/95 2.00
Review deposition and prepare testimony;
attorneys' fees hearing 5/5/85 10.50
Fees hearing 5/6/85 7.50
Fees hearing 5/14/85 3.50
Preparation of affidavit of objections
5/22/85 3.50
Preparation of supplemental fees application
6/6/85 1.50
_____
TOTAL 38.75
In all other respects, the services for which Mr. Kellogg seeks reimbursement will be disallowed.
In connection with the motion for attorneys' fees, Stanley Halpin has requested compensation for 73.75 hours. Of that requested amount, the following time will be granted to Mr. Halpin as compensable:
Hours
Services Rendered Allowed
Response to defendants' discovery regarding
fees, document production, interrogatories
11/19/84 2.25
Response to defendants' discovery, documents
to be provided 11/24/84 1.75
Preparation for Feldman deposition, review
of materials produced by discovery
from Feldman's firm 4/20/85 1.75
Preparation for Feldman deposition
4/24/85 1.75
Preparation for testimony, review of defendants'
objections to specific time items
(1.5); prepare with Menefee, review materials
(2.0) in preparation for hearing
5/5/85 3.50
*1450
Hours
Services Rendered Allowed
Hearing before Magistrate regarding
fees; testimony of Strickler, Leonard,
etc. (5.5); Halpin testimony (3.0) 5/7/85 8.50
Dictation of supplemental affidavit in response
to defendants' objections H, I, J,
K 5/18/85 2.75
Dictation of supplemental affidavit in response
to defendants' objection L (expenses)
and remainder of affidavit
6/1/85 1.25
Confer with L. Menefee (2.25); deposition
of S. Halpin re fees (3.0) 11/27/84. All
other items billed for that date are DENIED. 5.25
Preparation for Feldman deposition, reading
and analysis of Leonard's deposition
(2.5); deposition of Judge Feldman
(2.0) 5/1/85. All other items billed for
that date are DENIED. 4.5
Hearing before Magistrate regarding
fees 5/6/85. All other items billed for
that date are DENIED. 6.00
Preparation for hearing and hearing
5/14/85. All other items billed for that
date are DENIED. 4.00
_____
TOTAL 43.25
All other items requested by Mr. Halpin will be DISALLOWED.
In connection with the motion for attorneys fees, Armand Derfner has requested compensation for 25.9 hours. The following constitutes the allowed items:
Hours
Services Rendered Allowed
Letter to Jones re subpoena 4/18/85 .5
Review correspondence, subpoena, and
research 4/19/85 2.9
Research 4/21/85 2.6
Draft enforcement pleading 4/22/85 2.3
Motion to quash, draft opposition, telephone
Iselin, Menefee and
Court 4/23/85 3.0
Complete and file opposition 4/24/85 1.7
Telephone Hebert, Hancock 4/25/85 2.4
Supplemental declaration 5/5/85 1.1
____
TOTAL 16.5
Larry Menefee, counsel representing the aforementioned attorneys in this motion to assess fees, requests compensation for a total of 562.4 hours in connection with the fee litigation. The State has acknowledged that it has no objection to the number of hours billed by Mr. Menefee for his legal work other than those hours incurred for travel. The Court concurs with the defendant in this regard. There has been no showing of necessity to hire out of town counsel to handle the attorney fee matter. Competent counsel were present in New Orleans who could have been employed, or, alternatively, Messrs. Kellogg, Quigley or Scheckman could have handled this aspect of the case. The Court finds that 38 hours were expended on travel to and from New Orleans. Accordingly this will be disallowed from the 562.4 hours requested by Mr. Menefee, for a total of 524.4 compensable hours. Chrapliwy v. Uniroyal, Inc., 670 F.2d 760 (7th Cir.1982).
There are several reasons why the Court has disallowed all other items requested by counsel other than those listed. First, counsel on the main demand exercised their discretion and hired Mr. Menefee, a stranger to the principle litigation, to represent them in the fee hearing. At the point that original counsel became clients to Mr. Menefee, there is no need that they charge, and that the State pay for, time spent in discussing strategy with co-counsel, reviewing depositions, sitting in on depositions and looking over Mr. Menefee's shoulder in their representation. They cannot assume the role of counsel and client at the same time. As counsel for a prevailing party, the original five attorneys are entitled to reasonable compensation when they litigate their own claims for entitlement to Section 1988 fees. Johnson v. University College of the University of Alabama in Birmingham, 706 F.2d 1205 (11th Cir. 1983); Johnson v. Mississippi, 606 F.2d 635 (5th Cir.1979). It is not appropriate in every case for an attorney to hire counsel to prosecute his Section 1988 fee application, and where this is done, it is the exception rather than the rule. Jonas v. Stacks, 758 F.2d 567 (11th Cir.1985). Since fees are being allowed to Mr. Menefee under a set of circumstances wherein it is marginal whether or not plaintiffs needed to hire him to pursue this attorney fee question, the Court is very careful that there be no duplication of effort on the part of counsel and Mr. Menefee for which compensation is being allowed to both. Instead, the Court is making every effort to grant compensation for time expended by all counsel which constituted a bare bone necessity in carrying through with the litigation of this motion.
There is also authority for the fact that Mr. Menefee is improperly before this Court seeking a fee as he was not counsel of record in the initial litigation. Jonas v. *1451 Stacks, 758 F.2d at 569. However, since counsel who benefitted from Mr. Menefee's representation could supplement their fee application to include this fee as a cost and/or expense, the Court will address the issue as though Mr. Menefee were properly before the Court in order to completely dispose of plaintiffs' Section 1988 claim.
Julius Chambers of the Legal Defense Fund, who traveled to New Orleans to give the oral arguments on the motion for attorneys' fees, has requested reimbursement for 15 hours. The Court will allow those hours because they would have probably been billed by C. Lani Guinier or some other member of the Legal Defense Fund.
The Court thus finds that counsel for plaintiffs and Mr. Menefee should receive attorneys' fees for a total of 737.65 hours divided as follows:
Hours
Attorney Allowed
Stanley Halpin 43.25
Lani Guinier 46.7
James Kellogg 38.75
Steven Scheckman 29.1
William Quigley 38.95
Armand Derfner 16.5
Larry Menefee 524.4
Julius Chambers 15.0
_______
TOTAL 752.65
The Court will now turn to the hourly rate for the fee litigation.
B. The Length of the Relationship with the Client
The Court cannot comment on the length of the relationship nor whether these attorneys will again employ Mr. Menefee to assist them in obtaining collection of their fees.
C. Preclusion of Other Employment
Fee counsel suffered very little preclusion of other employment because they employed Mr. Menefee to represent them in this litigation. Preclusion of employment, as far as Mr. Menefee is concerned, is of no consequence. Mr. Menefee will be paid an hourly rate for his efforts in this matter.
D. Undesirability of the Case
The Court sees nothing undesirable on the part of counsel in pursuing fees earned in connection with their efforts on the main demand.
E. The Requisite Legal Skill
These attorneys involved in this litigation were not operating in the field of their expertise in litigating this attorney fee motion. This proceeding required tedious gathering of information and supplementing the information with receipts to back up expenses. The matter required far more bookkeeping and accounting skills than it did legal skills.
F. The Experience, Reputation and Ability of the Attorneys
This has been commented upon under the same category in connection with the main demand. As far as Mr. Menefee's work is concerned, he also has an excellent reputation and has conducted himself with extreme professionalism throughout the litigation.
G. Fixed or Contingent Fee
Counsel handled this matter on a contingency fee basis. That is to say, no monies were received during this litigation to compensate Mr. Menefee or fee counsel for services rendered. However, there was very little risk of failure on the part of plaintiffs in this particular piece of litigation.
H. The Customary Fee
Fee counsel have requested compensation at the same rate for which they sought compensation on the main demand. It is, however, unwarranted to grant counsel his or her best hourly rate attainable in their field of expertise when they are not functioning in an area where their expertise is needed. Flowers v. Wiley, 675 F.2d 704 (5th Cir.1982). The Court is of the opinion that an hourly rate of $80.00 for original counsel is sufficient on the fee application. As to Mr. Menefee, an hourly rate of $100.00 is appropriate to reflect his added responsibility in coordinating this effort.
*1452 Julius Chambers has requested an hourly rate of $300.00 for his work in this case. Mr. Chambers is director-counsel for the NAACP Legal Defense and Education Fund and has spent the last twenty years in civil rights litigation. Mr. Chambers is well known and widely respected in the civil rights field, and his affidavit indicates that his normal non-contingent fee is $300.00 per hour. The Court finds that Mr. Chambers' expertise in the civil rights area was not fully used in this fee application. Accordingly, the Court will award a rate of $120.00 per hour to Mr. Chambers.
I. Awards in Similar Cases
The Court is of the opinion that an hourly rate of $80.00 is in line with the awards in other litigation. See Flowers v. Wiley, 675 F.2d 704 (5th Cir.1982); Bolden v. City of Mobile, No. 75-297-P (S.D.Ala.1983). The Court declines to grant a multiplier in connection with the attorney fee litigation, seeing no reason to augment a fair hourly rate.
Expenses
In connection with the motion for attorneys' fees, Stanley Halpin has requested $437.40 in expense reimbursement. Of the amounts requested, the following will be granted by the Court:
Amount
Item Allowed
Mileage, round trip, Lafayette to New
Orleans, 272 miles at .21 per
mile 11/27/84 $ 57.12
Mileage, round trip, Lafayette to New
Orleans, 272 miles at .21 per
mile 5/1/85 57.12
Lunch, Crepe Nanou 5/1/85 5.45
Mileage, round trip, Lafayette to New
Orleans, 272 miles at .21 per
mile 5/6/85 57.12
Dinner, Tortia Flats 5/6/85 14.22
Hotel charge, Hotel Richelieu 5/5/85
and 5/6/85 133.20
Mileage, round trip, Lafayette to New
Orleans, 272 miles at .21 per
mile 5/14/85 57.12
Dinner at Eddie's 5/14/85 10.50
________
TOTAL $391.85
The Court awards these amounts based on the fact that the mileage charged is a standard amount acceptable to most businesses. The other amounts are allowed based on the fact that Mr. Halpin has presented receipts to substantiate these payments. Of the other items requested, there have been no receipts presented to the Court, and, therefore, these amounts will be disallowed.
Larry Menefee claims he should be reimbursed for $21,042.09 in expenses incurred from the attorney fee hearing. The State objects only to Mr. Menefee's expenses in four areas. First, travel expenses related to his travel to New Orleans are questioned. These expenses will be disallowed in their entirety. There has been no showing to this Court that competent counsel was not available in New Orleans for purposes of representing fee counsel. Mr. Menefee's travel expenses to and from the City therefore were unnecessary and shall not be charged to the State. The Court has examined Mr. Menefee's affidavit as to expenses and finds that the sum of $1,454.78 relates to his travel expenses to and from the New Orleans metropolitan area.
The State objects to reimbursing Mr. Menefee for postage expended asserting that postage is a matter of overhead which should be included in the hourly rate. The Court rejects the State's argument in this regard and will allow Mr. Menefee compensation for the full amount of his postage expenses.
Thirdly, the State excepts to reimbursement for meals claimed by Mr. Menefee at Cafe Sbisa in the amount of $62.55; Archna Indian Restaurant in the amount of $64.38; and Restaurant Jonathan for $160.00. Obviously, more than one person enjoyed a meal based on these prices. There has been no showing or discussion as to who the other parties to these meals might have been, and the Court declines to infer that it was Mr. Halpin or Ms. Guinier. The Court will allow $21.00 on the Cafe Sbisa bill; $23.00 on the Archna Indian Restaurant bill; and $40.00 on the bill at Restaurant Jonathan, for a total of $84.00. The State objects to a bill for $481.25 for photocopying requested by Mr. Menefee on the basis that there is no reference as to what was copied or for what purpose, thereby making an evaluation of the reasonableness of the expenses impossible. However, the Court will allow this amount as a bona fide expense.
*1453 Plaintiffs also request compensation for two expert witnesses, Frank Parker and Robert Weil, who responded to discovery requests. Apparently, counsel for defendants had agreed to pay for "deposition costs" but did not specify which. Plaintiffs now ask the Court to order payment for the time the witnesses spent in the depositions as well as the time they spent preparing for the depositions. This is not a matter where the witnesses responded to discovery under Rule 26(b)(4)(A)(ii) or (b)(4)(B), Fed.R.Civ.P., where the Court can order payment pursuant to Rule 26(b)(4)(C). In its discretion, the Court will order restitution for the reasonable preparation time plus deposition time for a total of five hours for each of the experts. This is consistent with the Court's interpretation of the agreement between the parties. The State must therefore reimburse plaintiffs for Mr. Weil's services at $180.00/hour for 5 hours $900.00, and Mr. Parker's services at $150.00/hour for 5 hours $750.00. The amount of $1,650.00 will therefore be allowed as a bona fide expense.
In light of the recent Fifth Circuit ruling in IWA, supra, the sum of $9,251.32 claimed by Mr. Menefee is further disallowed by the Court. This sum represents an amount expended on experts which is not compensable since not specifically provided for by statute. Accordingly, the sum of $9,176.06 will be awarded to Mr. Menefee in connection with his expenses in the handling of the attorney fee litigation.
C. Lani Guinier seeks $1,815.80 in expenses incurred by the Legal Defense Fund in connection with the fee hearing. These expenses are itemized in Appendix B, C, D and E of Ms. Guinier's affidavit entered into evidence as plaintiffs' exhibit 8. With regard to the expenses claimed in Appendix E, the Court allows all amounts requested for photocopying except the $54.30 for photocopying on March 25, 1985. Ms. Guinier has not presented contemporaneous records to support this expense. Rather, the records which she has produced indicate photocopying in the amount of $7.10 and this figure will be allowed for a total of $115.85 in photocopying expenses. The full amounts for postage, telephone and travel will be allowed.
Ms. Guinier presents claims for special research, service of subpoenas and legal printing and mailing. The $5.85 service of subpoena expense will be allowed. The $47.25 expense to Susie Wong for special research is disallowed. The nature of the research is not specified and if it pertains to the attorney fee motion, Ms. Guinier had counsel in the form of Mr. Menefee, who could have performed any such special research required. The $72.75 expense for copying and mailing information from Gingles v. Edmisten is disallowed. The nature of the material is not specified nor is the necessity. The $65.75 requested reimbursement outlined in Appendix E is denied in its entirety as being unrelated to the attorney fee motion, having been incurred at a point of time when the main litigation was still ongoing.
The Court will therefore award $1,575.75 to C. Lani Guinier as representative of the Legal Defense Fund for expenses in the attorney fee litigation.
Armand Derfner has requested $229.65 for the services of a law student. The Court will allow this as a proper expense.
Julius Chambers has requested $732.35 in expenses. As they were properly documented and represented bona fide expenditures, the Court will allow that amount.
In conclusion, the following amounts are awarded to counsel for fees and expenses in connection with the main demand:
Cost
Attorney Fee Award Reimbursement
Stanley Halpin $ 75,210.80 $ 1,037.90
C. Lani Guinier 86,585.20 7,835.63
R. James Kellogg 47,120.95 -0-
Steven Scheckman 16,119.20 7,308.97
William Quigley 35,370.00 -0-
Armand Derfner 4,158.00 -0-
____________ ___________
TOTAL $264,564.15 $16,182.50
Further, the following amounts are awarded to counsel for fees and expenses in connection with the motion to assess attorneys' fees:
Cost
Attorney Fee Award Reimbursement
Stanley Halpin $ 3,460.00 $ 391.85
C. Lani Guinier 3,736.00 1,575.75
R. James Kellogg 3,100.00 -0-
Steven Scheckman 2,328.00 -0-
William Quigley 3,116.00 -0-
Armand Derfner 1,320.00 229.65
Larry Menefee 52,440.00 9,176.06
Julius Chambers 1,800.00 $ 732.35
__________ ___________
TOTAL $71,300.00 $12,105.66
*1454
APPENDIX A
Non-Legal Work
R. James Kellogg 50%
2-12-82 2.5 Reviewing & organizing documents 1.25
2-17-82 .38 Department of Justice documents .19
3-5-83 .78 Phone calls to Secretary of State, Board of Election
Supervisors .39
3-16-83 1.0 Flow chart of legislation .50
3-22-83 1.0 Adding expenses .50
____
TOTAL 2.83
William P. Quigley 50%
11-30-81 .30 Talking with Bajoie re documents .15
12-4-81 .90 Comparing 1980 plans with census data .45
12-7-81 1.16 Preparing voting rights fact sheets .58
12-9-81 .83 Conferring with Bajoie's office re Congressional data .42
12-10-81 2.10 Newspaper archives 1.05
12-29-81 .50 Preparing Congressional data .25
1-1-82 1.92 Map analysis G. Henderson Plan, map .96
1-15-82 1.40 Preparing map .70
1-29-82 2.70 Sending out material to legislature 1.35
2-3-82 2.18 Analysis of Congressional data 1.09
2-11-82 .40 Confering with Delta Reproductions re maps .20
2-14-82 3.60 Preparing Congressional maps, etc. 1.8
2-19-82 1.87 Preparing and securing maps .94
2-22-82 2.33 Preparing statewide maps for Department of Justice 1.17
2-12-82 .20 Talking with James Gillis Times-Picayune .10
2-8-82 2.0 Analysis for computer print-out 1.0
2-9-82 1.16 Collecting and preparing data .58
2-17-82 2.20 R. Kwan and research West Bank growth 1.10
2-15-82 4.50 Reviewing and indexing documents 2.25
2-16-82 .50 Reviewing and indexing documents .25
2-18-82 .48 Telephone conference with legislative office re documents .24
1-7-83 2.0 Election returns work-up 1.0
1-14-83 .50 Maps at Regional Planning Commission .25
1-18-83 9.50 Meeting with map people re exhibits 4.75
1-19-83 2.0 Preparing demographics and conference with S. Laska 1.0
2-20-83 1.53 Meeting with artists re exhibits, meeting with G.
Henderson re maps .77
2-24-83 1.0 Meeting re maps .50
1-26-83 .23 Telephone conference with artists .12
1-28-83 .80 Meeting with map people .40
1-31-83 1.80 Meeting re maps, research population majority statistics,
confer with exhibit preparation people .90
2-7-83 .60 Telephone conference with G. Henderson re maps .30
2-11-83 .60 Meeting with artists .30
2-19-83 1.0 Working with photographer .50
2-24-83 .60 Preparing flow chart .30
3-2-83 3.07 Securing demonstrative aids meeting with D. Girard re
pictures 1.54
3-3-83 .60 Meeting with map people re corrections .30
3-4-83 1.50 Preparing flow chart .75
3-5-83 6.30 Meeting with artists, flow chart work, document and
exhibit preparation 3.2
*1455
3-14-83 .50 Telephone conference with Jack Scott reapportionment
documents and records .25
3-30-83 .20 Cartographers .10
4-1-83 .10 Try to get cartographer .05
4-5-83 .30 Talking with cartographer .15
_____
TOTAL 34.06
Steven Scheckman 50%
12-15-81 2.16 Telephone conference with Attorney General's office re
getting copy of Act 20, research on passage of Act from
newspaper articles, etc. 1.08
12-17-81 1.25 Retrieving back issues of Times-Picayune for history of
Act 20 .63
12-23-81 1.50 Research at library on history of Act 20 .75
12-28-81 .90 Reviewing back issues of Times-Picayune re apportionment .45
1-14-83 .55 Retrieving from Board of Elections office 1982 returns .28
1-16-83 1.0 Review of various election returns with Kellogg .50
2-9-83 .90 Preparing exhibits for trial and preparing index for
exhibits .45
3-5-83 3.67 Indexing scheme and import of particular documents,
preparing visual aids for trial 1.83
_____
TOTAL 5.97
C. Lani Guinier 50%
2-6-82 .20 Speaking to district court clerk re subpoena .10
1-12-83 1.30 Mailing federal express to Kellogg for filing .65
3-19-83 3.0 Calling Department of Justice and arranging to have
documents authenticated 1.5
3-24-83 2.20 Shipping files to New Orleans in preparation for trial 1.10
_____
TOTAL 3.35
Stanley J. Halpin 50%
12-4-81 5.0 Examining census and other data re possible result for
blacks if redistricting occurred 2.5
12-6-81 4.5 Examining analysis of census data to determine availability
and adequacy of data for analysis of plans 2.25
12-21-81 4.0 Analysis of redistricting plans 2.0
12-22-81 3.5 Analysis of configuration of plans, cursory exam of
ward maps and other geographical and physical features 1.75
1-3-82 3.5 Work re maps and data for developing New Orleans
district 1.75
1-12-82 3.5 Analysis of census and other data 1.75
1-8-82 2.0 Factual investigation re history of discrimination and
continuing effects 1.0
1-9-82 1.5 Calls to line up experts .75
2-8-82 .50 Telephone conference with Kellogg re deposition schedule .25
2-27-82 2.16 Factual investigation with respect to explanation of Morial's
and other black victories in New Orleans despite
polarization 1.08
3-31-82 3.38 Checking Henderson's data on Nunez plan, Act 20 plan 1.7
1-1-83 2.25 Miscellaneous matters regarding documentary evidence 1.13
5-8-83 1.38 Other administrative matters .69
_____
TOTAL 18.60
*1456
APPENDIX B
Non-Working Travel Time
C. Lani Guinier 50%
4-9-82 5.3 Travel to Washington to meet with Robert Kwan, Department
of Justice 2.65
1-18-83 4.0 Travel to New Orleans 2.0
3-11-83 4.0 Time to arrive at home 2.0
5-8-83 5.8 Leave New Orleans (9:45 a.m.), arrive at home (4:30
p.m.) 2.9
6-29-83 3.5 Travel to New Orleans 1.75
_____
TOTAL 11.3
Stanley J. Halpin 50%
4-9-82 3.0 No explanation 1.5
6-12-83 2.13 Travel to Baton Rouge 1.07
_____
TOTAL 2.57
Steven Scheckman 50%
6-30-82 2.75 Travel to Washington to meet with Department of Justice 1.38
7-1-82 2.44 Travel to New York City to meet with Legal Defense
Fund 1.22
7-2-82 3.0 Trip to New Orleans 1.5
_____
TOTAL 4.1
R. James Kellogg 50%
6-30-82 2.75 Travel to Washington, D.C. 1.38
7-1-82 4.75 Trip to New York City 2.38
7-2-82 3.0 Trip to New Orleans 1.5
_____
TOTAL 5.26
William P. Quigley
6-30-82 3.75 Travel to Washington to meet with Department of Justice
officials and review file 1.88
7-1-82 3.25 Trip to New York City 1.63
7-2-82 2.56 Trip to New Orleans 1.28
_____
TOTAL 4.79
APPENDIX C
Working Travel Time
R. James Kellogg 50%
12-18-82 2.0 Trip to Baton Rouge, conference with Quigley and
Scheckman 1.0
_____
TOTAL 1.0
Steven Scheckman 50%
12-8-82 2.0 Conference with Governor Edwards 1.0
_____
TOTAL 1.0
C. Lani Guinier 50%
2-28-83 2.0 Travel to Baton Rouge to meet with Turnley 1.0
2-28-83 6.0 Travel with Napoleon Williams, discuss arguments and
strategy 2.5
_____
TOTAL 3.5
Stanley J. Halpin 50%
2-18-83 4.50 Travel to New Orleans for depositions, prepare en route 2.25
2-24-83 4.50 Return travel, review documentary evidence en route 2.25
2-28-83 6.0 Travel to New Orleans for trial, prepare in route 3.0
3-4-83 3.25 Travel to New Orleans to Baton Rouge for witness prep,
conference with Guinier en route 1.63
_____
TOTAL 9.13
*1457
APPENDIX D
The Court finds that the following times were duplicated:
Date Time Attorneys
6/30/82 2.75 Quigley, Kellogg, Scheckman
7/1/82 5.19 Quigley, Kellogg, Scheckman
11/3/82 1.5 Quigley, Kellogg, Scheckman
11/8/82 5.0 Quigley, Kellogg, Scheckman
1/21/83 2.17 Kellogg, Halpin, Guinier
3/3/83 2.35 Quigley, Kellogg, Halpin, Guinier
1/9/83 5.0 Quigley, Kellogg, Scheckman, Halpin, Guinier
1/ /83 2.02 Quigley, Kellogg, Halpin, Guinier
3/7/83 26.5 Kellogg, Scheckman, Halpin, Guinier
3/8/83 24.75 Quigley, Kellogg, Scheckman, Halpin, Guinier
3/9/83 18.0 Quigley, Kellogg, Scheckman, Halpin, Guinier
3/10/83 31.0 Kellogg, Scheckman, Halpin, Guinier
/29/83 2.5 Quigley, Kellogg, Guinier
______
TOTAL 128.73
NOTES
[1] The standards for awarding attorneys' fees under the Voting Rights Act are the same that govern awards under § 1988. Coalition to Preserve Houston v. Interim Board of Trustees of the Westheimer Independent School District, 494 F. Supp. 738, 742 (S.D.Tex.1980), dismissed, 450 U.S. 901, 101 S. Ct. 1335, 67 L. Ed. 2d 325 (1981); see also, Hensley v. Eckerhart, 461 U.S. 424, 433 n. 7, 103 S. Ct. 1933, 1939 n. 7, 76 L. Ed. 2d 40 (1983) (discussing indications in legislative history that standards for fee awards should be the same under § 1988 and the 1964 Civil Rights Act).
[2] Ms. Guinier seeks $3,220.00 for time spent by Ms. Janice McCaughan, a law student, on various tasks performed under her direction. This sum represents 80.5 hours work at $40.00 per hour.
[3] The only evidence in the record which could support the Magistrate's recommendation is the testimony of Mr. Leonard. However, Mr. Leonard's testimony was discredited because of his lack of familiarity with the litigation and conflicts with the testimony of Martin Feldman.
[4] No reduction based on Hensley v. Eckerhardt was justified. Plaintiffs obtained precisely the relief they sought, a holding that the redistricting violated the Voting Rights Act and a court imposed plan that did not dilute black voting strength.
[5] Plaintiffs expended an average of 230 hours per quarter that they worked on this litigation. Martin Feldman and the members of his firm billed the State for approximately 180 hours per quarter that they were involved in this litigation. If only a modest five hours per month per state attorney is assumed, the defendants' entire litigation team would have expended the same number of hours as plaintiffs over same period. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1522222/ | 217 F. Supp. 644 (1963)
UNITED STATES of America
v.
Wayne Doyle COSTNER and Clayton Williamson.
Crim. No. 6664.
United States District Court E. D. Tennessee, Northeastern Division.
May 10, 1963.
J. H. Reddy, U. S. Atty., Chattanooga, David Smith, Asst. U. S. Atty., Knoxville, Tenn., for plaintiff.
John Dugger, Morristown, Tenn., for defendants.
*645 NEESE, District Judge.
Agents of the Alcohol and Tobacco Tax Division, Internal Revenue Service, Department of the Treasury, had an unlawful distillery under surveillance in the Dark Hollow section of Cocke County, Tennessee, on November 19, 1962. The surveillance was being conducted from across a river by means of binoculars, cameras, high-powered glasses and other such devices. The distillery was located near the Dark Hollow Road about seven-tenths of a mile from its intersection with the Willow Springs Road.
Agent Lawhorn saw through field glasses a 1955 Buick automobile parked about 30 yards from the site of the distillery on a road which passed below the distillery. This vehicle was yellow with a white top. Sugar was unloaded from this vehicle and carried into the distillery site, according to the testimony of witnesses for the prosecution, and an unidentified object or substance was loaded from the distillery into the Buick car. No other vehicle was observed in the area while the government agents watched.
Mr. Lawhorn left his initial position, after arranging with other agents to notify him by radio when the automobile under observation left the scene, and took up the new position with another agent. This new position was in an automobile parked on Willow Springs Road about one-half mile from the aforesaid intersection.
At about 9:45 o'clock, p. m., Agent Lawhorn was notified that the Buick automobile was leaving the distillery area. He could not see the departing automobile as it left the region of the distillery nor as it traversed Dark Hollow Road; nor could he see this suspected vehicle, if at all, until it had entered the intersection and turned left onto Willow Springs Road. However, the agents did see an automobile make the above entry and turn and proceed along Willow Springs Road and the Cosby Highway. The investigators pursued this vehicle from a distance of about a quarter-of-a-mile (and sometimes as much as a half-a-mile). They could not identify the driver of the pursued vehicle, nor could they ascertain the number of passengers therein. They were unable to determine the make, color or license plates number of the vehicle they were following. Indeed, all they could see of the vehicle ahead any time during the pursuit was its taillight.
As the pursuit progressed, the government agents passed a certain residence at an estimated speed of from 55 to 60 miles per hour. As they passed, Agent Lawhorn saw in the back yard of the premises "* * * the same Buick I had seen earlier * * *" at the distillery site. Whether it was, in fact, the same vehicle, this automobile was parked about 30 feet in front of the door to a smokehouse on the residential premises. The headlights of the car were burning. Neither of the passing officers at this time recognized any person in or near the vehicle, and neither was able to see any license plate numbers thereon.
Nevertheless, after turning their car around and returning to the residential premises, these officers went on the premises, conducted a search and made arrests of the defendants without either a search warrant or warrant of arrest.[1] The Court cannot accord the *646 positive testimony of the ATU investigator Lawhorn the weight it must have to constitute evidentiary proof that the automobile he had observed earlier at the distillery was the same car he searched and seized on someone's private property afterward. There is too great a margin for error in his presumption. No defendant should ever be convicted on mere suspicion or conjecture.
The government attorney relies on the leading case of Carroll v. United States (1925), 267 U.S. 132, 45 S. Ct. 280, 69 L. Ed. 543, 39 A.L.R. 790, as authority for the reasonableness of this search and seizure, and the Court was inclined toward the validity of the search during the oral hearing on the motion. On more mature consideration, however, the Court is now of the firm opinion that the officers made an unlawful entry onto the premises searched and, however well-grounded may have been their suspicions, the search and seizure were unreasonable. There was abundant opportunity for the investigators to have obtained a search warrant and have proceeded in an orderly, judicial way. Taylor v. United States (1932), 286 U.S. 1, 52 S. Ct. 466, 76 L. Ed. 951, 953, cited in Trupiano v. United States (1948), 334 U.S. 699, 68 S. Ct. 1229, 92 L. Ed. 1663, 1671.
As was well said in Trupiano, supra, "* * * (W)hen the agents of the Alcohol Tax Unit decided to dispense with a search warrant and to take matters into their own hands, they did precisely what the Fourth Amendment was designed to outlaw. Uninhibited by any limitations that might have been contained in a warrant, they descended upon [the defendants in a night] raid. Nothing circumscribed their activities on that raid except their own good senses, which the authors of the Amendment deemed insufficient to justify a search or seizure except in exceptional circumstances not here present." (In the instant case they searched thoroughly and somewhat destructively the parked vehicle as well as a smokehouse in which they concluded, summarily, were cases containing glass jars, which jars not only contained illegal whiskey, but illegal whiskey on which the proper tax had not been paid.) "The fact that they actually seized only contraband property, which doubtless would have been described in a warrant had one been issued, does not detract from the illegality of the seizure. * * *" Trupiano v. United States, supra, 68 S. Ct. 1229, 1233, 92 L. Ed. 1663, 1670.
Had there been a search of this automobile on the public highway, unmaliciously and with probable cause, when the pursued vehicle was moving rapidly, the result might be different. Carroll v. United States, supra. But, here a whole battery of investigators, armed with all manner of devices to assist them, had every opportunity to obtain prior authorization for what they afterward did without such authorization. They made an unlawful entry of private premises and a search of the curtilage. Baxter v. United States, C.A. 6th (1951), 188 F.2d 119, 120. One of the defendants was a part-time resident, at least, of the premises invaded, and there is no suggestion that his co-defendant was there improperly. Both defendants, accordingly, are entitled to question the legality of these searches.
"* * * No just interest of the Government in the effective and rigorous enforcement of the criminal law will be hampered by recognizing that anyone legitimately on premises where a search occurs may challenge its legality by way of a motion to suppress, when its fruits are proposed to be used against him. * * *" Jones v. United States (1960), 362 U.S. 257, 80 S. Ct. 725, 734, 4 L. Ed. 2d 697, 706[11]. When officers search *647 without a warrant incident to a valid arrest or in exceptional circumstances, the burden is then on the prosecution invoking the exception to produce facts to justify it. Weaver v. United States, C.A. 5th (1961), 295 F.2d 360, 361. (See also Lee v. United States (1956), 98 U.S.App.D.C. 97, 232 F.2d 354 where seizures of stolen guns were invalidated where officers who, even though acting on reliable information [as the officers in the case at bar were not], searched the apartment and automobile of the defendant without search or arrest warrants.) The prosecution simply has not carried the burden of justifying the actions of the officers here.
The defendants point defensively to the requirement of Rule 41, Federal Rules of Criminal Procedure, that search warrants must be served in the daytime unless the affidavits on which same are issued are positive that the property to be sought for seizure is on the person of, or in the place to be searched. Supra, subsection (c). The observation is made that language of the Supreme Court of the United States indicates that the adoption of this Rule, supra, negates any search on probable cause without a warrant in the nighttime. The Court did comment that said Rule 41(c) "* * * is hardly compatible with a principle that a search without a warrant can be based merely upon probable cause. * * *" Jones v. United States (1958), 357 U.S. 493, 78 S. Ct. 1253, 1257, 2 L. Ed. 2d 1514, 1519. That opinion, however, dealt with the search of a private home in the nighttime.
The prosecuting attorney would justify the search and arrest without a warrant on the premise that the officers who first saw the yellow and white-topped Buick used in the conveyance of materials and equipment in connection with the operation of the illegal distillery could then and there "officially seize" the vehicle and afterward go on private premises to search the automobile, which by then had been forfeited to the federal government, and arrest the defendants for possessing the contraband they found in the vehicle as a result of the search thus made. The most beneficent reaction this Court can express as to that theory is to adopt the following apposite language of Mr. Justice Douglas, to wit: "* * * We do not stop to examine that syllogism for flaws. Assuming its correctness, we reject the result. * * *" McDonald v. United States (1948), 335 U.S. 451, 69 S. Ct. 191, 93 L. Ed. 153, 157.
From all which the Court finds and concludes that the evidence of the federal agents with reference to the contraband found in the automobile and smokehouse was obtained by means of an unlawful search and is inadmissible against these defendants.
Counsel for the defendants will submit immediately an order not inconsistent with the views here suppressing such evidence.
NOTES
[1] The Court should clarify here the law which governs arrests by federal officers without a warrant in Tennessee. In United States v. Cook, D.C.Tenn. (1962), 213 F. Supp. 568, 572[10], this Court cited T.C.A. § 40-803 as the basis for this procedure. The Court overlooked in the former opinion the 1958 federal statute governing arrests without a warrant by agents of the Alcohol and Tobacco Tax Division, Internal Revenue Service, Department of the Treasury, 26 U.S.C. § 7608. This statute first came to the Court's attention in a review of authorities in this case. Thus, 26 U.S.C. § 7608, rather than T.C.A. § 40-803, should be understood as governing arrests by federal officers without a warrant in Tennessee. It is only in the absence of any federal statute setting the standard to apply in testing the legality of an arrest, at the time of an arrest, that resort is had to the law of the place of arrest. United States v. Di Re, 332 U.S. 581, 68 S. Ct. 222, 92 L. Ed. 210. However, this more recent statute does not change or limit former authorities on the subject. United States v. Murphy, C.A.3rd, (1961), 290 F.2d 573, 575. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1631312/ | 599 S.W.2d 684 (1980)
J. D. LAY, Appellant,
v.
AETNA INSURANCE COMPANY, Appellee.
No. 13142.
Court of Civil Appeals of Texas, Austin.
May 21, 1980.
Rehearing Denied June 11, 1980.
*685 William W. McNeal, Austin, for appellant.
George H. Spencer, George H. Spencer, Jr., Clemons, Spencer, Welmaker & Finck, San Antonio, for appellee.
SMITH, Justice.
Appellant, J. D. Lay, was employed by J. & J. Oil Venture to ascertain the proper location for, and supervise the drilling of, an oil well on a lease belonging to J. & J. in Caldwell County. At appellant's direction, a site was located, a well drilled, and production actually brought in. Subsequently, after J. & J. had expended some $40,000 in expenses on the well, it was discovered that, due to appellant's error in reading the surveyor's stakes, the well had been located and drilled on an adjoining tract not under lease to J. & J. A settlement was reached with the adjoining landowner, Jerry Sauer, whereby J. & J. purchased an assignment of the drilling rights on the property where the well was located. In turn, J. & J. brought suit against appellant to recoup its losses incurred as a result of the negligent location of the well on the wrong lease.
Appellant called upon his liability insurer, appellee Aetna Insurance Company, under its coverage of him in a valid general liability insurance policy, to defend the suit against him. Appellee refused and denied coverage on the grounds that the incident in question was not an "occurrence," nor was the suit one for the recovery of "property damage," as those terms are defined by the policy.
Appellant then acquired his own counsel and the cause proceeded to trial. After trial to the court, judgment was entered against appellant in the amount of $34,034.56, plus interest and court costs.
Subsequently, appellant brought this suit praying for a determination that he was covered by the provisions of the insurance policy and that he was entitled to indemnification for the amount of the judgment entered against him in the previous suit. From an adverse judgment, appellant now appeals to this Court.
Appellant was issued Aetna's Policy Number CG-30-48-94, a "Comprehensive General Liability Insurance" policy, which provided:
"The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
A. bodily injury or
B. property damage
to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage. ..." (Emphasis supplied)
Assuming, arguendo, that the drilling of the well in the wrong location was an "occurrence" within the meaning of the insurance policy, appellant must also show that this "occurrence" resulted in "property damage."
"Property damage" is defined by the policy as:
"... (1) physical injury to or destruction of tangible property which occurs during the policy period, including loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period." (Emphasis supplied)
Appellant sought indemnification for the following damages awarded to J. & J. Oil Venture in the previous judgment:
(1) $15,750 for purchase of an assignment of the portion of the lease upon which the well was drilled;
*686 (2) $1,640.56 for attorney and surveyor fees; and
(3) $ 16,644 for the loss of approximately 1500 barrels of oil to adjacent wells caused by delay in getting the well into production.
Language used in insurance policies is given its usual and popular meaning unless it is ambiguous or it is shown that the parties intended it to have a special meaning. Northwestern National Life Insurance Company v. Black, 383 S.W.2d 806 (Tex.Civ. App.Texarkana 1964, writ ref'd n. r. e.).
"Tangible property" is commonly understood to be property that is capable of being handled or touched. Erwin v. Steele, 228 S.W.2d 882 (Tex.Civ.App.Dallas 1950, writ ref'd n. r. e.); Bismarck Tribune Co. v. Omdahl, 147 N.W.2d 903 (N.D.1966). It has also been defined as "... such property as may be seen, weighed, measured, and estimated by the physical senses." 73 C.J.S. Property § 5 (1951).
The purchase of the assignment and the payment of attorney and surveyor fees were not injury to, destruction of, or loss of use of "tangible property." The purchase of the assignment was an economic transaction involving the exchange of money for the privilege of drilling and producing oil. Likewise, the attorney and surveyor fees were merely expenses necessarily incurred in the process of negotiating and acquiring the lease from Sauer.
There was also no injury to, destruction of, or loss of use of "tangible property" in J. & J.'s loss of oil to adjacent wells.
J. & J.'s "First Amended Original Petition" states:
"4.... Because of the delay attendant to the negotiations with the owner of the lease, Plaintiff was unable to begin production of oil from such well for a period of many months, although the well had been fraced and was being drained by an adjacent well. Because of the delay in getting the well into production, approximately 1500 barrels of oil were lost by Plaintiff to adjacent wells, which caused Plaintiff a monetary loss of $16,644 Dollars."
We have some doubt as to whether, under the "rule of capture," the owner of the property would have a cause of action for damages arising out of lawful drainage of oil from an adjoining well. Halbouty v. Railroad Commission, 163 Tex. 417, 357 S.W.2d 364 (1962). However, it is certain that J. & J. did not.
A cause of action for injury to real property accrues when the injury is committed. Wichita County Water Improvement District No. 1 v. Pearce, 59 S.W.2d 183 (Tex.Civ.App.Fort Worth 1933, no writ). It is a personal right which belongs to the person who owns the property at the time of the injury. Bowie Sewerage Co. v. Vann, 59 S.W.2d 180 (Tex.Civ. App.Fort Worth), modified, 127 Tex. 97, 90 S.W.2d 561 (1936). Without express provision, the right does not pass to a subsequent purchaser of the property. Gulf, C. & S. F. Ry. Co. v. Provo, 84 S.W. 275 (Tex.Civ.App.Austin 1904, no writ). Accordingly, a mere subsequent purchaser cannot recover for an injury committed before his purchase. City of Dallas v. Winans, 262 S.W.2d 256 (Tex.Civ.App.Dallas 1953, no writ); Bowie Sewerage Co. v. Vann, supra.
J. & J.'s petition sought damages for injury to property to which it had no claim when the injury occurred. Any cause of action for damage to the property belonged to the owner at the time of the injury. It did not pass to J. & J. by its subsequent acquisition of the mineral estate. Accordingly, J. & J. never had a cause of action for injury to the property stemming from drainage to adjoining wells.
Appellee's duty to defend "... is determined by the allegations of the petition when considered in the light of the policy provisions without reference to the truth or falsity of such allegations." Argonaut Southwest Insurance Company v. Maupin, 500 S.W.2d 633 (Tex.1973).
As J. & J. alleged no cause of action against appellant for injury to, destruction of, or loss of use of "tangible property," *687 there was no "property damage," as that term is defined in appellee's Comprehensive General Liability Insurance Policy. There being no "property damage," appellee had no duty to defend appellant, and, in turn, appellant has no right to indemnification for the amount of the judgment entered in favor of J. & J. in the previous suit.
Accordingly, the judgment of the district court that appellant take nothing is affirmed.
Affirmed.
PHILLIPS, C. J., not sitting. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1658703/ | 493 So. 2d 301 (1986)
FEDDERS CORPORATION
v.
Ross BOATRIGHT, Jr., and Mary Elizabeth Boatright.
No. 55,475.
Supreme Court of Mississippi.
May 28, 1986.
Rehearing Denied September 17, 1986.
*303 Guy T. Gillespie, III, Holcomb, Dunbar, Connell, Chaffin & Willard, Oxford, for appellant.
T.H. Freeland, III, T.H. Freeland, IV, Freeland & Freeland, Ralph M. Dean, Oxford, for appellee.
Before ROY NOBLE LEE, P.J., and HAWKINS and SULLIVAN, JJ.
HAWKINS, Justice, for the Court:
Fedders Corporation appeals from a judgment in favor of Ross and Mary Elizabeth Boatright in the circuit court of Lafayette County for $3,000 actual and $20,000 punitive damages, and attorney fees of $5,000 plus $310.74 in trial expenses.
We find no error in the award of actual damages, and also the allowance of attorney fees was proper under the Magnuson-Moss Act, 15 U.S.C.A. § 2303 et seq., and affirm the judgment as to these.
This is not a case for punitive damages, however, and the judgment is reversed and rendered as to this item.
FACTS
In 1977 Tommy Skelton constructed a new residence for the Boatrights. On July 11 the Oxford Heating & Cooling Company (OH & CC), a local air conditioning business, installed a Fedders brand heat pump. The Fedders Corporation's principal offices are located in New Jersey.
The complete system for this heat pump consisted of the outdoor condensing unit, the indoor evaporator (blower with coil on inside), and interconnecting tubing and thermostat.
Larry E. Tatum owned and operated OH & CC during the period following the Boatrights occupancy of their home, and this business was the local dealer for Fedders air conditioners.
Thermal Equipment & Sales Corporation (TESCO), a Memphis jobber, was the area distributor for Fedders air conditioners and parts.
Fedders issued a limited warranty with this heat pump carrying the following express obligations:
(1) In event of failure to function the first year due to defect in material or workmanship of any part of the product, Fedders would furnish a new or rebuilt part, with the owner obligated to pay all delivery, installation and labor costs.
(2) In event of failure to function from second through fifth year of purchase date due to defect in material or workmanship of compressor, Fedders would furnish a new or rebuilt compressor, with the owner obligated to pay all delivery, installation or labor costs.
The limited warranty excluded liability caused by improper installation or unreasonable use of the unit, including failure to provide reasonable and necessary maintenance, or to follow written installation and use instructions of the manual.
In bold face type the limited warranty stated it provided the sole and exclusive remedies, no other express warranties were made. Likewise, all implied warranties were limited to one year from date of purchase, and incidental expenses and consequential damages were excluded.[1]
The Boatrights testified the unit began giving them trouble in the summer of 1977. The main trouble with the heat pump occurred, *304 however, in the winter, especially in the severely cold periods, when the outdoor condensing unit would "freeze up."
This case went to trial June 15, 1983. Tatum testified his first record of repairing the unit was November 22, 1977, when he found the outdoor condenser coil frozen with ice. He said it was normal to freeze to a certain extent, but a defrost cycle should then be triggered thawing it out, and enabling the machine to start heating. On December 5, 1977, he found the same problem, and three small leaks. He thought the problem was the indoor coil or the "reversing valve," but neither he nor his employees could locate the precise cause of the problem. They never found the compressor overheated. Tatum contacted TESCO who told him the trouble was in the defrost switch, but he said another switch did not correct the problem. After working on the unit, it would operate for a while only to have the same problem recur.
Tatum had seventeen repair tickets covering the period from July 18, 1978, through April 20, 1980, of his firm's work on the unit, the lowest charge being $23.63 and the highest $59.06 on March 28, 1979, when the defrost timer switch was replaced. The Boatrights were never charged for any of the work done by Tatum's firm. Some time in the latter half of 1981 Tatum telephoned the Consumer Affairs Department of Fedders and reported the problem with the unit.
This model of Fedders heat pumps was having problems nationwide with the defrost cycle switches. The Federal Trade Commission (FTC) made an investigation, following which Fedders entered into a consent order with the Commission on June 14, 1979, whereby Fedders agreed to make available to all customers without charge defrost system service to replace the defrost cycle switches, and to install them without charge. In addition Fedders was required to give an extended full warranty for the replacement through May 1, 1980.
The order required Fedders to mail within ten days after it became final a written notice to each current owner of Fedders the obligations of Fedders thereunder, and to enclose with it a postage pre-paid card for the owner to mail to Fedders. The card was to notify Fedders of the owner's election to have a new switch installed.
The order also provided that failure of an owner to return the card, unless the package was returned to Fedders as undeliverable, should be considered an election by the owner not to have a new switch installed.
A later consent judgment was entered in 1981. The Boatrights testified they never received the notice. However, the notice sent by Fedders to the Boatrights pursuant to the second order was returned to the company, because it was not delivered, and it was mailed to Ralph M. Dean, an Oxford attorney who was then representing the Boatrights in their difficulties with Fedders. Pursuant to the order Fedders mailed 40,000 notices nationwide to customers.
Both Mr. and Mrs. Boatright testified about the problems they had with the heat pump, corroborating Tatum. Because of the inadequate heating the Boatrights purchased and installed a wood stove costing $800, and two kerosene heaters costing $179 each. They also testified their electric bills increased because of this, but no amount was shown.
In March, 1980, the Boatrights read an article in the local newspaper about Fedders heat pumps being defective. This article caused them to consult Dean, who they employed. Defense objection to the published article's introduction into evidence was sustained.
We summarize the exchange of correspondence between Dean and Fedders from April 25, 1980, through November 18, 1981.
1980 CORRESPONDENCE
1. April 25, Dean demands entire replacement cost of unit plus out-of-pocket expenses, including $800 lost for heater and $40 to $50 a month for added heating bills.
*305 2. May 21 Joel Gold, Manager-Consumer Affairs with Fedders, wrote Mr. Boatright that after evaluating the installation "a decision has been made to grant your request for a refund of the purchase price of your split system heat pump." This letter further states the refund covered the cost of equipment only, the retail price of which was $1,451.21. This letter requested Boatright to sign an enclosed release and return with the metal tags to the heat pump units.
3. June 4 Dean wrote Gold enclosing estimated cost of a replacement unit in amount of $2,227.37 and demanded this payment plus additional electrical bills in the amount of $480.
4. July 21 Dean received no replay to his letter, and again wrote Gold demanding payment reminding him of the complaint with the FTC.
5. July 22 Gold wrote Dean that under the terms of the full warranty, the consumer had the right to request a full refund for a free replacement, and Boatright had elected the refund (an error, Boatright had made no such election). The letter requested Boatright to sign the release and return with the metal tags.
6. July 31 Dean wrote Gold insisting on full replacement costs.
7. August 22 Gold wrote Dean their obligation was only to refund original, not current costs.
8. September 12 Dean to Gold, informing him Boatright was interested in investigating the possibility of a replacement unit rather than a cash refund. He wanted information of Fedders' policy regarding replacement units, cost of installation and warranty. He also wanted to know who would service the unit.
9. September 30 Gold to Dean. In lieu of refund Fedders would be willing to install a new outdoor unit at no cost. However, warranty would be from date of original purchase.
10. October 13 Dean to Gold. His client wanted the entire unit replaced, not just the outside unit.
11. November 17 Gold to Dean. Under "full warranty" the customer was entitled to refund of full purchase price of the entire unit. If customer wanted replacement, only the outside unit would be replaced; but if the service man upon inspection found the coil of the indoor blower should be replaced, Fedders would do this also.
12. November 21 Dean to Gold. His client wanted a replacement of the unit rather than cash refund, and also to replace the indoor unit if needed. If Gold would sent the necessary papers, he would have his client sign them. Requested prompt attention from Fedders.
13. December 29 Dean to Paul Kolv, Vice President. Stated he represented Boatright and had first written Fedders on April 25, and had since been negotiating with Gold. Because of total failure of unit, Fedders should either replace the unit with full warranty or refund at replacement cost. Also Mr. Boatright had suffered out-of-pocket expenses. Dean also stated he had been in contact with FTC, and he did not believe Fedders had dealt in a fair and reasonable manner.
1981 CORRESPONDENCE
14. January 20 Peter Palumbo, Manager-Consumer Affairs, to Dean. He stated their records indicated Mr. Boatright requested a refund of purchase price on April 25, 1980 (an erroneous statement), and that request had been granted on November 17. Fedders agreed to refund full purchase price or replace the unit at Fedders expense.
15. February 20 Dean to Palumbo. Stated he was confused by Palumbo's letter, and complained of "foot dragging" by Fedders, and asked for a replacement unit in a few days.
16. May 14 Palumbo to Dean. A search of files failed to produce a release. A *306 release was enclosed for Boatright to sign, and when returned would arrange for immediate installation of the replacement unit.
17. May 18 Dean to Palumbo. Complained release sent was for a cash refund of $1,451.21, and nothing said about a replacement unit. If not forthcoming suit would be filed.
18. June 22 Dean to Palumbo. The release was being sent, but with specific understanding Boatright would get a replacement unit.
19. July 14 Dean to Palumbo. Complaining he could not reach him in returning Palumbo's call to Dean.
20. July 27 Palumbo to Dean. Enclosed copy of June 26, 1981, FTC consent decree notice (the second order), which had been mailed to Boatright and returned. This gave options available to Boatright under the consent decree.[2] This letter requested Dean to review program with Boatright. It also stated Fedders was "processing the refund as per the previous correspondence." However, Mr. Boatright "may have additional benefits under the new program." The letter finally asked him to please allow thirty days for the check.
21. August 19 Palumbo to Boatright at Boatright's home address. This letter enclosed a check for $1,451.21 and apologized for problems.
22. August 26 Dean to Palumbo. Informed him his client elected a replacement, not a refund. He requested a replacement without delay.
23. September 4 Palumbo to Dean. Apologized, stated they had authorized their distributor TESCO to provide Mr. Boatright's service contractor with replacement equipment and have work performed at no charge to Mr. Boatright.
24. November 18 Dean to Palumbo. Demanded replacement within five days, or suit would be filed.
Sometime in November, 1981, Jayne Dini of Fedders, telephoned Max Jenkins of Bruce, an air conditioner dealer, but not of Fedders products, to investigate a change of inside and outside equipment. On December 29, 1981, Jenkins visited the Boatright home and inspected the unit. On March 15, 1982, Jenkins attempted to report to Dini by telephone, but was unable to get her, and she did not return his call.
The Boatrights filed suit on May 18, 1982. Shortly before suit was filed they conveyed their residence.
The jury returned a verdict awarding the Boatrights $3,000 actual and $20,000 punitive damages. The jury was unanimous in awarding actual, and nine-to-three in awarding punitive damages. Following the verdict, the circuit judge acting under 15 U.S.C.A. § 2303 (the Magnuson-Moss Act) awarded the plaintiffs $5,310.74 in attorney's fees.
LAW
FAILURE TO PROVE DEFECT
Fedders claims the Boatrights failed to prove any breach of warranty in that the fault could just as well have been a faulty installation as the product itself. The record clearly reveals what the problem was with this heat pump: it would "freeze up" and quit heating in cold, and especially in below freezing weather. Unfortunately, we will never know from this record what in fact caused the problem. Fedders, in the best position to answer this question after all it manufactured the heat pump never saw fit to have any of its factory representatives inspect it and answer the question.
It takes no extra amount of intelligence, however, to fathom that one of the two quite ordinary purposes for which this unit was purchased was to adequately heat the Boatright residence in the winter, and certainly no more cerebratrion to ascertain the unit, for some reason, was unfit for this purpose.
*307 The Boatrights at least proved a breach of an implied warranty of merchantability, about which more will be said later.
There are two answers, then, to Fedders contention. First, the Boatrights having proved a breach of the implied warranty of merchantability, it was the obligation of Fedders to prove it was the dealer's fault, not its own, that the unit was not fit for its ordinary heating purpose. It offered no such proof.
Second, such proof would have been unavailing in any event. Fedders manufactured and placed on the market a machine which required personnel of special skill and knowledge to install. Fedders contracted with and constituted OH & CC as its authorized dealer, the firm in Oxford to sell and install its machines in residences. Fedders represented to the public that OH & CC was its local dealer, and the firm which could install its equipment. OH & CC carried the Fedders sign, presumably, showing it was an authorized dealer. It could even be said that the proper installation of the machine was but a continuation of the manufacturing process, because until finally installed in place the unit had no usefulness.
There is no contention that the Boatrights in any way caused or increased the defect in the unit. The defect could only have been caused by one of two entities: Fedders or OH & CC.
Since manifestly there was a defect for which the Boatrights were blameless, should Fedders be permitted to escape its responsibility under the facts of this case by placing the blame on its dealer? Or, put another way, assuming the fault in the machine's performance arose from faulty installation by OH & CC, rather than at Fedder's manufacturing plant, who should have to pay for such a mistake, Fedders or the Boatrights?
Our answer is that Fedders should bear the burden. Having not only placed a machine which required special skill to install, but the dealer authorized to make such installation, on the market, Fedders should be estopped to deny responsibility for errors committed by its dealer in the installation.
Crocker v. Sears, Roebuck & Co., 346 So. 2d 921 (Miss. 1977), cited by Fedders is distinguishable. There is nothing in the record in that case to suggest that the installation of an electric stove, which allegedly was defective and caused a house to catch on fire, required special skill or expertise to install in the house, or further if such were the case, that the defendant had an authorized dealer who made such installations.
We addressed a similar contention to Fedders in Volkswagen of America, Inc. v. Novak, 418 So. 2d 801 (Miss. 1982), wherein the defendant manufacturer sought to escape liability under the UCC by claiming that its dealer, not itself, was the "seller." We held that under the facts of that case the manufacturer, as well as the dealer, was a "seller" under Miss. Code Ann. § 75-2-103(1)(d) (1972) because the sale and warranty "blended into a single unit" at the time of sale, and because such sales are usually made, "not only upon the make and model of the automobile, but also upon the assurance of the manufacturer, through its warranty, that the vehicle will conform to the standards of merchantability." P. 804.
Fedders does not seek to escape liability under the claim it was not the "seller," but seeks to require the consumer to prove the problem with the equipment arose solely from its manufacture as opposed to its installation. In Royal Lincoln-Mercury Sales v. Wallace, 415 So. 2d 1024, 1028 (Miss. 1982), we held the manufacturer bore responsibility to see that its authorized dealer properly made repairs necessitated by defects covered by its express warranty. It also follows that a manufacturer which puts on the market a machine which requires special skill and knowledge to install before it has any utility whatever is responsible for seeing that its authorized dealer who sold it did in fact properly install the unit. In Royal Lincoln we held that the dealer, insofar as making the repairs *308 of defects covered by warranty of the manufacturer, was the agent of the manufacturer. Here we hold that OH & CC, insofar as installing this machine to a properly operating unit, was likewise agent for Fedders.
This heat pump was not sold directly by Fedders to a consumer, with the consumer having the responsibility for its proper installation, but through an authorized dealer which made the installation.
MEASURE OF DAMAGES
Fedders next claims an improper measure of damages was submitted to the jury. Response to this entails an examination of the code provisions in the entangled negotiations between the Boatrights' attorney and Fedders.
When Dean wrote Fedders on April 25, 1980, there were three possible areas upon which liability could exist.
1. THE FTC JUNE 14, 1979, CONSENT ORDER
This order did not apply, because the Boatrights failed to respond to the notice sent them by Fedders.[3] Moreover, Dean never made demand against Fedders for relief under this order, after corresponding with the FTC himself.
2. THE LIMITED WARRANTY
Under this limited warranty Fedders was obligated to furnish a new or rebuilt part, with the Boatrights to pay delivery, installation and labor costs.
3. IMPLIED WARRANTY OF MERCHANTABILITY
The pertinent portions of Miss. Code Ann. § 75-2-314 (1972) are:
§ 75-2-314. Implied warranty: merchantability; usage of trade.
(1) A warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind....
(2) Goods to be merchantable must be at least as such
* * * * * *
(c) are fit for the ordinary purposes for which such goods are used; and
* * * * * *
(3) Other implied warranties may arise from course of dealing or usage of trade.
Fedders' attempt in its express limited warranty to limit its liability as to any implied warranty was invalid. Miss. Code Ann. § 11-7-20 (1972) abolished any requirement of privity to maintain an action against the manufacturer for a defective product, and Fedders was a "seller" within the code definition. See: Volkswagen; Royal Lincoln-Mercury Sales, supra.
Miss. Code Ann. § 11-7-18 (1972) provides:
§ 11-7-18. Limitation of remedies or disclaimer of liability as to certain implied warranties prohibited.
There shall be no limitation of remedies or disclaimer of liability as to any implied warranty of merchantability or fitness for a particular purpose.
This statute is clear and unequivocal as to any attempted limitation on remedies as well as liability for a breach of any implied warranty of merchantability. See also: Miss. Code Ann. § 75-2-719(4) (1972).
Damages for breach of warranty are covered by two sections of the code. Miss. Code Ann. § 75-21-719 states:
§ 75-2-719. Contractual modification or limitation of remedy.
(4) Any limitation or remedies which would deprive the buyer of a remedy to which he may be entitled for breach of an implied warranty of merchantability or fitness for a particular purpose shall be prohibited.
Miss. Code Ann. § 75-2-715 (1972) defines "incidental" and "consequential" *309 damages. Incidental damages are not involved in this case. See: Miss. Code Ann. § 75-2-715(1) (1972). Consequential damages are, and as to these this section states:
§ 75-2-715. Buyer's incidental and consequential damages.
* * * * * *
(2) Consequential damages resulting from the seller's breach include
(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
(b) injury to person or property proximately resulting from any breach of warranty.
Fedders' obligation under its limited warranty was limited to replacement of a defective part.
As we have noted, there was clearly a breach of Fedders' implied warranty of merchantability of this heat pump. Fedders' liability under § 75-2-714 was the difference in actual value of the heat pump at the time it was accepted by the Boatrights and its value if there had been no breach of warranty. See: Massey-Ferguson, Inc. v. Evans, 406 So. 2d 15 (Miss. 1981).
If the heat pump could have been repaired so as to properly function, the measure of damages under § 75-2-714 would have been the cost of repairs. See: Smart v. Tidwell Industries, Inc., 668 S.W.2d 605 (Mo. App. 1984); Richardson v. Car Lot, Inc., 10 Ohio Misc.2d 32, 462 N.E.2d 459 (1983); Southern Concrete Products Co. v. Martin, 126 Ga. App. 534, 191 S.E.2d 314 (Ga. 1972); Clark v. International Harvester Co., 99 Idaho 326, 581 P.2d 784 (1978).
If the heat pump could not be repaired and was worthless, the Boatrights under § 75-2-714 would have been entitled to a refund of the purchase price. As stated in Anderson, Uniform Commercial Code, 3rd Ed., Vol. IV, § 2-714:15:
The damage which a buyer recovers for breach of warranty as distinct from incidental and consequential damages, cannot exceed the price of the goods. See also: Ray [Raye] v. Fred Oakley Motors, Inc., (Tex. App.) 646 S.W.2d 288; Warren v. Guttanit, Inc., 69 N.C. App. 103, 317 S.E.2d 5.
Also, as in Massey-Ferguson, supra, this was a proper case for consequential damages suffered by the Boatrights as provided in § 75-2-315. Fedders should have very well have known when selling the heat pump that if it failed to properly heat, the purchaser would seek alternative sources of heat.
Dean's letter of April 25 demanding the replacement cost of the unit exceeded the damages that the Boatrights were entitled under § 75-2-714. Fedders' offer to refund the full purchase price was the maximum amount of damages for which Fedders would have been liable in any event under § 75-2-714. Dean insisted on a replacement cost of $2,227.37 through August, 1980.
Then, Dean wrote on September 12 that his client was interested in a replacement unit rather than a cash refund. Based on this letter Fedders offered to replace the outdoor unit at no cost. There was never any contention by Tatum, the local dealer, that there was any problem except with the outdoor unit, by far the major portion of the completed heat pump. It was therefore not unreasonable for Fedders to decline to replace the entire system, indoors and outdoors. Dean insisted, however, in his letter of October 13 on replacement of the entire unit. Again, Fedders by letter of November 17 offered a refund of the purchase price or to replace the outdoor unit at no cost, and if the indoor unit upon inspection needed replacing Fedders would do this as well. On November 21 Dean accepted this offer.
There was a change in personnel at Fedders resulting in further delay, confusion *310 and outright bumbling, as shown in the correspondence. Again on May 16, 1981, Fedders agreed to replace the unit, and again on June 16 following Dean accepted the offer. In spite of this Fedders mailed a refund check for the full purchase price to Boatright. Thereafter, Fedders again agreed to replace the unit.
There was thus a compromise settlement between the Boatrights and Fedders to replace the unit. In fact, the Boatrights were entitled to a peremptory instruction on liability for the cost of replacing the unit.[4]
When the Boatrights sued Fedders there had been a breach of a binding compromise settlement. In the case of D.L. Fair Tie Co. v. Warrell, 147 Miss. 412, 421, 112 So. 24 (1927), this Court stated:
There seems to be no division among the authorities that the settlement of a bona-fide dispute as to doubtful claims between parties, made fairly and in good faith, is a sufficient consideration for the compromise agreement based thereon... .
The United States Supreme Court in Hennessy v. Bacon, 137 U.S. 78, 11 S. Ct. 17, 34 L. Ed. 605 (1980), stated:
... It is the case of the compromise of a disputed claim, the parties dealing with each other upon terms of perfect equality, holding no relations of trust or confidence to each other, and each having knowledge, or having the opportunity to acquire knowledge, of every fact bearing upon the question of the validity of their respective claims. Cleaveland v. Richardson, 132 U.S. 318, 329 [10 S. Ct. 100, 38 L. Ed. 384] [33:384, 389]. Such a settlement ought not to be overthrown, even if the court should now be of opinion that the party complaining of it surrendered rights that the law, if appealed to, would have sustained... .
Indeed, the Idaho Supreme Court in Wilson v. Bogert, 81 Idaho 535, 347 P.2d 341, 345 (1959), stated: "In an action brought to enforce an agreement of compromise and settlement, made in good faith, the court will not inquire into the merits or validity of the original claim."
When the Boatrights sued there had been a breach of a binding compromise settlement. The undisputed cost of a replacement unit exceeded $2,200. Also, the Boatrights incurred additional expenses exceeding $1,100 purchasing one wood and two kerosene heaters. The jury verdict of $3,000 was not excessive.
Fedders makes no specific complaint as to any of the instructions. We do not address the propriety of the plaintiff's instructions on actual damages. Fedders has not specifically complained as to any such instruction, and the jury manifestly was not misled.
PUNITIVE DAMAGES
Fedders contends this was not a case of punitive damages and the court erred in submitting the issue to the jury.
We do not agree with Fedders that because enforcement of a contract is governed by the UCC it is thereby insulated from any claim for punitive damages. If the breach is of such gross magnitude that it would justify infliction of punitive damages in any contract dispute, it would be strange reasoning to hold that simply because performance of the contract is governed by the UCC there can be no punitive damages. In Bryan Construction Co., Inc. v. Thad Ryan Cadillac, Inc., 300 So. 2d 444 (Miss. 1974), cited by Fedders, this Court held that the plaintiff had "elected" his remedies in suing for breach of contract rather than in tort for fraud and deceit. The opinion in a footnote, however, notes the case precedes Miss. Code Ann. § 11-7-36, p. 449, which specifically authorizes such a pleading. We also note it precedes the adoption of the Mississippi Rules of Civil Procedure. Rule 8(e)(2) authorizes *311 pleading alternative or inconsistent claims.
While the UCC makes no attempt to specifically provide for punitive damages, it does note they may be had "by other rules of law." See Miss. Code Ann. § 75-1-106(1); Goetz v. Security Industrial Bank, 508 P.2d 410 (Colo. App. 1973); and Council Bros., Inc. v. Ray Burner Co., 473 F.2d 400 (5th Cir. Fla. 1973). The breach of a contract governed by the UCC, just as the breach of any other contract, in rare instances may be attended by such conduct as to authorize awarding an aggrieved party punitive damages in addition to damages for the contract's breach.
Was this such a breach of contract?
In Seals v. St. Regis Paper Co., 236 So. 2d 388 (Miss. 1970), we stated: "Punitive damages may be recovered for a willful and intentional wrong, or for such gross negligence and reckless negligence as is equivalent to such a wrong. (236 So.2d at 392)."
In Fowler Butane Gas Co. v. Varner, 244 Miss. 130, 141 So. 2d 226 (1962), we stated:
In order to warrant the recovery of punitive damages, there must enter into the injury some element of aggression or some coloring of insult, malice or gross negligence, evincing ruthless disregard for the rights of others, so as to take the case out of the ordinary rule. (244 Miss. at 150, 151; 141 So.2d at 233).
And, in Progressive Casualty Insurance Company v. Keys, 317 So. 2d 396 (Miss. 1975), we stated:
(b) Punitive damages are not recoverable for the breach of a contract unless such breach is attended by intentional wrong, insult, abuse or such gross negligence as to consist of an independent tort. [Citations omitted] (317 So.2d at 398).
In recent cases we have had occasion to address the propriety of punitive damage suits by policyholders against their insurance carriers.
In Blue Cross and Blue Shield v. Campbell, 466 So. 2d 833, 842 (Miss. 1984), this Court stated:
Any plaintiff asking for punitive damages, or any special or extraordinary damages based upon "bad faith" of an insurance company has a heavy burden.
* * * * * *
... In a punitive damages case, it is the responsibility and function of the trial judge, after reviewing all the evidence, to first determine whether the facts of that particular case justify submitting to the jury the issue of such punitive or special damages. In such a case the trial court is not guided by the simple rules of Paymaster, considering only one side's evidence, but rather must consider all the evidence and determine if the defendant's conduct was such that the jury should be called upon in turn to decide the justification and amount of punitive damages, or some extraordinary damages.
The decision of a trial judge whether to submit a punitive damage issue to the jury must come from life's experiences, it cannot come from any precise formula. Indeed, in Blue Cross and Blue Shield v. Campbell, supra, and in Bankers Life & Casualty Co. v. Crenshaw, 483 So. 2d 254 (Miss. 1985), we specifically eschewed the talismatic test that if the plaintiff was entitled to a peremptory instruction he would always be entitled to a punitive damage instruction, or if the peremptory instruction were properly refused, he would never be entitled to a punitive damage instruction. In doing so we followed Reserve Life Ins. Co., v. McGee, 444 So. 2d 803 (Miss. 1983), in which punitive damages were allowed even though the liability issue was also submitted to the jury.
We have, however, in these recent cases been able to illustrate some behavior which justifies infliction of exemplary damages.
In Standard Life Ins. Co. of Indiana v. Veal, 354 So. 2d 239 (Miss. 1978), we condemned an insurance carrier's refusal to pay a valid claim without any arguable reason for such denial. Until that case, *312 such conduct would permit an insurance carrier, in a far better bargaining position than its insured claimants, to simply refuse to pay a claim in the hope of getting it reduced or having the claimant forget it altogether. See also, Reserve Life Ins. Co. v. McGee, supra.
Travelers Indemnity Company v. Wetherbee, 368 So. 2d 829 (Miss. 1979), was a variation of the conduct condemned in Veal, supra. There the insured had a fire claim for loss of his dwelling and contents. The claim was clearly divisible but the insurance carrier refused to pay the contents claim, the amount of which was undisputed, until it settled with the insured on the dwelling. Until that case was decided, an insurance company could, and many in fact did, withhold payment of a perfectly proper and valid claim until settlement was made with the insured on the disputed claim.
In Bankers Life & Casualty Co. v. Crenshaw, supra, there was a denial of a meritorious claim with virtually no investigation as to its merits, coupled with disingenuous, deceptive conduct by the insurance carrier in dealing with the insured.
In National Life & Accident Insurance Co. v. Miller, Cause No. 55,702 (decided November 13, 1985, and not yet reported), we condemned a practice of selling health and accident insurance policies in which the commission agents filled the application form, and then denying the claims based upon false answers made by an agent, not the insured.
None of these cases supports a punitive damage instruction in this case. There was no denial of a valid complaint by Fedders; there was no proof of any chicanery on the part of this company. There was no proof of any deliberative pattern by Fedders to frustrate complaints made for defective merchandise. There was incredible incompetence or understaffing of the consumer complaint department of Fedders, or both.
There was ample cause for exasperation, but this in and of itself is not necessarily outrageous conduct. Moreover, the initial delay in making a settlement was caused at least in part by Dean's demanding more than the Boatrights were entitled to under the code. See also: Bellefonte Ins. Co. v. Griffin, 358 So. 2d 387 (Miss. 1978).
This was not a punitive damage case, and the circuit judge erred in submitting the issue to the jury.
ATTORNEY'S FEES
The Magnuson-Moss Act, 15 U.S.C. § 2303 et seq., provides for the awarding of attorney's fees to a consumer who prevails in a breach of warranty action.
Section 15 U.S.C. § 2310(d)(2) reads as follows:
(2) If a consumer finally prevails in any action brought under paragraph (1) of this subsection, he may be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of cost and expenses (including attorneys' fees based on actual time expended) determined by the court to have been reasonably incurred by the plaintiff for or in connection with the commencement and prosecution of such action, unless the court in its discretion shall determine that such an award of attorneys' fees would be inappropriate.
This case falls squarely under this provision and in fact it is hard to imagine a case that better exemplifies the type of litigation Congress had in mind when drafting this provision.
The trial court correctly held Fedders liable for attorney's fees.
AFFIRMED AS TO ACTUAL DAMAGES AND ATTORNEY'S FEES; REVERSED AND RENDERED AS TO PUNITIVE DAMAGES.
PATTERSON, C.J., WALKER and ROY NOBLE LEE, P.JJ., and DAN M. LEE, PRATHER, SULLIVAN and ANDERSON, JJ., concur.
ROBERTSON, J., not participating.
NOTES
[1] Significantly, the limited warranty also made note that in some states the limitations on implied warranty as well as on consequential damages were not permitted.
[2] It appears this second consent decree gave several options to the owner of a defective heat pump. He could be reimbursed for repairs which had been made, he could request a refund of purchase price, or he could demand a replacement of the unit.
[3] The Boatrights denied receiving any notice from Fedders. The order did not require actual receipt of the notice, however, only that Fedders send the package and not have it returned as undeliverable. There was no evidence that this package was returned.
[4] The Boatrights did not cross-appeal the circuit judge's refusal to grant them a peremptory instruction on liability. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1750056/ | 47 S.W.3d 767 (2001)
Susan Camille LEE, Individually, and as Trustee of the Article V Trust for the Benefit of Susan C. Gibson, and Derivatively on Behalf of the Article IV Trust and the Estate of Katherine Pillot Lee Barnhart, and Susan C. Gibson, Individually, and Derivatively on Behalf of the Article IV Trust and the Estate of Katherine Pillot Lee Barnhart, Appellants,
v.
Ronald E. LEE, Jr., Individually, as Trustee of the Article IV Trust, and the Article V Trust for the Benefit of Katherine Lee, and as Executor of the Estate of Katherine Pillot Lee Barnhart, Appellee.
No. 14-97-00162-CV.
Court of Appeals of Texas, Houston (14th Dist.).
May 17, 2001.
Rehearing Overruled May 17, 2001.
*772 Thomas A. Zabel, Houston, Daniel J. Sheehan, Marc S. Culp, Dallas, for appellants.
Adam P.Schiffer, Thomas B. Greene, D. Gibson Walton, Marie R. Yates, R. Glen Rigby, Houston, for appellants.
Panel consists of Justices ANDERSON, HUDSON, and Senior Chief Justice MURPHY.[*]
*773 CORRECTED OPINION
HUDSON, Justice.
This is an appeal from a judgment in a probate case in which appellants sought removal of the executor/trustee and sought damages for breaches of fiduciary duty and for excessive executor fees. After granting appellee's motion for judgment notwithstanding the verdict and disregarding several jury findings, the trial court rendered judgment: (1) refusing to remove appellee as executor and trustee, and (2)awarding $2.8 million in damages and prejudgment interest to the Article IV trust. Appellants raise eight issues and appellee brings three cross-points. In our corrected opinion of February 8, 2001, this court affirmed in part and reversed and rendered in part.
Appellants have filed a third motion for rehearing. We now withdraw our corrected opinion of February 8, 2001, and issue this corrected opinion, affirming in part and reversing and rendering in part.
Background
When Katherine Barnhart died in 1975, her will provided that the bulk of her estate was to pass to a trust (the "Article IV Trust"). Barnhart's two children, appellant Susan Lee, and her brother, appellee Ronald Lee, were each entitled to one-sixth of the income from the Article IV Trust, and so much of the remaining two-thirds as necessary for their health, support and maintenance, considering the "availability of funds from other sources." The remaining income was to go into separate trusts for each of the grandchildren (the "Article V Trusts"). The Article V Trusts were to distribute income to the grandchildren to the extent necessary to provide for their health, support and maintenance, also considering the "availability of funds from other sources."
As provided in the will, appellee was appointed executor of the will (and trustee of the trusts) and began administration in 1976. Appellee filed the estate's inventory reflecting a date of death value of $12.8 million. After negotiations that continued until 1992, appellee and the IRS agreed upon a taxable value of the estate assets of $12 million. By this time, federal and state inheritance taxes totaled approximately $7 million. Because the majority of the estate's assets were raw land, the estate was unable to pay the taxes it owed and the trusts could not be funded.
In February 1980, appellee reached an agreement with the IRS regarding the estate taxes due. The total amount due was $2.8 million, and the interest on that amount as of February 1980 was approximately $475,000 (for a total debt to the IRS of approximately $3.5 million). The estate also owed the State of Texas approximately $800,000 in inheritance taxes. Because the estate had little available cash, appellee continued to request extensions on these debts. Other debts continued to amass, including ad valorem taxes on the various parcels of real estate.
In December 1980, appellee accepted an unsolicited offer to purchase 61 acres of a large tract on Westheimer Road for $19.5 million. The contract provided for payment in four annual installments. Appellee funded the Article IV Trust in 1982 with a deposit of $4 million. Appellant, Susan Lee, received her first distribution from the Article IV Trust in January 1983 in the amount of $15,784.
Appellee testified that, by the time he funded the Article IV Trust, he had taken more than $1 million in executor fees. By December of 1983, appellee had taken a total of $2,836,000 in fees. Although the IRS initially disputed the amount of this fee, they ultimately allowed the deduction of $1.5 million of appellee's fee.
*774 In December 1985, appellee received a letter from Susan Lee's attorney stating that she had never received an accounting and demanding one at the earliest possible date. This letter also asked about appellee's plans and expected distributions. Appellee did not produce an accounting in response to this request. In 1988, Susan Lee's attorney sent appellee a certified letter requesting an accounting from November 1975 to the present under section 149A of the Probate Code. This letter demanded receipt of the accounting by December 17, 1988, and requested copies of all income tax returns filed for the estate and any trusts. Appellee did not produce the accounting on the deadline and appellants filed suit several days later.
Appellee did not list the remaining Westheimer property or the Pasadena property for sale. Although he received an unsolicited offer to sell the remaining Westheimer tract, appellee did not respond to this offer because he found it to be a bad proposal in that the offeror required high-density sewer capacity and would not pay for the portion of the property within the flood plain. In 1984, appellee had received another unsolicited offer to buy the Pasadena property for $2.3 million, which he did not accept because it was not a cash deal. Appellee did not make counteroffers to either of these offerors. In 1984, appellee had also received a contract offering $12,500 per acre for the Pasadena property. This was not a cash offer and appellee did not make a counteroffer.
Two family ranches were also in the estate: Cap Rock Ranch and River Bend Ranch. These ranches increased the estate's debts because they incurred taxes and were unprofitable. In 1990, River Bend Farm was leased for $20,000 per year. Appellee did not believe he could sell the family ranch because he and Susan Lee owned it jointly. Appellee discussed the possibility of partitioning with Susan Lee's attorney, but this never occurred.
During 1990-91, appellee considered developing the remaining Westheimer property into a residential subdivision to be called "Knollwood Trails." The development never received a loan and was ultimately abandoned. By 1991, appellee had spent more than $700,000 on Knollwood.
In April 1994, K-Mart bought a 21 acre parcel of the Westheimer tract for $8 million. The trial court ordered that these sale proceeds along with other estate assets be transferred to the Article IV trust. A year later, appellee funded the Article V trust.
Susan Lee brought suit individually and as trustee of the Article V Trust for the benefit of her daughter, Susan Gibson, and derivatively on behalf of the Article IV Trust and the Estate. Her daughter, Susan Gibson, was also a named plaintiff. Although the original suit was for an accounting and for removal of appellee as executor and trustee, additional claims included breaches of fiduciary duty, conversion, fraudulent concealment, constructive fraud and/or fraud, negligence, and gross negligence.
The case was tried to a jury and the jury found that appellee had breached fiduciary duties, that he charged unreasonable fees and expenses to the estate, that his fees and expenses were unreasonable by approximately $2.2 million, that the breaches of fiduciary duty resulted in damages, and that appellee defended against removal in bad faith. The jury also found that the breaches of fiduciary duty were not committed with gross negligence. Appellee filed a motion for judgment notwithstanding the verdict and to disregard jury findings. The trial court granted this motion in part, disregarding the jury's findings of breach of duty and damages for the *775 failure to sell the Westheimer and Pasadena property, the bad faith defense finding, and found the following:
(1) the Article IV trust was entitled to judgment against appellee in the amount of $840,000 (amount found by jury) for breach of fiduciary duty relating to the Knollwood development;
(2) the Article IV Trust was entitled to judgment against appellee in the amount of $1.00 (amount found by jury) for the breach of fiduciary duty relating to River Bend Farm;
(3) the Article IV Trust was entitled to judgment against appellee in the amount of $1.00 (amount found by jury) for the breach of fiduciary duty relating to Cap Rock Ranch;
(4) the Article IV trust was entitled to judgment against appellee in the amount of $659,506.50 (consisting of the $2.2 million of unreasonable executor fees less the tax savings realized by the Estate from the deduction of such fees on the Estate's estate tax return) plus prejudgment interest of 10% per annum, computed as simple interest; and
(5) the Article IV trust was entitled to judgment against appellee in the amount of $163,550 for unreasonable office expenses.
The judge also awarded appellants' attorneys reasonable and necessary attorney's fees of $1.5 million and awarded appellee's attorneys fees of $1.5 million, all reimbursable from the Estate (plus additional amounts for appeal).
Excessive Executor Fee
Appellants first challenge the trial court's reduction of the excessive executor fee finding. The jury found that the $2.8 million executor fee taken by appellee was unreasonable and excessive by approximately $2.2 million. The trial court reduced the jury's finding by $1.5 million, stating in the judgment that he was awarding appellee $659,506.50, which represented the jury finding of $2.2 million "less the tax savings realized by the Estate from the deduction of such fees on the Estate's estate tax return...."
Appellants contend the impact of the court's deduction is to allow appellee to reap $1.5 million for his wrongful conduct as long as the fee results in a tax deduction. Citing Anderson v. Armstrong, 132 Tex. 122, 120 S.W.2d 444 (1938), appellants contend the remedy for excessive fees is return of the entire amount with interest at the highest legal amount.
Appellee responds with three arguments: (1) the Probate Code supports the trial court's exercise of discretion to determine the amount of the fee; (2) Burrow v. Arce, 997 S.W.2d 229 (Tex.1999)[1] supports a trial court determination of fee forfeiture; and (3) the "tax benefits rule" authorizes the trial court to deduct the amount of tax savings realized.
We turn first to appellee's claim that section 241 of the Probate Code supports the trial court's decision to reduce the jury's award. Section 241 concerns compensation for personal representatives. This section provides that executors and other representatives are entitled to receive a commission of five percent of the gross fair market value of the estate. See Tex. Prob.Code Ann. § 241 (Vernon Supp. 2000). This statutory amount has been held to represent a fair and reasonable compensation. See In re Roots' Estate, *776 596 S.W.2d 240, 243 (Tex.App.-Amarillo 1980, no writ). The last sentence of section 241 provides that the "court may, on application of an interested person or on its own motion, deny a commission allowed by this subsection in whole or in part if: (1) the court finds that the executor or administrator has not taken care of and managed estate property prudently...." Id. at § 241(a)(1).
Because the will provides for a reasonable fee for the executor, both parties agree that section 241 is inapplicable as it concerns the amount of compensation appellee may be paid for his role as executor. This interpretation is supported by case law. See, e.g., Stanley v. Henderson, 139 Tex. 160, 162 S.W.2d 95 (1942). Despite the inapplicability of the subsection setting executor compensation, appellee argues another subsection of this same statute applies, and gives the trial court discretion, to reduce an executor's fee where there is a finding of imprudent management. Appellants, on the other hand, claim that where, as here, the will sets compensation, no part of the statute applies. In support of this argument, appellants cite Stanley.
We do not find Stanley dispositive on the question whether the last sentence of section 241(a) applies to this issue. First, when the Stanley opinion issued, the last sentence of the present version of section 241(a) was not yet part of the statute. Second, Stanley does not address the issue presented here, whether the last sentence of section 241(a) applies on appeal to support a trial judge's decision to reduce a jury finding of damages for charging an excessive fee.
Because it provides for a standard fee, section 241 applies in situations where the will does not set compensation, and the executor seeks compensation in the statutory amount or for a greater amount. See, e.g., Weatherly v. Martin, 754 S.W.2d 790, 793-94 (Tex.App.-Amarillo 1988, writ denied). Therefore, this section is available for an executor to seek the statutory five percent or may be used by an opponent, or the trial court on its own motion, to deny the executor a fee, in whole or in part. These applications of the statute, however, are not relevant to this case because the will set compensation.
First, appellee did not raise a section 241 objection to the fee questions on the ground that the questions were within the trial court's discretion. Appellee also did not base his objection to the jury's finding on section 241. Instead, appellee argued in his motion for judgment notwithstanding the verdict that there was no evidence to support the jury's finding. Appellee cited to the testimony of his expert accountant, Greg Bardnell, who testified that, when tax benefits and interest savings to the estate are considered, the $2.8 million in fees actually cost the estate only $850,000. Citing In re Garvin's Will, 256 N.Y. 518, 177 N.E. 24 (1931), appellee claimed the amount of tax savings must be considered. Appellee further argued that, even if legally sufficient evidence supported the jury's finding of unreasonableness, appellants could only recover the actual cost to the estate of the excessive fees.[2]
In addition to the absence of an objection under section 241, the trial court did not, on its own motion, apply section 241 to deny all or part of appellee's fee. Instead, the issue of unreasonableness of the fee was submitted to the jury. Furthermore, the trial court did not apply section 241 in granting the motion for judgment notwithstanding the verdict. In its final judgment, *777 the court specifically found that "the Article IV Trust is entitled to judgment against Ronald E. Lee, Jr. in the total amount of $659,506.50 (which consists of the $2,198,355 of unreasonable executor fees found by the jury less the tax savings realized by the Estate from the deduction of such fees on the Estate's estate tax returns)...." Because section 241 was not raised as a ground for appellee's motion for judgment notwithstanding the verdict, we may not consider it on appeal.
The trial court also did not reduce the jury's finding because there was no evidence supporting it. Instead, the trial court specifically stated he was reducing the fees by deducting the amount of tax savings realized by the estate. Therefore, we must determine whether the trial court properly applied the "benefits rule" to reduce the jury's finding. Appellee claims the trial court properly applied the "benefits rule" under Nelson v. Krusen, 678 S.W.2d 918 (Tex.1984).[3]
Nelson addressed the question whether Texas should recognize a cause of action for wrongful life. 678 S.W.2d at 924. In reaching their decision to follow the majority of courts refusing to adopt such a cause of action, the Texas Supreme Court observed that one rationale for not allowing a cause of action for wrongful life is that, in awarding damages, the court must offset any special benefits to the plaintiff resulting from the negligence. See id. (with citation to RESTATEMENT (SECOND) OF TORTS § 920 (1979)). Section 920 of the Restatement of Torts allows consideration of the value of benefits to the interest of the plaintiff that was harmed, to the extent this is equitable. See RESTATEMENT (SECOND) OF TORTS § 920 (1979).
Section 920A, however, augments section 920, providing that "[p]ayments made to or benefits conferred on the injured party from other sources are not credited against the tortfeasor's liability, although they cover all or a part of the harm for which the tortfeasor is liable." Id. at 920A (emphasis added). This section of the Restatement is the basis for the long-recognized "collateral source rule," which precludes a tortfeasor from obtaining the benefit of payment conferred upon the injured party from sources other than the tortfeasor. See Castillo v. American Garment Finishers Corp., 965 S.W.2d 646, 650 n. 2 (Tex.App.-El Paso 1998, no writ). In Texas, the collateral source rule has been held to apply in cases where the injured party received insurance benefits, see Brown v. American Transfer & Storage Co., 601 S.W.2d 931, 934 (Tex.1980), general fringe benefits, see McLemore v. Broussard, 670 S.W.2d 301, 303 (Tex. App.-Houston [1st Dist.] 1983, no writ), gratuitous services, see Oil Country Haulers, Inc. v. Griffin, 668 S.W.2d 903, 904 (Tex.App.-Houston [14th Dist.] 1984, no writ), and worker's compensation benefits. See Lee-Wright, Inc. v. Hall, 840 S.W.2d 572, 582 (Tex.App.-Houston [1st Dist.] 1992, no writ).
Because the estate received a tax deduction from the IRS, a source other than the tortfeasor in this case, it would initially appear that the collateral source rule should prevent appellee from obtaining the benefit of this deduction. More on point, however, are the cases regarding tax benefits. *778 Appellants cite LSR Joint Venture No. 2 v. Callewart, 837 S.W.2d 693, 697 (Tex.App.-Dallas 1992, writ denied), in which the court, in dicta, notes its agreement with a Supreme Court case, Randall v. Loftsgaarden, 478 U.S. 647, 106 S. Ct. 3143, 92 L. Ed. 2d 525 (1986). In Randall, the Court held that tax benefits may not offset a party's recovery. Appellee attempts to distinguish Randall on the grounds that it "(1) dealt with income (not estate) taxes; (2) turned on construction of securities fraud statutes; and (3) disallowed consideration of income tax benefits because of the statutory intent to punish and deter and because the tax benefit was speculative." Appellee claims the jury in this case found no culpable mental state calling for punishment or deterrence, the savings by the estate tax deduction is not speculative, and the IRS can no longer assess additional estate taxes or disallow the deduction because the time for doing so has passed.
Randall involved allegations of securities fraud. See 478 U.S. at 650, 106 S. Ct. 3143. Petitioners asserted claims under § 10(b) of the Securities Exchange Act of 1934 and § 12(2) of the Securities Act of 1933. See 478 U.S. at 651, 106 S. Ct. 3143. Respondents argued petitioners' damages should be reduced by the amount of tax benefits received from the security, comparing tax benefits to the section 12(2) deduction for income received. See id. at 652, 106 S. Ct. 3143. The court found that tax deductions or credits are not taxable events and cannot be classified as income. See id. at 657, 106 S. Ct. 3143. The court further observed that, although one purpose of the section 12(2) rescission remedy is to restore plaintiff to his position prior to the fraud, another purpose is to deter fraud and encourage full disclosure. See id. at 659, 106 S. Ct. 3143. The court observed it was more appropriate to allow the defrauded party to have the benefit of a windfall than to let the fraudulent party benefit. See id. at 663, 106 S. Ct. 3143 (citing Janigan v. Taylor, 344 F.2d 781 (1st Circuit)), cert. denied, 382 U.S. 879, 86 S. Ct. 163, 15 L. Ed. 2d 120 (1965). Because any recovery would be taxable as ordinary income, the court believed arguments about a windfall were greatly overstated. 478 U.S. at 663-64, 106 S. Ct. 3143.
Although Randall did involve construction of securities fraud statutes, the damages allowed by the statutes included rescission and out-of-pocket damages. The rescission damages encompassed the consideration paid (with interest) less the amount of income received on the security. 478 U.S. at 655, 106 S. Ct. 3143 (citing 15 U.S.C. § 77l (2)). The out-of-pocket damages included the difference between the fair value received and the fair value of what the defrauded party would have received had there been no fraudulent conduct. Id. at 661-62, 106 S. Ct. 3143 (citing 15 U.S.C. § 78bb(a)). Although the court held that rescission adds an additional measure of deterrence as compared to a purely compensatory measure of damages, much of the reasoning supporting their ultimate conclusion is applicable to nonsecurities cases.
Although it involves a breach of contract claim, Powers v. Powers, 714 S.W.2d 384 (Tex.App.-Corpus Christi 1986, no writ), addresses an argument analogous to the one made by appellee in this case. In Powers, a woman sued her ex-husband for breach of an agreement to pay monthly alimony. See id. at 386. The trial court rendered judgment for the ex-wife for payment of the arrearage, costs, attorney's fees, and post-judgment interest. See id. On appeal, the ex-husband claimed the trial court erred in entering judgment against him because his ex-wife failed to offer any evidence by which to calculate her alleged damages. See id. at 388. *779 More particularly, the ex-husband claimed the measure of damages "should have been the amount of unpaid alimony less the tax savings she realized on her non-alimony income as a result of his failure to pay the entire amount of alimony due under the contract." See id. In other words, the exhusband argued that his ex-wife's tax burden increased proportionately by the amount of alimony she received in a year, and the less alimony he paid, the more of a tax savings she realized. See id.
The court presumed the ex-husband's complaint went to mitigation of damages, in that he sought an offset for any tax savings realized by appellee. See id. at 389. First observing that the burden of proving the amount of damages that would have been mitigated was on the breaching party, the court concluded that they were "unaware of any principle or authority which would allow an offset to the party who has breached a contract for a `tax savings' the non-breaching party `realized' as a result of the breach." Id.
Only two other state courts have addressed deductibility of tax benefits from damages. In DePalma v. Westland Software House, 225 Cal. App. 3d 1534, 276 Cal. Rptr. 214 (1990), the appellant challenged the trial court's refusal to admit evidence of tax benefits. Appellant asserted that, by not admitting this evidence, the trial court applied the collateral source rule and may have given the respondent a compensatory award exceeding statutory limitations. See 225 Cal.App.3d at 1538, 276 Cal. Rptr. 214. The court first held that the collateral source rule has never been extended to breach of contract and it was within the trial court's discretion to deny the appellant collateral source credit. See id. at 1539, 276 Cal. Rptr. 214. In addition to denying application of the collateral source rule, the court asserted three reasons for refusing to consider tax consequences as a mitigating factor in compensatory damage calculations in breach of contract cases. See id. at 1540, 276 Cal. Rptr. 214. First, the court found that the federal tax benefits rule would cancel out most windfalls to plaintiffs in that the government may recapture past tax benefits awarded to a taxpayer if in a later year an event occurs which changes the basis of the premise upon which the deduction was originally based. See id. at 1540-41, 276 Cal. Rptr. 214. Second, the court observed that estimating tax consequences is speculative, time consuming, and confusing. See id. at 1541-42, 276 Cal. Rptr. 214. Finally, the court determined that public policy was better served if the breaching party was responsible for the full amount of compensatory damages. See id. at 1545, 276 Cal. Rptr. 214. The court felt so strongly about public policy that it stated it would reject appellant's argument even if there were no tax benefit rule. See id. The court cited to the Supreme Court's holding in Randall, in which the court had held it more appropriate to give the defrauded party the benefit of a windfall, and stated that the court likewise "favors parties who honor their promises, not those who breach them." See id. at 1546, 276 Cal. Rptr. 214.
The Supreme Court of Montana reached a similar result in a suit by a partnership of doctors against an accounting firm for failing to note the adverse impact the recommended reorganization and liquidation of a corporation would have on the partnership's industrial revenue bond financing. See Billings Clinic v. Peat Marwick Main & Co., 244 Mont. 324, 797 P.2d 899 (1990). On appeal, the accounting firm claimed it was entitled to an offset for the tax benefits the individual doctors received by proceeding with reorganization. See 797 P.2d at 912. The district court refused to allow evidence of tax benefits. See id. at 913. The supreme court found no entitlement *780 to an offset for tax benefits because the objective of compensatory damages is to restore the damaged party to the position the party would have attained had the tort or breach not occurred. See id. The court added that, had the accounting firm done its job, the clinic would have had the benefit both of the tax benefits arising from the reorganization, and the lower cost of the favorable tax-exempt status of industrial revenue bonds. See id. The failure of this bond financing resulted in a higher interest cost for the loans required for construction of an addition to the clinic. See id. Thus, the court reasoned there would be no equity in reducing that higher cost by the tax benefits to which the clinic was otherwise by law entitled. See id.
In response to these cases, appellee cites to Geeslin v. McElhenney, 788 S.W.2d 683 (Tex.App.-Austin 1990, no writ), for the proposition that, in determining the amount of fee to which the executor is entitled, the trial court should balance the value of the executor's services against the harm done to the beneficiaries' interests. In Geeslin, the court found the trial court acted within its authority under section 241 of the Probate Code in reducing Geeslin's fee to 2.5% of the gross estate. See id. at 687. Although the court stated the reduced amount could reasonably be viewed as commensurate with the value of Geeslin's services balanced against the harm done to the interests of the beneficiaries, Geeslin did not involve a tax benefit offset. Accordingly, we find Geeslin distinguishable.
In the instant case, there was evidence of the deduction the estate took for the fee, the interest accrued from the delay in filing the return, the reduction in interest based on the fee deduction, and the accounting fees incurred during the years preceding final settlement of the estate tax debt. The jury obviously considered this evidence and decided that, regardless of the deduction afforded the estate, $2.2 million of the total fee taken was excessive and unreasonable.
Based on our review of case law and the record, we find the trial court erred in deducting $1.5 million from the jury's finding. First, no authority supports an offset for tax benefits. We are unpersuaded by appellee's argument that the trial court's offset should be upheld because the IRS can no longer assess additional estate taxes. Our concern is with the parties before this court. Furthermore, we agree with the policy discussed in Randall and DePalma, As the Supreme Court stated "... it is more appropriate to give the defrauded party the benefit even of windfalls than to let the fraudulent party keep them." 478 U.S. at 663, 106 S. Ct. 3143. Under the facts of this case, it is more appropriate for the estate to obtain the benefit of a windfall than to let appellee keep $1.5 million in fees the jury found was unreasonable.
We next turn to appellee's argument that the Arce case supports the trial court's ruling. The Texas Supreme Court has recently affirmed, in part, this court's opinion in the Arce case, recognizing fee forfeiture as a remedy for breach of fiduciary duty in the lawyer-client relationship. See Burrow v. Arce, 997 S.W.2d 229 (Tex.1999). Appellants argue that Arce is inapplicable because it concerns a remedy for breach of fiduciary duties other than the duty not to take an excessive fee, but we do not read such a limitation in Arce. Instead, we find that Arce applies to any breach of fiduciary duty case where the plaintiff pleads the equitable remedy of fee forfeiture. See id. at 246. A review of the petition in this case, however, reveals no specific pleading of the remedy of fee forfeiture. Instead, appellants sought actual damages in the form of excessive fees *781 taken by the executor. Neither side mentioned forfeiture in the trial court. Appellee did not argue that the claim of excessive fees was one within the trial court's discretion and did not cite any case law regarding the equitable remedy of forfeiture either during the charge conference or in his motion for judgment notwithstanding the verdict. During the charge conference, appellee did not object to the questions concerning the excessive fee and damages. In his motion for judgment notwithstanding the verdict, appellee argued the evidence was legally insufficient to support the finding or, alternatively, the estate did not suffer damages in the amount found by the jury.
Even a liberal reading of the petition does not reveal a request for a partial or total forfeiture of the executor's fee. Appellants clearly claimed that the taking of an unreasonable fee was in itself a breach of fiduciary duty. Because there was no pleading for the equitable remedy of forfeiture, we hold that Arce does not apply to this case.
Having found in favor of appellants on their first issue, we turn to appellee's first cross-point, claiming that the evidence is legally and factually insufficient to support the jury's finding of $2.2 million in unreasonable executor fees. In his argument, appellee considers the evidence relating to the factors articulated in Arce for use by the judge in determining the amount of fee to be disgorged. Because we have found Arce inapplicable to the facts of this case, we will not utilize these factors, but will instead review the record for evidence supporting the jury's finding that $2.2 million of the fee taken by appellee was unreasonable.
Because the burden of proof was on appellants to show that the fee was unreasonable and excessive, appellee must show either that no evidence supports the jury's finding, or that factually insufficient evidence supports the jury's finding. When a "no evidence" challenge is raised, an appellate court may only consider the evidence and inferences supporting the jury's verdict, disregarding all contrary evidence. See Leitch v. Hornsby, 935 S.W.2d 114, 118 (Tex.1996). If there is more than a scintilla of evidence to support the finding, a no evidence challenge must fail. See General Motors v. Sanchez, 997 S.W.2d 584, 588 (Tex.1999). A scintilla of evidence exists when the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence. See Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983). In application, we should find there is no evidence "if reasonable minds cannot differ from the conclusion that the evidence offered to support the existence of a vital fact lacks probative force." Id. An appellate court may not second-guess the jury unless only one inference may be drawn from the evidence. See Ross v. Green, 135 Tex. 103, 118, 139 S.W.2d 565, 572 (1940).
Appellants offered expert testimony from James P. Bevans, a certified property manager for 25 years and former regional manager of the Trust Department at NationsBank. Bevans testified that, to properly evaluate fees, he considered the size of the estate, the diversity of assets, and the complexity of administration, including tax considerations. Bevans observed that, based on his experience with comparable estates, an approximate fee of $300,000 would have been reasonable. After reviewing the estate and appellee's actions, Bevans concluded appellee was not entitled to any fee. In support of his opinion, Bevans offered the following: (1) appellee did not give the beneficiaries an accounting for 13 years; (2) appellee did not keep proper records; (3) 80-90% of the estate's assets were non-productive real estate and *782 the farms and ranches were operated at a loss for 20 years; (4) appellee did not transfer property to a trust for 18-20 years; (5) appellee took his fee while there was a huge IRS debt with interest continuing to accrue; and (6) appellee spent $750,000 on experts regarding development of a Westheimer tract when he had no experience in development. The record shows that, although his mother died in 1975, appellee did not fully fund the Article IV trust until 1984 and did not fund the Article V trust until 1995. Bevans stated that the $2.8 million fee was unbelievable and outrageous.
This testimony is some evidence supporting the jury's finding that the fees taken were excessive. Accordingly, we find no merit to appellee's claim of legally insufficient evidence to support this finding.
Appellee also claims the evidence is factually insufficient to support the jury's finding. In deciding factual sufficiency questions, the appellate court considers all of the evidence. See Lofton v. Texas Brine Corp., 720 S.W.2d 804, 805 (Tex.1986). The court may set aside the finding only if the evidence is so weak as to be clearly wrong and manifestly unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986).
In addition to considering the testimony of Bevans, we must also consider the evidence presented by appellee. Appellee testified that, in taking his fee, he considered the will language, which allows him to take a just and reasonable fee, and he considered an unidentified insurance publication showing fees for similar estates in Texas and other jurisdictions. Appellee testified it was his decision to take a range of fees, rather than a percentage of the value of the estate. Appellee took his fee in a series of payments from 1981-83 ranging in amounts from $5,000-375,000. Appellee conceded he did not prepare a written analysis of how he determined his fee and he kept no time records of his efforts. Appellee also agreed that he did not consult an attorney or conduct legal research about customary fees. Although he took the fee in the early 1980s, appellee testified that he knew the estate administration would continue for a long time.
Appellee also produced several witnesses that testified about the tax and interest savings the estate realized as a result of appellee's taking the $2.8 million fee. Gregory Edward Bardnell, a CPA, testified that approximately $2 million of the fee was deductible, meaning that the estate effectively paid only $850,000 of appellee's fee. Bardnell also testified that, had appellee merely paid the estate taxes and not paid himself a fee, the estate would have saved only $85,000 in interest on the IRS debt. Bardnell had no opinion of the reasonableness of appellee's fee.
Milton L. Schultz, an accountant who performed work for the estate, testified that deducting the executor fee and other administration expenses was his idea. Schultz added that he believed the fee was reasonable in light of the size of the estate and the difficulties of administration, including the lack of liquidity. Schultz characterized appellee's administration and ability to pay the taxes and preserve the bulk of the estate as "nothing short of genius."
We find that the evidence supporting the jury's finding is not so weak that the finding is clearly wrong and manifestly unjust. Based on the evidence presented by Bevans, the jury could have determined that appellee was entitled to no fee. Instead, the jury determined that appellee was entitled to approximately $600,000, which is approximately 5% of the estate value at the time of Katherine Barnhart's *783 death. We refuse to second-guess the jury when there is ample evidence of improper and unacceptable actions by appellee as executor. We overrule cross-point one.
Failure to Sell Westheimer and Pasadena Properties
Appellants next challenge the trial court's decision to disregard the jury findings that appellee breached his fiduciary duties by failing to sell the Westheimer and Pasadena properties. By cross-point, appellee claims the evidence is legally and factually insufficient to support the jury's findings in questions 1(a)-(b) and 3.
Question 1(a) asked the jury whether appellee breached his fiduciary duty by failing to sell the Westheimer property. Question 1(b) asked whether appellee breached his fiduciary duty by failing to sell the Pasadena property. Question 3 asked the jury the date appellee reasonably should have sold the properties, the dollar amount of proceeds that would have been received from such a sale, and the dollar amount of proceeds that would be received if the property were sold today. In response to questions 1(a) and (b), the jury found that appellee breached his fiduciary duty by failing to sell the two properties. In response to question 3, the jury found the Westheimer property should have been sold in May 1981, the proceeds from such a sale would have been $42 million, and the proceeds if sold today would be $24.5 million. As to the Pasadena property, the jury found the property should have sold in July 1978, the proceeds from such a sale would have been $1.6 million, and the proceeds, if sold today, would be $2,485,500.
In his motion for judgment notwithstanding the verdict, appellee argued that there was no evidence to support the jury's findings in response to questions 1(a), 1(b), and 3. The trial court agreed with appellee's legal insufficiency argument and disregarded the answers to jury question 1(a)-(b) and 3.
Appellants first assert that appellee invited or waived error because appellee requested question 3, but we find nothing in the record indicating that appellee requested this question. Appellants next argue waiver because appellee's attorneys objected to the damages measure sought by appellants. Appellants sought a measure of damages that included potential profits had Appellee timely sold the properties and invested the sale proceeds in a diversified portfolio of stocks and bonds. Appellee disagreed with this measure, and argued the proper measure was sales proceeds plus interest.
Appellee's disagreement with appellants' measure of damages did not invite or waive the error complained of here. Appellee offered the testimony of Professor Johanson, who rejected appellants' proposed measure as improper and testified that the proper measure was sale proceeds plus interest. Appellee was not advocating sale proceeds as the proper measure of damages, but was countering appellants' proposal for damages to include lost profits. We do not find appellee's objection and offer of testimony to constitute invited error.
Appellants also argue that appellee invited or waived error by statements made during jury deliberations. The jury sent a question to the trial judge regarding the part of question 3 asking the date appellee should have sold the Westheimer and the Pasadena properties. The jury asked whether "date" referred to year, or month and year. The trial judge told the parties he replied "month and year," and asked the attorneys if they had any objections to this reply. Appellee's attorneys objected and asked that the reply inform *784 the jury that they must give the day, month, and year. Rather than objecting to "month and year," appellants' attorneys stated: "We can take it from the end of the month if that's going to be their problem. I think that's narrowing in too specifically." The court decided to let the jury answer month and year.
The statement of appellants' counsel during this discussion indicates they acquiesced in the "month and year" reply. Furthermore, this discussion does not show that appellee's counsel requested "month and year." Rather, this was the suggestion of the trial judge. We do not find that appellee's counsel invited error by asking for more specificity than the judge.
Likewise, appellee did not waive error by failing to object to question 3 on the ground of insufficient evidence. A party may challenge legal sufficiency for the first time after the verdict regardless of whether the submission of the question was requested by the complainant. See Tex.R. Civ. P. 279. By asserting in its motion for judgment notwithstanding the verdict that the evidence supporting the jury's findings was legally insufficient, appellee preserved this complaint for appellate review. See id.
Having found no waiver or invited error, we turn to appellants' challenge to the disregarding of the jury answers. A trial court may disregard a jury's finding if there is no evidence to support the jury's finding. See Alm v. Aluminum Co. of America, 717 S.W.2d 588, 593(Tex.1986). In reviewing the grant of a motion for judgment notwithstanding the verdict, the reviewing court must review all testimony in a light most favorable to the finding, considering only the evidence and inferences that support the finding and rejecting the evidence and inferences contrary to the finding. See Navarette v. Temple Indep. Sch. Dist., 706 S.W.2d 308, 309 (Tex.1986). If there is more than a scintilla of competent evidence to support the jury's finding, then the judgment notwithstanding the verdict will be reversed. See Mancorp v. Culpepper, 802 S.W.2d 226, 228 (Tex.1990).
Appellee claims questions 1 and 3 did not, as appellants suggest, ask whether he breached a duty to diversify assets, transform nonproductive assets into productive assets, and generate income, but instead, asked the jury whether appellee breached a duty to accept two specific offers. Appellee asserts there is no evidence supporting a finding that he had a duty to accept a May 1981 offer to purchase the Westheimer property or a July 1978 offer to purchase the Pasadena property. Appellee further argues there is no evidence that any sales pursuant to these two offers would have yielded the proceeds found by the jury.
Although the evidence reveals a number of unaccepted offers for the Pasadena and Westheimer properties, the jury's finding of breach in May 1981 for the Westheimer property relates to a May 1981 offer by a Mr. Carothers. The date found by the jury of July 1978 for the Pasadena property relates to the July 1978 offer for the Pasadena property made by U.S. Homes. By failing to object to the jury question requesting the month and year appellee should have sold the two properties, appellants acquiesced in the jury finding a date that related to specific offers.
The evidence showed the Westheimer property did not have high-density sewer capacity and appellee testified that he delayed the sale of this property because he knew it would be worth more if it had sewer capacity In May 1981, Mr. Carothers offered to purchase part of the Westheimer property for more than $40 million. *785 Appellee did not respond to this offer because he believed it was a poor proposal in that it required high-density sewer capacity and it included no payment for the portion of the property that was in the flood plain. Appellee conceded that he did not attempt to negotiate either offer. Neither Carothers nor his principal, Loh, testified whether they would have accepted a modified arrangement regarding the Westheimer property.
The evidence further showed that, in July 1978, U.S. Homes offered $1.5 million for the Pasadena property, and later raised that offer to $1.64 million. Appellee testified he rejected this offer because it was not a cash offer. No representative from U.S. Homes testified. Therefore, there is no evidence that, had appellee negotiated, U.S. Homes would have accepted a modified arrangement regarding the Pasadena property. Appellants' expert, Lucian Morrison, testified that appellee should have responded to the offers and negotiated for different terms than those in the original offers. Morrison did not state that appellee should have accepted the original offers from U.S. Homes or Carothers.
Texas courts have long held that unaccepted offers to purchase property are no evidence of market value of property. See Hanks v. Gulf, Colorado & Santa Fe Ry. Co., 159 Tex. 311, 320 S.W.2d 333, 336-37 (1959); Southwestern Bell Tel. Co. v. Wilson, 768 S.W.2d 755, 762 (Tex.App.-Corpus Christi 1988, writ denied). The courts have found this evidence uncertain and speculative. See Hanks, 320 S.W.2d at 337. Evidence of an unaccepted offer does not establish the good faith of the person making the offer. See id.
If unaccepted offers are too uncertain to serve as proof of the market value of a parcel of property, they are likewise too uncertain to serve as proof of the dollar amount of proceeds appellee would have obtained if he had sold the two properties on the dates found by the jury. Because the jury was advised to find a month and year when the properties should have been sold, the jury necessarily focused on the dates of specific offers and unaccepted offers are no evidence of the dollar amount of proceeds appellee would have received had he sold the properties. Accordingly, we find no error by the trial court in disregarding the jury's answers to questions 1(a), 1(b), 3(a), and 3(b). Having found no error in the trial court's actions, we need not reach appellee's cross-point.
Removal of Appellee as Executor and Trustee
Appellants next challenge the trial court's refusal to remove appellee as executor and trustee. Appellants also complain of the trial court's refusal to submit requested questions relating to removal.
Appellants initially raise an issue of statutory construction. Appellants contend that, because the supreme court has construed section 113.082 of the Trust Code as mandatory in nature, we should likewise construe section 149C of the Probate Code as mandatory because the language in these two statutes is similar. Section 149C of the Probate Code states that a trial court may remove an independent executor on the following grounds:
(1) the independent executor fails to return within ninety days after qualification, unless such time is extended by order of the court, an inventory of the property of the estate and list of claims that have come to his knowledge;
(2) sufficient grounds appear to support belief that he has misapplied or embezzled, or that he is about to misapply *786 or embezzle, all or any part of the property committed to his care;
(3) he fails to make an accounting which is required by law to be made;
(4) he fails to timely file the notice required by Section 128A of this code;
(5) he is proved to have been guilty of gross misconduct or gross mismanagement in the performance of his duties; or
(6) he becomes an incapacitated person, or is sentenced to the penitentiary, or from any other cause becomes legally incapacitated from properly performing his fiduciary duties.
Tex. Prob.Code Ann. § 149C (Vernon Supp. 2000).
Section 113.082 of the Property Code governs removal of a trustee. This section states a court may remove a trustee and deny part or all of the trustee's compensation if:
(1) the trustee materially violated or attempted to violate the terms of the trust and the violation or attempted violation results in a material financial loss to the trust;
(2) the trustee becomes incompetent or insolvent; or
(3) in the discretion of the court, for other cause.
Tex. Prop.Code Ann. § 113.082(a) (Vernon 1995).
In reviewing a trial court's removal of a trustee under a prior version of section 113.082, the supreme court held that removal was not discretionary with the trial court, despite the use of the word "may." See Akin v. Dahl, 661 S.W.2d 911, 913 (Tex.1983). Because the supreme court has found removal mandatory under section 113.082,[4] appellants argue removal should also be mandatory under section 149C. Absent any clear directive from the supreme court, however, we decline appellants' invitation to construe the clear language of section 149C to find that removal of an executor is mandatory.
1. Removal as Executor
Appellants contend the trial court's decision not to remove appellee as executor constituted an abuse of discretion because the evidence shows appellee did not timely file an inventory, misapplied property committed to his care, failed to timely file a proper accounting, and was found to have breached his fiduciary duty in numerous respects. A trial court abuses its discretion if its decision is arbitrary, unreasonable, and without reference to any guiding rules and principles. See Goode v. Shoukfeh, 943 S.W.2d 441, 446 (Tex.1997).
Gross misconduct or gross mismanagement is a ground for removal of an executor. See Tex. Prob.Code Ann. § 149C (Vernon Supp.2000). In Geeslin v. McElhenney, 788 S.W.2d 683 (Tex.App.-Austin 1990, no writ), the court reasoned that the statutory terms "gross mismanagement" and "gross misconduct" do not encompass ordinary negligence. Nonetheless, the court recognized that an executor owes the duties of a trustee:
He holds property interests, not his own, for the benefit of others. He manages those interests under an equitable obligation to act for the others' benefit and not his own. He is a "fiduciary" of whom the law requires an unusually high standard of ethical or moral conduct in reference to the beneficiaries and their interests. His "duties" are more than the ordinary "duties" of the marketplace. They connote fair dealing, good faith, fidelity, and integrity. He may have additional *787 duties that he would not have in an ordinary business relationa duty of full disclosure, for example, and a duty not to use the fiduciary relationship for personal benefit except with the full knowledge and consent of the beneficiaries. "It is against public policy to allow persons occupying fiduciary relations to be placed in positions in which there will be constant danger of a betrayal of trust by the vigorous operation of selfish motives."
Thus, the statutory criteria ("gross mismanagement" and "gross misconduct") are necessarily elastic. They must be sufficiently narrow to exclude ordinary negligence, yet sufficiently broad to include a fiduciary's breach of his higher and additional duties, some of which might not even exist absent the fiduciary relationship.
Id. at 684-85. The court concluded that gross misconduct or mismanagement, at a minimum, includes: "(1) any willful omission to perform a legal duty; (2) any intentional commission of a wrongful act; and (3) any breach of a fiduciary duty that results in actual harm to a beneficiary's interest." Id. at 685 (emphasis omitted).
In determining whether the trial court abused its discretion, the Geeslin court held there were seven legally relevant factors to consider:
(1) the higher quality of ethical and moral conduct implicit in Geeslin's fiduciary status;
(2) the degree of harm sustained by the beneficiaries' interest, owing to Geeslin's conduct;
(3) the public policy in favor of independent administration, due to the salutary purposes served by that method of administration;
(4) the sufficiency of a bond to protect the beneficiaries' interest if a bond is given under section 149 of the Probate Code;
(5) the complexity of the estate;
(6) whether Geeslin's acts and omissions resulted from professional advice, or whether they occurred in the face of such advice; and
(7) the distinction between willful conduct and inadvertent acts and omissions generally.
Id. In applying these factors, the Geeslin court upheld the trial court's removal of the executor because (1) Geeslin knew about an additional estate tax liability, and did not act to limit the interest and penalty, but paid himself commissions and paid other estate obligations; and (2) Geeslin used estate funds to pay pension-plan liabilities and used estate funds to make terminating distributions to pension-plan participants. Id. at 686-87. The court noted that Geeslin commingled funds despite warnings from his attorney and accountant that commingling might be prohibited. See id. at 687.
Appellee claims appellants misread Geeslin and that it does not hold the trial court may remove an executor for breach of a fiduciary duty that results in actual harm. Indeed, appellee argues that, because Geeslin does not so hold, the trial court properly denied appellants' requested questions. Appellee reasons that if a breach of duty resulting in harm were sufficient to support removal, any minor breach could constitute gross misconduct. We disagree with appellee's reasoning. Although Geeslin does state that a breach of fiduciary duty resulting in actual harm to a beneficiary's interest may be sufficient to constitute gross misconduct, this holding is tempered by the application of seven factors for the court to consider in determining whether a breach of fiduciary duty resulting in harm should result in removal. See id. at 685. We believe appellee's fears *788 about removal for minor infractions are unfounded. Consideration of the seven factors would, in our opinion, allow a trial court to determine whether the breach of fiduciary duty is of sufficient magnitude to merit removal of the executor.
We also disagree with appellee's statement that the trial court denied appellants' requested question 11 because he disagreed with appellants' interpretation of Geeslin. Appellants submitted the following question: "Did Ronald Lee grossly mismanage any part of the property committed to his care as executor?" In refusing to submit these questions, the trial judge stated:
THE COURT: The instructions and questions submitted as Plaintiff's A through F are denied. I will say on the record what I have said off the record, and that is that there's a finding of either gross negligence or a breach of fiduciary duty and damage. I would find that under the Probate Code to be grounds for removing the trustee, anyway. And so I don't think those questions, those particular ones, are necessary.
When denying appellants' requested question, the trial judge stated the question was unnecessary because the removal question could be answered from the jury's responses to questions regarding breach of fiduciary duty or gross negligence. The trial judge's statement is consistent with our interpretation of Geeslin.
Based on Geeslin, the trial court could have considered the jury's findings regarding breaches of fiduciary duty in making his decision regarding removal, either as executor or as trustee. The jury's failure to find gross negligence does not, as appellee strongly argues, preclude removal, but we may consider it in reviewing the trial court's ruling.
The evidence showed, and appellee admits, he did not file an accounting in a timely manner. The jury found breaches of fiduciary duty by appellee in the failure to sell the Westheimer property, failure to sell the Pasadena property, in the mismanagement of the River Bend Farm and Cap Rock Ranch, and in the expenditure of estate funds on the attempted Knollwood development. Because we have upheld the trial court's decision to disregard the jury's findings relating to the Westheimer and Pasadena properties, the court could not consider these breaches of duty in considering whether to remove appellee as executor. As to the findings regarding River Bend Farm and Cap Rock Ranch, the jury only found damages to the estate of $1.00 for each. As to the expenditure of estate funds with respect to Knollwood, the jury found damages of $840,000. The jury also found unreasonable fees of $2.2 million.
Because there were findings of breaches of fiduciary duty and substantial actual damages, we must determine whether, in light of the seven Geeslin factors, the trial court abused its discretion in refusing to remove appellee as executor. We begin with the overall consideration that appellee's position as executor, being fiduciary in nature, requires that we hold appellee to a higher ethical and moral standard. This consideration must be tempered, however, by consideration of the public policy in favor of independent administration and the undisputed complexity of this estate. Of equal importance, are the substantial damages to the beneficiaries' interest. The damages for excessive fees and for the failed Knollwood development total more than $3 million. Appellee did not consult professionals with respect to the amount of fees he took, but he did consult some professionals concerning the Knollwood development. Indeed, many of the expenses involved with Knollwood are those *789 of professionals appellee consulted. Finally, we must consider whether appellee's actions were willful or inadvertent. The jury did not find that appellee's actions constituted gross negligence. Nonetheless, the evidence does not indicate that appellee's taking of an excessive fee or his excessive expenditures on the Knollwood development were merely inadvertent acts.
Although the trial judge is given discretion by statute to determine whether an executor's actions rise to the level of gross misconduct, this discretion is not unlimited. An abuse of discretion occurs when the trial court makes a legally unreasonable determination given the factual-legal context in which it was made. See Landon v. Jean-Paul Budinger, Inc., 724 S.W.2d 931, 939 (Tex.App.-Austin 1987, no writ). In other words, the trial court's determination is legally unreasonable if the court failed to consider a fact shown in the evidence that was legally relevant. See id. at 939-40.
In this case, we cannot say that the trial court necessarily failed to consider any of the Geeslin factors. While we may not have reached the conclusion the trial court made in light of the factors, this is not the standard. Having considered the statute, the Geeslin factors, and the evidence, we cannot say the trial court abused its discretion in refusing to remove appellee as executor.
2. Removal as Trustee
Grounds for removal of a trustee under section 113.082 include a material violation or an attempt to violate the terms of the trust that results in a material financial loss to the trust. See Tex. Prop.Code Ann. § 113.082(a)(1) (Vernon 1995). Appellants requested a question (question 13) very similar to the language of the statute: "Did Ronald Lee grossly mismanage or materially violate the terms of the Article IV Trust resulting in a material financial loss to that trust?" The trial judge refused to submit appellants' requested question because the judge believed he could make the determination of mismanagement or material violations from the submitted questions regarding breaches of fiduciary duty and gross negligence.[5] Appellants claim the refusal to submit requested question 13 was reversible error.
Rule 278 provides that the court must submit questions raised by the written pleadings and evidence. See Tex.R. Civ. P. 278. See also Elbaor v. Smith, 845 S.W.2d 240, 243 (Tex.1992) (interpreting Rule 278 as a nondiscretionary directive). The decision whether to submit a particular instruction or definition is reviewed for an abuse of discretion. See State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 451 (Tex.1997). To determine whether an alleged error in the charge is reversible, the reviewing court must consider the pleadings, the evidence, and the charge in its entirety. See Island Recreational Dev. Corp. v. Republic of Tex. Sav. Ass'n, 710 S.W.2d 551, 555 (Tex.1986). As to instructions and definitions, the essential question is whether the instruction aids the jury in answering the questions. See Harris v. Harris, 765 S.W.2d 798, 801 (Tex.App.-Houston [14th Dist.] 1989, writ denied). *790 An instruction is proper if it assists the jury, is supported by the pleadings or evidence, and accurately states the law. See Perez v. Weingarten Realty, Investors, 881 S.W.2d 490, 496 (Tex.App.-San Antonio 1994, writ denied). Whether terms are properly defined or the instruction properly worded is a question of law reviewable de novo. See M.N. Dannenbaum, Inc. v. Brummerhop, 840 S.W.2d 624, 631 (Tex. App.-Houston [14th Dist.] 1992, writ denied). Error is reversible only if, when viewed in light of the totality of the circumstances, the refusal to submit a question or instruction probably caused the rendition of an improper judgment. See St. James Transp. Co. v. Porter, 840 S.W.2d 658, 664 (Tex.App.-Houston [1st Dist.] 1992, writ denied); Tex.R.App. P. 44.1(a)(1).
Because appellants pled for removal of appellee as trustee under section 113.082, and presented evidence of actions the jury found to be breaches of fiduciary duty, we hold that the issue of removal under the statute was a valid theory raised by the pleadings and evidence. Although appellants requested a question regarding a statutory ground for removal, appellee claims appellants "are not true to the record when they tell this Court that they asked the trial court to submit a question to the jury in language substantially identical to the specific statutory ground for removal of trustee under § 113.082...." Appellee argues that requested question 13 would have negated the statutory requirement of a material violation giving rise to a material financial loss by permitting the jury to answer "yes" if it found any breach of fiduciary duty resulting in harm or a material violation resulting in material harm. We disagree.
Requested question 13 asked the jury to determine whether appellee grossly mismanaged or materially violated the terms of the Article IV Trust resulting in a material financial loss to that trust. The instruction to that question stated: "You are instructed that `gross mismanagement' means any breach of a fiduciary duty that results in actual harm to a beneficiary's interest." Rather than appellee's more tortured construction of this question, we read this question to allow the jury to answer "yes" if the jury found a material financial loss suffered by the trust as a result of either: (1) a breach of fiduciary duty that resulted in actual harm; or (2) a material violation of the Article IV Trust. In other words, we believe the question presents "gross mismanagement" and "material violation of the Article IV Trust" as the two types of actions by a trustee that could result in a material financial loss to the trust. Therefore, this question substantially tracks the language of section 113.082.
In reviewing appellee's brief, we note that some of appellee's defensive arguments tend to support appellants' claim that the trial court should have submitted the requested question 13. Appellee argues in his brief that "whether a breach of duty is a `material violation' and whether a financial loss is `material' are necessarily fact questions...." Appellee continues, "the finding that expenditures on Knollwood were $840,000 too much cannot substitute for the missing fact finding that those expenditures constituted a material violation resulting in a material loss." As to the executor's fee, appellee observed that fact issues as to materiality of the breach and the loss are not conclusively established. As to the late filing of the inventory or the delay in providing an accounting, appellee reasons that, even if these items were undisputed, they "cannot substitute for the missing fact finding that any such breaches constituted a material violation causing any material loss."
*791 Nonetheless, we believe the trial judge's reasoning was correct when he stated he could determine removal from jury answers regarding breach of fiduciary duty or gross negligence. We agree with the trial court that breaches of fiduciary duty can constitute material violations of the trust. Furthermore, we believe that jury awards of damages for breaches of fiduciary duty can constitute a material financial loss to the trust. Accordingly, we find no error by the trial court in refusing to submit requested question 13.
Even without submission of requested question 13, there are jury findings of breach of duty that the trial court should have found to be material violations of the trust. These include the jury's finding of breach of fiduciary duty with respect to the expenditures on the Knollwood development and the taking of an excessive fee. There are also jury findings of substantial damages, including $840,000 for Knollwood expenditures, and $2.2 million in excessive fees, that constitute, as a matter of law, material financial losses to the trust.
Appellants argue that removal is mandatory if there is a material violation resulting in a material financial loss to the trust. Indeed, the supreme court appears to hold that removal is not discretionary. See Akin v. Dahl, 661 S.W.2d 911, 913 (Tex. 1983). Appellee rejects this interpretation of Akin and claims that Akin merely notes, in dicta, that removal is mandatory for an enumerated statutory ground. We are unpersuaded that we may ignore the court's holding as merely dicta.
In Akin, the trial court had removed the trustee pursuant to jury findings that the trustee had developed such hostility toward certain beneficiaries that his decisions as trustee in administering the trust funds would probably be influenced adversely to those beneficiaries' interests. 661 S.W.2d at 912. There was also a finding that the trustee had acted improperly with trust funds. See id. at 913. The court of appeals reversed, holding that removal was not warranted. See id. at 912. In the supreme court, a beneficiary argued that former section 39 of the Texas Trust Act (now section 113.082)[6] allowed removal of a trustee to be discretionary and that the appropriate standard of review was the "arbitrary and unreasonable" standard. See id.
Although the former statute provided (and the current statute continues to provide) that a trustee may be removed for a ground specified in the statute (material violation of trust resulting in material financial loss, incompetence, or insolvency) or "for other cause, in the discretion of the court having jurisdiction," the Akin court found that this statute "does not make removal of a trustee a discretionary act on the part of the trial court and hence subject upon review to the `arbitrary and unreasonable' standard." See id. The court observed that the portion of the statute allowing removal for other causes "in the discretion of the court having jurisdiction," was meant to insure that the grounds of removal were not expressly limited to those enumerated, but may include others that the trial court, in its discretion, deems proper. See id.
Because no issue was submitted to the jury regarding improper conduct or mismanagement by the trustee, and such conduct was not established as a matter of law, the Akin court found that removal for mismanagement of trust funds was not *792 warranted. See id. As for the jury findings regarding trustee hostility, the court first noted that ill will or hostility, standing alone, was an insufficient ground for removal. See id. The court then stated:
Article 7425b-39 [now section 113.082] of the Texas Trust Act sets out circumstances which warrant the removal of a trustee from office. Should the trier of fact affirmatively find that one of the enumerated circumstances has occurred, the trustee will be removed. Additionally, should the trier of fact find that hostility, ill will, or other factors have affected the trustee so that he cannot properly serve in his capacity, the trustee will be removed.
See id. at 914 (emphasis added). We understand this passage to mean that a trustee will be removed if the trier of fact finds the evidence shows the trustee has committed one of the enumerated acts or one of the acts, not enumerated, but which the trial court, in its discretion, deemed a proper ground for removal.
Although the jury in Akin had found the trustee's hostility "probably" would affect his performance, the supreme court held this finding was insufficient to support removal. See id. Instead, the court held that there had to be a finding that the trustee's hostility does or will affect his performance as a trustee. See id. Accordingly, the court's discussion of removal for an enumerated ground could be construed to be dicta. Nonetheless, the court also states that a trustee "will be removed" for hostility, a ground not enumerated, but found by the trial court in its discretion to be a proper ground for removal. See id.
By saying "will be removed," rather than "may be removed," the court construes the statute to be mandatory and not discretionary. Although the court's statement was unnecessary to the holding, we construe this statement to be judicial dictum deliberately made for guidance of the bench and bar and, therefore, binding on lower courts. See Ex parte Harrison, 741 S.W.2d 607, 609 (Tex.App.-Austin 1987, orig. proceeding). Although we disagree with the Akin court's construction because the plain language of the statute is discretionary in nature, we are constrained to follow supreme court precedent.
Appellants also argue appellee has a conflict of interest that requires his removal. The alleged conflict arises from appellee's opposition to appellants' motion for judgment and his attempt to reduce the trust's judgment. Such a conflict could arise anytime a beneficiary brought suit for damages against a trustee. Therefore, we decline to find a conflict of interest under these circumstances. Because we find that the breaches of duty found by the jury and the total of $3 million in damages constitute a material violation of the trust resulting in a material financial loss, we hold the trial court had a mandatory duty to remove appellee as trustee. Accordingly, the trial court erred in refusing to remove appellee as trustee.
Bad Faith Defense
Appellants next claim the trial court erred in not requiring appellee to bear his own attorney's fees and costs because the jury found appellee defended the lawsuit in bad faith. Section 149C permits an independent executor to recover necessary expenses, including attorney's fees, if he or she defends an action for removal in good faith. Tex. Prob.Code Ann. § 149C (Vernon 1980). In granting appellee's motion for judgment notwithstanding the verdict, the trial court disregarded the answer to question 8, finding that appellee defended the suit in bad faith. In a cross-point, appellee claims there was legally and factually insufficient *793 evidence to support the jury's finding that he defended this lawsuit in bad faith.
Appellee argues that, even if there is a finding of bad faith defense, an executor is entitled to attorney's fees where he prevails against attempted removal. In support of this argument, appellee cites Miller v. Anderson, 651 S.W.2d 726 (Tex. 1983). In Miller, the court was construing section 243 of the Probate Code, which allows an executor to recover from the estate his necessary expenses, including reasonable attorney's fees, when the executor defends the will in good faith, and "with just cause, for the purpose of having the will or alleged will admitted to probate, whether successful or not...." Tex. Prob.Code Ann. § 243 (Vernon Supp.2000). The supreme court upheld the trial court's award of attorney's fees to the executor even though there was no affirmative finding of good faith. See 651 S.W.2d at 728. The court observed that in prior cases, where the wills were denied probate, a showing of good faith and just cause was necessary to show a benefit to the estate compensable under section 243. See id. (citing Russell v. Moeling, 526 S.W.2d 533 (Tex.1975) and Huff v. Huff, 132 Tex. 540, 124 S.W.2d 327 (Tex.1939)). The Miller court found that a benefit to the estate was proven when the will was admitted to probate.[7] 651 S.W.2d at 728.
Section 243 is phrased similarly to section 149C, which provides that an executor "who defends an action for his removal in good faith, whether successful or not, shall be allowed out of the estate his necessary expenses and disbursements, including reasonable attorney's fees...." Tex. Prob. Code Ann. § 149C(c) (Vernon 1980). Although the language of the two statutes is somewhat similar, we are unconvinced that the holding in Miller applies to the facts of this case. In Miller, there was no finding of good faith and the supreme court held that the lack of this finding did not prevent recovery of attorney's fees. 651 S.W.2d at 728. Holding that a finding of good faith is unnecessary under certain circumstances does not inescapably lead to the conclusion that an affirmative finding of bad faith should be ignored. We cannot say that, based on its holding in Miller, the supreme court would disregard an affirmative jury finding of bad faith. Although appellee was successful in avoiding removal as an executor, removal was a discretionary determination made by the trial judge. In addition to finding many breaches of fiduciary duty by appellee, the jury found that appellee had defended the lawsuit in bad faith.
Although a trustee may also be removed under section 113.082 of the Property Code, there is no "good faith" requirement in the statute allowing recovery of fees. Section 114.064 provides that the court "may make such award of costs and reasonable and necessary attorney's fees as may seem equitable and just." Tex. Prop.Code Ann. § 114.064 (Vernon 1995). Thus, the grant or denial of attorney's fees to a trustee is within the sound discretion of the trial court, and a reviewing court will not reverse the trial court's judgment absent a clear showing that the trial court abused its discretion by acting *794 without reference to any guiding rules and principles. See Lyco Acquisition 1984 Ltd. v. First Nat'l Bank, 860 S.W.2d 117, 121 (Tex.App.-Amarillo 1993, writ denied). Because removal of a trustee does not require a good faith finding, the jury question in the instant case only concerns appellee's entitlement to recover attorney's fees as an executor.
As stated previously, a trial court may disregard a jury's finding if there is no evidence to support the jury's finding. See Alm v. Aluminum Co. of America, 717 S.W.2d 588, 593 (Tex.1986). In reviewing the grant of a motion for judgment notwithstanding the verdict, the reviewing court must review all testimony in a light most favorable to the finding, considering only the evidence and inferences that support the finding and rejecting the evidence and inferences contrary to the finding. See Navarette v. Temple Indep. Sch. Dist., 706 S.W.2d 308, 309 (Tex.1986). If there is more than a scintilla of competent evidence to support the jury's finding, then the judgment notwithstanding the verdict will be reversed. See Mancorp v. Culpepper, 802 S.W.2d 226, 228 (Tex.1990).
In support of the jury finding of bad faith defense against removal, appellants cite generally to the five weeks of testimony regarding appellee's conduct, including the amount of the executor fee taken, the estate's need for cash at the time appellee took the fee, the failure to provide a proper accounting, the use of estate funds to pay personal expenses, and the failure to transfer the estate's assets to its beneficiary until 19 years after his mother's death. Although this testimony supports liability as to breach of fiduciary duty, it does not necessarily support a finding that appellee defended this lawsuit in bad faith. Rather, to support the jury's finding, there must be some evidence that appellee's defense against removal was in bad faith.
Although the jury charge phrased the "good faith" requirement negatively, we construe the jury's affirmative finding to be a finding that appellee did not defend against removal in good faith. The jury charge did not define "bad faith." The statute, which includes the "good faith" requirement, also contains no definition of "good faith." Furthermore, we have discovered no case law addressing the meaning of "good faith" under this statutory provision.
In different contexts, "good faith" can be a subjective or an objective standard. For example, under the Texas Business and Commerce Code, "good faith" is defined as honesty in fact. See Tex. Bus. & Com.Code Ann. § 1.20(19) (Vernon Supp.2000). The Texas Supreme Court has held that the test for good faith is the actual belief of the party and not the reasonableness of that belief. See La Sara Grain v. First Nat'l Bank, 673 S.W.2d 558, 563 (Tex. 1984); Holeman v. Landmark Chevrolet Corp., 989 S.W.2d 395, 399 (Tex.App.-Houston [14th Dist.] 1999, writ denied). Unlike this subjective standard, the courts have adopted an objective standard where official immunity is asserted. See City of Lancaster v. Chambers, 883 S.W.2d 650, 656 (Tex.1994). The supreme court observed that this test, like the test under federal immunity law, is one of objective reasonableness, without regard to whether the official acted with subjective good faith. See id. This objective standard provides that an officer acts in good faith in a pursuit case if "a reasonably prudent officer, under the same or similar circumstances, could have believed that the need to immediately apprehend the suspect outweighed a clear risk of harm to the public in continuing the pursuit." Id.
Under other circumstances, a combination of subjective and objective standards has been found appropriate. In the context *795 of a whistle blower action, the supreme court considered the public and private concerns involved and the subjective and objective standards of "good faith," and decided on a combination of the two standards. See Wichita County v. Hart, 917 S.W.2d 779, 784 (Tex.1996). The court held that "good faith" in the whistle blower context means that: "(1) the employee believed that the conduct reported was a violation of law and (2) the employee's belief was reasonable in light of the employee's training and experience." Id. In reaching this holding the court considered the United States Supreme Court's discussion of objective and subjective standards for "good faith" in Wood v. Strickland, 420 U.S. 308, 95 S. Ct. 992, 43 L. Ed. 2d 214 (1975).
In Wood, the Court addressed whether an objective or subjective standard should apply in a section 1983 action where the school official claimed immunity. See id. at 314-15, 95 S. Ct. 992. The court held:
The disagreement between the Court of Appeals and the District Court over the immunity standard in this case has been put in terms of an "objective" versus a "subjective" test of good faith. As we see it, the appropriate standard necessarily contains elements of both. The official himself must be acting sincerely and with a belief that he is doing right, but an act... can be no more justified by ignorance or disregard of settled, indisputable law ... than by the presence of actual malice.
Id. at 321, 95 S. Ct. 992.
The standards referenced in Rule 13 are particularly illuminating. Rule 13 provides that an attorney or party's signature on a pleading constitutes a certificate by them that "to the best of their knowledge, information, and belief formed after reasonable inquiry the instrument is not groundless and brought in bad faith or groundless and brought for the purpose of harassment." Tex.R. Civ. P. 13. Under this rule, courts presume pleadings are filed in good faith and will not impose sanctions absent good cause, the particulars of which must be set out in the order. See id. "Groundless," in the context of Rule 13, means "no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law." Id.
In the context of an action to remove an executor, we believe we must balance the interests of the beneficiaries with the public policy in favor of independent administration. We must protect the beneficiaries' interest in the estate proceeds. At the same time, we must preserve an executor's ability to fulfill the obligations of the position, exercising judgment in handling the often complicated decisions involved in administration of an estate. Accordingly, we believe a fair balancing of these interests is achieved by adopting a standard of good faith that combines the subjective and objective tests. We hold that an executor acts in good faith when he or she subjectively believes his or her defense is viable, if that belief is reasonable in light of existing law. This standard should protect all but the plainly incompetent executors or those who willfully breach their fiduciary duties.[8]
The record contains much evidence regarding appellee's breaches of duty, but appellants do not point to, and we have not located, any evidence showing that appellee's *796 defense against removal was made in bad faith. We have located no evidence that appellee subjectively believed his defense was in bad faith and no evidence that his defense had no reasonable or arguable basis. Accordingly, the trial court properly disregarded the jury's finding of bad faith and allowed appellee to recover his attorney's fees.
Refusal to Require Reimbursement for Appellants' Attorney's Fees
In a separate issue, appellants claim the trial court should have required appellee to reimburse the Article IV Trust for appellants' attorney's fees and costs incurred in the prosecution of this case. Section 245 of the Probate Code provides:
When the personal representative of an estate or person neglects the performance of any duty required of him, and any costs are incurred thereby, or if he is removed for cause, he and the sureties on his bond shall be liable for costs of removal and other additional costs incurred that are not authorized expenditures, as defined by this code, and for reasonable attorney's fees incurred in removing him and in obtaining his compliance regarding any statutory duty he has neglected.
Tex. Prob.Code Ann. § 245 (Vernon Supp. 2000). The courts have held that this statute allows the beneficiaries to recover the attorney's fees they incurred in removing an executor in recovering the effects of an executor's neglect of his statutory duties. See Barnett v. Barnett, 985 S.W.2d 520, 535 (Tex.App.-Houston [1st Dist.] 1998, writ granted); Lawyers Sur. Corp. v. Larson, 869 S.W.2d 649, 653 (Tex.App.-Austin 1994, writ denied).
Appellee argues that appellants are not entitled to recovery of fees under section 245 because they requested no finding by the jury or the trial court as to what amount of attorney's fees were incurred in obtaining appellee's compliance with any statutory duty he neglected or in removing him as executor. Case law has held that a party seeking recovery under section 245 must present evidence to enable the court to determine what fees are recoverable by the estate. See Larson, 869 S.W.2d at 652; Fillion v. Osborne, 585 S.W.2d 842, 845 (Tex.Civ.App.-Houston [1st Dist.] 1979, no writ). The parties stipulated to reasonable and necessary attorney's fees and thus, no request for a finding by the jury or trial court was required.
Appellants respond that neither evidence nor segregation of fees was required. A party is not required to segregate fees unless the party asserts multiple claims, some of which entitle the party to recovery of fees and some of which do not. See Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 389 (Tex.1997). Appellants argue that, because all of their claims concerned alleged mismanagement of the estate and sought removal of appellee as executor and trustee, there were no claims for which appellants were not entitled to recovery of fees.
The statute allows the estate to recover attorney's fees expended for the following two actions: (1) removing the executor, and (2) compelling compliance with statutory duties. See Tex. Prop. Code Ann. § 245 (Vernon Supp.2000). Statutory duties include: (1) giving notices required by statute; (2) approving, classifying, paying, or rejecting claims against the estate; and (3) delivering to those entitled exempt property and allowances for support. See id. at § 146. An executor is also charged with the duty to use reasonable care in that he must care for the property of the estate as a prudent man would take of his own property. See id. at § 230.
*797 All of appellants claims for damages involved allegations of breach of fiduciary duty and, therefore, these were claims of violations of appellee's statutory duty of care. Appellants also sought appellee's removal as executor and as trustee. Although fees may not be recovered under section 245 for seeking removal of appellee as trustee, our review of the record shows that this effort and the facts supporting this claim were inextricably intertwined with the facts regarding removal as executor and for breaches of duty. There is an exception to the duty to segregate when the attorney's fees are rendered in connection with claims arising out of the same transaction and when the claims are so interrelated that their prosecution or defense entails proof or denial of essentially the same facts. See Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 11 (Tex. 1991). Because we find the prosecution of the claim to remove appellee as trustee was inextricably intertwined with the prosecution of appellants' other claims, we find this case falls within the recognized exception to segregation. Therefore, the trial court erred in refusing to apply section 245 to require appellee to reimburse the estate for the fees incurred by appellants.
On rehearing, both parties ask that we also rule with respect to appellate attorney's fees. In the judgment, the trial court awarded both parties $300,000 in fees for appeal to the court of appeals and $100,000 for seeking review in the Texas Supreme Court. These fees were to be paid by the Trustee for the Article IV trust. Appellants ask that we hold that appellee must also reimburse the Article IV trust for the awards of appellate attorney's fees to appellants.
As discussed above, section 245 of the Probate Code provides that an estate may recover reasonable attorney's fees incurred in removing the executor and in obtaining the executor's compliance regarding any statutory duty he neglected. Tex. Prob.Code Ann. § 245 (Vernon Supp. 2000). Regarding appellate attorney's fees, appellee raises the same complaint he raised regarding trial court fees: Appellee claims that appellants did not segregate their fees between claims for which reimbursement is available under section 245 and claims for which reimbursement is not available. We have already held that segregation was not required because the claims were intertwined. This holding extends to appellate attorney's fees. Accordingly, we hold that, under section 245, appellee must reimburse the Article IV trust, and not appellants individually, for appellants' stipulated appellate attorney's fees.
Both parties agree that any award of attorney's fees should bear postjudgment interest at 10% per annum, compounded annually (a) from the date of judgment as to the stipulated $1.5 million in trial court attorney's fees, (b) from the date of this courts' judgment as to fees for appeal to this court, and (c) from the date of the supreme court's ruling on petition for review as to the award for fees on appeal to the supreme court.
Exclusion of Evidence of Appellants' Damages Model
Appellants next challenge the trial court's exclusion of evidence of appellants' damage model that was designed to illustrate what a prudent executor would have done with the sale proceeds from the U.S. Home and Carothers contracts. Because we have held that the evidence regarding the unaccepted offers by U.S. Homes and Carothers was speculative and constituted no evidence of damages for breach of fiduciary duty to sell the properties, we need not address this issue.
*798 Refusal to Award Damages Directly to Susan Lee
Appellants contend that, because Susan Lee has a 1/6 beneficiary interest in the Article IV trust income, she was entitled to a recovery of 1/6 of the judgment damages representing trust income. In support of this argument, appellants cite Comment H to section 282[9] of the Restatement of Trusts:
Disposition of the Proceeds Recovered. Where the trust is of such a character that if the trustee had brought an action against the third person, the proceeds would be immediately payable to the beneficiary, the beneficiary is entitled to keep whatever he recovers from the third person under the rules stated in Subsection (2) and (3).
RESTATEMENT (SECOND) of Trusts § 282 cmt. H (1959). Section 282, however, addresses when a beneficiary may maintain a suit against a third person. It does not concern suits by beneficiaries against the trustee. Accordingly, we do not find Comment H applicable.
Unless a trustee is under a duty to pay money immediately and unconditionally to the beneficiary, the beneficiary may only sue to compel the trustee to restore money to the trust. See RESTATEMENT (SECOND) of Trusts § 198 & cmts. B-D (1959). Katherine Barnhart's will provided in Article IV that the trustee was to distribute equally to her children, and to the survivor between her children, "at least quarterly, one-third (1/3) of the current net income of the trust, and to the extent such income is insufficient for the following purpose shall distribute currently such amounts from the remaining two-thirds (2/3) of such current net income as may be necessary and required to provide for the health, maintenance and support of [her children, or the survivor], taking into consideration the availability of funds from other sources." Thus, Susan Lee was entitled to one-half of the one-third (one-sixth), of current net income.
The statutory definition of income is the return derived from the use of principal. See Tex. Prop.Code Ann. § 113.102(a) (Vernon 1995). Examples of income are rent on real property and interest on money lent. See id. Section 113.102 instructs the trustee to charge expenses against income in accordance with section 113.111. See Tex. Prop.Code Ann. § 113.102(c) (Vernon 1995). Section 113.111 requires the trustee to charge against income all ordinary expenses incurred in administration, management, or preservation of trust property, reasonable allowances for depreciation on improvements, and, unless the court directs otherwise, court costs and fees on periodic judicial accountings and other judicial proceedings concerning the income interest. See Tex. Prop.Code Ann. § 113.111 (Vernon Supp.2000).
The will gives appellant, Susan Lee, an interest in "current net income," not gross income. Therefore, she was entitled to any Article IV trust income, minus expenses as described in section 113.111. She was not entitled to trust income before deduction of expenses. Accordingly, the trial court properly awarded the damages to the Article IV trust and not to Susan Lee directly.
Prejudgment Interest
1. Simple or Compound Interest
Appellants next complain that the trial court awarded prejudgment interest *799 at the rate of 10% per annum, computed as simple interest, when the award should be 10% per annum, compounded daily. Appellants contend that, because the claims in this case do not fall within any of the prejudgment interest statutes, the case is controlled by Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549 (Tex.1985), which provides for interest compounded daily.
Although we agree with appellants that prejudgment interest in this case is not controlled by statute, the case on which appellants rely was overruled after appellants filed their brief. In Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 532 (Tex.1998), the supreme court held that prejudgment interest in cases controlled by common law is to accrue at the rate for postjudgment interest and it is computed as simple interest. Accordingly, the trial court properly computed the prejudgment interest in this case as simple interest.
2. Accrual Date for Calculation of Prejudgment interest
In his first motion for rehearing, appellee claimed that prejudgment and postjudgment interest should be awarded on the $1.5 million in executor fees required to be reimbursed by appellee. Although appellee did not contest the imposition of prejudgment interest, he claimed that it should be awarded pursuant to Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507 (Tex. 1998). The parties disagreed on the date from which prejudgment interest should accrue. Appellants also complained that appellee had not preserved this issue for review because he did not raise this complaint either in the trial court or in his brief in this court.
We turn first to the preservation issue. A point of error not preserved is not before the appellate court for review. Allright, Inc. v. Pearson, 735 S.W.2d 240, 240 (Tex.1987). An assignment of error raised for the first time in an appellant's motion for rehearing is too late to be considered. Washington v. Walker County, 708 S.W.2d 493, 497 (Tex. App.-Houston [1st Dist.] 1986, writ ref'd n.r.e.).
The trial court awarded prejudgment interest, according to the law in existence at that time, which held that prejudgment interest began to accrue six months from the date of the occurrence giving rise to the cause of action. Cavnar, 696 S.W.2d at 555. The prejudgment interest at issue here, however, does not concern the prejudgment interest on the trial court awards we have upheld. Instead, the prejudgment interest at issue here concerns interest on the $1.5 million this court is rendering in favor of appellants. An award of prejudgment interest on this new award of damages is an automatic legal consequence since appellants pled for prejudgment interest. Neither the award of prejudgment interest, nor the accrual date of this interest, required a point of error for preservation. Because the date of this new award implicates case law that succeeds Cavnar, we must consider whether the Cavnar rule regarding accrual of prejudgment interest applies.
"Prejudgment interest is `compensation allowed by law as additional damages for lost use of the money due as damages during the lapse of time between the accrual of the claim and the date of judgment'." Id. at 528 (quoting Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549 (Tex.1985)). The two legal sources for an award of prejudgment interest are general principles of equity, and an enabling statute. See Kenneco, 962 S.W.2d at 528. Statutory provisions for prejudgment interest apply only to cases involving claims *800 of wrongful death, personal injury, property damage, and condemnation. See Tex. Fin.Code Ann. §§ 304.102, 304.201 (Vernon Supp.2000). Because the claims in this case do not fall within the statutory provisions, an award of prejudgment interest in this case is governed by the common law. See Kenneco, 962 S.W.2d at 530.
Appellants argue that prejudgment interest accrued from the dates Ronald Lee paid himself executor fees. Because Lee paid himself fees in a number of payments over a two-year period, appellants have provided a chart depicting the various payments and the amount of interest on each, with a total amount due of $2,051,311.79. Appellee disagrees with appellants' calculation and contends that appellants' argument is based on the approach described in the Cavnar case, in contravention to the more recent Kenneco case.
In Kenneco, the court held that, "under the common law, prejudgment interest begins to accrue on the earlier of (1) 180 days after the date a defendant receives written notice of a claim or (2) the date suit is filed." See id. at 531. A "`claim' is `a demand for compensation or an assertion of a right to be paid'." See id. Appellee contends the first date he received notice of a claim with regard to executor fees paid, was the date suit was filed. We have not located in the record an earlier date of notice of a claim with respect to the executor fees.
Appellants next argue that accrual of prejudgment interest under Kenneco would nullify appellee's duty of disclosure as a fiduciary. Appellants base this argument on the following premisses: (1) an executor owes a duty to disclose all material facts affecting the beneficiaries' rights, see Huie v. DeShazo, 922 S.W.2d 920, 923 (Tex.1996); and (2) courts have historically required breaching fiduciaries to pay prejudgment interest from the date the breaches occurred. See, e.g., Ward v. Maryland Cas. Co., 140 Tex. 124, 166 S.W.2d 117, 119 (1942).
Despite the previous holdings that breaching fiduciaries must pay prejudgment interest from the date of breach, the Kenneco court held that the rule it announced applied to all cases that do not fall within the statutory guidelines for prejudgment interest. See 962 S.W.2d at 531. By making no exception for breach of fiduciary claims, the supreme court impliedly overruled all cases contrary to Kenneco. Therefore, we are not persuaded to create an exception to the Kenneco rule in cases involving breaching fiduciaries.
We hold that the date of accrual of prejudgment interest on the $1.5 million award rendered by this court is July 28, 1993, the date of filing of Plaintiffs' First Amended Petition. The prejudgment interest on those trial court damage awards upheld by this court accrues as the trial court ruled, according to Cavnar.
The Kenneco court further held that prejudgment interest accrues at the rate for postjudgment interest and it is to be computed as simple interest. See id. at 532. The rate of interest is 10%. See Tex. Fin.Code Ann. § 304.003 (Vernon Supp. 2000).
Accordingly, we hold that appellants are entitled to prejudgment interest on the $1.5 million in excessive executor fees required to be reimbursed, at the rate of 10% per annum, computed as simple interest from the date of notice of the claim, July 28, 1993, to the day preceding entry of judgment, October 24, 1996. Appellants are entitled to postjudgment interest on this award calculated from the date of judgment, October 25, 1996.
*801 Conclusion
We find the trial court erred: (1) in deducting $1.5 million from the jury's finding of excessive fees; (2) in refusing to remove appellee as trustee; and (3) in refusing to require appellee to reimburse the estate for appellants' attorney's fees. Accordingly, we (1) reverse the portion of the judgment awarding the Article IV trust $659,506.50 and render judgment that the Article IV trust recover $1,538,848.50 in excessive executor fees, in addition to the $659,506.50 previously awarded by the trial court, for a total award of $2,198,355.00 in excessive executor fees; (2) reverse the portion of the judgment denying plaintiffs' request to remove Ronald Lee as the Trustee of the Article IV trust and we render judgment removing Ronald Lee as Trustee of the Article IV trust; and (3) we order the following: (a) that Ronald Lee reimburse the Article IV trust for appellants' stipulated $1.5 million in trial court attorney's fees; (b) that Ronald Lee reimburse the Article IV trust for the appellants' stipulated $300,000 in appellate attorney's fees; (c) that, in the event either party appeals to the Texas Supreme Court, Ronald Lee shall reimburse the Article IV trust for appellants' stipulated $100,000 attorney's fees; (d) that the Article IV trust, on behalf of appellants, recover from appellee prejudgment interest on the $1,538,848.50 in excessive executor's fee awarded by this judgment at the rate of 10% per annum, computed as simple interest, from the date of notice of the claim, July 28, 1993, through the date preceding the day of entry of judgment, October 24, 1996; (e) that the Article IV trust, on behalf of appellants, recover postjudgment interest at the rate of 10% per annum, compounded annually, on the total of (i) the excessive executor fees awarded by this court ($1,538,848.50), (ii) the excessive executor fees awarded by the trial court ($659,506.50), and (iii) the prejudgment interest awarded on those amounts, from the date of the trial court's judgment, October 25, 1996; and (f) that appellee shall reimburse the Article IV trust for postjudgment interest at 10% per annum, compounded annually (i) from the date of the trial court's judgment as to appellants' $1.5 million in trial court attorney's fees, (ii) from the date of this court's judgment as to fees for appeal to this court, and (iii) from the date of the supreme court's ruling on petition for review as to the award for fees on appeal to the supreme court. We affirm the remainder of the judgment.
NOTES
[*] Senior Chief Justice Paul C. Murphy sitting by assignment.
[1] In his brief, appellee cited to Arce v. Burrow, 958 S.W.2d 239 (Tex.App.-Houston [14th Dist.] 1997, writ granted). Since submission of this case, the Texas Supreme Court has issued its opinion affirming in part, and reversing and remanding in part. See Burrow v. Arce, 997 S.W.2d 229 (Tex.1999).
[2] This amount represents the estate tax cost of $660,000, less $144,087 the estate would have owed in interest if appellee had not paid himself $2.2 million of the total fee.
[3] Appellee also cites Deloitte & Touche v. Weller, 1997 WL 572530 (Tex.App.-Amarillo 1997), opinion withdrawn and superseded on rehearing, 976 S.W.2d 212 (Tex.App.-Amarillo 1998, writ denied) The Weller opinion to which appellee cites was withdrawn on rehearing and the substitute opinion does not address the "benefits rule." See Deloitte & Touche v. Weller, 976 S.W.2d 212 (Tex.App.-Amarillo 1998, writ denied). Accordingly, we do not discuss this case.
[4] We address the Akin holding in further detail later in this opinion.
[5] In his response brief, appellee claims that the trial court "determined that `cause' would exist to remove if the jury had found gross negligence." Appellee then states that appellants did not complain below and do not complain on appeal that gross negligence is not a legally valid basis for removal. Because the jury refused to find gross negligence, appellee reasons the trial court properly declined to remove appellee as trustee. Appellee misrepresents the trial court's determination. The trial court actually said he could find grounds for removal if there was a finding of either gross negligence or breach of fiduciary duty and damages.
[6] The former statute has been rewritten upon codification to set out the grounds in an enumerated fashion; however, the language of the statute remains the same. Compare Act of April 14, 1993, 48th Leg., R.S., ch. 148, § 39, 1943 Tex. Gen. Laws 232, 246 (repealed) with TEX. PROP.CODE ANN. § 113.082 (Vernon 1995).
[7] This holding seems to fly in the face of the plain language of the statute. The statute allows recovery of attorney's fees if the executor defends the will in good faith and with just cause, whether or not he or she is successful in admitting the will to probate. See TEX. PROB.CODE ANN. § 243 (Vernon Supp.2000). Although the recovery of fees is expressly not tied to success in admitting the will to probate, it is tied to good faith defense. By holding that a finding of good faith was inapplicable where the executor was successful in admitting the will to probate, the court ignored the statutory language and tied recovery of fees to success in admitting the will.
[8] This is somewhat similar to the standard for official immunity, which has been held to protect "all but the plainly incompetent or those who knowingly violate the law." Courson v. McMillian, 939 F.2d 1479, 1487 (11th Cir.1991) (quoting Malley v. Briggs, 475 U.S. 335, 341, 106 S. Ct. 1092, 89 L. Ed. 2d 271 (1986)).
[9] Appellants incorrectly cite to section 294, but 294 has no Comment H. Appellants apparently intended Comment H under section 282, which concerns suits in equity by beneficiaries. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1747462/ | 648 So.2d 1090 (1994)
STATE of Louisiana
v.
Calvin DUNCAN, a/k/a Calvin Jones.
No. 94-KA-1045.
Court of Appeal of Louisiana, Fourth Circuit.
December 28, 1994.
Rehearing Denied February 15, 1995.
*1094 Harry F. Connick, Dist. Atty. and Kim Madere Graham, Asst. Dist. Atty., New Orleans, for appellee.
Laurie A. White and Angela A. Gerrets, Law Office of Laurie A. White, New Orleans, for appellant.
Before KLEES, LOBRANO and WALTZER, JJ.
LOBRANO, Judge.
The defendant, Calvin Duncan a/k/a Calvin Jones, was charged by grand jury indictment with first degree murder, a violation of LSA-R.S. 14:30. A jury found the defendant guilty as charged. He was sentenced to life imprisonment at hard labor without benefit of parole, probation or suspension of sentence. Defendant appealed and this court affirmed his conviction and sentence in State v. Duncan, 517 So.2d 1270 (La.App. 4th Cir. 1987), writ denied, 536 So.2d 1232 (La.1989). Pursuant to Lofton v. Whitley, 905 F.2d 885 (5th Cir.1990), the defendant was granted an out-of-time appeal on January 10, 1994.
The facts of this case are set forth in this court's original opinion as follows:
At trial, the State presented the testimony of an eyewitness to the crime, Kristie Emberling. She testified that she and [David] Yeager were waiting at a bus stop on the corner of North Roman Street and Esplanade Avenue in New Orleans at approximately eleven p.m. on August 7, 1986 [sic, 1981].[1] Emberling testified that a man she later identified as Calvin Duncan and another man walked up to the bus stop. Duncan asked Emberling and Yeager if they wanted to buy or sell any marijuana. Emberling told Duncan that they were not interested, and the couple attempted to back away from the two men. Duncan made a comment about the ring Emberling was wearing and then suddenly said, "Hold it, don't move, give me your money." Under his jacket Duncan held a gun pointed at the couple. Yeager pushed the other man, and Emberling started to run. She heard a gunshot and looked back and saw Yeager limping approximately ten feet away. She then saw Duncan put his gun to Yeager's head and fire. She rushed to Yeager who had fallen in the street. Duncan fled. The other man searched Yeager's body, took his wallet and then also ran away.
Approximately six months later, the New Orleans Police received an anonymous tip that Calvin Duncan was the murderer. On March 7,[1982], Kristie Emberling positively identified Duncan from a photographic lineup. A warrant was issued for Duncan's arrest, and newspapers and television publicized Duncan's identification as a suspect. Meanwhile, Duncan had left New Orleans and joined the Job Corps program in Clackamas County, Oregon where, acting on the New Orleans warrant, Clackamas County officers arrested Duncan on August 6, 1982.
SUFFICIENCY OF EVIDENCE (ASSIGNMENT OF ERROR NO. 5)
In this assignment of error, defendant argues that no rational trier of fact could have found him guilty beyond a reasonable doubt of first degree murder. Defendant argues that the testimony of the alibi witnesses created reasonable doubt as to the eyewitness' identification of defendant as the murderer of David Yeager.
When both the sufficiency of the evidence and one or more trial errors are raised as issues on appeal, the reviewing court should first determine the sufficiency of the evidence. State v. Hearold, 603 So.2d 731 (La.1992). This is because the defendant may be entitled to an acquittal or a reduction of the conviction to a judgment of guilty of a lesser and included offense if the evidence is found insufficient under Jackson v. Virginia, 443 U.S. 307, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). Id.
When the entirety of the evidence, including any inadmissible evidence which was erroneously admitted, is insufficient to *1095 support the conviction, the accused must be discharged as to that crime; and, any discussion by the court as to trial errors would be pure dicta because those issues would be moot. Id. However, when the entirety of the evidence, both admissible and inadmissible, is sufficient to support the conviction, the defendant is not entitled to an acquittal; and, the viewing court must then consider the trial error issues to determine whether the defendant is entitled to a new trial. Id. If the reviewing court finds trial error which is not harmless in a case where it has found the evidence sufficient to support the conviction, the defendant must receive a new trial but he is not entitled to an acquittal even though the admissible evidence by itself was insufficient. Id.
The standard for reviewing a claim of insufficient evidence is whether, after viewing the evidence in the light most favorable to the prosecution, a rational trier of fact could have found the essential elements of the offense proven beyond a reasonable doubt. Jackson v. Virginia, supra; State v. Rosiere, 488 So.2d 965 (La.1986). The reviewing court is to consider the record as a whole and not just the evidence most favorable to the prosecution; and, if rational triers of fact could disagree as to the interpretation of the evidence, the rational decision to convict should be upheld. State v. Mussall, 523 So.2d 1305 (La.1988).
Additionally, the reviewing court is not called upon to decide whether it believes the witnesses or whether the conviction is contrary to the weight of the evidence. Id. The jury's determination of credibility is not to be disturbed on appeal absent an abuse of the jury's discretion. State v. Cashen, 544 So.2d 1268 (La.App. 4th Cir.1989).
In 1981, R.S. 14:30 provided, in part:
First degree murder is the killing of a human being:
(1) When the offender has specific intent to kill or to inflict great bodily harm and is engaged in the perpetration or attempted perpetration of aggravated kidnapping, aggravated escape, aggravated arson, aggravated rape, aggravated burglary, armed robbery, or simple robbery;
* * * * * *
In 1981, R.S. 14:64 provided, in part:
Armed robbery is the theft of anything of value from the person of another or which is in the immediate control of another, by use of force or intimidation, while armed with a dangerous weapon.
Viewing the evidence in the light most favorable to the prosecution, we find that the State proved defendant's guilt beyond a reasonable doubt. Ms. Emberling positively and emphatically identified defendant as the person who shot Yeager after attempting to rob the couple of money at gunpoint. By finding defendant guilty, the jury obviously did not believe defendant's alibi witnesses. This assignment of error is without merit.
ASSIGNMENTS OF ERROR NOS. 1 & 2
In these two assignments of error, defendant complains about the admission into evidence of three inculpatory statements made by him. In the first assignment, defendant argues that the trial court erred in allowing Detective Loren Peterson to testify regarding statements made by defendant when he was arrested in Oregon on August 6, 1982. The defense claims that these statements should have been excluded because the arresting officers did not scrupulously honor the defendant's right to remain silent.
This court has already found no merit in this and other arguments in supervisory writ 89-K-2116 in which defendant sought review from the denial of his application for post-conviction relief. In that application, defendant raised the claim that his statements of August 6, 1982 should not have been admitted because his right to remain silent was not honored by the arresting officers. This court found no error in the trial court's denial of defendant's application for post-conviction relief.[2]
*1096 Defendant's second argument concerns statements made by him on August 16, 1982 and August 23, 1982 which he claims were obtained in violation of his right to counsel. In defendant's original appeal, he raised this same argument in a pro se brief. This court held that neither of these statements was obtained in violation of defendant's right to counsel. Duncan, 517 So.2d at 1272.
As for the statement of August 16, 1982, this court noted that the constitutional right to have counsel present during custodial police interrogation may be waived and found that the State affirmatively showed that defendant waived that right and talked freely with police without ever indicating that he desired to have an attorney present. Duncan, 517 So.2d at 1272. As for the statement of August 23, 1982,[3] this court found no error in the admission of this statement because it was made after defendant was informed of and claimed to understand his Miranda rights and was made without any inducement or threat and without any request for the presence of an attorney. Duncan, 517 So.2d at 1272.
Defendant, however, raises an additional argument not previously discussed, about the admissibility of these statements. His argument is predicated on the Sixth Amendment right to counsel. He argues that because he already had been appointed counsel at his extradition arraignment in Oregon, before these statements were made, they should not have been admitted into evidence because the police were barred from interrogating defendant in the absence of appointed counsel unless the defendant initiated communication. In support of this argument, defendant cites the United States Supreme Court cases of Michigan v. Jackson, 475 U.S. 625, 106 S.Ct. 1404, 89 L.Ed.2d 631 (1986) and Patterson v. Illinois, 487 U.S. 285, 108 S.Ct. 2389, 101 L.Ed.2d 261 (1988), and the Louisiana Supreme Court case of State v. Hattaway, 621 So.2d 796 (La.1993). The basic thrust of these decisions is that a defendant in a criminal matter, represented by an attorney, may not waive the assistance of counsel during interrogation. "Consequently, the state cannot, under such circumstances, obtain a waiver from the accused or otherwise communicate with him with respect to the offense ... except through the medium of defense counsel." Id. at 798.
We initially note that the above cited cases were all rendered subsequent to the interrogations at issue in this case, thus arguably posing an issue of retroactivity. However because we conclude that the introduction of the August 16, 1982 and August 23, 1982 statements constitute harmless error, we need not decide the retroactive effect of those decisions.
In State v. Hattaway, supra, the Louisiana Supreme Court applied a harmless error analysis to determine whether a confession by the defendant which the court found was made in violation of his right to be assisted by counsel contributed to his conviction. The court explained the harmless error test as follows:
"[W]e have examined the record to determine `whether there is a reasonable possibility that the evidence complained of might have contributed to the conviction' and whether the error was harmless beyond a reasonable doubt * * *" (citations omitted) Id. at 815.
(See also, Arizona v. Fulminante, 499 U.S. 279, 111 S.Ct. 1246, 113 L.Ed.2d 302 (1991), which held that the admission of an involuntary confession obtained in violation of right to counsel is subject to a harmless error analysis.)
In finding that the admission of the defendant's confession and the fruits thereof were not harmless error, the Hattaway court noted that the inadmissible evidence formed the core of the State's case and explained further as follows:
*1097 "Without the confession and its fruits, the prosecution's evidence consisted only of Hattaway's cryptic oral admission of guilt to his cousin and the circumstantial evidence implicating him in the crime. This evidence did not necessarily paint Hattaway as the `trigger person' or the main mover in the criminal scheme. There was neither eyewitness testimony nor direct physical evidence placing Hattaway at the scene of the killing" Id. at 815.
In the instant case, the portions of the statements given by defendant after the appointment of Oregon counsel and to which defendant complains are as follows:
On August 16, 1982 Detective Peterson testified that defendant stated:
"He told me he didn't feel the witness would be able to identify him because his appearance had changed so much in the last year's period of time."
On August 23, 1982 Detective Demma asked defendant why he had left New Orleans and moved to Oregon in February of 1982. Demma testified:
"[H]e had seen his name in the newspaper implicated in a murder and with that, once he saw his name, that's when he left the city. He said his reason for leaving the city was to get a job and make some money so he could afford an attorney to come back to the city and fight this. He also, during the course of the interview questioned whether or not if he could be identifiedhis statement was, what would happen if she could not identify him when he was brought back."
The circumstances of the instant case differ greatly from those in Hattaway. The statements in question do not constitute an admission of guilt. In fact, the detectives to whom defendant made these statements both testified that defendant denied involvement in the murder of David Yeager. Detective Peterson stated that defendant also indicated at an earlier interview that he was being wrongly implicated in this murder because he was black and the victim was white. Although he had not been told of the victim's race, defendant told Detective Peterson that he assumed the victim was white because of the intensity of the police investigation. Therefore, when the defendant's statements testified to by the detectives are taken in context with the detectives' testimony as a whole, it is clear that these statements were not a confession of guilt.
Most importantly, this case unlike Hattaway, had an eyewitness who was with the victim at the time of the attempted robbery and shooting and who testified positively that she saw the defendant shoot David Yeager in the head after attempting to rob the couple of their money. In light of the strong eyewitness testimony in this case, the statements in question by the defendant were harmless beyond a reasonable doubt.
ASSIGNMENT OF ERROR NO. 3
In his third assignment of error, the defendant argues that the trial court erred in allowing Detective Marco Demma to testify that information was received from an anonymous caller identifying the defendant as the perpetrator of the shooting death of David Yeager. According to defendant, this testimony was hearsay and its admission violated his right to confront and cross-examine his accuser.
A review of the record shows that no objection was made by defense counsel when Detective Demma testified that an anonymous tip had been received on the Crimestoppers hotline identifying the defendant as Yeager's killer. The lack of a contemporaneous objection precludes appellate review. LSA-C.Cr.P. art. 841. This assignment of error is without merit.
ASSIGNMENT OF ERROR NO. 4
In his fourth assignment of error, the defendant argues that he was denied due process and his right to a fair trial because the prosecution withheld from the defense exculpatory and impeachment evidence which would have changed the outcome of the trial or created a reasonable doubt that did not otherwise exist had it been disclosed to the defense. According to the defendant, the withheld evidence included: (1) the initial police report; (2) the names of other persons who witnessed the perpetrators fleeing the scene; (3) the August 26, 1982 investigative *1098 report which allegedly contained statements from the key witness, Kristie Emberling, indicating that after she identified the defendant, she stated that she was not sure about her identification; (4) the transcript of Kristie Emberling's grand jury testimony; and (5) the written statement signed by Kristie Emberling.
In Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), the United States Supreme Court held that "the suppression of evidence favorable to an accused upon request violates due process where the evidence is material either to guilt or punishment." See also, C.Cr.P. art. 718. However, the prosecution does not have the duty to provide defense counsel with unlimited discovery of the State's case. United States v. Agurs, 427 U.S. 97, 96 S.Ct. 2392, 49 L.Ed.2d 342 (1976).
Evidence is material, and hence discoverable, if there is a "reasonable probability" that the outcome of the trial would have been different had the evidence been disclosed to the defense. United States v. Bagley, 473 U.S. 667, 105 S.Ct. 3375, 87 L.Ed.2d 481 (1985). However, the mere possibility that undisclosed information might have helped the defense or affected the outcome of trial does not establish the materiality of that information. United States v. Agurs, supra. The undisclosed information must be evaluated in the context of the entire record; and, if there is no reasonable doubt about the defendant's guilt irrespective of this evidence, there is no justification for a new trial. State v. Paul, 499 So.2d 1288 (La.App. 4th Cir.1986), writ denied, 503 So.2d 475 (La.1987).
Defendant argues that the initial police investigative report, Ms. Emberling's grand jury testimony, and her written statement should have been disclosed because the description of the gunman contained in those documents allegedly differed from Ms. Emberling's trial testimony. Although a defendant is generally not entitled to the discovery of reports, memoranda, or other internal state documents made by the district attorney or State agents or to witnesses' statements made to the district attorney or State agents, the State is constitutionally required to produce exculpatory evidence upon the defendant's request. State v. Clark, 581 So.2d 747 (La.App. 4th Cir.1991), writ denied, 590 So.2d 63 (La.1991).
In State v. Banks, 446 So.2d 497 (La.App. 4th Cir.1984), this court applied the standards of the Jencks Act (18 U.S.C. Sec. 3500) to determine when and what a trial judge must examine during trial upon defendant's request for exculpatory witness statements. We stated:
The Jencks Act requires production of statements made by government witnesses even when incorporated in official investigatory reports. But it defines a discoverable "statement" as "a written statement made by said witness and signed or otherwise adopted by him." 18 U.S.C. Sec. 3500(e)(1). A witness adopts a statement only when he approves as his own the investigating officer's summary, selections, and interpretations of the witnesses's oral statements. United States v. Scaglione, 446 F.2d 182 (5th Cir.1971). Approval by the witness must be comparable to signature of the written statement, and discussions between the officer and the witness of the general substance of what the witness said does not mean the witness has adopted the statement. Moreover, a witness does not adopt a statement when the person taking the statement does not read it to the witness or when the witness does not read what the officer has written. Goldberg v. United States, 425 U.S. 94, 96 S.Ct. 1338, 47 L.Ed.2d 603 (1976).
On the other hand, a memorandum of an interview with a government witness which is not adopted by the witness is discoverable where it is a "substantially verbatim recital" of the witness's words and does not contain comments, impressions or opinions of the investigating officer. However, there is not a substantially verbatim recital merely because a report contains phrases or isolated sentences identical to language used by the witness. United States v. Cole, 634 F.2d 866 (5th Cir.1981). Generally, a police officer's investigative notes of a suspect's description are not a "substantially verbatim recital" of a witness' statement. *1099 March v. United States, 362 A.2d 691 (D.C.1976).
Id., 446 So.2d at 501.
The descriptions of the gunman contained in the initial police report and in subsequent police reports cannot be considered exculpatory evidence that could have been used to impeach Ms. Emberling's credibility.[4] Those reports did not contain any statements by Ms. Emberling that either were adopted by her or were a "substantially verbatim recital" of her words. The description of the gunman in the initial report was set forth in a checklist of physical characteristics and the description in the supplemental report was derived from her transcribed statement which we find to be the best evidence of what she actually said.
In the transcribed statement, Ms. Emberling described the gunman as 5'8" tall and weighing 185 or 190 pounds with a stocky build. She also said that he had a mustache which looked like that of a person who had not shaved in one or two weeks. At trial, she described the gunman as either 5'8" or 5'9" tall and weighing 180 pounds. She also testified that the assailant had a beard and mustache which looked as though he had not shaved in two or three weeks.
The difference between the description in Ms. Emberling's transcribed statement and the one in her trial testimony is slight; thus, there is not a reasonable probability that evidence of her transcribed statement to police would have changed the trial's outcome. This is also true of her grand jury testimony, in which her description of the perpetrator's height and weight was essentially the same as that given at trial except that she did not mention facial hair in her grand jury testimony. She was not asked about the presence of facial hair on the perpetrator when she was questioned before the grand jury; therefore, we cannot conclude that the failure to mention facial hair in her grand jury testimony was a contradiction which created a reasonable probability that the trial's outcome would have been changed had it been disclosed to the defense.
Defendant also argues that Ms. Emberling's grand jury testimony and the August 26, 1982 investigative report contained exculpatory evidence related to the identification of defendant made by Ms. Emberling when she was shown a photographic lineup by Detective Demma. Ms. Emberling testified before the grand jury that she did not make an immediate positive identification of defendant from the photographic lineup. She testified that she called the police later to tell them she was positive of her identification of defendant after focusing on the incident.
The report stated that after she chose defendant's picture from the lineup, Detective Demma asked her if she were positive that he was the one who shot Yeager. Ms. Emberling said that she was not sure and was very scared. The report further stated that she later called the detective to tell him that she was positive that defendant was the gunman and that her reason for initially stating that she was not sure was her fear that defendant knew where she lived and would try to kill her. At trial, neither Ms. Emberling nor Detective Demma testified about her initial hesitancy in identifying defendant in the photographic lineup.
Although there was no trial testimony that Ms. Emberling did not positively identify defendant at the time of the lineup, the failure of the State to disclose the August 26, 1982 report and grand jury testimony showing Ms. Emberling's initial hesitancy in identifying defendant is not reversible error. In both the report and the grand jury testimony, it was made clear that Ms. Emberling's initial reluctance to make an identification was resolved shortly after the lineup. It is not as though Ms. Emberling waited until trial to aver that she was positive defendant was the gunman.
Defendant argues that the initial report and the supplemental report of August, 1981 should have been disclosed to the defense because they contained the names of other witnesses whose testimony could have contradicted that of Ms. Emberling as to the *1100 description of the two assailants. The reports in question state that Martin Labord, Lionel Glasper, and Gregory Sumas heard gunshots and saw either one or two persons run from the scene. According to the report, Labord was inside his home when he heard two gunshots. Labord looked out of his window and saw two black males running on North Roman toward Kerlerec Street. He described one as being fifteen to sixteen years old with a stocky build, light skin, 5'7" tall and wearing cut-off shorts and a short sleeved shirt. He described the other as fifteen to sixteen years old with a slim build, dark complexion, 5'7" tall and wearing a multi-colored shirt and tan cut-off pants.
According to the report, Glasper told the police he was riding his bicycle on North Roman when he heard two gunshots and saw two black males running on North Roman toward Kerlerec Street. He stated that one of the males was wearing shorts. As to Sumas, the report stated that he was walking on North Roman when he heard two gunshots. He saw one black male, wearing a shirt and dark pants, standing over Yeager's body; but he did not see where this person went afterward. Sumas did not see a second black male.
We conclude that the failure of the State to disclose the names of these three witnesses to the defense does not constitute reversible error. None of these witnesses actually saw the shooting and only one of these witnesses, Labord, was able to give a detailed description of the perpetrators. Labord's description was not materially different from that given by Ms. Emberling, although the clothing descriptions differed. Even with this difference, there is not a reasonable probability that the outcome of the trial would have been different had the evidence been disclosed to the defense. Accordingly, this assignment of error is without merit.
ASSIGNMENTS OF ERROR NOS. 6, 8, 9, AND 10
In these assignments of error, defendant complains of various jury charges given by the trial court. In Assignment of Error No. 6, defendant complains of the charge in which the trial judge stated that an alibi defense relieved the State of its burden of proving defendant guilty beyond a reasonable doubt. In Assignment of Error No. 8, defendant argues that the reasonable doubt charge is the same as the one found to be unconstitutional in Cage v. Louisiana, 498 U.S. 39, 111 S.Ct. 328, 112 L.Ed.2d 339 (1990). In Assignment of Error No. 9, defendant complains that the jury charge on armed robbery was based on the 1983 amendment to R.S. 14:64 rather than the statute in effect in 1981. In Assignment of Error No. 10, defendant argues that the trial judge failed to instruct the jury on specific intent.
A review of the record shows that no objections were made to any of the jury charges. We do note, however, that defendant argues that a written objection was made to the reasonable doubt charge (which forms the basis for Assignment of Error No. 8). No such motion can be found in the record.[5] Therefore, appellate review of these errors is precluded. C.Cr.P. art. 801, 841; State v. Bourque, 622 So.2d 198 (La.1993); State v. Dobson, 578 So.2d 533 (La.App. 4th Cir.1991), writ denied, 588 So.2d 1110 (La. 1991).
ASSIGNMENT OF ERROR NO. 7
In his seventh assignment of error, defendant complains that the trial court violated C.Cr.P. art. 793 when it allowed the jury to have access to a newspaper article pertaining to the offense during their deliberations.[6] This argument was one of those *1101 found to have no merit by this court in supervisory writ 89-K-2116.[7] Additionally, a review of the minute entries for the trial shows that only the State objected to the trial judge's ruling allowing the jury to see the newspaper article that had been introduced into evidence. The defendant's failure to object to the viewing of this article by the jury precludes appellate review. C.Cr.P. art. 841. This assignment of error is without merit.
ASSIGNMENT OF ERROR NO. 11
In his eleventh and final assignment of error, the defendant complains that he received ineffective assistance of counsel at trial because his counsel failed to object to the jury charges on alibi, armed robbery, and specific intent and to Detective Demma's testimony concerning the anonymous tip. He claims that his counsel was also ineffective in failing to obtain the initial police report. These last two grounds were disposed of in defendant's prior writ application, 89-K-2116, where they were found to be without merit by this court; thus, they will not be reconsidered in this appeal.[8]
With regard to the ineffective assistance claims based on the failure to object to jury charges, such claims are ordinarily raised in applications for post-conviction relief; but, these claims can be addressed on appeal if the record contains the necessary evidence to evaluate the merits of the claims. State v. Seiss, 428 So.2d 444 (La.1983); State v. Kelly, 639 So.2d 888 (La.App. 4th Cir. 1994). There is sufficient evidence in the present case to evaluate these claims especially in light of the fact that defendant has already sought post-conviction relief in the present case.
Under Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984), a defendant must show that his counsel's performance was deficient and that the deficient performance prejudiced him. With regard to counsel's performance, the defendant must show that counsel made errors so serious that counsel was not functioning as "counsel" guaranteed by the Sixth Amendment. As to prejudice, the defendant must show that counsel's errors were so serious as to deprive defendant of a fair trial, i.e. a trial whose result is reliable. Id., 466 U.S. at 687, 104 S.Ct. at 2064. Both showings must be made before it can be found that defendant's conviction resulted from a breakdown in the adversarial process that rendered the trial result unreliable. Id. A claim of ineffective assistance may be disposed of on the finding that either one of the two Strickland criteria has not been met. State v. James, 555 So.2d 519 (La.App. 4th Cir.1989), writ denied 559 So.2d 1374 (La.1990). If the claim fails to *1102 establish either prong, the reviewing court need not address the other. State ex rel. Murray v. Maggio, 736 F.2d 279 (5th Cir. 1984).
The test for determining the correctness of a jury instruction is whether, taking the instruction as a whole, reasonable persons of ordinary intelligence would understand the charge. State v. Bourque, 622 So.2d 198 (La.1993); State v. West, 568 So.2d 1019 (La.1990)
The trial judge charged the jury on alibi as follows:
An alibi is evidence which seeks to prove that the defendant, at the time the crime is charged to have been committed, was at another place and therefore, could not have committed the crime.
Hence, as a defense, it involves the impossibility of the defendant's presence at the scene of the offense at the time of its commission and the range of the evidence as to the time and place must be such as to reasonably exclude the possibility of such presence.
This, however relieves the State of its burden of proving the defendant's guilt beyond a reasonable doubt.
Evidence in connection with an alibi should be considered in connection with all the evidence in the case. If on the whole evidence there is reasonable doubt, it would be your duty to acquit the defendant.
Defendant argues that this charge relieved the State of its burden of proof and should have been objected to by defense counsel. Viewing this jury charge in the context of the entirety of the jury instructions, we do not find that defense counsel was deficient for failing to object to the alibi charge. The trial judge repeatedly told the jury that the State had to prove defendant's guilt beyond a reasonable doubt. The charge in question appears to be an awkward attempt by the trial judge to instruct the jury that if it believed the alibi defense, it was to acquit defendant because of what defendant had proven, not because the State failed to prove defendant's guilt beyond a reasonable doubt.
As to the instruction on armed robbery, defendant complains that his counsel should have objected when the instruction on armed robbery was based on the 1983 version of R.S. 14:64 instead of the statute in effect at the time of the offense in August, 1981. Although defendant is correct in his assertion that the jury was instructed as to the 1983 version of the armed robbery statute, we do not find that he was prejudiced by his counsel's failure to object. The 1983 version defines an armed robbery as a "taking" rather than as a "theft", as the pre-1983 version defined armed robbery. However, because the evidence overwhelmingly established that the defendant had the specific intent to kill while engaged in the perpetration of an attempted armed robbery under the stricter pre-1983 version of armed robbery requiring an intent to permanently deprive, the defendant suffered no prejudice from his counsel's failure to object to the instruction on armed robbery.
Defendant also complains that his counsel should have objected when the trial judge failed to define specific criminal intent. The trial judge instructed the jury that first degree murder was the killing of a human being when the offender had the specific intent to kill or inflict great bodily harm when the perpetrator was engaged in the perpetration or attempted perpetration of an armed robbery.[9] The judge further charged the jury as follows:
The law with reference to specific intent to kill or inflict great bodily harm is as follows:
First of all, the time element. The law knows no specific time within which an intent to kill or inflict great bodily harm must be formed so as to make the crime or the homicide murder. If the will of the person accompanies the act a moment antecedent to the act which causes the death, it will be completely sufficient to make the offense murder as if it were a day or any other time.
*1103 It is sufficient if there was a design or determination to kill or inflict great bodily harm formed in the mind of the slayer at any moment before or at the time of the slaying.
We do not find that defendant's counsel's failure to object to the specific intent charge rendered his counsel's assistance ineffective. The trial judge instructed the jury that first degree murder was a specific intent crime. Thus, there was no prejudice to defendant in his counsel's failure to object to that charge. Accordingly, this assignment of error is without merit.
For the reasons stated above, the defendant's conviction and sentence are affirmed.
AFFIRMED.
NOTES
[1] The facts in our earlier opinion in State v. Duncan, 517 So.2d 1270 (La.App. 4th Cir.1987), contained an error as to the date of this crime. The record reveals that the crime which is the subject of this appeal occurred on August 7, 1981.
[2] Officer Peterson testified that defendant was advised of his Miranda rights and signed a card on August 6, 1982 which stated that he understood his rights and was willing to make a statement. The defendant then responded to questions and made some spontaneous statements to Officer Peterson and Officer Pat Reed. Therefore, the statements of August 6, 1982 were correctly admitted into evidence.
[3] The record is unclear as to whether defendant gave a statement on August 23, 1982 or August 26, 1982. Detective Marco Demma's testimony refers to a statement on August 23, 1982 but defense counsel filed a motion to suppress a statement dated August 26, 1982. In defendant's original appeal, this court assumed that defendant was actually complaining about a statement made on August 26, 1982.
[4] This case was tried prior to the decision in State v. Shropshire, 471 So.2d 707 (La.1985), which held that the incident report was a public record which must be produced for the defendant's examination.
[5] During oral argument, we requested defense counsel to find the written objection in the record because, after thorough review, we were unable to. A few days later, defense counsel supplemented the record with copies of pleadings styled "Objection to Jury Charge and Requested Jury Charge." However, these copies were not marked "Filed" by the district court, nor are they dated.
[6] C.Cr.P. art. 793 provides:
A juror must rely upon his memory in reaching a verdict. He shall not be permitted to refer to notes or to have access to any written evidence. Testimony shall not be repeated to the jury. Upon the request of a juror and in the discretion of the court, the jury may take with it or have sent to it any object or document received in evidence when a physical examination thereof is required to enable the jury to arrive at a verdict.
[7] The record shows that the newspaper article in question was introduced into evidence by the defense in an effort to show that defendant had an independent source of knowledge as to the particulars of the crime which would explain a statement made by him during an interrogation in Oregon. Because the article was introduced by the defense for the purpose of making the jury aware of the contents, any undue weight that the contents might have had would be to the benefit of the defense and, therefore, harmless error.
[8] Our review of the previous writ disposition and the information supporting it is as follows:
Detective Demma testified that a confidential informant told him that defendant was the person who fatally shot the victim. This evidence was merely cumulative because an eyewitness identified the defendant as the perpetrator. Erroneously admitted testimony that is merely cumulative or corroborative is considered harmless beyond a reasonable doubt. State v. Spell, 399 So.2d 551 (La.1981).
Defendant's claim that his trial counsel was ineffective in failing to obtain the initial police report is based on his allegation that the report contained a statement from the key witness, Kristie Emberling, which differed from her testimony at trial. The statement of that witness was not, standing alone, exculpatory and, therefore, was not discoverable as Brady material. Additionally, defendant's trial was held in January, 1985 and initial police reports were not routinely given to defense attorneys on request until after State v. Shropshire, 471 So.2d 707 (La.1985), which was decided on June 17, 1985 with rehearing denied on September 9, 1985. Even if the defense attorney had a copy of the police report at trial, it is unlikely that the eyewitness could have been successfully impeached as her trial testimony was more detailed and was not in direct contradiction of her earlier statement.
[9] A review of the jury instruction transcript shows that the word "intent" is missing. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1715544/ | 190 So. 2d 244 (1966)
The TEXAS PIPE LINE COMPANY
v.
Harry STEIN and Mrs. Leona Falgoust Stein.
No. 2243.
Court of Appeal of Louisiana, Fourth Circuit.
July 15, 1966.
Rehearing Denied October 5, 1966.
Writ Granted November 18, 1966.
*246 Wiley G. Lastrapes, Daniel P. Hurley, New Orleans, Blum & Sotile, Donaldsonville, Milling, Saal, Saunders, Benson & Woodward, M. Truman Woodward, Jr., R. King Milling, New Orleans, for plaintiff-appellant.
Martin, Himel & Peytavin, Lloyd R. Himel, Lutcher, for defendants-appellees.
Before REGAN, YARRUT and BARNETTE, JJ.
BARNETTE, Judge.
This expropriation suit comes to us on appeal from a judgment in favor of defendants Harry Stein and Mrs. Leona Falgoust Stein, owners of the property in question. Plaintiff-appellant has accurately stated the factual background to the suit substantially as follows:
Plaintiff, a common carrier pipeline company, sought a permanent servitude 30 feet wide as a right-of-way for its proposed pipeline along the northern boundary of defendants' property, a tract of approximately 825 acres situated on the east bank of the Mississippi River near the Sunshine Bridge in St. James Parish. The proposed 30-foot servitude extends along the northern edge of the property for approximately 1,530 feet and contains 1.06 acres. After traversing that distance, the pipeline would turn north and enter property owned by Texaco, Inc., on which a refinery is located where the line will terminate.
Plaintiff sought an additional temporary servitude to use for construction purposes which would be 30 feet wide on the landward *247 side of the levee and 120 feet wide on the river side of the levee.
Plaintiff operates several common carrier pipelines, including one which runs from fields in southeast Louisiana, near Houma, to two refineries at Port Arthur, Texas. Texaco is a principal user of this line, but it also serves other, smaller producers of crude oil and liquid hydrocarbons. Because the existing line is operating at maximum capacity, and because of increased consumer demand for petroleum products, Texaco decided to build a new refinery at Union, Louisiana, and contracted with plaintiff to use a proposed pipeline to run from the Houma fields the 40-mile distance to the refinery site. Plaintiff designed and selected a route for an 18-inch pipeline with an initial daily capacity of 130,000 barrels. The capacity could be increased to 300,000 barrels daily by providing additional pumping equipment. The servitude plaintiff seeks in this suit is the final link between the oil fields and the refinery.
Since the pipeline was to cross the Mississippi River, it was necessary to get approval of the crossing plans from the United States Army Corps of Engineers. The Corps of Engineers refused to approve any crossing that was not essentially perpendicular to the flow of the river. This insistence on the shortest possible crossing made it necessary for plaintiff to cross either the property of the defendants or the property immediately adjacent thereto on the north, identified as the James property.
When negotiations with the property owners were unsuccessful, plaintiff filed this suit to expropriate a right-of-way.
Defendants filed an exception of vagueness or ambiguity, an exception of no cause of action and no right of action, and an exception to the jurisdiction. The exception to jurisdiction is predicated on defendants' contentions that LSA-R.S. 45:251-45:265[1] are in violation of Article 1, Section 2[2] and Article 4, Section 15[3] of the Constitution of Louisiana and that the property sought is not needed for public purposes. By stipulation the exception of vagueness or ambiguity was waived in its entirety; and a hearing on the exception of no right and no cause of action and the exception to jurisdiction was waived, and the subject matter of those exceptions referred to the merits. Another exception of no right or cause of action was filed at the conclusion of trial predicated on the contention that plaintiff had failed to offer or file in evidence "a certificate of necessity from the office of Petroleum Administration for defense, a federal agency, or a certificate of public convenience or necessity from any federal or state agency."
Defendants' answer denied that the right-of-way sought was the most direct or suitable route for plaintiff's pipeline; that other property or route was available to it and there was no necessity for the taking of their property. They alleged further that plaintiff was not in good faith and had abused discretion in laying out the route of its pipeline. In the event of a taking, they sought compensation for the land, for crop damage, and for consequential and severance damage in an amount far in excess of the amounts offered by plaintiff. Defendants further asserted in their answer that plaintiff is not a public utility and is a private carrier, not a common *248 carrier; that the proposed pipeline would serve no public purpose; and that plaintiff was not entitled to expropriate the land. The case was tried on these and other incidental issues.
The trial court's judgment rejected plaintiff's demands, dismissed its petition, and fixed and taxed as costs witness fees for three expert witnesses called by defendants. Plaintiff has appealed.
The trial court, basing its judgment primarily on the authority of River & Rail Terminals, Inc. v. Louisiana Ry. & Nav. Co., 171 La. 223, 130 So. 337 (1930), held that the proposed pipeline would not serve a public purpose. The judge said in his reasons for judgment:
"From the record as a whole, the Court can only conclude as a factual matter that at the present time the sole and only purpose of the proposed pipe line is to carry crude products to one point and one point only, namely, the refinery of Texaco presently being constructed at Union, Louisiana. The Court is further of the opinion that as a legal proposition, the taking, under our constitution and jurisprudence, must be one for a public purpose and that the transportation of crude resources to one company's plant for refinery is not such a public purpose. The fact that the plaintiff pipe line would, as testified to by Mr. Evans, accept shipments from others to any plant which may be constructed by others, or the fact that the products to be manufactured by Texaco will find their way to the public, does not alter the situation. The Court does not believe that a potential public use is synonymous with the term public purpose as used in our constitution, and accordingly, finds this defense to be valid."
Thus the court held that the constitutional requirements for expropriation of private property had not been met. None of the other issues raised by the pleadings were reached.
Defendants-appellees have filed a motion to dismiss the appeal and, with reservation of rights under that motion, have answered the appeal. They pray that in the event the trial court should be reversed on the single issue upon which its judgment rests that the case be remanded for the determination by the district court of all other issues. In the alternative they pray for denial of plaintiff's right to expropriate defendants' property for lack of good faith and abuse of discretion in the selection of a route across defendants' property. Further in the alternative they pray, in the event the right-of-way in question is expropriated, that compensation, crop damage, consequential and severance damage, and expert witness fees be fixed in amounts aggregating approximately $99,000.
We must first dispose of the motion to dismiss the appeal which was argued and submitted with the issues on the merits. The motion is predicated on the allegation that since the rendition of the judgment below an alternate route for crossing the Mississippi River has become available to plaintiff which we will hereafter refer to as the angular crossing, or Location "B". It is alleged that the United States Corps of Engineers will now issue a permit for this crossing, which it had previously refused; that, therefore, the taking of defendants' property is not necessary; and that the questions presented by this appeal are now moot. To this motion to dismiss they have annexed copies of certain letters and documents indicating that plaintiff did renew its application for the angular crossing directly onto property owned by Texaco where the new refinery is under construction. It appears from the correspondence that the renewed application for angular crossing might meet favorable consideration under certain strict requirements, but permission has not been granted.
Appellant admits in answer to the motion to dismiss the appeal that it renewed *249 its application for an angular crossing because of the extreme pressures of time and possible tremendous financial loss if it is left without a river crossing. It contends that the angular crossing would be far more expensive and would entail many more serious engineering problems than the crossing sought in this proceeding. Its answer is supported by affidavits.
Under the exhibits and affidavits before us, the most that can be said of appellees' contention is that the issues in question might become moot if the angular crossing permit were actually issued. Counsel for defendants-appellees have said in their brief that they have been unable to find any decisions of the appellate courts of Louisiana on the question here presented. Appellant has cited G.E.M. Sundries Co., Inc. v. Johnson & Johnson, Inc., 269 F.2d 908 (9th Cir. 1959), holding that a court will not dismiss an appeal for "prospective mootness." But for a more obvious reason we think the motion is without merit. The issue of the alleged bad faith and abuse of discretion by plaintiff in selecting the route across defendants' property as opposed to plaintiff's contention that the route selection meets all requirements of the law as set forth in our jurisprudence renders the question anything but moot. Furthermore the issues raised by the appeal before us are of wide public concern and of vital interest to the oil and gas industry and the economy of the State of Louisiana, as evidenced by the filing herein of amicus curiae briefs by the Attorney General of the State of Louisiana and 28 law firms from all sections of the State. All the issues raised here by the motion to dismiss the appeal appear to have been raised and decided against dismissal in Ohio Oil Co. v. Fowler, 232 Miss. 694, 100 So. 2d 128 (1958).
The law favors appeals and except for clear and substantial cause the discretion of the appellate court should be exercised against dismissal for technical reasons. Emmons v. Agricultural Ins. Co., 245 La. 411, 158 So. 2d 594 (1963); Spiller v. Spiller, 170 La. 813, 129 So. 212 (1930); Sam v. Deville Gin, Inc., 143 So. 2d 838 (La.App. 3d Cir. 1962). The motion to dismiss the appeal is overruled.
This brings us to the issues raised by the appeal and answer. They are:
1. The right of plaintiff pipeline company to expropriate private property under the facts presented in this case.
2. The necessity and right of expropriation of that portion of defendants' property selected by plaintiff for pipeline right-of-way.
3. The value of the land in question and the compensation to be paid defendants, in event of a taking, for the servitude and temporary work area.
4. The amount of crop damage.
5. The consequential or severance damage to the remainder of defendants' property.
6. The expert witness fees taxable as costs.
We must disagree with the trial judge in his conclusion that plaintiff has failed to prove that the proposed pipeline would serve a public purpose. The distinction between this case and River & Rail Terminals, Inc. v. Louisiana Ry. & Nav. Co., supra, is so clearly evident to us that we do not find there the supporting authority which the trial judge found in it. Furthermore, we find error in the trial judge's reasons for judgment where he found that, since the pipeline would serve only one consumer (the Texaco, Inc., refinery under construction at Union) when placed in operation, it would therefore be for a private purpose.
There is abundant evidence in the record to establish beyond question that plaintiff is a common carrier petroleum pipeline authorized to do business in the State of Louisiana under the regulatory authority of the Louisiana Public Service *250 Commission. See LSA-R.S. 45:251, 45:252. Nor do defendants contend that plaintiff does not enjoy the right to expropriate private property under the authority of LSA-R.S. 45:254. Defendants' contention is that in the instant case plaintiff fails to meet the test of public purpose, which, counsel argues, means, in the absence of a specific constitutional qualification, actual public use, and that, accordingly, the constitutional requirement for the taking of private property has not been met.
We must reject defendants' argument on the ground that the evidence clearly shows that the pipeline in question meets the test of public purpose and that "actual public use" is not the criteria by which public purpose is determined.
The facts are that the pipeline when completed will transport crude petroleum, crude petroleum products, distillates, condensates, liquefied petroleum gas, and liquid hydrocarbons for hire from a point near Houma, Louisiana, where these products are gathered through feeder lines from 21 oil fields in South Louisiana, from over 5,000 royalty and mineral interest owners for refining into consumable products at the Texaco, Inc., refinery at Union, Louisiana. This transmission will be controlled by the State through the regulatory powers of the Louisiana Public Service Commission, which, among other things, insures nondiscriminatory tariff rates and acceptance into the line of any oil produced along the route. Furthermore, if any producer should want to use it for shipment of his crude petroleum to some outlet other than the Texaco Refinery, such as a barge terminal on the Mississippi River, he would be free to do so at the fixed tariff rates. There can be no requirement that shipment be only to Texaco's refinery.
Defendants point to LSA-R.S. 45:259 which provides in part as follows:
"* * * When there shall be offered for transportation more petroleum than can be transported immediately, it shall be equitably and ratably apportioned. The commission shall make and enforce general or specific regulations in this regard. Subject to these provisions, pipe lines shall accept ratably and equitably for transporation all marketable petroleum tendered; but no common carrier pipe line shall at any time be required to receive for shipment from any person, in excess of three thousand barrels of petroleum in any one day."
From this they argue "that even a common carrier can discriminate as to quantity when the tender exceeds only three thousand barrels of petroleum in any one day." The reason for this restriction is obvious. It is to protect the public right to use the pipeline by preventing a monopoly being acquired by one or a few producers. Rather than supporting defendants' attack upon the public character of the pipeline, we think it has the opposite implication.
Initially, the pipeline will be capable of carrying a greater amount of crude petroleum than that required by Texacoenough to insure ample facility to take care of foreseeable public needs. It is designed for expansion as the needs of the industry may require. At present there are no agreements to receive into the line petroleum products from any other source than the point of origin near Houma. Since pipeline transportation is much cheaper and more practical than shipment by truck, it is contemplated that the Thibodaux field, which is now shipping by truck to Houma for entry into plaintiff's pipeline there for transportation to Texas, will be serviced by this pipeline since it passes through that area of production. This probability is more likely since the line to Texas has already reached its maximum capacity. The use of the line to those producers on a nondiscriminatory basis is insured by our law. That this use is potential rather than actual does not make the pipeline any less a common carrier serving a public purpose, *251 since the right of the public to use it without discrimination is assured.
It could hardly be argued seriously that a pipeline which distributed a product such as natural gas or fuel oil to 5,800 consumers in the general public from a single point of production would not be serving a public purpose. We can see no valid distinction between a distributing pipeline and one which serves 5,800 private producers, members of the general public, by transporting their crude product to a single refinery where it is converted into a consumable product. The only difference is the direction of the movement of the commodity through the pipeline.
Much has been said in the briefs of counsel about "public policy," and defendants point to the failure of Louisiana to write into its constitution a specific expression of public policy regarding certain industries and resources, as other states have done. From this it is argued that the stringent restrictions of Article 1, Section 2 and Article 4, Section 15 have not been relaxed. We fail to see the point of this argument, since the ultimate purpose of this litigation is to protect the defendants by requiring a judicial determination of whether the constitutional principles have been met in applying LSA-R.S. 45:251-45:265 to the factual situation of this case.
The tremendous public benefits derived from the petroleum industry in the State of Louisiana are too well-known to warrant discussion. Perhaps no other resource is more important to the State's economy, and the public carrier pipelines which serve that industry are public utilities without which this all-important industry could not have been developed to its present significance. The public advantage resulting from an enlargement of the resources of the State, increasing available industrial energy and promoting the productive powers of a considerable number of citizens, was recognized by our Supreme Court as a contribution to the welfare and prosperity of the community, and was held to be sufficient proof of public purpose to justify the taking of private property by expropriation. Calcasieu & So. Ry. v. Bel, 224 La. 269, 69 So. 2d 40 (1953).
The Bel case involved the taking of private property for a spur track from a main line of a railroad to a privately owned sand and gravel pit. The plaintiff railway and the gravel pit were owned by the same parent company, a relationship closely analogous to that existing here between Texaco, Inc., and The Texas Pipe Line Company. The primary purpose in building the spur track was to serve the gravel and sand pit owned by plaintiff. It was shown that upon completion of the spur it would be open to the use of any persons for shipment of freight. The Court distinguished that case from River & Rail Terminals, Inc. v. Louisiana, Ry. & Nav. Co., supra, and held that a public purpose was shown and the taking would be for purposes of public utility. Certainly no less public advantage would result from the completion of the pipeline in this case.
The important distinction between the Bel case and the River & Rail case is the fact that in the lattera suit in trespass brought against the defendant railroad which had surreptitiously built a spur track across plaintiff's 40-foot wide parcel of propertythe spur led from the main track to a private industry; and there was no possible way for it to serve the public. The Court there said:
"The evidence clearly shows that the spur track of defendant company serves no other enterprise but the New Orleans Refining Company, and that it was constructed solely for the purpose of enabling defendant company to handle tank cars shipped out by the refinery.
"There is nothing in the record to show that the public has ever used the spur track of defendant company, or that defendant company's spur track will accommodate *252 a number of plants on the river front, and will be open to all other business enterprises, present and future, in the same vicinity. The evidence fails to establish, in our opinion, that the entire public has the right to use the spur track, constructed by defendant company to the plant of the New Orleans Refining Company.
"It is well settled that there must be a general public right to a definite use of the property, as distinguished from a use by a private individual or corporation which may prove beneficial or profitable to some portion of the public. [Citations omitted.]" 171 La. at 232, 233, 130 So. at 340.
We think the Bel case is much more pertinent to the factual situation in the instant case and will follow the authority of that opinion. See also Interstate Oil Pipe Line Co. v. Friedman, 137 So. 2d 700 (La.App.3d Cir. 1962), and Louisiana Power & Light Co. v. Charpentier, 165 So. 2d 614 (La.App. 1st Cir. 1964).
In his reasons for judgment, the trial judge quoted at length from United Gas Pipe Line Co. v. Blanchard, 149 So. 2d 615 (La.App. 1st Cir. 1963). It was factually established there that gas service had been available for five years for both domestic and commercial consumers, including the two consumers proposed to be served by a new pipeline. The court held that plaintiff had failed to prove public demand or necessity. The Blanchard case was held inapplicable by the same court in the Charpentier case on a factual distinction which is equally fitting here.
The public purpose is no less served because the pipeline initially will deliver to only one consumer. If this were reason to reject its qualification as a public utility carrier, it would be very difficult, if not impossible, for any new common carrier pipeline for delivery of crude oil to a refinery to qualify, for we may fairly assume they are initially connected to only one refinery. It is not the number of persons who initially contract for use of the line, nor the number who might actually use it at any given time, which determines its public character, but rather the extent of the right to its use by the public. City of New Orleans v. New Orleans Land Co., 173 La. 71, 136 So. 91 (1931); Kansas City, S. & G. Ry. v. Louisiana W. R. R., 116 La. 178, 40 So. 627 (1905); Gulf States Util. Co. v. Callahan, 65 So. 2d 608 (La.App. 1st Cir. 1953); Chicago G. W. Ry. Co. v. Jesse, 249 Minn. 324, 82 N.W.2d 227 (1957); Dotson v. Atchison, T. & S. F. Ry., 81 Kan. 816, 106 P. 1045 (1910); State ex rel. Ami Co. v. Superior Court, 42 Wash. 675, 85 P. 669 (1906); 2 Nichols, Eminent Domain § 7.2(1) (3d ed. 1963); 26 Am.Jur.2d, Eminent Domain § 31 (1966).
Defendants alternatively plead in the event of reversal of the trial court on the issue of the right of plaintiff to expropriation, which was the only issue decided below, the case be remanded for decision of all the remaining issues by the trial court. They do recognize, however, the authority of this court to adjudicate all issues, and we are not impressed by the argument why we should not do so.
This is a matter of great importance and public concern as we have pointed out above. There is a tremendous investment involved in plaintiff's pipeline and a multimillion-dollar refinery nearing completion dependent upon this pipeline for its crude petroleum. The ends of justice would be served by the exercise of our authority to render final judgment on all issues if the record before us is complete enough to do so.
Before considering the remaining issues, it will be helpful to have before us a map of the general area in question. We have prepared and reproduced below a sketch of that section of the Mississippi River and abutting property from exhibits on file in the record. We have omitted from this *253 sketch many notations and markings not necessary to the purpose here intended. We make no claim to cartographical perfection.
*254 For further clarification we reproduce below a map identified as Exhibit A and annexed to plaintiff's petition which shows accurately on larger scale the exact location of the proposed permanent right-of-way and the temporary construction right-of-way.
We now address ourselves to the necessity for the taking of the specific property sought by plaintiff and defendants' contention that the selection was arbitrary and an *255 abuse of discretion since other suitable routes are available. This very issue was raised and the fundamental concepts which must be applied in resolving it were fully discussed in Central Louisiana Elec. Co., Inc. v. Covington & St. Tammany Land & Improvement Co., 131 So. 2d 369 (La.App. 1st Cir. 1961).
Here the defendants contend that plaintiff was arbitrary and abused discretion in that it should and could have located its west bank terminus from which the river crossing was to be made at a point farther upstream, directly across from the Texaco Refinery. They further contend that an angular crossing could be made from the Ewen property, entering the Texaco property at some point north of the James property, thus avoiding crossing any private property on the east bank. This is the route identified as Location "B" on the above map. (Figure 1.)
Mr. Robert J. Evans, a graduate licensed civil engineer and an executive of the plaintiff company, testified concerning the methods and procedures employed in locating the route of the pipeline in question. It would serve no good purpose to attempt to summarize the detailed procedures to which he testified. Suffice it to say that they were almost identical to those used by the engineers in Texas Eastern Transmission Corp. v. Bowie Lumber Co., 176 So. 2d 735 (La.App. 1st Cir. 1965), and in Central Louisiana Elec. Co., Inc. v. Covington & St. Tammany Land & Improvement Co., supra, as described in some detail by the courts in both cases. After the company engineers made their preliminary decisions about the location, direction, and terminal points for the river crossing, plaintiff then employed Pyburn and Odom, a well-known and reputable firm of engineering consultants with extensive knowledge and experience in regard to the Mississippi River in the State of Louisiana. In a detailed report on the proposed river crossing, that firm concurred in the selection made by plaintiff's engineers and recommended as the most desirable crossing the one indicated as Location "A" on the above map. (Figure 1.)
The engineers preferred Location "A" over Location "B" for several reasons. The line of the pipe at Location "A" is much more nearly perpendicular to the flow of the river, as required by the United States Corps of Engineers whenever possible. Being a shorter, more direct crossing it would cost an estimated $40,000 less than a crossing at Location "B". The flow of the current in the river at that point is from the east bank downward toward the west bank and would more likely cause "scouring" of the river bottom at Location "B" than at Location "A". There are troughs in the river bottom of greater depth near the east bank along Location "B". Upkeep would be more costly and repair more likely because of the greater length at Location "B".
Mr. Evans testified as follows:
"A * * * as I stated in previous testimony, when the decision to cross the river where we are now proposing to cross it was made in the early part of the year, and on that basis we then attempted to negotiate with both the James heirs and the Steins, the owners of the Stein property, for the right to cross their property either on one side or the other of the property line separating them. We were not successful in negotiating with either one of them for a right of way, so it was then that we compromised on what we thought was the best engineered crossing and decided to attempt to make an angle crossing across the Mississippi River to the Texaco property in order to avoid litigation with either one of these landowners and to expedite the matter. So on June 11 we applied to the Corps of Engineers for an angle crossing and they advertised it as they do and then we received a letter from the Corps of Engineers *256 on July 7 refusing to grant us an angle crossing across the Mississippi River to the Texaco property and telling us that it would be necessary for the crossing to be approximately ninety degrees (90) with the course of the river. So it was then that we knew that we were going to have to deal with the landowners on the east side of the river and we felt that it was necessary to go onto the Stein property because this was the closest to a ninety degree (90) crossing with the course of the river, as I testified before. So we then attempted again to negotiate and were unsuccessful in that, which has brought about this suit, and then we applied to the Corps of Engineers for a crossing to the Stein property on July 15, of 1965."
The argument that plaintiff might proceed up the west bank to a point opposite the Texaco Refinery and there make a direct crossing cannot prevail. In the first place, we think it has been proven by expert testimony that the crossing at Location "A" meets the test of sound engineering practice. In the second place, this would require taking of other private property involving a number of factors no less important to the property owners on the west bank than those on the east bank. These factors were considered by plaintiff's engineers, and the crossing selected was found to be more feasible.
In Central Louisiana Elec. Co., Inc. v. Covington & St. Tammany Land & Improvement Co., supra, the court said:
"Regarding the general subject matter of expropriation the jurisprudence of this state has evolved certain fundamental concepts and rules which have been repeated on innumerable occasions. One such cardinal principle is that in the location of rights-of-way considerable discretion is vested in the expropriating authority and the courts will not disturb or interfere with the exercise thereof in the absence of fraud, bad faith or conduct or practices amounting to an abuse of the privilege. [Citations omitted.]
"It is also well settled that availability of other and alternate routes is of no concern to the property owner whose land is sought to be expropriated provided the location selected fulfills the needs and requirements of the expropriator, meets the standards prescribed by sound engineering and economic practices, is neither arbitrarily nor capriciously chosen, and does not constitute an abuse of the discretionary right of selection. * * *" 131 So.2d at 375, 376.
The burden of proof is upon the defendants to show that the plaintiff is guilty of fraudulent practices, bad faith, or conduct amounting to an abuse of the privilege of expropriation. Texas Eastern Transmission Corp. v. Bowie Lumber Co., supra.
It is not the court's purpose so much to determine if plaintiff's engineers have exercised their discretion wisely, as if they have done so honestly. There is nothing in the record to indicate that the selection of Location "A" was not made honestly and in keeping with sound engineering practices. The defendants have failed to prove bad faith, fraudulent practice or conduct amounting to an abuse of the privilege of expropriation. Plaintiff is therefore entitled to expropriate the property in question.
With regard to quantum, two real estate appraisers testified for plaintiff and two for defendants. Their respective qualifications are similar and uncontested, and we consider them of equal competence as experts for the appraisal of the land in question. On the matter of compensation for the 1.06 acres taken for the permanent servitude, there is very little difference between the highest and lowest estimate of value. All of the appraisers employed the accepted method of use of comparable sales, *257 and some particular recent sales in the area were relied on by all the experts. The only variation which we consider significant is that Mr. Gerald Van Viator, one of the defendants' appraisers, included certain sales on the west bank of the river which we do not think are as nearly comparable as the sales of property of comparable acreage on the east side of the river. For many reasons the land value on the two sides varies significantly in the same general area.
The estimates of value of the 1.06 acres range from $1,240.20 to $1,606.96, the highest being that of Mr. Viator. Considering that his estimate was based in part on comparables on the west side of the river, we think that the estimate of defendants' other appraiser, Mr. Kermit Williams, $1,358, is more nearly correct. The average of the three lower estimates is slightly more than $1,300. We, therefore, conclude that defendants are entitled to $1,350 for the 1.06 acres, and judgment should be entered accordingly.
Defendants are entitled to the rental value of that portion of their property required for a temporary construction right-of-way, because they will be deprived of its crop value for one year. An amount of $146.95 has been accepted by all the appraisers as reasonable, based on a 6 to 8 percent per annum return on the dollar value of that parcel. Defendants are therefore entitled to judgment for this amount.
The question of an award for damage to existing crops on the land involved in both the permanent and temporary servitudes, while of little consequence when compared with the total investment here involved, has had our serious consideration. Plaintiff's claims and right-of-way agent, Mr. Kenneth H. Woodward, testified to making an offer of $1,116 for this item when he was attempting to negotiate for the servitudes. What plaintiff was willing to pay for this item in the hope of avoiding litigation and costly delay cannot be accepted as an indication of its actual value. The only evidence we find in the record to support this claim is a stipulated agreement that Kermit Coulon, an agricultural expert who had been summoned to testify for defendants, would not be called as a witness, but that if he had testified it would be to the effect that the damage to the sugar cane crop "would not have been more than $900."
It is agreed by all appraisers that the value of the land in question for agricultural purposes is $400 per acre. We find in the record photographs offered as evidence by defendants showing a standing crop of sugar cane. We observe in these photographs that the sugar cane cultivation is only on that portion of the right-of-way which lies east of the state highway which runs parallel to the levee. That portion of the right-of-way which crosses the highway, the levee, and the batture to the mean low water line of the river is not under cultivation. Therefore, the area covered by the sugar cane is considerably less than the whole of the 2.63 acres involved in the permanent and temporary servitudes.
It is incredible that the value of one year's crop of sugar cane is worth approximately twice the total value of the land on which it is grown. Since the only testimony is that the crop is worth "not more than $900" we interpret that to mean also that it could be worth lessbut how much less we have no expert knowledge or testimony on which to base an opinion. Counsel for plaintiff have raised this point in their brief, but they did not offer any testimony at trial to contradict the $900 evaluation, and by their stipulation they waived the right to cross-examine the expert. While the figure is unrealistic, it is the only expert evaluation we have before us, and defendants will be awarded $900 for the crop damage.
The question of severance or consequential damage has given us great concern. The right-of-way will extend along the line between defendants' property and that identified as the James property. The taking *258 of 30 feet from defendants' land along this line will not cut defendants' property into separate tracts, hence there is no severance in the literal meaning of the word. However, in expropriation cases, severance and consequential damages are terms frequently used in the same meaning. The issue of damage here, strictly speaking, is that caused to defendants' remaining property as a consequence of the taking of this servitude for use as a pipeline right-of-way along its northern boundary.
That portion of defendants' property bounded on the south by the Sunshine Bridge right-of-way; a railroad on the east; the pipeline and Texaco property on the north; and the Mississippi River on the west, contains 85.80 acres of agricultural land. The question of consequential damage is limited to this portion of defendants' remaining property.
The distance from the bridge to the pipeline has been estimated by various witnesses as being 1,300 to 1,700 feet. The actual distance from the north line of Section 17 separating the James and Stein tracts to the center of the bridge is 1,705 feet. Therefore, we may reasonably assume that the actual distance between the pipeline and the nearest physical structure of the bridge is approximately 1,600 feet.
It is agreed between the parties that this property would have its highest value as an industrial site, and we have found that value to be $1,300 per acre. The experts are in hopeless disagreement on the consequential damage caused by the pipeline to the industrial value of the 85.80 acres. On the basis of the testimony in the record before us, it is not possible to determine the extent of this damage, but the plaintiff's experts seem to be closer to reality than the defendants' experts. Defendants' appraisers compute the damage at $900 per acre, being the difference between its industrial and its agricultural value. Obviously, this could only be based upon an assumption of total destruction of the industrial value of the property as a result of the location of the pipeline along its northern boundary. This is incredible and is not even entirely supported by their own testimony. On the other hand, plaintiff's appraisers testified that the remaining property will suffer no consequential damage whatever. They do not see the pipeline as being any interference with the industrial use of the 85.80 acres. This testimony is also unrealistic and cannot be accepted. There is no expert testimony in the record between these two extremes from which we can arrive at any conclusion as to the actual damage to the industrial value of the remaining property.
We have the testimony of Mr. Evans for plaintiff and of Captain S. K. Sprada, a licensed "Master of Rivers and First Class Pilot on the Mississippi River," who testified for defendants. As might be expected, Mr. Evans testified from the viewpoint, experience, and technical knowledge of an engineer and Captain Sprada from the viewpoint, experience, and technical knowledge of a river pilot. The engineer sees the pipeline buried in a trench 20 feet below the bottom of the river as posing no actual danger, and as no impediment to navigation, including the anchorage of ocean-going vessels. The river pilot sees the pipeline lying across the river bottom ready to snare any anchor which might be dropped near ita very real danger and a hazard to be avoided by the pilot. There is merit in both views and a substantial amount of testimony was taken to justify each opinion. Without attempting a detailed summary of the testimony, we will state the conclusions we have reached.
We think too much emphasis has been placed on the speculation that the unrestricted docking of ocean-going vessels would be the most important factor considered by a prospective purchaser. In the first place the 1,600-foot river frontage of the 85.80 acres is ample space within which to dock the largest vessels. Captain Sprada did not deny this and admitted ability to dock a sea-going vessel with a 50-foot clearance on each end, as is done at the *259 New Orleans wharves. He did explain the difficulties which would be encountered in anchoring a large vessel under certain conditions near the underwater crossing of the pipeline. The presence on the river bank at each terminus of the crossing of a sign saying "CautionPipeline CrossingDo Not Anchor" according to Captain Sprada would cause a pilot to avoid, if at all possible, dropping anchor within any conceivably unsafe distance. This we can and do accept as a factor to be considered. When questioned how deep an anchor digs into the river bottom he would not hazard a guess. He had no idea whether it could possibly engage a pipeline 20 feet below the river bottom. Mr. Evans testified that this would be physically impossible, and that the signs are required to be posted out of an abundance of caution. We believe the danger may be more psychological than real, but nevertheless it is an interference with the free anchorage of vessels. The psychological danger of pipelines has been recognized by our Supreme Court and considered an element of consequential damage. Texas Pipe Line Co. v. Barbe, 229 La. 191, 85 So. 2d 260 (1956); Texas Pipe Line Co. v. National Gasoline Co., 203 La. 787, 14 So. 2d 636 (1943). This element of damage was recognized and discussed by us in United Gas Pipe Line Co. v. New Orleans Terminal Co., 156 So. 2d 297 (La.App., 1963).
In arriving at the industrial market value of the land in question without the presence of the pipeline, the appraisers must certainly have considered all potential industrial usesits use by industries requiring docking of ocean-going vessels; by those requiring the docking of barges only; by those using both barge and deep sea vessel transportation; by those requiring no water transportation facilities; and many other factors. Any appraisal of the industrial market value with the presence of the pipeline which does not likewise take into consideration all these factors cannot be a sound estimate of value. The wide divergence of conclusions reached by the appraisers makes it evident that they did not consider all these factors in evaluating the land with the pipeline.
We are fully aware of the importance of time to plaintiff and the loss of time that may result by remanding the case for further trial, and have searched the testimony of all the witnesses in vain to find some basis upon which to arrive at a fair and equitable estimate of reduction in the industrial value of the land in question. As stated above, there is no estimate of damage between none and total, both of which we have rejected.
Plaintiff argues, and on good authority, that the burden is on the landowner to prove the damage to his remaining land and that proof must be with legal certainty. This proof must be positive and not based upon speculation and remote possibilities. City of Alexandria v. Jones, 236 La. 612, 108 So. 2d 528 (1959); State Through Dept. of Highways v. Tessitore, 178 So. 2d 501 (La.App. 1st Cir. 1965); United Gas Pipe Line Co. v. New Orleans Terminal Co., supra; Texas Gas Transmission Corp. v. C. M. Thibodeaux Co., 148 So. 2d 337 (La.App. 1st Cir. 1962).
We must hold that the defendants have proved that there will be some consequential damage to a legal certainty, but they have not proved the extent of the damage. Their claim is based upon highly speculative and remote possibilities, conjecture and assumption. We do not believe the ends of justice would be served by granting plaintiff the right to expropriate defendants' land without just compensation, merely because the defendants have failed to prove precisely the extent of the damage. In the absence of some credible estimate of damage upon which we could rest a judgment, any figure which we might assume to be equitable and just would be purely arbitrary.
When an appellate court concludes there are some severance damages, but there is no competent evidence in the record *260 upon which an award can be based, the case should be remanded to give the landowner the opportunity to prove the extent of such damages. Texas Gas Transmission Corp. v. Broussard, 234 La. 751, 101 So. 2d 657 (1958); Texas Pipe Line Co. v. Barbe, supra; State Through Dept. of Highways v. Reuter, 175 So. 2d 316 (La.App. 4th Cir. 1965); United Gas Pipe Line Co. v. New Orleans Terminal Co., supra.
In State Through Dept. of Highways v. Reuter, supra, this Court considered a problem in computing severance damages similar to that posed by the instant case. The plaintiff Highway Department took the position there was no severance damage due to loss of access, while the defendant based his only estimate of severance damage on a total loss of access. We found there was only a partial loss of access and remanded the case for further testimony on this point, reasoning: "* * * any damage which we might attempt to assess on account of partial loss of access, which we find as a fact to exist, would, obviously, not be supported by any evidence before us."
Texas Pipe Line Co. v. Barbe, supra, involved severance damages to two tracts of land as a result of a pipeline crossing the properties. As in the instant case, the defendants' experts testified that the remaining land was totally destroyed for industrial purposes and that the damages should be the difference between the value of the land for industrial purposes and its value for agricultural purposes; while the plaintiff contended there was no severance damage at all. For one tract, the trial judge awarded defendant the total difference between the market value of the land for industrial and agricultural purposes; and for the second, larger tract, 15 percent of the difference between the market value for industrial and for agricultural purposes. On the first rehearing, the Supreme Court reversed the award for severance damages because it held the expert testimony was conflicting and the damage speculative and remote, the defendants having failed to prove by a preponderance of the evidence that the adjacent land would be damaged by a pipeline right-of-way. On the second rehearing, the Court found there was some severance damage but the award was excessive and the percentage method used by the trial judge was "legally incorrect." However, it reasoned that in the interest of justice the case should be remanded to permit defendants to establish severance damages by competent evidence, the Court concluding:
"* * * To make ourselves perfectly clear, defendants must effectively show the market value of each tract immediately before and immediately after the expropriation in order to establish the quantum of their severance damages." 229 La. at 220, 85 So.2d at 271.
When the Supreme Court termed the percentage method used by the trial court "legally incorrect" we conclude that it did not mean that severance damages could not be computed on the basis of a percentage of loss of market value over an entire tract affected, but rather that there was no evidence in that particular record upon which an accurate percentage could be based. In fact, in Tennessee Gas Transmission Co. v. Primeaux, 100 So. 2d 917 (1958), the First Circuit upheld an award based upon a 5 percent decrease in market value over an entire tract and distinguished the Barbe case because it found severance damages were fixed with sufficient legal certainty so that a remand for additional testimony was not necessary. A writ of certiorari was denied by the Supreme Court.
We pretermit the question of taxation of expert witness fees as costs in view of our decision to remand on the issue of consequential damage.
The defendants' exception of no right or cause of action predicated on the contention that plaintiff failed to file in evidence a certificate of necessity has not been argued nor briefed. This is an intrastate *261 pipeline and defendant has not pointed to any federal agency having regulatory authority over it, nor has any failure to comply with state requirements been pointed out to us. We assume this exception has been abandoned, but, if not, it is overruled.
The judgment rejecting plaintiff's right of expropriation of defendants' land, more particularly described in its petition and Exhibit A annexed thereto, and dismissing its petition is reversed. The judgment fixing expert witness fees and taxing same as costs is set aside. The case is remanded for further trial and judgment in accordance with the specific holdings and views herein expressed. The trial on remand shall be limited exclusively to the issue of quantum of consequential damage to defendants' remaining 85.80 acres and the issue of expert witness fees. Judgment shall be rendered by the trial court consistent herewith. Costs of this appeal shall be paid by defendants-appellees, all other costs to await final judgment.
Reversed; remanded with instructions.
NOTES
[1] LSA-R.S. 45:251-45:265 defines petroleum pipelines as common carriers, provides control and regulation by the Louisiana Public Service Commission, grants the right to expropriate private property, and provides certain incidental procedures and penalties.
[2] LSA-Const. Art. 1, § 2 provides that private property shall not be taken or damaged except for public purposes after just and adequate compensation has been paid.
[3] LSA-Const. Art. 4, § 15 provides that no vested rights shall be divested unless for public utility and for just and adequate compensation previously paid. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1447079/ | 979 F. Supp. 454 (1997)
Joe JENKINS, Plaintiff,
v.
FARMINGTON CASUALTY COMPANY, Porter's Insurance Agency, Inc. and Aetna Casualty and Surety Company, Defendants.
No. 3:97CV328LN.
United States District Court, S.D. Mississippi, Jackson Division.
July 10, 1997.
*455 Frank D. Stimley, Craig D. Bluntson, Jackson, MS, for Plaintiff.
William Bruce Parker, Hamilton & Linder, Meridian, MS, Roger C. Riddick, Craig Robert Sessums, Upshaw, Williams, Biggers Beckham & Riddick, Jackson, MS, for Defendants.
G. Todd Burwell, Kirkland & Barfield, Jackson, MS, for Defendant Farmington Cas. Co.
MEMORANDUM OPINION AND ORDER
TOM S. LEE, Chief Judge.
This cause is before the court on the motion of plaintiff Joe Jenkins to remand the case to the Circuit Court of Hinds County, Mississippi, from which it was timely removed by defendants Farmington Casualty Company (Farmington) and Aetna Casualty and Surety Company (Aetna) on the ground that plaintiff, a Mississippi resident, has fraudulently joined as a defendant a Mississippi company, Porter's Insurance Agency, Inc. (Porter's), in order to defeat diversity jurisdiction. Defendants have all responded in opposition to plaintiff's motion and the court, having considered the motion and responses, concludes that the motion to remand is not well taken and should be denied.
On September 25, 1995, defendant Farmington issued a policy of insurance to Joe Jenkins d/b/a Church's Fried Chicken which covered Jenkins' Church's Fried Chicken restaurant in Canton, Mississippi. Several months later, on February 2, 1996, a fire occurred at the insured location which resulted in fire and smoke damage to the building. Four days later, on February 6, a second fire occurred which plaintiff alleges totally destroyed the property. Following the fires, plaintiff made a claim under his policy for the losses caused by the fires. When no payment was forthcoming, he filed the present suit in state court on March 3, 1997 against Farmington, Aetna[1] and Porter's, a local insurance agency through which the policy was acquired, alleging generally that although he had performed all conditions required of him by the policy and had demanded payment of full benefits, "the Defendants have wrongfully, intentionally, and willfully refused and continue to refuse to pay the benefits due the Plaintiff under the policy of insurance." More specifically, he alleged that Farmington and Aetna have conducted a grossly inadequate investigation of his claim and have willfully failed to make a realistic evaluation of the claim or to provide plaintiff with a justifiable basis for denying his claim, and further failed (until only very recently) to make payments under the policy to the loss payee as required by Mississippi law. And he charges Farmington has acted in bad faith by denying his claim for benefits, refusing to timely apprise him of its intentions respecting the claim and failing to inform him of any reasonable or justifiable basis for denying the claim. For its part, Farmington asserts that it has not actually denied plaintiff's claim, but rather has thus far declined payment for a number of reasons, including the facts that (1) there is evidence that the fires *456 were intentionally set, (2) plaintiff has failed to provide proper proofs of loss as required by the policy, and (3) plaintiff has failed to submit to an examination under oath and has thereby violated his duty of cooperation.
With respect to Porter's, plaintiff alleges that he had contracted with Porter's to place his insurance "with a reputable company which would insure his properties and provide prompt, quality service in the event of loss," and that Porter's, in violation of this duty, placed the coverage with a company that he "knew or should have known would be unable to meet its contractual obligations."
As an initial matter, plaintiff argues that removal was not proper because all defendants did not join in the notice of removal. More to the point, he states that the case must be remanded because one of the defendants, Porter's, did not sign the notice. However, as this court has previously recognized, it is not necessary that the allegedly fraudulently joined defendant join with the other defendants in the removal petition. Moore v. Interstate Fire Ins. Co., 717 F. Supp. 1193, 1195 (S.D.Miss.1989). Plaintiff's position is without merit.
In determining whether removal was proper based on the alleged fraudulent joinder, the court must decide whether plaintiff has any possibility of establishing a valid cause of action against Porter's, the sole nondiverse defendant. See Carriere v. Sears, Roebuck and Co., 893 F.2d 98, 100 (5th Cir. 1990) (question is whether plaintiff has any possibility of recovery against the in-state defendant). See also Tedder v. F.M.C. Corp., 590 F.2d 115, 117 (5th Cir.1979) ("If there is no arguably reasonable basis for predicting that state law might impose liability on the resident defendants under the facts alleged, then the claim is deemed fraudulent"). In making this determination in this case, the court has, as it must, resolved "all disputed questions of fact and all ambiguities in the controlling state law ... in favor of the non-removing party," but nevertheless concludes that plaintiff has no possibility of recovery against Porter's.
Precisely what is meant by plaintiff's allegation that Porter's failed to place his coverage with a "reputable" company is unclear from his complaint.[2] In his memorandum in support of his motion, plaintiff alluded to Farmington's "ability to pay" as an issue, yet he has not alleged that Farmington has not paid his claim because it lacks the ability to do so. Rather, a review of his complaint would seem to suggest plaintiff's position to be that Farmington is unwilling, rather than unable to pay.
If there were an allegation in the pleadings or evidence that Farmington has failed to pay plaintiff's claim because it lacks the financial resources to do so, then plaintiff would likely have a viable claim against Porter's, if, that is, he could demonstrate that at the time Porter's secured the Farmington policy for plaintiff, Farmington's financial condition was such that it rendered Farmington an unreasonable risk. Defendants do not dispute that, for they acknowledge that while an insurance agent is not the guarantor of the financial condition or solvency of the company from which he obtains insurance, "[h]e is required ... to use reasonable skill and judgment [in his placement of coverage] with a view to the security of indemnity for which the insurance is sought, and a failure in that respect may render him liable to the insured for resulting losses." Classic Motel, Inc. v. Coral Group, Ltd., 833 F. Supp. 593, 603 (S.D.Miss.1993) (quoting Higginbotham & Assoc., Inc., et al. v. Greer, 738 S.W.2d 45, 46 (Tex.Ct.App.-Texarkana 1987)). Defendants point out, though, that there is no allegation or evidence that Farmington is other than financially sound. Indeed, in this regard, while plaintiff notes that Farmington experienced losses in the years 1995 and 1996 of approximately $15,000,000 and 37,000,000 respectively, the unrefuted evidence establishes that Farmington, which has been fully admitted, approved and licensed by the Mississippi Department of Insurance to do business in Mississippi, had, at the end of *457 1996, a policy surplus in excess of $132,000,000.[3] Clearly, then, the company has the financial ability to pay the plaintiff's claim,[4] and to the extent that plaintiff is alleging that Porter's breached a duty to plaintiff by "plac[ing] the insurance with a company that he knew or should have known would be unable to meet its contractual obligations" due to insolvency, he has no possibility of recovery due to the lack of factual support for the claim.
Since Farmington's ability to pay is not at issue, then there is arguably presented the question of whether there is any possible basis for holding Porter's liable for Farmington's refusal to pay.[5] As regards such a potential claim, the court would first note that even if, as plaintiff implicitly contends, Porter's was plaintiff's agent for purposes of procuring insurance coverage, Porter's was not a party to the insurance contract between Farmington and plaintiff and therefore, under well-established Mississippi law, Porter's is not liable under the contract for the payment of benefits. See Patton v. Aetna Ins. Co., 595 F. Supp. 533 (N.D.Miss.1984). The only party which might have had (or have) an obligation to pay benefits was Farmington. The court does recognize, of course, that under Mississippi law, insurance agents and adjusters, while not liable for ordinary negligence in performing their duties on behalf of the insurers, can "incur independent liability when [their] conduct constitutes gross negligence, malice, or reckless disregard for the rights of the insured." Bass v. California Life Ins. Co., 581 So. 2d 1087, 1090 (Miss. 1991) (quoting Dunn v. State Farm Fire & Casualty Co., 711 F. Supp. 1359 (N.D.Miss. 1987)). Here, however, plaintiff has not alleged that Porter's performed any role in the investigation of his claim or was in any way involved in the decision to deny benefits, and he certainly has not alleged that Porter's committed any act in the claims evaluation or otherwise which would constitute "gross negligence, malice, or reckless disregard of the rights of the insured."
That leaves only one possible theory of recovery, and that is, that at the time it secured the coverage from Farmington, Porter's knew or had reason to know that Farmington would not promptly evaluate and pay plaintiff's valid claims for benefits.[6] Whether this is in fact asserted by plaintiff as a basis for recovery is difficult to discern, for while plaintiff's rebuttal memorandum is limited solely to the issue of Farmington's financial standing, plaintiff's argument in his initial memorandum does not foreclose the possibility that this is at least an alternative theory of liability. In that first brief, plaintiff cited a number of cases which have recognized that an insurance agent can be held liable if his negligence in the procurement of coverage defeats the insurance. See Simpson v. M-P Enterprises, Inc., 252 So. 2d 202, 207 (Miss. 1971) (if an agent or broker, with a view of *458 being compensated, agrees to procure insurance for another and through fault or neglect fails to do so, he will be liable for resulting damage); Ritchie v. Smith, 311 So. 2d 642, 646 (Miss.1975) ("An agent owes the duty to his principal to exercise good faith and reasonable diligence to procure insurance on the best terms he can obtain, and any negligence or other breach of duty on his part which defeats the insurance he procures will render him liable for the resulting loss."). These cases recognize that where the policy procured does not provide the coverage requested and required by the insured, or simply fails altogether to procure any coverage, the agent can be held liable for negligence in the procurement of insurance. As to the agent's duty in procurement, the court in Ritche explained as follows:
[A]n agent must faithfully carry out the instructions given him by his principal, his duty being not merely to obtain a policy, but holding himself out as being qualified to procure insurance, the agent is required to exercise the particular skill reasonably to be expected of one in that occupation and to have adequate knowledge as to the different companies and the variety of terms available with respect to the undertaking he has assumed.
Id. at 646. Even assuming that it is this duty, "the duty to have adequate knowledge as to the different companies," upon which plaintiff predicates his cause of action, he has no possibility of recovery since plaintiff has not alleged, intimated or adduced evidence that Farmington, which, again, had been licensed and approved by the State Department of Insurance to write coverage in this state, had a "reputation" for denying valid claims. For this, and all of the foregoing reasons, the court concludes that defendants have satisfied their burden to establish the fraudulent joinder of Porter's. It is, therefore, ordered that plaintiff's motion to remand is denied.
NOTES
[1] The court is unsure as to the basis upon which plaintiff has sued Aetna. The court recognizes that the complaint alleges that Aetna, along with Farmington, has failed to adequately investigate and has wrongly refused payment of plaintiff's claim; but Aetna did not issue the subject policy and there is otherwise no indication of any basis upon which Aetna might be liable.
[2] Plaintiff observes in his affidavit that he had never heard of Farmington before Porter's placed his insurance with that company. The court presumes that plaintiff's unfamiliarity with the insurer is not advanced as a ground for, or evidence that the company was not "reputable."
[3] This is established by Farmington's 1996 annual statement, which was submitted by defendants in response to plaintiff's motion. The Fifth Circuit has specifically approved the use of a summary judgment-like procedure in deciding whether a party has been fraudulently joined, which includes the consideration of evidence beyond the pleadings. See Carriere, 893 F.2d at 100.
[4] It is noted, too, that the financial information for the year ending 1996, while perhaps germane to the issue of Farmington's current ability to pay, is not, in fact, relevant to the issue of what Porter's "knew or had reason to know" when it placed the coverage, for the data which would have been available to Porter's at the time he obtained this coverage would have been that for 1995. And, while the 1996 annual statement reflects that Farmington had losses of $15,000,000 for 1995, it also shows that the company had a policy surplus of nearly $170,000,000.
[5] This is not clearly an issue since plaintiff has alleged only that Porter's knew or should have known that Farmington would be "unable" to pay the claim. As the court has ruled out "inability" to pay as a viable basis for plaintiff's claim, then, there would seem to be nothing more to discuss. The court will assume, though, strictly for the sake of argument and in an effort to be comprehensive, that plaintiff contends that Porter's is liable for Farmington's unwillingness to pay.
[6] Though Farmington has indicated a number of reasons for its refusal thus far to pay plaintiff's claims, the court assumes for purposes of deciding this motion that plaintiff properly made his claim for benefits and that his claim was payable under the policy. See Carriere, 893 F.2d at 100 (requiring court to resolve contested fact issues in plaintiff's favor when analyzing claim of fraudulent joinder). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2283317/ | 961 F. Supp. 889 (1997)
Carl Stephen MOSELEY, Petitioner,
v.
James B. FRENCH, Warden, Central Prison, Respondent.
No. 6:97CV00171.
United States District Court, M.D. North Carolina, Winston-Salem Division.
April 14, 1997.
*890 Paul McCallister Green, Durham, NC, Jonathan Broun, Center for Death Penalty Litigation, Durham, NC, for Petitioner.
Valerie B. Spalding, N.C. Dept. of Justice, Raleigh, NC, for Respondent.
ORDER
ELIASON, United States Magistrate Judge.
Petitioner is a state prisoner facing capital punishment. He is seeking a writ of habeas corpus in this Court. Petitioner has filed a motion requesting the Court to determine the statute of limitation for filing a Section 2254 habeas corpus petition. (Pleading No. 12) The upshot of the motion is that petitioner wishes the Court to reevaluate its February 28, 1997 order that the petition be filed within thirty days and instead give petitioner until January 31, 1998 to file the petition.
Petitioner's motion relies heavily on application of the recent enactment of the Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA"), Pub.L. No. 104-132, tit. 1, April 24, 1996, and the new state law regulating execution settings. The amendments to the habeas corpus provisions of federal law now provide a one-year limitation period for filing a federal writ of habeas corpus. 28 U.S.C. § 2244(d)(1).[1] North Carolina has adopted an orderly procedure for scheduling *891 executions which takes into account the normal progression of the state, then the federal, post-conviction proceedings. On June 21, 1996, the General Assembly enacted the following provisions contained in N.C.G.S. § 15-194:
§ 15-194. Time for Execution.
In sentencing a capital defendant to a death sentence pursuant to G.S. 15A-2000(b), the sentencing judge need not specify the date and time the execution is to be carried out by the Department of Correction. The warden of the State penitentiary at Raleigh shall immediately schedule a date for the execution of the original death sentence not less than 30 days nor more than 45 days from the date of receiving notification of any one of the following:
(1) The United States Supreme Court has filed an opinion upholding the sentence of death following completion of the initial State and federal postconviction proceedings, if any; ... or
(6) Following State postconviction proceedings, if any, the capital defendant failed to file a timely petition for writ of habeas corpus in the appropriate federal district court, or failed to timely appeal or petition an adverse habeas corpus decision to the United States Court of Appeals for the Fourth Circuit or the United States Supreme Court.
In the normal case, state law now contemplates that execution will be set between 30-45 days after the United States Supreme Court has had a chance to review the federal habeas corpus proceedings. Petitioner points out these state statutory provisions are not open-ended because the ADEPA requires a petition to be brought within one year after the affirmance of his state court conviction, excluding tolling times for post-conviction review in state court. Petitioner's argument is that if he were not an indigent, he could wait to file his petition until the last day of the limitation period. However, because petitioner is an indigent and had to apply to this Court for counsel, he then becomes subject to this Court's directions with respect to the time for filing the habeas corpus petition. As a result, and as happened in this case, the Court may require the petition to be filed at a date much earlier than the last day of the one-year limitation period. Consequently, court appointed counsel may have less time to prepare the petition than retained counsel. Second, to the extent review concludes at an earlier time, indigents may be called upon to serve their sentence at an earlier time than non-indigents.
Before addressing these matters, the Court will first look at whether the one-year limitation period would, in fact, give petitioner until January 31, 1998 to file his petition if he had retained, instead of court appointed, counsel. For habeas corpus cases in states which have not satisfied the prerequisites of 28 U.S.C. §§ 2261-2266 for expedited procedures, the limitation period is set forth in 28 U.S.C. § 2244(d) which provides:
(d)(1) A 1-year period of limitation shall apply to an application for a writ of habeas corpus by a person in custody pursuant to the judgment of a State court. The limitation period shall run from the latest of-
(A) the date on which the judgment became final by the conclusion of direct review or the expiration of the time for seeking such review.
(B) [The date of removal of an unconstitutional impediment to filing.]
(C) [The date the Supreme Court makes a new constitutional right retroactive.]
(D) [The date the factual predicate of a claim could be discovered.]
(2) The time during which a properly filed application for State post-conviction or other collateral review with respect to the pertinent judgment or claim is pending shall not be counted toward any period of limitation under this subsection.
Petitioner and respondent agree that the one-year limitation period became applicable to petitioner on April 24, 1996, the day the AEDPA became effective. They also agree that seventy-seven days are excludable from that date to July 1, 1996, when the pending state post-conviction petition was dismissed. 28 U.S.C. § 2244(d)(2). Finally, they agree that 42 days are to be excluded (August 30-October *892 10, 1996) pursuant to Section 2244(d)(2) for the time the petition for certiorari was pending in the North Carolina Supreme Court. Respondent objects to the exclusion of any more time.
Petitioner urges the Court to consider the state post-conviction petition and supreme court certiorari proceedings as one process in order to exclude preparation time for the certiorari petition (59 days; July 2-August 29, 1996). He argues that this would be consistent with the treatment of the time for the trial and direct appeal. The Court rejects the analogy because the trial and direct appeal are not exclusionary events under Section 2244(d)(2). Rather, the judgment is simply not final and the limitation period does not start to run until after those events. The one-year period expresses Congress' judgment on the amount of time reasonably necessary to file the state and federal post-conviction motions. The one-year period is given for the very purpose of preparing petitions, motions, etc. and, therefore, cannot be considered a tolling event. The time is even shorter if a state satisfies the expedited review requirement of Sections 2261-2266.[2] Petitioner has not shown the time to be unreasonably short so as to violate his rights to due process under the Fifth and Fourteenth Amendments or his statutory right to counsel.
Next, petitioner wishes to exclude from the one-year limitation period the time from when he filed a motion for appointment of counsel in this Court, pursuant to 21 U.S.C. § 848(q)(4)(B), until such time as the order was granted. The Court rejects the argument because that motion is not a part of the state post-conviction or collateral process exempted by 28 U.S.C. § 2244(d)(2). As held in the Court's February 28, 1997 order, except in exigent circumstances, such a motion for counsel may not even be filed in federal court until the state post-conviction process, including petitions for certiorari, have been completed.
Alternatively, petitioner contends that the court should consider his motion for counsel tantamount to the commencement of his action, thereby tolling the further running of the limitation period, citing the Supreme Court's decision in McFarland v. Scott, 512 U.S. 849, 114 S. Ct. 2568, 129 L. Ed. 2d 666 (1994). The provisions of Section 848(q)(4)(B) permit the court to appoint counsel in a state death penalty case prior to the time that a Section 2254 habeas petition need actually be filed so the petitioner can have assistance for such filing. McFarland v. Scott, 512 U.S. 849, 114 S. Ct. 2568, 129 L. Ed. 2d 666. Petitioner argues that because the motion for counsel, in his view, commences a habeas corpus action, the time from the filing to the ruling on the motion should be excluded from the one-year limitation period.
*893 The rules governing the filing, processing, and disposition of Section 2254 habeas corpus petitions are set out in the Rules Governing Section 2254 Cases, Title 28, United States Code. Rule 11 provides: "The Federal Rules of Civil Procedure, to the extent that they are not inconsistent with these rules, may be applied, when appropriate, to petitions filed under these rules." Rule 3 of the Federal Rules of Civil Procedure provides: "A civil action is commenced by filing a complaint [or in this case a petition] with the court." Petitioner argues that McFarland v. Scott, 512 U.S. 849, 114 S. Ct. 2568, 129 L. Ed. 2d 666, determined that in a capital habeas corpus case an action is commenced by the filing of a motion for appointment of counsel. However, the Supreme Court actually held that a "post-conviction proceeding under Section 2254" was commenced by such a motion for purposes of the appointment statute, 21 U.S.C. § 848(q)(4)(B), and that a federal court has jurisdiction to enter a stay of execution to safeguard the statutory right to counsel.
The Supreme Court did not hold that the motion for counsel commenced a habeas corpus action for other purposes. Were it otherwise, then the commencement of an action would be different for indigent and non-indigent prisoners. The Rules Governing Section 2254 Cases do not make such a distinction, and petitioner fails to show any basis for concluding that indigent capital habeas petitioners should have special status under either those rules or the Federal Rules of Civil Procedure. See Baldwin County Welcome Center v. Brown, 466 U.S. 147, 104 S. Ct. 1723, 80 L. Ed. 2d 196 (1984) (right to sue letter in Title VII case). Rather, the only affect a motion for appointment of counsel has on the one-year limitation period is that the pending motion may justify application of equitable tolling should the time to file run out during the pendency of the motion. See 466 U.S. at 151, 104 S.Ct. at 1725-26 (citing Harris v. Walgreen's Distribution Center, 456 F.2d 588 (6th Cir.1972) (if time for complying with limitation period unreasonably short after decision on appointment of counsel, court should set a reasonable time for the filing)).
Moreover, adopting petitioner's position could have unwanted repercussions. If the request for the appointment of counsel constitutes the filing of a habeas petition for statute of limitation purposes, then those defendants proceeding under the expedited review procedure requirements of 28 U.S.C. §§ 2261-2266 would face serious consequences. The parties have only 120 days for pleadings, briefs, and hearings. 28 U.S.C. §§ 2266(b)(1)(B). The Court would have to severely restrict the time in which indigent prisoners could prepare and submit a habeas petition. In fact, in the Fourth Circuit, as a result of Fourth Circuit Judicial Council Order No. 113,[3] the same fate would befall petitioner in this case. Therefore, the Court declines to so construe the one-year limitation provisions of Section 2244(d) as requested by petitioner.
The Court finds that petitioner's time to file a petition does not expire until August 12, 1997 (July 1, 1997, plus 42 days of tolled time for the certiorari petition). The time taken to prepare a petition for certiorari to the state supreme court is not excluded. Nor is the limitation period tolled because of petitioner's motion for court appointed counsel. Furthermore, because the limitation period did not expire during the time the motion for counsel was pending and sufficient time remains to file a petition within the limitation period, there is no occasion to employ the doctrine of equitable tolling.
The remaining issue is when should the Court order the petition to be filed. Petitioner argues that if he had retained counsel he could file a petition at the very end of the one-year limitation period, here August 12, 1997. He requests the same discretion.
*894 A number of factors go into making the decision of when to require the petition to be filed. The primary one is that Congress has indicated a desire for an orderly but prompt disposition of death penalty cases by enactment of the AEDPA. This calls for as short a time as reasonably possible. However, to the extent a shorter time is given to file a petition, two things may occur. First, a petitioner's potential execution date may arrive sooner. Nevertheless, this consequence is speculative. The processing of cases through the judicial system is subject to various factors involving judicial availability, complexity of the issues, and other matters which can speed up or delay a case. Also, to the extent petitioner uses public resources in the form of appointed counsel, he should not expect to be wholly free of accountability and direction imposed by others. The second consequence would be that the appointed counsel would not have as much time within which to prepare the petition. However, mere length of time does not guarantee better quality work. It is often the case that a firm but reasonable schedule produces the best quality of work.
In light of the newness of the AEDPA and the attendant questions associated with implementing new and significant legislation, the Court finds that sixty days would be a reasonable time within which to prepare the habeas corpus petition. While it is true that petitioner's counsel have already been appointed for a little over a month, the Court also finds that the new issues raised by the AEDPA have already taken considerable time. Therefore, the Court will grant petitioner sixty days from the date of this order within which to file his petition and brief.
IT IS THEREFORE ORDERED that petitioner's motion for the Court to establish January 31, 1998 as the last day of the Section 2244(d) limitation period and the date on which petitioner must file a habeas corpus petition (pleading no. 12) is denied for reasons stated in the body of this Order, but that petitioner is granted sixty days from the filing date of this Order to submit his habeas corpus petition.
NOTES
[1] The Attorney General has already conceded that this case does not come under the expedited procedures of 28 U.S.C. §§ 2261-2266 for those states which have adopted standards for competency of appointed of counsel, etc. A shorter limitation period applies to those cases. See n. 3, infra.
[2] Those sections require a state to meet standards for the quality, appointment and payment of counsel. Inferentially, a shorter 180-day limitation was selected based on the assumption that under such a system counsel will be better prepared and able to file the petitions and briefs and, therefore require less time.
The 180-day limitation period is found in 28 U.S.C. § 2263 which provides:
§ 2263. Filing of habeas corpus application; time requirements; tolling rules
(a) Any application under this chapter for habeas corpus relief under section 2254 must be filed in the appropriate district court not later than 180 days after final State court affirmance of the conviction and sentence on direct review or the expiration of the time for seeking such review.
(b) The time requirements established by subsection (a) shall be tolled
(1) from the date that a petition for certiorari is filed in the Supreme Court until the date of final disposition of the petition if a State prisoner files the petition to secure review by the Supreme Court of the affirmance of a capital sentence on direct review by the court of last resort of the State or other final State court decision on direct review;
(2) from the date on which the first petition for post-conviction review or other collateral relief is filed until the final State court disposition of such petition; and
(3) during an additional period not to exceed 30 days, if
(A) a motion for an extension of time is filed in the Federal district court that would have jurisdiction over the case upon the filing of a habeas corpus application under section 2254; and
(B) a showing of good cause is made for the failure to file the habeas corpus application within the time period established by this section.
[3] Once a petition is filed, it becomes subject to Fourth Circuit Judicial Council expedited review policy that encompasses all death penalty cases, even those which are not subject to expedited treatment pursuant to 28 U.S.C. § 2261, et seq. The policy declares that all cases should be decided in the proscribed time period as if the State had adopted and implemented mechanisms with respect to attorney qualifications and appointments mandated by Congress for expedited proceedings. Council Order No. 113. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/819313/ | 155 F.Supp.2d 801 (2001)
FABRIQUE DE FER DE CHARLEROI S.A., Plaintiff,
v.
THE UNITED STATES, Defendant
and
Bethlehem Steel Corporation and U.S. Steel Group a Unit of USX Corporation, Defendant-Intervenors.
SLIP OP. 01-82, Court No. 98-02-00359.
United States Court of International Trade.
July 3, 2001.
*802 *803 Barnes, Richardson & Colburn, Washington, DC (Gunter von Conrad, Michael J. Chessler and Alyssa Chumnanvech) for plaintiff.
Stuart E. Schiffer, Acting Assistant Attorney General; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Velta A. Melnbrencis, Assistant Director); of counsel: Bernd G. Janzen, Office of the Chief Counsel for Import Administration, United States Department of Commerce, Washington, DC, for the United States.
Dewey Ballantine LLP, Washington, DC (Michael H. Stein, Bradford L. Ward and Frank J. Schweitzer) for defendant-intervenors.
OPINION
TSOUCALAS, Senior Judge.
Plaintiff, Fabrique de Fer de Charleroi S.A. ("FAFER"), moves pursuant to USCIT R. 56.2 for judgment upon the agency record challenging various aspects of the United States Department of Commerce, *804 International Trade Administration's ("Commerce") final determination, entitled Final Results of Antidumping Duty Administrative Review of Certain Cut-to-Length Carbon Steel Plate From Belgium ("Final Results"), 63 Fed.Reg. 2959 (Jan. 20, 1998). Specifically, FAFER disputes: (1) Commerce's use of FAFER's general commission as a proxy for FAFER's indirect selling expenses; and (2) Commerce's decision that FAFER's antidumping duties have been absorbed.
BACKGROUND
This case concerns the antidumping duty order on cut-to-length carbon steel plate imported to the United States from Belgium during the 1995-96 period of review ("POR"). See Antidumping Duty Order and Amendment to Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From Belgium ("Antidumping Duty Order"), 58 Fed.Reg. 44,164 (Aug. 19, 1993). Commerce published the preliminary results of the subject review on September 15, 1997. See Cut-to-Length Carbon Steel Plate From Belgium: Preliminary Results of Antidumping Duty Administrative Review, 62 Fed.Reg. 48,213. Commerce published the Final Results on January 20, 1998. See 63 Fed.Reg. 2959. FAFER initiated the case at bar against Commerce on February 18, 1998, and on April 30, 1998, this Court granted consent motion to Bethlehem Steel Corporation and U.S. Steel Group A Unit of USX Corporation ("Domestic Producers") to enter as defendant-intervenors.
JURISDICTION
The Court has jurisdiction over this matter pursuant to 19 U.S.C. § 1516a(a) (1994) and 28 U.S.C. § 1581(c) (1994).
STANDARD OF REVIEW
The Court will uphold Commerce's final determination in an antidumping administrative review unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law ...." 19 U.S.C. § 1516a(b)(1)(B)(i) (1994); see NTN Bearing Corp. of Am. v. United States, 24 CIT ___, ___, 104 F.Supp.2d 110, 115-16 (2000) (detailing Court's standard of review in antidumping proceedings).
A. Commerce's Use of FAFER's General Commissions as a Proxy for FAFER's Indirect Selling Expenses
1. Background
On August 19, 1993, Commerce published the Antidumping Duty Order covering merchandise subject to the review. See 58 Fed.Reg. 44,164. On September 17, 1996, Commerce duly initiated the review at issue. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 61 Fed.Reg. 48,882. On September 19, 1996, Commerce issued to FAFER its standard questionnaire instructing FAFER, among other things, to report various expenses that FAFER incurred in its home market and the United States, inclusive of FAFER's indirect selling expenses related to the United States sales. See Def.'s Mem. Opp. Pl.'s Mot. J. Agency R. ("Def.'s Mem."), Ex. 1. Later on, Commerce issued a supplemental questionnaire seeking additional information and clarifications. See Def.'s Mem., Ex. 3.
Both questionnaires provided very specific instructions with regard to the format in which Commerce expected FAFER to submit the information sought. See id., Ex. 1, 3. Responding to the questionnaires, FAFER did not identify FAFER's indirect selling expenses related to the United States sales in the way and with the specificity that Commerce requested. See Pl.'s *805 Br. Sup. Mot. Summ. J. ("Pl.'s Br.") at 10. FAFER, however, notified Commerce that the submitted data: (a) was derived from FAFER's internal "Cost of Production Analysis System" ("COPAS"); (b) did not "distinguish between direct and indirect labor costs" due to the structural deficiencies of COPAS, Pl.'s Reply Br. Supp. Mot. Summ. J. ("Pl.'s Reply") at 5 and 6, n. 7; and (c) provided the calculation of FAFER's general and administrative expenses ("G & A") that included employees wages and charges. See Pl.'s Br., App. 13.
Commerce was left unsatisfied with the information provided by FAFER. See Preliminary Results, 62 Fed.Reg. 48,213-14. During the review, Commerce determined that FAFER's United States sale was a constructed export price ("CEP") sale, that is, a sale of the subject merchandise to an unaffiliated purchaser through an intermediary, the price for which had to be adjusted under subsections (c) and (d) of 19 U.S.C. § 1677a (1994) to account for FAFER's various direct and indirect selling expenses. See Preliminary Results, 62 Fed.Reg. at 48,214; 19 U.S.C. § 1677a(b)-(d) (1994). Missing the information on FAFER's indirect selling expenses, Commerce resorted to the facts available in reaching the applicable determination. See Def.'s Mem. 33-38. Specifically, Commerce used FAFER's general policy commission rate as a proxy for FAFER's indirect selling expenses even though Commerce established that "FAFER paid no commission upon its sole [United States] sale to its subsidiary, Charleroi USA" ("Charleroi"). Id. at 37.
2. Exhaustion of Administrative Remedies
a. Contentions of the Parties
As a preliminary matter, Commerce contends that the issues of whether Commerce properly: (a) "double-counted [indirect selling] expenses"; and (b) refused to entertain the shortcomings of FAFER's accounting system, should not be examined by this Court because FAFER failed to question these issues before Commerce and, consequently, forfeited its right to judicial review. Def.'s Mem. at 28.
FAFER alleges that the issues were sufficiently presented for Commerce's consideration when FAFER: (1) stated the deficiencies of COPAS; and (2) pointed out that G & A calculation was made on the basis of employees wages and charges that have already been taken into account. See Pl.'s Reply at 6.
b. Analysis
The exhaustion doctrine requires a party to present its claims to the relevant administrative agency for the agency's consideration before raising these claims to the Court. See Unemployment Compensation Comm'n of Alaska v. Aragon, 329 U.S. 143, 155, 67 S.Ct. 245, 91 L.Ed. 136 (1946) ("A reviewing court usurps the agency's function when it sets aside the administrative determination upon a ground not theretofore presented and deprives the [agency] of an opportunity to consider the matter, make its ruling, and state the reasons for its action").[1]
*806 The purpose behind the doctrine of exhaustion is to prevent courts from premature involvement in administrative proceedings, and to protect agencies "from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties." Abbott Lab. v. Gardner, 387 U.S. 136, 148-49, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967); see also Public Citizen Health Research Group v. Commissioner, FDA, 740 F.2d 21, 29 (D.C.Cir. 1984) (pointing out that the exhaustion doctrine serves "four primary purposes: [(1)] it ensures that persons do not flout established administrative processes"; (2) "it protects the autonomy of agency decisionmaking"; (3) it aids judicial review by permitting factual development of issues relevant to the dispute; and (4) "it serves judicial economy by avoiding repetitious administrative and judicial factfinding" and by resolving sole claims without judicial intervention.)
While a plaintiff cannot circumvent the requirements of the doctrine of exhaustion by merely mentioning a broad issue without raising a particular argument, plaintiff's brief statement of the argument is sufficient if it alerts the agency to the argument with reasonable clarity and avails the agency with an opportunity to address it. See generally, Hormel v. Helvering, 312 U.S. 552, 61 S.Ct. 719, 85 L.Ed. 1037 (1941); see also Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed.Cir.1990). The sole fact of agency's failure to address plaintiff's challenge does not invoke the exhaustion doctrine and shall not result in forfeiture of plaintiff's judicial remedies. See generally, B-West Imports, Inc. v. United States, 19 CIT 303, 880 F.Supp. 853 (1995). An administrative decision not to address the issue cannot be dispositive of the question whether or not the issue was properly brought to the agency's attention. See, e.g., Allnutt v. United States DOJ, 2000 U.S. Dist. LEXIS 4060 (D.Md.2000).
In the case at bar, Commerce advised FAFER that common examples of indirect selling expenses are "inventory carrying costs, salesmen's salaries, ... product liability insurance [,] ... technical services [and] warranty repairs." See Def.'s Mem. at 27 (emphasis supplied). FAFER stated that its G & A costs included "employees wages [that have already *807 been taken into account,] ... [i]nsurance costs [and] ... research costs." Pl.'s Br.App. 13 (emphasis supplied). FAFER also notified Commerce that its accounting system did not "distinguish between direct and indirect" expenses. Pl.'s Reply at 6, n. 7, accord Def.'s Mem. Ex. 5. While Commerce chose to read these two statements as asserting neither that FAFER's "G & A costs ... included [FAFER's] indirect selling expenses," nor that FAFER's "financial accounting system precluded the identification of indirect selling expenses," Def.'s Mem. at 30, FAFER's responses sufficiently provided Commerce with an opportunity to address the issues. The Court, therefore, concludes that FAFER properly exhausted its administrative remedies and has the right to raise these issues to the Court.
3. Commerce's Resort to Facts Available
a. Contentions of the Parties
Commerce contends that "FAFER's failure to[:] (1) report [FAFER's United States] indirect selling expenses[;] and (2) explain why Commerce should [assume] ... that there simply were no such expenses, ... warranted an adjustment based upon the facts available." Def.'s Mem. at 36 (citing to Final Results, 63 Fed.Reg. at 2963). Domestic Producers similarly assert that Commerce's resort to facts available was justified in view of the shortcomings of the information submitted by FAFER. See Domestic Producers' Resp. Pl.'s R. 56.2 Mot. J. Agency R. ("Domestic Producers' Resp.") at 10-11.
FAFER argues that Commerce was not entitled to resort to the facts available because: (1) FAFER included its home market indirect selling expenses in its cost responses; and (2) Commerce verified all the data submitted by FAFER. See Pl.'s Br. at 9-19.
b. Analysis
When Commerce cannot obtain the information in a timely manner or receives incomplete information, the appropriate statute allows and, in certain circumstances, requires Commerce to use facts available. See 19 U.S.C. § 1677e(a), (b) (1994). Specifically, section 1677e(a) of Title 19 provides that "if ... necessary information is not available on the record, or ... any ... person ... fails to provide such information by the deadlines for submission of the information or in the form and manner requested [,] ... [Commerce] shall ... use the facts otherwise available in reaching the applicable determination ...." 19 U.S.C. § 1677e(a) (emphasis supplied). Furthermore, if "an interested party ... fail[s] to cooperate by not acting to the best of its ability to comply with a request for information from [Commerce, Commerce], in reaching the applicable determination ..., may use an inference that is adverse to the interests of that party [and is] ... derived from ... any ... information placed on the record." 19 U.S.C. § 1677e(b).
The legislative goal behind Commerce's right to use facts available is to "induce respondents to provide Commerce with requested information in a timely, complete, and accurate manner ...." National Steel Corp. v. United States, 18 CIT 1126, 1129, 870 F.Supp. 1130, 1134 (1994) (citation omitted). Consequently, Commerce enjoys very broad, although not unlimited, discretion with regard to the propriety of its use of facts available. See generally, Olympic Adhesives, Inc. v. United States, 899 F.2d 1565 (Fed.Cir. 1990) (acknowledging Commerce's broad discretion with regard to the use of facts available but pointing out that Commerce's resort to facts available is an abuse of discretion where the information Commerce *808 requests does not and could not exist).
If a party, however,
promptly ... notifies [Commerce] that such party is unable to submit the information requested in the requested form and manner [and provides Commerce] with a full explanation and suggested alternative forms in which such party is able to submit the information, [Commerce] shall consider the ability of the ... party to submit the information in the requested form and manner and may modify [Commerce's] requirements to the extent necessary to avoid imposing an unreasonable burden on that party.
19 U.S.C. § 1677m(c)(1) (1994) (emphasis supplied).
Furthermore, Commerce
shall not decline to consider information that is submitted ... and is necessary to the determination but does not meet all the applicable requirements ... if... the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination, ... and ... the information can be used without undue difficulties.
19 U.S.C. § 1677m(e)(3) and (5) (1994) (emphasis supplied).
During the review at issue, Commerce requested FAFER to submit a per-unit G & A rate, to which selling expenses had to be added to arrive at a selling, general and administrative ("SG & A") rate. See Def.'s Mem. at 31. FAFER, however, failed to report indirect selling expenses in the manner required by Commerce. See Pl.'s Br. at 9-14. While Commerce should have considered the shortcomings of FAFER's accounting system, Commerce had discretion in determining whether: (1) Commerce was satisfied with "suggested alternative forms in which [FAFER was] able to submit the information"; (2) Commerce was "imposing an unreasonable burden" on FAFER by requesting the information to be submitted in particular form, 19 U.S.C. § 1677m(c)(1); (3) the "information [supplied by FAFER was] not so incomplete that it [could not] serve as a reliable basis for reaching the applicable determination"; and (4) "the information [could have been used by Commerce] without undue difficulties." 19 U.S.C. § 1677m(e). Commerce, therefore, had the right to determine that FAFER's mere statements that: (a) FAFER's G & A expenses did include employees wages and charges that "have already been taken into account," Pl.'s Br.App. 13; and (b) FAFER's accounting system does not "distinguish between direct and indirect labor costs" due to its structural deficiencies, Pl.'s Reply at 6, n. 7, were insufficient under the requirements posed by 19 U.S.C. §§ 1677m(c)(1) and (e). Consequently, Commerce was justified in resorting to facts available[2] under the mandate of 19 U.S.C. §§ 1677e(a) and (b).[3]
*809 4. Commerce's Use of the Imputed Commission as a Proxy for FAFER's Indirect Selling Expenses
a. Contentions of the Parties
Commerce contends that because "in calculating [FAFER's] CEP, Commerce must deduct from the price to an unaffiliated purchaser various expenses, including indirect selling expenses," Commerce acted reasonably by using the "commission amount derived from FAFER's ... response" as a proxy for the missing data on FAFER's indirect selling expenses. Def.'s Mem. at 34-35 (citing to Final Results, 63 Fed.Reg. at 2963). Domestic Producers: (1) support Commerce's contention, see Domestic Producers' Resp. at 12-38; and (2) point out that Commerce's action was reasonable because FAFER's indirect selling expenses would be an amount near the amount to which Commerce arrived on the basis of facts available. See id. at 26.
FAFER argues that Commerce was not entitled to rely on FAFER's commission rate because the "rate [is] known not to be applicable" in view of the particular facts of the case. Pl.'s Reply at 18-20.
b. Analysis
Making a determination based on facts available, Commerce should: (1) strive to arrive to "the most reasonable estimate," see Def.'s Mem. at 34; and (2) rely on the data that has a "rational relationship ... [to] the matter ...." National Steel, 18 CIT at 1132, 870 F.Supp. at 1136 (quoting Manifattura Emmepi S.p.A. v. United States, 16 CIT 619, 624, 799 F.Supp. 110, 115 (1992)).
The sale at issue was made by FAFER with the assistance of Charleroi, and it was the only sale of subject merchandise that FAFER made during the POR. While there is no evidence on the record showing that Charleroi received any form of compensation under FAFER's general policy commission rate, there is conflicting data on record suggesting that FAFER might have incurred specific indirect selling expenses in the course of the transaction. See Pl.'s Reply at 19-22; Def.'s Mem. at 35-36 and Ex. 6, 12.
Commerce has the practice of using qualified data as a proxy for the data missing from the record. See, e.g., Final Results of Antidumping Administrative Review of Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China, 62 Fed.Reg. 61,276, 61,277 (Nov. 17, 1997); Preliminary Results of New Shipper Antidumping Duty Administrative Review of Certain Stainless Steel Wire Rod From India, 62 Fed.Reg. 6171 (Feb. 11, 1977). Commerce, however, may neither use the substitute data out of context, see Manifattura Emmepi, 16 CIT 619, 799 F.Supp. 110, nor "resort to [the facts available] as an easy method to dispose of a case." NTN Bearing Corp. of Am. v. United States, 17 CIT 713, 720, 826 F.Supp. 1435, 1441 (1993). While Commerce's resort to the facts available was justified, the Court shares FAFER's bewilderment about Commerce's choice to use the only piece of *810 data admittedly unrelated to the transaction at issue as a proxy for FAFER's indirect selling expenses. See Pl.'s Reply at 19-22; Def.'s Mem. at 35-36 and Ex. 6, 12. There could be no rational relationship between a matter and a data that expressly does not apply to that matter under the particular facts of the case. Compare National Steel, 18 CIT at 1132, 870 F.Supp. at 1136; Consolidated Bearings Co. v. United States, 2001 WL 607015 **8-9, 2001 Ct. Intl. Trade LEXIS 74 at *29-30, Slip Op.2001-66 at 24 (2001) (quoting Madison Metro. Sch. Dist. v. School Dist. Boundary Appeal Bd., 1998 Wisc. App. LEXIS 1200 (Wis.Ct.App.1998), quoting in turn Kammes v. Mining Inv. & Local Impact Fund Bd., 115 Wis.2d 144, 340 N.W.2d 206, 213 (Wis.App.1983), and stating that "a rational course of conduct requires [that] ... [t]he gap between the facts and the conclusion must be filled"). Considering that there is no dispute about the inapplicability of FAFER's actual general commission to the sale at issue, Commerce's use of such commission as a proxy for FAFER's indirect selling expenses is unreasonable.[4]
B. Commerce's Determination that FAFER's Antidumping Duties Have Been Absorbed
1. Background
During the review, Commerce provided FAFER with an opportunity to submit relevant evidence and considered all submitted evidence in reaching its final determination. See Final Results, 63 Fed.Reg. at 2964.
In the Preliminary Results, Commerce determined that antidumping duties have been absorbed by FAFER on one hundred percent of its United States sales because Commerce: (1) had preliminarily determined that there was a dumping margin on one hundred percent of FAFER's sales; and (2) could not conclude from the record that an unaffiliated purchaser in the United States would pay the ultimately assessed duty. See 62 Fed.Reg. at 48,217. Commerce, however, allowed FAFER to submit (within 15 days after publication of the Preliminary Results) evidence that unaffiliated purchasers in the United States would pay the ultimately assessed duty charged to affiliated importers. See id. In response, FAFER submitted a very brief letter by an unaffiliated purchaser stating that the purchaser "irrevocably" committed itself to pay any antidumping duty on merchandise acquired from FAFER "if such duty is assessed upon final determination by ... Commerce." Def.'s Mem., Ex. 11. Unsatisfied with the deficiencies of this promise,[5] Commerce made further inquiries of whether there has been a modification to the existing sales contract other than this very brief letter. See id., Ex. 6, 14. FAFER responded that "[t]here has been no modification to the existing contract" and did not explain why its customer would agree unilaterally to pay an unspecified amount at an unspecified time without apparent consideration. Id., Ex. 14. Consequently, Commerce concluded that: (1) the evidence *811 on the record did not demonstrate the existence of an enforceable agreement to pay the full amount of the assessed duties; and (2) "antidumping duties have been absorbed by FAFER on one hundred percent of its [United States] sales." Final Results, 63 Fed.Reg. at 2964.
2. Commerce's Right to Conduct an Ad Hoc Determination Without Promulgating a Definite Criteria
a. Contentions of the Parties
FAFER contends that Commerce's finding that FAFER absorbed antidumping duties through its United States sales affiliate, Charleroi, was "contrary to the facts on the record" and is premised on "faulty logic" because Commerce provided "no substantive criteria ... for trade participants or even counsel to follow in establishing non-absorption." Pl.'s Br. at 28 (emphasis in original).
Commerce maintains that its determination that FAFER absorbed antidumping duties was reasonable, and "[t]he fact that FAFER's evidence was found to be insufficient ... does not mean that there were no substantive criteria to follow." Def.'s Mem. at 40. Domestic Producers support Commerce's contentions. See Domestic Producers' Resp. at 39-44.
b. Analysis
The duty absorption inquiry is a relatively new feature of Commerce's antidumping investigation. See Notice of Proposed Rulemaking and Request for Public Comments on Antidumping Duties; Countervailing Duties, 61 Fed.Reg. 7308, 7313 (Feb. 27, 1996) (giving notice that such inquiries are to be conducted by Commerce). Commerce clarified that such inquiries have little precedent and, therefore, Commerce indicated that it would proceed on an ad hoc basis until sufficient experience is collected. See Final Rule on Antidumping Duties; Countervailing Duties, 62 Fed.Reg. 27,296, 27,318 (May 19, 1997). Commerce specifically stated that Commerce "ha[s] not adopted ... substantive duty absorption criteria [because Commerce] will need experience with absorption inquiries before it is able to promulgate such criteria." Id.
Commerce's right to conduct the absorption inquiry is provided for in 19 U.S.C. § 1675(a)(4) (1994). The statute clarifies that
[d]uring any review [duly initiated, Commerce], if requested, shall determine whether antidumping duties have been absorbed by a foreign producer or exporter subject to the order if the subject merchandise is sold in the United States through an importer who is affiliated with such foreign producer or exporter.
19 U.S.C. § 1675(a)(4).
There is nothing in the language of section 1675(a)(4) requiring Commerce to specifically articulate the standard of what constitutes duty absorption prior to conducting a duty absorption inquiry. Conversely, the statutory language that Commerce "shall determine whether antidumping duties have been absorbed" demonstrates clear congressional mandate allowing Commerce to engage in the rulemaking processes traditionally used by an agency, including reaching a determination after examining the particular circumstances of the case without formally promulgating an all-inclusive standard. In aspiring to create a detailed standard, an agency is expected to accumulate technical expertise and draw from the monitoring of the regulated industry. See, e.g., Natural Resources Defense Council, Inc. v. U.S. EPA, 859 F.2d 156, 210 (D.C.Cir.1988).
[An] administrative implementation of a particular statutory provision [is valid *812 and] qualifies for Chevron [U.S.A. Inc. v. National Resources Defense Council, Inc., ("Chevron"), 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)] deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority. Delegation of such authority may be shown in a variety of ways, as by an agency's power to engage in adjudication or notice-and-comment rulemaking, or by some other indication of a comparable congressional intent.
United States v. Mead Corp., ___ U.S. ___, 121 S.Ct. 2164, 2171, 150 L.Ed.2d 292 (2001).
Commerce is correct in asserting that demarcated guidelines are not an indispensable part of the criteria that an agency uses in reaching a determination. Accord Def.'s Mem. at 40. Commerce was entitled to make a determination on an ad hoc basis by applying Commerce's expertise to the particular facts of the case at bar, see Natural Resources Defense Council, Inc., 859 F.2d at 210, and postpone the promulgation of a substantive duty absorption criteria until sufficient information is gathered.
3. Reasonableness of Commerce's Determination
1. Contentions of the Parties
FAFER alleges that Commerce's determination that FAFER's antidumping duties have been absorbed on one hundred percent of FAFER's United States sales is an "unacceptable exercise of arbitrary" judgment. Pl.'s Br. at 29. FAFER maintains that the letter by an unaffiliated purchaser supplied by FAFER to Commerce contained an "unqualified commitment to pay the antidumping duties" and constituted sufficient evidence that FAFER's antidumping duties have not been absorbed. See id.
Commerce asserts that FAFER's antidumping duties have been absorbed because Commerce determined that "there was no [valid] contract for the unaffiliated customer to pay the ultimately assessed duties." Def.'s Mem. at 42. Commerce contends that it reasonably refused to accept the commitment letter as sufficient evidence to the contrary because the letter: (1) was an unenforceable promise "to pay an uncertain amount, at an uncertain time, under uncertain circumstances;" and (2) failed to provide for a proper contractual consideration. See id.
2. Analysis
In the Preliminary Results, 62 Fed.Reg. at 48,217-18, Commerce stated that it would consider evidence that unaffiliated purchasers in the United States would pay the ultimately assessed duty charged to affiliated importers. Upon FAFER's submission of the record information, Commerce examined the terms of sale, first, between FAFER and Charleroi, and then between Charleroi and its unaffiliated United States customer, and arrived at the conclusion that the only relevant piece of evidence provided by FAFER, that is, the agreement letter, was unenforceable due to the lack of either consideration or certainty of amount, time, or conditions. See Def.'s Mem. at 42.
The Court holds that Commerce's conclusion was reasonable. It is axiomatic that while the uncertainty of amount, time and conditions could be sometimes cured by particular circumstances of the case, the lack of consideration makes a contract *813 unenforceable. See, e.g., Johnson v. Johnson, 244 Ill.App.3d 518, 185 Ill.Dec. 214, 614 N.E.2d 348 (1993); Appolonio v. Baxter, 217 F.2d 267 (6th Cir.1954); Robertson v. Miller, 286 F. 503 (2nd Cir. 1922). FAFER's failure to cure this defect in the agreement letter left Commerce no choice but to arrive at the decision Commerce made. The mere fact that FAFER's evidence was deemed by Commerce insufficient to establish that an unrelated related purchaser would, in fact, pay the duties ultimately assessed, means neither that Commerce's conclusion was faulty, nor does it mean that Commerce's determination that FAFER's antidumping duties have been absorbed on one hundred percent of FAFER's United States sales was unreasonable. See Chevron, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694. In view of the foregoing, Commerce properly determined that FAFER's antidumping duties have been absorbed on one hundred percent of FAFER's United States sales.
CONCLUSION
This case is remanded to Commerce to: (1) examine the record to determine what data should be used as a substitute for FAFER's indirect selling expenses; and (2) take further actions not inconsistent with this opinion.
NOTES
[1] There is, however, no absolute requirement of exhaustion in the Court of International Trade in non-classification cases. See Alhambra Foundry Co. v. United States, 12 CIT 343, 346-47, 685 F.Supp. 1252, 1255-56 (1988). Section 2637(d) of Title 28 (1994) directs that "the Court of International Trade shall, where appropriate, require the exhaustion of administrative remedies." By its use of the phrase "where appropriate," Congress vested discretion in the Court to determine the circumstances under which it shall require the exhaustion of administrative remedies. See CEMEX, S.A. v. United States, 133 F.3d 897, 905 (Fed.Cir.1998). Therefore, because "each exercise of judicial discretion in not requiring litigants to exhaust administrative remedies," the Court is authorized to determine proper exceptions to the doctrine of exhaustion. Alhambra Foundry, 12 CIT at 347, 685 F.Supp. at 1256 (citing Timken Co. v. United States, 10 CIT 86, 93, 630 F.Supp. 1327, 1334 (1986), rev'd in part on other grounds, Koyo Seiko Co. v. United States, 20 F.3d 1156 (Fed.Cir.1994)).
In the past, the Court has exercised its discretion to obviate exhaustion where: (1) requiring "it would be futile," see Rhone Poulenc, S.A. v. United States, 7 CIT 133, 135, 583 F.Supp. 607, 610 (1984) ("it appears that it would have been futile for plaintiffs to argue that the agency should not apply its own regulation"), or would be "inequitable and an insistence of a useless formality" as in the case where "there is no relief which plaintiff may be granted at the administrative level," United States Cane Sugar Refiners' Ass'n v. Block, 3 CIT 196, 201, 544 F.Supp. 883, 887 (1982); (2) a subsequent court decision has interpreted existing law after the administrative determination at issue was published, and the new decision might have materially affected the agency's actions, see Timken, 10 CIT at 93, 630 F.Supp. at 1334; (3) the question is one of law and does not require further factual development and, therefore, the court does not invade the province of the agency by considering the question, see id.; R.R. Yardmasters of Am. v. Harris, 721 F.2d 1332, 1337-39 (D.C.Cir.1983); and (4) the plaintiff had no reason to suspect that the agency would refuse to adhere to clearly applicable precedent. See Philipp Bros., Inc. v. United States, 10 CIT 76, 79-80, 630 F.Supp. 1317, 1321 (1986).
[2] Commerce asserted that in reaching its determination, Commerce had the right to rely and actually relied on 19 U.S.C. § 1677e(b), the subsection allowing the use of adverse facts available, in addition to relying on 19 U.S.C. § 1677e(a). See Def.'s Mem. at 34. Commerce fails to make a distinction between the use of facts available provided for in 19 U.S.C. § 1677e(a) and the use of adverse facts available reserved for the determinations concerning those parties that "fail to cooperate by not acting to the best of [their] abilit[ies]." 19 U.S.C. § 1677e(b). While the shortcomings contained in FAFER's data empowered Commerce to resort to 19 U.S.C. § 1677e(a), FAFER was sufficiently cooperative, thus precluding Commerce's reliance on 19 U.S.C. § 1677e(b). Compare Transcom, Inc. v. United States, 24 CIT ___, ___, 121 F.Supp.2d 690, 704-05 (2000).
[3] FAFER argues that because: (1) FAFER explained FAFER's cost of production analysis system to Commerce in great detail; and (2) Commerce verified the reported costs, such verification constitutes an implied admission by Commerce that Commerce found FAFER's statements with regard to indirect selling expenses satisfactory. See Pl.'s Br. at 9-20. Commerce's verification, however, is nothing more that the act of reconciling FAFER's reported costs to the information contained in financial statements of consolidated companies. See Def.'s Mem. at 32 and Ex. 9. The process of verification does not imply Commerce's endorsement of each expense item. See id. As Commerce correctly points out, "FAFER's lengthy analysis of the cost verification cannot alter the fact that FAFER did not report its indirect selling expenses as specifically requested by Commerce." Id. at 33 (emphasis supplied).
[4] The mere possibility that FAFER's indirect selling expenses could be an amount near the amount to which Commerce arrived on the basis of facts available, see Domestic Producers' Resp. at 26, cannot serve as a valid argument in view of Commerce's admitted obligation to arrive at "the most reasonable estimate," see Def.'s Mem. at 34 (emphasis supplied), that is, the estimate most rational under the circumstances rather than the most similar.
[5] The contractual agreement failed to state, among other things, the consideration and the time of performance. See Final Results, 63 Fed.Reg. at 2964. | 01-03-2023 | 02-05-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1320952/ | 124 S.E.2d 1 (1962)
203 Va. 408
Mary C. SMITH et al.
v.
The PITTSTON COMPANY.
Supreme Court of Appeals of Virginia.
March 5, 1962.
Rehearing Denied April 23, 1962.
*2 J. E. Duff, Lebanon, for appellants.
William A. Stuart, Abington (Penn, Stuart & Stuart, Abington, on brief), for appellee.
Before EGGLESTON, C. J., and SPRATLEY, BUCHANAN, WHITTLE, SNEAD, I'ANSON and CARRICO, JJ.
BUCHANAN, Justice.
This suit in equity was brought by the appellants, who are the widow and heirs at law of G. B. Smith, to quiet and establish title to the coal and other minerals underlying two tracts of land in Dickenson county, one containing 94 acres and the other 38 acres, of which the appellants are concededly the owners of the surface. The bill alleged that the appellee, The Pittston Company, claims title to the coal and other minerals. It was made defendant to the bill and filed its answer denying that the appellants had any title to the mineral estate in either of the two tracts and setting up the chain of title under which it claimed ownership of the mineral estate.
Numerous depositions were taken and exhibits filed, upon consideration of which the court below, for reasons stated in a written opinion, entered the decree complained of adjudicating that The Pittston Company was the owner of the mineral estate in both tracts and dismissing the appellants' bill. The appellants challenge the correctness of that holding on this appeal.
The appellants claim to own the fee simple title in the two tracts by superior paper title as well as by adverse possession. The appellee asserts that it owns the mineral estate in the two tracts also by superior title and adverse possession.
Neither party traced title back to the Commonwealth. The oldest instrument of title produced was a deed to Henry Kiser from James Kiser, his brother, and Ephram Kiser, his father, dated January 24, 1862, recorded in Dickenson county January 29, 1888, conveying a tract of 1120 acres, which included both the 94-acre tract and the 38acre tract. By a deed dated December 9, 1887, and recorded January 30, 1888, Henry Kiser conveyed to Tazewell Coal and Iron Company all the coal and minerals in this 1120-acre tract. Through duly executed and recorded mesne conveyances this title to the mineral estate vested in Clinchfield Coal Corporation by two deeds, one dated in 1906 and the other in 1907. Clinchfield was merged into The Pittston Company on December 28, 1956. Pittston and its predecessors in title have been duly assessed with and have paid the taxes on this mineral estate in the 1120-acre tract since the deed from Henry Kiser in 1887, severing the mineral estate from the surface.
At the date of his deed in 1862, Henry Kiser was living in a house on the 1120-acre *3 tract of land and he continued to live there until his death in 1908. In fact, there was evidence that he and his first wife and four of their children were living there in 1850. He was twice married and had eighteen children who were reared on this land. One of his daughters-in-law, who was born in 1873, remembered visiting in the Kiser home when she was a small child and testified that the house then looked old and old fruit trees were standing in an orchard. She and a number of other witnesses testified that on the tract were also a barn and outbuildings, considerable cleared land and fences around pasture fields. Having color of title to the 1120-acre tract under his deed of 1862, and having undisturbed possession thereof for the ten-year period then required by law, Henry Kiser became the owner of a good possessory title to the whole 1120 acres in the year 1872. Baldwin v. Mothena, 171 Va. 94, 198 S.E. 569; 1 Mich.Jur., Adverse Possession, § 8, p. 228, § 29, p. 239.
The appellants claim the 94-acre tract in fee simple also under Henry Kiser and also by adverse possession, as stated. By a deed dated February 9, 1889, and recorded June 23, 1898, both after the date (December 9, 1887) and after the recording (January 30, 1888) of the deed from Henry Kiser conveying the mineral estate to Tazewell, Henry Kiser and wife conveyed the 94-acre tract to William P. Kiser (who was his son) and Phebe Kiser, his wife, without excepting the mineral estate, for a stated consideration of $300 paid to him by them.
By deed dated May 4, 1897, William P. Kiser and wife conveyed to said G. B. Smith a tract of 121.5 acres which included parts of the 94-acre tract and all of the 38-acre tract, but it provided that "all the coal and mineral on & under said land, except about ten acres is excepted from the operations of this deed." The 10-acre tract referred to lies along the eastern boundary of the 38 acres, is not within the 1120-acre tract, and is not claimed by the appellee. By this deed and by the will of William P. Kiser, probated February 26, 1915, and by inheritance from Phebe Kiser, said G. B. Smith acquired the interest of William P. Kiser and Phebe Kiser in the 94-acre tract.
Appellants say, however, that sometime prior to this 1889 deed from Henry Kiser to William P. Kiser and wife, one Henry Powers had bought this 94-acre tract, then estimated to be 100 acres, from Henry Kiser; that no deed was then or thereafter executed to Henry Powers, but he took possession of the tract and held and used it as his own; that it was assessed on the land books to Henry Powers from 1880 through 1887, and in 1888 to William P. Kiser with the notation "transferred from Henry Powers." Appellants say that sometime prior to 1888 Henry Powers sold this tract to William P. and Phebe Kiser but since the title was still in the name of Henry Kiser it was agreed that Henry Kiser would make the deed direct to William P. Kiser and Phebe Kiser, but "they didn't get around to making this deed until February 9, 1889."
This contention is a theory that is without solid evidence to support it. Appellants did produce as found among the papers of G. B. Smith after his death in 1939 an unsigned form of deed dated March 24, 1881, in some unknown handwriting, naming Henry Kiser as grantor and Henry Powers as grantee, and describing the 94 acres; and from the same source what appears to be a survey of the same date of "courses of Henry Powers' land." There was evidence that Henry Powers lived in a house on this 94 acres which was afterwards occupied by William P. Kiser and wife; that he stayed there "a good while," "raised his family there." There was some testimony as to statements made by William P. Kiser as to Henry Powers having bought the 94-acre tract and Henry Kiser making a deed which he did not sign because he did not have a deed himself, but this was hearsay testimony and clearly inadmissible because no part of the res gestae. Pocahontas Fuel Co. v. Dillion, 161 Va. 301, 312, 170 S.E. 616, 619.
*4 The fact remains that there was no deed or other writing carrying out this supposed verbal agreement with Henry Powers, which in any event would have been void as to purchasers for value and without notice. Code 1887, § 2463; Code 1950, § 11-1.
Henry Powers had no color of title and definitely it is not shown that he held such possession as gave him title to anything prior to the conveyance of the mineral estate by Henry Kiser to Tazewell in 1887. As said by the trial court, even if the evidence showed equitable title in Henry Powers, his possession under the alleged verbal agreement was not adverse to the title of Henry Kiser but in privity with and under the protection thereof. Chapman v. Chapman, 91 Va. 397, 21 S.E. 813; Thompson v. Camper, 106 Va. 315, 55 S.E. 674; Matthews v. W. T. Freeman Co., 191 Va. 385, 395-6, 60 S.E.2d 909, 914.
When Henry Kiser conveyed to William P. Kiser and wife in 1889 he did not own and could not convey the mineral estate, of which fact his grantees had notice because their grantor's deed conveying the mineral estate to Tazewell was then on record and in their chain of title. Thereafter William P. Kiser and wife had no adverse possession of the mineral estate but held only the surface in privity with and not adversely to the owners of the mineral estate. They could not by merely holding possession of the surface thereby acquire title also to the mineral estate. Chapman v. Chapman, supra, 91 Va. at 399, 21 S.E. at 814; Interstate Coal and Iron Co. v. Clintwood Coal and Timber Co., 105 Va. 574, 591-2, 54 S.E. 593, 598; Clevinger v. Bull Creek Coal Co., 199 Va. 216, 220, 98 S.E.2d 670, 672; Ventro v. Clinchfield Coal Corp., 199 Va. 943, 951, 103 S.E.2d 254, 260.
The reason is clear. The owner of the mineral expects to see the owners of the surface using their property, and their ordinary activities on the surface do not put him on notice and prompt him or cause him to suspect that such uses of the surface constitute an adverse claim to his minerals. "`[T]he owner of the surface holds, or is presumed to hold, possession for the benefit of the owner of the minerals, that is, as a quasi bailee or trustee for the mineral owner.'" Clevinger v. Bull Creek Coal Co., supra, 199 Va. at 220, 98 S.E.2d at 672-3.
After a severance of the mineral and surface estates, the surface owner may acquire title to the minerals only by a possession of the minerals which has been actual, open, notorious, and hostile for the statutory limitation period (ten years at the time of these transactions). Ventro v. Clinchfield Coal Corp., supra, 199 Va. at 952, 103 S.E.2d at 261. The evidence established no such possession in this case.
The decree holding that the appellee is the owner of the mineral estate in the 94 acres was clearly right.
The 38-acre tract lies within an interlock between the Henry Kiser 1120-acre tract and a tract of 1110 acres which was conveyed by Shade Williams to John Powers by deed dated in 1874, recorded in Buchanan county (where the land was prior to the formation of Dickenson county in 1880) on December 24, 1890, under "set-up" proceedings after the Buchanan county records were destroyed by fire in 1885. By deed dated March 24, 1881, recorded in Dickenson county July 12, 1889, John Powers conveyed 48 acres to the said William P. Kiser, 38 acres of which, being the tract in controversy, was within the northeastern boundary lines of the Henry Kiser 1120-acre tract. As stated above, the appellee makes no claim to the mineral estate in the remaining ten acres.
By the deed above referred to dated May 4, 1897, William P. Kiser and wife conveyed the 38 acres, as part of the 121.5 acres, to said G. B. Smith, but excepted all the coal and minerals on the 38 acres.
*5 The appellants contend first that they have the superior paper title to the 38 acres on the theory that Clinchfield was charged with notice of what the records of Buchanan and Dickenson counties showed with respect to the Powers 1110-acre tract, and with notice of William P. Kiser's claim by reason of his possession after his deed of 1881, recorded in 1889. They contend that such possession gave notice to Tazewell under the holding in Chapman v. Chapman, supra, decided in 1895, that actual, notorious and exclusive possession of land takes the place of recordation of instruments of title, and that one who buys land in the possession of another than his grantor must take notice of such possession (a rule later changed by statute to the provision of present § 55-96 that possession shall not of itself be notice to purchasers for value; Acts 1895, p. 842; Acts 1897-8, p. 833; Acts 1899-1900, p. 89; Code 1919, § 5194).
The deed to John Powers was not a link in Clinchfield's chain of title and the records with respect thereto were not constructive notice to Clinchfield. Kiser v. Clinchfield Coal Corp., 200 Va. 517, 523, 106 S.E.2d 601, 606.
There is no evidence that Shade Williams or John Powers ever lived on, or had possession of, any part of the land within the interlock. On the other hand, as the record shows and as the trial court found, Henry Kiser took and held actual possession of the 1120-acre tract outside the interlock continuously from the date of his deed in 1862 until his conveyance of the coal and minerals to Tazewell in 1887. His was the senior deed, made some twelve years before the John Powers deed, and in such case the law of the possession of interlocks as between senior and junior patentees applies, as stated thus in Fry v. Stowers, 98 Va. 417, 419-20, 36 S.E. 482, 483:
"* * * [W]here a senior patentee settles upon any portion of his land claiming title to the whole, whether inside or outside of the interlock, before the junior patentee has settled upon any part of the interlock, the senior patentee is in possession to the extent of his grant, and a subsequent entry of the junior patentee upon the interlock only ousts the senior patentee to the extent of the land actually in the occupancy of the junior patentee by residence, improvement, cultivation, or other open, notorious, and habitual acts of ownership." See also Baldwin v. Mothena, supra, 171 Va. at 98, 198 S.E. at 570; LaDue v. Currell, 201 Va. 200, 206, 110 S.E.2d 217, 222.
We hold, as did the trial court, that the superior paper title is the appellee's title under the Henry Kiser 1120-acre deed.
The appellants contend next that they have the fee simple title to the 38-acre tract by adverse possession.
"To work a disseisin or ouster of the owner of land, it is not sufficient to set up a mere claim or color of title. The acts relied on must show actual, hostile, exclusive and continuous possession for the period of the statutory bar; acts of such notoriety that the true owner has actual knowledge, or may be presumed to know, of the adverse claim." Leake v. Richardson, 199 Va. 967, 976, 103 S.E.2d 227, 234.
Henry Kiser's possession under his senior deed gave him constructive possession to the limits of his boundary, which continued good until there was a disseisin. "To constitute disseisin it is just as necessary for claimants to take actual possession of some part of the interlock as if they had entered without color of title. To be effective the entry must be with intent to oust the owner and the possession must be evidenced by some act or acts indicating an actual possession of the land [here the mineral estate] itself, as distinguished from mere sporadic taking of the products thereof." LaDue v. Currell, supra, 201 Va. at 206-7, 110 S.E.2d at 222.
*6 The evidence of adverse possession offered by the appellants fails to meet the required standards. Appellants say in their brief that there are no witnesses now living who can testify how William P. Kiser occupied the 48-acre tract. There is no evidence that he ever resided on the 38-acre tract. His daughter, the widow of G. B. Smith, testified that after she and her husband married in 1888 they lived on the 94-acre tract for about two years and then moved to the 48-acre tract and into a house which they finished building. She did not know when it was built but said "he had it built a right smart while before we married." She did not explain to whom she referred.
Other evidence shows that the house she referred to was exactly on the property line between the 38-acre tract and the 10-acre tract which the appellants own. She said that when they moved onto the 48-acre tract there was not much fencing on it. "There was just a house there, and we repaired and fixed it when we first went there, and then we put up most of the fencing there." G. B. Smith and his wife lived in this house on the line between the 38-acre tract and 10-acre tract from about 1891 until 1897, probably with the permission of William P. Kiser, as the record gives no other explanation. On May 4, 1897, William P. Kiser and wife conveyed the 48-acre tract to G. B. Smith and wife, excepting all the coal and mineral on all except the 10 acres referred to. Thereafter G. B. Smith was not holding adverse possession or any possession of the mineral estate, nor did his heirs at law. There was evidence that they used some of the coal for household purposes but this was with the tacit consent of the owners of the mineral estate and in keeping with a practice generally prevailing in that area as between the holders of the surface and the owners of the mineral estate. Ventro v. Clinchfield Coal Corp., supra, 199 Va. at 952, 103 S.E.2d at 261.
At the time of the conveyance to G. B. Smith in 1897, there is little doubt that William P. Kiser knew that the coal and minerals on the 38 acres had been conveyed away by his father. He lived in a house on his father's land which was little more than a half mile from his father's house, and the fact that his father had received $1120 cash for the coal and minerals was not likely to have escaped the knowledge of his children. It is not unreasonable to suppose that William P. Kiser excepted (he did not say "reserved") the coal and minerals from the 38 acres of his conveyance to G. B. Smith because he knew that they were not his to convey, and there is no evidence that he afterwards ever asserted any claim to the mineral estate on the 38 acres. It is significant that he did not except the coal and minerals on the remaining 10 acres of the 48-acre tract which his father did not own and which William P. Kiser did have the right to convey.
Clinchfield became a complete purchaser for value of the mineral estate on the Henry Kiser 1120-acre tract in 1907, when the statute provided that possession by another without notice of other evidence of his title was not notice to Clinchfield (Acts 1899-1900, p. 90). Its predecessor in title, Henry Kiser, was the fee simple owner of the 1120-acre tract by virtue of his older deed and of his possession of that tract, including the 38 acres, before the date of the John Powers deed, which overlapped and included the 38 acres in the interlock. Nobody claiming under John Powers ever took actual possession of the mineral estate in the 38-acre tract so as to work a disseisin of the true owner. Clinchfield began mining operations on the 1120-acre tract in 1918, not within the 38 acres it is true, but under its title derived from Henry Kiser, who was the owner of the 38 acres and who conveyed the mineral estate under all of it to Clinchfield's predecessor. This mining by Clinchfield has continued to the present time without any objection or any assertion of an adverse claim by the appellants or their predecessors until the institution of this suit.
*7 The trial court was of opinion that Clinchfield had held adverse possession of the mineral estate for more than the required number of years to perfect its title if it were not good otherwise; and was further of opinion that equity should not entertain the appellants' suit because of their long delay in asserting their claim. We do not find it necessary to decide these points or to pass upon the correctness of the trial court's holding that adverse possession of the 38 acres if begun before the severance of the mineral estate would not continue so as to be adverse possession of the mineral estate. It is our conclusion that the evidence fails to establish adverse possession of the mineral estate on the 38 acres by the appellants and their predecessors sufficient to give them title thereto as against the older deed and possessory title under it acquired by the appellee's predecessors and now owned by the appellee.
The decree complained of is accordingly
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1652596/ | 805 So. 2d 1118 (2002)
Aizenhawar (Aizen) J. MARROGI
v.
Ray HOWARD and Ray Howard & Associates, Inc.
No. 2001-CQ-1106.
Supreme Court of Louisiana.
January 15, 2002.
*1119 Jeffery C. Vaughan, Lead Counsel, William C. Beary, Peter J. Butler, Peter J. Butler, Jr., New Orleans, Counsel for Appellant.
Anthony P. Dunbar, New Orleans, Kenneth B. Wright, Counsel for Appellee.
*1120 CALOGERO, Chief Justice.[*]
We accepted the certified question presented to this court by the United States Fifth Circuit Court of Appeals in Marrogi v. Howard, 248 F.3d 382, 386 (5th Cir. 2001).[1] The question is this: "Under Louisiana law, does witness immunity bar a claim against a retained expert witness, asserted by a party who in prior litigation retained that expert, which claim arises from the expert's allegedly deficient performance of his duties to provide litigation services, such as the formulation of opinions and recommendations, and to give opinion testimony before or during trial?" For the reasons that follow, we answer that question in the negative.
FACTS and PROCEDURAL HISTORY
In 1997, Aizenhawar (Aizen) J. Marrogi, M.D., brought suit in a Louisiana state court against the Tulane Educational Fund d/b/a the Tulane University School of Medicine ("Tulane"), seeking to recover fees for professional medical services that Dr. Marrogi performed while employed by Tulane but for which Tulane allegedly failed to bill or underbilled.[2] After filing suit, Dr. Marrogi retained the services of Ray Howard and his consulting firm, Ray Howard & Associates, Inc. (collectively referred to as "Howard"), to provide pretrial analysis and litigation support services. Howard, a Florida resident, held himself out as an expert in medical billing and coding. The agreement between Dr. Marrogi and Howard specifically called for Howard (1) to review pathology reports that would be sent to him from Louisiana, (2) to submit reports and affidavits to Dr. Marrogi's Louisiana attorney for use in preparing for and prosecuting the claim against Tulane, (3) to testify in depositions, and (4) to testify in hearings and at trial in Louisiana. Howard was paid a retainer of $1,200.00 and additional remittances totaling roughly $7,000 to $10,000.
In the course of the Marrogi/Tulane litigation, the Civil District Court for the Parish of Orleans ruled that Dr. Marrogi would be permitted only limited discovery of Tulane's medical records, i.e., records for one fiscal year out of the five years in question, unless he could establish a billing discrepancy or discrepancies in that one year. After reviewing the pathology reports, together with a billing and coding schedule for the one fiscal year, Howard provided Dr. Marrogi with an affidavit containing Howard's opinion that Tulane should have billed $523,485.00 for Dr. Marrogi's services during that fiscal year. In fact, Tulane had billed less than $250,000 for those services, an alleged difference of some $273,485. Relying on the billing discrepancies identified by Howard in his affidavit, Dr. Marrogi filed a motion to compel Tulane to produce the other four years of its medical records. At the hearing on the motion to compel, Tulane pointed to numerous mathematical errors in Howard's affidavit, as well as errors in his assignment of prices to coded services. In light of these errors, the court ordered that Howard submit to a deposition prior to the *1121 court's considering the merits of the motion to compel.
At the request of Dr. Marrogi, Howard thereupon prepared and submitted a revised opinion that reduced to $392,740.00, rather than the earlier $523,485, the amount that Tulane should have billed for Dr. Marrogi's services during the one fiscal year under review. Dr. Marrogi furnished a copy of this revised opinion to Tulane. Then, under questioning at the deposition, Howard was forced to admit to having made additional pricing and coding errors in his revised opinion. During a break in the deposition, Howard informed Dr. Marrogi's attorney that he was disgusted by the numerous errors that he had made and that he would neither participate in the remainder of his scheduled deposition nor provide any of the other litigation support that he had contracted to furnish.
Thereafter, Tulane filed a motion for summary judgment, seeking dismissal of Dr. Marrogi's suit. In support of the motion, Tulane submitted Howard's deposition testimony to demonstrate that Dr. Marrogi was unable to produce any credible evidence of underbilling. The Civil District Court, Parish of Orleans, granted the motion and dismissed the suit.[3]
After dismissal of this state court litigation, Dr. Marrogi filed a lawsuit against Howard in the United States District Court for the Eastern District of Louisiana, alleging two causes of action: negligence and beach of contract, or in the alternative, unjust enrichment. With regard to the negligence claim, Dr. Marrogi asserted that Howard had held himself out as an expert in medical billing and coding, that Howard made numerous mathematical and coding errors in analyzing the pathology reports, that the inaccurate analysis resulted in the dismissal of Dr. Marrogi's claims against Tulane, that Howard's actions breached the professional duties owed to Dr. Marrogi, and that Howard is liable to Dr. Marrogi for all losses incurred as a result thereof. With respect to the contract claim, Dr. Marrogi asserted that Howard's inaccurate analysis and his failure to continue performance under the contract constituted breaches of the agreement, that Howard had either billed or overbilled for the deficient services Howard had performed under the agreement, and that Dr. Marrogi was entitled to the sums paid to Howard under the agreement, either as contract damages, or for unjust enrichment.
Howard subsequently filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), arguing that, under Louisiana's witness immunity doctrine, Dr. Marrogi's action failed to state a claim upon which relief could be granted.[4] Howard asserted he was absolutely immune from suit because the claims were the result of his actions as a witness in a court proceeding. In opposition to Howard's motion, Dr. Marrogi argued that the witness immunity doctrine does not preclude a claim for professional malpractice against an expert witness by the party who had retained the expert witness.
Before granting the 12(b)(6) motion, the United States district court judge noted that no court applying Louisiana law has ever addressed the issue of witness immunity in the context of a party suing his own *1122 retained expert witness over the expert's performance of litigation support services. While the federal district court judge observed that Dr. Marrogi's position on the issue of retained expert witness immunity was "fully supported" by a Pennsylvania Supreme Court case, LLMD of Michigan, Inc. v. Jackson-Cross Co., 559 Pa. 297, 740 A.2d 186 (1999), she nonetheless stated that she was "unable and unwilling to be the first court to recognize such a modification of Louisiana law." The judge acknowledged "a certain logic to the rationale adopted by the LLMD court," but she also expressed concern that making an exception to the general rule of witness immunity for retained expert witnesses might entail "a multitude of evidentiary and practical problems in its application." The federal judge concluded that, under Louisiana law, Howard is entitled to absolute immunity like any other witness. Accordingly, the judge dismissed Dr. Marrogi's action with prejudice.
On appeal, the United States Fifth Circuit Court of Appeals found that the case turned on an important issue of first impression under Louisiana law, noting that no Louisiana court (or any other court applying Louisiana law) has addressed, much less decided, whether the general principle of witness immunity admits of an exception for the retained expert witness who is alleged to have performed litigation support duties deficiently, to the detriment of the party who retained that expert. The Fifth Circuit concluded this court should more properly address that issue, hence the certified question.
DISCUSSION
We initially dispose of defendant Howard's assertion that this court should not issue what in effect would be either an improper advisory opinion or an opinion contingent upon uncertain events. Under the circumstances of this case, we do not agree that our answer to the question certified to us will be either simply advisory or contingent.
Defendant Howard's "advisory" opinion argument is premised upon the federal district court's finding the existence in that court of personal jurisdiction. He contends the federal district court found personal jurisdiction only because Dr. Marrogi's petition and argument in that court were directed toward the presentation and effect of Howard's affidavit and deposition testimony upon the prior litigation in the Orleans Parish civil district court. As support for this contention, Howard points out that the federal district court, in a footnote, indicated that it would not have had personal jurisdiction over a claim of negligent preparation alone because that activity had occurred wholly in Florida.[5] Howard maintains that Dr. Marrogi on appeal to the Fifth Circuit retrenched from his original focus in the federal district court, i.e., on the presentation and effect of Howard's affidavit and deposition testimony upon the Louisiana litigation, and instead couched his argument, as he does now in this court, in terms of Howard's negligent preparation and formulation of his opinion, acts that allegedly occurred wholly in Florida. Asserting that the federal district court does *1123 not have personal jurisdiction if the focus is on the formulation of his opinion, acts that transpired in Florida, Howard argues that this court's present opinion will, therefore, necessarily be contingent upon a change in the federal district court's decision. He asks that we eschew deciding the question proposed by Dr. Marrogi and, assuming we have the authority to do so, "remand" the matter to the federal district court for dismissal.
We decline Howard's invitation to review the propriety of the rulings of the federal courts on the issue of personal jurisdiction. Howard unsuccessfully raised this same personal jurisdiction argument in his brief in the Fifth Circuit. In its opinion, the Fifth Circuit pointedly noted that the federal district court had expressly found defendant Howard subject to personal jurisdiction and that Howard had not appealed or cross-appealed that ruling. 248 F.3d at 383 n. 1. The appellate court further noted that, unlike subject matter jurisdiction, personal jurisdiction may be acquiesced in, or waived. Id. Given these observations by the federal appellate court certifying the question to us, we conclude that the federal courts have decided the issue of personal jurisdiction and that they have done so adversely to defendant Howard. We refuse to revisit the issue of personal jurisdiction in the federal courts. Accordingly, we do not believe that our determination on the question certified is contingent in any way, nor impermissibly advisory.[6]
Additionally, there can be no doubt that a justiciable controversy exists here. See Abbott v. Parker, 259 La. 279, 249 So. 2d 908, 918 (1971). The Fifth Circuit, though it disclaimed any desire to have us confine our reply to the precise form or scope of the question presented, nevertheless stated that our answer will determine the issue presented on appeal to that court: If the exception to witness immunity for retained expert witnesses is recognized, then the case will be remanded by the Fifth Circuit Court of Appeals to the United States District Court for further proceedings. If the exception is not recognized, and witness immunity is indeed applicable, then the federal district court's dismissal of the suit with prejudice will be affirmed by the Fifth Circuit Court of Appeals. 248 F.3d at 386. In light of the federal appellate court's statements, we find no merit to defendant Howard's argument.
WITNESS IMMUNITY or PRIVILEGE in LOUISIANA
We next turn to the question certified to us, and Howard's contention that this court should uphold our "longstanding and broad tradition" of witness immunity and refrain from creating an exception to that tradition for retained or friendly experts. However, the privilege of witness immunity is itself an exception to general tort liability; thus, the question before us is whether we should extend and broaden that exception by applying the privilege of witness immunity to retained or friendly experts so as to shield them from a malpractice suit by the party that hired them. In answering this question in the negative, we first examine the history of witness immunity in Louisiana to determine the underlying policy reasons that resulted in the crafting of the privilege, and then conclude that these policy reasons do not justify protecting a retained expert from malpractice liability in this case where the expert was hired to assist his client in a judicial proceeding by reviewing medical billing reports and making certain calculations, *1124 but made errors in performing these services.
In Louisiana, the affirmative defense of witness immunity or privilege has evolved from the jurisprudence.[7] Since the 1800s, this court has recognized the rule that, at least in the context of defamation suits against adverse witnesses, immunity from a civil action attaches to a witness in judicial or quasi-judicial proceedings. Oakes v. Walther, 179 La. 365, 154 So. 26, 27 (1934); Burke v. Ryan, 36 La. Ann. 951 (1884); Terry v. Fellows, 21 La. Ann. 375 (1869). The policy basis for this rule has been explained as follows: "The administration of justice requires the testimony of witnesses to be unrestrained by liability to vexatious litigation. The words they utter are protected by the occasion, and cannot be the foundation for an action for slander." Terry v. Fellows, 21 La. Ann. at 376.[8] More recently, in Knapper v. Connick, 96-0434, p. 3 (La.10/15/96), 681 So. 2d 944, 946, we stated that "communications made in judicial or quasi-judicial proceedings carry an absolute privilege so that witnesses, bound by their oaths to tell the truth, may speak freely without fear of civil suits for damages."[9]
The court in the 1869 Louisiana Supreme Court decision, Terry v. Fellows, further explained that "[w]itnesses, like jurors, appear in court in obedience to the *1125 authority of the law, and therefore may be considered as well as jurors to be acting in the discharge of a public duty, and though [they are liable to prosecution for perjury or for conspiracy to give false testimony], they are not responsible in a civil action for any reflections thrown out in delivering their testimony." 21 La.Ann. at 376-77, quoting Thomas Starkie, A Treatise on the Law of Slander and Libel, and Incidentally of Malicious Prosecutions, vol. II, p. 242 (2d English Ed. 1830) (hereinafter Starkie on Slander).[10] The court stated that "an action of slander does not lie for anything said or done in the course of a judicial proceeding." 21 La.Ann. at 377, citing Starkie on Slander, vol. II, p. 254.
In general, witness immunity is an "absolute privilege" because the privilege protects the witness from civil suit regardless of malice or falsity. See Burke v. Ryan, 36 La. Ann. at 951-52; see also Lauga v. McDougall, 463 So. 2d 754 (La. App. 4th Cir.1985)(police officer who testified against the plaintiff at grand jury proceedings and trials was absolutely immune from prosecution for a defamation action even if his testimony were false). At English common law, absolute witness immunity required no showing that the allegedly defamatory statements were relevant to the proceeding. See Briscoe v. LaHue, 460 U.S. 325, 331 n. 11, 103 S. Ct. 1108, 1113 n. 11, 75 L. Ed. 2d 96, 104 n. 11 (1983). In Louisiana, the rule of witness immunity is somewhat narrower, to the extent that the witness's declarations "cannot serve as the foundation for a civil suit when they are pertinent and material." Oakes v. Walther, 154 So. at 27, citing Burke v. Ryan, supra.
In Burke v. Ryan, the plaintiff sued the defendants, who had, under threat of subpoena, signed affidavits in an earlier case to the effect that the plaintiff had a poor reputation for truth and veracity. These affidavits, procured by an attorney representing a criminal defendant in the earlier case in which the plaintiff had apparently testified, were filed in support of a motion for new trial in that case based on newly discovered evidence. In reversing the jury's award for the plaintiff in the subsequent libel case, the court stated:
It needs no elaborate reference to authorities to establish the proposition of law; that as witnesses, who appear in a court of justice, discharge a public duty; that, though they be liable to a prosecution for perjury, should they commit such, they are not responsible, in a civil action, for any reflection thrown out in delivering their testimony, or for anything said or published by them in the course of a judicial proceeding, even if the statement be false, malicious and without probable cause. There is put this qualification, however: that statements thus made, in the course of an action, must be pertinent and material to the issue.
* * *
The authorities are also to the effect that every affidavit sworn to in the course of a judicial proceeding in a court of competent jurisdiction is absolutely privileged and no action lies therefor, however false and malicious may be the statement therein contained.
36 La.Ann. at 951-52 (citations omitted). The court in Burke v. Ryan reasoned that the affidavits were legal evidence and that they were applicable, pertinent, and material to the issue raised by the motion for new trial. Accordingly, the affidavits were *1126 protected communications, and the affiants were absolutely immune from civil liability.
In short, our courts have long recognized the general rule that there is absolute immunity from civil liability for testimony given by a non-party witness in a judicial proceeding, so long as that testimony is pertinent and material to the issue. See Oakes, supra.[11] Thus, as in a number of other American jurisdictions, once the threshold showing is made that the allegedly defamatory statements were relevant to the judicial proceeding, the privilege of absolute immunity protects the witness from civil liability regardless of malice or falsity. See Briscoe v. LaHue, 460 U.S. at 331 n. 11, 103 S.Ct. at 1113 n. 11; see also Murphy v. A.A. Mathews, 841 S.W.2d 671, 675-77 (Mo.Sup.Ct.1992).
Courts in Louisiana have not restricted application of absolute witness immunity to just defamation and libel/slander cases, but have also applied the privilege to retaliation cases against adverse witnesses, including experts. For example, in Moity v. Busch, 368 So. 2d 1134, 1136 (La.App. 3rd Cir.1979), concerning the testimony of an expert witness, the court of appeal found the witness's testimony to be absolutely privileged. There, the plaintiff sued the expert witness retained by the defendant in the prior litigation, alleging that the expert witness's testimony, filed in support of a motion for summary judgment, had been defamatory and consisted of untrue results and that the witness had not been qualified to give expert opinion testimony in the field of structures and paint.[12] The court of appeal, in affirming summary judgment in favor of the expert witness defendant, cited Terry v. Fellows, supra, and Bienvenue v. Angelle, 254 La. 182, 223 So. 2d 140 (1969), for the proposition that testimony given at a judicial proceeding by a non-litigant witness carries with it absolute immunity from a defamation suit stemming from the utterance of such testimony. 368 So.2d at 1136. The court went on to say that, "[a]s an accepted qualified expert witness, [the defendant] was free to give his opinion whether others might disagree with his conclusions or not." Id. Thus, an adverse expert witness was found to be immune from a retaliation suit filed by the losing party in the earlier litigation, so that witnesses in a judicial proceeding may speak freely without fear of civil liability and, thus, preserve and protect the truth finding objective of the administration of justice.
*1127 The privilege of absolute immunity, however, has not been extended in every suit against a witness or affiant in a prior judicial or quasi-judicial proceeding. In Goldstein v. Serio, 496 So. 2d 412, 415 (La.App. 4th Cir.1986), writs denied, 501 So. 2d 208, 209 (La.1987), the court refused to apply the privilege as an affirmative defense to defeat a claim for malicious prosecution or abuse of process. There, the plaintiffs, attorneys, sued former clients who had filed a complaint with the Louisiana State Bar Association alleging improprieties committed by the plaintiff attorneys during their earlier representation. The court observed that the privilege applies only to statements communicated to third persons; thus, it is a defense only to a claim of defamation. The court reasoned, "In both malicious prosecution and abuse of process, the crux of the action is not the statements made but the fact that a proceeding was maliciously and/or illegally pursued." 496 So.2d at 415. Thus, the privilege applies to preserve candor in the attorney disciplinary system, yet complaints to the bar under-taken in malice or in abuse of process are not worthy of such protection.[13]
A few Louisiana courts have discussed absolute judicial immunity from civil suit in the context of court-appointed experts. In S.T.J. v. P.M., 556 So. 2d 244 (La.App. 2nd Cir.1990), the court held that three psychologists appointed by the court during a custody dispute to evaluate an allegation of sexual abuse of a minor were entitled to absolute judicial immunity from any tort liability asserted in a subsequent suit filed by the losing parent. The court reasoned that the appointed professionals were non-judicial persons fulfilling quasi-judicial functions and, pursuant to La.Code Civ. Proc. art. 373, are classified as officers of the court with functions intimately related to the judicial process. Therefore, such court-appointed experts are entitled to absolute judicial immunity, as are judges, protecting them from having to litigate the manner in which they perform these functions. 556 So.2d at 247, relying on Myers v. Morris, 810 F.2d 1437 (8th Cir.1987) (psychologists-therapists who evaluated child victims of alleged sexual abuse have absolute immunity for damages arising from their performance of delegated functions).[14] The court opined, "Should they be found unprotected by such immunity, it can be envisioned that psychologists would seek to avoid future court appointments and that fear of civil liability could mar opinions and recommendations given to the court." 556 So.2d at 247.
In sum, the privilege of absolute witness immunity is an exception to tort liability under La. Civ.Code art. 2315. Louisiana courts have narrowly tailored the exception to protect the particular interests involved. In the case of adverse witnesses, both non-volunteer witnesses *1128 and expert witnesses, we have identified the protected interest as the administration of justice and its objective to uncover the truth. To further that interest, Louisiana courts have applied the privilege of witness immunity in defamation actions and retaliation suits against adverse witnesses. Until today, neither this court nor any other Louisiana court of appeal has been called upon to decide whether the administration of justice is, on balance, furthered by applying the privilege of absolute witness immunity to protect a "friendly expert" from a subsequent suit by the party that hired him, alleging that the expert was deficient in the performance of his duties to provide litigation services, including formulating opinions and recommendations, as well as giving testimony before or during trial. We thus turn to the precise issue presented to us.
WITNESS IMMUNITY and RETAINED EXPERTS
Does witness immunity bar a claim against a retained expert witness asserted by a party who in prior litigation hired that expert, which claim arises from the expert's allegedly deficient performance of his duties to provide litigation services, such as the formulation of opinions and recommendations, and to give testimony before or during trial? That question has become one of increasing importance given the rapid growth in the number of professionals and others hired to provide litigants with assistance in the preparation and presentation of their cases. There has been much scholarship on the issue, with the majority of commentators arguing against extending absolute witness immunity to retained or friendly experts.[15] Not surprisingly, there is a growing body of case law on the issue as well, again with the majority of courts finding that no policy interest is served by immunizing negligent litigation support professionals from malpractice and breach of contract liability under the rubric of witness immunity.[16]
Dr. Marrogi asserts that retained experts should not be entitled to witness immunity from civil liability for their negligence in the formulation of their opinion. He contends, citing Goldstein v. Serio, supra, that witness immunity has not been extended to bar all claims simply because they arise out of conduct that occurred during judicial proceedings. Instead, he argues, witness immunity is an affirmative defense only to those claims that have as an element communication to *1129 third persons during the course of judicial proceedings. Because his claim focuses only on the formulation of defendant Howard's opinion, rather than the communication of that opinion to third persons, Dr. Marrogi contends witness immunity should not bar his suit against Howard alleging breach of contract and breach of professional duties.
Defendant Howard argues that the policy behind witness immunity applies equally to the hired expert witness. The defendant asserts that the truth-finding function would be undermined if experts, with an eye toward their own liability, steadfastly refuse to acknowledge errors or modify their views in light of additional information. Defendant Howard contends that Louisiana courts have uniformly determined that expert witnesses may not be sued for damages arising out of their testimony, and that there should be no distinction between "friendly experts" and any other. Defendant Howard argues that those cases also involved a breach of a duty owed by the expert.[17] However, the reasoning in S.T.J. and Rogers v. Janzen for extending absolute judicial immunity to court-appointed professionals, i.e., those experts to whom the court has delegated quasi-judicial functions, does not easily translate to extending the privilege of witness immunity to a so-called "friendly expert" retained by a party. Similarly, the cases involving retaliation suits against an adverse expert do not address the issue of a retained expert's negligence toward his own client.
We next consider two approaches to the issue presented. And for the reasons set forth below, we conclude that no overarching public purpose is served by applying witness immunity to shield a retained expert witness from a claim subsequently asserted by the party who hired him when the claim alleges deficient performance of his professional and contractual duties to provide litigation support services.
One court that has applied the doctrine of witness immunity to preclude suits against a "friendly" expert witness is the Washington Supreme Court in Bruce v. Byrne-Stevens & Associates Engineers, Inc., 113 Wash.2d 123, 776 P.2d 666 (1989). There, the plaintiffs' land was damaged. At trial, they offered the testimony of their retained engineering expert, who estimated the cost of restoring the property at approximately $21,000. Although the plaintiffs prevailed, they later discovered that the engineer expert had underestimated the cost of restoration by about half. The plaintiffs thereafter sued their expert for negligence in preparing his analysis and testimony, arguing that, but for the expert's low estimate, they would have recovered the full cost of restoration from the original defendant.
*1130 A plurality of the Washington Supreme Court found that absolute immunity precluded suit against the expert witness for his testimony in judicial proceedings and that such immunity attached to acts and communications that occur in connection with the preparation of that testimony. The court opined that, in the absence of immunity, two forms of indirect censorship would develop: (1) the imposition of liability would discourage anyone who is not a full-time professional expert witness from testifying, because one-time or infrequent experts might not carry the necessary insurance to cover the liability risk in testifying, and (2) the expert witness might shade or distort his testimony out of fear of subsequent liability, perhaps losing objectivity or adopting the most extreme position favorable to his client. Id. at 670. These latter tendencies, the court believed, would deprive the finder of fact of candid, objective, and undistorted evidence. The court concluded that the imposition of witness liability was not necessary to secure accurate information for the finder of fact, because expert witness reliability is adequately ensured by the witness's oath, the hazard of cross-examination, and the threat of a perjury prosecution. Id. at 670, 673.[18]
While the Washington Supreme Court applied the privilege to a retained expert, the majority of the other courts that have addressed this issue have not applied the privilege of witness immunity to retained experts. See Note 16, supra. In a case factually similar to the instant case, the Pennsylvania Supreme Court concluded that the doctrine of witness immunity does not extend to bar professional malpractice actions against professionals hired to perform services related to litigation. LLMD of Michigan, Inc. v. Jackson-Cross Co., 559 Pa. 297, 740 A.2d 186 (1999). There, the plaintiff had prosecuted a breach of contract claim against lenders who had allegedly failed to provide financing for the purchase and rehabilitation of an industrial facility. The plaintiff hired an accounting firm to assist it in calculating the lost profits as a result of the lenders' breach. The agreement between the plaintiff and the accounting firm contemplated that the latter would quantify the damages, prepare a signed report, and participate in pre-trial conferences, depositions, and trial. The accounting firm provided the plaintiff with a calculation of lost profits amounting to some $6 million, and the firm's principal testified at trial to that effect. However, on cross-examination, opposing counsel established that the calculation contained a mathematical error that completely undermined its veracity. The witness had not personally performed the calculation and thus could not explain the error's effect or recalculate the alleged lost profits. The testimony and calculation were stricken from the record because they were based on erroneous mathematical calculations. Without this expert testimony, the plaintiff was left with its own testimony and calculation of lost profits. The day after the expert's testimony was *1131 stricken, the plaintiff settled with the lenders for $750,000.00.
Thereafter, the plaintiff sued the accounting firm, alleging that the firm had breached its agreement to furnish expert services by failing to deliver an accurate or workmanlike lost profits calculation and had failed to exercise the degree of care and skill ordinarily exercised by experts in the field of real estate counseling and computation of lost profits in real estate transactions. The district court granted summary judgment. On appeal, the intermediate appellate court affirmed on different grounds, concluding that the doctrine of witness immunity barred the plaintiffs action.
The Pennsylvania Supreme Court reversed, finding that the action was not barred by the doctrine of witness immunity. The court reviewed the doctrine, noting that, in the context of defamation actions, participants in judicial proceedings have an absolute privilege for the communications related to the proceedings. The court also recognized the policy basis for the doctrine, but noted that the privilege exists because the courts have other internal sanctions against defamatory statements, such as perjury or contempt proceedings. The court noted that the privilege furthers the two-fold policy of ensuring that the path to the truth is left as free and unobstructed as possible and of protecting the judicial process. The court did not believe that the same policy considerations were furthered by extending the privilege to professional negligence actions that are prosecuted by a former client against an expert witness who has been negligent in formulating his opinion. While cautioning that the substance of the expert's opinion testimony may not form the basis for a subsequent suit, the court concluded that the judicial process is enhanced by holding an expert witness to the degree of care, skill, and proficiency commonly exercised by members of his or her profession.[19]
After reviewing the cases from the courts of our sister states, as well as the applicable policy considerations, we hold that claims in connection with a retained expert's alleged failure to provide competent litigation support services are not barred by the doctrine of witness immunity. The privilege of witness immunity in Louisiana has been applied in defamation and defamation-like cases, as well as retaliation cases against adverse witnesses, expert and otherwise. The policy underlying that rule is that witnesses must be permitted to speak freely and without fear of exposure to vexatious litigation where a search for the truth is before the factfinder. However, that laudable objective is not advanced by immunizing the incompetence of a party's retained expert witness simply because he or she provides professional services, including testimony, in relation to a judicial proceeding. Witness immunity itself is an exception to tort liability, and thus should be narrowly construed in light of our Civil Code's provision that "[e]very act whatever of man that causes damage to another obliges him by whose fault it happened to repair it." La. Civ.Code art. 2315. Furthermore, immunity from tort liability is, generally, recognized *1132 only to promote an overarching public purpose.
We agree that the finder of fact must be able to rely on "candid, objective, and undistorted evidence." Briscoe v. LaHue, 460 U.S. at 333, 103 S.Ct. at 1114. However, we do not believe that shielding a client's own professional witness from malpractice liability is necessary to ensure that frank and objective testimony is presented to the fact-finder. A party's retained expert witness, rather than a court-appointed expert, for example, contracts for monetary remuneration with a party to assist in preparing and presenting his case not only in the best light possible but also, surely, in a competent fashion. Thus, the retained expert's function is not only to assist the court or fact-finder in understanding complicated matters, but also to render competent assistance in supporting his client's action against the client's opponent. The Bruce court assumed that in the absence of immunity, the expert would be motivated not simply by frankness and objectivity, but by the fear of exposure to civil liability among other considerations. Properly viewed, however, the roles of "hired gun" and servant of the court are not necessarily incompatible. In reality, the expert retained for litigation is hired to present truthful and competent testimony that puts his client's position in the best possible light. The expert witness's oath, the heat of cross-examination, the threat of a perjury prosecution, and, not least, the expert's professional ethics code all serve to limit the feared excesses of an expert subject to malpractice liability.[20] Moreover, the absence of immunity will not only encourage the expert witness to exercise more care in formulating his or her opinion but also protect the litigant from the negligence of an incompetent professional. Given these considerations, witness immunity does not serve an overarching public purpose in barring a client's suit against his own hired professional who deficiently performs agreed upon litigation support services.
The correctness of our view lies in the facts, alleged and established, in the instant case. In this case, defendant Howard, who had allegedly held himself out as an expert in the field of medical billing, got paid to review a set of medical reports and billing records, to make calculations based on this review, and, thereafter, to present his correct calculations and assumptions in court. Instead, the defendant made erroneous calculations and, when that fact was made known to him, he abandoned his client, rather than continue to assist him in the litigation, and kept the money that he was paid. Clearly then, Dr. Marrogi has made the allegation that the defendant was negligent, not in having a particular opinion, but in formulating his opinion, i.e., the defendant was negligent in performing professional services such as calculations upon which his expert opinion testimony would ultimately be based. That defendant Howard's erroneous calculations were, in this case, presented in an affidavit and in deposition testimony, rather than, say, a written report, does not change our view that an expert witness hired to perform litigation support services, but who performs those services in a negligent manner, cannot hide from civil liability to his client behind the shield of witness immunity.
The benefit to the judicial system in the rule we announce today is a practical one: ridding the system of incompetent experts and ensuring that reliable opinion testimony is presented to the fact-finder. The *1133 Washington Supreme Court in Bruce speculated that the lack of immunity will result in less truthful expert testimony.[21] With no sanction for incompetent preparation, however, an expert witness is free to prepare and testify without regard to the accuracy of his data or opinion. We do not see how the freedom to testify negligently will result in more truthful expert testimony. Without some overarching purpose, it would be illogical, if not unconscionable, to shield a professional, who is otherwise held to the standards and duties of his or her profession, from liability for his or her malpractice simply because a party to a judicial proceeding has engaged that professional to provide services in relation to the judicial proceeding and that professional testifies by affidavit or deposition. In this case, cross-examination during the deposition succeeded in revealing excesses or inaccuracies in defendant Howard's opinion testimony. The truth-finding function of the judicial system was thus protected. Though defendant Howard contends he is effectively being punished for telling the truth, i.e., confessing to his errors, we see no valid reason why the judicial system should immunize him from liability to his client for his alleged negligence in making calculations and formulating his opinion.[22]
Finally, we see no merit to the argument that witness immunity should apply to expert witnesses because it will otherwise be difficult for the expert's client to prove causation and damages in a suit brought by the client against the expert. Simply because the plaintiff client may have a heavy burden to carry in proving his case does not mean that we should immunize the defendant retained expert from civil liability for his professional negligence or breach of contract.
We therefore answer the question certified to us in the negative: Witness immunity or privilege in Louisiana does not bar a claim against a retained expert witness asserted by a party who in prior litigation retained the expert, which claim arises from the expert's allegedly negligent performance of his agreed upon duties to provide litigation support services.
DECREE
We answer the certified question as set forth in this opinion. Pursuant to Rule XII, Supreme Court of Louisiana, the judgment rendered by this court upon the question certified shall be sent by the clerk of this court under its seal to the United States Court of Appeals for the Fifth Circuit and to the parties.
CERTIFIED QUESTION ANSWERED.
NOTES
[*] Retired Judge Robert L. Lobrano, assigned as Justice Pro Tempore, participating in the decision.
[1] Marrogi v. Howard, 01-1106 (La.6/13/01), 794 So. 2d 778.
[2] While employed by Tulane, Dr. Marrogi, a pathologist, participated in the Faculty Practice Plan, which requires Tulane as administrators/ fiduciaries to bill and collect for the participant's professional services performed for patients at Tulane's various clinics or hospitals and then distribute to the participant a percentage of the collected money. For a summary of Dr. Marrogi's litigation against Tulane, see Marrogi v. Gerber, 00-1091 (La. App. 4 Cir. 5/16/01), 787 So. 2d 1098, writ denied, 01-1768 (La.9/28/01), 798 So. 2d 120.
[3] The district court's ruling was upheld on appeal. See Marrogi v. Gerber, supra.
[4] Howard also sought dismissal on the grounds that venue was improper in Louisiana and that the federal district court had no personal jurisdiction over the defendant because all of the actions complained of had transpired in the State of Florida. Alternatively, Howard sought transfer to the federal district court in Jacksonville, Florida, on the ground of forum non-conveniens.
[5] After finding that witness immunity did apply, the federal district court judge stated:
Of course, even if the plaintiff had argued that the focus of this action was the underlying preparation of the expert testimony rather than its presentation and effect on a Louisiana lawsuit, witness immunity may not be squarely presented, but this Court would lack personal jurisdiction over that action given the fact that all preparation occurred in Florida.
Marrogi v. Howard, 2000 WL 777914, * 3 n. 3 (E.D.La.2000).
[6] For an in depth discussion of advisory opinions, see Pascal F. Calogero, Jr., Advisory Opinions: A Wise Change for Louisiana and its Judiciary?, 38 Loy. L.Rev. 329 (1992).
[7] The privilege originated in the common law, more particularly the law of defamation. See Murphy v. A.A. Mathews, 841 S.W.2d 671, 674 (Mo.Sup.Ct.1992). The early Louisiana cases discussing the privilege of witness immunity rely on English common law, as revealed by their references to English treatises on slander and libel. See infra.
[8] In Terry, the defendant had testified before Congress that the plaintiff had participated in a rebellion against the United States government and had carried a flag emblazoned with a skull and crossbones, meaning no quarter to the enemy in the fight. The plaintiff later sued for libel and slander, but his suit was dismissed for no cause of action. The court affirmed. Because the defendant had uttered the words in response to interrogatories propounded to him as a witness and to which he was compelled to answer, the defendant was protected by witness immunity. 21 La.Ann. at 376-77.
[9] In Briscoe v. LaHue, 460 U.S. 325, 332-34, 103 S. Ct. 1108, 1114-15, 75 L. Ed. 2d 96, 105-07 (1983), the United States Supreme Court set forth the underlying policy rationale for absolute witness immunity thusly:
In the words of one 19th-century court, in damages suits against witnesses, "the claims of the individual must yield to the dictates of public policy, which requires that the paths which lead to the ascertainment of truth should be left as free and unobstructed as possible." Calkins v. Sumner, 13 Wis. 193, 197 (1860). A witness'[s] apprehension of subsequent damages liability might induce two forms of self-censorship. First, witnesses might be reluctant to come forward to testify. See Henderson v. Broomhead, [4 Haw. & N. 569, 578-79, 157 Eng. Rep. 964, 968 (Ex. 1859)]. And once a witness is on the stand, his testimony might be distorted by the fear of subsequent liability. See Barnes v. McCrate, 32 Me. 442, 446-47 (1851). Even within the constraints of the witness'[s] oath there may be various ways to give an account or to state an opinion. These alternatives may be more or less detailed and may differ in emphasis and certainty. A witness who knows that he might be forced to defend a subsequent lawsuit, and perhaps to pay damages, might be inclined to shade his testimony in favor of the potential plaintiff, to magnify uncertainties, and thus to deprive the finder of fact of candid, objective, and undistorted evidence. See Veeder, Absolute Immunity in Defamation: Judicial Proceedings, 9 Colum. L.Rev. 463, 470 (1909). But the truthfinding process is better served if the witness'[s] testimony is submitted to "the crucible of the judicial process so that the factfinder may consider it, after cross-examination, together with the other evidence in the case to determine where the truth lies." Imbler v. Pachtman, 424 U.S. 409, 440, 96 S. Ct. 984, 47 L. Ed. 2d 128 (1976) (White, J., concurring in judgment).
[10] Reprinted in Thomas Starkie and John L. Wendell, A Treatise on the Law of Slander and Libel, and Incidentally of Malicious Prosecutions (Steam Power Press, Massachusetts 1852)(with notes and references to American cases and to English decisions since 1830).
[11] In Oakes, the plaintiff had unsuccessfully sued a baking company and its employee for injuries inflicted upon the plaintiff by the employee. The baking company's law firm had hired a physician to examine the plaintiff. After examining the plaintiff, the physician sent a letter to the law firm in which he opined that the plaintiff was mentally "abnormal" and "undeveloped." The physician testified in court that he had written the letter and he then read the letter in open court. The plaintiff sued the physician for slander. The court first found that the physician enjoyed a qualified privilege for the letter, because it was a communication made in good faith, upon subject matter in which the physician had an interest, or in reference to which he had a duty, either legal, moral, or social, and it was made to a person having a corresponding interest or duty. 154 So. at 27, 179 La. at 370. The court then turned to the physician's in-court testimony and reasoned that the testimony was presumptively privileged under the rule of witness immunity and that the plaintiff, to overcome the presumption, was required to show that the physician's testimony was not "pertinent and material to the issue." 154 So. at 28, 179 La. at 370.
[12] The expert witness testified that the cracks in the plaintiff's home had been caused by settling and not by the defendant's seismic exploration activities and that the cracks had existed when the house was painted prior to the seismographic operations. 368 So.2d at 1136.
[13] The distinction between the immunity granted to witnesses and the immunity granted to litigants was pointed out in Lescale v. Joseph Schwartz Co., Ltd., 116 La. 293, 40 So. 708 (1905). The court explained that the privilege of a witness is an entirely different matter from the privilege of a litigant. "Obvious considerations lead to the protection of a witness, especially a non-volunteer witness, that have no application in the case of a mere litigant prosecuting, or defending, his private right." 40 So. at 711. The court in Lescale held that a litigant who without probable cause makes defamatory allegations against his adversary knowing them to be false commits a fault within the meaning of La. Civ. Code art. 2315, providing that every act whatever of man that causes injury to another obliges him by whose fault it happened to repair. Lescale held that a litigant cannot escape liability on the score of the allegations having been material to the issue.
[14] See also Rogers v. Janzen, 711 F. Supp. 306 (E.D.La.1989).
[15] See, e.g., Randall K. Hanson, Witness Immunity Under Attack: Disarming "Hired Guns," 31 Wake Forest L.Rev. 497 (1996); Douglas R. Richmond, The Emerging Theory of Expert Witness Malpractice, 22 Cap. U.L.Rev. 693 (1993); Eric G. Jensen, Comment, When "Hired Guns" Backfire: The Witness Immunity Doctrine and the Negligent Expert Witness, 62 UMKC L.Rev. 185 (1993); Douglas Pahl, Note, Absolute Immunity for the Negligent Expert Witness: Bruce v. Byrne Stevens, 26 Willamette L.Rev. 1051 (1990); Leslie R. Masterson, Comment, Witness Immunity or Malpractice Liability for Professionals Hired as Experts?, 17 Rev. Litig. 393 (1998); Mark Hansen, Experts are Liable, Too: Client Suits Against "Friendly Experts" Multiplying, Succeeding, 86 A.B.A. J. 17 (Nov. 2000); but see Adam J. Myers, III, Misapplication of the Attorney Malpractice Paradigm to Litigation Services: "Suit Within a Suit" Shortcomings Compel Witness Immunity for Experts, 25 Pepp. L.Rev. 1 (1997).
[16] See Pollock v. Panjabi, 47 Conn.Supp. 179, 27 Conn. L. Rptr. 316, 781 A.2d 518 (2000); LLMD of Michigan, Inc. v. Jackson-Cross Co., 559 Pa. 297, 740 A.2d 186 (1999); Murphy v. A.A. Mathews, 841 S.W.2d 671 (Mo.Sup.Ct. 1992); Mattco Forge v. Arthur Young & Co., 5 Cal. App. 4th 392, 6 Cal. Rptr. 2d 781 (1992); James v. Brown, 637 S.W.2d 914 (Tex.Sup.Ct. 1982); Levine v. Wiss & Co., 97 N.J. 242, 478 A.2d 397 (1984); but see Bruce v. Byrne Stevens & Associates Engineers, Inc., 113 Wash.2d 123, 776 P.2d 666 (1989).
[17] Defendant Howard relies on Genovese v. Usner, 602 So. 2d 1084 (La.App. 1st Cir.1992); S.T.J. v. P.M., supra; Moity v. Busch, supra, and Rogers v. Janzen, supra. As discussed previously, Moity involved suit against an adverse expert witness, while S.T.J. and Rogers involved suits against court-appointed experts. Genovese is somewhat different, in that the plaintiff sued his former social worker/marriage counselor for breach of a statutory privilege for communications between social workers and their clients, set forth in La.Rev.Stat. 37:2714, when the social worker was ordered to testify in court by the trial judge in a hearing to determine fault in a separation proceeding. In dismissing the suit against the social worker with prejudice, the court reasoned that the social worker did not unlawfully breach the statutory privilege, because the social worker would have been found in contempt had he refused without proper cause the trial judge's order to testify, even though that order was later deemed erroneous. Notably, the Genovese court did not base its holding on the application of witness immunity.
[18] In addition, the Washington Supreme Court gave no weight to the fact that the expert is retained and compensated by a party, rather than appointed by the court, because "[t]he basic policy of ensuring frank and objective testimony obtains regardless of how the witness comes to court." 776 P.2d at 669. The court stated that, "as a matter of law the expert serves the court," because the admissibility and scope of the expert's testimony is within the court's discretion and its admissibility turns on whether the testimony will be of assistance to the fact-finder. Id. Lastly, the court rejected the contention that witness immunity is restricted to defamation cases, reasoning that the chilling effect of the threat of subsequent litigation was the same regardless of the theory on which the subsequent litigation is based. Id.
[19] The Pennsylvania Supreme Court majority in LLMD of Michigan cautioned that its holding has limited application. "An expert witness may not be held liable merely because his or her opinion is challenged by another expert or authoritative source. In those circumstances, the judicial process is enhanced by the presentation of different views. Differences of opinion will not suffice to establish liability of an expert witness for professional negligence." LLMD of Michigan, 559 Pa. at 307, 740 A.2d at 191.
[20] At least some professional organizations have begun to set guidelines for providing litigation consulting services. See Myers, supra, 25 Pepp. L.Rev. at 3 n. 7.
[21] The concern that all but full-time experts will be driven from the courtroom is unrealistic. We have no doubt either that appropriate hold-harmless agreements can protect one-time experts seeking such protection or that the insurance industry can meet the needs of experts, whether full-time or not, for errors and omissions coverage.
[22] Defendant Howard's assertion that he admitted to his errors is perhaps more properly directed to an argument that Dr. Marrogi could have mitigated any damages. In fact, Dr. Marrogi apparently did engage other professionals to review at least some of the medical records in question in his unsuccessful attempts to oppose Tulane's motion for summary judgment and to obtain a new trial. See Marrogi v. Gerber, supra. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1775130/ | 343 So. 2d 149 (1977)
STATE of Louisiana
v.
Herbert GREEN.
No. 58417.
Supreme Court of Louisiana.
February 28, 1977.
*150 Robert F. DeJean, Sr., Opelousas, for defendant-appellant.
William J. Guste, Jr., Atty. Gen., Barbara Rutledge, Asst. Atty. Gen., Morgan J. Goudeau, III, Dist. Atty., Robert Brinkman, First Asst. Dist. Atty., for plaintiff-appellee.
SANDERS, Chief Justice.
The State charged Herbert Green with negligent homicide. After trial, the jury returned a verdict of guilty. The trial judge sentenced the defendant to three years imprisonment, but suspended the sentence and placed the defendant on active probation for five years. As a special condition of his probation, defendant was required *151 to serve six months in the parish jail and surrender his driver's license during the period of probation. On appeal, defendant relies upon five assignments of error for reversal of his conviction and sentence. Assignment of Error No. 1, being specifically abandoned, is not considered.
ASSIGNMENTS OF ERROR NOS. 2 AND 4
These two assignments of error are based upon the denial of defendant's motion for a mistrial. The defense made the motion after the trial court ruled that the results of chemical tests of defendant's blood, showing the alcoholic content, were inadmissible because of a failure to comply with the requirements of LSA-R.S. 32:661(C) governing admissibility. Because the blood tests were ruled inadmissible, the defense asserted that the prior reference to the test, in the State's opening statement and by a witness, Officer Gennuso, was prejudicial and warranted a mistrial.
The officer testified only that a physician drew a blood sample and that he later sent it to the laboratory. In our opinion, this general testimony did not ripen into a ground for a mistrial because of the later rejection of the results of the blood tests.
In his opening statement, the prosecutor made the following reference to the blood tests:
"The State is going to show you by competent evidence that at the time this accident happened that this defendant didn't even realize that there was a red light at this particular intersection, he didn't even realize it. Why didn't he realize it? The State is going to show you by competent evidence, we're going to introduce the nurse who extracted blood from his arm, the defendant's arm, at the hospital. It was taken to the crime lab in New Iberia where it was analyzed and it showed that this man had a blood alcohol content by weight of .30. Under the law of Louisiana a person with a blood alcohol content of .10 is presumed to be intoxicated. This man is three times past that presumption. The State is going to show you because of this condition this is why he didn't know there was even a red light at this particular intersection."
Article 766 of the Louisiana Code of Criminal Procedure provides:
"The opening statement of the state shall explain the nature of the charge, and set forth, in general terms, the nature of the evidence by which the state expects to prove the charge."
Under the article, the State's opening statement is mandatory. In addition to explaining the nature of the charge, the statement must set forth, in general terms, the nature of the evidence by which the State expects to prove the charge. The opening statement here complied with the requirements of the article.
The question presented here is whether a mistrial is required because the blood tests, mentioned in the opening statement as one of the items of proof, were later ruled inadmissible.
The prosecutor's opening statement is not evidence and has no probative force. Rather, it is designed to inform the jury so that they may understand the evidence as it unfolds and to protect the defendant from surprise. LSA-C.Cr.P. Art. 766; State v. Shaffer, 260 La. 605, 257 So. 2d 121 (1971); State v. Kreller, 255 La. 982, 233 So. 2d 906 (1970); State v. Dugas, 252 La. 345, 211 So. 2d 285, cert. denied 393 U.S. 1048, 89 S. Ct. 679, 21 L. Ed. 2d 691 (1969).
The general rule is that, absent bad faith on the part of the prosecutor or clear and substantial prejudice, the reference in the opening statement to evidence later ruled inadmissible is not a ground for a mistrial. The rule takes into account that proof frequently falls short of professional expectations. State v. Shaffer, supra; State v. McKee, 170 La. 630, 128 So. 658 (1930); Annot.: Prosecution-Opening Statement, 28 A.L.R. 2d 972, 974; 75 Am.Jur.2d, Trial, § 208, p. 291.
The trial judge ruled the results of the blood tests inadmissible, because the *152 consent form signed by the defendant contained no recital that the defendant had been advised of his rights. See LSA-R.S. 32:661(C). The State argues again in this Court that, despite the absence of the signed rights' form, the blood tests were nonetheless admissible. It relies upon State v. Bruins, La., 315 So. 2d 293 (1975). The State concedes that it lost the benefit of the presumption of intoxication created by LSA-R.S. 32:662. We assume, however, that the ruling of the trial judge was correct.
The trial judge found the prosecutor to be in good faith, stating:
"It appears that the State was in good faith in its assertion in the opening statement regarding the results of the blood test. The lab packet supposedly containing the requisite forms signed by defendant for his consent etc. to the blood extraction was not received by the State until the second day of the trial and apparently it did not know until that time that the results of the blood test would not be admissible."
The finding of the trial judge as to the good faith of the prosecutor is entitled to great weight. See, e.g., State v. Graves, 259 La. 526, 250 So. 2d 727 (1971); State v. Amphy, 259 La. 161, 249 So. 2d 560 (1971). We discern no adequate basis for a contrary finding.
More difficult is the question as to whether or not there was clear and substantial prejudice. Persuasive with us is the strong action taken by the trial judge to avoid prejudice. In a clearly worded and emphatic instruction, he cautioned the jury that the prosecutor's statement of what would be proved was not evidence and could not be considered. See ABA Standards for Criminal Justice, The Prosecution Function and Defense Function, § 5.5 and commentary.
The trial judge instructed the jury as follows:
"I want to repeat with particular emphasis and force what I have said to you before, and that is that nothing you have heard about this particular case can be considered by you unless it came from the mouth of a witness sworn in this case. What the lawyers said is not evidence; what the lawyers argued the evidence was is not evidence; what the lawyers said was proved is not evidence; what the lawyers said would be proved is not evidence; it's only the lawyer's appreciation of what the facts were or what they thought the facts would be, and you are prohibited by law and under your oath from considering as evidence anything an attorney or anyone else, a judge, a court official said. The only thing you can consider as testimony in this case is what came from the mouths of the witnesses on this witness stand. Accordingly, I reemphasize that to you."
We regard the case of State v. Shaffer, supra, as controlling here. In that case, the district attorney, in his opening statement, said: "The State will show the medical findings in this case are compatible with rape and recent sexual intercourse." When the State had rested, defendants moved for a mistrial on the ground that the State had failed to produce the medical evidence. We held:
"The opening statement has no probative force. State v. Kreller, 255 La. 982, 233 So. 2d 906. It is designed to inform and protect from surprise. The failure to produce the medical evidence raises only a question of sufficiency of the proof and is no ground for a mistrial. See C.Cr.P. Art. 775."
We conclude that the trial judge properly overruled the motion for a mistrial and that these assignments of error are without merit.
ASSIGNMENTS OF ERROR NOS. 3 AND 5
Defendant objected to the introduction into evidence of certain oral inculpatory statements made to Officers Curley Lanclos and Paul Gennuso. Defendant concedes, in brief, that he was fully apprised of his rights in accordance with Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L.Ed.2d *153 694 (1966). Defendant summarizes the issue: "The sole issue before the court was whether or not the Defendant was capable of understanding what was transpiring and what his rights were at the time that questions were asked and certain alleged inculpatory statements were made." Defendant contends that the inculpatory statements were inadmissible, the defendant being incapable of understanding because of intoxication or a blow on the head.
In ruling upon the confessions of intoxicated persons, we have consistently held that to render a confession inadmissible, the intoxication must be such as to destroy the defendant's comprehension and render him unconscious of what he is saying. State v. Phanor, La., 325 So. 2d 579 (1976); State v. Manuel, 253 La. 195, 217 So. 2d 369 (1969); State v. Alexander, 215 La. 245, 40 So. 2d 232 (1949); State v. Berry, 50 La.Ann. 1309, 24 So. 329 (1898); 3 Wharton's Criminal Evidence, § 688, p. 479 (13th ed. 1972); 23 C.J.S., Criminal Law, § 828, p. 226. Intoxication, of course, is a factor to be considered by the jury in determining the weight to be accorded to a confession.
Defendant argues that he did not know what he was doing, and did not understand his rights. He points to two isolated portions of testimony by Officers Lanclos and Gennuso, in which the officers used the word "incoherent." The testimony of these officers, taken as a whole, establishes that the defendant knew what he was doing. This is clearly shown by their testimony concerning the defendant's condition and understanding at the scene of the accident and shortly thereafter at the hospital.
When the defendant was informed of his rights by the officers, he stated that he understood them. He identified his automobile for Officer Lanclos. He told Officer Lanclos that he had been drinking, and told Officer Gennuso that he had consumed two tall "Schlitz" and "a pint or half a pint" of whiskey at a designated barroom. He contended that the fatal accident occurred before he arrived at the scene, stating: "Get off of my back, I told you the wreck had happened when I got there." He answered all questions Officer Lanclos asked him. He denied seeing the traffic light at the intersection on two separate occasions. He consented to having a blood sample taken and signed his name to the consent form.
The defendant's actions and his responses to the officers' questions do not portray an individual who had been deprived of his comprehension, either by intoxication or trauma.
Assignments of Error Nos. 3 and 5 are without merit.
ASSIGNMENT OF ERROR NO. 6
Defendant alleges that the trial court erred by giving the following charge to the jury:
"As the Court has already charged you, the Criminal Code provides that the violation of a statute or ordinance shall be considered only as presumptive evidence of such negligence. The Criminal Code provides and prohibits the offense of operating a vehicle while intoxicated. Operating a vehicle while intoxicated is the operating of any motor vehicle, aircraft, vessel or other means of conveyance while under the influence of alcoholic beverages, etc."
Defendant does not question the statement of law contained in the charge. Rather, he bases his assignment of error on the circumstance that the results of the blood tests had been excluded from evidence.
The trial judge is required to charge the jury as to "the law applicable to the case". LSA-C.Cr.P. Art. 802. As we have already observed, there was evidence independent of the blood tests, tending to establish that defendant was intoxicated prior to the accident. Hence, the trial judge correctly ruled that it was applicable.
Assignment of Error No. 6 is without merit.
For the reasons assigned, the conviction and sentence are affirmed.
TATE, J., dissents and assigns written reasons.
*154 CALOGERO, J., dissents for the reasons assigned by TATE, J.
DENNIS, J., dissents.
TATE, Justice, dissenting.
I respectfully dissent.
The defendant is charged with negligent homicide as a result of driving while intoxicated.
In the prosecutor's opening statement, he stated analysis of the blood content immediately after the accident would show that it had an alcoholic content of .30 weight, whereas under our law there is a statutory presumption of intoxication when only .10 alcoholic content is shown. The prosecutor continued: "This man is three times past that presumption. The state is going to show you because of this condition, this is why he didn't know there was even a red light at this particular intersection."
At the trial, it turned out that the results of the blood test were inadmissible as evidence. After the ruling of inadmissibility, the defendant immediately moved for a mistrial, which was denied. The denial of the mistrial was erroneous.
True, at the time of the opening statement, the prosecutor in good faith believed that the state could introduce the blood test of which he spoke. However, his belief turned out to be wrongthe blood test was inadmissible, but nevertheless the jury knew of the result of the blood test as surely as if it had been introduced.
Under these circumstances, the prosecutor's reference in opening statement to extremely prejudicial evidence which, as it turned out was inadmissible, entitle the defendant to a mistrial upon the ruling of inadmissibility. State v. Bell, 279 So. 2d 164 (La.1973). There was no way to cure the prejudice caused the defendant by this reference to specific central evidence, which was in fact inadmissible.
La.C.Cr.P. art. 766 provides that the state's opening statement shall explain "in general terms, the nature of the evidence by which the state expects to prove the charge." Strictly speaking the opening statement need not detail the state's evidence but simply is designed to describe the state's case in general terms sufficient to enable the jury to understand the evidence as it unfolds as well as to inform the defendant, State v. Sneed, 316 So. 2d 372 (La.1975). When the prosecutor details evidence which subsequently is not admitted, he takes the risk that a mistrial may have to be granted. See State v. Bell, cited above, and State v. Cannon, 184 La. 514,166 So. 485, 487 (1936), including summary of its holding at Official Revision Comment (B) La.C.Cr.P. art. 769.
The majority cites a general rule that reference to evidence later ruled inadmissible is not a ground for mistrial. The complete general rule relied upon is as follows, 75 Am.Jur.2d "Trial", § 208: "Generally, statements by counsel that certain evidence will be introduced are not improper if made in good faith and with reasonable ground to believe that the evidence is admissible, even though the intended proof referred to is afterward excluded. However, in the absence of good faith, or where prejudice is clearly produced, whether as the result of accident, inadvertence, or misconception, the rule is to the contrary." (Italics ours.)
Likewise, as stated at the Annotation, ProsecutionOpening Statement, 28 A.L. R.2d 972, 974 (1953), the complete general rule is as follows: "As a general rule, courts recognize the fact that proof frequently fails to come up to expectations, and so the tendency is to permit a prosecuting attorney a reasonable latitude in stating to the jury the facts proposed to be shown. And where no substantial prejudice results, and there is nothing to show that the prosecuting attorney acted in bad faith, the appellate court will usually refuse to reverse or to remand for a new trial because of a reference by the prosecuting attorney to matters which he subsequently made no attempt to prove." (Italics ours.)
The prejudice here caused by the prosecutor's detailed statement of the results of scientific tests to be introduced, admittedly made in good faith at the time, simply could *155 not be cured by an admonition by the trial court.
From the statement, the jury knew that objective scientific tests presumably proved that the accused had consumed three times as much alcohol as needed for intoxication. In this prosecution for negligent homicide, the central issue was whether the accused was intoxicated at the time of the accident.
Despite any admonition by the trial court to the jury to disregard the knowledge of this most crucial (but inadmissible) evidence it had gained from the prosecutor's opening statement, the jury knew of the result of this inadmissible test just as surely as if it had been erroneously introduced into evidence. The prejudice was perhaps all the greater, because the accused was deprived of his normal right to cross-examine the expert testimony as to the tests and to attempt to demonstrate the possibility of error or of misidentification of the blood tested.
Fully recognizing that the conscientious prosecutor was in the utmost good faith as to his intention to introduce the blood tests he described in his opening statement, nevertheless I am impelled to find that, when the result of the test was ruled legally inadmissible, the accused was caused substantial prejudiceand prejudice not curable by an admonition to the jury to disregard the knowledge it had thus gained of truly crucial evidence tending to prove the central contested issue of the prosecution, the accused's intoxication.
I must therefore respectfully dissent. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1848148/ | 56 B.R. 156 (1985)
In re James Gregory VRETIS, Jr., Debtor.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, Plaintiff,
v.
James Gregory VRETIS, Jr., Defendant.
Bankruptcy No. 85-457-BK-J-7, Adv. No. 85-172.
United States Bankruptcy Court, M.D. Florida, Jacksonville Division.
December 27, 1985.
Dorothea Beane, Jacksonville, Fla., for plaintiff.
Gregory K. Crews, Jacksonville, Fla., for defendant.
MEMORANDUM DECISION
GEORGE L. PROCTOR, Bankruptcy Judge.
This adversary proceeding was commenced by the United States Department of Health and Human Resources to determine the dischargeability of an educational loan under 11 U.S.C. § 523(a)(8).
FACTS
Debtor received financial assistance from the Public Health and National Health Service Corps Scholarship Training Program for his 1977-78 year at the Texas College of Osteopathic Medicine. In return, debtor agreed to serve on active duty for at least two years as a member of the National Health Services Corps in a designated health manpower shortage area. If debtor failed to fulfill the service obligation then he agreed to pay in full within three years the total amount of the award plus interest running from the date the award was given.
Under the award agreement, debtor received $6,750.00 as a stipend and $710.20 for tuition and fees. On July 27, 1982, after deferring his obligation in order to complete postgraduate training, debtor was *157 scheduled to begin serving his two year service obligation. Debtor declined to fulfill his obligation and the award went into default. Full payment was due by July 27, 1985. Debtor paid $250.00 on November 23, 1984, which was applied to accrued interest.
There is presently due and owing $7,460.20 principal and $7,838.46 interest after credit for the $250.00 payment.
LAW
An educational loan is a non-dischargeable debt under 11 U.S.C. § 523(a)(8) unless such loan became due more than five years before debtor filed his petition or excepting the debt from discharge "will impose an undue hardship on debtor or debtor's dependents." 11 U.S.C. § 523(a)(8); see also In re Hogan, 43 B.R. 117 (Bkrtcy.D.Ariz. 1984). Debtor does not dispute that the obligation became due less than five years before he filed his petition in bankruptcy or that repayment would impose an undue hardship. Debtor does contend however that the "award" was not an educational loan.
The test for determining whether an award is an educational loan under Section 523(a)(8) is "whether the funds were for educational purposes." In re Shipman, 33 B.R. 80 (Bkrtcy.W.D.Mo.1983). Based on four findings, the Shipman Court found an award from the Department of Mental Health not to be an educational loan because the funds were not specifically designated for educational purposes. Id. First, the contract awarding the money stated that only Shipman would be responsible for her tuition and other costs, the Missouri Department of Mental Health could not be held liable for her school tuition. Second, the contract required Shipman to work one day for each day paid. The award was given as a monthly salary. Third, the proceeds were only used for rent and living expenses. Fourth, the note was based on sums previously awarded in that Shipman did not return to school after execution of the note.
The case at hand materially differs from Shipman in that the award given by the Health Services Corps was designated for tuition and educational purposes. Although the stipend given to support debtor while enrolled in academic training was probably used for rent and living expenses just as the debtor in Shipman used her monies for rent and living expenses, the initial characterization of the loan is what controls. The stipend given debtor was designated as monies to support debtor while engaged in academic training since the training consumed all of debtor's time without leaving any free time in which to work. The fact that the obligations under the award could be discharged by either service or by payment does not change its initial character of being for educational purposes. Clearly, this award was an educational loan within the meaning of Section 523. See In re Scotton, No. LA 83-03720 JD, slip op., (Bkrtcy.C.D.Cal. Feb. 1, 1985); In re Luna, 54 B.R. 637 Slip op. (Bkrtcy. S.D.Fla.1984); In re Hogan, 43 B.R. 117 (Bkrtcy.D.Ariz.1984).
For these reasons, a final judgment finding the debt nondischargeable under Section 523(a)(8) will be separately entered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1859360/ | 598 So. 2d 1194 (1992)
Darlene HAYES, et al., Plaintiffs-Appellants,
v.
PARKEM INDUSTRIAL SERVICES, INC., Defendant-Appellee.
No. 90-1224.
Court of Appeal of Louisiana, Third Circuit.
April 16, 1992.
Rehearing Denied June 15, 1992.
*1195 Higgins & Starling, Richard E. Starling, Pineville, for plaintiffs-appellants Darlene Hayes, Lisa Michelle Duprey and Michael L. Duprey.
Gregory W. Wampler, Colfax, for plaintiff-appellant Patrick Hayes.
Carmouche Firm, Scott J. Pias, Lake Charles, for Parkem.
Hall, Lestage, Landreneau, David R. Lestage, Deridder, A. Frank McGee, Eunice, for LeDoux.
McGee & Caswell, Daniel P. Fontenot, Eunice, Usry & Weeks, Fred Schroeder, Allen Usry, Metairie, for Durio.
Demoruelle & Cole, J.E. Demoruelle, Kinder, for Estes LeDoux.
Juneau, Judice, Hill & Adley, Pat Juneau, Lafayette, for First State Ins.
Voorhies & Labbe, Thomas Hightower, Jr., Lafayette, for Harbor Ins.
Before STOKER and YELVERTON, JJ., and WILLIAM A. CULPEPPER,[*] J. Pro Tem.
YELVERTON, Judge.
The appeal in these four consolidated cases arises from the granting of a summary judgment in favor of the defendants, Sheriff John C. Durio and Deputy Sheriff Estes LeDoux of Allen Parish. The plaintiffs suffered damages in a wreck which happened in an adjoining parish. Their vehicle ran into an abandoned truck on a highway. They blamed Sheriff Durio and his deputy, LeDoux, claiming that the deputy knew about the truck and neglected to secure the scene for the protection of motorists. There were no disputed material issues of fact and the trial court determined that as a matter of law the defendants were not liable to the plaintiffs, Darlene Hayes, Patrick Hayes, Michael L. Duprey, and Lisa Michelle Duprey. The plaintiffs appealed.
For the following reasons, we affirm the judgments in all four cases. Separate judgments are this date being handed down in Duprey v. Parkem Industrial Services, Inc., etc., 598 So. 2d 1198 (La.App. 3rd Cir. 1992) (our docket No. 90-1225), Hayes v. Parkem Industrial Services, Inc., etc., 598 So. 2d 1198 (La.App. 3rd Cir.1992) (our docket No. 90-1226), and Duprey v. Parkem Industrial Services, Inc., etc., 598 So. 2d 1199 (La.App. 3rd Cir.1992) (our docket No. 90-1227).
The material facts are in the depositions of Deputy LeDoux and Mary Deville. Deville was the radio operator for the Allen Parish Sheriff's Office, and her radio log containing some of the factual events was attached to her deposition.
Some time after midnight on August 24, 1988, a truck owned by Parkem Industrial Services, Inc. and operated by Johnny Alvarez, was travelling north on U.S. Highway 165 in Jefferson Davis Parish when the *1196 engine stalled and the truck stopped. Alvarez abandoned the vehicle where it stalled in the northbound lane.
At about 2:15 a.m., the Allen Parish Sheriff's Office got word through a motorist that a stalled vehicle was in the middle of the northbound lane on U.S. Highway 165 south of Kinder. The exact location of the stalled vehicle was not known at this time. That night Deputy Sheriff Estes LeDoux of the Allen Parish Sheriff's Office was working the south half of Allen Parish, through which Highway 165 ran. He drove down the highway to go see if there were any injuries. In route to the stalled vehicle LeDoux realized that the vehicle was not in Allen Parish but in the adjoining parish of Jefferson Davis. After LeDoux arrived he found the vehicle in the traffic lane with its front and rear flasher lights on but no people around. LeDoux informed his office by radio that the stalled vehicle was in Jefferson Davis Parish, one and one-half miles from the Allen Parish line, and that the driver was not present. The Allen Parish Sheriff's Office at 2:33 a.m. informed the Jefferson Davis Parish Sheriff's Department of the situation, and was told that Jefferson Davis Parish would have a deputy in route. LeDoux did nothing at the scene and returned to Allen Parish.
Approximately one hour later LeDoux was again informed by a passing motorist that a stalled vehicle was blocking the northbound lane of U.S. Highway 165. LeDoux again informed his office about the vehicle. Shortly thereafter LeDoux heard on the radio that an accident had occurred involving the stalled vehicle.
The plaintiffs in the four lawsuits that followed this accident included as defendants Sheriff Durio and Deputy LeDoux. The petitions alleged that LeDoux breached his duty to the plaintiffs by failing to secure the scene of the stalled vehicle, and that Sheriff Durio, as his employer, was responsible.
LeDoux and Durio filed a motion for summary judgment, asserting that there were no disputed material issues of fact in the cases, and that, as a matter of law, they were not responsible because no duty was owed by them to the plaintiffs. They contended that they were not responsible because the accident occurred outside of their jurisdiction, they had no authority to act outside their jurisdiction, and therefore they had no duty to act outside their jurisdiction in this case.
The motion for summary judgment was granted dismissing the suits. Plaintiffs filed these appeals asserting that the trial court erred in holding that, as a matter of law, no duty was owed to the plaintiffs by LeDoux and Durio. We agree with the trial court that no duty was owed by the sheriff and his deputy in this case.
It is an accepted general rule that one person must not hurt another, but he is under no legal duty to help him or to confer benefits on him. See W. Keeton, Prosser and Keeton on Torts, § 56 (5th ed. 1984). For example, by the application of this rule, the two motorists, lay persons, who reported the obstructing truck that night, were not obliged by any legal duty to stop and make those reports. Although their actions were commendable, they were under no legal duty to the plaintiffs to report the risk, or do anything else about it. No one would dispute that these lay persons were under no duty, after coming upon the obstruction, to take any action to protect other motorists.
Deputy LeDoux was a commissioned deputy sheriff in Allen Parish. If he owed a duty to the plaintiffs whose accident occurred in Jefferson Davis Parish, the duty necessarily had to arise from his status as a deputy sheriff in Allen Parish, because his status as an Allen Parish deputy was the only thing distinguishing him from the two lay persons who reported the obstruction.
The plaintiffs have not pointed to any law, and we have found none, which authorizes a sheriff or his deputy to act outside the parish of his commission, other than the authority to enter another jurisdiction in hot pursuit, under La.C.Cr.P. arts. 204 and 213, and the authority to make an investigatory stop in certain circumstances, under La.C.Cr.P. art. 215.1. These exceptional *1197 circumstances do not exist in this case.
On the other hand, there are several express provisions of the law which limit the jurisdiction, and therefore the authority to act, of a sheriff to his own parish. Article 5, § 27 of the Louisiana Constitution of 1974 provides that a sheriff shall be elected in each parish and shall be the chief law enforcement officer "in the parish." The Highway Regulatory Act, specifically La. R.S. 32:5, invests law enforcement officers in the state with authority to direct, control, or regulate traffic "within their respective territorial jurisdictions." A sheriff may empower a local or municipal law enforcement officer to enforce any state law "throughout the parish." La.R.S. 33:1435.1. A sheriff can operate and maintain an ambulance, emergency rescue service, and emergency disaster service "within the parish." La.R.S. 33:1437.1. A sheriff can give permits for concealed weapons, but the permit is valid "only within the boundaries of the chief law enforcement officer's parish." La.R.S. 40:1379.1 F. Thus, although the sheriff is constitutionally and statutorily the chief law enforcement officer of his parish, his jurisdiction is limited to the territorial boundaries of his parish.
A deputy sheriff is required to reside in the parish where he is commissioned. La.R.S. 33:1432.1. A deputy can have no greater authority than the sheriff who hired him. A deputy's jurisdiction is limited to the territorial limits of the parish where he is employed.
If a sheriff's jurisdiction and authority to act is limited to his parish, it stands to reason that he has no jurisdiction or authority to act outside his parish. It follows that if he has no authority to act outside his parish, he has no duty to act outside his parish. As to the plaintiffs in the present case, the sheriff's duty was no greater than that of a lay person.
When Deputy LeDoux left Kinder and headed south on Highway 165 that night, he was aware only that there was a report of a stalled vehicle in the travel portion of the highway. He did not know whether the vehicle was inside or outside of Allen Parish. Once he realized that it was beyond the parish line and that it was in Jefferson Davis Parish, he nevertheless went on to the scene to see if someone had been injured. Arriving at the scene, he found no one present. He did not alter the scene. He did not touch or move the stalled vehicle. All he did was report its presence to his radio operator, with a request that the report be relayed to the Jefferson Davis Parish Sheriff's Office. He drove on south to a point where he could turn around, then returned to his duties in Allen Parish.
The plaintiffs argue the application of Lamkin v. Brooks, 498 So. 2d 1068 (La. 1987). That case held that a town may be liable for torts by a police officer committed outside the town limits if the officer acted in the course and scope of his employment. In that case a city police officer, who had encountered the drunken plaintiff three times earlier during the night, twice within the city limits and once outside, deliberately drove outside the city limits for a fourth encounter and hit the defendant in the face with his fist, inflicting injuries. The town was held liable for the actions of the officer. This was because the officer had a duty, like everybody has, not to hurt somebody else, and he violated it. The case has no application to the present facts.
The other case on which the plaintiffs rely is Duvernay v. State of La., through Dept. of Public Safety, 433 So. 2d 254 (La. App. 1st Cir.1983). That case, likewise, is not authority for imposing liability upon Deputy LeDoux. In that case a sheriff's department was found liable for not following up on the problem after it had been notified of a malfunctioning traffic light in its own parish. The First Circuit held that because the sheriff's department had the authority to act, it had the duty to act, that duty going beyond the duty of an ordinary lay person in the premises. In our case, Deputy LeDoux had no authority to act outside his jurisdiction, and therefore he had no duty to act.
*1198 As an alternative argument, the plaintiffs say that they are entitled to recover under the Good Samaritan Doctrine. We can find no basis at all for this assertion. Deputy LeDoux took no affirmative steps to change or alter the scene of the stalled truck. All that he did was see to it that the Jefferson Davis Sheriff's Office was notified. If he assumed the duty to report the situation, it was fulfilled when a report was made. Chance v. State of La., through Dept. of Trans. and Dev., 567 So. 2d 683, 686, n. 4 (La.App. 3rd Cir.1990).
For the reasons assigned, we affirm the judgment of the trial court. Appellants will pay costs of this appeal.
AFFIRMED.
NOTES
[*] Honorable William A. Culpepper, Retired, participated in this decision by appointment of the Louisiana Supreme Court as Judge Pro Tempore. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/4217752/ | NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS NOV 3 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SALVADOR MORALES-JASSO, No. 16-70122
Petitioner, Agency No. A030-224-184
v.
MEMORANDUM*
JEFFERSON B. SESSIONS III, Attorney
General,
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Submitted October 23, 2017**
Before: LEAVY, WATFORD, and FRIEDLAND, Circuit Judges.
Salvador Morales-Jasso, a native and citizen of Mexico, petitions for review
of the Board of Immigration Appeals’ (“BIA”) order denying his motion to remand
and dismissing his appeal from an immigration judge’s (“IJ”) decision denying
cancellation of removal. Our jurisdiction is governed by 8 U.S.C. § 1252. We
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
review for abuse of discretion the denial of a motion to remand. See Romero-Ruiz
v. Mukasey, 538 F.3d 1057, 1062 (9th Cir. 2008). We deny in part and dismiss in
part the petition for review.
The BIA did not abuse its discretion in denying Morales-Jasso’s motion to
remand to consider voluntary departure where he did not apply for such relief
before the IJ and did not allege he was not given an opportunity to do so or that
circumstances had changed. See 8 C.F.R. § 1003.2(c)(1); Najmabadi v. Holder,
597 F.3d 983, 986 (9th Cir. 2010) (listing grounds on which a motion to reopen
can be denied).
We lack jurisdiction to review the agency’s discretionary denial of
cancellation of removal. See Vilchez v. Holder, 682 F.3d 1195, 1201 (9th Cir.
2012).
We also lack jurisdiction to consider Morales-Jasso’s unexhausted
contention that the IJ failed to inform him of the availability of voluntary
departure. See Tijani v. Holder, 628 F.3d 1071, 1080 (9th Cir. 2010) (the court
lacks jurisdiction to consider legal claims not presented in an alien’s proceedings
before the agency).
PETITION FOR REVIEW DENIED in part; DISMISSED in part.
2 16-70122 | 01-03-2023 | 11-03-2017 |
https://www.courtlistener.com/api/rest/v3/opinions/1808650/ | 47 So. 2d 44 (1950)
217 La. 679
NEAL
v.
DANIELS.
No. 38809.
Supreme Court of Louisiana.
May 29, 1950.
Tucker, Bronson & Martin, Shreveport, for plaintiff-appellant.
*45 Lunn & Trichel, Shreveport, for defendant-appellee.
HAWTHORNE, Justice.
Plaintiff, T. S. Neal, instituted this suit seeking a judgment against the defendant, Leonard J. Daniels, in the sum of $13,500.00, received by the defendant as a commission from the sale of the majority stock of the Giddens-Lane Company, Inc. As a cause of action plaintiff alleges that the defendant began negotiations which led to the sale of the stock while in his employ or acting as his agent, and while in such employment obtained confidential information which defendant used to his own advantage in making the sale of the stock for which the commission was paid.
The plaintiff is not entitled to recover unless the defendant was in the actual employ of the plaintiff or was acting as his agent, as alleged. Under Article 3005 of our Civil Code, the agent is bound to restore to his principal whatever he has received by virtue of his procuration even should he have received it unduly. Under the jurisprudence of this court, as announced in Texana Oil & Refining Co. v. Belchic, 150 La. 88, 90 So. 522, 527, "The employee is duty bound not to act in antagonism or opposition to the interest of the employer. Every one, whether designated agent, trustee, servant, or what not, who is under contract or other legal obligation to represent or act for another in any particular business or line of business or for any valuable purpose, must be loyal and faithful to the interest of such other in respect to such business or purpose. He cannot lawfully serve or acquire any private interest of his own in opposition to it. This is a rule of common sense and honesty as well as of law. The agent is not entitled to avail himself of any advantage that his position may give him to profit beyond the agreed compensation for his service. He may not speculate for his gain in the subject-matter of his employment. He may not use any information that he may have acquired by reason of his employment either for the purpose of acquiring property or doing any other act which is in opposition to his principal's interest. He will be required to account to his employer for any gift, gratuity, or benefit received by him in violation of his duty, or any interest acquired adverse to his principal without a full disclosure, though it does not appear that the principal has suffered any actual loss by fraud or otherwise."
The question, therefore, is one of fact only, that is: Was the defendant, Leonard J. Daniels, an employee or agent of the plaintiff, T. S. Neal, at the time the negotiations began which led to the sale of the stock?
After trial on the merits the trial court answered this question in the negative and rendered judgment dismissing plaintiff's suit. Plaintiff has appealed.
The plaintiff operates and conducts a large real estate brokerage office in the City of Shreveport. During the year 1946, the plaintiff, the defendant, and another organized and formed a corporation, distinct and separate from plaintiff's brokerage business, known as the North Highlands Corporation, for the purpose of purchasing and developing a tract of land as a residential subdivision near the City of Shreveport. The office of the corporation was maintained in the same premises as plaintiff's personal business. Plaintiff was the president of this corporation, and defendant was its secretary and treasurer. As secretary and treasurer, defendant was to sell the bonds and stock of the corporation and was to receive a salary of $1000.00 per month. The business affairs of the corporation were not successful, and on February 13, 1947, according to a resolution of the board of directors of the corporation, the resignation of the defendant Daniels as an officer and director of the corporation was accepted and made effective as of February 28, 1947. On or about the date of this resignation, the plaintiff Neal became the owner of all the stock of the corporation, acquiring it from the other two incorporators. The corporation paid the defendant's salary of $1000.00 per month for the months of November and December, 1946, and a reduced salary of $500.00 per month for the months of January and February, 1947.
During the latter part of February, 1947, defendant and T. K. Giddens entered into *46 negotiations for defendant to sell the majority stock of the Giddens-Lane Company, Inc., owned by the Giddens Estate, and pursuant to these negotiations the owners of this stock granted to defendant under date of February 27 an option to sell this stock. This option was delivered to defendant on or about March 3, 1947, and shortly thereafter he sold the stock. Plaintiff is seeking judgment in the amount of the commission defendant received from this sale.
Plaintiff contends that, at the time defendant tendered his resignation as an employee of the corporation, that is, on or about February 13, 1947, defendant requested plaintiff to continue him on the payroll of the corporation until the expiration of the month of February, and that in consideration of being retained on the payroll defendant agreed not only to assist in the business of the corporation but also to assist the plaintiff in his general business as a real estate broker; that for this period of time defendant worked from the office of plaintiff with the other real estate agents and employees and held himself out in his business contacts as representing the plaintiff.
Defendant, on the other hand, flatly denies that any such agreement existed, and contends that he remained in the employ of the North Highlands Corporation to complete certain work already begun for the corporation. Defendant was not paid any compensation or commission by plaintiff individually, but was paid for the month of February by the corporation itself.
The trial judge concluded that plaintiff had failed to sustain the burden of proving this question of fact, and after reading the entire record we agree with this conclusion. We think the record establishes that for the month of February, 1947, defendant was employed by the corporation alone, and not by the plaintiff in connection with his real estate brokerage business.
That the plaintiff himself considered defendant as an employee of the corporation is evidenced by a letter which he wrote to the defendant a short time before the institution of this suit, in which he stated that he was of the opinion that defendant owed him a portion of the commission realized from the stock sale. The letter continued: "My reason for believing this, Leonard [defendant], is that these negotiations originated while you were employed by the North Highlands Corporation, which, as you know, was owned entirely by me and financed by me from its inception." (Italics ours.)
In this court plaintiff-appellant contends that, since he owned all of the stock of the North Highlands Corporation, he and the corporation were in fact, for financial purposes and for defendant's responsibility, one and the same person, and that for this reason, notwithstanding the fact that defendant was in the employ of the corporation, defendant was plaintiff's individual agent, and plaintiff individually is entitled to recover from the defendant.
We are not impressed by this argument. The corporation and the plaintiff are under the law separate and distinct legal entities. Plaintiff as an individual was not liable or responsible to defendant for any compensation for services rendered by the defendant to the corporation, and as such individual he never at any time paid to the defendant any compensation. Plaintiff does not explain on what legal principle the defendant would become his individual agent by the mere fact that the plaintiff owned all the stock of the corporation, and cites no authority in support of this proposition.
For the reasons assigned, the judgment appealed from is affirmed at appellant's costs. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1809346/ | 988 So. 2d 1078 (2006)
JOHN MICHAEL WARD
v.
STATE.
No. CR-05-0655.
Court of Criminal Appeals of Alabama.
September 8, 2006.
Decision of the Alabama Court of Criminal Appeals without opinion. Reh. denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1464609/ | 608 F. Supp. 739 (1984)
William TUDYMAN, Plaintiff,
v.
UNITED AIRLINES, Defendant.
No. CV 84-4463-ER.
United States District Court, C.D. California.
December 26, 1984.
*740 Richard Grey, Barnett & Grey, Beverly Hills, Cal., for plaintiff.
N. Morrison Torrey, United Air Lines, Inc., Elk Grove Village, Ill., for defendant.
MEMORANDUM OPINION
RAFEEDIE, District Judge.
Defendant's motion for summary judgment came on for hearing during normal motion calendar October 22, 1984. This Court, having considered the memorandum and declarations filed by both parties, the oral argument, and the file in this matter, grants defendant's motion. This decision is based on undisputed facts viewed in the light most favorable to the plaintiff.
FACTS
Plaintiff filed this action June 14, 1984, alleging violation of section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794. Plaintiff had applied for a position as a flight attendant with defendant, United Airlines on December 1, 1983. The rejection letter does not give any reason for the rejection, except that other candidates were better qualified. All parties admit, however, that the reason was that plaintiff's weight exceeded the amount that defendant's weight program for flight attendants established as the maximum weight for a man of his height (5' 7½"). Under the program's schedule, plaintiff could weigh no more than 163 pounds. At the time plaintiff applied for the position as flight attendant, he weighed 178 pounds 15 pounds over his maximum.[1]
*741 Plaintiff had previously worked for defendant as a flight attendant, beginning in June 1973. He was terminated on October 9, 1980, because of his weight. Plaintiff took his termination to arbitration, which upheld the termination. Although he did not appeal this decision, his attorney wrote to defendant in June 1982, seeking reinstatement. The request was denied.
Defendant's weight program appears to be motivated by a desire to assure the neat and pleasing appearance of its flight attendants, who have considerable contact with customers. The weight program, as set out in part in Exhibit A to plaintiff's complaint, establishes a maximum weight according to an individual's height, weight, and sex. A two pound "buffer" is also allowed. The program establishes a procedure for those who exceed the maximum weight to try to reduce their weight, and includes the option of termination for those who are unable to do so and who also refuse to transfer or resign. Finally, the program provides that "weight exceptions may only be approved through the local M.D. department" (italics in original).
While plaintiff exceeds the maximum weight for his height, this violation does not mean he is in poor shape. Indeed, his weight appears to result from plaintiff's avid body building, and resulting low percentage of body fat and high percentage of muscle. Before 1980, plaintiff had received medical exemptions from the weight maximum. In June 1979, however, Judge Pratt issued an opinion in a case concerning defendant's then existing weight program.[2]See Alpha v. United Air Lines, 26 Fair Empl. Prac. Case 607 (S.D.N.Y.1979). While he found that the weight maximums did not violate Title VII of the Civil Rights of 1964, 42 U.S.C. § 2000e-5, he found that United's disciplinary actions enforcing the policy discriminated on the basis of sex, as did its practice and policy of giving exceptions. Judge Pratt found the latter was justified because most of the exceptions were given to men on the Hawaii flight who had been hired to give the flight a vacation flavor. 26 F.E.P. at 621-22. After this decision, the medical staff declined to provide plaintiff with a medical exception as his condition was voluntary and self-imposed.
ISSUES PRESENTED
Defendant asserts that summary judgment must be granted on three grounds. First, defendant contends that it is not subject to section 504's anti-discrimination strictures because its "employment program" does not receive any financial assistance. Second, defendant contends that plaintiff is not protected by section 504 as he is not a handicapped individual. Finally, defendant claims that the statute of limitations bars plaintiff's claim as the Court should consider the date plaintiff was originally terminated, rather than the date his most recent application was refused. The Court will look at each of these questions in turn.
Rehabilitation Act ... Federal Financial Assistance
Section 504 of the Rehabilitation Act provides:
No otherwise qualified handicapped individual in the United States, as defined in section 706(7) of this title, shall, solely by reason of his handicap, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance.
29 U.S.C. § 794.
To prove a violation of the Rehabilitation Act, plaintiff must show that he is a "handicapped" person under the Act, see 29 *742 U.S.C. § 706(7) (1982); that he is "otherwise qualified" as a flight attendant, see 29 U.S.C. § 794 (1982); the existence of a relevant federally funded program; and that the weight program is discriminatory. See Bentivegna v. United States Department of Labor, 694 F.2d 619, 621 (9th Cir.1982) (outlining elements to be proved). Defendant disputes the first and third elements.
The Supreme Court has recently affirmed that § 504's ban on discrimination is limited to specific programs or activities receiving federal financial assistance. Consolidated Rail Corp. v. Darrone, ___ U.S. ___, 104 S. Ct. 1248, 1255, 79 L. Ed. 2d 568 (1984); see also Grove City College v. Bell, 465 U.S. 555, 104 S. Ct. 1211, 79 L. Ed. 2d 516 (1984) (Title IX case). Defendant presents a declaration stating that its "employment program" receives no federal financial assistance. Defendant impliedly asserts that this is the only relevant "program" and that since it receives no funding, this requirement has not been met. Defendant, however, does not deny that it receives any federal money, it merely denies that its "employment program" receives any assistance. But defendant does not provide any information that would allow this Court to determine that the assistance it does receive is unrelated to plaintiff.
Defining the appropriate program or activity is not an easy task. The higher courts have provided little guidance. In Consolidated Rail, ___ U.S. ___, 104 S.Ct. at 1256, the Supreme Court did not reach the question, but rather remanded the case for further findings. Similarly, in Meyerson v. State of Arizona, 709 F.2d 1235, 1237-38 n. 1 (9th Cir.1983), vacated ___ U.S. ___, 104 S. Ct. 1584, 80 L. Ed. 2d 118 (1984) (for reconsideration in light of Consolidated Rail), the Ninth Circuit only stated that it had not decided the extent of nexus required between the program receiving the assistance and the plaintiff. Thus, no binding precedent instructs this Court how to define the appropriate program or activity which must receive financial assistance if plaintiff is to meet the § 504 requirement of program specificity. But this Court is aware that "the issue of program specificity cannot be properly analyzed in the abstract, but instead requires a concrete set of facts." United States v. University Hospital, 729 F.2d 144, 151 (2nd Cir.1984). Because such facts are entirely lacking at this point, the Court refuses to grant summary on this ground. Before this Court could grant summary judgment on this ground, it must be assured that defendant receives no federal financial assistance, that the assistance is provided for a function or purpose which is entirely unrelated to plaintiff and any or all programs or activities in which plaintiff is involved, or that plaintiff has had a sufficient opportunity to conduct discovery and has not uncovered either the existence of any federal assistance or of a connection between these funds and the plaintiff.[3]
Defendant seems to argue that it is not necessary to know what other federal assistance is received, so long as the "employment program" receives no assistance. It bases this argument on its conclusion that Grove City "specifically rejected this theory of `institution-wide' coverage." Reply Memorandum at 3. Defendant's argument is wrong at three levels.
This Court is unable and unwilling to make any determination that the funding requirement is not met when defendant has not provided the faintest hint as to what exactly it means when it states that the "employment program" receives no funding. *743 Defendant has never defined "employment program" and the term is extremely ambiguous.
Defendant is confused about the meaning of institution-wide coverage. Assistance provided for one function may overlap and sufficiently affect plaintiff that the trigger may be met, even though plaintiff is not directly involved with that function. For example, if defendant received financial assistance for its health and/or fitness programs, that might provide the necessary nexus. This inquiry does not mean that the whole institution is captured because of the receipt of federal funds by one small section of it. Rather, it is merely a recognition that defining the relevant program is difficult and that the plaintiff may be part of several programs. Here it is important to recall that while the shorthand phrase is "program specificity," the Supreme Court itself spoke of "a program or activity receiving financial assistance."
Finally, defendant's interpretation of § 504's program specificity requirement after Grove City is far too narrow. Grove City provides primarily an expansive reading of when the federal assistance requirement is met. Grove City held that indirect assistance in the form of grants to students, rather than grants to the college itself, could trigger Title IX coverage. ___ U.S. ___, 104 S.Ct. at 1220.[4] The Supreme Court then determined that the correct program in that case was the student financial aid program. Id. at ___, 104 S.Ct. at 1221. In so doing, the Supreme Court rejected the Court of Appeal's holding that the student grants constituted aid to the entire institution. But importantly, the Supreme Court did not reject the possibility that federal aid could in some situations result in Title IX (or § 504) covering the entire institution the Supreme Court only decided that federal student grants did not have this effect.[5] As the Supreme Court stated in Grove City, Id., and repeated in Consolidated Rail, ___ U.S. ___, 104 S.Ct. at 1221. "[s]tudent financial aid programs ... are sui generis." Thus, the only holding of Grove City that is relevant to this case, or to most § 504 cases, is that indirect funding is sufficient to trigger § 504's coverage, but that the effect of the federal assistance on plaintiff must be more than merely "freeing up" defendant's own resources for use elsewhere. Grove City, therefore, neither compels nor argues for granting summary judgment on the basis of financial assistance.
Indeed, this Court finds defendant's argument to be similar to that rejected by the Supreme Court in Consolidated Rail. In that case, defendant received federal assistance by the government purchasing stock, as well as funds for retraining programs and termination programs. None of this money went "primarily" for employment, and therefore defendant argued that § 504 did not apply. The Court rejected this argument, because § 504's "bar on employment discrimination should not be limited to programs that receive federal aid the primary purpose of which is to promote employment." ___ U.S. ___, 104 S.Ct. at 1254.
Rehabilitation Act of 1973 Handicapped Person
Defendant's argument that, even if it is covered by § 504, plaintiff is not protected by the Rehabilitation Act as he is not a handicapped individual, is more successful. Again, this Court begins its inquiry by looking at the statute. Section 706(7)(B) of the Act states:
The term "handicapped individual" means for purposes of subchapter IV and V of this chapter, any person who (i) has a physical or mental impairment *744 which successfully limits one or more of such person's major life activities, (ii) is regarded as having such an impairment. For purposes of sections 793 and 794 of this title, as such sections relate to employment, such term does not include any individual whose current use of alcohol or drugs prevents such individual from performing the duties of the job in question or whose employment, by reason of such current alcohol or drug abuse, would constitute a direct threat to property or the safety of others.
29 U.S.C. § 706(7)(B); accord 45 C.F.R. § 84.3(j).
While the statute does not define any of the terms used in its definition, the regulations by the Department of Health and Human Services elaborate:
(i) "Physical or mental impairment" means (A) any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: neurological; musculoskeletal; special sense organs; respiratory, including speech organs; cardiovascular; reproductive, digestive, genito-urinary; hemic and lymphatic; skin; and endocrine; or (B) any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities.
(ii) "Major life activities" means functions such as caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working.
(iii) "Has a record of such an impairment" means has a history of, or has been misclassified as having, a mental or physical impairment that substantially limits one or more major life activities.
(iv) "Is regarded as having an impairment" means (A) has a physical or mental impairment that does not substantially limit major life activities but that is treated by a recipient as constituting such a limitation; (B) has a physical or mental impairment that substantially limits major life activities only as a result of the attitudes of others toward such impairment; or (C) has none of the impairments defined in paragraph (j)(2)(i) of this section but is treated by a recipient as having such an impairment.
45 C.F.R. § 84.3(j)(2).
Thus, there are three possible types of people who are considered handicapped: those who presently have some impairment substantially limiting a major life activity, those who have been so limited in the past, and those who are regarded by others as being so. Defendant argues that plaintiff has no such limitation or impairment and that it does not so regard plaintiff. It only regards plaintiff as not meeting the weight restriction. Plaintiff urges a broad interpretation of the term "handicapped" to include a person who is not "within the ordinary definition of that term" but "is perceived as such by an employer who has acted in a manner which precludes plaintiff from obtaining employment, notwithstanding the fact that he is in all other respects qualified to perform the requirements of the job." Plaintiff's opposition to Summary Judgment, 7-8.
Neither party cited any case dealing with the question of who is a handicapped person. Very few cases spend much time on the issue, as the issue usually requires little analysis. See, e.g., Longoria v. Harris, 554 F. Supp. 102 (S.D.Tex.1982) (amputee); Grube v. Bethlehem Area School District, 550 F. Supp. 418 (E.D.Pa.1982) (football player with kidney removed); Vickers v. Veterans Administration, 549 F. Supp. 85 (W.D.Wash.1982) (hypersensitivity to tobacco smoke required plaintiff to work in smoke-free environment); Bey v. Bolger, 540 F. Supp. 910 (E.D.Pa.1982) (hypertensive cardiovascular disease).
In defining who is a handicapped individual, § 504's "Catch 22" aspect appears: the plaintiff must first show that he or she has some impairment which substantially limits a major life activity, but this same plaintiff must show that he or she is not so handicapped as to be unable to perform the job. See Doe v. Region 13 Mental Health-Mental Retardation Commission, 704 F.2d *745 1402, 1408 n. 6 (5th Cir.1983); Doe v. New York University, 666 F.2d 761, 775 (2nd Cir.1981). This plaintiff, however, seeks to turn this difficulty on its head. He argues that because the weight restriction prevents him from obtaining a job, for which he would otherwise be qualified, the requirement transforms him into a handicapped individual as it is his body composition that prevents him from meeting this requirement. Plaintiff does not specify whether this constitutes a handicap under 706(7)(B)(i) or (ii).
There is, however, no authority for the proposition that failure to qualify for a single job because of some impairment that a plaintiff would otherwise be qualified to perform constitutes being limited in a major life activity. The regulations define major life activity as, inter alia "working," 45 CFR § 84.3(j)(2)(ii), but not "working at the specific job of plaintiff's choice." No court requires that an employee be prevented from all employment in order to be considered handicapped, and some courts are willing to define "major life activity" so that it is easily met. E.g., Doe v. New York University, 666 F.2d at 775 (major life activity limited when plaintiff unable "to handle stressful situations of the type faced in a medical training milieu") (court, nonetheless, reversed preliminary injunction); Vickers v. Veterans Administration, 549 F.Supp. at 87 (major life activity "capacity to work in environment which is not completely smoke free").
The only court to analyze the definition of handicapped status at any length is E.E. Black, Ltd. v. Marshall, 497 F. Supp. 1088 (D.Haw.1980), vacated and remanded to administrative law judge for further findings, Empl.Prac.Dec. ¶ 32,199, 26 Fair Empl. Prac. Cas. (BNA) 1183 (D.Haw.1981). That court rejected the proposition that § 504 protects those capable of performing a particular job who is rejected because of a real or perceived physical or mental impairment. 497 F.Supp. at 1099. The court reasoned that that was not what Congress sought to accomplish with § 504 because "[i]f it were, Congress would not have used the terms substantial handicap or substantially limits they (sic) would have said "any handicap to employment" or "in any way limits one or more such person's major life activities." Id. (emphasis in original). This court agrees with the portion of the Black court's decision[6] that the inability to obtain a single job does not render one "handicapped."
While aware that only one court has found a plaintiff not to be handicapped, see GASP v. Mecklenburg County, 42 N.C. *746 App. 225, 256 S.E.2d 477 (1979) (nonsmokers harmed by tobacco smoke not handicapped) and cognizant that the definitions are generally to be read broadly, see Doe v. New York University, 666 F.2d at 775, this Court believes that there are limits to who can be considered handicapped and that these limits were exceeded by this case. A person who exceeded the maximum weight for a United flight attendant because he is an avid body builder is not limited in a major life activity he is only prevented from having a single job.
Furthermore, plaintiff's "unique musculo-skelital system and body composition," as his motion papers describe his condition, are not the result of "physiological disorders," "cosmetic disfigurement," and "anatomical loss," 45 C.F.R. § 84.3(j)(2)(i). His weight and low fat content are self-imposed and voluntary. This distinguishes the present case from one in which the plaintiff's weight was involuntary e.g., the result of a glandular problem. Only one court has considered whether § 504 protects an individual who is "voluntarily" handicapped. In Davis v. Bucher, 451 F. Supp. 791 (E.D.Pa.1978), the court held past drug users to be handicapped and that a city could not automatically disqualify them for past use. It recognized that the condition was voluntary, but held that such persons were still covered by § 504 because the Department of Health, Education and Welfare's analysis of the question argued that drug addiction was an impairment. Id. at 796. Therefore, the court did not proceed to analyze the effect of voluntariness, but only mentioned it as a factor which would otherwise have been relevant. The Davis court also noted that drug addiction was a serious problem and that Congress would want to assist those attempting to overcome their problem. Id. The only other court to touch upon the question of voluntariness found that where a person very sensitive to tobacco smoke may be handicapped, there was no discrimination where the plaintiff refused to either move his desk or close his office door. See Vickers, 549 F.Supp. at 89-90.
No such factors balance this plaintiff's choice to be a champion body builder. While good health is certainly a laudable goal, there is no indication that Congress intended to confer special protection upon body builders when it passed the Rehabilitation Act to protect the handicapped. The 1978 amendment to the Act gives additional indication that § 504 was not intended to protect those with voluntary "impairments" from employment discrimination as it specifically excepted some present drug and alcohol abusers from the definition of handicapped individual. See 29 U.S.C. § 706(7)(B). What plaintiff is really suing for is his right to be both a body builder and a flight attendant, a right that § 504 was not intended to protect.
Thus, this Court concludes that as a matter of law plaintiff is not a handicapped individual under § 504. Plaintiff has no physical impairment and is not substantially limited in any major life activity. Nor does defendant perceive plaintiff to have a physical impairment which limits his activities. Defendant merely regards plaintiff as not being under a certain weight. For the same reason that the failure to qualify for a single job does not constitute a limitation on a major life activity, refusal to hire someone for a single job does not in and of itself constitute perceiving the plaintiff as a handicapped individual. If this were the case, then anyone who failed to obtain a job because of a single requirement which may not be essential to the job would become a handicapped individual because the employer would thus be viewing the applicant's failure as a handicap. This Court refuses to make the term handicapped a meaningless phrase.
Lastly, it must be observed that the fact that there may be no good, logical or medical justification for the defendant's weight program, as plaintiff contends, does not affect the analysis at all.[7] For good or *747 evil, private employers are generally free to be arbitrary and even capricious in determining whom to hire, unless the employer somehow discriminates on the basis of race, national origin, alienage, age, sex, or handicap status, considerations which Congress has determined to be prohibited. But it is only after the employment qualification or policy has been found to have some impact upon a member of a protected group that the defendant is required to justify that requirement or policy.
Rehabilitation Act of 1973 Statute of Limitations
Defendant contends that a three-year statute of limitations applies to § 504 suits, adopting California's three-year limitations statute prescribed for actions founded upon a liability created by statute. See Cal.Civ. Pro.Code § 338. Plaintiff concurs. Defendant, however, argues that plaintiff's cause of action accrued on October 9, 1980 when he was originally discharged for being overweight. Plaintiff argues that the limitations period does not begin to run until he applied and was rejected in December 1983, and thus is within the period.
As the Court has determined that plaintiff is not included within § 504's ambit, it does not reach the question whether a plaintiff who has reapplied for a job from which he was originally fired has a new cause of action that may be within the limitations period, even if the termination is barred. This Court notes, however, that the case upon which defendant principally relies actually distinguishes between a request for reinstatement and an application for employment. See Collins v. United Air Lines, 514 F.2d 594, 596-97 (9th Cir. 1975) (quoting NLRB v. Textile Machine Works, 214 F.2d 929, 932 (3d Cir.1954). While a request for reinstatement is not a new and separate violation, application for employment which is refused is a separate and distinct act. Id. The Ninth Circuit, however, has only applied Collins in cases concerning requests for reinstatements, rather than cases in which termination has been followed by a new application.
CONCLUSION
There is no material fact at issue. Defendant is entitled to summary judgment as a matter of law as plaintiff is not a handicapped individual protected by § 504. Accordingly, this Court orders that summary judgment be granted in favor of defendant, that judgment in its favor be entered, and that defendant recover of plaintiff its costs of action.
NOTES
[1] Plaintiff's application stated that his lowest weight in the preceding twelve months was 170 pounds.
[2] The weight program at issue in this case appears to be a different, and more lenient, program than that approved by the district court in Alpa, arrived at by settlement between the parties in Alpa. For example, this program differentiates by age. While defendant attempts to intimate that the weight program is mandated by the district court's decision, that decision only requires that the program, if it does exist, be administered or enforced in nondiscriminatory fashion. Air Line Pilots Ass'n., Intern. v. United Air Lines, 480 F. Supp. 1107, 1112 (E.D.N. Y.1979).
[3] This Court is not shifting the burden of meeting § 504's requirements from plaintiff to defendant. If this case were to come to trial, plaintiff must, of course, prove these elements. But when the defendant requests this Court to grant summary judgment, and the information needed to prove this requirement is in defendant's possession, defendant must persuade the Court that no such information exists. See Chaplin v. Consolidated Edison Co., 579 F. Supp. 1470, 1475 (D.C.N.Y.1984) ("Plaintiffs are entitled to obtain as complete a record as possible before being required to respond to the argument that they have demonstrated an insufficient nexus between the funding received by [defendant] and the position for which [plaintiff] was rejected.").
[4] Title IX has been interpreted to have the same "program specific" funding requirement as § 504. The Supreme Court cited both Grove City and North Haven Bd. of Educ. v. Bell, 456 U.S. 512, 102 S. Ct. 1912, 72 L. Ed. 2d 299 (1982) (also dealing with Title IX) in deciding Consolidated Rail.
[5] The Court itself noted that Title IX was not limited to only the administration of the federal student aid, as the College contended, but prevented discrimination in the administration of all student financial aid distributed by the College. 104 S.Ct. at 1221 n. 21.
[6] Black settled upon the test that a substantial handicap existed if the individual was disqualified from the same or similar jobs offered throughout the area to which the individual had reasonable access. 497 F.Supp. at 1101. Further, the court held that "In evaluating whether there is a substantial handicap to employment, it must be assumed that all employers offering the same job or similar jobs would use the same requirement or screening process." Id. at 1100.
The reason for this is that an employer with some aberrational type of job qualification (people with straight hair are inferior, and thus I require all job applicants to have curly hair) that screens out impaired individuals who are capable of performing a particular job, should not be able to say: "No one else has this job requirement, so the impairment does not constitute a substantial handicap to employment, and the applicant is not a qualified handicapped individual." If such an approach were allowable, an employer discriminating against a qualified handicapped individual would be rewarded if his reason for rejecting the applicant were ridiculous enough.
Id.
This Court must respectfully disagree with its sister court on this point. Only if the employer's restriction or requirement discriminates against handicapped persons is it illegal, no matter how stupid or objectionable the restriction or requirement might be in general. Using the curly hair/straight hair example, unless plaintiff can demonstrate that curly hair is a common job requirement or that straight haired individuals are generally perceived as limited in some way, so that the plaintiff is handicapped, the curly hair requirement is not prohibited. Therefore, defendant is not evading § 504 by selecting ridiculous or arbitrary qualifications, and there is no need or justification for the Black court's decision to assume that all employers have the same arbitrary job requirements unless that is shown to be true. In the present case, plaintiff has not shown that he is barred from any job other than the job of United flight attendant.
[7] As Judge Pratt found in Alpa:
[D]etermination of the specific amount of an exception to be granted a flight attendant is, from a medical standpoint, arbitrary and without solid medical basis.... Because the "exception" policy was without solid medical foundation, United's medical director directed that information from a private physician supporting a requested exception be elicited from a lay person rather than by the United medical director, "in order to keep me from appearing medically stupid to my peers."
26 Fair Emp.Prac.Cases at 615. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1488065/ | 880 A.2d 889 (2005)
91 Conn.App. 296
Anna BOCCANFUSO et al.
v.
John M. GREEN et al.
Anna BOCCANFUSO et al.
v.
Harold A. GORHAM et al.
No. 25109.
Appellate Court of Connecticut.
Argued March 21, 2005.
Officially released September 13, 2005.
*892 John R. Hall, with whom was Edward Kanowitz, for the appellants (defendant Louis Allen Conner, Jr., et al.).
William Bradley Kellogg, for the appellees (plaintiffs).
SCHALLER, HARPER and HENNESSY, Js.
HARPER, J.
The defendants[1] appeal from the judgment of the trial court rendered in favor of the plaintiffs[2] in these consolidated actions[3] in which the plaintiffs claimed that they own by adverse possession two contiguous parcels of land. On appeal, the defendants claim that the court acted improperly in determining that (1) the plaintiffs had established adverse possession over the parcels and (2) the defendants failed to prove that they had acquired title to the parcels by adverse possession. We affirm the judgment of the trial court.
The court found the following facts that are relevant to our resolution of the defendants' appeal. The plaintiffs commenced two actions alleging that they had acquired, by adverse possession, ownership of two parcels of land in Westport, referred to at trial as parcel B1[4] and parcel *893 B2.[5] Both parcels are bounded on the north by the Saugatuck River and on the south by Harbor Road. Parcel B2 is bounded on the west by parcel B1. Parcel B1 is bounded on the west by beachfront property known as lot 120-H, which is owned by the plaintiffs. Parcel B2 is bounded on the east by land identified as lot A. The parcel identified as lot A and the land to the east of lot A are owned by the plaintiffs. The plaintiffs are the record owners of the beachfront property in the area along that stretch of Harbor Road, except parcel B1 and parcel B2.
Parcels B1 and B2 are located across Harbor Road from the property known as *894 5 Madeline Avenue, which is owned by the defendants. The defendants purchased the 5 Madeline Avenue property through a warranty deed on May 12, 1978. The deed included parcel B1 and parcel B2 as a part of the property transfer, but the evidence presented to the court established that Robert Donahue and Elizabeth Donahue, who purportedly conveyed parcels B1 and B2 to the defendants, did not have title ownership of the parcels. The defendants later acquired title ownership of parcel B2 by a quitclaim deed dated May 21, 1999. The court found that ownership of parcel B1 remained in the names of Harold A. Gorham and Philip P. Mahoney, who were named as defendants but did not appear in this action.[6]
The plaintiff Anna Boccanfuso and her husband, Joseph Boccanfuso, purchased from Mahoney the property known as 88 Harbor Road and the beach area directly across the street from that property in April, 1950. Joseph Boccanfuso died in October, 1967. In a deed recorded in February, 1979, Anna Boccanfuso conveyed the property to herself and to her three sons, Guiseppe Boccanfuso and the plaintiffs Domenico Boccanfuso and Crescienzo Boccanfuso. In May, 1994, Guiseppe Boccanfuso transferred his interest back to his mother; therefore, the plaintiffs are the current owners of 88 Harbor Road. Anna Boccanfuso and Domenico Boccanfuso currently reside at 88 Harbor Road.
Immediately to the west of 88 Harbor Road is property known as 84 Harbor Road. In July, 1982, the three Boccanfuso sons acquired 84 Harbor Road and the beach area directly across the street from the property, known as lot 118-H, from Joseph O'Connor and Mollie O'Connor. The property located at 84 Harbor Road and the beach property directly across from it are now owned by Anna Boccanfuso and her three sons.
The defendants' property, located at 5 Madeline Avenue, is immediately to the west of 84 Harbor Road. The disputed beachfront parcels lie directly across Harbor Road from the defendants' property. The Donahues conveyed the property known as 5 Madeline Avenue to the defendants through a warranty deed in 1978.[7] The 1978 deed, and the prior deed that conveyed title from Elaine Rosenburg to the Donahues in 1972, purported to convey title to parcels B1 and B2.[8] In contrast, the deed that conveyed title from Nancy Littlefield to Rosenburg in 1967 did not include parcels B1 and B2 as part of the conveyance. Virginia Ehrhorn owned 5 Madeline Avenue between 1948 and 1961;[9] she then conveyed the property to Littlefield. Ehrhorn did not believe that she had owned parcels B1 or B2. Because of that discrepancy in title, the defendants abandoned their claim, in which they alleged that they had title ownership of parcels B1 and B2 on the basis of the 1978 *895 deed through which they acquired 5 Madeline Avenue.
Directly across Madeline Avenue to the west of 5 Madeline Avenue is the property known as 80 Harbor Road. Anna Boccanfuso and her husband purchased from George Tilly and Winifred Tilly the property known as 80 Harbor Road along with the beach property located directly across Harbor Road from the property, referred to as lot 120-H. The plaintiffs presently own that property.[10]
Although Anna Boccanfuso believed that when she and her husband purchased 88 Harbor Road in 1950, the purchase included parcels B1 and B2, her belief was incorrect because the property description contained in the deed clearly did not include parcels B1 and B2. The plaintiffs, however, used and maintained parcels B1 and B2 as though they owned them. Parcels B1 and B2 were the primary means of gaining access to the adjacent beach parcels; thus, the plaintiffs regularly used parcels B1 and B2 to access the beach for recreation and maintenance of parcels B1 and B2 and the parcels of beach surrounding the disputed parcels.
The plaintiffs began using those parcels in the 1950s and continued to use them in varying degrees until the time of trial. In addition to using the disputed parcels for recreational purposes, the plaintiffs' family operated a rowboat rental business beginning in the 1950s and continuing for about a decade. In connection with that business, they stored rowboats along the beach, including on parcels B1 and B2, and launched the rowboats from those parcels.
The plaintiffs hired contractors to bring boulders onto the beach area. The boulders were brought onto parcels B1 and B2 and then spread and set in a solid line along the entire length of the beach to serve as a protective seawall, with the exception of a portion of parcels B1 and B2 that served as an access and egress to the beach area and the Saugatuck River. Beginning in the 1950s, the plaintiffs and their family put sand, gravel and boulders on parcels B1 and B2 and then spread those materials along the beach with a backhoe, wheelbarrows, shovels and rakes to maintain the beach after storms and to prevent erosion. The court found that there was "no evidence that any one else hauled and dumped materials on and maintained the beach to the degree or extent as performed by the plaintiffs and their family."
To facilitate vehicle access to the beach area, the plaintiffs' family built a boat ramp made of dirt on parcels B1, B2 or both. The plaintiffs built the first boat ramp in the 1950s. The integrity and existence of the ramp varied through the years due to erosion and weather conditions and, thus, the plaintiffs' family reconstructed the ramp periodically through the years. The plaintiffs used the ramp as access and egress for boats, dump trucks, backhoes and wheelbarrows. There is no evidence that anyone else built or maintained ramps on parcels B1 or B2.
The plaintiffs' use of the ramp continued until the 1990s. In 1967, the plaintiffs used the ramp to allow equipment to access and egress the beach area while constructing seawalls on the plaintiffs' property in front of 88 Harbor Road. The plaintiffs used the ramp for similar purposes in 1986, while constructing seawalls on the parcels opposite 80 and 84 Harbor Road. The seawall built by the plaintiffs *896 encroached onto parcel B1. The plaintiffs also built a wall perpendicular to Harbor Road that divided parcel B1.
Parcels B1 and B2 were not included on Westport's tax rolls until October 1, 1987, at which time both parcels were added. Since October 1, 1987, the plaintiffs have paid the property taxes on parcels B1 and B2.
These consolidated actions were tried to the court in a four day period between July 17 and 23, 2003. The defendants filed numerous special defenses and counterclaims. The defendants first alleged that the plaintiffs failed to prove that they acquired title to parcels B1 and B2 by adverse possession prior to the defendants' purchase of 5 Madeline Avenue in 1978; however, the defendants alleged that if the court found that the plaintiffs had acquired title to those parcels by adverse possession that the defendants extinguished the plaintiffs' title to parcels B1 and B2 by their adverse possession of those parcels. The defendants argued alternatively that they acquired a prescriptive easement over parcels B1 and B2. The plaintiffs denied the allegations in the defendants' counterclaims and filed numerous special defenses.
The court found, on January 22, 2004, that the plaintiffs acquired ownership of parcels B1 and B2 by adverse possession by 1970, before the defendants had purchased the 5 Madeline Avenue property, and that the defendants had failed to establish that they had acquired title to parcels B1 and B2 by adverse possession. The court, however, found that the defendants had a prescriptive easement over a portion of parcel B1 and all of parcel B2 for recreational purposes and to access the Saugatuck River. On appeal, the defendants claim that the court improperly determined that (1) the plaintiffs' use of the property satisfied the elements of adverse possession and (2) the defendants did not establish adverse possession.
After the court issued its memorandum of decision, the plaintiffs filed a motion for articulation asking the court to specify the point in time beyond 1970 up to which they continued to satisfy the requirements of adverse possession. The court granted articulation with a handwritten notation.[11] The plaintiffs filed in this court a motion for review, claiming that the articulation was inadequate. This court granted the motion for review and, in response, the trial court issued an articulation stating that "the plaintiffs continued to satisfy the elements of adverse possession beyond the 1970s and to the time of trial." This appeal followed.
As a preliminary matter, we set forth our well established standard of review. "A finding of adverse possession is to be made out by clear and positive proof. . . . [C]lear and convincing proof . . . denotes a degree of belief that lies between the belief that is required to find the truth or existence of the [fact in issue] in an ordinary civil action and the belief that is required to find guilt in a criminal prosecution.. . . [The burden] is sustained if evidence induces in the mind of the trier a reasonable belief that the facts asserted are highly probably true, that the probability that they are true or exist is substantially greater than the probability that they are false or do not exist. . . . The *897 burden of proof is on the party claiming adverse possession. . . .
"Despite that exacting standard, our scope of review is limited. Adverse possession is a question of fact, and when found by the trial court will not be reviewed by this court as a conclusion from evidential facts, unless it appears that these facts, or some of them, are legally or logically necessarily inconsistent with that conclusion." (Internal quotation marks omitted.) Allen v. Johnson, 79 Conn.App. 740, 745, 831 A.2d 282, cert. denied, 266 Conn. 929, 837 A.2d 802 (2003).
The defendants' claim requires us to review the court's factual findings. "The standard of review with respect to a court's findings of fact is the clearly erroneous standard. The trial court's findings are binding upon this court unless they are clearly erroneous in light of the evidence and the pleadings in the record as a whole.. . . We cannot retry the facts or pass on the credibility of the witnesses. . . . A finding of fact is clearly erroneous when there is no evidence in the record to support it. . . or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed . . . ." (Internal quotation marks omitted.) Id., at 745-46, 831 A.2d 282.
I
A
We first review the defendants' claim that the court, on the basis of the evidence presented, improperly found that the plaintiffs obtained title to parcels B1 and B2 prior to 1978. We are not persuaded that the court's finding was clearly erroneous.
"[T]o establish title by adverse possession, the claimant must oust an owner of possession and keep such owner out without interruption for fifteen years by an open, visible and exclusive possession under a claim of right with the intent to use the property as his own and without the consent of the owner." (Internal quotation marks omitted.) 1525 Highland Associates, LLC v. Fohl, 62 Conn.App. 612, 622, 772 A.2d 1128, cert. denied, 256 Conn. 919, 774 A.2d 137 (2001); see also General Statutes § 52-575(a). The court determined that the plaintiffs' adverse use of the property ousted any prior owner and that the plaintiffs met all the other elements of adverse possession. After reviewing the record, we conclude that the court's findings were legally and logically consistent with the evidence presented, and not clearly erroneous.
The defendants argue that the plaintiffs' assertion of title by adverse possession must fail because the evidence presented to the court demonstrated that the plaintiffs' use of parcels B1 and B2 was not exclusive. The court relied on the principles outlined by our Supreme Court in Roche v. Fairfield, 186 Conn. 490, 502, 442 A.2d 911 (1982), to determine that the plaintiffs had fulfilled the requirement of exclusive possession of the disputed parcels. "In general, exclusive possession can be established by acts, which at the time, considering the state of the land, comport with ownership; viz., such acts as would ordinarily be exercised by an owner in appropriating land to his own use and the exclusion of others. . . . Thus, the claimant's possession need not be absolutely exclusive; it need only be a type of possession which would characterize an owner's use. . . . It is sufficient if the acts of ownership are of such a character as to openly and publicly indicate an assumed control or use such as is consistent with the character *898 of the premises in question." (Citations omitted; internal quotation marks omitted.) Id., at 502-503, 442 A.2d 911.
The defendants claim, however, that Roche is distinguishable from the present case because Roche concerned a municipality that adversely had possessed a beach, which it then operated as a public beach. The defendants claim that the nature of a public beach prevents the exclusion of anyone, thereby necessitating the court to restrict the definition of exclusive possession. We decline the defendants' invitation to limit the principles that constitute exclusive possession that our Supreme Court established in Roche.
During the trial, the parties presented detailed evidence relating to their use of parcels B1 and B2. The court found that "[b]ecause parcels B1 and B2 provided the most convenient ways to reach this entire beach area, over the years other people used these parcels to gain access to the beach. However, from 1950 through at least 1978, there is no persuasive or credible evidence that anyone other than the plaintiffs and their family used these parcels under a demand or claim of ownership." We conclude that the court's determination comports with the legal principles relating to exclusive possession in the context of adverse possession established in the case law.
After reviewing the record, we conclude that because the defendants had not purchased their property on Madeline Avenue until after the plaintiffs already had obtained title to the disputed property by adverse possession, any claim of ownership that the defendants asserted on the basis of their use of the property was too late to affect the exclusivity of the plaintiffs' use during the period within which adverse possession was established initially. See Roche v. Fairfield, supra, 186 Conn. at 501 n. 11, 442 A.2d 911.
B
The defendants further claim that the court's articulation that the plaintiffs had satisfied the elements of adverse possession from 1978 until the time of trial contradicts the court's finding that the defendants had established a prescriptive easement over a portion of the disputed parcels. The defendants argue that the court's findings are illogical, as a matter of law, and must be reversed. We do not agree.
The court's finding that the defendants possessed a prescriptive easement is a finding of fact. "[Findings of fact] that there had been an open, visible, continuous and uninterrupted use for fifteen years under a claim of right, as found by the trial court, are not reviewable unless the subordinate facts on which they are based are legally and logically inconsistent or are insufficient to support the conclusion that they exist." (Internal quotation marks omitted.) Gallo-Mure v. Tomchik, 78 Conn.App. 699, 704, 829 A.2d 8 (2003).
We begin our analysis by setting forth the elements necessary to establish a prescriptive easement. "[A] prescriptive easement is established by proving an open, visible, continuous and uninterrupted use for fifteen years made under a claim of right. . . . The standard of proof that is required is a fair preponderance of the evidence." (Citation omitted.) Gioielli v. Mallard Cove Condominium Assn., Inc., 37 Conn.App. 822, 829, 658 A.2d 134 (1995). "To establish an easement by prescription it is absolutely essential that the use be adverse. It must be such as to give a right of action in favor of the party against whom it has been exercised. . . . The use must occur without license or permission and must be unaccompanied by any recognition of [the right of the owner *899 of the servient tenement] to stop such use." (Citation omitted; internal quotation marks omitted.) Kelley v. Tomas, 66 Conn.App. 146, 159, 783 A.2d 1226 (2001). "Use by express or implied permission or license cannot ripen into an easement by prescription." (Internal quotation marks omitted.) Gallo-Mure v. Tomchik, supra, 78 Conn.App. at 705, 829 A.2d 8.
The legal criteria for adverse possession and prescriptive easements are not interchangeable. "Prescriptive easements, unlike title gained by adverse possession, do not require exclusive use by the claimant . . . and the burden of proof is by preponderance of the evidence rather than by clear and convincing evidence required by adverse possession." (Citation omitted.) Id., at 706 n. 4, 829 A.2d 8. After reviewing the record and transcripts, we conclude that the facts presented to the court clearly indicated that the defendants did not exclusively use the parcels and that their use was not continuous and uninterrupted.
The facts found by the court indicate that both the plaintiffs and the defendants used and maintained parcels B1 and B2. Because descriptions of parcels B1 and B2 were contained in the deed of 5 Madeline Avenue, the defendants believed that they were the owners of the disputed parcels. The defendants began to use the beach area for recreation beginning in 1978. The defendants also cleaned the parcels during the years following their purchase of 5 Madeline Avenue. The defendants built stairs on parcel B1 and, on at least one occasion, had sand placed on the disputed parcels.
The court found that the plaintiffs' and the defendants' use of parcels B1 and B2, at times, were with the other's knowledge and without the other's consent.[12] Until 1997, there is no evidence of serious conflicts arising from the plaintiffs' and the defendants' use of the disputed parcels.[13] The court found that "[t]he evidence indicates that to the extent that there were any . . . discussions [concerning ownership of the disputed parcels], either one of the plaintiffs or one of the defendants both expressed ownership of these parcels."[14]
The court's articulation does present some confusion. If the plaintiffs had adversely possessed the disputed parcels before 1978, per the court's initial opinion, then the plaintiffs would have obtained title to the disputed parcels commencing in 1978 at the latest. The court's articulation indicates, however, that the plaintiffs adversely possessed parcels B1 and B2 until the time of trial. The defendants claim that the court's ruling is inconsistent. They claim that the court found that both the plaintiffs and the defendants adversely used the property between 1978 and the time of trial. We disagree.
"One specific purpose of a motion for articulation of the factual basis of a trial court's decision is to clarify an ambiguity or incompleteness in the legal reasoning of the trial court in reaching its *900 decision." (Internal quotation marks omitted.) Journal Publishing Co. v. Hartford Courant Co., 261 Conn. 673, 688, 804 A.2d 823 (2002). Although the court's articulation does not make its decision as clear as we would prefer, we conclude, after reading the articulation along with the entirety of the court's opinion, that the articulation merely intended to clarify that the plaintiffs' title to parcels B1 and B2 had not been disrupted as of the time of the trial. The court determined, in its initial opinion, that the plaintiffs' use of parcels B1 and B2 in the years following 1978 coincided with the defendants' use of those parcels. The defendants' use, however, was not exclusive and did not serve to oust the plaintiffs or result in the defendants' adverse possession of the property. The defendants' use, however, was sufficient to establish a prescriptive easement over parcels B1 and B2.
Accordingly, we conclude that the court's decision that the defendants had obtained a prescriptive easement is not illogical or inconsistent with the court's finding that the plaintiffs adversely had possessed the parcel. We conclude, therefore, that the defendants' claim must fail.
II
We next review the defendants' claim that their use of parcels B1 and B2 during the years since 1978 was sufficient to disturb the plaintiffs' title to the parcels that they had established by adverse possession and to establish the defendants' own claim of adverse possession. After reviewing the record, we conclude that the court properly determined that the defendants' use of parcels B1 and B2 after 1978, at which time the defendants owned the 5 Madeline Avenue property, did not interrupt the plaintiffs' title to parcels B1 and B2.
"When a party is once dispossessed it is not every entry upon the premises without permission that would disturb the adverse possession." (Internal quotation marks omitted.) Ahern v. Travelers Ins. Co., 108 Conn. 1, 7, 142 A. 400 (1928). The court found that the defendants' use of the parcels in dispute was not sufficient to disturb the plaintiffs' title to parcels B1 and B2. We agree.
The court found that "[t]he fifteen year period of adverse possession was satisfied at least by 1970 before the [defendants] or their predecessors in title, the Donahues, acquired title to 5 Madeline Avenue. Based on the findings of fact, since the 1950s, the plaintiffs or their family have used and maintained the beach area, including parcels B1 and B2, openly and visibly under a claim of right, and they have done so with an intent to use the parcels exclusively and in derogation of the ownership rights of anyone else. This conclusion clearly is established by the conduct of the plaintiffs before and after the [defendants'] purchase of 5 Madeline Avenue, but most particularly by the dumping of materials and the construction of seawalls over the years through the use of parcels B1 and B2, as well as by the creation or maintenance of ramps on these parcels to facilitate these and other activities. For example, the plaintiffs constructed a wall dividing almost two-thirds of parcel B1. . . . The fact that the plaintiffs paid the taxes on the property is also strong evidence of their exclusive and adverse claim." Accordingly, because the court determined that the plaintiffs had satisfied the fifteen year period of adverse possession by 1970, the plaintiffs had obtained title to parcels B1 and B2 by 1970. The prior owner of record had been dispossessed, and the plaintiffs obtained legal title to the disputed parcels.
*901 The defendants claimed that the evidence presented was sufficient to establish that they satisfied the elements of adverse possession. The court found that the defendants had not proven by clear and convincing evidence that they acquired ownership of parcels B1 and B2 through adverse possession. Although the defendants proceeded to use the parcels under a claim of right after they purchased the 5 Madeline Avenue property and did not always obtain the permission or consent of the plaintiffs prior to using the property, the court found that the defendants' use of the property was not "sufficiently notorious, exclusive and continuous to constitute an ouster to satisfy the strict criteria of adverse possession."
Ouster has been defined clearly in case law. "By ouster is not meant a physical eviction, but a possession attended with such circumstances as to evince a claim of exclusive right and title, and a denial of the right of the other tenants to participate in the profits. As otherwise stated: An entry . . . on the land of another, is an ouster of the legal possession arising from the title . . . if made under claim and color of right . . . otherwise it is a mere trespass. . . . The intention guides the entry, and fixes its character." (Internal quotation marks omitted.) Lucas v. Crofoot, 95 Conn. 619, 623-24, 112 A. 165 (1921).
The court properly applied the law and properly weighed the evidence relating to the parties' use of parcels B1 and B2, and logically concluded that the plaintiffs' construction of the dividing wall and their payment of the property taxes were sufficient indicators to counter the defendants' adverse possession claim. The record contains sufficient evidence that the plaintiffs continued to use the parcels in a manner that counters the defendants' claim of exclusive right and title. We conclude, therefore, that the court properly found that the defendants' use of parcels B1 and B2 was not sufficient to constitute an ouster of the plaintiffs.
After reviewing the record, we conclude that the court gave proper credence to the facts presented and drew logical legal conclusions. The parties provided the court with ample evidence and testimony concerning their use of the disputed parcels. A trial court is in the best position "to determine issues of credibility because it observed the demeanor of witnesses, and we have but the dry record of their testimony." Gallo-Mure v. Tomchik, supra, 78 Conn.App. at 715, 829 A.2d 8. Accordingly, we give deference to the court's function to derive the veracity of the facts, and we conclude that the court properly weighed the facts relating to the plaintiffs' maintenance and use of the disputed parcels, and that the court properly determined that the plaintiffs' use of parcels B1 and B2 established exclusive possession.
Accordingly, the court properly found that the plaintiffs had proven that they obtained ownership of parcels B1 and B2 through adverse possession and maintained title to the parcels to the time of the trial. Thus, we conclude that the court did not act improperly in finding that the defendants had not proven their claim of adverse possession of parcels B1 and B2.
The judgment is affirmed.
In this opinion the other judges concurred.
NOTES
[1] In these consolidated actions, the defendants Louis Allen Conner, Jr., and Eulala M. Conner, and John Monroe Green, Lewis C. Green and Barbara Helen Bunting, named individually and as trustees under the last will and testament of Isabelle Green and Harold Green appeared and participated in the trial. The defendants Harold Gorham or his widow, heirs or representatives and creditors, and Philip P. Mahoney or his widow, heirs or representatives and creditors did not appear at trial and were defaulted. We refer in this opinion to the appellants, Louis Allen Conner, Jr., and Eulala M. Conner, as the defendants.
[2] The plaintiffs in both actions are Anna Boccanfuso and her sons, Domenico Boccanfuso and Crescienzo Boccanfuso.
[3] The plaintiffs initiated the proceedings by filing two separate lawsuits claiming adverse possession or prescriptive rights over two parcels of land in Westport. The matter entitled Boccanfuso v. Gorham, judicial district of Fairfield, Docket No. 379584, involved claims concerning parcel B1. The matter entitled Boccanfuso v. Green, judicial district of Fairfield, Docket No. 379583, involved claims concerning parcel B2.
[4] Parcel B1 is also known as lot 119-H1 on the town of Westport tax assessor's map number 5262-1. The legal description of parcel B1 is "[a]ll that certain piece or parcel of land together with the improvements thereon situated on the northerly side of Harbor Road in the Town of Westport, County of Fairfield and State of Connecticut and described as follows:
"Beginning at a point on the northerly highway line of Harbor Road, which point is the extension northerly of the westerly highway line of Madeline Avenue, said point being 30.7 feet from the northwesterly corner of Madeline Avenue; thence N 13 57' 38" E by a projection northerly of the westerly highway line of Madeline Avenue, a distance of 37 feet, more or less, to a point at the mean high mark of the Saugatuck River or Harbor, thence easterly along the mean high water mark of the Saugatuck River or Harbor, a distance of 28.5 feet, more or less, to a point at the intersection of the mean high water mark of Saugatuck River or Harbor and the extension northerly of the easterly highway line of Madeline Avenue to said mean high water mark; thence S 13 57' 30" W, a distance of 38 feet, more or less to a point on the northerly side of Harbor Road; thence N 46 45' 50" along the northerly highway line of Harbor Road, a distance of 28.66 feet, to a point marking the point or place of beginning.
"The [p]remises constitute the westerly side of property shown as Parcel B Area = 1690 +/sq. ft. on a[m]ap entitled `Survey Prepared for Robert E. Donahue, Elizabeth T. Donahue and Anna LaMance, Westport, Connecticut,' Scale 1" = 10,' Dated July 22, 1974, certified substantially correct by Leo Leonard, Surveyor, which [m]ap was filed on October 17, 1974 in the Westport Town Clerk's Office as Map Number 7220. The southwesterly corner of Parcel B.
"The premises are also shown as Parcel B1 on a[m]ap entitled `Map of Property Prepared for Anna Boccanfuso, Harbor Road, Westport, Connecticut,' Scale 1" = 20', Dated September 5, 2000, certified substantially correct by Charles Leonard, Surveyor."
[5] Parcel B2 is also known as lot 119-H on the town of Westport tax assessor's map number 5262-1. The legal description of parcel B2 is "[a]ll that certain piece or parcel of land together with the improvements thereon situated on the northerly side of Harbor Road in the Town of Westport, County of Fairfield and State of Connecticut and described as follows:
"Beginning at a point on the northerly highway line of Harbor Road, which point is the extension northerly of the easterly boundary line of property shown as `Land of Robert E. and Elizabeth T. Donahue" on a Map entitled `Survey Prepared for Robert E. Donahue, Elizabeth T. Donahue and Anna La Mance, Westport, Connecticut,' Scale 1" = 10', Dated July 22, 1974, certified substantially correct by Leo Leonard, Surveyor, which map was filed on October 17, 1974 in the Westport Town Clerk's Office as Map Number 7220, said point being 29.84 feet from the northeasterly corner of said property of Robert E. Donahue and Elizabeth T. Donahue; thence N 50 04' 00" W along the northerly highway line of Harbor Road, a distance of 13.39 feet; hence N 46 45' 50" W continuing along the northerly highway line of Harbor Road a distance of 14.86 feet to a point at the intersection of the northerly boundary of Harbor Road and the extension northerly of the easterly highway line of Madeline Avenue, said point being 32.09 feet from the northwesterly corner of said property of Robert E. Donahue and Elizabeth T. Donahue shown on Map 7220; thence N 13 57' 30" E a distance of 38 feet, more or less, to a point at the intersection of the mean high water mark of the Saugatuck River or Harbor and the extension northerly of the westerly boundary of said property of Robert E. Donahue and Elizabeth T. Donahue, to said mean high water mark; thence easterly along the mean high water mark of the Saugatuck River or Harbor, a distance of 29.5 feet, more or less, to a point; thence 13 57' 30" W a distance of 36 feet, more or less, to the point marking the point or place of beginning.
"The premises constitute the easterly side of property shown on Parcel B Area1690 +/sq. ft. on Map Number 7220 referred to above. The southeasterly corner of Parcel B.
"The [p]remises are also shown as Parcel B2 on a [m]ap entitled `Map of Property Prepared For Anna Boccanfuso, Harbor Road, Westport, Connecticut,' Scale 1" = 30', Dated September 5, 2000, certified substantially correct by Charles L. Leonard, Surveyor."
[6] The court, therefore, entered a default for failure to appear against Gorham and Mahoney, and their widows, heirs, representatives and creditors.
[7] The Donahues' deposition testimony indicated that they used parcels B1 and B2 without any contact or communication with the plaintiffs or their family members. The Donahues owned 5 Madeline Avenue from 1971 to 1978, during which they resided at the property only in the summer months. The Donahues did not observe the plaintiffs' family actively or regularly using parcels B1 and B2.
[8] Robert Donahue did not believe that he owned parcels B1 or B2 despite the description of those parcels in his deed of 5 Madeline Avenue.
[9] During the time that Ehrhorn owned that property, she lived on the property only for three summers. She did not observe or regularly use the beach area.
[10] In a deed recorded in 1981, Anna Boccanfuso conveyed the property to herself and to her three sons. In 1994, Guiseppe Boccanfuso transferred his interest to Anna Boccanfuso.
[11] The notation indicated that the motion for articulation was granted to the following limited extent: "The adverse use of the disputed property began upon or soon after Anna Boccanfuso's purchase of 88 Harbor Road in 1950 so that the fifteen year period of adverse possession was satisfied at least by 1970 before the [defendants] or their predecessors in title, the Donahues, acquired title to 5 Madeline Avenue."
[12] The court rejected the plaintiffs' evidence that asserted that the defendants never used the disputed parcels without the consent or permission of the plaintiffs.
[13] In 1997 through 1999, the plaintiffs and their family used parcels B1 and B2 more frequently. In 1997, the plaintiffs' family began to construct a concrete ramp on parcel B2. Louis Allen Conner, Jr., objected to the plaintiffs' construction of the ramp and destroyed part of the ramp with a hammer. In 1999, the Westport police department received four complaints concerning activity on the disputed parcels.
[14] For example, when the plaintiffs built the wall dividing parcel B1 in 1986, Louis Allen Conner, Jr., asked Domenico Boccanfuso to remove it and he refused. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/811867/ | FILED
United States Court of Appeals
Tenth Circuit
November 14, 2012
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
TENTH CIRCUIT Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 12-8063
(D.C. Nos. 2:11-CV-00077-ABJ and
GREGORY A. GARTON, 2:07-CR-00135-ABJ-1)
(D. Wyo.)
Defendant-Appellant.
ORDER DENYING CERTIFICATE OF APPEALABILITY *
Before KELLY, TYMKOVICH, and GORSUCH, Circuit Judges.
Gregory Garton was convicted by a jury of various drug and firearm
charges. For these federal crimes, the district court sentenced him to prison for
seventy-five years. After this court affirmed his sentence on direct appeal, see
United States v. Garton, 336 F. App’x 804 (10th Cir. 2009) (unpublished), Mr.
Garton brought a 28 U.S.C. § 2255 motion to vacate his sentence. The district
court dismissed this motion, concluding that the ten ineffective assistance of
counsel claims he raised all lacked merit. The district court, too, denied Mr.
*
This order is not binding precedent except under the doctrines of law of
the case, res judicata and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Garton’s motion for an evidentiary hearing. Mr. Garton now seeks from us a
certificate of appealability (“COA”) in order to challenge the district court’s
denial of both motions.
We may issue a COA only if the petitioner makes a “substantial showing of
the denial of a constitutional right.” 28 U.S.C. § 2253(c)(2). Under this standard,
an applicant must show “that reasonable jurists could debate whether (or, for that
matter, agree that) the petition should have been resolved in a different manner or
that the issues presented were adequate to deserve encouragement to proceed
further.” Slack v. McDaniel, 529 U.S. 473, 484 (2000) (internal quotation marks
omitted). Because Mr. Garton proceeds in this court pro se, we review his
pleadings with special solicitude.
Before us, Mr. Garton pursues nine of the ten ineffective assistance of
counsel claims that he pursued before the district court. In its thorough and well-
reasoned opinion, however, the district court applied Strickland v. Washington,
466 U.S. 668 (1984), and rejected each of these arguments. And, after reviewing
the record, we conclude no reasonable jurist could doubt the correctness of the
district court’s disposition of these claims. For example, three of Mr. Garton’s
grounds are premised on the supposition that, if Mr. Garton’s counsel performed
adequately, Mr. Garton would have received a plea offer. But Mr. Garton doesn’t
allege that the government ever made a plea offer, or even that a plea offer was
on the way. And as the Supreme Court has made clear, “a defendant has no right
2
to be offered a plea.” Missouri v. Frye, 132 S. Ct. 1399, 1410 (2012).
Accordingly, and for substantially the same reasons given by the district court, we
deny Mr. Garton’s application for a COA and dismiss his appeal.
Nor did the district court err by failing to conduct an evidentiary hearing.
A “district court must hold an evidentiary hearing on [a] prisoner’s claims
‘[u]nless the motion and the files and records of the case conclusively show that
the prisoner is entitled to no relief.’” United States v. Galloway, 56 F.3d 1239,
1240 n.1 (10th Cir. 1995) (alteration in original) (quoting 28 U.S.C. § 2255).
Like the district court, we are convinced that the lack of meritorious grounds for
Mr. Garton’s ineffective assistance of counsel claims justifies the denial of an
evidentiary hearing in this case.
ENTERED FOR THE COURT
Neil M. Gorsuch
Circuit Judge
3 | 01-03-2023 | 11-14-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/811870/ | FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT November 14, 2012
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 12-6030
(D.C. No. 5:11-CR-00125-F-1)
ADRIAN CONTRERAS GRANADOS, (W.D. Okla.)
Defendant-Appellant.
ORDER AND JUDGMENT*
Before LUCERO, TYMKOVICH, and HOLMES, Circuit Judges.
Adrian Contreras Granados appeals his conviction for possessing five
kilograms or more of cocaine in violation of 21 U.S.C. § 844. We have jurisdiction
under 28 U.S.C. § 1291, and we affirm.
BACKGROUND
With a history of convictions for importing marijuana into this country from
Mexico, Mr. Contreras became a registered confidential informant for Immigration
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
and Customs Enforcement (ICE). But ICE “officially terminated” him from that
position after only four months on October 11, 2010, after his cover was blown.
R., Vol. IV at 326.
On November 14, 2010, police officer Eldon Halliburton performed a traffic
stop on a vehicle driven alone by Mr. Contreras in Oklahoma. Mr. Contreras was
extremely nervous, falsely claimed to own the vehicle, falsely claimed to be married
to the woman the vehicle was registered to, could not recall the name of the city
where he started from, and stated he was traveling to Wichita, Kansas. Officer
Halliburton placed him in the patrol vehicle and radioed for permission to run his
drug dog around Mr. Contreras’s vehicle. When Officer Halliburton asked why
Mr. Contreras was headed to Wichita, Mr. Contreras claimed he was an informant for
the state department, ICE, and the Drug Enforcement Administration (DEA), and
added he was driving to Wichita and then Chicago.
After Officer Halliburton’s drug dog alerted to the presence of narcotics in
Mr. Contreras’s vehicle, Mr. Contreras repeatedly denied that it contained narcotics,
but he consented to a vehicle search. Officer Halliburton and another officer
conducted a search, finding over 21 kilograms of cocaine hidden in a “non-factory
compartment.” Id. at 38. They then handcuffed Mr. Contreras and placed him under
arrest. Returning to Mr. Contreras’s vehicle, the officers also found a post-it note
with a phone number that Mr. Contreras asserted was for his government contact.
-2-
Later that day, Officer Halliburton called the number and spoke with
Investigator Alejandro Rodriguez of the North Las Vegas Police Department.
Investigator Rodriguez stated that “he had had contact with Mr. Contreras” in the
past, but that Mr. Contreras “was not hauling the narcotics for them” and “was
probably trying to . . . ‘sneak one in under the radar.’” Id. at 40.
Mr. Contreras was indicted for possessing five kilograms or more of cocaine
with intent to distribute, a violation of 21 U.S.C. § 841(a)(1). Before trial, he gave
notice that he intended “to raise a defense of believed exercise of public authority,”
asserting that “he believed he was acting under the authority of the [DEA], or
possibly other law enforcement agency with authority to investigate drug crimes (in
particular the California Department of Justice/Bureau of Firearms, the Las Vegas
Police Department, and/or [ICE].” R., Vol. I at 11. He also asserted that “he was
acting at the direction of, and under the authority of, Francisco Espino[s]a
Insunza, . . . a registered informant for one or more of the above listed agencies.” Id.
At trial, Investigator Rodriguez testified that Mr. Espinosa was “signed up
through [their] narcotics unit as an informant,” id., Vol. IV at 60, and also “worked
with an agency out of California,” id. at 64. According to Investigator Rodriguez,
Mr. Espinosa informed him on November 13, 2010, that “he had a vehicle loaded
with cocaine headed towards Chicago,” id., and that the driver, Mr. Contreras,
“wanted to give up pretty much the load to law enforcement but did not want to be
stopped with the vehicle,” id. at 65. Investigator Rodriguez told Mr. Espinosa that
-3-
his office could not do anything with the information, but he gave Mr. Espinosa the
name and phone number of a DEA agent in Chicago who Mr. Contreras could call to
see if the DEA was interested.
Mr. Espinosa apparently gave Investigator Rodriguez’s phone number to
Mr. Contreras. Investigator Rodriguez testified to a brief telephone conversation
with Mr. Contreras the day before he was arrested, in which he told Mr. Contreras
simply “to reach out to Chicago contact when he got there.” Id. at 70. Investigator
Rodriguez was upset that Mr. Espinosa had given out his phone number, and he did
not want to speak with Mr. Contreras because he was not signed up as an informant
and he “didn’t know who he was,” id. at 81.
Mr. Espinosa testified that he and Mr. Contreras were friends, and that when
he learned of the planned narcotics delivery, he told Mr. Contreras that he would
“talk to [his] agent in Las Vegas and then . . . figure out what could be done.” Id.
at 249. According to Mr. Espinosa, when he called Investigator Rodriguez about the
narcotics, Investigator Rodriguez told him “we cannot work” with such short notice
and that he should tell Mr. Contreras to stop. Id. at 276. Mr. Espinosa stated that he
told Mr. Contreras to stop, but for reasons unclear from Mr. Espinosa’s testimony,
Mr. Contreras proceeded onward. Finally, Mr. Espinosa testified he did not relay the
DEA agent’s contact information to Mr. Contreras and that he, himself, had not made
contact.
-4-
Special agent Jose Cuellar from the California Department of Justice testified
that Mr. Espinosa worked for him as an informant, and that Mr. Espinosa did not
contact him about the delivery involving Mr. Contreras prior to his arrest. He further
testified that Mr. Contreras had attempted on several occasions prior to his arrest to
provide narcotics information, but he (Cuellar) told him that he could not work with
him because Mr. Contreras was already employed by ICE. Further, Agent Cuellar
indicated that he did not “in any way authorize Mr. Contreras’s possession of” the
cocaine. Id. at 117.
Mr. Contreras testified in his defense. He admitted that when he was recruited
to transport the cocaine into the United States, he no longer was employed as an
informant. He claimed, however, that Agent Cuellar had once told him “that any job
we were going to do together we should do it through his informants . . . and then we
would split the [payment].” Id. at 391. Consequently, Mr. Contreras approached
Mr. Espinosa and asked him to “talk to [his] superiors and . . . see if they will
give . . . the go-ahead [for] this job.” Id. at 392. Espinosa purportedly called back
and “said that his superiors said go ahead.” Id. at 392-93. After passing through an
immigration checkpoint on November 13, Mr. Contreras stated that he called
Mr. Espinosa and told him, “Now you know everything is okay,” to which
Mr. Espinosa allegedly answered, “Yes, everything is under control.” Id. at 409.
After the close of evidence, the district court turned to finalizing the jury
instructions and announced it would not instruct the jury on Mr. Contreras’s
-5-
public-authority defense.1 The district court’s ultimate reasoning is not in the record,
but throughout the proceedings the judge expressed concern as to whether there
would be any evidence showing that a government agent had authorized
Mr. Contreras’s actions.
During deliberations, the jury could not reach a verdict on the charged offense,
but returned a guilty verdict on the lesser-included offense of simple possession. The
court sentenced Mr. Contreras to 24-months’ imprisonment, and he has since served
that sentence and been released.
DISCUSSION
Mr. Contreras argues that the district court erred by refusing to instruct the
jury on the defense of public authority. “We review the district court’s decision to
give or to refuse a particular jury instruction for abuse of discretion.” United
States v. Diaz, 679 F.3d 1183, 1188 (10th Cir. 2012) (internal quotation marks
omitted). But “[a] criminal defendant is entitled to an instruction as to any
recognized defense for which there exists evidence sufficient for a reasonable jury to
find in his favor.” United States v. Apperson, 441 F.3d 1162, 1204 (10th Cir. 2006)
1
Mr. Contreras’s proposed instruction read:
If you find that Mr. Contreras was acting or reasonably believed he was
acting on behalf of a law enforcement agency or officer when he
engaged in the narcotics transaction charged in the indictment, then you
must acquit him of this charge.
R., Vol. I at 36.
-6-
(internal quotation marks omitted). “A district court’s failure to give such an
instruction constitutes reversible error.” Id. “The district court, however, is not
required to give a theory of the defense instruction which lacks a reasonable legal and
factual basis.” United States v. Gallant, 537 F.3d 1202, 1233 (10th Cir. 2008)
(internal quotation marks omitted).
“The public authority defense requires a defendant to show that he was
engaged by a government official to participate in a covert activity.” Apperson,
441 F.3d at 1204 (internal quotation marks omitted). And when the government
official engages a defendant to participate in a violation of federal law, that official
must actually have the authority to empower such a violation. See United States v.
Baker, 438 F.3d 749, 754 (7th Cir. 2006) (noting that under the public-authority
defense state and local law-enforcement officers generally cannot exempt violations
of federal law). “[A]s our sister circuits see it, the public authority defense is limited
to those situations where the communication was from a government official acting
with actual authority, and not merely apparent authority.” United States v.
Stallworth, 656 F.3d 721, 727 (7th Cir. 2011) (collecting cases), cert. denied, 132 S.
Ct. 1597 (2012). But this court has not yet decided whether apparent authority is
sufficient for a public-authority defense.
Mr. Contreras does not contend that a government official with actual
authority sanctioned his conduct. Rather, he claims that he reasonably believed he
was exercising public authority based on his interactions with Mr. Espinosa and
-7-
Investigator Rodriguez. We need not decide whether such a claim is cognizable
under the public-authority defense because, even if it were, as we detail below,
Mr. Contreras has shown no reasonable basis to justify a belief he was acting at the
behest of any government official.2
Initially, we note that Mr. Contreras’s public-authority notice did not mention
Investigator Rodriguez, but instead relied solely on Mr. Espinosa. But even if we
overlook that omission, there is no evidence that Investigator Rodriguez encouraged
Mr. Contreras or otherwise led him to believe he should proceed with the narcotics
delivery. Indeed, Investigator Rodriguez did nothing more than suggest to
Mr. Contreras, after he had already begun his journey, to reach out to DEA in
Chicago. And he had told Mr. Espinosa, who was in contact with Mr. Contreras
throughout the trip, that he (Rodriguez) could not do anything with the narcotics
2
Mr. Contreras argues that his public-authority defense is consistent with
Federal Rule of Criminal Procedure 12.3(a)(1), which requires a defendant to give
notice if he “intends to assert a defense of actual or believed exercise of public
authority on behalf of a law enforcement agency or federal intelligence agency at the
time of the alleged offense.” (Emphasis added.) The Fourth Circuit has rejected just
such an argument:
Since Rule 12.3 is merely a notice provision and does not in any way
alter the substantive legal standards with regard to the public authority
defense, we agree with the Third Circuit’s conclusion in [United
States v. Pitt, 193 F.3d 751 (3d Cir. 1999)] “that the law in jurisdictions
where actual authority was required was not altered” by the
promulgation of Rule 12.3. 193 F.3d at 757.
United States v. Fulcher, 250 F.3d 244, 254 n.5 (4th Cir. 2001). In any event, we
need not decide the effect of Rule 12.3 on the public-authority defense given the lack
of evidentiary support for Mr. Contreras’s view of the defense.
-8-
delivery. Moreover, Mr. Espinosa testified that Investigator Rodriguez said to stop,
and that he (Espinosa) relayed that command to Mr. Contreras. Even Mr. Contreras
testified that the impetus for undertaking the delivery was not any specific
communication with Investigator Rodriguez, but rather, some vague conversation
with Agent Cuellar about working with Cuellar’s informants. And even then, Agent
Cuellar testified that he repeatedly told Mr. Contreras that he could not work with
him.
Additionally, there is no evidence that would have justified Mr. Contreras’s
belief that he was working with the approval of government agents through
Mr. Espinosa. Although Mr. Contreras testified that Mr. Espinosa had told him that
his handlers had approved the controlled delivery, there is absolutely no
corroborating evidence of such approval. Significantly, Mr. Contreras’s own
testimony suggests that he was pursuing the delivery on his own accord, as he claims
to have reassured Mr. Espinosa after passing through a checkpoint, telling him, “Now
you know everything is okay,” R., Vol. IV at 409.
Mr. Contreras’s behavior after being stopped by Officer Halliburton further
belies his claim that he believed he was acting with government authorization.
Indeed, he lied about everything from vehicle ownership to the presence of
narcotics—even after he learned of the drug dog’s alert.
-9-
In short, we see no evidence outside of Mr. Contreras’s own, sometimes vague
and contradictory testimony, that would have supported his defense-of-public-
authority instruction.
CONCLUSION
The judgment of the district court is AFFIRMED. We GRANT the
government’s unopposed motion to dismiss the sentencing component of this appeal
as moot.
Entered for the Court
Jerome A. Holmes
Circuit Judge
- 10 - | 01-03-2023 | 11-14-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/1097529/ | 483 So. 2d 885 (1986)
J.N., a Juvenile, Appellant,
v.
The STATE of Florida, Appellee.
No. 84-2333.
District Court of Appeal of Florida, Third District.
March 4, 1986.
*886 Bennett H. Brummer, Public Defender, and Howard K. Blumberg, Asst. Public Defender, for appellant.
Jim Smith, Atty. Gen., and Randi Klayman Lazarus, Asst. Atty. Gen., for appellee.
Before HENDRY, HUBBART and BASKIN, JJ.
HUBBART, Judge.
This is an appeal from a final order which withholds adjudication in a juvenile delinquency proceeding and places the juvenile J.N. in a program of community control. The juvenile urges as his sole point on appeal that the trial court erred in entering a finding of delinquency because (a) the proceedings below resulting in this finding were the functional equivalent of a nolo contendere plea, and (b) the record fails to reflect that the juvenile was informed of and thereafter knowingly and intelligently waived the constitutional rights normally incident to a trial, as required by Boykin v. Alabama, 395 U.S. 238, 89 S. Ct. 1709, 23 L. Ed. 2d 274 (1969). We agree and reverse.
I
The facts pertaining to the point on appeal are as follows. On May 16, 1983, the juvenile J.N. was charged with the sale and possession of marijuana in a petition for delinquency, filed before the Circuit Court for the Eleventh Judicial Circuit of Florida. The juvenile entered a denial plea and filed a motion to suppress physical evidence obtained pursuant to a search and seizure. The motion set forth a set of facts which, the juvenile claimed, established that the said physical evidence was secured through an unreasonable search and seizure in violation of the juvenile's Fourth Amendment rights. Incontestably, however, these facts revealed that the juvenile had committed the offenses for which he was charged.
On September 20, 1984, the motion to suppress came on for a hearing. No testimony was taken on this motion. Instead, after counsel for the juvenile announced that the motion to suppress was dispositive of the case, both he and the prosecuting attorney stipulated to the facts as stated in the juvenile's motion to suppress and agreed that the trial court should decide the entire case based on those stipulated facts and the applicable case law. Both counsel then presented legal argument solely on the motion to suppress; no argument was presented on the issue of guilt or innocence or the legal sufficiency of the evidence presented.
At the conclusion of this argument, the trial court denied the motion to suppress and entered a finding of delinquency as charged. No inquiry was made of the juvenile himself concerning his waiver of trial rights prior to the entry of the delinquency finding. The trial court further entered an adjudication of delinquency; at a later hearing, however, this adjudication was set aside and the juvenile was placed on community control. This appeal follows.
II
It is settled in this district that
"where [defense] counsel [in a criminal case], for the avowed and singular purpose of preserving his client's right to appeal the trial court's denial of a motion to suppress the [accused's] confession [or the fruits of a police search and seizure], stipulates that the court determine the [accused's] guilt solely on facts proffered by the prosecutor; and where such proffered facts, to which no legal defense is made, establish beyond dispute the [accused's] guilt of the crime charged in the [charging document]; the proceedings, which predictably and immediately concluded with [a finding or] an adjudication of [guilt or] delinquency, are a mere substitution for, and the functional equivalent *887 of, a nolo contendere plea, requiring, therefore, that in accordance with Boykin v. Alabama, 395 U.S. 238, 89 S. Ct. 1709, 23 L. Ed. 2d 274 (1969), the record reflect that the [accused] was informed of and knowingly and intelligently waived the constitutional rights normally incident to a trial."
A.E.K. v. State, 432 So. 2d 720, 720-21 (Fla. 3d DCA 1983); accord Murphy v. State, 464 So. 2d 608 (Fla. 3d DCA 1985); C.S. v. State, 462 So. 2d 1205 (Fla. 3d DCA 1985). The underlying justification for this rule is that the constitutional requirements for taking a guilty or nolo contendere plea, as established in Boykin, may not be indirectly subverted through a stipulation by defense counsel to the truth of a set of facts which amounts, in effect, to a confession of guilt to the crimes for which an accused is charged, where the stipulation serves as a substitute for testimony at a non-jury trial. Such a confession-type stipulation amounts, in effect, to a guilty or nolo contendere plea which cannot be accepted by the trial court without observing the Boykin requirements of a knowing and intelligent waiver of constitutional rights normally incident to a trial.
A different rule obtains, however, where the set of facts stipulated to by defense counsel state an arguable defense and do not amount to a confession to the crime charged. In such a case, the stipulation in question is not the functional equivalent of a guilty or nolo contendere plea and the Boykin requirements attendant to such a plea are inapplicable. See Lara v. State, 475 So. 2d 1340 (Fla. 3d DCA 1985). A different rule also obtains where defense counsel stipulates, not to a set of facts, but to certain testimony taken at a prior court hearing in the cause such as a hearing on a motion to suppress as the testimony which would be adduced at a non-jury trial. In such a case, counsel is not stipulating to a set of facts as stated by counsel for either party; instead, counsel is stipulating only that testimony already adduced before the trial court will be repeated at the trial of the cause. By so doing, the accused is obviously admitting nothing by the stipulation and the Boykin requirements attendant to a guilty or nolo contendere plea are inapplicable. See Rodriguez v. State, 468 So. 2d 312, 314-15 (Fla. 1st DCA 1985). It is only where defense counsel stipulates to a set of facts as opposed to testimony previously heard in the cause which amounts, in effect, to a confession of guilt to the crime charged that the functional equivalent of a guilty or nolo contendere plea takes place; only in that event are the Boykin requirements attendant to such a plea fully applicable.
III
Turning to the instant case, it seems clear to us that defense counsel's stipulation to the set of facts below was the functional equivalent of a nolo contendere plea. The facts were entirely derived from defense counsel's motion to suppress and amounted, in effect, to a confession of guilt to the offenses for which the juvenile J.N. was charged. No defense on the merits was raised on these facts to the charges filed below, and indeed, defense counsel argued no such defense below. The only defense raised went solely to the lawfulness of the search conducted herein, and the stipulation on the merits of the case was plainly a transparent effort to preserve for appeal the search and seizure issue without going through a formal nolo contendere plea. This being so, the proceedings below amounted to the functional equivalent of a nolo contendere plea which, in turn, triggered the Boykin requirements attendant to such a plea. As these requirements were not observed below, the finding of delinquency and sanctions imposed thereafter must be reversed based on the established law stated above.
The state urges, at this point, that in the event of a reversal, the proper remedy would be to remand the case to the trial court for a determination as to whether the juvenile knowingly and voluntarily entered a nolo contendere plea in this case. We cannot agree. No such plea was ever entered below and no plea colloquy was ever *888 conducted by the trial court. Under these circumstances, we think it entirely inappropriate for the trial court to conduct a voluntariness inquiry on a nolo contendere plea which has never taken place. Moreover, a retroactive plea inquiry upon remand makes no sense at this point as the juvenile has never tendered such a plea and could decline upon remand to enter such plea for the first time which, of course, would obviate the necessity for a plea colloquy. See Fla.R.Juv.P. 8.130(a)(1). We therefore conclude that the proper remedy here is to reverse the finding of delinquency and sanctions imposed thereafter and remand with directions to conduct a new trial in this cause.
Reversed and remanded for a new trial. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2373860/ | 686 S.W.2d 605 (1985)
J.S. LOGAN, Jr., Petitioner,
v.
J.A. MULLIS, and Wife, Martha Mullis, Respondents.
No. C-3313.
Supreme Court of Texas.
March 13, 1985.
*606 Hubbard, Patton, Peek, Haltom & Roberts, Donald W. Capshaw, Texarkana, for petitioner.
Atchley, Russell, Waldrop & Hlavinka, Norman C. Russell, Texarkana, for respondents.
GONZALEZ, Justice.
This is a suit for damages and an injunction for interference with an easement. After a jury trial, the trial court rendered judgment for defendant, J.S. Logan, Jr. In an unpublished opinion, the court of appeals reversed and rendered judgment for plaintiffs, J.A. and Martha Mullis. We affirm.
In 1977, Logan owned a tract of land which was landlocked. He purchased a roadway easement from James and Carolyn Ashford, the owners of adjoining property. The easement crossed the Ashfords' property to a public road. The easement provided that:
*607 The right of way, easement, rights and privileges herein granted shall be used only for the purpose of providing pedestrian and vehicular ingress and egress between the paved highway lying West of the Grantors' property mentioned above and the property of Grantee which adjoins the property of Grantors to the East.
It is agreed that the Grantee will build a fence along one side of the said easement as agreed with the Grantors, and further that the Grantors, their heirs and assigns, and the agents, invitees and guests of the Grantors, their heirs or assigns may also use the road way built and to be built by the Grantee.
Logan subsequently constructed a gravel road over the easement. Because a creek intersected the easement, he built a culvert beneath the road at that point. The culvert was constructed by cutting both ends off of a railroad tank car and putting it in the creek bed. When the culvert was completed, the gravel road was extended over it.
Later the same year that Logan obtained his easement, the Mullises purchased 18½ acres of land from the Ashfords, subject to and including the Logan easement. Several years later, Logan acquired another highway access by purchasing the remainder of the Ashford property. Since he no longer needed the easement across the Mullis tract, Logan sent a letter to the Mullises informing them that "[y]ou will not use my road easement again unless you put it in yourself. Please be so advised and no matter what." Logan thereafter removed the metal culvert from the Mullises' property, destroyed part of the fence along the roadway, and piled dirt across the road to make it impassable.
The Mullises sued Logan for damages and injunctive relief. After a hearing, Logan was ordered to, within ninety days, replace the culvert, remove the obstructions placed across the easement and restore approximately 200 feet of fence which he tore down while removing the culvert. When he failed to comply, a motion for contempt of court was filed. Logan died before the motion was heard, and the suit for damages continued against his estate.
At trial, only special issues on damages were submitted to the jury. The jury found that: (1) the reasonable cost necessary to put the roadway in the condition in which it was immediately before Logan removed the culvert was $4,000; (2) the Mullises had suffered damages as a result of the removal of the culvert; and (3) the reasonable value of the loss of use of the property was $900.
The trial court initially rendered judgment for the Mullises in accordance with the jury verdict. Thereafter, Logan filed timely motions for new trial, for judgment N.O.V. and to vacate the judgment. The trial court vacated its original judgment and rendered a take nothing judgment in Logan's favor. At the Mullises' request, the trial court filed findings of fact and a conclusion of law that the culvert was not a fixture and that therefore, Logan had a right to remove it without incurring liability.
The essential liability issue was whether the culvert was permanently attached to the realty. If it retained its character as personalty, Logan was free to remove it when he abandoned the easement. If the culvert was a fixture, Logan had no right to remove it and subjected himself to liability for damages for its removal.
Three factors are relevant in determining whether personalty has become a fixture, that is, a permanent part of the realty to which it is affixed: (1) the mode and sufficiency of annexation, either real or constructive; (2) the adaptation of the article to the use or purpose of the realty; and (3) the intention of the party who annexed the chattel to the realty. O'Neal v. Quilter, 111 Tex. 345, 234 S.W. 528, 529 (1921), Fenlon v. Jaffee, 553 S.W.2d 422, 428 (Tex.Civ.App.Tyler 1977, writ ref'd n.r.e.). The third criterion dealing with intention is preeminent, whereas the first and second criteria constitute evidence of intention. Fenlon v. Jaffee, 553 S.W.2d at *608 428; Hutchins v. Masterson, 46 Tex. 551, 554 (1887).
Intent is made apparent by objective manifestations. Citizens' National Bank of Abilene v. Elk Mfg. Co., 29 S.W.2d 1062, 1065 (Tex.Comm'n App.1930, judgmt adopted). See also City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex.1968). As a general rule, intent is a question of fact to be decided by the jury. However, even testimony of intention that the chattel was not meant to become a fixture will not prevail in the face of undisputed evidence to the contrary. See Ruby v. Cambridge Fire Ins. Co., 358 S.W.2d 943, 946 (Tex.Civ.App. Dallas 1962, no writ). Where reasonable minds cannot differ, the issue is one of law rather than one of fact. See Exchange Savings & Loan Association v. Monocrete Pty. Ltd., 629 S.W.2d 34, 37 (Tex.1982) when this court in effect held that cement roofing tiles affixed to a dwelling were fixtures as a matter of law for purposes of determining lien priorities under TEX.REV. CIV.STAT.ANN. art. 5459.
In this case, the intention to make the tank car a fixture is conclusively established by Logan's conduct at the time he built the culvert. The manner in which he affixed the tank car to the realty, the circumstances surrounding the building and eventual destruction of the culvert, and the adaptability of the culvert to the peculiar topography of the land are all prime evidence of intention. Logan began construction by packing some substance (either clay or gravel) on the creek bed to prevent water from washing underneath the tank. After the tank car was in place, Logan used dirt, cement and wood pilings to pack it. He also built retaining walls around the culvert. After the tank was buried, he laid a gravel road on top of it. The tank was thus embedded in the road so that a vehicle could cross over it.
The manner in which the tank car was affixed to the realty is further evidenced by the difficulty Logan had in removing it once it was embedded. Logan testified that he used several large which trucks to hoist the tank car out of the creek. In the process, he excavated the gravel and removed the wood and concrete surrounding the tank car. Once the culvert was destroyed, the road was impassable and the stream eroded the creek banks considerably.
The purpose for which the annexation was made sheds further light on the issue of intent. In this case, it is undisputed that Logan's property was completely landlocked when he acquired the easement. He had no other prospects of obtaining access to a public road at that time. However, the easement was useless as a means of ingress and egress unless the creek intersecting it could be spanned. For that reason, Logan constructed the culvert.
Counsel for Logan's estate stipulated that Logan had abandoned the easement. He was free to do so. Yet, his right to abandon the easement did not vest him with authority to destroy the roadway and thereby prevent others from taking advantage of the benefits to which they were legally entitled, both by the easement grant itself and by their rights as owners of the freehold estate.
The status of the culvert as a permanent accession to realty was not altered simply because Logan opted to abandon the easement. Once the tank car was affixed in the manner that it was, it became a part of the fee estate. Logan was therefore liable for its removal.
The Mullises contended before the court of appeals that the trial court's findings of fact and conclusion of law that the culvert was not a fixture were erroneous. They arrest that there was no evidence to support the fact findings, and that therefore, the conclusion of law based upon such findings was in error.
The court of appeals rendered judgment for the Mullises based on the jury verdict. Although there was no jury finding on the character of the culvert, the court of appeals held that the culvert had impliedly been found to be a fixture because *609 the omitted issue was referable to the jury finding of damages in favor of the Mullises.
Tex.R.Civ.P. 279 provides "... such omitted issue or issues shall be deemed or found by the court in such a manner as to support the judgment." (Emphasis added.) Tex.R.Civ.P. 301 provides that there will be only one final judgment. Once the first judgment (in the Mullises' favor) was set aside, the cause stood precisely as if there had been no judgment. Thus, the later judgment (in Logan's favor) must be viewed as the only judgment rendered in the case. Sampson v. Scott, 318 S.W.2d 22 (Tex.Civ.App.Fort Worth 1958, writ ref'd n.r.e.). The court of appeals incorrectly applied Rule 279 to the jury findings rather than the judgment. However, since the culvert was a fixture as a matter of law, the issue was properly excluded from jury consideration. Ewing v. Wm. L. Foley, Inc., 115 Tex. 222, 280 S.W. 499, 503 (1926). The court of appeals was therefore correct in rendering judgment for the Mullises.
We affirm the judgment of the court of appeals.
Dissenting opinion by KILGARLIN, J., joined by RAY, J.
KILGARLIN, Justice, dissenting.
Because the determinative legal question discussed in the majority opinion was not briefed or argued by the parties either before this court or the court of appeals, I respectfully dissent.
A basis for understanding the error made by the majority of the court lies in the case's procedural history. The Mullises brought suit for damages they incurred due to Logan's destruction of the culvert. The jury answered damage issues in favor of the Mullises, but did not answer liability issues since none were submitted to the jury. The trial court initially rendered judgment in favor of the Mullises. Following several motions by Logan, including motions for new trial, a motion for judgment n.o.v. and motions to vacate the judgment, the trial court set aside the first judgment and rendered a second judgment for Logan. The trial court substituted this second judgment within the time period that it had plenary power.
The court of appeals reversed, holding that liability was a deemed finding under Tex.R.Civ.P. 279 as consistent with the trial court's first judgment. It held that the trial court had no power to vacate the first judgment, even though the trial court had plenary power. Written findings made by the trial judge to support the second judgment were likewise held to be improper under the theory that Rule 279 requires such findings to be made by the trial court prior to judgment. The court of appeals interpreted the word "judgment" in Rule 279 to mean the first initial judgment, not the final judgment rendered by the trial court. Throughout its opinion the court of appeals treated the question before it as a deemed fact finding under Rule 279. Writ of error was granted by this court solely on the issue of whether or not the court of appeals' procedural analysis was correct.
Today the majority decides that Logan's culvert was permanently attached to the realty as a matter of law (emphasis added). Although I do not quarrel with the majority's conclusion, I do dispute their procedural power to reach such a question. Neither Logan nor the Mullises briefed or argued this legal question to the court of appeals. There is nothing in the court of appeals opinion remotely suggesting that this issue was before that court. Neither party argued or briefed this question in this court.
Indeed, the Mullises, receivers of the majority's benevolence, argued both before us and the court of appeals that determination of the culvert's character was a question of fact. It should be noted that the Mullises did attack in the court of appeals the second trial court judgment on the grounds that there was no evidence to support the court's fact findings. However, the Mullises did not ask the court of appeals or this court to find as a matter of law that the culvert is a fixture. Moreover, their only no evidence argument remotely contending the culvert was a fixture was one directed *610 toward Logan's intent, which, as the majority observes, is but one of three necessary factors. Thus, the Mullises prevail on an argument never made. The irony of the majority's reasoning is underscored by the fact that the Mullises proceeded under assumptions opposite to the majority's conclusion.
The law in Texas is clear that grounds of error not asserted by points of error or argument before the appellate courts are waived. Gulf Coast State Bank v. Emenhiser, 562 S.W.2d 449, 452-53 (Tex.1978). Points not argued or briefed are questions that the court of appeals has no power or authority to decide. Bickler v. Bickler, 403 S.W.2d 354, 361 (Tex.1966). Accordingly, this court has jurisdiction only over those issues that are properly before it. Wisdom v. Smith, 146 Tex. 420, 209 S.W.2d 164, 166 (Tex.1948). A question of law not argued by either party and not found in the court of appeals opinion is outside this court's power and authority to decide legal questions.
These procedural rules not only incorporate basic jurisdictional concepts but also provide important constitutional safeguards. Due process assures not only an opportunity to present one's position but also an opportunity to respond to issues raised by one's opponent. When a case is decided on an issue never raised or anticipated, that opportunity is denied. Justice Frankfurter once noted that "the history of liberty has largely been the history of observing procedural safeguards." McNabb v. U.S., 318 U.S. 332, 347, 63 S. Ct. 608, 616, 87 L. Ed. 819 (1943). Because I would decide the case only on the issues properly before the court, I dissent.
RAY, J., joins in this dissenting opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3022201/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
Nos. 98-1438EA, 98-1886EA
___________
Todd E. Rooney, *
*
Plaintiff-Appellee, *
* On Appeal from the
v. * United States District Court
* for the Eastern District of
* Arkansas.
George Williamson, *
*
Defendant-Appellant. *
___________
Submitted: November 18, 1998
Filed: February 10, 1999
___________
Before RICHARD S. ARNOLD, FAGG, and HALL,* Circuit Judges.
___________
RICHARD S. ARNOLD, Circuit Judge.
This case arises under the Arkansas Securities Act, Ark. Code Ann. §23-42-
501(1) (1994), which requires that securities sold in Arkansas be registered. Todd
Rooney bought all the stock in an automobile dealership in Blytheville, Arkansas,
from George Williamson. The stock was not registered. After a bench trial, the
*
The Hon. Cynthia Holcomb Hall, United States Circuit Judge for the Ninth
Circuit, sitting by designation.
District Court,1 ordered that the sale be rescinded. Under the court's decree, Rooney
is to return the stock to Williamson, and Williamson is to pay Rooney a total of
$232,150.
We find no error of law in the District Court's reasoning in this state-law case,
and believe no sufficient purpose would be served by an extended opinion. In
particular, we believe that the District Court has appropriately exercised its discretion
in adjusting the equities between the parties, and in offsetting against plaintiff's
recovery the sum of $86,000 which plaintiff received, during his ownership of the
stock, as a credit against a loan he took out to buy the stock. See Todd E. Rooney v.
George Williamson, No. J-C-95-323, slip op. 6 n.2 (E.D. Ark. January 27, 1998).
We also see nothing unreasonable in the District Court's award of attorneys'
fees and expenses, which is the subject of the appeal in No. 98-1886.
There is one respect, however, in which we believe the judgment should be
modified. As we have noted above, the District Court offset plaintiff's recovery by
the amount of $86,000. We think this offset should have been taken into account in
calculating the amount of prejudgment interest. According to the defendant's reply
brief, page 10, the interest reduction, through January 29, 1998, should be
$11,154.08. We have no reason to doubt this calculation, but believe the better
course is to remand this matter to the District Court for re-computation of the amount
of interest owed, taking into account the fact that no interest should be charged on the
$86,000 from and after the date on which the plaintiff received a credit on his loan
for this amount.
Accordingly, the judgment is, in the main, affirmed, and the cause is remanded
to the District Court for a further calculation in accordance with this opinion.
1
The Hon. Stephen Reasoner, Chief Judge, United States District Court for the
Eastern District of Arkansas.
-2-
It is so ordered.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
-3- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1516221/ | 420 S.W.2d 133 (1967)
HUMBLE OIL & REFINING COMPANY, Petitioner,
v.
Johnnie D. WILLIAMS, Respondent.
No. B-273.
Supreme Court of Texas.
October 25, 1967.
Frank L. Heard, Jr., Houston, for petitioner.
Tucker, Senff & Adams, Nacogdoches, for respondent.
GREENHILL, Justice.
This is a suit by the owner of the surface of a tract of land, Johnnie D. Williams, against the Humble Oil & Refining Company, the owner of a valid oil and gas lease, for damages to the surface. Humble's lease had been obtained from Williams' predecessor in title, and Williams bought the land subject to the lease. Williams alleged a willful trespass, and his recovery is based on an alleged use by Humble of more of the property than was reasonably necessary for its operations. Trial was to the court without a jury. Williams recovered a judgment for $550, and Humble appealed. The Court of Civil Appeals at Tyler affirmed. 413 S.W.2d 413.
The Humble lease, among other things, gave it the right to enter upon the land for the purpose of drilling, exploring, mining, producing and removing oil from the property. It also authorized Humble to build roads upon the premises. The evidence set out below is relied upon by Williams to show a trespass to his land; i. e., to support the implied finding of fact by the trial court that Humble used more of the land than was reasonably necessary for the above authorized purposes.
*134 The statement of facts is relatively brief. The land involved is a 79.06 acre tract located approximately fifteen miles northwest of Nacogdoches. Humble drilled a well on the property and had constructed a road across the property from a gravel county road to the well site. Williams testified that the road was about 2,300 feet long and 30 feet wide. It had a gravel base but had been "black-topped"; i. e., it had some sort of an oil based surface over the gravel. The road was built up about twenty inches, perhaps two feet, above the surrounding land. It ran in a generally northerly direction from the county road and some fifty feet from Williams' side fence. It had a slight curve before coming to the well site. Williams drew a diagram of his land and the road on a blackboard in the courtroom; and he referred to places and directions as "down here," "over there," and "this direction here." No map is in the record, and we are unable definitely to relate the testimony to the location of the road and other items on the ground.
There was evidence that the road had been built in the general direction that Williams previously had used to get from the county road to the area of the well site. He said his tire tracks could have been seen if one had looked before it rained.
Pictures in evidence showed some small pine trees which bordered on an area of some large pine trees. Williams had not planted the trees; they were there when he purchased the property. Williams testified that Humble, in building the road, cut or pushed over some of the smaller trees, trees of a diameter of two inches or less. He counted 315 such trees, and testified that they were worth $2.67 each. Pictures introduced by Humble show the road going through the trees.
Williams testified also that there is an area off of the road which Humble's trucks had used for the purpose of parking and turning around. He said the trucks had made ruts up to a foot deep in such parking and turning area.
Williams did not live on the land, but he had two chicken houses there. He also used the land for grazing and had fertilized it. He testified that the road interfered with his working of the pasture; that the use of his mechanized equipment was impaired by the existence of the road. He considered the road a nuisance. Moreover, when Humble's trucks drove over his cattle guard, they spilled some oil. The spilled oil then became mixed with dirt, and his cattle guard had become ineffective to the extent that he had been required to chase and recover cattle from time to time. He did not, however, allege any negligent action in this regard. Using "before" and "after" figures, he testified that his land was worth approximately $3,500 less because of the existence of the road.
The oil and gas lease gave Humble and dominant estate. The lessee had the right to use as much of the premises, and in such a manner, as was reasonably necessary to comply with the terms of the lease and to effectuate its purposes. Warren Petroleum Corp. v. Martin, 153 Tex. 465, 271 S.W.2d 410 (1954); Warren Petroleum Corp. v. Monzingo, 157 Tex. 479, 304 S.W.2d 362, 65 A.L.R. 2d 1352 (1957), Brown v. Lundell, 162 Tex. 84, 344 S.W.2d 863 (1961); Keeton and Jones, Tort Liability and the Oil and Gas Industry, 35 Texas Law Review 1 (1956). A person who seeks to recover from the lessee for damages to the surface has the burden of alleging and proving either specific acts of negligence or that more of the land was used by the lessee than was reasonably necessary. Warren Petroleum Corp. v. Monzingo, cited just above; Robinson Drilling Co. v. Moses, Tex.Civ.App.1953, 256 S.W.2d 650, no writ; Finder v. Stanford, Tex. Civ.App.1961, 351 S.W.2d 289, no writ. It has been held that the parties may provide in the lease agreement that the lessee shall *135 pay for damages to land, trees and cattle, and that such provisions are enforceable whether are not the damage or destruction is occasioned by a reasonable use of the land. Meyer v. Cox, Tex.Civ.App.1952, 252 S.W.2d 207, writ refused. The lease in question contained no such provision.
The plaintiff Williams had no pleadings and introduced no proof of negligence, and there is no proof that Humble used more of the land than was reasonably necessary to conduct its operations. The lease itself authorized Humble to enter the land and build the road. There is no proof that the road was unnecessary or could have been built in a less damaging manner. There is no proof that the road would have sufficed for Humble's purposes had it been gravel instead of hard top, or narrower, or that it could have been built without destroying as many trees.
Humble, by necessary implication, had the right to use its trucks on the road. There is no evidence that it was unnecessary for the trucks to park or to turn around in the area where they did, or that they used more area in parking or turning than was reasonably necessary. Nor is there evidence that the trucks made longer or deeper ruts than were reasonably necessary.
Williams' testimony that the road interfered with his grazing operations and was a nuisance to him is not evidence that the road was not reasonably necessary. His testimony that because of the road his land was worth $3,500 less does not supply proof of the necessary elements here. The $3,500 figure does not relate to damages from an excessive, unnecessary, or unreasonable use of the property; it relates to the road itself which Humble had the right to build.
The judgments of the courts below are reversed, and judgment is here rendered that the plaintiff Williams take nothing. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2565573/ | 4 N.Y.3d 708 (2005)
MATTER OF QUINONES v. LOPEZ
Court of Appeals of the State of New York.
Decided March 31, 2005.
Motion for leave to appeal denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1695911/ | 581 So.2d 300 (1991)
Abe Lee KING
v.
SCHUYLKILL METALS CORPORATION, et al.
No. CA 90 0182.
Court of Appeal of Louisiana, First Circuit.
May 16, 1991.
Writ Denied September 20, 1991.
*301 W. Michael Stemmans, Baton Rouge, for plaintiff-appellant Abe Lee King.
Charles A. Schutte, Jr., Baton Rouge, for intervenor-appellee Liberty Mut. Ins. Co.
Keith Giardina, Baton Rouge, for defendant-appellee Schuylkill Metals Corp.
Before EDWARDS, WATKINS and LeBLANC, JJ.
LeBLANC, Judge.
Plaintiff, Abe Lee King, appeals from a judgment dismissing his personal injury suit against defendant, Schuylkill Metals Corporation, on a motion for summary judgment. The issue presented on appeal is whether plaintiff's injury resulted from an intentional act within the meaning of the exception provided by La.R.S. 23:1032 B to the general rule that an employee's exclusive remedy against his employer for a work injury is worker's compensation.
While in the course and scope of his employment with Schuylkill on April 5, 1988, plaintiff was injured when his left hand was caught in the blades of a screw conveyor he was in the process of cleaning. Despite clear warnings on the sides of the screw conveyor that the power should be locked out before removal of the safety cover over the blades, plaintiff was cleaning the conveyor while it was in operation, with the safety cover removed, as he had been instructed by his supervisor.
Plaintiff subsequently filed this tort suit against Schuylkill, alleging Schuylkill personnel ordered him to clean the screw conveyor under such conditions that they knew or should have known that injury was substantially certain to follow.[1] An intervention was filed in this matter by Liberty Mutual Insurance Company, Schuylkill workers' compensation carrier, for reimbursement of all benefits and medical expenses paid to plaintiff as a result of his *302 injury. After answering plaintiff's suit, Schuylkill filed a motion for summary judgment on the ground that plaintiff's exclusive remedy was workers' compensation, since his injury did not result from an intentional act. After a hearing, the trial court granted this motion for summary judgment, dismissing plaintiff's suit against Schuylkill. Plaintiff has now appealed, alleging the trial court erred in concluding there were no disputed issues of material fact as to whether his injury resulted from an intentional act and in sustaining Schuylkill's objection to portions of his opposing affidavits.
Generally, worker's compensation is the exclusive remedy of an employee injured in the course and scope of his employment. La.R.S. 23:1032. However, La. R.S. 23:1032 B provides an exception to this tort immunity when the employee's injury is the result of an intentional act. An act is considered intentional whenever the defendant either consciously desired to bring about the physical results of his act or believed they were substantially certain to follow from his conduct. Bazley v. Tortorich, 397 So.2d 475 (La.1981); Kent v. Jomac Products, Inc., 542 So.2d 99 (La.App. 1st Cir.1989). To meet the criteria of "substantial certainty" requires more than a reasonable probability that an injury will occur; this term has been interpreted as being equivalent to "inevitable", "virtually sure" and "incapable of failing". Kent v. Jomac Products, Inc., supra; Hood v. South Louisiana Medical Center, 517 So.2d 469 (La.App. 1st Cir.1987); Walker v. Grantham, 449 So.2d 12 (La.App. 1st Cir.), writ denied, 450 So.2d 966 (La.1984). The mere knowledge of an employer that a machine is dangerous and that its use, therefore, creates a higher probability that someone will eventually be injured is not sufficient to meet the "substantial certainty" requirement. Walker, supra; Holliday v. B.E. & K. Const. Co., 563 So.2d 1333 (La.App. 3d Cir.1990). Further, even where a defendant's conduct is grossly negligent, this fact alone will not allow the imputation of intent. Hood, supra. Finally, in determining whether an act was intentional within the meaning of La.R.S. 23:1032 B, a court should be mindful that this exception has been given a narrow interpretation, consistent with the policy rationale of the workers' compensation act and the legislative history of this exception. Reeder v. Laks Corp., 555 So.2d 7 (La.App. 1st Cir.1989), writs denied, 559 So.2d 142 (1990).
In brief, plaintiff contends summary judgment is not the proper procedure in which to determine whether an employee's injury resulted from an intentional act. This argument is without merit since the jurisprudence of this state clearly holds that summary judgment is a proper procedural method to consider an employee's allegation that his injury resulted from an intentional act of his employer. Mayer v. Valentine Sugars, Inc., 444 So.2d 618 (La. 1984); Hood, supra; Chaisson v. Henning, 525 So.2d 553 (La.App. 3d Cir.) writ denied, 531 So.2d 277 (1988); Galvin v. P.E. Barnes & Sons, Ltd., 521 So.2d 739 (La. App. 2d Cir.1988). Where the plaintiff has alleged his injury resulted from an intentional act of his employer, if the facts set forth in the pleadings, depositions, answers to interrogatories, and affidavits, if any, show there is no genuine issue as to the employer's lack of intent, notwithstanding conclusory allegations to the contrary, the employer is entitled to judgment dismissing the plaintiff's suit. La.C.C.P. art. 966; Hood, supra.
In this case, plaintiff does not claim that defendant consciously intended to injure him. Thus, our inquiry is limited to the second prong of the Bazley test: whether Schuylkill believed plaintiff's injury was substantially certain to follow from requiring him to clean the screw conveyor while it was running without its safety cover.
In support of its motion for summary judgment, defendant filed the affidavits of Calvin Roberts and Dalton Mann, two of its employees. Mr. Roberts deposed that on the date of the accident he instructed plaintiff to clean the screw auger (conveyor) with a long-handled, flat iron tool routinely used to scrape material from the sides of the screw auger trough, as plaintiff had *303 done without incident on a number of previous occasions. He further deposed that in his fifteen years of employment with Schuylkill, Schuykill's screw augers had been cleaned in this manner, while running, four to five times per year and that no other employee ever had been injured while employing this procedure. Finally, he indicated that in ordering plaintiff to clean the screw auger he did not intend any harm to plaintiff and had no belief that plaintiff would be injured in completing this task. In his affidavit, Mr. Mann declared that the screw auger which plaintiff was cleaning at the time of the injury had been cleaned in the same manner plaintiff was then cleaning it approximately four to five times a year since Mann began working for Schuylkill in 1972, and that no employee previously had been injured while cleaning any of the screw augers at Schuylkill.
In opposition to Schuylkill's motion, plaintiff filed his own affidavit, the affidavit of Gary Talley, a former co-worker, and the affidavit of Michael A. Weigand, an industrial safety expert. Plaintiff's affidavit described his accident, including the fact that he was ordered to clean the screw conveyor while it was running with its safety cover removed. Mr. Talley stated in his affidavit that he had warned Schuylkill previous to plaintiff's injury that operation of the screw conveyors without their safety covers was illegal and dangerous, and that someone would be hurt if Schuylkill continued to operate them in this manner. Mr. Talley also declared that Schuylkill had knowledge of an incident which occurred at Schuylkill approximately six months before plaintiff's injury, in which another employee nearly lost an appendage in a screw conveyor being operated without a safety cover. Mr. Weigand's affidavit expressed an opinion that Schuylkill knew plaintiff's injury was substantially certain to happen under the circumstances.
It is beyond dispute that the operation of the screw conveyor in question with its safety cover removed was dangerous and created a risk of injury. The warning labels on the sides of the conveyor clearly warned of this very danger. However, even the knowledge of a high degree of probability that an injury will occur is insufficient to establish that an employer was substantially certain that an injury would occur, so as to impute intent to him. Jacobsen v. Southeast Distributors, Inc., 413 So.2d 995 (La.App. 4th Cir.), writ denied, 415 So.2d 953 (1982).
In fact, we find no evidence or allegations herein which would support a finding that Schuylkill was substantially certain that plaintiff would be injured as a result of being ordered to clean the screw conveyor in the manner that he did. A distinction must be made between probability and substantial certainty. Thus, although there may have been a high probability that plaintiff would be injured, we do not believe such an injury was "inevitable", "virtually sure" or "incapable of failing", so as to lead to a conclusion that plaintiff's injury was a substantial certainty. This conclusion is supported by the fact that other Schuylkill employees cleaned similar screw conveyors in this manner for years without injury, and that plaintiff himself had previously cleaned the same conveyor without incident on prior occasions. This fact illustrates that, while there may have been a strong probability of injury, there was not such a substantial certainty that an injury would occur as to impute intent to Schuylkill. In effect, all plaintiff's allegations amount to is that Schuylkill was grossly negligent. Irregardless of its probable negligence, we conclude there is no question that Schuylkill was not guilty of an intentional act within the contemplation of La.R.S. 23:1032 B.
Plaintiff's contention that several issues of material fact exist which preclude summary judgment is without merit. These alleged issues of disputed fact are: whether the screw conveyor involved had routinely been cleaned in the same manner four to five times a year for over fifteen years as stated by Mr. Mann in his affidavit, since Schuylkill admitted in its answers to plaintiff's interrogatories that this particular machine had only been purchased only in 1987; whether the screw conveyor was being routinely cleaned at the time of plaintiff's *304 injury or whether it was undergoing renovations; whether prior complaints and warnings were made to Schuylkill concerning the danger of cleaning operating screw conveyors with the safety cover removed; and, whether Schuylkill had knowledge of a prior incident of a near injury to an employee involving the operation of a screw conveyor in this manner.
We do not believe that any of the disputed facts raised by plaintiff are such as would preclude summary judgment in this case. Even if the particular machine involved had been cleaned in the manner employed by plaintiff only a few times, rather than four to five times a year for fifteen years, this fact would not alter our conclusion that Schuylkill did not believe injury to plaintiff was substantially certain to follow as a result of his instructions to clean the conveyor. With respect to whether the conveyor was undergoing renovations at the pertinent time, we believe this question is immaterial to the issue of intent. Finally, our conclusion also would not be altered regardless of whether Schuylkill previously had been warned of the danger of the cleaning procedure it employed and/or had knowledge of a prior near injury. See Maddie v. Plastic Supply & Fabrication, Inc., 434 So.2d 158 (La. App. 5th Cir.), writ denied, 435 So.2d 445 (1983) (no intentional act found despite employer's knowledge of prior injuries); Reagan v. Olinkraft, Inc., 408 So.2d 937 (La. App. 2d Cir.1981), writ denied, 412 So.2d 1095 (1982) (employee's death was not the result of an intentional act even if plaintiff proved allegations that employer knew of prior accidents involving the machinery which killed decedent).
Finally, plaintiff maintains the trial court erred in sustaining defendant's objection to those portions of the affidavit of plaintiff's safety expert, Michael Weigand, which expressed opinions rather than facts. In sustaining this objection, the trial court stated, "I don't think the opinions in affidavits are acceptable." We find no error in this ruling.
La.C.C.P. art. 967 requires that affidavits filed in connection with a motion for summary judgment must be based on personal knowledge. An opinion of an expert, which is based solely on his special training and experience, is not based on personal knowledge as contemplated by article 967. Brock v. Newman, 543 So.2d 84 (La.App. 1st Cir.), writ denied, 548 So.2d 1251 (1989); McCoy v. Physicians & Surgeons Hosp., 452 So.2d 308 (La.App. 2d Cir.), writ denied, 457 So.2d 1194 (1984). As the court explained in McCoy:
A statement of opinion is not sufficiently certain or probative to justify a conclusion that there is no issue of fact which should be determined by a trial on the merits. Expert opinion statements or testimony requires evaluation by the trier of fact as to probative value. 452 So.2d at 310.
Thus, the trial court was correct in refusing to consider the portions of Mr. Weigand's affidavit which merely expressed his opinion.
For the reasons assigned, we affirm the summary judgment granted by the trial court dismissing plaintiff's suit against Schuylkill. All costs of this appeal are to be borne by plaintiff.
AFFIRMED.
NOTES
[1] KWS Manufacturing Company, the manufacturer of the screw conveyor, was also named as a defendant in this suit. KWS is not a party in the present appeal. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1849244/ | 312 So.2d 656 (1975)
STATE of Louisiana
v.
Aaron HAMILTON.
No. 55722.
Supreme Court of Louisiana.
April 24, 1975.
Concurring Opinion On Denial of Rehearing May 30, 1975.
*657 Fredric G. Hayes, Fredric Hayes, Inc., Lafayette, for defendant-appellant.
William J. Guste, Jr., Atty. Gen., Barbara Rutledge, Asst. Atty. Gen., J. Nathan Stansbury, Dist. Atty., for plaintiff-appellee.
DIXON, Justice.
Defendant was tried and convicted of burglary. R.S. 14:62. He was sentenced *658 to serve four years at hard labor. On appeal he urges numerous assignments of error. Essentially, he contends that he was prejudiced by (1) the exclusion of women from the jury venire, the denials of (2) a preliminary hearing, (3) his motion for a directed verdict, (4) his request for a special charge and (5) the trial judge's refusal to release the pre-sentence report or recuse himself.
Defendant was arrested on September 19, 1973 and a bill of information charging him with burglary was filed on that day. On October 10, 1973 he filed a motion for a preliminary hearing which was denied. Under the statute and jurisprudence applicable at that time, defendant was not entitled to a preliminary hearing if his request was filed after the filing of a bill of information; to grant or deny the request was within the discretion of the trial court. C.Cr.P. 292; State v. Jackson, 258 La. 632, 247 So.2d 558 (1971); State v. Barnes, 257 La. 1017, 245 So.2d 159, appeal dismissed, cert. denied, 404 U.S. 931, 92 S. Ct. 289, 30 L.Ed.2d 244 (1971). Defendant fails to show any abuse of this discretion.
Defendant was tried on February 21-22, 1974 by a jury selected in accordance with Louisiana Constitution (1921), Art. VII, § 41 and C.Cr.P. 402, which provide for a general exemption for women. The United States Supreme Court held that the decision in Taylor v. Louisiana, 419 U.S. 522, 95 S.Ct. 692, 42 L.Ed.2d 690 (1975), need not be applied retroactively in Daniel v. Louisiana, 420 U.S. 31, 95 S.Ct. 704, 42 L.Ed.2d 790 (1975). This court held in State v. Rester, 309 So.2d 321 (La. 1975), that we would not give the Taylor case retroactive effect. There is no merit in this assignment.
At trial Officer Rodney Credeur and Detective Sidney Broussard testified that they found the defendant's car parked in a carport next to the B. F. Goodrich store which was the subject of the burglary. The car had been reported to the policy by a witness who had observed it and the occupants driving suspiciously. Upon arriving at the scene, the officers found the store had been entered by breaking a glass in the door. The offices had been rifled and a television set from the store was in the driveway near the car.
Wilson George testified that he had burglarized the B. F. Goodrich store with the defendant, and that they had both fled when the police arrived. George had pleaded guilty to the burglary. There was sufficient evidence to support a guilty verdict. To justify a motion for a directed verdict, there must be an absence of evidence of guilt, or of an essential element of the offense charged. State v. Douglas, 278 So.2d 485 (La.1973). The trial court correctly denied defendant's motion for a directed verdict.
Defendant requested the following special charges dealing with circumstantial evidence and the reliability of an accomplice's testimony:
"Special Charge Number 3
"I charge you that circumstantial evidence is legal, and you may convict upon such evidence alone; but I charge you that, to do so, the circumstances relied on for conviction must not only be consistent with the defendant's guilt, but inconsistent with every other reasonable hypothesis."
"Special Charge Number 5
"I charge you that an alleged accomplice's confession alone is not sufficient to establish the guilt of Defendant. Such evidence is subject to suspicion and should be received and acted upon with extreme or at least with grave caution."
The court's general charge included an adequate explanation of circumstantial evidence, and specifically included the ideas contained in defendant's requested Charge No. 3. There were some lines in the general charge which were not precisely correct, but these were not objected to *659 by defendant. Giving requested Charge No. 3 would have been repetitious.
Defendant's requested Charge No. 5 is not a correct statement of the law. The subject was adequately covered in the general charge, a portion of which stated:
"The jury may convict upon his [accomplice] uncorroborated testimony and while it is not the rule of law it is rather the rule of our experience in dealing with that class of testimony, that while you may convict upon the uncorroborated testimony of an accomplice, still you should act upon his testimony with great caution, subjected to a careful examination in the light of the other evidence in the case, and you are not to convict upon such testimony alone, unless satisfied, after a careful examination, of its truth, and also that you can safely rely on it."
The general charge correctly summarized the law as developed by prior jurisprudence. State v. Lewis, 236 La. 473, 108 So.2d 93 (1959); State v. Matassa, 222 La. 363, 62 So.2d 609 (1952); State v. Feraci, 167 La. 78, 118 So. 699 (1928); State v. Prudhomme, 25 La.Ann. 522 (1873).
Finally, defendant contended that he was entitled to a copy of the pre-sentence report and that the trial judge should have recused himself because he was aware of defendant's juvenile record and would consider this information in determining sentence. The motion to recuse did not state any ground for reversal (C.Cr.P. 671) and was properly denied.
Defendant contended that he was entitled to the pre-sentence report because it contained hearsay statements which he had a right to challenge. C.Cr.P. 877 provides:
"The pre-sentence or post-sentence investigation report shall be privileged and shall not be disclosed directly or indirectly to anyone other than the sentencing court, members of the division of probation and parole supervision, the officer in charge of the institution to which the defendant is committed, the parole board, the probation or the parole officer if the defendant is placed on probation or released on parole, medical authorities if the defendant is committed to a hospital, the pardon board, and the governor or his representative.
"Before imposing sentence the court may advise the defendant or his counsel of the factual contents and conclusions of any pre-sentence investigation report. The sources of confidential information shall not, however, be disclosed."
Additionally, C.Cr.P. 875 provides that: "In making the investigation, the probation officer shall inquire into the circumstances attending the commission of the offense, the defendant's history of delinquency or criminality, his family situation and background, economic and employment status, education, personal habits, and other matters deemed relevant by the officer, or ordered investigated by the court." The report therefore would necessarily contain hearsay and the defendant's juvenile record. He would not have any right to challenge the hearsay statements, as these statements are not the basis for a conviction, but for a determination of a proper sentence within the prescribed bounds fixed by the legislature.
Defendant incorrectly cites Murray v. Murray, 220 So.2d 790 (La.App.1969) as holding that hearsay may not be used in a pre-sentence report. That case held that hearsay statements contained in a report of the Child Welfare Division of the Department of Public Welfare could not be used in resolving the merits of the custody dispute in a divorce suit. The situation is completely inapposite to the instant case.
The trial judge did not abuse his discretion in denying the production of the presentence report.
For the reasons assigned, the conviction and sentence are affirmed.
*660 On Application for Rehearing
TATE, Justice (concurring in denial).
I concur in the denial of rehearing, but I have reservations whether sufficient showing was made that the trial court's discretion in denying the accused's counsel access to the pre-sentence report, upon his request, did not violate due process requirements of the state and federal constitutions. The needs of confidentiality as to the informants must be balanced against the unfairness in permitting a convicted defendant's sentence to be based upon information undisclosed to his counsel, which may not be accurate or which may be explainable. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2524363/ | 227 P.3d 1010 (2010)
IN RE A.A.R.
No. 102606.
Court of Appeals of Kansas.
March 26, 2010.
Decision Without Published Opinion Dismissed in part, reversed in part, and remanded with directions. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2577575/ | 194 F. Supp. 2d 417 (2002)
WEST CHESTER AREA SCHOOL DISTRICT,
v.
BRUCE and Suzanne C., Parents and Natural Guardians of Chad C.
No. CIV.A. 01-1170.
United States District Court, E.D. Pennsylvania.
March 8, 2002.
Ellis H. Katz, Jason R. Wiley, Gina K. de Peitro, Sweet, Stevens, Tucker & Katz, *418 New Britain, PA, for West Chester Area School District.
Dennis C. McAndrews, Wayne, PA, for Bruce C., Suzanne C.
MEMORANDUM AND ORDER
SCHILLER, District Judge.
Through his parents, Chad C., a fourteen-year-old ninth grader diagnosed with Attention Deficit Disorder ("ADD"), seeks special education pursuant to the Individuals with Disabilities Education Act ("IDEA"), 20 U.S.C. § 1400 et seq. For the reasons set forth below, I find Chad C. eligible for special services pursuant to IDEA.
I. FACTS AND PROCEDURAL HISTORY
This matter, as it currently stands, represents the most recent phase in Chad C.'s evolving educational history. While in the second grade, Chad moved to the West Chester Area School District (the "District") from out of state. In the spring of 1997, Chad's fourth grade year, Chad was evaluated for the gifted and learning support programs. The evaluation disclosed that Chad's intellectual functioning was in the high average range, notwithstanding a 21-point discrepancy between his verbal and performance IQ scores as measured by the Wechsler Intelligence Scale for Children-Third Edition ("WISC-III"). This evaluation also disclosed multiple symptoms of ADD, including weaknesses in auditory memory, organizing skills, and concentration. (H.O. at 5-6, ¶¶ 3,4; Dist. Ex. 4.)[1] Nonetheless, the District found Chad did not qualify as an exceptional student.[2] Instead of providing services under IDEA or § 504 of the Rehabilitation Act, 29 U.S.C. § 794, the District provided Chad with a more informal and less binding Pupil Education Program ("PEP") comprised of modest measures such as multi-step plans for assignments and a focused correction approach to improving Chad's writing. (Dist.Ex.6.)[3] The PEP was intended to support Chad's learning in the fifth through seventh grades.
The PEP, however, was largely disregarded while Chad was in the sixth and seventh grades, and Mrs. C. was advised that implementation of the plan by Chad's teachers was essentially voluntary, with no power of enforcement by the building principal. (H.O. at 6, ¶ 8.) During Chad's seventh grade year, his parents also became concerned about their son's educational progress. Consequently, Chad's parents requested a § 504 service agreement that would become effective when Chad began the eighth grade, and, in September 2000, around the time Chad began eighth grade, Chad's parents also requested the District pay for an Independent Educational Evaluation ("IEE"). In a letter dated September 27, 2002, the District denied the parents' request for an IEE and formally conveyed its determination that Chad was not eligible for § 504 services. (H.O. at 6-7, ¶¶ 12-13; Dist. Ex. 24, 25.) Chad's parents disagreed and requested a due process hearing to determine whether Chad was entitled to special education services under § 504.
Pennsylvania Special Education Hearing Officer Anne Carroll, Esq. (the "Hearing *419 Officer") held a due process hearing, and, on January 23, 2001, found Chad eligible for § 504 accommodations. The District appealed to the Commonwealth Court of Pennsylvania, and Chad's parents removed the matter to this Court, seeking, by way of a preliminary injunction, compliance with the Hearing Officer's decision. Following a hearing on the record, I remanded this matter to the Hearing Officer for the additional determination of whether Chad is entitled to services under IDEA. On September 30, 2001, after hearing additional evidence, the Hearing Officer found Chad to be eligible under IDEA and ordered the District to develop an Individualized Education Plan ("IEP").
The District appealed to the Pennsylvania Special Education Appeals Panel, which reversed the Hearing Officer's decision. Without deciding whether Chad has a qualifying disability, the Appeals Panel determined Chad did not meet IDEA's eligibility requirements because he had not shown a need for special education. Subsequently, Chad's parents turned to this Court for a determination that their son is eligible for accommodations under IDEA.
Throughout his academic career, Chad's performance has varied. For example, Chad finished the seventh grade with As, Bs, and Cs, including Cs in English, Math, and Reading. (H.O. at 10, ¶ 31-32; Dist. Ex. 41.) In the eighth grade, Chad's grades in several major subjects dropped significantly over the course of the academic year. Although Chad performed better in other subjects, Chad finished the fourth quarter of the eighth grade with low Cs in Science and English. As an eighth grader, Chad was generally placed in the most challenging tier of classes; during his current ninth grade year, Chad's highest placement is in Honors classes, the third highest level of academic classes. (H.O. at 11, ¶ 38.)
More importantly, Chad's class placement and grades fail to tell the whole story. Throughout much of Chad's schooling, Chad's mother has worked with him on a daily basis, typically two or three hours each school night plus additional time on the weekends, to ensure assignments were completed and Chad was prepared for tests. In an effort to enhance Chad's sense of independence, Chad's mother became less involved with his studies during his eighth grade year. Tellingly, without his mother's extensive efforts, Chad's grades dropped considerably. (H.O. at 11, ¶ 36.)
II. DISCUSSION
A. IDEA
IDEA, originally enacted in 1970 as the Education of the Handicapped Act, PUB.L. No. 91-230, §§ 601-662, 84 STAT. 175, guarantees that all disabled children in states accepting federal funding for education for the disabled will receive a "free appropriate public education." 20 U.S.C. § 1400(c); see also Jeremy H. by Hunter v. Mount Leb. Sch. Dist., 95 F.3d 272, 277 (3d Cir.1996). Consistent with IDEA's purpose of "ensur[ing] that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs," 20 U.S.C. § 1400(d), Congress declared that "improving educational results for children with disabilities is an essential element of our national policy of ensuring equality of opportunity, full participation, independent living, and economic self sufficiency for individuals with disabilities." 20 U.S.C. § 1400(c)(1).
The hallmark provision of IDEA is that "all children with disabilities have available to them ... a free appropriate public education which emphasizes special education and related services designed to meet their *420 unique needs." 20 U.S.C. § 1400(c). In this regard, a free appropriate education "consists of educational instruction specially designed to meet the unique needs of the [disabled] child, supported by such services as are necessary to permit the child `to benefit' from the instruction." Board of Educ. v. Rowley, 458 U.S. 176, 188-89, 102 S. Ct. 3034, 73 L. Ed. 2d 690 (1982). Under IDEA, a disabled student is entitled to an IEP, a specially tailored educational program detailing the student's present abilities, educational goals, and specific services designed to achieve those goals within a stated timeframe. See 20 U.S.C. § 1401(a)(20).
IDEA places on the states the primary responsibility for satisfying the goals of the statute. Described as a model of "co-operative federalism," see, e.g., Bernardsville Board of Education v. J.H., 42 F.3d 149, 151 (3d Cir.1994); Town of Burlington v. Department of Education, 736 F.2d 773, 783 (1st Cir.1984), aff'd, 471 U.S. 359, 105 S. Ct. 1996, 85 L. Ed. 2d 385 (1985), IDEA authorizes federal funding for states providing the special education that the statute requires, but such funding is contingent on state compliance with its array of substantive and procedural requirements, 20 U.S.C. § 1412.
In its IDEA-implementing provisions, Pennsylvania law provides a two-part test for determining whether a student is entitled to an IEP. First, the student must have a qualifying disability, and, second, the student must "need special education." 22 PA.CODE § 14.1 (defining "eligible student"); see also 34 C.F.R. § 300.7 (defining "child with a disability"). Acknowledging that ADD is a specifically named disability in the federal regulations, 34 C.F.R. § 300.7(c)(9)(i), the District concedes that the remaining issue related to IDEA is whether or not Chad needs special education. (Br. Oppos. Mot. to Find Chad C. an Eligible Stud. at 4.)
B. Standard of Review
In authorizing judicial review of administrative proceedings, IDEA dictates that the district court "shall receive the records of the administrative proceedings, shall hear additional evidence at the request of a party, and, basing its decision on the preponderance of the evidence, shall grant such relief as the court determines is appropriate." 20 U.S.C. § 1415(e)(2). Moreover, in their review of administrative proceedings, district courts are not free to substitute their own notions of sound educational policy, rather they must give "due weight" to administrative proceedings. Rowley, 458 U.S. at 206, 102 S. Ct. 3034.
The Third Circuit has interpreted this "mandate to accord `due weight' to the administrative proceedings as a requirement to consideralthough not necessarily to accept-the administrative fact findings." Carlisle Area Sch. Dist. v. Scott, 62 F.3d 520, 529 (3d Cir.1995)(citing Oberti, 995 F.2d at 1219). Moreover, the fact that the Appeals Panel reverses a hearing officer's decision does not allow the district court to abandon this directive to accord "due weight." Carlisle Area Sch. Dist., 62 F.3d at 529-30 (3d Cir.1995). Accordingly, I review the administrative proceedings mindful of these principles.
C. Chad's Need For Special Education
There is no precise standard for determining whether a student is in need of special education, and well-settled precedent counsels against invoking any bright-line rules for making such a determination. See Ridgewood Bd. of Educ. v. N.E., 172 F.3d 238, 247 (3d Cir.1999)(rejecting the notion that what constitutes an appropriate education can be "reduced to a single standard") (citations omitted). Having reviewed the administrative proceedings as a whole and with due deference, I find the *421 Appeals Panel erred as a matter of law in deciding Chad was not entitled to an IEP.
While in some instances the Appeals Panel's decision is less than pellucid, at its core the Appeals Panel's determination that Chad is ineligible for an IEP is premised on the fact that his grades have never dipped below the passing level. The Supreme Court, however, has clearly repudiated the notion that grades can serve as IDEA's litmus test: "We do not hold today that every handicapped child who is advancing from grade to grade in a regular public school system is automatically receiving a `free appropriate public education.'" Rowley, 458 U.S. at 203, n. 25, 102 S. Ct. 3034. Recently, another court reiterated this point emphatically:
The [hearing officer's] reasoning, in effect, precludes a child whose academic achievement can be described as "satisfactory" from being able to demonstrate that documented disabilities adversely affected the student's academic performance. This should not and cannot be the litmus test for eligibility under the IDEA. The fact that a child, despite a disability, receives some educational benefit from regular classroom instruction should not disqualify the child from eligibility.... Each child is different, each impairment is different, and the effect of the particular impairment on the particular child's educational achievement is different. [Denying] special education benefits because [a student] is able to pass from grade to grade despite documented impairments that adversely affect his educational performance is wrong.
Corchado ex rel. Corchado v. Board of Educ., 86 F. Supp. 2d 168, 176 (W.D.N.Y. 2000).
In addition, the Appeals Panel chastised Chad's parents for not "realizing that the IDEA ... does not provide for an optimal, or potential maximization, standard." (A.P. at 14.) While the Appeals Panel may have been correct that IDEA "may not require public schools to maximize the potential of disabled students commensurate with the opportunities provided to other children," Cedar Rapids Cmty. Sch. Dist. v. Garret F. by Charlene F., 526 U.S. 66, 77-78, 119 S. Ct. 992, 143 L. Ed. 2d 154 (1999)(citing Rowley, 458 U.S. at 200, 102 S. Ct. 3034), the Appeals Panel incorrectly gave short shrift to Chad's potential. In particular, the Appeals Panel gave no justification for disregarding the significant discrepancies, as found by the District, between Chad's high verbal IQ and lower performance IQ, and between his verbal IQ and basic reading skills, spelling, and math reasoning. See H.O. at 9, ¶ 25 (discussing the "significant discrepancies noted by the School District" between Chad's potential ability and actual performance). In so doing, the Appeals Panel disregarded the Third Circuit's mandate that a student's entitlement to IDEA services "must be gauged in relation to the child's potential." Polk v. Central Susquehanna Intermediate Unit 16, 853 F.2d 171, 185 (3d Cir.1988); see also T.R. ex rel. N.R. v. Kingwood Twp. Bd. of Educ., 205 F.3d 572, 578 (3d Cir.2000)(assessment of what constitutes free appropriate education made in light of "individual needs and potential"); Ridgewood, 172 F.3d at 247 (describing Rowley as "noting that children of different abilities are capable of greatly different achievements [and adopting] an approach that requires a court to consider the potential of the particular disabled student before it").
Thus, as a matter of law the Appeals Panel erred in focusing on Chad's grades while disregarding Chad's potential. Furthermore, in light of the totality of the evidence, including the extensive amount of time Chad spent out of class receiving remedial and supplement assistance from his mother and Chad's potential as evinced *422 by the District's testing, I conclude Chad is entitled to an IEP.[4]
III. CONCLUSION
For the foregoing reasons, I find Chad eligible for special services pursuant to IDEA.[5]
ORDER
AND NOW, this 8th day of March, 2002, upon consideration of the Motion by Bruce, Suzanne, and Chad C. to Find Chad C. an Eligible Student Under IDEA, their Motion to Find Chad. C. an Eligible Student Under § 504 of the Rehabilitation Act, their Petitions to Supplement the Administrative Record, their Motion for Preliminary Injunction, and all the responses thereto, it is hereby ORDERED that:
1. The Motion to Find Chad C. an Eligible Student Under IDEA (Document No. 16) is GRANTED. West Chester Area School District shall immediately initiate proceedings to prepare an Individualized Education Program for Chad C. that is consistent with IDEA, applicable regulations, and the attached Memorandum.
2. The Motion to Find Chad C. an Eligible Student Under § 504 of the Rehabilitation Act (Document No. 16) is DENIED as moot.
3. The Petitions to Supplement the Administrative Record (Document Nos. 25 & 26) are DENIED as moot.
4. The Motion for Preliminary Injunction (Document No. 3) is DENIED as moot.
NOTES
[1] "H.O." refers to the decision of Pennsylvania Special Education Hearing Officer Anne Carroll, Esq. dated September 30, 2001. "A.P." refers to the decision of Commonwealth of Pennsylvania Special Education Due Process Appeals Review Panel, No. 1188, dated October 30, 2001.
[2] As defined by Pennsylvania law, the term "exceptional" applies both to those students deemed disabled and those deemed gifted.
[3] A PEP is a generic term for modifications to regular education unrelated to either IDEA or § 504.
[4] Chad also argues that the District, based on the doctrine of judicial estoppel, should be ordered to enforce the PEP. Because, inter alia, there is no indication that the District's conduct has "assaulted the dignity or authority of the court" or was made "in bad faith, i.e. with intent to play fast and loose with the court," this argument is unpersuasive. Montrose Med. Group Participating Sav. Plan v. Bulger, 243 F.3d 773, 781 (3d Cir.2001) (citations omitted).
[5] Chad also seeks a service plan pursuant to § 504 of Rehabilitation Act. I need not reach this issue, however, because I have already found Chad eligible for IDEA services. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2335909/ | 201 Md. 225 (1953)
93 A.2d 536
HULL
v.
HULL (Appeal and Cross-appeal)
[No. 13, October Term, 1952.]
Court of Appeals of Maryland.
Decided January 7, 1953.
The cause was argued before DELAPLAINE, COLLINS, HENDERSON and HAMMOND, JJ.
Michael Paul Smith and W. Albert Menchine, for Margaret V. Hull, appellant and cross-appellee.
Herbert Meyerberg, with whom were Robert L. Mainen, Smalkin and Hessian, and H. Richard Smalkin, for William W. Hull, appellee and cross-appellant.
COLLINS, J., delivered the opinion of the Court.
Maragret V. Hull, hereinafter referred to as the appellant, here appeals from a decree denying her permanent alimony. William W. Hull, her husband, hereinafter referred to as the appellee, cross appeals from the decree dismissing his cross bill for divorce; the *227 awarding of custody of the two infant children to his wife; ordering support for the children; and assessing him with other expenses.
The appellant filed her bill of complaint for permanent alimony on October 27, 1949, charging the appellee with abandoning and deserting her on September 13, 1949. On June 6, 1950, Mr. Hull filed a cross bill for divorce a vinculo charging his wife with adultery. The chancellor held that there was no corroboration of either of the charges. He dismissed the husband's cross bill; denied the wife separate maintenance; awarded custody of the two infant children to Mrs. Hull; ordered Mr. Hull to pay the sum of $4,000.00 per year for the support of the children, all unusual medical and dental expenses of the children, all charges for repairs, replacements, maintenance, insurance premiums, real estate taxes and all public charges on the house jointly owned by the parties; awarded the wife counsel fee of $1,000.00; and ordered Mr. Hull to pay the costs of the proceedings. The pertinent testimony follows.
These parties were married in 1935 in Baltimore and at the time of this trial each was 40 years of age. Two children were born as a result of the marriage: Margaret or Peggy, 14 years of age, and James, 12 years of age at the time of trial. Mrs. Hull, as an infant, was taken into the home of a Mr. and Mrs. Davis and raised by them. Another infant, Helen, when 2 years of age and eleven years younger than Mrs. Hull, was also taken and raised by the Davis family. Mrs. Hull and Helen were regarded as foster-sisters, although no adoption proceedings were ever instituted as to either child by Mr. and Mrs. Davis. Mr. Hull has been a Maryland State Pilot since 1927 and in 1950 his income was $15,116.67. Mrs. Hull is unemployed and has no income.
About 1940 the parties to this case built a home in Baltimore next door to the Davis family. In 1943, Mrs. Davis died and a dispute developed between Mrs. Hull and Mr. Davis on one side and Helen and Mr. Hull on *228 the other side as to some of Mrs. Davis' possessions. On the night of Mrs. Davis' death, Mr. Hull and Helen left the Davis house about 8 P.M. to go to the Hull home at Mrs. Hull's request. When Mrs. Hull arrived there about 6 A.M. the next morning she found Mr. Hull and Helen "asleep together on the studio couch" in the living room. Mr. Hull said he lay on the couch at Helen's request to comfort her for the loss of Mrs. Davis and went to sleep. He said he slept in his trousers and a robe and on top of the covers. On another occasion Mrs. Hull testified that while she and Helen were attending a Lion's Club dinner, Mr. Hull came in and in the presence of everyone, Helen ran over to him and threw her arms around him. Mr. Hull sat down beside Helen and some of the men said to him: "I suppose that is your wife". Mr. Hull did not correct them. Mrs. Hull also testified that in 1944 or 1945 she heard some gossip in the neighborhood about Helen and her husband and she had seen some things that didn't look "very nice between my sister and him". After dinner in the presence of her husband she told Helen of the gossip, that she had seen things in her home which she did not like and that people were blaming her for letting Helen stay in her home. She said she told Helen: "I just can't understand what is going on but I don't like it and I am not going to stand for it". Helen started to cry and Mrs. Hull went upstairs. When she came down Helen was crying on Mr. Hull's shoulder. Mr. Hull then took Helen home. When he returned she was in bed. He took his pajamas out of the drawer, walked out of the bedroom, went downstairs and slept on the couch in the den and has never returned to sleep with her again.
Mr. Hull denied that any conversation had taken place at any time between him, Mrs. Hull, and Helen concerning the gossip in the neighborhood or that his withdrawal from the bedroom followed this non-existent occurrence. He claimed that he left the bedroom in the fall of 1943 about six or seven months after Mrs. *229 Davis' death. He said that within a few weeks after Mrs. Davis died his wife began to accuse him of improper relations with Helen, which he denied. In November, 1943, while grain was being loaded on a ship, he was covered with grain dust which turned into a "gooey mess" from moisture and atmospheric conditions and this pasty condition occurred down the front of his blue uniform trousers. When he returned home he put the trousers where it was his usual custom to place clothes for the cleaner. Mrs. Hull and the maid were housecleaning upstairs so he went downstairs to sleep in the den. Suddenly Mrs. Hull awakened him, confronted him with the trousers and accused him of "running around" with women. He said he denied the accusation and she jumped on him and beat him on the head with a pillow. He said: "She told me she always loved me and she always respected me but after this incident she didn't love me anymore but hated me and if I was going to continue to carry on the way I was carrying on, never come back to her bedroom again." Mr. Hull said he told her that if she felt that way about it in spite of all his denials, he would stay downstairs. He said: "I made my bed down there from that time until I left there". He said, however, that he never removed any of his belongings from the bedroom until he left the house. Mrs. Hull testified that the incident about the trousers occurred some time after he had left the bedroom. She denied that she went into a tirade. She said her husband's only reply to her accusation was that she was crazy and it was cheaper to have the cleaning done on Broadway. She denied that she ever ordered her husband out of the bedroom and insisted that he left voluntarily the night she accused Helen and him of improper conduct. It is plainly apparent that there is no corroboration on either side as to just why the husband left the marital bedroom. There is no doubt that he removed from that room.
After this removal there is conflicting testimony, without corroboration, about an alleged assault made by *230 Mr. Hull on Mrs. Hull. After the husband left the bedroom, Mrs. Hull testified that she requested him many times to come back to her room not only for her sake, but because the children were asking questions. He refused to return. She said on one occasion she offered to put twin beds in any bedroom he desired if he would come upstairs. She said the present arrangement was embarrassing to her when the children had guests. On the other hand, Mr. Hull testified that after he moved to the den in 1943 he tried to become reconciled with her but she always refused him. She would accuse him of misconduct with women and would curse him. He denied she ever asked him to return to her bedroom. It is therefore plain that there is no corroboration on either side as to the conduct of either party from the time he left the marital bedroom to the time he finally left the house. However, Mr. Hull admitted: "On numerous occasions Mrs. Hull would say to me it was very embarrassing, the children were asking questions about it, that she would make arrangements upstairs, either put both children in the same room or put twin beds in the children's room. I told her I was perfectly satisfied sleeping where I was, I would rather stay down there."
At the trial of the case, Mrs. Hull said: "I still love him, Your Honor. That is why I asked for this divorce. I need him, my children need him; we have a lovely home; we worked hard for it." She also said she wanted him to return home regardless of what he might have done because she loved him and she and the children needed him. On cross-examination Mr. Hull testified as follows: "Q. Do you still love your wife? A. I do not. Q. Would you consider returning and living with her? A. Never." The chancellor concluded there was no love or affection on the part of either husband or wife, despite Mrs. Hull's expression.
When asked why he left the house in September, 1949, the time he is charged with deserting and abandoning his wife, he replied as follows. Early in 1949 he went *231 to Doctor Eastland for a physical examination. He had a feeling of extreme pressure around his kidneys. The doctor gave him a complete physical examination. As a result of that examination and after talking to the doctor he tried to take it a little easier during the summer. Conditions at home continued to make him nervous. He did not feel any better, so when the children went back to school in September, he subleased an apartment and left the marital domicile finally on September 13, 1949. Mrs. Hull testified that when he left on September 13th she thought he had gone down the Chesapeake Bay. The next day she received a letter from Mr. Hull's solicitor. He freely admitted that since he left the home in September, 1949, he had had sexual relations with other women. He testified that after he left the home he went there on one occasion in connection with the children. He said Mrs. Hull came down to the car and told him she was a decent woman and did not want him talking about her and she cursed him, spit in his face and walked away. When he later returned to get his belongings she told him to get what he wanted and get out. Mrs. Hull denied that these incidents ever occurred.
As above set forth, the facts relied on by Mr. Hull to justify his leaving the marital bedroom, as he admits he finally did in November, 1943, are not proven. Therefore, according to the record before us, this was done without justification. Nor are the events relied on by him from November, 1943, to September, 1949, proven. He admits that in September, 1949, he rented another apartment, left the home of his wife and children, and has no intention of returning to them. He said he did this because the quarreling of his wife had undermined his health. There is no corroboration of the charge that his wife quarreled with him at that time. According to the record before us, Doctor Eastland did not testify in the case. We must therefore conclude that Mr. Hull abandoned and deserted his wife on September 13, 1949, as charged in her bill of complaint and, from the record *232 before us, that the desertion was without justification or excuse.
The law is well settled in this State that a decree for permanent alimony may be granted upon grounds sufficient to support a decree for divorce, either a vinculo matrimonii or a mensa et thoro. Strzegowski v. Strzegowski, 175 Md. 53, 58, 199 A. 809, and cases there cited. Stirn v. Stirn, 183 Md. 59, 64, 36 A.2d 695. Recognizing this authority, the appellant has charged the appellee with abandonment and desertion on September 13, 1949. We are of opinion that this charge has been proven and the husband has not proven justification therefor. This is one of the grounds for a divorce a mensa et thoro as set out in Article 16, Section 34, 1951 Code. The decree will therefore be reversed to allow the wife separate maintenance.
In the decree the chancellor ordered that the appellee "pay for all repairs and replacements necessary to keep and maintain the property of the parties in good and livable condition, the need for such repairs and replacements to be determined by the Probation Director of Baltimore County; and shall pay all fire and windstorm insurance premiums, real estate taxes, and other public dues and charges that may become due and payable on said property." An equity court in this State, even in granting divorces, has no power, in the absence of a specific statute, to adjust the property rights of the parties. Roberts v. Roberts, 160 Md. 513, 154 A. 95; Dougherty v. Dougherty, 187 Md. 21, 32, 33, 48 A.2d 451. There is no divorce here. This is an alimony case. Article 16, Section 38, 1951 Code, therefore has no application. Blair v. Blair, 199 Md. 9, 10-11, 85 A.2d 442, 443; Brown v. Brown, 199 Md. 585, 590-591, 87 A.2d 626, 628. That part of the decree will therefore be reversed.
The chancellor also ordered that the husband pay "unusual medical and dental expenses of the infant children". In Kriedo v. Kriedo, 159 Md. 229, 150 A. 720, 722, the wife obtained a divorce a vinculo matrimonii *233 from her husband with the custody of their minor child, Morris, and an order that the father pay seven dollars per week for the support of the child until further order of the court. The wife filed a petition later in the divorce proceedings stating that since the divorce decree she had incurred hospital, medical, surgical and funeral expenses for the child in the amount of $712.10. She asked that the husband be required to reimburse her for such of these expenses as she had paid and also be required to pay the doctor for unpaid bills so incurred. In sustaining a demurrer to that petition this Court pointed out that the father was under the common law obligation to support the child during its minority and this obligation continued without regard to the divorce decree, unless in that decree the court should order that the child be supported by someone other than the father. This Court further said in that case in holding the obligation to be one at law and not in equity: "Our conclusion, therefore, is that the father is primarily liable for the extraordinary necessary expenses shown to have been incurred for the benefit of his deceased minor child, which liability is to the persons rendering the service in cases where those rendering services have not been paid, and that the mother is entitled to reimbursement from the father in those cases in which payment has been made by her, but that upon the refusal of the father to pay, the remedy is by a suit at law wherein he is entitled to have a jury pass upon questions of fact, including the inquiry as to whether the services were rendered, whether they were necessary, and whether the charge was a reasonable and proper one." We are therefore of opinion that the provision for "unusual medical and dental expenses of the children" should be eliminated from the decree.
The chancellor further ordered that Mr. Hull pay $4,000.00 per annum, payable in equal monthly installments, for the support of the minor children. In his opinion in the case, the chancellor said: "* * * in supporting his children the husband will have to support *234 the wife because she is necessary for their supervision and care. As long as they need the mother the father has to take care of the wife. We cannot separate the children from the mother in passing upon the question of support." From the salary earned by the husband and the station in life of the parties, we believe that the total sum of $5,000.00 for the support of the wife and children is proper. However, it would be well to specify just how much of this amount is allowed as alimony for the wife. As this award was based on the assumption by the chancellor that the wife and children would live rent free in the jointly owned house, it may in the future be advisable for the chancellor to add to the amount of $5,000.00 per annum any expense incurred by the wife and children for suitable living quarters if these are not provided without expense to the wife in the jointly owned house, in view of our modification of the decree as to the expenses of the house to be paid by the husband. Of course, any award will be subject to further order of the chancellor. The amount of the counsel fee is not contested here.
The appeal from the decree, dismissing the husband's cross bill for a divorce on the grounds of adultery of his wife, is abandoned here. In fact, the testimony on this phase of the case is not included in the printed appendix and is not before us in this case. Rule 39, Sec. 1 (e) of the Rules of the Court of Appeals; Sunshine Laundry Co. v. White, 197 Md. 582, 584-586, 80 A.2d 1, 2, 3. Moreover, the fact that the husband had sexual relations with other women after he left the home in September, 1949, absolutely barred him from a divorce on the grounds of adultery or any other matrimonial offense committed by his wife. Dougherty v. Dougherty, supra, 187 Md. 21, 31, 48 A.2d 451.
Decree reversed in part and affirmed in part and cause remanded for the passage of a decree to conform with this opinion. Costs to be paid by William W. Hull. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2984956/ | January 23, 2014
JUDGMENT
The Fourteenth Court of Appeals
IN THE ESTATE OF BARBARA CHAPMAN, DECEASED
NO. 14-13-00041-CV
________________________________
This cause, an appeal from the judgment signed October 8, 2012 in favor of
applicant Catherine C. Valby, was heard on the transcript of the record. We have
inspected the record and find error in the judgment. We order the judgment of the
court below REVERSED and we REMAND the case for further proceedings not
inconsistent with this opinion.
We order appellee, Catherine C. Valby, to pay all costs incurred in this
appeal.
We further order this decision certified below for observance. | 01-03-2023 | 09-22-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2447598/ | 841 S.W.2d 908 (1992)
Margaret I. ANNESLEY and Gale H. Touchstone, Appellants,
v.
TRICENTROL OIL TRADING, INC. and Tricentrol Overseas, Ltd., Appellees.
No. A14-89-00811-CV.
Court of Appeals of Texas, Houston (14th Dist.).
November 5, 1992.
Rehearing Denied December 17, 1992.
*909 William H. Bruckner, William H. White, Houston, for appellants.
Paul J. Dobrowski, Mark E. Lowes, Eileen Wilson, Houston, for appellees.
Before J. CURTISS BROWN, C.J., and JUNELL and MURPHY, JJ.
OPINION ON REMAND
JUNELL, Justice.
This suit to recover two seats on the New York Mercantile Exchange (NYMEX) comes to this Court on remand from the supreme court, 809 S.W.2d 218 (Tex.1991) (per curiam), on appeal from our unpublished opinion filed August 9, 1990. At trial, the jury awarded damages to appellees, Tricentrol Oil Trading, Inc. (TOTI) and Tricentrol Overseas, Ltd. (TOSL) for conversion, breach of fiduciary duty, breach of contract, punitive damages, and attorney's fees. In addition, the trial court declared TOTI to be the legal owner and holder of all right, title, and interest in the exchange seats. This Court reversed the judgment, holding that appellants' suit for conversion was barred by a release that expressly discharged "any and all causes of action, of any kind or character, whether now known or not known" between (1) Touchstone and (2) TOSL and its subsidiary and affiliated companies, including TOTI. The supreme court, however, found the release ineffective because appellant Gale H. Touchstone held the NYMEX seats in a resulting trust and, as trustee, he "failed to make a full and frank disclosure of his claim to the seats." We are bound by the supreme court's opinion as the law of the case. Upon consideration of issues not previously addressed, we affirm.
According to testimony, a NYMEX rule bars corporations from owning seats on the exchange, therefore as an officer of TOTI, Gale H. Touchstone took the two seats, paid for by the corporation, in his name and conferred trading privileges on TOTI. Touchstone held the seats in a resulting trust in TOTI's favor. However, after Touchstone was terminated, he refused to transfer the seats to TOTI's newly designated representative, claiming that TOTI's former president, Margaret I. Annesley, had orally agreed to give him the seatsin *910 fact, prior to their purchaseas part of his employment compensation. The jury found that Touchstone and Annesley had not entered into such oral agreement.
First, appellants contend that if there was no oral agreement, then there was no proof they breached their respective fiduciary duties to the corporation. They claim the jury's findings of breaches of fiduciary duty cannot be reconciled with the jury's finding of no oral agreement. We disagree. Touchstone breached his duty as a corporate officer by attempting to appropriate corporate property for his own financial benefit, and he breached his duty as a trustee of corporate property by refusing to carry out TOTI's demands as beneficiary of the trust property. Regarding Annesley, certainly it was a breach of her fiduciary duty to attempt to secretly divest TOTI of its corporate assets, even though she and Touchstone did not ultimately agree to terms that would form a legally binding agreement. Under Touchstone's version of their negotiation, the seats became his personal assets upon their purchase in January or February of 1985. Annesley testified that Touchstone could not have become owner of the seats for at least two years after their purchase; nonetheless, she clearly admitted she intended to give the corporation's seats to Touchstone to own as his personal assets.
Touchstone also contends there are no jury findings, and no evidence or insufficient evidence to support the award of punitive damages. Appellees respond that punitive damages may be recovered for (1) a willful or knowing conversion, First Nat'I Bank v. Brown, 644 S.W.2d 808, 810 (Tex.App.Corpus Christi 1982, writ ref'd n.r.e.); or (2) an intentional and knowing breach of one's fiduciary duty, Avila v. Havana Painting Co., 761 S.W.2d 398, 400 (Tex.App.Houston [14th Dist.] 1988, writ denied). Touchstone's failure to return the trust property at TOTI's direction supports the jury findings of conversion. "The unauthorized and wrongful assumption and exercise of dominion and control over the personal property of another, to the exclusion of or inconsistent with the owner's rights, is in law a conversion." Waisath v. Lack's Stores, Inc., 474 S.W.2d 444, 447 (Tex.1971) (citations omitted). It has been held that an intentional act not only negates good faith, but implies the person acted with malice: "All that is necessary is a willful and knowing conversion under circumstances showing a lack of good faith." Geders v. Aircraft Engine & Accessory Co., 599 S.W.2d 646, 651 (Tex. Civ.App.Dallas 1980, no writ). Here, the trial court defined "intent, intentional or intentionally" as an act done "knowingly, deliberately, willfully, or designedly," and instructed the jury "where there is a fiduciary duty between the parties, a person has a duty to speak and a person's knowing or reckless failure to disclose material facts, which he has a duty to disclose, is fraudulent." The jury specifically found that Touchstone's conversion of the seats was "intentional," as was his breach of fiduciary duty. In such a case, malice may be implied. See id. Likewise, the jury found that Annesley's breach of fiduciary duty was committed intentionally. The secrecy of her negotiations with Touchstone is some evidence of Annesley's breach of her fiduciary duty to "act with candor, unselfishness, and good faith." We overrule Touchstone's points of error one, two, three, four, five, six, and seven, and Annesley's first and fourth points of error.
Next, Touchstone contends the trial court erred in awarding attorney's fees to TOTI and TOSL. The grant or denial of attorneys' fees in a declaratory judgment lies within the sound discretion of the trial court and will not be disturbed on appeal absent a clear abuse of discretion. Tex.Civ. Prac. 37.009 (Vernon 1986); Oake v. Collin County, 692 S.W.2d 454, 455 (Tex.1985) (citations omitted). TOTI sought and received a declaration that it was the legal owner and holder of the NYMEX seats, and Touchstone has failed to prove the trial court's actions were arbitrary or unreasonable. Concerning TOSL, the trial court held that by suing TOSL, Touchstone breached their mutual agreement to release any and all causes of actionpast, present, or futureagainst each other. Touchstone responds that it was TOSL that breached the agreement by giving TOTI permission to sue Touchstone *911 for recovery of the seats. As previously discussed, the supreme court held the release ineffective. Consequently, Touchstone contends that none of the terms of the contractincluding the agreement not to suecould have been breached. However, we see no inequity or abuse of discretion in the trial court awarding attorneys' fees based on the written contract since it was Touchstone's failure to make a full and frank disclosure in the contract negotiation that negated its effect. We overrule Touchstone's points of error eight and nine.
In Touchstone's tenth point of error, he complains the trial court erred in admitting one of Annesley's superseded pleadings and compounding the error by not allowing Touchstone to fully cross-examine Annesley concerning the circumstances of the pleading. TOTI offered the superseded pleading to impeach Annesley's testimony that she was not "aware" of having ever asserted that Touchstone breached his fiduciary duty to TOTI by failing to disclose the transaction that placed the seats in his name. Indeed, the superseded pleading contained that allegation; as such, it was admissible to impeach the pleader. See, e.g., Valadez v. Barrera, 647 S.W.2d 377, 382-83 (Tex.App.San Antonio 1983, no writ). Touchstone also contends he was denied the opportunity to fully cross-examine Annesley. For example, Touchstone's attorney could not elicit from Annesley her definition of "fiduciary." We hold the trial court properly sustained TOTI's objection to that question as it called for a legal conclusion. Finally, Touchstone failed to make an offer of proof or a bill of exceptions showing what additional testimony Annesley might have given, therefore he waived this complaint. We overrule Touchstone's tenth point of error.
Appellants also contend the trial court erred by not treating TOTI (the plaintiff) and TOSL (a third-party defendant) as one party, and equalizing peremptory jury strikes. Tex.R.Civ.P. 233. However, appellants have failed to preserve any alleged error by not showing that the jury panel included members which they would have struck. Smith v. Christley, 755 S.W.2d 525, 531 (Tex.App.Houston [14th Dist.] 1988, writ denied) (citations omitted). We overrule Touchstone's eleventh and Annesley's third points of error.
Next, Touchstone contends the trial court erred in denying his motion for mistrial; citing examples in which jurors wrote on the verdict pages and asked questions during their deliberation, Touchstone claims the jury's verdict showed its "utter confusion." However, Touchstone has failed to show how the foregoing matters "amounted to such a denial of the rights of the appellant as was reasonably calculated to cause and probably did cause the rendition of an improper judgment in the case." Tex.R.App.P. 81(b)(1). Touchstone also complains the trial court omitted several pages of Annesley's testimony in response to the jury's request to "see the oral testimony of both Annesley and Touchstone in which they stated at what period of time the NYMEX seats would become Touchstone's personal assets." However, it seems apparent that the testimony studied by the jurors was sufficient for them to properly perceive that Annesley and Touchstone did not come to specific terms on the agreement, a finding that appellants have claimed supports their case of no conspiracy. Finding no probable prejudice, we overrule Touchstone's twelfth point of error.
Finally, in Touchstone's thirteenth point of error and Annesley's second point of error, appellants contend the trial court erred by allowing into the jury room an exhibit containing approximately fifty pages when only two pages of the exhibit had been admitted into evidence. Approximately eight days after trial, Annesley's attorney discovered that additional pages of the exhibit, known as the "Tricentrol PLC Corporate Policies Manual Issued January 1986," were taken into the jury room, an action Annesley describes as "apparently inadvertent." Appellants contend the additional pages could have led jurors to believe that Annesley had no authority to approve of TOTI's purchase of the seats in Touchstone's name. However, TOTI did not challenge Annesley's authority to approve purchase of the seats, only the *912 transfer of the seats to Touchstone as personal assets. Appellants note that Tex. R.Civ.P. 281, designated "Papers Taken to Jury Room," provides in relevant part:
Where part only of a paper has been read in evidence, the jury shall not take the same with them, unless the part so read to them is detached from that which was excluded.
In interpreting Rule 281, this Court has emphasized that "it is the responsibility of the attorneys for all parties, as well as of the judge and bailiff, to check the materials to be sent to the jury room." City of Houston v. Simon, 580 S.W.2d 667, 668 (Tex.Civ.App.Houston [14th Dist.] 1979, no writ) (emphasis in original). Moreover, "jury misconduct" refers to all unauthorized acts done by the jury and does not necessarily imply intentional wrongdoing. In the instant case, appellants failed to show that, amid more than seventy exhibits admitted into evidence, the jurors considered the additional pages; they failed to meet the strict burden of establishing that misconduct occurred, that it was material, and that it reasonably appears from the record as a whole that it caused injury to the appellants. Tex.R.Civ.P. 327; Howell v. Homecraft Land Dev., Inc., 749 S.W.2d 103, 111 (Tex.App.Dallas 1987, writ denied); City of Houston v. Simon, 580 S.W.2d at 669. We overrule Touchstone's thirteenth point of error and Annesley's second point of error.
The judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1830692/ | 735 So. 2d 782 (1999)
STATE of Louisiana
v.
John A. POSTELL.
No. 98-KA-0503.
Court of Appeal of Louisiana, Fourth Circuit.
April 22, 1999.
*783 Deborah K. Leith, Louisiana Appellate Project, Covington, Louisiana, Attorney for Defendant/Appellant.
Harry F. Connick, District Attorney, Parish of Orleans, Charles E.F. Heuer, Assistant District Attorney, New Orleans, Louisiana, Attorneys for State of Louisiana/Appellee.
Court composed of Judge MOON LANDRIEU, Judge JAMES F. McKAY III, Judge Pro Tempore JAMES A. GRAY II.
JAMES A. GRAY, II, Judge Pro Tem.
Defendant/Appellant was arrested on August 16, 1996, for possession of drug paraphernalia. La. R.S. 40:1033. Appellant was charged by bill of information with possession of cocaine in violation of La. R.S. 40:967, on October 2, 1996. On September 24, 1997, Appellant entered a *784 plea of not guilty. A six-person jury found Appellant guilty of possession of cocaine on October 6, 1997. On December 9, 1997, the defendant was sentenced to serve three years at hard labor in the custody of the Department of Corrections. Appellant's motion to reconsider sentence was denied. It is from this conviction that Appellant appeals.
FACTS
On August 16, 1996, Officer Steve Rice was on routine patrol of the French Quarter. At approximately 11:15 p.m., Officer Rice was headed lakebound in the eight hundred block of St. Louis Street when he observed the defendant standing on the sidewalk, leaning against a wall. Officer Rice pulled up to the side of the street and got out of his vehicle to see what the defendant was doing. As he neared the defendant, Officer Rice testified that he saw the defendant look at him, then stoop and drop something on the ground. When Officer Rice asked the defendant what he was doing, the defendant responded that he was looking for a place to go to the bathroom. Officer Rice then shined his flashlight in the area where the defendant had dropped the object and observed a shiny metal pipe laying on the ground. Officer Rice, an experienced and well-trained police officer, immediately identified the pipe as one used for the consumption of drugs, but was unable to detect the presence of any drugs in the pipe. He seized the pipe and placed the defendant under arrest for possession of drug paraphernalia, a violation of La. R.S. 40:1033.
Officer John F. Palm, a criminalist with the New Orleans Police Department crime lab, testified that he tested the pipe seized by Officer Rice to determine if it contained any dangerous substances. He testified that the pipe contained a small amount of cocaine residue. However, because the amount was so small, Officer Palm could not give an accurate weight of the amount detected. He also testified that he performed a microcrystalline test whereby he took some washings from the pipe and used a gold chloride crystal test, which formed crystals positive for cocaine. Officer Palm also performed a gas chromatograph test whereby some of the washings were placed in a machine to test for illegal substances. The results of this test proved positive for cocaine.
ERRORS PATENT ON THE RECORD
A review of the record reveals no errors patent.
ASSIGNMENT OF ERROR 1
By this assignment of error, the defendant claims the evidence was insufficient to support the verdict of possession of cocaine. He contends that there was not enough cocaine residue in the crack pipe to prove that he had the requisite intent to possess. The defendant further contends that the State cannot meet its burden of proving beyond a reasonable doubt that he knew there was cocaine in the pipe based on the availability of a test that will identify an invisible film as some form of cocaine. This claim has merit.
If the sufficiency of the evidence is raised on appeal, an appellate court must consider whether, after viewing the evidence in a light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime proven beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 99 S. Ct. 2781, 61 L. Ed. 2d 560 (1979); State v. Jacobs, 504 So. 2d 817 (La.1987). Additionally, as the fact finder is given the role of weighing the credibility of witnesses, an appellate court should not second-guess this determination beyond the Jackson sufficiency evaluation. State v. Jones, 94-1261, p.8 (La.App. 3d Cir.5/17/95), 657 So. 2d 262, 268.
When circumstantial evidence forms the basis of the conviction, such evidence must consist of proof of collateral facts and circumstances from which the existence of the main fact may be inferred according to reason and common expertise. State v. Shapiro, 431 So. 2d 372 (La.1982). *785 The elements must be proven such that every reasonable hypothesis of innocence is excluded. La. R.S. 15:438. This is not a separate test from Jackson, but rather is an evidentiary guideline to facilitate appellate review of whether a rational juror could have found a defendant guilty beyond a reasonable doubt. State v. Wright, 445 So. 2d 1198 (La.1984); State v. Addison, 94-2431, p.6 (La.App. 4th Cir. 11/30/95), 665 So. 2d 1224, 1228.
To convict a defendant for possession of cocaine pursuant to LSA-R.S. 40:967(C), the State must present evidence establishing beyond a reasonable doubt that the defendant was in possession of a controlled dangerous substance and that he knowingly or intentionally possessed the substance. State v. Lavigne, 95-0204, p. 11 (La.App. 4th Cir. 5/22/96), 675 So. 2d 771, 779 writ denied, 96-1738 (La.1/10/97), 685 So. 2d 140.
Possession may be actual or constructive. State v. Chambers, 563 So. 2d 579 (La.App. 4th Cir.1990). A person in the area of contraband may be considered in constructive possession if the illegal substance is subject to his dominion and control and he has guilty knowledge. State v. Trahan, 425 So. 2d 1222 (La.1983). Whether a defendant has dominion and control depends on several factors, including inter alia: 1) the defendant's access to the area where the drugs are found; 3) evidence of recent drug use by the defendant; and 4) the defendant's physical proximity to the drug. State v. Cormier, 94-537, p.5 (La.App.3d Cir 11/2/94), 649 So. 2d 528, 531.
Guilty knowledge is an essential element of the crime of possession of cocaine. A conviction for possession of cocaine may rest upon the possession of the slightest amount of the drug. The amount of the substance seized will have some bearing on the defendant's guilty knowledge, particularly in instances where there are no corroborating circumstances. State v. Spates, 588 So. 2d 398 (La.App. 2d Cir. 1991); State v. Jones, 94-1261, p.9 (La. App. 3d Cir.5/17/95), 657 So. 2d 262, 268.
A consideration of other reported cases involving the possession of trace amounts of controlled dangerous substances is instructive of the evidence necessary in such cases to show a defendant's guilty knowledge. It is also important to note the factual distinctions of these cases because the determination of whether there is sufficient evidence to convict is ultimately dependent upon the peculiar facts of each case.
In State v. Jackson, 557 So. 2d 1034 (La. App. 4th Cir.1990), this Court reversed a conviction of attempted possession of cocaine. The Court found that the evidence was legally insufficient to establish that the defendant exercised dominion or control over the residue-containing paraphernalia. The Court stated that the mere presence of the defendant in close proximity of drugs or the defendant's knowledge of the presence of drugs in the premises where he is located is insufficient to prove constructive possession. Id. at 1035. The Court noted that there was no evidence, aside from the fact that the defendant was standing next to the paraphernalia that would support a finding of the defendant's exercise of dominion or control.[1]
The Supreme Court of Louisiana has held that circumstantial evidence is sufficient to establish guilty knowledge of a defendant in establishing the requisite elements for a conviction of possession of a controlled dangerous substance. State v. Trahan, supra. However, without some sort of collateral and corroborating evidence, that conviction will not be upheld. The Court in Trahan, supra, found that the only evidence regarding the defendant's *786 guilty knowledge was the testimony of another person who was arrested along with the defendant and charged with the same offenses. Also, the police found Mannitol, a material used to cut cocaine, on the premises when the defendant was arrested. The Court held that there was doubt as to Trahan's dominion and control over the paraphernalia, and found that the presence of the Mannitol alone was not enough to establish guilty knowledge. Therefore, the Court reversed the conviction for possession of cocaine.
In State v. Spates, 588 So. 2d 398 (La. App. 2 Cir.1991), the defendant was convicted for possession of a trace amount of cocaine found on a piece of radio antenna converted into a special crack pipe called a "straight shooter". The defendant submitted to a search without flight and without making exculpatory statements to the police or at trial. The Second Circuit affirmed the defendant's conviction and held that the mere physical possession of a device without any utility other than the ingestion of crack cocaine was sufficient to support a conviction of possession of cocaine. Id. at 402.
Evidence of flight, concealment, and attempt to avoid apprehension is relevant when circumstantial evidence is used to establish guilty knowledge. State v. Davies, 350 So. 2d 586 (La.1977). In State v. Jones, 94-1261 (La.App. 3 Cir. 5/17/95), 657 So. 2d 262, the court concluded that the defendant's attempt to flee from the officers and his possession of the shiny chrome pipe, which only use was to smoke cocaine, provided sufficient evidence to show that the defendant knowingly possessed cocaine. Id. at 269-70. In State v. Gaines, 96-1850 (La.App. 4th Cir. 1/29/97), 688 So. 2d 679, writ denied, 97-0510 (La.9/5/97), 700 So. 2d 503, this court held that the defendant's possession of a glass pipe which contained cocaine residue as well as his flight upon recognizing the approach of the officers was sufficient to prove defendant's possession of cocaine. In the case at hand, the defendant did not attempt to flee nor did he exhibit any other furtive behavior that would support a finding of guilty knowledge. However, we find it necessary to note that the possession of drug paraphernalia is a violation of La. R.S. 40:1033. Therefore, to conclude that a suspect who attempts to avoid apprehension does so because of his knowledge that there are illegal drugs present rather than because of his awareness of having violated the law against possession of drug paraphernalia would be the most logical explanation. It seems to this court that the latter conclusion provides the best explanation of the suspect's actions.
Similar to the cases previously discussed, the defendant in this case was in close proximity to the residue-containing pipe when he was arrested. It was found on the sidewalk near him, and not on his person. Therefore, the State presented circumstantial evidence in an effort to satisfy its burden of proof established in State v. Chambers, supra. As previously stated, the State must present evidence that excludes every reasonable hypothesis of innocence to warrant a conviction for possession of cocaine.
The defendant contends that the State, through its own evidence, failed to establish an essential element of the offense charged, to wit: guilty knowledge. The State presented the testimony of Officer Rice and Officer Palm in an effort to establish the defendant's guilt. Officer Rice testified that he retrieved the pipe from the sidewalk near the defendant and placed him under arrest for possession of drug paraphernalia. LSA-R.S. 40:1033. Officer Rice, an experienced and well-trained officer of the New Orleans Police force, did not and could not detect the presence of cocaine at the time of arrest. Therefore, the defendant was not charged with possession of cocaine until after the tests had been performed and a positive result was rendered. Officer Palm, a twenty-six-year veteran of the New Orleans Police Department and an expert in the identification and analysis of controlled *787 dangerous substances, testified that the residue found in the pipe as a result of the tests performed was not visible to the naked eye. He further stated that the only way he could discover its presence was by performing sensitive scientific tests.
The record reveals no evidence of corroborating factors that would lead to the conviction of the defendant based on the circumstantial evidence presented. The evidence in the record, at most, proved that the defendant possessed drug paraphernalia in violation of LSA-R.S. 40:1033. As previously discussed, unlike the case of Jones, supra, the State did not present evidence of the defendant displaying furtive behavior upon seeing Officer Rice. Nor was there any evidence of recent drug use by the defendant. Finally, the State did not provide evidence establishing that the defendant had in any way attempted to obtain cocaine. All of these factors have been dispositive in courts upholding convictions of defendants for possession of an illegal substance.
There are several reasonable alternative explanations for the having drug paraphernalia, i.e. from keeping it for someone else to having it with the intent of obtaining drugs in the future. However, without supporting evidence, guilty knowledge, as required to convict a person of possession of cocaine, cannot be gleaned from mere possession of the paraphernalia. The State failed to provide sufficient evidence to establish its burden of proof in this case. Therefore, we must reverse the trial court's conviction.
ASSIGNMENT OF ERROR 2
Given our findings with regard to the first assignment of error, the second assignment of error posed by the defendant need not be considered.
CONCLUSION
For the foregoing reasons, we reverse the conviction and sentence of the defendant.
LANDRIEU, J., DISSENTS WITH REASONS
LANDRIEU, J. dissents with reasons.
I respectfully dissent. In the present case, the defendant was arrested after the police officer observed the defendant drop the metal crack pipe on the ground. The arresting officer testified that when he picked up the pipe he observed what appeared to be cocaine residue in the pipe. Officer Palm testified that the substance in the pipe tested positive for cocaine. As I cannot distinguish the facts of this case from those in our recent decision in State v. Williams, 98-0806 (La. App. 4 Cir. 3/24/99), 732 So. 2d 105, I find the evidence is sufficient to support the defendant's conviction. In addition, I find no merit to the defendant's second assignment of error arguing that the language on the verdict form was an improper Allen charge and denied hima fair trial. For these reasons, I would affirm the defendant's conviction and sentence.
NOTES
[1] The Court stated that there was no evidence that the residue-containing pipe was warm, that the defendant's fingerprints were on any item, that the defendant tested positive for cocaine, or that the defendant was anything more than a guest in the apartment where the contraband was found. State v. Jackson, supra at 1035. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2494002/ | 281 F.Supp.2d 59 (2003)
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, Plaintiff,
v.
James M. LOY, Defendant.
No. CIV.A. 03-0043(RMC).
United States District Court, District of Columbia.
September 5, 2003.
*60 *61 Anne M. Wagner, Mark D. Roth, Gony Frieder, American Federation of Government Employees, AFL-CIO, Washington, DC, for Plaintiff.
Brian G. Kennedy, U.S. Department of Justice Civil Division, Federal Programs Branch, Washington, DC, for Defendant.
MEMORANDUM OPINION
COLLYER, District Judge.
The American Federation of Government Employees, AFL-CIO, ("AFGE"), a union dedicated to representing government workers, initiated an organizing drive among airport screeners after Congress ordered that all airport screeners must be federal employees. AFGE filed petitions with the Federal Labor Relations Authority ("FLRA" or "Authority") in November 2002 and thereafter, seeking elections at various airports in the United States; if a majority of the airport screeners voted in favor of AFGE, the Union would become their exclusive collective bargaining representative. The organizing campaign ran into a roadblock in January 2003 when James M. Loy, Under Secretary of the Department of Transportation, determined that airport screeners would not be entitled to engage in collective bargaining (the "Loy Determination").[1]
The Transportation Security Administration ("TSA"), for which the airport screeners work, has argued to the FLRA that the Loy Determination means that the Authority must dismiss the Union's petitions for an election. The Regional Director of the FLRA's Boston Region recently agreed and entered his Decision and Order to that effect on July 7, 2003. Department of Homeland Security and American Federation of Government Employees, AFL-CIO, WA-RP-03-0023 etc. (Decision and Order on Petitions, July 7, 2003) (hereafter "DHS and AFGE").
In the meantime, the Union and an interested airport screener brought this suit in federal court, alleging that the Loy Determination violates the constitutional rights of the airport screeners. They seek a judgment declaring that Mr. Loy did not have statutory authority to issue the Loy Determination. They ask the Court to declare that the Loy Determination deprives affected employees of their rights to free speech and association under the *62 First Amendment and to equal protection under the Fifth Amendment to the Constitution, that it violates the Aviation and Transportation Security Act, Pub.L. 107-71, 115 Stat. 597 (2001) ("ATSA"), and that it is arbitrary and capricious agency action in violation of the Administrative Procedure Act, 5 U.S.C. § 706 ("APA"). In addition, they ask the Court to enjoin Mr. Loy and his subordinates from implementing the Loy Determination.
The Court concludes that the Union's arguments concerning the statutory issues have been, and should be, made in the first instance to the FLRA and then, if needed, to the Court of Appeals. The constitutional claims lack merit and will be dismissed.
Background Facts
Domestic passenger airplanes were used as lethal weapons by terrorists attacking the United States on September 11, 2001. One part of the Congressional response to these tragedies was passage of ATSA. As relevant here, that meant that Congress ordered that screening of passengers and cargo at commercial airports be conducted by federal employees. ATSA § 111, amending 49 U.S.C. §§ 44935.
ATSA established the TSA. Section 114(n) of the statute required TSA to adopt the personnel system in place at the Federal Aviation Administration ("FAA"). 49 U.S.C. § 114(n). That system extends the rights to form, join, or assist any labor organization and the right to engage in collective bargaining to FAA employees. See 49 U.S.C. § 40122(b)(2)(C); 5 U.S.C. §§ 7102(1) & (2). Despite this apparent approval of federal collective bargaining, Section 111(d) of ATSA granted broad authority to the Under Secretary over matters customarily subject to collective bargaining: "Notwithstanding any other provision of law, the Under Secretary of Transportation for Security may employ, appoint, discipline, terminate, and fix the compensation, terms, and conditions of employment of Federal service for" federally-employed airport screeners. 49 U.S.C. § 44935 note.
Beginning in November 2002, AFGE filed a series of petitions with the FLRA seeking elections among airport screeners at various airports and certifications as their exclusive representative for collective bargaining. Those petitions have been opposed by TSA before the FLRA on the basis of a memorandum issued by Under Secretary Loy on January 8, 2003. Mr. Loy determined that federally-employed airport screeners "shall not, as a term or condition of their employment, be entitled to engage in collective bargaining or be represented for the purpose of engaging in such bargaining by any representative or organization." Loy Determination, Exh. 1 to Defendant's Motion to Dismiss ("Def.'s Motion").
This lawsuit followed.
Analysis
The Federal Service Labor-Management Relations Statute, 5 U.S.C. § 7101 et seq. ("FSLMRS"), extended the right to federal employees to form, join, or assist any labor organization or to refrain from any such activity, 5 U.S.C. § 7102, although certain federal employees are excluded from the statute. 5 U.S.C. § 7103. The FLRA has exclusive authority over conducting elections to determine whether a labor union has the support of a majority of employees in an appropriate unit. See 5 U.S.C. § 7105(2)(A) & (B). The Union's petitions for election and the TSA objection that the Loy Determination deprives FLRA of jurisdiction to conduct any election are therefore properly before that agency. See Karahalios v. National Fed'n of Fed. Employees, 489 U.S. 527, 109 S.Ct. 1282, 103 L.Ed.2d 539 (1989) (when FLRA *63 has exclusive jurisdiction, district courts cannot proceed).
The plaintiffs argue that the election petitions before the FLRA and the claims at issue here are not the same since one "concerns the scope of the Administrator's powers under ATSA" and the other turns on "whether AFGE has made a sufficient showing of interest to warrant an election." Plaintiffs' Opposition to Defendant's Motion to Dismiss at 9 ("Opp."). This argument ignores the nature of TSA's position before the FLRA: without regard to whether AFGE has demonstrated that a sufficient number of airport screeners wants to be represented by the Union, TSA argues that the Loy Determination precludes bargaining and that the FLRA is without jurisdiction. As the Regional Director's Decision and Order demonstrates, the Authority could not decide whether to hold any elections without facing foursquare the argument that Mr. Loy has exercised his lawful discretion and that it has no jurisdiction to process the petitions. DHS and AFGE at 19 ("Whether the Authority has jurisdiction to conduct elections pursuant to these petitions is wholly dependent on the meaning of the three statutes at issue herethe ATSA, the HSA,[2] and the FSLMRS.") Thus, on the statutory claims raised by this complaint, the basic issue is very much the same before the administrative agency and this Court.
AFGE or TSA will be able to petition the Court of Appeals for review of any adverse final decision by the members of the Authority, assuming that the Regional Director's decision is appealed. See 5 U.S.C. § 7123. Unlike the procedures for the private sector under the National Labor Relations Act, 29 U.S.C. § 151 et seq., a dismissal of the election petitions by the FLRA would be immediately subject to review. Since the Loy Determination, and the parties' statutory arguments about it, can receive a full court hearing should one party appeal from the decision of the FLRA, it is highly improbable that this Court would need to assume jurisdiction to ensure a forum to the plaintiffs. See Sturm, Ruger & Co., Inc. v. Chao, 300 F.3d 867, 874 (D.C.Cir.2002) (One factor counseling against district court jurisdiction was that "the employer's claims can still `be meaningfully addressed in the Court of Appeals' after the [Occupational Safety and Health Review] Commission has rendered a decision.")[3]
Inasmuch as the fundamental issue of statutory law regards the jurisdiction of the FLRA and the parties are currently litigating those very issues before the FLRA, with court review available, this Court does not have jurisdiction to decide the same claims.
The plaintiffs bring to this Court constitutional claims that they assert raise issues beyond the jurisdiction of the FLRA. The First Amendment claim is based on the alleged effect of the Loy Determination. Plaintiffs state that TSA airport screeners have been chilled in their willingness to engage in organizing activities because of the Loy Determination. See Opp. at 4 (federal screeners have "experienced a chilling effect on their right to organize such that a hostile environment has been created at some airports"), and 7-8 ("directive's transparent chilling effect *64 upon their speech and associational activities"). Their Fifth Amendment claim is based on an alleged violation of the equal protection clause because the airport screeners are "being arbitrarily deprived of their right to participate in protected activities, ostensibly for national security reasons, while other airport workers continue to enjoy this right." Opp. at 8. The plaintiffs initiated the petition process in November 2002, before issuance of the Loy Determination. Therefore, contrary to TSA's argument, it cannot be said that they "elected" their forum for resolution of the constitutional claims.
Nonetheless, the FLRA could probably have considered these constitutional arguments. "When the statutory and constitutional claims are `premised on the same facts' and the [FSLMRS] remedy `would have been fully effective in remedying the constitutional violation,' exhaustion [of administrative remedies] is required. Only in the unusual case in which the constitutional claim raises issues totally unrelated to the [FSLMRS] procedures can a party come directly to district court." Steadman v. Governor, U.S. Soldiers' and Airmen's Home, 918 F.2d 963, 967 (D.C.Cir.1990) (cites omitted). The "statutory claim" at issue here concerns the rights of airport screeners working for TSA to select union representation and engage in collective bargaining. The "constitutional claim" arises from TSA's reliance on the Loy Determination to eliminate these bargaining rights. In reaching his decision, the Regional Director fully considered the rights of federal employees to form, join and assist unions under both the FSLMRS and Section 114(n) of ATSA and compared those to the discretion granted to the Under Secretary by Section 111(d) of ATSA. There appears no reason why the FLRA could not have considered the plaintiffs' constitutional claims in the process. Nat'l Treasury Employees Union v. FLRA, 986 F.2d 537 (D.C.Cir.1993) (remanding for FLRA consideration of first amendment issues); see also Sturm, Ruger & Co., Inc. v. Chao, 300 F.3d at 874 (administrative adjudicators can determine constitutional claims when "(1) `the reviewing body is not the agency itself but an independent Commission'; (2) the Commission has addressed constitutional claims in previous enforcement proceedings; and (3) the employer's claims can still be `meaningfully addressed in the Court of Appeals' after the Commission has rendered a decision").[4]
The Court recognizes that there are differences between the statutory and constitutional claims and that, despite the principle of exhaustion of administrative remedies, district courts can assert jurisdiction over "claims considered wholly collateral to a statute's review provisions and outside the agency's expertise." Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 207, 114 S.Ct. 771, 127 L.Ed.2d 29 (1994). Plaintiffs seem to have avoided raising their constitutional claims before the FLRADHS and AFGE does not mention themin order to bring them here. They cannot now be added to that case on appeal. DHS and AFGE at 29 ("An application [to the Authority for review] may not raise any issue, or allege any facts, not timely presented to the Regional Director."). Therefore, in order to avoid the possibility that constitutional wrongs would have no redress, the Court will resolve those issues even though they might have been argued to the FLRA.
Unfortunately for the plaintiffs, however, their constitutional claims are insubstantial. *65 The Loy Determination does not prevent airport screeners from engaging in organizing activities or joining the Union. Indeed, the Under Secretary instructed employees in a memo contemporaneous to the Loy Determination that "employees are still free to engage in employee organizational activities as long as they do not do so on work time and it does not interfere with our security work or otherwise undermine aviation security." Def.'s Motion, Exh. 4 at 2. Rather, the effect of the Loy Determination is on the other side of the table: it relieves TSA of any obligation to deal or bargain with AFGE. The right of federal employees to require the government to engage in collective bargaining is not constitutional but purely statutory. See Smith v. Arkansas State Highway Employees, 441 U.S. 463, 464-65, 99 S.Ct. 1826, 60 L.Ed.2d 360 (1979). The Court respects the decision of the Regional Director that the Under Secretary acted within his lawful statutory discretion in issuing the Loy Determination.
The Court understands that the airport screeners might feel "chilled" in their interest in representation but that is because the fruit of Union representation is a collective bargaining agreement and TSA has determined that it will not negotiate. The fact that these employees cannot engage in organizing on work time does not rise to a constitutional issue. As the ancient adage says, "Work time is for work" and the First Amendment does not say otherwise. The facial challenge to the Loy Determination under the First Amendment is without merit and will be dismissed.
The plaintiffs' equal protection claim under the Fifth Amendment has no greater force. Since a distinction limiting the collective bargaining rights of public employees involves neither a fundamental right nor a suspect classification, there need only be a rational relationship between any disparity of treatment and some legitimate government purpose. Cent. State Univ. v. Am. Ass'n of Univ. Professors, 526 U.S. 124, 119 S.Ct. 1162, 143 L.Ed.2d 227 (1999); Ass'n of Civilian Technicians, Montana Air Chapter v. FLRA, 756 F.2d 172, 177-78 (D.C.Cir. 1985). As detailed in DHS and AFGE, Congress acted intentionally and after significant debate when it granted the Under Secretary full discretion in the employment of security screeners because of their critical and sensitive law enforcement duties.
Congress itself, not the Under Secretary, distinguished between airport screeners and other TSA personnel. The Loy Determination addressed only those employees mentioned in § 111(d) of the statuteairport security screeners. Congress was specifically concerned about ensuring that TSA have the right to hire and fire airport security screeners as needed according to the demands and pressures of their jobs. See DHS and AFGE at 6 ("The participants in this Federal security workforce will not be able to strike or engage in work stoppages, and can be fired at the discretion of the Secretary if they are not able to adequately perform their duties. The Conferees recognize that, in order to ensure that Federal Screeners are able to provide the best security possible, the Secretary must be given wide latitude to determine the terms of employment of screeners.'" (citations omitted)). For the same reason, airport screeners are not covered by the protections of the normal federal civil service system. See DHS and AFGE at 10-11 n. 21 ("`[T]he majority has said time and again you cannot have Federal workers because it is too hard to fire them. It is too hard to move them around. So we give you the flexibility to write the rules *66 the way you want to do it ....'" (cite omitted)).
There is a rational basis for distinguishing, as Congress has done, between airport security screeners and other TSA employees. On this point, the statute represents a compromise of conflicting views with the single aim of providing heightened security through management flexibility. A different choice might have been made but Congress could rationally conclude that airport security requires federal employees who operate with more flexibility than either civil service or collectively-bargained protections and procedures would allow.
Finally, the plaintiffs have moved for leave to supplement the complaint. They assert that TSA has applied the Loy Determination to threaten employees with discipline and/or termination for conducting union organizing activities while not on duty in violation of the First Amendment. The revised complaint also alleges that Mr. Ferace, a lead Union organizer and plaintiff here, was discharged on the day after the decision in DHS and AFGE issued. AFGE argues that "justice requires that Plaintiffs be allowed to supplement their complaint to include an `as applied' challenge" to the Loy Determination, in addition to the facial challenge to the Determination in the initial complaint. TSA opposes the motion insofar as it would add Mr. Ferace's discharge to this litigation.
The allegations concerning Mr. Ferace in the supplemental complaint assert that he "actively promoted the effort to obtain union recognition," that the Regional Director's decision issued on July 8, 2003, that "TSA summarily discharged [Mr. Ferace on July 9, 2003] ... allegedly for disclosing personnel information to fellow screeners in an incident occurring May 20, 2003, nearly two months prior to the date of discharge," and that "TSA unlawfully discharged [Mr. Ferace] in retaliation for engaging in activity protected under the First Amendment."
Normally, the Court would defer Mr. Ferace's complaint about discharge due to union organizing activities to the expertise of the FLRA, despite its current posture as a First Amendment complaint. However, the FLRA has determined that it has no jurisdiction over airport screeners at TSA and that airport screeners have no statutory rights to engage in union organizing. Therefore, this Court is the only forum available to consider and adjudicate Mr. Ferace's constitutional claim.[5] Therefore, the Court will accept the supplemental complaint for purposes of providing a forum to Mr. Ferace.
The plaintiffs' statutory claims are dismissed for lack of jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure. The constitutional claims are dismissed for failure to state a claim under Rule 12(b)(6). The Court severs Mr. Ferace's individual First Amendment complaint from this suit so that the parties will be free, should they choose to do so, to appeal immediately.[6] A separate Order accompanies this Memorandum Opinion.
NOTES
[1] Congress enacted the Homeland Security Act of 2002, Pub.L. 107-296 in November 2002. This statute created the Department of Homeland Security, which includes TSA. TSA functions were transferred into the Directorate of Border and Transportation Security, effective March 1, 2003. The designated title for the head of TSA is now "Administrator" rather than Under Secretary.
[2] Homeland Security Act of 2002, Pub.L. 107-296.
[3] The Regional Director's finding that "the clear meaning of the ATSA" gave the Under Secretary "authority [to] determin[e], on January 8, 2003, that security screening personnel are not permitted to engage in collective bargaining," necessarily means that the Under Secretary did not act in an arbitrary or capricious manner in violation of the APA.
[4] The members of the FLRA adjudicate cases in the same manner as the Occupational Safety and Health Review Commission, which was the agency referenced in Sturm, Ruger.
[5] Mr. Ferace was a probationary employee when discharged so that he has no available grievance or internal agency appeal process available to him.
[6] Because the Court has severed Mr. Ferace's First Amendment complaint, his counsel must refile the complaint with the Clerk's office and pay the filing fee. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1411168/ | 890 F.Supp. 1452 (1995)
OONA R.-S., a Minor, by KATE S., her Guardian, Kate S., and Ken R., Plaintiffs,
v.
SANTA ROSA CITY SCHOOLS, et al., Defendants.
No. C 94-0623 TEH.
United States District Court, N.D. California.
May 2, 1995.
*1453 *1454 *1455 Desiree O. Cox, Nancy J. LoDolce, Santa Rosa, CA, for plaintiffs.
Michael D. Senneff, Senneff, Kelly, Kimelman & Beach, Santa Rosa, CA, for defendants.
ORDER
THELTON E. HENDERSON, Chief Judge.
On November 14, 1994, the Court heard oral argument on motions to dismiss filed in this action by several individual school district employees (collectively "Defendants"), the Santa Rosa City School District, and Drew Ibach ("Ibach"). In an order issued on November 23, 1994, the Court ruled on several of those motions. The Court also ordered the parties to submit supplemental briefing on two issues related to Defendants' and Ibach's motions to dismiss plaintiffs' claims brought under 42 U.S.C. section 1983. All parties timely submitted these supplemental briefs.
Having reviewed the written and oral arguments submitted by the parties, and good cause appearing, the Court rules on the motions which remain pending before it as follows. Defendants' motion to dismiss is GRANTED IN PART AND DENIED IN PART, and Ibach's motion to dismiss is DENIED for the reasons explained below.
I. BACKGROUND
Plaintiff Oona R.-S. ("Oona") and her parents bring this suit against the Santa Rosa City School District ("District") and against several employees of the District for events which allegedly took place when Oona was an 11-year-old sixth grade student at J.C. Fremont Elementary School. Broadly, plaintiffs allege two types of culpable conduct on the part of defendants. First, plaintiffs allege that Drew Ibach, a student teacher assigned to the classroom of Patricia McCaffrey, Oona's teacher, sexually assaulted and harassed Oona and other female students on more than one occasion. The complaint further *1456 charges that the other defendant officials failed to take adequate steps to prevent Ibach's conduct. Second, plaintiffs allege that the defendant school officials and teachers created a hostile environment for female students, in large part by failing to prevent Oona's male peers from harassing her and other girls in her class.
1) Ibach's Conduct and Defendants' Responses
According to the complaint, one day in early October of 1992, Ibach approached Oona in the classroom while she was seated at her desk studying. Ibach sat down in a chair close behind Oona in such a manner that his legs were straddling her body, and spoke with Oona and another student while leaning over Oona's shoulder. When Oona moved her chair forward and away from Ibach, he also moved his chair forward and resumed the same position. Plaintiffs allege that this conduct was part of a pattern and practice on the part of Ibach during September and October of 1992 of staring at, winking at, whispering to, hugging, and otherwise inappropriately touching female students in McCaffrey's class. Plaintiffs further allege that some of this inappropriate conduct occurred in the presence of defendants McCaffrey and Gerald Hill, the school's principal.
On October 15, 1992, Ibach approached Oona on the playground and fondled Oona's buttocks while whispering "Hi, Oona Noodles" in her ear. "Oona Noodles" was a nickname Ibach had given Oona earlier in the school year. Startled, Oona swung around, hitting Ibach on the arm. Because she was worried about getting into trouble for hitting Ibach, Oona did not report this incident to her teacher McCaffrey. After school, Oona told her mother, plaintiff Kate S., about the incident with Ibach. Kate S. called McCaffrey and told her what Oona had said, and requested that the school immediately remove Ibach from Oona's classroom. While maintaining that she could not believe Ibach could have done what Oona claimed, McCaffrey said that she would speak to Hill, the principal, about the matter the next day.
On October 16, Oona's father, plaintiff Ken R., met with Hill and requested that Ibach be removed from Oona's classroom. Hill refused on the ground that Oona's account of the incident was "unverified." Hill said that he had discussed Oona's allegations with Ibach and felt that Oona may have misinterpreted Ibach's intentions. Hill agreed, however, that there was no circumstance in which it was appropriate for a teacher to touch a student's buttocks. Ken R. told Hill that he did not want Oona and Ibach to be in the same classroom. Hill asked to discuss the matter further with Ken R. and Kate S. at some time within the next few days.
On October 18, Hill reiterated that Ibach would not be removed from McCaffrey's class, and suggested that Oona transfer to another sixth grade classroom. Oona's parents did not want to separate Oona from her friends in McCaffrey's class, however, and reluctantly agreed to allow Oona to remain in the classroom with Ibach.
A few days later, the mother of one of Oona's female classmates found her daughter crying in her bedroom and writing a letter to McCaffrey explaining that Ibach made the girls in the class very uncomfortable. The mother met with McCaffrey, who stated that the girl had been upset by a "lie" which Oona had told and subsequently "admitted" to McCaffrey. Unsatisfied, the mother told McCaffrey that the situation seemed more serious than McCaffrey apparently perceived it to be.
Some time after this meeting, McCaffrey called in five to seven of Oona's classmates and questioned them, in defendant Hill's presence, about Ibach's behavior and their feelings toward Ibach. Oona was not present at this meeting. Plaintiffs allege that several of the girls reported that Ibach had behaved inappropriately toward them.
On October 29, Oona told her parents that she thought Ibach had been removed from McCaffrey's classroom. A day later, however, Oona informed her parents that Ibach had been seen back on school grounds during school hours. Ken R. and Kate S. made an effort to find out whether Ibach had been formally removed and, if so, why he had been seen on school grounds. They were unable, *1457 however, to obtain this information from the defendants.
Ken R. and Kate S. directly asked defendant Director of Elementary Education Ron Lundy on November 2 whether Ibach had been removed from his position as a student teacher at the school. Lundy responded that Ibach had been formally removed, and stated that Ibach's return to the school on October 30 had been unauthorized. Lundy said that the plaintiffs had not been informed of Ibach's removal because personnel matters were confidential. When Ken R. asked Lundy who plaintiffs should contact to discuss any other concerns or complaints which might arise with regard to Ibach, Lundy allegedly provided "no information" in response to Ken R.'s question.
2) Student-to-student harassment
Throughout the fall and winter of the 1992-1993 school year, McCaffrey allowed the students in her sixth grade class to watch MTV without adult supervision. While watching MTV, some of the boys in the class made loud and vulgar comments of a sexual nature about the women in the music videos shown on the station.
In late February 1993, Oona told her parents that some boys in her class had repeatedly referred to girls' body parts as "melons" and "beavers." In a class meeting procedure designed to resolve student disputes, Oona had "written up" two of the boys for asking if she "had a beaver at home" and if she had "left her melons at home." The boys yelled out these statements in the vicinity of school employees including McCaffrey. At a meeting at which McCaffrey was present, Oona requested that the boys apologize and pay a fine in "funny money" under the class grievance procedure. The boys were fined $10.00 in funny money but not required to apologize.
On February 24, 1993, Oona's parents reported to McCaffrey and defendant Deputy Superintendent of Schools Larry White that Oona was being called a "ho" (a slang term for "whore") and a "lesbian" by the boys Oona had previously written up for calling her names. Neither McCaffrey or White, the complaint alleges, investigated this claim or took disciplinary action against the boys.
In early March, Oona told her parents that one of the boys that she had previously written up had struck her in the face and told her, "Get used to it." After this incident, Oona again wrote the boy up in the class log book. Ken R. immediately reported this occurrence to principal Hill, and plaintiffs allege that Lundy "was also informed" of this incident. No investigation of this claim was undertaken, and no disciplinary action was taken against the boy.
Also in early March, Ken R. and Kate S. received a letter from defendant Lundy indicating that Lundy, McCaffrey, and Hill had previously been unaware of any sexual harassment in Oona's classroom. A two-page pamphlet entitled "Sexual Harassment Students" was enclosed with the letter. On March 29, Kate S. asked Lundy for information on the school district's sexual harassment grievance procedure. She received no response to that request.
On March 30 and 31, Kate S. reported to the offices of Lundy and Hill that she objected to MTV being shown in McCaffrey's classroom due to its sexist content. Around April 1, McCaffrey informed the students in her class that they could no longer watch MTV because a parent had complained.
When report cards were issued on April 4, Oona received a "C-" in writing for the third quarter of the school year. Oona had received an "A-" in writing the previous quarter. Oona's grades for academic effort were also lower than they had been the semester before. Plaintiffs imply that the drop in Oona's grades was the result of retaliation by McCaffrey against Oona and was motivated by the complaints voiced by the plaintiffs.
On April 5, Kate S. told defendant Hill that a classmate of Oona's did not want to attend a field trip to a water park because boys in her class had called her "jello" (referring to her large breasts) and talked about her "beaver." Hill responded that Oona could transfer to any other elementary school in the district that she wanted to.
Kate S. filed a tort claim against defendants Santa Rosa City Schools, McCaffrey, *1458 Ibach, Hill, and Lundy on April 8.[1] On that date, Kate S. also filed a Discrimination Complaint Form with the Office for Civil Rights of the United States Department of Education. On April 9, Kate S. received a letter from defendant Deputy Superintendent Mel Solie accompanied by a seven-page document entitled "Sex Harassment."
After Kate S. filed these claims, plaintiffs allege that McCaffrey continued to retaliate against Oona. On April 23, McCaffrey refused to allow Oona to stay after school with other students to work on the school newsletter because no teacher would be present, telling Oona that "your mom wouldn't like you to be here unsupervised." A few days later, on April 26, McCaffrey cancelled a play in which Oona was to perform on the night of the 26th at an "Open House" at the school. None of the other events scheduled for the Open House were cancelled.
When the slapping incident which had occurred in early March came up for discussion on the class meeting log book on May 8, 1993, McCaffrey reprimanded Oona for writing the boy up rather than reporting the incident to McCaffrey immediately.[2] McCaffrey also criticized Oona's requested punishment as too lenient, and spoke with the boy privately for approximately 15 minutes. No disciplinary action followed this meeting. The next week, on May 10, Kate S. filed a report with the Santa Rosa Police against Ibach. No defendant had previously done so.
After the end of the school year, plaintiffs allege that McCaffrey engaged in one last act of retaliation. On July 9, Kate S. contacted the Gateway Reading Council, an organization which had selected Oona to receive a "Young Writers Award" the previous March, to ask why Oona had not yet received her award. Kate S. was informed that the prize, a book containing the stories written by Oona and other award winners, had earlier been sent to Oona's school for delivery to her. When Kate S. asked McCaffrey where the book had gone, McCaffrey said that she believed that she had thrown it away.
During the summer of 1993, plaintiffs decided to remove Oona from the Santa Rosa school system. Since that time, she has been schooled at home by her mother. On October 20, 1993, defendant District was informed that the Office for Civil Rights had reached a tentative finding that student-to-student harassment had occurred in McCaffrey's class, that this harassment had created a hostile environment for Oona, and that officials at the school knew or should have known of the harassment but failed to take timely, effective action to prevent it from continuing.
In the instant action, plaintiffs bring suit against the District and the individual defendants under a number of federal and state law theories, including the deprivation of rights secured by the Equal Protection Clause, the Due Process Clause, and Title IX, 20 U.S.C. § 1681. Defendants do not dispute that plaintiffs have properly stated a claim against defendant District for violation of Title IX, 20 U.S.C. § 1681, and its implementing regulations. Defendants move to dismiss plaintiffs' claims brought against the individual defendants under 42 U.S.C. § 1983, however, on the grounds that 1) an action against an individual District employee cannot properly be based on the alleged deprivation of a student's rights under Title IX; and 2) that even if the Court recognizes such a cause of action under section 1983, the conduct alleged by plaintiffs is insufficient to state a claim. The individual defendants also argue that they are entitled to qualified immunity, necessitating the dismissal of plaintiffs' section 1983 claims at this stage.
II. LEGAL STANDARD
Dismissal is appropriate under Rule 12(b)(6) when plaintiff's complaint fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Dismissal may be based on the lack of a cognizable legal theory or the absence of sufficient facts *1459 alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1988). The Court must accept as true the factual allegations of the complaint and indulge all reasonable inferences to be drawn from them, construing the complaint in the light most favorable to the plaintiff. Dodd v. Spokane County, 393 F.2d 330, 334 (9th Cir.1968); NL Industries, Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.1986). The Court must construe the complaint liberally, and dismissal should not be granted unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Intake Water Co. v. Yellowstone River Compact Comm'n, 769 F.2d 568, 569 (9th Cir.1985), cert. denied, 476 U.S. 1163, 106 S.Ct. 2288, 90 L.Ed.2d 729 (1986).
III. DISCUSSION
A. Motions to Dismiss § 1983 Claims on Merits
This case presents important issues regarding the viability of a cause of action against an individual state official under 42 U.S.C. § 1983 based on that official's alleged deprivation of rights conferred on a plaintiff by Title IX and the Fourteenth Amendment. No Supreme Court or circuit court decision of which this Court is aware has addressed the question of whether a cause of action will lie under section 1983 against a teacher or school official alleged to have engaged in or allowed the sexual assault and harassment of a student in violation of Title IX. Plaintiffs' suit therefore raises substantial questions of law and policy regarding the interaction between section 1983 and the substantive rights which it is intended to protect.
1. The Section 1983 Cause of Action
In order to state a claim under § 1983, a plaintiff must allege two elements: 1) the deprivation of a right secured by the Constitution or laws of the United States; and 2) that the alleged deprivation was committed by a person acting under the color of state law. West v. Atkins, 487 U.S. 42, 48, 108 S.Ct. 2250, 2254, 101 L.Ed.2d 40 (1988). Respondeat superior is not a sufficient basis for imposing § 1983 liability. Monell v. Department of Social Servs., 436 U.S. 658, 663-64 n. 7, 98 S.Ct. 2018, 2021-22 n. 7, 56 L.Ed.2d 611 (1978); Ybarra v. Reno Thunderbird Mobile Home Village, 723 F.2d 675, 680 (9th Cir.1984). Instead, in order to state a claim under § 1983, a plaintiff must allege facts to show that the defendant 1) personally deprived the plaintiff of a protected right; or 2) in a supervisory capacity, took culpable action or wrongfully failed to act in the training, supervision, or control of his subordinates, acquiesced in the constitutional deprivations complained of, or engaged in conduct demonstrating a "reckless or callous indifference to the rights of others," or 3) was responsible for an official policy or custom which resulted in the violation. Ybarra, 723 F.2d at 680-81; Larez v. Los Angeles, 946 F.2d 630, 646 (9th Cir.1991) (citations omitted).
In this case, it is undisputed that the alleged actions and/or failures to act attributed to the individual defendants, a public school teacher, a student teacher, and several administrators, occurred under color of state law. See Doe v. Taylor Indep. Sch. Dist., 15 F.3d 443, 452 n. 4 (5th Cir.1994), cert. denied, ___ U.S. ___, 115 S.Ct. 70, 130 L.Ed.2d 25 (explaining that where a "`real nexus' exists between the activity out of which the violation occurs and the teacher's duties and obligations, then the teacher's conduct is taken under color of state law"). The sole issue before the Court, therefore, is whether each named defendant deprived Oona of a constitutional or federal statutory right within the meaning of controlling precedent.
2. The Relationship Between Section 1983 and Title IX
a. Does Title IX create a right enforceable under 1983?
Title IX of the Educational Amendments of 1972 provides that:
No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education *1460 program or activity receiving Federal financial assistance....
20 U.S.C. § 1681(a).
The central questions raised by defendants' motion to dismiss concern whether Title IX creates a right enforceable by plaintiffs under section 1983 here and, if so, whether plaintiffs have alleged facts sufficient to state a section 1983 claim against any or all of the defendants.
Well-settled Supreme Court precedent establishes that a right of action under section 1983 will lie only where 1) the underlying substantive statute at issue creates "enforceable rights," and 2) Congress has not foreclosed private enforcement through section 1983 in the statute itself. Wright v. Roanoke Redevelopment and Hous. Auth, 479 U.S. 418, 423, 107 S.Ct. 766, 770, 93 L.Ed.2d 781 (1987) (explaining that section 1983 provides a remedial cause of action for a state actor's deprivation of a right secured by a federal statute "unless the state actor demonstrates by express provision or other specific evidence from the statute itself that Congress intended to foreclose such private enforcement"); Pennhurst State Sch. & Hospital v. Halderman, 451 U.S. 1, 28 and n. 21, 101 S.Ct. 1531, 1545 and n. 21, 67 L.Ed.2d 694 (1981); Middlesex County Sewerage Auth. v. Nat'l Sea Clammers Ass'n, 453 U.S. 1, 19, 101 S.Ct. 2615, 2625, 69 L.Ed.2d 435 (1981).
Similarly, the Ninth Circuit has held that "at least the existence of a federal right ... is required in order to support a section 1983 action." Boatouwers and Tenants Ass'n v. Port of Seattle, 716 F.2d 669, 673 (9th Cir. 1983). The Boatowners court applied the analysis set out in Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2087, 45 L.Ed.2d 26 (1975), in which the Supreme Court held that a "statute create[s] a federal right in favor of the plaintiff" where the plaintiff is "one of the class for whose especial benefit the statute was enacted." Id. at 672 (quoting Cort at 78, 95 S.Ct. at 2087) (emphasis in original). Boatowners further noted that application of the Cort analysis "requires not only a consideration of whether the plaintiff is a member of the class for whose benefit the statute was enacted, but also whether `Congress intended to confer federal rights upon those beneficiaries.'" Id. at 672-73 (quoting Fisher v. City of Tucson, 663 F.2d 861, 863 (9th Cir.1981)). Boatowners noted that "the special benefit test is satisfied where the statute places `unmistakable focus on the benefitted class.'" Id. at 673 n. 5 (quoting Limongelli v. Postmaster General, 707 F.2d 368, 371 (9th Cir. 1983)).
The Court believes it indisputable that Title IX confers an enforceable right upon plaintiff Oona here within the meaning of Boatowners. Title IX unequivocally states that "no person" may lawfully be discriminated against or otherwise disadvantaged on the basis of her gender under the auspices of certain educational programs, and the Supreme Court has viewed such language as "dispositive" of the question whether Congress intended to vest an enforceable federal right in individuals claiming to have been so treated. Cannon v. Univ. of Chicago, 441 U.S. 677, 690, 99 S.Ct. 1946, 1954, 60 L.Ed.2d 560 (1979). Because plaintiff alleges that she has been discriminated against on the basis of sex, her claim implicates a substantial federal right which is enforceable under section 1983, provided the second prong of the Boatowners test is met. See Cannon, 441 U.S. at 694, 99 S.Ct. at 1956 ("Title IX explicitly confers a benefit on persons discriminated against on the basis of sex, and petitioner [alleging that she was excluded from participation in a medical education program because of her sex] is clearly a member of that class for whose special benefit the statute was enacted.").
As to the second issue identified by the Supreme Court, the question of whether Congress intended to preclude enforcement of a particular right under section 1983, the Court finds nothing in the language of Title IX which reflects such intent on the part of Congress. Section 1983 provides a remedial cause of action for a state actor's deprivation of a right secured by a federal statute "unless the state actor demonstrates by express provision or other specific evidence from the statute itself that Congress intended to foreclose such private enforcement." Wright, 479 U.S. at 423, 107 S.Ct. at 770. Where *1461 "`the remedial devices provided in a particular Act are sufficiently comprehensive ... to demonstrate Congressional intent to preclude' a Section 1983 remedy," no such claim will lie. Keaukaha-Panaewa Community Ass'n v. Hawaiian Homes Comm'n, 739 F.2d 1467, 1470 (9th Cir.1984), citing Middlesex County Sewerage Auth. v. Nat'l Sea Clammers, 453 U.S. 1, 20, 101 S.Ct. 2615, 2626, 69 L.Ed.2d 435 (1981). The state actor bears the burden of proving that Congress intended to foreclose a private right of action under the statute establishing the right. Wright, 479 U.S. at 423, 107 S.Ct. at 770.
The Supreme Court's decision in Cannon established that Title IX does not expressly foreclose a private right of action. 441 U.S. at 717, 99 S.Ct. at 1968. Defendants argue, however, that the remedial scheme created by Title IX is "sufficiently comprehensive" to demonstrate Congress' intent to preclude a section 1983 remedy.
The Court finds that defendants have not met their burden of showing that Title IX's remedial devices are sufficiently comprehensive to demonstrate Congress' intent to preclude enforcement of rights created by Title IX under section 1983. The Cannon Court, having thoroughly analyzed the legislative history of Title IX, directly addressed the lack of comprehensiveness of the enforcement scheme under that statute:
[The Court has] never withheld a private remedy where the statute explicitly confers a benefit on a class of persons and where it does not assure those persons the ability to activate and participate in the administrative process contemplated by the statute.... As the Government itself points out in this case, Title IX not only does not provide such a mechanism, but the complaint procedure adopted by [the agency responsible for enforcement of the statute at that time] does not allow the complainant to participate in the investigation or subsequent enforcement proceedings. Moreover, even if those proceedings result in a finding of a violation, a resulting voluntary compliance agreement need not include relief for the complainant.
441 U.S. at 706 n. 41, 99 S.Ct. at 1962 n. 41 (citations omitted).
In Franklin v. Gwinnett County Public Schools, 503 U.S. 60, 112 S.Ct. 1028, 117 L.Ed.2d 208 (1992), the Supreme Court reaffirmed the holding of Cannon in finding that the remedy of damages is available in an action brought to enforce Title IX, even though the statute does not explicitly authorize an award of damages. The Franklin Court analyzed two Congressional amendments to Title IX enacted after the Cannon decision and concluded that "Congress did not intend to limit the remedies available in a suit brought under Title IX." 503 U.S. at 71, 112 S.Ct. at 1036. The Franklin decision, therefore, constitutes strong evidence that the Supreme Court still would not consider the enforcement structure of Title IX to be sufficiently comprehensive to preclude the enforcement under section 1983 of rights created by Title IX.
Defendants present no evidence that Title IX's enforcement scheme has changed since the Cannon decision in 1979. Moreover, the lower court cases cited by defendants were all decided before the Supreme Court's recent holding in Franklin implicitly rejected the position that the remedial mechanism provided in Title IX is so comprehensive as to preclude any other remedies, including the enforcement of Title IX rights under section 1983.[3] In light of the Supreme Court's assessments *1462 in Cannon and Franklin of the limited preclusive significance of Title IX's enforcement mechanisms, therefore, the defendants have not met their burden of showing that the remedial scheme under Title IX is sufficiently comprehensive to preclude plaintiffs from maintaining a section 1983 claim based on alleged violations of Title IX.
Because Title IX creates an enforceable right and the statute does not reflect Congress' intent to preclude plaintiffs from enforcing that right by way of section 1983, therefore, the Court finds that a section 1983 action may properly be based on alleged violations of Title IX. That holding does not conclude the Court's task here, however, for it remains to be determined whether the conduct alleged by plaintiff amounts to a deprivation of a right secured by Title IX within the meaning of relevant precedent. See Hill v. Ibarra, 954 F.2d 1516, 1522 (10th Cir.1992) (noting that it is "self-evident ... that a § 1983 claim premised upon rights created in another federal statute cannot survive the failure to establish a violation of the latter").
b. Deprivation of any Title IX right?
As noted above, Title IX states that "[n]o person ... shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance...." 20 U.S.C. § 1681 (emphasis added). The Supreme Court has emphasized that federal courts should accord to Title IX "a sweep as broad as its language." North Haven Bd. of Educ. v. Bell, 456 U.S. 512, 521, 102 S.Ct. 1912, 1917, 72 L.Ed.2d 299 (1982). However, at least two central questions pertinent to plaintiffs' claim in this case have yet to be directly addressed by the Supreme Court or any circuit court in the section 1983 setting: 1) What is the nature of the right created by Title IX in this context?; and 2) What type of conduct by a defendant amounts to a deprivation of that right?[4] The Court addresses each of these issues in turn below.
i. Nature of the Title IX Right in the Sexual Harassment Context
In the absence of specific Supreme Court or Ninth Circuit precedent directly addressing this question, the Court must look to Title IX itself and to interpretations of the statute by various courts to determine whether the conduct alleged here amounts to a deprivation of a right secured by Title IX.
Federal courts interpreting Title IX have heeded North Haven's direction to read the statute so as to broadly proscribe discrimination on the basis of sex in the educational setting. See, e.g., Franklin v. Gwinnett County Pub. Sch., 503 U.S. 60, 77, 112 S.Ct. 1028, 1039, 117 L.Ed.2d 208 (1992) (explaining that Title IX "unquestionably ... place[s] on [school districts] the duty not to discriminate on the basis of sex"); Cohen v. Brown Univ., 991 F.2d 888, 894 (1st Cir.1993) (noting that "the statute's heart is a broad prohibition of gender-based discrimination in all programmatic aspects of educational institutions"); Roberts v. Colorado State Bd. of Agric., 998 F.2d 824, 833 (10th Cir.1993), cert. denied, ___ U.S. ___, 114 S.Ct. 580, 126 L.Ed.2d 478 (referring to "Title IX's goal of protecting private citizens against discriminatory practices").
These interpretations of Title IX as conferring upon individuals a firm right not to be discriminated against on the basis of gender in all aspects of federally-funded educational programs find strong support in the language of the statute itself. Title IX explicitly provides that no person "shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected *1463 to discrimination" under any educational program or activity receiving federal funding. 20 U.S.C. § 1681(a) (emphasis added). The fact that Title IX focuses on the individual's rights under the statute, rather than simply imposing sanctions on educational institutions which discriminate, strongly indicates that the right created by Title IX to be wholly free from discrimination attributable to that institution and its employees is a personal right. See Cannon, 441 U.S. at 690-693, 99 S.Ct. at 1954-55 (noting that "[t]here would be far less reason to infer a private remedy in favor of individual persons if Congress, instead of drafting Title IX with an unmistakable focus on the benefitted class, had written it simply as a ban on discriminatory conduct by recipients of federal funds or as a prohibition against the disbursement of public funds to educational institutions engaged in discriminatory practices").[5]
Viewed together, Title IX and those federal decisions which have interpreted it stand for the principle that Title IX confers on plaintiffs an individual right not to be discriminated against or disadvantaged in the administration of educational programs on the basis of gender. Accordingly, the Court holds that where a plaintiff sufficiently alleges that she has been deprived, under color of state law, of her right not to be discriminated against on the basis of sex within the meaning of Title IX, she has stated a claim under section 1983.[6]
An essential question, however, remains for the Court to resolve in determining the scope of the right not to be discriminated against created by Title IX and enforceable under section 1983 in the instant context: whether intentional discrimination by a state actor is an element of a violation of that right.[7] For the reasons explained below, *1464 the Court finds that intentional discrimination is an element of a claim that an individual official has violated a plaintiff student's rights under Title IX by engaging in or allowing sexual harassment of that student.[8]
In Franklin v. Gwinnett County Public Schools, 503 U.S. 60, 75, 112 S.Ct. 1028, 1038, 117 L.Ed.2d 208 (1992), the Supreme Court held that monetary damages were available as a remedy in a Title IX enforcement action brought by a private plaintiff against a school district. The plaintiff in Franklin was a high school student who alleged that she had been subjected to continual sexual harassment by one of her male teachers. Plaintiff further charged that teachers and administrators at her school took no action to halt their subordinate's harassment of the plaintiff even though they were aware of and had investigated the harassment. 503 U.S. at 62, 112 S.Ct. at 1031. Neither the teacher alleged to have harassed the plaintiff nor the other individual officials were themselves defendants in plaintiff's Title IX action at the time the case was reviewed by the Supreme Court.[9]
In finding that a damages remedy was available in plaintiff's Title IX action, the Franklin Court explained that the withholding of monetary damages was not justified in cases in which intentional discrimination was alleged, and described the circumstances under which an institutional defendant in a Title IX action will be found to have intentionally discriminated:
In Pennhurst State School and Hospital v. Halderman ..., the Court observed that remedies were limited under [statutes enacted pursuant to Congress' Spending Clause power] when the alleged violation was unintentional. Respondents and the United States maintain that this presumption should apply equally to intentional *1465 violations. We disagree. The point of not permitting monetary damages for an unintentional violation is that the [institution receiving federal funding] lacks notice that it will be liable for a monetary award. This notice problem does not arise in cases such as this, in which intentional discrimination is alleged. Unquestionably, Title IX placed on the [defendant school district] the duty not to discriminate on the basis of sex, and "when a supervisor sexually harasses a subordinate because of the subordinate's sex, that supervisor `discriminate[s]' on the basis of sex." We believe that the same rule should apply when a teacher sexually harasses and abuses a student. Congress surely did not intend for federal monies to be expended to support the intentional actions it sought by statute to proscribe.
503 U.S. at 73, 112 S.Ct. at 1037 (citations omitted).[10]
In distinguishing Pennhurst and explaining that intentional discrimination creates a prima facie entitlement to monetary damages under Title IX in a way that unintentional conduct simply does not, therefore, the Franklin decision implicitly holds that intentional discrimination is an element of a claim that a school district has violated a plaintiff's rights under Title IX, at least where that student seeks to obtain damages against the district for harassment engaged in by an employee. Further, in establishing that a school district will be found to have intentionally discriminated when one of its employees sexually harasses and abuses a student, Franklin clearly assumes that the conduct of the employee who actually engages in such harassment constitutes a violation of that student's rights under Title IX as well. See Doe v. Petaluma City School Dist., 830 F.Supp. at 1575 ("Although not expressly stated in the opinion, the rule laid down by Franklin appears to be that, under Title IX, damages are available only for intentional discrimination but respondeat superior liability exists, so that an institution is deemed to have intentionally discriminated when one of its agents has done so.").
The logical conclusion to be drawn from these two premises is that when a student seeks recovery under section 1983 against an individual school official based on that official's alleged engagement in or failure to prevent sexual harassment in violation of her rights under Title IX, that student must as a preliminary matter establish that one of two prerequisites is satisfied. The plaintiff student must show that each defendant official either intentionally discriminated against her on the basis of sex or is liable under standard section 1983 supervisory liability principles for his own wrongful conduct in supervising a subordinate who intentionally discriminated. Where, as in Franklin, the plaintiff student alleges that a teacher or other school official has directly engaged in harassment, such a showing may be made by establishing that each defendant official has either sexually harassed the plaintiff, Franklin, 503 U.S. at 73, 112 S.Ct. at 1037, or is responsible for the harasser's conduct under *1466 principles of supervisory liability. Where plaintiff's peers or other non-officials are alleged to have engaged in sexual harassment, a plaintiff must likewise establish either intentional discrimination or direct supervisory responsibility for a subordinate official's discriminatory conduct on the part of each individual defendant named.[11]
The Court finds that the reasoning of Franklin and Doe persuasively establishes that intentional discrimination is an element of a Title IX claim against an institutional defendant in circumstances like those present in the instant action. Accordingly, following the reasoning of those holdings to their logical conclusion in the context of a suit brought under section 1983, the Court holds that a plaintiff must prove that an individual defendant either intentionally discriminated against her or had supervisory responsibility for a subordinate's intentional violation of the plaintiff's rights in order for such a claim based on the violation of rights under Title IX to lie against that defendant. The Court is confident that this holding is true to the spirit of the Supreme Court's mandate that rights under Title IX be given a sweep as broad as the language of that statute while remaining consistent with the clear import of the Franklin decision.[12]
ii. Have Plaintiffs Sufficiently Alleged a Deprivation of Oona's Rights Under Title IX?
Having concluded that plaintiffs' claim is legally cognizable, the Court must next determine, under the second prong of the Balistreri standard, whether the facts alleged by the plaintiffs are sufficient to state a section 1983 claim against any or all of the defendants. Plaintiffs base their claim that defendants violated Oona's rights under Title IX here on two broad classes of conduct: 1) Ibach's alleged harassment and assault of Oona; and 2) alleged harassment of Oona by other students. In effect, the structure of plaintiffs' complaint suggests two independent potential theories of liability with regard to every individual defendant besides Ibach: supervisory liability for Ibach's actions, and liability, either direct or supervisory, based on the student-to-student harassment endured by Oona. The Court must accordingly decide whether either or both of these types of conduct as pleaded constitute a deprivation of rights protected by Title IX sufficient to state a claim under section 1983 against any or all of the named defendants.
a. Ibach's Conduct
The complaint alleges that Ibach on one occasion suddenly approached Oona from behind on the playground, fondled her buttocks *1467 and whispered "Hi, Oona Noodles," a nickname which he had given her, in her ear. Compl. 6:5-8. Ibach, and only Ibach, addressed Oona in class and on school grounds on several occasions by this nickname, stopping only when she asked him to. Compl. 4:20-5:5. The complaint further alleges that on a different occasion Ibach sat down close behind Oona with his legs straddling her body and leaned over her, and resumed this position even after she attempted to move away from him. Compl. 5:6-13. Plaintiffs allege that Ibach singled Oona out for this unwelcome attention on the basis of her sex.
The Court finds that plaintiffs have stated a claim under section 1983 against Ibach based on his alleged deprivation of Oona's rights secured by Title IX. The Supreme Court and lower federal courts have indicated that actions like those allegedly taken by Ibach can constitute gender discrimination within the meaning of Title IX. As the Court explained in Franklin:
Unquestionably, Title IX placed on [school district] the duty not to discriminate on the basis of sex, and "when a supervisor sexually harasses a subordinate because of the subordinate's sex, that supervisor `discriminate[s]' on the basis of sex." ... We believe the same rule should apply when a teacher sexually harasses and abuses a student.
503 U.S. at 73, 112 S.Ct. at 1037 (citation omitted) (emphasis added).[13]
In Patricia H. v. Berkeley Unified School District, 830 F.Supp. 1288, 1293 (N.D.Cal. 1993), the court held that a plaintiff student could state a claim for hostile environment sexual harassment under Title IX based on the alleged conduct of a teacher. Taking note of the legislative history of Title IX and a number of other factors, including the criteria applied by the Office of Civil Rights of the Department of Education, the Patricia H. court explained that a plaintiff's rights under Title IX are infringed where a teacher sexually harasses a student because "[a] sexually abusive environment inhibits, if not prevents, the harassed student from developing her full intellectual potential and receiving the most from the academic program." 830 F.Supp. at 1293 (quoting Ronna Greff Schneider, Sexual Harassment and Higher Education, 65 Tex.L.Rev. 525, 551 (1987)).
Taking plaintiffs' allegations as true, as it must on this motion to dismiss, therefore, the Court concludes that plaintiffs have stated a section 1983 claim against Ibach based on his alleged discrimination against Oona in contravention of Title IX.[14]*1468 Accordingly, Ibach's motion to dismiss plaintiff's section 1983 claim against him is DENIED.[15]
The more difficult question is whether plaintiffs have stated a viable section 1983 claim against the other individual named defendants predicated on a theory of supervisorial responsibility for Ibach's conduct. As explained above, no section 1983 liability may attach under a theory of respondeat superior. Monell v. Department of Social Servs., 436 U.S. 658, 663-64 n. 7, 98 S.Ct. 2018, 2021-22 n. 7, 56 L.Ed.2d 611 (1978); Ybarra v. Reno Thunderbird Mobile Home Village, 723 F.2d 675, 680 (9th Cir.1984). Instead, as a general rule, "[a] supervisor cannot be held liable under § 1983 for the constitutional deprivations caused by his subordinate, absent his participation or direction in the deprivation." Ybarra, 723 F.2d at 680. The Ninth Circuit has held that "[s]upervisory liability is imposed against a supervisory official in his individual capacity for his `own culpable action or inaction in the training, supervision, or control of his subordinates,' ... for his `acquiescence in the constitutional deprivations of which the complaint is made,' ... or for conduct that showed a `reckless or callous indifference to the rights of others.'" Larez v. Los Angeles, 946 F.2d 630, 646 (9th Cir. 1991) (citations omitted).
The Court finds that plaintiffs have alleged facts sufficient to state a section 1983 claim based on supervisorial liability against defendants McCaffrey, Hill, and Lundy.[16] Plaintiffs allege that Ibach committed acts of harassment against female students in clear view of McCaffrey and Hill. Complaint 5:18-20. Further, the complaint alleges that McCaffrey and Hill failed to respond appropriately to Ibach's conduct. Complaint 6:13-28; 7:1-20; 8:4-16. Finally, the complaint alleges that Lundy failed to respond to Ken R.'s request for information regarding the appropriate person to contact with any further concerns or complaints about Ibach's conduct. Complaint 9:6-8. Construing these allegations liberally, as it must on this motion to dismiss, plaintiffs' allegations state a claim under section 1983 against these three defendants based on culpable action or inaction in the training, supervision, or control of their subordinate Ibach and/or acquiescence in his conduct which deprived Oona of her rights under Title IX.
The Court finds, however, that plaintiffs have failed to allege facts sufficient to establish the supervisory liability under section 1983 of defendants Solie, White, and Alsobrook. The complaint contains no factual allegations of any kind pertaining to these defendants, meaning that their inclusion in this action as presently pled can only be based on a respondeat superior theory. Because no respondeat superior liability exists under section 1983, however, plaintiffs' claims against these defendants must be *1469 DISMISSED WITH LEAVE TO AMEND to the extent that these defendants' alleged liability is predicated on supervisory responsibility for Ibach's conduct. Plaintiffs may amend their claims against these officials within 30 days of the date of this Order to allege facts sufficient to establish these defendants' supervisory liability for Ibach's aleged conduct under the test set out in Larez.
b. Student-to-student harassment
Drawing in large part on legal theory developed by the Supreme Court in cases brought under Title VI, the civil rights statute upon which Title IX is based, a court in this district held in 1993 that a school district violates Title IX when it discriminates against students on the basis of sex, and that district officials' failure to take appropriate action to remedy peer sexual harassment can constitute evidence of such discriminatory intent. See Doe, 830 F.Supp. at 1575 (explaining in case involving alleged peer harassment that "[s]urely [a student] is `denied the benefits of, or subjected to discrimination under' an education program on the basis of sex when, as alleged here, she is driven to quit an education program because of the severity of the sexual harassment she is forced to endure in the program"). Recently, the Ninth Circuit strongly implied, in dicta, that school teachers and administrators have a duty under Title IX to take steps to curb peer sexual harassment. Clyde K. v. Puyallup Sch. Dist. No. 3, 35 F.3d 1396, 1401 (9th Cir.1994) (explaining that "[g]iven the extremely harmful effects [peer] sexual harassment can have on young female students, public officials have an especially compelling duty not to tolerate it in the classrooms and hallways of our schools") (citing Monica L. Scherer, Comment, No Longer Just Child's Play: School Liability Under Title IX for Peer Sexual Harassment, 141 U.Pa.L.Rev. 2119, 2133-35 (1993)).[17]
The Court believes that Doe, especially read in light of the Ninth Circuit's recent statement in Clyde K., stands for the proposition that the right created by Title IX may be violated when female students are subjected to sexual harassment by their male peers at school and school officials discriminate against the female students on the basis of sex in encouraging or failing to appropriately respond to such harassment. Such discrimination may manifest itself in the active encouragement of peer harassment, the toleration of the harassing behavior of male students, or the failure to take adequate steps to deter or punish peer harassment. Cf. Doe, 830 F.Supp. at 1575-76.
Under this standard, the Court finds that plaintiffs have alleged facts which, construed liberally, state a section 1983 claim against defendants McCaffrey, Hill and Lundy[18] predicated on the peer sexual harassment endured by Oona.[19] Plaintiffs allege that McCaffrey intentionally discriminated against Oona on the basis of her sex by refusing to take sufficient action to counter persistent harassment by Oona's peers and by retaliating against Oona on more than one occasion for objecting to that harassment. Complaint 9:9-13:24. Similarly, plaintiffs allege that Hill and Lundy failed to adequately investigate or take steps to punish those responsible for repeated instances of peer harassment reported to them by Oona and her parents. Complaint 10:10-11:24. Under the liberal test applied in ruling on a motion to dismiss, therefore, the Court is convinced that dismissal of plaintiff's claims against *1470 McCaffrey, Hill, and Lundy would be inappropriate at this stage.[20]
However, as noted above, plaintiffs have failed to include in their complaint any factual allegations whatsoever with regard to defendants White, Solie, and Alsobrook. Thus, whether plaintiffs' claim against these three defendants is based upon their alleged personal discrimination against Oona or upon their alleged failure to adequately supervise and control McCaffrey and their other subordinates, the complaint as currently configured does not provide the factual support necessary to state a claim against any of these three officials.[21] Apart from plaintiffs' bald assertion that it is "absolutely inconceivable" that these defendants did not know of their obligations to remedy discrimination within the meaning of Title IX, no basis other than a pure respondeat superior theory could possibly underlie plaintiffs' claim against these officials in the absence of at least some factual allegations of wrongful conduct. Because this theory clearly does not support imposition of liability under section 1983, plaintiffs' claims against White, Solie, and Alsobrook are DISMISSED WITH LEAVE TO AMEND. Plaintiffs may amend their claims against these officials within 30 days of the date of this Order to allege facts sufficient to establish a basis for section 1983 liability. To the extent that plaintiffs' claim is based on alleged discrimination against Oona by each individual District official personally, plaintiffs must plead facts sufficient to support an inference that each defendant intentionally deprived Oona of her right under Title IX not to be discriminated against on the basis of sex. To the extent that plaintiffs' claim is based on the District officials' supervisory liability for the actions of McCaffrey and other District employees, plaintiffs must plead facts sufficient to state a claim against each defendant under the test set out in Larez v. Los Angeles, 946 F.2d 630, 646 (9th Cir.1991), as explained above.[22]
B. Qualified Immunity Defense
Defendants next argue that, even if plaintiffs have successfully stated a claim *1471 under section 1983, they are entitled to qualified immunity from liability on that Claim.[23] They argue that it was not clearly established in late 1992 and early 1993 that the conduct alleged by plaintiffs constituted a violation of plaintiff Oona's constitutional or statutory rights. Further, defendants argue that plaintiffs' own allegations in the complaint establish that the defendants acted reasonably under the circumstances of this case and ought not be held liable for damages. Not surprisingly, plaintiffs dispute both of these claims.
Preliminarily, the Court notes that the proper framing of the qualified immunity analysis to be applied by the Court in this case is not entirely clear under Ninth Circuit precedent. As a general rule, government officials performing discretionary functions 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. Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982). However, in a 1988 decision which was subsequently vacated by the, Supreme Court on mootness grounds, the Ninth Circuit held that "qualified immunity is not a defense in cases involving intentional racial or other similar discrimination." Gutierrez v. Municipal Court, 838 F.2d 1031, 1051 (9th Cir.1988), vacated as moot, 490 U.S. 1016, 109 S.Ct. 1736, 104 L.Ed.2d 174 (1989). As plaintiffs here allege that defendants intentionally discriminated against Oona on the basis of her sex, therefore, defendants' qualified immunity claim must necessarily fail at the present stage under Gutierrez if that decision retains precedential force on this point.[24]
Further, even if Gutierrez does not provide the controlling standard here, the Court finds that it would be inappropriate to grant qualified immunity to the defendants on the instant motion to dismiss. Since Harlow, the Supreme Court has not to this Court's knowledge considered a qualified immunity case in which intent or motive was an element of the constitutional offense at issue. The Ninth Circuit, however, has recently noted that the Harlow analysis, which focuses on the "objective reasonableness" of a defendant official's conduct, can produce outcomes which are "nonsensical in relation to a constitutional tort that depends on a subjective element, an invidiously discriminatory intent, for its very viability." Lindsey v. Shalmy, 29 F.3d 1382, 1384 (9th Cir.1994). Application of a purely objective test in such instances, as explained by the Lindsey court, would lead to an unacceptable result: defendant officials alleged to have invidiously discriminated against plaintiffs would invariably be found immune from liability for their actions.[25]Id.
Faced with the conundrum of remaining faithful to the objective rationale of Harlow without effectively eliminating plaintiffs' right to recover damages in an entire class of cases, the Ninth Circuit in Lindsey *1472 fashioned a test which allows courts to take subjective intent into account under some circumstances in determining whether a defendant is entitled to qualified immunity. Where the violation alleged depends upon a subjective element, the proper threshold question is whether a reasonable official in defendant's position at the relevant time would know that subjecting plaintiff to the treatment alleged because of her membership in a protected class would violate the plaintiff's clearly established federal statutory or constitutional rights. Lindsey, 29 F.3d at 1384 (emphasis added).[26] Where a plaintiff presents nonconclusory allegations of subjective motivation and supports those allegations by sufficient direct or circumstantial evidence, as required under Branch, therefore, a qualified immunity claim will be denied on a motion to dismiss. See id. at 1384-85 (discussing Branch and applying the holding of that case in the summary judgment context).
Applying the standard set out in Lindsey, the Court finds that plaintiffs have stated a claim sufficient to make dismissal of defendants McCaffrey, Hill, and Lundy on qualified immunity grounds inappropriate at this time. As noted above, plaintiffs have sufficiently alleged that defendants McCaffrey, Hill, and Lundy discriminated against Oona both by failing to adequately supervise and control Ibach and by tolerating or condoning peer sexual harassment directed at Oona. As discussed below, the Court is confident that a reasonable school official would have known in 1992 and 1993 that the actions alleged by plaintiffs here in each of these regards would unquestionably violate Oona's federal statutory and constitutional rights.
1. Supervisory Liability
The Supreme Court held in Franklin v. Gwinnett County Public Schools, 503 U.S. 60, 73, 112 S.Ct. 1028, 1037, 117 L.Ed.2d 208 (1992), that when a teacher sexually harasses and abuses a student, that teacher discriminates on the basis of sex within the meaning of Title IX. Controlling precedent at that time also held that "[s]upervisory liability is imposed against a supervisory official in his individual capacity for his `own culpable action or inaction in the training, supervision, or control of his subordinates,' ... for his `acquiescence in the constitutional deprivations of which the complaint is made,' ... or for conduct that showed a `reckless or callous indifference to the rights of others.'" Larez v. Los Angeles, 946 F.2d 630, 646 (9th Cir. 1991) (citations omitted).
A reasonable school official during the 1992-1993 school year, therefore, would have known that her failure to properly train, supervise, or control a student teacher engaged in intentional discrimination against female students on the basis of their sex would violate the statutory and constitutional rights of those students. Plaintiffs have sufficiently alleged intentional discrimination on Ibach's part. Accordingly, plaintiffs have pleaded sufficient allegations to overcome defendants' qualified immunity defense to the supervisory liability claim on a motion to dismiss.
2. Student-to-student harassment
As to the peer harassment claims, the Court finds that well-established precedent which should have been known to defendants in 1992-1993 made clear that disparate treatment of male and female students on the basis of sex with the intent to discriminate against the female students would violate those students' statutory and constitutional rights. See Goodwin v. Circuit Court, 729 F.2d 541, 546 (8th Cir.1984), cert. denied, 469 U.S. 1216, 105 S.Ct. 1194, 84 L.Ed.2d 339 (explaining that "[t]he right to be free of invidious discrimination on the basis of sex certainly is clearly established, and no one *1473 who does not know about it can be called `reasonable' in contemplation of law" (citing with approval Flores v. Pierce, 617 F.2d 1386, 1391-92 (9th Cir.1980), cert. denied, 449 U.S. 875, 101 S.Ct. 218, 66 L.Ed.2d 96); Bator v. Hawaii, 39 F.3d 1021, 1027-1029 (9th Cir.1994) (noting that the Ninth Circuit held in 1980 that "the constitutional right to be free from ... invidious discrimination is so well-established and so essential to the preservation of our constitutional order that all public officials must be charged with knowledge of it"); Lindsey v. Shalmy, 29 F.3d 1382, 1386 (9th Cir.1994) (noting that female plaintiff "had a clearly established federal constitutional right to be free of gender discrimination at the hands of a state actor in 1988").[27] Therefore, where a plaintiff has alleged facts sufficient to support an inference that the defendant acted with the intent to discriminate against plaintiff on the basis of her sex, qualified immunity should be denied at this stage.
As explained above, the Court finds that plaintiffs here have alleged facts sufficient to support a finding of intent against defendants McCaffrey, Hill, and Lundy, necessitating the denial of these defendants' qualified immunity claim. Accordingly, as prescribed in Branch, plaintiffs will be allowed to engage in narrowly tailored discovery limited to the issue of whether these three defendants acted with the intent to discriminate against Oona on the basis of her sex.[28] If such discovery does not reveal sufficient factual support for plaintiffs' claim that each of these defendants either intentionally discriminated against Oona on the basis of her sex or is liable in a supervisory capacity for an official who so discriminated, any or all of the defendants may argue in a subsequent motion that they are entitled to summary judgment on qualified immunity grounds on the claim based on peer harassment.
IV. CONCLUSION
For the reasons explained above:
1) Defendants' motion to dismiss is DENIED as to defendants McCaffrey, Hill, and Lundy (if Lundy is sued in his individual capacity). 2) The motion to dismiss is GRANTED as to defendants White, Solie, and Alsobrook, and the plaintiffs' claims against these defendants are DISMISSED.
NOTES
[1] This claim was rejected by Santa Rosa City Schools on August 24, 1993.
[2] The Court urges plaintiffs to verify the accuracy of the date included in this allegation, as May 8, 1993 was a Saturday, meaning that school presumably was not in session that day.
[3] Defendants cite Pfeiffer v. Marion Ctr. Area Sch. Dist., 917 F.2d 779 (3d Cir.1990), Mabry v. State Bd. for Community Colleges and Occupational Educ., 597 F.Supp. 1235 (D.Colo.1984), aff'd on other grounds, 813 F.2d 311 (10th Cir.1987), cert. den. 484 U.S. 849, 108 S.Ct. 148, 98 L.Ed.2d 104, and Bougher v. Univ. of Pittsburgh, 713 F.Supp. 139 (W.D.Pa.1989), aff'd on other grounds, 882 F.2d 74 (3d Cir.1989). However, not only were these cases decided before the Franklin Court revisited the preclusion of remedies issue, none of these decisions relied upon the type of thorough analysis of the comprehensiveness of Title IX's remedial scheme required to establish Congressional intent to foreclose a section 1983 remedy. See, e.g., Bougher, 713 F.Supp. at 146 (summarily concluding, without analysis, that Title IX is a statute "which contains its own remedies and is implemented through its own procedural scheme"); Pfeiffer, 917 F.2d at 789 (accepting, without analysis, district court's refusal to reach plaintiff's § 1983 constitutional claims because such claims were "subsumed" by Title IX and barred by the Sea Clammers comprehensiveness doctrine); Mabry, 597 F.Supp. at 1239 (summarily stating that trial court was "convinced" that plaintiff's remedies under Title IX would have been comprehensive and adequate had she prevailed on that claim). These cases, therefore, do not provide very persuasive evidence of Congress' intent to preclude a section 1983 remedy, especially in light of Franklin.
[4] This two-part inquiry tracks the standard for evaluating motions to dismiss set out by this Circuit in Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1988). In other words, the Court must here both determine whether plaintiffs have stated a cognizable legal theory under relevant precedent and, if so, decide whether plaintiffs have alleged facts sufficient to establish their entitlement to recovery under that theory.
[5] The Cannon Court contrasted the language eventually codified in Title IX with an alternative proposal considered but rejected by Congress before the statute's enactment. Unlike Title IX, the proposed statute was not phrased in terms of an individual plaintiff's rights. Instead, it provided that the Secretary of the Department of Health, Education, and Welfare, at that time the official who would be responsible for the enforcement of the statute, "shall not make any grant ... [to] any institution of higher education ... unless the application ... for such grant ... contains assurances ... that any such institution ... will not discriminate on the basis of sex in the admission of individuals." 441 U.S. at 693 n. 14, 99 S.Ct. at 1955 n. 14. Unlike the language of the current statute, such a construction could not fairly have been read to confer a right not to be discriminated against upon an individual plaintiff under the analysis set out by the Ninth Circuit in Boatowners.
[6] Defendants base their argument that plaintiffs' section 1983 claim should be precluded here in large part on their reading of Doe v. Petaluma City School District, 830 F.Supp. 1560 (N.D.Cal. 1993). The Doe court held that "individuals may not be held personally liable under Title IX." Id. at 1577. The individual defendants assert that to allow plaintiffs to bring a section 1983 action against them as individuals when no action would lie under Title IX itself would be somehow improper. Under defendants' reasoning, a plaintiff should be allowed to enforce under section 1983 only those substantive rights which she could enforce directly under the statute creating those rights.
Defendants' position is at odds with controlling precedent in this circuit. In Boatowners, 716 F.2d at 674, the Ninth Circuit rejected the argument that "a plaintiff who [is] unable to demonstrate a private right of action under [a federal] statute would necessarily be barred from seeking a section 1983 remedy." The opinion explained that "there are both substantive and evidentiary distinctions between the [statutory and section 1983] causes of action," most notably the presumption that a federal statute creating enforceable rights may be enforced in a section 1983 action. Id. The Boatowners court concluded that "the plaintiff who establishes the existence of an enforceable right will be free to proceed under section 1983," and noted that "there could well be federal rights enforceable under section 1983 which are not enforceable by means of a private right of action under the statute creating them." Id.
The Court has already found that Title IX confers a personal right not to be discriminated against on a group of individuals to which plaintiff belongs. Accordingly, the Court concludes that, under Boatowners, plaintiff here may enforce that right against the individual defendants under section 1983, even assuming arguendo that she could not do so under Title IX itself.
[7] This question is of central importance in evaluating plaintiffs' section 1983 claim, as it is well settled that such a plaintiff must allege and eventually prove all elements, including culpable state of mind if applicable, necessary to establish a violation of the right upon which the section 1983 claim is based. See Daniels v. Williams, 474 U.S. 327, 330, 106 S.Ct. 662, 664, 88 L.Ed.2d 662 (1986) (explaining that "in any given § 1983 suit, the plaintiff must still prove a violation of the underlying constitutional [or federal statutory] right; and depending on the right, merely negligent conduct may not be enough to state a claim").
[8] The Court is aware of holdings from courts in other circuits stating that a plaintiff may make out a violation of Title IX without proving a defendant's specific intent to discriminate. See Roberts v. Colorado State Bd. of Agriculture, 998 F.2d 824, 832 (10th Cir.1993) (holding that under Tenth Circuit precedent the "district court did not err ... in failing to require proof of discriminatory intent" in Title IX action); Cook v. Colgate Univ., 802 F.Supp. 737, 741 (N.D.N.Y. 1992), vacated, 992 F.2d 17 (2d Cir.1993) (finding that "Title IX ... can be violated without showing a specific intent on the part of the educational institution to discriminate against women"). However, those decisions which have addressed the intent issue and found that no showing of intentional discrimination is required have involved suits against educational institutions alleging inequitable allocation of resources to athletic programs serving males and females. See Roberts, 998 F.2d at 824 (discontinuation of university's women's varsity softball program); Cook, 802 F.Supp. at 737 (denial of varsity status to women's ice hockey team); Cohen v. Brown Univ., 991 F.2d 888 (1st Cir.1993) (revocation of varsity status of women's volleyball and gymnastics teams).
Because a plaintiff's Title IX claim in an inequitable funding case is fundamentally different from plaintiffs' discriminatory treatment claim here, the Court sees no inconsistency in requiring a plaintiff to prove discriminatory intent in the latter type of case even where she might not be required to do so in the former. Unlike the cases considered by courts in the funding context, suits like the instant action necessarily implicate the mental state of the individual defendants to the extent that plaintiffs directly allege that those officials took particular actions which disadvantaged Oona and other female students because those students were female. The primary problem present in an allocation of resources suit against an institution the difficulty of proving, or even defining, an institution's "discriminatory intent" based on its funding decisions is not present in a suit in which plaintiffs allege a direct violation of a student's rights under Title IX by individual officials who, because of that student's sex, discriminate against her.
For this reason, the Court's holding requiring a plaintiff student to allege discriminatory intent in order to state a section 1983 claim based on sexual harassment in violation of Title IX is in no way meant to imply that such a standard would necessarily be properly applied in Title IX actions involving disparate impact/inequitable funding claims. Rather, today's ruling is limited to the circumstance in which a plaintiff student claims that her rights under Title IX have been violated by the participation of school officials in sexual harassment or their failure to prevent or remedy such harassment by others (including other students).
[9] The teacher alleged to have engaged in the sexual harassment was never a defendant in the lawsuit, and the only individual defendant in the case had been dismissed by the district court. See Franklin v. Gwinnett County Public Schs., 911 F.2d 617, 622 (11th Cir.1990).
[10] The Franklin Court refused to address the question of whether Title IX was in fact enacted pursuant to the Spending Clause power. 503 U.S. at 75 n. 8, 112 S.Ct. at 1038 n. 8 ("Because we conclude that a money damages remedy is available under Title IX for an intentional violation irrespective of the constitutional source of Congress' power to enact the statute, we need not decide which power Congress utilized in enacting Title IX.").
The Supreme Court recognized in Cannon v. Univ. of Chicago that "Title IX was patterned after Title VI," and noted that the two statutes were to be interpreted in a similar manner. 441 U.S. at 694-96, 99 S.Ct. at 1956-57. Under Title VI, "no person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance." 42 U.S.C. § 2000d.
In Guardians Association v. Civil Service Commission of New York, 463 U.S. 582, 610-11, 103 S.Ct. 3221, 3236-37, 77 L.Ed.2d 866 (1983), the Supreme Court held, without a majority opinion, that Title VI plaintiffs must prove discriminatory intent on the part of a defendant in order to obtain damages under that statute. That decision also strongly suggested that Title VI, the statute upon which Title IX is based, was enacted pursuant to the Spending Clause. See 463 U.S. at 598, 103 S.Ct. at 3230 ("I note first that Title VI is spending-power legislation") (White, J., plurality opinion). For this reason, this Court assumes, absent direction to the contrary from the Ninth Circuit or the Supreme Court, that Title IX was likewise enacted pursuant to the Spending Clause. See Doe, 830 F.Supp. at 1574 n. 9.
[11] As the Doe court has explained, the reasoning of Franklin compels the conclusion that a finding that a student's rights under Title IX have been violated in the peer harassment context requires a determination that at least one defendant official has affirmatively discriminated against that student on the basis of gender:
[Franklin] require[s] that discriminatory intent be shown before damages are recoverable.... The court holds that no damages may be obtained under Title IX (merely) for a school district's failure to take appropriate action in response to complaints of student-to-student sexual harassment. Rather, the school district must be found to have intentionally discriminated against the plaintiff student on the basis of sex. The school's failure to take appropriate action, as alleged in plaintiff's complaint, could be circumstantial evidence of intent to discriminate.
830 F.Supp. at 1576; see also Houston v. Mile High Adventist Academy, 846 F.Supp. 1449, 1457 (D.Colo.1994) (citing Franklin and holding, in case in which plaintiff student claimed that she had been subjected to sexual harassment at school, that "a plaintiff may recover damages for the violation of Title IX only for intentional violations").
[12] In their complaint, plaintiffs maintain that Title IX imposes on defendant school officials "a legal and equitable duty to provide a discrimination, harassment, and retaliation-free environment." Compl. 18:10-11. The Court finds plaintiffs' reading of Title IX as requiring school-teachers and administrators to absolutely guarantee the existence of a "discrimination-free" or "harassment-free" environment troubling in this context and unsupported by the language of the statute.
The language of Title IX clearly reflects Congress' intent to confer on individuals a right not to be discriminated against on the basis of sex by state actors. From this premise, it follows that the ultimate fact which a plaintiff seeking to make out a claim based on an alleged violation of Title IX must prove is that the defendant in fact discriminated against her because of her sex, not that the defendant failed to guarantee that the plaintiff would not be exposed to any such discrimination by third parties.
[13] The Supreme Court has defined actionable "hostile environment" sexual harassment as that which is "sufficiently severe or pervasive `to alter the conditions of the victim's employment and create an abusive working environment.'" Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 67, 106 S.Ct. 2399, 2405, 91 L.Ed.2d 49 (1986). One commentator notes that "[s]exual harassment can [take] many forms: verbal harassment such as sexual comments or name calling; leering or ogling; jokes or pictures; unnecessary touching; sexist remarks about a person's clothing, body, or sexual activities; constant brushing up against a person's body; subtle or overt pressure for sexual favors; physical assault; and rape." Monica L. Scherer, Comment, No Longer Just Child's Play: School Liability Under Title IX for Peer Sexual Harassment, 141 U.Pa.L.Rev. 2119, 2127 (1993).
Taking the facts in the complaint as true, as it must on a motion to dismiss, the Court finds that plaintiffs have sufficiently established that Ibach's behavior toward Oona and her female classmates constituted sexual harassment.
[14] Under Ninth Circuit precedent, where subjective intent is an element of the violation alleged under section 1983, plaintiffs must "state in their complaint nonconclusory allegations setting forth evidence of unlawful intent" on the part of defendant officials. Branch v. Tunnell, 937 F.2d 1382, 1386 (9th Cir.1991), cert. denied, ___ U.S. ___, 114 S.Ct. 2704, 129 L.Ed.2d 832 (1994). Such evidence may be either direct or circumstantial. Id. at 1387. If a plaintiff fails to set forth such evidence of intent on the part of named defendant officials in her complaint, the district court may dismiss plaintiff's claim against those officials. See id. at 1388 (reversing district court's denial of defendant's motion to dismiss and remanding for reconsideration in light of newly-stated heightened pleading standard).
The Court first concludes that subjective intent is an element of plaintiffs' § 1983 claim in this case. Plaintiffs base their claim on alleged violations of Title IX and the Equal Protection and Due Process clauses of the Constitution. Discriminatory intent is an essential element of plaintiffs' claim based on Title IX for the reasons explained above. Discriminatory intent is similarly an element of a section 1983 claim based on the Equal Protection clause. See Bator v. Hawaii, 39 F.3d 1021, 1028 n. 7 (9th Cir.1994) (explaining that "a plaintiff must show intentional discrimination ... for equal protection claims"). While at present it is not clear whether an allegation of reckless, as opposed to intentional, conduct is sufficient to state a claim under the Due Process clause, see Daniels v. Williams, 474 U.S. 327, 328, 106 S.Ct. 662, 663, 88 L.Ed.2d 662 (1986), plaintiffs have based their § 1983 claim on some combination of these statutory and constitutional sources rather than bringing three discrete claims. Considering plaintiffs' § 1983 claim as a whole, therefore, the Court finds it appropriate to apply the Branch heightened pleading standard in ruling on defendants' motion to dismiss.
The Court finds that plaintiffs have met the Branch standard with respect to Ibach here. The allegations in the complaint regarding Ibach's behavior, taken as true, are nonconclusory and sufficient to support an inference that Ibach intentionally discriminated against Oona on the basis of her sex. Accordingly, dismissal of plaintiffs' claim under Branch at this time would be inappropriate.
[15] In light of its ruling that plaintiffs have stated a section 1983 claim against Ibach based on his alleged deprivation of rights conferred on Oona under Title IX, the Court need not address the contention raised by Ibach on his motion to dismiss that "the factual conduct complained of could not, as a matter of law, implicate any constitutional right" under the Fourteenth Amendment. Ibach's Mem. P & A Support Mot. Dismiss at 6. As explained above, section 1983 also provides a remedy for the deprivation of federal statutory rights under color of state law, and plaintiffs have sufficiently alleged such a deprivation here.
[16] The viability of plaintiffs' claim against Lundy depends in part on whether he is being sued in his official or individual capacity, a question which plaintiffs must resolve in an amended complaint. See note 22, infra.
[17] The Court believes that the facts alleged in the complaint, taken as true, sufficiently establish that Oona's male classmates subjected her to sexual harassment. See note 13, supra.
[18] Again, the sufficiency of plaintiffs' claim against defendant Lundy will depend on whether he is being sued in his official or his individual capacity. See note 22, infra.
[19] Because, as previously explained, intentional discrimination is an element of plaintiffs' section 1983 claim based on defendants' alleged encouragement or tolerance of peer sexual harassment in violation of Title IX, the Court must apply the heightened pleading standard set out in Branch. Applying that standard, the Court finds plaintiffs' allegations nonconclusory and sufficient to support an inference that McCaffrey, Hill and Lundy intentionally discriminated against Oona on the basis of her sex. For this reason, these claims are sufficiently pled under the Branch standard and should not be dismissed at this stage.
[20] The Court stresses that if discovery does not reveal facts sufficient to support plaintiffs' assertion that defendants intentionally discriminated against Oona on the basis of her sex, plaintiffs' claim would be unable to survive a motion for summary judgment.
[21] Plaintiffs' papers suggest that their claim against the District administrators is premised primarily on the theory that the personal actions of those officials directly contributed to the creation of a hostile atmosphere for Oona and other female students. See Mem. P & A Opp'n Defs.' Mot. Dismiss at 10 ("[D]efendants' wrongful conduct also consisted of actively creating, developing, and maintaining a climate of blatant sexual favoritism.... Th[e] harassment was then exacerbated by the school district officials' own failure to investigate and/or punish the boys who were verbally and physically harassing Oona, or punish defendants McCaffrey and Hill for allowing the harassment to continue....") (emphasis in original). As noted above, however, plaintiffs provide absolutely no factual examples of ostensibly discriminatory conduct on the part of White, Solie and Alsobrook.
[22] The Court trusts that plaintiffs' complaint will not be amended to include new factual allegations against defendants White, Solie, and Alsobrook unless plaintiffs' counsel first satisfy their obligation under Rule 11 of the Federal Rules of Civil Procedure to verify that any new allegations are well grounded in fact.
The Court also notes that at oral argument, plaintiffs' counsel stated that only three individual defendants McCaffrey, Ibach, and Hill were being sued in their individual capacities. This response appears to contradict plaintiffs' complaint, which names as defendants in the section 1983 claim "McCaffrey, Ibach, Hill, Lundy, Solie, White, and Alsobrook, Individually." Complaint 18:2-4 (emphasis added).
The Court directs plaintiffs to file an amended complaint within 30 days of the date of this order unambiguously specifying the capacity, official or individual, in which each defendant is being sued. That distinction is of central importance in determining the scope of immunity, if any, to which the defendants are entitled. Supreme Court precedent clearly establishes that a suit against a state official in her official capacity is treated as a suit against the state, and Eleventh Amendment immunity applies in such suits. Hafer v. Melo, 502 U.S. 21, 23-25, 112 S.Ct. 358, 361-62, 116 L.Ed.2d 301 (1991) (explaining that "neither a State nor its officials acting in their official capacities are `persons' under § 1983"). However, a suit against a state official in her individual capacity is not so barred. 502 U.S. at 31, 112 S.Ct. at 365 (holding that "state officials, sued in their individual capacities, are `persons' within the meaning of § 1983" and noting that "the Eleventh Amendment does not bar such suits").
[23] As school and district administrators and teachers, the individual defendants are clearly entitled to assert the defense of qualified immunity. See Wood v. Strickland, 420 U.S. 308, 318, 95 S.Ct. 992, 999, 43 L.Ed.2d 214 (1975) (school board members entitled to assert qualified immunity defense to suit brought under § 1983); Bilbrey v. Brown, 738 F.2d 1462, 1467 (9th Cir. 1984) (teacher and vice-principal entitled to qualified immunity under certain circumstances).
[24] As the Ninth Circuit persuasively explained in Gutierrez:
If the plaintiff fails to establish that the discrimination was intentional, the claim fails. If the plaintiff does establish such intent, there can be no qualified immunity. Thus, it seems simpler to say that qualified immunity is not a defense in such cases, rather than that the defense prevails where proof of intentional discrimination is not established.
838 F.2d at 1051 n. 29. See also Sanchez v. Santa Ana, 936 F.2d 1027, 1040 (9th Cir.1990), cert. denied, 502 U.S. 957, 112 S.Ct. 417, 116 L.Ed.2d 437 (apparently citing Gutierrez, after that case had been vacated, for the proposition that governmental officials are not entitled to qualified immunity from a section 1983 action based on intentional discrimination). But see Garcia v. Spun Steak Co., 998 F.2d 1480, 1487 n. 1 (9th Cir.1993) (stating that Gutierrez "has no precedential authority ... because it was vacated as moot by the Supreme Court," and concluding that the Garcia court was "in no way bound by [Gutierrez's] reasoning").
[25] Lindsey makes no mention of the apparent resolution of this dilemma by Gutierrez, and does not indicate whether that decision retains any precedential value on the qualified immunity issue.
[26] A court in this district illuminatingly described, six years before Lindsey, a situation of the type which the Lindsey court presumably had in mind in detailing the qualified immunity standard to be applied in these cases:
[I]t is not a violation of the constitution for a government official to fire a black employee, but it most assuredly is a violation of clearly established federal rights to fire an employee because he is black. "The act itself the act of discharge is neutral; it is the motive or the intent that makes the act both actionable and violative of clearly established law."
Willson v. Cagle, 711 F.Supp. 1521, 1530 (N.D.Cal.1988) (citation omitted).
[27] The Court feels compelled to note that the great majority of authorities cited by plaintiffs in support of their argument on the qualified immunity issue state statutes and school district policies are irrelevant to the question of whether plaintiffs' claims are sufficient to withstand the defendants' qualified immunity challenge. In order to defeat a qualified immunity claim at this stage in a section 1983 action, a plaintiff must sufficiently allege the deprivation of a clearly established right secured by federal statutory or constitutional law. While the District's adoption of sexual harassment guidelines might indicate that the defendants believed the school could be held liable for peer sexual harassment, that belief in no way establishes that such a legal duty based on federal law did in fact exist at that time. See Ward v. County of San Diego, 791 F.2d 1329 (9th Cir.1986), cert. denied, 483 U.S. 1020, 107 S.Ct. 3263, 97 L.Ed.2d 762 (1987) (explaining that, in the absence of binding precedent, a court must look to "all available decisional law including decisions of state courts, other circuits and district courts" to determine whether a right was clearly established at the time of the alleged violation) (emphasis added) (citation omitted). Plaintiffs' claim that "it is absolutely inconceivable that a school district would go to the time, effort, and expense of creating ... policies ... specifically prohibiting student-to-student harassment if it did not fully recognize and understand its potential liability for its failure to prevent and stop it" thus provides the Court little or no useful guidance in resolving this complex question.
[28] If plaintiffs amend their complaint to add sufficient allegations of intent on the part of defendants White, Solie, and Alsobrook with regard to the peer harassment claim, the Court may at that time allow limited discovery regarding the intent of these officials as well. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1571126/ | 277 S.W.2d 250 (1955)
HEAVY HAULERS, Inc., Appellant,
v.
Emma A. NICHOLSON, Appellee.
No. 12768.
Court of Civil Appeals of Texas, Galveston.
March 3, 1955.
Rehearing Denied April 14, 1955.
*251 Fulbright, Crooker, Freeman, Bates & Jaworski, and Jerry V. Walker, Houston, for appellant.
Blakeley & Williams, and Carey Williams, Houston, for appellee.
PER CURIAM.
The record in this case presents a question as to the appellate jurisdiction of this Court, which requires determination though not raised by point of error. The suit was filed in the County Court at Law of Harris County by Emma A. Nicholson, seeking a joint and several judgment against Heavy Haulers, Inc., Hugo C. Werner, and Frank Walker for damages alleged to have been sustained as a result of collisions between trucks owned or operated by the defendants and an automobile owned and operated by plaintiff. Trial was before a jury, and after receipt of verdict, judgment was entered that plaintiff take nothing against Hugo Werner, and that plaintiff recover judgment against Heavy Haulers, Inc. for the sum of $771.15. No mention is made in the judgment of the defendant Frank Walker, and plaintiff's asserted cause of action against him is in no manner disposed of, either expressly or by necessary implication. Such a judgment is not a final judgment from which an appeal will lie. Therefore, this Court is without jurisdiction to do other than dismiss the appeal. Latshaw v. Barnes, Tex.Civ. App., 170 S.W.2d 531.
Appeal dismissed.
On Motion for Rehearing.
HAMBLEN, Chief Justice.
This suit for property damage arose out of a collision between a Hudson automobile owned and driven by appellee Emma A. Nicholson, and a truck owned by appellant Heavy Haulers, Inc. and driven by its employee John A. Simmons, and a collision between appellee's Hudson automobile and a truck owned by Hugo C. Werner and driven by Frank Walker. The latter two individuals were named as defendants in the trial court. Trial in the County Court at Law of Harris County, before a jury, resulted in a judgment in favor of appellee and against the appellant for the sum of $771.15, and a judgment that appellee take nothing against Hugo C. Werner. On this appeal, no complaint is made by either litigant of the take nothing judgment as to Hugo C. Werner.
*252 Because the judgment of the trial court entered on April 30, 1954 failed to dispose of the defendant Frank Walker, this Court held that the same was not a final appealable judgment, and on February 3, 1955 dismissed the appeal therefrom. By supplemental transcript received by this Court with appellant's motion for rehearing on February 15, 1955, it is made to appear that on February 4, 1955, the trial court, after due notice to all interested parties, and upon the joint application of appellant and appellee, entered its nunc pro tunc judgment, reciting the inadvertent omission in the decree of April 30, 1954 of the order made by the court dismissing the cause of action as to the defendant Frank Walker, and proceeding thereupon to recite such dismissal on February 4, 1955 as of April 30, 1954. Such nunc pro tunc judgment evidences a final judgment of the trial court, and this Court accordingly sets aside its order of dismissal heretofore entered, and within the provisions of Rule 306c, T.R.C.P. considers the appeal heretofore perfected as an appeal from the judgment as reflected by such nunc pro tunc decree.
The facts giving rise to this litigation are agreed by the litigants to be substantially as follows: At about 12:00 noon on June 12, 1951, appellant's truck was proceeding west on Highway 90 toward the City of Houston. When about 20 miles east of Houston, a heavy deluge of rain occurred, which reduced visibility to from 150 to 200 feet, and which drowned out the engine of the truck. The truck stopped in the north half of the paved portion of the highway, and so remained at all times material. Shortly thereafter, appellee also proceeding toward Houston, collided with appellant's truck. This collision was a glancing blow, the right rear portion of appellee's automobile striking the left rear portion of appellant's truck. The automobile thereupon travelled to its left, or south, off of the pavement, across the shoulder of the highway, across the drainage ditch, and came to rest at a fence marking the south boundary line of the highway right of way. Some one to five minutes thereafter, the truck owned by Hugo C. Werner, collided with the appellee's automobile. The only evidence relative to this second collision, consisted of the testimony of appellant's driver, who testified to seeing the second truck travelling west when it was approaching the rear of his truck. When the appellant's driver saw the second truck, it was crossing the black stripe marking the center of the pavement. From that point it proceeded off of the pavement on the south side, across the shoulder, across the ditch, and into the rear of appellee's automobile. The second truck did not strike appellant's truck. This second collision admittedly caused most of the damages to appellee's automobile. As appellee states in her brief: "According to the uncontroverted evidence the damage resulting from the first collision was minimal. The serious damages apparently resulted from the second collision." It was stipulated that appellee's automobile was damaged to the extent of $771.15.
In response to special issues, the jury acquitted appellee of any asserted act of contributory negligence, and found the accident not unavoidable. The judgment rests upon the findings of the jury in response to issues 1 to 4, inclusive, which were as follows:
"No. 1
"Do you find from a preponderance of the evidence that John A. Simmons stopped, parked and left standing the truck of the defendant Heavy Haulers, Inc. upon the main traveled part of the highway when it was possible to stop, park or leave such vehicle off such part of such highway?
"No. 2
"Do you find from a preponderance of the evidence that such action on the part of John A. Simmons, if you have so found, was a proximate cause of the damages to plaintiff's automobile?
"No. 3
"Do you find from a preponderance of the evidence that John A. Simmons *253 left the Heavy Haulers, Inc. truck disabled upon the traveled portion of the highway when there was not sufficient light to render clearly discernible persons and vehicles on the highway at a distance of 500 feet?
"No. 4
"Do you find from a preponderance of the evidence that the action of John A. Simmons in leaving the Heavy Haulers, Inc., truck disabled upon the traveled portion of the highway when there was not sufficient light to render clearly discernible persons and vehicles on the highway at a distance of 500 feet, if you have so found in answer to the preceding issue, without immediately displaying a red burning fusee or a red burning electric lantern on the side of the truck was a proximate cause of the damages to plaintiff's automobile?
"All of such issues were answered `We do'."
Before the case was submitted to the jury, appellant moved for an instructed verdict. After receipt of the verdict, appellant moved for judgment non obstante veredicto. The action of the trial court in overruling such motions forms the basis of appellant's points one to three, inclusive. By points four to seven, inclusive, he complains that issues 2 and 4 above are duplicitous, vague and indefinite. We are of the opinion that under the record before us, appellant's points one to three are well taken, and that because of the error therein stated, the judgment of the trial court must be reversed and judgment here rendered in favor of appellant. This conclusion renders unnecessary any discussion of appellant's remaining points.
No question is here raised as to the evidentiary support for the findings of negligence in response to special issues one and three above. As we see it, and as is argued by appellant, the question presented is whether that negligence, unaided by any evidence other than that heretofore stated, was a proximate cause of the second collision which admittedly caused all but a minimal part of the total damage suffered. We think that it was not.
The legal concept of proximate cause has been the subject of many authoritative discussions by courts of this state, to the extent that further discussion here is unnecessary. We have carefully examined the extensive treatment of the subject by Chief Justice Gaines, in Texas & Pacific Ry. Co. v. Bigham, 90 Tex. 223, 38 S.W. 162, which has probably been referred to more often in this state than any other single decision wherein the question is discussed. When the rules therein set forth, which have been so consistently thereafter followed, are applied to the facts in the present case, the question to be determined is whether, on the one hand, the negligence of the appellant's driver, in a natural and continuous sequence, caused the damage resulting from the second collision, or whether, on the other hand, the second collision constituted a new and independent cause, breaking the connection between the negligent acts and the damaging event. To support the first premise, it is necessary to hold that a person of ordinary prudence, under the circumstance in which appellant's driver was after the first collision, should reasonably have anticipated and foreseen that the second collision, or a similar event, would probably occur. Appellant's liability can be supported on no other basis, for the reason that in so far as this record is concerned, we know only that the second collision happened. The record is otherwise silent concerning the actions of the second truck.
As we view it, this record supports the conclusion that the negligence of appellant's driver in stopping on the highway, proximately caused appellee to collide with the truck, resulting in some damage to appellee's automobile, the extent of which is unknown, but which is admittedly "minimal", and further resulted in appellee's automobile being placed in the position in which it came to rest. In that position, the undisputed testimony, supported by undisputed photographs, shows that her vehicle *254 was more than a car length removed from the nearest point of the paved portion of the highway. After the second truck collided with her automobile, that truck rested in the drainage ditch fully a truck width removed from the pavement. We find it entirely unreasonable to say that appellant's driver should have anticipated and foreseen that this second collision, or some similar event would probably occur. Therefore, the negligent acts of appellant's driver were not the proximate cause of the second collision. City of Vernon v. Lisman, Tex. Com.App., 17 S.W.2d 769; Union Stockyards v. Peeler, Tex.Com.App., 37 S.W.2d 126; Paris & G. N. Ry. Co. v. Stafford, Tex.Com.App., 53 S.W.2d 1019; Wester v. Smith, Tex.Civ.App., 213 S.W.2d 550.
We consider this case to be clearly distinguishable from Lone Star Gas Co. v. Fouche, Tex.Civ.App., 190 S.W.2d 501. In that case, the original negligence of the defendant proximately caused plaintiff to collide with defendant's truck. Plaintiff's automobile came to rest, as a result of such collision, in the lane of the street normally travelled by north bound traffic, and was thereafter struck by another vehicle travelling in that lane; a result which the court holds to be a foreseeable event.
It is admittedly possible in the present case, that the negligence of appellant's driver was the cause of the damage suffered by appellee as a result of the second collision. But it is likewise possible, and equally probable, that the second collision resulted from causes not connected with the actions of appellant's driver. Where circumstances are equally consistent with the existence and nonexistence of an ultimate fact sought to be established, such circumstances are wanting in probative force as any evidence tending to establish the existence of the ultimate fact. Perren v. Baker Hotel of Dallas, Tex.Civ.App., 228 S.W.2d 311; General Accident Fire & Life Assurance Corporation, Limited, v. Perry, Tex. Civ.App., 264 S.W.2d 198.
Lacking foreseeability the burden was upon appellee to prove a causal connection between the negligence of appellant's driver, and the damage for which she sought recovery. That burden was not met.
For the reasons which we have stated, appellant's motion for rehearing is granted, our former judgment of dismissal set aside, and judgment of the trial court is reversed and here rendered in favor of appellant.
GRAVES, J., dissenting.
GRAVES, Justice (dissenting).
Appellant's statement of the nature and result of this cause below has been acquiesced in by the appellee, with the addition of a detail or two, noted by her, and is as follows:
"This is a suit for property damage, arising out of a collision involving appellee-plaintiff, Emma A. Nicholson's automobile, and appellant-defendant, Heavy Haulers, Inc.'s truck, and also arising out of a collision involving appellee's automobile, and a truck belonging to Hugo C. Werner, and operated by Frank Walker the last two-named individuals being defendants in the trial court.
"Upon a trial to a jury, judgment was rendered for appellee Nicholson against appellant Heavy Haulers, Inc. (in the sum of $771.15) and (that she take nothing against) Hugo C. Werner.
"Appellant's motion for instructed verdict, motion for judgment notwithstanding the verdict, and motion for new trial, were duly presented to the trial court, and by it overruled. Appellant's objections to the charge of the court were duly presented to the trial court, and by it overruled, and this cause was regularly brought to this Court for review on appeal."
In other words, this was a two-collision case, that is, appellee's auto was allegedly hit twice on the occasion involved, first by the truck belonging to the corporation, Heavy Haulers, Inc., and second a short while later by a truck belonging to the individual person, Hugo C. Werner; but the trial court rendered judgment for *255 Werner, and he passed out of the case, neither side to this appeal having complained of that action.
Since the $771.15 amount of the damages awarded appellee was stipulated between the parties nothing is presented for review here, except what the appellant, Heavy Haulers, Inc., thus, in clear-cut statement, reduced its several points of error to, towit: "* * * appellee Nicholson has not discharged the burden of showing that her damages were proximately caused by appellant, and that the charge of the Court was erroneous in that it assumed facts in dispute and the two proximate-cause issues predicated on acts of primary negligence were duplicitous and multifarious and confusing to the jury."
It is held that appellant's contentions should be overruled, in substance, for these, among other, counter-considerations: (1) As this member of the Court reads the record and the statement of facts, the evidence the trial court heard concerning the chain of proximate causation between appellant's negligence on the one hand, and the appellee's damage on the other, was clearly sufficient to raise a jury issue in favor of the appellee's charges of negligence against the appellant's truck driver. Carey v. Pure Distributing Corp., 133 Tex. 31, 124 S.W.2d 847. (2) The record, as this member of the Court reads it, fails to show that the objections to the court's charge appellant so claims it made under its 4th and 6th points of error were reduced to writing, and at the time brought to the attention of the trial court. Wherefore, they were waived. Rules 272 and 274, T.R.C.P.; Lone Star Gas Co. v. Fouche, Tex.Civ.App., 190 S.W.2d 501, error refused, w. m. (3) Special Issues Nos. 2 and 4, of the court's charge, were not vague, indefinite, and confusing, as charged by the appellant. Those issues, in substance, were these:
"No. 2
"Do you find from a preponderance of the evidence that such action on the part of John A. Simmons, if you have so found, was a proximate cause of the damages to plaintiff's automobile?
"Answer `We do' or `we do not'.
"No. 4
"Do you find from a preponderance of the evidence that the action of John A. Simmons in leaving the Heavy Haulers, Inc., truck disabled upon the traveled portion of the highway when there was not sufficient light to render clearly discernible persons and vehicles on the highway at a distance of 500 feet, if you have so found in answer to the preceding issue, without immediately displaying a red burning fusee, or a red burning electric lantern on the side of the truck was a proximate cause of the damages to plaintiff's automobile?
"Answer `We do' or `We do not'."
It seems to me too clear for extended argument that the jury could not have failed to understand that under these issues especially in the light of the preceding ones, and the court's directions concerning them before they could give an answer in favor of the appellee to these two issues Nos. 2 and 4, they must have first found that the negligence of the appellant's driver had caused all the damage resulting from both the collisions referred to and described supra.
The record further appears to show that when the counsel for appellant objected to these quoted special issues Nos. 2 and 4, the trial court offered to further particularize the language of them, which proffer appellant's counsel refused. It would seem, therefore, that no belated objection thereto should be considered upon the appeal.
Further discussion is deemed unnecessary, since these conclusions are thought to determine the merits of the appeal. They require that the judgment should be affirmed. This protest that it is not so ordered, is respectfully entered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2524384/ | 962 N.E.2d 650 (2011)
DAVIS
v.
STATE.
Not in source.
Supreme Court of Indiana.
October 19, 2011.
Transfer denied. All Justices concur, except for Sullivan, J., and Rucker, J., who vote to grant the Petition to Transfer. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2633027/ | 184 P.3d 286 (2008)
STATE
v.
GRIFFIN.
No. 97604.
Court of Appeals of Kansas.
May 30, 2008.
Decision without published opinion. Affirmed. | 01-03-2023 | 11-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3107234/ | Fourth Court of Appeals
San Antonio, Texas
March 12, 2014
No. 04-14-00146-CV
IN THE INTEREST OF A.L.A., A CHILD,
From the 73rd Judicial District Court, Bexar County, Texas
Trial Court No. 2000EM502104
Honorable Jim Rausch, Judge Presiding
ORDER
On March 3, 2014, appellant Susan Idalia Anderson Costner filed a “Motion for Leave to
File Late Notice of Appeal” in this court. However, no notice of appeal appears to have been
filed in the trial court or in this court.
This court’s jurisdiction is invoked by the timely filing of a notice of appeal. Molina v.
Housing Authority of the City of San Antonio, No. 04-04-00774-CV, 2004 WL 2715903, *1
(Tex. App.—San Antonio Dec. 1, 2004, no pet.) (mem. op.); TEX. R. APP. P. 25.1(b). Because it
appears appellant has not filed a notice of appeal, she has seemingly failed to invoke this court’s
jurisdiction.
Accordingly, we ORDER appellant to file a written response in this court on or before
April 11, 2014 establishing that she has timely filed a notice of appeal and thereby invoked this
court’s jurisdiction. If appellant fails to satisfactorily respond within the time provided, the
appeal will be dismissed for want of jurisdiction. See TEX. R. APP. P. 42.3(a). If a supplemental
clerk’s record is required, appellant must ask the trial court clerk to prepare one and must notify
the clerk of this court that such a request was made. All deadlines in this matter are suspended
until further order of the court.
_________________________________
Marialyn Barnard, Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this 12th day of March, 2014.
___________________________________
Keith E. Hottle
Clerk of Court | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1516706/ | 726 S.W.2d 39 (1986)
Edward Anthony ELLIS, Appellant,
v.
The STATE of Texas, Appellee.
No. 69210.
Court of Criminal Appeals of Texas, En Banc.
July 2, 1986.
Frumencio Reyes, Jr., Renato Santos, Jr., Houston, for appellant.
John B. Holmes, Jr., Dist. Atty., and James C. Brough, Asst. Dist. Atty., Houston, Robert Huttash, State's Atty., Austin, for the State.
*40 Before the court en banc.
OPINION
TOM G. DAVIS, Judge.
Appeal is taken from a conviction for capital murder. V.T.C.A. Penal Code, Sec. 19.03(a)(2). After finding appellant guilty, the jury returned affirmative findings to the special issues under Art. 37.071(b), V.A. C.C.P. Punishment was assessed at death.
Appellant challenges the sufficiency of the evidence to prove one of the elements of the aggravating offense of burglary; specifically, that appellant's entry of the victim's apartment was without her effective consent.[1] See V.T.C.A. Penal Code Sec. 30.02(a).
There were no eyewitnesses to the offense. No one saw appellant enter or leave the apartment. The evidence was circumstantial. However, the standard for reviewing the sufficiency of the evidence on appeal is the same for direct and circumstantial evidence cases: to view the evidence in the light most favorable to the verdict to determine whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Garrett v. State, 682 S.W.2d 301 (Tex.Cr.App.1984); McGoldrick v. State, 682 S.W.2d 573 (Tex.Cr.App.1985); Jackson v. Virginia, 443 U.S. 307, 99 S. Ct. 2781, 2783, 61 L. Ed. 2d 560 (1979). Lack of consent to enter is an element of burglary that may be proven by circumstantial evidence. Prescott v. State, 610 S.W.2d 760, 763 (Tex. Cr.App.1981).
The deceased was a seventy-four year old woman who lived alone in an apartment complex in Houston. Appellant had been the maintenance man at the complex, and as such had access to master keys to all the apartments. Sometimes he went alone to have copies of keys made for the manager. Appellant was fired from his job a few months before the offense. The day he moved out of the apartments the office was broken into and some keys stolen. Some of the apartment locks in the complex were rekeyed after this burglary, but the one on the deceased's front door was not among them. Some time after appellant's firing the deceased's apartment was painted, including her front door. She also hired a neighbor of hers to thoroughly clean her apartment once a week, including scrubbing the inside of the front door. The neighbor, Susan Canales, testified at trial that she had last given the door such a cleaning approximately a week and a half before the offense. After the victim's death appellant's fingerprints were found on the inside of her apartment front door.
Jewelry was stolen in the burglary of the deceased's apartment and her car was taken as well. A witness testified that a few days after the offense appellant had been trying to sell jewelry and a car matching the description of those items taken in the burglary.
Susan Canales, the neighbor who cleaned the deceased's apartment, was also a good friend of the deceased's who saw her or talked to her nearly every day. Knowing that appellant had had access to the master keys and that he had been seen in the neighborhood of the apartments at least once since his firing, Canales had warned the deceased and made her promise that she would not open her door to appellant if he appeared. Over the years of their friendship, Canales testified, the deceased had never broken a promise to her.
In addition the jury heard testimony from Bill Scott, who had been incarcerated with appellant in the Harris County Jail while both were awaiting trial on unrelated charges. (Before the instant trial Scott was acquitted of the attempted murder with which he had been charged; there was no charge pending against him at the time of trial and no deal had been made in exchange for his testimony.) Scott testified that appellant had admitted to him that he had committed the burglary and murder, having gone to the deceased's apartment with the intention of stealing money and jewelry. The jury could readily have inferred that the deceased would not willingly have admitted him for that purpose, and that therefore his entry must have been without her consent or that her consent *41 was induced by fraud or force. V.T. C.A. Penal Code, Sec. 1.07(a)(12)(A). The evidence was sufficient for a reasonable trier of fact to have found that appellant entered the deceased's apartment without her effective consent. Ground of error one is overruled.
In his third ground of error, appellant contends that the trial court excluded prospective juror Bradshaw in violation of Witherspoon v. Illinois, 391 U.S. 510, 88 S. Ct. 1770, 20 L. Ed. 2d 776 (1968) and Adams v. Texas, 448 U.S. 38, 100 S. Ct. 2521, 65 L. Ed. 2d 581 (1980). We set out the pertinent portions of the voir dire, as follows:
"Q. [Trial Court] ...
"Now, the question I must ask you at this time is whether or not you have any religious, moral, or conscientious scruples or any scruples of any sort, for that matter, against the infliction of death as a punishment for a crime in a proper case?
"A. I couldn't say that a man should die for something; no.
"Q. I understand what you are saying and I can see your face and we can see your reaction to the question but the record we are taking down cannot. The little lady is taking everything we say down and it doesn't show the things that we see so we have to have a yes or no answer.
"Would you like me to give you the question again?
"A. No. I couldn't say sentence a man to death or be part of it.
"Q. Now, that gets us intowhen you say no, that gets us into another area. Let me give you the question again and you say yes or no to it.
"A. All right.
"Q. Do you have any religious, moral, or conscientious scruples or any scruples of any sort, for that matter, against the infliction of death as a punishment for a crime in a proper case?
"A. Yes.
"...
"A. The way I feel about itsay, if he did take someone's life, taking his life is not going to bring him back. So that's the eye for an eye thing and I just
"Q. [Prosecutor] You go for the two wrongs don't equal a right?
"A. That's right.
"Q. Now, I take it that's a pretty strong feeling you have; is that correct?
"A. Ever since, you know, I have been old enough and all to really think about it I have felt that way so I would say yes.
. . . . .
"Q. [Prosecutor] ...
"The question I want to ask you: Keeping in mind your feelings about the death sentence and the rightness or the wrongness of the death sentence, would you always in every case answer one of these questions no in order to prevent the Judge from assessing the death penalty?
"A. I believe so.
"Q. Okay. Remember the Judge asked you for a yes or no answer because of the record and only you can tell us what is in your mind.
"Let me put it in this light. Are you so against the death penalty that you would always answer one of these questions no in order to prevent the death sentence from being assessed?
"A. Yes.
"Q. In every case?
"A. Yes.
"Q. And I take it, that's a very strong feeling, as you said, since you have been old enough to think; is that correct?
"A. Yes.
"Q. Now, I'm not going to try to change your mind but let's say I did try to change your mind. Could anybody in this courtroom change your mind about your feeling on the death penalty?
"A. No.
"Q. ...
*42 "But if you are selected for a jury, if you are qualified for a jury, you have to take an oath[2] to follow the law and once you have taken an oath it's not like a job that you can quit and say, `Hey, this is not what I bargained for. I will find me another job. Can't do it.' You are stuck until the end of trial. You may end up doing something that does violence to your insides or your conscience or your soul or your morals or ethics or whatever and we don't want that to happen but the law will not require you to take that oath if you cannot live up to the oath. Do you see what I am sayingif it is going to do violence to you.
"The question I want to ask you is: Considering your feelings about the death sentence and given the choice of taking that oath or not taking the oath in a capital murder, would you refuse to take the oath?
"A. Yes.
"...
"Q. [Defense Counsel] My question to you, Mr. Bradshaw, is if you were selected as a member of the jury could you set your feelings aside and be able to answer Special Issues 1 and 2 after hearing the evidence?
"A. I guess you want a yes or no on that?
"Q. Yes.
"...
"Q. If you were selected as a member of the jury, could you along with the other jurors after the State having proved to the members of the jury at the guilt or innocence phase of the trial could you thereafter be able to answer Special Issues 1 and 2 provided it is proven to you beyond a reasonable doubt?
"A. Yes. I could answer them.
"...
"Q. ...
"If the State proved to you beyond a reasonable doubt, you as a member of the jury, beyond a reasonable doubt that these special issues should be answered yes, could you answer this yes?
"A. Yes.
"Q. ...
"Now, I'm not asking you about in this particular case, in that case about the kidnapper and murderer of the campfire girls. If you can think of a crime to be so heinous that you could tell or you could answer the question yes to the Special Issue?
"A. Can I say yes? I could answer yes to both of them but I don't think, you know, he should getthey should get punished but, you know, death.
"...
"THE COURT: ...
"What they are concerned about if you were on Question 2 and you knew if you answered Question Number 2 yes and you already answered Question Number 1 and if the State proved to you beyond a reasonable doubt that the answer to Number 2 should be yes and in your own mind you know that it should be yesthey proved it to you beyond a reasonable doubt that you should answer Question Number 2 yes, however heinous the crime iswould you vote yes knowing that I am going to assess the death penalty?
"THE VENIREMAN: Yes, I would. I would tell the truth. Yeah. What I thought was right. Yes.
"THE COURT: So then what you said earlier about having some scruples against the death penalty are not exactly what you led us to believe they are?
"THE VENIREMAN: Well, I'm not going to lie, you know. If both things are yes and that's the only choice I have and it's been proven I have to answer yes and be honest with the Court and what I know is right as far *43 as the facts in my head, I have to answer yes.
"THE COURT: So then if you took the oath, if you had a choice of taking that oath to follow the law knowing full well what you have said to us about your feelings about the death penalty, are you telling me now that you would or would not?
"THE VENIREMAN: I would not take the oath.
"THE COURT: You would and could take the oath?
"THE VENIREMAN: I would not take the oath. Either I don't understand or you don't understand. What I am saying if I had to take the oath for some reason and I was in that situation and I saw the facts and it was true I would say yes. ButI would try to avoid taking the oath because I just can't see sentencing someone to death if the situation arose.
"THE COURT: Okay. The situation will arise if you are chosen as a juror in this case. You will have to vote yes or no. There is no two ways about it. And you know if you take the oath that you will a true verdict according to the law and the evidence submitted to you, that you are going to have to answer those questions one way or another. And the question they are trying to determine is if it gets down to answering those questions and you have already taken the oath now, you see what I am saying? And you have got to answer those questions one way or another and you have got some feelings against the death penalty and at one point in time you said you don't believe in the death penalty.
"THE VENIREMAN: I don't but I have to tell the truth, too.
"THE COURT: What you are saying
"THE VENIREMAN: I'm going to follow it.
"THE COURT: No matter whether it does injury to your conscience and your soul or not?
"THE VENIREMAN: If that's what I have to do because
"THE COURT: You don't have to.
"THE VENIREMAN: I'm not going to lie.
"THE COURT: You don't have to. If your feelings are so strongwe are trying to find out how strong your feelings really are and we are not arguing about it.
"THE VENIREMAN: I understand that.
"THE COURT: We need to find out how strong your feelings really are. If your feelings are strong enough that if you take the oath and you are going to follow your oath and it is not going to do damage to your own conscience and your own soul and if you are convinced beyond a reasonable doubt both of those questions should be yes knowing full well if you answer them yes that I am going to assess the death penalty, then you could do that?
"THE VENIREMAN: If I took the oath, yes, sir, I would have to answer honestly.
"THE COURT: The next question: would you take the oath?
"THE VENIREMAN: No, then I would have to put myself in a situation."
In Wainwright v. Witt, 469 U.S. 412, 105 S. Ct. 844, 83 L. Ed. 2d 841 (1985), the Court wrote:
"The standard [for constitutionally permissible exclusion for cause] is whether the juror's views would `prevent or substantially impair the performance of his duties as a juror in accordance with his instructions and his oath.' [quoting Adams v. Texas, supra]. We note that in addition to dispensing with Witherspoon's reference to `automatic' decisionmaking, this standard likewise does not require that a juror's bias be proved with `unmistakable clarity.' This is because determinations of juror bias cannot be reduced to question-and-answer sessions which obtain results in the manner of a catechism. What common sense should have realized experience *44 has proved: many veniremen simply cannot be asked enough questions to reach the point where their bias has been made `unmistakably clear'; these veniremen may not know how they will react when faced with imposing the death sentence, or may be unable to articulate, or may wish to hide their true feelings. Despite this lack of clarity in the printed record, however, there will be situations where the trial judge is left with the definite impression that a prospective juror would be unable to faithfully and impartially apply the law. For reasons that will be developed more fully infra, this is why deference must be paid to the trial judge who sees and hears the juror."
See also, Lockhart v. McCree, ___ U.S. ____, 106 S. Ct. 1758, 90 L. Ed. 2d 137, ___ Cr.L. ____ (May 5, 1986) ("It is important to remember that not all who oppose the death penalty are subject to removal for cause in capital cases; those who firmly believe that the death penalty is unjust may nevertheless serve as jurors in capital cases so long as they state clearly that they are willing to temporarily set aside their own beliefs in deference to the rule of law." [our emphasis].)
We find that the record supports the conclusion that the venireman's views "would prevent or substantially impair the performance of his duties as a juror in accordance with his instructions and his oath.":
"If the juror is to obey his oath and follow the law of Texas, he must be willing not only to accept that in certain circumstances death is an acceptable penalty but also to answer the statutory questions without conscious distortion or bias. The State does not violate the Witherspoon doctrine when it excludes prospective jurors who are unable or unwilling to address the penalty questions with this degree of impartiality." Adams v. Texas, supra.
The venireman in the instant case stated unequivocally that he would not take the oath of a juror. He was unwilling to address the penalty questions at all. He was unwilling even to undertake the duties of a juror. His views would prevent the performance of his duties as a juror in accordance with his oath because he would not take the oath. See Adams v. Texas, supra; Wainwright v. Witt, supra; Lockett v. Ohio, 438 U.S. 586, 98 S. Ct. 2954, 57 L. Ed. 2d 973 (1978). The venireman was unwilling to set aside his own beliefs in deference to the rule of law. See Lockhart v. McCree, supra. The trial court's exclusion of this venireman did not violate Witherspoon or Adams. The third ground of error is overruled.
In his second ground of error, appellant contends that the trial court excluded prospective juror Holstead in violation of Witherspoon v. Illinois, supra, and Adams v. Texas, supra. We set out the pertinent portions of the voir dire, as follows:
"A. First let me ask you this.
"Q. [Prosecutor] Okay.
"A. Say I'm selected.
"Q. All right.
"A. What happens if I refuse to take this oath?[3]
"Q. Well, nobody can make you take the oath. I'm not saying you would go to jail or anything like that.
"A. I don't know; I'm not a lawyer.
"Q. You're talking about the consequences of not taking the oath. The only consequences are if you take an oath and don't follow your oath; you see what I'm saying? Nobody can force you to take an oath that you cannot, in your mind, carry out ... Would you take the oath, an oath to render a true verdict, according to the law and the evidence, or would you refuse to take the oath because you would be asked to participate in a system that might result in the death penalty being assessed?
"A. I would refuse to take the oath.
"Q. [Defense counsel] earlier asked you nearly the same question. Are you *45 withdrawing the answer you had at that point?
"A. I'm getting confused. What I'm saying is: If I were to take an oath, then, under those conditions, I would feel a moral duty to perform under that oath.
"Q. But given the choice
"A. But given the choice, I would not want to.
"Q. You would not want to or you would not do it, given the choice?
"A. I would not."
For the reasons discussed in the previous ground of error, the second ground of error is overruled.
In his fourth ground of error, appellant contends that the indictment is fundamentally defective because it fails to allege properly all of the elements of capital murder, Sec. 19.03(a)(2), supra. The indictment charges that appellant
"intentionally, while in the course of committing and attempting to commit Burglary of a Habitation owned by Bertie Elizabeth Eakins and located at 2210 18th Street, Apartment 19, Houston, Harris County, Texas, caused the death of Bertie Elizabeth Eakins by asphyxiating the Complainant in a manner and means unknown to the Grand Jury."
Appellant reads the indictment to allege that appellant intentionally caused the death of the victim while in the course of committing or attempting to commit burglary. Appellant goes on to point out that one of the elements of capital murder as defined in Sec. 19.03(a)(2) is that the actor intentionally commit the murder (as defined under Sec. 19.02(a)(1)) while in the course of committing an aggravating offense. Appellant contends that capital murder requires an intentional commission of murder, and murder in turn requires a culpable mental state. Thus, appellant concludes, the indictment is fundamentally defective in that it fails to allege a culpable mental state for the 19.02(a)(2) murder.
We find the contention to be without merit. Appellant would have the indictment read "intentionally knowingly and intentionally caused the death." Capital murder under Sec. 19.03(a)(2) proscribes an intentional killing in the course of an aggravating offense. The indictment alleges an intentional killing in the course of an aggravating offense. Appellant's fourth ground of error is overruled.
In his sixth ground of error appellant contends that the trial court erred in refusing to give appellant's specially requested charge in the trial court's instructions to the jury at the punishment phase of the trial.
The record reflects the following exchange:
"[Defense counsel]: Your Honor, we would make a specific request of this Court that the second paragraph which reads as follows, `If there is any Special Issue on which the vote of the jurors is unanimously qoute [sic] yes or no at least ten in favor of an answer of no, then there shall be no answer for that Special Issue and the foreman should not sign his name to any answer form for that Special Issue.' We would request at this time that paragraph be included in the charge as the Court has proposed.
"The Court: Well, that request will be denied."
Art. 37.071(c), (d) and (e), V.A.C.C.P. provides as follows:
"(c) The State must prove each issue submitted beyond a reasonable doubt, and the jury shall return a special verdict of `yes' or `no' on each issue submitted.
"(d) The court shall charge the jury that:
(1) it may not answer any issue `yes' unless it agrees unanimously; and
(2) it may not answer any issue `no' unless 10 or more jurors agree.
(e) If the jury returns an affirmative finding on each issue submitted under this article, the court shall sentence the defendant to death. If the jury returns a negative finding on or is unable to answer any issue submitted under this article, the court shall sentence the defendant to confinement in the Texas Department of Corrections *46 for life. The court, the attorney for the state, or the attorney for the defendant may not inform a juror or a prospective juror of the effect of failure of the jury to agree on an issue submitted under this article."
The trial court charged the jury as follows:
"The burden of proof in this phase of the trial still rests upon the State and never shifts to the defendant. Each Special Issue submitted must be proved by the State beyond a reasonable doubt; therefore, before any issue may be answered `Yes,' all jurors must be convinced by the evidence beyond a reasonable doubt that the answer to such issue should be `Yes.' If the jury unanimously determines (and only if such determination is unanimous) that the State has proved an issue beyond a reasonable doubt, then the Foreman will so record the Jury's answer to such issue by signing his name to the finding reflecting such answer on the form provided for that purpose.
"You are further instructed that if any juror, after considering the evidence and these instructions, has a reasonable doubt as to whether the answer to a Special Issue should be answered `Yes,' then such juror should vote `No' to that Special Issue in the jury's deliberations.
"If ten (10) jurors or more vote `no' to any special issue, then the answer of the jury shall be `No' to that issue, and the foreman will so record the jury's answer by signing his name to the finding reflecting such answer on the form provided for that purpose."
We find that the trial court's instruction complied with the requirements of Article 37.071, supra. There was no error in denying the special requested charge. The sixth ground of error is overruled.
In his fifth ground of error, appellant complains of the following argument by the prosecutor at the punishment phase:
"And he leaves San Antonio and he comes back to Houston. Within two weeks he is in Houston. January 12, 1983, I wrote it up on the board. And what is he doinghe is pulling a gun again. He is breaking into an apartment or coming out of the apartment when Ollie spots him and Ollie says what are you doing. He pulls the gun, `Hey, what are you doing m___ f___.' And points a gun at Ollie and he turns around and goes. He doesn't want to get shot and it's a good thing because he didn't know this man.
He didn't know what this man was capable, maybe this defendant didn't know what he was capable of and what does he do the same day, January 12, 1938 [sic] at the same apartments complex? Well, he is wiping out the Ashley Battles' family.
Ashley Battles and Maude Battles coming down from Michigan and bring everything with hopes of a new future, qualified for security work, have all the equipment having to get a job and go to a job interview and find out they have been wiped out and can't work at the jobs they have chosen. They have been wiped out.
"[Defense counsel]: Object to this line of argument. There is no testimony at all that Mr. Ellis was involved in the burglary of Mr. Battles, Ashley Battles' apartment.
"The Court: That's argument. Overruled. The jury has heard the testimony."
Appellant argues that the State had not proven that he committed the burglary of the Battles' apartment, and that the State was therefore precluded from inviting the jury to consider the burglary as one of appellant's prior unadjudicated offenses.
At the punishment phase, a witness testified that he lived at the Fondren Place Apartment on January 12, 1983. At one point in the morning hours, the witness heard loud knocks on the door of the Gatlins' apartment below his. When he went downstairs to investigate, he saw appellant "going in the window [of the apartment]. He was already proceeding in the window.... The window was up and the guy had one leg in the window and one leg out of the window." When the witness spoke to appellant to ask what he was doing, *47 appellant turned and looked at the witness. The witness testified that he saw a screwdriver in appellant's right hand, and a black revolver in his left. Appellant said to the witness, "Hey, you hold it, m____ f____." The witness turned and left to summon a security guard. When the guard and the witness returned to the scene, appellant had left. The owner of the apartment testified that when he returned to his apartment that day, he discovered that the bedroom window "was broken and looked like it was raised up or something." The owner testified that his wedding band, some watches, and two cameras were taken from his apartment that day, and that he had not given appellant permission to enter the apartment or take the property.
Ashley Battles testified that on January 12, 1983, he and his wife lived at the Fondren Place Apartments. They had come to Houston from Michigan seeking work as security guards and brought with them "All my security equipment, handcuffs, uniforms, night sticks and my gun belt, whatever." Battles testified that on that morning he and his wife "had an appointment for a job" and were gone from the apartment "a good couple of hours or more." When Battles returned to his apartment, he noticed that "We had been broke in to." Battles was asked if he was able to determine how the burglar had entered the apartment. He testified as follows:
"A. Through the kitchen window.
"Q. And how was that done?
"A. Well, some small implement. He tried to force my patio doors but I had a bolt in the bottom and that was jimmied with some kind of a tool. He couldn't gain entry there so he went to the kitchen window and below a little lock there and put something up and pop and
"Q. Were you able to determine what kind of property was stolen?
"A. Yes. TV's, two sets of, night stick, two sets of cuffs, my wife's weapon, jewelry, some of my tools, suitcases and I had a policer [sic] camera from Detroit which didn't work and she had a small 23 CB and that was also taken.
"Q. Pretty much wiped out?
"A. Yes."
Mrs. Eakin, the murder victim, had been found with her hands handcuffed behind her back. The handcuffs had been marked as State's Exhibit 60, and had been admitted into evidence at guilt-innocence. Battles testified concerning the handcuffs as follows:
"Q. Mr. Battles, I want to show you what has been marked as State's Exhibit 60, been admitted into evidence and ask if you can identify these. Have you ever seen these before?
"A. Yes. They are mine.
"Q. How can you tell those are your handcuffs?
"A. My Social Security number is on the back of them.
"Q. How long has that Social Security number been on the handcuffs?
"A. Ever since up in Detroit about maybe in '70, '65. Both pair were marked."
Appellant argues:
"This Court has held that the prosecutor may not ask the jury to consider prior offenses which have not been properly proven. See, Brown v. State, 530 S.W.2d 118, 119-120 (Tex.Cr.App.1975)."
Brown is altogether inapposite here. Brown was reversed because the prosecutor specifically asked the jury to punish the defendant for two additional crimes not then being tried.
In the instant case, the prosecutor's argument that appellant had burglarized the Battles' apartment was a reasonable deduction from the evidence. Ground of error number five is overruled.
The judgment of the trial court is affirmed.
ONION, P.J., not participating.
CLINTON, Judge, dissenting.
Appellant argues, in two grounds of error, that two prospective jurors were improperly *48 excluded from the jury in violation of Witherspoon v. Illinois, 391 U.S. 510, 88 S. Ct. 1770, 20 L. Ed. 2d 776 (1968) (hereafter Witherspoon). The majority disposes of these contentions with a series of conclusory statements after setting out the respective voir dire examinations. It is instructive, however, to examine more closely the precise procedure the majority today approves for excluding prospective jurors. In appellant's case one juror was properly excluded. The other was not.
The first of these veniremen, Kenneth Holstead, told the trial court that he did not believe in the death penalty. He told the prosecutor on direct examination that he could never answer both punishment issues "yes" knowing the death penalty would be assessed as a result. "I don't think I could take an oath that would put me in that situation."[1]
On crossexamination the venireman was asked if he could put aside his feelings and vote on the special issues according to the instructions and the law he would be given by the trial court, to which he replied, "You [sic] asking about taking an oath as a juror, I would have to." On redirect examination, however, he reverted to his earlier position, with the qualification, "No, I couldn't effectively take the oath."[2] When he was once again questioned by defense counsel Holstead was asked, "And whether or not you feel you agree with that particular law, the fact is you could follow the law of what the Judge would give you in his Charge?" and answered, "Yes."
On the last round of questioning by the State, this crucial exchange took place, after the venireman was asked once more if he could take an oath to follow the law in arriving at his verdict:
"A: [By the venireman] First let me ask you this.
Q: [By the prosecutor] Okay.
A: Say I'm selected.
Q: All right.
A: What happens if I refuse to take this oath?
Q: Well, nobody can make you take the oath. I'm not saying you would go to jail or anything like that.
A: I don't know; I'm not a lawyer.
Q: You're talking about the consequences of not taking the oath. The only consequences are if you take an oath and don't follow your oath; you see what I'm saying? Nobody can force you to take an oath that you cannot, in your mind, carry out ...
Would you take the oath, an oath to render a true verdict, according to the law and the evidence, or would you refuse to take the oath because you would be asked to participate in a system that might result in the death penalty being assessed?
A: I would refuse to take the oath.
Q: Mr. Reyes earlier asked you nearly the same question. Are you withdrawing the answer you had at that point?
A: I'm getting confused. What I'm saying is: If I were to take an oath, then, under those conditions, I would feel a moral duty to perform under that oath.
Q: But given the choice
A: But given the choice, I would not want to.
Q: You would not want to or you would not do it, given the choice?
A: I would not."
The State's challenge for cause was then granted without further questioning by either side.
"A man who opposes the death penalty, no less than one who favors it, can make the discretionary judgment entrusted to him by the State and can thus obey the oath he takes as a juror." Witherspoon, *49 391 U.S. 510, 88 S.Ct. at 1775, 20 L. Ed. 2d 776. This potential juror, however, stated more than once that he could never answer both special issues affirmatively, knowing death would be assessed, no matter what the evidence showed. Because the jury's function in the punishment phase of a capital murder trial is to answer the special issues based on the law and evidence, clearly Holstead's performance of this duty would have been impaired by his scruples against capital punishment. This belief made him properly subject to a challenge for cause under Adams v. Texas, 448 U.S. 38, 45, 100 S. Ct. 2521, 2526, 65 L. Ed. 2d 581, 589 (1980) [hereafter Adams]:
"... a juror may not be challenged for cause based on his views about capital punishment unless those views would prevent or substantially impair the performance of his duties as a juror in accordance with his instructions and his oath."
This standard was recently reaffirmed by the Supreme Court in Wainwright v. Witt, 469 U.S. 412, 424, 105 S. Ct. 844, 852, 83 L. Ed. 2d 841, 849 (1985).
However, Holstead also stated that he could follow the oath he would take as a juror, to render a true verdict based on the law and the evidence, not on the dictates of his own conscience. This equivocation in his answers seems to have arisen due to Holstead's apparent misapprehension that he would be violating the law if he said he could not take the oath. This belief left him in a dilemma: If he took the oath he would feel morally bound to follow it, but in doing so he would be violating his own belief that capital punishment is wrong. In casting about for a way out of this moral maze, Holstead asked what would happen if he did not take the oath, and discovered there would be no legal reprisal if he did not. He therefore managed to resolve his crisis of conscience by saying he would refuse to take the oath. In so doing he was in effect reasserting that he could not "effectively" take the oath; that he could not follow the law and the evidence in answering the special issues. It was clear Holstead would be "substantially impaired" in the performance of his duties as a juror. He was properly excluded for cause. Adams, supra; Witt, supra; Kelly v. State, 669 S.W.2d 720, 728 (Tex.Cr.App.1984).
Now we come to the prospective juror Kenneth Bradshaw. His voir dire examination came days after that of venireman Holstead, but in some ways the earlier voir dire provided a framework for Bradshaw's questioning, as shall be demonstrated.
Initially the venireman told the trial court, "I couldn't say that a man should die for something; no." The voir dire examination then began. The prosecutor explained what capital murder is in Texas, distinguishing it from "ordinary" murder, and also explained the two questions the jury would be required to answer during the punishment phase of the trial. When asked if he would always answer one of those questions no in order to prevent the assessment of the death penalty, the venireman said, "I believe so." The prosecutor pressed him for a yes or no answer to the question, "Are you so against the death penalty that you would always answer one of these questions no in order to prevent the death sentence from being assessed?" "Yes," said the venireman. "In every case?" "Yes."
The prosecutor, showing a commendable desire to be certain of the juror's feelings, went on to explain that, "[I]f you are qualified for a jury, you have to take an oath to follow the law..." However, "the law will not require you to take that oath if you cannot live up to the oath."
"The question I want to ask you is: Considering your feelings about the death sentence and given the choice of taking that oath or not taking the oath in a capital murder, would you refuse to take the oath?
A: Yes."
The State thereupon challenged for cause and defense counsel was allowed to question the venireman for the first time. As so often happens, the venireman began to equivocate.
Defense counsel again explained the procedure during the punishment phase of a *50 capital murder trial. After the explanation Bradshaw was asked,
"Q: If you were selected as a member of the jury, could you along with the other jurors after the State having proved to the members of the jury at the guilt or innocence phase of the trial could you thereafter be able to answer Special Issues 1 and 2 provided it is proven to you beyond a reasonable doubt?
A: Yes. I could answer them.
Q: And you understand that in order for the person to be given the death penalty the State does have the burden of proving both of these two special issues beyond a reasonable doubt...
If the State proved to you as a member of the jury, beyond a reasonable doubt that these special issues should be answered yes, could you answer this yes?
A: Yes."
A moment later, asked again if he could answer both special issues affirmatively, Bradshaw replied,
"Can I say yes? I could answer yes to both of them but I don't think, you know, he should getthey should get punished but, you know, death."
At this point it began to appear that Bradshaw might be the type of juror Adams held cannot be properly excluded from a jury: those who have scruples against the death penalty but could nevertheless follow the law in answering the punishment issues. As Adams said, citing Witherspoon, "[I]f prospective jurors are barred from jury service because of their views about capital punishment on `any broader basis' than inability to follow the law or abide by their oaths, the death sentence cannot be carried out." 448 U.S. at 48, 100 S.Ct. at 2528, 65 L.Ed.2d at 591. Bradshaw had stated that he could follow the law and abide by his oath. He remained adamant in that assertion when the trial court resumed questioning him:
"THE COURT: Well we talked to you earlier about your qualifications and if you have some feelings about something, if you can set those feelings aside and be fair and impartial, then you are qualified as far as your qualifications as far as setting your feelings aside.
What they are concerned about if you were on Question 2 and you knew if you answered Question Number 2 yes and you already answered Question Number 1 and if the State proved to you beyond a reasonable doubt that the answer to Number 2 should be yes and in your own mind you know that it should be yes they proved it to you beyond a reasonable doubt that you should answer Question Number 2 yes, however heinous the crime iswould you vote yes knowing that I am going to assess the death penalty?
THE VENIREMAN: Yes, I would. I would tell the truth. Yeah. What I thought was right. Yes.
THE COURT: So then what you said earlier about having some scruples against the death penalty are not exactly what you led us to believe they are?
THE VENIREMAN: Well, I'm not going to lie, you know. If both things are yes and that's the only choice I have and it's been proven I have to answer yes and be honest with the Court and what I know is right as far as the facts in my head, I have to answer yes.
THE COURT: So then if you took the oath, if you had a choice of taking that oath to follow the law knowing full well what you have said to us about your feelings about the death penalty, are you telling me now that you would or would not?
THE VENIREMAN: I would not take the oath.
THE COURT: You would and could take the oath?
THE VENIREMAN: I would not take the oath. Either I don't understand or you don't understand. What I am saying if I had to take the oath for some reason and I was in that situation and I saw the facts and it was true I would say yes. ButI would try to avoid taking the oath because I just can't see sentencing someone to death if the situation arose.
THE COURT: Okay. The situation will arise if you are chosen as a juror in *51 this case. You will have to vote yes or no. There is no two ways about it. And you know if you take the oath that you will a true verdict [sic] according to the law and the evidence submitted to you, that you are going to have to answer those questions one way or another. And the question they are trying to determine is if it gets down to answering those questions and you have already taken the oath now, you see what I am saying? And you have got to answer those questions one way or another and you have got some feelings against the death penalty and at one point in time you said you don't believe in the death penalty.
THE VENIREMAN: I don't but I have to tell the truth, too.
THE COURT: What you are saying
THE VENIREMAN: I'm going to follow it."
It was by this time quite clear that Bradshaw was precisely the type of venireman who could not be excluded for cause under Adams. He had stated firmly that in spite of his opposition to the death penalty he could answer both punishment issues in the affirmative if the evidence so dictated, even knowing death would be assessed as a result. The trial court continued questioning, however, after this clear assertion that Bradshaw would follow the law:
"THE COURT: No matter whether it does injury to your conscience and your soul or not?
THE VENIREMAN: If that's what I have to do because
THE COURT: You don't have to.
THE VENIREMAN: I'm not going to lie.
THE COURT: But you don't have to. If your feelings are so strongwe are trying to find out how strong your feelings really are and we are not arguing about it.
THE VENIREMAN: I understand that.
THE COURT: We need to find out how strong your feelings really are. If your feelings are strong enough that if you take the oath and you are going to follow your oath and it is not going to do damage to your own conscience and your own soul and if you are convinced beyond a reasonable doubt both of those questions should be yes knowing full well if you answer them yes that I am going to assess the death penalty, then you could do that?
THE VENIREMAN: If I took the oath, yes, sir, I would have to answer honestly.
THE COURT: The next question: would you take the oath?
THE VENIREMAN: No, then I would have to put myself in a situation.
THE COURT: Have you got any more questions?
MR. ADALPE: No, Your Honor.
MR. HAGSTETTE: Reurge the challenge, Your Honor.
THE COURT: The challenge for cause will be granted."
Thus exited this troublesome potential juror who stubbornly insisted that in spite of his opposition to the death penalty he could follow the law and the evidence and answer both special issues affirmatively if the State proved to him beyond a reasonable doubt that they should be so answered. He was excluded on the same ground Holstead had been, because he stated he would not take the oath. The crucial distinction between Bradshaw and the earlier venireman, however, is that he did not himself decide he would not take the oath; the idea was thrust on him. Even after he had been informed that "the law will not require you to take that oath if you cannot live up to that oath," he had said time and again that he could live up to the oath. It was only after suggestive remarks from the trial court ("... if you had a choice of taking that oath ..."; "You don't have to") that Bradshaw firmly stated he "would" not take the oath, because that would mean "I would have to put myself in a situation." The situation he would be in would be an uncomfortable one, no doubt serving in a case which might result in a death penalty. That would certainly have made this venireman uneasy.
*52 "But neither nervousness, emotional involvement, nor inability to deny or confirm any effect whatsoever is equivalent to an unwillingness or an inability on the part of the jurors to follow the court's instructions and obey their oaths, regardless of their feelings about the death penalty. The grounds for excluding these jurors were consequently insufficient under the Sixth and Fourteenth Amendments."
Adams, 448 U.S. at 50, 100 S.Ct. at 2529, 65 L.Ed.2d at 592-593.
The State refers us to Lockett v. Ohio, 438 U.S. 586, 98 S. Ct. 2954, 57 L. Ed. 2d 973 (1978), in which the Supreme Court held that four potential jurors had been properly excluded after "Each of the four specifically stated twice that he or she would not `take the oath.'" That sentence must be read in context. It came only after the trial court asked
"whether any of the prospective jurors were so opposed to capital punishment that `they could not sit, listen to the evidence, listen to the law, [and] make their determination solely upon the evidence and the law without considering the fact that capital punishment' might be imposed. Four of the venire responded affirmatively. The trial judge then addressed the following question to those four veniremen:
`[D]o you feel that you could take an oath to well and truely [sic] try this case... and follow the law, or is your conviction so strong that you cannot take an oath, knowing that a possibility exists in regard to capital punishment?'"
Lockett, supra, 438 U.S. at 595-596, 98 S.Ct. at 2960, 57 L.Ed.2d at 984.
In Lockett the four veniremen "would" not take the oath because they "could" not follow it. Bradshaw in the instant case had clearly stated he could.
If trial courts and prosecutors are allowed to exclude potential jurors in this fashion there will be no need for elaborate questioning designed to discover whether a venireman's feelings about the death penalty would impair his performance. Instead anyone who evinces the slightest discomfort at serving in a death penalty case could be excused after a simple ritual such as this:
TRIAL COURT: Could you follow the law and the evidence in arriving at your verdict, in spite of your qualms about the death penalty?
VENIREMAN: Yes.
TRIAL COURT: But you don't have to.
VENIREMAN: Then I won't.
Of course anyone at all uncomfortable at the thought of answering questions knowing a death sentence could result would choose to escape such service. But by pointing out this escape hatch to such veniremen and then excluding them for cause the trial court will inevitably produce what Witherspoon condemned as "a jury uncommonly willing to condemn a man to die." Adams, 448 U.S. at 44, 100 S.Ct. at 2526, 65 L.Ed.2d at 588. In the words of Adams,
"... to exclude all jurors who would be in the slightest way affected by the prospect of the death penalty or by their views about such a penalty would be to deprive the defendant of the impartial jury to which he or she is entitled under the law."
Adams, 448 U.S. at 50, 100 S.Ct. at 2529, 65 L.Ed.2d at 593. Making clear to such jurors an easy way to exclude themselves produces the same effect. All those with qualms about the death penalty would opt out of jury service and the defendant would be left with a jury composed solely of those who were perfectly at ease with assessing a sentence of death. Such a jury could hardly be called impartial. It is instead "a tribunal organized to return a verdict of death." Witherspoon, 391 U.S. at 521-522, 88 S.Ct. at 1776, 20 L.Ed.2d at 784.
The exclusion of venireman Bradshaw came after five weeks of voir dire examination in which more than a hundred veniremen had already been examined. I sympathize with the trial court's seizing on what appeared to be a formula, one magic question to decide whether the venireman was properly excluded for cause: "Would you *53 take the oath?" A death sentence may not be imposed where even one juror has been improperly excluded, however. Davis v. Georgia, 429 U.S. 122, 97 S. Ct. 399, 50 L. Ed. 2d 339 (1976). This formula used by the trial court was too easy. The prosecutor and trial court, perhaps taking a cue from the earlier venireman, told this prospective juror from the beginning that he could escape this discomfiting duty by simply refusing to take the oath. That is not the law. The only reason for a juror to refuse to take the oath is if he cannot follow it. Bradshaw could. His exclusion from the jury was therefore improper.
A defendant in a capital case as in all others is entitled to an impartial jury. The method used to exclude Bradshaw in this case would produce instead a jury stripped of all those who might hesitate to impose a death sentence. We should not be willing to live with such a system, nor to let some die by it.
To the majority's unconstitutional disposal of appellant's third ground of error, I respectfully dissent.
TEAGUE and MILLER, JJ., join.
ONION, P.J., not participating.
NOTES
[1] A treatment of this ground of error prepared by Judge Clinton is adopted.
[2] The oath referred to at this point and thereafter in the voir dire is that of Art. 35.22, V.A.C. C.P.: "You and each of you do solemnly swear that in the case of the State of Texas against the defendant, you will a true verdict render according to the law and the evidence, so help you God."
[3] The oath of Art. 35.22, supra.
[1] The oath referred to throughout this opinion is found in Article 35.22, V.A.C.C.P.:
"When the jury has been selected, the following oath shall be administered to them by the court or under its direction: `You and each of you do solemnly swear that in the case of the State of Texas against the defendant, you will a true verdict render according to the law and the evidence, so help you God.'"
[2] All emphasis is supplied throughout by the writer of this opinion unless otherwise indicated. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1517093/ | 905 S.W.2d 423 (1995)
Jean VENTURA, Billie Green, Margaret Davis, Jack Martin, Anice Martin, Jean Lavota, and John Lavota, Sr., Relators,
v.
The Honorable J. Manuel BANALES, Judge, 105th Judicial District Court, Nueces County, Texas, Respondent.
No. 13-95-224-CV.
Court of Appeals of Texas, Corpus Christi.
August 17, 1995.
Rehearing Overruled September 7, 1995.
*424 Gilberto Hinojosa, Magallanes, Sokat & Hinojosa, Brownsville, James H. Robichaux, Matthews & Branscomb, Corpus Christi, Andrew C. Schirrmeister, III, Zummo & Schirrmeister, Houston, for Intervenor.
Robert D. Kizer, Corpus Christi, for Relators.
J. Manuel Banales, Corpus Christi, for Respondent.
Before SEERDEN, C.J., and DORSEY and HINOJOSA, JJ.
OPINION
SEERDEN, Chief Justice.
In this mandamus proceeding, relators, Jean Ventura and other representative members of a class of plaintiffs, contend that the trial court abused its discretion in failing to dismiss their lawsuit against Valero Refining Company, the real party in interest. We conditionally grant a writ of mandamus.
In June 1994, the relators filed a class action lawsuit against Valero for injuries to a class of surrounding residents who were allegedly exposed to toxic fumes released by Valero. Valero answered the lawsuit and discovery proceeded, but the trial court never heard or determined the question of class certification under Texas Rule of Civil Procedure 42(c), before the relators filed their motion for nonsuit on all claims against Valero on May 18, 1995. On May 22, 1995, Valero filed a counterclaim against the relators for declaratory judgment. The trial court denied relators' motion for nonsuit. Relators bring this mandamus to force the trial court to dismiss their lawsuit in accordance with their motion for nonsuit.
If the underlying lawsuit had not been filed as a class action, relators would clearly have been entitled to nonsuit, and would further be entitled to mandamus relief from this Court. In Texas, the plaintiff has an absolute right to take a nonsuit at any time before he has introduced all of his evidence. Hooks v. Fourth Court of Appeals, 808 S.W.2d 56, 59 (Tex.1991); Rosenthal v. Ottis, 865 S.W.2d 525, 527 (Tex.App.Corpus Christi 1993, orig. proceeding); Tex. R.Civ.P. 162. A plaintiff's right to dismiss his suit exists from the moment a written motion is filed or an oral motion is made in open court, unless the defendant has, prior to that time, filed pleadings seeking affirmative relief. Greenberg v. Brookshire, 640 S.W.2d *425 870, 872 (Tex.1982); Rosenthal, 865 S.W.2d at 527. Moreover, in the absence of a claim by a defendant for affirmative relief, a trial judge's refusal to grant the nonsuit violates a ministerial duty and may be corrected by mandamus. Hooks, 808 S.W.2d at 59; Greenberg, 640 S.W.2d at 871.
However, Texas Rule of Civil Procedure 42, which governs class actions, specifies an exception to the general rule as follows:
A class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs.
Tex.R.Civ.P. 42(e). If this provision applies to the present lawsuit, the trial court has discretion to examine the nonsuit and to provide for proper notice to potential class members before approving dismissal of the lawsuit, in order to protect the interests of those class members. See Bloyed v. General Motors Corp., 881 S.W.2d 422 (Tex.App.Texarkana 1994, writ granted).
The primary issue before us is whether Rule 42(e) gives the trial court any discretion to refuse to dismiss a lawsuit brought as a class action before that lawsuit is certified as such under Texas Rule of Civil Procedure 42(c).[1]
There are no Texas cases which directly address this question. However, Valero contends that we may look to federal decisions for guidance in this area of the law, since Texas Rule 42 is generally patterned after Federal Rule of Civil Procedure 23. Specifically, Texas Rule 42(e) is identical to Federal Rule 23(e) concerning the requirement for approval of the trial court and notice before a class action may be dismissed or compromised. Because the Texas rule is patterned after its federal counterpart, federal decisions interpreting class action procedures provide authoritative guidance for the Texas courts. Bloyed, 881 S.W.2d at 428 n. 5; Grant v. Austin Bridge Const. Co., 725 S.W.2d 366, 370 (Tex.App.Houston [14th Dist.] 1987, no writ); RSR Corp. v. Hayes, 673 S.W.2d 928, 931-32 (Tex.App.Dallas 1984, writ dism'd).
The federal courts have interpreted Federal Rule 23(e) to apply to a class action during the interim between filing and certification. Accordingly, even before the class action is certified, Federal Rule 23(e) protects the interests of those absent class members who gained knowledge of the filing of the lawsuit and may be prejudiced by the running of the statute of limitations[2] if they are not timely notified of the voluntary dismissal of that action. See Diaz v. Trust Territory of the Pacific Islands, 876 F.2d 1401, 1408 (9th Cir.1989); Magana v. Platzer Shipyard, Inc., 74 F.R.D. 61, 66 (S.D.Tex.1977); Newberg on Class Actions § 8.19 (3rd Ed.1992). The trial court has an affirmative duty to make appropriate inquiry concerning the terms and circumstances of any dismissal or compromise in order to protect the absent class members from any prejudice to their interests. Diaz, 876 F.2d at 1408. Specifically with regard to voluntary dismissal by the class representatives, the likelihood of prejudice, resulting from reliance on the filing of the class action, compounded by the impending expiration of the statute of limitations at the time the class allegations are dismissed, generally requires appropriate notice to the class members. Diaz, 876 F.2d at 1409-10.
*426 However, although the Texas and Federal rules regarding class actions may be virtually identical, we are also concerned here with the rules regarding the voluntary dismissal of actions generally. The Texas and Federal rules regarding voluntary dismissal are very different.
Federal Rule of Civil Procedure 41(a) governs the plaintiff's right to voluntarily dismiss a lawsuit in federal court. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 394-95, 110 S. Ct. 2447, 2455, 110 L. Ed. 2d 359 (1990).
Rule 41(a)(1) provides for voluntary dismissal by the plaintiff merely by filing notice thereof under the following conditions:
Subject to the provisions of Rule 23(e), of Rule 66, and of any statute of the United States, an action may be dismissed by the plaintiff without order of court (i) by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment....
The federal court has no discretion to deny plaintiff's right to dismiss under a timelyfiled Rule 41(a)(1) notice of dismissal. The filing of such notice itself effectively terminates the case. Williams v. Ezell, 531 F.2d 1261, 1264 (5th Cir.1976); American Cyanamid Co. v. McGhee, 317 F.2d 295, 297 (5th Cir.1963).
However, after answer or motion for summary judgment, Rule 41(a)(2) provides generally for the plaintiff's voluntary dismissal only "upon order of the court and upon such terms and conditions as the court deems proper." The federal court's denial of a Rule 41(a)(2) motion for voluntary dismissal is reviewed based on abuse of discretion, and the trial court should deny such a motion if granting it would cause the defendant to suffer some cognizable prejudice greater than the mere prospect of a second lawsuit. Davis v. Huskipower Outdoor Equipment Corp., 936 F.2d 193, 199 (5th Cir.1991); see also McGhee, 317 F.2d at 298.
Accordingly, the Federal Rule generally requires court approval before the plaintiff may dismiss all but the most recently filed lawsuits and extends the power of the federal trial court over such dismissals to a much greater extent than the Texas Rule which liberally allows for voluntary dismissal by notice at any time before trial.
Parallels may be drawn between Federal Rule 41(a) concerning voluntary dismissals generally, and Federal Rule 23(e) with regard to class action dismissal specifically. The federal requirement for court approval of voluntary dismissals which may implicate the rights of potential class members even before the underlying class action is certified appears to be nothing more than an extension of the general federal approach which requires court approval of all such voluntary dismissals, the only difference being that the trial court is here charged with protecting not only the rights of adverse parties, but also the rights of the potential class members.
However, because the Texas Rule generally allows the plaintiff much greater latitude to dismiss or nonsuit at any time without the trial court's approval, we do not feel compelled to follow federal authority which would graft onto Texas Rules 162 and 42(e) an additional requirement for trial court examination and approval of a voluntary dismissal even before the class is certified. The mere possibility that some potential class members may carelessly rely on the continuation of the lawsuit to their detriment is an insufficient justification to interfere with the well-settled right of a Texas plaintiff to nonsuit his case at any time that he chooses before trial.
We hold that Texas Rule 42(e) does not abrogate the general principle set out in Rule 162 that the plaintiffs have an absolute right to nonsuit their pre-certification class action. The trial court is then required to fulfill its ministerial duty of entering an order of dismissal. In the present case, the trial court abused its discretion in denying relators' right to voluntary dismissal.
Accordingly, we conditionally grant a writ of mandamus ordering the trial court to vacate its order denying the motion for nonsuit, and to enter an order of dismissal. The present writ of mandamus will not issue unless the trial court fails to comply with the opinion of this Court.
NOTES
[1] Rule 42(c) provides for the initial hearing and determination by the trial court whether a lawsuit brought as a class action may be maintained as such, after which notice must be given to the members of the class.
[2] The United States Supreme Court has held that the filing of a class action suspends the applicable statute of limitations as to all asserted members of the class. Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 354, 103 S. Ct. 2392, 2397-98, 76 L. Ed. 2d 628 (1983); American Pipe & Construction Co. v. Utah, 414 U.S. 538, 554, 94 S. Ct. 756, 766-67, 38 L. Ed. 2d 713 (1974); see also Diaz v. Trust Territory of the Pacific Islands, 876 F.2d 1401, 1407 (9th Cir.1989). Texas likewise suspends the applicable statute of limitations as to all purported members of the class upon the filing of the class action, such that any time remaining on the statute of limitations of the class members' individual causes of action on the date of the filing of the lawsuit is restored and begins to run again on the date the class action is dismissed. See Grant v. Austin Bridge Const. Co., 725 S.W.2d 366, 370 (Tex.App. Houston [14th Dist.] 1987, no writ). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1542916/ | 46 S.W.3d 350 (2001)
Fredrick John HURRELBRINK, Appellant,
v.
The STATE of Texas, Appellee.
No. 07-99-0376-CR.
Court of Appeals of Texas, Amarillo.
April 4, 2001.
*351 Sara F. Moore, Attorney at Law, Lubbock, for appellant.
William Sowder, Criminal District Atty. (Wade Jackson, Assistant D.A.), Lubbock, for appellee.
Before BOYD, C.J., and QUINN and REAVIS, JJ.
BOYD, Chief Justice.
Appellant Fredrick John Hurrelbrink challenges his conviction of murder and the court-assessed punishment of 99 years confinement in the Institutional Division of the Department of Criminal Justice. In one issue, he alleges that the trial court erred in allowing expert evidence regarding footprint comparison and analysis. Disagreeing that reversal is required, we affirm the judgment of the trial court.
The victim, Curtis Drake, was found dead in his home on July 7, 1991, from stab wounds. He also suffered blunt force wounds from a pipe. The victim had been engaged in a custody dispute with his former wife, Barbara Drake, who was having a sexual relationship with appellant. A small curved knife found at the scene of the crime was identified as similar to one *352 owned by appellant, and appellant had been heard to say that if Curtis gave Barbara "a hard time or messed with her," appellant would kill him. Appellant also told Barbara to tell her grown daughter that he had killed Curtis, allegedly for the purpose of scaring her. Additionally, a witness described a man seen running away from the crime scene as wearing clothes similar to some later taken from appellant's home, and he also picked appellant out of a lineup as similar in appearance to the person he saw fleeing the scene. However, there was no eyewitness identification made of appellant at trial.
A bloody sock footprint was found at the crime scene which the State purported to tie to appellant through the testimony of two anthropologists as to footprint comparison and analysis. Appellant contends that the testimony of those two anthropologists should not have been permitted at trial because that testimony failed to meet the admissibility requirements of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993) and Kelly v. State, 824 S.W.2d 568 (Tex.Crim.App.1992). Appellant posits that the testimony was not grounded in a valid underlying scientific theory, there was no consistent technique used in applying the theory, and there was no proof that the technique was properly applied by the experts who testified at trial. He further argues that this was the only evidence to tie him to the offense and, because the State's case would have failed without it, the admission of that testimony constitutes reversible error.
Rule 702 of the Rules of Evidence provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise.
This rule requires scientific evidence to be reliable and relevant. Daubert, 509 U.S. at 589, 113 S. Ct. 2786. To be reliable, three criteria must be met: (1) the underlying scientific theory must be valid; (2) the technique applying the theory must be valid; and (3) the technique must have been properly applied on the occasion in question. All three criteria must be proven to the trial court outside the presence of the jury before the evidence is admitted. Kelly, 824 S.W.2d at 573. Factors that could affect a trial court's determination of reliability include, but are not limited to, the following: (1) the extent to which the underlying scientific theory and technique are accepted as valid by the relevant scientific community, if such a community can be ascertained; (2) the qualifications of the expert testifying; (3) the existence of literature supporting or rejecting the underlying scientific theory and technique; (4) the potential rate of error of the technique; (5) the availability of other experts to test and evaluate the technique; (6) the clarity with which the underlying scientific theory and technique can be explained to the court; and (7) the experience and skill of the person who applied the technique on the occasion in question. Id.
The burden is on the proponent of the expert testimony to prove by clear and convincing evidence that the testimony is trustworthy. Id. Furthermore, we review the trial court's decision under an abuse of discretion standard, which means the decision must be within the zone of reasonable disagreement in light of the evidence offered at the hearing and the requirements of Rule 702. Id. at 574.
The State sought to admit expert testimony to the effect that the footprint *353 found at the crime scene matched the footprint of appellant. Three experts testified at the hearing on the admissibility of the testimonytwo on behalf of the State and one on behalf of appellant. The first witness was Dr. Harrell Gill-King, who is the director of the Laboratory of Human Identification and Forensic Anthropology at the University of North Texas. He has a doctorate in physical anthropology from the Institute for Earth and Man at Southern Methodist University, and post-doctorate training in forensic pathology and osteology from the Southwestern Institute for Forensic Sciences, as well as 19 years experience in the analysis of identification and cause of death. He testified that the human footprint leaves a unique impression when it is placed on something capable of bearing an impression, which is why footprints are placed on birth certificates. Footprint comparisons based on scientific principles, such as principles of anatomy and biomechanics, are widely recognized by other experts in forensic pathology.
As relevant to this case, Dr. Gill-King received a piece of butcher paper with a foot impression and a photograph of a material, which appeared to be concrete, with a bloody footprint on it. He concluded that they probably belonged to the same person. However, because the footprint was partial and his experience was limited to complete footprints, he referred the case to Dr. Sonek, with whom he is familiar and has heard give presentations with respect to footprint comparisons. He recognizes Dr. Sonek as an expert in this particular specialty and stated that Dr. Sonek is recognized as being credible in this particular field.
On cross-examination, Dr. Gill-King stated that once a person holds a doctorate in physical anthropology and has focused their specialization in forensic anthropology, there is no other certification available. He also opined that he would prefer to have the original foot impression as opposed to a photograph. He is aware of the techniques and procedures to accomplish footprint analysis through his knowledge of the literature on the subject. Dr. Gill-King is only personally familiar with three or four persons who perform footprint analysis, one of whom is Dr. Sonek. He described the techniques as follows:
If we are given a complete foot impression, an unsheathed foot, no socks, no shoes, just a foot, longitudinal measurements are made. Assessment of the heights of arches are made. If dramatic lithic lines are present, they are also assessed. Photography is done.
Scaling techniques involving length to width ratios, measurements from point to point, from the ball of the foot to the outside of the foot, any anatomical uniquenesses, which are especially important, which would include defects in the bottom of the foot that might leave their own unique impressions, that is to say scars from punctures, prosthetics, any unique abnormalities, such as hammer toes, valise, valgus, other anomalies involving the foot are all noted.
He then described that he "would proceed with point by point comparisons between the two feet to determine whether, in the overall features of size, they were comparable at every step" in an attempt to rule out an individual.
Dr. Alexander Sonek testified that he is a professor of anthropology at San Diego State University and has a doctorate in anthropology from the University of Oregon. He is also a consultant in forensic anthropology for the coroner's office in Los Angeles County and San Bernadino County. Although he has never testified in court as an expert in the field of footprint comparison, he stated he is recognized as an expert in the field by his peers *354 and colleagues. He has participated about 20 times in police investigations involving footprint comparisons, and he has also given presentations to law enforcement agencies and professional groups.
He opined that it is possible to compare footprints from a known source to an unknown source and make an evaluation as to whether they came from the same source. He looks for a total morphological pattern, i.e., not one discrete feature but a number of characteristics that together form a pattern that indicates uniqueness. He described the underlying scientific principle as each individual having a unique footprint based upon heredity and other factors that influence the configuration of the foot through life. In making his comparisons, he initially looks at the prints, lays transparent paper over the footprints, and tries to obtain outlines to superimpose upon each other to see degrees of similarities or differences and to obtain measurements. Then he tries to rule out any variation that may have been produced by the subject throwing weight to one side or the use of standing footprints and weighting footprints. He uses the shapes of the pads, the presence of the spaces between the toes, and the existence of a toe stem in his determination. Some literature on footprint comparisons was introduced into evidence, and Dr. Sonek explained some of these features with illustrations from those articles.
He received from Dr. Gill-King some photographs of footprints taken from the alleged suspect, photographs of some footprints made in blood, a sock that had been inked and used to have the suspect walk on paper, and elongated pieces of butcher paper showing forward and backward gait. Although he would prefer to have the original material in which the impression was made, in this instance he was able to work with the photographs and draw some conclusions. There are other experts that perform the same work he does and the idea of being able to track a person by use of a footprint has been going on for a long time.
On cross-examination, he stated that he has never been published on the topic of only footprint analysis, although he does have a publication that includes that topic. He has collected 300 footprints from 150 people which he evaluated himself; however, no one checked those results. Nevertheless, he believes his work has been "checked" when he has given presentations, especially at the American Academy of Forensic Sciences. When asked if he consults with others in his field regarding footprint analysis, he stated that he had a conversation with another man who gave a presentation on the uniqueness of footprints. He averred that there are unwritten guidelines used in the field. One guideline is that the study of footprint impressions is not equal to that of the study of dramatic lithic patterns in fingers. Another is that the techniques that apply to tire impression analysis can be applied to footprint impression evidence.
He averred that there is a protocol he uses, which includes an examination of all the materials which, in this instance, included photographs, an inked sock, and butcher paper. He agreed that having a photograph instead of the actual impression could affect clarity and most of the footprints on the butcher paper he received could not be used due to lack of clarity. It was also apparent to him that the foot impression was not the entire foot.
On re-direct, Dr. Sonek stated that there were no other footprint impression experts in Southern California that he was aware of and there is no existing association of California footprint experts. There are other experts in the United States but they are with law enforcement agencies. *355 There are also experts in Canada with the Royal Canadian Mounted Police. He has read articles on the subject, studied them, compared them to one another, and compared their results to his own. Part of his protocol is to make transparencies so they can be overlaid from one photograph or illustration to another. In this case, he also made some slides to assist his examination. However, he did not send his work out and have other experts look at it. His opinion was that ultimately there was a match between the footprint obtained from the crime scene and the photograph submitted to him.
Upon questioning from the court, Dr. Sonek stated that no one has published an opinion to the effect that two individuals can have the same footprint and there has been an article written indicating that twins have different footprints. A study of 50 people showed that the footprints of no two people are the same. However, that is the largest study of which Dr. Sonek has knowledge. The military has conducted studies which include closer to a million people, and yet there are no published materials that have shown occurrences of the same footprint.
Dr. Gill-King was recalled and stated that the American Academy of Forensic Sciences is a professional organization that certifies people in various aspects of forensic science. However, there is no section on footprint comparison and analysis. There is a criminalist section which consists of people specializing in DNA, fingerprints, trace evidence, hair and fiber, glass, firearms, tool marks, and voice print examiners. Although he is not a member of that section, he is unaware of any written guidelines put forth by those scientists as to the protocol for footprint analysis and he believes that if they existed, he would be aware of them. He stated that the error rate can be important in the determination of reliability, but that most error rates can be challenged. Even though something is not 100 percent accurate, it can still have value in identification. The court questioned Dr. Gill-King as to whether there was any statistical base on footprints that one could use to establish that no two people have the same footprint. He responded that there is not a huge data base, but that no one has ever shown any two footprints to be identical.
Appellant then called Sergeant Robert Ben Kennedy, a crime scene analyst with the Royal Canadian Mounted Police. He is certified in fingerprint analysis and he is also qualified as a footwear analyst. He is unaware of any certification in barefoot comparison. Sergeant Kennedy has written several articles and given 15 or 16 seminars on footprint identification. All of his papers have been peer-reviewed except one. He was involved in research where 1,000 volunteer footprints were gathered to form a data base and a comparison performed as to the uniqueness of the foot. He is currently involved in research in which 10,000 feet have been used for comparisons to try to show if a bare foot can be identified back to an individual. That research is not yet finished.
Although some protocols are written, the protocol is similar to any physical evidence obtained for comparison, and those protocols cannot always be followed. He requests a walking impression to make sure the individual is not trying to change the characteristics on his feet by walking in a manner that shows the weight-bearing area to be different. The feet are also compared to the standing impressions and to sock impressions to ensure they are consistent with all the impressions the individual makes. He requests that the original impressions be furnished to him if at all possible. He also compares the impressions to a pair of shoes that a suspect *356 has worn. He opined that if Dr. Sonek's report had been sent to him, he would not make a positive identification on that type of evidence because the "clarity is not to the point where I would want it."
On cross-examination, he averred that identification based on footprints is a valid science. When he does a positive match, it means that nobody else in the world could have made this impression. He has never testified to an exact match; however, he has testified to following procedures, showing the areas that compare and any dissimilarities and explaining them. He has also testified that it is highly likely that an impression was made by a certain individual and that, from his experience and work, he would not expect anybody to duplicate that impression. However, a socked foot on a cement floor does not provide the clarity where it can be said that the impression only belongs to one person. Nevertheless, some assumptions could be made with it. On redirect, he said that if Dr. Sonek concluded it was likely or probably the same person, he would have agreed, but he does not agree with a positive identification. He considers the error rate of someone doing fingerprint analysis to be the expertise of the person doing the comparisons. The same would also be true for someone conducting footprint analysis.
The court ruled that Dr. Sonek could testify "with regard to the comparison, morphology of the prints, and to point out the similarities, and if he wishes to testify that, in his opinion, they match, we will permit that, too, but I will not permit any testimony to the extent that it has to be or is uniquely the Defendant's." The court further ruled that Dr. Gill-King could testify to the matters that he testified to at the hearing and could say that the prints look alike, but that he is not an expert and would defer to an expert. He could not opine that he concluded "beyond a reasonable doubt" the prints probably belonged to the same person.
All three experts were in agreement that footprint analysis is a valid science and could be used for purposes of identification. While there is no certification available in that particular science, there is literature and seminars are conducted supporting the science. All three experts described the technique used to make a comparison. While Sergeant Kennedy uses both walking and standing as well as barefoot and socked impressions to make an assessment and Dr. Sonek used only the materials provided to him, Sergeant Kennedy did not disagree with the result reached by Dr. Sonek, only the degree of certainty he would have attached to the identification. Nevertheless, because the trial court did not believe that sufficient research had been done to opine that no two individuals can ever have the same identical footprint, Dr. Sonek was not allowed to testify to such an opinion. Furthermore, Dr. Gill-King's testimony was to be qualified with a statement that he was not an expert in footprint analysis and would defer to an expert's opinion. We do not believe that the trial court abused its discretion in allowing this testimony.
Even if the admission of the testimony was error, it must be examined under a harmless error analysis. Rule 44.2(b) of the Texas Rules of Appellate Procedure provides: "[a]ny other error, defect, irregularity, or variance that does not affect substantial rights must be disregarded." A substantial right is affected when, after an examination of the entire record, the error had a substantial and injurious effect or influence in determining the jury's verdict. King v. State, 953 S.W.2d 266, 271 (Tex.Crim.App.1997). Appellant argues that the only evidence tying *357 him to the offense was the footprint analysis. However, there was other circumstantial evidence tying appellant to the crime, such as the similarity between the knife carried by appellant and the one found at the crime scene, the threat made by appellant toward the victim, the statement by appellant to Barbara Drake that she should tell her daughter he had killed the victim, and the description of the man seen leaving the scene of the crime, including the clothes worn by that man.
Furthermore, during his testimony at trial, Dr. Sonek testified there was "very, very close similarity between the two footprints." He also averred that he would call it a match. However, he explained that he could not make that statement with the same certainty that it could be said that fingerprints matched. Appellant cross-examined Dr. Sonek with respect to his experience, training, protocol, and the clarity and sufficiency of the documents he reviewed in an attempt to impeach his opinion, thereby giving the jury possible reason to disbelieve Dr. Sonek. Appellant also called as a witness Roger A. Smith, who worked for the Southwest Institute of Forensic Sciences, and has received training in footprint analysis. He was asked by the Lubbock Police Department to compare the two footprints and concluded that the person could never be identified or eliminated from consideration as the one having made the footprint at the crime scene. Based on this testimony and the other evidence presented at trial, as well as the limitations imposed on Dr. Sonek's and Dr. Gill-King's testimony, we believe that any error was harmless.
Finding no reversible error, we overrule appellant's issue and affirm the judgment of the trial court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1542917/ | 67 B.R. 863 (1986)
In re WALSH TRUCKING CO., INC. a New Jersey Corporation; National Retail Transportation, Inc., a New Jersey Corporation; Coastal Freight Lines, Inc., a Pennsylvania Corporation; Hempstead Delivery Co., Inc., a New York Corporation; and Francis J. Walsh, Jr., d/b/a Frank Walsh Financial Resources, Debtors.
Bankruptcy Nos. 85-03260, 85-03266, 85-03287, 85-03286 and 85-03267.
United States Bankruptcy Court, D. New Jersey.
December 9, 1986.
Schwartz, Tobia & Stanziale, P.A., Montclair, by Ben H. Becker, for trustee.
Bathgate, Wegener, Wouters & Neumann, Lakewood, by Timothy P. Neumann, for Francis J. Walsh, Jr. and Frank Walsh Financial Resources.
OPINION
WILLIAM H. GINDIN, Bankruptcy Judge.
On June 20, 1985 the individual debtor, Francis J. Walsh, Jr., d/b/a Frank Walsh Financial Resources, filed a petition pursuant to Chapter 11 of the Bankruptcy Code. On March 12, 1986 the Court authorized the appointment of a trustee for the debtor. Raymond T. Lyons, Jr. was appointed trustee and began functioning in such capacity on April 25, 1986.
A hearing was held pursuant to 11 U.S.C. § 341(a) on August 2, 1985 in the office of the United States Trustee. The hearing was continued until October 1, 1985. At that hearing the debtor testified concerning his financial affairs and the various documents which existed supporting and recording such affairs. In addition, on May 9, 1986, pursuant to the direction of this Court, a deposition of the debtor was taken pursuant to Rule 2004.
On October 6, 1986 the trustee was served with a subpoena requiring him to produce the following:
1. All bank statements and cancelled checks of Frank Walsh Financial Resources for the period from 1980 to 1985 inclusive.
2. All bank statements, cancelled checks, investment account statements and personal, federal and state income tax returns for Frank Walsh for the period from 1980 to 1985 inclusive.
The subpoena was issued in the name of the Clerk of the United States District Court on the application of the United States Attorney and countersigned by the Assistant United States Attorney. The designation on the subpoena was for testimony before the Grand Jury and the notation on the bottom of the subpoena indicated "frauds". It should also be noted that on September 23, 1986 the debtor was indicted by a Grand Jury in the Ninth Circuit for activities during the periods covered by the subpoena. The debtor has been advised that the investigation by the United *864 States Attorney's Office in New Jersey relates to possible Bankruptcy fraud.
On November 5, 1986 the trustee brought a notice of motion on short notice to compel the debtor to turn over the material requested by the United States Attorney's Office. The debtor responded to the notice of motion by urging that, by virtue of the privilege against self incrimination contained in the Fifth Amendment to the Constitution of the United States, the debtor has a privilege to refuse to turn over the material to the trustee.
The debtor argues in support of its position, firstly, that the trustee is serving only as a conduit for the transfer of information to the United States Attorney's Office. The debtor cites no law which restricts in any way the use of the subpoena in the instant case, and the Court can find no law in support of that proposition. The facts do however support the proposition, unopposed by the trustee, that the debtor has a genuine fear concerning criminal prosecution and, insofar as the law requires him to show that his concern is genuine, those facts are accepted in support of the debtor's position.
More importantly, the debtor urges that while the documents themselves are not privileged, the act of turning them over to the trustee is a testimonial act and would allow a trier of the fact to draw the inference that the mere act of turning over such documents is in itself an authentication of the documentation. The debtor urges, and there is nothing in the file to the contrary, that the documents have not yet been formally authenticated. In support of this proposition the debtor relies on United States v. Doe, 465 U.S. 605, 104 S. Ct. 1237, 79 L. Ed. 2d 552 (1984). In that case the Court made a clear distinction between the documents themselves and the act of producing the documents. Justice Powell indicated "that the contents of business records ordinarily are not privileged because they are created voluntarily and without compulsion". 465 U.S. at 608-09, 104 S.Ct. at 1239-40. He went on to hold, however, "a government subpoena compels the holder of the document to perform an act that may have testimonial aspects and an incriminating effect" 465 U.S. at 612, 104 S.Ct. at 1242. Although the result is somewhat different, Fisher v. United States, 425 U.S. 391, 96 S. Ct. 1569, 48 L. Ed. 2d 39 (1976) also clearly draws a distinction between the two acts.
The debtors claim that the privilege attaches and that they have not waived that privilege. The trustee points out that the testimony previously given at the § 341(a) hearing operated as a waiver of any Fifth Amendment privilege which the debtor may have had against the production of the documents. The debtor voluntarily gave testimony stating that he had the records referred to in the schedules and statement of affairs. These questions in the statement of affairs include questions concerning what books and records were kept. Furthermore, detailed testimony was given at both the § 341(a) hearing and the Rule 2004 examination. The case of Rogers v. United States, 340 U.S. 367, 71 S. Ct. 438, 95 L. Ed. 344 (1951) is instructive. There a secretary/treasurer of an organization acknowledged that books and records existed but refused to produce them, claiming a Fifth Amendment privilege. Then Chief Justice Vinson indicated that the free and full disclosure of a "criminating fact" requires full disclosure of the details, 340 U.S. at 374, 71 S.Ct. at 442.
In the Bankruptcy context the Court has held that "once a witness has freely testified to incriminating facts, he cannot refuse to testify as to the details". In re Candor Diamond Corp., 42 B.R. 916, 920 (Bkrtcy.S.D.N.Y.1984). While the distinction between the existence of the documents and the production of the documents as pointed out by the debtor is a valid one, the specific information produced by the debtor in the instant case is that the records involved were produced by his accountants and his accountants' staff. No assertion of the privilege in favor of such material is made and the production does no more than identify with more particularity the documents referred to in the petition *865 and schedules previously filed as well as the testimony at the § 341(a) hearing and the Rule 2004 examination.
Even more important than the distinctions set forth and the claim of waiver by the trustee is the right of the debtor to withhold the production of documents in the Bankruptcy context. The within petition is a voluntary petition.
While little has been written on the issue of turnover, a review of the question of dischargeability may be helpful. Historically, courts have made a distinction between Fifth Amendment rights and the privilege sought by a debtor to obtain a discharge from his debts. In re Dresser, 146 F. 383, 16 Am.B.R. 561 (2d Cir., 1905). Under the old Bankruptcy Act, sections 14c and 14c(6), if a bankrupt sought a discharge, he was compelled by the provisions of the act to cooperate. Kaufman v. Hurwitz, 176 F.2d 210 (4th Cir., 1949). There it was clearly held that a debtor was not entitled to plead the Fifth Amendment and still obtain a determination that he was entitled to a discharge or that a debt was not dischargeable. Matter of Harris, 221 U.S. 274, 31 S. Ct. 557, 55 L. Ed. 732 (1911) and McCarthy v. Arndstein, 266 U.S. 34, 45 S. Ct. 16, 69 L. Ed. 158 (1924).
Congress in drafting the bankruptcy code, 11 U.S.C. §§ 101 et seq., took a careful look at the issue and made specific determinations. It determined that failure to testify would prevent a discharge only after the debtor had been granted immunity. 11 U.S.C. § 727(a)(6). Under § (B) of that provision it was made clear that the discharge could only be denied if immunity had been granted under the provisions of 11 U.S.C. § 344. Immunity could be granted for the purposes of submission to examination. With respect to the discharge of particular debts, no such provision exists. As a result, it is clear that the privilege may not be used to prevent the declaration of nondischargeability as to a particular debt.
Likewise, Congress specifically dealt with the problem before the Court in the instant case. 11 U.S.C. § 521 provides for the debtor's duties:
§ 521. Debtor's duties. The debtor shall . . .
(3) if a trustee is serving in the case, cooperate with the trustee as necessary to enable the trustee to perform the trustee's duties under this title;
(4) if a trustee is serving in the case, surrender to the trustee all property of the estate and any recorded information, including books, documents, records, and papers, relating to the property of the estate, whether or not immunity is granted under § 344 of this title; (emphasis added) . . .
The legislative history makes it clear that the intention of Congress was that all material be turned over. H.R.Rep. No. 95-595, 95th Cong., 1st Sess. 176 (1977), U.S. Code Cong. & Admin.News 1978, p. 5787. Furthermore, the Bankruptcy Amendments and Federal Judgeship Act of 1984 (Pub.L. No. 98-353) added the underlined words so that no question remains but that Congress intended the debtor to turn over such material.
The debtor in the instant case relies as well on the principles which are ennunciated in Butcher v. Bailey, 753 F.2d 465 (6th Cir.,1985). In that case the Court held that the production of documents constituted an act which operated as an authentication of records and that the debtor's production of records was a testimonial act. The case, however, presents a problem different from the instant one in that the petition was an involuntary one. The debtor had not affirmatively sought relief under the code, but rather responded to a claim by creditors that he was insolvent. Furthermore, and more important, facts in that case arose prior to the passage of the Bankruptcy Amendment and Federal Judgeship Act of 1984, supra. Legislative history appears to be silent on the specific extension of the provisions of § 521, but it is clear from the language used that the problem anticipated in Butcher was sought to be avoided by Congress.
*866 It is clear that Congress intended that the debtor was not to have immunity and was required to produce documents to the trustee. Whether the trustee can turn those documents over to the United States Attorney is another determination for another forum.
Based upon the foregoing the motion for turnover by the trustee is hereby granted.
The attorney for the trustee is directed to submit an order in accordance with this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1847011/ | 320 So. 2d 533 (1975)
Ben D. JOHNSON, Sr.
v.
Geddes A. JONES-JOURNET et al.
No. 55971.
Supreme Court of Louisiana.
September 5, 1975.
Rehearing Denied October 9, 1975.
*534 A. M. Trudeau, Jr., New Orleans, for plaintiff-applicant.
Jesse James Marks, Dorsey & Marks, New Orleans, for defendant-respondent Charles H. D. Bowers, Jr.
MARCUS, Justice.
On November 30, 1970, a promissory note payable to the order of Ben D. Johnson, Sr., was executed by Geddes A. Jones-Journet, Charles H. D. Bowers, Jr., Mrs. Naomi J. Parnell, George F. Geddes, Willie P. Davis, Sr., and Mrs. Velma M. Brewer.[1] Johnson instituted this suit to collect payment on the note on November 3, 1971, naming the six makers as defendants. Alleging that defendants were "jointly and severally indebted" to him, plaintiff sought judgment against all defendants, jointly and severally, in the full sum demanded. Of the five defendants served, Bowers and Davis failed to file responsive pleadings within the delays provided by law,[2] and, on May 18, 1972, a default judgment was rendered against them, casting them jointly and severally liable for the amount of the note less the amount received by plaintiff in a compromise with another defendant. Neither Davis and Bowers took an appeal from this judgment.
*535 On May 11, 1973, plaintiff filed a motion to examine Bowers, his judgment debtor, in aid of the execution of his judgment. On June 6, 1973,[3] Bowers responded by filing what he termed a "Motion to Annul and in the Alternative Modify Judgment" on the ground that ". . . the judgment when taken was not obtainable in law."[4] More specifically, defendant urged that, on the face of the pleadings, his liability to plaintiff as a co-maker was joint rather than in solido. Hence, he argued, judgment against him should have been, at most, limited to his virile share of the obligation represented by the note. Plaintiff filed an exception of no cause of action, which was sustained by the trial judge on the ground that the allegations of the attack constituted a defense that should have been urged in an appearance prior to final judgment.
On appeal, the judgment of the trial court was reversed, and plaintiff's default judgment was annulled. Johnson v. Jones-Journet, 306 So. 2d 827 (La.App.4th Cir. 1974). The court of appeal, with one judge dissenting, held that obtaining a judgment on a claim patently insupportable by law is an "ill practice" under article 2004 of the Code of Civil Procedure, regardless of the subjective intent of the party urging the claim. Accordingly, the court concluded that defendant had stated a cause of action by alleging that the judgment taken was not "obtainable in law" and was, therefore, entitled to have the judgment annulled. We granted plaintiff's application for a writ of certiorari to review the judgment of the court of appeal. 39 So. 2d 678 (La.1975).
Two issues must be considered for an appropriate resolution of this controversy: (1) whether the note evinces a joint or in solido obligation, and (2) if the obligation is joint, whether the allegations of defendant, if taken as true, form a sufficient basis for an action of nullity under article 2004 of the Code of Civil Procedure, which allows the annulment of judgments obtained by fraud or ill practices.
I.
When there is more than one obligor named in the same contract, the obligation it produces may, inter alia, be either joint or in solido.[5] When several persons join in the same contract to do the same thing, it produces a joint obligation on the part of the obligors.[6] However, where several persons obligate themselves to the obligee by the terms in solido or use any other expressions that clearly show that they intend that each one shall be separately bound to perform the whole of the obligation, it is called an obligation in solido on the part of the obligors.[7] An obligation in solido is not presumed; it must be expressly stipulated.[8]
Important consequences flow from the characterization of an obligation as joint or in solido. Where the obligation is joint, suit on the obligation must generally be brought against all obligors,[9] and the liability of each joint obligor is limited to his *536 virile share of the obligation.[10] However, suit on an obligation in solido may be brought against any one of the obligors, and the entire amount may be recovered from the obligor sued.[11]
It is well settled that, absent additional promissory language, the words "[w]e promise to pay" in a note signed by co-makers are insufficient to constitute the express stipulation of liability in solido required by law.[12] In such a case, the obligation is considered to be joint, and the liability of each co-maker is limited to his virile share of the obligation. Thus, it is clear that, under ordinary circumstances, defendant's liability on the note would be limited to his virile share, or one-sixth, of the obligation.
However, in his petition seeking judgment on the note, plaintiff alleged that the six defendants were "jointly and severally indebted" to him and prayed for judgment against all defendants "jointly and severally." In Louisiana, the common law term "joint and several" is considered synonymous with the civil law term "in solido."[13] Clearly, by seeking a judgment decreeing the co-makers liable jointly and severally (i.e., in solido) on the note, plaintiff erroneously claimed greater relief than the law allowed him.
II.
Having determined that plaintiff was not originally entitled to the relief he claimed, we must decide whether plaintiff's *537 obtaining a judgment by default under these circumstances constituted an "ill practice." According to article 2004 of the Code of Civil Procedure, any final judgment obtained by fraud or ill practices may be annulled. However, no definition of the term "ill practices" is given. Hence, an historical exegesis of the article is in order.
Article 2004 is drawn primarily from article 607 of the Code of Practice, which, in addition to announcing the general rule that judgment obtained by fraud or ill practices were subject to annulment, set forth as illustrations bribery of the judge or witnesses, production of forged documents, and perjury by the party obtaining the judgment.[14] These illustrations were not considered exhaustive of actionable fraud or ill practices, however; the jurisprudence set forth two criteria to determine whether a judgment had, in fact, been obtained by actionable fraud or ill practices: (1) the circumstances under which the judgment was rendered showed the deprivation of legal rights of the litigant seeking relief, and (2) the enforcement of the judgment would have been unconscionable and inequitable.[15]
When the Code of Civil Procedure replaced the Code of Practice in 1960, the former rule was retained as article 2004. Although the illustrations were deleted, ". . . there was no intention to change the law." [16] Hence, the criteria of relief set forth in the jurisprudence still obtains.
Evaluating defendant's allegations in light of these principles, we are unable to agree with the majority of the court of appeal that, if taken as true, defendant's allegations demonstrate a cause of action for annulment of the judgment on the ground that it was obtained through an "ill practice." First, there is no allegation that defendant was deprived of any legal right; he had ample opportunity to appear and assert any defense he desired, either in the trial court or by appeal. Defendant argues that the rendition of a judgment against him stipulating greater liability than he should be held at law constitutes a deprivation of his legal rights. However, it is well settled that an action of nullity may not, by raising errors of law, serve as a substitute for an appeal.[17] Second, considering that defendant was personally served in the original suit and afforded the opportunity to appear and urge that his liability was joint rather than in solido, it hardly seems unconscionable or inequitable to disallow his belated complaint that the judgment is contrary to law.
There are persuasive considerations against disturbing the integrity of final judgments obtained without artifice. Under article 2004, the legislature has determined *538 that, where a judgment is obtained in such a way (i. e., by fraud or ill practices) that its enforcement would be unconscionable, fundamental principles of equity and fair play sufficiently counterbalance those considerations and require that a judgment debtor be allowed to challenge the legitimacy of the judgment taken against him. Here, defendant has failed to allege either by facts or conclusion that the judgment against him was procured by fraud or ill practices. Rather, he has demonstrated only the inadvertent failure of both the plaintiff and the trial judge to note that the prayer and judgment were based substantially on an error of law, which was a proper subject for a defense to the suit. For these reasons, the trial judge correctly determined that defendant had not alleged a proper ground to arnul the judgment.
DECREE
For the reasons assigned, the judgment of the court of appeal is reversed, and the judgment of the district court sustaining the exception of no cause of action is reinstated.
NOTES
[1] The note read as follows:
[2] Defendant Geddes A. Jones-Journet was never served. Defendants Naomi J. Parnell and Velma Brewer were served and filed answers denying that they had executed the note in question. Defendant George F. Geddes was an absentee; a curator ad hoc appointed to represent him was served and filed an answer on his behalf generally denying the allegations of the petition. Plaintiff later compromised his claim against Geddes, and suit against him was dismissed with prejudice. The remaining two defendants, Willie P. Davis, Sr., and Dr. Charles H. D. Bowers, Jr., were served, but did not file responsive pleadings. Service of process was domiciliary on Davis and personal on Bowers.
[3] The action to annul a judgment on grounds of fraud or ill practices must be brought within one year of the discovery by the plaintiff. La.Code Civ.P. art. 2004 (1960). However, no plea of prescription has been filed, and "[c]ourts can not supply the plea of prescription." La.Civil Code art. 3463 (1870); La.Code Civ.P. art. 327 (1960). Hence, this issue is not before us.
[4] This was, in effect, an action to annul the judgment. See La.Code Civ.P. arts. 2001-06 (1960). Such an action is considered an ordinary proceeding as opposed to a summary proceeding. However, no objection was made to the procedure employed. Hence, any error in this regard is considered waived.
[5] La.Civil Code art. 2077 (1870).
[6] Id. art. 2080.
[7] Id. art. 2082. See also id. art. 2091.
[8] Id. art. 2093.
[9] Id. art. 2085.
[10] Id. art. 2086.
The proportion . . . is calculated by the number of the obligors, each one answering for an equal part, unless the parties have expressed a different intention.
Id.
[11] Id. arts. 2091, 2094, 2095. See also id. arts. 2097, 2098.
[12] E. g., Watkins v. Haydel, 172 La. 826, 135 So. 371 (1931); Swan v. Mayer, 211 So. 2d 346 (La.App. 4th Cir. 1968). In contrast, where co-makers sign a note containing the promissory words "I promise to pay," each co-maker is regarded as having promised to pay the entire obligation, resulting in solidary liability on the part of each for the entire debt. La.R.S. 10:3-118(e) (1950), added by La.Acts 1974, No. 92, § 1, formerly La.R.S. 7:17(7) (1950).
[13] See, e. g., Meadow Brook Nat'l. Bank v. Recile, 302 F. Supp. 62, 67 n. 2 (E.D.La.1969); Shreveport Bank & Trust Co. v. Tyler, 275 So. 2d 451, 452 (La.App.2d Cir. 1973); Flintkote Co. v. Thomas, 223 So. 2d 676 (La.App.4th Cir. 1969); Wilks v. Allstate Insurance Co., 195 So. 2d 390 (La.App.3d Cir. 1967). For a discussion of the common law rule of joint and several liability see United States v. Wainer, 108 F. Supp. 386 (N.D.Ill.1952), rev'd on other grounds, 211 F.2d 669 (7th Cir. 1954); Schram v. Perkins, 38 F. Supp. 404 (E.D.Mich.1941).
For example, article 2088 of the Civil Code provides:
The obligation is in solido, or joint and several between several creditors, when the title expressly gives to each of them the right of demanding payment of the total of what is due, and when the payment made to any one of them discharges the debtor, although the benefit of the obligation be to be shared and divided among the different creditors.
The phrase "or joint and several" has no counterpart in the French text of article 2083 of the Civil Code of 1825, the predecessor of article 2088 of the present Civil Code.
Similarly, La.R.S. 10:3-118 provides in pertinent part:
The following rules apply to all instruments:
. . . . .
(e) When an instrument containing the words `I promise to pay' is signed by two or more persons, they are deemed to be jointly and severally liable thereon.
The Louisiana Business Corporation Law provides in pertinent part:
. . . . .
If property or services taken in payment for shares are grossly overvalued contrary to the provisions of this Chapter, the shareholders who knowingly, or without the exercise of reasonable care and inquiry, consented thereto or voted in favor thereof shall be liable jointly and severally to the corporation for the benefit of creditors or shareholders, as their respective and relative interests may appear, for any loss or damage against therefrom.
La.R.S. 12:93 (1950), added by, La.Acts 1968, No. 105, § 1.
[14] Article 607 of the Code of Practice provided:
A definitive judgment may be annulled in all cases where it appears that it has been obtained through fraud or other ill practices on the part of the party in whose favor it was rendered; as if he had obtained the same by bribing the judge or the witnesses, or by producing forged documents, or by denying having received the payments of a sum, the receipt of which the defendant had lost or could not find at the time, but has found since the rendering of the judgment.
[15] E. g., Succession of Gilmore, 157 La. 130, 102 So. 94 (1924); City of New Orleans v. Le Bourgeois, 50 La.Ann. 591, 23 So. 542 (1898); Lazarus v. McGuirk, 42 La.Ann. 194, 8 So. 253 (1890).
[16] La.Code Civ.P. art. 2004, Comment (b) (1960).
[17] In Walsh v. Walsh, 215 La. 1099, 42 So. 2d 860 (1949), cert. denied, 339 U.S. 914, 70 S. Ct. 575, 94 L. Ed. 1340 (1950), this court observed
. . . the difference between a judgment which may be erroneous as a matter of law, because of an insufficiency of evidence or otherwise, and one procured by fraud, ill-practice, or misrepresentation. It is only in the latter case that the action of nullity is permissible under article 607 of the Code of Practicefor it is firmly established that the remedy cannot be employed as a substitute for an appeal.
Id. at 1113, 42 So.2d at 864 (citations omitted). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1509460/ | 596 S.W.2d 904 (1980)
Esteban ALVARADO, Appellant,
v.
The STATE of Texas, Appellee.
No. 58714.
Court of Criminal Appeals of Texas, Panel No. 1.
April 16, 1980.
*905 Michael R. Gibson, El Paso, for appellant.
Steve W. Simmons, Dist. Atty., and Miguel J. Cervantes, Asst. Dist. Atty., El Paso, Robert Huttash, State's Atty., Austin, for the State.
Before ONION, P. J., and ROBERTS and DALLY, JJ.
OPINION
DALLY, Judge.
This is an appeal from a conviction for the offense of burglary of a habitation. The punishment, enhanced by two prior felony convictions, is imprisonment for life.
The appellant asserts that: the State failed to prove his intent to commit theft; the court erroneously refused to quash a paragraph of the indictment in which was alleged a prior conviction to enhance punishment; the court erroneously refused to submit a jury charge on circumstantial evidence, and the punishment assessed is cruel and unusual.
Sergeant Joe Chacon, an eighteen year veteran of the El Paso Police Department, and his wife were awakened at 3:00 a. m. by a noise coming from the den of their home. They discovered the appellant whom they did not know and a female companion in the den. Entry to the Chacon home had been made through a back door after a screen had been cut. The appellant had a screw driver in his pocket which did not belong to Chacon. The appellant's female companion fled from the house and escaped. Sergeant Chacon subdued and handcuffed the appellant.
The appellant argues that the presumption that one who breaks and enters a building in the nighttime does so with the intent to commit theft does not apply in his case. The appellant when discovered in Sergeant Chacon's den stated that he was seeking a job. It is urged that the appellant's statement that he was seeking a job rebutted the presumption that he had the intent to commit theft. The appellant also argues that there is a conflict between the presumption of innocence and the presumption arising from breaking and entering a building in the nighttime and that the presumption of innocence must prevail. The latter contention shows a common misconception of presumptions and their functions. See 1 McCormick and Ray, Texas Law of *906 Evidence, Sec. 41, et seq. (2d ed. 1956). A conflict between presumptions is a legal impossibility. McCormick and Ray, Texas Law of Evidence, Sec. 54 (2d ed. 1956). Presumptions are not to be given the weight of evidence; they are procedural devices to determine which party must first produce evidence. This is also true as it relates to the presumption of innocence. Mr. Justice Holmes observed in his opinion in Holt v. United States, 218 U.S. 245, 31 S. Ct. 2, 54 L. Ed. 1021 (1910) that it was incorrect to charge a jury that the presumption of innocence is to be given the weight of evidence in the defendant's favor. See also Agnew v. United States, 165 U.S. 36, 17 S. Ct. 235, 41 L. Ed. 624 (1897) and 9 Wigmore, Evidence, Sec. 2511 (3rd ed. 1940).
Evidence that the defendant broke and entered and was found on the burglarized premises in the nighttime is sufficient evidence for the jury to infer that the defendant intended to commit the offense of theft. Clark v. State, 543 S.W.2d 125 (Tex. Cr.App.1976); Lee v. State, 459 S.W.2d 851 (Tex.Cr.App.1970); Reed v. State, 456 S.W.2d 393 (Tex.Cr.App.1970). The appellant's statement that he was seeking a job when he broke into the private residence at 3:00 a. m. is also evidence to be considered by the jury. The appellant's statement if it were believed to be true by the jury would have rebutted the inference that appellant had the intent to commit the offense of theft. However, the jury, as is its prerogative, obviously rejected the defendant's stated purpose for being in the Chacon den. The evidence is sufficient to prove the appellant broke and entered the Chacon residence with the intent to commit theft.
One of the prior felony convictions alleged to enhance appellant's punishment was a 1968 conviction for possession of narcotic drug paraphernalia, a violation of the former penal code. The appellant argues that the prior conviction cannot be used to enhance his punishment under the new penal code because the act of possessing narcotic drug paraphernalia is no longer a felony offense under the new penal code. This same contention was found to be without merit in Moreno v. State, 541 S.W.2d 170, 174 (Tex.Cr.App.1976). We held in that case that a prior conviction for possession of narcotic paraphernalia, a felony under the former penal code, could be used to enhance punishment under the new penal code. V.T.C.A. Penal Code, Sec. 12.42. See also V.T.C.A. Penal Code, Sec. 12.41.
The appellant urges that the trial court erred when it refused to submit to the jury a charge on the law of circumstantial evidence. The appellant was found in Sergeant Chacon's home at 3:00 a. m. and there was evidence of a burglarious entry by way of a back door. In these circumstances a charge on circumstantial evidence was unnecessary. Bircher v. State, 491 S.W.2d 443 (Tex.Cr.App.1973); Leaderbrand v. State, 457 S.W.2d 557 (Tex.Cr.App.1970).
The appellant's complaint that life imprisonment, the punishment assessed as a matter of law because the appellant had been convicted of two prior felonies, is a cruel and unusual punishment is without merit. Rummel v. Estelle, ___ U.S. ___, 100 S. Ct. 1133, 63 L. Ed. 2d 382 (1980).
The judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2095294/ | 482 F. Supp. 830 (1979)
HEALY TIBBITTS CONSTRUCTION COMPANY, a corporation, Plaintiff,
v.
FOREMOST INSURANCE COMPANY, a corporation, Defendant.
No. C78-1897 SAW.
United States District Court, N. D. California.
May 31, 1979.
*831 *832 John E. Droeger, Hall, Henry, Oliver & McReavy, San Francisco, Cal., for plaintiff.
Alf R. Brandin, Lillick, McHose & Charles, San Francisco, Cal., for defendant.
MEMORANDUM OPINION AND JUDGMENT
WEIGEL, District Judge.
On August 21, 1978, plaintiff Healy Tibbitts Construction Company (hereafter "HTC") filed this action for declaratory relief against Foremost Insurance Company (hereafter "FIC"). HTC seeks a declaration that under a certain protection and indemnity insurance policy No. 741273 (hereafter "policy") FIC was and is under a duty to defend HTC in another case pending in this court, United States v. Claus von Wendel, No. C77-1698 SW, and to indemnify HTC in the event that HTC is held liable to the United States in said action. The court has concluded that the declaration sought by HTC should be denied.
HTC, with headquarters in San Francisco, is a building and construction company which maintains and uses floating equipment. FIC is an insurance company with headquarters in Michigan. Jurisdiction is established under 28 U.S.C. § 1332.
Carl Hoag was HTC's insurance broker at all times relevant to this litigation. On November 19, 1974, he procured from James E. Moore & Co. the policy naming FIC as the insurer and HTC as the assured. The policy extended coverage to several vessels owned by HTC, including a crane barge known as the HT-4. The parties have stipulated that the policy was valid and in effect at all relevant times. The policy provides, in pertinent part:
"The Assurer hereby undertakes to make good to the Assured . . . all such loss and/or damage and/or expense as the Assured shall as owners of the vessel named herein have become liable to pay and shall pay on account of the liabilities, risks, events and/or happenings herein set forth:
* * * * * *
(6) Liability for damage to any . . property whatsoever, except another vessel or craft, . . .
(7) Liability for cost or expenses of, or incidental to, the removal of the wreck of the vessel named herein when such removal is compulsory by law, provided, however, that:
(a) There shall be deducted from such claim for cost or expenses, the value of any salvage from . . . the wreck, inuring, or which might have inured, the benefit of the Assured.
* * * * * *
(14) Costs, charges, and expenses, reasonably incurred and paid by the Assured in defense against any liabilities insured against hereunder in respect of the vessel named herein, subject to the agreed deductibles applicable, and subject further to the conditions and limitations hereinafter provided.
*833 GENERAL CONDITIONS AND/OR LIMITATIONS
Warranted that in the event of any occurrence which may result in loss, damage and/or expense for which this Assurer is or may become liable, the Assured will use due diligence to give prompt notice thereof and forward to the Assurer as soon as practicable after receipt thereof, all communications, processes, pleadings and other legal papers or documents relating to such occurrences.
* * * * * *
Whenever required by the Assurer the Assured shall aid in securing information and evidence and in obtaining witnesses and shall cooperate with the Assurer in the defense of any claim or suit . . . in respect of any occurrence as hereinbefore provided.
The Assured shall not be liable for the cost or expense of . . . defending any claim or suit unless the same shall have been incurred with the written consent of the Assurer, or the Assurer shall be satisfied that such approval could not have been obtained under the circumstances without unreasonable delay, or that such costs and charges were reasonably and properly incurred, such cost or expense being subject to the deductible.
* * * * * *
The Assurer shall be liable for the excess where the amount deductible under this policy is exceeded by (A) the cost of investigating and/or successfully defending any claim or suit against the Assured based on a liability or an alleged liability of the Assured covered by this insurance, or (B) the amount paid by the Assured either under a judgment or an agreed settlement based on the liability covered herein including all costs, expenses of defense and taxable disbursements.
* * * * * *
PROTECTION & INDEMNITY POLLUTION EXCLUSION CLAUSE
NOTWITHSTANDING anything to the contrary contained in this Policy, no liability attaches to the Assurers for any loss, damage, cost, liability, expense, fine or penalty, of any kind or nature whatsoever, whether statutory or otherwise, imposed upon the Assured arising directly or indirectly in consequence of the actual or potential discharge, spillage or leakage of oil, fuel, cargo, petroleum products, chemicals or other substances of any kind or description."
HTC chartered the HT-4 to Claus von Wendel on a hire purchase basis. On October 15, 1975, while being operated by von Wendel to remove piling and debris at the U.S. Naval Supply Center, Oakland, pursuant to a contract between von Wendel and the Navy, the barge began listing as water entered through a hole in the hull. von Wendel and his crew moved the HT-4 into shallow water, where it came to rest, partially submerged, still within the area of the Naval Supply Center. As the barge submerged, oil escaped into the water through an open vent in the fuel tank which supplied the boiler for the barge's steam crane. FIC agrees, as it must, that the sinking of the HT-4 was the proximate cause of the escape of oil. There was no evidence to suggest that the leakage would have occurred but for the sinking of the HT-4.
The Navy began the cleanup of the oil on the afternoon of the sinking. The cleanup operation took several days. Five days after the sinking, on October 20, 1975, Hoag sent a letter to James E. Moore & Co., reporting the sinking of the HT-4 and suggesting the possibility that some liability might be imputed to HTC, as owner of the barge.
The Navy sought removal of the submerged HT-4 from the Naval Supply Center. On January 29, 1976 Colonel Flertzheim, of the San Francisco District Corps of Engineers, wrote to HTC stating that if it did not provide a written guarantee of a plan for removal of the HT-4 proposed by von Wendel, "the Corps of Engineers will prosecute the removal of the vessel and will attempt to recover costs of such operation from any and all responsible parties." In response, HTC gave the requested guarantee. *834 On March 25, 1976, von Wendel refloated the barge and received title to it pursuant to an agreement with HTC.
In May, 1976, HTC received notice of a Coast Guard hearing to be held concerning the HT-4. HTC was informed that all interested parties parties must be notified and given an opportunity to be heard. Jarvis Gates, Vice President of HTC, asked in his letter of reply: "have you notified the U.S. Navy Supply Center in Oakland, Mr. Claus von Wendel, and First International Assurance, Ltd.?" FIC was not mentioned as a party to be notified. The outcome of the HT-4 hearing was the assessment of a $1500.00 fine on HTC.
On August 4, 1977, the United States brought the aforementioned action (United States v. Claus von Wendel, No. C77-1698 SW) against Claus von Wendel, HTC, HT-4, Unnamed House and Equipment Barge and Unnamed Floating Drydock Located at Naval Supply Center, Oakland, California. The three causes of action in said suit naming HTC as a defendant, charged that HTC and von Wendel were liable for the $55,028.44 cost of removing from the water the oil which escaped from the HT-4.
In the early part of 1978, HTC and FIC engaged in correspondence concerning the United States suit. In a letter of March 15, 1978, John Hysong, liability claims supervisor for FIC, informed John E. Droeger, counsel for HTC, that FIC believed that the insurance policy did not cover the costs of cleaning up the oil and that FIC would not indemnify HTC for any judgment resulting from the portion of the United States suit dealing with that matter. Hysong added that FIC was prepared to consider whether the wreck removal clause § (7) of the policy was applicable, and asked for further documentation. Droeger replied by letter one week later, stating inter alia: that the matter on which HTC was sued by the United States "arises from a peril clearly covered by the policy"; that HTC would accept a defense under a reservation of rights; that an insurer who refuses to defend does so at very great peril; and that the Pollution Exclusion Clause "does not purport to apply to the duty to defend." On March 29, 1978, Hysong wrote to tell HTC that FIC had forwarded a copy of HTC's claim file to the law firm of Lillick McHose & Charles (hereafter "Lillick") and that FIC had asked said firm to "look after the defense of the lawsuit brought against you by the United States." On the same day, Hysong wrote the law firm requesting that it "enter an appearance and answer on behalf of" HTC in the suit brought by the United States. Both of the letters noted that FIC was acting under a reservation of rights.
Upon receipt of Hysong's March 29th letter, HTC instructed Droeger to provide Lillick with a substitution of attorneys and HTC's files in No. C77-1698 SW. On April 3rd, Droeger wrote to Hoag that Droeger's law firm would look to Hoag's firm for indemnity in the event that FIC denied coverage, and was held to have properly denied it and/or refused to pay for legal services performed so far. On April 4th, Droeger contacted Alf R. Brandin of Lillick to arrange for the delivery of HTC's files and for a substitution of attorneys. Brandin informed Droeger that Lillick had not be retained by FIC to defend HTC in No. C77-1698 SW; instead Lillick had been asked to determine whether FIC might be responsible for indemnifying HTC pursuant to the wreck removal clause of the policy. On April 7, 1978, Hysong wrote to Droeger that FIC would not defend HTC in No. C77-1698 SW for the following reasons: the wreck removal clause was not applicable to the United States claim against HTC; the policy imposed no duty to defend on the insurer; and the Pollution Exclusion Clause of the policy excluded coverage for any costs arising from the escape of oil from the HT-4.
Before reaching the merits of HTC's claim for defense and indemnity under the terms of the policy, the Court must consider FIC's contention that HTC is estopped from asserting said claim. This contention is based on HTC's alleged failure to notify FIC of a possible oil pollution claim until twenty-seven months after the sinking of the HT-4, and nearly six months after the *835 filing of suit by the United States in No. C77-1698 SW. FIC argues that it was prejudiced by the lack of timely notice as required by the policy. For example, FIC avers that it could not properly inform itself concerning the circumstances of the escape of oil from the HT-4 since the oil had been cleaned up and the HT-4 had been removed from the Naval Supply Center and repaired by the time that FIC was informed of the oil escape. In addition, FIC argues that it was denied the opportunity to make decisions concerning the cleanup of the oil which might have cancelled or greatly reduced its potential liability.
The policy is one of marine insurance. See International Sea Food Ltd. v. M/V Campeche, 566 F.2d 482, 485 (5th Cir. 1978). Its interpretation should therefore be governed by federal admiralty law, provided that there is a well-settled applicable federal rule. Wilburn Boat Co. v. Fireman's Ins. Co., 348 U.S. 310, 316, 75 S. Ct. 368, 99 L. Ed. 337 (1955). In this case, however, neither of the parties has suggested, and this Court has not found, any established federal rule dealing with the policy's notice provision and with FIC's estoppel claim. Accordingly, Wilburn Boat Co. requires that state law be applied. Federal choice of law rules determine what state law to apply. Those rules require the application of the law of the state with the most significant nexus with the insurance contract. Ahmed v. American S. S. Owners Mutual Protection and Indemnity Assoc., Inc., 444 F. Supp. 569, 571 (N.D.Cal.1978). The parties do not dispute that California law should govern in the circumstances of this case. The policy was negotiated and signed in California. HTC's principal place of business and the place of operation of the HT-4 are also in that state. Finally, most of the events, which provide a basis for this suit, took place in California.
Under California law, mere delay by an insured in notifying an insurer of a claim does not create a presumption of prejudice to the insurer nor constitute a defense to liability under the policy, even when the policy requires notice "as soon as practicable," as it does here. See Northwestern Title Security Co. v. Flack, 6 Cal. App. 3d 134, 141, 85 Cal. Rptr. 693 (1970). On the contrary "it is clear that the burden is on the insurer to prove that it suffered substantial prejudice as the result of the insured's breach." Colonial Gas Energy System v. Unigard Mut. Ins. Co., 441 F. Supp. 765, 768-69 (N.D.Cal.1977). See also Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566, 577 n. 8, 108 Cal. Rptr. 480, 510 P.2d 1032 (1973).
Measured against this standard, FIC's claim of estoppel is not meritorious. First, the evidence shows that on October 25, 1975, five days after the sinking of the HT-4, Hoag mailed notice to Moore & Co. FIC does not deny this. Rather, FIC argues that HTC should have notified FIC directly, implying that Moore & Co was not authorized to receive notice on FIC's behalf. But Hoag testified that the only normal method of giving casualty notice is to notify the "surplus line broker," which was Moore & Co. FIC has offered no evidence to the contrary nor to impeach Hoag's credibility. To be sure, HTC did not mention FIC when the Coast Guard asked who should be notified of the Coast Guard hearing concerning the HT-4 sinking. But FIC has not shown that it was prejudiced by this omission. HTC is not asking here for contribution to the fine which was assessed against it at the hearing.
Second, even if the October 20, 1975, notice to Moore & Co. was insufficient to put FIC on constructive notice of the HT-4 accident, FIC's estoppel claim would still fail. FIC has not met its burden of showing that it suffered "substantial prejudice." Indeed FIC has offered no evidence of prejudice at all. As previously noted, FIC stipulated that the oil spill resulted proximately from the sinking of the HT-4. It follows that FIC cannot claim that access to the wrecked HT-4 immediately after the accident was necessary to determine the cause of the spill and the applicability of FIC's Pollution Exclusion Clause policy defense to this action. Similarly, FIC's stipulation that the Navy cleanup began on the afternoon *836 of the day of the accident rules out any argument that FIC could have minimized its exposure under the policy by cleaning up the oil more efficiently than the Navy. There has been no showing that there was any opportunity for FIC even to attempt to do so.
Turning to HTC's claim for indemnity under the policy, the initial burden is on it to establish that the loss resulting from the oil spill, namely, the cost of the cleanup, arose from a covered peril. See Northwestern Mutual Life Ins. Co. v. Linard, 498 F.2d 556, 561 (2d Cir. 1974). HTC has met this requirement by showing that Section 6 of the policy broadly protects it against loss based on damage to "any . . property whatsoever." Accordingly, the burden shifts to FIC to prove by a preponderance of the evidence that the cause of the loss falls within a policy exclusion. See Strubble v. United Services Auto Assoc., 35 Cal. App. 3d 498, 110 Cal. Rptr. 828 (1973); Milliken v. Fidelity & Cas. Co., 338 F.2d 35, 41 (10th Cir. 1964). The Court must consider any claim of exclusion within the ambit of the general principle of marine insurance law that where the language of an insurance policy may reasonably be construed in more than one way, the meaning most beneficial to the insured is to be given effect. Allen Spooner & Son, Inc. v. The Connecticut Fire Ins. Co., 314 F.2d 753, 755 (2d Cir.), cert. denied, 375 U.S. 819, 84 S. Ct. 56, 11 L. Ed. 2d 54 (1963). See also State Farm Mut. Auto Ins. Co. v. Partridge, 10 Cal. 3d 94, 109 Cal. Rptr. 811, 514 P.2d 123 (1973) (policies are to be broadly construed as to coverage and narrowly construed as to exclusions).
FIC maintains that it has met its burden because the Pollution Exclusion Clause eliminates its liability for any losses resulting from the spilling of oil. This contention is well-taken. HTC argues in rebuttal that FIC is liable, notwithstanding the Pollution Exclusion Clause, under the following insurance law principles: (1) an insured is entitled to coverage if a peril which was insured against causes the action of an excepted peril, which in turn causes the loss, Sabella v. Wisler, 59 Cal. 2d 21, 30-35, 27 Cal. Rptr. 689, 377 P.2d 889 (1963); Gillis v. Sun Ins. Office, Ltd., 238 Cal. App. 2d 408, 415-24, 47 Cal. Rptr. 868 (1965); and (2) where two perils cause a loss, one being insured against and the other excepted, the insured is entitled to coverage. State Farm Mut. Auto Ins. Co. v. Partridge, 10 Cal. 3d 94, 104-05, 109 Cal. Rptr. 811, 514 P.2d 123 (1973). But see Wootton Hotel Corp. v. Northern Assur. Co. Ltd., 57 F. Supp. 112, 113 (E.D.Pa.1944), aff'd, 155 F.2d 988 (3d Cir.), cert. denied, 329 U.S. 758, 67 S. Ct. 111, 91 L. Ed. 654 (1946). HTC urges that these principles are applicable because the sinking of the HT-4 was a peril which the policy insured against, even though oil pollution was an excepted peril.
HTC's argument is in error because Section 6 of the policy does not insure against the peril of sinking. Instead, Section 6 insures against liability for loss based on damage to certain property which may result from perils such as sinking.[1] The principles relating to perils are therefore inapplicable here. There was no insured peril acting concurrently with or causing the excepted peril of oil pollution. Indeed, the argument that those principles should be applied to a section of a policy which does not insure against specific perils proves too much. If such an argument were acceptedgiven the fact that oil can never escape from a barge without the intervention of some other factorHTC could claim that Section 6 makes FIC liable whenever there *837 is an oil spill. In such circumstances, HTC could always contend that the intervening factor is a "covered" peril which "caused" the excepted peril of oil pollution. This would be tantamount to reading the Pollution Exclusion Clause out of the policy altogether.
HTC also seeks indemnity for the cost of the cleanup of oil under Section 7 of the policy, the wreck removal clause. This claim appears to rest on the view that the oil spill itself was part of the "wreck," within the meaning of Section 7. Even if this tenuous interpretation were correct, HTC's claim under Section 7 must fail for the reasons discussed earlier with respect to its claim under Section 6. See also Seaboard Shipping Corp. v. Jocharanne Tugboat Corp., 461 F.2d 500, 504 (2d Cir. 1972).
HTC claims that the insurance policy imposes upon FIC a duty to defend HTC in No. C77-1698 SW, or to pay the costs of said defense, even if HTC is not entitled to indemnity under the policy. The cases do hold that where an insurance policy includes the duty to defend, the carrier must defend any suit which potentially seeks damages within the coverage of the policy. First Ins. Co. of Hawaii v. Continental Cas. Co., 466 F.2d 807, 810 (9th Cir. 1972); Gray v. Zurich Ins. Co., 65 Cal. 2d 263, 275-76, 54 Cal. Rptr. 104, 419 P.2d 168 (1966). Moreover, since modern procedural rules focus on the facts of a case rather than on the theory of recovery stated in the complaint, the defense obligation must be determined in the context of the factual background of the case against the insured, and not merely in the light of the language of the complaint. Journal Pub. Co. v. General Cas. Co., 210 F.2d 202, 209 (9th Cir. 1954); Paramount Props. Co. v. Transam. Title Cas. Co., 1 Cal. 3d 562, 571, 83 Cal. Rptr. 394, 463 P.2d 746 (1970). In addition, where an exclusionary clause excuses an insurer's liability under a policy imposing the duty to defend, that duty is not necessarily vitiated. Rather, unless the clause clearly extends to the duty to defend, the existence of such a duty is tested according to the insured's reasonable expectation of coverage. Gray v. Zurich Ins. Co., supra, 65 Cal.2d at 273-75, 54 Cal. Rptr. 104, 419 P.2d 168.
However, the policy in suit does not obligate the insurer to undertake the defense of an action brought against the insured. It confers the right upon the insurer to take over a lawsuit. But this right is for the benefit of the insurer. It cannot be said to create a duty to defend. Kienle v. Flack, 416 F.2d 693, 696 (9th Cir. 1969). The policy does obligate the insurer to pay the reasonable costs incurred "in defense against any liabilities insured against hereunder." But, as has been noted, supra the action by the United States against HTC does not seek damages within the coverage of the policy. Cf. Denham v. La Salle Madison Hotel Co., 168 F.2d 576, 584 (7th Cir.), cert. denied, 335 U.S. 871, 69 S. Ct. 167, 93 L. Ed. 415 (1948). On the contrary, the Pollution Exclusion Clause excludes such coverage. That Clause clearly extends to the costs of defense and to the duty to defend, if any.
In the alternative, HTC argues that the March 29, 1978, letter from Hysong to Droeger constituted a clear and unequivocal offer to defend HTC under a reservation of "our right to deny coverage to you." HTC contends that its prompt acceptance of the offer created a contract, to which FIC is bound to adhere. This argument also falls short. Even if the March 29, 1978, letter constituted an offer and HTC accepted the offer, HTC has failed to show that there was adequate consideration for FIC's alleged obligation to defend HTC.
HTC contends that the consideration consists in the policy premium and in HTC's acceptance of a defense under a reservation of rights. HTC claims that it was entitled under the policy to insist on a defense without such a reservation. But the premium paid by HTC to FIC was consideration for the policy itself. It was not consideration for any separate promise or offer by FIC. Moreover, HTC had no right to a defense free of any reservation of rights by FIC. Even where an insurer has expressly contracted to defend an insured, which is *838 more than FIC did here, the insurer may defend, under a reservation of rights, a suit brought against the insured. See, e. g., Val's Painting & Drywall Inc. v. Allstate Ins. Co., 53 Cal. App. 3d 576, 585, 126 Cal. Rptr. 267 (1975). It follows that HTC's relinquishment of that purported right was not adequate consideration for FIC's alleged promise to defend HTC. See Walters v. Calderon, 25 Cal. App. 3d 863, 873-74, 102 Cal. Rptr. 89 (1972).
In the light of the foregoing findings of fact and conclusions of law,
IT IS HEREBY ORDERED AND ADJUDGED that HTC take nothing, that the action be dismissed on the merits, and that FIC recover of HTC its costs of the action.
NOTES
[1] In contrast, the insurance policies in the cases relied on by HTC all insured against specific perils. See, e. g., Sabella v. Wisler, supra, 59 Cal.2d at 26, 27 Cal. Rptr. at 691, 377 P.2d at 891 ("all risks of physical loss except as hereinafter excluded"); Gillis v. Sun Ins. Office, Ltd., supra, 238 Cal.App.2d at 415, 47 Cal. Rptr. 868 (direct "loss by windstorm"); State Farm Mut. Auto Ins. Co. v. Partridge, supra, 10 Cal.3d at 99 n. 5, 109 Cal. Rptr. at 814, 514 P.2d at 126 (damages caused by "an accident, including injurious exposure to conditions"). See also New Zealand Ins. Co. v. Lenoff, 315 F.2d 95, 96 (9th Cir. 1963) (similar to Sabella). See generally Denham v. La Salle Madison Hotel Co., 169 F.2d 576, 579-83 (7th Cir.), cert. denied, 335 U.S. 871, 69 S. Ct. 167, 93 L. Ed. 415 (1948). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1885876/ | 505 So.2d 478 (1987)
Roxanne WILLIAMS, Appellant,
v.
STATE of Florida, Appellee.
No. 85-2855.
District Court of Appeal of Florida, Second District.
March 9, 1987.
Rehearing Denied April 21, 1987.
*479 Dale Gardner Jacobs, of Jacobs & Valentine, P.A., Lakeland, for appellant.
Robert A. Butterworth, Atty. Gen., Tallahassee, and Davis G. Anderson, Jr., Asst. Atty. Gen., Tampa, for appellee.
SANDERLIN, Judge.
Appellant challenges the trial court's denial of her motion for verdict of acquittal, and a condition of probation which required her to pay restitution. We affirm in part and reverse in part.
Appellant was charged with and, following a bench trial, was found guilty of leaving the scene of an accident involving personal injuries, in violation of section 316.027, Florida Statutes (1985). On appeal, she claims that there was insufficient evidence from which the trial court could conclude that she had the mental capacity to "willfully" leave the scene of an accident. See § 316.027(2), Fla. Stat. (1985). After reviewing the record, we conclude that there is sufficient evidence to support the trial court's rejection of appellant's affirmative defense of intoxication. Accordingly, we affirm appellant's conviction for leaving the scene of an accident involving personal injuries. See Martin v. State, 323 So.2d 666 (Fla. 3d DCA 1975).
Appellant also challenges a condition of her probation which required her to pay restitution to her employer or her insurance company, if the insurance company reduced its claim to a judgment and notified the court. She contends that this condition has no relation to her crime, nor was there evidence that any damage occurred or flowed from the conduct for which she was convicted, i.e., leaving the scene of an accident. See Fresneda v. State, 347 So.2d 1021 (Fla. 1977); Riner v. State, 389 So.2d 316 (Fla. 2d DCA 1980).
In Fresneda, the defendant left the scene of an accident involving three automobiles, one of which was his. He was charged with leaving the scene of an accident involving personal injuries. As a condition of his probation, the trial court required him to pay $1,600 to the occupants of one of the automobiles, who were injured in the accident. Our supreme court *480 found the condition of restitution was not authorized in that case, reasoning:
There is no basis in the record for distinguishing between injuries sustained in either of the collisions from aggravation of those injuries attributable to such delay, if any, in securing medical attention as the appellant may have caused.
... Of course, the figure in the present case presumably bears some relationship to the accident out of which the prosecution arose, but it is not clear what the relationship to appellant's offense is.
347 So.2d at 1022. Accordingly, the supreme court held: "[A] condition of probation requiring a probationer to pay money to, and for the benefit of, the victim of his crime cannot require payment in excess of the amount of damage the criminal conduct caused the victim." Id.
The state argues that the supreme court's subsequent decision in J.S.H. v. State, 472 So.2d 737 (Fla. 1985), demonstrates that Fresneda and Riner unduly limited the restitution provisions of section 948.03(1)(e), Florida Statutes (1985). In J.S.H. the juvenile defendant was charged with second degree grand theft. The trial court withheld adjudication, placed the defendant on community control, and ordered him to pay restitution to the victim for damages he had done to the victim's boat in the course of the theft. This court affirmed, reasoning that the offense bore a significant relationship to the victim's damages. J.S.H. v. State, 455 So.2d 1143 (Fla. 2d DCA 1984).
On certified conflict with a decision in another district court, the supreme court affirmed our decision in J.S.H., reasoning:
The damages were the result of the theft as they resulted directly from petitioner's actions which were necessary to perpetrate his crime. The hole in the boat's bottom resulted from a seat being removed from the boat, and all the wires were cut in order to facilitate the theft of engine parts. These actions were undertaken so that items could be stolen and were necessary for the theft to occur. Without these acts of destruction, some items simply could not have been stolen. It is not necessary that the offense charged describe the damage done in order to support a restitution order but only that the damage bear a significant relationship to the convicted offense.
472 So.2d at 738 (Emphasis added). See also Bowling v. State, 479 So.2d 146 (Fla. 5th DCA 1985) (condition of defendant's probation which required him to pay restitution to victim for injuries sustained in automobile accident affirmed on basis of J.S.H. under facts similar to present case).
It may appear, at first blush, that J.S.H. warrants affirmance of the restitution condition in the present case, as the fifth district found in Bowling. We, however, find that the state's reliance on J.S.H. is misplaced. The restitution ordered in the present case could be construed to include not only damages resulting from appellant's criminal conduct of leaving the scene of an accident involving personal injuries, but also damages arising from the accident itself. Consistent with both J.S.H. and Fresneda, we find that the latter construction would bear "some relationship," but not a "significant relationship" to the crime for which appellant was convicted. See also Barnes v. State, 489 So.2d 1182 (Fla. 2d DCA 1986). Accordingly, we hold that the trial court erred in ordering the condition of restitution under these facts. We disagree with the fifth district's holding to the contrary in Bowling, and note conflict.
Although we hold that the condition of restitution in this case was error, our review of the record reveals that appellant failed to preserve this error by objection to the condition in the trial court. As such, we are precluded from reviewing the condition unless the trial court (1) lacked jurisdiction to impose probation or (2) where another fundamental error occurs. McPike v. State, 473 So.2d 291 (Fla. 2d DCA 1985); Young v. State, 438 So.2d 998 (Fla. 2d DCA 1983).
In McPike the defendant, a licensed physician, was convicted of grand theft. A condition of the defendant's probation prohibited him from writing medical prescriptions while on probation. We found this *481 condition improper because it was not reasonably related to the defendant's rehabilitation and did not provide a standard of conduct essential to protection of the public. 473 So.2d at 292. Nevertheless, we affirmed the condition because the defendant failed to object in the trial court and because:
[a]lthough the condition impacts upon a fundamental, constitutional right, i.e., the right to earn one's livelihood by any lawful calling, [citations omitted] the condition does not abrogate this right and an attack on grounds of overbreadth is not appropriate under the facts of this case.
Id. at 292-293.
In Young the probationer was convicted of carrying a concealed firearm. The trial court withheld adjudication, placed him on probation for two years, and imposed four special conditions of the probation. The probationer made no objection to any of the conditions, but on appeal challenged a condition which forbade him from living with a member of the opposite sex who was not a relative without the permission of his probation officer. In affirming the special condition, this court reasoned:
In some instances, ... we have ruled on a defendant's challenge to probation conditions raised for the first time on appeal. In [Rodriguez v. State, 378 So.2d 7 (Fla. 2d DCA 1979),] we held that certain special conditions of probation which prohibited marriage and pregnancy violated fundamental constitutional rights of the probationer, and we instructed the trial court to strike those conditions. See Burchell v. State, 419 So.2d 358 (Fla. 2d DCA 1982). Likewise, in Mays v. State, 349 So.2d 792 (Fla. 2d DCA 1977), we found that a condition stipulating that a probationer not live with a person of the opposite sex was unconstitutionally overbroad because it prevented the probationer from living with his mother or any other female relative. We directed that the probation order be modified to allow petitioner to live with a female relative.
Even fundamental constitutional rights may be restricted by conditions of probation; however, such restrictions are subject to careful review. At a minimum, probationers should be entitled to those rights which would be guaranteed to prisoners and parolees. See United States v. Consuelo-Gonzalez, 521 F.2d 259 (9th Cir.1975). See also United States v. Tonry, 605 F.2d 144, 148 (5th Cir.1979); Howland v. State, 420 So.2d 918 (Fla. 1st DCA 1982); Wiggins v. State, 386 So.2d 46 (Fla. 4th DCA 1980). Here, Young's fundamental rights were not proscribed as in Rodriguez. Nor does the condition exceed the bounds we approved in Mays.
438 So.2d at 999.
The restitution condition in the present case, unlike those conditions of probation in McPike, Young, and the cases cited therein, could be construed to require appellant to pay for all damages arising from the accident, not only those which flowed from her crime of leaving the scene.
Although no Florida court has specifically addressed the rationale for proscribing restitution for damages not flowing from the criminal conduct for which a probationer is convicted, courts in other jurisdictions have found that to require such would deprive the probationer of due process. See Commonwealth v. Cooper, 319 Pa.Super. 351, 466 A.2d 195 (1983); State v. Reese, 124 Ariz. 212, 603 P.2d 104 (Ariz. Ct. App. 1979); People v. Richards, 17 Cal.3d 614, 131 Cal. Rptr. 537, 552 P.2d 97 (1976); People v. Becker, 349 Mich. 476, 84 N.W.2d 833 (1957).
In Reese the probationer was convicted of burglarizing a law office. As a condition of probation, the trial court ordered the probationer to make restitution in the amount of $3,427.38, $1,500 of which was earmarked for the burglary of the law office. The balance was to reimburse the victims of dismissed charges and additional crimes not charged by the state. In setting aside the restitution order, the Arizona appellate court opined:
Under our system it would be untenable to incarcerate or impose a fine upon a defendant without an adjudication of guilt in accordance with due process of *482 law. Although restitution to a victim of crime is not a criminal punishment exacted by the state, it must nevertheless rest upon due process of law. Therefore, it is equally untenable to impose a requirement of restitution upon a defendant whose responsibility for the crime has neither been admitted nor established in accordance with due process. The requirement that a defendant make restitution under such circumstances would reduce our system of justice to a potentially dangerous facade and convert the criminal court into a collection agency with none of the requirements of due process found even in a civil money judgment proceeding.
124 Ariz. at 215, 603 P.2d at 107.[1]
Although the trial court tried to import the due process of a civil proceeding into the restitution ordered in the present case, we find that this, too, fell short. Not only could the restitution order be construed to require appellant to pay damages not flowing from her crime, but it also could be construed to require her to pay restitution to her employer for damages awarded in a civil action against the employer, an action to which she would not even be a party. This certainly does not comport with due process.
Because the condition of probation requiring restitution violates appellant's constitutional right to due process and is not reasonably related to rehabilitation for the crime of which she was charged and convicted, see Wiggins v. State, 386 So.2d 46 (Fla. 4th DCA 1980), we are constrained to strike that condition even in the absence of an objection in the trial court.
Accordingly, we affirm appellant's conviction, but strike the condition of probation requiring appellant to make restitution.
SCHOONOVER, A.C.J., and HALL, J., concur.
NOTES
[1] The Reese court went on to state:
On the other hand, if the victim were to recover a money judgment in a civil proceeding, the criminal court would be warranted in ordering, as a condition of probation, that the defendant pay the judgment. .. . [This] comports with due process and is reasonably related to the goals of criminal justice.
124 Ariz. at 215, 603 P.2d at 107. We find, however, this statement to be dicta and unnecessary to the disposition of the case. Most important, it appears contradictory to us to permit restitution in a criminal case in the form of payment of a civil judgment for conduct which a defendant has not been found criminally guilty. It is axiomatic that the burden of proof in a criminal case is much greater than that in a civil action. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2328803/ | 32 A.3d 272 (2011)
COM.
v.
LEE.
No. 1367 EDA 2010.
Superior Court of Pennsylvania.
July 18, 2011.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1792037/ | 428 F. Supp. 1297 (1977)
DuPONT GLORE FORGAN INCORPORATED et al., Plaintiffs,
v.
AMERICAN TELEPHONE AND TELEGRAPH COMPANY et al., Defendants and Third-Party Plaintiffs,
v.
UNITED STATES of America, Third-Party Defendant.
No. 73 Civil 2447.
United States District Court, S. D. New York.
March 23, 1977.
*1298 *1299 Nickerson, Kramer, Lowenstein, Nessen, Kamin & Soll, New York City, for plaintiffs; Eugene H. Nickerson, Robert M. Heller, Michael S. Oberman, Greg A. Danilow, New York City, of counsel.
Davis, Polk & Wardwell, New York City, for defendants and third-party plaintiffs; Guy Miller Struve, Hiram D. Gordon, L. Gordon Harriss, New York City, of counsel.
Daniel R. Murdock, Acting U. S. Atty., S. D. N. Y., New York City, for United States; William G. Ballaine, Asst. U. S. Atty., New York City, of counsel.
OPINION
EDWARD WEINFELD, District Judge.
Plaintiffs commenced this class action to recover communications excise taxes which they allege were overcollected by defendants, acting as statutory collecting agents for the government. The plaintiffs are users of "Centrex" systems,[1] a form of telephone service used primarily by businesses and other large organizations, which permits communication between different telephones within one office as well as outside communications. The defendants are the American Telephone and Telegraph Co. ("AT&T") and twenty-three affiliated operating companies. The defendants have served a third-party complaint seeking recovery from the United States in the event plaintiffs prevail in their action.
Section 4251 of the Internal Revenue Code of 1954[2] ("the Code") imposes an excise tax on telephone and other communications services and facilities.[3] The tax is *1300 imposed on the person who pays for the service or facility ("taxpayer") but the company providing the service or facility ("collecting agent") is obligated to collect the tax from the taxpayer and remit it to the government.[4] Pursuant to the Excise Tax Reduction Act of 1965,[5] however, no such tax is imposed upon "private communication service" such as intra-office communication by means of Centrex systems, provided that "a separate charge is made for such service."[6]
The complaint contains eight counts.[7] In substance, Counts I, III and V allege that the defendants' failure to make separate charges for intra-office communication service provided by Centrex systems between 1966 and 1972 violated federal statutory and common law fiduciary duties. Counts VII and VIII allege violations of the federal antitrust laws. Counts II, IV and VI allege that the entries on defendants' books for Centrex service satisfied the "separate charge" requirement, as interpreted in a ruling of the Internal Revenue Service,[8] and that therefore plaintiffs were not required to pay the excise tax upon the intra-office communications service provided by Centrex.
The defendants now move for summary judgment only on Counts II, IV and VI upon the ground that these counts assert claims for refund of taxes, which can be maintained only against the United States; alternatively, they seek partial summary judgment on these counts as to those members of the plaintiff class who have not filed administrative claims for refunds. The United States supports the defendants' motion and in addition has moved for summary judgment on the third-party complaint.
I. DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
Counts II, IV and VI of the complaint allege that "[s]ince the separation of the charges existed on the books of the defendants," the excise tax was not due upon the intra-office communication service, but that nonetheless
defendants collected, or caused to have been collected, a greater amount in excise taxes from plaintiffs and members of the class than they were entitled to collect, or cause to be collected, under the law, and plaintiffs and members of the class were required to pay and did pay to the [defendants] excise taxes which were not in fact due.[9]
The language of the complaint is thus cast solely in terms of a refund of overcollected taxes. Significantly, there is no allegation of breach of statutory or common law duty, or of violations of the antitrust laws, as alleged in the other counts. So, too, there is no dispute that all sums collected from plaintiffs by defendants were timely paid over by them to the United States as required by law. Thus, it is apparent that the issue to be addressed in these counts is essentially the same as would be presented in a tax refund suit: whether or not separate charges were made, which would determine the extent of plaintiffs' liability for the communications tax. However, the *1301 plaintiffs have chosen not to seek a return of the allegedly overcollected tax in a refund suit against the government, but rather have sued the defendants, who collected the tax from them and remitted it to the government. In support of their motion for summary judgment, defendants contend in essence that the tax refund provisions of the Code were intended by Congress to prohibit any suit against collecting agents such as themselves, and that plaintiffs therefore cannot maintain this suit against defendants but must sue the government.
The question is close and not entirely free from doubt, but the Court is persuaded that an overall view of the tax collection and refund provisions of the Code, and of the mandated role of non-governmental collecting agents such as defendants, shows that aggrieved taxpayers such as plaintiffs must bring their suit against the government. A brief examination of the refund procedures established by the Code is necessary to an understanding of the issues involved. The Code provides that a taxpayer seeking a refund of taxes[10] must first make an administrative claim for refund within three years from the time his return was filed (or two years from the date the tax was paid, whichever is later) or, if no return was filed, within two years from the time the tax was paid.[11] He cannot bring suit until either the refund claim has been acted upon or six months have elapsed since it was filed.[12] In no event can suit be brought more than two years after the claim has been disallowed.[13] Refund suits can be brought only in accordance with these procedures,[14] which serve two functions. First, they afford the Internal Revenue Service an opportunity to investigate tax claims and resolve them without the time and expense of litigation.[15] Second, they protect the Treasury by providing strict limitations periods for tax refund suits.[16]
Section 7422 of the Code,[17] upon which defendants rely, is persuasive evidence that an action against the government in accordance with these provisions of the Code was intended to be the exclusive remedy for a tax refund. Section 7422 reads, in relevant part:
(a) No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary or his delegate, according to the provisions of law in that regard, and the regulations of the Secretary or his delegate established in pursuance thereof.
. . . . .
*1302 (f)(1) A suit or proceeding referred to in subsection (a) may be maintained only against the United States and not against any officer or employee of the United States (or former officer or employee) or his personal representative. . . .
The explicit language of this section any suit "for the recovery of any internal revenue tax alleged to have been erroneously or illegally collected" exactly describes Counts II, IV and VI of the complaint in this case.[18] Thus under this section plaintiffs' suit "may be maintained only against the United States," and only in conformity with the procedures outlined above.
Plaintiffs contend, however, that the statutory refund procedures apply only in cases where a taxpayer seeks a refund of taxes from the government. They contend that their dispute, on the contrary, is solely with the defendants, who they claim illegally collected taxes from them without authority because the separation of charges existed. They argue that section 7422(f) was enacted solely to ensure that all suits brought against the government name the United States as defendant rather than the district director of internal revenue, as formerly permitted,[19] and that its effect is not to "prohibit an action against a private party which wrongfully collects monies under the guise of taxes." Thus, they claim, the fact that the provisions of the Code are "exclusive" in suits against the government in no way affects plaintiffs' right to bring suit against these defendants, without reference to the statutory refund procedures.
However, the language of section 7422 is unambiguous in requiring that a suit for the recovery of "erroneously or illegally" overpaid taxes may be brought only against the United States. Further, there is no indication that a remedy against private collecting agents such as defendants has ever been considered available. The legislative history of section 7422(f), while not directly on point, does not reveal that Congress contemplated that a tax refund suit might be brought against private collecting agents. To the contrary, the Senate report accompanying the bill referred only to the statutory procedures:
The bill does away with tax refund suits against collection officers, but retains the provisions of present law which permit these suits to be brought directly against the United States . . ..
. . . . .
Under present law a taxpayer seeking a refund of an overpayment of tax generally may sue the United States directly or may bring his action against the district director to whom the tax was paid. . . .
. . . . .
Although this bill abolishes the right of action by a taxpayer against a Government employee serving as the tax collector, this is done only because other adequate remedies either are already available, or are being made available by this bill, for the recovery of illegal collections.[20]
Moreover, there is no case in which an action such as the one plaintiffs have brought has been allowed. Indeed, in the only similar cases suits by excise taxpayers against collecting agents such as defendants have been dismissed.[21] And it has long *1303 been held, without qualification, that "[t]he remedy so given [by the Code] is exclusive, and no other remedy can be substituted for it."[22] The exclusive nature of this remedy has consistently been protected by both Congress and the courts. For example, injunctions and declaratory judgments in tax cases are expressly forbidden by statute.[23] And the courts have repeatedly prevented any effort to circumvent, by whatever ingenious device, "the harmony of our carefully structured twentieth century system of tax litigation."[24] In short, what emerges from cases, statutes and legislative history alike is a purpose to channel all tax litigation into the structure provided by the Code. The total lack of mention of any remedy such as plaintiffs seek, combined with the oft-stated intent to make the statutory procedures exclusive, strongly suggests that section 7422(f) means precisely what it says, and that plaintiffs may maintain a tax refund claim only against the government and not against collecting agents.
Moreover, litigation directed against collecting agents might significantly impair the protections which the refund provisions of the Code were intended to afford the government. Many members of the class plaintiffs represent have not filed refund claims, and even those members of the class who have filed refund claims have not yet brought a refund suit against the government. If the plaintiffs prevail, and the defendants in turn are allowed to recover from the government as they seek to do by their third-party complaint, the plaintiff taxpayers will have succeeded in avoiding the strict procedural requirements for obtaining refunds. In effect they will have obtained a refund of taxes from the government without giving the Internal Revenue Service an opportunity to consider their claims administratively, and without being subject to the statutes of limitations imposed by the Code.[25] This would clearly negate the Congressional purpose in enacting the refund provisions of the Code.
If the government is not made a party to a suit against a collecting agent, the problems are just as complex. In such a case the Court would be forced to adjudicate potentially complicated tax questions, perhaps of some public importance, in a litigation between private parties, without the benefit of the participation of the Internal Revenue Service. The government, of *1304 course, has a vital interest not only in collecting taxes that are due but also in assuring that refunds are made only to those entitled to them.[26] To permit private litigation for the recovery of tax refunds may defeat that purpose. In sum, the consequences of allowing plaintiffs to maintain this suit are a far cry from "the harmony of our carefully structured twentieth century system of tax litigation,"[27] and are persuasive evidence that Congress did not intend to permit a suit such as plaintiffs'.
Plaintiffs press, however, that their suit is authorized by the Code itself, relying upon section 6415(c),[28] which provides:
In case any person required . . . to collect any [transportation or communications excise] tax shall make an overcollection of such tax, such person shall, upon proper application, refund such overcollection to the person entitled thereto.
On its face this section does not create a cause of action for recovery of an overcollection by a taxpayer from a collecting agent. Plaintiffs argue, however, that this lawsuit itself is a "proper application" and that under section 6415(c) the defendants must refund to plaintiffs any amount overcollected. However, this section is applicable only to transportation and communications excise taxes, although there are other situations in which federal taxes are collected by third parties acting as collecting agents for the government.[29] Plaintiffs have suggested no reason why, despite the fact that the statutory tax refund procedures were generally intended to be exclusive, Congress should have singled out those who collect the transportation and communications excise taxes and imposed liability for refunds of overcollections solely upon them, and not upon other collecting agents.
Moreover, while there is little in the legislative history to illuminate the purpose of section 6415(c), such as there is supports defendants' position that section 6415(c) does not authorize this suit. The purpose of section 6415 as a whole[30] is apparently to provide mechanisms for lessening the burden of administering a tax which is imposed on a large number of taxpayers paying a relatively small amount of tax on each taxable transaction. It eliminates the necessity of individual taxpayers filing refund claims for each overpayment of an excise tax by allowing refunds to be made to the collecting agent for all of its customers, and it lessens the number of refund claims required by allowing a collecting agent in certain cases to take a credit upon a subsequent return instead of filing a refund *1305 claim. At the same time the statute ensures that the ultimate economic benefit of any refund or credit is passed on to the taxpayer.
Section 6415(c) is part of this mechanism. The predecessor of section 6415(c) indicated that a taxpayer could get a refund from a collecting agent "upon proper application" only in situations when the collecting agent was entitled to take a credit upon a subsequent return without filing for a refund.[31] Treasury regulations first promulgated in 1932, when the communications tax was enacted in its present form, and still applicable today, make it clear that a credit may be taken only when the overcollection was due to a "clerical or mechanical error." In all other cases, the regular refund procedure must be followed.[32] While the precise form of section 6415(c) differs from its predecessor statute, the legislative history of the Code indicates that no substantive change in the law was intended thereby.[33] Thus, it appears that section 6415(c) is intended merely to simplify the procedures for adjustment of minor errors in tax collection, and not to carve out sub silentio an exception to the orderly structure of tax litigation by allowing persons seeking to litigate major and disputed questions of tax law to bypass the normal refund procedure.[34]
Thus, the overall structure of the refund provisions of the Code negates plaintiffs' efforts to seek a tax refund from defendants. However, while conceding that the arguments against allowing this suit would have "considerable force" in an "ordinary" overcollection suit,[35] plaintiffs contend that their case is extraordinary because the taxes *1306 were allegedly collected by defendants without probable cause to do so. Plaintiffs further contend that preventing a taxpayer from maintaining suit against a collecting agent would be unfair to the taxpayer, since the collecting agent could conceal from the taxpayer facts entitling him to a refund until after the lapse of the period for filing a refund claim, thus barring altogether any recovery. However, as noted above, Counts II, IV and VI of the complaint are pleaded merely as claims for refund of overcollected taxes. They contain no allegation of lack of probable cause to collect the taxes, nor of any concealment of facts from the plaintiffs. Thus, the short answer to plaintiffs' argument is that, whatever its merits, it is not relevant to the claim upon which plaintiffs seek recovery from the defendants.[36]
Moreover, the interference with the orderly administration of the revenue laws is great even under plaintiffs' theory. It must be remembered that the defendants did not choose the role of collecting agents. The duty to collect the tax was imposed upon defendants by statute enforceable, if necessary, by criminal liability[37] for the convenience of the United States. Because the communications tax is imposed upon literally millions of separate transactions each year, its efficient administration requires that the defendants collect the tax as they do. In so collecting the tax and paying it over to the government the defendants act merely as agents for the United States.[38]
If plaintiffs' theory were accepted, however, the defendants would be placed in the position of having to collect taxes at their peril. Allowing suits such as plaintiffs' might lead to situations in which the collecting agent would be required to refund taxes to the taxpayer but could not recover them from the government. This is so because the procedures which must be followed in tax refund suits, outlined above, constitute a limited waiver of sovereign immunity and must therefore be fulfilled before any suit can be brought against the United States.[39] For example, if the taxpayer is permitted to sue the collecting agent after the statute of limitations for filing refund claims with the government has expired, the collecting agent may not be able to obtain a refund from the government of the amount it is required to pay the taxpayer, since, not being on notice of the taxpayer's claim within the limitations period, it would not have made a timely refund claim. It is unlikely that Congress, in requiring the defendants to collect taxes on behalf of the government, intended that they would have to defend lawsuits on behalf of the government or even bear themselves the burden of a tax imposed upon their customers.
The Court does not hold that an action can never be maintained against a telephone company for alleged wrongs arising out of the performance of its duties as collecting agent for federal taxes. In fact, the defendants, while denying plaintiffs' charges of wrongful conduct, have not challenged *1307 plaintiffs' right to maintain this suit upon the other counts of their complaint. Where, however, the gravamen of the complaint is merely that a tax was collected which was not owed, and where the money was duly paid to the government by the collecting agent, allowing the taxpayer to sue the collecting agent when he collected the tax "erroneously or illegally" would unduly interfere with the orderly administration of the internal revenue laws. In such a case the taxpayer should be required to avail himself of his statutory remedies against the government, which is the real party in interest. As the Court of Appeals for the Ninth Circuit said in another case involving the telephone excise tax:
[A]llowing [this suit] . . . could disrupt the orderly procedures created by Congress for handling tax litigation. The administration of the fiscal needs of the United States is undoubtedly a monumental task and is of vital importance to the nation. Congress has provided a system in which judicial review of tax liability can be obtained. In Flora v. United States, 362 U.S. 145, 80 S. Ct. 630, 4 L. Ed. 2d 623 (1960), the Supreme Court recognized that the procedures for obtaining judicial review of tax liability were designed to be the exclusive methods for litigating federal tax liability. In the instant case the taxpayers could have contested their tax liability . . . in a refund suit . . .. The procedure devised by the present taxpayers is outside the exclusive scheme provided by Congress.[40]
Accordingly, the defendants' motion for summary judgment on Counts II, IV and VI of the complaint is granted.
II. THIRD-PARTY DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
With the dismissal of Counts II, IV and VI of the complaint, the remaining counts of the complaint are all grounded upon the allegedly tortious conduct of defendants. The defendants' third-party complaint against the government alleges that defendants acted "as agents and fiduciaries for the United States of America in collecting [the telephone excise] taxes and paying them over to the United States of America" and that the United States therefore "is liable to defendants" for any amount defendants may be required to pay to plaintiffs on Counts I through VI.[41] Whether the third-party complaint is read to allege a claim for refund of taxes under section 6415(a) of the Code[42] or a claim against the government sounding in tort, it must be dismissed for lack of jurisdiction since the government has not waived its sovereign immunity from suit as to the subject matter of the remaining counts of the complaint.[43]
In Counts I, III and V of the complaint, the remaining counts to which the third-party complaint is applicable, plaintiffs do not seek a refund of overcollected taxes. Their claim is not that defendants collected more taxes than were properly due, but rather that defendants' allegedly tortious acts increased plaintiffs' tax liability. Under plaintiffs' theory on these counts the United States was legally entitled to all the revenues it received. Should defendants be held liable to plaintiffs under these counts, the recoverable damages would be based upon defendants' breach of duty owed to plaintiffs, and the damages could include items in addition to taxes which plaintiffs paid because of defendants' alleged failure to make a "separate charge." Since any liability of defendants on these counts would thus not be in the nature of a repayment of taxes, they could have no claim against the government "for the recovery of any internal-revenue tax," and there is *1308 thus no jurisdiction under Title 28, United States Code, section 1346(a)(1).
Nor is there subject matter jurisdiction of the third-party claim if it is intended to assert a claim against the United States as a joint tortfeasor. Specifically excluded from the operation of the Federal Torts Claims Act is "[a]ny claim arising in respect of the assessment or collection of any tax."[44] Any claim by defendants against the United States in this case "aris[es] in respect of" the performance of their function as collecting agents. There is thus no jurisdiction over such a claim.[45] Nor is there jurisdiction under Title 28, United States Code, section 2006, which applies only to a "revenue officer" and not to a collecting agent such as defendants.[46] Since there is no jurisdictional basis for the third-party claim insofar as it relates to the remaining counts of the complaint to which it is applicable, the motion of the United States for summary judgment dismissing the third-party complaint is granted.
It is so ordered.
NOTES
[1] Previously the Court ordered that this suit could be maintained as a class action under Rule 23(b)(3), Fed.R.Civ.P., on behalf of all users of Centrex systems. duPont Glore Forgan Inc. v. American Telephone & Telegraph Co., 69 F.R.D. 481 (S.D.N.Y.1975). That opinion expressly reserved the issue now presented. Id. at 489 n. 24.
[2] 26 U.S.C. § 4251.
[3] In 1970, Congress enacted a ten-year program gradually eliminating the communications excise tax, commencing January 1, 1973. P.L. 91-614, 84 Stat. 1836, § 201(b).
[4] 26 U.S.C. §§ 4251(a)(1), 4291, 7501.
[5] P.L. 89-44, 79 Stat. 136, § 302.
[6] 26 U.S.C. §§ 4251(a), 4252(a), (d).
[7] Counts I and II are brought against AT&T on behalf of all users of Centrex systems who were customers of any operating telephone company at any time between January 1, 1966, and December 31, 1972. Counts V, VI, VII and VIII are brought on behalf of the same class against all the defendants. Counts III and IV are brought against AT&T and New York Telephone Company on behalf of all users of Centrex systems who were customers of New York Telephone Company at any time between January 1, 1966, and December 31, 1972.
[8] Rev.Rul. 69-152, 1969-1 Cum.Bull. 289, held that the "separate charge" requirement of § 4252(d) is met where there are telephone company records which identify in precise detail the monthly charges for equipment and service relating to private communication service and such specific detail is furnished to a telephone subscriber upon request, even though the monthly billings to the subscriber do not show charges for private communication service separately.
[9] Complaint, ¶¶ 36, 37.
[10] The alternate method of contesting tax liability by appealing a notice of deficiency to the Tax Court is unavailable in the case of these excise taxes. 26 U.S.C. §§ 6211-14; Flora v. United States, 362 U.S. 145, 175 n. 38, 80 S. Ct. 630, 4 L. Ed. 2d 623 (1960); 9 J. Mertens, Law of Federal Income Taxation § 50.08 (Zimet Rev. 1974).
[11] 26 U.S.C. §§ 6511(a), 7422(a).
[12] 26 U.S.C. § 6532(a)(1).
[13] Id.
[14] See, e. g., United States v. Felt & Tarrant Mfg. Co., 283 U.S. 269, 51 S. Ct. 376, 75 L. Ed. 1025 (1931); Lewis v. Sandler, 498 F.2d 395, 399-400 (4th Cir. 1974); Scovill Mfg. Co. v. Fitzpatrick, 215 F.2d 567, 569 (2d Cir. 1954); United States v. Standard Oil Co., 158 F.2d 126, 129 (6th Cir. 1946), cert. denied, 331 U.S. 836, 67 S. Ct. 1519, 91 L. Ed. 1849 (1947) ("Meticulous compliance by a taxpayer with conditions prescribed for the recovery of taxes paid must appear before the taxpayer can recover.") See also cases cited n. 39 infra.
[15] See United States v. Felt & Tarrant Mfg. Co., 283 U.S. 269, 272, 51 S. Ct. 376, 75 L. Ed. 1025 (1931); Herrington v. United States, 416 F.2d 1029, 1032 (10th Cir. 1969); Lemoge v. United States, 378 F. Supp. 228, 232 (N.D.Cal. 1974).
[16] See United States v. Memphis Cotton Oil Co., 288 U.S. 62, 71, 53 S. Ct. 278, 77 L. Ed. 619 (1933); cf. Burnett v. New York Central R. R., 380 U.S. 424, 428, 85 S. Ct. 1050, 13 L. Ed. 2d 941 (1965).
[17] 26 U.S.C. § 7422.
[18] See p. 1300 supra.
[19] See S.Rep. No. 1625, 89th Cong., 2d Sess. (1966), reprinted in 1966 U.S. Code Cong. & Admin. News 3676, 3681-82; see generally Flora v. United States, 362 U.S. 145, 151-57, 80 S. Ct. 630, 4 L. Ed. 2d 623 (1960); United States v. Kales, 314 U.S. 186, 197-200, 62 S. Ct. 214, 86 L. Ed. 132 (1941).
[20] S.Rep. No. 1625, 89th Cong., 2d Sess. (1966) reprinted in 1966 U.S. Code Cong. & Admin. News 3676, 3677, 3681.
[21] There are three previous cases, all in the Northern District of Illinois. Econ, Inc. v. Illinois Bell Telephone Co., 351 F. Supp. 1087 (N.D.Ill.1972); Rose v. American Airlines, Inc., 331 F. Supp. 77 (N.D.Ill.1971); Agron v. Illinois Bell Telephone Co., 325 F. Supp. 487 (N.D.Ill. 1970), aff'd in part and rev'd in part, 449 F.2d 906, 914 (7th Cir. 1971), cert. denied, 405 U.S. 954, 92 S. Ct. 1171, 31 L. Ed. 2d 231 (1972). While plaintiffs and defendants herein have debated at length the ground of decision in these cases, it is clear that in none of them was the suit allowed. State law cases have also indicated that a collecting agent is not liable to the taxpayer for an illegal collection when he has paid the taxes over to the government. See John L. Burns, Inc. v. Gulf Oil Corp., 268 F. Supp. 222, 223 (N.D.Ga.1967); Kesbec, Inc. v. McGoldrick, 278 N.Y. 293, 297, 16 N.E.2d 288, 290 (1938). This accords with the common law rule that an agent acting for a disclosed principal who receives money by mistake is not liable to the payor if he has paid the money over to his principal without notice of the payor's claim. See, e.g., Hooper v. Robinson, 98 U.S. 528, 540-41, 25 L. Ed. 219 (1878); Mountain Lumber Co. v. Davis, 11 F.2d 219, 221 (2d Cir.), cert. denied, 271 U.S. 674, 46 S. Ct. 488, 70 L. Ed. 1145 (1926); Restatement (Second) of Agency, § 339, comment f (1958).
[22] Snyder v. Marks, 109 U.S. 189, 193, 3 S. Ct. 157, 160, 27 L. Ed. 901 (1883). See Cheatham v. United States, 92 U.S. 85, 88, 23 L. Ed. 561 (1875) ("That system is intended to be complete"); Kent v. Northern California Regional Office of Am. Friends Serv. Comm., 497 F.2d 1325, 1328 (9th Cir. 1974) ("the exclusive methods for litigating federal tax liability"); Poretto v. Usry, 295 F.2d 499, 501 (5th Cir. 1961), cert. denied, 369 U.S. 810, 82 S. Ct. 687, 7 L. Ed. 2d 612 (1962) ("mandatory and exclusive").
[23] 26 U.S.C. § 7421, 28 U.S.C. § 2201. See also 28 U.S.C. § 2680(c) (Tort Claims Act).
[24] Flora v. United States, 362 U.S. 145, 176, 80 S. Ct. 630, 647, 4 L. Ed. 2d 623 (1960) (payment of entire tax required before refund suit maintainable). See also Lewis v. Sandler, 498 F.2d 395 (4th Cir. 1974) (civil rights action); Kent v. Northern California Regional Office of Am. Friends Serv. Comm., 497 F.2d 1325 (9th Cir. 1974) (interpleader by trustees directed to pay over tax to government if it is adjudicated constitutional); Bohn v. United States, 467 F.2d 1278 (8th Cir. 1972) (suit challenging allegedly illegal seizure of property); United States v. Freedman, 444 F.2d 1387 (9th Cir.) cert. denied, 404 U.S. 992, 92 S. Ct. 538, 30 L. Ed. 2d 544 (1971) (motion for return of property under Rule 41(e), Fed.R.Crim.P.); Econ, Inc. v. Illinois Bell Telephone Co., 351 F. Supp. 1087 (N.D.Ill.1972) (suit against collecting agent); England v. United States, 164 F. Supp. 322 (E.D.Ill.), aff'd, 261 F.2d 455 (7th Cir. 1958) (tort suit based upon alleged fraud of government agents).
[25] The taxes at issue were collected during the years 1966-1972. The refund claims filed by plaintiffs were apparently filed in July, 1973, over seven years after the first contested taxes were collected. See p. 1301 supra.
[26] Cf. Cory Corp. v. Sauber, 284 F.2d 767, 773 (7th Cir. 1960), cert. denied, 366 U.S. 935, 81 S. Ct. 1659, 6 L. Ed. 2d 847 (1961).
[27] See n. 24 supra.
[28] 26 U.S.C. § 6415(c).
[29] Perhaps the best-known such situation is the withholding of federal income and Federal Insurance Contributions Act taxes by a taxpayer's employer. See 26 U.S.C. §§ 3102, 3402.
[30] Section 6415 reads as follows:
(a) Credit or refund of any overpayment of tax imposed by section 4251, 4261, or 4271 may be allowed to the person who collected the tax and paid it to the Secretary or his delegate if such person establishes, under such regulations as the Secretary or his delegate may prescribe, that he has repaid the amount of such tax to the person from whom he collected it, or obtains the consent of such person to the allowance of such credit or refund.
(b) Any person entitled to a refund of tax imposed by section 4251, 4261, or 4271 paid, or collected and paid, to the Secretary or his delegate by him may, instead of filing a claim for refund, take credit therefor against taxes imposed by such section due upon any subsequent return.
(c) In case any person required under section 4251, 4261, or 4271 to collect any tax shall make an overcollection of such tax, such person shall, upon proper application, refund such overcollection to the person entitled thereto.
(d) Any person making a refund of any payment on which tax imposed by section 4251, 4261, or 4271 has been collected may repay therewith the amount of tax collected on such payment.
Section 4251 imposes the communications excise tax; sections 4261 and 4271 impose excise taxes upon air transportation of persons and property, respectively.
[31] See Internal Revenue Code of 1939, § 1715(d)(2) (made applicable to the communications tax by Internal Revenue Code of 1939, § 3473):
In the case of any overpayment or overcollection of any tax imposed by this chapter, the person making such overpayment or overcollection may take credit therefor against taxes due upon any return, and shall make refund of any excessive amount collected by him upon proper application by the person entitled thereto.
See also Revenue Act of 1932, 47 Stat. 169, § 774; Revenue Act of 1926, 44 Stat. 9, § 1120; Revenue Act of 1918, 40 Stat. 1057, § 1310(a).
[32] Treas.Reg. 42, Art. 51, 52 (1932); Treas.Reg. 42, §§ 130.77, 130.78 (1942). As applicable today the regulations read:
Every person required to pay tax, or to collect and pay tax, who overpays from his own funds, tax on any monthly return may, in cases where the overpayment was the result of a clerical or mechanical error, take credit for such overpayment against the tax due on a subsequent monthly return.
. . . . .
A claim for abatement or refund of taxes alleged to have been erroneously or illegally assessed or paid . . . shall be prepared on Form 843 and presented to the collector of internal revenue for the district in which the amount claimed was assessed or paid. (See section [6511] of the Code.)
Although these regulations were promulgated under the 1939 Code they remain in effect today. 26 C.F.R. § 301.6415-1 (1976); Id. § 49.04; Treas.Dec. 6091, 1954-2 Cum.Bull. 47, § 1; see Rev.Rul. 70-13, 1970-1 Cum.Bull. 273.
[33] H.R.Rep. No. 1337, 83d Cong., 2d Sess. (1954); S.Rep. No. 1662, 83d Cong., 2d Sess. (1954), both reprinted in 1954 U.S. Code Cong. & Admin. News, 4560, 5231.
[34] This was made explicit in an early version of the regulations under a predecessor of § 6415(c), section 1310(a) of the Internal Revenue Act of 1918, 40 Stat. 1057, as it applied to the dues and admissions excise taxes, for which the collection and refund procedures were essentially identical to the communications tax. These regulations read in part as follows:
It should be noted that the right to claim a credit exists only in the case of "overpayment or overcollection." These words are confined in general to cases where, as the result of some clerical or mechanical error, an excess amount has been collected or paid.
. . . In all cases where tax has been collected and such collections are alleged to be illegal or erroneous it will be necessary for the person so paying the tax to file claim for refund . . .. Section 1310(a) of the Act [the predecessor of § 6415(c)] does not authorize the individuals, corporations, partnerships, or associations receiving such tax to make refund nor to adjust the claim. The only adjustment authorized under this section of the Act being limited to cases of overpayment or overcollection of tax.
Treas.Reg. 43, Art. 65, 66 (1921) (emphasis original).
[35] Transcript of argument, January 25, 1977, at 29-30.
[36] In addition, plaintiffs' basic legal analysis is based primarily on the language and history of various sections of the Code, principally sections 7422(f) and 6415(c). It does not depend on the presence or absence of probable cause or concealment, but rather on defendants' status as collecting agents. In fact, the only authority cited by plaintiffs in support of the distinction between a case where taxes were collected without probable cause and a case where probable cause exists, 28 U.S.C. § 2006, is patently irrelevant. See n. 46 infra. Thus, adopting plaintiffs' reasoning in this suit would permit a wide range of lawsuits to be brought against collecting agents whether or not probable cause or concealment existed, contrary to the exclusive refund provisions of the Code.
[37] 26 U.S.C. §§ 6672, 7202.
[38] Cf. United States v. Washington Toll Bridge Auth., 307 F.2d 330, 334-35 (9th Cir. 1962), cert. denied, 372 U.S. 911, 83 S. Ct. 724, 9 L. Ed. 2d 719 (1963); Sharp & Dohme, Inc. v. United States, 144 F.2d 456, 458 (3d Cir. 1944).
[39] See, e. g., United States v. Michel, 282 U.S. 656, 658, 51 S. Ct. 284, 75 L. Ed. 598 (1931); Kings County Savings Institution v. Blair, 116 U.S. 200, 205-06, 6 S. Ct. 353, 29 L. Ed. 657 (1886); United States v. Rochelle, 363 F.2d 225, 230-31 (5th Cir. 1966) (Waterman, J.).
[40] Kent v. Northern California Regional Office of Am. Friends Serv. Comm., 497 F.2d 1325, 1328 (9th Cir. 1974).
[41] Third-Party Complaint, ¶¶ 4, 5. No liability over is asserted on Counts VII and VIII, the antitrust counts.
[42] See n. 30 supra.
[43] Indeed, defendants virtually conceded as much at argument of this motion. Transcript of argument, January 29, 1977, at 22-23.
[44] 28 U.S.C. § 2680(c).
[45] Morris v. United States, 521 F.2d 872, 874 (9th Cir. 1975); Broadway Open Air Theatre v. United States, 208 F.2d 257 (4th Cir. 1953); Paige v. Dillon, 217 F. Supp. 18, 20 (S.D.N.Y. 1963). Although jurisdiction is usually found to exist over third-party claims on principles of ancillary jurisdiction, see 6 C. Wright & A. Miller, Federal Practice & Procedure, Civil § 1444 (1971), this is not true where, as here, a waiver of sovereign immunity is at issue. Id. § 1450 at 275-76; see generally United States v. Yellow Cab Co., 340 U.S. 543, 71 S. Ct. 399, 95 L. Ed. 523 (1951).
[46] It is clear that the term "collector" in 28 U.S.C. § 2006 does not refer to any person who collects a tax, but rather to the statutory position of collector of internal revenue, later known as the district director of internal revenue. See Internal Revenue Code of 1939, § 3940 et seq. See also Agnew v. Haymes, 141 F. 631, 640 (4th Cir. 1905) ("The protection afforded by [§ 2006] is confined to officers of the revenue"); cf. John J. Casale, Inc. v. Pedrick, 72 F. Supp. 848, 850 (S.D.N.Y.1947) ("Any person required to pay the collector a tax . . . is a taxpayer and this is so though he must first collect such tax from another taxpayer") (emphasis supplied); S.Rep. No. 1625, 89th Cong., 2d Sess. (1966) quoted p. 1302 supra, 1966 U.S. Code Cong. & Admin. News 3676. | 01-03-2023 | 10-30-2013 |
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